HC Deb 07 February 1966 vol 724 cc36-144

Order for Second Reading read.

3.41 p.m.

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

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

In our manifesto for the last election we outlined our plans for social security. From time to time the Opposition, both Front Bench and back bench, have shown interest in the progress of the implementation of those plans, and it seemed to me that perhaps it would be useful, particularly for the Opposition, if, in the first part of my speech, I dealt with the pledges which we have honoured. The plans which we gave in our manifesto were plans for a five-year term of government. We have now been the Government for between 15 and 16 months.

The first promise in our manifesto was to raise existing benefits. This we did at the earliest moment possible. Pensioners, for example, received the highest increase since 1946 not only in their pensions but in National Assistance. Sickness, unemployment and industrial injuries benefits and war disability pensions were raised by the largest amount ever in the history of National Insurance in this country.

What about the widows? The earnings rule for widows was abolished only two months after we had become the Government and the 10s. widow had her pension increased to 30s. Another pledge which we fulfilled in that part of our manifesto was to give redundancy payments to workers when they lost their jobs. That was implemented and came into operation in December of last year. In March of this year thousands of disabled workers in receipt of payments under the old Workmen's Compensation Acts will get an increase, and the extremely disabled industrial and war pensioner—those who are very, very disabled—will receive an extra £3 a week.

I think that I am justified in saying that never since the period 1945–50 has there been such activity in improving social security. But, as Minister responsible for this Department, I am very far from being complacent. I realise only too well how much is still to be done. But what we have achieved in the face of tremendous economic problems is proof of our will to complete our whole programme. As we have told the House time and again, we have been carrying out a general review of the whole field of social security. This Bill is the first of the new developments stemming from the review. But I want to stress that it is an interim Measure which will be re-examined in the light of the results of the completed review. The main feature of the Bill is the proposal to pay earnings-related supplements with unemployment, sickness and widows' benefits.

I want to turn to the National Plan for a moment. The plan shows the important part which earnings-related unemployment benefit can play in promoting the mobility of labour which is very much needed to meet economic and technological change. The provision of the Bill for earnings-related unemployment benefit is complementary to the Redundancy Payments Act. Both of them are to be seen in the setting of the economic needs of this country. It was made clear in the National Plan that priority is being given to schemes which can help to promote faster economic growth. For my part, as Minister in a big spending Department, the fastest economic growth possible is what I want.

In our manifesto—and the National Plan has not departed from our manifesto—we said: the key factor in determining the speed at which new and better levels of benefit can be introduced will be the rate at which the British economy can expand. We said that before the election. That still stands today.

So far, I have dealt with the economic reasons for earnings-related unemployment benefit, but there are also compelling social reasons for this benefit and for treating sickness and widows' benefit in the same way. So often there is a drastic fall in income for a man who becomes unemployed, for a man who becomes sick, for a woman who loses her husband. I think that everyone in the House and the country realises that this drastic fall in income causes very severe hardship to thousands of people every year and excessive worries for many families. Because of that I feel that the social reasons for the provisions of the Bill are as compelling as the economic reasons. We promised in our manifesto that widows' benefits would be reshaped in a new and more generous way". The provisions of the Bill are merely the beginning of that reshaping. We have taken the first opportunity to make improvements.

I should like to turn to the proposals in the Bill. The introduction of earnings-related unemployment benefit highlights the difficulties and anomalies in the existing system, and they are very great indeed. The Bill therefore seeks to simplify some of these provisions and to bring them more into line with modern conditions. The recommendations in the Report of the Committee on the Assessment of Disablement, in so far as they affect the Industrial Injuries Scheme, are implemented in the Bill. The proposal to pay the earnings-related supplement to sickness benefit on top of injury benefit has led the Government to propose in the Bill some further changes in the Industrial Injuries Scheme which are intended to simplify administration. Finally, there are proposals for some minor changes designed to keep the present National Insurance Scheme in good day-to-day running order.

What is the coverage of the Bill? Clause 2 provides for the new earnings-related supplements which will be payable to employed contributors over 18 and under pension age who are entitled to the existing flat-rate unemployment and sickness benefits. That is an important matter. The earnings supplements will be paid, with just one exception only, to those who are at present entitled to flat-rate unemployment and sickness benefits. The rate of the supplement will be one-third of the average weekly earnings between £9 and £30. They will be paid on top of the present flat-rate benefits including increases for dependants, but they will be subject to a maximum total benefit of 85 per cent. of earnings. The maximum supplement will, therefore, be £7, which is one-third of £21, for the claimant with average weekly earnings of £30 a week or more.

An upper limit of benefit expressed as a percentage of earnings—to secure that claimants generally are not better off when sick or unemployed than they would be at work—is a natural feature of a scheme in which benefits are related to earnings. A maximum of this kind is particularly necessary in a scheme like ours, where the personal rate of benefit can be increased substantially by allowances for dependants. There are in other countries some schemes where no allowance at all is made for dependants. The figure of 85 per cent.—and it is 85 per cent. of gross earnings, not of net earnings—takes into account the fact that gross earnings are subject to deductions for P.A.Y.E., National Insurance contributions and other expenses which do not arise during unemployment or sickness.

The £9 minimum level of earnings is the same as the existing minimum level of earnings for graduated contributions. People earning below £9 a week will be entitled to only flat-rate benefit, but this will, of course, be a relatively high percentage of their earnings—a higher proportion than the new benefits will provide for the higher paid. The existing upper limit of £18 for graduated contribution purposes would have been too low for the new short-term benefits, but it will continue to apply to graduated pensions. The proposed upper limit for short-term benefits is £30, which is rather more than one-and-a-half times the present level of national average earnings.

How are we to reckon earnings? Supplements will be based on earnings assessable to Schedule E Income Tax—in general, earnings taxed under P.A.Y.E. Average weekly earnings will be taken as one fiftieth—not one fifty-second—of annual gross earnings, usually those in the last complete tax year. It is proposed to determine earnings as far as possible by asking the claimant to produce the certificate of pay and tax deducted—that is, the Inland Revenue form P. 60, or its equivalent—which the employer gives to each employee at the end of the tax year. It will, therefore, help to get the supplement paid quickly—and I particularly stress this—if every employee, when he gets his Certificate of Pay and Tax Deducted next April, will keep it safely in case it is needed.

What will happen if a worker loses his P. 60? Where the P. 60 cannot be used to determine earnings, it will be necessary to send inquiries to employers. This will cause delay, possibly to the pay- ment of the supplement, which the worker will want to get quickly. It will also put an extra burden on employers. If we want to get our economic situation straight, we do not want to put extra unnecessary work on to employers. It is, therefore, in the interests of everyone concerned to see that this extra work is kept to a minimum.

What will be the duration of the supplement? It will be payable for up to six months of unemployment or sickness after the first 12 days. This waiting time is necessary to ensure that the supplement does not have to be calculated for the very large number of very short spells of incapacity, or unemployment. Special provision will be made for the supplement to be paid on top of injury benefit and widow's benefits, where these benefits are being paid instead of flat-rate unemployment benefit or sickness benefit. Thus, injuries benefit is also covered in the Bill.

How many people should benefit from the provisions of the Bill? The number to benefit from the new supplements will, of course, depend on the number of unemployed and sick persons, and we know how both can vary widely. When there is an epidemic, as we now have in some parts of Scotland and the north of England particularly, the numbers vary. This is not something new. The levels of sickness benefit always vary seasonally. The Government Actuary has, however, worked out—this is his job; and one needs to know these things if one is to have a scheme that is financially sound—that, on average, about a quarter of a million sick people, including 30,000 on injury benefit, and about 110,000 unemployed people—assuming a 2 per cent. level of unemployment—would be receiving the supplement at any one time.

What will be the cost? On this basis, as worked out by the Actuary, the cost of the supplements in the first full year is estimated at about £64 million.

Sir Keith Joseph (Leeds, North-East)

Did the right hon. Lady mention the figure of 130,000?

Miss Herbison

No. I said 110,000.

We hope, if the Bill is passed through Parliament in time for the necessary administrative arrangements to be made, to start paying the supplements in the autumn of this year. Every day is important. If we consider previous radical changes in social security—for example, those made during the 1945–50 period—we find that the graduated pensions scheme took two years from the passing of the legislation until the provisions began to operate. That is why I stress how important it is that no time is lost in getting the Bill through all its stages because we hope to operate it by about six months from the passing of the legislation.

I will now deal with some general matters of the Bill. Clause 4 provides for two important changes in widow's allowance. This is the allowance payable at a specially high rate in the initial period—that is, 13 weeks at present—after the husband's death to women whose husbands had not retired or who are themselves under 60. The first change, which will apply to all widows entitled to widow's allowance on or after the appointed day, is to extend the period of the allowance from 13 to 26 weeks. In other words, we are doubling the period of the allowance. This will give the widow a longer 'time in which to adjust herself to her new situation in life. Everyone knows that there are many difficulties, apart from the financial ones, which face women recently widowed and this longer time should help them to overcome some of these difficulties.

The second change is to pay to widows of employed men who have not retired and who die after the appointed day a widow's supplementary allowance calculated in broadly the same way as the supplement to the husband's unemployment or sickness benefit. The rate of the supplement will be one-third of his average weekly earnings between £9 and £30, giving a maximum supplement of £7 a week on top of the existing widow's allowance of £5 12s. 6d. In addition, there will be the allowances for children.

It is expected that the extended period of widows' allowance will benefit about 85,000 widows a year, and that the new supplement will be paid to about 70,000 widows annually. The total cost of this part of the Bill in a full year will be about £9 million.

There are other widows' benefits. The Bill, or regulations under it, will provide similar improvements in benefits for widows receiving death benefit under the Industrial Injuries Scheme. It is also proposed, under the war pensions scheme, to increase from 13 weeks to 26 weeks the duration of the temporary allowance for widows of severely disabled war pensioners. I have discovered, as I have been meeting the chairmen of committees of war pensioners, how much value they have placed on the decision of my predecessor to give this 13-week allowance. To increase it to 26 weeks will, I am sure, be greatly welcomed by the ex-Service men's world. This provision will require an amendment of the Royal Warrant.

We have taken the opportunity to provide for some simplification and modernisation of unemployment benefit. The introduction into unemployment benefit of supplements related to earnings highlights certain difficulties and anomalies in the existing provisions, which I have mentioned. The Government have thought it desirable to propose in Clause 3, and in regulations to be laid later, changes to simplify the present arrangements, and to give a new impetus to the part that unemployment benefit can play in the economic and social conditions of today.

The Bill proposes an important change in the provisions affecting workers whose employment has not been terminated, but who are temporarily suspended from work by the employer. Such suspension can vary, as we all know, from short-time working during any one week or a few weeks in which an employee receives a substantial proportion of his usual earnings, to prolonged lay-off because of an emergency—a factory fire, perhaps—in which the position of the employee may be much the same as if he had lost his job altogether.

Workers who are suspended are at present able to qualify for unemployment benefit subject to a very complicated set of rules. The longer I have been in the Ministry and the more representations I have had made to me about these complicated rules the more important I feel it is that we should do something about them. In practice, they have led to serious anomalies and difficulties, and to introduce earnings-related supplements into this situation would be quite intolerable. But there are compelling reasons—and again I say that they are social reasons as well as economic—why we should go further and bring the present unsatisfactory position to an end as soon as possible.

Attempts that have been made in the past to deal with this problem have only intensified the anomalies and the difficulties. This has led in certain industries—and we all know this—to the manipulation of short-time working to get round the benefit rules. The resources of employment exchanges have to be diverted from constructive work on behalf of those who are really unemployed to the task of handling benefit claims for workers who already have an employer and whose attendance at the employment exchange has little or nothing to do with looking for another job. In some cases, indeed, we have found that the guaranteed week agreement, which ought to be the workers' protection against short-time working, is reduced or suspended by arrangement between the parties so that more benefit can be drawn.

It does not seem sense economically, nor is it right socially, that the contributions of the general mass of workers—many of whom earn less full time than others are getting when they are employed part-time or on short time—should be used in this way to subsidise earnings in certain industries. I think that any reasonable person would accept that view. With earnings—related benefits, especially, it would be quite wrong to pay benefit for part of the week to people who still have a job and have earnings during the rest of the week.

The Government propose to tackle this problem at its very roots. Where an employer wants to retain a worker in his employment, we feel that the employer should accept responsibility for paying that worker a guaranteed minimum wage. Many employers already accept this responsibility, and their workers do not claim unemployment benefit for days when there is no work for them to do.

Our long-term aim is that the system under which workers who are on short-time are eligible for unemployment benefit should be brought to an end. Clause 3(1) therefore proposes that, as a permanent long-term measure, the first six days of suspension shall not give entitlement to unemployment benefit, either flat rate or supplement. Since Sundays are to be excluded in calculating the six days—as are days of recognised or customary holiday—this means that workers who are suspended will not start to qualify for unemployment benefit until the period of suspension has lasted a week.

Mr. Eric S. Heffer (Liverpool, Walton)

Perhaps my right hon. Friend will explain that part a little further. Is it intended to introduce some other type of legislation to cover this point about employers agreeing to a guaranteed week? If not, this provision will hurt those workers considerably. It seems to me that we cannot say that they ought not to qualify unless we can at the same time guarantee the introduction of legislation which will compel the employers to reach such an agreement.

Miss Herbison

I will be dealing with that point a little later, because I know that this is a matter that will worry many people in many ways.

We recognise that to impose the new six-day rule in its entirety from the outset would impose hardship on workers in industries where there are no satisfactory guaranteed-wage agreements—and for the very reason that my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) has adduced. That is why we decided that it would impose hardship if we just said that these new provisions would begin to operate from the very beginning.

The Bill therefore provides for a transitional period of three years, in which both sides of industry can negotiate on the provisions to be made for short-time working and for the first week of lay-off when this is no longer covered by the National Insurance Fund. In this transitional period the new six-day rule will apply to the earnings-related supplement, but the existing rules will continue to apply to the flat-rate benefit so that this will be payable exactly as at present.

Therefore, when this provision comes into operation, nobody will be worse off; indeed, the vast majority of workers will be better off. In this way the Government hope to secure an essential long-term change in the function of unemployment benefit without causing short-term hardship.

Mr. Tam Dalyell (West Lothian)

When my right hon. Friend speaks of the first week of lay-off, I presume that this could be from Wednesday to Wednesday and not necessarily starting on a Monday?

Miss Herbison

Yes, I understand that that is so. It is the first week of lay-off. That is why I mentioned Sunday, which is not included as a working day. I well understand some of the problems in my hon. Friend's area and the reason for his asking that question.

Since it is imperative that satisfactory wage agreements should be made between workers and employers before the end of the three years, the Government will examine the position reached at the end of 18 months—half way through—and, if necessary, will introduce legislation to make such agreements compulsory.

Another important change in unemployment benefit will be made in the regulations, but it is right to mention it now because it is complementary to the stricter measures we are proposing for workers whose employment has not been terminated. At present, where a worker loses his job, payments made to him by his former employer may prevent him from getting unemployment benefit. It is proposed that in future all payments by the employer, except wages in lieu of notice, should be ignored for unemployment benefit purposes. That, to some, will be of great importance. This means that payments of holiday pay or resettlement benefit will no longer affect entitlement to unemployment benefit.

This relaxation will simply another set of rules which has given rise to anomalies and complications. It is hoped that it will also help to break down resistance to changes of job and thus play its part in encouraging mobility of labour. I know from a firm in my constituency how important it is that we should encourage and get this mobility of labour if we are to employ people who could be taken off the unemployment register. That cannot be done now because we cannot get the few skilled workers needed and whose employment would lead to the employment of perhaps many hundreds of others.

Taken together with the new earnings-related supplements—and the recent legis- lation on redundancy payments—these changes make a new approach to provision for unemployment. Unemployment benefit, at a much higher rate because of the new supplements, will be available with fewer restrictions to people who have unavoidably lost their jobs and are available for re-employment. Where the contract with the employer has not been terminated greater responsibility will fall on the employer and less use will be made of employment exchanges for the sole purpose of getting unemployment benefit. Our aim is to break once and for all with the "dole" image and move towards a fresh, constructive realignment of the responsibilities of the State and employers in this field.

I turn to the duration of flat-rate benefit. A third change in unemployment benefit concerns the duration of the flat-rate benefit. At present, this is 180 days—seven months' benefit excluding Sundays—plus up to 312 days, one year, of "added days" depending on a person's contribution and benefit history. At first sight, it might appear reasonable that a person with a good contribution and benefit history should be entitled to a longer duration of benefit, but it is becoming more and more out of touch with modern ideas of social security. Unemployment usually arises through social and economic factors over which the individual has little or no control and it is unfair to pay benefit for a shorter period to the man who has worked in a less stable industry and been harder hit by economic factors. The calculation of added days is a further complication of unemployment benefit and once again our proposals are directed towards simplification.

Clause 3(2) of the Bill proposes to substitute for the existing provisions a straight 312-day maximum duration for flat-rate unemployment benefit. This will give up to 12 months' total benefit—six months of which may attract earnings-related supplement. The new rules will apply immediately to anyone currently entitled to less than 12 months' benefit. There will be special transitional arrangements for those with existing rights to more than 12 months' benefit so that anyone who is already receiving "added days" when the new scheme starts will get the full quota to which he is entitled under the existing rules.

Of course, we have to have contributions to pay for all these benefits.

Sir Spencer Summers (Aylesbury)

Before the right hon. Lady leaves the question of benefits, will she say a word about the maximum, in certain cases 85 per cent. of earnings? Some of us feel that this is bound to lead to increased absenteeism.

Miss Herbison

I have given the reasons for the 85 per cent. Unfortunately, that will apply in the main to the low wage earner. The higher wage earner, unless he has a very great number of dependants, will never be touched by the ceiling.

Perhaps the hon. Member has not noticed that the supplement will not be paid for the first 12 days. That takes account of the criticism, I think the unjustified criticism, which has appeared in some organs of the Press. In Committee, if the hon. Member wishes to deal with this further, I shall be happy to give further facts and figures.

Higher contributions will be needed to pay for the new earnings-related benefits. There has been some criticism in some of the Press that the provisions of the Bill are an extension of the previous Government's graduated pensions scheme, but we never complained about the machinery for collecting contributions under this scheme. What we complained about was the gross inadequacy of the benefits. The machinery for collecting contributions is excellent, and of course we shall use it. It is clearly right that the extra contributions should be related to earnings just as the supplements will be related to earnings.

The Bill therefore provides, in Clause 1, that the present graduated contributions of 4¼ per cent. a side by employer and employee on the part of earnings between £9 and £18 per week should be increased by ½ per cent. a side on earnings between £9 and £30 a week. The ½ per cent. increase in graduated contributions will also count for graduated retirement pension like the existing 4½ per cent.

There will be no contracting out of the new earnings-related benefits and the extra ½ per cent. contribution will also be levied on those who have contracted out of the 4¼ per cent. contribution for the graduated retirement pension. There will be no major alterations at this stage in the contracting-out arrangements. The level of equivalent pension benefits will not be changed by the Bill. Existing contracting-out certificates will, therefore, remain valid. In other words, this is an interim scheme. Similarly, the amount of "payment in lieu" which has to be made to the National Insurance Fund if a person ceases to be in contracted-out employment without having his equivalent pension benefits rights assured to him will remain unaltered.

Special tables will be supplied to employers to help them to calculate the new contributions payable on any specified earnings. The new contributions will raise about £76 million in the first full financial year.

The Bill implements, as regards the industrial injuries scheme, the Report of the Committee on the Assessment of Disablement under Lord McCorquodale of Newton. Similar changes are being made in the war pensions scheme by changes in the Royal Warrant. First, under Clause 6, a new increase of disablement pension is to be provided at the rate of £3 a week for people who are exceptionally severely disabled and likely to remain so permanently. The new allowance will be payable in addition to existing benefits, including constant attendance allowance, and will go to pensioners in hospital, who do not get constant attendance allowance, as well as those being cared for at home.

Mr. Arthur Tiley (Bradford, West)

The £3 a week is purely in relation to industrial disablement?

Miss Herbison

The additional £3 for those who are severely disabled industrially is contained in the Bill. Those who are seriously war disabled will be dealt with in the Royal Warrant. This £3 a week will be extended to old workmen's compensation cases also. It is estimated that perhaps 1,000 people will benefit from this.

Clause 7 arises from the Committee's recommendation of an increase from 60 per cent. to 70 per cent. in the scheduled assessment of disablement for certain amputations between mid-thigh and the knee. This change can be made by regulations for new cases, but the Bill ensures that there is also power to apply the new assessment from a current date to existing cases.

The opportunity is also taken in this Clause to give the Minister power by regulations to aggregate all disabilities under the industrial injuries scheme, under the workmen's compensation and other schemes for industrial injuries before 1948, and under the war pensions schemes, in deciding whether the test of 100 per cent. disablement is satisfied for payment of constant attendance allowance under the industrial injuries schemes. This will benefit a small number of badly disabled men who have been injured more than once.

It has clearly been noted that Clause 2 provides for the supplement to sickness benefit to be paid on top of injury benefit. The simultaneous payment of a National Insurance and industrial injuries benefit for the same contingency makes it necessary to bring more closely together the organisation of the two schemes. I am sorry that this has taken so long, but I think that the House realises the intricacies of this matter. There are many people who have to deal with this matter in the country outside who ought to get in as clear a form as possible the information that I am trying to give

Under Clause 5 the minor differences in title to and payment of injury benefit, as compared with sickness benefit, are removed so that a day of incapacity for sickness benefit supplement will always coincide with a day of injury benefit. The main change will be that injury benefit will cease to be payable for the day of the accident in most of the cases where it is now payable. The industrial injuries practice of disregarding work done on the day before the time of the accident will be replaced by the National Insurance practice under which a day is not a day of incapacity if more than a negligible amount of work is done.

Injury benefit for a day may be lost in up to 600,000 cases a year, but it is probable that in many of these cases wages, or wages less benefit, are, in any event, paid for that day. On the other hand, the provision for injury benefit to "link" with periods of sickness or unemployment will mean that in a number of cases injury benefit will be paid immediately where previously waiting days would have had to be served. Therefore, perhaps the one will help the other.

The essential justification for these changes is that these minor differences between the schemes are already the cause of much administrative difficulty and would, indeed, result in further serious complications if allowed to persist when injury benefit and earnings-related sickness supplement are paid together.

The Financial Memorandum to the Bill and the Government Actuary's Report explain that the net result of all these changes is a small saving to the Industrial Injuries Fund. These are the changes I have been dealing with recently. This small saving does not, however, mean that less will be spent on the industrially injured than previously envisaged; for people receiving injury benefit will become entitled to earnings-related supplements from the National Insurance Fund amounting in a full year to another £6 million.

Clause 8 provides for the assimilation of the industrial injuries adjudication system into the national insurance system. The change is largely technical, since the same persons now operate as insurance officers, local tribunals and commissioners in the National Insurance and industrial injuries schemes. Existing rights of appeal—I stress this—will remain unaltered, but it will be much easier to adjudicate on what is known as a "hybrid" claim for National Insurance and Industrial Injuries benefits.

As a corollary to this, Clause 9 provides for the Commissioner and Deputy Commissioners, who are the final appellate authority under the two schemes, to be renamed as Chief National Insurance Commissioner and National Insurance Commissioners. This will avoid misunderstandings which have arisen, because there have been complaints that it was a Deputy Commissioner and not a Commissioner. Again, the change will not affect in any way the appellant's rights.

The day-to-day operation of the National Insurance Scheme brings to light from time to time the need for minor adjustments. The Bill contains, mainly in Clauses 10 and 11, several such amendments. Some alter beneficially the conditions for certain benefits. The remainder are mainly to provide for simpler administration of the schemes.

Apart from the changes proposed in the Bill, there are some matters of particular public interest and complexity in the running of the present scheme which are particularly suited to consideration by the National Insurance Advisory Committee. It is appropriate to mention at this stage two such questions which the Committee is being asked to consider.

The first is the provision of unemployment benefit for people who have retired from their regular occupations and are receiving occupational pensions. There has been evidence in recent years that some occupational pensioners were receiving unemployment benefit when they had little or no real intention of seeking further employment. Many hon. Members on both sides of the House have expressed their concern about this practice. This is not to suggest that all occupational pensioners receiving unemployment benefit are in this category, because there are some occupational pensions which are so ridiculously small. Nevertheless, the whole question of occupational pensioners who retire from their jobs before the minimum National Insurance pension age seems to need detailed investigation and I therefore propose to refer this matter to the National Insurance Advisory Committee.

The second question which I shall send to the Committee is the earnings rule for retirement pensioners. Again, questions been asked on both sides of the House about this matter. This question was considered in detail by the Advisory Committee in 1956, but since then it has been able to consider the question only on the basis of draft regulations to raise the earnings limits which successive Ministers of Pensions and National Insurance have submitted to it for consideration.

It is thus, in effect, some considerable while since there has been any thoroughgoing re-examination of the working of the earnings rule, and because of this I have decided to ask the Committee to re-examine it very thoroughly. I shall, in the next few days, be referring the subject as a question to the National Insurance Advisory Committee with the following terms of reference: To review the present level of the earnings limit for retirement pensioners and to examine matters arising therefrom; and to report. I have given the Committee very wide terms of reference because so many things have got to be taken into account.

Mr. Charles Curran (Uxbridge)

I hope that the right hon. Lady will forgive me for interrupting her. We are all very interested in this. Will she make it clear, in connection with these terms of reference, that she will ask the Committee to give an up-to-date estimate of scrapping the rule?

Miss Herbison

It is not for the National Insurance Advisory Committee to deal with the cost. That is a matter for the Government. But there are many other matters that have been voiced both in this House and outside, and the terms of reference that I have given are sufficiently wide for the Committee to examine all aspects of this problem.

Mr. Patrick Jenkin (Wanstead and Woodford)

Can the right hon. Lady give me an assurance that the terms of reference are wide enough to cover the points raised in my Question earlier this afternoon, namely, the differential treatment of the earnings and the tax paid on other earnings, so as to place the position of a Schedule E taxpayer and a Schedule D taxpayer on the same basis?

Miss Herbison

Yes, as I told the hon. Gentleman at Question Time today, I hoped that the announcement that I was intending to make would satisfy him. The terms of reference are sufficiently wide to take in almost everything, including the specific point that has been concerning the hon. Member.

These terms of reference will enable the Committee to undertake once more a full—I stress the word "full"—examination of the working of the earnings rule such as the Committee last made in 1955–56, and to consider again points which the Committee then raised, as well as a number of new points which have cropped up since.

The Committee will, of course, have the opportunity of considering what should be the level at which the earnings rule should begin to operate and how this level should be adjusted for the future. It will also be able to consider whether there should be any change in the rate at which earnings above the limit result in deductions from pensions. I give some of these examples to show how wide the terms of reference are.

Other points which the Committee may well feel need investigation are the methods by which earnings are calculated and the deductions from earnings which can be made, including the rule under which deductions from salary and wages under the P.A.Y.E. system are disregarded in calculating earnings, but other kinds of tax payments do not come into the calculations. However, it will be seen that the terms of reference are very wide indeed.

There is a good deal to be done here, but I am confident that the Committee will be able to produce in due course—I know it is a big job, but I hope "in due course" does not mean too long—a valuable report which will provide the Government with a firm foundation upon which any possible future action in this matter may be based.

Sir S. Summers

Would the right hon. Lady say what scope there is for the Advisory Committee to receive evidence to influence its decisions?

Miss Herbison

The Committee can receive evidence and, I am sure, will be delighted to do so.

I now come back to the actual provisions of the Bill, though I felt it was important to deal with these other aspects to which I have just referred. The Bill, as I said before, presents the first stage in the Government's plans to reorganise social security. In spite of its interim character, it provides valuable extra help for the unemployed, the sick and the widow.

I was interested on Saturday to note that the Leader of the Opposition made a most moving speech—and I stress that it was a most moving speech. But if ever there was an indictment of 13 years of Tory rule, that speech was it. Have the Leader of the Opposition and his party just discovered the plight of the grossly under-privileged children in our midst? Have they just discovered the needs of our old and chronic sick, and the insecurity of those women who give devoted service to their ageing parents? These blights on our society have been with us for a long time, but the Leader of the Opposition and his party failed miserably to do anything worth while to eradicate them during 13 long years of power.

The right hon. Gentleman will find that these parts of his speech are regarded by the country as merely an election gimmick and are not the way to deal with matters of such human importance involving the suffering of so many of our people. At the same times, as the right hon. Gentleman says that the Tories, if they came to power, would do all these things, he and others are telling the country that they are to get real cuts in taxation. So it seems to me that wherever the Opposition speak, they are promising the people all this, and heaven too in the hope that the people will accept it.

There was another part of the same speech—I read it all very carefully during the weekend—which proves clearly that the Tories still believe in the "I'm all right, Jack" philosophy. It was in truth an attack on the Welfare State. I want to emphasise that I and the Government are conscious of how much still remains to be done in social security. In 15 months we have a record for which we do not need to apologise—indeed, a record of which we can be proud, a record of real improvements and achievements, against the background of the economic mess which the Tories left us to face. We are pursuing urgently the rest of our plans, but again I emphasise that some of these plans are dependent on an improvement in our economy.

I say not only to this House, but to everybody outside it: not only the Government but the whole nation must be involved if we wish to banish deprivation from the lives of the young and the old. It is only when the whole nation decides that this is its responsibility that any Government will be able to banish the poverty which still exists for some people and the hardship and worry experienced by our old people. I am never tired of stressing that the responsibility is the whole nation's, but the Government will shoulder their responsibility, as they have done so far, to eradicate as quickly as possible the human suffering and poverty that are still with our people.

4.40 p.m.

Sir Keith Joseph (Leeds, North-East)

We have had from the right hon. Lady something resembling a sandwich—and we make no complaint of that—with a very wholesome and large chunk of meat about the Bill in the middle. At first, the right hon. Lady gave us a blast on her trumpet about what the Government had so far achieved. We make no complaint about that. The right hon. Lady has a perfect right to claim, and we acknowledge, the part which she has played in the continuing process, by all parties, of improving the lot of the people.

Mr. Heffer

Get on with it.

Sir K. Joseph

Did the hon. Gentleman interrupt?

Mr. Heffer

Yes, I did. I said, "Get on with it." I said that because my right hon. Friend has not continued anything. We have had to start afresh and that is precisely what we are doing.

Sir K. Joseph

The hon. Gentleman forgets that his right hon. Friend the Minister of Housing and Local Government said of the last Labour Government that they cheated the pensioners. When we were the Government my right hon. Friends increased the pension five times and National Assistance no fewer than eight times. I am acknowledging the part which the present Government have played, but it is absolutely wrong for the hon. Gentleman to pretend that only the Socialists have played a part in improving the conditions of the people.

The right hon. Lady finished her speech with an attack upon what my right hon. Friend the Leader of the Opposition said in Birmingham on Saturday. My right hon. Friend said very plainly what the right hon. Lady has omitted to say, namely, that there is, as she must know, a vast and continuing job to be done. During the 13 years of the Tory Government, a great deal was done, but there still remains much to do. My right hon. Friend was calling attention to what remains to be done and what this side of the House will do when we are returned to power to tackle it.

The Bill embodies a principle which, of course, is accepted by both sides of the House, the principle of—I was about to say wage relation, but it is earnings relation. We welcome the changes involved by the Bill and those being introduced in parallel by the Royal Warrant. We shall do what we can to help the Bill to reach the Statute Book as quickly as is reasonable allowing for proper debate of any Amendments which may be suggested.

We also welcome the right hon. Lady's announcement that she is referring the earnings rule to her National Insurance Advisory Committee. I suppose that if, at the moment, the Government cannot erode the rule any further, reference to the Advisory Committee is at least something small which they can do, a small way of gaining virtue. The right hon. Lady said that the Committee had not had the earnings rule referred to it for now nearly 10 years, but she will be aware that since the last reference the previous Government eroded the earnings rule on two, if not three, occasions. It is a different earnings rule which is now being referred to the Advisory Committee, but we welcome the reference.

There were one or two rather startling omissions from the right hon. Lady's review of what the Government have achieved in social security. I shall draw attention to one or two of them, because the lack of the minimum income guarantee, which was pledged by the Labour Government unconditionally as one of the very first things which a Socialist Government would introduce, accounts for the relatively large number of criticisms which I have to make about the social effect of the Bill.

We appreciate the presence of the right hon. Gentleman the Chancellor of the Duchy of Lancaster, who is listening to the debate. We hope that his review of the social services is proceeding fast and that we may soon have a date when the country and the House will hear something of what is actually proposed. A minimum income guarantee, or something in its place, is needed. We happen to think that the minimum income guarantee is probably not the right answer, but that or something of the sort is needed to bring the Bill into social sense.

We understand that the Bill has been given legislative priority because of the wish of N.E.D.C. to encourage mobility of labour. We welcome any help which can be given to the mobility of labour, but, as the right hon. Lady said, the Bill has emerged as not just an economic but as a social Bill. In fact, only about a quarter of the benefits will actually go on unemployment earnings-graduated pay.

If it is meant to be a social Bill, then there is a great deal in the social sense which is ill done. Let me acknowledge straight away that the Bill is broadly very useful for people with average earnings, or with earnings just above the average, or with moderate earnings just below the average. Such people, even when they have families, will have no large loss when their earnings are interrupted because of unemployment, sickness or industrial injury.

But the Bill will give no help, or virtually no help, to people who socially suffer the most through such interruptions, namely, the low-wage earners, particularly those with large families. The right hon. Lady must be deeply aware of the sort of examples which I am about to quote. A man earning £11 a week, and with four children, will get no benefit from the Bill, because he already draws as much as 85 per cent. of his gross pay under the existing National Insurance Scheme. A man with £12 gross pay and with four children will, get an improved benefit of 8s. a week, while the single man at that rate of pay will get a benefit of £1.

I must confess that there are still relatively many long-wage earners, adult men on full-time work. I suppose that the efforts of the trade unions have improved the situation, but it would need a social historian to unravel whether they could have done more for the low-wage earners who, with a family of any size, still suffer household deprivation even when in full-time work.

However, we have to acknowledge the right hon. Lady's difficulties, because the more these people are helped by all social insurance the greater is the risk of making, for the few who may abuse the system, idleness relatively attractive. I do not want in anything I say this afternoon to exaggerate the relatively few who take advantage of any system of social insurance, but I am sure that the right hon. Lady will agree that there are a few and that she is concerned to minimise the temptation. Of course, it is all very difficult, but the amount of help which can be made available to the low-wage earning family man goes to the heart of a great deal of the remaining poverty in this country.

I shall try to make two comments on the Bill which, at first sight, may appear to be contradictory, but which will be seen not to be by those who are interested in the subject. On the one hand, there is nothing more for the family man on low earnings. Because of that, the right hon. Lady has been forced—and we sympathise with her—to put the proportion of gross earnings which can be recovered by benefit as high as 85 per cent. so as to help the moderately paid man if she cannot help the low paid man. The Government will be aware that 85 per cent. is internationally a very high level. It may be right, but it involves a certain number of risks and a certain number of precautions have to be taken.

But as a result of the 85 per cent. level, which still results in a lack of help for the low-wage earner, the administration of the Bill will be very difficult. There will be the risk of quite a degree of evasion, large and small, and temptations will be put in the way of people. We must take that into account when we consider the Bill in Committee.

Having made that double criticism of the Bill—that there is no help for those who most need it and that as a result the help is pitched temptingly high for the rest of the community—I want to go on to deal with the position of the low-wage earner. We have to accept that low-wage earners with family responsibilities are financially in trouble whether at work, sick, or unemployed. If the wife can work it can make all the difference, but with a young family this is often not possible, and it is seldom desirable.

At work, the man can get no help from the National Assistance Board. If he is sick or unemployed then he gains little if anything from the graduated benefits, because of the earnings stop, introduced by the Bill at 85 per cent. If his needs exceed the benefits that he can claim under the Bill when he is sick or unemployed, and he goes to the Assistance Board he can get no help because of the wages stop. What the Government are doing is to introduce an earnings stop on top of the wages, stop. There is no minimum income guarantee or something equivalent to replace it. This situation, which the Government criticised when in opposition, is still unremedied.

We now have an earnings stop as well as a wages stop. The evil is not the earnings stop or wages stop in themselves. It is the low earnings. One only wishes—it is easy enough to say this—that the unions were more effective in protecting the relatively few, though still large number of adult men, in full-time employment who are earning comparatively little.

Mr. Heffer

Would the right hon. Gentleman not agree that one cannot put the full responsibility for this upon the unions? The employers could give them better wages.

Sir K. Joseph

I do put a large amount of responsibility for this upon the unions, because they started as societies for helping the social conditions of the wage earner. Now, when they have such power they could use some of their bargaining leverage to help the lower paid instead of, as it seems to a layman, helping all evenly. I know that there are great difficulties—differentials are reduced—but this is a matter upon which one would have thought that the unions would place much more emphasis.

Wages do not recognise a wife or dependants, but social insurance must. I return to the right hon. Lady's strange omission in her catalogue of achievements—the minimum income guarantee which would have removed all of these criticisms. Maybe the Government have found that it was not practical and that may be true. We have grave doubts about its practicability. If this is so let the Government quickly and honestly come to the House and say that the idea does not work and what they intend to do about it. They must tackle what is socially, the most urgent part of this socially urgent system.

Miss Herbison

It seems that the right hon. Gentleman has not examined what the minimum income guarantee was to cover. It certainly was not going to cover the unemployed man or the man in full-time work.

Sir K. Joseph

I certainly have misunderstood. I thought that it was to make up all incomes below a certain level to a subsistence level. Perhaps I do the right hon. Lady and the right hon. Gentleman an injustice, because in that case they have not even addressed their minds to the most urgent social problem and I hope that they will get on and do so.

At the moment, there is not enough income, neither from work, benefit nor assistance for the large family on low earnings. We on this side of the House are pledged to cut through all these causes of primary household poverty, whether through work, sickness or unemployment, probably by a special allow- ance for children in households affected. Our proposal removes at one stroke both the disincentive to work and the inadequacy of income, whether at work, sick or unemployed.

There is nothing in the Bill, and we have heard nothing from the Government, to help these people with the most urgent social need. Nor is there anything in the Bill to help the long-term chronic sick or the longer-term unemployed. We have in mind an invalidity allowance, or at least an extra scale of assistance for people who are dependent on public help for more than a relatively short time.

We welcome the improvement in the conditions for widows, but, again, if the hon. Lady had the advice of her hon. Friend the Member for Holborn and St. Pancras (Mrs. Lena Jeger) she would know, as we know, that there are a large number of other improvements needed. The Bill misses a number of chances. So far as the Financial Resolution permits us we want to try and put some of these right. Our main criticism is of narrowness and missed opportunity.

The right hon. Lady batted very well against the obvious comment I wish to make, that she used the much-criticised graduated pensions scheme on which to hang her improved benefits. I remember that this scheme was attacked up hill and down dale by the then Opposition. It was attacked as a swindle, as a tax. Now the Government are gaily using the same scheme—we know that it is said only for an interim period—for their own legislation. Do not let the right hon. Lady say that the Government are not using the scheme but only the administrative framework. The Bill, as the Government made clear, would increase the funds in the graduated pensions scheme. There is a net income from the scheme, and I shall have a few questions to ask latter.

We are pledged virtually to abolish the graduated scheme when we return to power, because it has achieved its purpose. I wish to deal with those who are contracted out of the graduated pension scheme. Under the Bill they are to pay a ½ per cent. of earnings, between £9 and £30 extra each side, and this may range from anything to 1d. a week to 2s. 1d. a week. We want to know why they are paying it. Those for whom it is appropriate will receive a graduated benefit when unemployed or sick, but as I understand they do not qualify for any extra graduated pension. That is correct?

Miss Herbison

No. Everything that comes under it, whether for the contracted out or those in, goes towards pension.

Sir K. Joseph

The contracted out will benefit by the accumulation of their ½ per cent. into bricks for earning the graduated pension. That is very interesting indeed and explains a further question. Perhaps the right hon. Lady or her right hon. Friend the Chancellor of the Duchy of Lancaster will explain to the House the position of the person who is, virtually, paying twice for graduated sickness benefits.

There is a large number of such people, particularly in the public service, who have either a contributory or non-contributory pension and are covered against sickness for six months, or some months, at full pay. These people are to pay an extra ½ per cent. in order to get, so far as sickness is concerned, nothing. Their employers will save some money at the expense of the contributors. Have the Government any sort of contracting out in mind for such people or would the Minister, when replying to the debate, give us an explanation?

We remember the right hon. Gentleman the Minister of Housing and Local Government warning that a Labour Government would make contracting out very expensive. They are certainly beginning to do so. Here is an extra burden on the contracted out for something that they may not need. There is heavy administration involved because contracted-out employers will have to collect the ½ per cent. per side per week when, at the moment, they need have no system. Perhaps they will collect this money only at the rate of 1d. per week for many of their employees.

I had it in mind to ask the Government why they should not have collected the money on a payroll basis. Now that I have been told that each individual contracted-out employee gets credit for contracted-out graduated pensions in due course, then I see that there is some method to their madness and that they are forced, by this decision, to collect on a personal basis from each contracted-out employee. This is just another burden on the contracted-out employer. There is involved in this scheme a certain amount of redistribution against the men, many of them technologists and managers greatly needed by this country, who are earning over £30 a week.

I turn to the general economic implications of the Bill. I thought that my hon. Friend the Member for Aylesbury (Sir S. Summers) was right in reminding the Minister of the suggestions that the Bill may encourage voluntary absenteeism. Absenteeism can range from deliberate deceit, on the one hand, to staying at home a day or two more than might be medically justified, on the other. There can be no doubt that there is a certain amount of voluntary absenteeism, and there can be little doubt from the evidence that fairly generous sickness schemes tend to encourage it. By treating unemployment and sickness in the same way—perhaps the Government are right to do this, although some Governments in Europe treat them differently—the Minister is forced to set sickness benefits at the same rate as unemployment benefits and thus to make evasion slightly more tempting.

However, we acknowledge that the 12-day rule which the Minister has introduced in the Bill—the fact that graduated benefits are not available for the first 12 days of interruption of earnings—will substantially reduce this temptation. The remaining temptation will be that some people who are away sick may be encouraged to prolong their absence. It is an unfortunate coincidence that, due to the discussions and negotiations with the medical profession, the Bill should coincide with the relaxation of the certification procedure. We note the relative unhappiness of the Minister's Advisory Committee when giving qualified approval to the new certification procedure and that it asks for a review of the new procedure after two years. We are particularly glad that this will happen in the light of the slight increase to temptation provided by the Bill.

Mr. Ted Leadbitter (The Hartlepools)

Am I to understand from what the right hon. Gentleman says that the new procedure, or the allowances, or both, are incentives to absenteeism? If so, is it the Opposition's policy to alter the procedure, or would they reduce the allowances to remove the incentive?

Sir K. Joseph

Any sensible observer would agree that any sickness system must encourage the relative few irresponsible members of society. Probably both sides of the House agree that the more we deal with true family poverty by giving an allowance which goes to that family whether in work or out of work, the lower we need to pitch the graduated benefits. I do not think that this is a political point.

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


Sir K. Joseph

I hear the fateful word "Speenhamland".

We are all aware of the danger of subsidising earnings. He will not find that mistake made by this side of the House. We would want to review the whole situation once the Government, or we, have dealt with primary family poverty. As earnings and the capacity to save rise, the need for the highest level of graduated benefit diminishes. However, I must not be tempted into interesting footnotes.

I turn to the main categories of help dealt with by the Bill. First, I refer to unemployment. The Minister surprised me by saying that there would probably be only 110,000 unemployed affected by the Bill. However, it appears from the last issue of the Ministry of Labour Gazette that there were 180,000 unemployed males over 18 years of age who had been unemployed for more than two weeks. I do not know whether the right hon. Lady is predicting that unemployment will fall as dramatically as her figure implies. Perhaps the Joint Parliamentary Secretary will give us some reconciliation of these two figures when he replies. It is true that the graduated benefit goes only to those earning over £9. That may be the explanation.

In theory, the unemployment benefit should, ideally, be highest during the first two weeks of unemployment so that the man who is out of a job can, without any worry about the household being on his mind, go straight off to search for a new job. By the 12-day rule, the right hon. Lady has prevented this help from coming until the end of the second week. It may be unavoidable if she is to stop evasion being encouraged, but it is unfortunate that at the time when unemployment benefit should be at its highest, it is deferred for two weeks.

Again, we make the point that there is no provision for longer term unemployment. If the Government are to succeed in redeploying labour as their economic policy demands, we must watch with great interest the number of people who change their jobs. Socially, the crucial issue is not the crude number of people changing their jobs, but the amount of time each one of them is out of a job. I wonder whether the right hon. Lady would convey to the Minister of Labour that it would be helpful to us if the Ministry of Labour Gazette broke down slightly more the figures of duration of employment. The figures of those unemployed for more than eight weeks are already shown repeatedly. It would help a great deal if the figures were broken down into those unemployed for more than four months, six months, and so on. The six months' category is the one which will apply to the Bill.

We note that the Minister is making a substantial change in the position for short-term working. We note, also, that she is allowing three years for both sides of industry to work out alternative arrangements. We are glad that she has said that she will consider the matter in 18 months. We warn her of the danger of upsetting the expectations on which employers have entered into bargains and on which they have based their costs. I am sure that she will be as careful as we want her to be in the question of costs on the industrial community.

I turn to sickness. We note sadly that the Government Actuary shows that there has been an upward trend of 8 per cent. since 1963. We note, also, that there is evidence to point to a rise in absenteeism and sickness when individual firms introduce sickness schemes, although in some cases that may be only a temporary rise. In cases where it is permanent, it may merely represent the true impact of illness. We cannot tell. But it involves more cost to the community in one way or another, and of that the Government must realistically be very careful.

We acknowledge that the 12-day waiting period will discourage evasion to some extent, but, again, the Government seem to have got their main strategy slightly out of order, because they are introducing graduated sickness benefit for just that period when more and more employers are supplementing the basic National Insurance benefits.

The trade unions came late to full awareness of fringe benefits. It is not for me to judge, but it is a fact that only recently, fairly recently, did the trade unions start to bargain for fringe benefits, whereas in America the unions bargained a great deal earlier. Nearly 14 million out of 22 million wage earners in this country are covered by private occupational sickness benefit. There is a vast variety of schemes in terms of qualification, amount, duration, waiting days, and so on. There has been a spread from the staff to the works. But, nevertheless, all public employees, staff and works, are covered by some sort of sickness benefit scheme, and nearly all private enterprise staff and well over one-third of private enterprise manual workers.

I do not want to exaggerate the effect of this because, owing to the duration of benefit, although probably 60 per cent. of workers are covered, it may well be that only a quarter of those sick at any one time are getting private benefit from their employers because their rights have been exhausted.

What will be the effect, however, of these two schemes working in parallel? First, there is the 12 days with only the basic benefit from the Government and any private benefit that may be payable. Half the total spells of sickness are for less than two weeks. These, therefore, are unaffected by the Bill. When the spell of sickness lasts for more than 12 days for the 60 per cent. who are in private schemes, we have to distinguish between two sorts of private help. There are, first, those private schemes which make up the insurance benefit to either full pay or to a fraction of full pay. In these cases, the increase of benefit under the Bill will save money for the employer. He will, presumably, have less to make up and he will, presumably, save money. That will offset some of the ½ per cent. that the employer will have to pay and that is welcome, I imagine, on both sides of the House.

Where, however, the habit of the employer is to supplement the benefit, presumably, as the benefit has risen, he may review the degree to which he supplements it. We must warn the Government that, in view of the extra cost that is imposed upon them, a number of private employers may review their private sickness schemes. This seems a great shame when already 60 per cent. of the country's working force is covered.

We realise that in many cases the employee gets an uncovenanted benefit, because what is made up is the basic insurance benefit and the employee often keeps dependant's benefit. All this may well be reviewed, however, in the light of the extra cost now thrown upon the employer.

Again, I ask the Minister, what about those private sickness schemes that are both contributory and contractual? What about civil servants, who are already covered for their sickness benefit for six months? They will be paying extra for less than the full benefit that the extra payment normally covers. Will any opting out or contracting out be allowed? While I admit that we on this side would regard contracting out of sickness benefit as probably too elaborate a procedure for the relatively small sums of contribution involved, there are certain groups of people who will be suffering as a result of this extra payment. We would like to have the Minister's comments about this when he replies.

Again, I draw to the attention of the Government, on this largely social Bill, that 35 per cent. of those who are sick have been off work for more than a year. Indeed, there are at present 135,000 who have been off sick for more than five years. The Bill does nothing for them.

As to sickness, it is an unsatisfactory switch-back that the Government have now arrived at, although, admittedly, on an interim basis. There is, first, 12 days on flat rate, then six months on graduated payment, then a reversion for the remainder of the time a person is sick either to flat rate or to flat rate supplemented by National Assistance. In some bad cases that may go on for years, if not for life. We on this side recognise the need for a higher benefit for chronic sickness or assistance, if need be, at higher benefit rates to take into account the emptying of the cupboards that goes on when people are ill for a long time.

Perhaps the right aim is for the employer to be left more and more to cover the early weeks of sickness at his own cost with a consequent reduction in the amount of the ½ per cent. that the employer is asked to pay, but with the Government taking much more responsibility for higher continuing payments for the long-term and chronic sick. That is, perhaps, an objective at which we can all aim over the years without, so far as we can help it, adding to industrial costs.

I turn briefly to disability and industrial injuries. We welcome the proposed changes, including the extra £3 a week for the severely disabled. We recognise that there is no possible incentive for a man to get himself industrially injured, so that the fact that more is paid on top of the 85 per cent. maximum is probably no encouragement except that it makes the temptation of being sick for the man who is industrially injured slightly greater.

We would like to point out to the Government that there are now such a large number of anomalies between the treatment of the industrially disabled, the civilly disabled and those disabled in other ways that this is a subject that needs thorough review. We hope that the Minister will bear this in mind. We welcome the relief that is available for widows although, again, we could point to a large number of other reliefs which should also be considered.

I turn now to a few questions which I should like to put to the Joint Parliamentary Secretary. What of the position of the self-employed? They are not mentioned in the Bill. Many of them would welcome the chance to get some benefit when sick. Have the Government considered allowing them to opt in for sickness benefit in any way? Married women have an option. I recognise that there are many difficulties, but would it be administratively practicable to allow the self-employed to have a share in this?

How many extra staff do the Government expect to have to employ to cope with what, the Minister has fairly acknowledged, will be a big administrative task, particularly when an employee loses his P. 60? We agree with the right hon. Lady that an employee can expect to get quick benefits only when he keeps his P. 60 and uses the procedure promptly. I understand that arrangements will be made to print suitable warnings on the P. 60 so that the employee retains it.

Finally, I come to the place that the Bill occupies in the National Plan. The chapter of the plan dealing with social security is unique in that it is based not on constant prices, but on current pensioners' benefits. That is to say, it does not treat a pensioner as it treats a doctor, as a recipient of a standard benefit. It measures the pensioners' benefits by the actual amount that the Government expect them to receive between now and 1970.

The National Plan allocates £387 million for increases in pension between now and 1970. Of that £387 million, nearly £80 million is taken by the Bill. Therefore, something like £300 million is left for the basic pension. I calculate that that leaves about 1s. 6d. per week per annum growth in the basic pension. I hope that the Minister will tell us whether the Government are saying that between now and 1970, according to their National Plan, the pensioner can expect to be only 7s. 6d. a week better off.

I repeat that we on this side welcome the Bill for its general move towards graduation, but that we deplore a number of its features and a number of its implications. It extends the wages stop, it introduces a new earnings stop and it does nothing, or very little, for the poorest who are already receiving less than National Assistance. It does nothing for the chronic sick, nothing for the long-term unemployed and it does less than is needed for widows. It uses the graduated scheme, which was so much attacked and which we shall be virtually abolishing, administratively.

There are a number of detailed points in the Bill which we shall try to improve in Committee, but we shall still give it as rapid a passage to the Statute Book as we can.

5.20 p.m.

Mr. Hugh D. Brown (Glasgow, Provan)

This is the first time since I became a Member of this House that I have had the privilege of following a leading spokesman of the Opposition. I find it very tempting to follow him literally, and to counter some of his arguments, but I have a feeling that I might then be ruled out of order, because I understand that one of the things one is never allowed to suggest in the House is that a Member is hypocritical.

While I should not like to say that of the right hon. Member for Leeds, North-East (Sir K. Joseph), nevertheless I think that in general terms—in dealing, for instance, with the comments made at the weekend by the right hon. Member for Bexley (Mr. Heath)—there is at least an element of insincerity in some of the statements which have been made by the party opposite.

If we look at "Putting Britain Right Ahead", which was issued in October last year, we see that really there has not been any great improvement on it, nothing added to it. It says, for instance: We have designed a new and coherent social policy". Well, we are still waiting for it. Then it says: We would help local authority social services to be more effective by reforming their structure". What does this mean? If it means a wee tidying up arrangement for overcoming hardship, then it would seem that no great thought or research had been done by October, 1965, in spite of the resources which Members opposite for 13 years had available for research. Further, it says: When economic circumstances permit we want to see improvements in the welfare services in the home and other supporting services and we will take steps to seek out those needing help". In other words, both at the weekend and today we have had merely a repetition of the same vague statements which were got together rather hurriedly in October, 1965. Just what was said at the weekend, and just what has been said today? The right hon. Member for Bexley is reported as saying: In the years to come poverty in old age will be banished". What an indictment of the election slogans of just six years ago when we were told that we had never had it so good. How cynical can people get when, six years after this line was worked out to win a General Election, we have this admission that in years to come poverty in old age will be banished.

I dare say that it is recognised by now that I come from Glasgow, but in any case I want to mention the spokesman for the Conservative Party in Scotland, the Glasgow Herald, which echoes that in an editorial which says: The long-term aim is an ambitious but essential one, the banishment of poverty. The long-term aim! It goes on: No State could reasonably afford to provide benefits on a scale which would promote automatic relief of hardship. What kind of society is this we are living in, where we get prominent members of the Conservative Party and editorials in well-known Conservative papers talking in terms of the abolition of poverty as a long-term objective?

Members on this side of the House expected to have heard by now from the right hon. Member for Leeds, North-East what precisely are his party's proposals. He did not give us any today. On this one point alone it seems to me that there is a general question of the sincerity of hon. Members who, for party political purposes, are prepared to exploit the poverty, the hardship and suffering in the community.

One other, practical, point. They also suggest that they will have new welfare officers—unspecified—who would be given certain tasks, one of them being the positive rôle of seeking out people in need. There is a very simple way to do that. It is to make available the information which is known to the National Assistance Board and the Ministry of Pensions and National Insurance, and that includes the war pensioners. But consistently all Governments have refused to give this information.

When hon. Members opposite were in government they refused to give this information despite specific requests from really advanced local authorities like Salford, which were genuinely trying to do something to help the ageing population. Members opposite refused to give this information. I am not suggesting we should give it without thought, but what I am suggesting is that it seems to be a rather belated attempt by hon. Members opposite to be constructive when, in fact, hon. Members opposite, when they were in government, had already turned down and rejected the very thing which now, when they are in opposition, they are arguing for.

Then there is the attitude, which we saw in the right hon. Member for Leeds, North-East, when he was speaking today, that, somehow or another, the Conservative Party believes in encouraging thrift and self-reliance and a strong family community life. [HON. MEMBERS: "Hear, hear."] All right, but the implication is always that Members on this side stand for the very opposite. [HON. MEMBERS:"Hear, hear."] It is popular among Members opposite to suggest that we as a party believe in the Welfare State, and that is evidently meant to convey, according to hon. Members opposite, that we are layabouts and irresponsible people who succumb to temptations to get public money.

It is the kind of smear we heard this afternoon, but it is never specified, and even when one of my hon. Friends queried it no attempt was made to suggest how to overcome the source of it, if it exists, nor have we any evidence on what scale, if any, it does exist. But always the attempt is made to suggest that we are an irresponsible party, throwing public money away quite indiscriminately to help the loafers and the "no-users" in the community. Anyhow, at least we have made a start here by introducing this Bill, with the new principle of wage-related benefits.

There was another point arising from the speech of the right hon. Member for Leeds, North-East, though I do not think that the right hon. Member was really concerned, as I am—and it is a minor criticism I would make of the Government—that so many people do not have one provision which even the poor old civil servants and employees, in the main, of the nationalised industries and other public service generally invariably have, certainly if they are non-manual workers, and that is, full sick pay for six months. That is a wonderful thing, and I think everyone should enjoy it. I do not think that it encourages malingering, but it enables a person to decide genuinely whether he or she is fit to return to work, without rushing back because of the economic pressures which can be put on if one has not a sick pay scheme.

I speak as an ex-malingering civil servant, according to some people. Nevertheless, we should be asking ourselves, why is it we always have to go to tremendous lengths to introduce a public scheme when, in fact, the solution is by law to compel the indifferent and inefficient employers to have some kind of sick pay scheme? Why should we not look at it from this point of view?

I wish some hon. Members opposite would ask their Conservative friends who run businesses of one kind and another, and who do not pay out a penny in sick pay of any kind, why they do not see fit to introduce some such scheme. This applies to the large and small businesses. In shipbuilding, the lack of fringe benefits is notorious. The shop owner is the backbone of the nation and sometimes of the Conservative Party, but he gets away with murder because there is not such a thing as a shopkeeper who pays sick benefit. [Interruption.] Certainly, in the large retail industry there may well be, but because of the unwillingness of hon. Members opposite to face up to the economic and political consequences of arguing for such a desirable scheme—

Captain Walter Elliot (Carshalton)

The hon. Member has just mentioned the small shopkeeper as not contributing. Would he in that case agree with me on the Bill that it would be a good idea if he were given an option to come in if he wants to?

Mr. Brown

Obviously, the hon. and gallant Member has not been following what I have been talking about. I am not talking about the shopkeeper on his own. I am talking about the small shopkeeper who employs somebody and who makes absolutely no provision for his employee for sickness pay. I will not go into this argument because it is a bit more complicated than the hon. and gallant Member is suggesting.

I would like to express my sympathy for public servants generally, who will now contribute to something from which they will get no benefit. I appreciate that it is only marginal in the sense that for even the main range of civil servants it will mean that they will pay something like £2 10s. a year which will be a loss to them and, ultimately, a saving in sickness benefit to the Government and the various industries who have full sick pay schemes. When critics of the Government talk in terms of the Bill being responsible for increasing local rates and the rest of it, I hope that they will take note of the fact that for good or bad, it will save money for local authorities who are more lenient in their sickness schemes.

I must confess that I am not altogether clear about the ½ per cent. being related to graduated pensions. I cannot follow how there is any part of the ½ per cent. paid by the employee and the ½ per cent. paid by the employer that will qualify anyone for graduated pension. Perhaps I did not understand my right hon. Friend properly, but I think that some amplification is necessary.

I am dealing with criticisms of the Bill at the moment, and another omission is that it does not make it clear whether any of the wage-related element will be treated as a disregard by the National Assistance Board. I notice that no mention is made of that.

However, all hon. Members will welcome the Bill because it is of tremendous importance, particularly to widows. Last week, the House was discussing crime. I would say from my experience that one of the subjects that need study is the problem of a widow with a young family in the strain and stress and emotional involvement of losing her husband. She may have a number of problems if, like so many wives, she is not used to making decisions and dealing with problems. Some husbands seem to do everything, God bless them. There are not many of them, but there are quite a few.

To a woman who, for one reason or another, is not capable of facing up to the problems of widowhood, this extension plus the increase of the wage-related part is a wonderful thing. I Would like to see it followed up. I think that there will be a saving in staff time at the National Assistance Board as a result of the increased benefits, and perhaps consideration could be given to whether it would be possible to devote more of the time of the Assistance Board's staff to welfare work on the problems of widowhood, sickness and long-term employment, pending the review of the wider system that is proceeding at the moment.

Hon. Members may criticise the Bill. It can always be said that it has taken too long to reach us, that there is not enough in it for everyone or that one section of the population should get more as against what is proposed. We can all make criticisms. But at least it is a first hesitant step on the road towards wage-related benefits, and I think that it is the right road. I am not talking just in terms of the income guarantee, but in terms of benefits and the associated services generally. The next revolutionary step in the social service is long overdue and has been carefully ignored in the past 13 years. I hope that we are not stampeded into introducing the next step without giving it careful thought, and I do not mean cash benefits so much as making the necessary researches into the social problems, and putting less emphasis on the actuarial problems.

As I say, this is the first step along the right road, and I wish the Government every success provided they put forward Bills such as the present one.

5.35 p.m.

Mr. R. H. Turton (Thirsk and Malton)

All of us who listened to the last part of the speech of the right hon. Lady and to the first part of the speech of the hon. Member for Glasgow, Provan (Mr. Hugh D. Brown) must have realised how unwise it is in this House to make party politics out of social security. We do not come to the House unless we are anxious to improve the social security of the people. We differ a good deal, and I shall today, but there is very little value in trying to score party points on this subject.

The hon. Member for Provan talked about the welfare advisers who are mentioned in our policy document. They are intended to deal with the problems of old people, and we have all had experience of the reluctance of old people to obtain advice or assistance. It is necessary in a modern welfare society to have officers going out from a Ministry of Social Security to the old people rather than waiting for them to come there, and I feel that the hon. Member for Provan would applaud that suggestion of ours, just as he would many others in our document.

I would like to congratulate the right hon. Lady on the Bill. Many years ago when I was Parliamentary Secretary in her Ministry I remember that a report came out from the Fabian Society on the question of wage-related benefits. It was written by Mr. Brian Abel-Smith, and entitled "The Reform of Social Security". Having examined wage-related benefits in many countries of the world, he said: Among the countries with flat rate systems are Sweden, Australia, New Zealand, and in part Norway—all countries with strong socialist traditions. He summed up by saying: It is for these reasons that payments for unexpected needs should be kept at the flat rate subsistence level. Fortunately, we have all moved onwards from those days, and I congratulate the right hon. Lady on the progress.

I do not want to speak for long, and, therefore, I shall omit the praise for most parts of the Bill, with which I thoroughly agree, and concentrate on what I regard as the great weakness in the present Measure.

The weakness in the Bill is that it treats unemployment and sickness as similar kinds of interruption of employment requiring similar treatment. I believe that they are quite the reverse. In unemployment, the need is to try and give a greater measure of help in the very early period of unemployment, whereas in sickness the greatest need comes to those who are suffering from long bouts of illness or the chronic sick.

That was the great mistake in the Beveridge Report. Beveridge treated sickness purely as one, whether it was an illness for a week or for many years, and made no provision of any kind for invalidity benefit. He made one exception to that when dealing with Class II employment, and suggested that there should be no short-term benefit for Class II and that long-term sickness should be paid benefit at the same level as short-term sickness in Class T. But, fortunately, Parliament rejected that. I hope that we will look at this sickness benefit again to try to get it right, because I think that at the moment it is wrong and out of character with the social security requirements of modern times.

I think that the earnings-related benefit, when it is taken in conjunction with redundancy payments, is a wise and beneficial advance, but I do not believe that this is a good Measure when one is dealing with sickness benefit. As my right hon. Friend said, we are dealing with three periods. The first is from the 3rd to the 12th day, when a man gets a flat-rate benefit. He then rises to the graduated scheme benefit until the 169th day, and then falls back to the flat rate. This will work very unequally and hardly on the long-term sick, the people for whom we want to try to find some better provisions than we have at the moment.

If one takes the figures for 1963, one sees that 4½ million of the spells of incapacity will not be covered by the Bill, that the next 3½ million will be covered, and that 162,000 will come outside the scope of this Measure as being too long. The Bill deals with only half the bouts of sickness, and there is this minority, the 162,000, for whom I believe hon. Members on both sides want to make better provision.

That brings me to consider the position of sick pay schemes to which the right hon. Lady did not refer. Last year, the Ministry of Labour carried out a study of sick pay schemes, and its report shows that 13 million people were covered by such schemes. What will be the position of those who qualify under sick pay schemes and also under the terms of the Bill? If the findings of the study are right, 45 per cent. of them provide full wages or full earnings up to a period of 13 weeks, which, as we know, cuts right into the graduated earnings benefit scheme.

The low-wage earner will be subjected to the earnings stop under this scheme, but what will happen to those who receive benefit under a sick pay scheme? Will they also be subjected to an earnings stop? If not, hardship will be caused to the low-wage earner, while a man who is receiving benefit under a sick pay scheme will be able to draw more than he gets when he is well. I hope that when the Joint Parliamentary Secretary replies to the debate he will be able to tell us whether there will be earnings stop under the sick pay scheme.

I wish that sickness benefit had been reviewed, and not brought into the Bill, because I believe that by bringing it in we will make it very difficult to change the Beveridge concept of sickness benefit, which ought to have been changed a long time ago. I see no reason why an employer should not be responsible for the first four weeks of payment during an employee's sickness. I have held this view for a long time. I know that some people disagree with me, but I believe that a good employer should look after his employee during his first four weeks' sickness.

That is done in most industries. In the agricultural industry it is the invariable rule that an employee's wages are made up for the first four weeks of sickness. I therefore ask the right hon. Lady to consider amending the Bill in its later stages so as to give the graduated benefit over the whole period of incapacity after the start time, and not to stop it after the 169th day.

The right hon. Lady knows that the most hardship arises when the breadwinner has been sick for more than six months. He may be bedfast for months, and even years, with the result that his family's standard of living falls. It is cruel after the 170th day suddenly to say to such a man, "We will take away your earnings supplement".

If the right hon. Lady gave that concession, no doubt, in order to get her financial structure right, she would have to make the graduated benefit start later, but I believe that that would be an acceptable bargain. If, as I believe, the employer has an obligation to cover the first four weeks of sickness, the right hon. Lady could bring the start date nearer to the 24th day. If that were done, I believe that there would be no loss on the Bill. I believe that those who are ill for a short time, bearing in mind that 45 per cent. of them are already covered under sickness pay schemes for a short period, would benefit, and I hope that the right hon. Lady will consider this.

I would be happy if the right hon. Lady kept the Bill in its present form and made the graduated benefit continue without any change in the start date, but I think that there has to be a bargain, and I am certain that the Minister, more than any other Minister on the Front Bench, would not like to see hardship done to the most deserving of all, the long-term sick. I applaud what the right hon. Lady is doing for widows, for the war disabled, and for the industrially disabled, but I think that at the present time there is a great defect in the sickness graduated benefit scheme, and I hope that she will cure it.

5.48 p.m.

Mr. Ted Leadbitter (The Hartlepools)

It is evident that during the debate we have had a note of apology from the benches opposite. There has been more than one indication particularly, from the right hon. Member for Leeds, North-East (Sir K. Joseph), that this Bill is a continuation of some good work done over a period of years. I am the last Member in the House to minimise the efforts of any Government in dealing with social security allowances, but I must underline the fact that during the past 15 months we have heard more from the benches opposite about the needs of old people and about the needs of selected groups of the community than ever we heard when they were doing work for which I am willing to give them credit.

They went so far. From time to time they claimed responsibility for the Welfare State. They will not admit that they were pushed, and pushed hard, from behind, first by the Liberal Party and then, during a long period in this century, by the Labour Party. Never would they agree, when they were in power, that the real needs of the community ought to receive their attention.

On this most important Bill I am rather surprised that the right hon. Member for Leeds, North-East has not been more forthcoming, and has admitted that my right hon. Friend, in line with a battery of Measures which have injected justice into our society, has brought forward a Bill which will be received throughout the whole country with a great deal of sympathy and which will be welcomed as a blessing by all those sections which it covers.

The right hon. Member for Leeds, North-East was in my constituency four years ago. At that time we had an exceptionally high unemployment figure. By 1962, one in every eight of the working population was out of a job. I had the unhappy experience, for many months, not only of trying to assist many men, but also to understand why the Tory Party of the day was indifferent to their needs. I thought that today we would hear more from Conservative Members in acceptance of the fact that for the first time something is to be done to assist people who have become unemployed—even if it be in a context different from that which existed in 1962. We are no longer looking forward to excessive levels of unemployment. I hope that we are not looking forward to the kind of unemployment which was practically confined to certain areas of the country while other areas continued to exist in a degree of affluence.

The allowances that we are discussing are complementary to others which have been introduced in this Parliament. There is the Redundancy Payments Act, and the provisions which are related to the transitional period between one job and another, so that standards of living should not be harmed to any great degree and the ability to move from one job to another should be eased, with opportunities for training, so that a man's family will not be adversely affected while he is seeking to find a more useful place in society.

It is, therefore, with a great deal of enthusiasm that I welcome the Bill. It is only one of a whole bater of Measures. I shall refer only to four or five. We have had the Redundancy Payments Act, the rating relief measures, the Pensions (Increase) Act, the Workmen's Compensation and Benefit Act and the abolition of prescription charges. All these illustrate the emphasis which this Parliament has brought to bear in terms of social reform. No wonder the Tories are despondent. Look at the Opposition today! It is a pathetic sight. Hon. Members opposite are not used to being in opposition. We do not have to rush to support the Bill, because we know that it will go through. There is no opposition. Hon. Members opposite will not oppose, nor will they give credit where it is due. They are just a pathetic Opposition, in complete disarray.

Hon. Members need not accept my words as a test of that. Opinion outside the House confirms it. Even today's news has frightened the Opposition. I therefore suggest that when the right hon. Member for Leeds, North-East welcomed the Bill, with reservations, he was in a very embarrassing position. He referred to a few of the usual fears. He talked of absenteeism. This problem was also referred to in an interjection while my right hon. Friend was speaking. I gathered from it, and from the contribution of the right hon. Member for Leeds, North-East, that the Opposition have some kind of objection either to the procedures or to the allowances. Are we to gather that the allowances are so high as to incite absenteeism? If that is an arguable case, are we to take it, as a corollary, that the Conservative Party thinks that the levels of allowances in respect of sickness should be lower than the Minister has decided?

If hon. Members opposite will not accept this thesis, do they presume that there should be some kind of discriminatory power? If so, how do they suggest that power should be exercised? They should take the opportunity today to tell the country what they mean when they say that they fear that the level of proposed sickness benefit may produce absenteeism. If they object to the allowances they must say what kind of allowances, within the context of the present economy and wage levels, they would introduce in order to provide disincentives to absenteeism. I was rather surprised that the right hon. Member did not come to the "how" part of this serious problem.

I have here a document which says: If the retirement condition and the earnings rule did not exist, there would be an immediate extra cost of about £100 million a year. Most of this money would go to help those relatively less in need, namely, those able to continue working full-time. Moreover, it is an inherent principle of the National Insurance Scheme that benefit is paid for interruption or cessation of earnings through sickness, unemployment or retirement, etc. To abolish the earnings rule would be contrary to this principle. That quotation does not come from a review in the middle 'fifties but from a Conservative document issued in 1964. In other words, the Conservative Party policy is not to abolish the earnings rule. I am surprised at the persistence of this argument and the appearance of some rethinking on the subject by the party opposite. There is the imputation also that the Minister's proposals to have an inquiry are not quite honest.

We must, therefore, test the honesty of the argument on the earnings rule. In this connection I would supply the following quotation from the same Conservative document: Abolition of the rule for widowed mothers only, it is sometimes suggested, would cause difficulties and anomalies. For National Insurance purposes, they remain widowed mothers only while they have dependent children; many would become entitled to the widow's pension when their children grew up. Difficulties would occur in changing from widowed mother's allowance to widow's pension if the earnings rule applied to the latter but not the former. Equally, if the rule was abolished for all widows, a similar difficulty would arise when widows changed from widow's pension to retirement pension at the age of 60. Either course would substitute new problems for the existing ones. Therefore, when the earnings rule argument is applied to widows, there is hedging and an insistence that it should not be abolished. The test of honesty, therefore, is that it must be seen to be what it really is. It was the present Minister of Pensions who abolished the earnings rule for widows.

I have no doubt that, when the present Minister indicates to the House that, in the next few days, she will ask for this matter to be reviewed, she intends either to erode it to a point at which it is practical or get rid of it altogether. The costings which the Conservative Party applied in 1964 may have been realistic and, after the inquiry, the present Minister may not be able to get rid of the rule in this respect as she got rid of it for the widows. One thing, however, is certain—the present Minister will get rid of it quicker than hon. Members opposite, because they have no intention of doing so. Certainly, the present Minister will erode it to the point at which retired people will find it acceptable.

I hope that the right hon. Member for Leeds, North-East and his hon. Friend who will be winding up the debate for the Opposition will not dwell too much on the earnings rule. Similarly, I hope that they will not dwell too much on the subject of absenteeism. It is a philosophy of my party, I hope, that we must legislate for those values of the community which take the majority into account. We are not here to pass legislation for the lazy, or for the man who is not concerned about his country. We are here to legislate for the majority. I am convinced that, when we discuss absenteeism, we are talking about only a few people by comparison with the whole of the working population. I challenge any hon. Member on the other side of the House to decry the great value of the British worker or to doubt his sincerity. I hope that no one in the House would rate the British worker lower than any other in the world.

I now come to the question, raised by an hon. Member opposite of the cost of the present proposals. I suggest, relating the term "cost" to the earnings rule, that, in 1964, this was something connoting fear. I hope that, when we discuss costings in terms of social allowances in future, we will follow the advice of the right hon. and learned Member for Chertsey (Sir L. Heald) and not make political points out of social security matters. The right hon. Member for Leeds, North-East said that the lower income groups did not benefit from the Bill. On page 127 of the Conservative document "Answers", published in 1964, is this rather illuminating statement: The graduated pension scheme, which started in April 1961, enables the better paid to earn a pension more related to earnings…". I have never seen, in any graduated pensions scheme or any other social allowances Measure of the Tory Government, a predominance of concern for the lower-paid workers. The graduated pensions scheme, which no one will deny is a perfect swindle, was not concerned with the lower-paid, but with those who were called the average paid worker.

If we cannot do all that we should for the lower-paid worker—I regret that we cannot and I hope that the Minister will keep a close eye on this very important problem—at least we should legislate in such a way as to provide for the majority of people in accordance with the capacity of the country' to deal with their needs. Under the Bill, taking an average family as comprising a man, his wife, and two children, with earnings of £18 a week, the flat-rate benefit will be £8 7s. and the supplementary, under the new provisions, will be £3. This is a considerable percentage increase—£11 7s. is not so great a drop from that family's average earnings as to put the family in the poverty line.

I should like to see it higher. I have no quarrel with the formula of flat-rate benefit plus supplementary up to a maximum of 85 per cent. of earnings. I regret, however, that our economy has not yet reached the state in which we can do all that we want to do, and which we must seek to do in the future. Another example is that of a family with two children earning £16 a week. They would receive the flat-rate benefit of £8 7s. and the supplement of £1 13s., making a total of £10. I suggest, again, that such an average family on such an income would find this provision far better suited to them than any provided by past legislation. Of course, this does not take into account certain other allowances, particularly family allowances.

When we are discussing the important problem of social allowances, although it must be agreed that the right hon. and learned Member for Chertsey's advice that it is desirable not to make political points on such a subject is the ideal, the facts of life are exactly the opposite. The facts of life are exactly the opposite. This is a democracy, and the political parties determine the rate at which certain things are done in our society. When the Conservative Government were in power they claimed all they could for the little they did. I, as a Socialist, intend to seek the greatest credit for what the Labour Government are doing.

This is right, provided that in so doing we do not seek to introduce a state of affairs in which those whom we seek to help will in fact suffer. It is the clash of opinion between the two sides of the House that matters. What matters is the courage of one man on one side of the House or the other to say what he feels to be right. It so happens that the Labour Party govern the land.

In 1966, following so quickly on the promised priority of social legislation in the National Plan in September 1965, I am intensely proud that the Minister of Pensions and National Insurance has brought forward such a Bill, which, I am sure, will be welcomed throughout the land.

6.11 p.m.

Mr. James A. Kilfedder (Belfast, West)

I warmly welcome the Bill and the introduction of wage-related benefits. I appreciate what the Minister said about the war disabled and the industrially injured and her decision to refer to the National Insurance Advisory Committee the question of the earnings limit as applied to retirement pensioners.

At this stage of this Parliament I thought that I should be welcoming a different Bill—one guaranteeing a minimum income. However, I do not agree with the hon. Member for Glasgow, Provan (Mr. Hugh D. Brown), who said that the Bill was merely a first hesitant step on the right road. I welcome it, and although I should not call it a milestone, I feel that it is a step which follows the first step of the graduated pension scheme which got away from the traditional concept of a flat-rate benefit for a flat-rate contribution. I look upon the Bill as being on the right road to greater social security.

As a Member for a constituency which suffers from a constantly high level of unemployment and a considerable degree of sickness, and which has perhaps as high a proportion of widows as any comparable area in the United Kingdom—mostly war widows—I know from personal experience how much the provisions of the Bill will improve the lot of many people. I know what it means for a family suddenly to be deprived of the income which it has grown accustomed to expect—to be deprived of it by spells of sickness or unemployment or through the death of the husband.

This can deal a blow to a family from which it may well take a long time to recover. It may well be that the money coming in each week has already been accounted for by the wife in paying various expenses which occur quite regularly. The Bill in some degree helps to ease the plight of the family in certain circumstances.

In Ulster most people are workers directly connected with the land or with industry. If they are not directly connected with either, they are not far removed from them. Here I take up a point made by the hon. Member for The Hartlepools (Mr. Leadbitter) in his challenge to this side of the House about decrying the great value of the British worker. Most people in Ulster are workers.

I particularly welcome the earnings-related supplement to the widow's pension. The sick, one hopes, will recover; and the unemployed, one hopes, will eventually obtain some work. But the widow, encumbered with domestic difficulties and perhaps left with a family to support, cannot readily re-establish herself, certainly not immediately after the emotional impact of the death of her husband. For one reason or another, some widows are never able to re-establish themselves.

I have noticed two defects in the Bill. First, I regret that one sizeable section of the working population appears to suffer rather badly. I refer to men and women who cannot obtain employment which lasts throughout the year—the so-called seasonal worker. They may work in agriculture or in hotels, or it may be that they are no longer active or not as young as they used to be and can secure employment only at a time of labour shortage. Such people are frequently able to work only for 20 to 30 weeks in the year.

These people are likely to benefit very little from the earnings related supplement, for, under the provisions of the Bill, the average weekly earnings are to be calculated as one-fiftieth of the reckonable earnings in the year from May to May. As a seasonal worker is entitled to benefit only during that part of the year in which he would normally expect to work, and as a seasonal worker's entitlement to benefit is to be restricted to the season, it seems to me that there is a case for calculating his weekly earnings over the same period. To divide his annual income by 50 when he works for only 20 to 30 weeks of the year is as illogical as to divide the annual income of the ordinary worker by 52. If the two weeks annual holiday can be excluded from the calculation for the average worker, why cannot the off-season be excluded for the seasonal worker?

The second defect of the Bill arises from an amendment to the existing Act which allows the award of additional days of unemployment benefit—180 plus 312, making a total of 492—as a reward for a good employment record. The Minister said that this is in line with modern conditions. No doubt, as she says, it will be an advantage in areas of great economic prosperity such as the south-east of England, but in development areas and in areas such as the City of Belfast, in which my constituency lies, it is a different story, because the closing down of a single large factory can cause long-term unemployment, certainly longer than the 12-month duration. This indicates a grave defect in the Bill.

I am glad that an attempt has been made to remove restrictions where a discharged employee receives holiday pay or compensation for loss of employment. This will help to encourage the mobility of labour which is so essential for the working of the National Plan. However, the opportunity might have been taken to lessen the burden of proof on a claimant who is caught up in a trade dispute at his place of work. Under present legislation, if an employed person is participating in, financing or directly interested in the outcome of a trade dispute as an individual or as a member of a grade or class, he is disentitled to employment benefit for the duration of the stoppage.

I realise that this is a difficult problem. The Minister might also refer this matter to the National Insurance Advisory Committee because the National Insurance Commissioners' interpretation of the word "financing" results in a number of disallowances of benefit where a worker's connection with a dispute is either remote or most indirect, and injustice is caused.

Another important point concerns the hearing at the local tribunal. It is the practice of the Ministry to prepare a resume of the facts and of the law for everyone concerned in the case. With the best intention and will, it is difficult for these submissions not to present the facts in a somewhat partisan manner, emphasising the opinion of the insurance officer and not doing full credit to the case of the complainant. These submissions could be done away with without any great loss and, in doing so, one would avoid the inherent danger of bias and there would be a considerable saving of the time spent in their preparation.

Instead, greater use might be made of photocopying machines. All the relevant documents in the case could be photo-stated and made available to the members of the tribunal as well as to the complainant, and they could also be given all the quotations from the relevant legislation and case law.

I welcome the Bill. No one can claim that it is a great advance or that it is legislation far in advance of its time. I look forward to further legislation in this sphere of social security benefits, in particular a minimum incomes guarantee or something equivalent to it. Only then will the nation really mitigate the poverty which still strikes at a great number of families who are in receipt of low earnings.

6.24 p.m.

Mr. Eric S. Heffer (Liverpool, Walton)

I agree with the hon. Member for Belfast, West (Mr. Kilfedder) that the problem of workers involved, but not directly, in trade disputes requires speedy action. Although we have been given an assurance that the matter will be placed before the Royal Commission on the Trade Unions and Employers' Associations I hope that a more speedy result will be achieved, instead of our having to wait for a report from that body.

Many of my constituents, particularly those employed in the shipyards in Liverpool and elsewhere, are often faced with this problem. They sometimes find themselves not directly responsible for a dispute, remembering that such a dispute may arise from a demarcation disagreement in a shipyard. Despite this, they find themselves out of work and in an exceedingly embarrassing and difficult position. I urge the Government to consider this matter with all urgency, recognising that all hon. Members agree that something positive should be done to solve this problem.

I come immediately to the remarks of the right hon. Member for Leeds, North-East (Sir K. Joseph), and in doing so I hope that my comments will not be considered to be party political points. A national newspaper of great repute recently stated that from now on every speech in the House of Commons would be geared to what it described as the forthcoming General Election. I hope that hon. Members will ignore that and will make speeches which are not geared to the coming election, whenever that may take place, but are designed to deal with the legislation and problems which we must tackle. The speech of my right hon. Friend the Minister was a model in that direction; and, within its limitations, the speech of the right hon. Member for Leeds, North-East was equally a model in that strain.

The right hon. Member for Leeds, North-East commented on the important question of fringe benefits and the fact that the trade unions have been somewhat late in negotiating these benefits. That is true and anyone who is honest about it will agree that it is true. Having established the truth about it, it is equally important to consider the differences in attitude between trade unions in Great Britain and those in America. We cannot suggest that American trade union thinking is identical or has ever been the same as that of our trade unions. British trade unions created a political party. Some people may not like to recall that but I, as a trade unionist, am never ashamed to think that the trade unions and a small band of Socialists created the Labour Party. Bearing that in mind, it will be seen that Britain's trade unions have always had a wider attitude to certain questions and have accepted that certain matters are the responsibility of the entire population. One such matter is the question of sickness benefits and payments.

I spent some time in America studying their trade unions and their thinking on this subject. I was told, in effect, by trade unionists, "We are concerned only with our membership." Many trade union leaders there boasted to me, " We have the finest sickness scheme". I asked, "What about those who do not belong to your union and those who can never join a union, such as housewives?" They replied, "That is not our responsibility. We are not bothered with people who are not members of our union".

In Britain, the trade unions are concerned not only with those who are in the movement, but also with those who can never at any time belong to a trade union. This is the basic difference between the thinking of our unions and that of the Americans. Before considering this matter further, we must consider this vital difference.

I agree that when sickness schemes are introduced and when 100 per cent. benefits—100 per cent. of wages—are paid, the question of absenteeism can arise and that, for a short period, particularly in the first instance, some people will abuse the scheme. One has to recognise that fact—there is no point in running away from it—but is not that because in the past, before such schemes were introduced, many of those workers remained at work, although they were practically dropping dead?

Before I entered this House I was in the building industry, and I hope that I still in a sense speak for it—or, at any rate, for the workers' side of it. There are no sickness schemes in the building industry. The right hon. Member for Thirsk and Malton (Mr. Turton) said that most employers now have schemes which allow for the payment of sickness benefit. That is not so in the building industry. I know from my own experience of workers who have stayed at work when they should have been in their sick beds. Many of them have ended their lives earlier than should have been the case because they could not afford to remain in bed at home and get the necessary treatment. In discussing this matter we have to keep things in perspective.

I feel rather sorry for the right hon. Member for Leeds, North-East today, because he has had very little to talk about. I had met the right hon. Gentleman before I came to this House, and I have always thought that in many ways he is far more progressive than a lot of those surrounding him; that he wants to move ahead sometimes when his colleagues, because of their reactionary thinking, do not want him to do so. If there are progressive Tories, the right hon. Gentleman is one of them—he is a rare bird.

That being so, I have some sympathy with him now, because what could he say of the Bill? He criticised it for what he called its narrowness and missed opportunity. That was really the essence of his criticism. On the other hand, hon. and right hon. Members opposite have had plenty of opportunities in the past—why have they not been coming forward? It is, therefore, difficult, I appreciate, for someone to criticise the Bill who knows that they have not come forward like that.

The Government, in introducing the Bill, have stressed the importance of mobility of labour and have equally stressed the humanitarian side. Coming, as I do, from an area like Liverpool, I can tell the House that it is the humanitarian side in particular that will be welcomed by the people of Merseyside. When talking to a constituent at the weekend about his problems, I mentioned this Bill, and he at once called it a magnificent Bill—he had read of it in the Press. His attitude was typical of that of constituents who have talked to me about the Measure.

The Government are to be congratulated on introducing such a Bill at this time despite the financial difficulties with which they are faced. Two categories of workers who will be particularly well served by it consist of those people who do not have constant, regular employment but are often unemployed for short periods—perhaps two or three days, sometimes two or three weeks. I can understand why the hon. Member for Belfast, West welcomes the Bill; he has in mind the same category of workers. No doubt they are among his constituents as well as among my own.

The categories are, first, building and civil engineering workers and, secondly, shipbuilding and ship-repair workers. Workers in the second group do not have constant, regular employment. They work on a ship, the ship is repaired, the ship sails, and the men are out of work for two or three days or perhaps longer. That fact is absolutely chilling to industrial workers. I know because I have suffered it myself, and it is still being suffered by workers in places like Belfast and Liverpool. This Measure will be of great assistance to those workers.

The Bill has weaknesses. I have expressed my view that the right hon. Member for Leeds, North-East is more progressive than many others in his party, and I am glad that he is present now to hear me repeat that remark. He said that the treatment of the family man will need looking at again during the Committee stage. I think it unfortunate that the family man, perhaps with four children gets relatively less, because of his position, than the worker who has no children. The 85 per cent. figure for this lower-paid category of workers with large families should be re-examined, and I urge further consideration upon my right hon. Friend.

I know that there will be talk from the other side of the Chamber of feather-bedding. We will be accused of creating a situation in which absenteeism is encouraged. Let us leave out sickness at the moment and look only at the unemployment side because, to some extent, I agree with the right hon. Member for Thirsk and Malton, who says that there is much difference between the two conditions. If a worker absents himself from work on the odd day now and again over the year his action will be reflected in his total income for the year. Therefore, his earnings-related benefit will suffer as a result of his absenteeism. In a sense, therefore, the Bill does the very reverse; it does not encourage absenteeism, but has just the opposite effect of making certain that the worker puts in his full time. I am sorry that employers' organisations have said absenteeism will be encouraged. That is old-fashioned and doctrinaire thinking, and I had hoped that the employers would have got away from it.

The Report of the Government Actuary states that the amounts paid will be…by reference to earnings in the previous income tax year. This is something else which should be looked at. It is too long a period and should be reduced to something like four months. The worker in the shipyard in Belfast or Liverpool, who, through no fault of his own, suffers periods of unemployment, at the end of the year will have much lower earnings than if his employment had been full and continuous. If a man or woman is sick for three or four months, taking into consideration that throughout the year his earnings are very low indeed, the benefit should be related to basic pay. This is very important. Do you get the point I am making?

Mr. Speaker

Order. The hon. Member must not drift into conversation with the Minister, but must speak through the Chair.

Mr. Heffer

This is a very important subject to me. I apologise, Mr. Speaker, but I wanted my right hon. Friend to get the point clearly.

A further weakness in the Bill has been largely overcome by the reply which my right hon. Friend made to a question I raised. When I first read the Bill and the Report by the Actuary, Clause 7 worried me considerably. I was much concerned that we might have a situation in which a worker was suspended by his employer, perhaps through no fault of his own, and then would have to wait for seven days before he received any benefit. I urge that even though it has been promised that this matter will be looked at in 18 months' time with employers and unions negotiating in the meantime, it should be further looked at and consideration given to legislation. We are talking about legislation with trade unions, some of which I do not like at all, but there are other types which would be very beneficial and legislation could be introduced to overcome this difficulty.

I hope that because I have criticised certain aspects of the Bill, and suggested that some parts of it should be strengthened, it will not be considered that I am opposing the Bill. On the contrary, I think it a magnificent Bill, particularly as the Minister said that it was a first step on the road to complete reorganisation of our social security system. It is a wonderful first stage. Provided we eliminate some of the weaknesses and tidy up some of the matters we shall have made a serious contribution to revolutionising our social security system. If we go on in this way the people in the country will not only continue to support this Government, but will give them even greater support.

6.44 p.m.

Mr. Russell Johnston (Inverness)

I shall not exactly follow the hon. Member for Liverpool, Walton (Mr. Heffer) in his final remarks, but I echo the welcome given generally to the Bill. I congratulate the right hon. Lady on the obviously hard work that she is doing in her Ministry. I welcome the emphasis she laid on the fact that this is an interim Measure, introduced with the intention of tackling at least some of the many complications and anomalies which, as she stressed, bedevil our social security system.

I did not altogether agree with what was said by the right hon. Member for Thirsk and Malton (Mr. Turton), who, unfortunately, is not now present. He seemed to suggest that politicians should not make political remarks and, as he called it, political capital out of arguments about social security. Social security and the way in which we approach it is one of the fundamental problems with which politicians wrestle. If we say "We do not think that what you did was particularly good", that is a fair sort of criticism to make.

I found myself in a fair amount of sympathy with the hon. Member for The Hartlepools (Mr. Leadbitter), who said that he was somewhat doubtful about many of the criticisms which hon. Members of the Opposition addressed to the Government on their approach to certain social security issues. I find the same myself. Although there are individual exceptions, those who are tremendously interested and occasionally put questions about pensions and certain anomalies, one is still left with the question of what the Opposition said and did during their term of office.

Here we have a Bill concerned to deal with some of the problems of those who are less well-off. Like the hon. Member for Glasgow, Provan (Mr. Hugh D. Brown), I read the speech of the Leader of the Opposition this weekend. I was amazed to discover that the rôle of the Conservative Party in politics was to overcome poverty. Previously, I was not aware of this. In my admittedly short political experience—doubtless this will be drawn to my attention—I have not encountered any man who would say that he walked through the squalor of the slums visiting the sick, talked to the unemployed, was appalled by the poverty he saw, and then rushed to join his local Conservative association. That is not what I have associated with the Conservative Party.

Sir K. Joseph

The point is that we have been accused that during the last 13 years we made too much of a song and dance about affluence. The hon. Member will recognise that we spread affluence to an unprecedented majority of the population, but there is still a substantial minority needing more money. To that minority my right hon. Friend the Leader of the Opposition drew attention.

Mr. Johnston

While it is true that there was a period during Conservative rule when there was considerable general affluence, I as a Liberal criticise the Conservative Administration for complacency at a certain stage. There was a period when, as the right hon. Member for Leeds, North-East (Sir K. Joseph) will admit, it invaded Government circles and they were over-concerned with emphasising the fact that things were relatively good—as they were for a time—rather than concentrating attention on using that affluence to relieve the evident poverty which still existed.

I welcome the Bill generally. I shall restrict my criticisms, first, because I do not want to take up too much time and, secondly, because this is primarily an interim Measure and consequently one's criticisms can only be interim ones. I criticise, first, the length of time for which the extra benefits are to be paid, although I realise that this has been extended. Secondly, I tend to criticise the level of the benefits. Thirdly, I criticise the effect on the self-employed, to which the right hon. Member for Leeds, North-East referred.

Fourthly, I criticise the effect on seasonal workers, which the hon. Member for Belfast, West (Mr. Kilfedder) has substantially dealt with. Lastly, I criticise the lack of provision to encourage occupational schemes. The hon. Member for Walton referred to this aspect. The Government have shown no enthusiasm for creating conditions to encourage employers to establish occupational pension schemes.

First, as to the period of payment, the purposes of our social security have greatly changed since the war. It is no longer primarily designed—I say "primarily" despite the continued existence of real poverty—to relieve desperate poverty. Its purpose today is, rather, to enable people to stabilise their standard of living in changed circumstances, to maintain the standard of living they have earned by their work, and to endure such breaks as they may be subject to.

A statement was made by the Government today about hire purchase. We know how many people are committed to it. Part of the object of these services is to enable some people to maintain such obligations. I know that there are economic limitations, but in absolute terms it is wrong that sickness and widows' benefits should be limited to six months.

The extension of the widow's benefit to 26 weeks will be widely welcomed. However, although this may be a wrong criticism to make at an interim stage, we Liberals believe that at the end of the day the object should be to provide a reasonable standard of living for as long as is necessary for somebody who has, through sickness or some other factor outwith his control, suffered an interruption in his employment. The discontinuance of widow's benefit after six months causes very great hardship. We should pitch the expectation level higher, because the standard is always going higher. The object at the end of the day should be to extend the term of payment.

On the level of benefits, I should like to see some guarantee of a minimum of two-thirds of earnings, subject to a maximum. As the Bill stands, the benefits for sickness and unemployment will reach only two-thirds of actual earnings for a married man with four children. Others will not have similar benefit.

At the end of his speech the right hon. Member for Leeds, North-East drew attention to the position of the self-employed, who are not to participate in this scheme. As the hon. Member for Walton said, many self-employed are by no means well off. Many of them earn as little as £9 a week. Small shopkeepers are not necessarily by any means well off. The Minister should see if there is any way in which these people could be allowed to participate, because it is very difficult for them to make provision.

The hon. Member for Belfast, West has substantially dealt with the problem of the seasonal worker, who is still in a very exposed position. In my part of the country, and in areas represented by my hon. Friends the Members for Devon, North (Mr. Thorpe), Bodmin (Mr. Bessell) and Ross and Cromarty (Mr. Alasdair Mackenzie), who, I see, are present, tourism is a very important industry. In any area where the tourist season is short, there are people who are in a very difficult position. I know that it would be difficult to make provision for them, but I ask the Minister to consider the matter.

No step is taken to encourage occupational schemes. Liberals believe that occupational schemes should be subject to legislation to ensure that they provide adequate benefits. I know that many concerns run occupational schemes which are far from satisfactory. The Government should tell employers, "We would like you to provide voluntary occupational schemes, but we shall expect you to meet a minimum requirement, because we will then be in a position to encourage you". If there were safeguards of that type, provision could be made so that firms wishing to do so could contract out and provide their own occupational schemes. This could not be done unless there were an agreed minimum.

I conclude by saying that I very much welcome the Bill. I welcome the priority which the Government have given to social security measures. I look forward to the results both of the social security inquiry which is proceeding and of the two references which the Minister announced this afternoon. I am particularly pleased that the right hon. Lady has referred to the National Insurance Advisory Committee the question of the earnings rule. We in the Liberal Party have consistently argued against the earnings rule. We did so at a time when the Conservatives were in power and when many of those who now sit on the Opposition back benches were perhaps less vocal about this question. We know that the economic situation might not permit of total abolition, but it might be possible to raise the level. I look forward to the further provisions which we have been promised.

6.58 p.m.

Mr. Paul Dean (Somerset, North)

Like the hon. Member for Inverness (Mr. Russell Johnston), I welcome the Bill, although, like him, I have one or two points of criticism. I was particularly interested in the hon. Gentleman's point about occupational schemes. I shall come to that later.

The general aims of the Bill have been welcomed in all the speeches. It aims to cushion the financial impact of short-term employment, sickness and widowhood. This is an agreed aim and the method of doing it, namely, relating benefits more closely to earnings, is also one as to which there has been a wide measure of agreement for some time.

However, it is difficult to tell whether the method adopted in the Bill is right. First, it deals with only part of the problem. Secondly, it is tacked on to a system which is out of date and which is generally agreed to be in need of reform. For example, it is not easy to judge the value and the rightness of the short-term benefits without knowing more about what the Government have in mind in relation to the longer-term benefits.

What happens, for example, when the earnings-related benefits are exhausted after six months? As things stand at present, it looks as if there will be a considerable drop in income for most people who are still in receipt of benefits after the period of six months. It is true that the numbers involved by this time will be small, but, none the less, there will be people who are in real need and distress. Therefore, some indication of the Government's long-term plans, in particular what is to happen after the six months' benefit has been exhausted, would be a considerable help in trying to judge the merits of this scheme.

My second point is to question whether it is right to deal with these three categories in the same way. I am thinking now of the three main new aspects which have been introduced in the Bill—widowhood, unemployment and sickness. In the case of widowhood, I believe that this is essentially a long-term problem. I agree with the resettlement benefit for the early months and I welcome the fact that it is on a more generous basis and that it is much more closely related to the money which has been coming into the family before the woman concerned was widowed.

I feel, however, that widowhood as such should create an entitlement to benefit and that this should be an integral part of our arrangements, both State and occupational, for pensions schemes. It falls very much more into the long-term benefits than it does into the short term. I cannot see that we shall get rid of the anomalies and the sense of injustice which they create until we accept this principle as far as widowhood is concerned.

Turning to unemployment and sickness, I think that it is generally accepted that these are different problems. I am not convinced, at the moment at any rate, by the argument which is often used that they must be dealt with in the same way and have the same level of benefit, otherwise people would shift from one to the other depending upon which category would give them the better benefits. I am not convinced that this is an insuperable problem. If one looks at the obligations which sickness and unemployment create, I think one finds clearly that they are very different. In the case of unemployment there is no job and there is no employer. In the case of sickness there is both a job and an employer but an inability for the time being to do that job.

I think it is no accident that in the case of sickness, private schemes are much more widespread than they are in the case of unemployment. I am doubtful about the allocation of priorities in this Bill, which envisages an additional outlay of something like £44 million a year on National Insurance sickness benefit, where private schemes are fairly widespread, but only about £20 million a year on unemployment, where private provision is very much more limited.

In the case of unemployment, I believe that this is the classic example of generous benefits on a national basis. One cannot expect private arrangements to go very far in this direction for the very good reason that it is at the time of unemployment when a firm is least likely to be able to carry people over and pay benefits for them. Of course, the new redundancy scheme recognises this principle by spreading the cost, as it were, through a flat rate contribution—in fact, a poll tax—to this scheme.

I wonder if the right hon. Lady has considered whether there might not be a case for treating unemployment, redundancy, resettlement and retraining which are involved under one umbrella. Has she considered whether it is desirable to have a redundancy scheme—admittedly it is a new one and has only just been set up—running up from one engine as it were, and a quite separate unemployment benefit running from another engine, with resettlement allowances and retraining arrangements again run in rather a different way? Is there a case for looking to see whether the whole problems of unemployment, redundancy and those matters which are associated with them would not be better treated under one particular national scheme which concentrates alone on these particular problems?

As to sickness, I agree very much with the point made by my right hon. Friends the Members for Leeds, North-East (Sir K. Joseph) and Thirsk and Mahon (Mr. Turton) that here is a case where there is a much greater obligation on the part of the employer. I believe that there is a strong argument for saying that during the first three weeks or a month the obligation should be on the employer to provide for sickness benefits on an earnings-related basis for his employees. This would cover something like three-quarters of all the spells of sickness and I believe it could be done more efficiently, at lower cost and also with more effective claims control by employers.

It would have the advantage, too, of leaving the State scheme more free to concentrate on longer-term sickness and other aspects which of their nature cannot really be effectively covered by occupational schemes. I should like to be told whether the Government have considered the possibility of a proposal of this kind and, if they have but have turned it down, I would be grateful to be told why that was done.

My second main point is that I am doubtful whether it is right to treat these three very different types of problem in the same way, which is, broadly speaking, what the Bill does.

My final main point is the one referred to by the hon. Member for Inverness concerning contracting out. The White Paper has one bold statement, in paragraph 16: There will be no contracting out…". The right hon. Lady said very little about this paragraph this afternoon. It is very strange that private schemes, which in the case of sickness cover over half the population, should be dismissed in the White Paper in six words with no explanation as to why this is so. This is one of the major weaknesses of the Bill. It was well expressed by the Daily Telegraph on 27th January, when it said in a leader: It is one thing to make providence obligatory; it is another to prescribe that it shall be exercised through a single, State-controlled system. To do this is to attack the powerful, competitive incentives which have done so much to improve the standards of occupational provision. I believe that there is a good deal in that view.

It is totally wrong to force people into State schemes when they are already adequately covered by private arrangements. There are several sound reasons for that view. First, the more one does that, the more one denies choice; secondly, the more one tends to get one's State schemes top heavy and rigid and therefore not so able to have the flexibility which is required to deal with the whole vast variety of personal problems which are covered by our National Insurance Scheme. The third reason is that the State will not be able to concentrate effectively on real needs if we have a continuing expansion of State schemes. The philosophy behind the blanket universal State scheme is out of date and cannot produce effective social security in these days.

For a number of specific practical reasons it is a mistake not to allow contracting out. This applies especially to sickness benefit. The first reason is the existence of private arrangements. It has already been said that more than half of the working population, about 13 million people, is covered. Everybody in the public service and the nationalised industries is covered, both white-collared and manual. In private industry, most white-collared workers are covered and about one-third of the manual workers, and the process is growing. The schemes are expanding year by year.

The general pattern for more than half the working population is usually full pay less National Insurance benefit for a period, very often up to six months, and then half pay plus National Insurance benefit for a further period. Many employees get better benefits for longer periods than are proposed in the Bill and in many cases they do not pay contributions.

The nurses' scheme is a good example of the public service. After four years' service, nurses get four months on full pay less National Insurance and four months on half pay plus National Insurance, a cover for eight months. In the seventh year of service the periods are six months on full pay and six months on half pay.

What is to happen to schemes of this type? Will they continue to provide the same benefits as at present, or will the tendency be for these benefits to be levelled down to those of the State scheme? If the second is the case and the benefits are to be levelled down, because of the contribution which the employers will have to pay, that will be a strange way in which to encourage the recruitment of nurses and teachers, for whom considerable recruitment programmes are now in operation.

Whatever the effect is on these schemes, it will certainly mean that employers, whether in the public service or in private service, who are contracted out and who, therefore, do not pay the graduated contributions will have all the paper work involved in coming into the State graduated arrangements. To the extent to which good private schemes exist, they should have the chance to contract out as long as they measure up to the standards laid down and have the necessary policing arrangements which would be required.

The final practical point is concerned with claims control. We have heard a good deal about absenteeism and the effect, if any, which these new benefits are likely to have. There is no doubt that all of us, whatever our individual positions, know that the nearer benefits in sickness or unemployment approach earnings in work, the greater the temptation to all of us, aided by a loving wife, to give ourselves that little benefit of the doubt and to stay away a little longer.

In many cases, when sickness schemes have been introduced in firms it has been found that to begin with there has been a tendency for the sickness rate to rise, but then very often to flatten out after the scheme has been in operation for some time. Possibly this is partly because sickness which before was concealed, because a man could not afford to stay away for a sufficient length of time to get sufficiently well, has reflected itself in the scheme.

However, many occupational schemes have been able to evolve a fairly effective method of claims control. They have personal knowledge of the sick person and, very often, their own doctor who knows the person and the conditions of work—a very important factor in deciding when a person is fit to go back to work. Many have also evolved arrangements somewhat similar to the no-claims bonus with motor insurance in a variety of ways, for example, by allowing entitlement to be banked up if it is not used and in some cases graduated entitlement, if it is not used, for ill health pensions later.

Those are some of the factors in favour of these sick pay arrangements. One of the great weaknesses of the Bill is that it appears to reflect what is already being done. As our social system evolves, I hope that there will be a position in which the State scheme and private arrangements can be complementary, the one concentrating on those areas of real need, which cannot be dealt with in any other way, and, over and above that, private schemes being encouraged to provide for an evergrowing number of people.

I want, finally, to refer to the earnings rule and the right hon. Lady's welcome announcement. She will recollect that with many other hon. Members I have been questioning her about this rule during the whole of this Parliament. I very much welcome the fact that she is now submitting not only the level, but the working of the earnings rule to the National Insurance Advisory Committee. I hope that when the Committee has done its work it will succeed in finding an acceptable way in which we can get rid of the rule altogether.

Whatever arguments there may have been in its favour when it was introduced in the early days after the war, their weight is now substantially diminished. After all, it has already been substantially eroded by the increase in the amount which can be earned and it has been abolished for the widow. The logical next step is to find an acceptable way in which to get rid of it altogether.

7.20 p.m.

Captain Walter Elliot (Carshalton)

I have listened to my hon. Friend the Member for Somerset, North (Mr. Dean) with great interest and I hope that he will not think it discourteous of me if I do not follow him. I want to make one or two points of my own. The hon. Lady catalogued, as did other of her hon. Friends, the increased financial benefits which have been awarded, in a variety of ways, by this Government. As she went on I scratched my head and tried to think of the things to which the Prime Minister was referring when I saw him on television the other night, beating his breast and referring to firm Government and all the unpopular things that it was necessary for him to do. It seems that these hundreds of millions of £s which were being spent were by no means unpopular.

It is right that at least one hon. Member should relate these benefits to our present situation. The right hon. Gentleman the Minister of Labour referred to the country as "drifting and dreaming". During this debate I had a strong impression that it is perhaps we who are drifting and dreaming. What is the present situation under which we are debating this Bill? As the right hon. Gentleman the Minister of Labour said, we have a colossal weight of new debt while we are still paying off our old debt. The economy is stagnating and prices are rising. Here is another Bill which is costing us £76 million. There is at least one thing which the right hon. Lady did not do but which was done by the right hon. Gentleman the Chancellor of the Duchy when he brought in the Pensions (Increase) Bill. At the end of his speech he struck a pose and said that it was going to cost, I think, something over £100 million and if the international financiers did not like it they would have to lump it. That very afternoon the news came on the tapes that they had lent us £1,000 million.

This money has to be found and we have to repay our debts. I welcome the Bill and I do not suppose that a single Member would oppose it. We all like to give extra benefits to the sick. It is a Government responsibility to decide the priorities and they had a long list of top priorities which have to be paid for. I listened with great interest to the hon. Member for Liverpool, Walton (Mr. Heffer), who is not in his place now and who always gets at us pretty fiercely, but speaks with intimate knowledge of the working side of trade unions. No doubt he has great experience. He admitted, I think, that some other hon. Gentleman on this side of the House had said that the unions had neglected their pursuance of fringe benefits. I agree wholeheartedly with that statement, and if he did not make it I certainly think it. The unions, and the employers for that matter, continually foist on to Parliament work which they ought to be doing. This Bill, as well as the earlier Bills, like Redundancy Payments, are really the job of the unions and the employers.

I must confess that I was rather surprised when the hon. Member for Walton compared American trade unions with those in this country, and gave what he considered was a good reason why British trade unions had neglected fringe benefits. He said that they considered not only their own mem bers but the rest of the country. I do not have a vast number of trade unionists in my constituency but I am sure that many of my constituents living on small fixed incomes would not think that these great pressure groups, which have not only kept abreast of inflation but have actually got ahead of it, represented their interests.

It is because unions and employers foist on to Parliament work which they ought to be doing that we get bogged down in these sterile discussions of such things as whether these improved sickness benefits are going to encourage absenteeism. As we know, the C.B.I. had doubts. It thought that it might produce such a result. We also have the authority of Lord Robens who has remarked on absenteeism in the mining industry. It is right that those people should make these remarks. We discuss to the best of our ability whether it will lead to absenteeism. This is one of the dangers of centralisation because we are not in a position to do it. I certainly would not like to say whether it does or does not. We all know that there is a small minority who would take advantage of this, but surely the people on the spot, the employers and trade unions, are the people who know and who weed these men out.

I am glad that the earnings rule is being reconsidered. I view its being sent to a committee with slight concern. I have only been a Member of this House for five years and we seem to have been discussing it most of that time at one time or another. I hope that the committee will report speedily. In a way age can be looked on as a form of sickness in that it reduces efficiency in the same way as does sickness. I agree that in spite of past arguments the position today may have changed, but I do not think, as in the case of the widows, that the earnings rules should be abolished for everyone. If it is, then money will be given to a number of people who do not need it and a number of people who need it will not get it. I hope that the approach will be a sensible one and that the limit will be raised as high as possible.

The right hon. Lady referred to P.A.Y.E. I hope that it can be looked at and averaged over the year. Perhaps that is what she meant.

Miss Herbison

indicated assent.

Captain Elliot

I see that the right hon. Lady nods her heads. There is a very strong case for changing that.

Miss Herbison

Perhaps I should make it quite clear that the reference which has been given to the Insurance Advisory Committee allows almost anything to be looked at.

Captain Elliot

I am delighted to hear that. I hope that we will get a clear cut policy on the earnings rule as soon as possible.

Finally, I wonder whether the Minister has considered whether self-employed people should be able to opt in, or possibly be brought in compulsorily, to the sickness supplement scheme. Many self-employed people earn only small incomes. They are not necessarily self-employed to earn a big income. They want to keep themselves occupied and they like working for themselves, which I am sure is to be encouraged. Apparently, I misunderstood the hon. Member for Glasgow, Provan (Mr. Hugh D. Brown) when I intervened. It seems that he was referring to employees and was saying that the small man should have a sickness scheme for them. Many self-employed people do not have employees. Many employ perhaps one or two people. I agree with the hon. Gentleman to a certain extent. If self-employed people were allowed to opt in, this would be a powerful lever to encourage them to produce a scheme for any employees they might have.

We are told that the Bill has two main purposes. The first is to assist mobility in industry. It seems to me that it will do that. We are told that the second purpose is social. Here the financial advantage is again to go to those who are currently earning and not to where I believe the need is greater—to the elderly, the retired and those on small fixed incomes. Any prosperity which we enjoy today is due just as much to the work of people who retired in, say, the last 10, 15 or 20 years as it is to those who are currently earning. Therefore, I question the social object of the Bill to assist those who are currently earning.

As I said at the beginning, in all these things we have our priorities. The Bill may be high on the list, but the fact is that many similar Bills have been equally high. I view with grave concern, for whatever reason, these priorities which are increasing Government expenditure more and more in an economic situation which is fraught with danger for this country.

7.33 p.m.

Dr. M. S. Miller (Glasgow, Kelvingrove)

The hon. and gallant Member for Carshalton (Captain W. Elliot) damns the Bill with faint praise. I believe that he is a member of the select community which has an obsession about making available to people something for which they have worked and which is in reality theirs. I find it most gratifying to be able to give unqualified support to a Bill of this kind, particularly in view of the current fashion to attack and even to denigrate schemes of welfare and social justice as though they were crimes against society. My right hon. Friend the Minister is to be congratulated on presenting a Bill of this description.

The Opposition's claim to have spread affluence is rather astonishing. It is more accurate to say that during their term of office the people became a little more affluent, often in spite of rather than because of Conservative policy, because of their own efforts and in common with what went on, but to a greater extent, in other Western countries.

Much has been made of the possible abuse of schemes of this description. I admit that when the Bill becomes law there might be an increase, for a time at any rate, in the number of people drawing sickness benefit. But I put it to hon. Members who may find this objectionable that this might be the bringing out of what previously was concealed illness among the workers who could not afford, and who at present cannot afford, to be sick but who should not be at work. In my experience in general practice, this state of affairs is not exceptional.

It has never been the policy, however, of a Labour Government to shy away from problems of this description. We believe that social justice demands that the vast majority of people who do not take unfair advantage of a service should not be penalised because of the possibility of abuse by a small minority. I should have thought that a considerable amount of sociological investigation needed to be made into problems of this description. The Opposition should have done some work in this respect when they were in office instead of assuming, as they are too prone to assume, that working people are always seeking ways and means to abuse schemes of social welfare.

Again speaking from my experience in the medical profession, there are many checks to discover whether a man or woman is fit to return to work. In the first instance he or she requires a doctor's certificate. The suggestion that anybody who is fit for work can go to a doctor and receive a certificate is a slur on the good name of the medical profession. If members of the medical profession are harassed, as perhaps some hon. Members opposite might suggest, and tend to give certificates without looking fully into the desirability of doing so, I say again that the Opposition, when they were in office, were sadly lacking in not carrying out an investigation to attempt to solve the problem.

Even if people are occasionally so given a certificate by a doctor, they have another barrier to pass—the regional medical officer. If a worker has been off sick, often not for very long, he is called before a regional medical board. An independent examination is made and very strong recommendation is given to the doctor concerned about the individual's fitness or unfitness for work. My experience is that a very small minority of people are able, if indeed they try, to get away with the abuse which some hon. Members opposite appear to consider is the object of working people.

The Bill is one more step in the right direction. It marks a fundamental difference between the two sides of the House. It marks the idea which we have on this side that one should not, have to ask people to depend upon charity or to undergo what is, in effect, a means test before what they have worked for is given to them. I would hate to have a scheme operated by hon. Members opposite which depended upon their justification for giving people what they are entitled to.

I say once again that the Bill is a step in the right direction. It is one more step. The ultimate objective should be that there is no penalising of an individual because of illness or because of the mis- fortune of unemployment. I hope that in Committee we will be able to strengthen the Bill and make it even better.

7.42 p.m.

Mr. Michael McGuire (Ince)

My hon. Friend the Member for Glasgow, Kelvin-grove (Dr. Miller) has said that the Bill is but a short step in the right direction. It is to some degree an honouring by my party of some of its pledges.

Much has been made by Conservative Members of certain features of the Bill which, they believe, will encourage men to pretend to be sick when they are not sick in order to get what, after all—and this is one of my criticisms of the Bill—will not be a very great amount. Under the Bill, a married man who has four children and earns £12 a week will be only 8s. a week better off.

It has been suggested from the Opposition benches that that will increase what hon. Members opposite believe to be an undesirable tendency for men to get something for nothing. Hon. Members opposite have an obsession with this. It comes out sometimes particularly from certain hon. Members who, if they want to pinpoint anybody, usually pick upon my colleagues who happen to work in the pits.

I am sorry to have to say that when Lord Robens was pinpointing absenteeism and its increase, and relating it to men qualified to receive sickness benefit, he made the point that as the social benefits increased, so, also, did absenteeism. We on this side have always maintained that absenteeism applies to man who could go to work but who chooses not to do so. We have never regarded the man who is sick or injured and has no choice in the matter as an absentee. When, however, Lord Robens spoke of men going off work—this was the only inference one could draw from it—to get sickness benefit and that the sickness benefit was almost as much as the wages, he was illustrating the poverty of the wages of some of the men in the industry.

The Tory Party use as one of their bogy men the question of paying men who are sick as nearly as possible the wage that they would get if they were working. As my hon. Friend the Member for Kelvingrove has just said, it is not as easy as it seems. When I was a branch secretary, I often had occasion to defend men before the local appeal tribunals. It is a big indictment of doctors for anyone to suggest that a man can simply go along and say, "I have X, Y or Z wrong with me. Please fill in a form." As my hon. Friend has just explained, a man who is off work has to get past the regional medical officer. If a man has a record of going off periodically, he is the more quickly pulled in and he will soon be brought before the regional medical officer.

I pay tribute to the impartiality of the regional medical officers. Their job is to assess, when a man or woman comes before them, whether a person is unfit for work. I do not know the percentage of cases in which the regional medical officers agree or disagree with the doctor, but I would assume that they agree in far more cases than they disagree. In any event, a man who is off work has to pass the regional medical officer, who is liable to say, "In my opinion, this man is fit for work."

Very often, a man goes before the regional medical officer a fortnight or more after he first went sick. It might be the common complaint that we get particularly in the north of England of a man having a bad cold. The man might get word to go before the regional medical officer. The law provides that a workman can choose to sign off, because it is indicated in the notice which he receives that if he feels that he is now fit, he does not have to appear before the tribunal. That is the object of the exercise. It would be an abortive affair if a man went back to work and the regional medical officer then decided to find whether he was fit. The purpose of the examination by the regional medical officer is to ascertain whether his opinion reinforces or is contrary to the opinion of the doctor who has signed a man as being sick.

We know that a number of people suffer from illnesses which last, perhaps, only a fortnight or sometimes less. We are not saying that a man should not be off work because he has one of these illnesses of only short duration. Particularly in my area, in Lancashire, we must have the highest rates of bronchial and chest troubles. A man may be off work for only a short period. As my hon. Friend has said, many of these men are often forced back to work by economic pressures, because the sickness benefit is too little for them.

In the pits, there have been scores of men who prematurely ended their lives by going down the glory hole when they were not fit to do so. They were far from malingerers. The reason why they went back too soon was that their sickness pay was not enough. At scores of funerals of our men, one hears people say, "He was a fool. He should not have worked on when he did. He did not even have the odd day off." I do not like the sniping by hon. Members opposite at the working class generally—because this is a working-class problem—in the sense that people will choose to stay off work because they can get just as much money when they are sick.

The only thing that I would say about the regional medical officers and the Ministry generally is that they are obsessed with the idea that this is a problem all the time of the working class or manual worker. It seems to be thought necessary for them to devote all their efforts to curbing the ambitions of men in the pits and in other categories of work to get something for nothing.

I want to leave that and to praise the positive points of the Bill. During the 16 months that I have been a Member of the House there has been a chant from the Opposition benches about broken promises. Naturally, hon. Members opposite do not speak of the promises we have fulfilled. I know they have great faith in the Labour Party, because they expected us to do in 15 or 16 months all the things they did not do in 13 years. I recognise this as a sort of back-handed tribute. One of the positive features of the Bill is the increase in the widow's supplementary, giving a widow 26 weeks instead of 13.

I want my hon. Friend, when he replies to the debate, to clear up this point. I think that the Bill provides that if a widow is already receiving widow's allowance because her husband has died, but not more than 13 weeks from the introduction of the Bill, she will have her allowance increased to 26 weeks. There is also provision in the Bill that if a woman is the widow of a man who was not retired, and the assessment of what he would have received is between £7 and £21, she will also get a further supplement. What I want to know is this. Why has this not been given to the widow who is already receiving an allowance? We are to give a widow now receiving widow's allowance an extension to 26 weeks, but are we not to have this retrospection whether the husband was a non-pensioner or not?

I want to congratulate my right hon. Friend for honouring within a period of four months that part of the McCorquo-dale Report which recommended this increase outlined in the Bill, namely, the £3 increase to the men who are already receiving constant attendance allowance. It is noticeable that the Tories have not made any mention of our honouring that. It was not one of our election pledges, because we could not pledge ourselves to something a committee was reporting on. Nevertheless, we have honoured that speedily.

While I am mentioning constant attendance allowance I wonder whether my hon. Friend would clarify the reference made to making new regulations about a person qualifying for constant attendance allowance. I would infer from this that various disabilities are aggregated. Will a person only qualify when all the disabilities are industrial injury disabilities? I know quite a lot of men—pit men—who have been assessed as 100 per cent. disabled, but part of that 100 per cent. is offset by what is called natural condition; that is, if a man has bronchitis or something of that kind it is said, "You have a chest disablement of 100 per cent. but we consider that only 80 per cent. of it is attributable to industrial injury and the other 20 per cent. is a natural condition."

Sometimes, these men are severely disabled and have to have constant attendance. If they have not got 100 per cent. industrial assessment they do not qualify for the allowance. Is it the intention to widen this to include men who are 100 per cent. disabled as certified by the medical board's assessment, notwithstanding the fact that a certain part of their disability may be what we call natural condition? Is it intended to bring those men in?

Is it intended to alter the regulations whereby one can appeal on a decision about entitlement to receive constant attendance allowance? I think that I am right in saying that at present it cannot be the subject of an appeal, that it is purely a medical decision and that one must abide by that medical decision. I am wondering whether these improvements will include, as I hope they will, the improvement that regard will not have to be had to the man's natural condition if that contributes to his disability. This particularly applies, as my hon. Friend knows better that I do, to miners. It seems foolish that, if a man has a 100 per cent. bad chest, some of that 100 per cent. disability must be offset because part of the disability is a natural condition whether or not that is aggravated by the industrial complaint.

I end on this note. I welcome the Bill as being a step forward in the right direction. It is true to say it will penalise nobody. It will make quite a lot of improvement. Unfortunately, in my opinion, it does not improve a great deal the lot of the lower-paid man, but it improves it slightly. I know that the Government will bring in the minimum income guarantee and the other features which we desire. I believe that the Bill is a stopgap in the sense that it will relieve some of the pressures on certain sections of the people. I look forward to the further measures. I welcome the Bill wholeheartedly.

7.56 p.m.

Mr. T. W. Urwin (Houghton-le-Spring)

In speaking at this stage in the debate I am sure that there will be one or two things which I shall be saying which have been said already. None the less, I sincerely trust that they lose none of their import because of repetition; and in saying that I feel that one or two of the contributions which have been made this afternoon from the Opposition benches might well have been reserved for discussion in Committee on the Bill.

I consider the Bill, in common with many of my hon. and right hon. Friends, to be the most radical change in National Insurance since the inception of such Measures. It undoubtedly will benefit many more people than any previous legislation of this kind. My right hon. Friend, at one stage of her speech this afternoon, made a tentative apology for what she considered to be the unduly lengthy time that she was taking to make her speech.

I want to say to my right hon. Friend that she had no reason at all to apologise, because bearing in mind the importance of the Bill and its extensive provisions I do not think she could have done it in any less time, and in her simple, concise language she conveyed to us very clearly indeed what is involved in the Bill. I am sure we are all grateful, too, for the explanatory memoranda. Again, it is commonly a criticism we hear from the Opposition benches that material explanatory of a Bill has not been available in time in the Vote Office. On this occasion it was not only available, but also very helpful.

Not unnaturally, the Bill, being a Bill of this kind, has met with some criticisms from the Opposition benches. We have had the usual parody, oft repeated in these last 15 months, that, "We would have introduced a similar Bill had we still been in office." My hon. Friends on this side have drawn attention to that kind of utterance from Opposition Members. The right hon. Member for Leeds, North-East (Sir K. Joseph), leading for the Opposition, also indicated that while he welcomed the Bill he had one or two reservations to make. I will deal with one or two of those in a moment, but I noticed particularly that when my right hon. Friend made reference to the spate, almost, of legislation which has been introduced in this relatively short period despite the economic difficulties which we inherited after 13 years of Toryism he met with the usual sneers from the Opposition benches, and cries of "Repetitive utterances by Ministers".

My right hon. Friend and any others of our Front Bench spokesmen who feel justified, as they certainly are, in drawing attention to the shortcomings of 13 years of Tory Administration should go on doing so, because I am satisfied that at the end of 13 years of Labour Administration there will not be the same opportunities for criticism or for criticism at the same level as we have had occasion to make from this side.

If I may be permitted to deviate just a little from my main theme, which is the Bill being introduced today, I want to make reference to an utterance made by the right hon. Member for Bexley (Mr. Heath), the present Leader of the Opposion, and I regret that he is not in his usual seat. It is in connection with the inheritance which we took over in Octo- ber, 1964. During a television interview in Newcastle just before Christmas, the right hon. Gentleman first of all claimed credit for the new upsurge of economic recovery in the North-East as being the responsibility of the Tory Government which had gone out of office.

He went on to say, when questioned about the economic situation which was left behind: Don't forget people were afraid a Socialist Government was coming in. The opinion polls were running against us throughout 1964, so we deliberately expanded the economy, saying, 'Let's get the imports in before the Socialists get in, as they are bound to impose import charges'. If that was not a statement of irresponsibility, I do not know what is, and I consider that it heavily underlines the truth of what has been so frequently said from these back benches about that particular legacy. In those circumstances, I suggest that my right hon. Friend was also perfectly in order in attacking the past Conservative Administration for their neglect and failure to improve social legislation.

On 31st January last, my hon. Friend the Member for Fife, West (Mr. William Hamilton) asked a Question about the depreciation in money values with direct reference to social benefits, citing particularly family allowances and retirement pensions. On that occasion, in answer to his supplementary question, my right hon. Friend indicated that the family allowance of 8s. in 1946 had now depreciated to 3s. 11d. and that if the present retirement pension of 80s. had been applicable at that time, it would now have been worth 39s. 3d.

There is not very much difference between October, 1964, and February, 1966, in regard to those figures; yet we find that, despite the proper claim which is made by the Conservatives that they increased pensions and benefits five times during their 13 years in office, I remind myself that my right hon. Friend has repeatedly said from the Dispatch Box on this side that when she took office in October, 1964, despite all the protestations which had been made by the Opposition, they had made no preparations for implementing an increase in pensions.

Again I accept that the Conservative Party manifesto in the General Election of 1964 promised to improve sickness and unemployment benefits. But, in view of their past record, I think that we are entitled to ask this very cogent question: would they have implemented their promise, bearing in mind their dismal record in this and other spheres? I suggest that we are entitled to question their motives.

The inconsistency of recent Opposition pronouncements to reduce taxation, on the one hand, and yet, on the other, somewhat paradoxically, their assurances that they will increase these benefits and generally improve social services, does not hold water. How can they do one and, at the same time, continue to do the other?

Captain W. Elliot

I am very glad to tell the hon. Gentleman. It is because one directs aid to where it is needed, and not to where it is not needed.

Mr. Urwin

The hon. and gallant Gentleman may well be correct in what he says, but, having regard to the figures that I have already quoted for the depreciation in money values, would it not be correct to assume that everyone in receipt of such benefits was in need of increases, rather than any particular section?

The fact is that we on this side are implementing the election promises that we made. But, as some of my hon. Friends have said, we cannot possibly be expected to carry out a five-year term of office and do everything that we promised to do in 15 months or however much short of five years the period of office happens to be.

The Bill is but a further example of the Government keeping faith with the electorate by introducing yet another Measure as a prelude to the introduction of the minimum income guarantee, which has already been referred to quite extensively.

I thought that the right hon. Member for Leeds, North-East, found himself in some difficulty in leading for the Opposition. His speech was in the nature of both an apology for Tory inertia on the subject and a tribute to my right hon. Friend for producing a good Bill. He made a proper reference to the omission of lower paid workers, and I, like many of my hon. Friends, feel particularly con- cerned about that exclusion, more especially as they are already handicapped by the wages stop for National Assistance purposes.

In his reference to low wages and what he considered to be a mistake made by the Government in excluding such people, in reply to my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) the right hon. Gentleman said that the unions are to blame for the situation which exists in this section of industry, that the unions ought to take the blame and that they ought to take action to remedy the situation and improve the lot of lower paid workers.

In my experience of industry, employers have consistently waged a highly successful campaign against these very people in the lower income groups, because they are the people who, generally speaking, have no bargaining power. Would it be in order for me to suspect that the right hon. Gentleman was advocating unofficial action by the trade unions to achieve that objective? Was he inciting them to take strike action against the very strong employers with whom they have had to negotiate for many years to improve their lot? The very nature of their employment means that virtually they have no bargaining power at all.

The right hon. Gentleman also referred, as did one or two of his back bench colleagues, to the new Measure possibly offering incentives to malingerers. That point has been adequately dealt with by my hon. Friend the Member for Glasgow, Kelvingrove (Dr. Miller) and by my hon. Friend the Member for Ince (Mr. McGuire). But surely the House appreciates that a Government do not legislate for malingerers, even though it may be possible for such people to find loopholes in the system of certification which my right hon. Friend outlined. The legislation is aimed at reducing hardship for the majority of people, as this Bill will do.

The right hon. Member for Leeds, North-East again contradicted himself when he referred to the 12-day flat-rate payment period in the Bill as being a hardship to the newly unemployed. The fact is that this provision, by its very nature, could be a serious deterrent to the would-be malingerer.

It was suggested that as a result of this legislation employers may conduct a reappraisal of supplemental pay schemes in industry, that they may abrogate such schemes which have been negotiated between employers and the trade unions. Perhaps when my hon. Friend replies to the debate he will tell us whether, if this provision is not already in the Bill, it is likely to be introduced by way of an Amendment in Committee to ensure that the employers concerned in such cases have a statutory obligation to continue the supplemental pay scheme in the form of the former fringe benefits, rather than take advantage of this legislation to save themselves a good deal of money.

The extension of the period for the widow's allowance from 13 to 26 weeks has been given a broad and wide welcome. The loss of a husband, quite often after a long partnership of marriage, must, inevitably, have a shattering impact on a woman, and I am sure that my right hon. Friend had this in mind when she introduced this Clause. Thirteen weeks is far too short a time for a widow to readjust herself.

I wish that this legislation could go further and abrogate completely the necessity for widows, and indeed for anybody, to get from the State, and having on occasion to apply to the National Assistance Board for, supplementary benefits. I have had experience—as I am sure many other hon. Members have—of advising widows, after the expiry of 13 weeks, with regard to applications for National Assistance, and, indeed, on the necessity to register for employment to qualify for National Assistance benefits.

There are one or two provisions in the Bill which I am sure will be very much welcomed, not least the power to be given to the Minister to make regulations relating to the Industrial Injuries Scheme, the Workmen's Compensation Acts and the Industrial Diseases Acts.

I am pleased to note that it will no longer be necessary to put in the three waiting days after 13 weeks of unemployment or sickness in order to qualify for industrial injuries benefit. I note, however, that the provision with regard to three waiting days is to continue to apply in respect of sickness benefit, and I hope that at some time in the future my right hon. Friend will find it possible to dispense with this requirement.

References have been made to drones and malingerers, but there are many more genuine people in industry, many of whom hasten to get back even before the three days have elapsed, and by doing so cut themselves off from any payment. They receive no wages for that period, and they receive no sickness benefit.

I know that at the other end of the scale there are many people who, once the period of sickness is extended to nine or 10 days, make sure that they qualify for the three waiting days by deferring their visit to the doctor to get a final certificate. I have met many examples of this in industry. I know that my right hon. Friend will tell me that it would cost a colossal amount to abrogate or dispense with this waiting period, but I hope that my hon. Friend will deal with this point this evening, or, if not, that the matter will be dealt with at a later date through another channel.

8.15 p.m.

Mr. Arthur Tiley (Bradford, West)

For some years I have sat on the back benches on both sides of the House, in all their nakedness, looking down at my colleagues and opponents who have had the privilege of speaking from the Dispatch Box. I have always envied them, as I felt that they had something on which to lean and look composed, no matter how they were feeling, and somewhere to put their notes. But, standing here for the first time, I realise that the only advantage of speaking from the Front Bench is that the speaker knows that he will catch the eye of the Chair.

The House will be interested to know that I did not have to pass the 11-plus to arrive here. I understand that there is some selection, and no doubt hon. Members will appreciate that I am a late developer. Never mind. As Robert Louis Stevenson said: To travel hopefully is a better thing than to arrive", and I want my right hon. Friends on the Front Bench to realise that I am travelling hopefully.

I ought at the beginning of my speech to declare an interest in private insurance. Older Members know that I have such an interest, and, as we are fringeing a little on private insurance, I think that it is best for me to declare that interest.

I am pleased to note the amount of interest which has been shown in the weekend speech of my right hon. Friend the Member for Bexley (Mr. Heath). It is obvious that he made a splendid speech on the social services. We are very glad indeed to see hon. Members opposite so interested in it, and to note that the national Press is commenting so favourably on the speech.

If I may say so without appearing to be patronising, we have had a very good debate. It has covered a wide field indeed, and no wonder, because the provisions outlined by the Minister touch almost every home in the country.

We have listened to some excellent speeches, and I should like to thank, first, my right hon. Friend the Member for Thirsk and Malton (Mr. Turton), who brought the debate back to the level which we have all wanted to see, because the country is sick of our arguing and making party points, both inside the House and outside it, on this important subject of social services. It may be dull both for spectators and for the Press, but the House is a very pleasant place when we are examining this subject dispassionately and endeavouring to find ways of improving our social services. It is extremely pleasant when there is a measure of agreement between the two sides of the House.

My right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) said without equivocation that we supported the Bill. Of course we do. It was in our election manifesto as a promise, and it is promised again in "Putting Britain Right Ahead". To hon. Gentlemen opposite who decry those promises, perhaps I might point out that during the years of Conservative rule we carried out every promise which we made in respect of the social services. We increased pensions five times during those years, and I hope—and I say this sincerely—that the right hon. Lady will be able, within the economy of the country, to make similar improvements during the Socialists' period of government.

This is not new thinking. The Minister has not had a sudden brainwave. It is continuing work, and members of all parties—and many thousands of people outside—have contributed to the growth of the social services of which we are all proud. We know that 13 million people out of the 22 million employed workers are already covered by sickness and accident pay schemes, and that thousands of smaller firms have arrangements for sickness and accident benefits. It is not fair to allege that the self-employed man in a small way of business is, in every case, failing to do his duty to his employees. Thousands are making payments without the enforcement of any prescribed plan for sickness and accidents. Dozens of friends in my own city have private schemes within their own firms, about which nobody hears.

If we looked up the record in this matter we should probably find that the people who originated this method of compensation were the leaders of our ancient friendly societies, donkey's years ago. We welcome the principles of the Bill and the sincerity of the Minister in presenting it. To present a Bill is a privilege which any hon. Member would like to have. If I were in her position I should take the Bill home and have it mounted in passe-partout and hung in my drawing room together with all the other Bills that I had introduced.

I congratulate the right hon. Lady on the way in which she introduced the Bill, because it is full of technical difficulties. We were grateful to her because, besides explaining it fully, she did not speak for too long. We all believe in the extension of these benefits and in the principle that the many should share the misfortunes of the few. It is right that these developments should continue by way of State schemes, where necessary.

The fact that we have welcomed the Bill and then criticised it does not mean—as the hon. Member for Glasgow, Kelvingrove (Dr. Miller) said—that we condemn it with faint praise. Almost every speech by hon. Members on both sides has contained a welcome for the Bill and, more than that, helpful criticism. Where criticism has been made it has been with the idea of improvement, and it is not damning with faint praise to do that.

The financial arrangements are appalling. It is a very complicated Measure, and all the complicated books for which the Minister is responsible will now contain several additional pages full of more complicated provisions. I also congratulate the light hon. Lady on the fact that the book that was printed in September, 1965, is already out of date. What could be better for a Minister than to put out of date a recent publication with something which is better.

But how can the people—and we, as shadow Ministers or ordinary back benchers—begin to understand all these rules? When I first came here I thought that I understood them, because of my experience in insurance, but every new Measure that comes in persuades me that I know less and less about the subject. The position becomes worse and worse. The Bill is a bit of rag-bag of injustices, inequalities, and omissions.

My right hon. Friend the Member for Thirsk and Malton and my hon. Friend the Member for Somerset, North (Mr. Dean) pointed out that the Government are trying to deal with three problems in one Bill, and that it would have been better to have had three separate Measures. The three problems with which we all need to deal, whether in Government or not are widows' benefits, unemployment benefits, and sickness and accident benefits. All those are completely separate from each other. They present three different problems, demanding three different answers.

I would have thought that with the recent improvement which the right hon. Lady made in the widow's earnings rule we had got widows into a position where one Bill could have been introduced to deal with all their problems at once. We welcome the improvements made in respect of certain widows, but I ask the Government if this is what they have really promised. Every bite at the cherry and every improvement which is made in the provisions concerning certain widows makes the position worse for those widows who are left outside. This creates bitterness and a sense of injustice among those widows who receive scarcely anything.

At the moment, we have full earnings benefit widows; war benefit widows; industrial benefit widows; 30s. widows; 20s. widows; and widows who receive no benefit after 26 weeks. No wonder the widows are after us. The biggest injustice occurs as a result of the curious anomaly which has always existed and which allows a situation to arise in which one of two widows, of the same age and in identical circumstances, living next door to each other, receives a pension while the other receives nothing at all.

The 1964 Act increased this anomaly. A woman who married at Easter, 1948, and who was widowed last year, at the age of 36, will now draw 30s. a week if she has no children under school-leaving ago. A woman married in August, 1948—a few weeks later—also widowed last year at the ago of 36, and also with no children under school-leaving age, receives no benefit. This is a serious injustice. We had an opportunity in the Bill to deal with the position of all widows and to clear up that injustice once and for all. The Bill does nothing to solve the problem of 40,000 of those widows.

Miss Herbison

Is the hon. Member saying that since we found it impossible to deal with all the anomalies relating to widows—and how right he was to say that the widows were after us; they have been after us for a long time—but found that we could do something for some widows, we nevertheless ought not to have done anything?

Mr. Tiley

I take the right hon. Lady's point, but we have now arrived at a position, with the improvement made some months ago, when the anomalies could be cleared up without a great deal more consideration. In my view, it could have been dealt with now in one Bill and this injustice removed.

I come now to the second benefit, that for unemployment. As my hon. Friend the Member for Somerset, North said, we are dealing here with a completely different problem and subject: nothing like the same disciplines are needed in this respect. It has always been my experience that men want a job. We need to remove the fear not of short-term unemployment, but of long-term unemployment. That is the real cancer in a family's life—the effect which change alteration and redundancy might bring because of long-term consequences. It is a great pity that the Bill does not include some provision for this. Here again, if we had dealt with unemployment as a separate thesis, we should probably have encompassed that aim as well—

Mr. Heffer

Would not the hon. Member also agree that the short-term unemployment—that of two or three months—experienced by some casual workers is also a cancer, something which eats right into workers? Therefore, is it not equally important that that also should be cleared up?

Mr. Tiley

Having spent the whole of my youth in a textile area of Bradford and having seen my friends' fathers out of work for weeks and months, I do not need many lessons about the cancer of unemployment. It is the one thing which I shall never forget all my life.

As my hon. Friend the Member for Belfast, West (Mr. Kilfedder) said, we have missed the chance of including a supplement in the Bill for longer unemployment. I have known malingerers in sickness and accident and I have a massive boast, because I live in my constituency, that, in 10 years, I have known only five cases of men who did not want jobs. Three of them had wife trouble and realised that, if they were working, their earnings would go for maintenance, one was a convict who had chosen an easier way of life and the fifth had 12 children and I felt that he was too busy to bother with another job.

As a matter of fact, he wrote a letter to me in which he said that the National Assistance Board was paying him 2s. 6d. a week too little. I sent a letter to the Board saying, "Here is a letter from your best customer, who is complaining". To its eternal credit, the Board confirmed his view—he understood this better than I—and backdated the payment and apologised to him.

The argument is quite true that what is right in the consideration of sickness and accident benefits is often wrong for unemployment. A different solution was required and a different Measure, which should be linked completely to the Redundancy Payments Act, would have been better. I am not damning the Bill with faint praise, or saying what I am maliciously. The right hon. Lady would agree, I think, that it would have been better to carry out a complete study.

The third section deals with sickness and accident benefits. Many inequalities have been created in the Bill by the new Clauses. We are confronted here with a modern Government, of modern thought, who are creating more mess in our legislation than we had before—

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

This is quite a good speech.

Mr. Tiley

I am enjoying it myself. I have sat here all day, so why should I not?

Surely the moment has come when we should look again at the problem of the difference between industrial accident and industrial disease and the different benefits payable for ordinary sickness and accident. There is such a narrow margin. I cannot see the difference between benefits for a man who breaks a leg when he is knocked down going to his job and those for a man who breaks a leg at his job. A sillier example is the comparison between a man who slips on his bathroom floor getting ready to go to work and the man who slips in the toilet at his factory.

The old Workmen's Compensation Act idea is now out of date. Would it not be a good idea to include in the future review some consideration of the difference which now obtains between these industrial injuries benefits and the ordinary benefits? There have been many alterations in common law claims. Damages are much higher and it is possible for a man to sue his employer at common law with greater frequency where there has been negligence at his place of employment. We made it easier, as it was right that we should, for these claims to proceed by removing the defence of common employment and the defence of contributory negligence. Surely we might consider this point in future and simplify another area of these difficult technical problems.

We shall be spending a lot of money in future each year in dealing with many cases and yet, as hon. Members on both sides of the House have said, the really serious cases are still being left. The worst shortcoming in the Bill is that the saddest and most enduring cases are left out. In these modern days they should have been our first task. I am thinking of the smallest group of unfortunate people, those who are paralysed, by sickness or accident, those with chronic diseases, and I am thinking of the agony of mind in a young family, with young children, when the husband has multiple sclerosis and faces not two or three years but a whole lifetime of agony. We ought to do something about these cases in Committee. If they had been included in the Bill everybody on both sides of the House would have gone home tonight feeling better.

The Bill contains some odd inequalities. From page 7 of the White Paper, it seems that a single person on a wage rate of £12 a week will get a flat rate of £4 benefit plus £1 earnings-related supplement, making a total of £5. A married man with four children will get a paltry 8s. supplement. Thus, we shall have £5 a week to keep one person and £10 4s. a week, including the 8s. and children's allowances, to keep six people. An even larger family will get no benefit from the Bill at all. Is this what the right hon. Member for Sowerby (Mr. Houghton) has been going broody about for so many months? Is this what he has been sitting on? By this time we should have had the pearl of his thinking. Something better should have been hatched out in the Bill.

There is an extraordinary position about industrial injuries. I am advised that the basic benefit under the Industrial Injuries Scheme of £2 15s. a week is not included in the 85 per cent. stop. This means that in the £12-a-week wage bracket a man with more than two children will get more than his weekly wage. Is this the planning which the Minister wants? The stop is either right or wrong. It should be the same for all. It is not right that it should apply to one family and not to another. Paragraph 3 on page 2 of the White Paper states that the benefits are subject to a maximum total benefit of 85 per cent. of his earnings ". Will the Minister comment on the wage stop?

In February, 1963, the Minister said of the wage stop: There are many people today who because, of its operation are living below what even a Tory Government believe to be subsistence levels."—[OFFICIAL REPORT, 18th February, 1963; Vol. 672, c. 89.] I note that the Minister says "Hear, hear". We are now able to insert the words "below what even a Socialist Government believe to be a subsistence level".

We have been greatly interested in the way in which the graduated pensions Measure has been used to furnish the method by which the Bill will be implemented because it was not merely the benefits of that Measure which were decried, it was every part of it. HANSARD is full of illustrations by hon. Members opposite, both Front Bench and back bench, who referred to it as a scandal and a swindle.

The Guardian, that Tory newspaper, observed on 22nd January: It is a strange turn of events that has led Labour to graft its new scheme on to the Conservatives graduated pension scheme which Labour attacked when in opposition, particularly because it would bring in a surplus to finance other parts of the State insurance scheme. The Government is now using the graduated pension scheme for the same purpose and is levying a new charge on those who contracted out of it.

Miss Herbison

Would the hon. Gentleman tell me how much of the £70 million which will be brought in will be used for any purpose other than to provide the benefits contained in the Bill?

Mr. Tiley

I will come to that later. I began by saying how appalling the financial arrangements were. I assure the right hon. Lady that I will deal with this matter later.

Other matters need clearing up. For example, is it absolutely certain that those who are contracted out and are now called upon to pay ½ per cent. of their wages, plus the ½ per cent. from their employers, will begin to have purchased for them a brick in the graduated pension sphere? My hon. Friends and I understand from our reading of the Bill that they will be paying into the graduated pension fund but, because they were contracted out, the only benefits they will get will be for sickness, accident and unemployment.

But the Minister said earlier that a small pension would also be applicable. That means, for example, that the teacher will get the teachers' superannuation fund, plus the State benefit, plus the collection of graduated contributions when the local authority has a graduated pension scheme. We would like this matter cleared up. It is odd to think that without Conservative planning—by way of P.A.Y.E. and the graduated measure —it would not have been possible for the Minister to implement the Bill by next August.

The question of contracting out is important because on page 5 of the White Paper we are told that no contracting out will be permitted under this scheme. About 13 million people are already covered under sickness and accident schemes. What will be the position of these large groups of people who have these benefits within their contracts of service? The whole of the Civil Service, for example, is adequately covered. Even the men and women who prepared the White Paper are covered. Not a word about the consequences of this scheme and the bearing it will have on these civil servants have we been given. Nor have we been told about all the local government employees, nurses and teachers, and so on.

Under the teachers' scheme, for example, after the third and any subsequent year of service there is full pay for 69 working days and half pay for 69 working days after that. The teachers will, in effect, not benefit at all from this Measure. And what applies to the teachers will apply largely to the other large groups I have mentioned. An explanation of the position must be given. Do they all have to be dismissed so that new agreements, contracts of service, may be started? I suggest that it would be a bad thing to dismiss the teachers, because some of them might not return to the profession. Has there been any consultation on this scheme?

The odd thing is that just as there was pay-as-you-earn and just as there was the graduated Measure, there is machinery in being—again, thanks to Conservative planning—for contracting out. Many private schemes are insured on our insurance market. Did the Minister have any consultation with the Accident Offices Association to see whether it would have been possible to contract out most of the larger schemes?

The Government and hon. Members opposite always try, if they can, to "have a bash" at private insurance, but it is the envy of the business world, and people abroad support it as much as we do in our own country. The Chancellor of the Exchequer must be glad to accept the hidden exports coming from insurance. The companies are all good employers, and insurance encourages saving and thrift. People abroad can never understand the criticism there is at home here of our insurance market. While almost on every occasion hon. Members opposite will consult the trade unions, they never seem to think of consulting these equivalent interests in the sphere of business and commerce.

I was very glad to hear the hon. Member for Inverness (Mr. Russell Johnston) mention the self-employed—he was the first hon. Member to do so—because there is no mention anywhere either in the Bill or in the White Papers of this great army of people. I understand that there are 3 million of them. They were not forgotten when the Socialists were drawing up national superannuation of ill-repute some years ago, when all their contributions were taken into account in the calculations. If the better benefits can be obtained, and we all admit this, by this mass application of contributions, it is a great pity that some thought was not given to the inclusion of this great number of people.

I am not thinking of the wealthy barristers, the wealthy stockbrokers, or the wealthy professional men—or the wealthy farmers, for that matter—all of whom are in the self-employed class. I am thinking of the thousands and thousands of little men. We can rest assured that the bigger units and the well-to-do will look after their own sickness and accident benefit by membership of private personal schemes and membership of things like B.U.P.A.

Hon. Members opposite always talk of attracting the small man, but do nothing for him. He is forgotten in the Bill, and it is difficult now to know how he can be included. I wondered whether he could not be given a 1 per cent. tax concession on his gross earnings—that is, the ½ per cent. from the employer and the ½ per cent. from the employed; allow the self-employed man to have a tax-free 1 per cent. on condition that he provided privately his own sickness and accident scheme. That is at least, an idea, a thought on means by which the self-employed could be brought into this arena of social service.

Many disturbed voices have spoken of absenteeism. I would tell the hon. Member for The Hartlepools (Mr. Leadbitter) that I shall not deal with the subject maliciously, but it would be cowardly for any hon. Member not to admit that there is a real problem here. For instance, in page 4, paragraph 7 of Comnd. 2884, the Government Actuary states: Sickness has increased since 1963 and is now about 8 per cent. above the average… That was one of the years when the benefits were increased. We had another increase in 1965. I wonder whether figures are available for the nine months showing the trend of sicmkness benefit during 1965. We are entitled to know the basis of costing in calculating the ½ per cent.

I have a great regard for actuaries, but I can never understand the intricacies of their work and only with difficulty can I understand the outcome of their work. They are apt to look at facts without emotion. A story was told about an arithmetic question asked by a teacher of a class of boys. The teacher asked, "If there were 100 sheep in a field and 10 went out, how many would be left?" A little boy answered "None". When the teacher disagreed, the boy said, "You may know arithmetic, but you don't know sheep." Actuaries are a little like that in looking at figures without emotion.

There is great concern in industry about this problem. Someone has referred to Lord Robens. He is a very courageous public man. We had no doubt about the statement he made and which was reported in the Daily Telegraph. It was that miners' absenteesism covered by a doctors' certificates had risen from 10.1 per cent. in 1964 to 11.7 per cent. last year. This sudden rise could be explained only by improved social benefit payments. Nothing malicious was being said about the men referred to in that statement. People were wrong to attribute to Lord Robens any maliciousness in the point he was making. The increase may be absolutely genuine.

This problem does not arise only in nationalised industry. All leaders in industry are perturbed about loss of production. The great Leyland company, in the private sector, had to make changes recently because of the incidence of absence through sickness; and I.C.I, and other great companies which run these schemes are much concerned about the problem. So far we have relied on the medical profession for a check, but, as the hon. Member for Kelvingrove said, we ought to understand that they are very busy. This is no reflection on doctors, Prescription charges have been abolished and that has made doctors busier. We are about to begin a new system whereby medical certificates can be issued for more than two weeks at a time. I ask the Minister if this is the appropriate moment, in view of the satisfactory increases, for medical certificates to be issued for three weeks, which would give one week at the extra benefit. That is taking a risk. Is it wise to do that now?

We on this side of the House were challenged to say how we would deal with this problem. There are two methods. Could we have bonuses for not claiming? A bonus is given for not claiming pensions at age 65 by increasing the pension. There seem to be two ways worthy of consideration. I wonder whether the Minister has thought of them. Could we build up a period of benefit beyond six months for those who do not claim in any one year? I want to bring some discipline into the great experiment which is taking place.

Secondly, could we give an extra pension at 65 on retirement for each year of freedom from claims? The greatest discipline of all is to emphasise the fact, from both sides of the House, that we ourselves pay these benefits and the more we claim the more they will cost. The money, even the employers' proportion, comes out of the earnings of those who are working because the profits are there only as a result of the work of the man at the bench, in the shop, or in the warehouse.

We all benefit from this scheme, not only those who receive the accident, sickness or unemployment benefit. We all benefit from this social service, because it gives all of us peace of mind. We have the right, as politicians and as leaders on both sides of the House, to ensure that there is no abuse. We can have these schemes only if we work and pay for them.

My hon. and gallant Friend the Member for Carshalton (Captain W. Elliot) made a very important point here. We are giving ourselves new benefits at this moment which in effect, judging by the figures of production, are not being earned. None of us often boasts about spending money which we do not earn, but the Minister did on the eve of the famous by-election in "North Hell", I will call it. I have a draft of the speech, in which the right hon. Lady said this: The worker and the employer will pay just over a penny a week on each pound of their earnings, and these contributions will completely pay for these new benefits. It is a great disservice to the whole field of social service to drop a dose of the soft, soothing, sickly, syrupy, sentiment. The words "just over a penny" give the impression of something for nothing, something on the cheap. These are famous last words before bankruptcy.

The job of all of us should be to emphasise the cost of these schemes. Industry will contribute £38 million more in the first full year in its pennies. Ministers and all of us—I apply this to both sides of the House—do a great disservice when we preach that these things cost nothing. The £38 million is a rise for each person free of tax, and it must be earned in the future. When politicians pretend that they have something to give, they are pretending on a false premise, because they have nothing to give.

When I think of the extra millions, in addition to the £38 million, which during the last year had been imposed on industry, I begin to fear for the future of our exports. The only effect of doing this is to make the listening public softer. We want to persuade them that this is a benefit which comes from the result of hard work.

Mr. Heffer

Would the hon. Gentleman answer this question? Are you in favour of what we are doing or not, because you say that you are supporting the Bill but for the last five minutes have gone on grumbling and grumbling about the cost?

Mr. Deputy Speaker (Mr. Roderic Bowen)

Will the hon. Member for Liverpool, Walton (Mr. Heffer) please address his remarks to the Chair?

Mr. Tiley

I am trying my best, in these final few minutes, to bring some common sense into this area of social service. It is no good any one of us pretending that these benefits have not to be paid for. Of course I support them, but I have never advocated pensions increases in this House without saying, at the same time, that they have to be paid for. In our debates here we are surrounded, oddly enough, with deficits. I have never yet seen a Socialist with a surplus.

Mr. Sydney Silvennan (Nelson and Colne)

Does not the hon. Gentleman remember that he and all his party supported the Government's proposal a year ago to raise old-age pensions and, at the same time, voted against the means of paying for them?

Mr. Tiley

We have always supported those increases in pensions and we have always supported the increased contributions that were necessary. Every time we increased pensions in the 13 years of our rule we never failed to make people realise that these things have to be paid for. Oddly enough, on the front page of "National Superannuation", the middle paragraph, these words or something like them appeared, "If our old people are to benefit by having greater pensions, it can only mean that those of us who are working have to be poorer".

Mr. Silverman

Not all the extra money was collected in contributions. There was a Government contribution as well and that was paid for by an increase in Income Tax.

Mr. Tiley

The Government have no money at all. They only have the earnings from industry. It does not matter whether it is the employers' portion or the taxpayers' portion. It all comes from the efforts of the people.

Miss Herbison

The hon. Member for Bradford, West (Mr. Tiley) is posing as a realist. He said that in the manifesto to which he referred it was stated that if more help were given to the older people other people would have to pay for it and give up something. That is exactly what hon. Members opposite have refused to face, because whatever increases were made during the 13 years of Tory rule, they have come from three sources—the employers' contribution, the workers' contribution and the contribution of the Chancellor of the Exchequer. The hon. Member and the whole of the Opposition voted against the Chancellor's contribution which was to take something from the other people.

Mr. Tiley

The right hon. Lady is quite wrong. The additional contributions paid for the increased pensions, and the figures are there in black and white to prove it. The odd thing was that in our period of government we never shrank from imposing higher costs on those who were working to pay for the extra pensions. It does a great disservice to do as the right hon. Lady did in her broadcast and pretend that these things are easily come by. After the Saturday night comes the Sunday morning, and the only way to get these benefits and extend our social services is to tell the truth about their costs. I expect the writer of the front page of "National Superannuation" has been given the sack.

There is no fairy godmother in this place. There is much hard work ahead of us, and the truth had better be told to the country if these benefits are to fructify in the future. We are very glad to support the Bill, and we shall do our best to improve it in Committee.

9.2 p.m.

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

First, I wish to congratulate the hon. Member for Bradford, West (Mr. Tiley) on his speech. I realise that he intended to make a thoughtful and constructive speech. He was concerned about some hon. Members on this side of the House making political comments and seeking political advantage. Then when he got to the middle of his speech he got lost completely, and did exactly what he complained hon. Members on this side of the House were doing, and sought to make political capital.

Nevertheless, I welcome the hon. Gentleman's speech because he and I have something in common. He speaks with a good old Yorkshire accent and I am going to speak with a good old Durham accent. At least we have a combination here, and that is quite a nice change.

I also agree with the hon. Gentleman that this has been a most interesting Second Reading debate, as we would expect on social security problems. Many points have been raised. I have been trying to count the number of questions that the hon. Gentleman was asking. I counted up to 120 questions and then I got lost in the bog myself. Quite a number of points that have been raised—I think the right hon. Member for Leeds, North-East (Sir K. Joseph) and the hon. Member for Bradford, West will recognise this—are more appropriate for examination in Committee rather than on Second Reading. My hon. Friend the Member for Liverpool, Walton (Mr. Heffer) and my hon. Friend the Member for Ince (Mr. McGuire), who asked a very important question about the industrially disabled, raised highly technical and complicated matters about which we shall no doubt hear more in Committee.

The general object of the Bill, to relate unemployment and sickness benefits to previous earnings, has received a wide measure of agreement throughout the debate. There may be more room for argument about the Government's decision to give priority to the reform of this part of our system of social security, although I was very pleased with the welcome given to it. I say at once that the Government committed themselves to short-term benefits for sickness, unemployment and widowhood on an earnings-related basis as part of the reform of the country's social security scheme in our election manifesto, as my right hon. Friend emphasised. The main reason why the Bill has been given priority is that earnings-related unemployment benefit is part of the programme, started by the Redundancy Payments Act, to improve the financial provision for those who have to change their jobs and so facilitate the mobility of labour which is needed in this age of rapid scientific and social change.

It must be given pride of place at a time when the economic legacy which we have inherited from right hon. Gentlemen opposite means that we must do all we can to improve efficiency. I realise that in some quarters there is bitter disappointment that other social measures have had to give way to this scheme. My right hon. Friend and I are particularly well aware of the concern of many hon. Members about the problem of large families with low incomes. I want to make it perfectly clear that the Government share that concern and are giving the problem particular attention in our social security review.

However, the Bill has the limited purpose which I have mentioned and family allowances, paid from the Exchequer not from the National Insurance Fund, are thus outside the scope of these proposals. I can assure the House that the Government are intent on pressing ahead with their social security review as fast as possible in the light of the economic problems bequeathed to us and the need to work out in detail the arrangements required. I emphasise again that the problem of the low income worker is receiving our most urgent attention.

It has been pointed out that the contributions for the short-term benefits will be an extension of the graduated contributions for graduated retirement pension. The Government make no apologies for this. Our complaint has always been about the benefit provided under the 1959 Act and at no time have we complained about the type of machinery used to collect the contributions. We are opposed to the graduated pension scheme which was brought forward in 1959. No one was more forceful than my right hon. Friends the Chancellor of the Duchy and the Minister. We said that it was a swindle perpetrated upon the people of this country and we have so far found no evidence throughout the whole of our term of office to alter our opinion about that. It was a swindle then and it is a swindle now. But that machinery of collection is the only one which we can use if we are to start collecting additional earnings-related contributions next autumn. If we are to have earnings-related benefits we must collect earnings-related contributions.

What we shall be collecting under the Bill is barely sufficient money to meet the cost of the new benefits. It is estimated that in the first full year new contributions will raise about £76 million, against an extra expenditure of £77 million—£73 million on the new benefits and £4 million on the administration. This is far different from extending the existing graduated pension scheme. Our proposals will have the incidental effect of marginally improving the scheme. We accept that, since we shall be letting the new contributions count towards graduated pensions, even though they are designed primarily to meet the cost of the new benefits.

This is as far as any similarity goes between what we are doing and the Tories' scheme. Even the range of earnings over which the contributions are graduated is vastly different. They are longer, and higher at the top and fairer all round. This is but an interim arrangement, pending the result of our comprehensive review of the National Insurance scheme. I appreciate the feeling that the Government could have taken this opportunity to recast the graduated pension scheme. The Government remain committed to reformation of the social security provisions for the old so as, among other things, to provide eventually a fairer system of graduated pension than that set up under the 1959 National Insurance Act by the previous Government. The introduction of the new provision for short term benefits is not a suitable occasion for such recasting. In the Government's view it is better not to tinker with the graduated pensions arrangements at this time.

Some interest has been shown in the categories covered by the earnings-related supplement for sickness and unmployment benefit. It has been asked why supplements do not apply to certain cases, and the question of the self-employed person has been raised by a number of hon. Gentlemen opposite. It has been suggested that the self-employed person should be brought within the scope of the new scheme. Self-employed people cannot be covered for unemployment benefit and therefore could not be brought into this part of the scheme. They are entitled to flat-rate National Insurance sickness benefit under the ordinary conditions. It would be difficult, at this stage, to extend the earnings-related supplements to them because the definition of earnings which is used is that assessable for P.A.Y.E. Income Tax under Schedule E, which, in general, covers only employed persons. This is in line with the position under the graduated pensions scheme which uses the same basis of earnings and which also excludes the self-employed.

The problem is that the earnings of the self-employed fluctuate sharply from one week or month to another and it is often difficult to determine quickly, after the end of the tax year, what their annual earnings were. It would therefore be most difficult to calculate in good time both the contribution they are liable to pay and the benefit which they could receive. A further obvious problem is that the self-employed do not have an employer with whom to share the contributions.

The right hon. Member for Thirsk and Malton (Mr. Turton) asked about the long-term sick. The criticism has been made that we offer no help for the long-term sick. But the Bill has limited objectives—I am sure that that is recognised by hon. Members on both sides—to provide better benefits for the early months of sickness. This does not mean that we have forgotten those who are chronically ill. But provision for them must be studied as part of the general review, and this is being done.

The right hon. Member for Leeds, North-East asked for reconciliation of the figure of 180,000 unemployed for more than two weeks which appeared in the Ministry of Labour Gazette and the Government Actuary's estimate of 110,000 unemployed supplements in payment at one time if there were 2 per cent. unemployment. The short answer is that the 180,000 covers everyone unemployed for more than two weeks, including those who have been unemployed for six months or more and would therefore have exhausted their entitlement to earnings-related supplement.

Some interest has been shown in the debate in the rate of supplement. The Government decided that for a supplement paid on top of the existing flat-rate benefits one-third of earnings between £9 and £30 was the right figure. People earning below £9 already receive flat-rate benefits which are a high proportion of their earnings. Cover will be extended on earnings up to £30 a week, which is about one and a half times the average earnings of men.

Let me take the recently published figure of average earnings of men of £19 12s. for October, 1965. The proportion of one-third of earnings will provide just over half of "take home pay" for the single man with average earnings of £19 12s. He has £4 flat rate and £3 11s. supplement, making a total of £7 11s. We compare this with his "take home pay", which after deduction of tax and National Insurance contributions comes to £14 16s. This means that he has almost half pay to take home. Married men will get £2 10s. extra for their wives, with further aditions if they have children.

To have gone further than this, either by increasing the proportion of one-third or by extending graduated benefits to earnings below £9, would have meant that with the significant increases of flat-rate benefit payable for dependants, benefit might have exceeded earnings in a significant proportion of cases.

I turn now to absenteeism, which has been referred to by more than one speaker during the debate. Here we find a contradiction. While some people are worried about the 85 per cent. ceiling, which they regard as being too low in some cases, other people are anxious about the high scale of earnings-related supplement. They say that it is too high because it might encourage a high rate of absenteeism. The hon. Member for Aylesbury (Sir S. Summers) intervened during my right hon. Friend's speech, the right hon. Member for Leeds, North-East mentioned it and the hon. Member for Bradford, West and other hon. Members opposite, if I understood their speeches aright, expressed anxiety about the high ceiling for sickness benefit and the danger that absenteeism could be encouraged.

Absenteeism is a vague term which is usually taken to mean an odd day or two off work. When some people talk about absenteeism, they mean that men are absent from work for no good reason. This kind of absenteeism, as has been made clear by a number of my hon. Friends, including the hon. Member for Houghton-le-Spring (Mr. Urwin), the hon. Member for The Hartlepools (Mr. Leadbitter) and others, will not usually attract flat-rate benefit, since a person has to serve three waiting days after proving his sickness or unemployment before becoming entitled to benefit. Nor will it attract the supplement, for which there are 12 waiting days which are not repayable.

Secondly, before a person can obtain benefit, he has to show evidence of incapacity by producing a doctor's certificate or he has to register at the employment exchange and show that he is unemployed and available for work. Thirdly, as was emphasised by my hon. Friend the Member for Glasgow, Kelvin-grove (Dr. Miller), another hon. Friend of mine from Scotland and my hon. Friend the Member for Ince, the Ministry has a system of controls to check doubtful claims for sickness benefit. I should like to give some interesting figures. During 1965, 818,000 sickness and injury benefit claimants were referred for an independent medical opinion to the regional medical officers of the appropriate Health Departments and 476,000 were visited in their homes.

Regardless of what certain people might think and regardless of what is sometimes written in the Press, frequent claims by people are far from being a problem. Of the 21 million people insured for sickness benefit, 70 per cent. make no claim during the course of a year; 20 per cent. claim only once a year, and 10 per cent. claim more than once, but only one-third of these claim three or more times. Most of these are genuine claims for benefit.

I therefore hope that people who seem to think that the British worker is always prepared to take advantage of increased social security benefits will pay full regard to these revealing figures, which prove that the vast majority of workers fulfil their responsibilities and obligations, both to the industry in which they work and to the nation at large. I think that that should be made perfectly clear.

Of course, the Ministry is well aware of the identity of the small number of claimants who are referred to as malingerers. They claim benefits frequently for trivial illness and injuries, but their claims are investigated and they are examined; we take steps to check their incapacity for work. It should not be assumed that they receive benefit every time they claim. Therefore, while the risk of doubtful claims has to be borne in mind it would be wrong to think that supplement, with the 12-day waiting period and with the 85 per cent. benefit ceiling, is likely to create a large new problem. For any cases which do arise, as I have said, the Ministry has a regular system of control.

The right hon. Member for Leeds, North-East talked a good deal about sick pay schemes run by employers, and he made the point that such schemes may have to be adjusted when their benefits were added on to those provided by the flat-rate benefit and the new earnings-related supplement. The Ministry reckons—I know the right hon. Gentleman will take notice of these figures which I give both for his benefit as well as that of other people in the House—that there are some 10½ million people who are entitled to sickness benefit who will also be in the field for the supplement and who, to some extent, will also be covered by sick pay schemes. The right hon. Gentleman mentioned a higher figure, but I am informed that this includes people not entitled to sickness benefit—for example, married women who opted out of paying contributions. The size and the duration of the payments made under any sick pay scheme vary very greatly. In many cases National Insurance benefits are taken into account automatically; that is, they are deducted from the sick pay; in such circumstances the new supplements may cause the scheme's benefits to be adjusted.

It has also been suggested that an employer should be able to contract his employees out of the new earnings-related supplement as well as the graduated pension scheme and so make it unnecessary to revise his sick pay scheme. It would not be feasible to have contracting out of the earnings-related supplement to unemployment benefit because benefit will usually only be payable when the link between the employer and the employee has been broken. Arrangements for contracting out of sickness benefit would therefore, presumably, have to give employers the choice of contracting out of either the graduated pension or sickness benefit or both together whilst still leaving him with the liability for some graduated contribution to cover earnings-related unemployment benefit. I am sure the House will agree that this would be a situation which would surely be far too complicated for all concerned.

Mr. Turton

The hon. Gentleman said that sick pay schemes will have to be adjusted. I ask him whether the stop system would apply or not to sick pay schemes. Does that remark of his mean it will apply? Or will it not?

Mr. Pentland

Oh, no. Definitely it will only apply to the supplement in the sick pay scheme which we are now proposing.

I come now to another point raised by the right hon. Member for Leeds, North-East. He asked about the cost of the Bill in relation to the limits for social security expenditure laid down in the National Plan.

When we were constructing the plan, we took full account of the expenditure that would be needed under the Bill, and both in Chapter XVIII and Chapter XXII we explained that priority would be given to, improved provisions on these lines for those who lose their jobs or become ill. We also explained how the total expenditure on benefits and assistance could best be applied, apart from the introduction of earnings related unemployment and sickness benefit on which the Government had already reached a decision, would need to be considered in the further stages of the review of social security.

Sir K. Joseph

I am grateful for the hon. Gentleman's partial answer to my question, but I also asked whether I was right in my calculation that having taken off the cost of the Bill there would be enough left in the National Plan figure only for an annual increase in retirement pensions of about 1s. 6d. per pensioner per week.

Mr. Pentland

We cannot understand from where the right hon. Gentleman gets his figure. We cannot accept that it is the true figure. What has happened here is that the prediction of the plan was based on 1965 prices. It has to be a flexible plan, and I have emphasised to the House that the figures that we have brought forward in the National Plan are firm 1965 prices.

Sir K. Joseph

That is quite wrong. In Written Answers to my hon. and learned Friend the Member for Bebington (Mr. Howe), the First Secretary of State made it plain that Chapter XVIII was unique in not being based on constant prices. It is on those Written Answers by the First Secretary of State that I based my question. But I will put it again in a P.N.Q. to the right hon. Lady, if I may.

Mr. Pentland

The right hon. Gentleman's information is in contradiction with the figures laid down in the plan.

The right hon. Gentleman then asked how many extra staff would be required for the scheme. In making our plans we have all along had in mind the need to keep the administration as simple as is consistent with the essential purposes of the scheme. Until experience of the working of the new arrangements has been gained, we shall not be able to say precisely what the staff requirements will be, but these are the figures which the right hon. Gentleman asked for. We have to reckon with the possibility that by 1967–68 something like 2,000 extra staff may be needed in the Ministry of Pensions and National Insurance as a result of the Bill, most of them in our local offices. To launch the scheme, about 1,700 extra staff in my Ministry would be sufficient. In addition, there will be those needed in the Ministry of Labour to administer earnings related unemployment benefits, where I understand rather more than 700 will be needed initially. The longer-term requirements depend very much on the rate of unemployment.

I know that there are many questions which have been left unanswered. As I said at the beginning of my speech, it is a highly complicated Bill. There are many technical points which will have to be raised in Committee. But I commend the Bill to the House as marking a step forward in the development of our social security provisions. It will provide additional help for people who lose their jobs and will therefore play a significant rôle in encouraging the redeployment of labour which we need in order to secure faster economic growth. As we all know, it is on the rate of this economic growth that our long-term plans for improving other aspects of social security must largely depend.

Mr. Kilfedder

Will the hon. Gentleman deal with the injustice to which I referred in my speech? The point that I put to him was with regard to a worker who is caught up in a trade dispute in his firm and is out of work and not entitled to unemployment benefit. Will the hon. Gentleman agree to refer this matter to the National Insurance Advisory Committee so that it can go into the matter and try to do something to remedy this injustice.

Mr. Pentland

I thought the hon. Gentleman realised that a decision had been taken a long time ago to refer this question of trade disputes to the Royal Commission on Trade Unions and Employers' Associations, which is now sitting. I think that it was my hon. Friend the Member for Liverpool, Walton (Mr. Heffer), who also referred to this. As my hon. Friend knows, and as the House is aware, this is a Government decision, and the matter is now before the Royal Commission.

The Bill provides benefits for families whose incomes are suddenly reduced by the death or illness of the breadwinner. The link between the provisions to be made for the early months of unemployment and sickness will maintain the idea that it is the sudden loss of the family income which needs to be considered, and not the contingency itself. I am sure that the House will agree that it would be wrong to pay more to the family when the breadwinner is unemployed than when he is sick.

As has been pointed out during the debate, some of us can remember the old days when a man who was not really fit for work would go along to the employment exchange and sign on on the dole because he would get more for being on the dole than he would receive by way of sickness benefit. I think that it was one of my mining Friends who said that he could recall men who were not fit dragging themselves to work, even when the doctors had determined that they should be in bed, because they were scared stiff of the financial consequences to their wives and families of staying away from work. We put a stop to that in 1948, and we are going to make sure that we do not bring it back again.

The Bill also takes an important step towards getting rid of some of the complications of the present system of unemployment benefit by fixing a standard period for which flat rate benefit can be obtained, just as there is to be a standard period for the duration of the earnings-related supplement, and changes in the benefit conditions for workers on short time and lay-off. In our view these changes will eventually lead to a fairer and more sensible division of responsibility between employers and the National Insurance Fund. I feel sure the House will agree that, in a National Insurance Scheme, it is vital that the contributors' money should be seen to go to those who need it, and we hope that the new arrangements will help to secure this. The Government will, of course, keep a very careful watch on developments to make sure that the new arrangements achieve their purpose.

The Bill marks only the first step in the Government's proposals for new social security arrangements. Hon. Members on both sides of the House—and this has been demonstrated during the debate—are naturally anxious to know when other parts of the programme will be brought forward. Indeed, we find that the introduction of one part of the programme inevitably throws into relief the parts of our programme which still remain to be carried out. All that I can say tonight is that the Government are anxious to press on with other items as fast as this can be done, bearing in mind that improvements in social security must be paid for from the increasing wealth of the country and must involve detailed planning, for which adequate time must be allowed.

I readily accept that one could, if one wished, pinpoint certain imperfections in the Bill. But we are bringing it forward not only because we recognise that it is an act of social justice to do so but because it is the Government's sincere belief that this is one more step forward towards our objective of bringing about a state of human happiness and economic security to millions of our fellow citizens. We still have a long way to go. All of us in the Government accept that. But the proposals embodied in the Bill will bring us just that much closer to our main objective in social security.

I therefore ask the House to give the Bill a Second Reading as a valuable step forward in itself and as a pledge by this Government of further improvements to come.

Question put and agreed to.

Bill accordingly read a Second time.

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

Committee Tomorrow.