HC Deb 14 April 1969 vol 781 cc765-7
5. Sir B. Rhys Williams

asked the Secretary of State for Social Services what allowance he will make in settling the terms for contracting out of the proposed state graduated pension scheme for the fact that payments by employees into private schemes are accepted as a deduction from income for tax purposes but those to the state scheme are not under present arrangements.

The Secretary of State for Social Services (Mr. Richard Crossman)

I would ask the hon. Member to await the results of our current study of the detailed arrangements for contracting out under the new scheme.

Sir B. Rhys Williams

Is it not obvious that the Government have got themselves into a thorough muddle over this? Would it not be better to admit that social insurance and Income Tax are simply different aspects of the same cash relationship between the individual and the State, and by so doing cut the Gordian knot?

Mr. Crossman

That, of course, would mean providing an entirely new scheme, which would imply, I suppose, in the first place, abjuring the rights to a return on their contributions which millions of contributors have received, and this we do not intend to do.

Mr. Worsley

But surely the right hon. Gentleman will accept that the impact of Income Tax and the impact of contribution on the family must be considered together. Does he realise that his proposals immensely increase the disincentive effect of the total? What will he do about that?

Mr. Crossman

That, again, is somewhat different to the Question, and I replied to the part which was asked. If one tried to take into account the advantage gained by occupational schemes through the Income Tax concession, one would have to observe that some gain it and some do not. For instance, in the case of all non-contributory schemes the gain is nil.

34. Mr. McMaster

asked the Secretary of State for Social Services whether he will take steps to make it obligatory for contracted-out pension schemes to give beneficiaries increases dependent on the general level of prices.

Mr. Crossman

I would refer the hon. Member to the reply I gave the hon. Member for Kensington, South (Sir B. Rhys Williams) on 3rd March.—[Vol. 779, c. 17.]

Mr. McMaster

Will the right hon. Gentleman make it obligatory that the benefits under contracted-out schemes shall rise along with general increases in wages and salaries?

Mr. Crossman

I thought that I had dealt with that in my original Answer.

35. Mr. McMaster

asked the Secretary of State for Social Services how much revenue he estimates will be lost from the proposed State pension scheme for each one quarter of a million contracted out.

Mr. Crossman

The answer depends primarily on the level of abatement of the contributions for contracted-out employees. This has still to be worked out.

Mr. McMaster

Can the right hon. Gentleman say when, if contracting out continues at the present rate, the scheme will come into deficit?

Mr. Crossman

If we have the same number of people as we have at present, when the scheme would come into deficit would depend on the terms on which they were contracted out, which have not yet been agreed.

Mr. Worsley

Will the right hon. Gentleman indicate what are his objectives in this respect? How many people would he like to see contracted out of the scheme?

Mr. Crossman

This is a difficult question to answer because it depends on the balance of advantage. I want a scheme which is fair to those contracted in and to those contracted out. I suppose my aim would be to get contracting out on about the same level as now.