NATIONAL INSURANCE AND PENSIONS (BENEFITS)

HC Deb 26 November 1962 vol 668 cc44-159

4.3 p.m.

Mr. Douglas Houghton (Sowerby)

I beg to move, That this House calls for an early and substantial improvement in all social benefits and allowances payable to the sick; those disabled in war and industry; the unemployed; widows and widowed mothers; and old age pensioners. This Motion is all-embracing and in peremptory terms. We fully intend it that way. We are demanding nothing less than a major advance along the whole front of the social services. We urge the Government to take up new forward positions in the war on poverty and the drab and threadbare lives of a great number of people in Britain today. We call for substantial relief to be speedily given to the old, the widows and the sick, several millions of whom are fighting a losing battle against destitution and clinging as best they can to the last vestige of their personal dignity. We also call for practical sympathy with those who have lost health or limbs, or both, in war or workshop.

We recall that there is still 250,000 disabled from the 1914–18 war and 68,000 widows, all of whom have paid part of the nation's war debts for the last forty-five years. We mention specially the unemployed, now over 500,000 —the worst November total for twenty-two years, and a sinister reminder of past failures of Toryism. This is the casualty list of life and society, of war and industry, and of eleven years of Conservative rule. It totals over 6 million people altogether and they are all in a greater or lesser degree in the care of the right hon. Gentleman the Minister of Pensions and National Insurance.

We have a new Minister, and the House will welcome him to his post, which is one of heavy responsibility and challenging opportunities. We have not heard from the right hon. Gentleman before in our National Insurance debates and this debate will show whether he is a Minister with a mission or merely the man from the Ministry. The fresh crop of by-elections suggests that he may be no more than a caretaker. But, nevertheless, he must "soldier on". Therefore, we eagerly await his moving summons to the conscience of the nation and the grand sweep of his imagination in sketching new frontiers of social provision, and his courage in warning his predecessor—whose prisoner he would otherwise become—not to crab and confine these majestic plans from his new strong point in the Treasury.

What hopes are there of anything of this kind happening? The signs and portents are discouraging. Since we have not had a major speech from the right hon. Gentleman I had to turn to the best alternative, a report of an interview with the right hon. Gentleman headed, "Policy and Caution". It was reported in a publication entitled, "New Society (No. 3)" of 18th October, 1962. I presume that the right hon. Gentleman saw this report, and since there were many quotations on comments which he had made I assumed that he approved of it. This is how it begins: The right hon. Niall Macpherson, Minister of Pensions and National Insurance, is plainly a cautious man. After only three months in what is the most technical of all Ministries he is naturally reluctant to commit himself to sweeping generalisations about the rôle of National Insurance in society. 'You must remember', he says. `that this is a very wide field and before radical changes are made one wants to be very sure of one's ground.' I can quite imagine the right hon. Gentleman groping his way through the dark corridors of the Ministry, humming to himself that well-known hymn: Lead kindly light… I do not ask to see the distant scene, One step enough for me. We on this side of the House do ask to see the distant scene. One step is not enough for us.

This year is the fiftieth anniversary of National Insurance. This is the year for a bold stride forward, something to match the events of the period 1946–48 for which my right hon. Friend the Member for Llanelly (Mr. J. Griffiths) will always be remembered. I am sure that it is with pleasure that we see my right hon. Friend taking part in debates such as this from time to time.

What is it that we want? We are asking for a completely fresh appraisal of the obligations and functions of the State in the wide and complex field of social welfare. Conservative Governments have been in office for eleven years and they have done no progressive thinking on these matters in all of that time. The rest of the industrial nations are now passing us by. In Britain, the structure of National Insurance and Industrial Injury schemes remain substantially as they were. Flat-rate contributions and flat-rate benefits continue to dominate them both. National Assistance plays as big a rôle in 1962 as it did in 1952. There have been seven increases in National Assistance scales and four in National Insurance benefits in ten years, not one of them based on any body of principle or known factors. Each one of them has been ad hoc and never related to the one before. The next one has always been unpredictable and is unpredictable now.

The only new thing in the years of Tory rule is the graduated scheme, which is a fake. This, in substance, was really a financial transaction though of magnitude and audacity. The Tory Government calmly pocketed the large surpluses of the early years—which the contributors will, of course, never see again—and began to get restive only when it was seen that the National Insurance Fund was about to go on to the wrong side.

These prospective annual deficits were clearly foreseen from the beginning. They came as no surprise, although the size of the Exchequer liabilities which lay ahead had been made greater by increases in pensions not fully covered by increases in contributions. They were, nevertheless, fundamentally the same as they had been accepted by earlier Governments under the 1946 Act. The main purpose of the graduated scheme was to transfer to contributors, employers and workers alike, the obligations previously accepted by the State.

It is interesting to see the switch in the proportion of the cost of National Insurance benefits borne by contributors. It is now over 80 per cent., whereas the 1946 expectation was that it would be not more than 69 per cent. The 1959 Act brought about this change compulsorily and put an extra levy on earnings of between £9 and £15 a week with a promise to pay part of it back later, in debased currency. If Dick Turpin had been dressed up in an Act of Parliament he would have been a right hon. Gentleman.

I turn again to "Policy and Caution." Of the new Minister it says: His most immediate problem is the administration of the graduated pensions scheme. In other words, he is the man in charge of the computer. He is a higher executive officer busy collecting the cash. He has paid nothing out so far under the graduated scheme, which is now his big problem.

After dealing with the financial aspects of the graduated scheme, "Policy and Caution" goes on to say: But it was on the social advantages of the new system that the new Minister was most emphatic. 'The flat-rate pension provides a level of insurance benefit below which nobody who has maintained his insurance record can fall; but by itself it cannot allow everyone to live in the comfort they would desire.' In the new graduated scheme, however, the Minister sees a means of supplementing, within limits, the flat-rate retirement pension. "By itself it cannot allow everyone to live in the comfort they would desire". That is given in the report in quotation marks. "By itself" is 57s. 6d. a week for a single person and 92s. 6d. a week for a married couple. Where is the comfort in National Insurance when the National Assistance Board says that "by itself" this National Insurance benefit is not even enough for the barest needs? Over one million people on retirement pensions who cannot live without extra help because they lack private means to buttress the basic pension.

Again, I quote from the document: The Minister believes that there is no hard and fast rule you can lay down as to what the level of subsistence actually is: it varies so widely from individual to individual especially when you take into account rents which vary from one part of the country to another. Our philosophy is to make a foundation payment and then add to it in accordance with need. We aim to provide an insurance benefit at a level which takes account of contributions that the great majority of contributors can reasonably be asked to pay. So the National Insurance benefit is now called a "foundation payment". Like a foundation garment, or a foundation cream, it is underneath but never by itself enough. A foundation payment can be anything that the Minister likes to think of. There is no hard and fast rule about foundation payments any more than there is about subsistence, but if either term is to have any meaning at all it should at least imply what the National Assistance Board defines as the minimum human need.

The Board puts that at 57s. 6d. plus an addition for the rent for a single person and for a married couple 95s. 6d. plus the rent. If we reckon an average rent allowance of 20s. a week that would give a flat-rate National Insurance benefit of 77s. 6d. for a single person and £5 15s. 6d. for a married couple. Can anything less than that be given the name of a foundation payment?

It is when the right hon. Gentleman speaks of National Assistance that we on these benches cease to take it seriously: Turning to National Assistance the Minister agrees that it is still, as it was regarded originally, a service for special needs and is not, as some have claimed, developing into a regular supplement for pensioners as a whole. 'The number of people who receive a supple-meat to their pension has risen in almost direct proportion to the increase in the total number of pensioners over the last decade'. A service for special needs; that is what National Assistance is said to be. Over 1 million retirement pensioners have special needs met by National Assistance, 22 per cent. of all persons on retirement pensions go to the National Assistance Board far additional help. In addition, 134,000 sick persons go to the Board, 13 per cent.; 77,000 widows under 60 go to the Board, 13½ per cent.; anything up to 100,000 unemployed go to the Board, something like 14½ per cent. or 15 per cent. The Minister takes comfort from the fact that the number on National Assistance has risen in almost direct proportion to the increase in the total number of pensioners in the last decade. How complacent can the new Minister be?

We are told that many of those retiring now have occupational pensions. As many as 43 per cent., we understand, earn something extra from the pension by staying at work. After fifteen years of full employment, although it is no longer quite so full, people have been able to save more and everyone is better off. Yet, notwithstanding as high a proportion of those on pension now have to get help from the Assistance Board as they did ten years ago. That shows that National Insurance provides no better cover for pensioners as a whole than it did ten years ago, notwithstanding the fact that there have been four increases since. The Minister seems to be content with that.

The last increase in National Insurance, industrial injury and war disablement pensions was in April, 1961. Our last major debate on the subject was on 13th March this year, when every conceivable statistic, real and imaginary, was bandied across the Floor of the House. I had many letters afterwards complaining that the hon. Lady the Joint Parliamentary Secretary, who deployed most of the imaginary statistics, did not know what she was talking about. Many of my correspondents—quite rightly, I think—deplored that any woman should stoop to use the balderdash of statistics to resist the claims of the poor.

I think that it must be from the hon. Lady that the hon. Member for Liverpool, Kirkdale (Mr. N. Pannell) got his brief for an address he gave to the rally of the National Federation of Old Age Pensions Associations at the Central Hall recently. I told the hon. Member that I intended to refer to his valiant stand in the face of enormous odds at the Central Hall, but he has to be away on parliamentary duties and cannot be in the Chamber at this time. When the hon. Member told the pensioners' rally that the present pension rates represented a rise of 90 per cent. since the Conservative Government came into power While retail prices had risen by 52 per cent., he was met with scornful laughter. When he doggedly claimed that the pension was worth one-third more than in 1951, he had to pause while first-aid was brought to several folk who could not stand any more of it.

Those receiving these social benefits will listen to no test of their purchasing power and their adequacy except the test of their own experience, which I submit is as good as, if not better than, any other. I have a letter here from a man who tells of his own experience: I am turned 64 and was awarded the Military Medal in the 1914–18 war. I get 19s. a week pension. I ran off benefit on the Exchange because at my age it is impossible to get a job. Including the increase I got in September, my whole income is now £4 8s.£3 9s. from the National Assistance Board and my 19s. pension. I share the rent, heat and light with my brother and these come to roughly for my share 32s. 6d. Food and washing is extra. A few months ago I wrote to the Minister of Labour about some clothes shoes and such like, and a few weeks later I had a visit from a representative of the Assistance Board. He sent me to the W.V.S. in 346 Hoe Street and there I was given a second-hand suit of clothes and two pairs of underclothing. I have applied for shoes but cannot get them.ֵ I am now as near as can be to an old aged pensioner and if I cannot get a job because of my age and if I am unable to buy clothes and shoes why cannot I get the means of buying a new suit instead of having to wear others' cast-offs? How many statistics do we need to discount the full impact in human terms of this man's story? Nevertheless, since the Minister is no doubt prepared to pour a veritable cascade of them upon us, I will confine myself to pointing out that both the index of retail prices and the index of wage rates have risen by over 5 per cent. since the last increase. The hon. Lady the Joint Parliamentary Secretary said that the index of retail prices had risen by 5.1 per cent. and that it would cost £55 million, I think the figure was, to restore the benefits now to the value they had when they were last increased in April, 1961.

The pay pause has ended, but the pension pause has not. Earnings are up. Pensions stand still. Pensioners are mostly living and mixing with friends and neighbours who are still at work and they feel very keenly the worsening of their relative position. I am more and more convinced that the only sound basis for fixing and adjusting pensions is in relation to current earnings. That basis, and that alone, can give people in retirement the sense of belonging to their families and their friends and of moving in a going concern. When all at work realise this as clearly as they will later on, a dynamic pensions scheme will come about by popular demand, and we on this side of the House will lead the movement to achieve this.

Under the existing arrangements all social payments are manifestly too low and it only needs the most cursory observation of hon. Members to know that that is so. I ask hon. Members to look at the extreme example of a war disabled man described in paragraph 11 of the Report of the Ministry of Pensions and National Insurance for 1961: The following example illustrates the effect of the increases for the more severely disabled pensioners. An ex-private under the age of 65, married and having two children, totally incapacitated and in receipt of full supplementation—unemployability supplement, constant attendance allowance (at the special maximum rate), comforts allowance and clothing allowance—previously received £14 6s. 4d. a week and now gets £16 7s. 3d., exclusive of family allowance. What sort of life can that unfortunate ex-soldier be living with such appalling afflictions, on just about £1 a week more than the average industrial wage? No money can compensate him and his family for their misfortune, but £16 7s. 3d., whatever the 7s. 3d. may be for, is surely not the limit of the nation's compassion for those to whom death would no doubt have been preferable to this.

I ask hon. Members to think, also, of over 68,000 widows of the First World War, 54,000 of them over 70. They get 10s. a week extra for being old. I suppose that, if a war widow over 70 has also earned her National Insurance retirement pension, she may receive a total of £6 3s. 6d. a week. That is for being a widow and having lost her husband in war over forty years ago. There are other widows who will not do anything like so well. The civilian widow of a man who dies from natural causes gets 57s. 6d. a week. These people are living on what many hon. Members would regard as small change.

We believe that the time has come to make radical changes. Especially do we think the time has come to abolish at least one drag on the welfare of widows, namely, the earnings rule. We heard a very unsatisfactory reply from the Minis- ter earlier this afternoon. We would sweep it away for all widow pensioners and relax it for all others.

The right hon. Gentleman heard what his own party conference said at Llandudno about the earnings rule. He says that the matter is under review, and he no doubt has it under review, because he received a plain warning from the conference that it expected him to do something about it. My hon. Friend the Member for Brixton (Mr. Lipton) has been fortunate in the Ballot for Private Members' Motions, and there will be an opportunity to discuss this matter further after the Christmas Recess.

The size of this problem regarding the earnings rule for widows is not a formidable one. Out of 321,000 widowed pensioners, 6,500 have their pensions completely withdrawn because of earnings. Forty-seven thousand require some adjustment on account of earnings. Out of 148,000 widowed mothers, 21,000 had some reduction for earnings but only about 400 had their widowed mother's allowance withdrawn completely on account of earnings. Therefore, the problem is not a very large one.

On the broad field of social security and other social payments, we on this side are pledged to bring about a substantial all-round improvement as one of the first priorities upon the nation's resources. We must stop talking about the aged and the afflicted as a burden on the community. Old age is merely an extension of life. We proudly say that people are living longer, but what are we doing with them and to them when they do?

There is a new study of some of the problems of old age published in Mr. Peter Townsend's "The Last Refuge" giving a very sad glimpse of many people who are tucked away in accommodation and institutions quite unsuitable for modern needs. The community must be prepared to face its social obligations squarely and be ready for the transfer of enough of the national income to the old, the sick and the disabled, and to widows, despite other claims.

What we need is a steady rise in the national income so that social needs can be met alongside rising standards generally, but the Government's economic policies of late have dealt a serious blow to hopes of being able to do this in the near future. The Labour Party would not only raise benefits generally, but would replace the system of National Assistance very largely by a new system of supplements to income. We on this side are determined when we get the opportunity, which may not be long delayed, to do three things.

First, to widen the scope and improve the whole scheme of wage-related pensions, and also to speed up the better provisions to be got from it. Second, to raise the flat-rate pension substantially to begin with, and keep it harmonised with movements in wages and the cost of living. Third, to get rid of the selective means test for additional or supplementary pensions.

As the higher pensions from the wage-related scheme replace the flat-rate system, the need for supplementary pensions will decline, but we already have 5½ million people on the flat-rate pension, and it is for them, principally, that some alternative to National Assistance must be found. The Chairman of the National Assistance Board has said, I believe, that an increase of £1 a week in the retirement pension would relieve less than ½million people from the need for National Assistance. Therefore, the problem of supplementing retirement pensions is bound to remain formidable for some years to come.

Our way of meeting it will be to contrive a dual-purpose means test to determine who shall pay and who shall receive. There would be one standard return of income for all and, on the information disclosed, some would pay—as they do at present—and others would receive. Just as we do not ask people to apply to pay tax, so we would not ask them to apply for the income supplement. There would be a coding for P.A.Y.E. and a coding for R.A.Y.N.—receive as you need. Income, and not capital resources, would be the test for the income supplement, as it is for the Income Tax. As income is taken for tax purposes, so it would also be taken for the supplement.

What a change this will be. What an exciting prospect to be able to turn the scales on the Income Tax collector and get some of our money back. All this inspiring work is going on behind the scenes of our party, while the new Minis- ter comes to the House drooling the empty words in the Gracious Speech about keeping social benefits under "close review".

What is the Minister waiting for, apart from wanting to make sure of his ground? If we keep a matter under close review, it must surely be to some purpose. Either we are expecting something to happen, or we are awaiting a probable change in conditions. What are these changes and conditions that the right hon. Gentleman is waiting for, and what is he watching? Is he waiting for the cost of living to rise, or for wages to rise, or for the general economic situation to improve, or for entry into the European Economic Community, with the need to overhaul and improve our social benefits to harmonise with theirs? Or is he waiting for the possible date of the General Election? Or is the right hon Gentleman's name Micawber, that he is just waiting for something to turn up and, that, meanwhile, he is keeping the matter under "close review"?

Is this genuine, is this sincere, or is it just fooling about with the genuine anxieties of millions of people to whom this "close review" matters greatly? It would be better for the right hon Gentleman to begin by establishing his reputation for frankness and honesty. Does keeping this matter under "close review" mean anything? If not, he should say so. If it does mean something, he should disclose to the House what considerations he has in mind.

Above all, we want the right hon. Gentleman to have a mind of his own on his new problems and responsibilities. I understand that his predecessor, the right hon. Gentleman the Chief Secretary to the Treasury is to wind up the debate. The Chief Secretary is becoming the jack in the box of the Treasury Bench—he is bobbing up on everything—and the new Minister should begin as he intends to go on, by putting the lid firmly on the Chief Secretary and proclaiming this afternoon that his 6 million anxious listeners have something to hope for from the close review that has been promised in the Gracious Speech.

4.35 p.m.

The Minister of Pensions and National Insurance (Mr. Niall Macpherson)

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof: welcomes the assurance in Her Majesty's most Gracious Speech at the opening of the present Session of Parliament that the position of war pensioners and of those who are receiving National Insurance benefits will be kept under close review. I must begin by thanking the hon. Member for Sowerby (Mr. Houghton) for the welcome which he gave me personally. I must say that I am not in the least concerned at the rôle that he has ascribed to me, as caretaker. The best thing about a caretaker is that he takes good care, and I hope to be able at least to do that.

It would be hard to exaggerate the importance of the work for which my Ministry is responsible in meeting needs in old age and adversity. Expenditure cannot measure it, but its importance may be illustrated by a single figure. The total expenditure on war pensions, National Insurance benefits and family allowances is now running at over £1,400 million a year, which is more than the expenditure for which any other single Department is responsible—

Mr. E. Fernyhough (Jarrow)

Defence?

Mr. Macpherson

Defence is not a single accounting Department.

The hon. Member for Sowerby devoted a great deal of his speech to what was really not in the Motion at all. I would agree that he devoted some part of it to immediate needs, but a great deal of it went very much further; peering, as it were, into the future, and into what a future Labour Government might do if they ever were entrusted with the task. I would welcome the hon. Member's extension of the debate in this way, as I am sure that my hon. Friends will also wish to express their ideas. We certainly do not have a static scheme, in any sense. From time to time, changes must be made, and I hope that we shall receive very many suggestions on that score.

I intend to divide my speech into two sections; to deal, first, with the Motion, and then to show exactly where we stand at the present time because, unless we see that, I do not think that we shall be able to build safely and securely for the future.

It is true, as the hon. Gentleman said, that the real value of the basic benefit has declined since the last increase was made in April, 1961. The index of retail prices has risen by 5.1 per cent. since then, and to give the same value as in April, 1961, the single benefit of 57s. 6d. would need to be raised to 60s. 5d., and the married benefit to 97s. 3d. from its present 92s. 6d.

There is nothing new, unfortunately, in the decline in the value of money since the war, but the essential fact is that, despite the decline in the value of money, benefits and allowances today are worth more in terms of purchasing power than at any time before the last increase. The hon. Gentleman argues that benefits and allowances should be increased now, but it is just one and a half years since the last increase, and the present basic single benefits are worth 4s. 8d. more in terms of purchasing power than they were before the last increase in April, 1961.

It seems to me, therefore, that this is a remarkable argument to come from the hon. Gentleman. He came into this House in 1949, three years after the basic single National Insurance benefit had been fixed at 26s. and the year in which the £ was devalued. There was no question of the Labour Government making "an early and substantial improvement in all social benefits and allowances" then. Those who were already retirement pensioners and widowed mothers had to wait two years longer before they received a 4s. increase. As for the sick, the unemployed and the widows, they had to wait for a change of Government for an increase, and they got it from the Government presided over by my right hon. Friend the Member for Woodford (Sir W. Churchill), within a year.

The retirement pensioner had to wait for over five years, until the retail prices index had risen by 28.8 per cent., until the value of the 26s. pension had fallen to 20s. 3d., before the party opposite thought fit to raise it; and that as a last convulsive gesture before the demise of the Labour Government. [An hon. Member "Old Stuff".] Hon. Members may have heard this before, but they are asking for an increase now, one and a half years after the last increase, and this is their record.

Mr. Fernyhough

When the right hon. Gentleman talks about either 26s. or 20s. 3d., the figure to compare it with is 10s. at which it stood before we did something in 1946 for the pensioners.

Mr. Macpherson

It was all worked out and agreed in the Coalition Government, as to what it should be, and the further increase up to 26s. from the figure agreed by the Coalition Government was simply to match the increase in the cost of living.

Mr. James Griffiths (Llanelly)

On a point of accuracy, what the right hon. Gentleman says is not true. The Coalition Government fixed the benefit at 20s. and I raised it to 26s.

Mr. Macpherson

I will accept that from the right hon. Gentleman, if that is what he says.

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

Get the story right.

Mr. Macpherson

I do not propose to waste time, in spite of what the hon. Gentleman says.

Each time, since 1952, increases in benefits have been made under the Conservative Government, they have been raised in terms of real value by much more than was needed simply to restore their value at the date of the previous increase. The hon. Member for Sower appears to doubt that. Let me remind the House of those increases in real value.

By April, 1955, the retail prices index had risen by 6.6 per cent. since the previous increase in October, 1952. The basic rate of single benefit was raised by 23.1 per cent. The next increase in January, 1958, raised the single benefit a further 25 per cent., although prices had increased by little more than half that figure. The last increase, which took place in April, 1961, raised the rate of single pension by 15 per cent.—more than three times the rise in retail prices since the previous increase.

In the light of that record, how can the hon. Gentleman have the effrontery to say that this progress has been backwards, as he said in an article? Whereas in 1951 the proportion of the gross national product devoted to pensions was 2.1 per cent., in 1961 it was 3.3 per cent.

In reply to a Motion of this character I am bound to point out what has happened. I think that we must get the record clearly in mind. Since the country turned out the Labour Government in 1951, the real value of the basic benefits has increased by at least one-third. The real value of the 100 per cent. disablement pension for those disabled in war and industry has gone up by over half, and from 45s. to 97s. 6d. in monetary terms. Indeed, the basic war pension rate for 100 per cent. disablement was increased by 10s. only six months after the Conservative Government took office, although the Labour Government had said that it could not be done. So has the widow's pension gone up by over 50 per cent. in real terms; so, too, has the benefit of a man who is sick or unemployed with a wife and family. And the benefit of a widowed mother with three children—this class for which the party opposite now says that it particularly wants the benefit—has gone up from 55s. to £6 14s. 6d., an increase in real terms of 72 per cent.

Dr. Jeremy Bray (Middlesbrough, West)

While the Minister is dealing with these so-called rises in real pensions, will he give the comparable figures with a real old-age pensioners' index? If he cannot, why has he not prepared an old-age pensioners' index?

Mr. Macpherson

I am coming to that point very soon. I want to finish this part of my speech first.

The hon. Gentleman has today been talking about our having pocketed the investments of the National Insurance Fund, and then he has said that we make a lower Exchequer contribution than was made under the Labour Party's arrangements. But in 1951 those arrangements were changed, and the effect of that change was that in the first complete year after that, in 1952–53, the Exchequer contribution was only £65 million, whereas today it is running at £190 million.

That is the answer to the hon. Gentleman, and he will remember that the National Insurance Fund was initially invested in Daltons, and one knows what happened to them. It was not this party that swallowed up the Fund. It was this panty before 1951.

It remains true, as my predecessor constantly reminded the House, that nobody need live on basic insurance scales alone, and if they have no other resources, or meagre resources, they can apply for and obtain supplementary payments from the National Assistance Board.

Mr. Bernard Taylor (Mansfield)

Before leaving the question of increased benefits since 1951, I am sure it would be of interest to the House if the right hon. Gentleman were to say something about the increase in the contributions levied.

Mr. Macpherson

That is another point with which I am proposing to deal when I come to it. But it is most certainly the case that we must accept that increased benefits have to be matched by increased contributions. The money has to come from somewhere.

The hon. Gentleman said that the present basic National Assistance scales, which are now higher than the National Insurance rate for married couples, are quite inadequate. Perhaps I may remind the right hon. Member for Llanelly (Mr. J. Griffiths) of what he said in this regard. I am sure he will agree with this. He said in the Second Reading debate on the 1946 Act: I believe that we have in this way, endeavoured to give a broad subsistence basis to the leading rates, within the framework of a contributory insurance scheme."—[OFFICIAL REPORT, 6th February, 1946; Vol. 418, c. 1742.] National Insurance rates are much higher in real terms than they were in July, 1948. And national Assistance basic scales for a married couple are now higher than the National Insurance rates. They have risen by 139 per cent. since July, 1948, whereas the average earnings of adult males up to last April had risen by 133.4 per cent. and the Index of weekly wage rates by 91 per cent. National Assistance payments, of course, are made in relation to need, and I think that the House would want to secure that those who are in need get what they need, but at the same time I am sure hon. Members will want to secure that there is full encouragement to thrift and to providing for oneself.

As the general standards of the community rise, so basic needs tend to rise also, but, as I have shown, needs are being met in increased measure related almost exactly to the increase in average earnings. To estimate what a subsistence level universally applicable throughout the country should be is virtually impossible. Circumstances and the cost of living vary so much from place to place and, indeed, from case to case. I believe that at least one European country pays different levels of pension in different areas of the country. That would certainly give rise to controversy here. In those countries where benefits are related to individual earnings which vary in different sections of the country, the benefits also will vary proportionately.

What the Government and the National Assistance Board both do is to watch the movement of prices, costs, wages and earnings and to study the Family Expenditure Survey and the National Food Survey sponsored by the Ministry of Agriculture, especially the section devoted to pensioner households. This section indicates that the average expenditure per head on food by pensioner households in 1961 had increased by 14.7 per cent. over 1957, as compared with a rise in food prices over the same period of 4 per cent., which shows that on average pensioners can afford to spend more on food and more interesting food than they could five years ago. The same must apply to all people on National Assistance, particularly since the rates were increased last September.

It is only right to point out that no other country has a system so effective and prompt in dealing with need wherever it may arise as our National Assistance system. I do not think that we need dwell on the level of Assistance rates because the scales have only just been increased, and the level was debated in the House as recently as last July. Of course, whenever National Assistance scales are increased by themselves, that is, without any increase in National Insurance or Industrial Injuries rates, there is bound to be some increase in the number of people receiving National Assistance simply because some whose resources would previously have just debarred them from receiving Assistance are made eligible for the increase.

I thought that the hon. Gentleman related in some way the proposals which he suggests for immediate increases to the proportion of retirement pensioners receiving supplementary assistance and to the rents they have to pay; but that proportion of pensioners is the same as it was in December, 1951. The figures are quite significant. Although the number of retirement pensioner households receiving National Assistance rose by 38 per cent., from 767,000 in December, 1951, to 1,060,000 in June, 1962, the proportion was the same at both dates —23 per cent. And certainly these figures do not prove that we should increase National Insurance rates by an amount sufficient to cover the average rent paid by retirement pensioners receiving supplementation. If we were to do so, as I think the hon. Gentleman will agree, roughly half of those now receiving a supplement to cover their rent would be receiving more than the rent they have to pay and, to that extent, would be better off than the other half, who would be no better off than they are now and would still have to apply, as the hon. Gentleman said, to the National Assistance Board for supplementary allowances. I think he will agree also that the vast majority of the 77 per cent. of retirement pensioners who do not receive supplementation would be receiving, mainly at the expense of present contributors to the National Insurance Fund—as the law now stands—an addition to their retirement pension which they do not need just to pay the rent. For them that would be an uncovenanted benefit: and we have to consider how best we should lay out any money that is available.

I have deliberately spoken of the "vast majority" because there is, undoubtedly, some disagreement as to how many of the 77 per cent. are eligible for supplementary allowances but for one reason or another do not care to apply for them. No doubt, some people prefer not to ask for National Assistance although, if they asked, they would get it. The National Assistance Board tell me that they are quite satisfied that, all in all, such people do not total anything like some of the large numbers which have been bandied about, and that of them not many, to put it no higher, are suffering real hardship.

Mr. R. H. S. Crossman (Coventry, East)

Purely on the number who have the right to National Assistance but are not applying, is the hon. Gentleman discounting the figures of Miss Cole, or are those figures accepted by the National Assistance Board and by his Ministry? Miss Cole's figures were based on a very careful analysis, and they show a very considerable number. I wonder whether the Minister is now taking this opportunity to disown Miss Cole's calculation.

Mr. Macpherson

I think that her calculations have to be accepted with some reserve if only because they were based on a comparatively small sample—a sample of only 500 covered by her interim report.

Mr. Crossman

Quite rightly, the Minister says that they were based on a sample. But every sample is a sample. As far as I know, Miss Cole's sample has not been criticised by any sociologist as being smaller than is necessary to obtain accuracy. Is the Minister now impugning her competence as a social scientist by suggesting that she chose deliberately a small sample, or what is he saying?

Mr. Macpherson

I say that, in my view, it would be dangerous to reach conclusions on such a small sample, particularly having regard to the facts that she herself cites. Among the 12 per cent. of the sample who, in her opinion, were eligible for National Assistance but were not applying for it, about two-thirds were not living alone, although some were living with other pensioners. Only 5 per cent. were advised to apply to the National Assistance Board for Assistance, and only 2 per cent. actually received it. Moreover, one must remember that it is one thing to be a social science research worker asking questions for information, and it is quite another to be an official of the National Assistance Board asking questions. People are likely to be a little readier to disclose financial information in the second case than they are in the first. I think, therefore, that one is entitled to accept those figures with some reserve. I do not think that I need go further than that.

Undoubtedly, some will argue that, whether or not the argument to which I have referred is the right way to consider an increase, the basic rate should be raised very substantially. A figure of £4 for the basic rate has been mentioned a good deal. The hon. Member for Sowerby wrote an article "Better Social Services for All" in which he put National Assistance first, and, after that, a substantial increase in all National Insurance and Industrial Injuries benefits. He said: Improvements in retirement pensions and widows' pensions are especially pressing and he went on to say that the Labour Party's social security policy has, of course, to be paid for. It is worth paying for. People are ready to pay for it provided the price is within their means and the financial burden spread justly". He omitted only one thing—what it would cost. Over and over again, alas, the great weakness in Socialism's grandiose schemes is finance.

If the retirement pension were raised to £4 single and £5 17s. 6d. married, and if all other benefits were increased in line, the cost would be an extra £455 million. At present, under the 1959 Act, contributions are divided equally between employee and employer and the Exchequer adds a quarter of the combined flat-rate contributions. On that basis the extra cost to the Exchequer would be £125 million and to the employee and the employer 3s. 4d. a week each.

No doubt, the hon. Gentleman will say that, even with that addition, our social services would be taking no greater share of our national income than those of other European countries do of theirs. That is a point which he made in his article. Here again, one must be rather guarded in making comparisons between countries. The basis of statistics is different. What is more important, the cost of living in different countries is different. The conditions of insurance schemes are different, and a very great deal depends on the age at which pension benefits can be obtained. To quote just one example, I think I am right in saying that the pension age in Sweden is 67 for both men and women, which, of course, makes it possible to give a much larger benefit than if the pension age for women is 60.

I do not want to detain the House too long, but there are one or two other things I wish to say. The hon. Member asked for a completely fresh appraisal. I think that we have to consider, first of all, what we as a nation and as individuals can afford to pay and what should be the level of benefits provided. These questions have to be considered both separately and together. There is no point in deciding on the insurance cover one wants until one has considered what one can afford to set aside weekly, monthly or yearly. But it is well worthwhile examining the kind of cover and the pattern and conditions of cover at present provided to see whether they meet the needs of the present and the future.

In considering what the nation can afford, we have to have regard to several considerations. I will mention three. First of all, we have to have regard to the state and the prospects of the national economy. Secondly, we have to have regard to the need to encourage private and group thrift and private providence, which form the basis of economic independence for the individual and of progressive investment to sustain growth. Thirdly, we have to have regard to the need to ensure that we do not unduly handicap industry in international competition by overloading it with social security burdens or taxation. [HON. MEMBERS: "Oh."] I said "not unduly."

While it is reasonable that after fifteen years the present arrangements should be reviewed, it would not be reasonable, I think, to alter the schemes in such a way as to deprive contributors of benefits that they have been led to expect and for which they have contributed, even although at the present time nobody has earned more than a fraction of his benefits under the National Insurance scheme.

Mr. J. J. Mendelson (Penistone)

The Minister has just said that we have to make certain decisions and that they must be taken together. Would he not also agree that there has to be a social allocation, as to whether certain burdens can be allowed to continue for our old people and those in difficult positions and, at the same time, whether taxation relief can be granted to other classes not in need?

Mr. Macpherson

I quite agree that the question has to be regarded as a whole, but we cannot develop anything unless we know the nature of what we are developing, and that goes for the National Insurance Scheme.

The 1959 Act put it on a pay-as-you-go basis. There was no option, for two reasons. First, the fact that all contributors entering the Scheme in 1948 were entitled to draw full benefit, subject only to a ten-year contribution period for those not already covered by previous schemes, meant that the Exchequer had an immense uncovered liability, which the party opposite simply accepted in 1951 and passed on to its successors. Indeed, it reduced the current Exchequer payments.

The 1959 Act brought a prospective deficit of £400 million a year fifteen to twenty years from now down to manageable proportions, but it could only be done on a pay-as-you-go basis, and including the graduated pension scheme. Secondly, the decline in the value of money—at an average rate of nearly 6 per cent. per annum up to 1951, though not nearly so fast since—and the consequent increases in benefit had greatly added to the uncovered liability of the Exchequer in respect of all contributors. Here, again, it became necessary for the present Government to take action by raising the level of contributions in line with benefits, with matching Exchequer payments.

The net effect has been to depart from the original actuarial conception of each pension being earned by a contributor's payments, together with those of his employer and a matching Exchequer contribution, throughout the working life of the contributor from 16 to retirement. Instead, those of us who are still working pay our contributions into a fund from which benefits are paid to those who are not earning because they are either sick, unemployed or retired. That, incidentally, is the main justification for maintaining the earnings rule. In other words, by virtue of our contributions each of us has one share in the pool, and that share will entitle him to whatever level of benefits this House sees fit to determine in the light of what the nation can afford when his earnings are interrupted.

Now a word about the purpose and philosophy of the present National Insurance scheme. Its purpose is to pro- vide as of right, as the right hon. Member for Llanelly (Mr. J. Griffiths) said, in return for contributions during working life, financial benefits when earnings are interrupted or cease on retirement. Its philosophy is that the benefits provided should be adapted to the needs of broad categories rather than of individuals and that they should be in the nature of foundation payments on which individuals can build in accordance with their particular needs. In other words, in return for flat-rate contributions flat-rate benefits are received.

The National Insurance scheme has been expanded to include a graduated element which not only increases retirement pensions in the future but reinforces the finances of the National Insurance Fund. Between 1946 and 1951 the benefits lost value. Indeed, it was not until the last increase in 1961 that part at least of the increase was no longer required only to restore the 1946 value. On that occasion the value of the basic single rate became 11 per cent. higher than the equivalent of the 1946 value before the increase. The effect of the 1961 increase, therefore, was to give all pensioners an enhanced share in national prosperity.

While we should undoubtedly continue to allow recipients of National Insurance and other benefits as a whole to share in the increasing prosperity of the nation, the question is ought we to spread the share evenly or ought we to select certain categories for benefits higher than those given to others? If certain categories are to be selected, who should they be? Should they be the aged or the widowed mothers, or the unemployed as suggested in the Guardian today, or what other group or category of beneficiaries should be specially provided for?

May I just say in conclusion that we may differ on what the level of benefits should be at any given moment. But the 1946 Act stands today very much in its original form, although the present Government have improved it in a number of ways and, in particular, have made one major improvement in putting its finances on a sound footing. That Act, as Earl Attlee said at the time, was founded on the Beveridge Report and on the White Paper of the war-time Coalition Government, accepted by all parties and by the country. Earl Attlee said that on 7th February, 1946, and it can be found in col. 1896 of HANSARD for that date. Is it too much to hope that major changes or developments of the Scheme should equally be founded on the agreement of all parties? I am not talking of the Motion moved by the hon. Member for Sowerby today.

In the meantime, we have to consider what changes of rates or conditions should be made within the broad framework of the Scheme. The hon. Gentleman is asking for an early increase all round in basic National Insurance rates with corresponding increases in war pensions and Industrial Injuries benefits. The hon. Gentleman at least is well aware that starting from today it would be quite impracticable to make such changes in the three weeks or so before the House rises for the Christmas Recess. I hope that no one will ask for that. "Early" cannot possibly mean before Christmas.

The record of this Government shows that they do not need to be prodded or goaded into looking after the interests of the old, the sick and the unemployed. Since 1951 there have been four increases in National Insurance rates and Industrial Injuries rates, five in basic disablement rates for war pensioners and seven in National Assistance scales. Overall, benefits have increased in real value by about one-third.

I ask the House to say that it will continue to trust the Government to keep under review the position of war pensioners and other beneficiaries and to judge the right time in the interests of the nation to increase them.

5.10 p.m.

Mr. James Griffiths (Llanelly)

My hon. Friend the Member for Sowerby (Mr. Houghton) began his speech by giving a welcome to the new Minister. He is the seventh in the line of Ministers of National Insurance. I was third in line. It was my great privilege to introduce the National Insurance legislation in 1945 and 1946. Since something has been said about the history of this matter, perhaps I may say a word about it—I believe that I am entitled to do so—before I close.

The Minister knows that after this last week his tenure of office is bound to be very short. Perhaps that accounts for the fact that he has not told us much about any forward-thinking policy. Obviously the Conservative Party is not looking forward because there is nothing for it to look forward to except defeat. The right hon. Gentleman begins his tenure of office with the heavy dark clouds of large scale unemployment looming up again. The right hon. Gentleman made no reference to this, but, as one not only with experience as a Minister but with a good deal of experience of all the social problems which arose from unemployment in my native Wales in the 1920s and 1930s, may I quite sincerely and quietly give him a warning: this matter is dynamite.

It is not appropriate today to discuss the question of social policy, but unemployment at present is at its highest level for twenty-two years at this time of the year. Surely the Minister will say something about this before the debate closes, because, although the Minister of Labour is responsible for people while they are at work, the Minister of Pensions and National Insurance is responsible for their insurance when they are unemployed.

In a way, the problem of unemployment benefit during the period that people are unemployed has certain new features of which I hope the Minister will take note. I hope that his Department will call his attention to them. First, not only for the unemployed but for others—at the moment I am emphasising the problem of the unemployed—the drop in income from work earnings to unemployment benefit is heavier than it has ever been before. I ask the Minister to realise this very important fact.

Secondly, one of the great changes which has taken place in the last twenty years is the increasing proportion of women who stay in employment outside the home after marriage. A good deal of this affluence about which we hear is double pay affluence for the working class. This fact has never been stressed enough. Often the husband and the wife work in the same workshop, in the same factory. When they become unemployed they are often unemployed together, and the burden is all the greater because two pay packets are lost. I ask the Minister to look at this problem.

I gave married women the option of whether to contribute or not. Many married women are now unemployed because of economic stagnation. Unemployment is once more rearing its ugly head, and it may be that a wife is not entitled to unemployment benefit because she has contracted out. That was her choice, but that is the problem.

Another new feature about which the Minister should be thinking is this. I am sorry that he did not mention it. I hope that he and his Department are thinking about it. Compared with my younger days—I hope I do not speak too much like an old man; I do not feel like one at the moment—this is a very big change. I have talked to trade union colleagues about it. A large proportion of our young married people today, people who are becoming unemployed and staying unemployed, are in this position. At the beginning of each week, before they work one day and before they have earned one penny, anything from 25 to as much as 40 per cent. of their income is committed, if I may use the familiar phrase, to the "never-never".

Is the Minister thinking about this question? Young married people are becoming unemployed. They have started getting their homes together, they have mortgages and are buying things on hire purchase. As I say, from 25 to 40 per cent. of these people's total income is committed at the beginning of the week. Does the right hon. Gentleman realise what that means in unemployment? For that and other reasons, we are justified in this Motion in asking for an increase.

Whatever may be the truth about whether we can have a major Bill between now and Christmas, there is another thing which the Minister can do quite simply, and that is to restore Clause 62 of the National Insurance Act. In my constituency—I am sure that this applies to the North-East, to Scotland, to Merseyside and elsewhere where men and women are unemployed—people are unemployed for such periods that they exhaust their standard benefits. Section 62 provided that when this happened they were entitled and enabled on the recommendation of a tribunal to receive unemployment benefit without a means test.

Now that unemployment is over the ½ million mark, the highest for twenty- two years—in many areas it is becoming chronic and long-term unemployment—I beg the Minister to take very early steps to ensure that unemployed people are not left without any benefit and have to rely entirely on assistance, If he does that, he will be serving the nation. As I have said, this matter is dynamite, and I beg the right hon. Gentlemen to think about it.

I come to the general position. I was very disappointed with the Minister's speech. I thought that today he would tell us where the Government stood and what their policy was. The first Minister of National Insurance in the Conservative Party after its victory in 1951 stated the Government's policy. Has it changed? Right hon. Gentlemen opposite are forever asking us questions; I now ask them one. The first Conservative Minister of National Insurance was Mr. Osbert Peake, now Lord Ingleby. In May, 1952, he introduced his first Bill. It was his first appearance as a Minister in a major debate in the House. He outlined the policy of hon. Members opposite. He began by expressing concern at the fact that the gap between insurance and assistance was widening. He said that his Government were concerned that a bigger proportion of people were depending on assistance. I am summarising what he said on 5th May, 1952, but I believe that I am doing so fairly.

The then Minister said that one of the purposes of the Bill which he was introducing was to restore people's faith in the insurance principle. Do the Government still stand by that? Do they still regard it as the business of the National Insurance scheme to provide in the main for all people on the National Insurance principle with the National Assistance Board as merely a net, or has National Assistance become a definite part of the National Insurance scheme? This is a very important question. The Minister said nothing about that matter today. Has that policy changed? That was what the present Lord Ingleby said in introducing his proposals for an increase. The former Minister told us that those proposals would bring the National Insurance rates to a higher level than they had ever attained either before or since 1946. Let us accept that last statement as being true.

But after the rates, by the claim of the party opposite, had been brought to their highest level and, so it was said, their real value increased, we find that after the Bill had been put into law and the increases had come into effect, 22.7 per cent. of retired pensioners were still on Assistance, as were 12 per cent. of sick people, 13 per cent. of widows and 14 per cent. of the unemployed. Even some of those in receipt of Industrial Injury benefits were on Assistance just after the time when the Minister reduced the contributions by a penny, when, in fact, he should have kept the penny and increased the benefit. When we consider future policy, it is essential to remember that 71 per cent., or nearly three-quarters, of all grants made by the Assistance Board are made in supplementation of National Insurance benefits. That is the position we have reached.

Let me say a word or two about 1951, to which the Ministers always refer. We are told by Government spokesmen how how better the pensions now are and how much greater is their real value than in 1951. When the Minister replies, I want him to deal with this. How comes it that at the end of 1961, when benefits, we were told, were of greater value than ever before, 550,000 more old-age pensioners were on Assistance than in 1948 when the scheme began? Perhaps the Minister can explain this. There may be reasons for it. In fact, 289,000 more people were on Assistance in 1962 than in the so-called terrible year of 1951. What are the reasons?

The right hon. Gentleman referred to the increase in the total number of pensioners. Not only is the total number much higher than in 1945 or in 1951, but even with all the increases which have been given since 1951 there has never been less than one in five of pensioners on Assistance. I therefore ask the Government whether that is their answer. Is that their policy and is that what they say to the country?

We have been told about the new scheme. I should like to give an example of what it means. A man who, in April, 1961, when the scheme came into operation, was 40 years of age and earning £12 a week will, in 1986, when he becomes 65 years of age, be entitled to a pension for himself and his wife of £5 4s. In the meantime, contributions will have been paid by the man and his employer at the rate of 22s. 10d. each week, and in 1986 he will have a pension of £5 4s., which is less than he would get now on Assistance if he happened to be paying the average rent. I therefore say that the speech of the Minister was disappointing, because he has not said anything about the future except a continuation of Assistance as being far too important an element.

I should like to say one or two words about the old people before I speak about the future policy of my party, which, I believe, will in due course be the party to apply the future policy of the country. I hope that hon. Members who take part in the debate will look first at pages 19 to 21 of the 1961 Report of the National Insurance Board, from which one gets some revealing figures about the position of a large proportion of those who receive Assistance and who now represent more than one in five of the pensioners.

The present generation which is now reaching retirement age and becoming entitled to retirement pension and who are now on Assistance are the generation whose youth was caught in 1914, whose middle years were dominated by the 'twenties and 'thirties and who now, after a lifetime of service in peace and war, ten years of their lives having been dominated by war, see the position as revealed by the figures in the Report.

Of the 1,056,000 pensioners who are receiving Assistance, only one in ten owned his own house. There is not much of the appearance of a property-owning democracy about that. Only 650,000 of them had any capital assets, including war savings, and of these more than half—340,000—had less than £100. One in six of them had less than £400. Those are the revelations from the National Assistance Board about the plight of pensioners. Everybody knows that pensioners are having a stiff time, and I believe it to be the universal view of the country that both pensioners and others should have an increase, and have it quickly.

The Minister made no reference to future policy. Since 1945 and 1946, there have been great changes. Most of the important changes in this field of insurance have taken place outside the range of the Government services but they impinge upon and have an influence upon them. They have to be thought about. Since 1945 and 1946, there has been a great growth in fringe benefits. I am proud to belong to an old industry which now has fringe benefits almost equal, I believe, to any in the country. The people in that industry had to wait for nationalisation before they got any of those benefits. I pay my tribute to my old colleagues, both the Chairman of the National Coal Board and my old colleagues in the miners' union, about the redundancy scheme which they have adopted.

I believe that the time has come for a new assessment of the whole of National Insurance and for a major new step. In 1945–46, all of us, in all parties, had our thinking and our policies conditioned by the 1920s and the 1930s and by the Beveridge Report, which was published in 1942 in the midst of the war. We were concerned to provide a benefit as of right and a benefit on a subsistence basis. We have failed to maintain the subsistence level in the insurance scheme. If hon. Members opposite want to blame me for that, all right; but let us get away for a moment from blame. By the Government scheme we shall not have subsistence in insurance in 1986. These are the facts. In 1986 one in five—and that is a fair proportion—of pensioners will still depend on National Assistance unless they are covered by insurance benefits from outside.

The fact is that we have already three classes of pensioners. The Minister should realise that this is the problem. We have the pensioners who, in addition to their pensions, get superannuation. We have the pensioners who may have an income of their own—although, bless me, lots of these have not got it. Then we have the pensioner with the flat-rate pension and nothing else except National Assistance. So far as I can see from the Government they are prepared to leave it there. But I do not believe that the nation is prepared to leave it there.

I am very glad that in my own party my hon. Friend the Member for Sowerby and my hon. Friend the Member for Coventry, East (Mr. Crossman) and other hon. Members have been working on this. Now we come to this problem. I believe now that we have to do what Beveridge did. He took over schemes that had been developed bit by bit—sickness, pensions and others—and brought them together to see how they could be co-ordinated into one major national scheme. The major policy of the Beveridge Report was to co-ordinate them into one comprehensive national scheme based upon Assistance. I hope that now we are getting away—and I hoped that the party opposite was getting away until I heard the Minister—from this idea of subsistence. What people are concerned about is that in all adversities, sickness, unemployment, widowhood and particularly in old age everyone should be guaranteed an income which will be at least half the income which he had when in employment. Quite frankly, I think that the nation has made up its mind about this; in fact I am certain it has. I still move a good deal about the country. This is what a large number of people already have, and the people who have it feel ashamed that others have not got it. That is why I welcome very sincerely what my hon. Friend has said, and that is what we are working towards.

Under the Government scheme I do not believe that we shall ever attain that position. Under our scheme, infinitely better, we shall not attain the position of half pay for some years to come. There is, therefore, the transition. I believe that my party, when it shortly comes back into power, will develop a scheme by which, when it is in full maturity, people will be insured in sickness, in unemployment, in widowhood and in old age for a proportion of the earnings they received when they are in work and be guaranteed that. That will be the new test.

In the meantime, during the transition, there are bound to be people, particularly pensioners, who will be below the level. Speaking for myself, I am not content to let them be on assistance. This is not a criticism of the Assistance Board or its Chairman or offices. The Board was not created for the purpose of supplementing National Insurance except to a minor extent, and the Minister knows that. I am not content with allowing them to go on with public assistance. Therefore, I am very glad that our party—and I was one of those who was in at the making of that policy in the first stage—believe that this nation accepts the view that if persons who have lost their income because of sickness, because of the failure of society to provide them with a job, or because they have become widowed, we as a nation should be pledged to bring into operation schemes which will guarantee them half of their former pay. Let us provide for those who will be without it in the transitional stage.

That is why I am glad to welcome this idea of an income supplement. We could turn to the machinery which is already available to us, through the Inland Revenue, P.A.Y.E., and all the rest of it, but there are many variants of this. I think that we should set our sights and we shall hear the details from my hon. Friends who are working hard on this, supported by Professor Titmuss and his own team. Let me pay tribute to them. I have just been reading a book on the plight of old people by one of them.

I am looking forward to the day when the next Labour Government and the next Minister of Pensions and National Insurance will be taking this major step. It was my privilege to take the major step in 1945. It is now our policy to take the next major step, and that must be to ensure that by a combination of State policy and insurance policies everyone in this country who loses his livelihood, whatever may be the reason, is entitled to at least half of his earnings. I am told that we live in an affluent society. If we are living in an affluent society, that is not a big step to take. I believe that this is the right next step in social policy facing the day when there will be a Labour Government to put it into operation.

5.36 p.m.

Sir John Vaughan-Morgan (Reigate)

It is a pleasure to follow the right hon. Gentleman the Member for Llanelly {Mr. J. Griffiths). We may not agree with all the points he made, or with all his arguments, or with all his intentions, but those of us who have taken an interest in this matter for many years know that he was a very great Minister of Pensions. He was the architect of the present scheme with its virtues and with its faults. My interest in these matters goes back to when I first came to the House in 1950, and I would say that if the right hon. Gentleman had been the Minister in 1951 he would never have made the errors that there were in that Bill introduced then, which it was the first task of Lord Ingleby, as he now is, to correct when we came back to power.

If I do not deal with all the details of the right hon. Gentleman's speech, with some of which I find myself in considerable agreement, it is because I have some other points to make. On the theme that he embarked on at the end, on the need for a re-thinking in our approach, I am in some agreement, and I shall come back to it later.

So far as the scheme runs at present, most of us are satisfied that the pledges made by the Government have been redeemed. But I am, and others, I think, are less satisfied, that there is any real sense of direction in the Ministry as to what it is trying to achieve. My right hon. Friend said—I was glad to hear him say it—that it was not a static scheme, but I did not in his speech detect any particular note of dynamism. Towards the end he asked a number of rhetorical questions but he did not give the answers.

He has been under some pressure from some of us on these benches that any pension increase to be made in the near future should be selective and not based on a uniform entitlement. I would support this. It is true that the scheme is becoming increasingly complex. There are, I believe, now no fewer than 150 different rates of pension being paid, which only proves that the Ministry is perfectly capable of coping with a variety of benefits.

I was very interested in an article written in the Daily Telegraph by my hon. Friend the Member for Acton (Mr. Holland), who I see is sitting on the P.P.S.s' bench. He gave some very broad hints about desirable directions for change, and I would echo all of them. His priorities were, first, that there should be an increased rate of pension at a particular age. He gave the alternative that it should be given for those who are born before a certain date. His second priority was for widowed mothers, and the third was for the long-term sick. These seem to me to be wholly desirable directions in which to mould the scheme in future. But I really would enter, if I may, a caveat against what might be called the "date limit". That was the mistake which the party opposite made in 1951, a quite unforgivable mistake, and we, as I said earlier, corrected this anomaly when we got back to power. So for heaven's sake do not let us have a Conservative advocating that sort of thing. It is bad Conservative policy.

On the category of widowed mothers, although it strictly does not come into National Insurance, I wish that somehow some genius at the Ministry would find some way of including in the category of widowed mothers deserted mothers and divorced mothers. Some of the worst cases of poverty we come up against—I know that they can go to National Assistance—but some of the worst cases of poverty come from that very category, of mothers who have been deserted. But I think there is a very strong argument, as I say, in favour of these three categories, and I hope that perhaps we may even have some good news from the Chief Secretary to the Treasury when he winds up this debate.

What I should like to talk about is, first, our old friend the earnings rule. Once again we have reached the stage when there is need for a little relaxation. No doubt the Chief Secretary to the Treasury will be glad to know that I am not going to advocate its complete and total abolition. Through the years I have had to defend it, its utter and pure logicality, but I have never found the recipients of my replies were convinced. The earnings rule has existed since 1946 when the right hon. Gentleman the Member for Llanelly introduced it, and I think he was quite right, in the context of the time. Nor am I seeking to get rid of it altogether. We cannot do that with the scheme as it is at present. The mistake was made, and it has continued during the years since, that the public has never been educated to understand the difference between the retirement pension and the old-age pension. Come to think of it, the Opposition have never succeeded in educating themselves, because I see that in their Motion today they do not refer to "retirement pensioners" but to "old age pensioners".

The next mistake, made, no doubt, for very good reasons, was the illogicality of restricting the earnings rule to the two bands of earnings, for men from 65 to 70 and for women from 60 to 65. From the moment that concession was made it became almost impossible to justify it to the average insured person. There was also the rigidity of the limits of 20s. and of—I think it was—not more than 12 hours at work, a limitation imposed by the commissioner. The latter has now gone. It was obvious from the start that more flexibility was needed. Now it has been relaxed gradually over the years.

The House will forgive me saying I speak on this matter with some authority. On the matter of relaxing the earnings rule, I said in 1951: I throw out as a tentative suggestion that it might be possible to make provision for a basic earnings allowance of, say, 20s. and then, if the Minister considers it necessary, to deduct, say, 3d. for every 1s earned over that for the pension."—[OFFICIAL REPORT, 26th April, 1951; Vol. 487, c. 664.] I discovered that that was an echo of the Beveridge Report, which had an earnings limit of £3 a month and over that one-half to two-thirds to be deducted. Although this wise advice of myself and, before me, Lord Beveridge, was rejected, the limit was increased to 40s. but no further.

I found in the years after 1951 that the resentment against the earnings rule continued to mount, and therefore in the Session of 1955–56 I gave notice of my intention to introduce a Bill to amend it. Things began to happen. The Ministry began to think furiously. When it discovered that it was—contrary, to its previous belief—open to a private Member to introduce such a Bill, because it did not increase Government expenditure but only made a charge on the National Insurance Fund, it felt, I think, a little disappointed. My hon. Friend the Member for Somerset, North (Sir E. Leather), who I am sorry to say is not here today because he has, as many hon. Members know, been very ill indeed, very kindly, having a prior place in the Ballot, took over my Bill but allowed me to pilot it through the House. Meanwhile, the then Minister, now the Chief Secretary to the Treasury, wisely decided to refer the issue to the National Insurance Advisory Committee who, thank goodness, came down on our side, and all was therefore well that ended well. That was the first major relaxation in the limits, and the first introduction of a partial deduction of the pension.

I apologise for this chapter of autobiography, an autobiography which, I hasten to add, will never be written, but it may be some encouragement to those of my hon. Friends, such as the hon. Member for Acton, who may find themselves up against a Ministry which sometimes seems obtuse, obdurate and obstinate, to know that one can persuade it to change its mind.

This is a matter it is really time to have another look at, because the shoe is beginning to pinch again. Again I do not advocate total abolition, which, I am told would cost £100 million I am quite certain that that should not be given as the first priority.

The Labour Party wish to abolish the earnings rule for widows and, presumably, widowed mothers, but surely that in itself would introduce further anomalies, as between widows and unmarried women. One of the difficulties of this scheme has always been anomalies. Therefore, it seems rather pointless at this stage of the day to introduce yet another one. The Liberal Party, I understand, intends to abolish the lot without any heed to cost. It would abandon entirely the Beveridge principle. Presumably, as a corollary, it would scrap increments which are earned by staying on at work.

There are three ways of relaxing it. The first is to increase the limits; next, to increase the band of earnings with partial reduction; and thirdly, we could reduce the amount of deduction. I would suggest that the right way would be to increase the limit slightly and reduce the amount of deduction from 6d. to 3d. in the Is. It is for the Minister to calculate what the proposals would cost and arrange accordingly, but the aim is—and this is the aim in seeking any relaxation of the earnings rule—to facilitate the retention in employment of those who do not want full-time work but who equally do not want total retirement.

Now I would like to suggest also that it is time to take yet another look at the increments which are earned for staying on at work. They were, I think, originally 3s. extra for each year the employee stayed on. The figure is now 4s., which is surely a very modest in- crease. Lord Beveridge, in speaking of the increments, said While it should be sufficiently strong to encourage postponement"— of retirement— it is below the actuarial value of his pension. If that were so then, it is even further, presumably, below the actuarial value of today. Is it then sufficiently strong to encourage postponement of retirement? When one sees the figures, the answer must surely be "no". Only one third of men stay on and earn any extra increments and one fifth of the women, and few stay on more than a year.

Therefore, the amounts earned in increments must be absolutely negligible. If it is accepted that it is desirable that, wherever possible, for social and medical reasons, people who are able to do so should stay on in employment, then there must surely be a very strong case for adjusting increments to the present level of earnings. I suggest at the same time that the increments should be scaled so that the extra increments come in the later years—the more so as that would surely be actuarily correct.

I do not expect my right hon. Friend necessarily to carry out all my suggestions—that would be expecting too much—but I should be satisfied if he showed that he was considering all of them and would at least implement some in the course of time.

Mr. B. T. Parkin (Paddington, North)

Will the right hon. Gentleman say whether he accepts the suspiciously round figure of £100 million which this might cost? Does he feel that, in Productivity Year, it is sensible to discourage people from adding to the wealth of the country when they wish to do so? Has he estimated what the additional amount of productivity might be when offset against this estimate of increased costs?

Sir J. Vaughan-Morgan

I do not accept the figure as being absolutely and accurately £100 million. That question might be better addressed to my right hon. Friend, but I have accepted the figure temporarily. I should like the scheme amended to encourage people to stay on. I think that that is allowable. The hon. Gentleman made a good speech the other day in which he managed to bring in Nell Gwynne—a remarkable feat.

I remind the House, as did the right hon. Member for Llanelly, that it is now 20 years this month since we had the Beveridge Report. The scheme has been much amended since then, and so far it has stood up remarkably well. We have had the quinquennial reviews, the Phillips Report and the Guillebaud Report—and I do not think that the two latter were very impressive. Yet the world we live in has completely changed since the pre-war days which were the background to the Beveridge Report. I agree strongly with what the right hon. Member for Llanelly said on that point.

Another factor is that we in this country are no longer unique. Others have their welfare states as well. Have we not now something to learn from them, as they have learned from us? Is it not time we had a new inquiry?

5.54 p.m.

Mr. R. H. S. Crossman (Coventry, East)

It is a pleasure to follow the right hon. Member for Reigate (Sir J. Vaughan-Morgan) and I agree with him very much on one point about the earnings rule. I agree with him that we cannot afford to abolish it altogether, but I do not agree with him when he seems to imply that there is difficulty in abolishing it for widows. He made an odd comment when he said that it would produce difficulties in cases of unmarried mothers.

Sir J. Vaughan-Morgan

I am sure that the hon. Member listened with great attention, but he has put two paragraphs in one point. I said that it would introduce anomalies as between widows and unmarried women. I was making quite a separate point.

Mr. Crossman

I am relieved that we do not disagree about unmarried mothers, who are a group of people sadly neglected in our Welfare State. I think that the right hon. Member has a case when he says that the retired spinsters might make difficulties. But that is a small matter compared with the anomalies which my right hon. Friend the Member for Llanelly (Mr. J. Griffiths) has pointed out already exist between the widow with an industrial pension, the widow with a war pension and the widow with an ordinary pension. It is indefensible that we should treat these three types of widow differently in relation to earnings and it is therefore possible to argue responsibly that one can literally abolish the earnings rule for widows while retaining and revising upwards and improving the rule for retirement pensioners and others.

I was glad to notice that in his cautious, kindly, Christian and forgiving way, the right hon. Gentleman was critical of the Minister. The Minister's speech was remarkable. I shall come back later to the one original point which he made when he talked of the way we pay for pensions. But to begin with he made the long and laboured excuse, "Of course, the pension is already worth 3s. less than the spending value it had when we last raised it. That is a terrible pity for these poor people. But this wearing down in value is no one's fault. It has happened several times since the war, and it is inevitable. If we introduce Bills, it takes time, and if they get cheated it is too bad."

I want to make it clear that from this side of the House we are not only demanding a substantial increase in all social security payments. We are demanding, as we have done year after year, the writing into a new Measure of a built-in elevator which will automatically maintain the purchasing power of the pensions. The Government say that they cannot help and that it is for Parliament to decide. I agree that it is for Parliament to decide.

Lord Balniel (Hertford)

If that is the Opposition policy, why is it not in the Motion?

Mr. Crossman

For the simple reason that it will require a Labour Government to enact the built-in elevator. But even we do not think so badly of the Government that it was inconceivable to us that, a little nearer the next election, they will not raise the basic rate. We know that this is a possible Tory policy, whereas they will fight to their dying day against a built-in elevator because they believe in pensions politics and we do not.

In addition to an increase in the flat rate we insist also on a special cost-of-living index for the pensioner which will ensure that every year, automatically, the value of the pension is reviewed and raised upwards if the cost-of-living has risen.

We ask for a second built-in elevator. My right hon. Friend the Member for Llanelly raised this in his extremely moving and powerful speech, when he pointed out that our demand for the old-age pensioner is not a demand for so many calories or for a scientific definition of the standard he can subsist at without dying. We demand that he shall get his share in the prosperity of the country—that as we force our way up, making the country more prosperous, he too should move upwards on a built-in elevator at the same pace as the working section of the community. This would ensure that each year he would not only have the value of his pension guaranteed so that it did not wither away, but that he would also get his proportional share of the increase in the national wealth. These are the two requirements we make. Once they are written in a new pensions Bill, we shall take pensions out of politics, where they never should have been.

I want now to go back to the central problem which the Minister raised in criticising my hon. Friend's speech from the Front Bench. It was the usual criticism. He said, "The Labour Party has wonderful ideas, but let us study their finances. How will they pay for the increase?" That is a curious question to ask. I suppose that on the subject of contributions and how pensions are to be paid for no party has committed itself so frankly to the electorate as the Labour Party. We published a complicated and long—perhaps it was too complicated, too long and too detailed—pamphlet showing precisely how each class of person would have to pay for our scheme of national superannuation. It is no good the Minister saying that the financial basis of our scheme is in doubt. There is no doubt whatsoever how we shall finance national superannuation when we come to power.

Before I come to that, it is worth spelling out to the Minister how he finances his scheme. The Minister has been quite candid. I have been amazed to find him becoming a little more candid each year. This time he positively boasted. He said, "Is it not splendid! The National Assistance scales are well above the National Insurance pension. Am I not a fine Minister? I have them well arranged. I have kept the pensions down."

It is very easy to pay for old-age pensions, sickness benefits and unemployment benefits if one keeps what one gets by right far below the subsistence level, and then says that anybody who needs more than that penury will have to have a means test. This is the Conservative method of paying, to build into their social security a low-level flat-rate benefit on which nobody can live; and then to give to the old, the sick and the unemployed the choice of either having the good fortune to have an employer who helps them through or having to go to the National Assistance Board.

That is what we mean when we say that the Government are creating two nations in the community once again. There are the lucky people who have a good employer; an employer who makes up their wages when they are ill, and who, when they are made redundant, will even pay them a few weeks' wages: an employer who looks after their old age so that they do not have to rely on the National Insurance benefits. They are the lucky ones. Then there are the unlucky majority who do not have such nice, Christian employers; whose employers do not help them at all when they are sacked and leave them to their sickness benefit when they are ill and who do not contribute one penny to their old age. Every single man and woman with an employer of that kind is forced to have a means test by this Government's method of financing their social security benefits.

I think it was before the present Minister went to his Office that his Ministry invented that wonderful phrase about how National Assistance is only a long-stop. Actually, National Assistance is now being deliberately made a main instrument for the payment of social security benefits under this Government.

Then, to add insult to injury, the Government introduced their graded pensions scheme. As my hon. Friend showed from the Front Bench, the graded pensions scheme is, first and foremost, a device for extracting more money from the wage-earning section of the community, from wages in the £9–£15 bracket, to pay the total cost of pensions. But it does something else. It produces a graded pension which is such an outrageous swindle that one and a half million more workers than was expected have been contracted out of the scheme because their employers would not pay for the swindle.

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

We said they would at the time.

Mr. Crossman

Yes, we said that at the time. I am glad to find that some employers have had enough sense.

The most important group of people who have been contracted out of the Government's swindle are the civil servants, a very great number of whom are paid to operate the scheme. Up in Newcastle-upon-Tyne there is a large number of civil servants who are concerned solely with this complicated keeping of the records of our lives. First our contributions are noted on our P.A.Y.E. forms, and then the column is micro-filmed and taken to Newcastle. All this is for the sake of this pitiable grade element.

These civil servants do not pay the graded contribution because they know it earns no adequate graded benefit. They know that if they put the money in the Post Office, they would get more for it in the end than they would from this Government. They know that 25 per cent. of the money at most comes back to each of them, and the rest goes into the Chancellor's fund with which he pays off his deficit on pensions as a whole. Everybody knows this.

So we have the action which the Government have taken quite deliberately. The Minister was quite candid about it. He said, "What we want is to have a nice, low-level, flat pension on which" —the Minister's happy Christian, Tory phrase—"people can build." What the Minister really means is that we shall have a nice low State pension, so low that every decent employer who is given big enough tax concessions will use part of his profits for setting up a private pensions scheme which will bring profit to the insurance companies. The Minister is forcing into the hands of the insurance companies thousands of firms. These firms say to the insurance companies, "Get us a private superannuation scheme for our people, because we will not take part in the swindle."

Four and a half million workers have been contracted out. Why? It is because their employers say, "Why should we pay a contribution which brings us no benefit for our workers at all?" This is how the Government pay for their scheme. It is perfectly simple. Having done this and got this group of people looking forward to fairly decent pensions in later life, the Government are left with the workers whose employers have not done likewise, and they still form the majority of the workers.

Do not let us exaggerate the number of people in private schemes. About half the male workers, representing about one-third of the total workers, are in superannuation schemes. But half the working population of the country are still outside any private superannuation scheme and likely to remain so. Therefore, when half the working population of the country come to old age they will be destitute on the Government's insurance scheme and forced on to National Assistance. That is a very easy way of getting pensions on the cheap. That is what the Government have done, and it is against this that we protest.

The Minister asks how we are to pay for our scheme. There is no secret about this. We shall do two things. The Minister has collected in Newcastle-upon-Tyne an army of civil servants, enough to run a genuine pension scheme and not a swindle. We shall put them to work. There will be some really adequate contributions coming through, and, moreover, everyone will contribute—from the top to the bottom. The £50 a week worker will contribute the percentage required by his income. Some will find they are paying a great deal of money when asked to pay their share. We say, very openly, that each will pay a percentage of earnings and it will be the same percentage from the top level to the bottom. So we shall get a lot more people paying.

Also, under our scheme the employers will pay about double. It will be about time they did. As to the British employer who is so glad to go into Europe, one of the reasons he is glad is that he is undercutting the European employer by the little which he pays in social contributions. If he is to be put on a level with his European competitor, he will have to pay about what the French employer, the Swedish employer or the German employer pays. The British employer is having it on the cheap now. I will give him fair warning about it. We shall not make him pay too much, but he will have to pay as much as the people against whom he is competing in Europe. That is something else that we shall do.

The third thing is that we shall not take the same view of contracting out as right hon. Gentlemen opposite. Their aim is to get as many employers as possible disgusted with their scheme. They call it a great success to get them so disgusted that they will not pay into the scheme. We are going to have such a good State scheme that it will be extremely expensive to contract out. Ours will be half pay on retirement, and to contract out of that an employer will have to do better than we propose to do. Good luck to any employer who gives a man two-thirds of his pay on retirement. We would welcome his contracting out, but many employers who have contracted out of this miserable scheme will think it good business to come back and have the job done for them inside the State scheme.

Those are the ways in which we shall finance the scheme, and we do not pretend that this will not demand of the nation a much more alert social conscience with regard to the treatment of the sick, the widowed, the unemployed, and the aged than has been shown in the last ten years.

Mr. John McKay (Wallsend)

I am glad to hear that the Labour Party has decided on the means by which the scheme will be financed, but is my hon. Friend aware that 4½ per cent. on the employer's contribution and 4½ per cent. on the worker's contribution, plus a portion of the money now paid by the Exchequer, one-seventh of the contributions, would pay a basic sum of £5 to the sick, the unemployed, and those on pensions, for single men plus all dependency payments in addition to a basic sum of £2 a week for redundancy?

Mr. Crossman

I hope that my hon. Friend, who is an expert on contributions, will catch the eye of the Chair and be able to elaborate his views, which he always puts with great conviction. He must not divert me from the course of my argument, because I am pleading the official line in a way that I do not usually do. I must go on clinging to orthodoxy!

We know that our scheme will cost money. Quite frankly the people of this country will not believe any Government which offers what we shall offer them—half pay on retirement—and says that it can be done on the cheap. They know that the scheme will demand bigger contributions from them as well as from their employers.

My right hon. Friend the Member for Llanelly also raised the question whether we should confine our benefits in our new scheme to the old-age pensioner or whether we should extend the same principle of wage-related benefits and contributions to sickness and unemployment. If we are right in saying—and I know that we are—that the aim should be to enable the old-age pensioner to live in the same house and to have something approximating to the standard of living and pleasures which he enjoyed when he was at work, the same must apply to a man who is suddenly taken ill. If a man is taken ill, his wife ought to be able to carry on and meet the household obligations which he incurred while at work. The same is true of a man who suddenly finds himself unemployed.

In all these cases, no system will give full security unless benefits are related to wages, and therefore a man's contributions have also to be related to his wages. But I am convinced—and here I think that I am following my right hon. Friend the Member for Llanelly—that the time has come not to over-complicate the system but to have one single, graded, social security payment, an all-in payment, which gives a man all-in social security. It will be a single graded payment giving a man graded security, and I believe that this will be an enormous bureaucratic simplification.

In regard to payments for sickness, one of the things about which I have been thinking is making an employer pay for the first ten days of an employee's sickness, but I am told that there are difficulties about this. So what can we do? One proposal to to combine a flat-rate element with a graded element—say one-quarter of the man's wages, added to his flat-rate benefit. As my right hon. Friend said, I can see no reason why we should not move on from his 1946 scheme and make another Act as memorable as his.

I was shocked at the contrast between the speech of the Minister, who is a bit younger, and the speech of my right hon. Friend. The Minister's speech was entirely in terms of party polemics—who did what 15 years ago? My right hon. Friend, though he was the architect of one of the greatest Acts of social reform which this country has ever seen, was big enough to say, "Yes, I was to blame if there were any mistakes, but I want to put them right". Is not that the better attitude to adopt? Is it not better to be prepared to say, "Looking at what I did in 1946–47, there are things which I want to see the younger generation put right"? Is it not incredibly dreary to have a comparatively young man putting out the same old eternal party polemics? What the Minister should be doing is inquiring how to put right the mistakes which have been made by both parties since 1945.

That is what we have been doing. For the last four or five years hon. Members on this side have been thinking hard about what we did. We laid the foundations, and we made certain mistakes, but we have been considering how to complete the job, and it was miserable to hear nothing from the other side except party political points.

The Minister said one new thing—at least I think he did. I think I heard him say that he believed in "pay as you go", that we should try to raise each year only the amount of money required to cover outgoings.

Mr. N. Macpherson

I was explaining the situation as it is now.

Mr. Crossman

I thought that the hon. Gentleman believed in what he was doing. Does he not believe in it? I said that he did, and gave him credit for it, but perhaps he does not believe in what he is doing. He said that what he is now doing is to collect sufficient money to pay for outgoings. He said that one must not any more think of the individual pension contribution as related to the individual benefit. Each of us ought to think in terms of what contributions are required now to foot the bill, and then hope that this House will in due course decide what he gets himself. Is that right?

Mr. N. Macpherson indicated assent.

Mr. Crossman

That is a revolutionary statement of which we ought to take particular note. If the hon Gentleman is now saying that what we contribute is not a contribution to an insurance scheme but merely a social security tax raised to pay for the pension outgoings of that quinquennium, then what the deuce are we having all these stamps for? Why do we have these people outside the scheme? What is all this elaborate nonsense and hocus-pocus which involves leaving 500,000 people outside the scheme because they are not "proper" contributors?

If we are going to run a pension scheme on this simple line of collecting the money and then paying out whatever Parliament decides from year to year, why not do it like the Australians do? Why not do it straightforwardly and honestly out of taxation and let people know what we are at? I happen not to believe in this. We on this side of the House have had many discussions between those who believe in paying for pensions out of taxation and those who believe in a contributory system. I think that if we want to get the British people to pay for pensions it is no good trying to raise the money out of taxation on top of everything else. I think that we have to make each man feel two things. First, that he has a moral duty to pay for the pensions of the older people. Secondly, if he pays regularly rather more than he does now, what he gets will bear some relation to what he pays. There must be some relation between a man's contributions and his benefit.

Suppose the Prudential Assurance Company Ltd. were suddenly to say, "Ladies and gentlemen, we are changing our system a bit. We are not going to pay out what each of you has earned, but what we think each of you deserves." There might be a few withdrawals from the company by people who will say that they did not go in for a scheme like that.

If we are to solve the pension problem, I believe that there must be a flat-rate minimum, and above that flat-rate minimum all the variations must bear relation to a man's wages and what he earns. So I am looking forward to hearing the Chief Secretary's speech in reply. When I heard the Minister speak an amazing nostalgia smote my breast for the days when the Chief Secretary was Minister of Pensions. It is a pleasure to hear the Chief Secretary, in contrast to his right hon. Friend, because he says exactly what he means, ably, constructively and pertinaciously. I am looking forward to his making up for the ghastly mess in which the Minister left us.

Those are the main points which I wanted to make to the Minister, but there is just one more which my right hon. Friend touched on. What we are trying to do is to move into an all-in graded system, with a single social security contribution. But there is still the appalling problem of 5 million people who have been unjustly treated for the last 15 years. They have not been given justice since the war. We tried hard in 1946, and we now know the mistakes that we made. And, since 1951, these people have been worse treated, because although the country has been affluent their share of that affluence has been denied them. We cannot give to future pensioners the prospect of social justice without ensuring social justice for the 5 million people of whom I have spoken.

This problem is intensified by the fact that our old are split into two nations—750,000 for whom the National Insurance pension is a useful addition to their main pension, then, at the very bottom, the 2 million people on National Assistance, the 500,000 people who ought to be on it but are not, and then people in various grades of poverty between.

How can we help them? As we say in our Motion, the flat-rate benefit for the pensioner, the widow, the unemployed person and the sick person must first be substantially raised. As a backbencher I can now talk freely, and say what kind of increase I would take seriously. In 1957 we said that the minimum increase should be to £3 a week for the single person. We also said, and laid it down as a principle, that we must automatically increase the pension to keep it in line with average male earnings, in order that the pensioner should share in national prosperity. Let us suppose that the £3 that we proposed in 1957 had been dynamised—to use a terrible cliché—in this way in every year, in order to keep pace with national wealth. I estimate that it would now be at least £4 5s. for the single person.

When we proposed the £3 it was on the low side, but this would be the flat rate. That flat rate would go to at least 1 million people who have considerable other sources of income. But how do we supplement that £4 5s. to get it nearer to the £6 level required to provide decent living standards for the 2 million who do not have other sources of income?

There are only two ways of doing it. One is the Government's way, through National Assistance, and the other is a system of supplementation without National Assistance, such as my right hon. Friend suggested to the House in a most important passage of his speech.

It is quite possible to apply to old people and to poor people the methods of assessing income already applied to the rich. It is also quite possible to apply our present methods of assessing income to the determination of the amount of supplementation of pension required. I should rather like for one part of my life to have my income assessed for payment of tax and for the other part of my life to have it assessed for supplementation of pension. That would be a nice idea.

So let me sum up. There is no doubt that what we need today is a substantial flat-rate increase, far beyond what the Government are prepared to give. But notice that this big flat-rate increase can be offered only if we introduce national superannuation with its graded contributions from top to bottom. Secondly, and on top of this flat-rate benefit, we need a generous supplementation for those who need it, without the ignomy of a means test.

Both these things could be here now. They could have been done by this Government at any time in the last five years. They are not difficult and complicated things; they are simple acts of social justice. One of the best tests of a democracy is what it does with its affluence when it gets it. When a civilised and humane democracy becomes wealthy it raises everybody above the flat rate of poverty, and ensures to everybody, but above all to the sick, the widowed and the unemployed, a fair share in prosperity. It is a great indictment of this Tory Government that in this unrivalled age of modern scientific affluence they have ensured that those who pay Surtax have their share of wealth, while they have deliberately told the people that they cannot afford to give the old, the sick, the widowed and the unemployed the full share of the nation's new affluence which we shall give them when we get the chance.

6.26 p.m.

Mr. Arthur Tiley (Bradford, West)

I begin by declaring my interest in the debate, as I normally do. I operate in insurance, although that has little to do with the debate, except in one or two aspects to which the hon. Member for Coventry, East (Mr. Crossman) has referred. He has made a bitter, arrogant and malicious speech—as he always does. It contained more rubbish about pensions than anything I have heard before in the thirty years I have spent in this work.

The hon. Member for Mansfield (Mr. B. Taylor) interrupted my right hon. Friend when he was pointing out that pensions had increased very much in value under our Government in the last ten years. The hon. Member for Mansfield said that contributions had also risen, and the hon. Member for Coventry, East shouted, "Hear, hear". Of course contributions have risen.

Mr. B. Taylor

I did not say that. Seeing that the Minister was so delighted about the increase in benefits since 1951, I asked him whether he would say something about the contributions.

Mr. Tiley

That is the point that I am making. Contributions have risen, and to that the hon. Member for Coventry, East shouts "Hear, hear". He spent five or six minutes trying to persuade his hon. Friends to accept the idea that if we have pensions we have to pay for them. At least, he is frank about this. This is a picture which, for years, pensioners have not seen properly. The reason Why the National Superannuation Scheme failed abysmally, and was rejected at the last General Election, was that the first page of the introduction in the explanatory booklet said, in effect. "You will have to be poorer if you wish to obtain all these extra benefits."

It was because that was not accepted that the party opposite was utterly rejected at the last election. This was to be the means by which the Opposition won the last election, and I am not surprised that, after his indulging in invective and malicious exaggerations about the graduated scheme, the hon. Member had to cover himself, and, therefore, became hypocritical and mentioned the right hon. Member for Llanelly (Mr. J. Griffiths) as saying nice things about pensioners and about his schemes.

We have had to sit here and listen to the malicious things said by the hon. Member about the record of this Government during the last ten years, when we have been clearing up the mess left by the previous five years of Socialist government. [Interruption.] Of course, if contributions go up, pensions will go up, but why did not hon. Members opposite do that very thing when, in the words of the hon. Member for Coventry, East, they were robbing and cheating our old people? It takes guts to put contributions up, and it loses votes, but the Tory Party has for ten years been dealing with the problem and clearing up the previous mess.

The graduated pension scheme has been attacked by the hon. Member for Coventry, East, and by two or three other speakers—

Miss Margaret Herbison (Lanarkshire, North)

Before the hon. Member gets on to his graduated scheme, would he answer a simple question, which is really what the debate is about? Does he himself think that our people are having the kind of life that they should have in a civilised and Christian country?

Mr. Tiley

I shall deal with that—[HON. MEMBERS: "Answer."] I shall not fail; I do not run away. I have made speeches in all pensions debates over the last seven years, and I shall deal with that question before I sit down. I want to make a constructive speech, and I shall do so, but I shall defend the things for which I have voted, and the things my party has been doing over the last ten years.

We have been told that the graduated scheme is a fake and a swindle. I say that it was an essential piece of pensions legislation, and any Minister with courage would have tackled the problem it covered. I would just give the House seven important and necessary things that the scheme did. It recognised, for the first time, graded pensions. It recognised that the flat-rate basic pension for all and sundry was out of date. It recognised—and this was one of the most important things—that the lower-paid workers cannot pay any more of what hon. Members opposite call the poll tax from their weekly pay packet. For the first time in pensions legislation, it defended the interest of the lower-paid worker.

The scheme recognized—

Mr. A. V. Hilton (Norfolk, South-West)

The hon. Member has said that the scheme was designed to help the lower-paid worker, but how many of our farm workers—and there are a good many of them—have benefited by the graduated pensions scheme?

Mr. Tiley

They will benefit in that, when they reach 65, their pensions will have been increased under the Tory Government—

Mr. Hilton

But they do not participate in the scheme.

Mr. Tiley

They benefit by the joint pension for man and wife. We have not left the amount at 30s. The pensions have been increased, and those people will benefit.

We did not put up the weekly contribution of the lower-paid worker to the same extent as the contributions of others were increased. It stopped at the £9 level—

Mr. William Ross (Kilmarnock) rose—

Mr. Tiley

No. I must get on with my speech—

Mr. Ross

The statement that the hon. Gentleman has made is just not true.

Mr. Tiley

The hon. Gentleman will, I understand, have the chance later to say lots of things.

The graduated scheme gives the greatest benefits to the lowest-paid people. It made another important change. Contracted-out employees are dealt with under private schemes, and never again can one of those men cash his benefits if he leaves the firm. We have had experience in all private schemes previously that 90 per cent, of men, on leaving, took out their savings in cash. Never again can that be done because, in the event of a man leaving, there has to be paid up and frozen in the fund sufficient to provide that which would have been obtainable by him in the pension arrangement of the Government scheme.

The scheme has made the thriftless save something—and it is not a piffling amount—starting halfway through life, in order to provide another 30s. or £2 a week on retirement. The mighty Prudential, mentioned by the hon. Member for Coventry, East, made its initial assault by collecting pennies. Another £2 a week is not a piffling sum at 65.

As my right hon. Friend has said, the graduated scheme encouraged private pension schemes. There are now 10 million workers in the private schemes, and we are told that there are 4½ million contracted out. I cannot understand why hon. Members opposite should feel that this is a disappointing figure. They should be overjoyed to know that, after the graduated scheme has only been in force for 13 or 14 months, 4½ million people are contracted out and are having larger contributions paid for them from industry. Many millions are being paid by industrialists—and these are the men whom the hon. Member far Coventry, East was spurning—on account of past service—

Dr. Bray rose—

Mr. Tiley

No; I shall never get through my speech if I give way, and there is so much to say.

It should give hon. Members opposite great satisfaction to know of the extra saving that is now going on but, of course, they cannot bear people who save. They are the great spenders. When did we ever see a Socialist Minister with a surplus? When the National Health Service scheme started, it was only £200 million out in its actuarial calculations in its first year. Under the present pension scheme, more saving is going on, but we hear nothing but criticism from hon. Members opposite.

Let us now make a comparison between national superannuation and the graduated scheme. I can assure the House, from my experience in business, that it is not easy to compete with many of the ages and benefits in the graduated scheme. It is a foul thing, and can only do grave disservice to future pensions Ministers, to refer, in the terms used by the party opposite, to this fine National Insurance contribution as a swindle which man and employer make each week to provide the benefits offered.

There is nothing that private insurance can offer—the unemployment cover, the sickness cover, children's allowances, Health Service benefits and final pension, that can hold a candle to the whole of this graduated scheme—[HON. MEMBERS: "Why did they come out of it?"] They came out in respect of the additional pension because more and more employers are becoming enlightened, and more and more insurance salesmen are able to persuade them to pay more than the amounts payable under the Government graduated pension scheme in order to get a more adequate pension at 65. Hon. Members opposite should be very glad of that.

We were told by the hon. Member for Coventry, East that the basis of the cost of what the Socialists will do, if they ever have the chance, is contained in national superannuation, but it was known by actuaries and students of pensions that national superannuation would be "bust" and bankrupt before it was on the market for a month. Let us take just one calculation. The party opposite took as the receipts under the scheme the sum of £90 million per year, which was 8 per cent. of the £1,100 millions earned by the self-employed, but not a single self-employed person who would join a scheme like that.

The country just will not accept this Government over-excess of deduction from wages for pension purposes, because once wages have been received and the deduction has been made people may never see that money again. They have lost control of it and the hon. Member for Coventry, East would take double the amount now taken. If it is fair comment to say that the graduated scheme is a fake, there is not a word to describe national superannuation, because the hon. Member for Coventry, East knows that it has twice the impact of grab from the wage earner's pocket. No self-employed man would have gone into the scheme. Why should a man with £1,000 a year have £80 a year deducted and then by the time he is 64¾, if he dies, he has lost the lost? It has all gone. [Interruption.]

Mr. Speaker

Order. In this House it is one of our privileges to have to listen to a lot of things with which we do not agree. I think that we had better keep that in mind.

Mr. Tiley

I am grateful for your protection, Mr. Speaker, I have been in my place since half-past two, listening courteously to all the horrid things that hon. Members opposite have said about us, but now they cannot take it. I am grateful to you, Sir, but, in effect, you are protecting them, because now I shall be a little more careful.

The self-employed would not join the scheme. If £90 million a year was not paid in, by the end of ten years we would have lost £900 million. The whole costing of national superannuation was a flop from the word "Go.". The actual cost would be much more than the hon. Member suggested. The hon. Member attempted to show that we cannot have pensions without the workers being poorer while they are working for the benefit of older people. I want to be a little constructive. [HON. MEMBERS: "Hear, hear."] I have not heard a single constructive thought that was logical and feasible coming from the benches opposite during the whole afternoon.

I want to say a word or two about war pensions. I hope that my right hon. Friend will have a word with the Parliamentary Secretary who deals with this important part of our Welfare State. I think that we are taking too much notice of medical evidence when assessing cases of ex-Service men. I have in mind a soldier who died recently. He was wounded very severely during the First World War. He died from heart trouble. During his life he had had 50 operations. When the case was heard, the doctors decided that the war wounds all those years ago had nothing to do with the heart condition which caused his death.

I cannot believe that. This was a man who had been shocked and severely wounded on the battlefield, enduring all that that means. The 50 operations must have put a strain on his heart, every one of them. Yet the board had the impudence, at the end of the day, to say to the widow, "You cannot have a war pension because the doctors say that the war wounds had nothing to do with the death."

Another case concerned a very old friend of mine who was wounded in action in France early in the First World War, when many Bradford men were massacred all on one day. This boy, then aged 18, lost a leg. Now, at an advanced age, he is suffering with arthritis in his body and arms and a leg. His muscles are useless and swollen. We are told that the loss of that leg all those years ago has nothing to do with his present condition.

That may be so according to the doctors, but common sense tells us that the suffering over all those years and the fact that he could not take part in ordinary activity must have added weight and caused atrophy of the muscles. The condition in which he is today must be largely due to the loss of his leg all those years ago. We should be more merciful in our analyses of these cases. It is all right saying that the heart condition has nothing to do with the wound that the man suffered, but that is not the way in which we should look at these cases because, after all, the attendant distress and shock have produced these outside effects.

I want to say a word or two about prescription charges. I shall be careful, Mr. Speaker, not to deal with the general subject, but with the charges that old people have to pay, particularly those who are in receipt of National Assistance. I tell my Front Bench that I am deeply ashamed that we permit this system to go on. An administrative change is required. I cannot believe that paying 2s. for a prescription and then having to get that repaid by the National Assistance Board is worth while. We should not make our old people suffer this humiliation any longer.

This could be done administratively by the doctors. The family doctor knows each patient very well. The chemist could not do it, because he has not the intimate knowledge of patients which doctors have. All that is needed is the production of a certificate showing that the person has a supplementary pension and proving that he is in receipt of National Assistance. Then all that the doctor would have to do would be to initial the prescription and write on it, "No payment".

If that is too big a job to be done, why should we not have white prescription certificates for those who must pay the charges and green ones for those who do not have to pay? I am told that it would be necessary to obtain agreement to this from the B.M.A. and that the B.M.A. might oppose it. I have discussed the problem with many doctors in my city. There is not one of them who would not try to help to overcome the difficulty if such a system could be arranged by the B.M.A. with the Minister of Health. If the B.M.A. think that doctors do not wish to handle these things in this way, they are just as much out of touch with ordinary doctors as some trade unions are out of touch with their ordinary members.

Over the last few years we have saddled private industry and the nationalised industries with the task of becoming the nation's tax gatherers. A very fine move was made when the Government got industry to carry out the terms of pay-as-you-earn. No one can say that industry has not supported both Governments over that, but last year we further saddled industry and the nationalised boards with collection of the graduated amount of pensions. Now they are doing both jobs. Why cannot these two things be achieved with the same card and at the same time? Can we not get rid of stamps? Let us say to industry that we not only give them jobs to do, but that by an adjustment of our methods we can finish with the business of stamping insurance cards?

There are millions of cards. There are 23 million stamps issued every week—oceans of lick and oodles of gum. The work involved is tremendous. Where are all these stamps and cards kept? Some of the Government Departments frighten me with their massive buildings. I see now that they need them to store stamps and cards. They need huge buildings for that purpose. I am sure that the one Income Tax P.A.Y.E. card could be used for this purpose also and that the whole business could be simplified.

We could also develop the system which was started by the last Bill which was introduced by the Minister for looking after lower-paid workers. Instead of altering their stamps when contributions and pensions are increased, we could give them a minimum amount of social insurance tax to be deducted from the amount on the card. This is an idea I have thought about. I do not need an answer to it today, because if I am told about it today a civil servant will say that it cannot be done. I want it to be closely examined.

I come to the most important point. Here I am in agreement with the hon. Member for Sowerby (Mr. Houghton). What is the next move that the Government should make in regard to pensions? I believe that the National Assistance benefits for the poorest of our people are too low. They are not too low by a little or by a few shillings. The Motion is right in this respect. In some sectors of our Welfare State a substantial increase is required. In my view, people do not qualify early enough in the income scale for the benefits of the supplementary pension.

I should like my right hon. Friend to bear in mind the point bandied across the House about the Report on the 1,000 units which were examined. There is not much in the Report which can be taken as valid and proved, because the units involved were so few. Many of the 1,000 were pressed into giving information. In addition, many hundreds were seen who would not give information. However, there is one figure which is absolutely right and cannot be contested. Two per cent. of the 1,000 were able to obtain supplementary benefits when they had been persuaded to go to the National Assistance Board. This is very important. We may, if we wish, disbelieve all the rest of the Cole Report, but this figure is factual. Two per cent. of 1,000 is 20. Two per cent. of 5½ million pensioners is 110,000. That adds up to a great many people suffering dreadfully, if the figure is right. The real figure may be slightly higher, because some people refused to give information.

We make appeals from both sides of the House, and we ourselves are implored at our Conference, to extend the benefits of the pension. The Motion is widely drafted. It calls for an extension of all the benefits of the Welfare State. We are implored to help in so many directions. How shall we select them? Shall it be those over 75 who are suffering more than the younger ones? Shall it be those over 80? Shall it be the 10s. widows? Shall we remove the earnings rule? Shall we include all pensioners, all widows? [HON. MEMBERS: "Yes."] Hon. Members are playing safe with the whole of the fair sex this afternoon. Shall we make selections—the sick, the chronic sick, or the unemployed?

The right hon. Member for Llanelly made some important points in this connection? How shall we do it? We must evolve a method of deciding where the need is greatest and what the exact need is. We cannot select except by guesswork now. We have guessed long enough. We have made tremendous strides in the last ten years. What was right five years ago may not be right in the next five years. We should endeavour to evolve a scheme by which we can ascertain the exact needs of the old people.

I wish to remove these two classes of pensioners. I wish to have one graded pension. I wish eventually to see everyone with a private pension as of right—going to him or to his family. Under present Socialist schemes payments would be made at a heavy level for, perhaps, forty years of a working life. A huge amount is paid into the scheme. If death occurs, even after a year's pension has been paid, £7,000, £8,000, or £9,000 savings are gone overnight and lost to the family. I want to see our private schemes enlarged. My right hon. Friend the Chief Secretary to the Treasury was one of the most successful Ministers of Pensions and National Insurance the country had.

I want the new Minister to grasp the challenge. It is never right merely to do what has been done for the last ten years. The problems must be faced and must be tackled. I hope that on these lines we shall eventually achieve greater happiness for all the people who arrive at the age of 65 and for all the other casualties of our life together in this island.

6.55 p.m.

Mr. Donald Wade (Huddersfield, West)

On the subject of war injuries I commend the words of the hon. Member for Bradford, West (Mr. Tiley) and I willingly support him in his plea. The Amendment contains these words: benefits will be kept under close review. Last week I put forward proposals for carrying out a review with particular reference to public service pensioners and pensioners of the Armed Forces and their widows. The Chief Secretary was not very forthcoming then. Therefore, I am a little sceptical of the words "close review" However, I have never regarded a review, whether close or otherwise, as any substitute for immediate action.

The Motion covers a very wide range of categories of persons and it would justify a series of debates. It places the House in some difficulty. There is inevitably a tendency for the debate to be a little ragged, or, at any rate, for hon. Members to jump from one subject to another, because the Motion is so wide.

I have on other occasions spoken about the very important subject of pensions. If I do not refer to the pensions or to the sick, it does not mean that I am not very much concerned with their welfare. If later I refer to widows, it does not mean that I am not interested in spinsters. [Laughter.] As a married man, I hope that my words will not be misunderstood. I want to limit my remarks to the breadwinner—first, the unemployed bread winner.

I want to quote from the leading article in the Guardian today. It says that the Government should be pressed to increase the scales of unemployment pay without any further delay. On November 12th the number of people out of work in this country was 544,451—the highest at this time of the year since 1940. Later, the article says this: The present rates of unemployment benefit are quite inadequate for families where the breadwinner may now be out of work for several months on end. The fact is insufficiently realised that unemployment pay is today a good deal less in relation to the level of earnings than it was before the war. This is not only a case of individual hardship. It is a serious social problem. It is also a very human problem. It is all very well for economists and others to talk about mobility and the need for a policy which recognises the need for change, but this does not sound too good to the man who has been in a job for a number of years, feeling reasonably safe and secure, but who suddenly finds himself out of work and unable to find other employment. It is a human tragedy for some.

We need a more enlightened attitude to the whole subject of redundancy. My colleagues and I have advocated the setting up of a national redundancy fund, and there is a strong case for it. I am aware of the argument that all National Insurance benefits should move in line, but I think that there is a case for a separate national redundancy fund in order to assist mobility and retraining. I have in mind, say, a higher payment for the first six months after a man becomes unemployed.

That would help. It is not an alternative to plans for checking the serious drift of population to the South-East, nor is it an alternative to policies for encouraging industrial development in areas where there is a high level of unemployment. But I think that, in addition, there is a need for a specific policy to ease the position of those who are unemployed, who cannot easily find another job and who, perhaps, are quite unable to find one unless they move to another part of the country. That is one immediate task which I think the Government should carry out.

Another example of the breadwinner is the widowed mother. It may be that because she has to look after her children, she is not able to go out and earn any bread and must rely solely on her pension. This is a special case, full of complexities. I have studied the booklet, "Everybody's Guide to National Insurance", which is well presented and laid out, but even one who has had some experience of these problems of widows' benefits will find the passages on the subject of widows a little difficult to follow. There is the widow's pension, the widowed mother's allowance, the widowed mother's personal allowance, the 10s. widow's pension and all kinds of conditions which have to be satisfied.

My correspondence can be divided into three categories. First, there are cases of real hardship where the correspondent is obviously having great difficulty in making ends meet. Secondly, there are cases in which there is a sense of injustice because of the disparities, which are so difficult to explain, between one person and another. Thirdly, there are the complexities, which are so confusing. The Minister knows of many examples. For example, the widow who had not been married for more than three years gets nothing at all. There is the 10s. widow and there is, in particular, the widowed mother and the problem of earnings and the earnings rule which has been referred to earlier.

I will limit my remarks to widows. It is impossible to explain satisfactorily to anyone why this rule operates in this way. In the first place, much depends on the circumstances in which the husband died. If he were killed in an accident on the road, the earnings rule applies, but if he were killed in an accident at work, the earnings rule does not apply. If he died from an industrial disease, the earnings rule does not apply, but if he died as a result of an epidemic which is not an industrial disease, then the earnings rule applies. It is impossible to make anyone understand the rhyme or reasoning behind such a state of affairs. If a widow is left comfortably off by her husband, the earnings rule does not apply to her private income; that is not taken into account. But where she has no private income and goes out to work the earnings rule applies to all her income.

There is no doubt that many of these widowed mothers are having a hard time in bringing up their families. I am told that about 250,000 children are dependent on widowed mothers bringing them up. I have no statistics on the subject—I do not know whether the Government have—but, from such information as I have been able to obtain, it appears that the chances of these children getting to a technical college or university are considerably less than those of the average child.

Mr. David Webster (Weston-super-Mare)

Does not the hon. Gentleman agree that this is a very tricky point? If the earnings rule for a widowed mother is changed, and she is encouraged to go out to work, is there not a risk that the mother's influence upon her children and her care of them will be removed? I follow the hon. Gentleman's argument with great sympathy, but is it not a difficult question?

Mrs. Slater

Does not that argument apply to the wealthy professional woman who goes out to work, but who raises her family and sends them to school? Is it not futile to make that point as an excuse for doing nothing to help these people?

Mr. Webster rose—

Mr. Speaker

Order. We cannot have an intervention in an intervention. If we do it is very hard for the hon. Member who is addressing the House.

Mr. Wade

In my opinion, there is a very strong case for abolishing the earnings rule in respect of these widows, whatever may be said about the wider aspect. I take the point which has been raised about raising the limit, but I think that there is a strong case in favour of the abolition of the rule here.

These are some of the immediate requirements, and there are many others, but I intend to make a very brief speech and I will not develop the point. I want to touch on the long-term aims, because we must be thinking about them. What is our intention? I am aware of the argument that one should try to limit benefits to those in need, that the money available should be channelled in such a way that only those in need are those who benefit. But I must say that this argument causes me some concern. In the first place, there is always difficulty in defining need.

The Chief Secretary will recollect that on 13th July this year, when he was speaking as Minister of Pensions and National Insurance, he said: How one defines need is an interesting philosophical question. …"—[OFFICIAL REPORT, 13th July, 1962; Vol. 661, c. 1683.] It is rather more than a philosophical question to a person who is in real need.

We have to consider whether it is this country's policy to increase the number of people who derive benefit from a body such as the National Assistance Board—in other words, who are on a means test. There has already been a substantial increase in the number of persons who receive their benefit through the Assistance Board, and it was never intended to work out that way.

There is an interesting article in a journal, New Society, entitled "The Edge of Poverty". Referring to the debate in 1948, the article reads: The House of Commons was told then by the Parliamentary Secretary to the Minister of National Insurance: 'It would be inappropriate to wish the National Assistance Board an active future. Our hope is that the extensions of insurance, and eventually a rising level of prosperity for all, will in the long run leave it with little to do. But for some time to come it is likely to remain responsible for providing, in whole or in part, the maintenance of more than 1,000,000 people.' Like many calculations made in those stirring, post-Beveridge days, that one proved to be a little wide of the mark. Two years later, some 2,000,000 people including dependants were being assisted. Today the number is officially reckoned at about 2,500,000 but if account is taken of the turnover in recipients of assistance during the course of the year, it might be nearer 4,000,000 a year. Is that the policy of Her Majesty's Government, to go on increasing the number of people who are subject to a means test? I think that we have to decide whether the policy should be that more and more people should be subject to a means test and should have to rely upon the National Assistance Board. That is one possibility.

The second possibility is that we should increase the payments as of right, even though they are not paid for by the contributors' own payments into a fund; in other words, they are paid for out of taxation or compulsory contributions. The objection to that course is that the amount of compulsory payments, whether by contributions or by taxation, would be so great with the passing of the years that it would be bound to be inflationary.

There is a third possibility, and that is that one should maintain the basic payments and go on increasing them as the level of prosperity rises, but that one should hope for a substantial increase in voluntary insurance of all kinds, by employers and by others. We have to make a choice between those three possibilities, and I hope that it will be the third. I believe that if one looks further into the future it might well work out that way.

In the meantime, we have arrived at a time when there should be a new major study, in the light of all that has happened since the Beveridge Report. After all, even when the National Insurance Scheme was introduced it did not follow precisely what Beveridge pro- posed. There were a number of differences. The idea of building up the fund was not carried out. It was really unsound from the very start. But that is another matter. The time has come when there should be a major review, not exactly on the same lines as the Beveridge Report but looking back on all that has happened and trying to look to the future. No committee or individuals producing such a report could decide major issues of policy, namely as to which of the three possibilities I have mentioned should be followed. That is a matter which should be decided in this House.

However, we do need an impartial and clear-sighted review of what has been happening and the kind of problems that we shall be facing in the future. I believe that is absolutely necessary if we are to progress in the way that we would wish for the benefit of the many people—pensioners, widows and others—who deserve our attention and our care.

7.13 p.m.

Dame Edith Pitt (Birmingham, Edgbaston)

The hon. Member for Huddersfield, West (Mr. Wade) referred to widows, and that is a subject on which I myself would like to touch. I would say to the hon. Gentleman that the alternatives which he proposed towards the end of his speech—alternatives of which I myself have made notes and which I hope I may repeat in my own way—really form the crux of this debate.

It has been very interesting for me—indeed, fascinating—to find that hon. Members on both sides of the House are projecting their thoughts ahead to the type of social security which fits the social pattern of today, and that scarcely one of us so far is satisfied with a flat-rate scheme. We are thinking in terms of providing something better. When I say that we are not satisfied with a flat-rate scheme, I do not mean to reflect on what has been done under the National Insurance Scheme from the time it was introduced by hon. Members opposite, based on the framework devised by the Coalition Government.

Since my party took control of affairs and has been able to improve the benefits, the record has been good, and I believe it is perfectly fair to claim that the beneficiaries under the National Insurance Scheme have shared in the rising prosperity of the country. The increases which we have been able to give in National Insurance benefits are double any increases which there have been in the prices of commodities and they are equal to the increase in average earnings.

I shall not talk about percentages. No pensioner or person on sickness benefit ever talks about percentages. But I will speak of increases which my party has been able to give National Insurance beneficiaries in the eleven or twelve years since we came to power, in terms that the beneficiaries themselves would use—what the economists call real terms, and what the average man and woman mean when they say, "What will it buy? What is it worth to me?"

Over those years the benefits have been increased, in respect of a single person to the extent of 14s. 11d., and a married couple 21s. 7d. The value of those benefits in terms of what they can buy is much better than in 1951. I can say this from my own contacts with pensioners—and they form by far the largest proportion of people of whom we are talking. They appreciate what has been done, and they say to me that they are satisfied with what the Conservative Government have done for them. Of course, that is not to say that they would not like more, but they are satisfied that they have been looked after while the Conservative Party has been in power, and they do not want to change to a Socialist form of Government because they think they would be less well off than they are now.

I believe pensioners realise that those drawing the pension today are, in fact, enjoying a good bargain, because those of them who remember the history of pensions know that they have not contributed further back than 1926. Some will say, "What about 1908, and what about Lloyd George?" implying that they have paid for their pensions since those days, forgetting that those were days of noncontributory pensions. But those who have worked it out and who have only been paying since 1926 are well aware that on the rates available to them today, they are in fact enjoying a good bargain.

I doubt whether any of them would realise that their contributions, together with those of their employers, if they had been insured since 1926, would have bought a pension of only 9s.; and a married couple, both of retirement age, receive 92s. 6d. today, so there is a tremendous difference between what they have paid in and what they are receiving. But they do appreciate the fact that they have shared in the prosperity of today. I think they have a very natural desire to obtain more because they see this widely-shared prosperity all around them. Their neighbours are doing extremely well, their standard of living is high, and I think that it is absolutely natural that the pensioners themselves should think, although they have been doing well in comparison with the past, that they would like even more.

Matters which spring naturally to their minds are the prices of food, because food is something which they buy every day. When some item of food goes up in price—for instance, when the price of butter goes up from 3s. 7d. to 3s. 8d. per lb.—it is an important item to the pensioner. Pensioners do not have to buy blankets or new boots every week, but they do have to provide food. Even though I believe it is correct to say that the food element in the retail prices index has not risen to the same extent as have other goods, nevertheless I am well aware that this is an important question for pensioners.

In addition, some of them are less well able to shop in order to get the best value. In these days when some of the stores are competing for the customer's favour, there are from time to time special items which are sold cheaply. For instance, 2 lb. sugar may be marked at Is. 3d., plus 1 lb. lard, the whole lot for 2s.. Tea usually sold at 1s. 9d. a quarter may, if one walks down a row of shops, be found for sale at 1s. 7d., then 1s. 6d. or, at times, even for Is. 4½d. a quarter. However, the old person may not have the ability to walk from one shop to another in order to get the best price available. This is why I say that I do understand when pensioners ask for an increase.

I do not agree with the hon. Member for Sowerby (Mr. Houghton) when he says that all social payments are manifestly too low. This is just not true. Pensioners are representative of all sections of the community, and they include some who are comfortably off and some who are moderately well off. There is one pensioner whose name quite often appears in the newspapers who is the classic example of someone who does not really need his £2 17s. 6d.

There are others—the hon. Gentleman shares this knowledge with me—people who are called the late-age entrants, who came into compulsory insurance for the first time in 1948 and who paid for ten years—who were precluded earlier because their earnings were higher than those required for compulsory contributions—and these people are now enjoying the benefit of the National Insurance pension. Good luck to them. They paid for as long as they were asked to do so. But a good many of them have resources and pensions of their own which mean that their National Insurance benefit is only a small part of their total income.

When the hon. Gentleman calls for an improvement right across the board, he would use money to benefit some people who are much less in need than other pensioners.

Mr. Houghton

The hon. Lady must not overlook the taxation which claws back a lot of it when it is paid to those who have other resources.

Dame Edith Pitt

I have not overlooked that, but I assume that the hon. Gentleman agrees that it is not necessary in many of those cases to urge that an increase in pension should be given. I would like to see more done for those pensioners who have limited means.

I was about to make the point that, today, because of the general prosperity, families are able to help their old people to quite a considerable extent. I think that we should say here that many families are doing very well in this respect, providing extra money and corn-forts for their old people, even though, because of the smallness of their homes, they may not all be living together.

I believe that to the pensioners themselves the most important thing in life is to maintain dignity and self-respect. Anything which we can do in improving the basic benefit is, I feel, in line with this self-respect and dignity to which I attach importance. Nevertheless, it is right to point out that no one has to live on the basic benefit alone. If pensioners have no other resources apart from their National Insurance pension, they may apply for National Assistance.

As my right hon. Friend has said, this part of our social service has been seven times improved since the Conservative Government came into power. The right hon. Member for Llanelly (Mr. J. Griffiths) seemed to think that there was something wrong in the fact that over 1 million pensioners were on National Assistance today, but this arises from the fact that the total number of people of the relevant age is consistently rising, and they are, apparently, ready to use the machinery which the Government have made available.

Mr. J. Griffiths

I appreciate what the hon. Lady is saying, that the total number of pensioners has increased, but the fact is that, throughout these years, the percentage of proportion on National Assistance has remained between 20 and 25 per cent.

Dame Edith Pitt

That does not surprise me. In the first place, the total number of pensioners within the population is increasing, as I have said. Secondly, National Assistance scales have seven times been increased. As the amount payable in National Assistance is raised, one is bound to bring in more people whose resources previously did not qualify them for Assistance.

I take the point made by several hon. Members on both sides that there is still reluctance to apply for National Assistance. I know very well that, in the minds of those concerned, it still is not National Assistance but public assistance. I feel that this was a most unfortunate choice of title. All of us, I am sure, have given our minds to trying to find something better—I have nothing to suggest to my right hon. Friend today—and I wish that we could drop the words "National Assistance" and confine ourselves more closely to the supplemental processes which are by far the largest part of the duties of the Board. I know the difficulties. In some cases there is nothing to supplement and, therefore, one could not speak only of supplementary grants.

Some people are still unaware of what is available. For instance, they do not know that the Board has power to make discretionary additions for special diet, for fares, if necessary, for shoes, for window cleaning—I have in mind a particular case where a window cleaning grant has been made—for coal where it is needed, and so forth.

The hon. Member for Sowerby spoke of what he thought might be needed in the future, and of a supplemental scheme based on Income Tax. I wonder how he would cope with the varying needs of people. There would be those below the level when the Income Tax return was made who would appear to be in need of supplemental assistance, but needs within this group would still vary. What of those who had quite a heavy rent to pay compared with those living at home and not making any contribution? What of those who cannot do their own washing and need a laundry grant? What of those who cannot clean their windows and need a window-cleaning grant? What of the diabetics who need a grant for special food? How could one cater for those within the kind of scheme the hon. Gentleman has in mind? I do not dismiss it. I am pointing out some of the practical difficulties which come to my mind.

Mr. Houghton

If the income is raised, then one pushes National Assistance into the place it was intended to take, to deal with special needs. Our complaint is that, if there are 1 million people today receiving National Assistance, one cannot say that its rôle is still to meet special needs.

Dame Edith Pitt

I realise now that the hon. Gentleman still envisages a rôle for the National Assistance Board to play. From what he said, I thought that he wished to wipe it out altogether, but I now understand that he cannot do away with a means test. He will still have to have a means test for those who will need assistance from the Board.

The National Assistance Board does a wonderful job. Since no one has yet done so, I feel that I should pay a tribute to what the Board's officers do. [HON. MEMBERS: "Hear, hear."] With the growth of experience over the years, they have brought tremendous humanity and sympathy to the work which they have to do. While we continue with National Assistance, I am glad that we have the right kind of people to help us in it.

Now a word about the widowed mother. She commands my particular sympathy among all the beneficiaries for whom the National Insurance Scheme caters. She has very heavy responsibilities. I am glad that my party has done much to help her. I am glad that the earnings rule for the widowed mother has been changed so that she may now earn up to £5 before there is any deduction, and that for the next £1 only 6d. in the 1s. is deducted, in fact, in all she may earn up to 8 guineas a week before her payment is fully withdrawn. This compares with £4 10s. in 1951. So that there has been a real improvement for the widowed mother.

The introduction of a higher payment for the children of the widowed mother—it was 5s. when it was introduced in 1956 and went up to 7s. 6d. with the last increase—is the best of all ways to help her. The hon. Member for Sowerby and the hon. Member for Huddersfield, West (Mr. Wade) would sweep away the earnings rule for the widowed mother. I have considerable sympathy with them in advocating this, but, again, I see the practical difficulties. If we abolish the earnings rule as it affects the widowed mother, what happens when her children go to work or reach the age of 18 and she is no longer a widowed mother and then comes up against the earnings rule for the widow?

Mr. Houghton

I thought that I had made the position clear. We are in favour of abolishing the earnings rule for all widows. Therefore, that difficulty would not arise.

Dame Edith Pitt

I can still take it one stage further. When the widowed mother reaches the age of 60, and becomes a retirement pensioner, she is still up against the earnings rule for the retirement pensioner, and, certainly, the hon. Gentleman did not suggest doing away with that rule.

I do not wish to be critical. I understand how hon. Members feel about the widowed mother. I wish that there were other ways in which we could help her. I am glad that my right hon. Friend has made it clear that he intends to keep in mind this question of the earnings rule, to see whether improvements can be made. I hope that he will be as generous as possible to the widowed mother and that he will, in particular, urge his right hon. Friends to do more for the children of the widowed mother, because any improvement for them will apply to all of them, irrespective of whether the mother is one of the favoured few who can earn high pay. She is the only one who has her earnings extinguished, but all the children in her care benefit from an increase.

Mr. Charles Curran (Uxbridge)

I wonder whether my hon. Friend would tell us from her great experience whether she accepts this estimate that to scrap the earnings rule would cost £110 million a year?

Dame Edith Pitt

I do not want to go into figures, or I shall find myself in the difficulty of the hon. Member for Coventry, East (Mr. Crossman). I argued with him about figures on a previous occasion. I remember that the superannuation scheme which he introduced had to be withdrawn because some of the figures were wrong. I accept that about £100 million would probably be involved in the withdrawal of the earnings rule because one would simply have to pay pensions in full to those who are at present earning increments. What I should not like about the total withdrawal of the earnings rule in respect of retirement pensioners would be that it would also bring an end to the increments, which are very valuable socially and financially to the people prepared to go on working.

I turn to future policy. The dilemma of the National Insurance scheme is that when increases are given they must be, under our present system, increases for all. That is the practical difficulty of flat-rate benefits and flat-rate contributions. There must be a limit on what one can do where we go right over the board, and I believe that there is a limit on what can reasonably be taken from the contributor.

For some time I have had in mind the doubt, which is obviously shared by other hon. Members, judging from the speeches made today, whether the social services are appropriate to the social conditions in which we live. They were framed against the very different background of the inter-war years, when wages generally were low and when the standard of living was very much lower than it is today. Now we have widely shared prosperity. We have a very high standard of living and, therefore, I think that we should be considering all of our social services, but this one in particular, in the light of today's conditions and asking ourselves in what way change would be beneficial.

There is the practical point that the number of old people is growing and will continue to grow. They will, therefore, make considerable demands on whatever form of National Insurance we have. They will also make considerable demands on the other social services. I think that it just as important that we provide the right kind of supporting social services for our old people in order to make sure that they have adequate money to live on. That means we must make a choice.

I am glad that we introduced the graduated pension scheme. If I may turn from my main theme for a moment, it does not dismay me to learn that over 4 million people have contracted out of it. This is a healthy indication of what we said when we introduced the scheme, namely, that we wanted it to encourage private schemes. I am glad to learn that so many private schemes are so good that 4½ million people can contract out of the State scheme.

I wish to see this trend developed. One possibility is an extension of occupational pension schemes. Obviously more and more concerns are introducing them, stimulated, I hope, by the legislation which the Government introduced. I should like to see developments in provision by employers for sickness benefit. Some make such provision now, but the provisions of which I know are very modest I should like to see this encouraged.

I hope, too, that out of provisions made by the private employer for redundancy we will get developments to take care of short-term unemployment. Having lived through it, I never want to see long-term unemployment, and neither does any hon. Member on this side. But if the day came when the State scheme could be relieved of the short-term benefits we might be able to concentrate more on the long-term benefits for the chronic sick and the retirement pensioners.

I believe that we have a choice. Either we can increase National Assistance and devote our resources to the people who, by implication, are most in need, be selective and use the National Insurance Scheme to deal with special benefits, again perhaps for those who have been chronically sick for a long time, or for those over 70—I have no knowledge about this; I am merely canvassing ideas—or we can take what I believe is the best course, namely, encourage the development of occupational schemes with an extension to sickness and redundancy and provide through the State scheme the basic allowance which will help those who have the ability and will to help themselves.

7.38 p.m.

Mr. Bernard Taylor (Mansfield)

There were two points in the speech of the hon. Lady the Member for Birmingham, Edgbaston (Dame Edith Pitt) which I thought were most interesting. The first concerned the late-age entrants into the National Insurance scheme. It is true that they have a very good bargain, but the answer is that when for the first time, in 1945, legislation was being prepared for a comprehensive universal scheme it was only right and proper that the type of case to which the hon. Lady referred should be brought into that scheme.

The hon. Lady's other point concerned the National Assistance Board. I share her view that, with the statutory powers at their disposal, the managers of local offices, in my experience, bring to bear human feeling, thought and understanding, particularly when it comes to exercising the discretionary powers at their disposal.

This debate today is a unique occasion. We have a new Minister who has taken part for the first time in a debate on National Insurance. Sitting by his side has been his immediate predecessor, and taking part in the debate we have had my right hon. Friend the Member for Llanelly (Mr. J. Griffiths), who in the early days of National Insurance was the Minister who undertook and accomplished the Herculean task of piloting through the House all the proposals embodied in the National Insurance and Industrial Injuries legislation. For those reasons, today is a unique occasion in National Insurance.

I am sorry that the Minister is not in his place at the moment, although I understand the reason. There are two points in his speech today to which I should like to refer. They were not altogether complimentary to him, because by his own words they were a condemnation of his lack of action for immediate purposes on behalf of National Insurance beneficiaries. Secondly, I could not help thinking that the mantle of the right hon. Gentleman's predecessors has fallen upon him, because he was prone to say much about the past with little reference to either the immediate or the long-term future. If the right hon. Gentleman continues in that strain, his vision for the future will be considerably blurred.

In any debate on National Insurance, two aspects come very much to the fore. One is the long-term problem, which is by no means unimportant, although I do not propose to say anything about it today. I wish rather to refer to the Motion. In spite of the unfavourable comments by the hon. Member for Bradford, West (Mr. Tiley), I consider that the speech of my hon. Friend the Member for Coventry, East (Mr. Crossman) showed both vision and prescience. We will have to give more thought and time to the proposals contained in my hon. Friend's speech.

The other aspect which always comes to the fore in a National Insurance debate is the immediate question, and it is that with which the Motion is concerned. I congratulate my right hon. and hon. Friends on taking the first Supply Day of this new Session to discuss and to debate this matter and to focus the attention, not only of the House of Commons but of the public outside, upon the problems of National Insurance beneficiaries.

There are two implications of the Motion on which I should like to comment. The first is the nature of the problem and the second is its size. A lot of statistics have been given in this debate and they are not out of place, because we should constantly remind ourselves of the large numbers of people who are beneficiaries of National Insurance. I calculate that one-sixth of our total population receives some kind of benefit from National Insurance.

Let us put on record this huge total of people whose earnings have been either interrupted or stopped through a number of causes. Nearly 6 million people are retirement pensioners. That is a formidable figure and as the hon. Lady the Member for Edgbaston said, that is not the end. The number is likely to increase. There are 700,000 war-disabled pensioners—that, too, is a colossal figure—and more than 500,000 widows, and if the economists are anything to go by there are more than half a million unemployed.

It is never easy to calculate the numbers of those in receipt of sickness benefit, because the number fluctuates. At certain times of the year, it rises steeply. During summer, claims and awards are much fewer and the number comes down. In spite of that fluctuation in sickness benefit, everybody, in all parts of the House, is concerned—at least everybody should be concerned—about that portion of sickness benefit cases to whom, for want of a better term, I refer as long-term cases, people who are so afflicted that they are in receipt of benefit for months and years. In this category there are other kinds of cases, including those who have no hope of recovery.

Sometimes, in debates of this kind, we are unintentionally inclined to forget the long-term sickness case for whom there is no hope and for whom the only escape from affliction is death. We should do well to pay a little more attention to the claims of the long-term sickness case. Even if he cannot give it in his reply tonight, I wonder whether the Minister could circulate a reply giving the number of long-term sickness cases who have been in receipt of benefit for, say, not less than three or six months. It would be a sizable number.

That, however, is not the end of the story, for there are other categories who are covered by National Insurance, including the industrially disabled. As with sickness benefit, the figures fluctuate, but we must remember that the numbers will continue to grow, as they have done from what was a small trickle at the commencement of the scheme. According to the latest report of the Department, the number in receipt of benefit is nom/ about 180,000.

In addition to these astronomical figures, I calculate that between 11 million and 2 million people are in receipt of supplementation from the National Assistance Board. That is an alarming figure. As stated by my right hon. Friend, of that total 1,056,000 are in the ranks of the retired pensioners. I and everyone else knows that the numbers to which I have referred in the various categories are not entirely dependent upon National Insurance benefits, but I submit to the House that a substantial number of them are, particularly in the sphere of the old, the permanently sick and the severely disabled. I sometimes wonder whether, with all our professions of human feeling and thought, we are really giving enough thought, time and attention to this section of our community.

I put to the House a very pointed question. It is a simple one, and only the Government can answer it. What is needed? That is the question posed in the Motion of my right hon. and hon. Friends. I would answer it in this way. It is not a negative approach that is needed. The Amendment of the Prime Minister and his right hon. Friends shows that they are so merciful towards these unfortunate people that the only sop that can be given, as was predicted in the Gracious Speech, is that the matter … will be kept under close review. Soft words never did, do not now and never will butter any parsnips. What is needed is a positive, tangible, practical action.

I give three main reasons why that should be so. One is that winter is with us—it is with us early this year as it was last—and for the people to whom I have been referring and describing their disabilities, the people who are on bare subsistence level, the old, the sick and the severely disabled, it is the worst time of the year. No one will deny that; it is indisputable. My second point is—this was one of the points the Minister made this afternoon—that the cost of living—this is his own admission—since the last increases were made in April, 1961, has gone up slightly more than 5 per cent. On that ground, if on no other—and other grounds could be argued as well—there is a substantial case for immediate action to be taken by the Government. By 1961 standards, the beneficiaries on National Insurance are worse off now than they were in April, 1961.

Between now and Christmas, which is only a month away—Father Christmas will be coming a month tonight according to the legend—many and perhaps all hon. Members will be meeting old-age pensioners at parties organised on a voluntary basis to give them a little Christmas cheer. We shall all talk to those old folk about their problems, and I am almost certain that the outstanding question will be, "When are we to have an increase in our retirement pension?" Merely to tell them—I put it to the House very seriously and sincerely—that all we know is that on the authority of the Government's Amendment tonight the matter is under close review, will leave these old people cold and frustrated in the extreme. They will go to their homes from those parties with a feeling of despondency and despair.

I ask the Government very sincerely to make an early announcement, remembering that he who gives quickly gives twice. I ask them to come off the pedestal of uncertainty, stop procrastinating and give positive assurance that something will be done soon and quickly for the National Insurance beneficiaries. Unless it is, this Christmas and winter will be worse than the last.

Reference has been made this afternoon, and I make no apology for drawing this analogy, to the fact that the time is now about due for the handsome hand-back to the Surtax payers, £80 million to a few people, but there is to be no positive help, so far as we know from the terms of the Government's Amendment, to the old, the sick and the disabled.

The third point is that we have been told by the Minister this afternoon, as we have on many previous occasions, that from a percentage angle benefits are better now than they have ever been. I want to use another yardstick and compare present pensions and National Insurance benefits with wage rates. I do not think that this is unfair. I regard this as very important. The Guardian took up the matter today. I will not read the whole quotation, because it was given by the hon. Member for Huddersfield, West (Mr. Wade), and I know that this article refers particularly to unemployment benefit, but the same thing can be applied to other National Insurance benefits. It states: The present rates of unemployment benefit are quite inadequate for families where the breadwinner may now be out of work for several months on end. The fact is insufficiently realised that unemployment pay is today a good deal less in relation to the level of earnings that it was before the war I want to give one or two post-war facts concerning pensions and average earnings. In 1946, when the pension was 26s, for a single person, the average earnings were 101s. The percentage rate of pension at that time to average earnings was 25.7. In 1952, the pension was 30s. and average earnings 136s. The percentage rate was 22. So the story goes on, and I will not weary the House with the details. In 1962 the present rate of retirement pension is 52s. 6d., and average earnings are 317s. 10d., and, as compared with the 25.7 per cent. in 1946, the percentage of pensions to the average wage rate is 18.1 per cent. or 7 per cent. lower than it was in 1946.

By this yardstick, and with the cost-of-living increase, what is needed, to use the language of the Guardian this morning, is a straight increase in the present scales, which Parliament could put through quickly without delay. Let me for a brief moment turn to the question which is perhaps my favourite topic, the question of industrial injuries—only for a brief moment, I can assure the House. With pleasure I note that the schedule of prescribed diseases has been added to—only by one, but it is a bit of progress. I am sure it was right that what is described in medical terms—I hope I have them right—as dystrophy of the cornea of the eye should be added, and I welcome it. It may be that the numbers affected are very small. Perhaps the Minister could enlighten us as to what the numbers are.

That brings me to what I have raised in this House before, and what I shall continue to raise while I am here, and till it is prescribed, and that is Dupuytren's contracture. It was a long, weary battle that the pioneers fought before silicosis became prescribed. When it was prescribed it was with restrictions. There had to be a certain amount of silica in the rock. Then, in 1943, in the war, we got a complete revolution. We got the term "pneumoconiosis," which embraced everybody suffering from dust on the lungs, irrespective of what his occupation might be. I fear that with Dupuytren's contracture we may be confronted with the same long, protracted battle. I had a long interview with a former Parliamentary Secretary and the Chief Medical Officer of the Department. I was interested in what they had to say to me, but I did not agree with the conclusions I eventually got.

It is true that the number suffering from this disease is small, but I am absolutely convinced that the sufferers from Dupuytren's contracture have a grievance and that there is a substantial case for the disease to be added to the schedule. To tell the victims of this disease, as I have seen a number of them in the coal field around Mansfield, whose fingers are crooked and of very little use to them—to tell them that there are not many of them, and that this disease can come as a natural, biological phenomenon, leaves them cold and cynical. I hope that the new Minister will give further consideration to this.

In conclusion I would just say, as one who spent quite a long time in the Department, and enjoyed every moment of it, a word or two about the work of the Department. The claims it receives and the awards it makes are a gigantic total, are they not? To read this report about the claims and rewards in every branch of National Insurance is to see that they total an astronomical figure—and all the benefits paid as well. I place on record in conclusion my sincere appreciation of the staff, who do so much, and who every day are dealing not with cases but with people, many of whom have personal worries and problems. I know from my own experience of the local office that the staff are doing their best to comfort them in their adversity.

8.5 p.m.

Lord Balniel (Hertford)

We always listen to the hon. Gentleman the Member for Mansfield (Mr. B. Taylor) with respect, because of both his sincerity and the knowledge which he acquired when he was in the Department dealing with these matters of pensions. He said that this was a unique debate. I think that it is unique in one particular respect which I should like to comment on—in the extraordinarily interesting but extremely surprising speeches which we have had from some members of the official Opposition.

We listened, first, to the hon. Gentleman the Member for Sowerby (Mr. Houghton). When he was welcoming my right hon. Friend—and I should also like to echo the welcome to my right hon. Friend on taking over this office—he said that my right hon. Friend "walks along the corridors of the Department humming the tune 'Lead, Kindly Light'." I can only say with respect to him that the hon. Gentleman cursed the darkness of what is wrong today—and we have a good deal of sympathy with him—but singularly failed to light for the future a torch which we could follow, except in one extraordinary brief statement which will not read as more than two columns in HANSARD.

Speaking from the official Opposition Front Bench, in that brief paragraph, the hon. Gentleman announced that it is the official policy of the Labour Party to raise the flat-rate pension, to get rid of selective means tests for supplementary pensions, and to pay graded pensions according to some kind of P.A.Y.E. This without any doubt, if it is the official Labour policy, is the biggest change in the last fifteen years, and we listened with interest.

But then we heard the right hon. Gentleman the Member for Llanelly (Mr. J. Griffiths), in a most powerful speech, say something rather different. He said it was the intention of the Labour Party that pensioners should retire on half pay. That is really important. Then we heard the hon. Gentleman the Member for Coventry, East (Mr. Crossman), speaking, he informed us, from the back benches, explaining at considerable length the official line of the Labour Party, echoing this view that the official line of the Labour Party is graded pensions.

I can only say that this is extraordinarily interesting. The Opposition's Motion calls upon the Government to increase the rates of pension. Not one single word in the official Opposition Motion about getting rid of selective means tests for supplementary pensions. Why not? It is a most remarkable advance in pensions policy. And not one single word in the official Opposition Motion about paying graded pensions according to some kind of P.A.Y.E. Why not? Not one word about paying pensions at half pay rates. We should, I think, like to know whether this is, in fact, official Labour policy, as the hon. Gentleman the Member for Coventry, East declared, or whether it is in fact, something quite temporary.

Mr. Houghton

The Motion, of course, calls upon the Government to do something. It is no good calling on the Government to do all these revolutionary, exciting things. All we can expect the Government to do is to pursue existing lines of policy, and we therefore ask for an allround increase in social benefits. I must just correct some misunderstanding which the hon. Gentleman has of what I said. I did not say the income supplement scheme would replace this scheme of graduated pensions. Flat-rate pensions would be continuing, because they are already in payment. Graduated pensions will be beginning to come into payment as the scheme fructifies. The income supplement scheme would raise the increase to a certain guaranteed level and thereby replace National Assistance over a wide field.

Lord Balniel

The hon. Gentleman's explanation is longer than the one he gave in his opening speech. If he has convinced himself of the reasons for not including these elements in his speech, he has not convinced many hon. Members, at least on his side of the House. In his speech he said that he wanted a dynamic pensions policy and he criticised the Government for having a policy which he described as static. That was a bit harsh.

When the Conservatives returned to office, the annual total expenditure on pensions was £275 million. This year the figure is £787 million. That is hardly a static policy. When we project this into the future, we find that, within less than ten years, the total expenditure will rise to £1,000 million and in less than twenty years to £1,200 million. This increase in expenditure on pensions is not only to meet the cost of living or the increased numbers of pensioners. Altogether, £200 million of the £787 million this year represents real improvement in the value of the pensions.

Like other hon. Members, I would rather turn to the future than linger on party political controversy over pensions. One mistake which many of us make in discussing pensions is that we tend to think of all the 5½ million pensioners as belonging to one economic unit, as if they all have the same financial circumstances. In fact, this is far from being the case. The financial circumstances of pensioners vary from those desperately poor to those reasonably well off. Also, combined with this mistaken view, we tend to go on echoing the old principle that benefits should be related to contributions.

When these two views are welded together, we tend to believe that all benefits should be treated as a block and that all that can be given under the present flat-rate scheme is that they should all receive the same pensions, irrespective of need.

I am by no means convinced that the old principle that benefits should be related to contributions is sound, in the present state of development of our National Insurance Scheme. In the first place, benefits are not paid by contributions. We have already been given an example of how a person entering the scheme at its inception would have earned by his contributions a pension of a mere 9s. a week whereas the pension which he and his wife can receive is 92s. 6d.

In the second place, not only is a substantial element of the pension paid for by taxation and not by contributions, but when we consider the financial circumstances of the pensioners themselves the payment of equal benefits to persons of unequal means must involve a substantial amount of wastage. This is rather like a farmer liming all his pastures irrespective of the needs of individual fields. Any wastage in social security must be to the detriment of those in greatest need.

Many of us will have read the survey undertaken by Dorothy Cole and John Utting. I cannot judge how accurate their assessments are, but they came to the conclusion that 2½ million of our retirement pensioners are living below or close to the poverty line as established by the National Assistance Board. This, of course, means that 3 million retirement pensioners are living above that line, some of them very much above it.

If it is possible for the Government to marshal financial resources to give more help than is required merely to meet the rising cost of living, then surely those additional resources should increasingly be channelled to those in greatest need, because if we diffuse the resources indiscriminately to those who are not in need, and to those who welcome additional help but are not in need, we are penalising those in the greatest need.

I do not deny that, theoretically, the logic of my argument leads me to believe that the needs of these persons could best be met by raising the level of National Assistance, so that a greater proportion of the needs of our elderly people could be met by National Assistance. But there are major difficulties in the way of doing that. I also agree with the hon. Member for Sowerby that, whilst National Assistance is well designed for the meeting of individual and special needs, I would hate to see this become a permanent part of our system of National Insurance.

As it is, I find it very distressing that so many of our old people who, because of unemployment in the 1920s and 1930s, could not put aside savings, or who, if they were able to save, have found their savings eroded since the war, are permanently dependent upon National Assistance. What we should do instead is to try to select in broad terms from all those who are in receipt of pensions certain categories where the main elements of hardship seem to reside. Such a concentration of help on certain categories would be rough and ready and be fairly arbitrary, but it would mean that better justice would be done to those people than is perhaps being done now.

The work of selecting certain categories amongst our old-age pensioners in need of greatest assistance would, of course, mean departing from the principle of universality so dear to Members opposite in the past. But they have already been abandoned by their own economists. Professor Titmuss, who is often quoted in such laudatory terms, says in his pamphlet, "The Irresponsible Society": Many of us must … now admit that we put too much faith in the 1940s in the concept of universality as applied to social security. Mistakenly, it was linked with economic egalitarianism. Those who have benefited the most are those who have needed it least We understand that Professor Titmuss is helping hon. Gentlemen opposite in preparing their new pensions policy.

Many of us have advocated that one of the groups of pensioners most in need of additional help are the elderly elderly—those over 70. It is difficult for us to prove that they are suffering the greatest hardship except by the commonsense arguments that those who are oldest need the greatest amount of warmth, and need warmth for longer periods of the day and night, and also that they have been living longer on the pension and their savings, which have in greater degree been eroded.

These are supported by the figures given in the Report of the National Assistance Board. For instance, of the men between the ages of 65 and 69, 14 per cent. are on National Assistance; of those over 80, 30 per cent. are on National Assistance. Thus, the picture of our retirement pensioners is that as they get older a greater number of them become dependent on National Assistance.

These people, and perhaps also the other category of the chronic elderly sick, are a clear-cut category, and I believe that they could be given additional assistance, which would be welcome to both sides of the House, over and above the general level of assistance which we can afford to give to pensioners. I was very glad when at Llandudno my right hon. Friend, rebutting arguments on the subject of the earnings rule, used this phrase: Ought we not to give the highest priority to helping people who need it most? My answer to that is that I hope my right hon. Friend will do that in this particular field of pensions, and, in particular, help those who are over 70.

There were a number of other points that I wished to mention. Perhaps I might just comment, as the subject has been raised from this side of the House and also by the representative of the Liberal Party, on the question of the earnings rule. I agree with my right hon. Friend the Member for Reigate (Sir J. Vaughan-Morgan) that there ought to be a review of the principles lying behind the earnings rule. But I would be very careful before going too far along the course which has been followed by some hon. Gentlemen. I quite accept that there is widespread dislike of the earnings rule in the country, and there is considerable misunderstanding and, I believe, even a certain amount of distrust about it, and there is no doubt that any Government Which set out to abolish the earnings rule would gain a lot of popularity.

We can gauge this from resolutions which have been passed. On 20th September the Liberal Party passed a resolution calling upon the Government to abolish the rule. On 1st October the Labour Party passed a resolution calling for the abolition of the rule in so far as it relates to widows. On 13th October my own party passed a resolution calling on the Government to raise the lower limits of the earnings rule. I think that in a way those three resolutions reflect the degrees of responsibility and likelihood of the various parties forming a Government. The proposal by the Liberal Party would cost £100 million. The Labour Party's proposal would cost less, but it would be a substantial figure. Therefore, we ought to be very careful in making the change.

First, the proposal departs completely from the principle which I have been advocating, which is that what resources we can muster should be given to those in the greatest need. To abolish the earnings rule would be of no help whatever to the 4½ million pensioners, men over 70 and women over 65, undoubtedly the section of pensioners who are in the greatest need. It would be of no help to those who are compulsorily retired, people who are very often in great need. Also, it would be of no help to the chronic elderly sick who in any case cannot work.

I accept that the earnings rule is not popular, but it is a compromise between two alternatives. One alternative is a pensions scheme which demands compulsory retirement before any pension is paid. I consider such a scheme inhuman and wrong. It used to be described as "a ticket of death" for compulsorily retired people. The other alternative is to have a pensions scheme which pays the additional £100 million a year to those who can be in full-time employment. That is such a lavish scheme that when resources are short even for those in desperate need I think it would be a mistaken policy, however attractive electorally it might be to follow.

I refrain from mentioning other aspects on this occasion because I realise that a number of hon. Gentlemen still wish to take part in the debate.

8.26 p.m.

Mr. John McKay (Wallsend)

It is a pleasure to engage in this debate on this occasion. I quite agree that some change should be made in the earnings rule. When we are dealing with people who are earning in addition to receiving a pension, we are dealing with a class of people who are to a large extent able to pull their weight in society. For this reason, the amount by which the pension of anyone who is earning is reduced ought to be limited.

The policy of the Government, the speeches of hon. Members opposite and their attitude towards pensions seem to be entirely divorced from the real problem. Too much emphasis is laid on the question of pensioners. Nearly 1 million people among the ranks of the workers are having to seek benefits of some kind because they are unable for one reason or another to carry on their work.

The psychology of the Conservative Party with regard to pensions reminds me of the situation that existed around 1926 with regard to the miners. In 1926 we had the General Strike and the miners were on strike for about six months. For a time they received a fair amount of help. They had their soup kitchens and fish markets and such things. But gradually the amount of help they received grew less.

So, too, with regard to the question of the pension. Whatever opinions we may hold about the amount of pension that ought to be paid, I think we all agree that that pension should be related to the general earning power of the mass of the people. I have gone into this question fairly closely, and I have based my figures on the amount of pension received by a married pensioner. In 1948 he received 42s. while the average wage was 138s. His pension therefore was 30.5 per cent. of the average wage. In 1961 the average wage was 306s. 10d., while the married pensioner received 92s., or 30.17 per cent. of the average wage. We have been told that in 1962 wages rose by about 5 per cent. If we add 5 per cent. to the average wage in 1961, it works out at a rise of about 15s., making the average wage this year £16 1s. 9d. If, therefore, one works out the pension received by the married pensioner as a percentage of the average wage, one sees that it has fallen from 30.5 per cent. in 1948 to 28.7 per cent. now.

There has been some controversy about whether pensioners are better off now than they were, and this takes me back to the time of the strike in 1926 when the miners gradually received less and less to help them. Our attitude generally is that there should be a little more reality in the level of pensions; that they should approximate a little more to what, if we were unfortunate enough to have to consider what we should receive, we would regard as something like a reasonable wage for aged people, and this consideration applies not only to the aged, but to the sick, the disabled, and the unemployed.

The question is, how much are we prepared to do to meet the present difficulties? We heard spokesmen on behalf of the Labour Party saying that they were thinking of a basic pension of £4 10s. Is this sufficient? Are we really representing the spirit of the nation? Spokesmen on behalf of the Conservative Party emphasise that we should not pay pensioners or disabled people too much because if we do so difficulties will arise. Today we are really discovering the Conservative Party policy with regard to pensions. Hon. Gentlemen opposite hold the view that working people who have been receiving fairly reasonable wages and been careful and saved some money for the future, and, as a result, are able to supplement their pension by £2, £3, or £4, should not, despite the fact that for many years they have contributed to the National Insurance Scheme, be entitled to a pension that will obviate the necessity for drawing National Assistance.

This means that the poorer seotions of the community who have no income whatever except what they can get from National Insurance must apply for National Assistance. The Conservative Party refuses to raise the pension and to institute a system whereby the workers pay for it in proportion to what they earn. The Conservative Party is not prepared to make the necessary change to enable this to be done and to keep the poorer people from going to National Assistance. In my view the people will not mind having to pay a little more for their pension if it is at least as high as National Assistance—and I believe that it should be greater.

Speaking personally, I am not satisfied with the Labour Party's idea that the basic pension ought to be £4 10s. A boarder may have to pay £3 10s. for his lodgings. If he goes to National Assistance he may end up with about 15s. as pocket money. He is getting as much money as, and perhaps more money than, the ordinary individual who is out of work and getting 57s. 6d. That principle is wrong.

I want to suggest some principles that we should embody in our National Insurance policy. I do not believe in pushing ideas unless I can see how to finance them. I would make the basic pension £5 at least, allowing all the other benefits, for widows, children, fathers-in-law, wives and so forth, to remain as they are at the moment. If we are really going to deal with the problem of providing a sufficient income for the aged we must concentrate the money which comes into the National Insurance Fund upon expenditure in the basic pension, so that it all goes to the aged people, and others unable to work.

The basic pension should be £5 a week, and payment for injured workers, at present 97s. 6d. a week, should be increased by the same extent, by 74 per cent., making a payment of £8 9s. 6d. a week. Is it asking much that we should pay £8 9s. 6d. a week to a man who has had a serious accident, while working for his country, when the ordinary wage is twice that amount? Surely there is nothing extraordinary in such a payment.

Next, instead of paying 4½ per cent. into the graduated pension fund on wages above £9 a week, we should make it 5 per cent. This would increase the graduated pension. First, we should provide a proper basic pension and then we should pay 5 per cent. instead of 4½ per cent. in respect of the graduated pension scheme. By paying a bigger basic pension to all the aged, the sick and the injured we should ensure that they had a fairly reasonable pension, for example, half their wages. Indeed, a married man would have far more than half his wage. We should work for this ideal, aril the Labour Party should aim at it and try to implement it as far as possible.

The question is, where does the money come from?

Mr. Ellis Smith (Stoke-on-Trent, South)

Before my hon. Friend deals with that, will he deal with the question of the unemployed?

Mr. McKay

I should like first to deal with pensions.

I have suggested raising the graduated pension, in addition to raising the basic pension to £5 for all single pensioners—a rise of 42s. 6d. This may seem extravagant, but is it a great sacrifice for the nation? It can be done. We have had comment about a redundancy payment, and I would add the redundancy payment to the National Insurance scheme. Many people suggest that the question of redundancy payments will be a big question for the future because as we modernise we are constantly causing many men to be unemployed. Some employers are trying to do their bit in this respect but others are not, and there is inconsistency in the way in which redundancy is treated.

As in the case of anything of importance, this matter should be dealt with by the nation as a whole and by a unified system. The Exchequer Supplement should be one-seventh of the contributions which come to the fund. If that were done it would not be a great penalty for the Exchequer. The Exchequer would pay £229 million. There is a very small difference between the amount that the Exchequer would have to bring into the insurance scheme and the amount it is paying now. According to the actuaries' figures, this scheme would take all insured people off National Assistance—not push them on to it—because their pensions and basic payment would be greater than they could receive from National Assistance. The same applies to the sick, the disabled and the unemployed.

On the 1961 figures, the Exchequer would save from £70 million to£80 million of what it is paying at present to insured people as National Assistance. The direct liability to the Exchequer would be less than it is now. Last year the Treasury gave me an Answer to the effect that the contributions from employers in 1962 were running at about 3.1 per cent. Under the suggested scheme what would they have to pay in future? I have put a lot of time into this. I may have made mistakes, but I have tried to be correct. We have to get a basic figure which has sense behind it and which has been worked out from practical experience and knowledge obtained from Government publications.

I would charge employers 4½ per cent. on the wages. The total wages of the country are in the Blue Book on National Income and Expenditure. I would charge insured people 4½ per cent. and the self-employed I would charge 7 per cent. From the employers, the workers, salaried people and self-employed we get a total of contributions and on that total I would charge the Exchequer one-seventh. Then there would be £50 interest brought into the total income.

How would that match up with outlay? To put my idea into operation I have to find the total amount paid out to people under the £5 basic benefit. I was told it was about 14 per cent. as dependency benefits. After that we went into it with people who understand figures better than I do. I concluded after much discussion that we could work it with 15 per cent. as dependency benefits, taking that from the total amount of benefits paid according to the Blue Book. I would raise the basic payment by 74 per cent. That would bring the 57s. 6d. up to £5 and the 97s. 6d. for injured men from 97s. 6d. to £8 9s. 6d. That is not too much, in comparison with wages of £16 or £17, to pay to men who have been injured whilst working for the benefit of the country.

I added 120,000 extra pensioners each year, therefore overloading the increased benefits likely to be payable. Paying these extra people £5 per week—£260 per year—would amount to £31 million. Another £10 million extra benefits would go to other beneficiaries. That leaves me a balance. I worked it out for ten years. I kept the balance that accrued each year in operation by adding it to the new income. The old balance comes into the new year. Working this out as accurately as possible I had a rather large balance.

What more could be done than pay the additional benefits applicable under the National Insurance and Industrial Injuries Fund? I see signs that hon. Members find this difficult to follow. It is also difficult to do. Very few people attempt to do it, but I have attempted it. I am sure it can be done. After the £5 basic benefit has been paid and after all the present dependency benefits have been paid, the question is whether there is a sufficient balance to do anything more.

I thought that something could be done for our redundant workers. On the basis that we paid half a million redundant people £2 a week, the liability was increased by £50 million at the first turnover. In the next year, the liability increased to £100 million, with an increase of £50 million each succeeding year. I then found that even after raising all the basic benefits and paying a redundancy benefit of £2 there was still a good balance.

Is it so much out of the common or a matter of such great difficulty that something of this nature cannot be done? Anybody who looks into this will find that the general principles I have stated, and the results I have given, are correct. Let us, as a nation, look at this problem, not with the idea of seeing how much money can be saved or of preventing big liabilities, but in the certain knowledge that the people are prepared to pay the money. In any case, we are not putting any great liability on the Exchequer beyond its present commitments, and if the situation were properly explained I am sure that the employers and the wage-earning and salary-earning contributors would willingly pay the 4½ per cent.

If the nation is in earnest, if it really has great sympathy for the underdog, and sincerely wishes to help the aged, the suffering unemployed, the sick and the disabled, it will attempt to provide a benefit that will keep them off National Assistance, and give them a reasonable return in their old age, and in their various difficulties.

This is a matter of the spirit of the nation—something quite apart from Tory or Labour policies. The question is: what does the nation want? Does it want anything of the kind I have stated? I think that mine is a practical suggestion, and that those on both sides of the House who want to do the best they can for their own people will find in it a solution that can be carried through without any great difficulty. I hope that we see it before we go off this earth. I hope that it is brought in by a Labour Government, but it does not matter to me if it is done by a Tory Government, as long as it is done.

9.0 p.m.

Mr. William Ross (Kilmarnock)

I do not think that we can complain that we have had a quiet debate. We got off to a very good start with the robust speech of my hon. Friend the Member for Sowerby (Mr. Houghton). There was almost a touch of Scottish aggressiveness about him, which may be due to his having some connections north of the Border. This is a subject which demanded that approach, because we deliberately cast our Motion fairly widely so that we could prod the House of Commons into real consideration of a real problem.

I have a measure of fellow-feeling for the new Minister. I was glad that he was one of those who remained in office after the reshuffle. I do not know that I am all that glad now, because he had an opportunity of impressing himself upon the House as Minister of Pensions and National Insurance with a forward look, a man with a mission. In fact, he was a man with a brief, and an old brief, too. I have heard that speech before, and far better delivered, by the right hon. Gentleman the Chief Secretary to the Treasury. That was exactly the speech that he made when he wound up our last debate, and it sounded a little more persuasive then than it did from the present Minister of Pensions and National Insurance.

The right hon. Gentleman, in the days that he probably likes to forget, proclaimed himself in this House as a liberal reformer. He objected to being called a National Liberal reformer. I can refer him to the column in the OFFICIAL REPORT if he likes, though I think that he knows me well enough to appreciate that I am speaking the truth. It was on the Third Reading of the National Assistance Bill. There is little indication of any liberal reform here. The right hon. Gentleman has not taken even one step. He was marking time on an issue which, if it does not concern hon. Members opposite—or shall I omit the back benchers and refer to right hon. and hon. Gentlemen on the Government Front Bench—certainly concerns about 8 million people outside.

We demand immediate and substantial increases for old-age pensioners, retirement pensioners, war pensioners, disablement and industrial injury pensioners and widows—for all those who can become, if we are not aware of present-day events, the other nation. This is the new problem and we have got to face it, and we have also got to face the cost of putting it right.

Many people use the term "Welfare State", sometimes seriously and sometimes jeeringly, but the implication is that all the problems are solved, that all the affluence is shared by everyone in the community. In fact, a lot of social dirt has been swept under our national "never, never had it so good" carpet. Books have been written by three well-known people on the subject of National Assistance and of old people, each one of which has jerked us out of this Welfare State complacency.

The hon. Member for Bradford, West (Mr. Tiley) told us that if we project the calculation that was made by Miss Cole, we find that 112,000 old-age pensioners are entitled to National Assistance. Remember, National Assistance is the bare subsistence level, for the poorest of the poor, but for one reason or another they will not apply for it.

Why do not they apply? The right hon. Gentleman and I share one thing, a constituency interest in a man called Robert Burns. It was in Kilmarnock that Burns' poems were first printed and sent out to the world, and it was in Dumfries that he spent the latter days of his life and died—with the good people of Dumfries walking on the other side of the road when they saw him coming. What was Burns' aim?—to preserve the dignity of man. There is no dignity in insecurity, whether it be insecurity in old age, in widowhood, in unemployment, or in sickness. There are many pensioners who regard it as a further insult to their dignity to be asked to submit to a personal means test. We must face this. They are not alone in that. We must appreciate that the feeling is there.

It is no good parading percentages, flooding us with figures and statistics, telling us what things were like between 1945 and 1951. The man who is worried is the man who has already retired, in 1962. The man who will retire next year was 47 years of age in 1945. The man who can tell us what things were like and give us a true reflection of his reactions to what we did in 1945 is, if he is still alive, 82 today. I shall come to that later.

Let us face reality. There is insecurity in the present level of benefits. Every time the Minister gave us another percentage, I reminded myself of the figures, £2 17s. 6d. for a single person and £4 12s. 6d. for a married couple. That is the reality of which we should never lose sight. Equally, we must remember that the man who was 47 in 1946 has not got very much saved up and never had a chance to save very much. The man who is retiring, even after having worked a little longer to earn an increment knows that the average increment will be between 8s. and 9s. a week. Let us remember also that the average payment in respect of rent is over £1. In spite of all that has been done, therefore, he looks forward to National Assistance.

I do not know whether the Chief Secretary to the Treasury is reluctant to leave the scene of his former triumphs, or wonder whether it is a case of the criminal returning to the scene of his crime. However, I do not mind saying that, for entirely other reasons, we are looking forward to hearing the hon. Lady the Parliamentary Secretary, for her speeches are well worth "seeing".

I am a little surprised that the Chief Secretary and the Minister of Pensions and National Insurance are so anxious to dabble in percentages. No doubt, they have been doing it all weekend. I assure hon. Members on the back benches opposite, those who have been looking at their majorities and wondering, "How long, oh Lord, how long?", that all the percentages, additions, subtractions and calculations bring as little comfort to old-age pensioners as do the percentages and calculations which they have been making about their own future during the past weekend. Let us stick to reality. Let us face the facts and adopt a new attitude to the needs of the nation. That is all we want.

I gladly take on any hon. Member over what happened between 1946 and 1951, but the problem today is what we are to do about security in old age. There is no doubt about the need for this. Every speaker has referred to it today, and we have had a wealth of talent. We have had speeches from my right hon. Friend the Member for Llanelly (Mr. J. Griffiths), from the hon. Lady the Member for Birmingham, Edgbaston (Dame Edith Pitt), a former Parliamentary Secretary to the Ministry of Health, and from my hon. Friend the Member for Mansfield (Mr. B. Taylor), another former Parliamentary Secretary. We have heard from all the experts, and everyone except the Minister has expressed dissatisfaction and the desire for a change in order to try to meet the problem.

The Chief Secretary to the Treasury will remember the words which he used on the Third Reading of the Bill which introduced the graduated pensions scheme. He chided us for voting against it. He said, "I do not mind. It means that in future all the credit will redound to my party". Will any hon. Member opposite rise and say that the graduated pensions scheme makes any contribution towards solving the problem of insecurity in old age?

Mr. Tiley

I spent a few minutes this afternoon in pointing to the advantages of it, and I am willing to say now that it was a necessary step forward and that I am glad we had the courage to introduce it.

Mr. Ross

The hon. Gentleman says that he spent a few minutes telling us about its advantages. It does not take very many minutes to do that. The hon. Gentleman knows as well as I do that even after two decades we will still be relying on National Assistance.

A man of my age, paying at the top rate, will be entitled to an additional 11s. 6d when he becomes 65, which will be in about fifteen years' time. What 11s. 6d. will be worth then, I do not know—probably about 6s. Does the Minister really think that this scheme is in any way a contribution towards meeting that problem? He knows as well as I do that the real purpose of that Act of Parliament—and it was effective—was to put the National Insurance scheme on a sound financial basis. Once again, we had the canard about what was done in 1951 by my right hon. Friend the Leader of the Opposition. No one referred to what the present Home Secretary said in 1954 in accepting liabilities which it was known would arise year after year, or to what was said by the Chief Secretary to the Treasury in 1957 when he accepted a liability of £357 million which would be met next year. What that Act of Parliament did was to get rid of the emerging deficits, to limit the liability of the Exchequer and to pass the burden on to the contributors.

When we talk of national superannuation, we do not mean something that is ineffective. We mean something which will certainly have to be paid for by the contributor, with the State also paying its share, and by which, in an expanding and dynamic economy, we will be able to pay wage-related pensions which are real much faster than by the present sham of a scheme.

But even that is not the real problem. The real problem is what is to be done with the 5½ million people who have already retired.

Viscount Lambton (Berwick-upon-Tweed) rose—

Mr. Ross

I promised to sit down by a certain time to allow the Chief Secretary his opportunity of replying fully to the debate. I am sorry I cannot give way, much as I should like to do so.

What do we do with the 5½ million pensioners who are on the existing inadequate rates? From everything that has been said today from the Government Front Bench it seems that they will continue to rely upon National Assistance. To my mind, in this proclaimed affluence, we cannot have these inadequate benefits with this continued resort to National Assistance.

I was glad that my hon. Friend the Member for Coventry, East, as well as my hon. Friend for Sowerby, spoke about this new conception of supplementary payments that will deal with this and deal with the difficulties in relation to the transitional period before the full payments are made. What this amounts to is an adequate minimum personal income for everybody and dealt with in a fair way. I do not think that the hon. Lady the Member for Edgbaston would complain about that.

For goodness' sake, do not let us hear again, "Where is the money to come from?" Perhaps the Chief Secretary will tell me: where has it come from so far'? We have heard a lot about 1951. Will the right hon. Gentleman compare the income of the National Insurance Fund in 1951 with its income today? It was not the Government who gave increased pensions. It was the contributors. Every time the Government raised the pension, they made a profit.

Every time the pension was raised, spokesmen from the Government side said, "Yes, but in future years, the Government's contribution will be so much". They nut that right with the graduated scheme; they wiped out that liability. Between £400 million and £500 million more per year have been raised to give inadequate pensions, and that is not counting the £200 million that will be taken this year for the graduated contributions. I am not frightened by £450 million. Let us face the fact that the pension is inadequate. This is the only way to face the problem.

My hon. Friend the Member for Coventry. East was right. What are we to do with our affluence? I have a feeling that either hon. Members opposite have no faith in the future, or they are not prepared to give the new social attitude for which the country is crying out. It is this "I'm all right Jack", "You have never had it so good" society.

Just a year ago, speaking in Peebles, the noble Lord, Lord Hailsham, said this: The country deserved a bit of a spree, a holiday from austerity, a relaxation of taut nerves. I think that it is time to change, to recover a new sense of direction and social purpose which we have surely been foolish to regret". I agree with that. The noble Lord then said—and to my mind this is why hon. Members opposite are losing by-election after by-election: We must return to the virtues of honesty, service and morality". Hon. Members opposite are trying to return to them just about ten years too late.

Consider exactly what has happened. We have had all this double talk that pensions are rising higher than prices, wages and the rest. By the way that hon. Members opposite are talking, one would think that the pension calculations should be made from the last time there was an increase. The last time an increase was made was in the first week of April, 1961, but the promise and the pledge was given in the November. We were discussing it two years ago, before ever the increase was paid. A considerable proportion in the increase was lost.

Here are the facts. From that time until today the cost of living has risen by nine points and for four months of this year it was 10 and 11 points. If we decided tonight to raise the pension substantially, it would not become effective until about April or May. Can anyone tell me what the cost of living will be then? I know that in my part of Scotland, a fortnight ago, a bag of coal went up by ls. 3d. I know that, prodded by the Government, the electricity authority has raised the price of lighting and heating in respect of electricity, and I know that rents are going up.

What does all this talk of percentages mean in these terms? A man who retires next year, and whose average wage at the moment is over £16, comes down immediately to 57s. 6d. That is the problem. [An HON. MEMBER: "What about the Lord Chancellor"?] The Lord Chancellor cannot afford to live on the pension that we have passed for him. Much as I am in favour of raising the pension I was the one who put down an Amendment to oppose that one, for which we gat the moral obligation explanation from the former Solicitor-General.

But this is the gap and the gap is widening. If we take the two years before the last increase and the years since it effectively until April of this year, wages have risen by £3 on average and the pension has risen by 7s. 6d. If the landlord raises the rent by 50 per cent, it is no good the pensioner going to him and saying, "I will give you 50 per cent, of the increase in my pension." The pension is 57s. 6d. The average rent under the calculation of the National Assistance Board for 1½ million old-age pensioners is 20s. 10d. This has to be paid before another penny is spent. What does that mean?—37s. Take two bags of coal at 12s. a bag off that, and we appreciate exactly what we mean by saying that there should be special consideration for the expenditure of old-age pensioners.

I hoped that the terms of the debate would have been such that we would appreciate the real problems. I hoped that we would have a Minister who would have given us a new start, but we have not gat him—and now we are to have the right hon. Gentleman the Chief Secretary to the Treasury to give us some more statistics and ask us, once again, to praise the Government. Why should we praise the Government? There is not a soul in the country who praises them. It was the right hon. Gentleman who, when he was Minister of Pensions and National Insurance, told us that the Government had done more than any other Government for the pensioner. Who really believed it? But that speech of his was drowned by the chorus of "Ten shillings, ten shillings, ten shillings."

The right hon. Gentleman remembers that speech; it was not one of his best. Let me remind him what the Government he sneered at did far the pensioner. We raised the pension right away as an act of faith and introduced it, before the Act came into force, by 160 per cent., from 10s. to 26s. But that was not all. We followed that up by introducing the National Health Service, which, to most people, was worth more than another pension. All the time of that Government we maintained a restriction on rents, and subsidies on food.

What did the Government do far the old-age pensioner during their eleven years. Let us forget about percentages. I was talking a short time ago about rents, but it was this Government who passed the Rent Act and subjected these people who tend to be forgotten to that, because a man pays his rent when he is unemployed, when sick, when old, just the same. The Government subjected them to the Rent Act. They subjected them to increased cost of food. And what about the Health Service? One shilling per item of prescription. That was the first step. Then they made it 2s. per item. I do not think that there is any Government who, in their incidental legislation, apart from the direct effects on pensions, have done more damage to the pensioner than the present Government.

It really is time—and I notice that The Times today is saying it—that we took up new attitudes. That is what we had hoped to achieve out of this debate. We had hoped to get support from both sides of the House. We have failed in that, but we shall certainly carry this crusade for these new social attitudes and responsibilities and obligations to the country; and I am sure that we shall get its support.

9.26 p.m.

The Chief Secretary to the Treasury and Paymaster-General (Mr. John Boyd-Carpenter)

I suppose that I have sat through and taken a part in as many pensions debates in this House as any hon. Member here, with, of course, the distinguished exception of the right hon. Gentleman the Member for Llanelly (Mr. J. Griffiths), and certainly, as the hon. Member for Kilmarnock (Mr. Ross) began his observations by saying, this has been one of the best and most varied of them. I think if I may say so that the quality of the debate has been in inverse ratio to the quality of the Motion upon which it has taken place.

It began very agreeably with the Hon. Member for Sowerby (Mr. Houghton), who very amiably observed, on my appearance in this debate—I took down his words—that I "popped up in everything". I am bound to say that it struck me that the observation was not wholly inappropriate to the hon. Gentleman himself. He is certainly not one of the strong silent men of the Opposition Front Bench. He has with me taken part in so many debates, and in that context reminded me of an observation of a former Member of this House, who, in the First World War, commended his orderly for a decoration, and when it was refused, expressed great indignation, and said, "He is the bravest man in the British Army. He goes everywhere I go."

Then the hon. Member for Sowerby started to quote a hymn to my right hon. Friend, a hymn that begins with the words, "Lead thou me on."

Mr. Ross

No: "Lead, kindly Light."

Mr. Boyd-Carpenter

"Lead, kindly Light". The hon. Gentleman must not lead me on. But the hon. Gentleman the Member for Sowerby quoted "Lead, kindly Light". I think that there was perhaps something a little Freudian about his quotation from that hymn, and it applies to the hon. Member for Sowerby—for Anglicans do go to church—because that hymn goes on: I was not ever thus, Nor pray'd that Thou should'st lead me on: I loved the garish day, and, spite the fears. Pride ruled my will: remember not past years. A very appropriate concluding line from hon. Members representing the Labour Party in a pension debate.

Mr. Houghton

My own quotation was enough for me.

Mr. Boyd-Carpenter

I accept that, because the conclusion of the hymn is too much for the hon. Member.

I thought that the hon. Member made a very agreeable speech, and an even more startling intervention during the speech of my noble Friend the Member for Hertford (Lord Balniel). I will repeat what he stated then because there were not many hon. Members present at the time, and those who missed it should hear it. He indicated that the Labour Party's policy was for flat-rate pensions, graduated pensions, an income-related supplement and National Assistance. In other words, to get out of the problem of the means test, we should have two, and to get out of the complexity of the present system, we should add two additional limbs to it.

The hon. Gentleman has expressed surprise that a Treasury Minister should take part in the debate, but on reflection, in view of his own activities in other directions, he may think it appropriate after all because, of course, one of the consequences of the massive increase in these services over recent years is that very important financial considerations arise. The expenditure on this group of social services is running now at about £1,700 million a year. About two-thirds of that is National Insurance benefits, and about two-thirds of the National Insurance figure is retirement pensions.

Even on present rates of benefit, the cost of retirement pensions, now at £785 million a year, will rise in ten years' time to £1,050 million and in twenty years to £1,225 million. The House will note that, in deference to the susceptibilities of the hon. Member for Kilmarnock, I am quoting figures and not percentages.

The House must face these massive figures and the fact that a further series of all-round increases as suggested in the Motion would impose a very considerable additional charge on the present working generation. An additional difficulty is that while, in so doing, it would give—and I do not dispute it—advantage and help to many people who could well do with it, it would also give, at a heavy cost to the working generation, advantage to those who are not in particular need.

One must also look at these proposals in the Motion against the demands of the other social services. We have been discussing payments to persons, as they are called in the statistics, all day, but the House must appreciate that if we make large additions in this direction there is so much less for other social services. It is necessary, in considering the Motion, to look at it against the enormous increase over the last ten years, not in percentages, but in pounds, in expenditure on each of these groups.

The expenditure on National Insurance benefits in 1951 was £443.7 million, and £1,234.9 million last year. On war pensions, it was £82.9 million in 1951 and £110.5 million in respect of a much smaller group of pensioners last year. On family allowances, it was £67.8 million in 1951, and the latest figure is £144.1 million. The National Assistance figure was £104.6 million in 1951 and reached £190.7 million last year. At the same time the cost of the National Health Service has nearly doubled and the cost of the education service has more than doubled.

Let us take another test. National Insurance benefits in 1951 were 16.2 per cent. of current national expenditure. In 1961, this was up to 20.3 per cent. of total national expenditure. Education, health and National Insurance took 36.5 per cent. of the national expenditure in 1951 and 43.2 per cent. in 1961. Grants to persons have gone up as a proportion of the gross national product from 4.9 in 1951 to 6.5 in 1961, and retirement pensions themselves have gone up as a share of the gross national product from 2.1 per cent. to 3.3 per cent.

The House will, I know, appreciate that when one is dealing with these very large financial considerations one has to have in mind that there is a point—we can argue about where—of limit as to what can be done without overloading the economy. Therefore, it is really not possible to judge when and to what extent improvements should be made in this set of benefits without having very much in mind the obligations which, as a community, we are assuming for other social services as well as for pensions.

The hon. Member for Kilmarnock said in his speech, talking about the retirement pension in particular and National Insurance benefits in general, that it was not the Government who had increased the pensions. Of course it was not. Whether the money is raised by taxation or by contributions, basically the charge falls on the community. We can argue—it is a matter of legitimate argument—as to the proportion which should be borne by the taxpayer and the proportion which should be borne by the contributor, who is, of course, in almost every case the taxpayer, too. But it really obscures counsel to suggest that anybody thinks that the Government, other than in their capacity as representing the taxpayer and the contributor, find anything. The Government have the very difficult job and responsibility of judging what is the right burden for this purpose to put upon the taxpayer or the contributor.

On the same point as the hon. Member for Kilmarnock, I do not think it helps judgment as to whether this is the right time and what should be the amount of any increase in these benefits to talk as if the Government were making away with large sums of money. The truth of the matter is that in the current year the National Insurance Scheme as a whole paid out about £200 million a year more than the contributors—the employers, the workers, and the self-employed—put in and that the balance is found either out of the interest on the Fund or from the contribution made by the taxpayer through the Exchequer. It does not help consideration of whether it is right to move further at any particular time to obscure the fact that from the point of view of the contributors as a whole this is a scheme which pays out £200 million more now on an annual basis than it takes in from the contributors.

Mr. Houghton

Suppose the contributors said, "We should like to double our contributions in order to pay out better benefits." Would the right hon. Gentleman call that "an additional expenditure"? Would he say that the additional contribution meant that there would be less money available for other social services? Are premiums payable under private insurance "an addition to expenditure" and "a charge on resources"? Surely he is ignoring the element of direct contribution to the National Insurance Scheme which goes to that purpose specifically and is not part of general taxation? It is a charge on the contributor for a specific purpose.

Mr. Boyd-Carpenter

I think that the hon. Gentleman is confusing two things. First, this is money that the contributor finds, and is compelled by law to find, for this purpose. Therefore, he has less resources available to find money by way of taxation or to maintain his standard of life, or, even on the other side of the contribution, to meet that part of it which goes towards the cost of the National Health Service. It is, therefore, a charge. The difference which I think the hon. Gentleman, and this was rather unlike him, failed to see between these contributions and the premiums on a policy, to which he referred, is that these are compulsory. These are imposed by law, and he cannot, without incurring the penalties of the law, cease paying them, whereas if he enters into a scheme with a private firm which he is unable to carry out he comes to an accommodation and receives a refund of premiums and so on. There is therefore this difference, that this is an additional charge compulsorily levied through the machine of Government—though through different machinery—on the population.

I think that the House will want to remember that the proportion of those of working age both to the old and to those too young to work is falling. In 1946 there were six workers for every National Insurance pensioner. In 1961 the figure had fallen to four workers for every National Insurance pensioner, and in the same period the number of children whom ten workers supported had risen from four to five. Those are all reflections which I think are necessary in any judgment on this, as I have often said, the biggest social problem of the day, and equally the biggest financial problem in the whole of our social service system. We cannot ignore the fact that whereas only 6.7 per cent of the population were over pensionable age in 1911, the figure was 13.5 per cent. in 1951 and 14.8 per cent. in 1961.

My noble Friend the Member for Hertford made a most interesting speech, and I very much liked his emphasis and thought on how the scheme might develop. He mentioned the possibility that one might look at the degree to which universality continued. I am sure that my noble Friend is aware that there has been a quite substantial breach in the principle of universality, that is, the successive improvements made out of proportion to other changes in National Insurance in the provisions made for the children of a widowed mother. That has been made quite consciously—I had a little bit to do with it on two occasions—because of the social reasons which my noble Friend had in mind of the particular problems of the widowed mother.

My noble Friend's reference, and that of several other hon. Members, to the earnings rule points, if anything, in the other direction, because, whatever abolition of the earnings rule would do, it would not fulfil my noble Friend's purpose of securing that provision was made in special degree for those most requiring it. Almost as a matter of definition, the people subject to the earnings rule, being people with fairly appreciable earnings, are on the whole less in need of help than those others entitled to the same benefit who for one reason or another are not able to do a substantial amount of work.

I am sure that the House was delighted to hear a speech again on this subject from the right hon. Member for Llanelly, and, if he will allow me to say so, he was in more vigorous form than I have seen him for years. The right hon. Gentleman referred to the great problem of unemployment. I should be out of order in this debate if I were to deal with the measures suitable for doing the best thing of all, that is, curing the disease. One is concerned in this debate only with the remedial measures to help those affected by it, and of these the most important is unemployment benefit.

The right hon. Gentleman rightly referred to the drop in income that occurs when a man becomes unemployed although, as he knows, its immediate effect is in some degree considerably cushioned by a return of P.A.Y.E. or a payment of wages in arrears, hut, when he comes to unemployment benefit, though it is considerably below the current level of earnings, he still comes to an unemployment benefit which in real terms is better than ever before.

Let me give the House the figures. The original figure under the right hon. Gentleman's Act was 67s. a week in respect of an unemployed man with a wife who has not contributed and three children. The equivalent today of that 67s. per week to get the same purchasing power would have to be 95s. The actual rate is 147s. which means that that family is better off to the extent of 52s. a week in real terms, or, if the House will permit a percentage on this occasion, 55 per cent.

The right hon. Member for Llanelly then challenged me to explain why the percentage of retirement pensioners receiving supplement today was almost exactly the same as it was when the Labour Government left office in 1951, namely, 22.5 per cent. The House probably realises that the percentage of retirement pensioners supplemented is largely determined simply by the relationship between the two rates. If we move the National Assistance scales up to a lesser extent than we move up the National Insurance scales we will reduce the number of supplementations. Equally, if we move them up more we will increase the number, because as we raise National Assistance scales we automatically increase the number of people eligible to apply for it. We have not only maintained but successively improved the scales of National Assistance, so that, in cash terms, they are above the 1951 scales to the extent of 91 per cent. for single people and 91.7 per cent. for married people.

The other reason is that hon. Members on both sides of the House have rightly urged upon successive Ministers of Pensions and National Insurance and Chairmen of the National Assistance Board the desirability of taking every step to get rid of the psychological barriers which make eligible people loth to apply for assistance. I believe that successive Measures and the advice that hon. Members have continued to give to individuals have had their effect. I have no doubt that it is because of a greater realisation that National Assistance is a right and not a charity that a larger proportion of people are applying today than ever before.

Those two facts—the fact that the assistance scale rates have kept pace with the insurance rates, and the fact that every proper step has been taken to enable people, without feeling loss of pride, to apply for National Assistance—reflect themselves in these figures.

Finally, the right hon. Member for Llanelly asked me whether my right hon. Friend would restore Section 62 of the National Insurance Act, 1946. The right hon. Member will well remember that that provision was designed in the fear—happily not realised—of large-scale, endemic unemployment following the last war as it followed the previous one. It was designed and laid down in the original Act that it should end after five years from 1948—that is, in 1953. It did so, although the present noble Lord, Lord Ingleby—then Minister of Pensions and National Insurance—took the step of extending the possible total of added days to 312.

There is also the question why unemployment benefit should not be permanent. It has been best put by the noble Lord, Lord Morrison of Lambeth, when speaking in this House as Mr. Herbert Morrison. He said: I think it is impossible, being an insurance scheme, that it should march on the basis that there can be unlimited or unqualified benefit in respect of unemployment … what is impossible in any insurance scheme is to base it upon the principle that there are limited contributions and unlimited benefits."—[OFFICIAL REPORT, 23rd May, 1946; Vol. 423, c. 661.]

Mr. J. Griffiths

In some areas, including my own, unfortunately, the danger that we envisaged in 1945 is becoming a reality. Men are exhausting their benefit. That situation is dynamite.

Mr. Boyd-Carpenter

Nobody underrates the feeling of the right hon. Gentleman, or, I hope, the care of the Government, to look after people who, through no fault of their own, are placed in that position. But I am sure that the reasons given by Lord Morrison of Lambeth are compelling ones in dealing with an insurance scheme.

The hon. Member for Kilmarnock made a great deal of play, as he always does—and tonight's was one of his best speeches—with the amounts of 57s. 6d. and 92s. 6d., but I thought that he blurred the fact that the amount concerned is not one on which anyone is expected to live, or needs to live. Hon. Members opposite seem to fail to understand a great deal of the significance of the universality of cover of the 1946 Act. It comes out curiously in the Motion when they talk about "old-age pensioners." "Old-age pensioner" had a meaning related to poverty—relative poverty—because contributions for many years were limited to people in the lower income brackets. Since 1946 it has been a matter of universal application, and the situation therefore is not that the retirement pensioners can be classified as rich or poor; they are both. Indeed, as my noble Friend the Member for Hertford said, the late-age entrants brought in on very favourable terms in 1948 as a result of the right hon. Gentleman's Act are almost as a matter of definition people of at least some substance.

Retirement pensioners are a complete cross-section of our community. Among the 5½ million, I believe there are 1½ million on occupational pensions—at least, there are 1½ million occupational pensioners, though not all of them perhaps are retirement pensioners. This number is rising. Although the hon. Member for Coventry, East (Mr. Crossman) apparently does not hold these private pension schemes in very great favour, they are developing at a remarkable rate. The Life Offices Association gave some figures the other day related only to assured schemes, and, therefore, only to a certain portion of the occupational schemes; and these figures showed a rise in actual pension payments from £5½ million a year in 1953 to £20 million in 1961.

There are also the occupational pensions of public servants. The House has just been dealing with a Pensions (Increase) Bill. Of the home civil officials covered by it, I understand that some 90 per cent. are also drawing retirement pensions. There are also the increments; 1½ million people are drawing them, in the case of men at the average rate of 9s. 8d. And failing all else there is National Assistance, to which hon. Members have referred.

Whatever may be the arguments, therefore, for a particular rate of benefit, the suggestion that anybody has to live on it is not consistent with the facts. The true problem is more difficult. As my right hon. Friend stated in his most admirable speech, given the widely varied composition of the pensioner body and given also the limitation as to what is a reasonable amount to put on the contribution the true problem is this: what is the right amount to put on the contribution?

The Motion sets out in some detail the benefits which it suggests should be improved, but there is not a word about how they should be paid for. There is no mention of an increase in contributions. This is an insurance scheme, as far as National Insurance itself is concerned, and there are many of us who feel that it would be disastrous if it ceased to be one and if, therefore, the benefit as of right and without a means test became difficult to defend. If hon. and right hon. Gentlemen opposite are advocating an increase in contributions to pay at any rate in part for the increased benefits, it would be more appropriate if they put that on the Order Paper together with the proposed improvements.

They do not say by how much, they do not commit themselves to any figure; I think that the words are "early and substantial". It seems to me that this failure to indicate how they are to be paid is perhaps an indication that right hon. Gentlemen opposite are not so con- fident that they may be in a position of responsibility as some of their brave words suggest. It might sound a very harsh thing to say, and I hope that hon. Members opposite will not be offended by it, but in this way they are reducing themselves to the level of the Liberal Party. At the General Election the Liberals produced a pamphlet with a very agreeable old lady on the front—a pamphlet headed "Security for our Pensioners". For 20 pages it proceeded to describe the improvements in benefit which hon. Members on the Liberal benches would provide if they were elected and on page 21 it suggested that some study should be given as to how these were to be paid for.

There is no indication in the Motion of the relevant priorities among these benefits. Aneurin Bevan once said: Socialism is the language of priorities". Since then hon. Members seem to have become much less articulate. Are they suggesting that there should be similar proportionate increases all round?

Mr. Houghton rose—

Mr. Boyd-Carpenter

I cannot give way to the hon. Member now.

There is mention in the Motion, very properly mention I think, of the war disabled. I accept, as I hope and believe hon. Members opposite do, that the war disabled are entitled to preference and priority in our system. It is the fact that the 100 per cent. war pension rate started after the First World War at 45s. I understand it was not increased in the changes of 1951. It has since been raised so that the 100 per cent. rate is 97s. 6d., and there is an increase in real terms of 33s. 8d. That is an improvement and, as hon. Members who have studied the matter know well, particular attention has been given to the allowances for more severely disabled men. I quote the example of a 100 per cent. disabled man with a wife and two children who had £8 3s. 6d. in 1951 and has £16 2s. 6d. in 1962, and he has another 15s. age allowance if over 65.

I come to the Amendment. It substitutes for what is said in the Motion reference to the words placed by the Government in the Gracious Speech. I ask the House to reflect on this. They are the words used by a Government who raised the rate of National Insurance benefits to a new high level in 1955, who did the same to a new high level in 1958 and did the same to a new high level in 1961, and who are maintaining rates in real terms still higher than on any occasion prior to the last increase in 1961.

Those are achievements which entitle the Government to confidence. They entitle us also to say that these words, placed in the most solemn and formal of all contexts, the Gracious Speech itself, are words which give full weight because they come from a Government who have a good record in this matter. They come from a Government who have produced the biggest increases over the whole of our social service field that any ten years in our national history have seen. They are, therefore, entitled to respect.

I suggest that they are a better ending to this debate, and a better conclusion, than the easy words of the Motion, because the words of the Motion, which we suggest should be amended, are an offer all round of an unspecified amount without any indication of how it is to be paid for or how it is to be distributed.

It is dangerously easy and tempting in a democracy to attempt to appeal to generosity and to seek to project a warm human view without at the same time bringing out either the cost or the effect of other good things which are proposed. If one yields to that sort of temptation it is infinitely dangerous to a Parliamentary democracy. That is why we must amend the Motion. We must put in its place words which express our confidence that the Government who over stormy and difficult years—[An HON. MEMBER: "We have never had it so good."]—who over years of external problems have successfully and successively—

Mr. Herbert W. Bowden (Leicester, South-West)

rose in his place and claimed to move, That the Question be now put.

Question, That the Question be now put, put and agreed to.

Question put accordingly, That the words proposed to be left out stand part of the Question:—

The House divided: Ayes 199, Noes 269.

Division No. 8.]	AYES	[10.0 p.m.
Abse, Leo	Davies, S. O. (Merthyr)	Holt, Arthur
Ainsley, William	Deer, George	Houghton, Douglas
Albu, Austen	Delargy, Hugh	Hughes, Hector (Aberdeen, N.)
Allaun, Frank (Salford, E.)	Dempsey, James	Hunter, A. E.
Allen, Scholefield (Crewe)	Diamond, John	Hynd, H. (Accrington)
Awbery, Stan	Dodds, Norman	Irvine, A. J. (Edge Hill)
Bacon, Miss Alice	Driberg, Tom	Irving, Sydney (Dartford)
Baird, John	Ede, Rt. Hon. C.	Jay, Rt. Hon. Douglas
Baxter, William (Stirlingshire, W.)	Edelman, Maurice	Jeger, George
Beaney, Alan	Edwards, Walter (Stepney)	Jenkins, Roy (Stechford)
Bellenger, Rt. Hon. F. J.	Evans, Albert	Johnson, Carol (Lewisham, S.)
Bennett, J. (Glasgow, Bridgeton)	Fernyhough, E.	Jones, Dan (Burnley)
Benson, Sir George	Finch, Harold	Kelley, Richard
Blackburn, F.	Fitch, Alan	Kenyon, Clifford
Blyton, William	Fletcher, Eric	Key, Rt. Hon. C. W.
Boardman, H.	Fraser, Thomas (Hamilton)	King, Dr. Horace
Bottomley, Rt. Hon. A. G.	Gaitskell, Rt. Hon. Hugh	Lawson, George
Bowden, Rt. Hn. H. W. (Leics, S. W.)	Galpern, Sir Myer	Ledger, Ron
Bowen, Roderic (Cardigan)	Ginsburg, David	Lever, Harold (Cheetham)
Bowles, Frank	Gordon Walker, Rt. Hon. P. C.	Lever, L. M. (Ardwick)
Boyden, James	Gourlay, Harry	Lewis, Arthur (West Ham, N.)
Braddock, Mrs. E. M.	Greenwood, Anthony	Lipton, Marcus
Bradley, Tom	Grey, Charles	Loughlin, Charles
Bray, Dr. Jeremy	Griffiths, David (Rother Valley)	Lubbock, Eric
Brockway, A. Fenner	Griffiths, Rt. Hon. James (Llanelly)	Mabon, Dr. J. Dickson
Broughton, Dr. A. D. D.	Griffiths, W. (Exchange)	MacColl, James
Brown, Rt. Hon. George (Belper)	Grimond, Rt. Hon. J.	MacDermot, Niall
Butler, Mrs. Joyce (Wood Green)	Gunter, Ray	McInnes, James
Castle, Mrs. Barbara	Hale, Leslie (Oldham, W.)	McKay, John (Wallsend)
Chapman, Donald	Harper, Joseph	Mackie, John (Enfield, East)
Cliffe, Michael	Hart, Mrs. Judith	MacPherson, Malcolm (Stirling)
Collick, Percy	Hayman, F. H.	Mallalieu, E. L. (Brigg)
Corbet, Mrs. Freda	Healey, Denis	Manuel, Archie
Craddock, George (Bradford, S.)	Henderson, Rt. Hn. Arthur (Rwly Regis)	Mapp, Charles
Crossman, R. H. S.	Herbison, Miss Margaret	Marsh, Richard
Cullen, Mrs. Alice	Hewitson, Capt. M.	Mason, Roy
Darling, George	Hill, J. (Midlothian)	Mellish, R. J.
Davies, G. Elfed (Rhondda, E.)	Hilton, A. V.	Mendelson, J. J.
Davies, Ifor (Gower)	Holman, Percy	Millan, Bruce
Milne, Edward	Roberts, Albert (Normanton)	Thomas, George (Cardiff, W.)
Mitchison, G. R.	Roberts, Goronwy (Caernarvon)	Thomas, Iorwerth (Rhondda, W.)
Monslow, Walter	Robertson, John (Paisley)	Thomson, G. M. (Dundee, E.)
Moody, A. S.	Robinson, Kenneth (St. Pancras, N.)	Thorpe, Jeremy
Morris, John	Rodgers, W. T. (Stockton)	Tomney, Frank
Moyle, Arthur	Rogers, G. H. R. (Kensington, N.)	Wade, Donald
Mulley, Frederick	Ross, William	Wainwright, Edwin
Noel-Baker, Francis (Swindon)	Royle, Charles (Salford, West)	Warbey, William
Owen, Will	Shinwell, Rt. Hon. E.	Watkins, Tudor
Paget, R, T.	Short, Edward	Weitzman, David
Pannell, Charles (Leeds, W.)	Silverman, Julius (Aston)	Wells, William (Walsall, N.)
Pargiter, G. A.	Silverman, Sydney (Nelson)	White, Mrs. Eirene
Parker, John	Skeffington, Arthur	Whitlock, William
Parkin, B. T.	Slater, Mrs. Harriet (Stoke, N.)	Wilkins, W. A.
Paton, John	Slater, Joseph (Sedgefield)	Willey, Frederick
Pavitt, Laurence	Small, William	Williams, D. J. (Neath)
Pearson, Arthur (Pontypridd)	Smith, Ellis (Stoke, S.)	Williams, Ll. (Abertillery)
Peart, Frederick	Snow, Julian	Williams, W. R. (Openshaw)
Pentland, Norman	Sorensen, R. W.	Williams, W. T. (Warrington)
Plummer, Sir Leslie	Soskice, Rt. Hon. Sir Frank	Willis, E. G. (Edinburgh, E.)
Popplewell, Ernest	Spriggs, Leslie	Winterbottom, R. E.
Price, J. T. (Westhoughton)	Steele, Thomas	Wyatt, Woodrow
Probert, Arthur	Stewart, Michael (Fulham)	Yates, Victor (Ladywood)
Pursey, Cmdr. Harry	Stonehouse, John	Zilliacus, K.
Rankin, John	Stones, William
Redhead, E. C.	Stross, Dr. Barnett (Stoke-on-Trent, C.)	TELLERS FOR THE AYES:
Reid, William	Swain, Thomas	Mr. Charles Howell and
Reynolds, G. W.	Swingler, Stephen	Mr. McCann.
Rhodes, H.	Taylor, Bernard (Mansfield)
NOES
Agnew, Sir Peter	Costain, A. P.	Hastings, Stephen
Aitken, W. T.	Coulson, Michael	Hay, John
Allan, Robert (Paddington, S.)	Craddock, Sir Beresford	Heald, Rt. Hon. Sir Lionel
Amery, Rt. Hon. Julian	Crosthwaite-Eyre, Col. Sir Oliver	Henderson, John (Cathcart)
Arbuthnot, John	Cunningham, Knox	Hendry, Forbes
Ashton, Sir Hubert	Curran, Charles	Hill, Dr. Rt. Hon. Charles (Luton)
Atkins, Humphrey	Currie, G. B. H.	Hill, J, E. B. (S. Norfolk)
Balniel, Lord	Dalkeith, Earl of	Hirst, Geoffrey
Barber, Anthony	Dance, James	Hobson, Sir John
Barlow, Sir John	d'Avigdor-Goldsmld, Sir Henry	Hocking, Philip N.
Barter, John	Deedes, Rt. Hon. W. F.	Holland, Philip
Batsford, Brian	Digby, Simon Wingfield	Hollingworth, John
Beamish, Col. Sir Tufton	Donaldson, Cmdr. C. E. M.	Hope, Rt. Hon. Lord John
Bell, Ronald	Doughty, Charles	Hopkins, Alan
Bevins, Rt Hon. Reginald	Drayson, G. B.	Hornby, R. P.
Bidgood, John C.	Duncan, Sir James	Hornsby-Smith, Rt. Hon. Dame P.
Biffen, John	Elliot, Capt. Walter (Carshalton)	Howard, Hon. G. R. (St. Ives)
Biggs-Davison, John	Elliott, R. W. (Nwcastle-upon-Tyne, N.)	Howard, John (Southampton, Test)
Bingham, R. M.	Emery, Peter	Hughes-Young, Michael
Birch, Rt. Hon. Nigel	Farey-Jones, F. W.	Hulbert, Sir Norman
Bishop, F. P.	Farr, John	Hurd, Sir Anthony
Black, Sir Cyril	Fisher, Nigel	Hutchison, Michael Clark
Bossom, Clive	Fletcher-Cooke, Charles	Iremonger, T. L.
Bourne-Arton, A.	Forrest, George	Irvine, Bryant Godman (Rye)
Boyd-Carpenter, Rt. Hon. John	Foster, John	James, David
Boyle, Rt. Hon. Sir Edward	Fraser, Rt. Hon. Hugh (Stafford & Stone)	Jenkins, Robert (Dulwich)
Braine, Bernard	Fraser, Ian (Plymouth, Sutton)	Johnson, Dr. Donald (Carlisle)
Brewis, John	Freeth, Denzil	Johnson, Eric (Blackley)
Bromley-Davenport, Lt.-Col. Sir Walter	Gammans, Lady	Johnson Smith, Geoffrey
Brooke, Rt. Hon. Henry	Gardner, Edward	Joseph, Rt. Hon. Sir Keith
Brooman-White, R.	Gibson-Watt, David	Kerans, Cdr. J. S.
Brown, Alan (Tottenham)	Gilmour, Sir John	Kerby, Capt. Henry
Browne, Percy (Torrington)	Glyn, Dr. Alan (Clapham)	Kershaw, Anthony
Bryan, Paul	Glyn, Sir Richard (Dorset, N.)	Kitson, Timothy
Buck, Antony	Goodhart, Philip	Lagden, Godfrey
Bullus, Wing Commander Eric	Goodhew, Victor	Lancaster, Col. C. G.
Butcher, Sir Herbert	Gough, Frederick	Langford-Holt, Sir John
Butler, Rt. Hn. R. A. (Saffron Walden)	Gower, Raymond	Leavey, J. A.
Campbell, Gordon (Moray & Nairn)	Grant-Ferris, R.	Leburn, Gilmour
Carr, Compton (Barons Court)	Green, Alan
Carr, Robert (Mitcham)	Gresham Cooke, R.	Legge-Bourke, Sir Harry
Cary, Sir Robert	Grosvenor, Lt.-Col. R. G.	Lewis, Kenneth (Rutland)
Channon, H. P. G.	Gurden, Harold	Lilley, F. J. P.
Clark, Henry (Antrim, N.)	Hall, John (Wycombe)	Lindsay, Sir Martin
Clark, William (Nottingham, S.)	Hamilton, Michael (Wellingborough)	Linstead, Sir Hugh
Clarke, Brig. Terence(Portsmth, W.)	Harris, Frederic (Croydon, N. W.)	Litchfield, Capt. John
Cleaver, Leonard	Harris, Reader (Heston)	Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)
Cooke, Robert	Harrison, Brian (Maldon)	Lloyd, Rt. Hon. Selwyn (Wirral)
Cooper, A. E.	Harrison, Col. Sir Harwood (Eye)	Longbottom, Charles
Cordeaux, Lt.-Col. J. K.	Harvey, Sir Arthur vere (Macclesf'd)	Longden, Gilbert
Cordle, John	Harvey, John (Walthamstow, E.)	Loveys, Walter H.
Corfield, F. V.	Harvie, Anderson, Miss	Lucas, Sir Jocelyn

Lucas-Tooth, Sir Hugh	Pilkington, Sir Richard	Stoddart-Scott, Col. Sir Malcolm
McAdden, Sir Stephen	Pitt, Dame Edith	Storey, Sir Samuel
McLaren, Martin	Pott, Percivall	Studholme, Sir Henry
McLaughlin, Mrs. Patricia	Powell, Rt. Hon. J. Enoch	Talbot, John E.
Maclean, Sir Fitzroy (Bute & N. Ayrs.)	Price, H. A. (Lewisham, W.)	Tapsell, Peter
Macleod, Rt. Hn. Iain (Enfield, W.)	Prior, J. M. L.	Taylor, Sir Charles (Eastbourne)
McMaster, Stanley R.	Profumo, Rt. Hon. John	Taylor, Edwin (Bolton, E.)
Macmillan, Maurice (Halifax)	Proudfoot, Wilfred	Taylor, Frank (M'ch'st'r, Moss Side)
Macpnerson, Rt. Hn. Niall (Dumfries)	Pym, Francis	Taylor, W. J. (Bradford, N.)
Maddan, Martin	Quennell, Miss J. M.	Temple, John M.
Maginnis, John E.	Ramsden, James	Thatcher, Mrs. Margaret
Maitland, Sir John	Rawlinson, Sir Peter	Thomas, Peter (Conway)
Marshall, Douglas	Redmayne, Rt. Hon. Martin	Thompson, Kenneth (Walton)
Marten, Neil	Rees, Hugh	Thorneycroft, Rt. Hon. Peter
Mathew, Robert (Honiton)	Rees-Davies, W. R.	Thornton-Kemsley, Sir Colin
Matthews, Gordon (Meriden)	Renton, Rt. Hon. David	Touche, Rt. Hon. Sir Gordon
Mawby, Ray	Ridley, Hon. Nicholas	Turner, Colin
Maxwell-Hyslop, R. J.	Ridsdale, Julian	Turton, Rt. Hon. R. H.
Maydon, Lt.-Cmdr. S. L. C.	Rippon, Rt. Hon. Geoffrey	van Straubenzee, W. R.
Mills, Stratton	Robinson, Rt. Hn. Sir R. (B'pool, S.)	Vane, W. M. F.
Miscampbell, Norman	Rodgers, John (Sevenoaks)	Vaughan-Morgan, Rt. Hon. Sir John
Montgomery, Fergus	Ropner, Col. Sir Leonard	Wakefield, Sir Wavell
Morgan, William	Royle, Anthony (Richmond, Surrey)	Walder, David
Morrison, John	Russell, Ronald	Walker, Peter
Mott-Radclyffe, Sir Charles	St. Clair, M.	Webster, David
Nabarro, Gerald	Scott-Hopkins, James	Wells, John (Maidstone)
Neave, Airey	Seymour, Leslie	Whitelaw, William
Noble, Rt. Hon. Michael	Sharples, Richard	Williams, Dudley (Exeter)
Nugent, Rt. Hon. Sir Richard	Shepherd, William	Williams, Paul (Sunderland, S.)
Oakshott, Sir Hendrie	Skeet, T. H. H.	Wills, Sir Gerald (Bridgwater)
Orr-Ewing, C. Ian	Smith, Dudley (Br'ntf'd & Chiswick)	Wise, A. R.
Osborn, John (Hallam)	Smyth, Brig. Rt. Hon. Sir John	Wood, Rt. Hon. Richard
Osborne, Sir Cyril (Louth)	Soames, Rt. Hon. Christopher	Woodhouse, C. M.
Page, John (Harrow, West)	Spearman, Sir Alexander	Woodnutt, Mark
Page, Graham (Crosby)	Speir, Rupert	Woollam, John
Partridge, E.	Stanley, Hon. Richard	Worsley, Marcus
Pearson, Frank (Clitheroe)	Stevens, Geoffrey
Percival, Ian	Steward, Harold (Stockport, S.)	TELLERS FOR THE NOES:
Peyton, John	Stodart, J. A.	Mr. Chichester-Clark and
		Mr. Finlay

Proposed words there added.

Main Question, as amended, put and agreed to.

Resolved, That this House welcomes the assurance in Her Majesty's most Gracious Speech at the opening of the present Session of Parliament that the position of war pensioners and of those who are receiving National Insurance benefits will be kept under close review.