HC Deb 23 January 1963 vol 670 cc82-92
The Minister of Pensions and National Insurance (Mr. Niall Macpherson)

I should like, with permission, Mr. Speaker, to make a statement about improvements in war pensions. National Insurance and industrial injuries benefits and National Assistance.

I am presenting today a Bill to increase benefits and contributions under the National Insurance and Industrial Injuries Schemes. The Bill will be available in the Vote Office this afternoon together with an explanatory White Paper and a report by the Government Actuary.

It is proposed that the standard National Insurance rates of unemployment and sickness benefit and flat-rate retirement pensions should be increased by 10s. a week for a single person from 57s. 6d. to 67s. 6d. and by 16s. 6d. for a married couple to £5 9s. Allowances for children will be increased by 2s. 6d. a week. These increases mean that the rate for a man and wife with three children will be £8 11s. including family allowances.

The standard rate of widow's pension will also be raised to 67s. 6d. a week. The widowed mother will have her personal benefit increased to 67s. 6d. a week and the allowance for each of her children will be increased by 5s., thus providing allowances of 30s. a week for the first child and of 22s. in addition to family allowances for each other child. In other words, the preference which in recent years the Government have accorded widowed mothers as a class is being extended.

The Bill also provides that a widowed mother in work will always keep at least 26s. of her personal benefit under the earnings rule. This amount will be the difference between benefit for a single person and that for a dependent wife. Taken together with the regulations which I have submitted to the National Insurance Advisory Committee fox raising the earnings limits for widowed mothers from £5 to £6, this represents a substantial improvement for widowed mothers in work.

Under the Industrial Injuries Scheme the standard rate of injury benefit and of the 100 per cent. disablement pension will be increased from 97s. 6d. to £5 15s. a week. The supplementary allowances will also be increased, and the widow's pension of 64s. will become 75s. a week.

I turn now to the timetable. As the House knows, the raising of pensions is a massive and complex task, but I hope that the new rates will operate from the week beginning 27th May. If the Bill is passed into law by the end of February, as I hope with the co-operation of the House it will be, it is my aim excep- tionally to bring in the new higher rates of unemployment and sickness benefit together with injury benefit as from 7th March.

The extra cost in the first full year of the higher rates of pensions and benefits will add about £212 million to expenditure from the two Insurance Funds. In contributory schemes improved benefits involve increased contributions. The minimum total contribution paid by the employed man will be increased from 10s. 7d. to l1s. 8d, and that paid by his employer from 8s. 7d. to 9s. 8d. As to the graduated part of the scheme, the maximum earnings on which contributions are charged will be raised from the present £15 to £18 a week, and the man earning £18 a week or more in the graduated scheme will pay 19s. 4d. a week in all as compared with 15s. 8d. at present, and the employer 17s. 4d. as compared with 13s. 8d. The extra graduated contributions will, of course, count for extra graduated pension. The total contribution for the employed man contracted out of the graduated scheme will go up from 12s. 2d. to 14s. 1d. and that for his employer from 9s. 10d. to 12s. 1d. There will be corresponding increases in other contribution rates. The contribution changes will operate from the beginning of June.

As regards National Assistance, although the rates were raised as recently as last September, I am glad to be able to tell the House that the National Assistance Board intend to make proposals for some further increase in them to come into effect at the end of May, at the same time as the increases in National Insurance pensions, so as to improve again the standard of living of the poorest members of the community.

Meantime, the Bill I am presenting today includes a temporary provision which will have the effect of ensuring that a person whose unemployment or sickness benefit is supplemented by National Assistance will not get less advantage from the benefit increase in March than he would if the Board's proposals were in operation at the time.

So much for the Bill. Now war pensions, which are a matter for the Royal Warrants. Increases will be made in the basic rate of pension for 100 per cent. disablement from 97s. 6d. to £5 15s. The standard rate of pension for war widows will be raised from 76s. to 90s., with appropriate increases in the rates for their children. There will also be increases in the allowances for constant attendance, unemploy-ability and lowered standard of occupation and in the maximum rent allowance payable to war widows with children. I will circulate a list of all the principal changes in the OFFICIAL REPORT. The main new rates will come into operation in the week beginning 27th May. The additional cost to the Exchequer on war pensions will be £15 million in the first full year.

Mr. Houghton

Does the right hon. Gentleman acknowledge that these proposals are being made much later than they should have been made? In view of the bitter winter which we are going through, does he realise how cruel this delay has been? Does he recall that on 26th November we on these benches pressed the Government for an immediate and substantial advance upon the whole front of social security benefits and that the right hon. Gentleman then pleaded that it could not be done before Christmas? Why have the Government left it until now when they had all summer to think about it and October in which to promise it? The statement is being made in January, taking effect over the main field of retirement pensions on 27th May.

May I ask him whether, in a sentence or two, he will throw a little light on the criteria which he has taken for proposing increases of 10s. for single persons and 16s. 6d. for married couples? We on this side of the House had hoped for at least 15s. a week for a single person and 20s. a week for a married couple. That would have given only £3 12s. 6d. for a single person and £5 12s. 6d. for a married couple. Is the right hon. Gentleman aware that £5 12s. 6d. for a married couple is still only one-third of the average adult earnings at present?

Further, has the right hon. Gentleman considered, in connection with sickness and unemployment benefits, departing from the principle of flat-rate benefits and introducing wage-related sickness and unemployment benefits in keeping with tine principle of the graduated scheme? While the flat-rate increases might be an interim measure, will the right hon. Gentleman consider the prospect of introducing a wage-related scheme later?

Will the right hon. Gentleman—[HON. MEMBERS: "Oh."] The right, hon. Gentleman has made a statement covering a wide field of social benefits, and we are entitled in advance of the Bill to ask him a few questions about it. Will the right hon. Gentleman give fresh consideration to the abolition of the earnings rule for widowed mothers? Why does he retain this intricate arrangement for a small body of pensioners to whom we should like to give the maximum posible benefit?

Turning to the effective date for retirement pensions, can the right hon. Gentleman offer any hope at all of shortening the timetable? This, of course, is an added reason for introducing proposals early if they are to take effect from the date at which they would be appropriate. The date 27th May is a long time from now, and there might be bitter weather and grave hardship before that time arrives.

We welcome the promise that the National Assistance Board will introduce additional proposals for National Assistance scales. We also welcome the additions to industrial injury and war disability pensions. If the right hon. Gentleman can briefly answer those points it may assist us—[Interruption.] The right hon. Gentleman had plenty of time to give consideration to what he is doing and I am sure that he can give an answer to these questions in a few sentences.

Mr. Macpherson

The hon. Gentleman said, first, that these proposals are being introduced later than they should have been. I would point out to him that the interval since the last increase has been as short as any other interval since the tidying up operation of 1952.

Secondly, the hon. Gentleman asked what are the criteria for the 10s. and the 16s. 6d. increases for a single person and for a married couple. He said that he had hoped for increases of 15s. and 20s. The increase of 10s. compares with 3s. 6d. required by the rise in prices since April, 1961, to last month, and the rise in earnings over the two years to October, 1962, would justify only a little over 5s. In other words, these increases represent practically three times the rise in the cost of living since the last increase and practically twice the rise in earnings since then.

The hon. Gentleman asked whether we have considered wage-related benefits. Of course we have considered them, but surely it is better in the present circumstances to help all? That is what we are doing. We are introducing a Bill which will give assistance to all beneficiaries.

The hon. Gentleman then asked about the earnings rule for widowed mothers. We think that there it is better to do what we are doing and, indeed, as the National Insurance Advisory Committee recommended us to do, to raise the extra benefit that is given per child, which will assist all widowed mothers rather than assisting a relatively small proportion of them by abolishing the earnings rule.

The hon. Gentleman asked whether we could hasten the effective date. The House will be aware that on previous occasions effective dates for pensions have been 20 weeks, 24 weeks, 21 weeks, 12 weeks, and 22 weeks after increases have been announced. On this occasion we have made it at 18 weeks and that has only once been bettered.

Mr. Kenton

Is my right hon. Friend aware that this further display of practical social justice on the part of the Government will be warmly received by the mass of the people, whatever opinions may be held on the benches opposite about his proposals? Does it follow from what my right hon. Friend has said about the amount of the increases compared with the increases which have taken place in the cost of living since the previous Bill that those who are to benefit under the Bill will, in fact, be getting an increased share of increasing national prosperity?

Mr. Macpherson

I am much obliged to my right hon. Friend. I certainly agree that it follows from what I have said that the beneficiaries will be getting an increased share in the national prosperity.

Mrs. Slater

Does the right hon. Gentleman realise that the mass of the people will remember that it was his Government Who said only a few months ago that there was no need for a rise in the basic pensions and basic benefits? [An HON. MEMBER: "What about your Government? "] We are talking about 1963 and not 1951.

Is the right hon. Gentleman aware that, even though this increase will be a little more than the supposed cost of living, at present the cost of living is rising so much and so many people acre getting so little share of the national cake that they will not relate it and think that it is fair justice?

Further, could not the right hon. Gentleman examine the point raised by my hon. Friend the Member for Sowerby (Mr. Houghton), that the whole of the earnings rule could be abolished for widows, who need the money at that time? Finally, has he made any provision to do anything for the forgotten 10s. widows?

Mr. Macpherson

The hon. Lady said that on a previous occasion we said that an increase was not needed. What we have always said is that the value of the pension was higher than it had been at any time before the previous increase. That is so still.

It is a fact that this increase will give an additional share of the national cake to the pensioner.

I think that I have already answered the point about the earnings rule for widows in reply to the hon. Member for Sowerby (Mr. Houghton).

Lord Balniel

Whilst not commenting at all on the merits of an overall flat-rate benefit system, is my right hon. Friend aware that the scale of these increases, which apparently far outstrips the rise in the cost of living and the rise in average earnings, will be very welcome indeed to the country as a whole? Is he aware, in particular, that the emphasis on widowed mothers will be very welcome, and can he say what effect this is likely to have on the contracting-out schemes?

Mr. Macpherson

I am much obliged for what my noble Friend has said. The effect on the contracting-out schemes will be that all those employers who will not be providing the new equivalent pension benefit consequent upon the raising of the maximum of the span from £15 to £18 will have to bring their schemes into line with that requirement.

Mr. H. Hynd

Will the Minister first answer the question asked by my hon. Friend the Member far Stoke-on-Trent, North (Mrs. Slater) about the 10s. widows? Can he say whether any improvements that have been announced today will be deducted from recipients of National Assistance?

Mr. Macpherson

I apologise to the hon. Lady. I omitted to answer her question. No; the present proposals make no provision for the 10s. windows, nor have any previous proposals made provision for them. This, as is generally recognised, is a reserved right resulting from a previous scheme which has now been replaced.

It always is the case that if National Insurance benefits rise by more than National Assistance benefits there is an adjustment between the two.

Mr. Eden

Whilst the whole House must welcome any step taken to improve the lot of retired people and to make it easier for them, is my right hon. Friend aware that many would have wished to have seen us take this opportunity of departing from a flat-rate basis? What consideration was given to trying to introduce a scheme involving a greater degree of selectivity? Could my right hon. Friend also make clear exactly what the proposed increases in retirement pension will cost the country as a whole, recognising that a substantial amount of this has to come from direct taxation?

Mr. Macpherson

I recognise my hon. Friend's views on this and I know that they are shared by many others. The way in which we approached this was that there were claims from several groups for special consideration. We felt that anything that was given to one group would be bound to be at the expense of the other groups. We therefore felt that it was better, at least on this occasion, to stick to the flat-rate increases.

My hon. Friend also asked what the additional cost of pensions will be. The cost will go up from about £800 million a year at the present time to just short of £960 million in a full year.

Mr. Monslow

As well as giving this prelude to a General Election, can the right hon. Gentleman give us the approximate date of the election?

Dame Irene Ward

While I welcome the proposals put forward by my right hon. Friend, and thank him for them, may I ask when we can expect the Government to do some real thinking about giving what is available to those who have the smallest incomes rather than always continuing on the same plan of a flat-rate increase? Is he aware that the Conservative Party has thought very deeply about this for some considerable time and that I was hoping that we might now have got to a position where we might have taken a decision?

With regard to the subject of widowed mothers and what he has said, may I ask my right hon. Friend whether he is aware that a vast number of anomalies remain to be corrected? Will he tell us when the Government will think about correcting those anomalies? We are having to wait too long for a new policy. What I have said does not, however, detract in any way from my pleasure that these announcements have been made.

Mr. Macpherson

Again, I am grateful to my hon. Friend. I know her views, and that she would like to see, as she puts it, what is available confined to those who need it most. I can assure her that the Government are continuing to think about this matter, just as she is doing.

Dame Irene Ward

They are taking too long.

Mr. Macpherson

On the question of anomalies, I am afraid that any scheme of this kind will always have anomalies, but we are progressively ironing them out. I think it is right, however, that we should stick to the preference that is given to war widows and industrial injuries widows.

Miss Herbison

The right hon. Gentleman has said that the extra cost of the benefits will add about £212 million to the expenditure of the two insurance funds. We should like to know how much of that extra cost will be met by the contributions of employees and the contributions of employers and how much under the scheme the Government are again to filch from the graduated contributions which are paid by the workers.

Mr. Macpherson

The extra cost in respect of the Industrial Injuries Scheme will be about £11 million. The contribution that will be made from the graduated pensions scheme is about £44 million and the contribution from the Exchequer will be about £28 million. If right hon. and hon. Gentlemen will not mind doing that sum, they will find the other figure, which escapes me at the moment.

Miss Herbison


Mr. Speaker

That appears to show yet again the peril of trying to debate these matters without a Question before us.

Miss Herbison

On a point of order, Mr. Speaker. With respect, I should like to point out that I had no intention of debating this matter, but the Minister was asked for a figure which I, and, I am sure, every hon. Member on both sides of the House, would have expected him to have without requiring to obtain information from the Officials' Box. Surely, in courtesy, the Minister ought to give that figure to the House.

Present rate Proposed rate
Disablement pensions (100 per cent. assessment):—
ex-private or equivalent 97s. 6d. a week 115s. a week
ex-non-commissioned officers Increase of 17s. 6d. a week
ex-officers Increase of £46 a year
ex-regular officers—disablement addition Increase of £46 a year
The amounts of weekly allowances and terminal gratuities for assessments of less than 20 per cent. will also be increased proportionately.
Constant attendance allowance 20s. a week 25s. a week
30s. a week 37s. 6d. a week
Normal maximum 40s. a week 50s. a week
60s. a week 75s. a week
Exceptional maximum 80s. a week 100s. a week
Unemployability supplement 63s. a week 74s. a week
The allowances payable with this supplement (and with treatment allowances) will also be increased:—
Allowance for wife or other adult dependant 35s. a week 41s. 6d. a week
Allowance for first child 17s. 6d. a week 20s. a week
Allowance for other children 9s. 6d. a week 12s. a week
Allowance for lowered standard of occupation Up to 39s. a week Up to 46s. a week
Widows' pensions:—
Widows of ex-privates or equivalent 76s. a week 90s. a week
Widows of ex-non-commissioned officers Increase of 14s. a week
Widows of ex-officers Increase of £37 a year
Allowance for each child:—
Other ranks 29s. a week 34s. a week
Officers £83 10s. a year £96 10s. a year
Rent allowance for widows with children Up to 29s. a week Up to 34s. a week
Pensions for unmarried dependants who lived as wives of men now deceased:—
Other ranks 68s. 6d. a week 82s. 6d. a week
Officers £203 a year £240 a year
Orphans' pensions:—
Other ranks:—
Under 15 years 34s. 6d. a week 40s. 6d. a week
15 years or over 46s. a week 54s. a week
Up to 18 years £128 10s. a year £149 10s. a year
Adult orphan incapable of self-support 57s. 6d. a week 67s. 6d. a week
Mr. Speaker

I do not know whether the right hon. Gentleman is ready to give his figure now, but if he is I will let him give it.

Mr. Macpherson

It was a question of making a calculation in my mind. The total income for the Insurance Fund will be £206 million. As I said, the contracted out will contribute £44 million, and the contribution from the Exchequer will be £28 million. I make it that £136 million—no, £134 million—will be contributed by the contributors.

Several Hon. Members


Mr. Speaker

The Chair has a very difficult task on these occasions. We really cannot debate these matters on statements. We have already spent about 26 minutes on this matter. I take the view that we must go on.

Following is the list: