NATIONAL INSURANCE (No. 2) BILL

HC Deb 03 July 1967 vol 749 cc1336-97

Order for Second Reading read.

7.0 p.m.

The Minister of Social Security (Miss Margaret Herbison)

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

Since this is a short debate, I propose to be as brief as possible so that back benchers will have a chance of making their views known.

The statement I made previously covered most of the proposed increases contained in the Bill. The basic proposal in the Bill is an increase of 10s. in the standard rates of all National Insurance pensions and benefits for a single person and of 16s. for a married couple.

The corresponding increases in 1965 were 12s. 6d. and 21s. So, in the first three years of our term of office, benefits will have been increased by £1 2s. 6d. for a single person—that is, one-third—and £1 17s. for a married couple. During the same period those with fixed incomes—and we all think immediately of the elderly retirement pensioner—have benefited by the restraint imposed on prices by our prices and incomes policy, although all of us who are in regular contact with retirement pensioners and others are well aware how little margin there is in their spending money and how severely any price increases bear on them.

To re-establish the value of the pension rate introduced in 1965 would require an increase of 6s. 11d. on the single rate and 11s. 3d. on the married rate. The real value of the increases in benefits over the whole period since we took office in October, 1964, in terms of purchasing power, is 15s. 4d. in the case of a single pensioner and £1 5s. 5d. in the case of a married couple. By the autumn prices may have risen, but the increase proposed is intended to secure more than a full restoration of the very substantial improvement in real standards that we made in 1965.

We shall continue to watch closely the value of these basic contributory benefits, and I would like to repeat here the assurance that I have given on a number of occasions that in considering the many competing claims on national resources we shall certainly not neglect our obligation to the very many people, particularly elderly people, who are very largely dependent on the contributory benefits.

The proposed new rates of benefit are set out in detail in the Schedule 2, and the old and new rates of benefit are shown side by side in Appendix I to the White Paper.

Hon. Members will wish to have some idea of the number of people affected by the change. The great majority are retirement pensioners, of whom there are currently about 6½ million, and everyone knows that that number is steadily rising.

I want to say a word about increments to retirement pension. Another improvement we have felt able to make on this occasion is a higher return in the form of increments for contributions paid after minimum pension age. Increments are a measure of encouragement and compensation for those who, having reached 65, or 60 in the case of women, are able and willing to defer their retirement and continue working, and it is right that they should be increased from time to time to take account of benefit increases over the years.

To the flat-rate retirement pension to which their contributions already entitle them there is added at present an increase of 1s. a week for every 12 further contributions they pay. They thus continue to earn their living, contribute to the national effort, and earn some addition to the pension they will draw when they eventually retire. This is of some importance when I come to deal with the question of selectivity.

Under the Bill, the return for contributions paid during postponed retirement after the appointed day will be raised to one 1s. increment for every pine contributions paid, instead of 12 as at present.

We also increase industrial injuries benefits. The Bill increases disablement pension from £6 15s. to £7 12s. for an assessment of 100 per cent. Injury benefit is increased by 10s. from £6 15s. to £7 5s. This means that disablement benefit and injury benefit will no longer be the same amount. Last year, however, we intro- duced earnings-related supplements, which can be paid with injury benefit as well as with other short-term benefits, but not with disablement benefit by itself.

Increases are also made by the Bill in disablement gratuities and in the supplementary allowances payable with disablement benefit and the additional benefits payable for dependants. The industrial injuries standard widow's pension is increased from £4 10s. to £5 1s. The changes in the industrial injuries rate will provide increased benefits for about 350,000 people.

The special £1 rate of pension payable to the younger childless industrial widow who is not incapable of self-support is increased to £1 10s. Hon. Members will remember that in 1965 we raised the National Insurance 10s. widow's pension to £1 10s. This further change does not prejudice the general review of provision for widowhood, including the lower rate industrial widow's benefit, but it ensures that industrial widows without the full standard rate of widow's pension receive £1 10s. whether or not they have, as many do, underlying entitlement to the £1 10s. National Insurance pension.

I turn now to contributions. Flat-rate contributions are increased by 2s. a week for an employed man and 2s. 3d. for his employer. This includes an increase of 1d. a side on the industrial injuries part of the contribution. The woman who pays the full Class I contribution will pay an extra 1s. 9d. and her employer an extra 2s. The higher flat-rate contributions for those contracted out of the graduated pension scheme will be increased by the same amounts. The contribution for a self-employed man becomes £1 1s., an increase of 2s. 4d., and for a self-employed woman 17s. 3d., an increase of 1s. 11d. Other contributions are increased broadly in proportion. Graduated contributions for short-term earnings-related benefits ands for graduated additions to retirement pension are not affected by the Bill.

I take it that hon. Members will have had an opportunity to study the Financial Memorandum accompanying the Bill and the Government Actuary's Report on the Bill's financial effects. The cost of the increases to the National Insurance and Industrial Injuries Funds is £219 million and £10.6 million respectively in the first full year of operation. The Exchequer supplement to the two funds will be increased by £53 million and £1.8 million respectively.

I am aware of the concern—it was expressed by Opposition Members—lest this substantial sum of money should be going to those who have no need of it, and I would like to say more about this later. I am aware, too, of the suggestion that the increased social security expenditure is a threat to the prices and incomes policy because it adds to the costs of both employer and employee.

My right hon. Friend the First Secretary has already stated the Government's policy on this, and all I would add is that those who through age, unemployment, sickness, or injury, are temporarily or permanently removed from the working population are entitled to practical help from the rest of us.

There is widely voiced concern for those who suffer most from rising costs, and I very much hope that there will be an equally wide determination to avoid reducing, by taking action which further increases costs, the value of what we have been able to do for them, even if this means accepting some restriction in profits, on the one hand, or in personal expenditure on the other. I believe strongly that the nation must decide its priorities in such matters.

I want now to say a word about Clause 5 of the Bill. I know that most people are very concerned about the poverty suffered by children. Our long-term proposals will be put to the House before the Summer Recess, and I think again that most sensible people realise that a radical and permanent solution requires the most careful consideration of a large number of factors, many of which were aired during the earlier debate on this subject, and have been discussed since then both inside and outside the House. As it may be desirable to make an interim improvement in family allowances to coincide with the increase in other benefits in the autumn, and since the intervention of the Summer Recess would make this impossible, we are taking the special, and purely temporary power in Clause 5.

I propose to deal next with what I call the burning question of selectivity. Our proposals for increasing National Insurance benefits have been attacked as being wasteful by people, including Front and back bench Members opposite, who talk a great deal about selectivity and retired millionaires. I urge the hon. Lady the Member for Melton (Miss Pike) to "come clean" this evening and tell us what the Tories mean by selectivity from the point of view of the benefits provided in the Bill, because the issues involved are of fundamental importance to every man, woman, and child in the country.

I have here a Conservative publication. It is a scrap of paper called "The Weekly News", and is dated 24th June, 1967, a little over a week ago. It says: Recall Harold Wilson's smear that if the Conservatives were returned to power the Welfare State would be replaced by 'the Means Test State'. When throwing this dirt he knew only too well that the accusation was unfair, untrue and completely without foundation. All I can say is that it looks as though the wires have become crossed between the Opposition Front Bench and the Conservative Central Office, because since the publication of this little scrap of paper we have seen another publication, a pamphlet written by the hon. Lady the Member for Melton, and published only last weekend.

I have read this publication very carefully. There is complete silence on the question of selectivity with regard to the benefits in the Bill. One heading is, "Labour's failure". I think that this is a real compliment. I know that the hon. Lady must be very conscious of the abysmal failure of her party, because of all the things that she lists here. She must also be aware of the considerable improvements which we have made in a short time over a very wide field. It is, indeed, a compliment for the hon. Lady to expect us almost overnight to remedy all the ills that her party left behind.

We are only too well aware of how much still needs to be done, and extremely anxious to do it, but, concerned as all of us on this side of the House are about any person who is deprived, we are not magicians. If ever there was a crushing criticism of generations of Tory rule, not just 13 years of it, this pamphlet which the hon. Lady wrote, and which was published at the weekend, is just that.

I return now to the Bill, and to the question of selectivity. All of us hope to reach retirement age, and all of us at some time are likely to suffer the sort of misfortune, such as sickness, for which our current schemes of social security make provision, and today I welcome the opportunity of making the Government's attitude clear.

Some of the critics appear to suggest that contributory insurance benefits should have no place now in our social services because they are indiscriminate. Let us look at the people who are receiving these benefits, and at the sort of people who will receive them. We have heard a lot about retired millionaires, but my concern is for the majority of the population who work hard all their lives for a living wage, and have the right to expect a pension at a reasonable rate when they retire.

If hon. Gentlemen want to know about the financial circumstances of the people receiving contributory pensions, I recommend them to look at the report published by my Department in June of last year on the financial and other circumstances of retirement pensioners. They will see that there are many retirement pensioners whose incomes, though above the level which would have attracted supplementary pension, were less than £1 above that level. Overall, half the couples, two-thirds of the single men, and four-fifths of the single women—and single women form the majority of pensioner households—had net available resources either below the National Assistance standard, or not more than 20s. above it.

Those who had rather more than this modest level were still, for the most part, living on small incomes, commonly derived from occupational pensions, private insurance, and the fruits of a lifetime's personal saving. Do we care about these people and the hardship many of them must have endured in order to make that extra provision?

Among them were the people who continued to work after retirement age and earn increments. These are the people who have contributed throughout their working lives in the expectation that they would get a pension at a fair level, which at the very least would be protected against erosion by inflation, and indeed which would give them a share in the national wealth which they had helped to create.

The vast majority of pensioners are people in modest circumstances who have made their plans for retirement on this basis, and I ask the House and the country: are we now to break faith with them because of the kind of criticism which has been levelled at us by the Opposition and by what I call some of the responsible journals in this country? [HON. MEMBERS: "No."] Hon. Gentlemen opposite say "No."

Miss Mervyn Pike (Melton) rose—

Miss Herbison

The hon. Lady can deal with this when she makes her speech.

It has also been suggested that it is nonsense to say that the contributions of these people have earned any right to benefits at the level that we are now proposing. There seems to be a great deal of confusion in some minds about the contributory principle. Obviously, the contributory principle of a modern social security scheme is not the same principle as that of the classic type of commercial insurance. Contributions do not buy benefits in the direct way that they do in a funded commercial scheme.

Expenditure on current benefits is met, for the most part, out of income from current contributions. The working population meets current obligations in the full expectation that future generations of contributors will, in turn, finance their pensions when they retire. These contributions are, therefore, a genuine provision for the contributor's own retirement.

Hon. Members on both sides of the House will be interested to know that most developed countries now administer their social security schemes in this way, since this is the only realistic basis to adopt in current circumstances. Are we to abandon the contributory principle in favour of a means-tested non-contributory system financed from taxes? The alternative of wholesale means-tested benefits is where the demands of hon. Members opposite for selectivity really lead.

The grossest misunderstanding evident in some Press comment on the Bill is that the issues can sensibly be narrowed down to a straight choice between selectivity of this sort, on the one hand, and universal contributory social insurance, on the other. The Government's concern to develop an intelligent strategy for the social services, based on sound information about the country's social problems, gives us a better right than hon. Members opposite to talk about selectivity.

We have carried out surveys on which to base each step that we have taken in the social services. Our research department at the Ministry is planning the research into these matters. I am sure that selective benefit has an important part to play—and I have always said so—for example, in family allowances and in housing, to name only two. There may be many others that I could add.

In the benefits field the Government have firmly made it clear that the supplementary benefit, and, above all, the supplementary pension, is a benefit made available as of right to those who need it. But it is quite plain that non-contributory benefits cannot take over the major burden of providing for sickness, unemployment and old age.

It would be foolish not to look at the overall problem and recognise that excessive reliance on non-contributory benefits, particularly in old age, could stunt the growth of personal saving and thrift, including provision of occupational pensions. These can, in any event, never be sure of covering the whole ground—and many widows know, to their cost, how they have not been covered by occupational pensions—but, for the great mass of our people, they will seem much less worth while if they cannot be built on a firm foundation of a contributory state pension and so offer some real assurance of advantage in retirement.

We need this foundation if we are effectively to limit the areas of poverty in our society for which selective benefits can properly provide. It is not a question of a division between complete universalism and complete selectivity. I accept that reliance in the main on the contributory system involves a willingness on the part of contributors to meet the cost. It is my belief that our people are prepared to pay for better provision for sickness, unemployment and old age. They will meet the challenge in a responsible way.

No one who has studied these matters can doubt that in all parts of the world the contributory principle has represented a major step forward in the development of any country's system of social security. In common with all progressive countries we see the future in terms of further development of the contributory principle to provide earnings-related pensions guaranteeing to retired people the maintenance of a reasonable standard in their retirement.

Today, we are keeping faith with the older generation of contributors by continuing our policy of ensuring that they are not left behind. For many of them the contractual pension has been a secure element on which they have planned their provision for their retirement. This is the true purpose of a contributory pension—to guarantee to working members of the community that they will continue to receive a just return for their efforts when they have ceased to be wage-earners. I am certain that that purpose will receive widespread support.

The new measures already introduced as a result of our continuing review of the whole field of the social services and the proposals which are still being considered do not obviate the need to keep faith with existing beneficiaries. I have said on many occasions that a complete recasting of our social security system overnight is impossible. We are tackling the problem in turn. We have already tackled many of them and have brought forward legislation to deal with them. Family endowment proposals will be announced very shortly. Work on a scheme of earnings-related pensions to replace the existing scheme, and on improved provision for widows and the long-term sick and disabled is continuing.

I repeat that we are very conscious of what remains to be done, but I assure hon. Members that we are also very determined to make progress as speedily as possible. We shall do this by a combination of universal and selective benefits. Labour has always known the devastating effects of poverty upon families and individuals. One of our primary aims is to eradicate it wherever it exists.

7.28 p.m.

Miss Mervyn Pike (Melton)

I congratulate the right hon. Lady on once again making a very able speech about practically nothing. It has been the usual plum of the slightly tearful, rather hopeful and vaguely sneerful. She must not blame my hon. Friends and me if, she having pulled out her plum, the rest of the Press and the journalists have been sour about it. The criticism that she has talked about today has not come from these benches; we have not had time to say very much in debate. The criticism has come—she must have read it, and it seems to have got under her skin—from outside the House, from people working in the social field and people writing about social problems.

There was, in the right hon. Lady's speech and in the Bill, just about enough policy to cover two by-elections and the next Socialist Party conference. This is what we complain about. We had again the story of her great reviews of social policy. These are reviews engaging the energies of the right hon. Lady and her colleagues and those so ably done by the right hon. Member for Sowerby (Mr. Houghton). It must be significant that the right hon. Lady has already found it necessary to review her policies more often in three years than Queen Victoria reviewed her troops in all her 60 years.

But this is not amusing, and this debate must be concerned not with what is in the Bill so much as with what has been left out. This is what the criticisms and the sourness in the Press and by people outside have been about; a vital opportunity has been lost. Lost opportunities are bad enough in themselves. The right hon. Lady has now had three years to assess and formulate her policies, as well as 13 years in Opposition. She spoke about my writing a small pamphlet—a very slight one, I admit—which comes out today, but at least it shows that we are thinking of our policies and looking at the problem. We are not complacent, saying that there is nothing more to do. All right, we should have done it when we were in office. We did not finish everything in 13 years, but we got on a good deal faster with most of the problems than the right hon. Lady is doing.

The trouble with the Bill is not that we criticise in any way the financial justice which it contains, but that it will increase rather than diminish the present social problems, anomalies and inequalities which worry all of us. The Bill increases the main insurance benefits by 10s. for the single person and 16s. for the married couple, but these money in- creases are not increases in real terms, as the right hon. Lady said.

The present £4 pension has already lost about 6s. 11d. of its buying power since March, 1965, and the real increase in purchasing power is about 3s., which is dwindling rapidly. We all know that big increases in prices are on the way. We are now faced, for example, with a rise of about 2s. in the £ for electricity, an item which looms very large in an old person's budget. Therefore, despite all the rave notices for these pension increases, by the time they start in November we will be paying out an extra £220 million a year simply to keep pensions and benefits in line with prices, and to repair the damage to the buying power of these pensions brought about by the failure of the Government's prices policy.

The Government may talk about restraining prices, but the right hon. Lady cannot deny that measures like the S.E.T., increased petrol duties, higher Purchase Tax, postal charges and the rest, are directly responsible for much of the rise in the cost of living. If prices continue to rise only as quickly as they have done in the past 27 months, By October 10 per cent. of the 12½ per cent. increase will be needed just to make good the lost purchasing power. The Spectator of 23rd June said that the remaining 2½ per cent. will be less in real terms than the percentage rise in incomes in the same period. In other words, the margin is smaller for these people. So much for the right hon. Lady's promises to ensure that pensioners will continue to get an increasing share of the country's prosperity; we are running very hard just to stay in the same place.

Having read the Bill and listened to the right hon. Lady, the only forward planning of which I can detect a sign has nothing to do with social policy or social justice. The right hon. Lady must accept that the one pattern which stands out clearly is that of the Government's election tactics. Hon. Members will have noted that, as a result of the increase in National Insurance contributions, the Fund will have a surplus of £1 million at the end of 1967–68, and of £17 million at the end of 1968–9.

The Government Actuary's Report on the financial provisions of the Bill admits that the proposed contribution increases will be more than is needed to meet the direct cost of the increases in benefit, the balance of the extra income being required to meet the deficit which will accrue at 31st March, 1970, if the present rates of benefit and contributions were continued. It is not difficult to deduce, therefore, that the next pension increase—this will be of interest to pensioners as well—will be in June, 1969, in time for an autumn election. All I wonder is what on earth its purchasing power will be by then. In the meantime, of course, I should be surprised if the right hon. Lady denies that the Cambridge and Walthamstow by-elections will be in the first week of November.

So much for the contents of the Bill and its forward planning. It is a cruel weakness, as the right hon. Lady knows, that it is just another botched-up, tinkering, stop-gap Measure, which once more ignores the real problems which still remain. By giving an all-across-the-board increase, it not only ignores the heart of the social problems facing us but exaggerates the injustices and anomalies. For instance, there is a general increase in sickness benefits under the National Insurance Scheme and in the injury benefits and disablement pensions under the Industrial Injuries Scheme. We welcome this, but the person born crippled and the wife who is chronically disabled and who have no benefit will still be without benefit under this Bill and the right hon. Lady's social policies. This is unfair and wrong.

It is equally wrong that people suffering from multiple sclerosis or diseases of that kind who come under the National Insurance Scheme should get lower benefit than those suffering from industrial disease or the results of industrial accidents. There has been no attempt to put this right and no statement about it. In the provisions for illness and disability there should have been more discrimination in favour of chronic and long-term illness. Employers are increasingly providing benefits through sick pay arrangements for short-term illness and, of course, there is the earnings-related sickness benefit under the State scheme for the first six months of illness.

Surely it is, therefore, much more in the case of long-term illness and disability that greater help from public funds is needed. Yet the Bill makes no attempt to discriminate in favour of long-term or chronic disability but provides a general increase and does not even close the gap whereby the person born crippled and the chronically disabled wife get nothing.

What about the other anomalies—the widows, for example? We hoped that the right hon. Lady might put right some of the anomalies here, but the pensionless widow in her late 40s whose children have grown up remains pensionless. A woman widowed for the second time late in life may still fail to qualify for a pension. I am thinking particularly of the example of a woman widowed for the first time in her early 40s, whose children have grown up—which means that she has no pension, although she had been married for 15 years—and who then marries again. If her second husband died before three years are up, she would still get no pension because her marriage had lasted for less than three years. I cannot see why the rules cannot be altered to allow the first marriage to count towards the three-year condition.

What about the widow whose husband dies of cancer, or a similar disease which comes under the National Insurance Scheme, who would get a lower pension than a woman whose husband died of industrial disease or accident? What about the anomalies in increased contributions and the increased burden of these on those least able to pay? The increases of 2s. for an employed man and 1s. 9d. for an employed woman are steep for the lower-paid workers. In the case of those families with earnings which are already below the level of supplementary benefits, this increase in contribution will represent a further heavy blow at their inadequate living standards.

The right hon. Lady has had three years to consider these problems and is still only taking powers and saying that before we rise for the Recess she will have something to say. But unless she has something pretty drastic to say pretty quickly, these people will be at a tremendous disadvantage.

Since the present Government took office, the employed man has had to pay an extra 4s., taking into account this latest increase. Yet in 1963 the present Leader of the House complained because we increased contributions by 1s. and said that it was a very heavy impost. The right hon. Lady will remember the speeches she made complaining about such a heavy increase in contributions imposed on the lowest-paid workers. Yet for the lowest-paid workers the contributions under this Bill will take a higher proportion of their earnings than in 1964. I shall be surprised if the increases do not lead to a demand for higher wages and prices. I read in the Financial Times that the increases will cost the National Coal Board about £3 million and British Railways about £2 million.

This will hit the poorest in the community the hardest. The burden is harder for the employed person on the lowest wage. When they were in opposition, hon. Members opposite criticised increases in flat-rate National Insurance contributions as a "regressive poll tax". They do not have much to say about that at present. The proposals for raising the supplementary benefit scales, welcome as they are—I stress that we welcome those measures—[HON. MEMBERS: "Oh."] Yes, we do, but they only put the position back to where it was before. We are grateful for that, even if we are having to run fast to stay still, but they merely aggravate the problem of the low-wage-earning families, because already many of them are not able to benefit to the full extent from supplementary benefit.

When we were discussing the new proposals on the basis of the right hon. Lady's statement of 21st June, she asked how I would be more selective. She has asked that again in the context of this Bill. I tell her straight away that I would give priority to the real needs, which are largely ignored. The obvious example is the low wage-earning family where the income is below the level of the benefit. We are no wiser about the Government's intentions in this connection. We do not know the proposals. Does the right hon. Lady or anyone on the Government Front Bench know? It is not good enough to take blanket powers such as those in Clause 5 to alter family allowances without the faintest idea of how those powers are to be used.

What sort of increases are to be proposed? Are they to be selective and, if so, what will be the cost to the taxpayer? We are told that a general increase of 10s. for family allowances would cost £160 million a year and that the Government have quite rightly rejected this. If that is not so, perhaps the right hon. Lady will correct me. What does she propose? In the debate on family poverty on 20th April, I suggested that more help on a selective basis should be given by extending the scope of the child maintenance allowances, improving the allowances themselves, and revising the needs test involved. I also suggested increasing the cash family allowances where the income was below a certain level—say, too low to benefit from child tax allowance. I hope that the Minister will be able to tell us the estimated cost of a 10s. increase in family allowances to families where the income is too low to benefit from the child tax allowances.

Surely it is possible by now to tell the House what the Government's proposals are. Are we to wait for the next three weeks until the Summer Recess for a series of Press leaks, inspired or otherwise? The right hon. Lady must accept that it is not only those in this House who are getting impatient. I have much sympathy with Mr. Tony Lynes who, according to The Guardian of 22nd June, described it as "fantastic" that the Government have still not made up their mind. I shall not keep bringing the right hon. Member for Sowerby into this argument because I think his patience is already exhausted. He was saying so in the debate on 25th April. He could not understand why proposals had not come forward and I do not think that anyone can understand it. We shall seek in Committee to amend Clause 5, because we want a fuller explanation of the Minister's intentions.

We are told that she needs it and that during the Recess she might suddenly hit on a plan to help these families. This Bill and this Clause give the most vivid illustration of the utter failure of the right hon. Lady and of the Government to thrash out and agree upon their social policies and social objectives. I do not know where the right hon. Lady is going for her summer holidays. Last year, if I remember rightly, she went to Yugoslavia. I hope that she enjoyed herself, but this year she might perhaps stay in this country and brood over the need to get some sort of plan agreed before she goes to Scarborough. [HON. MEMBERS: "Cheap."] It is not cheap at all, for she is asking us to pass a Clause on something we know nothing about. It is fantastic the way in which the right hon. Lady can get away with this. Even her best friends are getting weary of what we could call "The Tales of Herbison". She must get her plans straight and give us some indication of what she is going to do about these vital matters.

While she has been thinking of these things, and we have been having these reviews and arguments have been going on in the Cabinet, the plight of these families, particularly of the children, has been getting steadily worse. If the delay and indecision by the Government have been tragic for the young people, they have been equally hard for the old. On 21st June, the right hon. Lady said that of those of pensionable age and over the survey of June, 1965 showed 50 per cent. of married couples were under the National Assistance level, or not more than 20s. above and 81 per cent. of single women were in the same position. She said on these figures it would be difficult to be selective. I am not sure that I entirely accept that. On the right hon. Lady's figures, it seem strange that the increase in scale rates of supplementary benefit are to be a great deal less than the all-across-the-board increases in retirement pension and benefits generally.

Those getting help from the Supplementary Benefits Commission will get the least help from this latest round of increases. Why has the right hon. Lady not considered graduating insurance for retirement on the principle that after a person has been retired for some time, his savings get used up? We all know that older people need more financial help and care than those who have recently retired. Very often those who have recently retired can still get part-time work.

The right hon. Lady said that 81 per cent. of single women pensioners were on the National Assistance level or about £1 above it. It would be interesting to know what proportion of those are over 70 years of age. Most women are rather tougher than men, and they generally tend to live longer. I should imagine that it was a very large proportion of the 81 per cent. the Minister mentioned. These people have suffered most from inflation and their savings and stock of goods have been used up. These people need more help and their increasing needs should be recognised. The report of the Food Education Society of last November claimed that about 1 million old people were suffering from malnutrition. I do not know the true figure and I do not think anyone does, but I do know that the elderly housebound are much more likely to suffer from malnutrition and lack of warmth and comfort than others. Here is a way in which we could have a graduated scheme for those on pensions.

What about those who are not older retirement pensioners but who are approaching retirement? The provision for improving the increment for postponement of retirement beyond the minimum age is very welcome and we are grateful for that, but perhaps the right hon. Lady could tell us whether the increments will be on a proper actuarial basis and what will be the cost of the proposed change.

I see from the Report of the Government Actuary that there is still a trend towards earlier retirement. If, as forecast, expectation of life continues to increase and people at the same time tend to retire earlier, that is bound to have economic consequences of which we must take note in our forward planning. Peter Jay, in an article in The Times, pointed out that between 1966 and 1980 the total population is likely to increase by 6 million but the number of people of working age will increase by only about 800,000. On many occasions we have said that we must try to avoid the sudden change from full-time work to complete retirement. This sudden change is bad for those concerned, and it must surely also be bad economics. We should be giving far more study to this problem and to the retraining of older men and women, and in this context we should like to know what help is being given to these people. Selectivity arises not only in increasing the benefits but also in increasing the opportunities and the security of people who are approaching pension or who have been on pension for some time.

In spite of what the right hon. Lady may think, I want to be fair to her and I want to welcome the Bill as far as it goes, and to welcome the things that it does. But she must accept that it is difficult to find anything good to say about a Bill which has so little in it apart from, once more, a straight increase across the board. If she thinks that I am being too hard, she should study more carefully both Press reports and the speeches made by well-informed and realistic people, many of them her own supporters.

It is obvious that the right hon. Lady and some of her hon. Friends find it difficult to eat some of their words, and we do not want to make it more difficult for them. What matters is not raking over old scores or continually asking, "Why didn't you do it in the last 13 years?". [HON. MEMBERS: "Oh."] The right hon. Lady knows in her heart of hearts that what I say is true. She knows that there was a steady increase in benefits and that the challenge now is not only to go on with steady increases across the board but also to get rid of the pockets of poverty. Even though in the House we may find it amusing and even edifying to go over the old arguments, people working in this field in the world outside are beginning to get more and more tired of it.

What is necessary is that we should hammer out between us policies which will enable us to care properly for those who need and which will enable us, too, to root out the remaining pockets of poverty and to prevent a recurrence of poverty and misery in future generations. If we are to do that we must make provision for the sudden sharp drop in income which all too often occurs on retirement when there is no adequate occupational pension scheme on top of the State pension. At the last General Election we on this side of the House stressed the need to spread occupational pension schemes as widely as possible. I hope that the Government are now genuinely convinced of the value of these schemes and have moved from their former attitude of hostility. At the 1962 Labour Party conference the Leader of the House threatened that Labour's half-pay on retirement scheme would be very expensive to contract out of"— those were his words.

I hope that there is no question of the Government withdrawing or reducing the tax allowance on contributions to occupational schemes. We accept that there must be an adequate earnings-related State pension scheme for those who, for one reason or another, cannot be covered by an occupational scheme, but we should like to see much more flexible arrangements whereby the occupational schemes can continue to grow side by side with any State scheme. At present those in occupational schemes have to be completely within the State graduated scheme, too, or completely contracted out of it, and for those who are contracted out problems inevitably arise when there are changes in the State graduated scheme.

I want to see a much more flexible arrangement whereby there could be partial contracting out of the State scheme. I think that "abatements" is the correct technical term. For example, if a 10s. a week contribution to an occupational scheme gives at least as good value as 10s. contributed to the State scheme, there seems to me no reason at all why there should not be contracting out of the scheme to that extent. In this way we should overcome the problem of adjustments to the occupational schemes when the State scheme is altered. I also welcome, as I am sure does the right hon. Lady, the growing concern of occupational schemes with post-retirement inflation as well as inflation which takes place during the person's working life.

Another main problem in connection with occupational schemes is the transferability or preservation of pension rights on a change of job. I hope that the Government will consider having discussions with industry on this point, possibly with a view to establishing a clearing house where pension rights can be put into cold storage on change of job and claimed when the qualifying age is reached.

But need either in retirement or in the course of working life is often as much concerned with housing costs as with State cash benefits. It is ironic that while we have many people living in council houses at subsidised rents who do not need help there are other families in real need who are living in privately rented homes and who can get no help at all in respect of rent from public funds unless they happen to fall within the scope of supplementary benefits. Many of these are older people, or low-income and large families. It is unfair and it is illogical, and we should seriously consider changing from our present system of subsidies attached to the house to a system whereby those families in need receive a housing allowance payable direct to them. We already have a rates rebate scheme and the fair rents machinery, which could well be adapted for this additional purpose.

The right hon. Lady made some play about a means test. I would ask her again to read the debate of 20th April. I made it very clear in that debate that we never envisaged means testing the contributory pension. I made that doubly clear, as the right hon. Lady knows. But if we are to move forward to realistic policies we must try to rationalise and to reduce the many and various means tests which are in existence for so many different purposes. Most people, irrespective of party, now accept the principle of a means test. The problem is the practical one of finding a form of means test which would be generally acceptable. I see that the Joint Parliamentary Secretary, the hon. Member for Gloucestershire, West (Mr. Loughlin), indicates that he does not accept the principle of the means test. I believe that the majority of people on all sides of the House accept that principle and that we are arguing about finding one which is acceptable, which is dignified and which is just.

Having said those harsh things about the right hon. Lady, I should like to congratulate her on having considerably reduced the incidence of failure among old people, for one reason or another, to apply for supplementary benefits to which they are entitled. She has done a particularly good job in that respect, although she will agree that successive Governments, both Labour and Conservative, have emphasised since the war that there is a genuine entitlement to this extra help and that therefore there should be no question of stigma to those who apply for it. The question is whether there is still a stigma in the public mind. I must admit that, personally, I think that there is a stigma among the very old—those over 80, those who were over pensionable age when the present scheme started. That is why, for this reason only, I should like them to get some pension without any means test, because they cannot accept that there is no stigma attaching to a means test. But I am sure—and I believe that the majority of hon. Members will agree—that subsequent generations have become much less concerned about this aspect.

There have been frequent suggestions that we should hand over to the Inland Revenue the task of operating any and every form of means test on the basis of the Income Tax returns. Indeed, as long ago as 1963 the Labour Party's policy document "New Frontiers to Social Security" promised an income guarantee scheme operated by "a simple tax return", and without any form of means test other than that accepted by every taxpayer in the land. It is interesting to note that both the Minister without Portfolio and the right hon. Member for Sowerby returned recently to that theme.

It is attractive, but I must admit that I have certain reservations about it. Let us take the case of the supplementary benefit. How can any system of this sort cope with the time factor? Tax is assessed annually, whereas in the case of supplementary benefit the assessment is on a weekly basis. How can sudden needs be dealt with—for example, the need for a special fuel or clothing allowance? There would be the added complication in some cases of sharp income fluctuations. Those of us who deal with our Income Tax returns know that the Inland Revenue is already grossly overloaded. Again, we must face the fact that many people would fill in the form only to get nothing in return, and that would be bound to cause a good deal of disappointment, particularly for old people, who in any case find it difficult to fill in forms. Of course, it may well be that in some cases the forms would never be completed.

For all those reasons I foresee great difficulties, for the present at any rate, in getting the Inland Revenue to operate all means tests on this basis. I am sure that the right hon. Lady has run up against this difficulty, and I should like to know whether she has found any solution of them.

Nevertheless, this must not stop us from trying to simplify and rationalise the present system by reducing the number of different tests and the number of bodies administering them. It might well be that the best solution would be to have one body or agency which would be responsible for the administration of all forms of means test, from supplementary benefit to school meals and university grants, and also the system of housing allowances which, I have suggested, should replace the present housing subsidies.

Finally, and most important of all, I do not believe—and I think that the right hon. Lady in her heart also accepts this—that we shall get social justice either in the short term or the long term unless we are prepared to be more selective. We must face the fact that social services cannot be a free-for-all. I agree with Mr. Rudolph Klein, who, writing in the Observer on 25th June, referred to the myth of the Welfare State that all services must be provided free, in other words, at the taxpayers' expense". The National Plan, to which the right hon. Lady subscribed, estimated that the cost of the various cash benefits, including administration, would rise from £2,379 million in 1965–66 to £2,533 million in 1969–70 simply to keep pace with the growing number of pensioners and children. This made no allowance for any increase in benefits. The plan itself allowed for the total rise of these benefits to £2,920 million by 1969–70. It is clear that under the National Plan £387 million was to be available for benefit increases. Of this sum already £80 million has been used up in wage-related unemployment and sickness benefits. A further £230 million will be used up under this Bill. Taking account of the £50 million or more which was the net cost of the Ministry of Social Security Act of last year, clearly, the money allocated under the National Plan has already been almost used up, but in addition the 4 per cent. annual growth rate envisaged under the Plan has now apparently been abandoned, and, in any case, for two years there has been hardly any economic growth at all. So the cupboard must be pretty bare, and this explains why the right hon. Lady does not come forward with her policies, and it means that ways must be found to try to be more selective in the social services.

The same is true of social services expenditure as a whole. Mr. Peter Jay pointed out in The Times on 31st May: It seems that total social services expenditure at constant prices will rise by more than 60 per cent. over the decade 1965 to 1975 merely in order to keep pace with current policies. That is what we are talking about. That is why we are talking about selectivity. We are not taking about a means test under the contributory system. We are not talking about getting rid of the present system, except in so far as it can be taken over by better and juster policies. What we are talking about is how we can use our scarce resources for the best results for the greatest majority of our people. This is not something to get sentimental about. It is a matter for hard-headed realism; it is a matter for proper argument; it is a matter for proper debate without any raking up of old scores and arguments of the past.

The solution to this cannot be by increasing taxation. This, again, is something we all accept. If we are to get increased resources we must have incentives to economic growth, and the Chancellor and all those on the Treasury Bench accept this. So it cannot come from increased taxation.

We are critical of this Bill because once again opportunities have been lost of bringing real help to those who are most in need. We on this side of the House believe that we must be more selective in the social services, selective in such ways as replacing the present housing subsidy attached to the house by an allowance payable to families in need, by making fair and sensible charges for use of the health services, by giving extra help in family allowances only to the families who are in need. At the same time we must find a way to use effectively the enormous fund of good will and compassion which exists in our society—the many people who would like to help in the provision of care for the elderly and families in need, and who do not know how to set about it but who would respond to a definite lead. We want to see a community task force which would harness the good will and energies of people of all types in service for the community. We want to see local authorities being much more dynamic in their approach to community services and community renewal, more dynamic in using voluntary effort to initiate and extend practical local welfare services, projects which will plug the gaps, and root out the ugly and degrading, and seek the prevention of new social ills.

We are living in a machine age, and, no doubt, as times goes on, more and more of the jobs formerly done by people will be done by machines. This is a good thing, but it is all the more reason why we should guard against the machine-line impersonalised approach. There is not and never will be a machine which can be a substitute for the good health visitor or even the home help. These people cost money and we should find more ways of bringing more people into the service.

We support this Bill for what it does to restore the purchasing power of our present benefits. We support it for that reason and we welcome it for that reason, but we censure the Minister and the Government for once more failing to meet both the needs and the spirit of our people.

8.5 p.m.

Mr. Harold Finch (Bedwellty)

I am glad of this Bill which provides for increased benefits for those who come within the National Insurance and Industrial Injuries Act and also provides for increased benefits for those under the old Workmen's Compensation Act and war pensioners. In addition to this we have in the Bill an increase in supplementary allowances by way of constant attendance allowance, unemployability allowance, and hardship allowance, and further we have the assurance of my right hon. Friend that at an early date we shall have regulations to adjust supplementary benefits.

I take this opportunity of congratulating my right hon. Friend on bringing forward such a comprehensive Measure, covering, as it does, so many aspects of social life, and affecting, as it does, pensioners, industrially injured, the disabled, the old workmen's compensation cases, widows and allowances. I am glad that, in spite of the fact that we have not yet fully recovered from our economic difficulties, she has been able to come forward with a Measure of this kind.

I have held the view for many years that if the people of this country can get the assurance that in the event of accidents, in the event of disease or sickness, they will have adequate security, they will have removed from them to a large extent their worry and anxiety. Indeed, we as Members of Parliament often used to say, "What are we going to get as pension after spending years in this House?" It is a problem which does arise. The younger men I have dealt with in matters pertaining to industrial injuries, men of 21 and 22, thought the time seemed far away when they would have need of this security. When one has met them after some years one finds they scratch their heads and ask, "What will the pension be? What will be my position in the future?"

This question of social security is priority No. 1. I agree with my right hon. Friend that it is priority No. 1. The test of any Government and the test of this House, in the last analysis, will be how we treated the infirm, the sick and disabled. It is because of this that I am glad that my right hon. Friend has brought forward a Measure which at least increases the rates of benefit above, in some cases at least, the cost of living.

I readily agree that the whole of our National Insurance Scheme requires remodelling. We want a reappraisal of the whole National Insurance Scheme and Industrial Injuries Act. It requires reorganising completely. It has been in operation for many years, and the time has now come when we must look more closely at the changing conditions.

Industry is changing and social conditions are changing. When my right hon. Friend the Member for Llanelly (Mr. James Griffiths) first introduced the National Insurance Act, conditions were very different from those of today. The standard of living has improved, and conditions generally are much better than they were then. We must therefore build on the original National Insurance Act in order to deal with many of the problems that are now arising.

Having said that, I must add that it amazed me to listen to the hon. Lady the Member for Melton (Miss Pike). She is among those who were in power for 13 years but from whom we never had a suggestion that it was intended to reorganise National Insurance legislation. I am glad to see present with us the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter). He was Minister of Pensions at one time, and has vast knowledge of the subject. He came forward, as my right hon. Friend has done, with increased benefits to try and keep pace with the then cost of living. The hon. Lady now seeks to tell us what should have been done, but in this respect the record of the party opposite is poor. In the original Act, the woman without children whose husband died when she was 40 years of age or just over had a pension, and it was the party opposite that increased the age to 50 before pensions were payable. So what is the hon. Lady talking about now?

Some hon. Members opposite talk about poverty among children, but this brings in the question of unemployment benefit. When my right hon. Friend the Member for Llanelly was in office, unemployment benefit was continuous in that if the Ministry of Labour could not put a man in suitable work he continued to get his benefit. Then the party opposite based it on the, contributory principle, so that a man did not get benefit after he had been out of work for 19 months. That acts very harshly on a disabled man, who finds it more and more difficult to get work. There are today a large number of disabled men who after 19 months have found it impossible to get a job. Because benefit is based on contribution they no longer get it, and have to seek supplementary benefit. That is only one aspect of poverty.

Reference has been made to the use of family allowances to relieve child poverty, but before we go into that let us look at what basically creates poverty—unemployment, the younger widow and all the other aspects. The time has come when we must reorganise the social security system. My right hon. Friend has told us that this is a big job, and so it is. The party opposite could not do it in 13 years, but we are expected to alter the whole system when we have been in power for less than three years. Changing conditions make a review necessary.

Constant attendance allowance and unemployability allowance apply only to the industrially injured or to the war pensioner. The man who is disabled and bedridden because of pneumoconiosis is in a very bad way and gets constant attendance allowance, which the Bill increases up to £6. But the man who is bedridden from natural causes does not get the allowance. Such differences as these must be remedied.

A man who is unemployable because of industrial injury or industrial disease can be paid unemployability allowance, but if he is just disabled by sickness or by natural causes the allowance is not payable. In this respect, too, I know that my right hon. Friend agrees that we must reorganise and remodel the whole basis of the National Insurance Scheme.

Much has been said about poverty, but I do not believe that the State can always pull us out of our difficulties, or that we must go to the National Insurance Scheme every time. After all, where is the poverty and what is its cause? The main cause of poverty is low wages. However much we may increase family allowances, it should be remembered that there are day-wage men in the mining industry who take home £11 a week or less. I do not dispute that family allowances will be of benefit but even with increased family allowances there will be poverty because the men will get, perhaps, £13 a week. Can a man with a family live on £13 a week? We know that he cannot, so we must look at the problem of low wages.

I do not always agree with our friend Frank Cousins of the Transport and General Workers' Union, but I agree that there should be a national minimum wage. No man should go home with less than £14 or £15 a week. Differential rates cause great discontent. If we fix a better minimum wage we can the better apply ourselves to some parts of the National Insurance legislation, but supplementing wages by the National Insurance Scheme will not solve the problem of poverty. I therefore hope that the National Board for Prices and Incomes and other people will appreciate that poverty can best be grappled with by increasing wages.

The hon. Lady the Member for Melton took between 35 and 40 minutes to race through a brief, and made certain statements that were very difficult to follow, but I must tell her once again that she and her hon. and right hon. Friends, in 13 years of power, never suggested reorganising the Acts. Today we are only repeating what was done by the right hon. Member for Kingston-upon-Thames. He brought forward measures, I say it in justice to him, for increased Cates of benefits of various sorts, and he was criticised for it. We are getting the same criticism today. It is true that the proposed increases in this Bill are a little more than the increase in the cost of living, but the day has come when we must reorganise the National Insurance set-up.

Let us go forward and build on the basis laid by my right hon. Friend the Member for Llanelly many years ago. If this debate serves that purpose, it has been worth while.

8.18 p.m.

Mr. John Boyd-Carpenter (Kingston-upon-Thames)

The right hon. Lady, at the beginning of her clear and, except in its inevitable peroration, agreeable speech, referred to this "short debate". But let me say at once what an outrage I think it is on the House of Commons that we should be asked to deal with a National Insurance Bill in a debate in which, by the time the first two speakers had concluded, less than two hours was available for all the back bench speakers and for the hon. or right hon. Gentlemen who may be winding up. The hon. Member for Bedwellty (Mr. Finch) referred to the time when I had certain responsbilities in this sphere, and I can say that this was not the way in which we used to treat National Insurance debates.

This subject affects everyone of our constituents. It is monstrous that the Leader of the House, who, when in opposition, would have raised the biggest row of all if this had been suggested by the then Government, should allow three hours in all for this debate. This is underlined, and the Government's curious sense of proportion illustrated, by the fact that, at ten o'clock, there will be put a Motion for an unlimited suspension for the homosexuals Bill. This is an astonishing sense of proportion.

The Government's own National Insurance Bill, affecting everyone in the country, gets three hours, but there is to be an unlimited suspension for what is still pretended to be a Private Member's Bill. I do not blame the right hon. Lady. I am sure that she did her best. But this is not treatment for which the House will lightly forgive the Leader of the House.

The Press has given the right hon. Lady's Bill something of a basting. The Daily Telegraph had a brilliant article taking it to pieces and so did most of the Press—almost always on the point to which she herself rightly devoted a good deal of her speech, the absence of selectivity. The fact remains that she is drawing some hundreds of millions of pounds from what is, unhappily, a static national product, without giving any guarantee whatever that she is going to overcome the main strategic centres of poverty.

This Bill will be, in this respect a dispersion of forces as ineffective as all the efforts of the Egyptian Army in the last few weeks. I agree with a good deal of what the right hon. Lady said about selectivity. There are plainly limits to the extent one could introduce it into the contributory part of the social security system. On the other hand, it is possible to introduce it into the contributory part in respect of certain broad categories of beneficiary who can be thought in general to have special degrees of need.

I have heard the hon. Member for Bedwellty, who speaks with great authority, many times on this subject and he has taken me personally to task for not having done this when I had the honour to occupy the office of Minister of Pensions and National Insurance. He is wrong and I will remind the House of what I suggest offers a precedent to what the right hon. Lady should now do and extend.

I took the view at the time, and I think that the House supported me, that the person in greatest need was the widow with a number of children. Therefore, every time we increased the National Insurance benefits, we increased the provision made for the widow's children and, therefore, for her household, quite out of proportion to the increases we were making across the board. The net result was that, whereas at the end of the Conservative Government in 1964 the real value of the general benefits of the scheme was 50 per cent. up from the level we inherited in 1951, in the case of a widow with three children, for example, it was up 100 per cent.

I suggest that the right hon. Lady should build on that and bring in further categories. First I suggest that it is the very old, as my hon. Friend the Member for Melton (Miss Pike) argued—say, those over 75—who are such a category that is in the greatest need. They have special needs. There is increasing physical weakness, increasing inability to look after oneself, things wearing out, inability to do even a modest amount of work.

I think that the right hon. Lady will find in her Department evidence to support the claim that the greatest hardship among pensioners is among the very old.

I see no reason why, just as we stepped up the provisions for the widowed mother and her children over and above the extent to which we stepped up the other benefits, the right hon. Lady should not do so for the very old pensioner.

One other category are those who, in the rather bleak language of the Department, are described as the long-term sick—the hopelessly crippled and disabled who will never work again. I have a gallant lady in my constituency who suffers the ghastly disease of multiple sclerosis, which she endures with the utmost courage. She only draws the ordinary standard sickness benefit, which may be adequate for the short-term sickness of someone in regular work but is a poor foundation for a life of increasing disability and inability to work. Here again, there is a case for greater selectivity, whether we call it, as has been suggested, constant attendance allowance or unemployability supplement or something else, borrowed from the war pension scheme, does not matter. But it is certainly a form of selectivity that we should adopt.

I want to pick up the hon. Member for Bedwellty again in his claim that we did not do anything about selectivity. I recall, again from my own experience, that we also increased the family allowance for the third and subsequent child to 10s. as compared with 8s. for the second child. That selectivity was outside the contributory range. It is a sort of selectivity that this Bill does not include.

The Bill is more noticeable for its omissions than for its contents. It is a rather sad aftermath to the prolonged thoughts of the right hon. Member for Sowerby (Mr. Houghton), and the rather less effective brooding of the Minister Without Portfolio. It is a far cry from National Superannuation, half pay on retirement and all those other delightful ideas that right hon. and hon. Members opposite dangled before our fellow countrymen at the polls. There is omission after omission of that kind. But one omission gives me pleasure. This is that the right hon. Lady has omitted any steps to interfere with the scheme of graduated contributions and pensions introduced in the National Insurance Act, 1959.

That is curious. The House will recall what right hon. and hon. Members opposite said about that scheme. The right hon. Gentleman the Leader of the House, straining to its limits the resources of a Wykehamist vocabulary, described it as a "swindle". The word even crept into the Labour Party's election manifesto. I am glad to see the Joint Parliamentary Secretary here. He will recall that in February last year he told us: We said 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."—[OFFICIAL REPORT, 7th February, 1966; Vol. 724, c. 135.] If the hon. Gentleman and the Minister really meant that, why are they not altering it? Why are they putting themselves in the position of drawing revenues from a scheme which they described as a swindle and building up pension rights under it? Why are they not, when they have the power, raising a finger to alter it? They have been in office for nearly three years. The hon. Member for Belwellty thought that it seemed longer. It certainly seems so to the country.

The Government have now got a majority of 100 and it is nearly 18 months since the Parliamentary Secretary said that. If they do mean to be taken seriously in describing a scheme in these terms as a swindle, is it not their duty to alter it and not to draw their payments under it and continue to do so on an ever increasing scale? There is a test of the sincerity of the party opposite.

If this is an acknowledgment that this is a sound scheme, every penny of which goes in payment of pension benefits, then it is very sensible of them to continue it and, having had something to do with it, I welcome that. However, I hope this means that we shall not hear any more of this calculated hypocrisy of trying to besmear a scheme which is serving this country well and which the right hon. Lady admits to be so doing by continuing it in force.

If she again accuses me of having in this way perpetrated a swindle, I will remind her of the words of the late Lord Birkenhead, "To a man of spirit the receiver of stolen property is a degree more contemptible than the original thief."

I want to say a word about the extraordinary Clause 5. There is no effective provision in the Bill or in the Clause to improve family allowances. There is no obligation imposed on the Government to make any increase at all. The words, and I recall them with a certain feeling of irony, are, … may with the consent of the Treasury … The right hon. Lady may do this; there is no guarantee that she will.

It is quite extraordinary. Every previous Government which has improved family allowances has brought that precise proposal before this House and asked it to decide it. The right hon. Lady is merely asking for this power. Of course, we know why this is. We know that the right hon. Lady wants to do something and the Chancellor of the Exchequer does not want to do anything. The Cabinet is split on it, but there is nothing novel about that, because the Cabinet is split on everything.

Then there is the right hon. Gentleman the Minister without Portfolio, who was here a short time ago, with his habitual air of a recently orphaned bloodhound, brooding completely ineffectively over it. He does not even bark. This is the reason, and it is a very bad way to treat the House of Commons.

The Clause is a very bad Clause. The right hon. Lady is not only seeking to take power to increase family allowances; she is also seeking to take power to reduce other allowances paid in respect of children under the National Insurance schemes. I recall no precedent—I hope I am wrong—for giving a Minister power to reduce allowances which this House has voted under the National Insurance scheme. This is a very wide and sweeping power to give the right hon. Lady.

If she does come forward with a proposal it is to be only subject to the negative procedure. It is most extraordinary that something which is normally the subject matter of legislation is now to be dealt with under the negative procedure. The right hon. Lady may say, "I may want to do it in the Recess". If the right hon. Lady has it in mind it should be done now instead of putting the House in the hopeless position that if we think what she pro- poses to do is inadequate, as it may well be, all we should be able to do is to reject it so that the children get nothing. This is utterly unsatisfactory and must be looked at in Committee.

Then there is the extraordinary provision that though the orders are not made they are revoked in advance as from next April. That is an astonishing proceeding. Why? I suppose it is because the right hon. Lady wants to tie this up with some sort of tax "fiddle" of the Chancellor's. I hope that she is not going to finance these proposals by increasing the taxation on other families. I hope that my hon. Friend the Member for Melton and my right hon. Friend the Leader of the Opposition will forgive me if I say that if there is to be additional taxation it should be on bachelors and spinsters.

Mr. W. R. van Straubenzee (Wokingham)

Why?

Mr. Boyd-Carpenter

Because—my hon. Friend has declared his interest—everybody knows that the family at all levels of society carries a very heavy financial burden compared with single people in similar positions. If this is to be financed out of taxation it should not be financed by transferring the burden as between families.

These are extraordinary provisions, revoked before they are made, with no power to compel the right hon. Lady to make them, subject only to the negative procedure. This is absolutely unprecedented, giving the right hon. Lady power, which none of her predecessors ever sought, over the interests of the beneficiaries of the scheme, and all for the squalid reason that the Government cannot make up their minds what it is they want to do.

When the right hon. Lady is on pension herself, when she is a charming old lady in retirement, I think that she will look back on this Bill as her great missed opportunity. It seems easy in the second year of a Parliament and the third year of a Government to think that there is plenty of time. But time moves very quickly for a Government and is the lifeblood of a Government. Very soon, the right hon. Lady will be in the position where the Chief Whip and the Leader of the House will be saying that there is no time for complicated legislation.

Here the right hon. Lady is, in the second year of this Parliament, with a majority of 100 and all these opportunities missed. I think that she may well reflect on those wise words of Kipling's: Day-spring mishandled cometh not again.

8.35 p.m.

Mr. David Winnick (Croydon, South)

A great deal has been spoken today by hon. Members opposite about what was done in their term of office. I have checked on the figures. I do not want to make great play with them, but during the 13 years that they were in office there was a. total increase to single people of 37s. 6d. and to married couples of 59s. So far, under the Labour Administration, including the proposed increases which we are discussing, the total increase to a single person will be 22s. 6d. and to married couples 37s. I can well understand that the hon. Member for Melton (Miss Pike) and the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) did not want to give our scheme too much praise.

Before I came to the House, I can remember moving a Motion as a member of the Borough Council of Willesden suggesting that there should be a pension increase. It was some time in 1962 or 1963. The very next day, I happened to see my own Member of Parliament, the hon. Member for Willesden, West (Mr. Pavitt), who said that he had come from the House, where M.P.s were debating the same subject, and that the then Minister, the right hon. Member for Kingston-upon-Thames, had put forward all the possible arguments why there should not be an increase.

The hon. Member for Melton conceded the point that the number of retired people receiving supplementary benefits has increased. It has increased, and the House should be pleased that a group of people desperately in need of a few little extras are now receiving them. There is no element of charity in it. In a Written Reply last year, the Parliamentary Secretary said that there were approximately 1,200,000 pensioners receiving supplementary benefits. The position at the moment is that 1,600,000 are receiving them. This is an excellent step forward, and I am very pleased about it.

During the short time in which I have had the honour to be the Member of Parliament for Croydon, South, I have made the point time and time again in speeches and letters to the local Press that retired people entitled to supplementary benefits and not receiving them should not hesitate to claim them. I hope that many more will claim who are entitled to the supplementary benefits but are not claiming them at present.

I am pleased that the pension increase is taking place. There is a great debate going on not only between the two parties, but inside them, about whether increases in welfare benefit should be universal or selective. I do not want to deal with that aspect tonight, because I want to concentrate mainly on the difficulties of elderly retired people, but I am not in favour of the idea that the old age pension should remain more or less frozen and that all that should take place are supplementary increases for those most in need. Over a period of time the basic old-age pension should be increased. That is why I am happy that we are discussing increases of 10s. and 16s. tonight.

It is interesting that the trade union—for that is what it is—which is responsible for pensioners, the National Federation of Old Age Pensioners, has insisted time and time again that the basic pension should be increased over a period of time. I hope that the local branches of the National Federation will be happy with the increases which we are discussing.

I sometimes think that it may be very difficult for people of my generation to understand what it means for retired people to try to live on a very limited budget. Fortunately, I have never had to do so. I have never had to face the sort of poverty which so many of my constituents must face day in and day out. I do not wish to appear to preach to the House, or to adopt a holier-than-thou attitude, but there must be occasions when even hon. Members find it difficult to understand how pensioners on a very small budget meet all kinds of difficulties when they buy odds and ends which they have not budgeted for, items which we take for granted, such as underwear and other clothing and shoe repairs. For the pensioner with a very small income they form a deviation from the normal budget which cause them a great deal of hardship and difficulties in making ends meet.

People who have not had to face poverty themselves have difficulty in understanding the plight of our fellow citizens who are living in poverty mainly because they are retired and no longer working. I decided to try to find out the position of some of the pensioners in my constituency. I did not consider it necessary to make a constituency survey, but I spoke to some of the people responsible for the welfare of the pensioner. In my hand I have the budget of a single pensioner and a married couple. The single person has a budget of about £6 a week, and this is how it is constituted: rent and rates, £ 1 15s.; repairs and decorations, 10s.; fuel and light, £1; clothing and shoes, 5s. 6d.; food, £1 10s. I hope that it is more, for that is only about 4s. a day. The budget continues: fares, 4s.; television rental and licence, 9s.; and pensioner's outing club, 3s. 6d.

The married couple has a combined income of £10 13s., some of which comes from the supplementary benefit. Their budget is: rent, £2 13s.; repairs £1; gas, electricity, coal and oil, £1 11s.; clothing and laundry £1 5s.; television and radio 15s.; fares 5s.; milk and food, including a special diet, £3 4s. In a special note on this piece of paper, which I received over the weekend, they say, "We have to watch every single penny".

What must be depressing for so many retired people is the knowledge that they are not only living in poverty and near-poverty, but that they will remain in it for the rest of their days. The only possibility of help is an increase in the pension or supplementary benefit. It must be terribly depressing to realise that day after day, for as long as one lives, one will never get out of the poverty rut.

This is why I am so pleased that in the short time since they took office the Labour Government have increased the general pension and brought the supplementary benefit into existence. Those who argue so strongly for selective benefits should bear in mind what happened last November, when we introduced the minimum income of £7 2s., plus rent and rates for a married couple, and £4 10s. plus rent and rates for a single person.

But I am also aware of the poverty of other sections of the community. Some of my hon. Friends want to deal with the poverty of young people, for the House has a responsibility not only to the elderly but to the very young. In my own small way I have tried to argue in favour of a minimum wage of £15 a week. I have tabled two Questions and I hope to chance my luck with an Adjournment debate on the need for a minimum wage. It can be seen, therefore, that I am well aware of the difficulty of those who earn small sums and have large families.

I am particularly concerned about people receiving supplementary benefits who may not get the total increase. I am not sure what the position is. I remember that when the National Assistance Board's operations were in existence pensioners who were on National Assistance did not get the overall increase. Will pensioners receiving supplementary benefits get the overall increase on this occasion? I ask that question because these pensioners, who are obviously in most need, should get the total increase of 10s. and 16s. I know that in theory they will all get the pension increase, but if there is any deduction from the supplementary benefit which they receive from the Ministry of Social Security they will not get the overall increase. I hope that we shall have a positive reply to that question from the Parliamentary Secretary.

My speech was intended to be very brief. It was not meant to go into the wider questions of poverty or selective benefits. We have a duty and responsibility in the House constantly to be aware of the sections of the community most in need. The House humiliates itself when it forgets those most in need, whether they be retired elderly people desperately trying to make ends meet or those living in poverty because they do not earn enough money and whose children are brought up in poverty. With limited economic growth, we shall not do all that we want to do in a short time. One of the main reasons why we are here is to overcome the poverty with which so many people are accursed and to create a better society in which poverty is one of the nightmares of the past.

8.47 pm.

Mr. John Pardoe (Cornwall, North)

I had hoped to be able to welcome the Bill, but there is very little time for any of us either to welcome it or attack it. I had hoped that we would have adequate time to welcome it and that it might be the end product of the Government's often announced review of the social security system. I had hoped that we might find in it some inkling that there had been a thorough-going review going on and that the pockets of poverty which we heard so much about were not simply the pockets of intellectual poverty in the Government's thinking process.

I regard this as a thoroughly miserable Bill. I do not welcome any part of it, except the meagre increases given in it. Absolutely nothing has been done to recast the system. There is nothing in the Bill, and there was nothing in the Minister's speech, to indicate that there will be a recasting of the system. I am not throwing the brick-bats which have been passed backwards and forwards across the House. Nobody, fortunately enough, can blame the Liberal Administration for their record in social security. I should think that people could only praise it. I admit that one of our problems is to escape from the magnificent work of that great Liberal, Lord Beveridge, and this debate, short as it is, may help to take us some way along that road.

I oppose the proposed increases because they are inadequate. The hon. Member for Croydon, South (Mr. Winnick) said that he did not understand how people could live on these very low pensions. I entirely agree with him. I cannot understand how people will make ends meet even on the new pension of £7 6s. for a married couple. What I want from the Government is some idea that they are aiming at a realistic level of old-age pension. I accept that they may not be able to afford them here and now, but I would like an announcement that they have in mind an idea of the level which they regard as satisfactory. It must not be stated in money terms. It must inevitably be stated in terms of average earnings in the country.

The aim should be that pension must be linked to average earnings and should go up when average earnings rise, so that the old people get an automatic share in the increased wealth of the country. These levels should be one-half the average male earnings for a married couple and one-third for a single person. That would give an old age or retirement pension for a married couple of about £10 to £11 a week. I accept that that cannot be done overnight, and not even within three years, but it could be stated as the Government's aim, and I hope in the very near future to see an indication that that is so.

I oppose not only the increases in the benefits, but I oppose the increases in the contributions still more. I believe that the Government have again made the vital mistake of clinging to the contributory system. The Minister spent a considerable time in defending the contributory principle. I am sorry, but I do not accept one word of her defence of it, because the contributory system as we have it is a poll tax. It is a poll tax in the sense that it affects the poor and the richt alike. Even though we have the fraudulent and swindling graduated pension scheme, which to a certain extent relates contributions to earnings, nevertheless it is still basically true that contributions in our pension scheme are a poll tax.

Why not go over to a non-contributory scheme? What is so wrong with it? A contributory system is far less distributivist than a system based on taxation. It is extremely important to isolate the money which we apply for the scheme from the Government's general expenditure, which is what contributions do. One can do it perfectly well, however, by a social security tax, which would be related to incomes, which could perhaps be levied, as I hope it would be, as a payroll tax as a percentage of an employer's payroll, with the employer paying two-thirds and the employee one-third. It would be easy to collect, it would be a dynamic tax and it would rise as earnings increased. It could be devoted solely to paying for the social security system. The great thing is that it must not be raided for east of Suez follies or any other machinations of Governments, either the present one or their successors.

I turn briefly to the question of the means test, which has become all the rage in the Press and, I fear, is very much the rage and the "in" thing on both sides of the House. It is almost impossible to escape from the jargon of universalism, discriminatory benefits and the rest. Indeed, it seems that no radical politician who wishes to retain his self-respect can resist jumping on the band wagon.

I do not oppose the means test in principle, and I do not think that there are many hon. Members who in principle are opposed to it. Even the Labour Party accepts our progressive taxation system, which is a means test. Again, many people in the Labour Party advocate a means test for housing subsidies, and I would certainly go along with that.

When, however, the Conservative Party advocate the discriminatory payments of social security benefits, they are being less than straightforward. The Tories pretend that they want less welfare to go to those who do not need it and more to go to those who do need it. What they mean, I suspect, is that they want less welfare. Behind the mask of the means test the Tories hide their real purpose, which is to cut public expenditure at all costs. Their attitude to public expenditure is pathological. It is never seen as more roads, or more houses, or more hospitals. It is just seen as some gigantic science fiction octopus grasping the nation in its tentacles.

For all their righteous prating, the Tories see the means test not as a way of giving more to the poor but as a way of giving less to exerything public. There are those who gaily refuse to accept that there are difficulties in testing means. They orate in somewhat Old Testament terms about the iniquities of council tenants who live on £30 to £40 a week, implying that this is all part of some wicked Socialist conspiracy to destroy the moral fibre of the nation and ending up with a crying appeal to give more to those who really need and stop giving away the nation's birthright to a load of spivs and charlatans. This mixes strangely with the Conservative Party's attitude to the proposals to change the system of family endowment.

I should have thought that it was a good Tory principle to say that we want to use the £500 million which is presently used in tax allowances for families to give more to those who really need it and less to those who do not, but for some unknown reason at this point the Conservative enthusiasm for the principle cools off notably—I can only suppose because the Tories realise that it will affect the pockets of those who give them their support.

I am not talking about millionaires who do not need this money. I am talking about myself, because the State pays me the best part of £200 for my family of three children. The tax allowances for my children are worth about £47 10s. at the standard rate, each child. The family allowances which my wife and I get for the second and third of our children are worth approximately the same amount for the two of them together. Therefore, although I, with a perfectly adequate Parliamentary salary, am being paid £200 a year by a very generous State for the benefit of having three children, somebody in my constituency who is trying to bring up three children on perhaps £10 a week is getting less than £50 a year given to him by the State for doing so. This seems to me to be absolutely crazy.

In following along the principle of giving more to those who really need it and less to those who do not, I say to myself, "Rearrange the system so that some part of that £200 which the State pays to me goes to those who really do need". We can play around with the taxes of spinsters and bachelors if we like. We might well help out the endowment scheme by this means. I am convinced that this is the way forward.

I hope that the Minister will not be deterred by remarks which have been made today from the Conservative benches. I hope that when she brings the scheme forward later this month it will be along the lines which I proposed at last year's Liberal Party Assembly, which have been adopted by the Child Poverty Action Group, and which, when I raised the matter last time in the House, drew from the Joint Parliamentary Secretary the comment, "Anything the Liberal Party can do we", meaning himself, "can do better." I hope that that song will at last see the light of day later this month.

There are severe disadvantages in using the P.A.Y.E. system to give some form of means test. One of the reasons why I say this—it sounds all very easy, especially when the right hon. Member for Sowerby (Mr. Houghton) talks about banks of computers, as he does in his recently published pamphlet—is that there is hardly a Conservative Member who does not honestly believe in his heart that the progressive P.A.Y.E. system is a disincentive to effort. We are always being told this. Many of us probably believe it. Recently, when a council in my constituency proposed a rent rebate scheme, I was involved in the row that transpired and which always transpires on such occasions. It came across to me very forcefully that the man who is discouraged from doing any overtime at all by the idea of paying 6s. 5d. in the £ on his overtime is far more discouraged when he realises that by doing his overtime, or by his wife going out to work as a waitress in an hotel during the summer season, he will have to pay a higher rent. Thus, if it is a disincentive in our Income Tax, it is a disincentive when it is applied to granting help.

While I accept that it would be honest to have some form of discriminatory payments, to believe that we can discover some way of finding out where the pockets of poverty lie, so that we can find out where to apply the money, is a pipe dream, not because people do not accept the principle—many may not, many may have severe reservations about it—but because even those who accept the principle must admit that the practicality of it is not there.

It is no good people coming to the House of Commons, or going into the country, and talking in the old clichés about "we really must look at this"—and I say this with a non-party attitude—and all the rest of the rigmarole that we get, particularly from the Conservative benches. It is no good their saying this. If they want the House to accept the means test, they must come forward with a practical solution. I hope that they will do so, but at the moment there is not one on the horizon.

9.2 p.m.

Mr. Peter Archer (Rowley Regis and Tipton)

Throughout his speech I suspected that the vigorous delivery of the hon. Member for Cornwall, North (Mr. Pardoe) rather concealed the fact that he was very much more in sympathy with this side of the House than with some hon. Gentlemen opposite.

I confess that on one matter I find myself wholeheartedly in agreement with the hon. Gentleman. This is in his regret that it has not been possible in the Bill to provide larger increases than have proved possible, and it is for this reason that I confess to some disappointment with both the other speeches from the benches opposite. They dutifully and if I may say do ably, trotted out the predictable arguments against the Bill, but ignored the fact that my right hon. Friend had already dealt with those arguments, that she had faced them squarely and answered them.

My right hon. Friend said that if there is only a limited amount of cloth, one has to decide what kind of coat to cut. During the last three years the Government have been dealing with a crisis not of their own making, and in the process they were determined that the elderly, the sick, and the unemployed would not be the sufferers. As my right hon. Friend said, the Government were determined to keep faith with them.

If it is proposed by the hon. Lady the Member for Melton (Miss Pike) that certain other provisions should be made selectively for other categories, unless she can show where the additional money will come from, the only conclusion to which she must be driven is that she regrets that the beneficiaries mentioned in the Bill are to be benefit as they will. If this is the case put forward by hon. Gentlemen opposite, they should say so honestly to the nation.

Having said that, I am bound to concede that I have a certain sympathy with the feeling that when future benefits are available, when it becomes possible to dispense perhaps a larger measure of generosity, it will be dispensed with some degree of selectivity, something which I understand is already in my right hon. Friend's mind. The question which then appears to confront us is whether the selectivity should be a means test, or whether, in the words of the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), it should be categories. The right hon. Gentleman made his position clear.

It seems that there are those to whom the future policy of the Conservative Party is committed are equally clear, because in a report by the Young Conservatives, published in September of last year, entitled, "Social security in the 'Seventies", the chapter on pensions and social security says: If we take the community's role to be that of ensuring a basic minimum level of security". This is where we on this side of the House immediately join issue with them. And, of course, they are led to conclude that such benefits, as child benefits, maternity benefits, and family allowances should be paid subject to a means test.

I listened carefully to the hon. Lady the Member for Melton, hoping that she would let us know on which side of the fence she came down. I was still wondering at the end of her speeech, but her reference to low income families caused me to come to the conclusion that she came down on the side of the means test. If that is the proposal it will meet with little sympathy from this side of the House. I would be very unhappy about a means test, for at least four reasons.

First, a means test penalises hard work and thrift. I am always rather surprised that those who are most ready to speak of a means test in this connection speak so much more vigorously of the need for incentives when rates of Income Tax are under discussion. It seems that the incentives provided in respect of low-income families is fear that they will be driven to a means test. The argument appears to be that the rich will not work unless you make them and the poor will not work unless you make them poorer.

The second reason is that we already have a plethora of means tests. Some families are submitting to as many as ten. This afternoon I tried to persuade my right hon. Friend the Minister of Health that a family, one member of which had already proved entitlement to free school meals, should not be asked to establish, independently, entitlement to welfare foods. A strong feeling exists among Members on both sides of the House that we do not want more means tests.

The third reason why I am unhappy about the prospects of a means test is that it exacerbates the problem of non-take-up. No family which believes that it is entitled to benefits will willingly contemplate submitting to a further means test, particularly when the forms involved nearly always begin, in jet black letters, with a warning about the dire consequences of any mis-statements. It is enough to put the fear of God into people before they start.

The fourth reason is that, all too often, as the hon. Member for Cornwall, North has said, a means test is not a method of redirecting resources; it is a method of cutting down benefits which already exist. It is an excuse.

I hope that my right hon. Friend will forgive me if I say that some of us hope that the time will soon come when some of the selective principles in reverse which already operate, and to which these increases are still subject, will be looked at. The first and obvious one is the wage-stop. I accept the reasons for this, but it seems unfortunate, to put it at its lowest, that a family which already, when the breadwinner was in full employment, had too little to live on, should for that reason continue to have too little to live on when the breadwinner ceases to be in employment.

The second is contained in Section 13(1) of the National Insurance Act, 1946—a Section to which I have ventured to draw my right hon. Friend's attention in the past. I make no apology for raising the subject now. I appreciate the enormous pressures to which any Minister is subject, especially a Minister holding my right hon. Friend's high office, but it appears to be not a reason for sympathising with her and easing off, but, rather, for continuing to apply pressures in the other direction. There was the character in one of Charlotte Bronte's books who said, "We must turn to Parliament to help us and if they say it is difficult we must shout all the louder because they will need all the more prodding to do something which is difficult."

Section 13(1) of the 1946 Act provides that a person who has become unemployed as a consequence of a trade dispute shall not receive benefit. The subsection proceeds, in a rather confusing series of negatives to say that, nevertheless, it may be payable if he does not belong to … a grade or class of workers of which, immediately before the commencement of the stoppage, there were members employed at his place of employment any of whom are participating in or financing or directly interested in the dispute. That means that if 100 men work at a certain place, one of whom belongs to a union engaged in a trade dispute elsewhere, in consequence of which that place of employment comes to a stop, all the other 99 are deprived of their benefit. My right hon. Friend has promised to give her attention to this matter and I indicate only that we have not forgotten it—

Miss Herbison

My hon. Friend will be aware that the Royal Commission is examining this matter.

Mr. Archer

I had not forgotten that, but I am grateful to my right hon. Friend for reminding me.

One other instance of discrimination in reverse is the fact that many beneficiaries who are most in need find that their benefit either runs out or is reduced because their contribution record has expired. For example, the long-term sick are just the people who need money, but discover that, because they were sick last year, they have not obtained the appropriate contribution record. This calls in question the whole contributory system. I listened carefully to my right hon. Friend and confess that it was with this part of her speech that I was not wholeheartedly in sympathy.

The alternative is not means-tested benefits, but to finance them from Income fax. Someone called this "letting the burden fall on the taxpayer", but surely that is the fairest way. I appreciate that there were arguments in favour of the contributory system at its inception—that it gave people a sense of responsibility because they related contributions to benefits, and a sense of entitlement instead of receiving charity, and that it set up a fund which was preserved against being eaten into by cuts—but the time has now come, perhaps, when these arguments have subsided. The nation's mood is prepared to accept a revision of this scheme and I hope that this will be considered by my right hon. Friend.

There are certainly categories which we would all wish to help, which suffer because of this. The obvious example is that of the elderly people who were too old to be brought into the contributory scheme. I know that they cannot be helped now, because it would be a breach of the contributory principle but surely this is a reason for at least considering getting rid of that principle. Another example is a widow who receives benefits in respect of contributions by her late husband. If she remarries and her second husband does not obtain the necessary record of contributions, even if he dies on the wedding night her brief moment of matrimonial bliss will have cost her her pension. I hope that my right hon. Friend will consider this again.

I had hoped that there would be time to look at the principle of selectivity and some of the categories which we should help, and I know that some of my hon. Friends were anxious to consider the cases of children of families in poverty, elderly people, the chronic sick and invalids; I join those who regret that there was not more time to discuss the Bill's principle. I hope that if I end now, it will enable one more back bench Member to speak.

I am wholeheartedly in favour of the Bill. I accept with gratitude what is in it already, but look forward with some anxiety to the next.

9.15 p.m.

Mr. Airey Neave (Abingdon)

I am glad that the hon. Member for Rowley Regis and Tipton (Mr. Archer) mentioned the subject I wish to speak about in a short sharp attack on the Minister for the next five minutes for not including in the Bill old people who were excluded in 1948. She has had many warnings about this matter and I shall refer to the Answers she gave to me on 26th June.

The right hon. Lady told the House that there were 175,000 old people still surviving who were not included in the National Insurance Scheme in 1948 because they were above pension age. She said she could not do anything for them. She said that their average age was 85. The plea I make is for those who are getting on for 90 there should be a State pension as of right. It is a shocking confession for any Government to have to make. I agree that the Conservative Government did not do anything about this. I criticised them at the time for not doing it, but the present Government have now been in power for two and a half years and have had this matter drawn to their attention. They should do something about it, for obvious reasons very quickly, because of the age of these people.

The right hon. Lady knows that 75,000 of these non-pensioners have died since she took office and since I originally attempted to introduce a Private Member's Bill in 1965. The right hon. Lady says that to give them pensions would be giving money indiscriminately to people who have not contributed to the scheme. Of course they have not contributed; she knows that by law they are not allowed to contribute. They were prevented from contributing in 1948, so it is not a fair argument to say this when they were over age under the 1946 Act.

I do not believe that this is a serious point of principle to make when those concerned have reached the average age of 85. The State is subsidising retirement pensions. The hon. Member for Rowley Regis and Tipton said that we should get rid of the contributory principle. I do not go quite so far as that, but this principle is quite irrelevant in this case. The right hon. Lady further said that 400,000 more old people are now on supplementary pensions. That is a very good thing. There are more in receipt of more supplementary pension than before, but she knows that it is dodging the real argument to say that when talking about those who have not been allowed to contribute.

I asked the right hon. Lady if she knew how many of these non-pensioners over age 85 were affected by supplementary pensions and she said that she did not know. In the same breath in the exchange at Question Time she said that this proposal would mean giving £40 million to people some of whom may be very well off indeed. We have heard before the argument about millionaire pensioners, but how does she know that these people are well off? She does not know how many of these non-pensioners are on supplementary benefit. She has no register of those who are not on supplementary pensions. She has no information about it.

Why does she not adopt my suggestion of making a register of these non-pensioners? Although she says that it would mean giving £40 million to people including some who might be well off, she is giving £290 million to people who have been contributors and some of them may be well off. It is hardly a fair argument to say to those over 85 who have not been allowed to contribute for 19 years that as they were not contributors they should have no pension. Things have changed in that time in terms of inflation.

On 26th June, the right hon. Lady said that hon. Members in various parts of the House asked her to be more selective in cases of need and that the pensions, if they were paid as I and others have suggested to these non-pensioners, would be indiscriminate. Why not be selective for people who are nearing 90 years of age? Are they to reach the age of 90 before she does something about this? She will be pressed throughout this Parliament about it. I hope that hon. Members opposite will be forced to vote again on this issue one of these days. Does the right hon. Lady wish that these people should die off before then?

Miss Herbison

It is just nonsense of the hon. Member to suggest that we are leaving them to die. The effect of the generous disregards in supplementary benefits and the different treatment of capital has made it possible for anyone who is really in need, with quite a large sum of capital, to have help. We have done everything possible to help them by the supplementary benefits scheme.

Mr. Neave

That is no answer at all. The right hon. Lady knows quite well that the claim is for a pension as of right in this case. She knows that it is a gross injustice simply to say that the supplementary pensions have been improved—as, indeed, they have—when it does not apply to perhaps more than half those we are talking about. That is no answer to the claim we are making.

I am sorry that the right hon. Lady tried to dodge the issue today. I hope that she will forget this Departmental line, will take a decision of her own and do justice in this case, because my hon. Friends will certainly continue to press her very hard indeed.

Mr. Speaker

Mr. Paul Dean.

Mr. Paul Dean (Somerset, North) rose—

Dr. David Owen (Plymouth, Sutton)

On a point of order. I have never before raised a point of order in the House, Mr. Speaker, and I do so now in order to seek your guidance. The Bill probably affects more of our constituents than any other Bill likely to come before the House. We have had a situation in which the Front Bench spokesman from the Opposition took 38 minutes and the Front Bench spokesman for the Government took 28 minutes. We are now to have another 40 minutes devoted to Front Bench speakers. In these circumstances, is it always necessary for the Chair to call a Front Bench spokesman?

Mr. Speaker

I am in complete sympathy with the hon. Member. I understand that the facts are correct as he has stated them. I have down here in my notes 29 minutes for the first Front Bench speaker and 37 minutes for the second Front Bench speaker, so that he is roughly right, and he is also right in the time which Front Bench speakers are now about to take. But Mr. Speaker has no power in these matters. He must call a Front Bench speaker to open and close the debate if the Front Benches insist, in a short debate, on having two Front Bench speakers from each side of the House. Mr. Paul Dean.

9.21 p.m.

Mr. Paul Dean (Somerset, North)

The whole House will be in sympathy with the hon. Member for Plymouth, Sutton (Dr. David Owen) in the point which he raised, but the target at which he should aim his remarks is the Leader of the House, who has allowed so little time for a debate of this importance. It has been a debate in which we have had many interesting and thoughtful speeches on both sides of the House, and it is a pity that we have had so little time for hon. Members to develop these points. I ought to start by declaring a kind of interest and thanking the right hon. Lady for the increase in the war disability pension which I gather I shall receive in November. I do not know whether that is an example of selectivity.

The first point which emerged clearly from the right hon. Lady's speech is that we need about £200 million to restore the value of the pension and other benefits to the March, 1965 level. In other words, this is not an advance for pensioners; it merely restores a cut which has been brought about by price increases. The right hon. Lady admitted that about 7s. has been eroded from the increase which was given in March, 1965. By the time that the new increases come into opera- tion, we shall have had further increases in prices, including an extra 2s. in the £ on electricity prices, and very little will be left of the increases in benefit. In other words, we shall be back, broadly speaking, to the position from which we started in March, 1965.

I know that the right hon. Lady quoted two sets of figures and showed that there has been a real increase in the value of these benefits if we take the last increase in addition to this, but she must realise that what matters to pensioners is whether their standard of living is rising or declining over a comparatively short period of time. They are not interested in what happened two and a half years ago. They are interested in what the pension is going to buy at the present moment. So I hope that she is not going to dwell on this argument, which has very little relevance to the pensioner.

We are talking, therefore, about a rescue operation to make good the decline in the standard of living of pensioners, a decline which has taken place during the last two and a half years. As such, of course, we welcome the Bill and support these proposals.

The cost is a very substantial one, an increase in contributions amounting to £217 million a year, an increase from the Exchequer contribution—in other words, from the taxpayers—amounting to £55 million. For the lower wage earner, the increase of 2s. on his weekly contribution is a very considerable additional burden. I looked up earlier the comments of the right hon. Lady and the comments of the present Leader of the House when contributions were put up by my right hon. Friends by 1s. There was a howl from their side of the House. Now they are putting up contributions by 2s.

This whole Bill, based as it is on the old traditional lines, is indeed a far cry from that day, 25th November, 1964, when the right hon. Lady moved the earlier Bill, her first Bill, and both she and her right hon. Friend the Member for Sowerby (Mr. Houghton), formerly Minister without Portfolio, created the very strong impression that that would be the last Bill on these old, traditional lines, and that long before another pension increase would be required the whole of the arrangements would be reformed. And yet we get another Bill on the traditional lines brought forward now.

We have heard a great deal about selectivity. The right hon. Lady called it a burning question. I wonder if she realised just how appropriate that word was; because, of course, it is no secret on this side of the House that there is a great deal of heat in the argument that is now going on in the Cabinet about what to do about selectivity and whether to act on it, and so it is a burning question for the Government.

She went on to say that selective benefits have an important part to play, but she said not one word about her idea of selectivity. She mentioned family allowances and a possibility here, and she mentioned housing subsidies and a possibility there, but she gave us no indication whatever of the meaning of selectivity within this field.

We believe that there is a growing feeling for it not only on this side of the House but also on her own side of the House. The right hon. Gentleman the Member for Sowerby has shown this in a very effective way. The former Minister without Portfolio was talking the other day about the need to give priority to pockets of poverty. Here are two examples from her own side of the House as well as those which have come from this side in the argument that indiscriminate, across-the-board benefits are a barrier to progress in the social field as a whole, so that we get into the vicious spiral of not giving sufficient help to the needy and not responding sufficiently fast to new needs as they arise—that on the one side; and on the other side of the penny, and equally important, of a growing burden of taxation which makes it more difficult for people to provide for themselves even if they want to.

We shall never have a casualty service if we insist upon treating everyone as a casualty, and we shall never help the weak if we break the back of the strong by penal taxation. We shall never get social justice unless we encourage work, thrift and personal responsibility. Unless we do this we shall not have the means of fulfilling our social obligations. Surely this is becoming more clear, particularly under this Government, when we see the graph of development of social services tending to decline and personal taxation rising at the same time.

It is a great pity that the right hon. Lady first put up and then spent a great deal of time knocking down the Aunt Sally that selectivity inevitably involves the means test. She spent a great deal of time on that argument, but my hon. Friend the Member for Melton (Miss Pike) made it crystal clear that we on this side are not in favour of means testing National Insurance benefits. I am very surprised that the Minister should have spent so much time on this topic. It suggests to me the disturbing thought that she is not treating at all seriously the possibility of selectivity; that she is not really considering the point made by my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) of the possibility of introducing selectivity within the National Insurance framework itself. My right hon. Friend explained how he did that very thing with regard to widows, and that is just one example.

Serious consideration ought to be given to whether there is not a way in which other categories where need tends to be greater can be given help over and above the general increases. The very old have been mentioned in this connection, and that is a classical example. We strongly support the view that we must have a basic floor upon which people can be encouraged to build—a contributory floor—but the longer people have been in retirement the more difficult it is for them to maintain their standard of living: furniture wears out, clothes wear out, things become more difficult.

We owe a special debt to the older pensioners, because they were working during the 'twenties and 'thirties when it was exceedingly difficult to put money aside for old age, but we must recognise that conditions are changing and that younger pensioners and those in the latter years of their working life have had the opportunity of better earnings and a much greater chance of joining occupational pension schemes.

One has only to look at the figures to see that the contributions to occupational pension schemes now just about equal contributions made to the State scheme. They run at well over £1,000 million a year, and the pensions and other benefits being paid out are running at the very substantial level of over £600 million a year. These are significant facts, and show that occupational schemes are becoming a major partner in means of provisions for old age.

This is a way in which the burden on the State of supplementary benefits should in time be reduced, but how much serious thought are the Government giving to it? We know of the state of uncertainty at present existing among those running occupational pension schemes. They have asked the Government on many occasions to tell them their future intentions for the National Insurance scheme. Until these people know that, it is difficult for them to plan ahead and do what the right hon. Lady mentioned—ensure better cover for widows. They cannot do that until they know what the State intends to do. So there is an obligation on the Minister to give a clear and early indication of intention.

There is also the question of transferability, frozen pension rights, portable pension rights—call it what one will. For months now—indeed, for well over two years—the Government have been considering this subject. Pressure on the Minister has come from both sides of the House, but nothing has happened. I hope that the Government spokesman tonight will tell us that the Government will be able to indicate their proposals for the future in regard to occupational pension schemes and transferability or freezing of pension rights.

Then there are the supplementary benefit arrangements. Here, surely, we have the classic example of selectivity against the poorest in the community. The hon. Member for Croydon, South (Mr. Winnick) mentioned this point. He asked the Joint Parliamentary Secretary the simple question of what will be the position of those on supplementary benefits under the Bill and the other proposals which are being brought forward for supplementary pensions.

Mr. Winnick

The hon. Gentleman is, of course, aware that, when pensioners were receiving the old National Assistance supplements, the total pension was reduced. They did not get the overall pension increase but only two-thirds.

Mr. Dean

It depended entirely on by how much the then National Assistance was put up. The question is whether it is the case, as I understand it, that those on supplementary pensions are going to get a 5s. increase, whereas those who are necessarily better off are going to get a 10s. increase. If that is the position, surely this will create, to say the least, misgivings and resentment amongst those concerned.

I know that the Joint Parliamentary Secretary will say, "We have increased the supplement by 5s., have brought in all sorts of special arrangements and have put up the disregards." But before using that type of argument, I hope that he will remember his own speech of 15th December, 1964. in which he said: In recent years, both sides of the House have considered it very desirable that the increases should operate at the same time in order to avoid the confusion and misunderstandings which occur if … National Assistance allowances which have been increased have to be reduced again after a short time for those receiving the National Insurance benefits. Those people would naturally feel disappointed and frustrated when they found that they received no advantage, or less than the full advantage, from the National Insurance increases."—[OFFICIAL REPORT, 15th December, 1964 Vol. 704, c. 323.] If I understand the Bill correctly, that is precisely what is going to happen on this occasion, so I hope that the hon. Gentleman will be able to explain the speech he made on that occasion. This is one example of the selectivity, and that the worst form, against those who are most in need.

Then there are the omissions—the omission of any word about child poverty, of anything for the non-pensioners, mentioned by my hon. Friend the Member for Abingdon (Mr. Neave), of anything for the widow who gets no pension, of anything with regard to the disabled. There is the extraordinary Clause 5, referred to by my right hon. Friend the Member for Kingston-upon-Thames, which gives the right hon. Lady powers to increase family allowances and to reduce National Insurance and Industrial Injuries allowances. Surely it is monstrous to ask the House to accept, without any chance of a debate, on a negative Resolution what may well be a major change in social policy at what may be a substantial cost. Surely the least the right hon. Lady can do in Committee on Friday is to tell us precisely her intentions under Clause 5.

Then there is the question of sickness benefit. Here we have the second most expensive benefit in the whole National Insurance Scheme, now costing over £300 million a year. Has the right hon. Lady considered the possibility of asking the employers to take on the first few weeks of sickness and relieve the National Insurance scheme of this? Many employers do it now. I am sure that there is a considerable overlapping and duplication in this between the sickness benefit scheme and what the employers do. Has the right hon. Lady considered the possibility of saving expenditure in this respect?

These are just a few possible ways in which selectivity within the National Insurance arrangements could be introduced. In so far as the Bill deals with the declining standard of living of pensioners themselves, we welcome it but we are disappointed that it leaves many urgent questions untouched.

9.40 p.m.

The Joint Parliamentary Secretary to the Ministry of Social Security (Mr. Norman Pentland)

Although we have had a very limited debate on Second Reading I think that everyone will agree that those Members who have been fortunate enough to catch your eye, Mr. Speaker, have made interesting and thought-provoking speeches on many aspects of our social security provisions. I can understand the disappointment that many hon. Members feel about the shortness of this debate, but I understand that this was agreed upon through the usual channels, so the fault must not be put just on one side.

In a debate so limited as this it is not possible for me, I think everyone will accept, to answer all the questions that have been posed, but I am sure that we shall hear more about them during the Committee stage of the Bill.

Before passing to the Bill, I must say, with respect to the hon. Lady, the Member for Melton (Miss Pike), that we are becoming accustomed to the kind of politically biased speech she always seems to make on social security matters. She always seems to act as if she herself is the guardian of the Tory Party's conscience on social security provisions. The more that conscience reminds her of what the Tory Party should have done for the neediest section of the community when they had the opportunity to do so, the more politically dismal and defensive her speeches become. There is hope for her yet. After 13 years of Tory rule, I can understand her dilemma when she has to reply on social security matters. She is a kindly person at heart, so we look forward to much better speeches from her in the years that lie ahead.

As my right hon. Friend has said, the main feature of the Bill that we have put to the House is the increase in National Insurance benefits—sickness and unemployment benefits, retirement and widows' pensions. They are to go up by 10s. for a single person and 16s. for a married couple.

I can tell the hon. Gentleman the Member for Somerset, North (Mr. Dean) that in the three years that will have elapsed since we took office in October, 1964, single rate pensions will have increased by £1 2s. 6d. and married rate pensions will have gone up by £1 17s.—an increase of a third in money terms over the previous rate. Despite what he has said, the Government have maintained benefits at a higher level than ever was achieved when hon. Members opposite were in power. The country will recognise that the economic and financial context in which we have had to take our decisions, has presented us with great difficulty when we have had to decide upon our priorities.

I think that every fair-minded person in the land will accept that our actions are clear evidence of the Government's determination to look after those who rely on the benefits of the scheme—the old, the sick and the unemployed.

We are also very much concerned to look after the industrially disabled. For instance, as a consequence of the Bill, about 350,000 people will benefit from the increases which we propose in industrial injury benefits. Disablement benefit is being increased by 17s. to £7 12s., and injury benefit by 10s. to £7 5s. It is true that there is to be a larger increase in disablement benefit than in injury benefit, but in many injury benefit cases there will be an earnings-related supplement.

Other industrial injury benefits—disablement gratuities and the supplementary allowances payable with disablement benefit—special hardship allowance, unemployability supplement, constant attendance allowance and increases for dependants, are also increased.

However, it would be a mistake to think of this operation as being concerned solely with increases in National Insurance and Industrial Injuries benefits and contributions. There will also be increases in war pensions and in supplementary benefits which are not part of the Bill, but which will come into effect at the same time. They form a very necessary corollary to the increases in National Insurance and industrial injuries benefits.

A lot has been said about selectivity, but one should not overlook the fact that a very large number of people really need the benefit of the increases which we are making. They are considerable increases, and they will be of great help to many thousands of people.

It has been said both in the House this evening and elsewhere in the country that a choice should be made between universal contingency benefits as of right, and selectivity based on some test of need. My right hon. Friend the Minister has said repeatedly in reply to Questions and has emphasised again this evening that she does not see the issue in that black and white way. I agree entirely with her. My right hon. Friend and I believe that there is a place in social security provision both for benefits which are payable because an insurable contingency has arisen and without any further test of need, and for benefits which are directed towards meeting special need on an individual basis.

At this point I want again to ask whether those who favour selectivity as a general answer are ready to say that they propose to let our old folk, the unemployed, the sick, widows, war pensioners and the industrially injured draw benefits which, year after year, fall further behind not only the rising standards of the population at large, but the cost of living.

Hon. Members opposite have expressed the view that there ought to be a more efficient use of our national resources for social security provision. The hon. Lady and others have said as much this evening. That is fair enough, but as my hon. Friend the Member for Rowley Regis and Tipton (Mr. Archer) has said, the Opposition have not said how they would measure this greater efficiency, nor what its practical effect would be. They never advise us of the consequences of their approach to the problem.

Mr. Dean

I am sure that the hon. Gentleman will agree that we are discussing his Bill and not the Tory Bill which we should like to see.

Mr. Pentland

That is how we get into the dilemma. Right hon. and hon. Gentlemen opposite continue to advance arguments that we should make a more efficient use of our national resources. It is interesting to note that, at the same time, we are criticised for not giving a larger increase in this Bill. We have also been criticised for not giving contributory benefits to those who have not paid contributions. Hon. Members opposite cannot have it all ways. Where are the resources to come from?

It is quite true that some workers are covered by sick pay schemes while they are off work because of illness, and that some retired people have made adequate provision for themselves in old age or enjoy the benefits of occupational pensions schemes. We have no indication, however, that more than a minority of pensioners are receiving National Insurance benefits as an addition to an already adequate income, but we do know that for very many people above the supplementary benefit level the National Insurance pension is of the very greatest importance. This is not to say that the Supplementary Benefit Scheme is not an essential part of our total social security provision. The benefits as of right which it provides are necessary to the well-being of a great many people.

I now come to the question posed by my hon. Friend the Member for Croydon, South (Mr. Winnick) and the hon. Member for Somerset, North. The main changes proposed in supplementary benefit rates are increases of 5s. a week for a single householder and 8s. a week for a married couple. However, this is the second increase in supplementary benefit rates since National Insurance rates last went up in March, 1965. Taken together with the increases made in the rates when the Supplementary Benefit Scheme was introduced in November, 1966, our proposals will result in increases of 10s. and 15s. 6d. a week respectively. These are broadly equivalent to the proposed increases in National Insurance rates.

It seems to me wholly proper that people should in the normal course be able to look forward to National Insurance benefits at a reasonable level, which they have contributed towards and draw by right, and be able to supplement these, without diminishing them, by means of savings, occupational pensions, and increments earned by working on after minimum pension age. When people think of selectivity it is important not to confound concern for pockets of poverty and areas of real need with an excessive spread of means-testing which could be a strong disincentive to self-help, and quite possibly a positive disservice both to the population at large and to those in real need.

This does not mean, however, that we have overlooked the need for a close examination of existing schemes for social security. We are looking to the future with the new measures already introduced as a result of our continuing review of the whole field of the social service provisions and the proposals which are still being considered, but it is no less our present concern than it ever was to provide a fair deal for the many thousands of people with rights under our existing schemes.

When we took office we undertook a review of the whole field of social security, and this review is still proceeding despite the cynicism often seen in certain parts of the Chamber. We have made it clear that we would not wait until our review was completed before bringing forward our proposals for improvements in the scheme.

Indeed, as decisions have been taken, we have already brought forward legislation to implement them. In this way we have introduced earnings-related supplements to sickness and unemployment benefits and the widow's allowance. Last August we set up the Ministry of Social Security and introduced in November the Supplementary Benefits Scheme, which has been widely acclaimed by hon. Members opposite as well as by my hon. Friends. My right hon. Friend the Minister has said on many occasions that a complete recasting overnight of social security provisions is probably not desirable and, even if it were, would certainly be impracticable. Therefore, as my right hon. Friend has said over and over again, we are tackling the problems in turn.

Family endowment proposals will be announced very shortly. A scheme of earnings-related pensions to replace the existing highly unsatisfactory scheme will be brought forward as quickly as possible. Work on improved provision for widows and the long-term sick and disabled is also continuing I know the disappointment of many hon. Members that we are not able to bring forward as soon as we would like many of the consequences of this review, but I assure the House that we are very conscious of what remains to be done and, what is more, we are very determined to make progress as speedily as posssible in this direction.

The Bill is a traditional uprating Bill and not a major overhaul of the schemes of social security. I should make it clear that a number of smaller additional measures in the Bill are designed to make improvements in the more restricted fields. For instance, the Bill increases death grant from £25 to £30. This is the first change in the rate since 1958 and only the second since death grant was introduced as an entirely new benefit in 1949. Death grant, of course, does not, and was never intended to, cover the full cost of a funeral. It makes, however, a useful contribution towards a cost which falls on all families.

The income limit below which self-employed and non-employed people may claim exception from paying National Insurance contributions is being raised from £260 to £312.

There are a number of changes in the Bill which are not of any major importance, but I know that they will affect and benefit many thousands of people. The Bill as a whole, however, is of major importance. We are pledged to maintain all social security benefits, and we are doing just that. We have taken action and I assure the House that we will take further action in due course to honour our responsibilities and obligations. People can look forward with complete confidence that the Government will look after their interests in social security.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Committee of the whole House.—[Mr. Charles R. Morris.]

Committee Tomorrow.