NATIONAL INSURANCE &c. BILL

HC Deb 25 November 1964 vol 702 cc1297-405

Order for Second Reading read.

4.18 p.m.

The Minister of Pensions and National Insurance (Miss Margaret Herbison)

I beg to move, That the Bill be now read a Second time.

More than 20 years ago, we had the Beveridge Report. A Labour Government acted on it immediately after the war, but since then, I am sorry to say, there have been no changes in the basic concepts of Beveridge during 13 years of Tory government. This is in striking contrast with the modernisation of social security in most other industrial countries. Because of our desire to improve the lot of the old, the sick, the unemployed and widows, we are now debating the Bill just a little after five weeks from the date of the election.

This is in striking contrast with the Tory record. After a number of years in the wilderness, right hon. Gentlemen opposite were returned in October, 1951. They waited until April of the next year to have the Second Reading of their National Insurance Bill, and from the date of the Second Reading until the increased payments were made our people had to wait 25 weeks. I say without hesitation that if we had a Tory Government today, we would certainly not be discussing a National Insurance Bill. No provisions were made for this Bill during the Recess and if right hon. and hon. Gentlemen opposite had had any intention of introducing increases, there would have been signs of that preparation when I went to the Ministry.

In spite of that, I know that the Tories will not dare to vote against the Second Reading tonight. If they were honest, they would vote against it, for on three successive occasions in the last few weeks they have voted against the means of paying for the increases. This has not gone unnoticed in the country.

The right hon. Member for Wolverhampton, South-West (Mr. Powell) appeared on the B.B.C. programme "Gallery" on 12th November. He was asked whether pensions could have been raised without raising taxation. He hedged, but I will give his words so that hon. Members can decide for themselves. He said: Well, we calculated, and we published the calculations, that, given a rate of increase of the national income as a whole which we believed we should aim at, this and all the other expenditures in our programme should be covered at approximately current total taxation. His questioner did not allow him to get off with that and asked: This was assuming a 4 per cent, growth rate which we were not getting, I think? We were not getting it. During the whole of this year we have not had one-millionth part of 1 per cent. increase in production and, taking the more than 13 years of Tory government, the yearly average increase in production has been 2. per cent. But the right hon. Member for Wolverhampton, South-West said: Well, we have yet to know whether this will he achieved for the years ahead. For these people and for this particular right hon. Member it is almost like gazing into a glass to find out what will happen. I would say that "the years ahead" in that answer are the operative words. If a Tory increase in pensions and other benefits were dependent on a 4 per cent. increase in production, we know from their miserable past record in this matter that all of our people would have had to wait for a very long time for any increase at all.

In examining ways of getting help to those who need it in the quickest way possible, we had, with very great reluctance, to adopt the traditional method, but we are already engaged on provisions for an income guarantee for retired people and widows, and as rapidly as possible we shall carry out a major review of the social security provisions to get them into line with modern needs. I know that hon. and right hon. Members opposite do not like to hear some of these truthful words, but it is important that they should be made because many people are interested.

Mr. Ian MacArthur (Perth and East Perthshire) rose—

Miss Herbison

I am sorry. I cannot give way. I have a very long speech to make, for obvious reasons.

I want to deal with the operating timetable. I can understand very fully the feelings of our old people at the delay in paying their increased pensions. I can also understand the feelings of my hon. Friends, and, since I have had so many questions on it, not only from this side of the House, I felt that I must deal with it.

First, the National Insurance pensions are far from simple. A retirement pension order book can be made up of anything up to three of the following five elements: first, the basic pension; second, the wife's pension; third, the increase for a wife under 60 and perhaps for a child or children; four, the flat-rate increments for deferred retirement; and fifth, the graduated pension. Nor is that all. Where there is not a full contribution record, the standard rates for the pensioner and for his wife are reduced approximately in proportion and so are the amounts of the increases now to be awarded. Reductions also have to be made for other reasons, for example, because of earnings.

This means that there are over 200 different rates of retirement pension in payment, and that it is not possible to tell from the amount of the pension what increase is due.

The same total amount may be made up in various ways qualifying for different amounts of increase. If only for this reason, post offices could not give the correct statutory increase by simply paying a flat or percentage addition to the amount shown on the orders.

When rates are changed, the great majority of the books are already in the hands of the pensioners, and there is no alternative but to call them in and over-stamp each order foil at the appropriate new rate, which has to be determined separately for each pensioner. Even though, in the great majority of pension cases, the increase is straightforward, there are still over a quarter of a million retirement and widows pensions which are at the reduced rates, mainly because of contribution deficiencies.

For other types of benefit, such as industrial injuries benefit and war pensions, the existing rates and the appropriate increases vary still further. The operation cannot, therefore, be reviewed merely in terms of a hypothetical straightforward case.

Something which could be done almost overnight if only a handful of straightforward cases were involved changes its character completely when there are several millions to be dealt with, including a proportion needing special treatment. Even if these latter cases represent a minority, as they do, they still have to be identified and separated from the others, and this means that one cannot conduct the whole operation on mass production lines. The Ministry's staff have to carry out the law and arrange for the correct increase to be given in each case. They cannot vary the amounts laid down in the Acts and regulations in order to simplify and speed up the operation.

Experience has shown that the local offices need a full seven weeks for the actual work of dealing with about 6 million retirement pensions and other order books, involving the overstamping of something approaching 200 million individual orders. Before this can take place a vast amount of preliminary work is necessary to ensure that when the time comes—and this is very important—each pensioner gets the correct amount of his increase and has his order book returned at once. This preliminary work cannot go ahead until the proposed new rates and operative date are known. The whole operation has been streamlined as far as possible, and the overall timetable has been cut to the minimum.

There is an added difficulty. An up-rating, particularly in the winter months, places a severe strain on the Ministry staff both in the central and in the local offices. The Ministry is, of necessity, staffed only for its normal load and because of this all the uprating work has to be done on the top of this normal load. Where possible—and this is done—casual staff are employed to help, but the more skilled work can be done only by the existing staff. An over-tight timetable could very easily lead to a breakdown, particularly in the winter uprating. This would mean order books piling up in the local offices and many pensioners, left without their weekly payments, would be forced to go to the National Assistance Board for help.

I want to make it clear that what I am about to say does not reflect either on the Ministry's headquarters staff or on the staff throughout the country. These men and women deserve very great praise for their work, and particularly praise for the very heavy burden that they carry at times of uprating. [HON. MEMBERS: "Hear, hear."] For many years, when we were in opposition, we criticised Tory Governments on account of the long time between the announcement and the payment of the increases. Today, we do not withdraw one word of that criticism. The men who used to occupy this Front Bench and who claim to have great business acumen failed in their 13 years of Government to institute a speedier method of payment.

Not only have the Labour Government inherited a serious economic situation; they have inherited an out-dated system of paying increased pensions. Perhaps some may think that I am too severe on Tory Ministers because, after all, they did install a wonderful computer at Newcastle to implement their shoddy, disreputable graded pension schemes. The Tories found a method whereby they could take money from the workers. They were so little concerned with the plight of the old that they did nothing in this computer age to speed up the payments.

I can assure the House that the Ministry is now engaged on a study of whether the present order book system might be replaced by some other method of paying pensions, using a computer and highspeed printing equipment. My frustration during these past four weeks makes me determined that some such means will be found.

I turn to the main proposals in the Bill. The main one is to increase all the standard rates of National Insurance benefits and pensions by 12s. 6d. for a single person and by 21s. for a married couple. Thus, the present £3 7s. 6d. will become £4, the present 41s. 6d. for a dependent wife 50s. and the present £5 9s. for a couple £6 10s. Those rates will apply to retirement pension, widow's pension, widowed mother's personal allowance, unemployment benefit, sickness benefit and maternity allowance.

The allowance for children will also go up by 2s. 6d. a week—from 20s. to 22s. 6d. The combined effect is that the weekly rate of, for example, sickness benefit for a man with a wife and two children, including family allowances, will be £8 15s. a week. We are retaining the preference for the children of widowed mothers, and the benefit for them, including family allowances, will go up from 37s. 6d. a week each, which it became earlier this year, to £2. Thus, a widow with three children will in future receive £10 a week, including family allowances. These various new rates of benefit are set out in the Second Schedule to the Bill for which provision is made in Clause 1(3).

Except in 1946, when the Labour Government rescued pensioners from a generation of Tory rule, the increases in benefit proposed in the Bill are, in absolute terms, the largest. The Tories continually boast of their achievement, but today, after 13 years of their rule, benefits are still lagging behind the rise in average earnings compared with 1946. As I said in my review of the rates and amounts of benefits published last week as an appendix to the memorandum on the Bill, taking the test of the rise in earnings since 1946, the rates proposed in the Bill mean that benefits will have more than caught up with that rise in earnings.

Taking the pensions as they were when last increased in May, 1963, they have since lost in real value 2s. 7d. on the single rate and 4s. 2d. on the married rate. But the increase which we are making is 12s. 6d. on the single rate, or 21s. on the married rate; or, in percentage terms, about a 19 per cent. increase as against a fall in value of about 5 per cent. and, of course, the number of pensioners is continually increasing. At the latest date for which I have detailed figures—March, 1964—there were just over 6 million pensioners.

Another very important part of the proposals in the Bill concerns the abolition of the earnings rule, for the widowed mothers' allowance and the widow's pension. Again, this represents the implementation of a pledge which we gave in our election manifesto. It represents, also, the end of a long fight which Labour Members put up against the adamant refusal of the Tory Governments to abolish the earnings rule for widowed mothers and widows. We believe, and have often said, that the widowed mother who is striving to do her best for her children, and who has to be both mother and father to them, ought not to be penalised by an earnings rule.

We have taken the earliest opportunity to translate our belief into action. The relevant provisions are in Clause 1(5) and paragraph 4 of the Seventh Schedule to the Bill. These provide for the abolition for the earnings rule in relation to widow's benefits and also make the consequential amendments necessary to secure the same results for widows between 60 and 65 years of age. At present, a woman who is widowed when over 60 qualifies immediately for a retirement pension and not for a widow's pension. In future, under the provisions of the Bill she will be able to qualify for widow's pension until she is 65, when the earnings rule in any event ceases to apply to retirement pensions for women. Similarly, a widow pensioner who has passed the age of 60 will in future continue to be eligible for a widow's pension up to the age of 65 irrespective of the fact of retirement.

These are inevitably somewhat complex provisions, but I am glad to be able to tell the House that I think we have found the right answer to secure fair treatment for all the women concerned. I am very glad to be able to say, also, that we intend to bring the abolition of the earnings rule for widows' benefits into operation very shortly after the Royal Assent to the Bill. We are preparing the necessary administrative measures now and we shall be getting in touch with the widows concerned when the time comes.

Questions have been raised about the earnings rule in general as it affects retirement pensions and I feel that I should deal with it at this stage. There are no proposals in the Bill to alter this. The reason is that to abandon the principle that men between the ages of 65 and 70 and women between 60 and 65 are awarded their pension subject to retirement from regular employment, and subject to earnings rule if during those five years they undertake work, would, in effect, mean that we would be paying pensions in full to everyone on reaching the age of 65 if they were men or 60 if they were women, including many people who are continuing in full-time employment at normal wages.

To abolish the earnings rule for pensioners would involve an immediate additional expenditure, at the new rates of benefits proposed in the Bill, of up to £120 million a year, since there are about 400,000 people who have passed minimum pension age and who have not retired but who are continuing to work, and who are incidentally, therefore, earning increments to their pensions for when they eventually retire. I can, however, assure both sides of the House that the Government will be prepared to consider the level at which the earnings rule figure for retirement pensions should be appropriately set at any particular time.

I turn now to the position of the 10s. widows. We are proposing to increase the 10s. widow's pension to 30s. This, again, is in implementation of the pledge which we gave in our election manifesto, and we are delighted that we are able in such a short time to honour a further pledge which we made. About 100,000 widows will benefit by this increase in pension, which has not been raised since 1948. An increase to 30s. is roughly proportionate to the increase in the main benefit rates from 26s. in 1948 to 80s. now. The cost is about £5 million a year initially.

I mention that at this stage because it forms an important part of our total proposals. The provision for it will not, however, be found in the Bill, since the increase to 30s. will be effected by regulations. I should, perhaps, add that about 5,000 of these pensions are still being awarded each year to women newly widowed who qualify for them because they were married to contributors under the pre-1948 scheme, but who are not qualified for any of the long-term benefits of the present scheme. Some people seem to think that no more of these 10s. widows are created, and yet there are about 5,000 new ones each year.

The hon. Member for Finchley (Mrs. Thatcher) asked last week about the position of the no-shilling widow. Such a question from the hon. Lady is rather cynical. I want to ask her two questions. Is she opposed to our raising the 10s. to 30s., or does she want us to do something for the no-shilling widow? If it is the latter and she wants something done for the no-shilling widow, the hon. Lady must be well aware that her own Government, by raising the operative age from 40 to 50 years for the widowed mothers, have already added about 10,000 to the number of no-shilling or 10s. widows. Had the Tory Government not perpetrated this mean trick on those widowed mothers, they would be getting by the end of March of next year £4 a week instead of no shillings or 30s. The hypocrisy of former Tory Ministers time after time during these few weeks has to be heard to be believed.

There is, perhaps, one other point to which I should refer at this stage. The fact that we are abolishing the earnings rule for widows and increasing the 10s. pension as we have undertaken to do is one thing, but it is, perhaps, only touching the fringe of the problem. Quite apart from that, the whole structure of widows' benefits under the National Insurance Scheme will, as I have made clear in answer to Questions over the last few weeks, inevitably form an important part of the review of the future of social security provisions which we are undertaking. This must obviously cover such matters as the age condition for widows' pensions and the many anomalies which exist in the present provisions for widows generally.

I come now to the maternity benefits. By Clause 1(3) and the Second Schedule, the Bill increases the weekly maternity allowance from £3 7s. 6d. a week to £4. We also propose in Clause 1(4) to merge the lump sum home confinement grant of £6 with the maternity grant, which will be increased from its present £16 to £22. We are making this change for the following reasons.

As the House knows, the maternity grant is payable to all mothers wherever their babies are born. The home confinement grant, however, was intended for mothers who have their babies at home to compensate them for the extra cost of a home confinement and for the lying-in period. Mothers confined in hospital and receiving free maintenance there for a lying-in period of 10 days or more did not generally incur such costs. Nowadays, however, more and more mothers who are confined in hospital are being discharged soon after confinement. They have to meet much the same extra expenses during the lying-in period at home, such as the cost of having someone in to look after them and their babies, as mothers who are confined at home, but they do not get the home confinement grant in compensation.

We have decided that this difference in treatment between one mother and another according to whether her baby is born in hospital or at home can no longer be justified. If the House approves our proposals, the improved maternity grant of £22 will be payable to all mothers wherever their babies are born. More than 900,000 mothers a year will qualify for the grant. The extra cost will be about £3. million a year.

Now I come to the industrial injuries part of the Bill. The two key benefits here are injury benefit paid for periods of initial incapacity and 100 per cent. rate of disablement pension upon which are based the amounts of disablement pension for lower assessments. In both cases the benefit will be increased by 20s. a week from 115s. to 135s. This gives broadly the same proportionate increase as that to be made in the standard benefit rate under the National Insurance scheme.

In addition, appropriate increases will be made in disablement gratuities and in supplementary allowances which can be paid with disablement benefit, namely, special hardship allowance, unemployability supplement, constant attendance allowance, as well as in the benefits for dependants. The industrial injuries widow's pension, now 75s. a week, will be raised to 90s. These changes will provide higher benefits for about one-third of a million people who, at any one time, are now receiving weekly benefits because they have been disabled or bereaved as the result of an industrial injury or disease.

I turn to workmen's compensation and the other "old cases". Many of my hon. Friends realise how important this aspect of workmen's compensation, and of what we do with the "old cases", is in fact for many people. The Bill maintains the existing relativity in the treatment of "old cases" as compared with their industrial injuries counterparts by making corresponding improvements in the special benefits and allowances provided out of the Industrial Injuries Fund for those men who are disabled as the result of injury or disease due to employment before the Industrial Injuries Act came into force in 1948.

This is done in Clause 3. Subsection (1) increases from £3 5s. to £4 5s. the supplementary allowance paid, under the Workmen's Compensation and Benefit (Supplementation) Act, 1956, to "old cases" who are totally disabled or incapacitated for work. This £1 increase is the same as that made in the 100 per cent. rate for disablement pension, and it means that a totally disabled married man with £2 10s. compensation will receive each week the same amount, namely, £6 15s., in compensation and supplement as if he were receiving the 100 per cent. disablement pension. Subsection (2) applies to the men on compensation who, being partially disabled, are not covered by the 1956 Act. The maximum rates of the supplementary allowances for these men go up by 12s. 6d. Thus, compensation and supplement together can be increased to two-thirds of earnings lost, subject to a maximum of £4 2s. 6d. or £4 12s. 6d. for the married man injured later than 1923 who receives £2 10s. compensation.

The rather odd maximum rate of £4 8s. 6d. appears in the Bill to preserve the 16s. differential in favour of certain partially disabled pre-1924 men who can be treated as totally disabled. Indeed, only two men now benefit by it, because all the rest who may qualify are instead entitled to the increaese for a dependent wife by virtue of some National Insurance benefit or unemployability supplement. Altogether, about 6,000 partials come within the scheme and about one-third of these will benefit by the higher maximum rates.

Subsection (3) applies to the partially disabled time-barred men. These are men who contracted slowly developing industrial diseases, chiefly pneumoconiosis, as the result of pre-1948 employment but in whom the disease showed itself too late for them to be able to claim compensation within the time limits of the Workmen's Compensation Acts. Totally time-barred men receive an allowance of £2 a week under the Industrial Injuries Act and will automatically qualify for the proposed £4 5s. allowance under the 1956 Act. To maintain the right relation between the totals and the partials this subsection increases the flat rate of £2 2s. 6d. for the latter to £2 10s. About 5,400 men will benefit from this provision.

I now pass to the "old cases"—an issue of considerable difficulty. The remedy adopted in the past was to deal with true hardship as it emerged, hence the mass of complex legislation which has arisen over the years. In the past two or three years increased attention has been focused on those partials who do not benefit by this legislation. After repeated urging by Labour Members for something to be done for these men an inquiry was instituted by my predecessor to find out, if possible, the facts. The National Coal Board, certain large employers and the T.U.C. are all helping. The inquiry of the employers will provide only basic details in general terms. The T.U.C. will complement this with more details about individual cases.

It is, of course, difficult for employers to trace these cases in their long-buried records, and the T.U.C. does not expect to receive replies from union branches till the end of this year. Since it is only when this material is to hand that I can begin to assess the extent and the nature of the remaining difficulties it will be early next year before I can see how things are developing. It may be that a more detailed follow up inquiry will have to be made, but when this information is obtained I can assure my hon. Friends that I shall examine the whole subject with a fresh mind.

I now turn to contributions. The flat-rate contributions are to go up under the Bill, as the House knows, by 2s. a week for an employed man and 3s. 3d. for his employer. Because of the burden of the weekly contribution on the lower-wage earner the Government decided that this time the employer should pay a larger share of the increase. This includes an additional contribution of 1d. a side for industrial injuries. The comparable increase for women will be 1st. 9d. for the employee and 2s. 10d. for the employer, again including 1d. each side for industrial injuries. Proportionate additions will be made for boys and girls under 18 and the self-employed and the non-employed. The changes will be exactly the same for employees who have contracted out of the graduated scheme as for those who are subject to it, and there will be no alteration in the graduated contributions themselves.

Another point of interest is the small income exception. The income limit below which self-employed and non-employed people may claim exception from paying National Insurance contributions is being raised from £208 to £260 a year. At present, about 170,000 people hold certificates of exception on the ground of small income. The majority of those are women. Power is being taken to make any future increases in the income limit by regulation, so as to avoid delay once it is clear that an increase is warranted.

I turn now to the financial effects of the changes. The effect of the Bill on the finances of the insurance schemes is set out and analysed in the Government Actuary's Report on the Bill. This shows that in the first full year the changes now proposed, including the extra 20s to be provided by regulation for the 10s. widows, will result in £271 million extra expenditure under the main National Insurance Scheme. Insured persons and employers will pay £265 million more, supplemented by an extra £67 million from the Exchequer. In the result the extra income will exceed the extra outgo by £61 million in the first full year as compared with what the income and outgo would have been under the present contribution benefit rates.

But that comparison leaves out of account the fact that under present legislation contributions were to have been increased in April, 1965, with no return by way of extra benefits. Indeed, if we had brought in no legislation at this time, in April of next year both employers and employees would have had to pay increased contributions with no increased benefits at all. After examination we decided to forgo these increases because of our great opposition to the present graded pension scheme. Thus, the new contributions are no more than is necessary to support the benefits.

In making their review, the Government are bound to pay the closest attention to the expenditure involved in meeting the benefit expectations already being built up under the present scheme, and correspondingly to the extent to which under the present contribution structure the prospective income will be sufficient to meet that expenditure. Knowledge of such estimates must be one of the starting points for any plan to remodel the scheme.

I want now to say a little about the Government Actuary's review. Among the documents laid before the House on 20th November was the Report by the Government Actuary on his Third Quinquennial Review of the National Insurance Scheme. This review covered the period 1st April, 1959, to 31st March, 1964. It was carried out in advance of the present Bill, but, nevertheless, provides a wealth of financial and statistical information for those who are interested in the working of the National Insurance Scheme. It will be invaluable to all those who are interested in the scheme's development.

The Report includes a study of the future income and outgoings based on the contribution and benefit rates provided for under the legislation in force at the end of the review period. To some extent, therefore, these estimates are superseded by those in the Government Actuary's Report, but the Quinquennial Review brings out facts about future trends which continue to be of fundamental importance. It will be useful to take one illustration from the incomes side, and another from the expenditure side.

Dealing with income, the Actuary shows that with the growth in population of contributing age the number of contributors may be expected to rise slowly from nearly 25 million in 1963 to 27 million in 1983, and more rapidly thereafter to reach about 32 million by the turn of the century.

On the benefits side, one of the most significant features is the continued growth to be expected in the number of retirement pensioners. Retirement pensioners already number about 6 million, of whom about 4 million are women. The number will continue to rise rapidly until about 1980, and more slowly thereafter until it reaches about 8¼ million in the last decade of the century, or nearly 40 per cent, above the number in 1963.

Hon. Members will see in Schedule 6 of the Bill preparations for consolidation. We are hoping in the near future to consolidate all the National Insurance (Industrial Injuries) and Family Allowances Acts. Since the first of these Acts, the Family Allowances Act, was passed in June, 1945, there have been no fewer than 20 separate Acts, and it will be a great help in the preparation of the new legislation which will result from our review of the scheme to be able to start from a clean set of comprehensive Acts for National Insurance, Industrial Injuries, and Family allowances. We are hoping that these amendments will go through quickly. I am sorry that I have taken so long, but there have been so many facets with which to deal.

I should like to sum up what the Bill does. It gives the biggest increase in all benefits except that given by a Labour Government in 1946. It abolishes the earnings rule for widows. It gives a guaranteed maternity grant of £22, which will be an increase of £6, for many mothers in the future, and by regulation the 10s. widow's pension will be increased to 30s. I would say to everyone in the House that these represent no mean achievement for a Government which has inherited so many economic problems from the Tories. Indeed, the contents of the Bill show the basic differences in philosophy between the two sides of the House.

During the election campaign the Leader of the Opposition said that the Tories would give a donation to the older pensioners. His use of the word "donation" was deeply resented by old people all over Britain. Our old people do not want charity. This was no slip of the tongue by the right hon. Gentleman. Coming, as I do, from Lanarkshire—and the right hon. Gentleman used to represent South Lanark in this House—I remember the bitter resentment of the miners in those dark days of the 'thirties under Tory rule, when the same right hon. Gentleman suggested in this House that between 2,000 and 3,000 miners and their families should transfer to the south of England. To do what? To be domestic servants for the businessmen of London. That is why I say that his statement was no slip of the tongue. Throughout his political life the right hon. Gentleman's political attitude has always been that of the lord of the manor towards his serfs—the very opposite of what we would wish to do.

The Bill is the beginning of Labour's plan to ensure that in retirement, and when adversity strikes a home, there will be real social security. Our philosophy tells us that men and women have a right to dignity, and to a standard of living when in retirement, or when sick, or when unemployed, comparable to that which they enjoyed when they were working. Our aim in social security will be to do everything possible to weld into one the two distinct nations in the Britain left by the Tories. I commend the Bill to the House.

5.10 p.m.

Mrs. Margaret Thatcher (Finchley)

Being unaccustomed to opposition, I referred to the debate on the last Pensions (Increase) Bill which the Tory Government presented, to see how the right hon. Member for Sowerby (Mr. Houghton) coped with the situation from the Dispatch Box at which I now stand. His speech had four aspects. First, he expressed congratulations. Then he went on to commentary, then to criticism and, finally, to constructive suggestion. I propose to follow the precedent which he has set. He was very skilled in opposition. I hope never to attain such skill in opposition as he did.

First, I will follow the right hon. Gentleman by congratulating the right hon. Lady in being so fortunate, in the first few weeks of her Ministry, as to to be able to bring forward increases in pension benefits. She will agree that it is a very pleasant duty.

I now pass to criticism, commentary, and what I hope are some constructive suggestions. First, I want to take the right hon. Lady up on some of the debating points that she made at the beginning of her speech. She made a fighting speech, but I think that she was fighting her own side. She pointed to the striking contrast between the present proposals and what happened under the Tory Government in 1951. But when we returned to power in 1951 it was after an election immediately before which there had been a pensions increase. This was the only time that there had been an increase in pensions just before an election. The Socialist Government increased them three weeks before the 1951 election, having left them untouched for five whole years. But that increase did not restore the level of benefits to the position in 1946.

The right hon. Lady now comes to office under very different circumstances. There have been swifter increases under past Tory Governments. There was an increase in 1961 and another increase in 1963, to deal only with what happened in the last Parliament. So there is no basis for the analogy which the right hon. Lady is seeking to draw.

The right hon. Lady then said that we would be against these increases because we had denied the Government the means of paying for them. Presumably she means that we voted against the increase in the standard rate of tax. I must point out that if on the five occasions on which we increased benefits we had also increased the standard rate of tax by 6d., that standard rate would now be 12s. in the £. I have never heard such nonsense. We inherited a standard rate of tax of 9s. 6d. imposed by the last Socialist Chancellor of the Exchequer. We managed to make five pensions increases and, at the same time, to reduce the standard rate of Income Tax.

I would point out to the right hon. Lady that it augurs very ill for retirement pensioners if she is saying that every time she increases pensions 6d. must be put on the standard rate of tax and another 6d. on petrol.

Miss Herbison

Will the hon. Lady tell us how the Tory Government were expecting to pay for the increases, since it was made clear that they would be dependent on a 4 per cent. increase in production? We would like to know that.

Mrs. Thatcher

I speak as one brought up in trade and still in trade, and I can say that the economic situation would have been quite different if we had been returned to power. I also speak as a Member who has not merely sat on the benches opposite distributing the moneys which other folk have made; I speak as one who has been concerned in manufacturing and retailing, in both the home and export trade.

I commend to the right hon. Lady the difference between her general attitude and that taken by Lord Attlee on past Tory records. The right hon. Lady spoke very highly of the work done by the Beveridge Committee. I entirely agree. But to listen to the right hon. Lady one would have thought that its Report was entirely the child of the Labour Party. On 7th February, 1946, Lord Attlee, speaking on the National Insurance Bill, said: This Bill is founded on the Beveridge Report. I would like here to pay a tribute to my right hon. Friend the Lord Privy Seal, who set Sir William Beveridge to work on this, to Sir William Beveridge himself and, as I have already said, to members of all parties who worked on it. The White Paper produced by the wartime Coalition Government, accepted by all parties, and by the country, is different in kind from all its predecessors."—[OFFICIAL REPORT, 7th February, 1946; Vol. 418, c. 1896.] At least Lord Attlee was prepared to be accurate, honest and magnanimous.

I now turn to one other point of commentary—the comparison of rates of benefit with average earnings and retail prices, of which the right hon. Lady has made a considerable point. She said that increases in pension benefits had lagged behind earnings, taking them over the whole period from 1946. I agree that if we take them over the whole of that period it is true that they have not risen as much as have the increases in average earnings. If, however, we take 1951 as the base year, which was the beginning of the stewardship of the Tory Government, we find that the reverse is true.

Brigadier Terence Clarke (Portsmouth, West)

And the pensioners know it.

Mrs. Thatcher

I want to give the right hon. Lady some figures which were supplied to me by her Department before I left. In October, 1946, the single rate of pension introduced by the right hon. Lady's Government was 21. per cent. of the then average earnings. In October, 1951, which was the end of the period of Labour Government, it had fallen to 18 per cent. of average earnings. That was the situation which we inherited, in spite of an increase three weeks before the October, 1951, election.

Over our period of Government, up to April, 1964, the pension was increased again until, in that month, it stood at 19 per cent. of average earnings. In our stewardship, therefore, we increased pensions benefits, expressed as a percentage of average earnings. In the right hon. Lady's own memorandum—Cmnd. 2518—she compliments us, over her own signature, on our Performance over the last five years when she says: Over the period of the quinquennium under review the rise in earnings was about 27 per cent., as compared with the increase in benefits of 35 per cent., so that in recent years improvements of benefit rates have been overtaking the rise in earnings. There are many other figures that I could give concerning the position, but I will pass from the point. One test of the adequacy of pension benefit rates used by the right hon. Lady and by her right hon. Friend when they were in opposition was the test of how the rates compared with the then average earnings. Naturally, as I expect she has done, I have been looking back over the debates, and have been studying the Amendments which she and her right hon. Friend put forward. I notice that on 6th February, 1963, she and her right hon. Friend moved an Amendment to increase the level of pension which we were then putting forward. They used as one test of the adequacy of the rate that they were then proposing the comparison between it and average earnings.

The right hon. Gentleman then mentioned that according to his researches average earnings in manufacturing industries were £16s. 6s. It is interesting that, when he was in Opposition, for average earnings of £16 6s. he then proposed a £4 rate of pension. Now average earnings are £17 12s. 5d., but he is in power and he is not proposing an increase proportionate to the increase in average earnings since that time.

The Chancellor of the Duchy of Lancaster (Mr. Douglas Houghton)

May we expect that the hon. Lady and her friends will put down an Amendment to improve the benefit?

Mrs. Thatcher

No, we believe in behaving when in Opposition as we would if we were in the Government. We do not believe in having a public auction of pensions. The right hon. Gentleman knows full well that every time we had an increase he put down an Amendment which made a bid for higher increases. When we had an increase of 10s. last time he put down an Amendment for an increase of 22s., or it may have been 22s. 6d. We shall not behave in that way because we believe that once again we shall soon be the new Government and that people will judge us then by what we said we could do in Opposition. Indeed the right hon. Lady has found this out, because they expected her to do in power what she said she could do when she was in Opposition. I have turned up the reference to the increase to which I referred proposed by the right hon. Member for Sowerby. It was 22s. 6d. for single persons when we were proposing 10s., and he proposed 32s. 6d. for a married couple when we proposed 16s. 6d.

The right hon. Lady said that to restore the rate of benefit to where it was—presumably in May, 1963—would require, I believe she said, 2s. 7d. In her own memorandum again on page 7, she goes on to say in paragraph 8: … simply to restore the purchasing power of the present standard rate of £3 7s. 6d. would by then"— that is late March, 1965— require between 4s. and 5s. If she says that to restore it now would require 2s. 7d. she is expecting a very great rise in the cost of living between now and the end of March; for she said 2s. 7d. in her own memorandum published as late as last Friday morning at three minutes past eleven. By then, March, 1965, it would require between 4s. and 5s. increase. There is only one way to get that figure and it is to postulate an increase in the index of prices of 3 or 4 points. The right hon. Lady may be being extremely honest, in which case I congratulate her.

She will perhaps remember, if she has gone back over the earlier debates, that when the Labour Government of 1945 fixed the pension increases they fixed them in these terms. On 6th February, 1946, a statement was made in the House to this effect: The House will be aware that the Chancellor of the Exchequer has expressed the Government's intention to hold the cost of living at about 31 per cent. over the Sepember, 1939, level. We decided, therefore, to review the leading rates proposed in the White Paper and in the Beveridge Report on the basis of an overall addition of 31 per cent. instead of 25 per cent."—[OFFICIAL REPORT, 6th February, 1946; Vol. 418, c. 1742.] For that reason the Labour Government increased the Coalition Government's proposal from 20s. single and 35s. married to 26s. single and 42s. married, on the basis that the Labour Chancellor of the Exchequer would hold the cost of living at 31 per cent. over the September, 1939 level. What happened? The cost of living rose at unprecedented rates. In 1948 it rose 4.6 per cent., in 1949 by 3.6 per cent. In 1950, 3.9 per cent., and in 1951, the last year of the Labour Government's rule, by 13 per cent.—in one year. So that by that time the benefits had been eaten away. There was an increase in pensions three weeks before the 1951 election. So much for some of the traditional indicators.

I come on to another point raised by the right hon. Lady, that of contributions and taxation, and I also will deal with what hon. Members opposite have said about taxation in this connection. We have never shied away from the fact that to increase pensions benefits we must increase contributions. Indeed, from the Government Dispatch Box I was always trying to urge hon. Members opposite, who were then on this side of the House, that they should never try to convey the impression that we could have large increases in benefits without the ordinary people paying any increased contributions. So therefore we have an absolutely clear record on this matter.

The total weekly stamp has gone up very greatly in cost. It is now 26s. 7d. basic rate for those participating in the scheme. For those who have contracted out it is 31s. 5d. I think it is worth mentioning that for those participating in the scheme with average earnings the cost of the weekly stamp has gone through the £2 barrier. For those on average earnings the cost is now 41s. 3d. for the weekly stamp. For those earning £18 and over it is 41s. 11d. each week. We have a clear record on contributions, but hon. Members opposite have been very acid when before there has been an increase on the flat-rate contributions. Indeed, the right hon. Member for Coventry, East (Mr. Crossman), as reported in the OFFICIAL REPORT on 28th January, 1963, said: But a flat-rate increase of 1s. for a lower paid worker is a very heavy imposition indeed. … So heavy is the burden put on the worker now by saying that all workers must pay the same that everyone earning under £15–£16 a week is being mulcted of far more than the share due from him for the rest of the social services. This, of course, is the old evil of the poll tax on the poor. Each time the Government put one shilling on that tax they make the burden more intolerable."—[OFFICIAL REPORT, 28th January, 1963; Vol. 670, c. 657–8.] I wonder whether he would say the same to the right hon. Lady if he were here today. I understand that he has other duties. She is in fact now putting a 2s. increase in place of the 1s. basic increase which was the subject of his comment.

Hon. Members opposite have always said that the Exchequer should bear a large proportion of the contributions. But I understand that the Exchequer contribution will be unchanged by the provisions of this Bill. It seems to me that hon. Members opposite are now, for the first time, being brought face to face with the realities of power which they should have faced upon these benches, had they been prepared to look at the whole scheme on a sound financial basis, instead of being more concerned to outbid us regardless of the consequences.

The right hon. Lady made some strong strictures on the graduated scheme. I was not surprised, as she made equally strong strictures on the scheme in one of her party political broadcasts where I think that she was thoroughly misleading in a sentence which I shall quote. On 9th October on the Light Programme, in a party political broadcast on behalf of the Labour Party, the right hon. Lady said this: The truth is that the Tories' graded scheme is not a pension at all. It is really a way of getting extra taxes. This is the bit on which I want to comment: Take last year, the Government collected £177 million in graduated contributions from people at work; but they paid out only £130.000; almost every penny collected was spent in meeting Government bills. A more misleading statement I could not imagine. It is as if the rest of the Government had used the money collected for graded pensions. The right hon. Lady knows that every single penny went to meet pensions and benefits paid out under National Insurance. But she did not say that in her broadcast. She deliberately chose to use the phrase, was spent "in meeting Government bills". After her speech today I am not surprised at the way she put it.

I turn now to taxation. The right hon. Lady accused us of hypocrisy. I wish that some people who make accusations would cast the mote out of their own eye. First we have been talking about contributions and taxation as a means of financing the scheme. The right hon. Member for Sowerby as he pointed out in his election address, was Chairman of the Public Accounts Committee, a broadcaster—"Can I Help You" and Labour's expert on taxation, finance and pensions. This is all in his write-up on the left-hand side of his election address. What did he say about the taxation of social services? He said: Labour will not be a spendthrift Government. It will not need to increase the general level of taxation to pay for its programme. Also on the left-hand side, it said, "Douglas Houghton"—and in a box immediately below "Integrity, Vision, Knowledge, Experience." I pay the right hon. Gentleman this compliment. Had I read that in his election address as an elector, and knowing him, I would have believed him. I also say this, that I am bitterly disappointed that the Labour Government should now have increased the taxation on top of that pledge which the right hon. Gentleman, Labour's expert on taxation and pensions, gave. I would have had much more glee in trotting that out had it come from one of his right hon. Friends, than coming from him.

Mr. Houghton

That was written without a realisation of the depth of deception that we have since discovered in the economic and political record of the hon. Lady's party.

Mrs. Thatcher

I have had to say "Nonsense" to the right hon. Gentleman before, and I now say it once again.

May I make another quotation on taxation? This comes from The Guardian of 15th October, 1964, in an article on page 2 entitled "Nursery Economics—Mr. Callaghan. Mr. Maudling's figures screwy". Then there is a sub-heading which says "Serious Point". This is what the present Chancellor says: As far as we are concerned the fulfilment of our social programme depends upon the achievement of a faster rate of growth in the economy. We shall not cash cheques until the money is in the bank. That is quite clear. I should think that that was meant to imply that taxation would not be increased.

The third main point is the inter-connection and relation of National Insurance with National Assistance and the propaganda that there has been about a national income guarantee. Throughout the time that I sat on the Government benches hon. Members of the Opposition have got up and said, "Is it not scandalous that there are still as many people on National Assistance?" The number on National Assistance depends on the rate at which the Government increase the Assistance scale rates. One could quite easily have cut down the number on National Assistance by putting up the pension, but not the scale rates. The right hon. Lady has not chosen to do that. We did not, either.

During the time that the present Government were in opposition they built up a thorough objection to National Assistance and helped to implant that objection in the minds of the people by the kind of language they used. I quote from "Election Forum" on 23rd September, 1964. This is the terminology which the present Prime Minister used. He said: Instead of being driven, as 2 million are being at the present time, on to National Assistance with its means test—and many more who are too proud, rightly or wrongly, to go and ask for National Assistance when they're entitled to it; instead of that, we are going to provide a minimum income; and, having done that—substantially more than the existing National Assistance scale—we are going to guarantee it against rising prices. The terminology which the right hon. Gentleman used was, "instead of being driven on to National Assistance".

In another broadcast, on 12th October, 1964, the right hon. Gentleman said: That is why I pledged the Labour Government to urgent action to deal with this problem with a humanity that has been lacking, to ensure to each a guaranteed and adequate pension on which our old-age pensioners, widows and others can live, without the need to go cap in hand to the National Assistance. The right hon. Lady talked of people being abandoned to National Assistance. One cannot in one breath talk about trying to increase people's standard of living by increasing the National Assistance scale and then talk in the other breath of abandoning them to National Assistance. National Assistance is a very wonderful instrument. I personally do not mind whether it is called National Assistance, whether it is called a basic standard of living, whether it is called a basic income, or what. It is the instrument which we use for meeting variations in individual needs, and if, instead of denigrating National Assistance, people would urge its many advantages upon their constituents, then I do not think that there would have been built up the present reluctance which I am told exists about going to it.

The whole of the Labour propaganda, both in broadcasts and in "New Britain" and in election addresses, led us to believe that top priority was the introduction of an income guarantee scheme. This, we were led to believe, had been ready for a very long time indeed. At the beginning, "New Britain" said: Labour is ready. Poised to swing its plans into instant operation. Impatient to apply the New Thinking that will end the chaos and sterility. The Prime Minister also indicated that the national income guarantee was the one thing that would not wait.

On page 16 of "New Britain" it was stated: For the same reason we stress again that, with the exception of the early introduction of the income Guarantee, the key factor in determining the speed at which new and better levels of benefit can be introduced, will be the rate at which the British economy can advance. The exception to that was the introduction of the income guarantee. That was going to be done immediately. It has not come immediately for reasons that I would have expected. The right hon. Gentleman, with his knowledge, knows that one cannot introduce a scheme of this complexity immediately, or in the first year at all. He also knows that there are very considerable difficulties in the form of plan which he was proposing. So it has not come immediately, and it will not come immediately.

If I may, I will make one other point about testing the adequacy of pension benefits by a rule used by the right hon. Gentleman in a former debate. He said that another test of the adequacy of pension benefits would be how they compared with National Assistance. He also said that one of his criteria of adequacy would be to take the National Assistance scale rate and add to it the National Assistance average rent. So let us test his scale by his own test to see whether the present rate is adequate.

The present National Assistance rate is 63s. 6d. and the present National Assistance average rent is 25s. 10d. Had the right hon. Gentleman been standing where I am and using that scale he would have been criticising me were I at the Dispatch Box on the Government Front Bench for introducing a pension benefit of £4 and would say that, on his test, it should be £4 10s. I am not going to adopt his tactics, but the test of adequacy of benefits by his test would mean that the single rate should go up to £4 10s.

Mr. Houghton rose—

Mrs. Thatcher

The right hon. Gentleman will be winding up the debate tonight. I have given way a good deal. I did not interrupt the right hon. Lady in the only speech in the House which I have seen her read.

Mr. Sydney Silverman (Nelson and Colne)

The hon. Lady said just now that the increases in the pension could not be paid immediately. I agree with her—that is too painfully obvious to all of us—but if the Administration, of which the hon. Lady was a distinguished member, had intended to raise pensions and had put the preparations in hand at the tail end of the last Session, would there then have been any difficulty in paying them immediately this year?

Mrs. Thatcher

The hon. Gentleman is right off beam. I am not talking about the timing of the increase in retirement pensions. I am talking about the introduction of the national income guarantee, which is an entirely different point. National Insurance itself, as I understand it, is a basic universal scheme. It is the magic of averages. Everyone gets so much in return for actual contributions. It cannot begin to cater for different individual needs. National Assistance, on the other hand, does cater for individual needs and for variations.

There has been a movement on our side, and I believe on both sides, of the House to try to get something rather between those two. Our reasoning, and I believe the reasoning of hon. Members opposite, was that there are circumstances which are not catered for either by National Insurance as it is at present or by National Assistance as it is at present. For example, there are people who would not qualify for help under National Assistance, but who need help because they are suffering under permanent illness like disseminated sclerosis, or poliomyelitis, or they are chronically sick. Perhaps they get National Insurance benefits, but those are not enough. Therefore, we on this side were tackling the problem by trying to urge increasingly selective benefits.

The right hon. Lady will remember that on the last Bill the Labour Party was thinking along very much the same lines in the Amendment on the constant attendance allowance, which would have been the same thing for the chronically sick. We were grappling with this problem through last summer. I hope that the right hon. Lady will continue to grapple with it where we left off and find an answer. It is extremely difficult—[Interruption.] I wish that the right hon. Lady would not jump to rather bitter conclusions when I am trying to tell her what we were doing.

It is extremely difficult to define the chronically sick. Each of us knows whom we want to benefit, but it is extremely difficult to put in legislation a system which would be administratively equitable and capable of an insurance basis. I know from Amendments which, in the past, were tabled by the Labour Party that the right hon. Lady will agree that there are people such as the chronically sick who are not catered for adequately now by either scheme. I believe that both sides of the House are trying, and will go on trying, to find a solution to this problem.

The other day, when the right hon. Lady made her statement in the House, I put a point to her to which I would like to return. It concerns the increased amounts for child dependants under the new increased benefits she has announced. Hitherto, it has been our pride in this country that our scheme has always given preference to the family man—rather more preference than has been given to him on the Continent. The Continental schemes, being based on earnings, have taken their benefits as a percentage of earnings, regardless of the family commitments of the beneficiary. We have not had such an interest in percentage of earnings until now, but we have always seen that family commitments were met under National Insurance by increased benefits in proportion to the increase in family commitments.

In 1963, when we proposed increases of 10s. in the single rate and of 16s. 6d. in the married rate, the incease in respect of each child was 2s. 6d. Therefore, when I saw the right hon. Lady's initial proposals, which were not detailed, I expected that she would increase the dependency benefits in respect of children by at least 3s. In fact, she has chosen to give maximum advantage from her increased benefits either to the single man or to the married couple, and the advantages decrease proportionately as the size of the family increases.

I am very surprised at this, because there has been a tremendous amount of commentary from sociologists to the effect that the larger the family the lower the standard of living comparatively; therefore, an increase in family allowances is needed—not dependency allowances to cope with this. The increase in family allowances would be completely non-selective and would bring extra help to many people who do not need it, but the way family allowances can be increased for the sick and the unemployed is to increase the dependency benefits, because these by very definition go to the children of people who are either ill or unemployed. Therefore, I would have expected the right hon. Lady to have given larger dependency increases in respect of children than she has given.

It is particularly marked in the case of widowed mothers. I am the first to admit that by abolishing the earnings rule for the widowed mother and for the widow the right hon. Lady is doing a great deal for the widow who goes out to work, that is, for the widowed mother who earns more than £7 a week, and for the widow who earns more than £5 a week. But the right hon. Lady's record is not so good in respect of the widowed mother who cannot go out to work because she must stay at home to look after her children. She will not be affected at all by the abolition of the earnings rule.

Every time this came up before, we took the advice of the National Insurance Advisory Committee and increased the benefits payable for children. Under us those were not subject at all to the earnings rule. So on the last occasion when the widow herself got a 10s. increase in benefit each of her children got a 5s. increase in benefit. On this occasion the widowed mother herself is getting a 12s. 6d. increase but each of her children is getting only a 2s. 6d. increase in benefit. Under our last increases the widowed mother with two children got a 20s. increase. Under the Bill she will get an increase of only 17s. 6d Under us the widowed mother with three children got a 25s. increase. Under the Bill she will get an increase of only 20s. Under us the widowed mother with four children got a 30s. increase. Under the Bill she will get only a 22s. 6d. increase.

Under us the increase in benefit for the widowed mother with five children—I have gone up to this level because I happen to have very much in mind a family of five small children I know whose mother cannot go out to work—would have been 35s. Under the Bill it is only 25s. We did, in fact, every time put the increased amount towards increased dependency allowances for the children, thus benefiting to a higher extent the widowed mother who could not go out to work. Under the Bill it is a little ironic that she has the least good bargain of all from all the increases that the right hon. Lady is proposing.

I come to the present position with regard to widows' benefits. I agree entirely that under us it was anomalous. As I mentioned the other day, there was a difference already under us of £600 between what the 10s. widow could draw out of the scheme and what the no-shilling widow could, the 10s. widow being able to draw up to £600 more from the scheme than the no-shilling widow.

I will make the point clear by an example. The differences emerge from two brides—one married at Easter, 1948, and the other married on August Bank Holiday, 1948, to men with identical insurance records. They are widowed this week at the age of, say, 36. Under the right hon. Lady's proposals the one married at Easter will be able to draw £1,800 more from the scheme than the one married on August Bank Holiday. I am a post-1948 bride, married to a "pre-1948" man, so if the worst came to the worst I would be a no-shilling widow, whereas many of my contemporaries, if the worst came to the worst, would be 10s. widows. A difference of £1,800 is an untenable difference, unless at the same time something else is to be done elsewhere in the scheme.

These anomalies are again accentuated by the abolition of the earnings rule. I will take another example. A woman, who is widowed on her fiftieth birthday will now get widows' benefit regardless of how much she earns, and she will get it until she draws retirement pension, and she will not in fact have to pay any more contributions for retirement pension. The basis on which she will get that benefit at 50 is that she is deemed to be unable to go out to earn her own living, but she will get it regardless of how much she earns. But had she been widowed on the day before her fiftieth birthday, she would get nothing beyond the 13 weeks' resettlement benefit because she would he deemed to be able to earn her own living. She would get nothing even though she could not earn her own living.

We therefore have an absolutely rigid boundary at the age of 50. [Interruption.] I hope the right hon. Lady will listen, because we did a great deal for widows, for example, widows and children. After the immediate increases three weeks before the 1951 election the allowance for children of widows was 10s. for the first child, 7s. 6d. for the second and 7s. 6d. for the third. When we left power this time, the allowance for each child was 37s. 6d. We did a great deal and the hon. Lady knows we did.

I am on a fairly complicated and intricate point, and I believe that, however much one has done, there is not a time when one can ever say that one has finished, and there never will be such a time. At the moment, we are running for widows two quite different sorts of schemes, one based on benefit for the event of widowhood—that is the 10s. widow and now the over 50 widow—and the other based on benefit for the absence of earnings. That difference has been accentuated by the steps which the right hon. Lady has taken. I do not think that one can have two quite different bases for widow's benefit and say "We will leave the solution of this to a review." The only thing to do to soften the age 50 line is to follow the precedent of the Industrial Injuries Scheme and have a lower rate of benefit equal to the 10s. widow's benefit for the woman who is widowed below the age of 50.

Miss Herbison

Why did not the hon. Lady do that?

Mrs. Thatcher

This is probably one of the things that I would have done. [Laughter.] The Department will be able to tell hon. Members opposite, and if the right hon. Lady asks she will find that I was extremely interested in widow's benefit and always concerned about the anomalies. She has put the matter over to a review. I think that she got the idea from us. I do not think that, having taken the actual steps that she has, she can leave the matter until a review.

Mr. Eric Lubbock (Orpington) rose—

Mrs. Thatcher

May I continue for a moment?

The right hon. Lady was severe in her strictures about what happened after the 1956 National Insurance Advisory Committee review on the question of widows' benefits, when we introduced the change for the widowed mother from 40 to 50, on the recommendation of the National Insurance Advisory Committee, coupled with considerable other advantages in benefit to those widows. The right hon. Lady accused me of hypocrisy. But that change came before the House and the Labour Party did not vote against it. It accepted it, and, therefore, can only be taken to have concurred in the changes then made.

Mr. Lubbock

I wonder whether these criticisms that the hon. Lady was making of previous arrangements were in the Conservative election manifesto.

Mrs. Thatcher

I have a copy and if I can find it I will let the hon. Member have it. He will find a reference to a review of changes in widows' benefits. I am sorry that I cannot lay my hands on it at the moment, but there is such a reference in the manifesto. I now want to go on to another point, about timing.

Miss Herbison

The hon. Lady has made great play of this increase from 10s. to 30s. and suggests that we ought immediately to do something for the no-shilling widows. I suggest that her own Government made many more of those no-shilling widows and 10s. widows. Since she feels so strongly about this, will she put down an Amendment and back up the case, or will she oppose the regulations which will come before the House to raise the 10s. to 30s.? That would be the honest thing to do.

Mrs. Thatcher

I propose to put down an Amendment for the no-shilling widow. That is why I am giving so much notice now—[An HON. MEMBER: "Cynical."] It is not cynical. We, too, had considerable plans which we would have carried out had we got back into power. [HON. MEMBERS: "Oh."] Of course we had very considerable plans. I would have looked forward to a period of five years of power, with a complete future of five years in front of one, when other considerable changes could have been made in the scheme similar to the considerable changes which were made in the previous 13 years.

May I now continue? The right hon. Lady and the Joint Parliamentary Secretary are not being nearly as courteous to me as I was to them. May I now go on to the point about timing? When the right hon. Lady and her hon. Friends were in opposition I would have thought that, having studied pensions, they would have known most of the things about timing and the difficulty of giving increases which the right hon. Lady, very kindly and in great detail, told us today. Then they put forward a different solution which I have no doubt some of their back benchers will take up. They said, "If we accept that it takes a long time to make the increases, why can you not make some of the increases retrospectively?"

The right hon. Lady herself on 28th January, 1963, said: I want to repeat the plea made by my hon. Friend the Member for Blackburn. If it is impossible to pay these increases until nearly the end of May, then cannot the Government seriously consider giving them retrospectively? I can think of many uses to which the old people could put a lump sum at the end of May."—[OFFICIAL REPORT, 28th January, 1963; Vol. 670, c. 694.] I do not remember whether we voted on this, but the right hon. Lady herself suggested retrospective payment, and the right hon. Gentleman the Chancellor of the Duchy of Lancaster supported her. If, having studied pensions closely, as she did, the right hon. Lady gives indications when in opposition of what she would do if she were in power, she cannot be dismayed if her own back-benchers now believe her. She, in fact, made a good deal of play of the excellent computer which we have at Newcastle. I hope that she will inquire further into the computers for the 10 centres throughout the country which were under way. The fact that they were under consideration was published in The Guardian on 6th May, 1963.

I agree with the right hon. Lady that the factor which stops her and stopped us from increasing benefits in a shorter period the time that it takes to deal with every single book individually; this must be done because that book relates to an individual record. It seems to me that this is one of the points which could quite well be considered by a major review of the social security schemes, but from our viewpoint we do not think that a major internal review would be enough. We agree that there should be another review of the social security provisions in this country. The Beveridge Report was brought out in relation to the conditions of the 1930s. Beveridge reported in about 1943. The White Paper was brought forward in 1944. The scheme came fully into operation and was heralded as a tremendous advance in 1948. It has, therefore, been in operation now for about 16 years.

If we want to have major changes, it will take another four years or so to have big changes of the kind which the Beveridge Report itself proposed. We think, therefore, that there should be a major public review which can take evidence from interested bodies and that it should deal with many of the questions which we know are now raised. To some extent we have already departed from Beveridge in introducing a certain amount of wage relation, but there are other things absolutely basic to the Beveridge conception which people have never accepted. The earnings rule is one. That stems from the basis of State insurance—insurance for the absence of earnings.

Whether that is an appropriate basis for insurance in the modern society is one question. Whether all benefits should merge together and we should have the same rate for sickness, unemployment, widows benefit or retirement benefit, or they should be separate as before Beveridge, is another question; Whether one should relate actual benefits to actual individual contribution records—it is that which causes the time factor now—or use contributions as a method of financing benefits, the benefits being universal but the contributions not necessarily related to them—these are some of the questions which should be dealt with in a review. This review should challenge the accepted principles then either reaffirm, adopt, or radically change them. Such a review should be instituted now. It should be undertaken, not as a departmental review, but by an outside body which can take evidence and publish its findings.

I had intended to go into a number of miscellaneous points of detail. If the right hon. Lady is interested in the kind of approach I shall adopt in Committee I shall now mention some of the points I have put down to be considered further. The first one was under consideration at her instigation during my time in office. It is the death grant in respect of mentally handicapped children of over 19 years of age. We were considering making a dependent on the recipient being an insured person. Another thing I should like to have tackled is the six months' bar to benefit claims. If one does not claim benefit within six months there is an absolute bar to getting any benefit. It used to be three months, but now it is six months and I think that it should be longer.

The theory about increments has always been that they should be related to the amount of pension forgone. We have had no increase in increments since 1959, although there have been two increases in pensions and there will now be a third. It is time that we increased the increments to give extra incentive to deferred retirement. The Government Actuary's Report on the Quinquennial Review records a trend towards earlier retirement, surprisingly, among men. We have to decide whether we want to reverse it. Increasing the increments would be a way of giving that extra incentive.

I agree with what the right hon. Lady has done about maternity grant. I know the administrative problems of having a separate home confinement grant. Although that means that the woman who has her baby at home will get no increase in maternity benefit, I agree that it is right to have a single grant.

I should have liked to have seen something done about disregards for National Assistance. They have not been moved since 1959: changes are not made as often as the scale rates are moved. I hope the right hon. Lady will bear that in mind when she is laying National Assistance regulations and increase the capital and income disregards.

The earnings limit improved five times under our Government, but is not to be increased under the present Bill. Perhaps the right hon. Lady does not think the time is ripe for that, but at a time when increases in benefits are being justified by reference to average earnings, the same reasoning should apply also to raising the earnings rule. This is a point we shall have to consider in Committee.

In spite of all my comments, criticisms and, I hope, some constructive suggestions, I congratulate the right hon. Lady on having the very pleasant duty of bringing forward a Bill which substantially increases benefit for many people who need increases. We shall help her as far as we can in speeding the Bill on its way and hope that it gets the Royal Assent as quickly as possible.

6.5 p.m.

Mr. Michael McGuire (Ince)

I rise to address this House for the first time. I am pleased to be doing so on the occasion of the first demonstration by the Labour Government that it is to translate into action one of our election pledges, namely, to improve the lot of those of our people who need help most.

After listening to the hon. Lady the Member for Finchley (Mrs. Thatcher) I am reminded of the story of a man who had died. His relatives were gathered round the coffin while the vicar was speaking in his praise. The man was made out to be the finest husband there had ever been, but he had been just the opposite. His wife nudged her son and said to him, "Look at the name on the coffin". Just as I am convinced that it was right to bury that man, I am convinced that we were right to bury the last Government, and it will be a long time before they are—forgive the pun—exhumed.

The constituency I have the honour and great privilege to represent is not among the most beautiful, although some parts of it are as beautiful as most parts of other constituencies. Like all Lancashire constituencies, the people in it are most warmhearted, understanding and, as we say in Lancashire, outspoken. My constituency comprises seven urban districts—Abram, Ashton-in-Makerfield, Ince-in-Makerfield, Orrell, Billinge-with-Winstanley, Skelmersdale, and Up Holland. I read the maiden speech of an hon. Friend a few days ago. He said that in his constituency there were several urban districts all of which claimed priority as the most important. He very wisely said that he accorded that claim to each of them, and I do the same for each of my seven urban districts.

Ince is mentioned in the Domesday Book, and Skelmersdale is being developed as a new town. So we have a link with the past and we also look to the future. We still have the traditional industries of the North—coal, cotton, light engineering, railway waggon workshops and sheds, although they have declined considerably, and we now have the largest food factory in Europe. My constituency bears witness to the ravages of private enterprise. There are many acres of derelict land in it. Good work has been done by the local authorities to improve and reclaim that land. I am certain that they will do much better under a Labour Government.

I believe there are certain traditions in this honourable House and one is that a maiden speaker is allowed to be mildly controversial, but he must not wade too deeply into the waters of controversy. I was in the Strangers' Gallery the other day when one of my hon. Friends made what I thought was a good rip-roaring speech. I have not eloquence to match his, but I hope that the House will forgive me if I wade in more than I should. I wish to introduce a little humour. I believe it is the tradition of the House to start proceedings each day with prayers. That is a very ancient and honourable institution, and, I think, a very necessary one.

I knew of this tradition before I came to the House, but I was surprised when I found that instead of facing one another hon. Members turned to the backs of the benches during prayers. I asked one of my hon. Friends about this, because I had not known that it occurred, and he replied: "There is an official reason, but the real reason is that Members know, when they pray, that God is more likely to be found on the back benches". Incidentally, my hon. Friend is not a Front-Bencher. This was the most comforting piece of news I had received since I entered the House, and I like to think that, among the prayers offered, there is one directed particularly towards the giving of strength to maiden speakers.

The man I succeeded had been Member of Parliament for Ince for 22 years, Mr. Tom Brown. I know that he was loved and respected by his constituents, and I am sure that he enjoyed great respect on both sides of the House. [HON. MEMBERS: "Hear, hear."] I believe that Tom did much to brighten the House. Hon. Members will recall that one of his delights was to demonstrate his skill in gardening and to bring to the House flowers from his greenhouse, and I believe that another of his intentions, in which he succeeded many times, was to make many right hon. and hon. Lady Members more beautiful by his gifts of flowers.

Tom Brown was known throughout his long political life as the champion of old-age pensioners. I do not mean to imply that he was their only champion, but he certainly was one of the most eloquent. Apart from their general interest in affairs, hon. and right hon. Members have special interests, and Tom Brown's special interest was in old-age pensioners. He would have been delighted to be here today to take part in this debate and speak on their behalf.

In recognising the plight of old-age pensioners, the sick, the disabled and the widows, in a time of serious financial difficulty, the Government are vindicating the ideals which have always inspired our party. It is particularly noteworthy at this time, when my right hon. Friend the Chancellor of the Exchequer, having gone to the cupboard, has found it not only bare but burdened with a few debts as well, that this increase, the biggest for 13 years, is to be given. I contrast it with the increases made during the past 13 years, the years when, so we were assured, we had "never had it so good". People can see the true value of what this Government are doing, not only in increasing the pension but in abolishing prescription charges and the earnings rule for widows' pensions. I am sure that our people will realise that we have kept faith with them.

It can be argued that we have not done enough and that there is a delay in paying the increase. We know that much still remains to be done. But, after all the talk of comparisons between what we did from 1945 to 1951 and what the Tories did from 1951 to 1964, and after all the bandying about of statistics, the brutal fact remains that still, even with the new pension, a lot of our old people will have to suffer a very poor standard of living. Even with the increase, whenever it comes, many of them will not have enough to live decently.

In my constituency there are about 6,800 old-age pensioners who will be delighted with what the Government are doing. As I go about the constituency, many of them tell me that, after they have paid the rent, paid for coal, food and other necessities, they have a miserable existence. All the talk about average rates, and Conservative boasting that, on the basis of statistics, the pension under their Government was proportionately greater than it will be under this Government, ignores the fact that averages are meaningless unless we apply our minds to what the pension really is and what it will bring in purchasing power.

I am reminded of the story of the man who went to a Colonial Territory to measure the natives there. He found that half of them were 6 ft. tall and the other half were 5 ft. tall, so he sent back a report that the average height was 5 ft. 6 in., and suits of clothes were sent out for people of 5 ft. 6 in. which fitted none of them. That is the value of averages unless they are related to reality.

The real solution to the problem of pensions lies in the Labour Party's plan for at least half-pay on retirement, and this can only serve to bring about a big improvement on the present apology for a pension scheme. As an ordinary working man before entering the House, I have always asked why we should have divisions and distinctions in our society. Why should some people, not because they displayed any great initiative, be able on retirement to enjoy a good pension while the other half, or more than half, have to exist on a pittance?

I hope sincerely that this Government, given the time—I see no reason why we should not get the time—will be able to introduce the half-pay on retirement scheme, making a real step forward in social welfare. Remembering that it was the Labour Party which removed the threat of sickness from our people and introduced, as its crowning achievement, the National Health Service and social security schemes, we all look forward to a final and just solution of the pension problem.

Although these increases are most desirable, I hope that my right hon. Friend will bear in mind some of the difficulties experienced by people who are still not brought any comfort or succour by the new increases. I should like serious consideration to be given to reassessing the distinction which now exists between those disabled through war service and those disabled through industrial service. I am thinking particularly of the provision of invalid cars and the clothing allowance which a person with artificial limbs, as the result of industrial accident, has as compared with the allowance received by someone with artificial limbs as a result of war service. I am thinking also of the constant attendance allowance. The hon. Lady the Member for Finchley said that the Tories were thinking about this. I look forward to the Labour Government doing something about it as soon as they can.

In all the talk which we so often hear about the difference between what we did from 1945 and 1951 and what the Tories did from 1951 to 1964, it is forgotten that the Labour Government of those days were running the country just after it had been, for the first time, to some extent devastated and war had been brought home to these islands. There was the Korean War, too, when we were again involved in defending freedom at the same time as we were trying to rebuild Britain. I contrast what we did in our six short years with what the Conservatives did in their 13 years when we "never had it so good". That is the proper perspective in which to consider all these things.

I thank the House for the fair and quiet hearing which I have been given on this the occasion of my maiden speech.

6.18 p.m.

Mr. Alasdair Mackenzie (Ross and Cromarty)

It has always been regarded, and rightly so, as an honour and a responsibility to address the House of Commons for the first time, and I am deeply sensible of that honour and responsibility. Since the beginning of this Parliament, it has been repeatedly pointed out that it is the custom for a Member making his maiden speech not to be too controversial, and I hope to observe that custom.

I am very pleased to be speaking when the House is discussing pensions and insurance. As a member of the party which pioneered the introduction of social security services in the early part of this century, I take real pleasure in seeing the measures which are being introduced to help pensioners and to alleviate hardship wherever it occurs. I congratulate my right hon. Friend the Minister upon her part in bringing these measures about. She has had a very big responsibility. I and my party wish the right hon. Lady the Minister well in her onerous duties.

The eyes of the aged and the infirm will always be directed towards the Ministry of Pensions and National Insurance. For that reason, we are very disappointed that it is not humanly possible to bring the payments forward at this time. We should have liked to see the payments for old-age pensioners started by Christmas, but we have been told the reasons why this is not possible.

I have referred to the question of the earlier payments because I realise the hardship that many old people suffer during the winter months. It is medically accepted, though not widely known to the public, that many old people die of the cold every winter because they have not the money to pay for adequate heating. There are also those who were too old to come into the scheme in 1948 and those who did not qualify because they were self-employed and did not pay insurance contributions. They are in receipt of National Assistance, but we should like to see those classes receiving an adequate income without recourse to National Assistance.

When I joined the local authority in my own county, over 30 years ago, I had some experience of working a means test. It was an experience that I would never wish to have to repeat. Notwithstanding the many arguments and counter-arguments, and sometimes the gloomy forecasts made in speeches in this House, I and my party hope that the economy of the country will always be sufficiently strong to enable the Government to obviate the need to apply a means test to people who have served their country faithfully and well as long as they have been able to do so. The abolition of the earnings rule for widows is also timely, and we on this bench warmly welcome it, and are glad to know that this Measure will be introduced fairly soon.

Having said that, I should like to refer to my own constituency of Ross and Cromarty. It is a county of great scenic beauty, and the people have long been famous for their hospitality to strangers. Agriculture is our main industry, and here we are making a very valuable contribution to the nation's larder. We produce beef and mutton second to none for quality anywhere in the world, and the bulk of this produce of our county finds its way to the markets in London and other English cities. To confirm this, I was very interested to read this morning the report of the Birmingham Fat Stock Show. This is a big event in the farming calendar. I was most interested to read that the heifer which won the first prize was an animal which one of my neighbours sold to an English farmer three months ago.

Tourism is a very fast growing industry in my constituency. People from all the English counties have been going to the Highlands in increasing numbers in recent years. If one looks through the registers of our most important hotels in the Highlands one finds that most of the names are those of people from the Midlands and other English counties.

But we have our problems. Depopulation is our biggest single problem in the Highlands. We have been losing our able-bodied people at the rate of 1,500 a year over the past 10 years. No community can view this situation with equanimity. To arrest this decline is our most urgent task.

That is why we welcome the proposal in the Queen's Speech to set up a Highland Development Board. We hope that this Board will be different from many of the other boards and commissions that have been set up in the past to develop the Highlands. Many commissions and panels have been set up over the past 50 years. These bodies in turn appointed working parties and study groups. Admirable reports have been produced by many people who were able and full of good will towards the Highlands. Thereafter, those reports found their way into Government Departments in St. Andrew's House, Edinburgh, and in Whitehall, but I am sorry to say that no further action was taken. As a friend of mine so aptly put it, they were sent to those Government Departments to be consigned to the limbo of forgotten things. I think that we have now come to the crossroads and there is no point in setting up any more "talking shops" to investigate the Highland problem.

Is there a future, then, for a Highland Development Board? There is indeed. We do not pretend that the task will be an easy one, but it will be very awarding because there is a vast potential to be developed and the money used will prove to be a very sound investment. What is important is the fact that the people will co-operate. While the Opposition party has never come out in favour of such a Board, it is a well-known fact that most of its supporters in the Highlands are wholeheartily in favour of such a body.

Speaking as one who has spent his whole life in the Highlands, I can assure the Government that, provided that the Board is set up with the necessary executive powers and financial backing in order to promote development along the right lines, the enthusiasm of the people will far transcend all party barriers and partisan interests in order to make it a success.

I thank hon. Members for their indulgence, and I should like to close on a more personal note. Since coming to this House I have met many people who have been extremely well disposed towards my hon. Friends and myself but I regret that very few of them have crossed the Highland line. I cannot help feeling that they would find it much easier to follow our arguments if they had seen the area for themselves. Consequently, I would humbly suggest that when hon. and right hon. Members are arranging their summer holidays they might do worse than arrange a holiday in the North of Scotland.

If they did that—and you, Mr. Deputy-Speaker, are included in this—I am sure that they would find it much easier to follow the discussions relating to our problems, and that they would also benefit from the superb scenery and bracing atmosphere of our Highland hills.

6.30 p.m.

Mr. A. Garrow (Glasgow, Pollok)

The only thought that consoles me in presenting my maiden speech is the knowledge that almost every other hon. Member has at some time or other suffered from the same emotions and turbulence that I am experiencing. I have the honour of representing the constituency of Glasgow, Pollok, which was represented in the last Parliament by Sir John George.

Sir John George was a very highly respected individual in Pollok and, from what I can gather, a very highly respected individual on both sides of this House. It is my hope that I will be able to represent the electors of Pollok as well in this Parliament as Sir John did in the last.

Pollok is not an industrial area. It can aptly be described as a dormitory constituency in so far as most of its residents are required to travel out-with its boundaries in order to perform their daily tasks. As it is a dormitory area, the people of Pollok automatically become the victims of all the ills which normally befall an area of under-employment such as Glasgow. When an industry closes down or a factory goes on short time anywhere in or near the City of Glasgow, this has an adverse effect on at least some of my constituents.

I share with every individual in Scotland the sincere hope that the Government will speed their proposals to bring back industry north of the Border. Industrialists need not be afraid to move there. My fellow Scots are a keen, energetic and industrious people if given a chance and any industrialist who moves there will, I can assure him, be very well rewarded.

Pollok contains within its boundaries the ancient village of Pollokshaws. History has it that this is the place where the "queer folk" come from. Pollokshaws village is rapidly losing its air of quaintness. This is a direct result of the massive redevelopment plans of Glasgow Corporation. Old buildings are disappearing and are being replaced by multi-storey blocks of flats which are providing the most modern type of accommodation for residents of the area.

Also within my constituency are the lands of Sir John Stirling Maxwell, of Pollok, comprising several acres of magnificent estate. Pollok House, on the estate, was built by Robert Adam in 1752 and contains a magnificent collection of paintings, some by Goya, El Greco and William Blake.

The owners of Pollok Estate have offered to Glasgow Corporation the site to house the world-famour Burrell art collection which, for the past 20 years, for want of a home, has been hidden in storage up and down the country. It is confidently assumed now in many quarters that at long last a suitable site has been found and that, before very long, this priceless collection will go on view for the world to see.

Whatever differences emerge in this debate, I think that it is true to say that this Bill will be welcomed throughout the nation. Most of us recognise the need for increased benefits, and my right hon. Friend the Minister of Pensions and National Insurance is to be congratulated on introducing it so early in this Parliament. I recognise that parliamentary convention lays it down that maiden speeches shall be non-controversial, but it is sometimes rather difficult to be non-controversial when one is discussing a subject like this which is so fundamental to social justice. However, I trust that if I do stray over the borders of convention I will be excused.

I have two reservations about the Bill. First, there is the extent of the increases proposed. These are very welcome and are much higher than any increases proposed over the past 10 or 12 years, but no one will be deluded into thinking that these will be sufficiently high to meet the needs of the categories involved. My second reservation concerns the date on which the increases become effective. If one is a pensioner it is not easy, or palatable, to be told that one must wait for several months. It is apt to remind one of the soldier writing home, "Dear Mum, I am sending you ten bob but not this week."

While appreciating the administrative difficulties of bringing into effect these increases at any early date, I trust that the Government will ensure that this extensive delay will not recur. It is to be hoped that the Government will see to it that future increases are paid when they are required and not several months later.

I was glad to hear my right hon. Friend state that she is considering more modern methods of paying pensions. It seems to me rather ironic that there should be even the slightest criticism of this Bill from the benches opposite because, as an inexperienced Member, it strikes me that what is being done by the Bill is merely to repair all the damage which has been allowed to creep in over the past few years. The Bill should not have been introduced now; it should have been introduced at least 12 months ago.

The pensioners are a section of the community all too easy to forget. We—and I mean the general public—tend to accept that they have served their purpose in life and are now merely a burden on the State. We must not forget that, because of their lifelong devotion to the service of the community, we in the younger generation are able to live in a democratic society and enjoy the full fruits of their labour.

I trust that the Government will very soon consider the prospect of removing from the provision of social security the horrible stigma of National Assistance. There must be many thousands of people who qualify for National Assistance, but who, because of a false sense of pride, elect to do without. I hope that the Government will soon carry out a complete reappraisal of the scale of pensions with a view to bringing them to such a level that those involved need not have to seek other methods of assistance.

Every year that passes sees more and more people living to a greater age. If for nothing else, common decency demands that they be allowed to live in retirement in comfort and without worry. We as a nation stand condemned for so long disregarding the plight of the elderly and we do not and will not merit acquittal until we have established them in a position of social and financial independence.

6.40 p.m.

Mr. Terence L. Higgins (Worthing)

It is a very great honour for me to have been elected the Member of Parliament for Worthing, and in making this my maiden speech I crave that indulgence which, by tradition and by courtesy, hon. Members customarily extend to those addressing the House for the first time.

For more than 18 years the constituency of Worthing was represented by Brigadier Sir Otho Prior-Palmer, and on this occasion I should like to begin by paying tribute to him for the services which he gave to the House, more particularly in recent years in connection with N.A.T.O. affairs, and also in helping constituents with their problems. I should also like to add a personal word of thanks to him for the kindness which he has shown to his successor, because continuity is very important in constituency affairs.

It would appear that commercials for holiday resorts are in order and I should like to add a word for Worthing, which is a deservedly famous holiday resort on the South Coast. In recent times, Worthing has also become a place to which people find it pleasant to retire. I have been studying a recent publication covering United Kingdom towns with populations of more than 50,000 and I found that Worthing has more people over the age of 65 than any other town in the country. It is, therefore, particularly appropriate that I should make my maiden speech in a debate on pensions.

However, I should like to stress that the subject which I shall raise in the main part of my speech concerns not only Worthing, but people in every part of the country and it is a subject in which reform is desperately needed.

Before coming to the main subject of the debate, I should say a word of explanation, because in recent weeks economists have not been universally popular and it may appear strange that "Sunny Worthing" should have elected a Member who is a disciple of what has been called "the gloomy science". The reason for this is that I had the great privilege of beginning to learn economics at Cambridge, where there is a long tradition of economists going through Marshall, Pigou, Keynes and Robertson. It is true that Marshall, who was first in that line of economists, was perhaps the most mathematical and the most academic, but he always worked with a portrait of a poor man in front of him. I saw that portrait hanging in the library at Cambridge and it is in that spirit of concerning oneself with poor people that I want to approach the debate today.

I am second to none in approving and welcoming the Bill, though perhaps one should express a little surprise about it, because one understood from the election addresses of the Labour Party that we were to have a mammoth new scheme, including an incomes guarantee. When my hon. Friend the Member for Finchley (Mrs. Thatcher) queried this, it was suggested that it could not be implemented immediately because the outgoing Conservative Government had not prepared for it. That is not an adequate answer. I tend towards controversy and I do not want to go through the statisical analysis which my hon. Friend the Member for Finchley made earlier, but I should like to take up one point.

The figures for the period of the Conservative Government, especially during the last five years, show that pensions have been going up faster than average earnings. The crucial point here is that that is a better performance than the target which the Labour Party now suggests as a long-term target, namely, that average earnings and pensions should merely be linked together. Therefore, our past performance is better than what the present Government believe should be the long-term target. Of course, it is true that the Bill increases the amount of pensions more than recent increases in average earnings, but the Minister's report shows that she has only 2s. 6d. in hand over the increase necessary to cover average earnings and that is likely to be diminished rapidly by inflationary policies.

I want now to turn to a matter which is non-controversial, because it is not the accepted policy of either side of the House. I want to stress the case of a group of people for whom very few speak up and for whom it is desperately urgent that we should speak up. I refer to those old people, their wives and widows, who were left out of the scheme when it was introduced by the Labour Party in 1948, people customarily referred to as "old-age non-pensioners". It is a fact that if one tells any member of the electorate that there are people in this country who are over 80 and who get no National Insurance pension, one will not be believed. It is, therefore, essential to publicise the need to do something for these people.

This is not a controversial matter, because it is something which every hon. Member ought to support. It is a matter of urgency, because the men in this category are now over 80 and, with the exception of some wives and widows, all the women are over 75. This is not something which can await a long-term appraisal of our pensions policy. It is a true emergency and something on which immediate action needs to be taken.

A great deal has been said in the debate about hypocrisy, but there is a point which needs to be made. In "New Frontiers for Social Security", the Labour Party's view appeared to be that National Assistance should no longer supplement inadequate National Insurance benefit, but should revert to its purpose of providing a safety net for those who did not qualify for National Insurance—in other words, for the old-age non-pensioners. On the same page of that document we are told of the "stigma" of accepting National Assistance relief. What I want to know is: if it is a stigma for those people who are getting National Insurance pensions, why is it not equally a stigma for those who were left out of the scheme in the first instance?

I want now to examine the arguments against extending benefits to this group. There are two main arguments. One is that we are concerned with a National Insurance system and the other is that the cost of giving these people benefits at this stage would be too great. It is perfectly clear that we have long since abandoned the actuarial basis for the basic pension. Anyone who studies it can see how far we have strayed. Singularly enough, in the actuarial report for the last quinquennium and in the actuarial report attached to the Bill there is no reference to this. However, on 17th June, 1963, my hon. Friend the Member for Finchley said: Of those now drawing retirement pensions, the man who retired this year aged 65 could not have contributed, had he entered the scheme in 1926, more than £240 towards the cost of his pension, together with a similar sum on the part of his employer. The capital value of the pension for such a man, if single, is £1,700, and if married, £3,500."—[OFFICIAL REPORT, 17th June, 1964; Vol. 679, c. 11.] In other words, the pension of £5 9s. for a married couple had only about 7s. 6d. covered by contributions. This means that the remainder of the amount paid out under the National Insurance scheme came from contributions from people who had not already retired and from the general level of taxation.

If a large percentage of the National Insurance pension is not related to contributions, surely the old-age non-pensioner who was left out of the scheme when it was introduced is at least as much entitled to that part of the pension which is not covered by contributions.

I believe that we should be quite clear in saying that the insurance argument is not an argument for failing to give pensions without a means test to the old-age non-pensioners. Indeed, I think that we should stress that the increase now proposed in this Bill is not, in fact, due in any way to contributions paid in the past by people who have already retired, and if this sum is available we should consider very carefully the priorities involved and whether one should not make some allowance, not subject to means test, to the old-age non-pensioners rather than to those who are on National Insurance.

My next point is that so far as one can see the true contribution which justifies the payment of retirement pension is in fact the service which people have given over their lives to the community. The only way in which one should allow for a contribution is that people who have contributed should have an additional amount on an actuarial basis dependent on the contribution which they have made.

I turn to the question of cost. Hon. Members opposite may well say, "Why has not something been done about this before?" The explanation probably lies in the fact that if the Labour Government had tried to do it when the scheme was first introduced, the cost would have been very heavy, and, indeed, it would have been very heavy until quite recently, but I believe that the amount involved is now an amount which it is feasible to spend in bringing these people into the scheme.

Regrettably, statistics on this subject are remarkably poor, but so far as one can estimate there are about half a million people who come into the category of old-age non-pensioners. At first sight, I thought that the cost of extending benefits to them would probably not be very great because they would all surely be drawing National Assistance benefit. But the fact is that only about 124,000 of that 500,000 or 600,000 are drawing National Assistance. This surely suggests to the House that something is wrong somewhere. It seems that the gross cost of extending benefits in the way suggested would, at the most, be £100 million and probably the cost would be only about £60 million. It is, therefore, about a fifth of the cost of the Bill which we now have before us.

It is helpful to divide the old-age non-pensioners into four groups, dependent on what their present resources are. There must be people in this group, probably not very many, who have considerable resources. In this case, if the benefit is extended to them, they will, of course, pay it back to a considerable extent in Income Tax, and the cost of the whole exercise will be reduced by that amount. Their claim on the basis I have suggested is, of course, quite as good as equally well off people in a somewhat younger age group.

The second group are the people who are just above National Assistance level, who were not allowed to contribute to the scheme in the first place because they were just above the income limit which was set. But although they might at that time reasonably have expected to put aside money for their retirement, the amount of money which they in fact put aside was not sufficient in the intervening fifteen years or to keep them at a similar standard of living, because there has been inflation and increases in costs, such as rates.

Therefore, these people have found their standard of living constantly declining. A number of them are now only just above National Assistance level and this means that they have to run down their capital continually. To a man of 80 or woman of 75 this is a constant source of anxiety. Eventually they find that they have to rely on National Assistance subject to the means test.

Finally, there is the group below National Assistance level. If they are already on National Assistance the proposal that I am putting to the House will cost no more at all, while if they are below the National Assistance level and have not applied, perhaps because they are people of an older generation who are more independent than our generation, used to the social service system, this is surely a matter which we ought to do something about. We have, then, these three groups. I believe that there is a case for helping all three and that the cost of doing so would not be excessive.

We have heard a great deal of talk today about widows' benefits, but the fact is that there are widows whose husbands were above the 65 age limit when the National Insurance scheme was introduced, although they themselves were below it, who were not allowed to enter the scheme as contributory members unless they were out of work. I had a letter only yesterday from a lady whose husband was over 65 in 1948, and who is now fairly elderly herself. Her husband died two years ago and she gets no widow's benefit whatever through no fault of her own, except that her husband was a few years older than he might have been.

I put it to the House that this is clearly an injustice which we ought to do something about, far beyond any of the other measures which, quite rightly, are being introduced. This is a question of priorities and I believe that on this question of old-age non-pensioners we have our priorities wrong. I believe, equally, that something should be done about this at the earliest possible moment.

I thank the House for the indulgence which it has shown to me in listening to my speech. I am deeply grateful to hon. Members and I trust that my words will not be considered as a mere formal maiden speech. This is a real problem and one which, as I have said, both sides of the House should surely unite in doing something about.

6.56 p.m.

Mr. Hugh D. Brown (Glasgow, Provan)

I am very grateful to the hon. Member for Worthing (Mr. Higgins) for making his maiden speech, because I think the House enjoyed it, and, although I did not agree with his arguments, it helped to break the impression that we might have been in the Scottish Grand Committee because of the three previous speakers.

Tradition is a great thing. The unfortunate part of it is that we take advantage of it in making our maiden speech by claiming the right of privilege. As a non-conforming, disputatious and somewhat rebellious Scot I am not sure that I want to claim any privilege in the sense of being free from interruption; in fact I might welcome it because it might make me feel more at home. But being also a canny Scot, I have no doubt that there is good reason for this tradition and I shall certainly do my best to observe it.

My predecessor, William Reid, was a man who gave 44 years to public service, 30 years as a member of the Corporation of Glasgow, during which period he claimed to have tried 20,000 cases as a police judge. I must confess that it is too late for me to compete on that score, but certainly during his 14 years membership in this House I think that his most dramatic contribution was on the subject of the abolition of capital punishment. It seems to me that in the first Session of this Parliament this also might be an appropriate subject matter for discussion.

But it is in the name of Provan that I should like to make a few remarks. Provan is rich in historical association with the City of Glasgow. It takes its name from former lands of the Church and indeed it is connected with the oldest house in Glasgow, Provand's Lordship. The lairds of Provan in the past included William Turnbull, Bishop of Glasgow and founder of Glasgow University, and later James IV. They were fruitful lands for the Church in those days, and indeed they are fruitful lands now.

There is the magnificent achievement of the Glasgow Corporation in its attempts to solve the housing problem of that great city. Within Provan in the post-war period alone we have had about 15,000 new houses for a population of 50,000 and 22 new schools—16 primary schools, five secondary schools—all comprehensive schools—and one special school. They are well equipped with everything except, as the cynics say, teachers. We have the unenviable record of having the highest incidence of teacher shortage in the country. This is only one of the many headaches handed over by the former Government to my right hon. Friend the Secretary of State for Scotland.

Industry is taken care of in our modern industrial estate which was started in 1946, with the first factory being occupied in 1948. It manufactures and produces anything from ladies' outerwear to valves for Polaris submarines. It is a pity that after about 18 years it is still not fully utilised.

I should like to think that this contribution is relevant to the debate. I believe that it is relevant, for two reasons. I have had some connection with the Ministry of Pensions and National Insurance. Although I was not in at the conception of the scheme, I was associated with its birth, having been employed in the Department since 1947 until I was somewhat unceremoniously banged out on my neck as a result of being selected as a prospective Parliamentary candidate. While many hon. Members may criticise the present Minister and past Ministers for the lack of speed in implementing pension increases, I can assure the House that no criticism could be made of the speed with which I was removed from that Department. I want to be perfectly fair. It was not the responsibility of the Ministry of Pensions and National Insurance. It was a Treasury ruling of which I was aware.

I should like to go on record as saying that the Department has a wonderful record of a liberal outlook in the sense that it afforded me many facilities to engage in local authority work. I am sure that these facilities will be continued and, I hope, extended by the new regime. I did not receive a golden handshake when I left, and, unlike other more fortunate Members, I will not even get a directorship if the people of Provan reject me. However, I take comfort from the thought that they are a very intelligent, discerning electorate who gave me a 14,000 majority.

The subject of pensions is a very emotional one because we always seem to be playing on the natural sympathy of people for those less fortunate than ourselves. There are strong differences of opinion on this side of the House as well as on the benches opposite.

I should like to deal with some of the wider aspects of social insurance and social services. The care of the aged emphasises how far behind we have lagged in our social service provision. It would do us well as politicians to recognise the political significance of the old people in terms of numbers alone, not just by making nice pleasant speeches, but by applying ourselves to the problems of old age. I know that this is unpardonable, but may I say to the hon. Member for Worthing, who has just made his maiden speech, that we should be thinking less in terms of reviewing things in actuarial isolation. We should be considering them more from the broader aspect and in relation to the other services and benefits which might be provided for the old and others.

I should like to draw attention to what I have always felt were one or two minor anomalies in the scheme. The earnings rule has been referred to by my right hon. Friend the Minister. It is a source of great discontent, particularly in areas like Glasgow which are suffering from under-employment, that so many old people are exploited quite mercilessly by employers who give them part-time wages for full-time work simply to keep them within the earnings regulations. I hope that this is a matter which will be covered in a major review. Another point is that the disregard in the National Assistance Board scales can apply to certain categories of benficiary, but not to the thrifty person who has earned increments on his own National Insurance pension. This is something else which could be examined.

Lastly, I can never understand why it is that if someone in the Services is killed in a motor accident involving an Army truck his widow should receive one rate of pension, whereas if a worker who is going to his place of employment in his employer's vehicle is killed as the result of a motor accident his widow gets another rate of benefit. If the unfortunate chap who happens to be walking along the street minding his business is killed by a vehicle driven by a Service man or a worker, his widow gets a lower rate of benefit. It has always seemed to me that there is something unreal and unjust about this and that we have not applied our minds to the problem.

I am mainly concerned with the future from its broadest aspect. My right hon. Friend the Chancellor of the Duchy of Lancaster, during the debate on the Queen's Speech, referred to the possibility of using the Ministry of Pensions and National Insurance and the National Assistance Board as a means of liaison with other welfare organisations. There are no other departments which have greater knowledge of the problems of the people, whether they arise from widowhood, retirement, broken marriages, unmarried mothers, illegitimate children, financial matters, alcoholics or problem families. Name the problem and officers in these two departments will have had experience of people who have suffered from them.

The time is ripe for an examination of the question of where we go from here. In my approach to the National Assistance Board, I am probably—I had better not say "as usual" and create any false impressions—in a minority on this side of the House. I think that the Board has done an excellent job. In many ways it is unfortunate that, because of the historical associations the National Assistance has had in the past, we have all at some time or other tended to continue the old outlook.

Even in the Beveridge Report dealing with benefits generally, against the background of examination of financial resources, it was stated: The first view is that benefit in return for contributions, rather than free allowances from the State is what the people desire … It is shown another way by the strength of popular objection to any kind of means test. These and some of the other attitudes that we still have are unfortunate. They are understandable on this side of the House particularly because of the viciousness of the means test in the old Public Assistance days in the 1930s. They are probably explained among hon. Members opposite by their constant admiration, pre-war perhaps, of some of the excesses of State control in the countries of the dictators, when many hon. Members opposite were extolling the qualities and virtues of dictatorship. Certainly, hon. Members opposite and their party have constantly been guilty of using all civil servants as whipping boys to discredit ideas of State ownership or some kind of planning and they have used this popular misconception of civil servants and Government Departments to justify their own political ends.

Let me make one controversial point. I am sorry that the hon. Member for Finchley (Mrs. Thatcher) is not in her place. In her speech, the hon. Lady said that the National Assistance Board was a wonderful instrument. Before playing an instrument, however, one must make sure that it is in tune. Let us look at this wonderful instrument after 13 years. In dealing with accommodation, last year's Report of the Board stated that it was necessary to make provision for it by encroaching on rooms which are ordinarily reserved for conferences or staff messing or which are not suitable for normal use as working rooms, perhaps because of bad natural lighting. In several offices staff have had to share desks.' After 13 years of this wonderful instrument, the staff were working in conditions like that. They are almost as bad as the conditions which have been provided in the accommodation of Members of Parliament.

In 1963, the staff had to work almost 1 million hours of overtime. The percentage of temporary staff rose from 14 per cent. in 1961 to 21 per cent. in 1963. In 1963, there were 50 specialist officers engaged in the wonderful task of trying to rehabilitate people who had been long-term unemployed. During the first half of 1963, every one of those 50 specialist officers had to be taken off those duties and put on to ordinary duties in the Board. This is what the hon. Lady the Member for Finchley refers to as a wonderful instrument. It does not strike me that we will get much tune from an instrument like that if so little regard is shown for the conditions under which the staff have to work.

As I see it, we have this opportunity to make an advance in benefits and in the future we will have the opportunity of putting forward our ideas for the new Britain in relation to the wider field of social services and all the problems that bother us in the community. I hope that I will have the opportunity in all humility of playing my part in ensuring that, having arrived in the corridors of power, they are properly signposted out of the 'sixties into a new era of human relationships based upon dignity, understanding, justice and a genuine concern for our fellow man.

7.15 p.m.

Mr. James A. Kilfedder (Belfast, West)

I intend to follow the admirable custom that maiden speeches should not be controversial. For an Irishman, that is a restriction which means that my speech will be commendably short. Indeed, perhaps that is the reason why maiden speakers should be brief and heard in perfect silence, because it places a great burden upon the older Members of the House who normally at the slightest provocation interrupt and erupt.

First, however I should like to pay a tribute to my predecessor, Mrs. Patricia McLaughlin, who represented Belfast, West for some nine years. She is a person of great charm and great personality who worked strenuously and assiduously for her constituency. She was well liked in the House and at the Council of Europe, to which she was a delegate. It is a tremendous pity in one sense that there is one woman less in this Parliament.

The constituency of Belfast, West, which I have the honour of representing is an industrial constituency somewhat similar to the constituencies in the industrial Midlands, but without their full employment. We in Northern Ireland suffer badly from unemployment. However, despite all the unhappiness which they certainly suffer from unemployment, the people in my constituency are, nevertheless, kind and warmhearted, generous and humorous. The speech which we have heard from one hon. Member from Lancashire seems to bear out that we are not unlike each other.

The people of Northern Ireland are generous almost to a fault. That is borne out by their relationship with their old people. In Northern Ireland, particularly in Belfast, the old people are looked after with loving care. Despite overcrowding in many homes and despite the need of constant attention for old people who are infirm, a mother or father or a grandparent would not be sent off to the loneliness of an old people's home or into hospital unless it was no longer humanly possible to look after such a person without the skilled medical attention that is needed.

That attitude is a right one, and it is brought about by our own atmosphere in Northern Ireland, where home life is so important. The old people, not only in Northern Ireland but here and everywhere else, deserve all the attention and consideration that they can get. They deserve to enjoy part of the national prosperity and wealth, because they are the mothers and fathers of us all.

I said at the beginning that I would not be controversial. I have avoided inflaming hon. Members opposite and, at the same time, I will not be controversial about the amount of the old-age pension that the old people received during the past 12 months under the former Government. It is, however, sufficient to say that the pension that the old people receive has been steadily becoming inadequate for their needs.

It is increasingly hard for old people, in many parts of the country, to see young people earning colossal amounts or, on the national level, millions being spent on drink and gambling while they themselves have to make do with very little. Therefore, I, for my part, welcome the proposed increases in these old-age pensions and it is a matter of regret to me personally, as, indeed, it is I know to a great number of hon. Members—I suppose all hon. Members—in the House that the increases cannot take effect immediately. The fault, of course, is not that of the right hon. Lady the Minister. It is, as we understand, the formidable task of trying to put machinery into operation to bring the increases forward sooner.

If, however, the old-age pension increase cannot be brought forward sooner, then I sincerely hope that the right hon. Lady will try in some way to make the old people a present of, perhaps, £5 the week before Christmas, so that they would have a Christmas box which they could spend on luxuries. It is said that they will have to wait perhaps till March, but it is these old people who are the least able to wait. For some of them, indeed, it may be the last Christmas. I would like to think that every effort possible will be made to give them something on account of the increase which they will be getting in March of next year.

I feel very strongly about the old people and what should be done for them because when they were younger they looked after their sons and daughters, and by their own labour they helped to create the wealth which we are enjoying in Great Britain and Northern Ireland today. In many cases the old people struggled to give their children opportunities which they themselves did not possess. I think that it is our duty and our first priority to make sure that they are catered for and provided for out of the nation's wealth today.

It is no use increasing the old-age pension if it loses its purchasing power through the rising cost of living, and that is the danger which we here face. My fear is that even before the extra 12s. 6d. is paid a little of its value will have been swallowed up by inflation—but, as I am trying to avoid being controversial, I shall leave that and say no more about that at this stage. All I would say, again, is that I welcome in this Bill all the other social benefits—for unemployment, sickness, maternity, and industrial injury, and, of course, the war pensions, and I am especially pleased to see something done for the 10s. widow. This benefit is limited, and there are other widows who should be looked after by the State, deserving widows who are in an anomalous position.

I should, perhaps, have told you, Mr. Deputy-Speaker, something more about my own constituency, which is a constituency in which the people work in engineering, in the shipyard, in the aircraft factory and in linen as well. They are people who have, as I have already said, suffered severely from unemployment. Indeed, I believe that since the war our percentage of unemployment has been something over 11 per cent. Now through the drive, the energy and the imagination of the Ulster Government that figure has been brought down to 5.4 per cent. this month. That is a considerable reduction, but we are not satisfied with that, and we are hoping that the day will come when it will be completely conquered and that people will not suffer unemployment.

We have suffered through unemployment, because when people are unemployed they are unable to save up, and what little they may have saved up they have to spend when they are out of work. Coming back to the old people again, it means that, if they had savings when they were working, many of them spent them when out of work, and so are dependent on the old-age pension. Again their sons and daughters, if they are out of work, are not able to provide for them and look after them as well as they might if they were in work.

Leaving that now, I would conclude by thanking the House for its quiet reception of my speech. All I can say is that it has been a very pleasant occasion for me, not only because the House has received me very kindly but because I have been speaking on a subject which is dear to my heart—and also because I know that this is perhaps the last occasion on which I shall find myself in such agreement with hon. Members on the benches opposite.

7.26 p.m.

Mr. A. E. Hunter (Feltham)

I am very pleased to follow the hon. Member for Belfast, West (Mr. Kilfedder) and to congratulate him upon his maiden speech. He has chosen to make it on a subject very close to my heart and to the hearts of many other hon. Members. He spoke with deep sympathy for the aged. One could tell that he feels real concern for them. He spoke quietly, very effectively and very sincerely; and sincerity, I know, always impresses the House of Commons. We shall all look forward to hearing again from the hon. Member.

I am pleased to speak on the Second Reading of the Bill and to congratulate the Government on the action that they have taken on the social services, action which will assist millions of people. I know the pleasure that it will give my right hon. Friend the Minister of Pensions and National Insurance, who, during my period of nearly 10 years in this House, has always shown great sympathy for the old, the sick and the disabled. I should like to pay tribute to the interest which my right hon. Friend has always taken in this subject. We all regret that the date of payment is not earlier, but I am certain that if my right hon. Friend could have made it earlier she would have done so.

I was very pleased to hear the tribute paid by my hon. Friend the Member for Ince (Mr. McGuire) to the previous Member for that constituency, Mr. Tom Brown, who was known as the old-age pensioners' champion. I join with my hon. Friends in paying tribute to Mr. Brown and the many years of work he has done for old people. I had a letter from him just after the General Election. He is now in retirement. I am sure that all hon. Members will wish him a long, happy retirement in his cottage and his garden.

The great improvements which the Government are bringing to many social benefits are the greatest advance since 1946, and the 1946 Act was the biggest advance for a very long period. By increasing social benefits the Bill does much for so many people, and one of the many things that it does is to put an end to the widows' earnings rule—a subject we have debated many times in this House, apart from the question of the payment to the 10s. widows being brought up to 30s.

I am certain, Mr. Deputy-Speaker, that in view of the interest you have taken in this subject, and of the fact that you have spoken many times from the benches opposite on behalf of these widows, it must give you great satisfaction to preside over our debate on the Second Reading of this Bill today.

I wish to deal mainly with the retired people. There are about 6 million, of whom 1 million are receiving National Assistance. We know the number of occasions on which the retirement pension has been increased since 1945. On a number of occasions the previous Government increased retirement pensions, and they always received my support, but one of the greatest difficulties in providing a pension in this modern age is the original low level of the basic pension. One has to bear that in mind in looking back at history.

The old-age pension came in in 1912. It was 5s. a week at 70, with a means test of £26 a year. Thus, if someone had £26 a year, he did not receive a pension. If he had less than that sum, he received the appropriate proportion of the pension. Nothing was done from 1912 until 1920, when it was raised to 10s. a week, payable at 70, and still subject to a means test. No further major alterations were made for some time. The only alterations were those regarding the means test and a change in, I think, 1929, when the age was reduced to 65, and the pension was put on to a contributory basis.

We had to wait from 1920 until 1946 before the basic pension was raised. I think that our predecessors must accept some of the blame for that state of affairs. For 26 years a great commercial and industrial country like Britain did not raise the old-age pension, and it means that we now have to try to do something to make up the leeway.

Pensions in this country have not kept pace with those paid in some countries in Western Europe. They are lower than those paid in West Germany, Sweden and the Scandinavian countries. They are also lower than those paid in Canada, Australia, and New Zealand. Why are pensions in Britain lower than those in Europe and in some of the Commonwealth countries?

I appreciate and support the Government's action in bringing in the Bill so quickly after the election. Retirement pensioners are mainly in the low-income group, and as they have to balance their weekly budgets to meet the cost of rent, food, heating, lighting, and so on, this means that they are living on a razor's edge.

Pensions were a major issue during the election campaign. During my tours of my constituency I was asked a number of questions about pensions. Only once was I asked about nuclear weapons. Domestic issues such as retirement pensions, housing, and rents worry people more than any other issues, and I think that hon. Members should bear that in mind.

I think that we all appreciated, during the election campaign, that old people were not given enough to enable them to enjoy a proper standard of living. Even the youngsters knew that their grandmothers and grandfathers were not receiving proper retirement pensions in this modern age. I should like this Parliament to end poverty in old age, and when I talk about ending poverty I am not referring only to the inability of old people to buy food. Man cannot live by bread alone. To me, poverty means that a person cannot buy two newspapers a day, that he cannot buy magazines, that he cannot afford a radio or television set, that he cannot go to a theatre, or a cinema, or a concert. Also when they cannot afford to buy their grandchildren gifts at Christmas or on their birthday.

In strongly supporting the Government tonight, and in congratulating my right hon. Friend on bringing in the Bill, I am looking forward to the day when we can bring in a superannuation scheme which will really end poverty in old age—and I repeat that I mean poverty in the real sense of the word—so that people can enjoy culture, holidays, leisure and some of the good things of life. I have pleasure in supporting the Second Reading.

7.36 p.m.

Dame Edith Pitt (Birmingham, Edgbaston)

It was generous of the hon. Member for Feltham (Mr. Hunter) to acknowledge the increases given by the previous Government. He was rather more generous than his right hon. Friend, and I noted it with gratitude.

I begin what I have to say where the hon. Gentleman began. The proposals for increases will certainly be welcomed by all those who stand to benefit under the terms of the Bill, but I think we should be clear that not everyone at present covered by National Insurance or industrial injuries will benefit. I also make the point that by no means all the people about whom we are concerned have the same needs.

The proposals in the Bill continue the policies of my party which were implemented when we were in power, namely, that pensioners and other beneficiaries should share in the rising standard of living in this country. As my hon. Friend the Member for Finchley (Mrs. Thatcher) said in her admirable speech, this is confirmed by the Minister's own review, in the Command Paper which has been made available to us, which shows that the benefit increases of recent years were well above any price increases, and although in earlier years the increases in benefits lagged behind average earnings, in recent years they have been overtaking them.

I am glad, too, that the National Assistance grants are to be increased. I think that we must all welcome this proposal, because, by definition, the people claiming National Assistance must be the least well off amongst us, and the most in need. But why cannot these grants be paid earlier? I understand the administrative difficulties of paying National Insurance benefits at an earlier date than 29th March, because I have served in the Department and understand the amount of work involved in changing all the order books, but this does not apply to National Assistance.

The administrative difficulties here are fewer, and I think that the Minister ought seriously to consider bringing forward the date for the increase in National Assistance grants because, as I have said, these are the people who are the least well off. In that way the right hon. Lady would help some of her hon. Friends who have been so critical of the long time being taken to implement the promises which they gave during the General Election, and which they know helped to secure them votes.

I think that the poorer people—I am using words used by hon. Members opposite when they were in Opposition—ought to be helped as quickly as possible. The quicker we can make assistance available to people who suffer hardship, particularly in getting through the winter, the better. I cannot understand the reluctance to speed it up. I appreciate that a promise has been made that a £4 bonus will be given at least to most people receiving National Assistance, with certain exclusions which I understand and accept. That £4 bonus will be very useful, especially for purchasing extra coal, because warmth is of prime importance to the old and the chronic sick.

This, however, does not help everybody, and I ask the Chancellor of the Duchy of Lancaster if he will tell us what is to happen about the other 1 million people which his party, when in Opposition, so often asserted were eligible for National Assistance but were too proud to claim it. If these 1 million people really exist, what efforts are being made to search them out in order that they, too, may enjoy a bonus for Christmas? I regret that the right hon. Gentleman is not present at the moment. Perhaps a note will be sent to him.

The Joint Parliamentary Secretary to the Ministry of Pensions and National Insurance (Mr. Harold Davies)

He has been here all the time up to now.

Dame Edith Pitt

I understand that. I merely regret the fact that he is not here now to hear this point made. I wanted to ask him what progress is being made with the inquiry that was instituted some months ago by my right hon. Friend the Member for Bridlington (Mr. Wood)—then Minister for Pensions and National Insurance—to try to ascertain how many people were eligible for National Assistance but were not applying for it. I hope that the inquiry is proceeding. If the right hon. Gentleman can confirm that it is, or even go further and say when we may expect some results, I shall be very interested.

An inquiry, made by experts—and I regard those who work for the National Assistance Board as experts in this matter—into need, which is the essence of National Assistance, may have a very interesting result, and perhaps a surprising one.

Mr. Charles Loughlin (Gloucester, West)

The hon. Lady is making a valid point. She asks what steps the Government are taking to search out the 1 million people who ought to receive immediate assistance because they should be in receipt of National Assistance. This is a good suggestion, and I am in entire sympathy with it. But from her vast experience as Minister perhaps she can tell us whether it is possible in any way to secure this information.

Dame Edith Pitt

The hon. Member is very generous to me. I do not have vast experience as a Minister—I was a junior Minister—but I do have some experience of and a tremendous interest in this work. I have worked with National Assistance officers. I was on an advisory committee long before I became a Member of this House. A Labour Government made me a member of the Birmingham Advisory Committee because of my experience of working with people, and I was glad to be appointed. I know, therefore, that over the years the National Assistance Board has acquired a body of men and women who are very good in this kind of welfare work.

This work can be done only by personal contact and personal calls, and by being extremely patient in drawing people out in order to discover exactly what are their resources and their needs. But I doubt whether this can contact anything like 1 million people. Perhaps we can have a pilot scheme of worthwhile proportions, so that we can judge.

I wonder why Parliament has not been presented with a Socialist scheme to do away with National Assistance, as the party opposite has so often threatened or promised. One of the preceding speakers referred to the horrible spectre of National Assistance—such a wrong description, as most of us would agree—and the party opposite, when in Opposition, on several occasions said that it would amalgamate National Assistance with National Insurance. I well recollect the present First Secretary of State making a radio broadcast during the course of the General Election. He made it at 7 o'clock on 13th October. I recollect it because I was then snatching a sandwich, having finished canvassing, before going on to a public meeting.

In the course of five minutes the right hon. Gentleman managed to promise so many things that I was horrified, because at no stage did he say what the bill would be. One thing he did say, however: after referring to his party's promise of a better standard of living for pensioners, widows and those who live on small fixed incomes, he said that all this would be done without recourse to the National Assistance Board. I should like to know why the Government are not in a position to put forward proposals, and what has happened to the promises they made so often of a guaranteed minimum income.

I know that the right hon. Lady said that the Government are still working on this, but it was held up on innumerable occasions by hon. Members opposite as the panacea which would deal with all those cases of people living on limited means. It seems that not sufficient thought was given to the matter in the early stages, when the party opposite was talking so much. Even now I doubt whether it is possible to devise a guaranteed minimum incomes scheme, because we are dealing with people as individuals, all of whom have differing needs.

How can one possibly contemplate a minimum guaranteed income below which none shall fall when above it there will be those who will have different demands made upon their minimum incomes? There will be those who pay the average of 25s. in rent about which we have heard today, but there will be others who are paying £2. There will be old ladies who can still do their own washing, but there will be others whose hands are so gnarled with rheumatism that they will have to have a laundry grant, as is the case now. There will be some who are nimble enough to be able to clean their windows, but there will be others who will need a little grant to help them with the window cleaning bill. I do not see how a guaranteed minimum incomes scheme can operate fairly if everybody is to be dealt with at one level.

I now return to the general position of National Insurance. It is quite natural that pensioners and other beneficiaries should wish to share in the rising standard that they see around them today as prosperity increases. As the standards of young and middle-aged couples rise it is only natural that pensioners will hope that their standards will also improve. But, as I said earlier, not all are in the same need, and when we contemplate this vast and complicated subject we must remind ourselves that the 1946 Act, for the first time, brought everyone within the orbit of comprehensive insurance. That meant that pensioners became a real cross-section of the community. They now include some people who are quite well off and who are well able to look after themselves. To these people the new offer will mean very little. At the other end of the scale they include people with very few resources, if any. They are being helped by National Assistance.

The increases now proposed will be given to all, without any thought of priorities. They will be given to that field marshal who talked so often of drawing his pension when he became eligible; they will be given to a former Prime Minister of my own party who was photographed drawing his pension the first time he went to the post office to do so, and they will be given in just the same way to the railwayman who has retired on a modest pension of perhaps no more than 9s. or 10s. a week. These are the matters that we should be thinking about.

There are some pensioners whose need is greater than others and they include the older people. In our election proposals my party made clear that when next we gave a general increase we should give preferential treatment to the older pensioners. I am sure that I do not have to persuade hon. and right hon. Members of the need of older pensioners. The older one gets, the more one's reserves dwindle. Savings are reduced, certainly the value of savings is reduced. Old people may have started with a good stock of clothes, bed linen and household things, but these wear out, and that is the point I want to make.

Mr. William Hamilton (Fife, West)

The same problem arises in this respect as in the instance quoted by the hon. Lady a few moments ago. Sir Winston Churchill could qualify under the scheme that she is now proposing. Unless she advocates a means test for the older people, her argument falls to the ground.

Dame Edith Pitt

The hon. Gentleman had better do his arithmetic. Sir Winston Churchill would be too old to be eligible, and that was the point made by my hon. Friend the Member for Worthing (Mr. Higgins) who spoke about many pensioners of the age of Sir Winston but who might have limited facilities and nothing at all by way of State benefit. I take the point made by the hon. Member for Fife, West (Mr. Hamilton). Among those who are eligible for National Insurance benefit who have reached the age of 70 plus or 75 plus will be some who are well able to take care of themselves.

I am glad to have that confirmed from the benches opposite. Listening to earlier debates, one might have got the impression that pensioners were always poor and starving. I doubt whether any hon. Member would contradict my assertion that as pensioners grow older their needs grow greater and in itself that is an argument for looking at what we propose to consider, additional benefits when old people reach a certain age.

Mr. A. Woodburn (Clackmannan and East Stirlingshire)

I am sure that the hon. Lady does not mean to misrepresent the picture. Obviously, Sir Winston Churchill and a former Prime Minister would pay practically the whole amount back in tax. They are not allowed to keep an old-age pension. Since people pay according to their ability, surely they are entitled to receive the benefits of the scheme?

Dame Edith Pitt

I do not dispute that they are entitled to draw benefits. They have paid in full everything they were asked to pay, which is very little indeed compared with the capital sum required to provide a benefit, and that was the point made by my hon. Friend the Member for Worthing. I ask the Minister to say whether the review contemplated will give consideration to what should be done for older pensioners.

There are examples where I think not all have been treated equally. Why not continue the preference given to the widowed mother with children? I do not intend to go into detail, as this was done so admirably by my hon. Friend the Member for Finchley. We always felt that the widowed mother with children was most deserving of sympathy and we did our best to help her. Now she is to be treated on the same level as other pensioners.

The Government have decided to do something about the 10s. widow and to increase that figure to 30s. This is a difficult subject. I have always considered that, had a little more courage been exhibited in 1946 by the then Government, this anomaly would never have arisen. I understand the reasons why it was done because all widows had expectations, prior to the full operation of the 1946 Act, to 10s. whatever their age and circumstances. At that time it was thought that the expectation must be continued, but if only the courage had been there to say that the whole of the widows' pension benefits would be revised in the light of the recommendations made by Beveridge, we should not have had this "sore thumb" of the 10s. widow—[HON. MEMSERS: "You had 13 years in which to do something."] I note that intervention made by several hon. Members, but the party opposite introduced the 10s. and it has been continued. I know it is easy for me now, with the benefit of hindsight, to say that a courageous decision should have been made in 1946, but that difficulty has been one of the things which has be-devilled comprehensive National Insurance schemes ever since.

Mr. Peter Bessell (Bodmin)

Would not the hon. Lady agree that in 1946 the position was quite different because it was immediately after the war and, by the same token, the average pension was increased only to a relatively small sum because the financial reserves of the country would not permit more and the cost of living was nothing like as high? Her party was in office for a period of 13 years and persisted in opposing every attempt to put the matter right.

Dame Edith Pitt

That intervention was really more of a speech. The pension was only 26s. in those days and by comparison 10s. must have sounded reasonable. That figure has grown increasingly unreasonable as the years have gone by. I am sure that certain hon. Members who support the present Government were, when in Opposition, as reluctant as we were to increase the 10s. pension because they felt, quite properly, that to do so would only increase the anomaly between the widow who had something and the widow who had nothing. Now the party opposite has yielded to the pressure of what I think was a fairly powerful lobby for the 10s. widows. We all heard a great deal from them.

There is an emotional appeal also, is there not? The sum of 10s. sounds so derisory. Today it is to be increased to 30s., but this only throws into sharper relief the position of the "no-shilling widows" who are not organised and have not the ability to put pressure on Parliament. We shall now accentuate the disparity. Some widows will get 30s. and others—it may be their sisters even—will get nothing at all, and so I expect the pressure to grow.

If the 10s. widow is to have an increase, I am surprised that no increase has been proposed for the 20s. widow, that is, certain war widows below the age of 40 and without children when they lost their husbands. They receive only 20s. If I am to be told that they qualify for the full pension at the age of 40 I wish to point out that they could still be war widows in their thirties and receive only 20s. Some 10s. widows could be in their thirties, for we are not so far away from 1946. Therefore, there is this disparity of treatment, and the war widows receiving a 20s. pension have been less generously treated than the widows receiving a 10s. pension on National Insurance. Similarly, the younger industrial injuries widows will still receive 20s. I should like to know why there has been this discrimination.

Now I wish to say a word about the earnings rule. I am glad to see—

Mr. Victor Yates (Birmingham, Ladywood) rose—

Dame Edith Pitt

No, I cannot give way to the hon. Gentleman. He has just come into the Chamber and I am not prepared to give way to him. I have given way a dozen times already—

Mr. Deputy-Speaker (Sir Harry Legge-Bourke)

Order. If the hon. Lady does not give way, the hon. Member for Birmingham, Ladywood (Mr. Victor Yates) must resume his seat.

Dame Edith Pitt

I am glad to see that the earnings rule is to go, especially in respect of widowed mothers. I have always considered that a widowed mother was most deserving of sympathy. My own party made the earnings rule progressively easier in its application to widowed mothers, but now it is to disappear entirely. I must make the practical point that by definition the removal of the earnings rule for all widows does not help those most in need. It will help those who are able to earn good money, or they would not have been affected by the earnings rule. The widow or the widowed mother with modest part-time earnings, or the woman with young children around her who is not able to go out to work, will not be helped by the abolition of the rule.

The Minister herself said that it secures fair treatment for the women concerned. I question this. It puts widows in a preferential position as opposed to single women.

Mr. Houghton indicated assent.

Dame Edith Pitt

I am delighted that the right hon. Gentleman nods his head. I hope that he will deal with that point. I think that we should have special sympathy for the single woman. I had hoped that she would enjoy the sympathy of the Minister under the Bill. The single woman may be required to retire at 60. Employers often have the mistaken idea that women are less able physically to go on working after 60. This cannot possibly be true, otherwise they would not live longer than men. There is a view, however, that women should be retired at 60. There may be single women who have had a particularly hard life looking after aged parents, as so many have been required to do, who are glad at 60 to give up full-time work and take life a little easier. If they return to work and have part-time earnings, they will be affected by the earnings rule. Yet widows will not be affected. Some thought should be given to spinsters.

I have received a letter from a constituent who is over 70. She is single. She says that she is required to bear just the same expenses as a married couple or a widow. Fortunately she has a home of her own. She has to bear all the costs of lighting, heating, rates, water rate, ground rent, and so on. She says that electricity will now cost her a lot more. This is true. The Midland Electricity Board has just announced a 14 per cent. increase in electricity charges. She believes that the increase in pension will be almost eroded by the demands made on her in endeavouring to maintain a home of her own.

The position of the spinster should be considered. I appreciate that my constituent is not affected by the earnings rule, because she is already 70, but I put in a special plea for spinsters because they are entitled to some fairness in treatment, as also is the divorced woman. Am I not right in thinking that a woman who has been divorced is treated for insurance purposes now as a single woman? She gets the benefit of her husband's contribution up to the date of the divorce. She then has to pay herself and is, if I remember correctly, treated as a single woman. She too, must come up against the earnings rule when she becomes 60. I should like to know why there is this difference in treatment.

The cost of this operation is put at about £300 million. It is by no means fair to all, and I should like an answer to some of the points I have raised. It is by no means fair not least to the lower paid worker. How often we heard from the Labour Party about the evils of the poll tax when we increased the contribution and how it affected the lowest-paid worker. No consideration has been given to him now. All these points are a very strong argument for a complete review of the whole of our social security schemes. I hope—here I warmly support the point made by my hon. Friend the Member for Finchley—that the review when it takes place will not be carried out by so-called pensions experts in the party opposite.

Mr. Ioan L. Evans (Birmingham, Yardley)

The hon. Lady has given a catalogue of the deficiencies in the existing social services. Is it fair to expect a Labour Government to put right in five weeks what the Tories failed to do in 13 years?

Dame Edith Pitt

We made many alterations in the National Insurance scheme. Not least, we first restored its purchasing power and then built it up. We gave a priority to the widowed mother. We gave a flying start to other widows. I could give a whole catalogue of things we did. We have always admitted that the time is fast coming when we need another Beveridge. The present scheme is out of date in the conditions of today, with our much higher standard of living, with the higher earnings and with the higher level of employment. Beveridge budgeted for 8 per cent. unemployment. Happily, we have had nothing like that. There is a strong argument in favour of a complete review. What I was saying when I gave way was that I hope that the review will not be carried out by the so-called experts of the Labour Party, because they tried and failed four times to produce a new plan. The right hon. Member for Coventry, East (Mr. Crossman), who is now the Minister of Housing and Local Government and who was one of the experts who produced the various plans, said this: I am delighted that we should have to take the lead and do all the constructive thinking.—[OFFICIAL REPORT, 10th December, 1963; Vol. 686, c. 273.] So far the constructive thinking has not produced anything which the party now in power can put before the House. We are told that there must be a review. I should like the review to be carried out by people outside the political sphere so that we may have a firm basis on which to develop still further our case for those whose needs as individuals should occupy our minds.

8.6 p.m.

Mr. Charles Loughlin (Gloucestershire, West)

The hon. Lady the Member for Birmingham, Edgbaston (Dame Edith Pitt) is a very complex character. She stands over there with a very appealing look in her eyes, with a very sweet smile on her face, being the very essence of reasonableness. She expresses great sympathy for all sorts of people. She can give us a catalogue of the various widows and various people not covered by this what I would call emergency operation. She can tell us of all the things that might have been done in the first five weeks of Labour rule.

She herself was a junior Minister at the Ministry of Pensions and National Insurance for a long time. The Tory Government had 13 years, in a period which they constantly referred to as affluent, in which to do any of the things the hon. Lady has included in her catalogue. Apparently, according to her, they still remain to be done.

The hon. Lady said that last year and the year before she advocated that there should be a review. I wonder what kind of review it would have been, because she was in danger of pursuing a policy which has been advocated by the right hon. Member for Wolverhampton, South-West (Mr. Powell), whose attitude towards pensioners and poor folk—he is not in his place tonight—is so well known. The attitude that the hon. Lady has been advocating is that what we should have is not a pensions scheme at all. She says that we should so order things that only those in desperate need should be assisted by the Government.

The hon. Lady began by saying that the Labour Party should have introduced the Socialist scheme to eliminate National Assistance. She asked what had happened to it. "Why have not they brought it forward?", she asked. She went on to talk about pensioners who do not need these increases and she gave examples of people who, because we are not applying the principle of National Assistance to this matter, will not need the increases that we are proposing. She trotted out, as hon. Members opposite so often do on the public platform and in this House, the case of a field-marshal who is accustomed to opening his mouth. She also referred to a Prime Minister who, although he did not need the pension, went along to the Post Office for publicity purposes. As my right hon. Friend the Member for East Stirlingshire (Mr. Woodburn) said, the money goes back in taxation anyway, so there is no other purpose in a Prime Minister receiving the money than to get his photograph taken at the Post Office.

What the hon. Lady said in essence was that we ought to ensure that pensions are paid to those people who need them. The only way to do that, whatever their age and whether or not they are the people referred to by my hon. Friend the Member for Fife, West (Mr. William Hamilton) in his intervention, is to institute a complete means test from top to bottom. This is the review that hon. Members opposite would have undertaken. It is no use their coming here tonight and saying, "Look at all the deficiencies in this plan that the Labour Government have proposed." It is no use saying, "These increases ought to be given so that people can benefit from them immediately." I exclude the hon. Lady from my comments so far as pensioners are concerned because she said that enormous difficulties were involved in operating such a scheme quickly, but she certainly said it about National Assistance.

I do not know whether the hon. Member for Finchley (Mrs. Thatcher) is as progressive as her hon. Friend the Member for Edgbaston, or whether she is a little more liberal. I have not heard her express any point of view on this subject so far, but she is very fond of quoting election addresses. I saw the election address of my opponent in my constituency, and on the subject of pensions he said that the only increase given by the Labour Government between 1945 and 1951 was 4s. I challenged him on that and he has not yet denied the accuracy of the correction that I made, that the Labour Government changed the whole situation on pensions, that they started with a pension of 10s. which had been considered adequate by hon. Members opposite for a considerable time, and increased it to 26s., and that at the end of the day in 1951 it was 30s.

Dame Edith Pitt

Will the hon. Gentleman give way?

Mr. Loughlin

Yes.

Dame Edith Pitt

The hon. Gentleman is very generous.

Mr. Loughlin

Charmed.

Dame Edith Pitt

The hon. Gentleman has just said that in 1951 the pension was 30s. It was 30s. for some—only for those who had reached 65 on 1st October, 1951. There was not enough money in the kitty to pay it to the others.

Mr. Loughlin

If the hon. Lady expresses that point of view she contradicts my opponent who represented her party in my constituency. He said that the only increase was 4s. [An HON. MEMBER: "Not to all."] He did not say "not to all". He probably got a document different from that of the hon. Lady from which to write his election address. I have read the Tory manifesto and I can find no specific pledge of any kind to increase old-age pensions should that party have been returned at the General Election. It is true that they said that in any review of pensions they would consider giving increases to the older people.

Mr. Cyril Bence (Dunbartonshire, East)

Donations.

Mr. Loughlin

The manifesto did not mention donations. The right hon. Gentleman the Leader of the Opposition used the word "donation". I do not charge him with any wrong intent but it was he who used that word. There is nothing wrong in that from his point of view, because he is accustomed to adopting the attitude of giving us something. It is second nature to him.

Let us be quite clear that not only was there no pledge in the Tory Party manifesto; there was no pledge given by any leading member of the Tory Party at the last General Election, nor was there any plan of any kind in the Ministry when my right hon. and hon. Friends took over for the provision of any increases in benefits for pensioners, the sick and industrial workers. This is the issue that we are dealing with today. It is no use the Tory Party coming here and saying how poor our pension proposals are and saying, "I hope the Minister, in looking at this matter, will consider something that has not been dealt with in the past 13 years". It is sheer hypocrisy.

Hon. Members opposite cannot do anything other than go into the Lobby tonight and vote against this proposal, for the very good reason that they do not want increases in pensions. They divided against the very instrument that would find the money to give these pensions. Having done that, the logic of their policy is to expose themselves to the electorate of Britain and go into the Division Lobby tonight to vote against this proposal.

Let me now refer to the hon. Member for Finchley. In the second part of her speech she made an extremely good and intelligent contribution to the debate. I should like, if she does not think that I am too presumptuous, to congratulate her on that part of her speech. I really mean it. But we get a bit tired of this nonsense that we heard in the early part of her speech, and I think people outside the House are getting tired of it as well. I wish right hon. and hon. Members opposite would cease constantly arguing about what took place between 1945 and 1951. Many people who voted in the election were very young in the period 1945–51. One cannot argue comparisons between a siege economy—[Interruption.] Of course, it was a siege economy. Surely the hon. Member for Hertford (Lord Balniel) does not deny that.

Mr. Bence

He does not remember the war.

Dame Edith Pitt

It was a seller's market.

Mr. Loughlin

It was a siege economy. One cannot compare a siege economy with a period when the trading conditions of this nation were as favourable as they could possibly be. Between 1951 and the early part of 1963, the whole terms of trade were in Britain's favour. That sort of thing cannot be argued with logic.

The hon. Lady tried to be a little mischievous and to suggest that the fighting speech made by my right hon. Friend the Minister was designed to placate back benchers on this side of the House. Some of us feel extremely keenly the tremendous disappointment of having to ask pensioners, the sick and others who are to benefit from these proposals, to wait a considerable time before they can be paid. No one on these benches feels that more than my right hon. Friend the Minister. Second to her no one feels it stronger than I do. I can afford to say this because my hon. Friends know as much about the position as I do. I can honestly say that it is a tremendous disappointment that we cannot ensure that the pensioners—old people in particular—cannot get the benefit of this rescue operation before Christmas and well before the compulsory operative date.

I believe that these proposals are proposals of which we on the Government side of the House can be tremendously proud. We have no need to fall into the error of defending these proposals simply because the mechanics will not allow us to implement them quickly. I feel tremendously proud that we have carried out the pledge we gave at the General Election—and I shall defend this in my constituency—that virtually the first action the Labour Government have taken on this occasion, just as it was almost the first action on the last occasion when we took office, irrespective of the economic difficulties with which the country is faced, is to put in ambulance-type services for those in need.

If criticism is to be made that the increases cannot be implemented more speedily, that should not be lodged at the door of my right hon. Friend but at the door of hon. and right hon. Members opposite who, for 13 years, had the opportunity of introducing a more streamlined machine for the operation. We are to have a review of the whole situation. That is a step in the right direction for the operation of rescue. The hon. Lady the Member for Edgbaston spoke about many people who did not need pensions. I know my pensioners; I go to some of their clubs. When I talk about pensioners I do not talk about people en masse but of individuals whom I know personally. Although some may receive pensions and not need them, an enormous number who will receive them are in the direst possible need.

In addition, there is to be the elimination of prescription charges. I live in a little village called Staunton in Gloucestershire. Two of my constituents—an old couple—are ill. The wife went to the chemist this week and paid 8s. in prescription charges. Pensioners in my constituency have come to me from the chemist's shop and shown me items on prescriptions for which they have had to pay substantial sums of money. It was not hon. Members on this side of the House who imposed prescription charges. I remember being nearly suspended from the House on this very issue. It may be that some people who get increases will not need them. I am not concerned about that. What I am concerned about is that all who do require them should get the increases.

I wonder what hon. Members opposite would have done if they had come into the situation which we face. What a wonderful opportunity they would have had of telling the country all the economic difficulties that the country faced. In the last two or three days they have argued that one of the reasons for the run on the £ has been that we have been so extravagant as to suggest increases for old-age pensioners. That is not what has produced the run on the £. The run on the £ has been a direct consequence of the policies pursued by the Tory Government over the last few years. After 13 years of Tory rule, with all the conditions in their favour and all the affluence they talked about, we come to power and find a situation of serious economic difficulty in which the only solution is to borrow. In this situation a Tory Government would have been delighted to tell the people that they could not do anything to improve the social services.

The most amazing statement I have seen recently was not in a Socialist newspaper. It was an explanation of why there has been a run on the £. I quote from "Lombard" in his article in the Financial Times this morning. Talking about the Bank Rate increase, the article said: Clearly, though of the same size as that included in the 1961 programme, Monday's Bank Rate increase was bound to pack a much more modest punch, having been announced as an isolated move to defend the pound and without any assurance that help from the outside world would exceed the $1,000 m. represented by Britain's existing standby credit with the Fund—and most of which is reported to be bespoken for repaying Basle-type central bank credits obtained and subsequently used up by the U.K. authorities in recent months. There need be no illusions about it. But even in these circumstances, even though we have inherited such a shocking economic position from the Tory Government, we are prepared to make these increases.

There may be an enormous number of reasons why we have a run on the £. There may be gentlemen sitting in offices within this country and without who are deliberately making difficulties for the Labour Government. Let there be no doubt that we shall ride this storm. Whatever the Tory Party or those who may be acting in concert with it may be prepared to do, we shall ride the storm and we shall bring into being, in the lifetime of this Parliament, not only a scheme to ameliorate the difficulties of our pensioners but a scheme to ensure that we are rid for all time of poverty among them. We shall get away from the concept of poverty in the midst of affluence.

8.31 p.m.

Mr. Kenneth Lewis (Rutland and Stamford)

It was interesting to hear the hon. Member for Gloucestershire, West (Mr. Loughlin) in a new rôle. He devoted the first part of his speech so much to an attack on this side of the House that I thought that he was still in his old rôle, and it came almost as a surprise when, towards the end, he said one or two things in commendation of his own Government.

The hon. Gentleman asked why we did not promise in our election manifesto to increase pensions across the board, as, of course, we did not. The answer is that we did not need to do so because we had given five pensions increases during our period of office and there was no reason why pensioners should doubt for a moment that we should keep up our record of maintaining their pensions in advance of the increased cost of living.

There is no difference between the two sides of the House on the need to keep pensioners' incomes ahead of the cost of living and to ensure that they share in any increase in the national wealth. There is, however, considerable difference of opinion on the way in which this increase has been given. I agree with my hon. Friend the Member for Birmingham, Edgbaston (Dame Edith Pitt) when she says that we ought to look at social benefits from the point of view of whether we should continue to give them across the board, or whether we ought to put the increases into the sectors where the need is greatest, letting those who have other incomes, perhaps other pensions, do with less and look after themselves.

Mr. Bence

Will the hon. Gentleman allow me—

Mr. Lewis

No, I shall not give way now as I have only just started. I have been here throughout the debate.

I have two criticisms, in particular, of the action which the Government have taken. What I am about to say may not be popular either with them or even with some of my hon. Friends. I disagree entirely with the timing of the announcement, and I believe that the actions of the Government, parallel with this announcement, will not, in the long run, help to maintain the value of pensions, but rather, because of the rise in the cost of living which will occur, will erode them even more quickly than happened when right hon. and hon. Members opposite were last in power.

The right hon. Lady the Minister was glad that the announcement about the pensions increase had been made within five weeks of the General Election. I do not think that the foreigner has been very glad about it. He saw the announcement as a very big bill which was adding to inflationary tendencies. The right hon. Lady knows very well that, although she has made the announcement, she has not helped the pensioner, because the pensioner will not get the increase until next March.

What has happened is that the Government have made the announcement at this time when they themselves said that we were in a period of crisis, and in so doing they have contributed to the run on the £. The right hon. Lady and her right hon. Friends could well have given the pensioners the increase in the new year and made the announcement at Christmas or in January.

Miss Herbison indicated dissent.

Mr. Lewis

The right hon. Lady suggests that what I am saying is not true, but she has told the Opposition today that if we had done some of the work on this, she would have been able to give the increase now.

Miss Herbison rose—

Mr. Lewis

I will give way in a moment.

Therefore, it must follow from that that if the right hon. Lady had started the work now she could have given the increase a few weeks ahead of the time when she actually is to give it.

Miss Herbison

I would ask the hon. Member to read the words I uttered this afternoon. He will find that the situation is not at all what he is trying to say.

Mr. Lewis

We must agree to differ on this.

Miss Herbison

Read HANSARD.

Mr. Lewis

I repeat that the timing of the announcement has not helped the old-age pensioner, and it has added to the crisis created by the actions of the Government which has led to the present situation in regard to sterling.

I understand that on the other side of the House there has been considerable discussion about the gap between now and March. It has reached the stage where some hon. Gentlemen, including two hon. Members representing constituencies in Glasgow, the hon. Member for Pontypool (Mr. Abse) and the hon. Member for Buckingham (Mr. Maxwell), in a public relations exercise, have announced their own particular brand of charity. When I decided to refer to this subject, it occurred to me that I ought to inform the hon. Members concerned. But I had second thoughts about it, because I came to the conclusion that if they thought as much about the pensioners as they say they do they ought to be attending the debate. But some of them have been conspicuous by their absence this afternoon.

Mr. Sydney Silverman

They will be in the Division Lobby.

Mr. Lewis

Yes, I imagine that they will. The attention of those hon. Gentlemen should be directed to the saying that when one gives alms it is not necessary that one should let the right hand know what the left hand is doing. Let us leave it at that.

One might also ask from a political point of view when, in between elections, assuming that there is an early General Election coming, the rule about bribery applies in respect of Parliamentary candidates. I believe that the last time right hon. and hon. Members opposite were in office there was an increase in the pension from 26s. to 30s.

Mr. Bence

It was first increased from 10s. to 26s.

Mr. Lewis

That was just after the Beveridge Report. It had been agreed by both parties that whichever was elected would make the increase.

Mr. Bence

No, it was not.

Mr. Lewis

Yes, it was.

The fact is that the Labour Party increased pensions from 26s. to 30s. They did not do quite as well as we did. Last time right hon. Members opposite increased the pension it was just before they held a General Election. This time they have increased it just after the election—no doubt with the idea of going to the country again soon.

The important thing is that, when they increased the pension last time, within three years the increase had been eroded. The increase in the cost of living completely swept away the value of the increase in pensions. I do not think that they have started very much better within the last few weeks. They are on the same road.

Miss Herbison

I am sorry to intervene again, but I should like to clear up one point. The hon. Gentleman says that, in three years, the increase we gave was eroded. In my speech today I made the point that, although the Tories came to power in 1951, they waited until the following April before bringing forward their Measure to increase pensions and that it was not until 25 weeks later that the first increased payment was made. The hon. Member for Finchley (Mrs. Thatcher), with the knowledge that she has of the Ministry, said that the increases we had given were made a few weeks before the election. If what the hon. Member is now saying about erosion of the increase is true, why did not the Conservative Government of 1951 introduce increased benefits earlier than they did?

Mr. Lewis

Our record is recognised to be good. It has been stated by a number of people, including my hon. Friend the Member for Finchley (Mrs. Thatcher), that we had an exceptionally good record of increases for pensioners and for widows while we were in office.

Mr. Sydney Silverman

I hope that the hon. Gentleman will answer two very short questions. First, is he in favour now of the proposed increases in old-age pensions? If the answer to that is "Yes", why did he vote against the Resolution to provide the money for those increases?

Mr. Lewis

I have already said that there is no difference between the two sides on giving increases to old-age pensioners when the country can afford it, but I have criticised the timing of the announcement. I am in favour of the increases, however.

Mr. Silverman

Now answer my second question.

Mr. Lewis

There are differences of opinion on how one may raise money for old-age pensions. Obviously, the money has to be raised. I am differing about the way in which it is being raised, about the imposition of more taxes. Obviously, in voting against the Resolution, I differed from the Government, but otherwise I agree that the money must be found.

Mr. Silverman

I concede readily and enthusiastically the hon. Member's right to vote against the increase in Income Tax if he thought that to be the wrong way of paying for the increased pensions. But if that method was, in his view, wrong, what does he think would have been the right way?

Mr. Lewis

There are many ways in which one can raise revenue. We disagreed with a rise in Income Tax. But we are not now responsible for raising revenue. The Government have to do it.

I should like to return to the subject of the increase in the cost of living, with which I was dealing before I was interrupted by the right hon. Lady. I was saying that the cost of living has already started to increase against the pensioners. The 15 per cent. surcharge is bound to affect many of the goods which they have to buy. The increase in petrol tax will affect many of them, certainly until we hear whatever proposals may come forward for dealing with some form of subsidy for the bus services. I had a letter from my constituency today telling me that because of the increase in the petrol tax, there is to be a 10 per cent. increase in laundry charges. Other examples have been given today of increases in the cost of living which are to take place.

Clearly, if an increase is given to the pensioners, the first charge on the Government is to make sure that the pension remains at its value when granted, within a reasonable measure, and that it is not eroded and that the pensioners do not find themselves in the position of having something given with one hand and taken away with the other.

The other day I was reading J. B. Priestley's "Angel Pavement", a good book to quote from, because the author is well known to right hon. and hon. Gentlemen opposite. There is a character in it called Turgis who goes to the cashier, Mr. Smeeth, and asks for a "sub". Smeeth does not like that very much and does not want to give the "sub", but is gradually persuaded to do so. When he does he says: 'Don't forget,' says Smeeth, 'Tomorrow—you'll have £1 less'. It is the responsibility of the Government, when they give this increase, to see that prices remain reasonably level. I see no sign of that happening at the moment. My criticism of the Government's policy is that everything they are doing is in the opposite direction and if they have started to increase prices in five weeks, goodness knows what they will do within a period of five months, or fifteen months, which is probably about as long as they will last.

The hon. Member for Nelson and Colne (Mr. Sydney Silverman) asked me how I would pay for these increases. I have never said that the cost of the stamp should not be increased. There is much to be said for increasing it. The cost of the stamp in this country is a good deal less than it is in many others in Europe, for example, and it is right that those people in good employment should contribute towards increased pensions and social benefits for those who are not.

However, it is interesting to note that this has never been the theme of right hon. and hon. Gentlemen opposite. In a speech about a year ago, the Prime Minister said: The Conservatives in the past few years in times of crisis increased stamp contributions which fell most heavily on those whose needs are greatest and whose incomes are lowest. One might ask hon. Members opposite whose 2s. it is on the stamp.

We believe that we have a good record on pensions. We accept that, because it will help pensioners, this is a Bill which we should and will support. I have already expressed reservations about the timing of the announcement and I have also expressed doubts about whether the Government will be able to hold the value of the currency, which is very important to the pensioner. Apart from that, this is a Bill which, as most of these pensions Bills, is acceptable to both sides of the House, because we all feel that when we can help those least well off we ought to do so.

Mr. Sydney Silverman

May I ask the hon. Gentleman one question by way of reminder? He said that he was about to tell us how he would have paid for it, but he appears to have forgotten to answer it. Will he tell us now?

Mr. Lewis

The hon. Member must be partially deaf, because I said that there was a good deal to be said for increasing the cost of the stamp even more if it became necessary to do so.

8.50 p.m.

Mr. William Hamilton (Fife, West)

I want to deal with one or two of the points raised by the hon. Member for Rutland and Stamford (Mr. Kenneth Lewis) because I think that they are fundamental to the problem we are discussing.

The first point that the hon. Member made was that we were wrong in advocating a flat rate across the board benefit. He is not by any means the only one on the other side of the House to advocate that proposition. It is well known that right hon. Members on the Front Bench opposite have advocated consistently, over a long number of years, that there should be a means tested Welfare State right through—National Insurance, the Health Service, education and the rest. They have long been on record as advocating that. We fundamentally differ on that point. They will not convert us to their point of view, and we shall certainly not convert them.

The fact is that at the General Election the issues were not defence, not the H-bomb, not foreign affairs, but pensions, jobs, and the Health Service. The issue in this context was posed to the electorate and we have now got the result in this House. Of course, the hon. Member said that the timing was wrong. I have never known a time in the long history of this country when any measure of social progress was introduced but that the Tory Party said, "The time is not opportune"—right from the time of children in the coal mines in the middle of the last century.

Mr. Kenneth Lewis

The hon. Member may recall that I said that the timing of the announcement was wrong.

Mr. Hamilton

We disagree even there. We made the point in the election—in fact, I was repeatedly guilty of repeating myself in the course of the election in saying that there would be a substantial and immediate increase; and the electorate are sufficiently sophisticated to know that, when an announcement is made of an intention, we cannot translate the intention into action beyond the capacity of the machine left behind by the previous Government with which to do it. The people know that very well. I must confess that I am one of those who are disappointed—indeed, I think everybody on this side of the House is disappointed—that the intention cannot be translated into fact within a period much less than that which is now possible. We are all conscious of this disappointment. It is shared by every hon. Member on this side. I am not sure that it is shared by every hon. Member opposite.

One of the reasons why the administrative machinery available to us is not as good as we should like is that hon. Members opposite had a vested interest in not making it so.

Mr. Frederic Harris (Croydon, North-West)

Nonsense.

Mr. Hamilton

Take the controversy we have had in the first few weeks of this Parliament on the Concord project and the bitter criticism made of this side of the House because we ventured to suggest that it should be reviewed. We are bitterly opposed on the ground that this is a technological break-through which we must not destroy. Yet we allow a situation to develop in the most human problem which we face—dealing with our old, sick and poverty-stricken—which shows that we are still in the penny-farthing era. If we were to devote as much time, money and technological effort to remedy this situation, we should have a much better claim to being a civilised community.

I want to try to put the problem which we are discussing in the context of the situation in which the Labour Government found themselves—the balance of payments problem, the entire economic problem and the fact that we had a new Government with a very small majority and new Ministers who had been 13 years in opposition. Yet in the first Queen's Speech we declare intentions steeped in warm humanitarianism, despite the difficulties. We declare an intention which cannot be implemented until mid-March. But I would bet the last halfpenny that I had that no such intention would have been declared by hon. Members opposite had they won the election. On the contrary, as one of my hon. Friends said, it would have been a wonderful alibi for them to repeat the argument which the hon. Member for Rutland and Stamford has produced, that the time is not yet opportune, not even for the donation.

I am sorry that I missed most of the speech of my right hon. Friend the Minister. I was otherwise engaged. I understand, however, that she made certain pronouncements about the intentions of the Government concerning the administrative machinery which she has to use to implement this promise. I hope that the Estimates Committee will help her in that regard. I hope that one of the first tasks of the new Estimates Committee will be to look into the administrative machinery of the Ministry of Pensions and National Insurance because I am sure that it can unearth a lot of stuff which would help my right hon. Friend enormously in her task.

I should, however, like to say this about the delay of two or three months. A delay of this kind would not be of such great concern, such great frustration or, indeed, such great anger if we were dealing with the problems of young or wealthy people. But we are dealing with the old and poor people. The young and the wealthy have both the time and the means to wait for an alleviation of their problems. But the old and the poor have neither the time nor the means to wait.

It is true that the Government have, as one would expect, taken some measures to relieve some of the worst hardship which undoubtedly will be endured this winter by unknown numbers of people. I am sure that this was the bitterest pill for my right hon. Friend the Minister to swallow. As she and the country know, innumerable suggestions have been made to her about how to cut back this period of waiting. I do not want to repeat any of them. I want merely to make two points in this context.

As my right hon. Friend well knows, one of the biggest needs for old people in the difficult days that lie ahead is heating and warmth. I hope that my right hon. Friend will consult the National Coal Board to see whether means can be devised by which the old people can be given a free allocation of coal monthly from December to March, inclusive, at least until the pensions increase comes along.

My second proposition for consideration—and I realise that this ground might well have been ploughed long before I make the suggestion—is that when my right hon. Friend explains, as she has done repeatedly, that it is impossible for administrative reasons to make the increase before 29th March, perhaps she could make an announcement of intention that if the economic situation allows, when the increase is paid on 29th March there will be an element of retrospection in it. There are bodies of people, professional and others, who never hesitate to claim, and with certain justification, an element of retrospection in the pay claims which they make, and I do not see why consideration at least should not be given to this proposition for the old people. This would at any rate do something to mitigate the disappointment which is now widely felt and which, I repeat, is no fault of the Government.

I want to say one word on the contributions side. We on this side, when we were on the benches opposite, made quite hostile and justified criticism of flat-rate contributions, particularly as they affect the lower-paid worker. One of the most angry reactions of my constituents during the election was when the then Prime Minister, who is now Leader of the Opposition, repeated around the country that we now had full employment at good wages and that the average earnings were £17 12s. 5d. I got a cynical belly laugh from my constituents when I said, "You are doing all right. Your average earnings are £17 12s. 5d." I do not know where that figure comes from. It does not come from West Fife, where the average earnings are nearer £10—and it is a coal mining community, where we we are told that every miner has a car, if not two cars, outside his front door.

Average earnings are nothing like that in the vast number of constituencies, certainly those represented on this side of the House. The 2s. a week which is now being imposed upon the £9 or £10 a week man is a quite considerable hardship. How the former Prime Minister could go into his own constituency of Kinross and West Perthshire, an agricultural community, and talk about average earnings being £17 12s. 5d. and get away with his life, I just do not know. The average take-home pay there will be £8 or £9 a week. It seems to me that this represents a quite disproportionate sacrifice by the lower-paid worker.

I realise that this is an interim, short-term Measure, and my right hon. Friend is conscious of the strength of the point I am making. I realise that having had to introduce the Bill now, as the Government felt morally obliged to do, they had to fasten it on to the existing scheme, but we hope that they will quickly get round to the scheme of graduated contributions and graduated benefits on which we fought the election.

I turn now to the employer element of the contribution. I have believed for a long time now that employers' contributions have a very great potentiality as an instrument for influencing industrial location and ensuring the efficient use of manpower. One of the bases on which our welfare services have to be founded is an incomes policy, efficiency in production and increased production, which means, among other things, a highly efficient use of manpower. The use of a differential employers' contribution would ensure that no labour would be used by any employer who could do without, and a penal contribution in areas of high density like London, and a preferential rate of contribution by employers willing to go to places like Scotland would kill two or three birds with one stone. I think that the Chancellor made a reference to this in a speech on an earlier occasion, and I hope he will pursue it a good deal further.

I just want to add a word on the point I made at the outset on the basic difference of approach between this side of the House and that. I know that in the Bill before us, as in all other National Insurance Bills which have come before us, one can point to anomalies, one can point to injustices. This will happen in whatever National Insurance scheme one produces; the man has not been born who can produce a foolproof scheme. The basic principle, however, on which the two sides differ, and on which there will be no meeting of minds, I fear, is the one which I enunciated at the beginning, that we believe that we are one another's keepers, that every one of us is involved in this.

Indeed, I would go much further than any scheme which my right hon. Friends have yet announced. I would go some way with the suggestion made—by the Liberal Party, I think—some while ago, that instead of licking stamps and having all kinds of people contributing subject to various qualifications, and so on, there should be a social insurance tax right to the Exchequer, so that everybody contributes and then everybody gets—contributes according to ability to pay and gets back according to need. I think that the hon. Lady the Member for Finchley (Mrs. Thatcher), speaking from the Opposition Front Bench, nearly got to that point. I hope I am right in saying that. I hope I am, and if I am not I hope that she will think about it, because I think it behoves both sides to think on these things, not in purely party political terms, for I think it is much too serious for that.

Meanwhile, we believe that there ought to be a considerable element of comprehensiveness about it and a steady diminution of the means test principle. That is the cleavage between the two sides, and I do not think we shall meet on this, at any rate in this Parliament, and, may be, not in this generation.

9.8 p.m.

Sir Keith Joseph (Leeds, North-East)

It is a pleasure to start by paying tribute to the remarkable set of maiden speeches to which we have listened today. In every case the hon. Member came before the House for what, by my experience, is an intimidating occasion and presented his views in a fluent and sincere way, with vigour and yet with modesty.

My hon. Friend the Member for Worthing (Mr. Higgins) claimed to speak for more pensioners in his constituency than there were in any other town in this country. I thought he spoke most effectively on the problem of the no-pension elderly, and I hope that he will continue to state their case. My hon. Friend the Member for Belfast, West (Mr. Kilfedder), in a wide-ranging and sympathetic speech, put the problems and virtues of his constituency.

The hon. Gentlemen the Members for Ross and Cromarty (Mr. Alasdair Mackenzie) and Glasgow, Pollok (Mr. Garrow) invited the whole House to go to their constituencies, as tourists in the first case, and as industrialists, and employers potentially, in the second. The hon. Member for Glasgow, Provan (Mr. Hugh D. Brown) spoke of the need for school teachers in his constituency, and also interested the House by telling us some of the problems and the facts of working in the National Assistance Board. The speech of the hon. Member for Ince (Mr. McGuire) appealed to me particularly because in his constituency there is a fascinating combination of some of the legacies of the pioneering industry in this country, and the new town of Skelmersdale. We welcome all these hon. Members and look forward to hearing them frequently again.

I think that the Government are perhaps fortunate that so many maiden speeches robbed them of the pleasure of listening to even more perhaps slightly critical speeches of some of their hon. Friends. We on this side of the House welcome the Bill and the increased benefits which it proposes.

Although we raised benefits universally last year, and raised them no less than five times during our term of office, and would have raised them again, we recognise that these benefits now will be much appreciated. Of course, there are reservations. I agree strongly with my hon. Friend the Member for Rutland and Stamford (Mr. Kenneth Lewis) that there is a grave danger of the benefit being eroded by inflation. After all, the great increase of the first Labour Government after the war to 26s. was eroded by inflation, and I am sure that right hon. and hon. Members opposite have learnt the lesson that it is not enough just to start with a good figure, or a figure which at least is better than in the past, but that it must be protected.

I agree very much with the hon. Member for Fife, West (Mr. William Hamilton) that any Bill is bound to leave some anomalies in the system. My hon. Friends and I may seek to point out that in some particulars this Bill makes more anomalies than it cures, but that is for the Committee stage. My hon. Friend the Member for Finchley (Mrs. Thatcher), in what I thought was a most powerful speech, indicated a number of points on which we shall have some criticisms to make in Committee.

During this vigorous debate, whenever one of my hon. Friends has made a constructive comment he has been greeted by hon. Gentlemen opposite with the words "13 years". We shall not make much progress if either party thinks that it has reached perfection in its pension arrangements. Parties and people learn, and facts change. We as a party had decided that the facts had changed sufficiently for a major review to be necessary of the whole of the social security arrangements of the country.

Right hon. and hon. Gentlemen opposite—and I think that they will accept this comment—have their consciences uneasy because of their own record in Government towards pensioners from 1945 to 1951. In Opposition they presented a series of pension schemes to the public. Now that they are in power they have discarded some of those schemes, some temporarily, and some, perhaps, permanently. It is proper and natural, now that they have the resources of Government, that they should consider in great detail the schemes which they put forward. Meanwhile, however, we are right to point out that the Labour Government are adopting a number of methods which they roundly condemned when in Opposition.

I am not sure that I agree with the hon. Member for Fife, West that there is such a cleavage between the parties, at least on the objective. Both parties seek a decent and rising standard of living for the elderly. There may, perhaps, be some cleavage on some of the methods. We would put emphasis not only on the basic pension, not only on raising the resources of those most in need, but also on paying attention to savings, to occupational pension schemes, to the level of disregards and to the whole theme that pensions can only be paid out of earnings, and that the vast bulk of the burden of raising the standard of living of the elderly falls on people working now. That is common ground between us, but it is not always emphasised adequately from the Government benches.

I want to make a few general comments before coming to some particular points. First, as the third quinquennial review of the Government Actuary makes plain, we face a totally changed situation from the days when Beveridge produced his great report. There is the growth of population; there are the totally changed prospects of prosperity; there is the rising proportion of elderly people; there is the great increase in the propensity to save, and the great fall, mercifully, in unemployment. There must therefore be a whole host of changed assumptions and conditions for any review of Beveridge.

There has been general progress in pensions since Beveridge, to which the right hon. Lady, in Appendix 1 of her own Memorandum, pays decent and honourable tribute. But bit by bit, and lately with a rush, the pace of change in the context of pensions has intensified. In the light of all this my party welcomes the conversion of the Labour Party to the idea of a review. We are glad that we have persuaded them. Our election manifesto proposed a review of Beveridge, while right hon. and hon. Members opposite did not at that time have the idea, because they were wedded and dedicated to panaceas which they thought would stand up to examination.

I hope that the Chancellor of the Duchy of Lancaster will tell us a little more about this review. How soon does he hope that he or his right hon. Friend will be able to make a detailed announcement? How long does he think the review will take? Can he give any assurance that it will be not an internal, private review within the Government machine, but a review to which the public can give evidence? Many people are now sophisticated in the implications of social security, and they will not be satisfied if the review is conducted internally and decisions are announced without the public being able to participate.

The review implies some doubt in the Government's mind about the panaceas that their party put forward while in opposition. There have been a number of such panaceas. There was National Superannuation in 1957; there was the revision of National Superannuation in 1958, and there was "Signposts for the Sixties" in 1961. I give the Labour Party in Opposition full marks for diligence. It tried to find a panacea, and it is natural that it should review the possibilities with the full resources of Government. Then there was "New Frontiers in Social Security", in 1963, and "The New Britain" in 1964.

We readily concede that everything cannot be done at once. To adopt one or other of these major changes would involve elaborate preparation. It would take time to work out. It is true that a crueller critic than I would taunt the right hon. Lady with her statement at the Scarborough conference in October, 1963, that all Labour's plans were based on detailed and rigorous technical, financial and actuarial advice. Evidently that advice was not good enough to stand up to the test of legislation. Certainly it makes sense to reconsider the question by way of a review.

But there are some pledges that the Labour Party made in Opposition which could be introduced at an early stage if it so desired, or if they had been watertight suggestions, and if the Government do not introduce them they will clearly be breaking their election pledges. I can give two examples. First, there is the minimum income guarantee, about which the country heard a great deal in speeches on television and in articles. This was stressed and stressed and stressed again. It was promised and pledged in broadcasts, and in the Labour Party election manifesto "The New Britain". What has happened to that? It is not enough for the Government to say that it will come later. The point is that time and time again the minimum income guarantee was picked out for early introduction. Those were the words in the Labour Party manifest. Those were the words in the election address of the right hon. Member for Sowerby (Mr. Houghton). Those were the words in the election address—no, I am wrong, the words in the election address of the Prime Minister were that this"— that is the minimum income guarantee— will come without delay".

Mr. Archie Manuel (Central Ayrshire)

So it will.

Sir K. Joseph

So it will, we are told. Why is it not in the Queen's Speech? The Queen's Speech contains a list of legislative proposals which will keep Parliament busy—if they are put forward—for more than a year, so we find that a minimum income guarantee pledged for early introduction is not to be put forward even in the first year, and that is a clear breach of a pledge.

What about the indexed pensions? We heard a great deal about that to keep pace with the cost of living. This was always presented as something which would be introduced early if not in this Bill. Up to now, as the right hon. Lady makes plain in Appendix I of her Memorandum, the pension has kept pace with prices and earnings. It has more than kept pace. Over the last five years the pension rose 35 per cent., prices rose 13 per cent. and earnings 27 per cent. Are the Government so sure that they can keep prices steady that they now neglect, while in power, the pledge of indexed pensions which they gave when they were seeking power?

There was a pledge that they would carry out their proposals without any tax increase. We heard a lot of teasing whenever my hon. Friends mentioned this, and we were asked how we would propose to pay for the benefits if they were not paid for by tax increases. The fact is that the benefit increases for the next year are more than paid for by the contribution increases proposed in this Bill. The tax increase goes, as it were, to reserve and is not needed for the next year. It takes the place of the quinquennial actuarial increase proposed in our 1959 legislation which, to that extent, is repealed in this Bill. It provides something for next year or the year after. The contributions proposed by the Government, which I shall come to in a moment, will suffice for the benefits proposed in this Bill.

Of course, the hon. Member for Fife, West was quite right to say that if the Labour Party criticises as a poll tax and as regressive the effect of the contribution on less than average wage earners it is a great shame that they should be not only using the same method but doubling the effect in their first pensions Bill on coming to power. The right hon. Lady the Minister of Pensions made a number of very strong comments about the increase of contributions on the employee during the Second Reading of our National Insurance Bill in 1963. She said: The lowest paid worker, the labourer, will pay an extra 1s. 1d. a week even though he may earn less than £9 a week, and the highest paid executive in the land will pay the same amount."—[OFFICIAL REPORT, 28th January, 1963; Vol. 670, c. 697.] That is the Minister's quotation. The only difference is that the increase proposed by the right hon. Lady is not 1s. 1d. but 2s.

Mr. J. J. Mendelson (Penistone)

In view of what the right hon. Gentleman has just said about the combined effect of the increased contribution and the increase in the standard rate of Income Tax, how did it come about that he agreed with his right hon. Friends on the Opposition Front Bench in condemning our Budget as inflationary?

Sir K. Joseph

I fully agree with my right hon. Friends that the effect of the Budget, in the petrol tax and working through the price system, will be inflationary. That has nothing to do with the general point that I am making, that the contribution which the right hon. Lady stigmatised as grossly repressive when it was 1s. 1d. is much more repressive when it is a 2s. increase.

I hope that the right hon. Member for Sowerby when he replies will give us some details of the effects of the proposed legislation on the number of people entitled to National Assistance. We all know that while in Opposition the Labour Party thought very ill of any increase in the number of people on National Assistance, although, as we pointed out time and time again, this was at least the index of the extent to which the neediest in the land were having their standard of living raised.

The Government say that they are prepared to use this method again this time, at least until they have had their review. Could the right hon. Gentleman please tell us what he reckons the number of those entitled to National Assistance will be once this legislation is through, compared with the number of people entitled now? I was very glad to hear the hon. Member for Provan praise the work of the National Assistance Board. My hon. Friend the Member for Birmingham, Edgbaston (Dame Edith Pitt) made a most wise and shrewd speech about the need in all our dealings with pensions to remember that the needs of individual elderly people and households varies and that this must be taken into account in any arrangements we make.

I come, finally, to the point about the timetable for payment. It is interesting that, despite the news that we have heard of rebel meetings, pressure groups and lobbying, we have witnessed the power of the right hon. Member for Sowerby to soothe his colleagues and keep quiet the rebellious speeches today. What we on this side of the House have to ask is why this timetable was so inadequately, so insensitively and so clumsily thought out in the first stage. Why have we had such a series of expedient shifts of position from Ministers connected with this timetable? First, we had the Chancellor of the Exchequer announcing on 11th November: … it is not possible to make these increases from an earlier date."—[OFFICIAL REPORT, 11th Novemebr, 1964; Vol. 701, c. 1033.] Then we had the Minister of Pensions, propelled by the passion of her colleagues, coming to the House on 20th November, nine days later, and advancing the short-term benefits from 29th March to 25th January. We are glad that she did so. Then there was a great deal of talk about a pre-Christmas bonus which the right hon. Lady would announce. It has not been announced. There was evidently in private a major row last night, but the right hon. Lady has not given way to her colleagues and she has not been able to announce any pre-Christmas bonus.

The question we put to the Government is this. Why have they not used the method that lies to their hands even now to help the neediest in a matter of weeks? I am not now stressing whether it is just before Christmas or just after Christmas, but if the right hon. Lady and the Government wished they could lay Regulations for an increase in National Assistance which, by hypothesis, would bring help to the neediest of the elderly and the Government could lay them with such a date as would bring the extra money into the hands of those, qualified by, at latest, the end of January, a good eight weeks earlier than the date in the Bill.

I hope that the right hon. Member for Sowerby, when he replies, will tell us why the Government have rejected this perfectly practicable approach. The very strong administrative reasons why the right hon. Lady cannot advance substantially the date for increasing the pensions do not apply to the arrangements necessary for increasing National Assistance scales. Why, therefore, will the right hon. Gentleman tell us, are the Government rejecting the method that lies to their hands? Did not they think of it, or is it just bcause we suggested it that they will not accept it, or will not the Treasury let them pay it? Why did they not in the first place think of that method and take it into account when working out the method of paying for the benefits?

What a botched and bungled story the timetable has been. Normally we would blame the right hon. Lady the Minister of Pensions in particular and the Government in general, but now we have the Chancellor of the Duchy of Lancaster there, as he tells us, as a friend of all, not the supervisor but the co-ordinator, the stimulator, the co-operator. A sorry example this shows of his co-ordination and stimulus.

What have we got in front of us as legislation?—several pre-election pledges gone or, at best, deferred indefinitely; the minimum income guarantee, pledged for early introduction, not even in the Queen's Speech; a tax increase despite the pledge that no tax increase would be necessary; our theme from our manifesto—the review of the social security arrangements—taken over by the Government because all their own panaceas did not stand up to examination. Finally, we have this shifting, insensitive, unimaginative and unco-ordinated handling of the timetable. We really had thought better of the right hon. Gentleman than this.

9.31 p.m.

The Chancellor of the Duchy of Lancaster (Mr. Douglas Houghton)

The first thing that I will say to the right hon. Member for Leeds, North-East (Sir K. Joseph) is this. Those who would have done nothing are not entitled to press questions upon those who are doing things. It is three weeks yesterday since the Queen's Speech—15 Parliamentary days—and the House can get the measure of the scope and boldness of our initiative if I enumerate for the benefit of right hon. and hon. Members opposite what we have done so far in this field of social affairs.

First, National Insurance benefits to be improved by the largest amount since 1946; second, Industrial Injuries benefits to be improved by the largest amount since the inception of the scheme; third, maternity benefits to be improved; fourth, payment to the 10s. widow to be trebled; fifth, abolition of the earnings rule for widows; sixth, separately but associated with this great operation, the abolition of prescription charges on medicines; seventh, improvements in the scales of National Assistance; eighth, improvement in war pensions; ninth an eviction Bill to make people secure in their homes. Cannot the right hon. Gentleman understand how impatient we are under this carping and nagging comments upon what we are doing?

As for the hon. Lady the Member for Finchley (Mrs. Thatcher), I also congratulate her on her great performance—the hon. and battling Lady the Member for Finchley, a kind of Parliamentary Boadicea charging around the Chamber stabbing us right and left with a hat pin in one hand and a stiletto in the other. If there is any such word as a gladiatress, we saw two of them in combat this afternoon.

I now want to say, in preface to a number of things that I have to comment upon, a word about our general strategy, because here the right hon. Gentleman is entitled to ask—and the hon. Lady the Member for Birmingham, Edgbaston (Dame Edith Pitt) also asked—what had become of our income guarantee proposals. I would say at once that had the election not been delayed until October, had it taken place, as we hoped and expected, earlier in the year, we should certainly have approached this problem of social change somewhat differently, because we said in our manifesto and in other publications that the first thing we wanted to do was to introduce the income guarantee, accompanied undoubtedly by improvements in National Insurance and Industrial Injury benefits, but the two would be harmonised, one taking account of the other, and would not have left us in the exposed position that we are in today.

Right hon. and hon. Members opposite clung to office until the very last moment. In more respects than this the nation is paying a heavy price for the political manoeuvrings of the Leader of the Opposition who wanted to retain power. The Conservative Party has no philosophy, no principles, no scruples, but they do understand power, and if they can keep it they will, even if it mean embarrassing their successors and delaying essential steps to correct the deterioration of the economy in the meantime.

That, like it or not, the right hon. Gentleman must realise, when we are coping with an inheritance which is not only a grievous one for the country, but which is making great difficulties for the Government of today.

Sir K. Joseph

I do not accept that, of course, but I ask the right hon. Gentleman why six months' deferment of the election—if that is what he is talking about—made it harder to introduce an income guarantee scheme?

Mr. Houghton

Surely the right hon. Gentleman is not as illiterate as all that. He knows well enough that it takes time to draft schemes and translate them into Bills, to get them through the legislative process and into a shape and at a time which will enable the schemes to come into operation at a convenient season. The income guarantee scheme may well be linked in its seasonal rhythm with the tax year because we are planning to relate the income of a person to tax principles and to a tax year. One has to look at the beginning of a tax year as a convenient moment at which to introduce a scheme of this kind.

There has been no opportunity for us to get that into operation, ready to be applied and everything in working order, by the beginning of the next tax year. In the circumstances, we had to decide what we should do. We believed that it would fulfil our obligations to the country and would fulfil our pledges if we embarked upon a bold and even dramatic holding operation on traditional lines in order that we could have the time to undertake subsequent reform without time running against those who are on social benefits. That is why we have done as we have.

In our manifesto we said that National Insurance benefits would be raised and thereafter linked to average earnings so that as earnings rise so, too, will benefits. That is what we proposed to do, but we have gone far beyond lifting the level of National Insurance benefits to the point at which they match the increase in earnings since last time. The right hon. Gentleman knows that we have gone far beyond that point. In fact, we have gone beyond the point of the estimated rise in earnings between now and April. We have overshot the mark on any criterion the right hon. Gentleman likes to take, because we wanted to make a preempted bid on the level of the benefits in order to give us time to introduce what will be our next Measure, the income guarantee.

Although it was not mentioned in the Queen's Speech, I can assure the right hon. Gentleman that it is a "must" in our legislative programme and that room will be found for it. At this moment active attention is being given to many of the complicated details. We are working hard on it. The income guarantee, in a way, will be a transitional measure. It is not intended that an income guarantee scheme shall be a permanent feature of our social security arrangements. We hope, in due time, and probably sooner than many of us have previously expected, to introduce a social security scheme which will provide, on a wage and income related basis, a suitable level of retirement pension which should relieve most people of the need for additional help, and it would not then be suitable to retain the guaranteed minimum income for all time with its possibly discouraging affects upon savings and the initiative for personal provision.

Sir K. Joseph indicated assent.

Mr. Houghton

I appear to carry the right hon. Gentleman with me so far.

During the course of this most interesting debate, we heard six maiden speeches, and I join with the right hon. Gentleman in congratulating those hon. Members who spoke for the first time today. I thought that special mention should be made of my hon. Friend the Member for Ince (Mr. McGuire), because in his place, for years past, we have all been used to hearing Tom Brown's agreeable contributions to our debates on old-age pensions and social benefits. It seemed to me that my hon. Friend's speech was somewhat unconventional. It had the quality of novelty; it had the spice of humour. Above all, it was the authentic voice of a man who has come straight from the pit to be an hon. Member of the House of Commons.

I did not quite follow where the heifers and the sheep got to in Ross and Cromarty, but I could almost smell the heather as we all listened to the hon. Member for Ross and Cromarty (Mr. Alasdair Mackenzie) with great interest.

My hon. Friend the Member for Glasgow, Pollok (Mr. Garrow) expressed in maiden speech manner, which means a non-controversial manner, his disappointment at the delay in making the payments. The hon. Member for Belfast, West (Mr. Kilfedder) ventured to suggest that there might be a Christmas box for all old-age pensioners and retirement pensioners. I must point out that a Christmas box of double benefit for once only to all people on retirement pensions would cost well over £20 million and would be a charge on the Exchequer, because it could not be supported in a single operation of that kind by increases in contributions.

The hon. Member for Worthing (Mr. Higgins), who, I understand, is an economist, made a most interesting speech. We now have another economist in the House who can contradict all the others. It is said that, where there are four economists, there will be five opinions. Now, I suppose, we shall have six.

The hon. Member for Worthing raised a very interesting question which has occupied our minds on many occasions by his reference to those who are called the "no pensioners". These people who were too old to join the scheme in 1948 would be covered, as we have said specifically, by the income guarantee. All persons who had retired, whether National Insurance beneficiaries or not, would be covered by the income guarantee.

I know that that is not quite the same—some would say by no means the same—as a pension as of right alongside the contributory pension, but I must point out that the advice I am given is that to give the full-scale pension to the quarter of a million or so "no pensioners", all very aged people today, would cost over £40 million a year. That may be thought to be a sum which we could take in our stride. All I can say to the hon. Gentleman is that these people, many of them undoubtedly deserving people, are not lost sight of, and that we shall keep them in mind when we undertake our review of the scheme. I hope that he will be satisfied with that assurance.

My hon. Friend the Member for Glasgow, Provan (Mr. Hugh D. Brown), a former civil servant, previously in the Ministry of Pensions and National Insurance, made some very agreeable remarks about the National Assistance Board. After longer membership of the House, my hon. Friend will learn the truth of what I have said on numerous occasions, that there are three institutions in Britain about which no hard word can be said in this House—the Crown, the Church, and the National Assistance Board.

Mr. Emrys Hughes (South Ayrshire)

They are the same thing.

Mr. Houghton

I was very struck by my hon. Friend's remark that the purpose of the social services is to look at persons in the conditions in which they are, in the home or wherever it may be, and that all the social services must combine to satisfy the reasonable needs of life of people at various stages and in various conditions. That is what we aim at doing by the word "co-ordination", to ensure that in all circumstances the social services, the physical services, the money benefits, the welfare services, institutional care, homes, and whatever it may be—that all these services are available to satisfy the needs of the citizen at any particular moment.

The review about which the right hon. Gentleman asked is now being undertaken. I cannot say tonight whether it will be put out to an outside body. The former Government did not put the graduated scheme out to an outside body. They thought it all up themselves, Jiggery-pokery and all. Let me say, in passing, that one thing that we have not done is to put our hands in the till of the graduated contributions to help pay for these benefits. Last time the Conservative Government lifted the wage band from £15 to £18 and got another £48 million in a full year from additional graduated contributions and switched it straight across to the flat-rate scheme in order to keep the flat-rate contributions down.

We have not done that this time. As a matter of principle we have not done it. But there would have been other difficulties had we endeavoured to lift the wage span higher than £18. We should still have got into difficulties with the conditions—

Dame Patricia Hornsby-Smith (Chislehurst) rose—

Mr. Deputy-Speaker (Dr. Horace King)

Order. If the right hon. Gentleman does not give way, the right hon. Lady must sit down.

Mr. Houghton

I do not want to be discourteous to the right hon. Lady, but I still have a little way to go.

The hon. Lady the Member for Edgbaston asked about the progress of the inquiry into the retirement pensioners who may be entitled to National Assistance, but are not applying for it. The inquiry is about to begin. It will be carried out over about 11,000 retirement pensioner households, including about 14,000 individual pensioners—they will all be visited—in different parts of the country. A pilot survey is to begin in a few days' time, if it has not already begun, over 350 sample cases to make sure that the approach to the inquiry is the most suitable. We expect to have the main inquiry carried out in the late spring or early summer.

The hon. Lady and the right hon. Gentleman asked about the introduction of the new National Assistance scales. I can make no announcement about that tonight, because we have to await proposals from the National Assistance Board. That is the form, and that is how it will be done. My right hon. Friend is having consultations with the Board.

The hon. Lady the Member for Finchley set about me and some of my right hon. and hon. Friends in right good style. Since the hon. Lady did me the honour of quoting my election address, I recall that I said two things in it. I said that Labour would not be a spendthrift Government. Will she say whether the proposal in this Bill is the mark of a spendthrift Government? Does she regard this further entrenchment of the security of the great mass of the old, the sick, the unemployed and the disabled as the mark of a spendthrift Government? If she does not so regard it, then I will claim exemption from any criticism she may make of what I said in my election address.

Mrs. Thatcher rose—

Mr. Houghton

Another thing to which the hon. Lady referred—I have listened to her for so many years that I know exactly what she is going to say—was my statement in my election address that Labour … will not need to increase the general level of taxation to pay for its programme. Of course, what none of us realised then was how bad the economic situation was. Although we did not trust the then Prime Minister absolutely, we did at least think that there was some tittle of truth when he said that the economy had never been sounder. We also thought that the right hon. Member for Barnet (Mr. Maudling) was being candid and honest with the country when he said that there was no need to take any special measures to deal with the situation.

It was in the expectation that the then Government's own estimate of the economic situation was correct, and in anticipation of something approaching a 4 per cent. growth rate, that we erected our own social and other programmes for the election. I can only say now that we had never realised—we were not in a position to do so—just how bad the situation would be when we came into office.

Sir K. Joseph

The right hon. Gentleman really cannot claim this alibi again and again. The published figures showed, and the announcements of my right hon. Friend the Member for Barnet (Mr. Maudling) proclaimed, time and again, that we were going through the necessary phase towards the expansion which both sides of the House had expected, with heavy stocking and with big capital investment abroad. If the right hon. Gentleman did not read the monthly returns, he only has himself to blame.

Mr. Houghton

We have debated this and we are entitled to stick to our opinion that the late Government was less than candid and less than honest with the people.

What we are doing in this enormous step forward in social benefits is undoubtedly anticipating a growth rate that we have not yet seen and that represents an act of economic faith as well as an act of social justice. It is sad if international financiers are to regard our social policies as a mark of weakness. The truth is, however, that what is troubling them is not our social policies but the weakness of our economy as it was left behind by the last Government.

In their White Paper on Government Expenditure, the former Government estimated that they could spend, on a 4 per cent. growth rate, another £360 million at constant prices in real terms between now and 1967–68. In the Bill we provide for £285 million of that, so we are providing for 80 per cent. of what the party opposite estimated could be spent over the next four years in the initial step we are taking now. That is the measure of the boldness of our programme. It is the measure of the act of faith and social justice written into the Bill.

When she chides us with proposing no more in the Bill than we proposed when the last Measure was under consideration by the House in February, 1963, all I can say is that when we moved our Amendment then, although the level of average wages was lower and our proposals last year represented a higher proportion of average earnings, we believed then that the economy was riding high. We have had to modify our approach to the level of benefits, notwithstanding the higher level of average earnings, to take account of the fact that we are anticipating a rate of economic growth which we have not yet achieved.

In the few minutes remaining to me, I wish to put a few questions to the right hon. Gentleman. What would the Conservative Party have done if hon. Members were now sitting here? When my hon. Friend the Member for Nelson and Colne (Mr. Sydney Silverman) was ask- ing the hon. Member for Rutland and Stamford (Mr. Kenneth Lewis) how the hon. Member would pay for these improvements, it seemed to me to be a rather futile question. It is no good asking anybody how he would pay for what he was not going to do. There was nothing in the Conservative programme at the time of the election which gave any clear indication of what the Conservatives intended to do or when they were going to do it.

All that the Conservatives said was that when next they made a general increase in benefits, they would give preferential treatment to the older pensioners. What preferential treatment? How much preferential treatment? If they had it all planned, why have we not heard about it tonight as an alternative to our proposals? I do not think that the Conservative Party would have done a single thing so far in the life of this Parliament had it been returned to power.

I am bound to say that if we had not made the announcement when we did, it would have been very difficult to make it now, having regard to the worsened economic situation. That, again, is an indication of the courage and determination of the Government to see that the poor and needy shall not suffer, come what may, and if the international financiers do not like it, they must lump it.

Sir K. Joseph rose—

Mr. Deputy-Speaker (Dr. Horace King)

The right hon. Member for Leeds, North-East (Sir K. Joseph) knows that if the right hon. Gentleman does not give way, he must resume his seat.

Mr. Houghton

And the right hon. Gentleman must lump it, too.

Britain's economy is going to be made sound and we shall achieve the rate of economic growth which will be necessary to support our social policy. We are determined to do that and we are determined to take all measures, as we are now doing, to achieve that purpose. But I am sure that the whole House will realise that we cannot surrender to any consideration our care of the old, the sick and the needy, even if sacrifices have to be made by the rest of the community.

Sir K. Joseph rose—

Mr. Houghton

Even if sacrifices have to be made by the rest of the community, we shall see that that will not happen. To me this is a proud moment and I hope that the whole country and the House will realise that they now have a Government plainly and directly set on social change and reform and that we shall achieve our purposes.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Committee of the whole House.—[Mr. Lawson.]

Committee Tomorrow.