NEW PENSION SCHEME

HC Deb 27 April 1961 vol 639 cc638-99

3.57 p.m.

Mr. Douglas Houghton (Sowerby)

The new graduated pensions scheme has now begun. It has taken two years to get all the elaborate machinery ready. We understand that new offices have been built at Newcastle-upon-Tyne and that extra staff have been taken on. There are cards, microfilms, forms, guides, leaflets, Statutory Instruments—and I understand that an outsize in electronic computers has been devised as part of the enormous apparatus to get this scheme working. I would very much like to know how much money has been wasted on printing expensive booklets twice over because the first were out of date before the scheme began.

During the pensions debates in 1959 we warned the Minister that the contributions set up in the Bill could not conceivably stay as they were until April, 1961, because the Government would surely increase pensions before then. They did. The pensions increases were put into an amending Act last autumn, and the new rates came into operation at the beginning of this month. With higher benefits came higher contributions. Two substantial booklets—the Employers' Guide, of 40 pages, and the General Guide, of 14 pages—had to be reprinted to bring all the figures up to date after last autumn's amending Act.

There was, however, more to it than that. The Government led everyone to believe that part of the magic of their scheme was that the contributions of those getting under £9 a week would be reduced, and that those lower-paid workers were to be relieved to the extent of 1s. 7d. a week in the case of men, and 10d. a week in the case of women. The Government went through the General Election with this promise on their lips. Within twelve months, it had been falsified. The only reduction that anybody has had is 2d. a week, instead of 1s. 7d. a week, for men—and nothing at all for women. Another 10d. a week extra for National Health Service contribution for men, and 8d. a week extra for women, in two months' time, should surely complete the disillusionment of all those who were taken in by the Government.

The Minister may say that the reason for the increased contributions was the increased pension, and that that is why the present contributions are higher than they were expected to be. That is exactly what we said would happen. We believed that it was plain that if the Government were to fulfil their pledge to give old-age pensioners a share in the increased prosperity of the nation, they could not, or would not, keep to the same contributions as they wrote into the Bill two years ago, yet the Government persisted with the myth that lower contributions would come about. The result is that the new scheme has begun with only a 2d. reduction in the flat-rate contribution for an employed man as the only remnant of the earlier promise.

The mischief goes even further. In the Finance Act last year, a new scale of tax reliefs on National Insurance contributions was agreed to. These were decided upon last year so that all the P.A.Y.E. codings for the tax year beginning on 6th April could include the new flat-rate reliefs. All the coding for this tax year was completed before Christmas and the actual work was in progress knowing that the reliefs in the Finance Act of last year were out of date.

Now, in the Finance Bill, published today, there is a proposal to increase the relief on National Insurance contributions to take account of the fact that the expected reduction last year has not taken place. So the re-coding for P.A.Y.E. to give the new relief will cost the Inland Revenue 300,000 hours of overtime in the next few weeks—and this from a Government who talk about economies in administration.

If the Minister's excuse is the difficulty which he had in providing for increased pensions two years ahead, he could have done what we urged him to do in 1959, namely, to increase the pensions a year ago, even though he would have to draw on the National Insurance Reserve Fund to tide him over until the new contributions began this year. There was nothing impossible about that. The Minister is sitting on a nest egg of £1,500 million in the National Insurance Reserve Fund, a large part of it profit which he made in the earlier years on the National Insurance Scheme because of the overloading of the contributions for an unemployment level that we happily never had. Before leaving administration, although what I have to say concerns the level of benefits also, it is as well that the Committee should appreciate that there will be an enormous amount of office work for small and, in many cases, trivial benefits and, in other cases, no benefits at all.

One of the questions which people have been asking in recent weeks is about the position of those who are within a few weeks or months of retirement age. They are asking whether, in view of their imminent or early retirement, they have to pay graduated contributions if they are earning over £9 a week, and, if so, what benefit they will derive from them.

The answer is that they will have to pay for every week before they retire when they earn more than £9 a week, men and women, married women and single women, and that they cannot get any benefits out of the graduated scheme unless they pay enough for at least half a unit of graduated contributions, £7 10s. for men and £9 for women. If their contributions total less than half a unit, they get nothing at all. If their contributions exceed half a unit, they will get the benefit of a full unit, which will be 6d. a week extra on their pension.

The Committee should, however, appreciate that it takes a man earning £15 a week or more 29 weeks, paying the maximum contribution of 5s. 1d. a week, to attain the half-unit mark and, therefore, to earn 6d. extra on his pension. A woman earning £15 a week paying the same amount of 5s. 1d. a week takes 36 weeks to reach half a unit and get 6d. extra on her pension. Those on lower earnings must obviously pay for a correspondingly longer period to qualify for the half-unit to give them any benefit at all. To many people, that will represent hardship. In any event, they will feel that they have been cheated out of benefit for contributions compulsorily paid from which, apparently, they will be unable to derive any advantage.

The fact is that for the contributions under the graduated scheme that began several weeks ago, little, if anything, will be paid out this year in benefits under the graduated scheme. All the graduated contributions collected this year will be used to pay for flat-rate pensions and will not ever be used to pay graduated benefits, which is supposed to be their purpose.

In some extreme cases in the scheme, one discovers almost unbelievable results. A man who earns less than £9 a week for 51 weeks in the year but who, in the fifty-second week, earns £15 for that week, will pay one contribution for that year at the maximum rate. If such a man was 21 years of age at the beginning of this month, he could continue to do that for forty-four years, one contribution a year at 5s. 1d. and his employer paying 5s. 1d., too, for only 6d. extra pension. If he were 51 instead of 21 at the beginning of this month, that same man could go on paying one maximum contribution per year for the next fourteen years and get nothing out of it at all.

We have the case of the married woman who has given up work and pays no flat-rate contributions on her own option, but must pay graduated contribution if she takes a job and earns over £9 in any week. She may go back to her old job or take temporary employment for a short period. She may be required to pay a graduated contribution for this short period of employment out of which she will get little or no benefit. She could do one week's work in every year for forty-two years and still not qualify for an extra 1s. on her pension.

The Minister will be keeping hundreds of thousands of small accounts. Perhaps the best he can say of them is that the contribution will scarcely pay for the paper that he will use upon them. Leaving aside the trivial benefits, however, even the more tangible benefits are small enough. Many contributors under the graduated scheme are only just realising how meagre the pensions are. A man aged 40, earning £12 a week, will pay 2s. 8d. a week, and his employer another 2s. 8d., for twenty-five years to add 11s. 6d. to the pension. In the case of a married man, that would give on present figures a total of £5 3s. a week.

A woman aged 45, earning £12 a week, will pay 2s. 8d. and her employer another 2s. 8d. for fifteen years to add 6s. a week to her pension, which, for a single woman, would give a total of £3 3s. 6d. a week, including the flat-rate pension. In both those cases, the people concerned would do better on National Assistance now. Indeed, on these scales, they will still need National Assistance, taking the existing National Assistance scale at 53s. 6d. a week plus rent in the case of a single person and 90s. a week plus rent in the case of a marked couple.

As far as I can calculate, the maximum extra pension which can be earned over forty years of employment at the £15 rate would be 35s. a week, giving a total pension for a married couple of £6 7s. 6d. a week. In present conditions, even that is a bare living. It cannot be regarded as adequate subsistence for a married couple. This is not only the basic pension, but the graduated pension at the maximum rate added to it.

Furthermore, there is no provision in the 1959 Act for an improvement in the graduated benefits. One may ask what 6d. extra a week on the pension will be worth in twenty years' time. Indeed, what will 11s. 6d. extra on the pension be worth in twenty years' time? These questions illustrate the inadequate scale upon which the graduated scheme has been based.

We know the financial secret of all this. It is, perhaps, a coincidence that in 1959, when the Minister said that taxation must be relieved of the emerging burden of the National Insurance Scheme, the Government found it possible to reduce Income Tax by £230 million a year and, in 1961, when that scheme comes into operation, the Government find it possible to reduce Surtax by £83 million a year. These are the two key dates and the two key events within which we must put the graduated pension scheme to appreciate the transfer from taxation to the contributor, from payment according to ability to pay to contributions which ignore ability to pay.

What the Minister is doing in the scheme is to make a huge profit in the years to come on the graduated pension part of the scheme and to use it to meet the deficit on the flat-rate part of the scheme, the emerging cost of which, the Minister said, was getting too heavy for the taxpayer reasonably to bear. What the Exchequer was going to find out of taxation, the contributor will now pay in a somewhat bitter pill with a little graduated jam on it.

Let us look for a moment at what this profit will amount to. This year, it is estimated that about £100 million will be collected in graduated contributions. The benefits paid out under the graduated scheme will to all intents and purposes be nil. In ten years' time—that is, in 1971–72—it is estimated that £295 million in contributions will be collected and the estimated payments out of the graduated part of the scheme will be only £16 million. In twenty years' time, in 1981–82, the contributions are estimated to reach £391 million and benefits under the graduated scheme £63 million. In forty years' time, if we can look as far ahead as that in present circumstances in the world, the contributions are estimated to yield £537 million and the benefits paid out in graduated contributions just less than £200 million. Therefore, if we look at the profit to be made on the graduated side of the scheme, we find that in ten years' time it will be £280 million a year, in twenty years' time, £330 million a year, and in forty years' time, £340 million a year.

We know where the surplus will be going. It will go to pay for the flat-rate benefits. That is how the flat-rate pension scheme gets out of the "red". Instead of taxing according to ability to pay, we shall find that a man on £10 a week will have 1s. 2d. a week stopped out of each £1 of his earnings, while a man on £25 a week will pay only 7d. in each £1 of his earnings, which seems to be graduation in reverse: the more one earns, the less in proportion one pays.

The Minister, however, may say that we must consider the two schemes together, that we must bring them together to consider the finances and the value of the combined National Insurance Scheme. I agree that, up to a point, one has to look at the two schemes together although when the flat-rate scheme was already there and is still to remain there and for many people will be the only scheme there is, the new scheme, with its separate contributions and separate benefits, must be looked at separately as regards its purpose and its terms. Neither the purpose nor the terms of the combined scheme gain approval from this side of the Committee.

We believe that the grievous fault of the graduated scheme is the concentration of contributions in the narrow wage band of £9 to £15 a week and the excessive use of graduated contributions to finance a deficit of the flat-rate scheme which should be met to a greater extent out of the Exchequer contribution.

That brings me to the question of contracting out. We understand that over 4 million employees have been contracted out and that about half of them are public servants, which looks as though the Government have erected this elaborate apparatus of contracting out principally for their own use. I have always held the view—I expressed it during the Committee stage of the 1959 Bill—that, for a scheme of these modest proportions, it is extremely doubtful whether contracting out was justified. My belief is that universal compulsory insurance could be carried a stage further than the Minister has chosen to carry it, especially as those who are contracted out have to be taxed separately and specially by being required to pay more for their flat-rate benefits than those left in the scheme.

Of those who are contracted out, men are paying 1s. 7d. a week more than those left in the combined scheme for the same flat-rate benefits. For women, it is 10d. a week more. There is a good deal of confusion and misunderstanding about this and hon. Members, probably on both sides, have received letters from those who have been contracted out asking why they have to pay more for the same flat-rate benefit which those left in the scheme receive. The answer is that, since they are not paying a graduated contribution which can be milked, they must pay an extra contribution in the form of tribute for the privilege of being left out of the graduated scheme.

Last December, I asked the Minister whether he would issue a statement explaining to people who are contracted out the reasons why they have to pay an extra contribution for the flat-rate benefit. Hon. Members will find the Minister's reply in cols. 109 and 110 of the Written Answers in the OFFICIAL REPORT of 19th December, 1960. I was obliged to the Minister for going to so much trouble, but I defy any hon. Member to discern in the Minister's official statement the real truth of the reason why the contracted-out contributor has to pay more than the person who is left in. His statement is wrapped up in obscure phraseology and it does not reveal the true facts of the situation.

Concerning those who have been contracted out, it would be interesting if the Minister could supply the Committee, perhaps in answer to a Question, later, with an analysis of the type and numbers of employees who have been contracted out. I have referred to the fact that civil servants, teachers, local government officers, police, firemen and many others in the public sector have been contracted out. We also understand that some large industrial firms have decided to leave their employees in the graduated scheme, although they have an occupational scheme which might pass the test for contracting out. It would be interesting to know how the other half of those contracted out is made up.

In conclusion, it cannot be too clearly understood by the country at large and those contributing to the graduated scheme that this is not a genuine pension scheme, but a gigantic reshuffling of the finances of social security. The motive behind the scheme was not to provide extra pensions. It was to solve the financial difficulties of the flat-rate scheme. People earning over £9 a week are to pay through the nose for benefits quite inadequate for their needs and manifestly not value for money. By this means contributors are to pay more so that the Exchequer may pay less, which is like levying one's creditors to pay one's debtors.

4.21 p.m.

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

I have listened with great interest to the speech of the hon. Member for Sowerby (Mr. Houghton). I hope to deal with most of the points that he raised and with the case set out in the recently published document of the Labour Party entitled, "The Pensions Fraud. A Guide to the Tory Scheme for Poverty in Old Age". [HON. MEMBERS: "Hear, hear."] Hon. Members opposite may not be quite so pleased when I have dealt with them. My right hon. Friend will deal with the points that I am not able to cover.

Today, the Opposition have tried to prove that the new graduated pension scheme is a fraud and a swindle. This is an accusation which the Government wholeheartedly repudiate. We must recognise that this debate is a propaganda exercise to cover the shortcomings of the Opposition's national superannuation scheme which they are now in the process of rehashing. However, we have one meeting point, probably the only one.

The hon. Gentleman admits that something had to be done to put the pension scheme on a sound financial basis. We cannot go on paying pensions with an actuarial value ten times higher than the maximum employer and employee's contributions without finding the money from somewhere. Last year, we paid out about £90 million more than we received from employers, employees and the Exchequer supplement to contributions of £126 million. If nothing had been done, that deficit, even on the former 50s. pension, would have reached about £425 million a year in twenty years' time, in addition to the statutory supplement from the Exchequer. It would be unrealistic for the Committee not to take these facts into consideration.

Because of this, the 1959 Act and the graduated pension scheme were deliberately designed to meet future commitments for pensions on the pay-as-you-go basis. Further—and I make no apology for it—the 1959 Act deliberately weighted the Government's subsidy in favour of the lower-paid workers and largely provided that the young and better-off people should aid the old and the retired. I cannot see that the Opposition can find fault with that. It also provided an opportunity for those earning more than £9 a week who were not contracted out to earn higher eventual pensions.

The real difference between the hon. Member and myself is that the Socialists believe that pensions should be more heavily subsidised by the Government. It sounds so much nicer to say "subsidised by the Government" than to say, "put on the taxpayer". How much more honest it would be if they said, "We will not take it off your insurance, but slap it on your P.A.Y.E.".

It has been a cardinal principle of national insurance that it should have a firm contributory basis and provide a pension as of right. As hon. Members know, this principle was overwhelmingly endorsed by the Beveridge Committee and it has been consistently upheld by the T.U.C. To load millions of pounds more on the Exchequer would inevitably jeopardise the pension-as-of-right principle and make what is now an independent pension fund much more a matter of direct budgetary policy.

We have been told that the Exchequer is not paying its fair "whack". This year the Exchequer will find £189 million for the National Insurance Fund. How anyone can suggest that he is being swindled with a subsidy of that magnitude from the taxpayer I do not know. This is the largest annual payment yet made by the Exchequer to the Insurance Fund. Since the 1946 Act, the lowest payment made was when, under legislation for which the Leader of the Opposition was responsible, the Exchequer payment fell from £139 million to £65 million in two years.

Mr. William Ross (Kilmarnock)

We are here dealing with what people in employment pay today. Will the right hon. Lady tell us who received the money which was paid out last year—the people who are paying, or the people who have already retired?

Miss Hornsby-Smith

It is a combination of both.

Mr. Ross

The right hon. Lady knows quite well that the bulk of expenditure is on retirement pensions for people who have already retired.

Miss Hornsby-Smith

Any payments from the fund for pensions will naturally go to retired people. Surely that is the subject of this debate. Nothing that hon. Members opposite do will alter the fact that any pensions expenditure goes to people already retired. They would not otherwise be drawing their pension.

It is also interesting to note the proportion which has been paid by the contributor and by the Government. In 1951, under the Socialist Government, the contributors provided 89.9 per cent. of the total payout. This year, 1961–62, for higher benefits to more pensioners, contributors will pay only 81.5 per cent. Therefore, the proportion of the Exchequer contribution is higher than the contribution made by the Exchequer when hon. Members opposite were in office. The current Exchequer payment represents a quarter of the flat-rate contributions. In twenty years time the supplement will be £238 million from the taxpayer. It is, therefore, clear that the taxpayer will continue to make a substantial annual contribution to the Insurance Fund. This in itself destroys the idea that the contributor is being swindled.

What hon. Members opposite now advocate contrasts strangely with what they advocated when they were in office. On the one hand, we have the plea of the hon. Member for Coventry, East (Mr. Crossman) at the Labour Party Conference, for an increase in pensions to be met by taxation. Hon. Members opposite now ask that the Exchequer should bear the main burden of pensions. Yet in their policy statement, "National Superannuation", they categorically reaffirm the insurance principle and make plain that the overwhelming body of opinion among trade unionists is that the fund should continue to be financed largely by the payment of contributions, as they feel that the worker then can receive the benefits as of right and that, therefore, no politician could take them away.

Mr. Houghton

The right hon. Lady will recall that the basis of contribution was to be 5 per cent. from the employer and 3 per cent. from the employee with the remaining 2 per cent. as an Exchequer contribution of the average earnings of the nation. That was to be applicable to the graduated scheme as well as to the other scheme. Under the Government scheme, no Exchequer contribution whatever is made to the graduated scheme.

Miss Hornsby-Smith

With great respect, I do not think that that alters my argument. Hon. Members opposite are busy recasting the finance of that original proposal. I shall deal with certain aspects of it later and I hope to prove that their scheme would do considerable damage to very large areas of the field of occupational pensions were it brought into operation as they have outlined it.

In concentrating their attack on the graduated part of the scheme, hon. Members opposite have deliberately divided the pension into two bits, yet, strangely enough, when they speak of their own pension scheme they refer to it as one. As they know very well, the only fair analysis is on the basis of the figure on a man's pension book when he draws it. I exonerate the hon. Member for Sowerby from this, because in one of his not infrequent flashes of objective rather than political thinking, he has admitted, in Socialist Commentary, that whether our scheme is a swindle depends on whether we look at the scheme as a whole or whether we look at the graduated scheme by itself". The hon. Member for Sowerby, therefore, honestly admits that the pension which a man receives on retirement, on our joint scheme, is not a fraud and not a swindle. But even if we take the graduated part of the pension by itself the scheme gives the workers, the majority of whom have not enjoyed the benefits of an occupational scheme, a good return for what they have paid in.

It will be seen that for every £7 10s. "brick" paid in by the male employee, with average expectation of life at pension age, the Government scheme gives a return of £15 12s., and the return is higher if he leaves a widow. For every £9 paid in by a woman, who may retire five years earlier and, on average, lives longer—and I always wonder why we are called the weaker sex—the average is £24. The total pension is a good bargain.

I take the hon. Member for Sowerby to task for his calculations about people who are in the scheme for only a short time. The hon. Member worked on a sum of £7 10s. But to earn an additional 6d. the employee would have to pay for only 15 weeks not 29 weeks, as the hon. Member said, and the sum he would have to pay is £3 15s. not £7 10s. We shall be paying some pensions increased in this way before the end of the year.

The hon. Member referred to various examples. In the Labour Party document, which, presumably, will be widely circulated, and possibly widely read, the party takes what it considers to be the worst possible case it could find to prove that our scheme is a swindle. I do not blame hon. Members opposite for that. It is a fair debating point. To discredit our scheme, the document states that a lad of 18, earning £13 a week, who will retire eventually at 65 in the year 2008, will have a pension of only £6 a week.

To get this figure hon. Members opposite assume that for forty-seven long years the lad never gets promotion and never gets a rise in pay. They assume that during forty-seven years wage-rates do not rise at all, and that for forty-seven years there is no rise in the basic flat rate pension—when, in fact, we have had five rises in the last ten years.

Such a fantasy is really an insult to one's intelligence. If that is the best example that right hon. and hon. Members opposite can dream up against the Government scheme they must be very bankrupt of valid criticism. There is also the point that as the Labour Party is pledged to increase the flat-rate pension, right hon. and hon. Members opposite apparently assume that we shall not have a Labour Government for forty-seven years.

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

That is probably right.

Miss Hornsby-Smith

Right hon. and hon. Members opposite complain that the £9-a-week worker is not affected by the graduated scheme, but he is. It has enabled him to get higher benefits for slightly lower contributions. It is a mean spirit that does not welcome that, and I again exonerate the hon. Member for Sowerby, because he has already acknowledged it in an article in Socialist Commentary and he has said that there is nothing wrong with it.

The basic flat-rate pension is and will remain the major part of the insurance pension and, therefore, it is relevant to consider it. We have been accused of abandoning the post-war aim of adequate pensions as of right. In fact, we have increased the pension four times, and on the last two occasions the greater part of the increase has given pensioners an increase in the real value of their pension as well. Over the years hon. Members opposite have argued that the pension should be tied to the cost of living. Had we tied it to the cost of living, the 26s. pension of 1946 would be 44s. 11d. today instead of 57s. 6d.

Mr. James Dempsey (Coatbridge and Airdrie)

Ugh.

Miss Hornsby-Smith

It is no use the hon. Member saying "Ugh". It is a fact. The married rate, on a cost-of-living basis, would be 72s. 7d. today as against the present 92s. 6d. These differences of 12s. 7d. and 19s. 11d. are a measure of the way in which we have kept our pledge to the old people and have done outstandingly better than a cost-of-living index increase would have provided.

Nor do we forget that, when hon. Members opposite were in office, by their partial increase of the pension rate from 26s. to 30s., in 1951, they did not even keep pace with the cost of living. Hon. Members opposite have also mentioned, automatic increases, which they know very well are impracticable. One cannot bob pensions up and down every month in accordance with the cost-of-living index. But even assuming that they could find some method of changing the pensions far more frequently, the Labour Party speaks with two voices on this issue of an increase, whether on the basis of the Index of Retail Prices, or on the basis of the new "dynamism" to which they refer in their document entitled, "National Superannuation", and which is supposed to be linked with earnings or national wealth.

In this document the party opposite provides for selective treatment. It claims that once a person was retired his pension would be made "inflation proof" only to the extent of keeping up with the cost-of-living. Thus, the so-called "dynamism" which links pensions to earnings and national wealth would only apply during the pensioner's working life. Hon. Members opposite now claim, in another voice, that the existing pensioners, numbering 5½ million, would receive the dynamic treatment, too, which they were not to do according to "National Superannuation". But they give no explanation of how the money is to be raised. If it is to be raised by taxation, every 10s. extra on the pension represents roughly £200 million on the Exchequer.

Mr. Houghton

Does the right hon. Lady not realise that in 1957 the Labour Party was pioneering in this field? It was blazing a trail which the Government took up twelve months later.

Miss Hornsby-Smith

I am glad to acknowledge that we at least took up the trail to that extent. The hon. Member cannot complain about that. We have been anxious to maintain the insurance principle and also to ensure that we do not mislead people into thinking that what they avoided paying in contributions they would not have flung on to their P.A.Y.E.

Then hon. Members opposite have complained about the smallness and niggardliness of our graduated scheme. We are criticised for its modest level. This was deliberate and we make no apology for it. We believe that private schemes are of infinite value to the employee and can be more easily tailored to his needs than a State scheme. A classic example is how the miners' scheme is tailored to the needs of the mining industry. I am sure that there is not an hon. Member opposite who would wish to see that scheme superseded.

We do not seek to destroy private insurance schemes. Provided that they are at least as good as the State scheme, we hope that they will flourish. We do not seek to take so much of a man's income that he loses the right to dispose of a large part of it in the way that he thinks fit. If he wishes to dispose of his savings on wider family insurance, or on buying his house, we think that it is perfectly right for him to do so.

Again, taking this document, "The Pensions Fraud", I do not think that any true comparison can be made between the State scheme, whether it is our State scheme or that of hon. Members opposite, and a private scheme. The State scheme gives the advantage of every increase in the flat rate—and there have been five in the last ten years—without retrospectively increasing the contributions of the employee or his employer. Thus, on his own and his employer's contribution, the insured person gets a better total pension than he could reasonably expect to obtain by private insurance. The amount paid out in benefit today is, and always will be, greater than the amount paid by the contributors—employers and employees—because a very substantial payment is made by Exchequer subsidy. How, then, can it be a swindle, if these vast sums are coming from the Exchequer?

The Opposition complain that very small sums will be paid out in the earlier years. The hon. Member for Sowerby made great play about it. He knows, as well as I do, that this was recognised in his own party's publication "National Superannuation": In the nature of things, a superannuation scheme does not become fully operative until after a considerable number of years. An insured person pays contributions in his working life so that he may have a pension on retirement.

Why there should be criticism of what is going into reserve and talk about the profits that we are building up? Has the hon. Member forgotten that according to his own party's calculations the Socialist scheme would pay out nothing at all in the first year? In ten years the Socialist scheme would have accumulated £4,000 million and in the tenth year would pay out £37 million. Who is the hon. Member to talk to us about building up profits?

Mr. Houghton

The hon. Lady is pointing the finger of scorn at me. May I point out to her that the Labour Party scheme was to be financed on entirely different principles from the Government scheme? The accumulation of contributions was to be funded and the interest on investments was to provide benefits later on. The Government scheme is simply "pay as you go"—a straight transfer from graduated contributions to flat-rate benefit.

Miss Hornsby-Smith

I always enjoy the hon. Member's eloquence, but with great respect I say that he cannot criticise building up the Insurance Fund's reserve, on the one hand, and suddenly make that wholly reputable, on the other. The accumulated funds will not be paid out year by year for the excellent reason that the contributions are paid for many years of the insured person's working life and are subsequently drawn out on retirement. This cannot be derided if the Government do it and applauded as wonderful if the party opposite do it.

We come to the individual. The party opposite has said that the Government scheme is a fraud and swindle. On page 11 of its document, "The pensions Fraud", it is bitterly complained that 9 million people are left out. How inconsistent can hon. Members opposite be? If the scheme is a fraud, hon. Members opposite ought to be rejoicing that these people are left out. They cannot have it both ways. If they say that it is a fraud because the under £9 per week worker is left out they are, by implication, suggesting that the people who contribute to the scheme are the lucky ones and, therefore, the scheme is a good one.

In fact, over 6 million employed persons between 18 and 65 will at any one time not be paying graduated contributions. The latest figures are that just over 4 million of the 6 million will be women, many of whom work part time and many of whom have chosen not to pay contributions towards their flat-rate benefit. The figure will also include those sick or unemployed and temporarily not paying graduated contributions and a number of young people between 18 and 21 who can be expected to earn graduated pensions as they get on in their jobs. According to the Ministry of Labour Survey, published today, the number of men in full-time employment with average earnings of £9 a week or less is very small indeed.

Again, I think that we are entitled to look at the Socialist alternative to our scheme. The hon. Member for Sowerby has endorsed, at any rate by implication, the claims made by his hon. Friend the Member for Coventry, East (Mr. Crossman.) The Labour Party continues to assume that the whole provision for old age must come from State schemes. Much of what the hon. Member said this afternoon, particularly when he said that the graduated pension scheme could reasonably have been imposed on private schemes, endorses that view.

This is the very foundation of the Opposition's scheme. It is important for us to consider it. It is not realistic, in an age when half the employed men are covered by occupational schemes, for the Government to make virtually compulsory contributions on salaries of up to £2,000 a year or more. Recently, in a broadcast, I think that I heard a Labour spokesman say that it should possibly be £2,500 a year.

Let us get clear in our minds what this means. The whole finance of the Labour Party scheme is based on the very high contributions which it intends to get out of the higher paid workers, most of whom are already covered by occupational schemes. The Labour Party has been very coy about the extent to which it is prepared to allow the £2,000 a year man to contract out. I confess that it is in a very real dilemma. If it allows contracting out—and from recent pronouncements it does not appear to want to—it loses the subsidisers and is left with the subsidised, and the foundation of the whole scheme collapses.

If, on the other hand, it intends to deny contracting out, or makes the conditions so stringent that it is virtually impossible to do so, the public and the 8 million people in these schemes are entitled to know. Would the Labour Party, for example, make civil servants, teachers, doctors, nurses, and local government officials come into the State scheme and abandon their own individual schemes? Would they tinker with the miners' pension fund? Or is its approach purely partisan and does it propose to attack only private industrial occupational schemes and make them impossible?

In comparing the Government's scheme and the Labour Party's proposals, we have to bear in mind that if the figures upon which it makes its calculations are to be fulfilled this can only be done at the expense of a vast number of occupational schemes which are in operation today and which cover more than half the people in the State's employ, people employed by nationalised boards and in public services.

We should look for a moment at the number of those who have contracted out of the graduated pension scheme. A total of 4,270,439 have contracted out. Of these, 1,612,908 are in the public services, 1,052,846 are in the nationalised industries, and 1,604,685 are in private industry.

The Socialist attack on the graduated scheme is part of a sordid campaign to make people believe that the Tory party is destroying the Welfare State. It is as "phoney" and ill-founded as the Socialist attacks on the Government's housing and education record. Yet the Socialists themselves have no workable alternative. When they were in office they watched the old-age pensioners get steadily worse off. It was they who slashed the Government subsidy and did nothing to meet approaching deficits in the National Insurance Fund.

It ill befits them to condemn an admirable scheme which enables people with higher incomes to earn higher pensions and provides higher pensions at no greater cost for the lower paid workers and, of course, for all existing pensioners.

Mr. Houghton

The right hon. Lady overlooks the fact that the Labour Government increased the 10s. pension to 26s., and the £1 pension to 42s. as the first measure of social security they introduced. Why do we have to have these tiresome references to the past without the whole truth being told? The Labour Party has not been in office for a decade. When we left office it was under conditions in the world and in this country quite different from those of today. These past ten years have made a difference. Yet the right hon. Lady harks back to failures of the Labour Government when she should be paying more attention to failures of her own Government.

Miss Hornsby-Smith

The hon. Gentleman cannot get away from the fact that, despite all the Labour Party's protests about keeping up with the cost of living, and their new, grandiose schemes, during the six years of Labour administration the pension ran down in value from 26s. to roughly 21s. When they did make an increase, it was by only 4s., which did not even make up for the run down.

Members opposite dislike this analogy, but in every case they have compared the Government's latest rate with the former one, and I am rightly comparing the rate which the Labour Government thought, fit to introduce with the far greater rise in the cost of living and pointing out that they never even made up the loss.

Mr. Ross

For long periods during the Conservative administration, the value of the pension, even after being raised, has been below what it was during the period of office of the Labour Government. The right hon. Lady said that the Government are providing a higher flat-rate pension at no greater cost to the lower-paid worker. How is this being done, and how was it done after the last increase?

Miss Hornsby-Smith

The current stamp is 9s. 9d. A week or so ago it was 9s. 11d. Contributors earning under £9 a week have been paying 9s. 11d., and now they pay 9s. 9d. The basic benefits, either pensions or unemployment or sickness benefit, are 57s. 6d. single and 92s. 6d. double. Therefore, the contributors earning under £9 a week are getting higher benefits for no greater National Insurance contributions.

Mr. Ross

Under the graduated scheme, which we are supposed to be discussing today, that contribution was to be reduced to 8s. 4d. but the last pensions increase was paid for by charging even the lower-paid workers an increase of 1s. 5d. in contributions, with the employers' contribution also being increased by this amount.

If the Minister would wipe the smile off his face and look at the Second Quinquennial Report, published in 1960, he would see that it said quite clearly that future general increases would have to be followed by general increases in contributions. That is what was done to lower-paid workers when they had to pay an extra 1s. 5d.—the same amount paid by higher-paid workers.

Miss Hornsby-Smith

Perhaps the hon. Gentleman may be able to convince a man who has been paying 9s. 11d. a week and now pays 9s. 9d. a week, for higher benefits, that he is paying 1s. 5d. more. I am surprised at the hon. Gentleman. He is a Scotsman, too.

Mr. Dempsey

The party opposite promised a reduction at the last General Election.

Miss Hornsby-Smith

Certainly, but the new rates of pension had not come in then. The fact remains that higher basic benefits are being paid. I know that Members opposite do not like this and are trying to camouflage it, but the fact is that higher benefits are being paid while less is being taken from pay packets.

I hope that I have uncovered some of the fallacies of the Labour Party's document, but my right hon. Friend will more than make up for my omissions when he replies to the debate. I repudiate the charges made against the graduated pension scheme and outlined in this unworthy publication by the Labour Party. I ask the Committee to endorse the sound policy followed by my right hon. Friend by giving him a resounding majority and rejecting forcibly the still only half baked and disastrously inflationary schemes of the Opposition.

4.59 p.m.

Mr. James Dempsey (Coatbridge and Airdrie)

One is tempted to intervene in this debate after listening to the speech by the right hon. Lady the Joint Parliamentary Secretary. I had understood that we were to discuss the management and working of the new graduated pension scheme. Instead, we have been treated to a dissertation about failures of the Labour Government. The right hon. Lady went so far as to juggle with figures in trying to convince us that under the Labour Government a pension increase was not really an increase at all.

In the course of gyrations in relation to the value of the pension, the right hon. Lady completely forgot to mention that during the last ten years the value of the £ has fallen, even under this Government. She never mentioned it in her speech, but it further decreased the real value of the present pensions, and she should admit it.

I must confess that I have always regarded ladies, whether in the House of Commons or elsewhere, as being the gentle sex but, after hearing the dissertation of scorn and the pouring out of abuse by the Parliamentary Secretary, I have reached the conclusion that there are exceptions to the general rule. I am not at all pleased about my conclusion, since the Parliamentary Secretary is a nice looking lady, well dressed, presentable and charming, and it is somewhat alarming to find that she can be so wicked and vicious in her references to other hon. Members.

Here we are, endeavouring to ascertain what is happening under this scheme, and all we have had from the Parliamentary Secretary is an address on the Labour Party's scheme. It therefore seems to rest with me to explain the implications of the Government scheme, which has been described as a swindle. Why has such a phraseology been applied to it? I can best explain my arguments by illustration.

A man earning between £9 and £15 a week will be paying, say, about 2s. 6d. a week to the graduated scheme, or £6 10s. a year. If he is 45 and he continues to pay for the ensuing twenty years, he naturally pays twenty times £6 10s., which is £130. The result is that he receives 6d. for every £7 10s., if I am correct, or approximately 8s. 9d. a week as a superannuation pension—and that is after paying 2s. 6d. per week for twenty years. Can anyone suggest that this is a generous scheme and that that man will receive a reasonable degree of social equity? Naturally, the benefit at the end of the day will not be adequate to meet his needs. That is one of the arguments being put forward by the Opposition as to why the Exchequer should be making a contribution in addition to the employers and employees contribution. Only in that way will the individual be able to look forward to a reasonable pension during his period of retirement.

May I use another illustration to support my argument? A man earning between £9 and £15 a week, if he is 40 years old, will have to meet his contributions for a period of twenty-five years to qualify for a pension. At the end of that period he will receive approximately 11s. 3d. a week. Taking the argument a stage further, a man who has to pay for thirty years on the same basis, and on the same wage, will receive a pension of about 13s. a week. These rates are obviously extremely inadequate to meet the needs of anyone in retirement. That is why it is a misnomer to call this a graduated pension scheme. It is misleading and misrepresenting the facts to talk about superannuity during the period of retirement.

After a man has made a lifetime's contribution to the economy of the country, by working in industry and service and by contributing towards his pension, it is unfair that he should receive miserable allowances such as I have described during his days of economic adversity. I have been giving, as an example, men earning between £9 and £15 a week, and to these individuals the pension benefits are so inadequate that they will require to be supplemented by National Assistance during the rainy days ahead.

The Parliamentary Secretary referred to Exchequer payments into the scheme. It is true that the Exchequer contribution has increased considerably. But it is even more true to say that the employees' and the employers' contribution has increased much more. I ask the Parliamentary Secretary to measure the increase in the Exchequer contribution not in the way she did, but from 1950 up to the present time.

Miss Hornsby-Smith

The hon. Gentleman must be mistaken, because I gave the figures for which he is asking. I said that, in 1951, 89.9 per cent. was paid by contributors, employers and employees. At present, the figure is 81 per cent. The hon. Gentleman cannot, therefore, complain that the Exchequer has not maintained a fair contribution.

Mr. Dempsey

I have already said that figures are made to lie. I will not, however, complete the quotation. I merely asked the Parliamentary Secretary to have another look at this matter from a statistically different point of view. She will find that the overall Exchequer contribution during the reign of the Tory Government has gone up by about 80 per cent.—and I admit that—but the Parliamentary Secretary must compare that with the global total increase paid by contributors. On doing that, she will find that the contributors' contribution has gone up during the same period from 4s. 11d. a week to its present level, and that that represents an increase of 260 per cent.

The Exchequer contribution has not, therefore, marched hand in hand and does not correspond with the contributors' increase. That cannot be denied. In Scotland, we say, "Facts are chiels that winna ding "—but perhaps someone will explain the meaning of that to the Parliamentary Secretary later.

We must be fair in our attitude towards the principle of superannuation. I want to see superannuation working effectively and I am criticising the scheme because it does not fulfil the obligations of superannuation as we understand it. Many people are worried about this question. I belonged to a form of employment which has a trade union that introduced superannuation for the first time in the history of that employment. In introducing that scheme, provision was made whereby women who were likely to leave their employment to be married should have their contribution repaid, with interest. What I should like to know is: in circumstances where such employees who are now part of the graduated pension scheme leave to get married, will their contribution be refunded, with or without the interest those contributions have earned during the period the contributor has been in the superannuation fund?

Miss Hornsby-Smith

In many ways, the Government scheme is better than the scheme the hon. Gentleman has described, because when they leave, the general rule in occupational schemes is that they get their own contribution back, plus interest. Under the graduated scheme, the pension that they have paid for will be frozen, and when they eventually come to retire it will be an addition to the amount of their husband's insurance or to that which they have earned on their own. In the long run, they retain the pension they have earned, rather than get back their own contribution and interest.

Mr. Dempsey

May I take it that in the event of these ladies not being spared to reach retiral age, their contributions die and the interest rate dies with them? There is no return for the present arrangement whereby the contributions are refunded with interest at the time of marriage. This should be clearly understood—

Mr. Raymond Gower (Barry)

Does not the hon. Member appreciate that that is true in the case of practically every contributor? If any person contributing to a national scheme of this kind dies, his contributions die.

Mr. Ross

There is no other national scheme of this kind. This is the first one.

Mr. Gower

To this scheme.

Mr. Ross

The hon. Member should be exact.

Mr. Dempsey

What, in essence, the Parliamentary Secretary said is that thousands of employees who now treat their superannuation payments plus the interest which they bear as a marriage dowry will lose that right. I am not talking about local superannuation schemes. I am talking of the Scottish superannuation scheme, and if this can be accomplished in Scotland there is no reason why it should not be the practice in this country.

The Parliamentary Secretary has made a startling and shameful admission to the effect that thousands of ladies can say goodbye to their marriage dowry as a result of the graduated pension scheme. The hon. Lady would have been better employed addressing herself to a solution of this problem than in making scurrilous attacks on right hon. and hon. Members on this side of the Committee.

These are aspects of the scheme which we should like to see removed. I know that figures have been bandied about in the Committee and figures may be misrepresented in more ways than one. But the figures which I have quoted are accurate, because they are based on the 6d. per £7 10s. of contribution. For that reason, I say that the benefit is inadequate and because of that people have been driven to take out private insurance. The Co-operative movement offers an independent, individual, private insurance scheme which is far better than the one proposed by the Government.

Now that the scheme is under way the Minister and the Government should review its working in the coming months and make it their business to see that it is a success, as it could be were it organised on better financial lines, with a contribution from the Exchequer and, as a consequence, more adequate benefits. If the Minister and his Parliamentary Secretary would approach the problem of superannuation in that way, something worth while might be accomplished. At the moment, the word applied to this scheme is a misnomer. It is a complete fallacy as a superannuation scheme, because the element of benefit would be less than the level of National Assistance.

The aim and object of a perfect superannuation scheme should be to enable people to retire in receipt of a reasonable amount without regard to means test or needs test or any other interference with the private rights of a man and his family. This is a misrepresentation of the principle and that is why I criticise the scheme. We cannot allow the present state of affairs to continue. The scheme should be made to work. It could be made a success provided the benefits to be received in the twilight of a man's working life are more reasonable and more adequate to meet the needs of retired pensioners.

It is my considered opinion that unless this is revitalised and made more generous, as a superannuation scheme it will not meet the needs of the recipients, or wishes and aspirations of the organised working people of the country, which is simply to enjoy a secure and contented eventide.

5.15 p.m.

Mr. Arthur Tiley (Bradford, West)

I am glad to follow the hon. Member for Coatbridge and Airdrie (Mr. Dempsey). Like all other hon. Members opposite, he wants a bigger pension for every man and woman in their happy old age. But when he looks at the way to pay for it, then, like the Labour Party he shirks the responsibility. The hon. Member said that he was afraid of inflation. So are we all in this matter. And that is why, when "National Superannuation" first came out—

Mr. Dempsey

I never used the word "inflation".

Mr. Tiley

I used the word "inflation" because it shortened the form of the sentences which the hon. Member used to explain the value of the pension coming down. I thought that I could save a bit of time for the Committee by so doing.

The hon. Member said that the Government's scheme was a swindle and a fraud. I will deal with that later. But if it is, the whole of the proceeds are going to our present pensioners every week, every month and throughout the whole year. The whole proceeds of what we are collecting will go to the old folk now.

I do not wish to get into trouble with the female sex, but the hon. Member for Coatbridge and Airdrie made a point about pensions for the womenfolk. It is my experience that in these matters womenfolk are interested in marriage and not in old age. It has never been effectively pointed out to them, according to "National Superannuation", that they would retire at 65 years of age. After all the years of striving by our women and the efforts of Mrs. Florence White—a constituent of mine, who spent years in getting spinsters a pension five years earlier—in "National Superannuation" the age was put back to 65.

The hon. Member for Sowerby (Mr. Houghton) enjoyed himself immensely by giving examples from the graduated scheme, and my right hon. Friend was correct to point out that there are not two pension schemes, but only one. There is a basic scheme. There are two methods of collecting the premiums and we ought to be glad that there are, because, by collecting the graduated pension in this way, for the first time we have been able to stop the working of what hon. Members opposite call a poll tax on the lower-paid workers. At long last, my right hon. Friend has found a way to get more contributions from those who can afford more.

The hon. Member for Sowerby gave many examples from the graduated scheme. He must know that those of us who have studied this question of pensions could do exactly the same from "National Superannuation." He said that "National Superannuation" blazed a trail. Well, the fire went out a long time ago. Nobody believes it now. In all these years that we have had it on the market—the Socialist pension scheme blazing the trail—I have never seen a copy of it being read in a library or on a railway train. I have seen many people reading "Lady Chatterley's Lover," and other "classical" literature, but I have never seen anybody with a copy of "National Superannuation".

I sometimes wonder whether I am the only hon. Member who has read it completely. I am not surprised that the Opposition have not read a good deal of it, because on the front page it says: If the old are enabled to spend more, the rest of us will have that much less to spend. They say that, but they never mean it, because it is in the payment of these contributions, with all the increases which we have to impose, that we make ourselves poorer for the benefit of our retired people. The Government have never shrunk, and neither has the Minister, from doing that in a State where salaries and wages have been increasing.

We are told by the hon. Member for Sowerby that the expenses are high. There, again, in "National Superannuation" the sum estimated for launching the scheme was £16 million in the first year, growing to £50 million in twenty years. Therefore, of course, the same arguments can be levelled at both schemes. The Government's pension schemes, basic and graduated, are not puny schemes. They are a massive financial effort on the part of those who are working and earning to pay pensions which in these days we wish more appropriately to see our old people receive.

We were also told by the hon. Member for Sowerby that those who are now almost 65 will not get any increase over the next few months for the first contributions which they will make to the graduated scheme. They will not, it is true, but in a short time when they retire they will get the benefit of the increased pension of £4 12s. 6d.—increased a fortnight ago—and for which increase they will not have contributed during their working lives.

A few months ago my right hon. Friend gave figures of entitlement for contributions paid over the years from the commencement of the National Insurance Fund, and stated that for contributions from employer and employee they would have purchased a pension of 9s., whereas a pension of £4 12s. 6d. is being provided. I suppose that that is part of the fraud about which we hear so much—a pension of £4 12s. 6d. for contributions yielding a pension of 9s.

I want to give one simple illustration from the National Insurance Fund in the same way that the hon. Member for Sowerby and the hon. Member for Coat-bridge and Airdrie have given examples of the smaller pensions in the Government scheme. It is, of course, possible to pick out the good and the bad from all pension schemes. We are assailed in "The Pensions Fraud" because we have left out the self-employed man. I want to tell hon. Members something so that they may understand exactly what Labour's "National Superannuation" would have done for the self-employed man.

Such a man with an income of £1,000 a year would have paid to my right hon. Friend 8 per cent. of his salary, that is, £80 per year. That is a long way removed from 6d. a week to the Prudential. If the man paid it from the age of 25 to the age of 65, he would pay £3,200. Here is a point which should interest the hon. Member for Coatbridge and Airdrie. If the man died at 64 and 11 months, his widow would receive just a small pension and his life savings would all be gone. Had he paid that £80 into a building society and received interest on it at the rate of 4 per cent. throughout the period, after forty years it would have produced him, at age 65, almost £8,000 in his own right. Under the Socialist superannuation scheme he would get a pension of £500 a year.

The alternative is to take £8,000 in cash. He could go to the insurance market and get a pension of £800 a year, guaranteed for ten years, so that the whole £8,000 would be paid to his family whether he lived or not. Do we want to see these massive deductions by the State from the wage packets of those working? That is why "National Superannuation" when it blazed the trail, became a damp squib. As was evidenced at the General Election, people are not daft these days. Hon. Members opposite forget that we have had fifty years' experience of social welfare, and that has included education.

People do not want the main part of their savings to be controlled by politicians, least of all by Socialist politicians. We do not expect pensions which are able to provide an investment yield. We do not get large profits for contributions made as members of a pension fund. One does not get large profits from the whole insurance market; one gets cover against death. The only investment yield to a member under the fund, whether Government or "National Superannuation", is simply the profit which comes because of the saving of tax, on the one hand, and the employers' contributions, on the other.

A pension fund, private, Socialist or Tory, is a long hard, laborious saving year by year for the happy old age of the workers. There are more profitable investments, as the hon. Member for Coventry, East (Mr. Crossman) once pointed out, open to all the families in our land than under a Government scheme.

I apologise for not declaring, at the beginning of my speech, my interest in the insurance field. The reason was that I was carried away by the speech of the hon. Member for Coatbridge and Airdrie. I was extremely interested, because I like to hear his speeches, although it would be easier with an interpreter. However, I shall be able to understand more fully tomorrow what he said. As the Committee knows, I am engaged in the field of insurance, though not specifically with pensions. I am not a specialist in pensions at all. I am engaged rather more in the general field.

In "National Superannuation", in debates on pensions, and in their speeches, hon. Members opposite always assert that the Government have introduced this graduated scheme to fit in with the desires of the private insurance market. Nothing could be further from the truth. It hates the scheme, I received more protests from my insurance colleagues all over the country when the Measure for the graduated scheme came into being than from any other source, because once we go beyond the basic scheme we are entering the field which has hitherto been that of private insurance companies. They opposed the whole graduated scheme. We ought not to gibe at them, as is sometimes done in Opposition speeches and as is done in the Labour Party's booklet, because private insurance is one of the biggest and brightest gems in the whole of our commercial life.

Some years ago Sir Stafford Cripps paid a great tribute in the House to the insurance market for the way in which it administered, without profit, the whole war risk insurance scheme. He said that 70 per cent. of our premiums in the British market came from overseas. I think that the figure has now grown to 80 per cent. That means that 80 per cent. of me is paid for by the foreigners. As we provide only 50 per cent. of our own resources in raw materials for food and clothes, I, as a member of the insurance business, am a very great profit to the country, especially as I came to this House for almost nothing into the bargain.

Why should we try to destroy this market? Irrespective of our party affiliations, it should be in the interests of both sides of the Committee to see this business, on its world scale, extended. It creates employment for hundreds of thousands of people, it makes profits at home and abroad and 80 per cent. of its profits are from overseas. We shall never beat the Russians to the moon, we cannot kill as many people in a few seconds as the Americans can, but, because of our initiative and our enterprise, we can insure people all over the world, and we shall continue to do so unless we impair the security of these great institutions.

It is a dreadful thing to make such a long speech in a short debate, but I now want to pay two tributes. One is to my right hon. Friend's permanent staff for the way in which they have issued about 15,000 certificates in a few months, which means that they have reviewed about 15,000 schemes. There have been no hitches, and it has been an interesting experience for me to take part in pensions debates in this House in helping to fashion the Bill, although I suppose that the hon. Member for Sowerby would say that I did not help very much in Committee.

However, we helped with our presence to fashion the Bill in Committee, and I have seen in my commercial experience the effects of our legislation. There have been many tributes from all sides to the work which the Ministry has done, which has been of tremendous value. It has involved increases in the pensions, the setting up a completely new Department, and this has been done without a hitch. I think that the only certificate which we have not had in my office is due to clerical mistakes of our own, and we cannot complain to the Registrar about that.

I want also to say how much the business community has helped, even if it has complained, and how much the life offices have helped to do this job, because it is a specialised field. Those of us who take part in these debates know how specialised and technical it is, and these people have rendered a great service, much of which, I am glad to say—though we are in private business for profit—without thought of profit. We have been effecting changes to hundreds of schemes already in force, which has meant hundreds of meetings. I was at many meetings in canteens, and I can say that one can get a much better audience on pensions than one can on politics. All this great work has gone on.

I hope that we shall review some of the points which the hon. Member for Coatbridge and Airdrie was questioning about, and also review the administrative side of the scheme. I hope that, since the rush is now over, it might be possible for the Minister to have prepared a standard form of application for election to contract out. It has meant a lot of work in business in preparing this form, and perhaps a standard form in the shape of a certificate in a standard fashion, prepared according to the specifications of the Minister, could be handed to all those workers who are contracting out.

I think that my right hon. Friend has given figures of those contracting out. About half represent teachers, local government officers and civil servants. Nobody ever expected that this large group of 2 million people would go into any other pension scheme but their own. It is not because of criticism of the Government's scheme that these people have contracted out. After all, before this scheme started they were in the happy position of contributing themselves to a scheme which was to provide two-thirds of their working salaries on retirement, and I do not think that the teachers and all those involved in salary negotiations realise what a big advantage that is. When they come to retirement they find that their pension is based not on the contributions they have made throughout their years of service, but on the average salaries in the last three years, and that is why all these other schemes, without exception, prove to be insolvent.

We have the best example the country can look at to warn us away from the national superannuation scheme which recommends the upgrading of pensions according to wage increases, and so on, in the National Health Service employees. Last year, after five years, a quinquennial valuation took place, and that small scheme, aflecting only 300,000 employees, was found to be £80 million "in the red". My right hon. Friend the Minister of Health has contributed £40 million to the deficit. There is a warning there. Imagine that state of affairs for 23 million workers, when there is an £80 million deficit in respect of only 300,000 workers. It is a dangerous thing, and it can lead in itself to inflation.

I believe that the graduated scheme, for the first time in our pensions history, has at least attempted to cover all the problems with which my right hon. Friend was confronted. I am glad that the difficulties which everybody expected in regard to contracting out have not emerged. We were told that no other country in the world had been able to allow contracting out, and that we should fail. We have succeeeded, though almost 4½ million people have contracted out, which ought to give us great pleasure, because it means that 4½ million people are in schemes which are better than the Government scheme, and 2 million of them are in schemes which provide two-thirds of the salary on retirement, which is a very good thing. It also means that, from the figures we were given from the Government Actuary in an earlier debate, 6 million other people, mostly men, are in pensions schemes and have not contracted out, so that 6 million of our workers are in private schemes which are augmenting their Government pensions, which, again, is quite a good thing.

It is also the case that the graduated contributions are collected, but are not paid back. They are, in effect, going to those in retirement now, and I see no reason why those contracting-out into private schemes, which are, admittedly, better, should not pay a little more for the privilege, and, indeed, they are doing that. The man who paid 9s. 11d. before April now pays 11s. 4d., his employer's contribution has gone up from 8s. 3d. to 9s. 8d., a total of £1 1s., instead of 18s. 2d.—a 3s. increase with no benefit whatever to the man, except that he has contracted out and is a member of a first-class scheme.

Four million people are, therefore, paying 3s. per week more, which is 12 million shillings per week, or £600,000 per week collected by my right hon. Friend. In 52 weeks, that is over £31 million, and in ten years it is £310 million. That is why we cannot divide the graduated scheme from the basic scheme, and, therefore, I say that this £310 million is being taken out, as are the other contributions on the graduated scheme, to fulfil our obligations at this moment to our old people. We cannot separate the one from the other, and it is right, in my view, that the people who are contracted out should pay this extra.

I believe that this bargain—and it is a bargain—of membership of this National Insurance Fund at all ages is a good thing for the country. The life offices have shown that from £12 per week at all ages, there is nothing in the private sector of insurance that can touch the Government pension scheme, and, even at £15 a week at 50 and over, there is nothing in the private sector to touch the Government scheme.

This scheme is a bargain. There is no other country in which, for 9s. 9d. a week, a man can get a pension for both himself and his wife, children's allowances, a health scheme, maternity benefits for his wife, industrial injury benefits, sickness benefits, unemployment benefits, and so on. To assert that this scheme is a fraud can do only the gravest disservice to pensions generally and bring into disrepute those who make such statements.

I am certain that the right step has been taken. The scheme can add only strength to our pension arrangements for the future. It can bring only greater happiness to old people, and I congratulate my right hon. Friend on what he has achieved in the last year, and also on what he has done during his term of office at the Ministry of Pensions and National Insurance.

5.41 p.m.

Mr. Thomas Steele (Dunbartonshire, West)

I always listen with interest to the hon. Member for Bradford, West (Mr. Tiley). He brings to any meeting a sense of humour and a pleasant manner of speaking. His contribution this afternoon was much longer than his contribution during the Committee stage of the Bill, which lasted for a considerable time, although I recall one occasion when he did make a speech in the Committee. However, he is a Yorkshireman with a sense of humour, or whatever it is called, and when he condescends to speak it is obvious that he has a good knowledge of his subject.

The hon. Gentleman started by being enthusiastic about the speech of my hon. Friend the Member for Coatbridge and Airdrie (Mr. Dempsey). He then went on to say that he had omitted to tell us about his financial interest in the matter. Having declared his interest, he advertised the insurance companies and said how much they had been against the introduction of this scheme. Will he tell us whether they are still against it?

Mr. Tiley

They are still opposed to it, largely because they fear a further encroachment on their activities. We, too, should fear that.

Mr. Steele

They are afraid of losing their profits; but they have benefited largely by the introduction of, first, the family allowances scheme, and, secondly, by the other things which have been done. The insurance companies have carefully examined what the Government have been prepared to do under the new scheme, and as far as I can see they are taking advantage of the scheme to provide new business for themselves.

The Parliamentary Secretary said nothing this afternoon about the operation of the new scheme. She failed to answer any of the questions asked by my hon. Friend the Member for Sowerby (Mr. Houghton). I think that the hon. Member for Bradford, West should thank his hon. Friend for giving to the Labour Party document the publicity which he thinks it deserves. He complained that nobody reads it while travelling in a train. I am surprised at that, because the Conservative Party have given more publicity to this document than we have.

The speech of the Parliamentary Secretary was shocking. During the Committee stage of the Bill we discussed the many administrative and other problems which might arise from the introduction of the new scheme, yet this afternoon the right hon. Lady said nothing about those problems. She said nothing about what has happened as offshoots to bringing in the scheme. Her speech was confined to trying to pour cold water on the scheme proposed by the Labour Party. We are not discussing that this afternoon, and I think that the right hon. Lady ought to have told us something about the effects of this scheme.

In Committee, we were told that it was expected that about 2 million people would be contracted out. We now learn that 4½ million people have been contracted out. Is that figure correct?

Mr. Boyd-Carpenter

The figure is 4¼ million.

Mr. Ross

The figure is 4,275,000.

Mr. Steele

The hon. Member for Bradford, West thought that because 4¼ million people had been contracted out it was a credit to the scheme. I take the opposite view. It shows clearly that what we said during the Committee stage of the Bill has been borne out by results.

What has happened is that local authorities, nationalised industries, and public enterprise have recognised that if a person is earning £12 10s. a week and over it is better for him not be be in the Government scheme, but if he is earning less it is. Instead of a firm or company contracting out all its employees, it is contracting out those who earn £12 10s. a week and over, and keeping in those who earn less. That is what local authorities in Scotland have been doing, even with the salaried workers.

What has all this meant? The new scheme has given rise to many administrative problems. When I have discussed this question with the financial staffs of local authorities, I have found them to be completely at sea about how the scheme will be worked. We will soon be discussing Regulations, which, I understand, will be prayed against, in connection with the modification of local authority superannuation schemes for teachers and other people. I believe that the complexities of the scheme are impossible to understand.

Those are some of the offshoots of the introduction of the new scheme. It is easy to argue that we have to take the flat-rate scheme with the graduated scheme. It is also easy to argue that they should be taken separately. However, the Government have decided that they should be separate schemes. If there were only one scheme, it would be unnecessary to contract people out. The Government have separated the schemes by saying that one group of people can be contracted in, whereas another group of people can be in the flat-rate scheme and be contracted out. It is nonsense to suggest that we are the only people who are arguing that there are two separate schemes. It is because the insurance companies and the local authorities have recognised that anyone earning £12 10s. a week or more can get a better bargain outside the scheme, that 4¼ million people have contracted out.

I know of one firm which is giving its employees an individual option by which, with a small contribution per week, which is made up by the employer, the employee is able to make a better bargain. Throughout the proceedings on the Bill as it passed through the House we made it clear that those earning above £12 10s. a week would not be getting a good bargain from the Government's scheme and that their contributions would be used to subsidise not merely the pensions of those who would benefit under the scheme, but the increased pensions which the old people would be receiving.

I am disappointed that the Parliamentary Secretary did not devote some time to the problems which are being encountered. We discussed the problems of contracting out, and the Act lays down conditions for contracting out. We would like to know what has happened and what kind of provisions have been made and how the various superannuation schemes are meeting their problems. Those people who pay superannuation are interested in these matters and we would have like some information about them.

I know of no superannuation fund in the country which is quite like that of the miners, which is rather odd.

Miss Hornsby-Smith

I quite agree.

Mr. Steele

If the Parliamentary Secretary intends to use that as an example, and is to say that that is something that the Government should do in that form, she would meet the argument of my hon. Friend the Member for Coatbridge and Airdrie. The Government, through the National Coal Board, as the employers would be making a larger contribution and on that basis it would be a very good bargain for the miners indeed, although very odd.

I hope that the Minister himself will give us more information about what is happening administratively, what the staff have had to do, what differences the scheme has made, the actual administrative cost, the effect on industry, and problems connected with payrolls and with the method of collecting contributions. This is a new method of financing pensions and we would like to know exactly what has happened and how the scheme has worked out. If we could have information of that kind, we would be very grateful. We do not want to know about what happened ten or twenty years ago.

5.55 p.m.

Mr. Philip Holland (Acton)

The hon. Member for Dunbartonshire, West (Mr. Steele) complained of attacks which were made on his party's scheme by my right hon. Friend the Parliamentary Secretary and my hon. Friend the Member for Bradford, West (Mr. Tiley). He will applaud my attitude when I tell him that I shall not refer to it, preferring to ignore it. He will not expect me to stand in for my right hon. Friend and answer his many questions, and I hope that he will forgive me if I address myself to the comments which I want to make.

It is right and proper that each of us should accept a measure of responsibility for providing for our own retirement, so far as we can reasonably afford to do so. The true function of the Welfare State is to bridge the gap between what most ordinary people can afford and their minimum social welfare and personal retirement. Such a concept in no way lowers the nation's morale by weakening self-reliance and encouraging fecklessness. Quite the contrary. Emphasis on the need to recognise personal responsibilities is an important feature of our current National Insurance scheme. It has been underlined by the introduction of a system of graduated contributions.

The State bears responsibility for the social needs of the community on a sliding scale which works in inverse ratio to that of Income Tax. In this context, possibly the most attractive feature of the whole scheme—basic and graduated combined—is that it allows the Exchequer grant to be concentrated on the people with most need and, at the same time, as is equally important, it enables people spending the maximum period of time at the higher rate of income to provide virtually entirely for their own retirement.

Nevertheless, having said that, those who earn more than £15 a week for the whole of their working lives, while paying nearly the amount which they would have to pay to a private insurance company to obtain the same sort of retirement benefit, are still getting a very good bargain with the cover for sickness and unemployment and the other benefits which my hon. Friend the Member for Bradford, West mentioned. Many of the additional benefits are far better than could be afforded in private schemes and far better than those which other countries provide in similar schemes. In West Germany, for example, the contributions for unemployment and sickness benefit alone cost 15s. a week for the £15-a-week man, and to that has to be added the contribution of 21s. which he has to pay towards his pension. It is a bigger pension than ours, but he has to pay a bigger contribution and in all if is not as good a bargain as our scheme.

I want to turn from the general to one or two particular aspects of the scheme, those which appeal to me and those which I regret. I will deal, first, with those which appeal to me, because, like the scorpion, I like to keep the sting in the tail. For personal reasons which are already known to the Committee, I take a particular interest in welfare provisions for the bereaved—for the widows. When I first looked at the graduated part of the scheme, and on the emphasis placed on the fact that benefits are essentially personal to the contributor and not transferable, I foresaw serious disagreement between my right hon. Friend and myself.

I now extend an apology to my right hon. Friend for my initial lack of confidence in his humanity. I soon discovered that the personal principle did not apply in the case of widows. It is a commendable feature of the graduated part of the scheme that, on reaching retirement age, a widow becomes entitled not only to half the graduated benefits which her husband was drawing at the time of his death, but, if he had died before reaching retirement age, when she reaches retirement age she becomes entitled to half the graduated benefits which her late husband's contributions had earned, even though he had not survived to qualify for them himself. It is just that sort of provision, allied to the general principle which I have already postulated, which commends the scheme to me and assures my right hon. Friend of my support this evening, in spite of slight misgivings to which I now turn.

While approving the scheme generally, I regret that in an average working week—and I am choosing my words carefully—the graduated part of the scheme applies to only about half of the working population. For the benefit of the mathematicians present, let me add that I have reached that conclusion by adding together the estimated 6 million people, who, in an average week, receive £9 a week or less; the 4¼ million people who, I am glad to note, unlike the hon. Member for Dunbartonshire, West, have already been contracted out, so that more than one-sixth of our working population, while not necessarily getting a better bargain, will receive a pension larger than that for which the new scheme provides; the 1,390,000 self-employed, and the 300,000 non-employed.

I would like some provision to be made for some of those in the first category, the 6 million, so that they could participate a little more in the graduated part of the scheme, and, also, so that all those in the third category could do so rather more. In an average week, an estimated 6 million people earn less than £9 a week and, therefore, cannot contribute in that week to an increase in their basic pension. But it is by no means the same 6 million who are not eligible every week. The incomes of many of them are subject to variation and the variation may be due to a drop from normal earnings through sickness or unemployment for a few weeks, after which they may go back to normal earnings; or they may be earning a salary and commission or bonuses varying week by week.

It is by no means rare for employees, whose incomes in some weeks may be below £9, in other weeks to earn more than £15. It is unfortunate that under the present collection arrangements such people are not allowed to balance a week in excess of £15 against a week below £9 for the purpose of calculating the graduated contributions. Clearly, many such people could contribute for higher pensions if their weekly earnings were averaged out over the year, rather than taking each week in isolation, as under the present system.

The other category who could be more favourably suited in the scheme are the self-employed. I say "more favourably" because they are included in the scheme to the extent that they pay slightly increased contributions as from the beginning of April, but they are not allowed to participate in the graduated part of the scheme, although they get an increased basic pension. It is only a very small number of the self-employed who are top-hatted and cigar smoking plutocrats. The vast majority are shopkeepers, manufacturers' agents, commercial travellers on commission only, and many other people of that kind.

Large numbers of them are quite unable to afford to take on the commitment of providing privately for pension requirements in addition to the State scheme, because to take out an entirely new pension involves larger initial contributions added to the amount being paid into the State scheme. I should have thought it not impossible to arrange some method of averaging weekly or monthly earnings to enable such people to make graduated contributions for a graduated pension increase and so increase their provision for their old age. There is certainly no difficulty in doing so when it comes to a tax assessment.

I am sure that my right hon. Friend has considered those possibilities, because I have great confidence in his thoroughness. I guess that he has probably decided that they are administratively impracticable. Nevertheless, I ask him to look at them again and, in doing so, to recall the attitude of the Navy during the Second World War—"The difficult we can do at once; the impossible may take a little longer."

6.5 p.m.

Mr. William Ross (Kilmarnock)

This has been a very short debate owing to the time available. I regret very much that the Joint Parliamentary Secretary, either through lack of judgment or calculation of some kind or other, completely misconstrued the purpose of the debate. I think she imagined that she was opening a Tory sale of work somewhere. We got her usual rather aggressive, silly sort of speech, which we enjoy on the right occasion. But this was not the occasion for it.

I shall require to address myself to some of the remarks she made nevertheless. It will be her fault, not mine, if the tone and temper of the debate suddenly change. I was glad to hear the speech of my hon. Friend the Member for Sowerby (Mr. Houghton), to whom we always listen with considerable interest because he has knowledge. It was interesting to notice that in addressing himself to the graduated scheme he expressed some of the same fears about it as did the hon. Member for Acton (Mr. Holland). I think he made a splendid speech in relation to what we are discussing.

Let us appreciate the scheme which has started. We had long debates and discussions in Committee upstairs. I did not have the privilege of being a member of that Committee and my interest in this aspect of Parliamentary life began only a few months ago, but I have taken the trouble to read those debates. There followed Report and the eventual Third Reading. When we came to Third Reading, the Minister announced that we were starting a new and historic epoch-making scheme. I am sure that the speech of the Joint Parliamentary Secretary was not worthy of the occasion, embarking on the first Ministerial speech on the subject that her own Minister declared was "historic and epoch-making."

If the right hon. Lady had addressed herself to some of the pledges made by the Minister on Third Reading, that he was determined to get the thing into operation as soon as possible and was going to do all in his power to ease the complexities and difficulties which would arise, it would have been better. Never has any scheme come into operation having to get over so many hurdles as this one. I thought that we might at least have got from the Joint Parliamentary Secretary some indication of the work which has been done by her Department and that she might pay a meed of tribute to that.

What must it have been like for the Minister, in relation to a scheme prepared two years ago to come into force in the month of April, to discover that as soon as the Department got out all the booklets, leaflets, pamphlets and explanations, something else happened on the Parliamentary scene which put them out of date. As my hon. Friend was speaking I was doing some scribbling. A couple of lines ran through my mind and, with the help of our Deputy Chief Whip, I wrote: Leaflets by the million, booklets by the score, Pouring through the letter-box, littering the floor, Most of them were useless, some of them came late, All the first edition was already out of date. Not only is the first edition out of date, but within two or three weeks the second edition will be out of date.

This sounds like the speech which the right hon. Gentleman delivered on Third Reading. Here was the man who was going to make things easy. He was the man who introduced new rules which further confused the issue. Before 1st April people were paying 9s. 11d. and the Tory Party, having proclaimed that it would be only 8s. 4d. when the scheme started, suddenly came with a new Bill putting it up to 9s. 9d. So we have three lots of figures. All the people were paying 9s. 11d. and were promised that they would pay 8s. 4d. Then, from 1st April, they found they had to pay 9s. 9d. It did not end there. They reckoned without the Minister of Health who, with the help of the Minister of Pensions and National Insurance, put on another 10d. So the present amount of 9s. 9d. has to go up to 10s. 7d. in three or four weeks' time, at the beginning of July for those in the scheme.

Even a booklet which I got this morning, which I presume is a new issue because it is dated April, contains tables which will be of service to anyone only for three or four weeks. Could we be told by the Minister exactly how much all this has cost? This question was asked by my hon. Friend and we are entitled to an answer. All this must have led to a considerable amount of waste, chaos and muddle.

I can well appreciate the feelings of the right hon. Gentleman. We reckon him to be one of the most efficient Ministers, administratively, and I personally consider him one of the most efficient Parliamentarians. I can well appreciate how he felt when after all this chaos the Chancellor of the Exchequer came along with the suggestion that there should be a pay-roll tax and that it was going to be carried on that overworked bit of paper, the National Insurance stamp. It was stated in the Sunday Express that the right hon. Gentleman kicked up his heels and said "No" to that one. Why did he not resign? The cold Parliamentary winds which have blown down on the Government from the North have killed the pay-roll tax.

Mr. Tiley

Not from Yorkshire.

Mr. Ross

The Government just saved their deposit in an industrial city and got 5,000 votes out of 40,000. That gets us to a point where the Government should stop and think. Does not the right hon. Gentleman see what is happening to his Department? It is a great social Department of State which is becoming purely and simply a tool of the Treasury. He is becoming a tax gatherer. Everyone is trying to get into the act, or on to the National Insurance stamp—the Minister of Health with his National Health Service contributions and the Chancellor with his pay-roll tax. I have no doubt that when the right hon. Gentleman protested he was told that it was a quid pro quo or a couple of hundred million quid pro quos because the Treasury is gathering the money for this graduated contribution.

It is serious when we consider how this tremendously elaborate machinery has been built up. We used to have lectures from the right hon. Gentleman when he sat on this side of the Committee, not always at a quarter past six in the evening, but usually at about quarter past six in the morning. I can remember him talking of a vast flood of ill-digested delegated legislation which flowed from the Departments of State and menaced the whole principle of democracy.

Look at the "vast flood". Look at the present list of Statutory Instruments issued on 22nd April. I am sure that the right hon. Gentleman is delighted to know that he has now become "Statutory Delegated Legislator No. 1" stemming from his National Insurance Bill. It is a proud position which, I am sure, he never thought that he would achieve or, having achieved it, that he would be proud of it. There are enough Statutory Instruments relating to what we are discussing today with changes and modifications of superannuation schemes relating to firemen, teachers, local government servants and the rest—if we decided that we could discuss them all—to take every available day for the next five weeks. The poor Scots would not get a look in with the Statutory Instruments relating to betting and gaming.

Although the right hon. Gentleman has become king of the Statutory Instruments, he is not alone. There are plenty of others. All this has been happening at a time when Parliament has been concerned with other Parliamentary interventions which have followed this scheme. There has been his National Insurance Bill and, following that, the National Health Service Bills. Parliament has been at full stretch. These complications arising directly from the graduated scheme have not received proper attention from the House.

Then we have the kind of speech which we had from the Joint Parliamentary Secretary today. Such drivel. She shows me "The Pensions Fraud". She complained about having to scrape the bottom of the barrel to find the most difficult and unfair comparisons in relation to what someone was to pay and what someone would get. She did not need to look at "The Pensions Fraud" but only at a Ministry publication which came out last week. Look at page 31 giving examples of future retirements pensions. All that she said to my hon Friend about a man not getting any promotion and this, that and the other is the same here.

Miss Hornsby-Smith

The hon. Member says it is a fraud.

Mr. Ross

I have not mentioned the word "fraud" yet except when quoting the title of the pamphlet. I leave people to judge for themselves. A man who at the age of 25 in April, 1961, has forty years' working life at £10 a week will eventually achieve an increase in pension of 6s. 6d. I am not saying that it is a fraud. I am reading from page 31 of "Everybody's Guide to National Insurance", which is an official publication and well worth the 9d. asked for it. The only thing which is obscure about it is the foreword by the right hon. Gentleman. I shall come to that later.

Take another instance. People of 25 years of age are not terribly interested in retirement pensions, but people of 40 show a certain interest. A man of 40 on £12 a week is to pay 2s. 8d. for twenty-five years week after week and has already started to pay. He asks himself what he will get and the answer is, an additional pension of 11s. 6d. A man of 55 who has £14 a week is to pay at the rate of about 4s. 9d. or 4s. 10d., and his pension in ten years will be increased by 7s. 6d. I am not saying that it is a fraud. I am not saying that it is a swindle. I ask people to judge by what they are paying and what they will get. That is how people will judge it.

Let us appreciate that this is not the end. The right hon. Lady made some play about people receiving a higher pension and paying less. With all due respect to her, that was a twist, and she knew it. She knows that the original scheme enacted in 1959 laid it down that a lower-paid worker paid 8s. 4d. a week for the then pension. She equally knows that the Government introduced an Act to increase contributions this year. The increased contributions were not related actuarially to what was required to meet the future cost. They were increased, as they have been increased since 1954—we have only to read the Report of the Government Actuary to prove it—so that the lower-paid worker paid exactly the same as the higher-paid worker; he paid 1s. 5d. a week more.

In the same way, when we came to the increased National Health Service contribution the lower-paid worker paid 10d. more, as did the higher-paid worker. There was no differentiation. Indeed, the only differentiation is the 1s. 7d. written into the original scheme. That differentiation has been carried forward in the spring-heel increases which we will have over five-year periods. These increases, which are written into the Act, are related to existing pension and pension rates.

I hope that the right hon. Gentleman remembers his speech on Third Reading, when he said, there is to be a reduction…in the contribution of these people for at any rate twenty years. He was referring to the lower-paid workers—those paying 8s. 4d. He continued, and at the end of twenty years the increase would be only 1d."—[OFFICIAL REPORT, 9th June, 1959; Vol. 606, c.936.] Let me tell him what happened in the first week of July, which is not twenty years after the scheme started.

Mr. E. G. Willis (Edinburgh, East)

It is not twenty weeks.

Mr. Ross

It is about three months. The contribution will then be 9s. 9d. plus 10d.—10s. 7d.; that is, 2s. 3d. more than the figure when the right hon. Gentleman made his speech. If he wants to work in the twist about which the right hon. Lady spoke, it will be 8d. more than the man was paying before the scheme started. It is about time the Minister started eating some of the words of his Third Reading speech both in relation to the ease of administration and in relation to the effect upon the lower-paid worker in the graduated scheme.

It is obvious from what happened about the last increase and the increase in the National Health Service contribution that in future any increases in contributions to the flat-rate pension will be on the basis of a poll tax. I was surprised that the hon. Member for Bradford, West (Mr. Tiley) suggested that we had got away from the poll tax. He knows that we did not get away from it in the last pensions increase or in the increase in the National Health Service contributions. The only difference between the fiat-rate contribution in relation to the contracted-in and the contracted-out is that written into the Act. From the Government's actions it is clear that we are to continue with this process. I am surprised that hon. Members opposite, many of whom have been concerned about the poll tax aspect, have swallowed it.

Mr. Tiley

The whole basis of the argument being used is that wages will be stationary for the next twenty years. They will not be stationary.

Mr. Ross

That is quite irrelevant. The graduated tax will be stationary. The £9 and £15-a-week aspect of wages is written into the scheme. The figures which I have quoted and the calculations which I have made, and those which the Department have made, are quite accurate. I hope that the hon. Member appreciates the point of his own remarks. If these pensions of 6s. 6d., 7s. 6d. and 2s. for people, at the ages which I gave, look pretty insignificant now, how will they look in relation to the wage increases which we hope will take place with the passing of the years? This scheme is trivial and will become more and more trivial as the years pass and more and more irrelevant as an attack on poverty and old age. That is the basis of our attack upon the scheme, and it was the basis throughout the debates in the House. We complain of its total inadequacy. I agree with the right hon. Gentleman, and we all agree in the Labour Party, that people are prepared to pay for their pensions. It is a question of how they pay.

The right hon. Lady also commented on how wonderful the Government had been about the deficit. She should appreciate that it was no surprise to anybody that there was a growing deficit in the National Insurance Fund and that it had to be met by supplements from the Exchequer. I do not know whether she was interested in pensions on 13th November, 1957, when the right hon. Gentleman, occupying the same office as he occupies now, talked at that Dispatch Box about the burden of £357 million which had to be met by the Exchequer in 1964–65. He said, Though we think that it is right that the country should assume the burden, it is a profund mistake to under-rate the magnitude of the liabilities which the…taxpayers are assuming."—[OFFICIAL REPORT, 13th Nov., 1957; Vol. 577, c.976.] This was a liability known and accepted by the Conservative Government. It was the emerging deficit. Does anyone suggest that, because it was met by general taxation, somehow or other that was wrong? Is it suggested that the State flat-rate pension scheme would collapse? Anyone who says that means that the credit of the country would collapse. Here we had a scheme which required, and is known to require, additional supplement from the national Exchequer. That has been accepted by the Government, and the contributions are tripartite—from the contributor, the employer and the Government.

Then we have an Act of Parliament which divides the employees into two groups—contracted in and contracted out. One part of the Act reduces the amount of money which will be levied from one of these groups—the contracted-in group. If that is all that we do, what will happen? The deficit will rise and there will be a greater call on the Exchequer.

But of course the Government scheme did not end there. They introduced a new graduated contribution and, as a result of it, and as a result of the increases which are built into the Act in relation to existing rights, the Exchequer liability disappeared. What does that mean? It means that instead of it being borne by the general taxpayer this accepted liability is being borne by certain people who pay the graduated contribution. That is the simple point It is as simple as J.B.C.

If we present this to the people of the country as a graduated pension scheme and tell them that it is an attack on poverty and old age, in face of the fact that what they are paying for this graduated scheme is out of all proportion to what they will get out of it, how will they regard it? Will they regard it as a sham, as a fraud, as a swindle? I leave the people to judge. When people appreciate this year that according to the Actuary's Report a sum of £202 million is to go to meet the deficit, what will they think? Of course, the Report will soon be out of date, because we now have the estimate of the number of people who have contracted out. I have shown that this amount of money is to go to pay for the deficit. It will be spent to meet the emerging liability.

I congratulate whoever is responsible for the printing, lay-out and work of the Ministry's pamphlet to which I have referred, but I do not congratulate the right hon. Gentleman on his foreword in which he said, April, 1961 marks the introduction of two important changes in national insurance. It will be observed that it is no longer historic; it is just "important". He continues, For the first time retirement pensions—and so contributions"— he mentions contributions as an afterthought— will bear a relation to an employee's earnings". With all due respect to him, it is the contributions which bear the relationship to the earnings. The retirement pension bears little or no relationship. It is a poor relationship—a very tenuous relationship. The right hon. Gentleman continues: This system is inevitably a rather complicated one. It couldn't otherwise be fair as between people whose circumstances vary so much. The point is that it is not fair. It is not fair to take what has been accepted as a national responsibility, to place it upon a group of people and to leave them to bear it in this way. The Government have transferred a financial burden from one form of taxation to another, from a fair system of taxation to one which is relatively unjust. To pass this on to the public as graduated insurance is to deny the whole meaning of words.

The right hon. Gentleman has been far too long at his present post. I think that he is becoming soured by political events. He has seen people less able than he, political nonentities and not very good brief-readers, edge him away from a seat in the Cabinet.

If the right hon. Gentleman remembers his Third Reading speech, he will recall that he concluded with a Latin tag and gave his own version of it. There is another translation of that that I would venture to give. I do not seek to do it in the Latin, although I could do that with reasonable facility. My version would be "He whom the gods wish to destroy or frustrate politically, they first make Ministers of Pensions".

6.35 p.m.

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

This debate has been an almost classic example of the desire of Her Majesty's Opposition to have it both ways. The first stage is to embark, with all the resources of the Labour Party, on a campaign launched by the Chairman of the Labour Party in person—who, only the other day, denounced this scheme as a fraud, as a swindle, and used all the adjectives with which a Winchester education furnishes a man.

When we come to a place where these charges can be answered, there is an attempt to create a wholly different atmosphere. The hon. Member for Dunbartonshire, West (Mr. Steele)—to whom I hope I shall do no irreparable damage if I say that I thought he made much the best speech we have heard from that side today—took my right hon. Friend to task, as did the hon. Member for Kilmarnock (Mr. Ross), for having ventured, among other things, to remind hon. Members opposite of their own very murky past in this matter.

Says the hon. Member for Dunbartonshire, West, "Oh, we would have far preferred to have heard the details of the introduction of the scheme, the administrative arrangements and so on." Both hon. Members worked themselves up into a quite impressive state of synthetic indignation against my right hon. Friend. The hon. Member for Kilmarnock threatened me with a Latin tag; I shall give him another. It is Volenti non fit injuria, which, I think, can be roughly translated as "Provoke a redhead and you've had it."

If the hon. Member for Dunbartonshire, West, really expects a right hon. Lady of such colour of hair as my right hon. Friend has the good fortune to have, to sit quietly by wishing to discuss the details of administration, the particular type of leaflets issued and the Orders made, when such terms as "scandal", and "fraud", and "cheating the public" are being used quite deliberately and calculatedly——

Mr. Willis

And correctly.

Mr. Boyd-Carpenter

—I will deal with that—used deliberately, not only in speeches but in a special Labour Party document, I think that the hon. Gentleman mistakes the calibre and resiliency both of my right hon. Friend and of the Government as a whole.

In replying to this debate, I have to deal both with the Dr. Jekyll on the back benches and the Mr. Hyde on the Front Bench—which seems to me, if I may follow up the agreeable personal preferences made by the hon. Member for Kilmarnock, the particular habit of the Labour Party. If I am to deal with both, I think I shall start with Dr. Jekyll. I fully understand that the hon. Member for Dunbartonshire, West who, I know, has Departmental knowledge of the subject, is concerned and interested in how this scheme is developing, but I certainly join issue with him when he says that the number of people contracting out amounts to something of a reflection on the scheme itself.

I believe that that remark springs from a very real difference of approach and philosophy between his side of the Committee and mine. It seems to those of my way of thinking that the right use of compulsive power of the State is not to compel people who are doing things perfectly satisfactorily now, to change over and do those things through State machinery, but rather to use the compulsive power of the State to bring along others to the standard of those who are doing it now.

If we accept that philosophy, it is, as my right hon. Friend said, highly satisfactory that it has been demonstrated to an impartial Registrar—and I am grateful for the very proper compliments paid by both sides of the Committee to that officer for the way in which he has handled his extremely difficult job—that there are, at any rate, 4¼ million people in schemes that have come up to the quite austere standard required for the issue of the certificate of non-participation.

That is a good thing. I can well see that from the point of view of hon. Members opposite, who really want to see provision for old age made a State monopoly, it is no doubt an unsatisfactory state of affairs. And I believe that the contracting-out arrangements went through a great deal better—thanks to the devoted work put in—than anybody could have dared to hope some months ago. Every applicant whose application had been made up to a few days before 3rd April and to whom it was possible to grant a certificate—that is, where due notice had been given and the application was in order—received a certificate in time. That is an extraordinarily satisfactory thing from the point of view of administration—leaving aside, for the moment, the difference there is between the hon. Gentleman and myself on the general question of contracting out.

My hon. Friend the Member for Acton (Mr. Holland) made a most thoughtful and interesting speech, and asked for one or two comments from me. He said that he wanted to see more participation in the graduated scheme of the 6 million people who, in any one week, are not participating in it. My hon. Friend made it clear that he understood the significance of the term "in any one week". That total includes the sick, the unemployed—even some on unpaid holiday—during that period.

It is here that we come to the point that my right hon. Friend rightly stressed—though it evoked the ire of hon. Gentlemen opposite—that among the most conspicuous beneficiaries from this scheme are precisely those people on £9 a week or less. It is because, under this scheme, we are able to concentrate the subsidy from the Exchequer far more efficiently and effectively than is possible in a universal flat-rate scheme upon those on the lower earnings that it has been possible to reach what is—whatever hon. Members opposite may say—the not inconsiderable achievement of seeing to it that people who, at the end of March, were paying on these earnings the flat-rate contributions now find themselves, while paying no more—indeed, paying 2d. less—eligible to receive the increased rate of pension, and other benefits that came into operation on that date. It is because of that characteristic of the graduated scheme of concentrating the subsidy on those who need it most that it has been possible to help those 6 million people in that extremely valuable way.

I take my hon. Friend's point about bonuses. I should like to be able to do more about it, but I think that he will agree with me, because I know that he has experience of these matters, that, at any rate in the earlier years of the scheme, it is essential, as far as one can, to try to simplify its administration. It is quite clear that a clear-cut principle of basing the contribution on the pay period—the week or the month, or whatever it may be—is really essential if we are to get this new departure from a flat-rate to a graduated basis properly under way. I give my hon. Friend the undertaking that I shall watch the scheme with his point very much in mind, and I assure him that it was not until after very careful consideration that I and those helping me decided that, at this stage at any rate, we could not meet the point.

I return to the hon. Member for Kilmarnock. I am not grateful to him for much, but I am grateful to him for his compliment about the leaflet and I am grateful to him—and this may surprise him more—for his quotations from it. He referred to a number of cases in order to suggest that the pension earned was derisory. I took down one of his examples. A man of 40 earning £12 a week—this is the hon. Gentleman's quotation from the leaflet—and paying 2s. 8d. a week graduated contribution will, by the time he reaches 65, have paid something like £174 in graduated contributions

The average expectation of life of a man at 65 is 12 years. If he is a man with the average expectation of life he will enjoy for 12 years the additional pension of 11s. 6d. quoted by the hon. Gentleman. If the hon. Gentleman will tot that up, it amounts to £360. It is a little significant that the example which the hon. Gentleman, with all his ingenuity in debate, selected as a basis on which to condemn this scheme is that of a man putting in £174 and taking out £360—

Mr. George Lawson (Motherwell) rose—

Mr. Boyd-Carpenter

For reasons that the hon. Gentleman knows, I cannot give way to him—

Mr. Lawson

Will the right hon. Gentleman give way—

Mr. Boyd-Carpenter

I am afraid not. I have to reply—

The Deputy-Chairman (Major Sir William Anstruther-Gray)

Order. Only one hon. or right hon. Gentleman can have the floor.

Mr. Boyd-Carpenter

I have to reply, Sir William, to a number of speeches. I have undertaken to resume my seat by two minutes to seven, so the hon. Gentleman can, if he wishes, then seek to reduce my already exiguous salary—

Mr. Ross

But does not the employer in this case pay a matching contribution?

Mr. Boyd-Carpenter

Of course the employer pays a matching contribution. The hon. Gentleman will not find the mathematics very difficult because, as he has already said, the matching contribution matches.

The hon. Member for Sowerby (Mr. Houghton) chose another example. He asked, "What about the people retiring in the next few years?" He said that those people would have to contribute £3 15s.—there is a matching contribution, if the hon. Gentleman wants it—in order to get 6d. addition to the pension. Very well—let us face that £3 15s. They will then get—

Mr. Lawson

It is £15—£7 10s. matched.

Mr. Boyd-Carpenter

If the hon. Gentleman, who has not taken part in the debate, will be good enough to let me develop my own argument he will appreciate that his hon. Friend knows, though he himself does not, that where—and this is where the £3 15s. came in—a person is half way to the value of a brick under the scheme he gets the full value of the brick, so that the figure of £3 15s. is right, and his own hon. Friend was right in quoting it. That person will therefore contribute £3 15s. and thereby earn 6d. a week additional pension. If he has an average expectation of life—that is, 12 years from age 65—he will get £15 12s., so, again, I do not think that the hon. Member for Sowerby was particularly happy in his choice of an example of what he thought was a bad part of the scheme.

The hon. Gentleman then objected to what he called the small scale of the scheme. There, I think, we really come up against one of those fundamental differences in the Committee. It is not our view that the State should monopolise provision for old age. It is not our view that it is the function of the State to compel, through State machinery, more than a modest provision. We believe that the exercise of the rights of the individual to decide whether he shall provide further for his old age and take advantage of all the opportunities which are offered—the various schemes that are available to people—is the proper way of dealing with this matter beyond the basic pension. I cannot meet the hon. Member in that, because we are in a state of fundamental disagreement.

Both the hon. Member for Sowerby and the hon. Member for Kilmarnock attacked the 1959 Act on the ground that, in their view, it transferred liability from the taxpayer to the contributor. My right hon. Friend the Joint Parliamentary Secretary made it clear that the Exchequer contribution this year is the highest that the Exchequer has ever made to National Insurance—£189 million. I will not quote the figures used by my right hon. Friend, but the proportion of benefit expenditure represented by the value of the contributions is considerably less than it was either at the beginning of the scheme, or in the last year of office of right hon. and hon. Members opposite. Therefore, it is not fair to suggest that what we are doing is pushing an unfair burden on to the contributor.

All that was very well put by the hon. Member for Sowerby some time ago, when he said, on Third Reading of the Bill: I am not complaining in the least that the Minister has felt it necessary, and has had the courage, to tackle what he believes to be, and what a great many other people have believed to be, a growing burden of taxation which might threaten the principle of benefits as of right, which would destroy the insurance principle to which a great many people attach importance."—[OFFICIAL REPORT, 9th June, 1959; Vol. 606, c.863.] The hon. Member was talking extremely good sense.

The question is—it is the only question when one analyses the matter—whether we have got the proportions quite right. I call in aid "National Superannuation", which states, on page 10: Although the State should make its contribution towards financing them"— that is to say, the benefits— the main burden must be borne in the future, as in the past, by contributions from the employer and the employee. Now, we come to the wild, exaggerated and ludicrous charges of swindle, fraud and so on, which hon. Members opposite have circulated outside but which they are not quite so keen to back up here in a place where they can be answered. They say that in the earlier years of the scheme, we shall collect large sums of money and pay out very little by way of graduated benefits. That is perfectly true. It is true always of any new scheme. It was true of "National Superannuation", which—my right hon. Friend quoted the figures—after 10 years would have collected over £4,000 million and be paying out £37 million a year.

Hon. Members opposite must not be sensitive when I refer to "National Superannuation." I agree that one is probably discussing the dead and should deal with it delicately, but when it is said that because one is doing things of this kind one is guilty of fraud, dishonesty and all the rest, it is relevant to note that something very similar was proposed by right hon. and hon. Members opposite. That does not establish that it is right; but it raises doubt as to the sincerity of the criticism. That is why my right hon. Friend was absolutely right to raise the question.

The matter was summed up by the hon. Member for Sowerby in Socialist Commentary for April, in which he said: Is it a 'swindle'? Quite honestly, it all depends upon whether we look at the scheme as a whole, or whether we look at the graduated scheme by itself. Of course, we must look at the scheme as a whole. There is nothing infamous, wrong or immoral about looking at what is, in the result, one pension as a whole. Looked at as a whole, there is no shadow of doubt that it give very good value for money to the contributor.

I ask the Committee to accept one figure for the current year. We shall spend on National Insurance benefits this year £1,134 million; we shall take in in contributions, flat-rate and graduated together, £937 million and the balance, bringing this up to a modest surplus, will be produced by the Exchequer contribution of £189 million plus £50 million interest on the invested balances of the funds.

It does not make sense to the ordinary man or to anybody else to suggest that an elaborate swindle is being perpetrated in a scheme which pays out—and this pattern will continue right through the future—something like £200 million a year more than is paid in. Therefore, it is quite wrong for hon. Members opposite to adopt this argument.

It is possible for hon. Members opposite to take examples favourable to themselves, although some of those quoted have not always turned out to be quite as favourable as hon. Members thought when they used them. Our scheme, however, does give more proportionate aid to some people than to others. It concentrates the benefit from the Exchequer upon those with lower earnings and also in considerable measure upon those nearing retirement. I would have said that it was no criticism of a subsidised scheme that it concentrated its biggest benefits upon the poor and upon the old. That is precisely what this scheme does.

I am under no illusions—nobody introducing a complex scheme of this sort could be—that its introduction will other than involve difficulties. I do not pretend it is perfect. I undertake to watch its development and, if things go wrong, to put them right. But on the facts as they have been brought out in this debate and elsewhere, we can claim that by restoring the solvency of National Insurance, by so enabling a real advance to be made in the value of

present benefits for present pensioners and by, at the same time, bringing into operation a scheme which enables help to be given most to those who most need it, we at least have done some service to the millions whom it is our duty to serve.

Mr. Houghton

In view of the unsatisfactory nature of the Minister's reply, I beg to move, That item Class X, Vote 2 (Ministry of Pensions and National Insurance), be reduced by £5.

Question put:—

The Committee divided: Ayes 146, Noes 232.

Division No. 150.]	AYES	[6.58 p.m.
Ainsley, William	Hamilton, William (West Fife)	Probert, Arthur
Allaun, Frank (Salford, E.)	Hannan, William	Proctor, W. T.
Allen, Scholefield (Crewe)	Hart, Mrs. Judith	Randall, Harry
Bacon, Miss Alice	Healey, Denis	Rankin, John
Benson, Sir George	Herbison, Miss Margaret	Reid, William
Blackburn, F.	Holt, Arthur	Roberts, Goronwy (Caernarvon)
Bowden, Herbert W. (Leics, S. W.)	Houghton, Douglas	Robertson, J. (Paisley)
Bowles, Frank	Howell, Charles A. (B'ham, Perry Bar)	Robinson, Kenneth (St. Pancras, N.)
Boyden, James	Howell, Denis (B'ham, Small Heath)	Ross, William
Butler, Mrs. Joyce (Wood Green)	Hughes, Emrys (S. Ayrshire)	Shinwell, Rt. Hon. E.
Castle, Mrs. Barbara	Hunter, A. E.	Silverman, Julius (Aston)
Chapman, Donald	Irving, Sydney (Dartford)	Silverman, Sydney (Nelson)
Chetwynd, George	Jay, Rt. Hon. Douglas	Skeffington, Arthur
Cliffe, Michael	Jeger, George	Slater, Joseph (Sedgefield)
Collick, Percy	Jenkins, Roy (Stechford)	Small, William
Corbet, Mrs. Freda	Jones, Dan (Burnley)	Sorensen, R. W.
Cronin, John	Kelley, Richard	Soskice, Rt. Hon. Sir Frank
Crosland, Anthony	Key, Rt. Hon. C. W.	Spriggs, Leslie
Cullen, Mrs. Alice	Lee, Frederick (Newton)	Steele, Thomas
Darling, George	Lee, Miss Jennie (Cannock)	Stonehouse, John
Davies, Harold (Leek)	Lever, L. M. (Ardwick)	Strauss, Rt. Hn. G. R. (Vauxhall)
Davies, Ifor (Gower)	Lewis, Arthur (West Ham, N.)	Stress, Dr. Barnett (Stoke-on-Trent, C.)
Davies, S. O. (Merthyr)	Mabon, Dr. J. Dickson	Swain, Thomas
Delargy, Hugh	McCann, John	Swingler, Stephen
Dempsey, James	MacColl, James	Sylvester, George
Diamond, John	McInnes, James	Taylor, John (West Lothian)
Dodds, Norman	McKay, John (Wallsend)	Thomson, G. M. (Dundee, E.)
Donnelly, Desmond	McLeavy, Frank	Wade, Donald
Driberg, Tom	MacMillan, Malcolm (Western Isles)	Warbey, William
Dugdale, Rt. Hon. John	MacPherson, Malcolm (Stirling)	Weitzman, David
Ede, Rt. Hon. C.	Manuel, A. C.	Wells, Percy (Faversham)
Edelman, Maurice	Mason, Roy	Wells, William (Walsall, N.)
Edwards, Robert (Bilston)	Mayhew, Christopher	White, Mrs. Eirene
Edwards, Walter (Stepney)	Mellish, R. J.	Whitlock, William
Evans, Albert	Mendelson, J. J.	Wigg, George
Fernyhough, E.	Milne Edward J.	Wilkins, W. A.
Finch, Harold	Mitchison, G. R.	Willey, Frederlok
Forman, J. C.	Moody, A. S.	Williams, Ll. (Abertillery)
Fraser, Thomas (Hamilton)	Moyle, Arthur	Williams, W. R. (Openshaw)
Gaitskell, Rt. Hon. Hugh	Noel-Baker, Rt. Hn. Philip (Derby, S.)	Williams, W. T. (Warrington)
Galpern, Sir Myer	Oliver, G. H.	Willis, E. G. (Edinburgh, E.)
George, Lady Megan Lloyd (Crmrthn)	Oswald, Thomas	Wilson, Rt. Hon. Harold (Huyton)
Ginsburg, David	Padley, W. E.	Woof, Robert
Gordon Walker, Rt. Hon. P. C.	Paget, R. T.	Wyatt, Woodrow
Griffiths, Rt. Hon. James (Llanelly)	Pannell, Charles (Leeds, W.)	Yates, Victor (Ladywood)
Griffiths, W. (Exchange)	Pargiter, G. A.	Zilliacus, K.
Grimond, J.	Parker, John
Gunter, Ray	Peart, Frederick	TELLERS FOR THE AYES:
Hale, Leslie (Oldham, W.)	Pentland, Norman	Mr. Lawson and Mr Redhead
Hall, Rt. Hn. Glenvil (Colne Valley)	Plummer, Sir Leslie
NOES
Agnew, Sir Peter	Ashton, Sir Hubert	Batsford, Brian
Aitken, W. T.	Atkins, Humphrey	Baxter, Sir Beverley (Southgate)
Allason, James	Barber, Anthony	Beamish, Col. Sir Tufton
Amery, Rt. Hon. Julian (Preston, N.)	Barlow, Sir John	Bell, Ronald
Arbuthnot, John	Barter, John	Bennett, Dr. Reginald (Gos & Fhm)
Berkeley, Humphry	Hamilton, Michael (Wellingborough)	Nugent, Sir Richard
Bidgood, John C.	Hare, Rt. Hon. John	Orr, Capt. L. P. S.
Biggs-Davison, John	Harris, Frederic (Croydon, N. W.)	Orr-Ewing, C. Ian
Birch, Rt. Hon. Nigel	Harris, Reader (Heston)	Page, John (Harrow, West)
Bishop, F. P.	Harrison, Brian (Maldon)	Page, Graham (Crosby)
Bourne-Arton, A.	Harrison, Col. J. H. (Eye)	Pannell, Norman (Kirkdale)
Box, Donald	Harvey, Sir Arthur Vere (Macclesf'd)	Partridge, E.
Boyd-Carpenter, Rt. Hon. John	Harvey, John (Walthamstow, E.)	Pearson, Frank (Clitheroe)
Bromley-Davenport, Lt.-Col. Sir Walter	Harvie, Anderson, Miss	Pickthorn, Sir Kenneth
Brooman-White, R.	Hastings, Stephen	Pitt, Miss Edith
Browne, Percy (Torrington)	Hay, John	Pott, Percivall
Bryan, Paul	Heald, Rt. Hon. Sir Lionel	Powell, Rt. Hon. J. Enoch
Buck, Antony	Henderson-Stewart, Sir James	Price, David (Eastleigh)
Bullard, Denys	Hendry, Forbes	Profumo, Rt. Hon. John
Bullus, Wing Commander Eric	Hiley, Joseph	Pym, Francis
Burden, F. A.	Hill, Dr. Rt. Hon. Charles (Luton)	Rawlinson, Peter
Campbell, Sir David (Belfast, S.)	Hill, J. E. B. (S. Norfolk)	Redmayne, Rt. Hon. Martin
Campbell, Cordon (Moray & Nairn)	Hinchingbrooke, Viscount	Rees, Hugh
Carr, Compton (Barons Court)	Hirst, Geoffrey	Rees-Davis, W. R.
Carr, Robert (Mitcham)	Hobson, John	Rippon, Geoffrey
Cary, Sir Robert	Hocking, Philip N.	Roberts, Sir Peter (Heeley)
Channon, H. P. G.	Holland, Philip	Robertson, Sir David
Chataway, Christopher	Hopkins, Alan	Roots, William
Clark, William (Nottingham, S.)	Hornsby-Smith, Rt. Hon. Patricia	Ropner, Col. Sir Leonard
Clarke, Brig, Terence (Portsmth, W.)	Howard, Hon. G. R. (St. Ives)	Royle, Anthony (Richmond, Surrey)
Cleaver, Leonard	Howard, John (Southampton, Test)	Seymour, Leslie
Cole, Norman	Hughes Hallett, Vice-Admiral John	Sharpies, Richard
Collard, Richard	Hughes-Young, Michael	Shaw, M.
Cooke, Robert	Hutchison, Michael Clark	Skeet, T. H. H.
Cooper, A. E.	Iremonger, T. L.	Smith, Dudley (Br'ntf'rd & Chiswick)
Cooper-Key, Sir Neill	Irvine, Bryant Godman (Rye)	Smithers, Peter
Cordeaux, Lt.-Col. J. K.	Jackson, John	Smyth, Brig. Sir John (Norwood)
Corfield, F. V.	Jenkins, Robert (Dulwich)	Soames, Rt. Hon. Christopher
Costain, A. P.	Jennings, J. C.	Spearman, Sir Alexander
Coulson, J. M.	Johnson, Dr. Donald (Carlisle)	Steward, Harold (Stockport, S.)
Craddock, Sir Beresford	Johnson, Eric (Blackley)	Storey, Sir Samuel
Crowder, F. P.	Johnson Smith, Geoffrey	Studholme, Sir Henry
Cunningham, Knox	Jones, Rt. Hn. Aubrey (Hall Green)	Sumner, Donald (Orpington)
Curran, Charles	Kerans, Cdr. J. S.	Tapsell, Peter
Currie, G. B. H.	Kimball, Marcus	Taylor, Sir Charles (Eastbourne)
Dalkeith, Earl of	Kitson, Timothy	Teeling, William
Dance, James	Leavey, J. A.	Temple, John M.
d'Avigdor-Goldsmid, Sir Henry	Leburn, Gilmour	Thomas, Leslie (Canterbury)
Deedes, W. F.	Legge-Bourke, Sir Harry	Thorneycroft, Rt. Hon. Peter
de Ferranti, Basil	Lewis, Kenneth (Rutland)	Tiley, Arthur (Bradford, W.)
Digby, Simon Wingfield	Litchfield, Capt. John	Turner, Colin
Doughty, Charles	Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)	Turton, Rt. Hon. R. H.
Drayson, G. B.	Longden, Gilbert	van Straubenzee, W. R.
du Cann, Edward	Loveys, Walter H.	Vaughan-Morgan, Sir John
Duncan, Sir James	Low, Rt. Hon. Sir Toby	Vickers, Miss Joan
Duthie, Sir William	Lucas, Sir Jocelyn	Vosper, Rt. Hon. Dennis
Elliot, Capt. Walter (Carshalton)	Lucas-Tooth, Sir Hugh	Wakefield, Edward (Derbyshire, W.)
Emery, Peter	McAdden, Stephen	Wakefield, Sir Wavell (St. M'lebone)
Farey-Jones, F. W.	MacArthur, Ian	Walder, David
Farr, John	McLaren, Martin	Walker, Peter
Fisher, Nigel	Maclean, SirFitzroy (Bute&N.Ayrs.)	Walker-Smith, Rt, Hon. Sir Derek
Foster, John	Macleod, Rt. Hn. Iain (Enfield, W.)	Watkinson, Rt. Hon. Harold
Fraser. Hn. Hugh (Stafford & Stone)	McMaster, Stanley R.	Watts, James
Fraser, Ian (Plymouth, Sutton)	Maddan, Martin	Wells, John (Maidstone)
Freeth, Denzil	Marlowe, Anthony	Whitelaw, William
Galbraith, Hon. T. G. D.	Marples, Rt. Hon. Ernest	Williams, Dudley (Exeter)
Gammans, Lady	Marshall, Douglas	Williams, Paul (Sunderland, S.)
Gardner, Edward	Matthews, Gordon (Meriden)	Wills, Sir Gerald (Bridgwater)
Glyn, Sir Richard (Dorset, N.)	Maxwell-Hyslop, R, J.	Wilson, Geoffrey (Truro)
Goodhart, Philip	Maydon, Lt.-Cmdr. S. L. C.	Wise, A. R.
Goodhew, Victor	Mills, Stratton	Wolrige-Gordon, Patrick
Grant, Rt. Hon. William	Montgomery, Fergus	Wood, Rt. Hon. Richard
Grant-Ferris, Wg Cdr. R.	Moore, Sir Thomas (Ayr)	Woodnutt, Mark
Green, Alan	More, Jasper (Ludlow)	Woollam, John
Gresham Cooke, R.	Morgan, William	Worsley, Marcus
Grimston, Sir Robert	Morrison, John	Yates, William (The Wrekin)
Grosvenor, Lt.-Col. R. G.	Mott-Radclyffe, Sir Charles
Gurden, Harold	Noble, Michael	TELLERS FOR THE NOES:
		Mr. Finlay and Mr. Gibson-Watt.

It being after Seven o'clock The CHAIRMAN left the Chair, further Proceeding standing postponed until after the consideration of Private Business set down by direction of The CHAIRMAN OF WAYS AND MEANS under Standing Order No. 7 (Time for taking Private Business).

Mr. DEPUTY-SPEAKER resumed the Chair.