New Clause.—(REFUNDS IN RESPECT OF OLD-AGE PENSIONERS.)

HC Deb 01 August 1966 vol 733 cc149-210

Where any employer who is not a charity to which section 5 of this Act applies has paid selective employment tax for any contribution week in respect of any man over 65 years of age or any woman over 60 years of age employed by him in an employment to which neither section 1 nor section 2 of this Act applies and which is not an excepted employment, then subject to the provisions of section 7 of this Act, the Minister of Labour shall make to that employer in respect of that person and that week a payment of an amount equal to the tax paid.—[Miss Pike.]

Brought up, and read the First time.

Miss Pike

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

I approached our last Amendment with a certain optimism because I felt that I was arguing a case which could not be refuted by hon. Members opposite. But that very small and important concession having been resisted, I do not approach my present argument with the same optimism. I hope that hon. Members opposite will listen to the argument and not approach it, as all our previous arguments this evening have been approached, with a sort of boredom and lethargy which shows that they are determined to stonewall through to the end of the evening, giving way on nothing at all.

The group of people we talk about in the Clause will be more cruelly hit by the tax than almost any other section of the community. This was true when the tax was first introduced, and, as we have said on previous Amendments in the past few days, it is more than ever true in the new circumstances in which we now find ourselves, and in the new circumstances which are bound to arise in the months ahead. Because of the very savage deflationary measures that the Government have taken, the old-age pensioners, particularly those in employment, will be very cruelly hit.

Surely the Government have some regard for the social effects of the very savage financial measures they are taking? We have heard arguments this evening which go to refute the idea that social considerations can be weighed in the balance and were told that one must look only at the purely economic considerations and the universality of the taxes that are being raised.

There are certainly very strong economic arguments for accepting the Amendment, but the social arguments, the human arguments, are the most important when we approach this very important subject. All hon. Members accept that it is desirable, in the interests of the older people themselves and the community and the strength of our community life, that the older people should be encouraged to go on working and to go on taking a part in the community. There are at present about 7.3 million people of pensionable age and over, that is, 15.2 per cent. of the total population. It is expected that by 1976 the number will rise to 8½ million, about 16.2 per cent. of the total population. In 1964, the expectation of life of a male at birth was 68 years 6 months and of a female—we are, after all, the stronger sex—74 years 7 months. At 60 the expectation of life was 75 years 4 months. At 60, the expectation of life of a male was 15 years 4 months and of a female 19 years 7 months. This compares with an expectation of life at birth of 61 years 4 months for a man and 71 years 5 months for a woman in the years 1950–52, and an expectation of life at 60 of 14 years 8 months for a man and 18 years 1 month for a woman in the same period.

9.0 p.m.

Thus, not only are more people reaching pensionable age but they are living longer once they reach their sixties. Moreover, if we have a break-through, as we all think we shall, in the attack on such diseases as cancer which take such a toll of people in their sixties, there will be a great many more people of pensionable age and a much larger problem in this respect than we have thought of hitherto.

I direct my argument, first, to the social aspect of the matter. These people, having lived their lives in gainful employment and having had a place in society which gave them a feeling of belonging and making a real contribution to the well being of the community and the future of the nation suffer a most cruel blow if, quite suddenly, they are thrown out of employment and on to the scrap-heap. We have all recognised this over the years. The need to encourage the employment of older people was recognised, for example, in 1953 terms in the Report of the Advisory Committee on the Employment of Older Men and Women. I shall quote some extracts from that Report. It is important to have them before us and take them into consideration now. This is what is said on page 15. It is the Government's policy to maintain a high and stable level of employment for all who want to work and are fit to do so, and we are sure that there should be no age limit to this. Neither from a human nor an economic angle can a limitation of employment opportunities for older people who want to work be regarded as a tolerable permanent solution for unemployment. It has been argued that to encourage more employment amongst older people is inconsistent with the movement towards increased leisure, in the form of holidays with pay and shorter hours of work, which is one of the fruits of technical progress. We do not think that this need be so. Indeed, increased leisure for all, old and young, is one of the good things which we can have as a result of the full use of all our resources, including the valuable capital asset that lies in the accumulated skill and experience of those men and women who are able and eager to work but prevented by age restrictions. Increased leisure may be a good thing, but enforced leisure in the form of unsought unemployment is at any age wasteful and harmful from the point of view of the nation as well as the individual. This has always been accepted. We on this side of the House have accepted it in all our legislation and it was against that background that we framed our financial and social legislation. Hon. Members opposite in their arguments on welfare and social policy have always brought it forward as one of the prime factors to be taken into account. In approaching this matter, Ministers must recognise the importance of it generally and the medical evidence which shows how people begin to disintegrate once they feel that their opportunities for gainful employment and a place in the world are past.

We need a more flexible policy towards the employment of older people. In some cases it might be permissible, and even a good thing, to retire people at the minimum pensionable age, but in most cases there is no reason why a man of 65 should not continue at work. In the last few weeks, the Yorkshire Council of Social Service has published the report of a working party on preparation for retirement. One of the most telling passages in that report observes that while retirement occurs in its present form—suddenly without regard for a man's capacities and abilities, often involving a sharp decline in status and earnings overnight—it is bound to be deeply disturbing experience for many. Clearly, apart from the emphasis on preparation for retirement, gradual retirement through going on to part-time work avoids the sudden and complete break with a long routine.

Of course, it is this part-time work and the part-time worker that have to suffer as a result of the Selective Employment Tax. He is the man who, on the whole, is the less economic for the employer to keep on his books; he is the man most easily dispensed with; and he is the man who, on the whole, will suffer the most serious injury because of this Bill.

As recently as 27th April of this year there was a Ministry of Labour Press notice of which I have a copy here, issued about the National Joint Advisory Council. It says: The National Joint Advisory Council, under the chairmanship of Mr. Ray Gunter, Minister of Labour, at its meeting today, Wednesday, 27th April, 1966, discussed the problem of the employment of older workers; received further reports on fee-charging employment agencies … and had a further discussion of Part VI of the Factories Act. The point about this is that it says: The National Joint Advisory Council approved proposals put forward by the Minister for a new approach to the employment of older workers. At the end it says that a new initiative by local officers of the Ministry of Labour in placing older workers should be intensified and a more sophisticated approach should be taken to the whole problem.

Is this the more sophisticated approach which, we are led to believe, the Ministry would take towards this problem? If so, it is a very cruel one and a very harsh one for these people.

What sort of work do the people in this group I am pleading for by this new Clause do on the whole? Last year, the Ministry of Pensions and National Insurance carried out an inquiry into the type of work being done by retirement pensioners, and the result of that inquiry was published in the Ministry of Labour Gazette of July, 1965, on page 307. This shows that the majority of pensioners were employed for the most part in occupations other than production processes. It says that the proportion employed in production processes was only 12 per cent. of the total. It goes on: Pensioners were employed for the most part in occupations other than production processes". So, on the whole, it is the old people remaining in employment after reaching retirement age who will have no help and no hope from this tax.

As regards part-time work, anybody who employs a person more than eight hours a week has to pay the employer's part of the insurance contribution, and now, on top of this, has to pay this tax, making some 38s. 4d. a week in all, and that apart from the salary or wages. It is inevitable, therefore, that employers will look at this section of the community very hard. Let us also recognise this fact, that when an employer is considering which of his people he will, very reluctantly, lay off as a result of the deflationary measures which we all know are bound to take place within the next few months, and when he weighs up the many difficult circumstances he has, first and foremost, to weigh up the economic requirements and resources of his own firm, its financial requirements, because of those circumstances, getting more and more stringent the whole time; then, if he has on his books two men of equal capacity, one of them a young man with a family, probably an unskilled worker, but still, a young man with a family, and with the whole of his working life ahead of him, and the other an older man doing, may be, the same job, but getting towards the end of his working life, the employer is bound to say that he will keep on the younger man and get rid of the older man.

It is the older man who will not be able to benefit from any training scheme, who will not be able to retrain, not be able to move into one of the development districts, not be able to move into one of the new industries requiring the new skills which we want to see. It may be that the upheaval will be the greater for the younger man, if he is moved, and has to find another house for his family and another school for his children, and all the rest of it. That is a harsh necessity which we are having to face at the present time. Still, it should be the younger man who should be driven to the new training schemes to attain new skills, in order to make, may be in another part of the country, his contribution to the economy.

This is not how it will work. Let us weigh the balance slightly in favour of the older person, the retirement pensioner. If he is a part-time worker, he is doubly penalised by the tax. The very fact of being a retirement pensioner, in any case, will mean that he is the person who will go on the scrap heap. He will have no chance of using the facilities of retraining.

I base the larger part of my argument on the social and humanitarian aspects of the tax. I have said before—I do not mind how many times I repeat it—that we have all paid lip service to the fact that we believe that people should be eased into retirement. People should be enabled to go on working and contributing for as long as possible in their active life. We recognise that people are living longer. They are fitter. The resources of medicine and science make it possible for people to go on. We all recognise that the new techniques of industry make it possible for older people, with their experience, to go on using their skills, because nowadays often great exertion is not required of them. The great majority of these people are people who will be in non-productive industry.

If the Chief Secretary will not pay regard to my plea based on the humanitarian aspect, he probably will listen to Professor Titmuss, who, after all, is one of his party's advisers on social and welfare policies. In a letter to The Times of 11th May, 1966, the professor wrote thus: Amidst all the anguished cries from service industries and the arguments of economists for 'efficient resource allocation' the social policy aspects of the proposed payroll tax are in grave danger of being forgotten. Do we or do we not wish to encourage the employment, part-time or full-time, of older men and women and the rehabilitation of the disabled and the handicapped? Unless amendments are made to exclude these groups (administratively this would not present great difficulties) the social and psychological effects—as well as the purely financial—could be serious and far-reaching. I find it odd that at a time when a number of countries are becoming more conscious of the social aspects of budgetary and economic instruments Britain would seem to be moving in a reverse direction. I will not read all the letter. I am sure that the Chief Secretary has read it.

If the Chief Secretary will not take into consideration the social aspects, will he take into consideration the economic aspects of the contribution these people can make? These people, who often make a contribution part-time, are sustaining many valuable organisations. This is not directly relevant to my argument, but earlier we discussed an Amendment designed to give some relief to private nursing homes, private institutions, private organisations of all kinds. We failed in our attempt to get some flexibility written into the law.

Many old-age pensioners are giving their services part-time to such organisations, organisations which, because of this tax, will be badly strained in seeking to give a service at an economic price. When it comes to looking after older people, people in their early sixties are just the people who can do this, because they have the understanding. They have a rapport with old people. Much of this welfare work, which is extraordinarily important and which is in danger at present, is done by people of pensionable age. This is apart from the many other skilled occupations in which such people engage.

9.15 p.m.

They can make a very real contribution to the country's economy, because, while they are earning money, they are able to provide for their old age, they are able to add to their savings, they are able to add to their pension rights, they are able to build up their independence, and so on. At the moment, of course, they are seeing their savings being whittled away by inflation, but at least they are able to run hard to keep pace with this.

At the same time, they are to a great extent keeping themselves out of the ambit of the social security departments. Many of these people, if they stop earning, will have to apply for supplementary benefits for their rent and rates. Their added earnings enable them to stand on their own feet, to pay their own way, and they keep them from being a charge on the State.

But even if the right hon. Gentleman will not take those two arguments into consideration, I hope that he will take the final, and I believe the most powerful argument of all, into consideration, namely, the rate at which the value of the pension is dropping. I do not know whether the right hon. Gentleman has seen the August edition of the Pensioners' Voice. It does not need good eyesight to read the heading on this issue—" We speak for the older generation". Under the banner headline of "Down and down it goes", it says: According to a reply given in the House of Commons on Monday, 27th June, the value of the 12s. 6d. increase, granted to single pensioners in March, 1965, has now dropped by 5s. The value of the 21s. given to married couples has dropped by 8s. 2d. To get back to March, 1965, conditions, single pensioners require an immediate increase of 5s. 8d. and married couples 9s. 2d. The value of the single pension is therefore back to £3 14s. 10d. and for married couples £6 0s. 10d. Pensioners are running like mad and getting nowhere. If the pension drops in the next 16 months as it has during the past, then the single pension will be worth £3 7s. 6d. and the married pension £5 10s. This is where we came in. Can the right hon. Gentleman categorically tell the House that during the next few months he will be able to keep the pension level with its present value? Is it not the fact that the value of the pension will constantly be eroded by the difficulties which lie ahead?

These people, who can be gainfully employed to build up their own security, should command the sympathy and the attention of the Government. Many of them have taken on commitments. They have done so foolishly, but they have done so because they believed in the promises of right hon. and hon. Gentlemen opposite. What we are asking is that the Government should slightly weight the balance in their favour. When the decision is made as to who should be laid off and who should be kept on, as to who should leave and who should go for retraining, or, in the case of old-age pensioners, whether they should go on the scrap heap, we ask that the judgment should be marginally weighted in favour of these older people, because we believe that on every count they should command the respect and the attention of the nation. They have given us splendid help in the past. It is our turn to make certain that we help them over the next few difficult months.

Mr. Gower

My first reaction was that the Government could hardly reject the principle behind the Clause, but I have an uneasy feeling that they will do just that, because I remember our earlier attempts, during our debates on the Finance Bill, and on the earlier stages of this Bill, when hon. Members on these and the Liberal benches tried to obtain a measure of alleviation of the difficulties which will be faced by persons in this and other categories.

It is hard to believe that a Labour Government will say "No" on this occasion When the Labour Party was in opposition, on these benches, hon. Gentlemen used to speak in moving terms about the plight of the older people. I do not blame them for that. It is a natural thing for them to have done. But it would be wholly inconsistent tonight if, having said those things not so long ago, they should now take a decision which ran so contrary to the views previously expressed by them. As my hon. Friend pointed out in her latter remarks, it is almost impossible under present conditions for any Government to give to elderly people the sort of pension that we would deem to be entirely satisfactory.

No hon. Member on either side of the Committee would say that the retirement pension, even as supplemented, has at any time been entirely adequate. It therefore behoves any Government to study every possible method by which the standards of living of those in the retirement age bracket may be improved, to make up for the inevitable inadequacies of the State scheme.

However the Minister may try to disguise or cover up the issue, these provisions are a discouragement to the employers of elderly people. They cannot be otherwise. They are a distinct disincentive to employers of the old. This is a serious matter. It is doubly serious in some parts of the country, where the elderly congregate in even greater numbers—constituencies like those represented by some hon. Members now present—but in all parts of the country it is a serious matter for the elderly.

In pressing our Amendments we have been told two things. First, we have been told that the Bill has an economic purpose, and that nothing must be done in any way to deviate our course from it. Secondly, we have been told that there are apparently insuperable technical difficulties. There may be other arguments, but I want to deal with those two.

Let us consider the great economic purpose. The Minister cannot possibly say that the concession of the principle in the Clause would in any way interfere with the basic economic purpose, because the purpose—we are told—is to encourage the movement of more and more people from the service and neutral industries into the productive industries. We know that people of these ages are employed predominantly in the service and neutral industries rather than the productive industries.

If we succeed in moving these elderly persons from their present employment it is hardly conceivable that they will move into productive industry. I hope, therefore, that the Minister will not suggest that the concession of the principle embodied in the Clause would in any way diminish the economic purpose of the Bill, or affect it adversely. That would be completely fallacious.

We have been told of these apparently insuperable technical difficulties. The Government have shown great ingenuity in solving other technical difficulties, and in a case like this I would have thought that they would make the maximum effort to overcome those difficulties. I am glad that my hon. Friend referred to the beneficial aspects of employment in one's years of retirement. I well remember seeing an article dealing with persons in comparable employment at different ages.

The comparison was made there between bank officers—clerks and managers—who tend to retire at an early age and my own profession, the lawyers, who go on working to a very great age——

Sir G. Nabarro

Do not believe it.

Mr. Gower

It is a fact. My hon. Friend must accept this——

Sir G. Nabarro

No.

Mr. Gower

Bank officers as a body tend to die at a much earlier age than solicitors, who go on working to a later age——

Sir G. Nabarro

Look how much money they make.

Mr. Gower

If my hon. Friend likes to look at the statistics which give details of different employments, he will find that those who retire young or at a fixed age tend to have a much shorter retirement, unfortunately, and tend to die at a younger age than those who, by the nature of their employment, work to a greater age. This is a fact.

It should, therefore, also be the objective of the Government to take no steps which will suddenly terminate the employment of the elderly. This is a social purpose. These are the things which we have in mind. I hope that the Government will not give us the sort of answer which we have had in the past about the elderly and the disabled. It would be intolerable to hear those arguments in response to a new Clause of this kind.

This does not conflict with the objective of their Bill. It is necessary if we are to retain in employment anything like the present proportion of the elderly. Let the Government take no decision tonight which will make nonsense of so much which they have professed in the past.

Mr. Nicholas Scott (Paddington, South)

Much water has flowed under the bridge since the recent General Election campaign and, unfortunately, a large amount of our gold and dollar reserves seems to have flowed with it. But some of us can still remember some of the speeches during that campaign, especially the time when the Chancellor of the Exchequer said: We will sit the burdens on the shoulders of those able to carry them, on the strongest and not the weakest. But that, of course, was before the election, and not since.

It has become quite clear, during the debates on this tax, that it will bear particularly hard on those least able to stand on their own feet. We have heard from the Treasury Bench two arguments in response to these points. The first is that it is a subsidy and an encouragement for the employment of old, disabled or sick people in manufacturing industry. That, of course, one accepts. It is true also that it is a tax not on the employee, but on the employer.

However, even given those two points, it is clear that, for about 600,000 or 650,000 retirement pensioners in the service industries, this will be a factor which will severely mitigate against their continued employment. Many of these people will be working part time for a small salary, £4, £5, or £6 a week, perhaps, on which an impost of 25s.—or 12s. 6d. for a woman—will be a substantial increase and a disincentive for their employment.

I find it difficult to believe that the Chief Secretary will say later that he cannot accept this and that he will react in the stony-hearted way in which he reacted earlier. His right hon. Friend said on 25th May that he found three advantages to the tax. I confess that I have not been so lucky. The third advantage, he said, … of the Selective Employment Tax is that it is capable of very great variation and flexibility."—[OFFICIAL REPORT, 25th May, 1966; Vol. 729, c. 651.] If it is, let it be demonstrated. Let it be demonstrated here tonight by the Chief Secretary. I find it difficult to understand why the Government do not do this. Surely it is not because it would undermine the principles of the Bill, because the right hon. Gentleman claims that the flexibility inherent in the tax is one of its great virtues.

Surely the loss of revenue would not be significant. Even in absolute terms this cannot be claimed. If we bring into the balance common humanity, the cost is derisory. Surely administrative inconvenience cannot be claimed. This cannot weigh very heavily in the balance, because this is one of the few groups of people which is comparatively easy to define. They have to pay a different stamp, they have a different coloured card, and administratively it would be comparatively simply and easily done to exempt them from the tax. Why not?

I hope that the presence on the Treasury Bench of the Parliamentary Secretary to the Ministry of Pensions and National Insurance does not mean that, in the terms which have become so drearily familiar to us at Question Time, the Chief Secretary will stand up and say how passionately he is concerned for this group of people, how no group warrants our help more and how proud he is of all that his party has done for them but that nevertheless today he will do nothing. I hope that he will not do that, but that he will find a way of helping a group of people who greatly need help.

Previously, I have argued that the tax lacks both common humanity and economic logic. It is still not too late for the Chief Secretary, in his reply to the debate, to give it a little of each of these two qualities. It may be the eleventh hour, but let him now repent.

9.30 p.m.

Mr. Marcus Worsley (Chelsea)

This is such an important discussion that I am sorry that it is so unevocative of interest on the Government benches.

Dame Irene Ward

One solitary Government back-bench Member present.

Mr. Worsley

One solitary Member—whom we are very glad to see.

Sir G. Nabarro

Would my hon. Friend note that the Labour Party in the House is 363 strong, that 357 are Missing and that only six are here? I take from the 357 one in respect of yourself, Mr. Irving, making it 356 who are absent.

The Deputy-Chairman

The hon. Member is entirely in order in referring to the benches opposite him, but it would be better if he did not refer to the Chair.

Mr. Worsley

I have not my hon. Friend's statistical skill, but it was a point well worth making.

It seems to me that this is one of the most important of all the discussions on the Bill. People approaching retirement age have a choice before them. They can retire suddenly. My hon. Friend the Member for Barry (Mr. Gower) had some interesting statistics comparing his own profession with another. There was this virtue in what he said—that the most undesirable thing a person wishes to do at this time is, having been working full-time, suddenly to revert to not working at all.

There are many people approaching retirement age who think that this would be Utopia and that when they come to the time that they need not get up in the morning to go to work, this would be a happy existence. The fact is that, confronted with a week or two of this, many of them realise that, far from being Utopia, it is a minor sort of hell.

What ought to be happening and what the House ought to be encouraging is a gradual change of gear from full 100 per cent. employment, through a period of less exacting employment, to something less than full-time work and finally to retirement. It should be a cardinal feature of the policies of all parties to enable this to happen. It should be, but the Bill is directly and absolutely opposed to this idea.

Already, the present system, when one thinks of the period before 6th September, militates against the sort of approach to employment of the elderly to which I am referring. Under the National Insurance Scheme, the earnings rule, and so on, one must even now stamp a card—I am not referring to the graduated pension aspect—in respect of a retirement pensioner or someone nearing retiring age, in exactly the same way as someone in full employment. And now, in addition, there will be this 25s. a week impost on each man.

I assure the Committee that this will inevitably mean that a great number of employers, with the best will in the world, will find this additional 25s. the marginal difference between being able to employ such a person and not being able to do so. This sum could be the critical amount and, in any case, it is an imposition which is directly against the desirable objective of the employment of the elderly.

Figures already show that the incidence of unemployment increases as people get towards retirement age. I recently received a Written Answer from the Ministry of Labour indicating the steep rise which takes place in unemployment among people in the last five years before retirement. I am thinking of the period immediately before retirement, although the principle is the same. It is that as people get near to retirement age they become more difficult to employ.

A few minutes ago I was reading in the Library an account of recent moves in the American Congress. It appears that last year the Americans legislated to protect older people from discrimination in employment. It is a sorry day when the Americans are more advanced in matters of social legislation than we are. We used to take pride in leading the world in this sphere, but today the Labour Government are imposing a burden in respect of older people which is bound to be disastrous in many cases.

Apart from this, many employers take a pride in producing employment—part time or half time—for a number of elderly people. These employers have thought that they deserved a slight pat on the back for being able to do something valuable for the community as a whole. From 6th September they will be told, "You must pay an extra 25s. for each person you employ, elderly or otherwise." I fear that they will reply, "If that is your attitude, and all the encouragement we get for trying to provide employment for the elderly, we will not bother to try." It is important that we take a lead in following advanced and humane employment policies for the elderly. If we do not take a lead, how can we expect employers to do so?

Sir G. Nabarro

I am grateful to you for calling me, Mr. Irving, and I apolo- gise for my earlier indiscretion in referring to you as a Labour hon. Member. That is historically accurate but possibly unpropitious.

The Deputy-Chairman

Order. The hon. Gentleman was not out of order in referring to me personally as a Labour hon. Member but for referring to the Chair at all in this context.

Sir. G. Nabarro

I was not talking about the Chair but about Members. But I must pass on to the matters with which this very important new Clause is concerned. It will not have escaped your attention, Mr. Irving, that with new Clause 1 we are debating new Clause No. 17, "Refunds in respect of workers over 60." New Clause 17 stands in the names of my hon. Friends the Members for Torquay (Sir. F. Bennett), Harwich (Mr. Ridsdale), Hertfordshire, South-west (Mr. Longden) and myself, and its terms are indistinguishable in their import and purport from those of new Clause 1.

In the House, of course, the Opposition always takes the side of the retirement pensioners, and always pleads at great length and with great eloquence and force that they are badly treated and insufficiently remunerated, and that the community as a whole does not have sufficient regard to their interests. In fact, I think that the House dwells too much on the amount of the monetary pension, if I may call it that—the sum paid every week in the retirement pension—and too little on the social consequences which would flow from a policy of enlarging the area of suitable employment for men over 65 years of age and for women over the age of 60 years; in other words, incentives to keep them at work.

It is now 12 years since the Phillips Committee reported to this House on the problems of the elderly. I remember that an important debate then was on the question of the earnings rule for retirement pensioners. There was a Minority Report on that subject, which was, of course, written by Professor Cairncross, later recruited by a Tory Government as a Principal Economic Adviser and kept on by the present Labour Government as a Principal Economic Adviser. Professor Cairncross's Minority Report advocated to encourage the continuance of full-time employment of men over 65 years until 70 years and women over the age of 60 until the age of 65, the total abolition of the earnings rule. I am glad to see assent nodded by an hon. Member on the Front Bench opposite.

These are matter of history and fact, but this Government never take any notice of their economic advisers—[Interruption.]—I was coming to it—save the two notable exceptions that inevitably prove the rule, manifest at the present time by the surfeit of Hungarian goulash delivered to us, and notably the Selective Employment Tax.

The point I am trying to make is that we should not be concerned with the monetary amount of the retirement pension but much more largely concerned with adequate and appropriate employment in industry and the services of men and women who are no longer young enough to be agile, nimble-fingered, mobile and rapid in piece work. That is the principle. In factories, and in times of normal competition for labour, a young woman of 21 or 22 will invariably secure a job in competition with a young man of 21 or 22 because she is more nimble-fingered and agile and is capable of producing more. [Interruption.]. I mean producing more in the factory. So right up the scale. It is indubitably the fact that in times of deflation, which we are now entering, an employer presented with the choice of whether he retains in his employment a man of 45 or a man of 65 will always retain the man of 45 and dispense with the man of 65.

9.45 p.m.

I dwell on this point about deflation for a moment. We have heard 20 times over during the course of the Committee Stage of the Bill that the purpose of the Selective Employment Tax is deflationary. We heard from the Prime Minister a few days ago his objective, clearly stated, is 1½ per cent. to 2 per cent. unemployment, arithmetically quoted it may be something between 400.,00 and 600,000 registered unemployed. Compared with the last published level of 261,000, that is an increase of 300,000. Who are these people to be, the additional 300,000 unemployed? They will be the people who are less able to compete in the labour market. They will be the people forced out of employ- ment on account of minor disability or advancing years.

I say therefore that the deflationary measures announced as part of the Prime Minister's package a few days ago are going to be discriminatory in character in the labour market against elderly people. The increase in unemployment on that account alone is most largely going to be felt by elderly and retired people. I am sorry that the Chief Secretary does not agree. I repeat that every employer presented with a choice to keep a 45-year-old or a 65-year-old will keep the 45-year-old in a competitive labour market. I am sure I am right about that.

The second factor is the question of the employer weighing in competitive conditions where he can get the best value for his money in the labour market. If he is obliged to pay Selective Employment Tax for elderly people if he keeps them in his employment, the elderly people will go to the wall first. I am not suggesting, as might have been interpreted from my hon. Friend's speech, that there are 7.3 million of these people. There are nothing like that. The retirement pensioners today, whether they draw pensions or not, who are working in manufacturing industry cannot be concerned in any way with this new Clause. The premium is paid in respect of those people. I do not think there would be much discrimination in those industries—for example, in transport—where the tax is repaid without premium.

I am directing my comments only to the service industries where the tax is paid, there is no premium and no repayment. The majority of elderly people today are working in the service industries. That is a fact simply because employment in the service industries is generally less arduous than employment in manufacturing industry or transport. For all these reasons, which I believe are good and valid reasons, I hope that the Treasury will seriously consider the relief pronounced in this new Clause on behalf of retirement pensioners. I liked particularly the reference by my hon. Friend the Member for Barry (Mr. Gower) to the great economic purpose said to be behind the Selective Employment Tax. I grant that there is an economic purpose although it is extremely raggedly and badly applied.

If there is to be any amelioration of the imbalance in the tax as it has been presented to us during the earlier stages of this Bill I suggest that the amelioration should come from an acceptance of the principle that no person of retirement pension age should be subject to Selective Employment Tax if he is continuing to work in the service industries.

I warmly support my right hon. Friend the Member for Melton (Miss Pike), and, if the Treasury Ministers give an unsatisfactory answer, I hope that we shall unite the total strength of the Tory and Liberal Parties in the Division Lobby. I am glad to see a Liberal spokesman about to bob, and I hope that he will support strongly the principles which I have enunciated, because they are not only Tory principles but Liberal ones as well. They are very humane principles, and it is on that basis that I appeal to the right hon. Gentleman the Chief Secretary.

Sir John Eden (Bournemouth, West)

I am glad that my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) emphasised that we are not concerning ourselves with the number of people over retirement age who are employed in manufacturing industry. We are more concerned about those who are employed in the service industries, upon whose employers the full weight of this iniquitous tax will fall.

It is right also to emphasise that probably the majority of the people concerned are women rather than men, and, although that reduces the rate from 25s. to 12s. 6d., it does not in any way alter the principle on which our case is based.

I know from experience in my constituency how important to the economy of a number of industries and services is the labour force provided by women, particularly those working part-time, many of whom are past the age of retirement. The reason for it is that they are working to supplement the retirement incomes of their husbands. Their husbands have ceased active employment and, on retirement, in many cases they have moved from another part of the country. Their wives find it necessary to go out to work to supplement the incomes on which they are living out their years of retirement.

That has become particularly important in the past few years, during which we have gone through a grievous inflationary experience which has sadly eroded the value of the money which these people have put aside for their old age and which has had the added harmful effect of increasing the costs of the necessities on which they depend.

In my constituency, obviously, there are large numbers of hoteliers and other people, such as chemists, who employ large numbers of elderly people who have reached the age of retirement and find it necessary to take on some form of additional employment.

In our consideration of this Clause we are concerned principally with those people who are likely to experience competition in the labour market. In some areas of employment, employers who dispense with the services of elderly people already working for them will not be able to find anyone else to take their places. In that sense, the further impost of this new tax is not likely to cause an employer to dispense with their services, because he will find it difficult to replace them.

I am trying to be fair in arguing this case because, as I see it, we narrow it down to a comparatively small number of people. Primarily, they are those who have reached retiring age and are working in the services, are most likely women, probably working part-time, and in that form of employment for which there could be competition in the securing of their jobs. To my certain knowledge, that applies to the hotel industry and to that other category of employer to whom I have already referred, the chemists.

On a wider definition, I think that it would also apply in particular to the retail shops. The retail shops employ large numbers of elderly people, and they are likely to try to dispense with those elderly people who work on a part-time basis. This is where this tax is likely to have the most harmful effect. Where an employer now employs two people on a part-time basis, and those two people are elderly women, they are likely to find that, as soon as it is possible to do so, the employer will replace those two with another single younger person. In this sense the tax will have the effect of displacing two people past retirement age who are working to supplement their personal budgets.

My hon. Friend and others who have spoken on this Clause made a particularly important point in stressing the fact that we are talking of people who do not lend themselves readily—to use a favourite term of the Prime Minister's—to redeployment. They do not lend themselves readily to being transferred or to being encouraged to move to any other area. We are considering people who, because they have reached this particular age, have probably already changed their form of employment or, more important, have almost certainly already moved their home to another place where they wish to live during their remaining years.

They have, therefore, adopted a fairly fixed pattern of life, and that is why, in all our arguments on the effect of inflation on elderly people, we stress the harm done in a social or psychological sense. They cannot readily turn to any other form of living or employment. They do not lend themselves readily to moving to another area.

We should realise that pensionable age is something which is chosen quite arbitrarily. We talk of somebody who has reached the age of 60 or 65 as being old, but that is not necessarily the case, as the hon. Member for Nelson and Colne (Mr. Svdney Silverman) will be the first to testify. Many years of useful and valuable existence still remain to them.

Mr. Sydney Silverman (Nelson and Colne)

The hon. Gentleman was good enough to refer to me personally. I should like to ask him a question on this point. Of all the legislation in my time that discriminated most harshly against elderly people, I can think of nothing graver than the measures which were taken by the Government whom he supported to impose a charge on prescriptions.

Old people are often in need of medical attention more than young people, and the prescription charges bore in a very harshly discriminatory way precisely against that class of the community for which the hon. Gentleman is now pleading. Will he tell the Committee which way he voted when the Government proposed to restore those allowances?

10.0 p.m.

The Temporary Chairman (Sir Ronald Russell)

It would be out of order for the hon. Member for Bournemouth, West (Sir J. Eden) to answer that question.

Sir J. Eden

I am sorry that the hon. Gentleman returned what was intended as a bouquet to him with a rather ill-aimed brickbat. He will know that anybody who is on National Assistance falls into a special category.

As to prescription charges, we have always argued that those who are most in need should get such forms of benefit and assistance as the State can provide. I am sure that the hon. Gentleman will be the first to recognise that if the State help were channelled to particular categories, the amount that could be afforded for their benefit would probably be much greater than it is when it is dispersed in the form of the universal largesse distributed by the Labour Government.

I am sure that all hon. Members will recognise that old-age pensioners do not wish any of us to regard them as a special category. They do not want to be treated differently from others. This lends support to the argument that we are putting forward, that people who have reached a certain age should not for that reason be specifically singled out.

So I try to link my argument in support of the Clause with the arguments that we advanced during previous discussions in Committee on the Bill, particularly in regard to the Amendments dealing with part-timers, because I think that if they were to be brought into a category of that kind they would stand to benefit just as much and would certainly feel that they were contributing to our economic strength.

The social reasons that my hon. Friend advanced are extremely important, and it is on these that I shall end my short intervention. As was said, retirement should be a gradual process. It should not be forced on anybody arbitrarily because of the age at which they have arrived. If there are other forms of employment to which, having reached a certain age, they can turn, they should be encouraged to do so. Certainly, the danger as a result of the new tax is a very real one, that where two people are employed on a part-time basis they are likely to be replaced by a single person, and that argument is likely to be much greater if they are elderly.

Since we are concerning ourselves with a comparatively small number of people—small in practice, although I admit that the arguments can be widened; but I believe that when it comes down to practical terms it is a fairly small number of people—that lends strength to our argument. Since our proposal will not cost much, since it will not depart very greatly from the revenue requirements of the Treasury, and since it will add very substantially to the social benefit of our people, I hope that the Government will be able to accept the Clause.

Mr. Albert Booth (Barrow-in-Furness)

I should like first to congratulate those who drafted the two new Clauses upon the beautifully ironic phrases with which they commence. I refer, of course, to the words Where any employer who is not a charity". Many of us before coming to the House of Commons had some experience of trying to wring wage improvements from employers. In discussion among ourselves we referred to those employers in many words which it would not be appropriate to use here. One expression which it might be appropriate to use was that they were tight-fisted, but I cannot recall any occasion when we referred to the employer as a charity.

Hon. Members opposite have sought in support of their cause to make the case that the Bill discriminates against the old. To be specific, they have sought to make the case that it discriminates against men over 65 and women over 60. I would have thought that for a Bill which has within its title the word "Selective", it was remarkably impartial on the subject of age. It treats the man of 35 and one of 65 who are doing the same job in exactly the same way in respect of the tax. It is not selective at all; it is completely impartial. Right hon. and hon. Members opposite cannot, therefore, have it that the Bill discriminates against the old.

In moving the new Clause, the hon. Lady the Member for Melton (Miss Pike) suggested, quite fairly in view of the Clause which she was supporting, that what the Government should do was to tip the balance in favour of men over 65 and women over 60. And yet the hon. Member for Worcestershire, South (Sir G. Nabarro), who so bountifully bestows his knowledge upon the Committee, talked about the employer getting the best value for his money. Does the hon. Member want the employer to decide with complete impartiality which employee gives him the best value for money or does he want the balance tipped by the Government using a financial carrot on behalf of the old? One cannot have it both ways.

Sir G. Nabarro

I did not use the words "tip the balance". What I said was that in conditions of severe deflation, to use the Prime Minister's expression—the hon. Member's Prime Minister, not mine—employers would, with competition on the labour market and not over-full employment, as we have suffered from in the last year or two——

Mr. Russell Kerr (Feltham)

You, not "we".

Sir G. Nabarro

No, we have all suffered from it.

Mr. Kerr

Let us be the judge of our position.

Sir G. Nabarro

If the hon. Member would like to get up on his feet, I will answer him. He has not been here all day. He has just walked in.

The Temporary Chairman

Order. The hon. Member is making an intervention. It is not in order for him to ask for another.

Sir G. Nabarro

We are in Committee, Sir Ronald. The hon. Member for Feltham (Mr. Russell Kerr) has just walked in. This is his first two minutes in the Committee.

Mr. Kerr

No.

Sir G. Nabarro

Yes, it is.

Mr. Sydney Silverman

Although we are in Committee, Sir Ronald, is there anything in our rules that enables two hon. Members to make speeches at the same time?

Sir G. Nabarro

I will continue my intervention, Sir Ronald, as the hon. Member for Barrow-in-Furness (Mr. Booth) has given way to me.

The Temporary Chairman

I hope that it will not be too long an intervention.

Sir G. Nabarro

A few minutes, Sir Ronald.

The Prime Minister has announced the severely deflationary package which will create acute competition in the labour market. What I said was, not tipping the scales—I did not use that expression—but that in conditions of competition the employer would take the best labour available for him and that this would rebound painfully against the retirement pensioner.

Mr. Booth

I have listened with great interest and at length to the intervention of the hon. Member for Worcestershire, South, and I must tell the hon. Gentleman that I did not credit him with having used the phrase, "tip the balance". I credited the hon. Member for Melton with having used it, and I credited the hon. Member for Worcestershire, South with having said that the employer would decide how he would get the best value for money, which is the sense of the phrase he used.

I was putting to him and to the House that one cannot have this both ways. Either an employer will decide that he will get the best value for money on a basis of paying the tax, or one tips the balance of the argument by holding out a financial incentive.

Miss Pike

As the hon. Member said, I used the phrase "tip the balance". I think that the phrase is important because the Bill's title is the Selective Employment Payments Bill, and selectivity means tipping the balance. The balance has been tipped in one respect by the premium provisions, and, if the Bill means anything at all, it should tip the balance in favour of those categories that most need help.

Mr. Booth

The term is a very fair one to use in favour of the Clause. I do not object to its being used in favour of the Clause, but the point is that one cannot argue both ways. One can support the Clause if one believes that the Government should tip the balance in this way, but let us admit that that is precisely what the Clause seeks to do.

In practice, whether a woman over 60 or a man over 65 works depends upon a number of factors, many of which will be totally unrelated to whether the employer must pay the Selective Employment Tax. I look forward to the day when old people can choose more freely whether they work, when they are not pressed nearly as hard by financial pressures to continue working, as many of them are now. Other things being equal, a person with lower financial commitments, such as somebody with lower rent to pay, is more likely to retire. Other things being equal, somebody with a higher retirement pension will be more likely to retire. Whether or not the employer is paying Selective Employment Tax in respect of them will not alter that issue.

If one accepts that we are moving into a deflationary period when people will be thrown out of work—I shall strongly oppose measures which seek to do that—then the terrible prospect with which we are faced in the House is to determine whether or not we should support a Clause which would throw young people out of work, as opposed to throwing old people out of work.

Who is to say that the hardship imposed on a young man with a young family who is thrown out of work is any greater than that on an old person thrown out of work on to an inadequate State retirement pension? It is not good enough to talk glibly about the young person being able to retrain and move to another part of the country. Those who talk glibly about mobility of labour should try some. They should try shifting a wife and family and home several hundreds of miles to take up another job.

Mr. Gower

The hon. Member appreciates that the purpose of the Bill is to influence people to leave a particular kind of service employment, young people as well as old people. It is the purpose of the Bill to influence them to move from service and other employment into productive employment. We do not want that to apply to the elderly.

10.15 p.m.

Mr. Booth

Now, apparently—I do not know whether it is in order—we are discussing the purpose of the Bill, which, it is said, is to move people from one type of industry to another. I concede that this is the point of the Bill if we are talking about a long-term trend, but I do not concede that it is the purpose of the Bill to cause employers to sack young people in order that they should maintain old people in employment. That has never been the Bill's purpose, yet it is the purpose which the Opposition are trying to impose on it by the new Clause.

Miss Pike

The hon. Gentleman is following my argument, but he is taking it into devious paths which would lead none of us anywhere. My point was that the purpose of the Bill is to redeploy labour. If that is not the purpose, we do not know what it is. If one is to redeploy labour, the sort of labour one should redeploy is, presumably, the young unskilled man who is, perhaps, working in an over-populated area like the Midlands where there is over-full employment. He should be encouraged to move to one of the development areas or to one of the new industries. We accept that this means hardship for the young man, but it is a harsh necessity because, if we are to get our industry moving and our economy expanding, we must redeploy labour and we must retrain our young people.

Mr. Booth

My recent experience in talking with service employers has been that they often prefer to employ old people or married women rather than young people, for a variety of reasons totally unconnected with the Selective Employment Tax. I accept that they are the best judges of the people they want to employ. I have some personal experience, on the other hand, of the hardship which people well below retirement age have in shifting home from one part of the country to another in pursuit of their jobs, and I maintain that, if we want to see more old people employed in jobs which are suitable for them, it should be our overall aim to ensure that there is adequate work for everyone. We should not be discussing this question in terms of the suggestion now coming from the Opposition that there should be a financial incentive to sack young people in order to maintain old people in employment.

Mr. J. Bruce-Gardyne (South Angus)

It is a pleasure to have some hon. Members opposite intervening in the debate——

Sir G. Nabarro

Only one, not some.

Mr. Bruce-Gardyne

Only one, as my hon. Friend says.

The hon. Gentleman's appearance and intervention in the debate is a fair representation of the attendance we have had on the Government side from a party which claims to consider, above all, the interests of the older citizen. It was a remarkable intervention which we had from the hon. Member for Barrow-in-Furness (Mr. Booth), and I shall return to it in a few minutes.

I wish, first, to consider the argument advanced from time to time from the Treasury Bench that old-age pensioners will not be harmed by the effects of this tax. It has been said that employers of old-age pensioners employed in manufacturing industries will gain an incentive to retain them; but, as my hon. Friend the Member for Melton said in moving the Clause, the vast majority of old-age pensioners in employment are in the service industries.

Another argument we have had from the Treasury Bench is that the tax is paid by employers and not by employees. Departing from the general arguments which we on this side have put in favour of the Clause, I shall descend from the general to the particular for a moment and give an example from my own constituency which demonstrates very well the fallacy of that argument that the tax is paid by the employer and that there will be no effect on the old-age pensioner employee.

I should say at once that the Chief Secretary knows quite well the case I wish to raise, because I have already been in correspondence with him about it. The reply which I got from him was so ludicrously inadequate that I felt that it would be adding insult to injury to pass it on to my constituents who raised the case with me in the first place.

This is the case of a bowling club in Monifieth, in my constituency. I have already discussed the affairs of this club, which is affected in many ways by the measures we have been discussing this summer; I raised them in a different connection in Committee on the Finance Bill. The club is facing severe consequences as a result of the inclusion of part-time old-age pensioner employees in this tax. Therefore, the club is particularly concerned with this Clause. I think that it is worth drawing the attention of the Committee to this instance, because I think that it demonstrates very clearly the sort of things which will happen as a result of this tax, unless the Clause so ably moved by my hon. Friend the Member for Melton (Miss Pike) is accepted by the Government.

The Monifieth Bowling Club at present employs a 66-year-old pensioner as a part-time greenkeeper for 15 hours a week for a wage of £4 10s., plus insurance stamp. The club calculates that the imposition of the tax in respect of that man will cost the club an additional £65 a year. The club has run at a loss of £200 for the past two years, and the fee for members has already been increased by £1. It is estimated that if the fee were further increased to cover the cost of this tax in respect of the part-time green-keeper the membership would, inevitably, fall of, particularly as about 30 per cent. of the membership are old-age pensioners, many of whom may be affected by the provisions of the Bill. As a result, the club is facing the position that if it has to meet this bill of £65 on its part-time green-keeper through the Selective Employment Tax it will very likely have to close down.

Here, to my mind, is a classic example of the sort of effects that this tax will have. Does the Chief Secretary really intend to tell us that this 66-year-old greenkeeper will be re-employed in manufacturing industry—in the Midlands, manufacturing cars for export? Will he seriously suggest that this pensioner will be "shaken out"—in the elegant phrase used by our admirable Prime Minister to describe the effects of the measures which he has been throwing before the House day in and day out during the past few weeks—that this old-age pensioner will be shaken out into manufacturing industry as a result of this tax? I do not think that even the Chief Secretary would have the nerve to put that sort of explanation before the Committee tonight.

I believe that the application of this tax to old-age pensioners in employment is a piece of economic lunacy of which one can only say that it fits in all too well with the pattern of the measures which have been laid before the House in recent weeks by the Government. We shall, I suppose, as my hon. Friend the Member for Barry (Mr. Gower) suggested, be told by the Chief Secretary, when he replies to the debate, that there would be insuperable administrative difficulties in accepting the Clause. Really, sometimes when I hear the replies we get from some of the hon. Gentlemen opposite, and perhaps most of all from the Chief Secretary, I recall Philip Guedalla's comment on a civil servant whom he described as an inverted Micawber, waiting for something to turn down. That is all the Chief Secretary does, and it will be a depressing performance on a new Clause of this kind.

The hon. Member for Barrow-in-Furness touched, perhaps unwittingly, on what I fear may be the thinking behind the Government's action on the Amendment. Can it be that they are calculating that, by imposing the tax on old-age pensioners, they will be able to achieve a certain amount of this famous shake-out which the Prime Minister has been talking about in terms of old-age pensioners, who will not show up in the unemployment statistics? Can it be that this is the cynical intent behind the imposition of the tax on old-age pensioners?

If this is the thinking which might lead the Chief Secretary to reject the Amendment, which was so ably proposed by my hon. Friend the Member for Melton, it will be treated by old-age pensioners with the contempt it deserves. I therefore hope that, contrary to all my expectations, the Chief Secretary will accept the Amendment.

Mr. John Pardoe (Cornwall, North)

I hope that the Committee will forgive me if I say that the House is not only in Committee, but is also "Through the Looking Glass". Many of us who followed debates on this type of subject before we entered the House of Commons and before the 1964 election have read the massive attacks which the Labour Party when in opposition made on the Conservative Government on just this kind of subject. We have read the tear-away speeches made by Labour Members about the earnings rule.

The hon. Member for Worcestershire, South (Sir G. Nabarro) said that he has been advocating the abolition of the earnings rule consistently over a long period. I can justifiably remind him that I am speaking for a party which, alone of the parties represented in the House of Commons, has consistently opposed the earnings rule.

Sir G. Nabarro

Do not be silly. I taught the Liberal Party how to do it.

Mr. Pardoe

The hon. Member for Barrow-in-Furness (Mr. Booth), in some strange arguments, said, first, that the tax does not discriminate against the old. It does, because old people tend to have low incomes. This is one of the effects of the earnings rule. Old people tend to have low incomes partly because of the earnings rule and partly because they are often part-time workers. The tax discriminates against low income earners. Any poll tax does that, because it is a higher proportion of a low income than it is of a high income. The first thing to be said therefore is that the tax discriminates against the elderly.

Secondly, even if this were not true, the new Clause, which I support, would help to right the balance. I agree that the balance should be tipped, but in this instance it would only right the balance against the weight of the earnings rule as it exists today. There is already a disincentive to elderly people to work, because of the earnings rule. If the new Clause were accepted, I would hope that the balance would in some sense be righted.

I do not support the new Clause in the spirit of the puritan ethos that work is good for work's sake and that everybody should go on working for the whole of their lives. I have some vision of a society in which people will want to retire and genuinely want to give up work. I am a member of a generation—not all Members of the House of Commons are—who have had two years' experience of retirement already. I speak of National Service. During that time I made up my mind to dedicate the rest of my life to preparing for the next period of retirement. I hasten to add that this is not the reason why I entered the House.

I would not like to follow the hon. Member for Melton (Miss Pike), who moved the Amendment so passionately, in asserting that all social legislation introduced by the Conservatives had these problems in mind.

The earnings rule forces down the incomes of elderly people, and the Gov- ernment come along and deliver the coup de grace with this tax which will have savage effect on elderly people.

10.30 p.m.

The whole of this debate has been about the national problem, but I want to refer briefly to the particular problem of development areas, in particular areas such as Cornwall and the deep South-West, where we have a situation such as that referred to by the hon. Lady the Member for Melton. A very high proportion of our population is in the retirement age group. This tax will savagely affect the whole economic base of Cornwall and of other development areas like it. We have a very low activity rate because of this age structure.

I must warn the Government—they seem to take this very lightly—that the economic measures which have recently been announced will have a terrible result in the development areas. I know that the Government do not really believe this. They think that the measures announced over the last two years to help the development areas will solve this problem, but they will not. Unemployment will start to rise in the development areas first. It will rise faster there than elsewhere in the country, and there will be considerable distress in the development areas within a very short time. I support the Clause because I believe that it will help the development areas. The Government have so far refused to help these areas, but I hope that they will do so now by accepting this new Clause.

I want, now, to deal with the arguments about administrative problems. Many of the arguments which have been put forward tonight were put forward when, at an earlier stage, I proposed an Amendment to deal with the problem of part-time employees. The Government, in the person of the Financial Secretary, then put forward the argument that it was impossible to select the part-time employees because one could not prove who they were. The hon. and learned Gentleman had a point there if one sticks to the letter of the law, but this argument cannot be made in respect of pensioners, because if it is possible, as it says in Clause 1, to select a different rate of tax for persons under 18, it is also possible to select a different rate of tax for persons over 60, or over 65, because they have pension books and these are the ultimate proof that they are in those age groups. An employer would only have to produce an employee's pension book to prove to the Inland Revenue that he was entitled to this rebate.

I hope that the Government will not fall back on the argument about the administrative problem, and that they will accept that this is a sound principle. The hon. Member for Worcestershire, South said that this was not only a Tory principle but that it was a Liberal principle. He did not go quite as far as I think he should have gone. It is not only a Liberal principle, not only a Tory principle, but it is a Socialist principle. It is all very well for a party to continue to ride roughshod over the principles of the Opposition, but when the Government rides roughshod over their principles, they are in danger of losing their soul.

Miss J. M. Quennell (Petersfield)

My hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) quoted an example of the operation of this tax when it becomes effective, but I believe that nearly every one of my hon. Friends could produce a similar case to demonstrate the folly of this proposal.

My hon. Friend the Member for Paddington, South (Mr. Scott) found an economic logic in the conception of the Bill and my hon. Friend the Member for Barry (Mr. Gower) an economic purpose. Their detective instincts are better than mine. The Committee is faced with a dilemma. When the Bill was introduced to a somewhat stunned and startled country it was argued in its support that we were in a condition of acute and severe over-employment and needed a redeployment of our labour resources, and the argument for economic logic and the economic purpose of the Bill was to secure this.

Since then we have had announcements from the Prime Minister, and deflationary measures which have altered the situation markedly, certainly for those over 65 years of age, who will find the Bill implemented in a way completely different from that suggested when it was introduced. It would be more encouraging if we could see the Government pursuing their own logic a little more effectively, but it was said in another place last week that the Government's office accommodation increased by 1 million square ft. last year and also that the State's intake of labour last year exceeded the total increase in the national labour force.

The redeployment of labour is an ugly phrase, but the State, in one way or another, through its agencies, employs between 20 and 25 per cent. of the total labour force of the country, and it is, therefore, the State, through its various agencies, which can effect a cure of our present dilemma much more quickly than any other single employer. If the Cabinet were to instruct all the agencies of the State to reduce their labour force by about 5 per cent. our dilemma would be a very different one.

The labour shortage in the South of England is acute. If one wants a tile for a roof, or a pane of glass replaced, one is extremely lucky to get it done without a long wait. Old-age pensioners are an essential part of the labour force in my constituency and others in the South-East and South of England, both as full-time and part-time employees. As my hon. Friend the Member for Melton (Miss Pike) said, they need the cash, thanks to the rising cost of living.

In my constituency, and constituencies adjacent to mine, employers will often employ two part-time workers in place of one full-time worker, but pensioners are facing a period in which the Government—and this must be the first Government ever to do so—are planning for unemployment, planning deliberately for deflation, and a reduction in the level of prosperity and the economic activity of the country, and planning for the curtailment of affluence. In those circumstances, this group within our community is far more vulnerable, as employees, than any other single group, as my hon. Friend the member for Worcester, South (Sir G. Nabarro) has demonstrated. As he made quite clear, physically they cannot work either so hard, or for so many hours, as younger employees. This partly contributes to their vulnerability as employees, but, nationally, it is in the interest of the nation that they should remain actively and usefully employed.

The traumatic effects of the early retirement of elderly people have been mentioned. One of the most horrid experiences I have had was to tell an old friend that he should not retire because it would be bound to be fatal. He did retire, and died within a year. Once elderly people retire they tend to become dependent and feel unwanted. The consequences are often irrepairable and they begin to make demands on the social services which they previously did not have to make.

Although it may have been argued that the Bill made a useful contribution to the redeployment of labour, that initial argument was put forward when the Bill was introduced, and not at a time when the economy is in a state of deep freeze. My fear is that the retirement pensioners will be the first to be frozen out.

I hope that the Government will meet the arguments adduced for the new Clause by my hon. Friends. If the will exists, there would be no administrative problems in getting the new Clause in operation easily. However, if the Government are not willing to go the whole way, they could administer the new Clause on a regional basis. The population structure of one area differs markedly from that of another. While the Government may be planning to put the whole country into deep freeze, I trust that they will not give old-age pensioners the "frozen mitt" tonight.

Sir D. Glover

When this tax was first introduced by the Chancellor I thought it irrelevant, badly thought out and that it would not achieve the objectives set for it by the right hon. Gentleman. At least, when it was introduced the Government were operating in a period of over-full employment, with only 250,000 people unemployed. Even then we thought the Government were going too far and many of my hon. Friends saw how the economy was developing. However, today we must consider S.E.T. in the light of the Prime Minister's statement of 20th July and the fact that he talked about shaking people out of work, rather like shaking peas through a colander. The people who fall through the holes will be the most defenceless of all, because, having been shaken out, they will be out of work.

When the tax was introduced the Government made it clear that they wanted a shake-up in employment. To put it simply, they wanted people to move from less worth-while to more productive occupations. But that was at a time of full employment. Now the Prime Minister has admitted—he said this when replying to a Question of mine—that he expects about 500,000 people to be unemployed as a result of these measures.

I believe that the economy was turning down before the Government took any action at all, and I pray to God that we do not have 1 million unemployed by this time next year—though I have very great fears that that is the situation that the country is facing. If that be the case, I should like, with a lifetime of experience in distribution, to say a few things to the Government about what will happen.

10.45 p.m.

Hope springs eternal—and, I hope, always will—in man's breast. Because of the deflation the Government have brought in, Mr. A. loses his job. A service industry is employing two part-time people, both of them over retirement age. Mr. A. is a full-time person now looking for a job. The firm employing those two people-over 60 or over 65 depending on whether they are men or women—will be only too delighted, in a period of deflation, when finding it more and more difficult to keep up turnover and maintain profits, to reduce its oncost by taking on Mr. A and discharging the two older people. It will thereby save 25s. in the case of a male employee and 12s. 6d. in the case of a woman, so keeping its oncost lower——

Mr. Sydney Silverman

What would be wrong with that?

Sir D. Glover

I will tell the hon. Gentleman. It entirely contradicts the Government's original object under the Bill. If the hon. Gentleman, from his sedentary position, will allow me to make my argument, I will explain why I say that.

The whole purpose of the tax was to cause a shake-out, and thereby get people who were probably semi-trained to go on retraining courses for more worthwhile occupations in the growth industries and the exporting industries, and in the development areas. What will happen now, unless this Clause is accepted? The older people, who are probably working part time, will get the sack, and their employers will take on one semi-trained person who has got the sack from some other occupation. So, instead of younger persons going for retraining, we will find when we want to expand our economy again that we have no more trained manpower than we have at present.

If the Government want their policy to work, they should at present be scrapping the 7s. 6d. bonus for all the people in manufacturing, and providing a bonus for the whole of our economy to maintain the maximum number of old people in their present occupations so that, if there is any shake-out, the younger ones can be retrained—because the old ones will not be retrained. We will not retrain a lady of 60 or a man of 65 in a new computerised industry——

Mr. Michael McGuire (Ince)

They should have a proper pension. They should not need to be working.

Sir D. Glover

I am dealing with Government policy.

If the Government want their policy to work the only sensible and logical way to go about it is to encourage, in a period of deflation, those beyond the point of retraining to be kept on in their occupations even to the disadvantage of the young, because the young can then, under the Government's retraining proposals, be retrained for the more constructive industries we want to build up in order to make our economy grow and become more efficient. If the Government do not accept this Clause, they are contradicting their own policy and making it quite certain that it cannot possibly work in a period of deflation.

As I said earlier, hope springs eternal. When a man loses his job he thinks that he will get it back again and be where he was before in two or three months' time. He will take a slightly inferior job meantime, if he can get it, but he will not go for retraining unless he feels that he will not otherwise get another job.

There is a great deal of support on both sides of the House for the idea of training people for new industries, but if they do not accept this Clause the Government will be making almost certain that their policy will fail.

Mr. Julian Ridsdale (Harwich)

I am very glad to speak on this subject on new Clause 17 at this time rather than at 2.11 in the morning, as I did last time. I am also glad to have the support of my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) for this Clause, which affects men who have not a pension. An hon. Member opposite said that they should have a decent pension, but they do not have a pension at the age of 60.

As the Chief Secretary knows, many of these people are employed for only 10 hours a week. They earn £2 10s. a week and on that their employers will have to pay 25s. a week. There will not be very much incentive for employers to keep these people on at a time when costs are getting very competitive and there is deflation in the economy. I should like to underline the principles of this Clause, because by it we want to give an opportunity to men of 60 and over who do not get a pension until they are 65 to try to help themselves.

In my part of the country many of these people are employed in hotels and shops as part-time workers. There 25 per cent. of the population consists of old-age pensioners. I know what a severe influence this tax will have on them. I have twice pleaded with the Chief Secretary on this matter. He refused to answer just before the deflationary measures were introduced, and treated me with disdain, but, because I know that he is a reasonable man, I ask him to think seriously about the case I am putting.

I am sure that if he reasons correctly he will see that the whole basis of the tax has been altered since the new measures were introduced. I cannot see that the Government can have the same case now. I ask the right hon. Gentleman to consider carefully and to give pungent reasons why we should have to go ahead with this tax which falls on people earning only £2 10s. a week, 5s. an hour for 10 hours a week, and the employer has to pay 25s. a week. Surely the right hon. Gentleman can make a concession on that.

The right hon. Gentleman knows that the deflationary measures will mean a large amount of unemployment. I am sure that it is not his intention to cause unemployment and hardship to people who want to help themselves. I do not believe that those on the Treasury Bench are hard-hearted. As the hon. Member for Cornwall, North (Mr. Pardoe) said, it is a Liberal principle, it is a Conservative principle, and up to now it has been a Socialist principle, that people who want to help themselves should help themselves. I have never known such a hard-hearted Measure as this. I hope that the Government will use common sense and alter the hardship that they are causing to old-age pensioners.

The Chief Secretary to the Treasury (Mr. John Diamond)

It is always preferable to start on common ground, as far as one can. May I say that the Government share the views which have been expressed by the hon. Lady the Member for Melton (Miss Pike) and other hon. Members on both sides of the Committee, that those who wish to be active for longer than the normal span of working life should be free to do so.

I am reminded that in various primitive societies there is one word only for work and for play, which one translates as activity, and there is a lot to be said for that. I enjoy my work, and I am sure that most hon. Members do. It is very hard to distinguish between what is work and what is play. Those of us who garden for play will find it difficult to say why we call gardening play and why a full-time gardener calls it work.

I agree with a good deal of what the hon. Lady said, that the possibility of working is something which, subject to examination, we want to encourage. It is something which is satisfying on human and social grounds and, on economic grounds, it is something which is beneficial to the community as a whole. We are on common ground there, at all events.

I move from that, and consider the effect of this tax. I hope that the hon. Lady will forgive me if I do not go into some detail in answering her general thesis about the worth-whileness of having work for old people. No one disputes that at all. What we are considering and what the hon. Lady devoted a tiny part of her speech to considering is the effect of the tax on the employment of older people.

If I may say so, I was interested most in the speech of the hon. Member for Bournemouth, West (Sir J. Eden), who tried to put it, as he said, in fair terms and tried to grapple with the size of the problem that we are discussing. He said that he wanted to narrow it down to a comparatively small number, and I think that that is right. We are dealing with a comparatively small number.

The hon. Gentleman described the persons whom he thought might be affected by the tax in present circumstances. However, the first thing about which I must remind the Committee is that, of all the men over 65 and all the women over 60 who are working more than eight hours a week, half the women and more than half the men are in employment which attracts either the premium or the refund. Therefore, those hon. Members who have spoken to the contrary have not been fully informed of the facts.

This is a major principle. If it is right to say that the tax has a deterrent effect on the employment of older people in services, it is also right to say that it has an effect in the opposite direction on the employment of people in premium receiving activities. It does not have that effect to the same extent, but it has an effect. That must be so. If the argument is that the imposition of a tax has an effect on an employer's decision whether to employ a particular person, it must be the case that a premium has an opposite effect.

Miss Pike

Surely that is wrong. In a premium-attracting industry, all employees are on the same basis, whether they are of retirement age or under. The premium is repayable. What we are asking for is that the balance should be tipped slightly the other way, and that older people in the service industries should be put at a slight advantage, so that, when a decision comes to be made, an employer will weigh that in the balance.

11.0 p.m.

Mr. Diamond

The hon. Lady said nothing against what I am saying. The essence of the matter is whether the employer is likely to discontinue employment of a man over 65 or a woman over 60 because he has to pay an additional 25s. or 12s. 6d., as the case may be; and I am just demonstrating that if it is alleged that the employer is less likely to continue employing such a person because of the tax, it must be true—proportionately but not to the same absolute extent—that the receipt of a premium of 7s. 6d. is an encouragement to continue.

Several hon. Members will not accept that argument. I do not think there is a great deal in it either way. I share the view of the hon. Member for Bournemouth, West that we are probably dealing with a very small number of people where the addition of the 12s. 6d.—because it will be mainly 12s. 6d.; we know that—will be such as to make the employer say, "I am no longer going to employ this employee." I do not think that is likely to happen to any considerable extent at all.

Mr. Ridsdale

Would not the Chief Secretary agree that, where the wage is £2 10s., the 25s. tax on a man will have a very considerable effect on the employer?

Mr. Diamond

If the hon. Gentleman wants to do so, let us consider the part-time employee. At the moment, we are not considering the part-time employee; we are considering the elderly employee. There are elderly employees who are also part time, but the essence of the argument is the elderly employee. If we were discussing the part-time employee—which we are not—I would seek to deploy a number of arguments relating to part-time employees. What we are considering is the elderly employee and the likelihood of the elderly employee being the most vulnerable in circumstances in which employment is likely to fall somewhat, and, therefore, somebody who should be specially protected. That is the argument.

The first thing I say, therefore, is that having regard to the incentive effect of the tax in part, having regard to the fact that more than half the employed men over 65 are in the incentive area of the tax, I do not think that this tax will have a substantial effect.

The next point I want to make——

Mr. Gower

I am very grateful to the right hon. Gentleman for giving way. I take his point that if there is a disincentive effect with regard to the tax there may be a slight contrary effect with regard to the premium. But is he not basing his argument on the fallacy that the service and productive industries occur in equal amount in all parts of the country? Of course, this is not the case. The very parts of the country which will suffer most harshly from elderly people being put out of service industries are those parts which have relatively few premium-earning industries.

Mr. Diamond

The hon. Gentleman is on a completely false point. We are not dealing with regional policy. We are dealing with a situation where, according to most hon. Members opposite who have spoken, we have over-full employment—not full employment, but over-full employment.

We have suffered, said the hon. Member for Worcestershire, South (Sir G. Nabarro), from over-full employment. The hon. Lady the Member for Melton said the labour shortage in the South is acute. The hon. Member for Cornwall, North (Mr. Pardoe) said that employment is over-full. The present situation that we are dealing with is one in which there is full or very full employment, and one is considering, therefore, people who are in employment at present and the likelihood of them continuing to be employed.

The whole case put forward by the hon. Lady the Member for Melton was that we must have a special incentive for the old so that they would not be competing equally with other possible employees for the jobs which are going.

Mr. Pardoe

I said nothing about "over-full employment". I have just read my speech and there are no such words in it.

Mr. Diamond

I am sorry if I had it down to the hon. Member. It must have been another hon. Member, but I thought that it was the hon. Member for Cornwall, North. There were at least three hon. Members whose speeches I have quoted who said it and everyone has been saying the same thing. Many right hon. and hon. Members on the Front Bench opposite have said it time and again when referring to the number of vacancies in relation to the number of applicants.

The second point hardly needs mentioning, but I had better remind hon. Members about it. We are talking about a tax on employers as opposed to a tax on employees.

The third point to which I would like to draw attention is one concerning humane grounds and is one to which the hon. Lady the Member for Melton asked me to pay attention. There are two aspects here to which we should give full attention. It is not true that there is a wide variety of jobs which an older person cannot do quite as well as the younger person can. There is a whole variety of sedentary jobs that the older person can do and sometimes they are thought by the employer to be able to do them better than the younger person can. We do not want to accept the point of view that the older person has to be discouraged as an employee, quite the reverse.

Miss Pike

There will not be a wide variety of jobs in the future.

Mr. Diamond

If the hon. Lady will allow me to get that far I will deal with that point, too. I have had seven interventions so far.

Dame Irene Ward

The right hon. Gentleman is saying silly things.

Mr. Diamond

I am saying a lot of things which are perhaps not acceptable to the hon. Lady the Member for Tynemouth (Dame Irene Ward).

Dame Irene Ward

I was wondering when the right hon. Gentleman would tell us the object of the Selective Employment Tax. In the terms of the Government's own statement, it is to shake out people. We are asking him not to shake out old people because they will not be able to get in anywhere else. Could he deal with that point, because I am sick of all the others.

Mr. Diamond

I will deal with it immediately. As usual, the hon. Lady is completely and utterly wrong in saying that the Government have ever alleged that the purpose of the Bill is to shake out old employees.

Dame Irene Ward

Redeployment.

Mr. Diamond

The hon. Lady is quite inaccurate. I hope that if she disagrees with me she will draw my attention to statements in the OFFICIAL REPORT where any Member, on behalf of the Government, has said that the purpose of the Selective Employment Tax is to shake out elderly employees. If she has not got the reference handy, perhaps she will accept my word for it.

Dame Irene Ward

Perhaps I will be called after the right hon. Gentleman.

Mr. Diamond

There is plenty of time.

The next point is on the humane approach. It is not the case that all those, particularly ladies, who are 60 or more wish to disclose their age. They are perfectly happily employed at the moment and if they were to disclose their age there is likely to be discrimination against them, or there is the possibility of it. Their age is not shown on their insurance cards. It is not the case that one would want to do that unless there were compelling reasons, which there are not.

The hon. Member for Cornwall, North was also mistaken in thinking that one could deal with this on administrative grounds by having regard to the pension book. Pension books do not exist where the employee continues in employment over the age of 60 or 65, as the case may be. It applies only to the retired pensioner. There is not a separate category which corresponds with this Amendment which one could deal with in that way. I repeat that we do not expect that there will be any number of elderly people who will be likely to be thrown out of work.

Mr. Pardoe

They must surely be in any case. Otherwise, the earnings rule would not exist. It applies to people who are earning some money and who have a pension.

Mr. Diamond

I repeat that the person who carries on in employment does not have a pension book. The person who retires and then comes back to work is a retired pensioner and is then in work with a book and is then subject to all the rules about limitation. A vast number carry on at work without any question of a book, or disclosing their age. This is very relevant indeed. There is no need to disturb that situation. In short, one is dealing with a very small section, one where the effect of the tax is likely to be minimal.

If it is said that the situation now is somewhat different from what it was when the tax was introduced, that is true, but let us examine the extent of the difference. The hon. Member for Worcestershire, South quoted some alarming figures. He mentioned 600,000 unemployed, but I suppose that he did not mean to say 600,000.

Sir G. Nabarro

What I said was that, arithmetically applied, the Prime Minister's figure of 1½ to 2 per cent. might result in unemployment between 400,000 and 600,000.

Mr. Diamond

That is just what I said. There was hardly need to interrupt me for that.

Sir G. Nabarro

Nothing of the sort.

Mr. Diamond

The hon. Gentleman referred to a figure of 600,000, which is quite wrong. If it were 2 per cent. the upper limit would be 480,000, and at 1½ per cent. the lower limit would be 360,000. If one quotes what the Prime Minister said, we are talking about a figure between 360,000 and 480,000. At 1½ per cent., it would be a figure less than that which held when there was a change of Government in 1964. If it were between 1½ and 2 per cent. it would be somewhat less than the average figure which obtained during the whole of the 13 years of office of the Tory Government. If one examines the figures, there is no need to use the startling phrases on which hon. Members have based their approach to the Clause.

We do not dispute that there will be a lessening in the number of employed in the way that the Prime Minister has indicated. But that is certainly very different from saying the things that hon. Gentlemen have said. It is certainly not expected that it will have a substantial effect on the numbers employed of those about whom we are talking.

There has been reference to part-timers, too. They have been referred to on the basis that one has to have two part-timers to do the work of one whole-timer. That is not the case. In many instances in the distributive trade one has a part timer because one can carry only a part timer. One has a part-timer because one has peak requirements in labour, and that situation can be met only by employing the services of somebody who is willing to give part-time service and unwilling to give full-time service, and one would not solve the problem by having full-time service because it is a peak problem that one has to satisfy very largely in the distributive trade. So it is not quite as simple as people have thought it to be. I do not think that there is any need, therefore, to look to a Clause of this kind, which would go far wider than has been suggested in many of the speeches.

If I may refer to the cost, I can say mat that would be about £20 million a year, which is a substantial part of any ordinary year's revenue.

11.15 p.m.

Mr. Bruce-Gardyne

Prescription charges.

Mr. Diamond

We are not discussing prescription charges. If that is the best that the hon. Member can do, then he has not a particularly strong argument for this Amendment.

I have already referred to the administrative difficulties, but the Committee does not seem to want to hear about those. But there are administrative difficulties. There is the question of the disclosure, to which reference has already been made, and the major difficulty that once one starts bringing in elderly people in the services then the Ministry of Labour would have to set up a major administrative machine to deal with those services now outside their ken. I might add that such services ought not to be brought within their ken.

No person inside, with the exception of the charities, is to have a refund. If we bring in the elderly and, as a result, have something which approaches more than 800,000 persons working full time—that is women over 60, and men over 65—then we shall have to deal with the whole of the service employees to satisfy ourselves that there were no abuses committed, and so on. An extraordinarily large number of civil servants would have to be recruited to deal with them all.

Mr. Bruce-Gardyne

I thought that the whole burden of the Government's case was that few people were concerned. Now the right hon. Gentleman says that there would be more than 800,000. He cannot have it both ways.

Mr. Diamond

If the hon. Member does not want to listen to what I have been saying he should at least have listened to what his hon. Friend the Member for Bournemouth, West (Sir J. Eden) had to say.

The Amendment proposes that we should distribute £20 million to 800,000 or more people because of the possibility that a very small number of elderly persons might become unemployed, a very small number indeed. That is the point which I am trying to make. It is not only a question of categories of people employed; there are other factors as well, and I cannot recommend this Amendment to the Committee.

However, having said that, I would like briefly to look at what is the main basis on which the Opposition have proceeded; not on what they previously said, but on their later anxiety which appears to stem from what the Prime Minister has said. To the extent that what my right hon. Friend has said may make the situation less satisfactory than it previously was, I promise that we shall keep the matter under close review. If it is necessary we shall bring forward suggestions, but we do not think that there is a solid case for dealing with this vast number of persons; for tipping the balance. Indeed, that case has not been made out at all.

Of course, we agree that there is a good case for employing as many people as possible in the course of adjusting jobs, so far as that can be done, but at the same time, there is no case for selecting any specific old person and saying that he shall get a job so that a young person may lose his.

In the circumstances, the best I can offer is the promise I have already made that we shall keep this matter under review and under even closer review in view of the Prime Minister's statement. I cannot recommend this Amendment, because I think that it is unnecessary.

Dame Irene Ward

I am glad that the Chief Secretary has tempted me to intervene, because I had listened to all the various arguments and I decided to record my vote and not to take up the time of the Committee. I want, however, to make clear what my intervention was, because I try, even though the Chief Secretary does not think that I do, to be absolutely accurate in what I say.

I understood from the beginning that the whole case for the Selective Employment Tax was based upon the fact that the service industries did not pay their share of taxation and that redeployment in the service industries was very much required by the Government. Am I right as far as I have gone?

Mr. Diamond

The hon. Lady is not right. The Government have made it clear time and time again that they do not expect a large redeployment in terms of transfer of labour to arise from the Bill. They have said time and time again—my right hon. Friend the Chancellor and I both said this in the opening speeches in the Budget debate in dealing with the introduction of the tax—that what we hoped would happen would be that recruitment would benefit from this and that new recruits into industry would tend to come the more into manufacturing and less into services as a result of this tax.

Dame Irene Ward

This is a new position. I have listened very carefully and although, as the right hon. Member has generously pointed out, I am not surrounded by copies of HANSARD, or by civil servants, the point remains that during the earlier stages of the Bill there was a great deal of talk about trying to attract people from the service industries into manufacturing industry.

It is difficult sometimes on these matters to be quite certain what somebody said or did not say, but I fully accept that the right hon. Gentleman, or all those other Ministers who have spoken during our debates, might have meant to say that they hoped that that would be the effect with new recruitment, the people who will be 60 or 65 or whatever it may be but who have not got there yet—and it may be some time before they get there. The point was, however, made that there would, it was hoped, be an encouragement by the S.E.T. for people to transfer—I do not say that it was the elderly—from the service industries to manufacturing industry.

My hon. Friend the Member for Bournemouth, West (Sir J. Eden), who made a wonderful speech from the point of view of the Chief Secretary, also made the case for Bournemouth, but his constituency is not the only place which has hotels or shops. The case that my right hon. and hon. Friends have tried to make throughout the whole of these debates is that in certain parts of the country, which include Bournemouth and parts of my constituency, in the areas where most people are employed in service industry there is not the manufacturing industry to which they can transfer. The Chief Secretary has never sought to answer that case. That is what I have been waiting for, from the beginning of this wretched debate to the end. Now, when the right hon. Gentleman has generously invited me to intervene, all he says is that I am absolutely wrong.

I can give a specific case—again, I do not have HANSARD with me—on the right hon. Gentleman's argument that people do not employ two part-timers because they can do very well with one part-timer. Of course, some firms can. Every firm, hotel or boarding-house deals with cases according to how it suits it best. I can assure the hon. Gentleman that if he likes to make a date with me I will take him along to a big store in London where there are two cleaners, one coming in at 7 o'clock in the morning and one coming in at 1 o'clock, who have already been told that the shop will require one full-timer. As it happens, neither of the two can fit in her times to suit the store. So I think that I would be right in deducing that both those part-time women will depart.

Another point I really must take up with the right hon. Gentleman is the sudden decision about age. I really do not know what he knows about women; I really would not quite know that; but the point is that, under National Insurance, age has to be declared, because when one applies for one's retirement pension one has, if one is a woman, to declare one's age, 60, and if one is man, one has to declare one's age, 65. That is absolutely true. Another point is that if one wants to continue earning and draw pension at the same time, one must declare one's age to get one's book and go on, even if one keeps within the earnings rule.

So what the right hon. Gentleman was saying about age was absolute nonsense—although there are, of course, some people, grand people, both men and women, but, I think, mostly women, who, naturally, do not want to declare their age; but that is an infinitesimal number of people the hon. Gentleman discusses so frequently in the arguments he tries to put forward to shake our Amendments. The point is that with life as it is now people have got over the bother about declaring their ages; they have got quite used to it, because they have to declare age for so many things. I think that was a very silly line that the right hon. Gentleman took, if I may say so.

What I really want an answer to is this suggestion that one should transfer from service industry into manufacturing industry. I want again to follow the line taken by my hon. Friend the Member for Bournemouth, West. The right hon. Gentleman has said, quite rightly, that this is a tax which will be paid by the employer. He is thinking just in terms of I.C.I. I am thinking in terms of small boarding-house keepers, or small hotel keepers, or small shopkeepers.

Quite a lot of them are elderly women, and they like to employ part timers so that they can get a little relaxation from the long hours they have to work. Indeed, I would like to pay a tribute to the shopkeepers, for I do think there is no section of the community which works longer hours. I am not talking about the Harrods or the Harveys or the Woollands or the C and A's; I am talking about the small shopkeepers, who are the salt of the earth and who work from early morning to late at night—and do not make much profit, either. The Government are imposing a tax on them.

So there are different types of employers, in exactly the same way as there are different ages, in the service industries. The right hon. Gentleman really made absolutely no attempt whatsoever to distinguish between them, or to say what will happen in the areas where there are mostly old people in the service industries, employed in small hotels, small boarding-houses, small shops, and who cannot get other employment.

One difficulty after another is piled on the small shopkeepers, the small boarding-house keepers, the small hotel keepers, and they cannot afford to pay this additional tax. People will be forced out of employment not out of malice, because nobody wants to get rid of the best servants, but because of this tax. It is among the elderly that we find the best type of men and women, because they respond to the need to maintain their independence, and try not to be a burden on the State.

11.30 p.m.

The hon. Member for Nelson and Colne (Mr. Sydney Silverman) intervened to make a comment about prescription charges. As he was allowed to make that intervention, perhaps I might be allowed to reply to it. The hon. Gentleman did not get his facts right, because these old people who are on National Assistance never did have to pay prescription charges, and if I had had my way many other people on the small income limit would not have paid them, either, so that is tit for tat. When someone as experienced as the hon. Member for Nelson and Colne does not know his facts, I am only too delighted to "have a go".

It is not a question of turning out the young at the expense of the old. I invite the Government to come to my part of the country. We would be delighted to give them a good time at Whitley Bay. Elderly people tend to be in the service industries, and the whole argument is about the fact that the Government have decided to make this dividing line between manufacturing and service industries. It was a most unfortunate decision, and I am sure that it was "coughed up" by Mr. Kaldor.

It is an artificial division, and the right hon. Gentleman keeps on talking about there being only a small percentage of people who will be affected, and about there being so many hundreds of people over 60 and 65 who are employed in manufacturing industry. Believing in democracy as I do, I do not think that one section of the community should be castigated because statistically they do not fit into the other group. The right hon. Gentleman's argument is a very false one indeed.

I get tired of the right hon. Gentleman's smarmy opening every time he replies to the debate on a proposed new Clause or Amendment. He always says that it comes from the heart, and if only the heart could operate against the head he would come down on the side of the heart. By that time his heart has beaten so fast it has nearly choked him. He then thinks that he uses his head.

I think that we have made a very good case for the Clause. The Government have created their own difficulties, against which they are trying to struggle, by making this idiotic division between manufacturing and service industries. If I last long enough—I do not know whether Members are in a service in- dustry —I shall look forward to the day when I can remember what I said today, and what the right hon. Gentleman said.

I have had to fight hard in my part of the country. Whenever I want to speak, the hon. Member for Barrow-in-Furness (Mr. Booth) comes in and makes a speech, which, of course, is very flattering. I remember the election campaign in 1964, and Tynemouth would be very surprised to hear the hon. Gentleman, after the methods of electioneering that he employed then.

I will not argue against the hon. Gentleman, but he is the sole person—I put that down to the appearance of myself—who likes challenging me, because I defeated him. He has talked a great deal about employment, and what he wanted and did not want. Nobody wants unemployment. But the hon. Member for Barrow-in-Furness, which produces the Polaris submarines, is not particularly suited to represent that area when he is a member of C.N.D.

Mr. Booth

Would the hon. Lady not consider that the electors of Barrow-in-Furness to whom she referred would be in a very much better position to decide whether they should have a member of the C.N.D. as a representative precisely because the Polaris submarines are built by them?

Dame Irene Ward

The hon. Member has a right to his own opinion—and I congratulate him on having convinced Barrow-in-Furness that they should elect him—but his argument about unemployment and employment is not so effective as it would be if he had defeated me in Tynemouth. I have been challenged by the hon. Member and I have tried to give my reply. I am looking forward to going into the Lobby against him and his Government.

Mr. Maurice Macmillan (Farnham)

My hon. Friend the Member for Padding-ton, South (Mr. Scott) was lamentably prophetic in saying that we would not get anything out of the Chief Secretary. In all these debates on this type of Amendment he has done nothing more than give an imitation of Bowman, in the Hunting of the Snark, saying, What I tell you three times must be true. The deviousness and irrelevancy of this reply illustrates the illogicality and what my hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) called the "economic lunacy" of the whole tax.

It was that complication and illogicality that made the tax a payroll tax and an attempt at the same time to broaden the base of indirect taxation and achieve a reduction in labour in the service industries by means of transferring it to the manufacturing industry. It is no good the right hon. Gentlemen saying that this was intended from the beginning only to ensure that recruits to industry favoured the manufacturing side rather than the services side, because the White Paper says clearly, in paragraph 4, that the intention is to move people from service industries to manufacturing industry. It says, Second, it"— that is, the Selective Employment Tax— will have a beneficial longer-term effect by encouraging economy in the use of labour in the services and thereby making more labour available for the expansion of manufacturing industry. Unless the White Paper is using English in a way never foreseen by Roget, "economy in the use of labour", and "thereby making more labour available", means a transfer of existing labour and not merely a change in the emphasis of recruiting labour.

In the course of this debate, the only intervention from the other side was that of the hon. Member for Barrow-in-Furness (Mr. Booth), who reminded us that, whatever difficulties we may be having, he had experienced very great difficulty in getting more wages out of employers. That may well have been his experience, but the employers that he would be dealing with now have an excuse that the former employers never had; now they can say that they cannot pay extra wages because the Government would fine them if they did so.

The Chief Secretary argued that because half the women and more than half the men of the 800,000 affected by the Amendment were already in manufacturing industry we could not but argue, through the logic of our own argument, that the premium encouraged older people to be employed in manufacturing industry.

Mr. Diamond

I do not want the hon. Gentleman to put the argument against himself any higher than I put it. The 400,000 are not in the premium earning category but in the premium earning and refund categories.

Mr. Macmillan

As the right hon. Gentleman's argument was totally ridiculous anyway, I do not think that I could put my argument in a strong enough way to refute it, because it is patently obvious that, at a time when manpower generally is being encouraged to go into manufacturing and when the choice is between the elderly and the young, the natural choice is for the young. I do not wish to exaggerate the extent of possible unemployment, but what I say is bound to be the case in a state of increasing unemployment; although I agree with the Chief Secretary that while the Government intend that the amount of unemployment should be small, the result of their policies is likely to be a totally different matter.

When talking about the number of people employed in the service industries, particularly by small employers, the Government must remember that marginal costs such as S.E.T. are bound to be important to the labour expenses of firms. Many elderly people employed in larger manufacturing industries are doing various semi-service jobs within those larger establishments. Such firms have a large proportion of employees who qualify for repayment or neutrality. Many of the elderly workers in these establishments are retired servants of these companies, perhaps doing less active tasks than they did in their younger years.

The arguments of the Chief Secretary represented a sort of elegant paradox, more suitable to a Fabian drawing room than the House of Commons, particularly when speaking about the hardships that could be caused by rejecting our proposal. At one point the right hon. Gentleman was putting forward the classical defence of the Victorian maidservant when charged by her employer; of the girl, on showing the baby, saying, "It's only a little one". It is no good the right hon. Gentleman saying that only a few people will be affected—and then only the old.

The Chief Secretary's administrative argument does not stand examination. He said that one reason for the Government not giving way was that it would force people to disclose their ages while, at the same time, he adduced the usual argument that it would be too difficult for the Government to right a wrong which they had created because too many people would be involved owing to the complexity of their administrative system. To say that the Government cannot give this small and admittedly marginal assistance to the employment of the elderly because it would discriminate in their favour is an odd argument coming from the benches opposite. Of course, we are asking for a mild discrimination in favour of the elderly. Life itself discriminates against them. As they get older, so their problems are bound to become greater. The value of their pension gradually becomes less.

One hon. Gentleman opposite suggested that the better solution would be for the pension to increase as people get older. I am inclined to agree. My hon. Friends are not arguing that people should be forced to stay at work after retirement age when they do not wish to, but are obliged to do so for financial reasons. Nor are we arguing about the forced retirement of people when they wish to stay at work. But, alas, in present conditions, more and more people will find that, because of the harsh conditions created by this Government, they will need to stay at work.

As my hon. Friend the Member for Melton (Miss Pike) pointed out, the value of the pension is consistently and steadily being eroded by inflation. The earnings limit is a relevant consideration here. It was last raised—in April 1964—to £5. Since then, according to the provisional figures for April 1966, average earnings have risen from £17 12s. to £20 5s.—a rise of 15.1 per cent. Yet nothing has been done to raise the earnings limit. Nor has anything been done to raise the increments in regard to postponing retirement. I wish the right hon. Gentleman had said something about that, as the

matter was mentioned by one of my hon. Friends.

The relevance of the new Clause is that even if older people can do enough to justify their employer keeping them on, even if the small employer can say to an old person, "If you can put in a few more hours, do a little more work and earn a little more, it will make it worth while paying the extra 25s. to keep you at work," it is quite possible that the operation of the earnings rule may mean that the old person will not get much benefit for himself from his extra work. As one hon. Member said, one cannot dissociate in this argument the question of the employment of the old and the pensions for retired people who do not choose to go back to work.

My hon. Friends the Members for Bournemouth, West (Sir J. Eden) and Harwich (Mr. Ridsdale) made the case very plainly, indeed, particularly for the small shopkeeper and the hotelier, but theirs are not the only constituencies being adversely affected in this way. Hon. Members on all sides will have received large numbers of letters on this very point.

One of my main charges against the Government on this new Clause, as in regard to other parts of the Bill, is that they are risking grave damage for the future—because, as has been pointed out, more and more old people are concerned every year—for a very problematical gain in the present.

Since the right hon. Gentleman has not been able to offer more than a faint hope that in some circumstances he would be willing to look again at the problems and difficulties of the old under the S.E.T., I must ask my hon. and right hon. Friends to divide the Committee, and I hope that one or two of the Liberal Members who have expressed their views this evening will support the new Clause.

Question put, That the Clause be read a Second time:—

The Committee divided: Ayes 128, Noes 175.

Division No. 154.]	AYES	[11.49 p.m.
Alison, Michael (Barkston Ash)	Boyd-Carpenter, Rt. Hn. John	Bullus, Sir Eric
Allason, James (Hemel Hempstead)	Boyle, Rt. Hn. Sir Edward	Carlisle, Mark
Astor, John	Brinton, Sir Tatton	Chichester-Clark, R.
Balniel, Lord	Bromley-Davenport. Lt. Col. Sir Walter	Cooper, Key, Sir Neill
Batsford, Brian	Bruce-Gardyne, J.	Corfield, F. V.
Bessell, Peter	Buchanan-Smith, Alick Angus, N&M)	Crowder, F. P.
Body, Richard	Buck, Antony (Colchester)	Currie, G. B. H.
Dance, James	Johnston, Russell (Inverness)	Prior, J. M. L.
Davidson, James (Aberdeenshire, W.)	Kimball, Marcus	Pym, Francis
d'Avigdor-Coldsmid, Sir Henry	Kirk, Peter	Ramsden, Rt. Hn. James
Dean, Paul (Somerset, N.)	Kitson, Timothy	Rawlinson, Rt. Hn. Sir Peter
Deedes, Rt. Hn. W. F. (Ashford)	Knight, Mrs. Jill	Ridley, Hn. Nicholas
Dodds-Parker, Douglas	Langford-Holt, Sir John	Ridsdale, Julian
Doughty, Charles	Legge-Bourke, Sir Harry	Rossi, Hugh (Hornsey)
Eden, Sir John	Lloyd, Ian (P'tsm'th, Langstone)	Royle, Anthony
Elliot, Capt. Walter (Carshaiton)	Longden, Gilbert	Scott, Nicholas
Elliott, R. W.(N'c'tle-upon-Tyne, N.)	Lubbock, Eric	Sharples, Richard
Eyre, Reginald	MacArthur, Ian	Sinclair, Sir George
Fletcher-Cooke, Charles	Mackenzie, Alasdair (Ross&Crom'ty)	Steel, David (Roxburgh)
Foster, Sir John	Maclean, Sir Fitzroy	Summers, Sir Spencer
Gilmour, Sir John (Fife, E.)	Macleod, Rt. Hn. Iain	Taylor, Frank (Moss Side)
Glover, Sir Douglas	Macmillan, Maurice (Farnham)	Temple, John M.
Goodhew, Victor	Maddan, Martin	Thatcher, Mrs. Margaret
Gower, Raymond	Marten, Neil	Thorpe, Jeremy
Grant, Anthony	Maude, Angus	Tilney, John
Gresham Cooke, R.	Maxwell-Hyslop, R. J.	Turton, Rt. Hn. R. H.
Griffiths, Eldon (Bury St. Edmunds)	Maydon, Lt.-Cmdr. S. L. C.	van Straubenzee, W. R.
Grimond, Rt. Hn. J.	Mills, Peter (Torrington)	Vickers, Dame Joan
Gurden, Harold	Munro-Lucas-Tooth, Sir Hugh	Wainwright, Richard (Colne Valley)
Harris, Frederic (Croydon, N. W.)	Nabarro, Sir Gerald	Ward, Dame Irene
Harvey, Sir Arthur Vere	Neave, Airey	Weatherill, Bernard
Hawkins, Paul	Noble, Rt. Hn. Michael	Webster, David
Heald, Rt. Hn. Sir Lionel	Nott, John	Wells, John (Maidstone)
Heseltine, Michael	Onslow, Cranley	Whitelaw, William
Hill, J. E. B.	Orr, Capt. L. P. S.	Wilson, Geoffrey (Truro)
Hobson, Rt. Hn. Sir John	Osborn, John (Hallam)	Winstanley, Dr. M. P.
Hogg, Rt. Hn. Quintin	Page, John (Harrow, W.)	Wolrige-Gordon, Patrick
Holland, Philip	Pardoe, John	Worsley, Marcus
Hooson, Emlyn	Peel, John	Wylie, N. R.
Hornby, Richard	Percival, Ian	Younger, Hn. George
Howell, David (Guildford)	Pike, Miss Mervyn
Hutchison, Michael Clark	Pounder, Rafton	TELLERS FOR THE AYES:
Irvine, Bryant Godman (Rye)	Powell, Rt. Hn. J. Enoch	Mr. Jasper More and
Jenkin, Patrick (Woodford)	Price, David (Eastleigh)	Mr. Peter Blacker.
NOES
Albu, Austen	Fernyhough, E.	Irvine, A. J. (Edge Hill)
Alldritt, Walter	Fletcher, Raymond (Ilkeston)	Jackson, Colin (B'h'se & Spenb'gh)
Allen, Scholefleld	Fletcher, Ted (Darlington)	Jackson, Peter M. (High Peak)
Atkins, Ronald (Preston, N.)	Floud, Bernard	Jeger, George (Goole)
Beaney, Alan	Foley, Maurice	Jenkins, Hugh (Putney)
Bennett, James (G'gow, Bridgeton)	Foot, Michael (Ebbw Vale)	Jenkins, Rt. Hn. Roy (Stechford)
Bidwetl, Sydney	Ford, Ben	Johnson, Carol (Lewisham, S.)
Bishop, E. S.	Forrester, John	Jones, Dan (Burnley)
Blackburn, F.	Fowler, Gerry	Judd, Frank
Blenkinsop, Arthur	Fraser, John (Norwood)	Kelley, Richard
Boardman, H.	Fraser, Rt. Hn. Tom (Hamilton)	Kenyon, Clifford
Booth, Albert	Freeson, Reginald	Kerr, Russell (Feltham)
Boston, Terence	Galpern, Sir Myer	Lawson, George
Bowden, Rt. Hn. Herbert	Gardner, A. J.	Ledger, Ron
Boyden, James	Garrow, Alex	Lestor, Miss Joan
Braddock, Mrs. E. M.	Ginsburg, David	Lewis, Ron (Carlisle)
Bray, Dr. Jeremy	Gordon Walker, Rt. Hn. P. C.	Lomas, Kenneth
Brown, R. W. (Shoreditch & F'bury)	Gourlay, Harry	Luard, Evan
Buchan, Norman	Gray, Dr. Hugh (Yarmouth)	McBride, Neil
Callaghan, Rt. Hn. James	Gregory, Arnold	McCann, John
Carmichael, Nell	Grey, Charles (Durham)	MacDermot, Niall
Coe, Denis	Griffiths, David (Rother Valley)	McGuire, Michael
Coneannon, J. D.	Griffiths, Will (Exchange)	Mackintosh, John P.
Craddock, George (Bradford, S.)	Hamilton, James (Bothwell)	Maclennan, Robert
Cullen, Mrs. Alice	Hamilton, William (Fife, W.)	McMillan, Tom (Glasgow, C.)
Dalyell, Tam	Hamling, William	MacPherson, Malcolm
Davies, Dr. Ernest (Stretford)	Hannan, William	Mahon, Peter (Preston, S.)
Davies, Harold (Leek)	Harper, Joseph	Manuel, Archie
Davies, Robert (Cambridge)	Harrison, Walter (Wakefield)	Mapp, Charles
de Freitas, Sir Geoffrey	Haseldine, Norman	Mason, Roy
Delargy, Hugh	Hazell, Bert	Mayhew, Christopher
Dell, Edmund	Henig, Stanley	Mendelson, J. J.
Diamond, Rt. Hn. John	Herbison, Rt. Hn. Margaret	Mitchell, R. C. (S'th'pton, Test)
Dickens, James	Hooley, Frank	Molloy, William
Dobson, Ray	Horner, John	Morgan, Elystan (Cardiganshire)
Doig, Peter	Houghton, Rt. Hn. Douglas	Morris, Charles R, (Openshaw)
Donnelly, Desmond	Howarth, Robert (Bolton, E.)	Murray, Albert
Dunn, James A.	Howell, Denis (Small Heath)	Newens, Stan
Dunnett, Jack	Howie, W.	Noel-Baker, Francis (Swindon)
Dunwoody, Mrs. Gwyneth (Exeter)	Hoy, James	Norwood, Christopher
Eadie, Alex	Hughes, Emrys (Ayrshire, S.)	Ogden, Eric
Ellis, John	Hughes, Roy (Newport)	O'Malley, Brian
Ennals, David	Hunter, Adam	Oram, Albert E.
Evans, Albert (Islington, S. W.)	Hynd, John	Orme, Stanley

Oswald, Thomas	Sheldon, Robert	Williams, Alan (Swansea, W.)
Palmer, Arthur	Silkin, Rt. Hn. John (Deptford)	Williams, Alan Lee (Hornchurch)
Pearson, Arthur (Pontypridd)	Silkin, S. C. (Dulwich)	Williams, Mrs. Shirley (Hitchin)
Pentland, Norman	Silverman, Sydney (Nelson)	Williams, W. T. (Warrington)
Perry, Ernest G. (Battersea, S.)	Slater, Joseph	Willis, George (Edinburgh, E.)
Price, Christopher (Perry Barr)	Small, William	Wilson, William (Coventry, S.)
Price, Thomas (Westhoughton)	Spriggs, Leslie	Winterbottom, R. E.
Price, William (Rugby)	Steele, Thomas (Dunbartonshire, W.)	Woodburn, Rt. Hn. A.
Pursey, Cmdr. Harry	Thomas, George (Cardiff, W.)	Woof, Robert
Redhead, Edward	Varley, Eric G.	Wyatt, Woodrow
Rees, Merlyn	Wainwright, Edwin (Dearne Valley)	Yates, Victor
Richard, Ivor	Walker, Harold (Doncaster)
Roberts, Gwilym (Bedfordshire, S.)	Watkins, David (Consett)	TELLERS FOR THE NOES:
Roebuck, Roy	Weitzman, David	Mr. Alan Fitch and
Rose, Paul	Wellbeloved, James	Mr. Ioan L. Evans.
Ryan, John	Wells, William (Walsall, N.)

It being after eight minutes to Twelve o'clock (the House having resolved itself into the Committee at eight minutes to Four o'clock), The CHAIRMAN proceeded, pursuant to Order [18th July], to put forthwith the Questions necessary for the disposal of the business to be concluded at that hour.

Schedules agreed to.

Whereupon The CHAIRMAN, pursuant to Order [18th July], left the Chair to report the Bill, as amended, to the House.

Bill reported, with Amendments; as amended, to be considered Tomorrow and to be printed. [Bill 90.]