Commons Sitting of 4 December 1969

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
ORAL ANSWERS TO QUESTIONS
  EMPLOYMENT AND PRODUCTIVITY

    Prices and Incomes (Standstill Orders)
    Mr. Crouchasked the Secretary of State for Employment and Productivity if she will publish a list of the standstill orders or directions under the Prices and Incomes Acts, 1966, 1967 and 1968 at present in force, stating in each case the expiration date of the order or direction and the numbers of persons affected by each standstill relating to incomes.
    The Under-Secretary of State for Employment and Productivity (Mr. Harold Walker): There are two standstills at present in force, both relating to incomes. I am arranging for the information about these cases to be published in the OFFICIAL REPORT.
    Mr. Crouch: What is the effect of the standstill orders on the level of aggregate demand in the economy?
    Mr. Walker: The standstill orders flow from the general policy which itself is having an effect on the level of demand.
    Mr. Higgins: But is not the overall purpose of the policy to reduce the level of aggregate demand in relation to inflation? I am sure that the Minister, before imposing the orders, takes their effect into account.
    Mr. Walker: The overall purpose of the policy, among other things, is to relate the growth in incomes to the growth in output. The orders are part of that general policy.
    Following is the information:
    Statutory Standstills under the Prices and Incomes Acts at present in force
    1. On a settlement reached on 7th February, 1969 relating to the pay of certain workers employed in the exhibition industry. The Awards and Settlements (Temporary Continuation of Standstill) (No. 2) Order 1969 (S.I. 1969 No. 953) extended the standstill until 17th February, 1970. This agreement covered about 4,800 workers. The Order does not apply to the settlement reached on 10th October and effective from September, 1969.
    2. On an agreement relating to the pay of certain workers employed by members of the Association of Film Laboratory Employers. It is at present in force by virtue of Section 1(2)(a) of the Prices and Incomes Act, 1967, which provides for the continuation of a standstill imposed by direction for thirty days after the publication of an adverse report by the National Board for Prices and Incomes if the Secretary of State gives notice within 10 days of the publication of the report of a proposal to make an order extending the standstill. The N.B.P.I, report was published on 6th November and notice was given in the Gazette on 14th November. This standstill affects about 3,150 workers. An Order has been made, and will be laid and published on 5th December and come into operation on 6th December, extending the standstill until 7th February, 1970.

    Wage Settlements
    Mr. Crouchasked the Secretary of State for Employment and Productivity how many wage settlements have been notified to her Department in the current year to the latest available date where the award has exceeded 5 per cent.
    Mr. Harold Walker: Twenty-four affecting 10,000 workers or more. The number affecting a fewer number of workers cannot be extracted without a disproportionate amount of work.
    Mr. Crouch: Does the hon. Gentleman consider that this has been an effective order from his Department? By how many has this exceeded the norm, which we understand to be 3½ per cent.
    Mr. Walker: I am not sure that I understand the hon. Gentleman's question. He should not attach too much significance to the 5 per cent., because these settlements invariably involve a substantial element of productivity or substantial restructuring of wages.
    Mr. Heffer: Is the recent building workers' settlement likely to be referred to the Department for further consideration?
    Mr. Walker: The settlement is currently under consideration by the Department.

    Employment, Midlothian
    Mr. Eadieasked the Secretary of State for Employment and Productivity what was the total employable labour force in Midlothian in April, 1966; how many were male and female; how many were teenage, male and female; and what are the comparable figures to the nearest available date in 1969.
    The Minister of State, Department of Employment and Productivity (Mr. Edmund Dell): The employment estimates available for local areas show the numbers of employees—employed and unemployed—at each mid-year. They are analysed by sex but not by age. At June, 1966, the estimated number of employees in Midlothian was 257,000 of whom 156,000 were male and 101,000 female. The corresponding figures for June, 1968, the latest date for which information is available, were 255,000, 153,000 and 102,000.
    Mr. Eadie: I thank my hon. Friend for his answer. Would he agree that these figures indicate that, despite the fact that there has been massive contraction of the agricultural and coal mining industries, the County of Midlothian seems to be, not only holding, but increasing its population? Is not this because of the Government's policy of giving the development areas preferential treatment, or, as the Prime Minister says, blatant favouritism?
    Mr. Dell: I entirely agree that this excellent result is due to the considerable assistance given to Scotland by the Government.

    Ex-miners (Industrial Retraining)
    Mr. Eadieasked the Secretary of State for Employment and Productivity how many ex-miners received industrial retraining in the year 1968 in the County of Midlothian and to the nearest available date in1969.
    Mr. Dell: This information is not available for the whole field of industrial retraining. Eight ex-miners from Midlothian completed courses at Government training centres during 1968 and 16 so far in 1969.
    Mr. Eadie: Would my hon. Friend agree that these figures are most unsatisfactory, bearing in mind that the Select Committee on Nationalised Industries, in its report, indicated that contraction of the mining industry would still take place? Would he also agree that if this contraction continues at a substantial rate, not only in Midlothian but all over the country, his Department or the Secretary of State should look into the question of retraining miners?
    Mr. Speaker: Order. Long questions mean fewer questions.
    Mr. Dell: The small numbers are not due to the lack of facilities in Government training centres. If further ex-miners are available and suitable for training in Government training centres, their ability will be assessed. But the main possibility of retraining miners lies in industry where it can be undertaken on the specific jobs on which they are employed and in development areas and intermediate areas, with the assistance of Government grants.

    Safety, Health and Welfare Legislation
    Mr. Ellisasked the Secretary of State for Employment and Productivity what consultations she is having about her proposed legislation on safety, health and welfare; and if she will make a statement.
    The First Secretary of State and Secretary of State for Employment and Productivity (Mrs. Barbara Castle): I have had the benefit of advice from a sub-committee of my Industrial Health Advisory Committee so far as my proposals for the reform of the Appointed Factory Doctor Service and the establishment of the Employment Medical Advisory Service are concerned, and of a subcommittee of my Industrial Safety Advisory Council in relation to my proposals for joint consultation on safety. The C.B.I., T.U.C., nationalised industries and other interested organisations are represented on these sub-committees and, in addition, there has been individual consultation with organisations concerned with the proposed legislation. I hope to introduce the legislation at an early date.
    Mr. Ellis: Does my right hon. Friend accept that, while a lot of propaganda is

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    made about strikes, official or unofficial, the fact is that more man-hours are lost in this way than in any other? Will she therefore see that the legislation is speeded up? She has given an encouraging reply but we should get on with this vital job.
    Mrs. Castle: I agree that, if we are concerned with keeping up a high level of production, it is imperative to take measures like this to improve health and safety at work. I am anxious to introduce the legislation as soon as possible.
    Dr. Winstanley: Does the right hon. Lady agree that, by establishing an effective occupational health service, she might do more to promote productivity and avoid strikes than she would by any Industrial Relations Bill? Will she do what she can to fill this gap in our otherwise comprehensive health services?
    Mrs. Castle: The hon. Gentleman is merely echoing what my hon. Friend said and I have already replied to that point. I think we need to tackle this problem of maintaining production from a number of angles, and these two are very important. I am anxious to get the legislation on the Statute Book as early as possible.

    Industrial Relations Bill
    Mr. Dudley Smithasked the Secretary of State for Employment and Productivity what further consultations she plans to have with the Confederation of British Industry over the forthcoming Industrial Relations Bill; and if she will make a statement.
    Mr. William Hamiltonasked the Secretary of State for Employment and Productivity if she will make a statement on the progress of discussions with the Confederation of British Industry and the Trades Union Congress on the proposed legislation on trade unions.
    Mrs. Castle: Consultations on detailed proposals made by the Government are now taking place with both the C.B.I. and T.U.C.
    Mr. Smith: Can the right hon. Lady confirm that she will publish a White Paper before the Bill? Will she also confirm that, contrary to the Government's undertaking last summer that there would be no penal sanctions in the Bill, there will be such sanctions but
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    that they will be purely discriminatory and levelled against one side only—the employers'?
    Mrs. Castle: I will consider the need for publishing a White Paper. The hon. Gentleman knows that consultations are only just beginning in this very important matter and it would be wrong for me to anticipate the outcome with regard to the second part of the supplementary question.
    Mr. Hamilton: Can my right hon. Friend give any idea as to when the Bill is likely to be published? Does she recognise that there is a good deal of urgency in the matter in the sense that many firms, particularly in Scotland, flatly refuse to recognise trade unions and this is creating the potential for and, indeed, the certainty of very bad industrial relations?
    Mrs. Castle: I cannot at this stage give a date for publication of the Bill because, as I have said, the consultations are only just beginning, the proposals are far-reaching and detailed and will require considerable amount of discussion with the T.U.C. and the C.B.I. The recognition question is tremendously important. This is why we have not waited for publication of the Bill. As my hon. Friend is aware, the C.I.R. is dealing with a number of recognition references I have made to it.

    London Transport (Inter-union Dispute)
    Mr. Goodhewasked the Secretary of State for Employment and Productivity what progress she has made in achieving a settlement in the inter-union dispute concerning the appointment of mechanical craftsmen at London Transport's railway overhaul works at Acton, which was referred to her in mid-August.
    Mrs. Castle: I very much regret the public inconvenience caused by this dispute. My officers and the T.U.C. have both held a number of discussions with the parties in an effort to find a solution. Further proposals put forward by London Transport earlier this week were rejected by the A.E.F. last night.
    A meeting is at this moment taking place in my Department between my officials, London Transport and the T.U.C. and in the light of this I shall

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    be urgently considering what further steps should be taken.
    Mr. Goodhew: Is the right hon. Lady aware that this has been going on nearly four months, and on the Northern Line, as each week goes by, more and more carriages and rolling stock go out of repair, more and more escalators go out of use and passengers are now expected to travel in a manner which would not be considered acceptable for cattle, let alone human beings? If the T.U.C. is really unable to redeem its solemn pledge to the Government, why does she not do something about it now?
    Mrs. Castle: Of course, I am aware that the dispute has been going on since 26th September. This is why there have been these efforts by my Department and the T.U.C. to find a solution. I assure the hon. Gentleman that the T.U.C. has put in very hard efforts to find a solution and is doing so at the present moment.
    Mr. Orme: Does not my right hon. Friend agree that this official dispute in which the A.E.F. is involved is not basically an inter-union dispute between it and the N.U.R. but arises from the fact that London Transport has violated an agreement it has made with the A.E.F.?
    Mrs. Castle: I am aware that this is the argument put forward by the A.E.F. Whether the N.U.R. would agree is a different matter. There are inter-union difficulties here which it is important the T.U.C. should take action about, and this is it so doing.
    Mr. R. Carr: Is not the right hon. Lady aware that, when the Prime Minister commended the binding undertaking of the trade unions to this House, he laid great emphasis on the powers which the T.U.C. had taken to deal with this sort of dispute? After four months, should not these powers be used if the agreement is to be kept?
    Mrs. Castle: As I have said—and I am sure that the right hon. Gentleman will appreciate its importance—a meeting is going on at present between London Transport, the T.U.C. and my Department to consider what the next step should be, and I would not wish to add anything until we see what comes out of this talk.
    Mr. Goodhew: On a point of order, Mr. Speaker. In view of the unsatisfactory nature of the reply, I beg to give notice that I shall seek to raise this matter on the Adjournment at the earliest possible moment.

    Employers' Liability (Compulsory Insurance) Act, 1969
    Mr. David Watkinsasked the Secretary of State for Employment and Productivity what consultations she is having in connection with formulating regulations under the Employers' Liability(Compulsory Insurance) Act, 1969; and if she will make a statement.
    Mrs. Castle: These matters are under consideration and a further statement will be made as soon as possible.
    Mr. Watkins: Is my right hon. Friend aware that this important piece of legislation does not become operative until regulations are made? Will she treat it with some urgency?
    Mrs. Castle: I am aware that this is an important piece of legislation and I congratulate my hon. Friend on his success in getting it through the House. I assure him that no time will be lost in preparing the regulations but this is a very detailed and technical matter. I ask him to have a little patience, as it is not many weeks since the Act was put on the Statute Book.

    British Leyland Clerical Staff (Wage Claim)
    Mr. Danceasked the Secretary of State for Employment and Productivity what percentage increase was involved in the settlement of the British Leyland clerical staff wage claim; and on what grounds it was approved by her Department.
    Mr. Harold Walker: I understand that the settlement to which the Question relates is that between the Austin-Morris Division of the British Leyland Motor Corporation and the Clerical and Administrative Workers Union, which was effective from 9th June, 1969, and involved an average increase of 9·9 per cent. for clerical staff. It was not opposed by my Department because of the direct contribution by clerical staff towards increasing efficiency and the

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    further productivity measures included in the agreement.
    Mr. Dance: What productivity guarantees did the Government get out of this settlement?
    Mr. Walker: The productivity guarantees in the agreement, which satisfied the Department.
    Mr. Roy Hughes: Can my hon. Friend say whether the Department also took into consideration the fact that this section has always been an under-privileged section of the motor industry and that, in this sense, the increase was well justified?
    Mr. Walker: The increase was justified because of the measures included in the agreement leading to increased efficiency and further productivity.

    Motor Vehicle Retailing and Repair Workers (Wage Claim)
    Mr. Danceasked the Secretary of State for Employment and Productivity what percentage increase was involved in the settlement of the motor vehicle retailing and repair workers' wage claim; and on what grounds it was approved by her Department.
    Mr. Harold Walker: The increase is estimated to be within the 3½ per cent. ceiling. Approval was given primarily in recognition of the increasing amount of repair work being undertaken by a reduced labour force. The agreement should chiefly benefit the lower paid in the industry, who had not had a national increase since December, 1967.
    Mr. Dance: Whilst one is delighted that the lower-paid workers will get an increase, may I ask whether the hon. Gentleman would agree that the various settlements now going on have blown the roof off any prices and incomes policy?
    Mr. Walker: I fail to see how that wild allegation arises out of a Question the answer to which relates to a settlement within the ceiling.

    Employment, North-Western Region
    Mr. Fortescueasked the Secretary of State for Employment and Productivity whether she will list the total number in employment in the North-
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    western Region at the latest available date and the equivalent date in 1966.
    Mr. Dell: The estimated numbers of employees in employment in the Northwestern Region at March, 1969, and March, 1966, were 2,876,000 and 2,987,000, respectively. The figure for March, 1969, is provisional.
    Mr. Fortescue: Does the Minister recall that in 1966 the Prime Minister said that he saw no reason why unemployment should increase and that later in the summer he said that the regions would be protected from the effects of the squeeze? There are now 111,000 fewer jobs in the North-West than there were in 1966. Has the Prime Minister been to his own north-western constituency to explain this discrepancy, and, if he has not, when will he come to Liverpool to do so?
    Mr. Dell: As the hon. Member knows, being a Member from the North-West, a great amount of industrial restructuring has been going on in the North-West over the last few years as a result of which employment prospects are now very much more secure in many of the industries which in 1966, and since, were declining very fast. I can tell the hon. Member that on the basis of the I.D.C.s issued since April, 1966, when the projects are completed and manned we will have created 76,800 jobs as compared with only 45,000 in the four-year period 1961–64.
    Mr. Arthur Davidson: Can my hon. Friend confirm that as a result of the Government's help to areas such as North-East Lancashire this area in the North-West, which has traditionally suffered from unemployment, now has a potential danger of a shortage of skilled labour? Is he bearing this in mind?
    Mr. Dell: Certainly, I am bearing that in mind. There is to be a conference on employment in that area in the next few months and my hon. Friend will know that, as a result of creating an intermediate area in the area to which he refers, grants for industrial training are now available from the Government.
    Mr. R. Carr: How can the hon. Gentleman talk about employment in this area being more secure when, despite all the waffle about restructuring, the fact is that

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    there are 111,000 fewer jobs than there were three years ago?
    Mr. Dell: I am saying that employment prospects are more secure because industry in the area has been diversified and is more modern and more capable of competing both in this country and internationally, and that is the basis for the future prosperity of the North-West and in particular of Merseyside which has development area status.

    Women (Average Earnings)
    Mr. Rossiasked the Secretary of State for Employment and Productivity what estimate she has made of the in crease in average earnings of women in industry by 1975 resulting from the ending of discrimination on grounds of sex.
    Mrs. Castle: Allowing for the fact that some women already receive equal pay, the average earnings of all women workers will probably increase by between 15 and 20 per cent.
    Mr. Rossi: Can the right hon. Lady say what effect this will have on the economy as a whole?
    Mrs. Castle: We believe that the effect on the economy will be containable taking into account the rise in production and output that will take place in the period up to 1975 and the fact that the figures I have given correspond to an increase in the national wage and salary bill for all workers of between 3 and 4 per cent, during that period in respect of equal pay.

    Employment (Yorkshire and Humberside)
    Mr. Hileyasked the Secretary of State for Employment and Productivity whether she will list the total number in employment in the Yorkshire and Humberside Region at the latest available date and the equivalent date in 1966.
    Mr. Dell: The estimated numbers of employees in employment in the Yorkshire and Humberside region at March, 1969, and March, 1966, were 1,986,000 and 2,092,000, respectively. The figure for March, 1969, is provisional.
    Mr. Hiley: When the Minister examines this unfortunate trend, will he consider the possibility that the over-generous treatment of the development
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    areas has adversely affected those who are outside those areas and that we are not securing any new real jobs, but merely transferring unemployment from development to other areas?
    Mr. Dell: I do not believe that that is the case. In any event, the hon. Gentleman will know that the Yorkshire coalfields and North Humberside have now been made an intermediate area. There are many factors affecting the level of employment relative to March, 1966. These factors include such things as the point in the cycle which we had reached in March, 1966, an increase in the number of people self-employed, and an increase in the number of people staying at school. All these are factors in the situation.
    Mr. Tinn: On the contrary, will my hon. Friend bear in mind that in development areas the unemployment rates are running at two, three and even more times the rate for Yorkshire and Humberside and that there is no justification for the allegation of over-generosity to these areas?
    Mr. Dell: I entirely agree with my hon. Friend. That is why we are continuing to give substantial assistance to the development areas.
    Mr. R. Carr: Does the hon. Gentleman realise that this is the second area in three Questions of which he has had to admit that the number of jobs is more than 100,000 fewer than three years ago?
    Mr. Dell: Yes. I have also given the right hon. Gentleman an explanation of these facts. I am sure that the right hon. Gentleman will have studied, for example, the March, 1969, edition of the D.E.P. Gazette showing forecast levels of employment which go way ahead. He will find that even at high levels of demand it is expected that they will remain very stable for as far ahead as 1980 owing to various demographic factors of which the right hon. Gentleman must be aware.

    Government Training Centres
    Mr. Ellisasked the Secretary of State for Employment and Productivity how many Government training centres and training places there were in each year since 1964; and how many are planned in the next two years.
    Mr. Dell: With permission, I will circulate the figures in the OFFICIAL REPORT.
    Mr. Ellis: Does my hon. Friend accept that the Government deserve a great deal of credit for the great increase which these figures will show? Will he tell the House whether he has initiated any studies with existing places as to the usefulness of the work being done there and whether they are meeting the needs of people we are keen to serve in this business of retraining?
    Mr. Dell: I entirely agree with my hon. Friend that the increase in the number of training places since November, 1964, which has more than trebled them, has been a factor of fundamental importance and a considerable achievement. The usefulness of training places is shown by the fact that people trained at Government training centres normally achieve useful employment very shortly afterwards.
    Following is the information:

    Number of Government Training Centres

    Training Places

    November, 1964

    26

    4,078

    November, 1965

    30

    5,595

    November, 1966

    32

    6,421

    November, 1967

    38

    7,775

    November, 1968

    40

    8,863

    November, 1969

    43

    9,609

    November, 1971 (estimated on the basis of present plans)

    54

    nearly 13,000

    Wages Inspectorate
    Mr. Frank Allaunasked the Secretary of State for Employment and Productivity what plans she has for enlarging the Wages Councils' Inspectorate and for increasing the fines on employers who are found to be paying employees below the legal minimum.
    Mr. Gardnerasked the Secretary of State for Employment and Productivity whether she is satisfied with the present size and activities of the Wages Inspectorate; and if she will make a statement.
    Mr. Harold Walker: Each year about 10 per cent, of all establishments on Wages Councils lists are inspected by the Wages Inspectorate and the wages of approximately a quarter of a million workers are examined. Of this number
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    about 5 per cent, on average are found to have been underpaid. The number of wages inspectors employed full time on visits to employers' premises varies between 145 and 155. Given the low rate of infractions I see no justification for increasing the size of the Inspectorate.
    In the great majority of cases the Department is able to secure compliance with the requirements of the Wages Regulations Orders by enlisting employers' co-operation and it is rarely necessary to resort to legal proceedings. I have no plans for increasing the penalties laid down in the Wages Councils Act.
    Mr. Allaun: I thank my hon. Friend for that very full answer. Does he agree that there is no point in wages councils or minimum wages, however low, unless there is effective control to see that they are observed?
    Mr. Walker: The Donovan Commission gave some advice on the way ahead for wages councils and suggested that the best answer to the problem implicit in my hon. Friend's question was for the growth and development of collective bargaining to be facilitated in those industries.
    Mr. Fernyhough: Will my hon. Friend look at this again? His figures showed that employers are visited only once every 10 years and then it is found that 5 per cent. of them are not observing the law-This means that over a period of 10 years there may be several tens of thousands of decent workers who are not getting what they are entitled by Statute to get.
    Mr. Walker: My hon. Friend must not misunderstand the figures. It is not that 5 per cent. of employers are found to have been not complying with the regulations, but that 5 per cent, of the employees covered by the establishments visited were found to be receiving wages below the amount. This was usually not because of any attempt on the part of the employers to evade, but because of the complexity of the regulations and the need to explain them.

    Mergers (Economic and Social Consequences)
    Mr. Dalyellasked the Secretary of State for Employment and Productivity

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    what studies she is making of the economic and social consequences of mergers which have taken place.
    Mrs. Castle: The results of a pilot research study commissioned by the Government have recently become available and are being studied to see whether a broader programme of research would be worth while.
    Mr. Dalyell: What discoveries are emerging about the long-term effects of mergers?
    Mrs. Castle: As I explained in my answer, what we have carried out so far is a pilot study, the object of which was to attempt to assess the development flowing from a merger which took place five years ago. We are now considering whether a more extensive programme, involving a number of mergers and dealing also with more general studies would be worthwhile.
    Mr. Dudley Smith: Has the right hon. Lady had her attention called to the debate late last night when the whole question of the merger of the Prices and Incomes Board and the Monopolies Commission was condemned on all sides? In view of the outstanding speech by her right hon. Friend the Member for Batter-sea, North (Mr. Jay), a former President of the Board of Trade, who proved conclusively that this was a bad thing, would she look at it again?
    Mrs. Castle: I am sure that the hon. Gentleman is aware that this is an entirely different question. I would be very happy indeed to deal with the merits of the proposed merger at the appropriate time.

    Low-Paid Workers
    Mr. Dalyellasked the Secretary of State for Employment and Productivity what she is doing to identify those groups who are low-paid.
    Mrs. Castle: My Department's new earnings survey has yielded a wide range of information about the incidence of low pay in the economy.
    Mr. Dalyell: Will the results be taken into account in any White Paper?
    Mrs. Castle: Yes. The results of the survey have of course been published in the D.E.P. Gazette each month from
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    May to October of this year. There was a special article in the October issue dealing with some of the causes of low pay. I have had these findings very much in mind in evolving a policy for the low-paid in the next stages of the prices and incomes policy as my hon. Friend will see when a White Paper is published.
    Sir B. Rhys Williams: Is the right hon. Lady studying the possibility of helping the low-paid workers through the tax system?
    Mrs. Castle: The hon. Gentleman knows that that is not a matter for me.

    South Wales (Government Training Facilities)
    Mr. Fred Evansasked the Secretary of State for Employment and Productivity what plans she has to extend Government training and retraining facilities in South Wales.
    Mr. Dell: There are now three Government training centres in South Wales and a fourth is to be opened in West Monmouthshire by the end of 1970; and with effect from 1st September, 1969, new and expanding firms in the Cardiff area and part of Monmouthshire, which is shortly to be designated an intermediate area, have become eligible to receive the full range of my Department's training grants and other forms of training assistance available in the rest of South Wales.
    Mr. Evans: I thank my hon. Friend for that encouraging answer. Is he aware that, in an area like South Wales, where there has been an incidence of pit closures, with further closures threatened, and the consequent denial of traditional forms of employment for young people, the acceleration of training places and the maximising of the range of skills taught is now a matter of desperate urgency?
    Mr. Dell: I entirely agree with my hon. Friend. This is why the Government have placed so much emphasis on industrial training and retaining.

    Hotel and Catering Industry (Training Board)
    Mr. Fred Evansasked the Secretary of State for Employment and Productivity whether she will introduce legislation to amend the Industrial Training Act in order to enable the Industrial Training

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    Board for the Hotel and Catering Industry to extend its scope, in view of the limitations placed on it by a recent decision of the House of Lords.
    Mr. Dell: Yes. I shall take the first opportunity of introducing an amending Bill for this purpose.
    Mr. Evans: Is my hon. Friend aware of the keen sense of injustice felt by many employees, not least those in local authority employment, as a result of being denied the opportunity of proper training? Will he, whenever a weakness is revealed in the Act—as a result of an appeal court decision—which has enabled certain employers to deny their employees the opportunities of training, take immediate steps to close such loopholes?
    Mr. Dell: As I said to my hon. Friend, it is our hope to introduce legislation on this as soon as we can.
    Mr. R. Carr: Can the hon. Gentleman enlighten us further as to what he means by "as soon as we can"? Can he confirm that it will definitely be in this Session of Parliament, because I think that the House would think that anything later would be disgraceful?
    Mr. Dell: I cannot give the right hon. Gentleman a definite date, but I hope that it will be in this Session of Parliament. I cannot guarantee that.

    Wage Rates
    Mr. Scott-Hopkinsasked the Secretary of State for Employment and Productivity (1) what has been the average rise of wage rates during the last six months in the private sector of industry and services;
    (2) what has been the average rate of increase in wage rates in the last six months in the public sector of industry and public services.
    Mr. Harold Walker: Separate indices of wage rates are published for 18 major groups of industries based on the Standard Industrial Classification. This classification does not, however, distinguish between the private and public sectors as such.
    Mr. Scott-Hopkins: I thank the Minister for that most unhelpful reply. Would he not agree that we had the greatest number of wage rises in the past six months in the public sector? Does this
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    not go well over the norm set by his right hon. Friend and is it not now evident that her policy is completely in tatters?
    Mr. Walker: I would not accept that and the hon. Gentleman must not allow himself to be misled into drawing conclusions from one or two well publicised settlements in the public sector which do not necessarily reflect a movement in earnings.
    Mr. Molloy: Can my hon. Friend say whether he intends to have discussions with the Secretary of State for Social Services about the very low wage structure of the nursing profession?
    Mr. Walker: That is not a matter for me.
    Mr. Maudling: The Minister was asked a very serious question by my hon. Friend to which I do not think he has replied Can he say whether the movement of these two sectors in the last two months have been in advance of the Government's norm?
    Mr. Walker: The Question related to wage rates—the policy concerns itself primarily with earnings.

    Gross Annual Earnings
    Mrs. Renée Shortasked the Secretary of State for Employment and Productivity what were the average gross annual earnings for men and women, respectively, in Great Britain in 1968.
    Mr. Harold Walker: £1,249 and £622 respectively in the tax year 1967–68, the latest period for which annual figures are available. The figures relate to employees covered by P.A.Y.E., aged at least 18 but under the normal retirement age, who were at work for the whole year.
    Mrs. Short: Do not these staggering figures indicate the moral basis of the case for equal pay? Is my hon. Friend aware that in the West Midlands, which is a wealthy part of the country, the average earnings for women are lower than the national average? Will he take all steps to see that the date for the implementation of equal pay is advanced as much as possible?
    Mr. Walker: To the first part of my hon. Friend's supplementary question I would say "Yes." I have no statistical

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    evidence whatever to support her contention about women's pay in the West Midlands. She will know that my right hon. Friend is engaged in consultations with the C.B.I, and the T.U.C. about the phasing, implementation and other matters of equal pay.
    Mrs. Ewing: Can the hon. Gentleman give the figures for Scotland, or at least publish them in the OFFICIAL REPORT? Do not the figures that he has already given show that some cut in the phasing period must be made, as this is an injustice which cannot be tolerated for as long as is proposed?
    Mr. Walker: I have no figures to show that the position in Scotland justifies the hon. Lady's contention.

    Manpower and Productivity Service
    Mr. Howieasked the Secretary of State for Employment and Productivity what services are now being provided to industry and the trade unions by the Manpower and Productivity Service of her Department.
    Mrs. Castle: The assistance of Manpower and Productivity Service is freely available to both employers and unions. It provides information and advice on a wide range of subjects relating to productivity, especially in the better utilisation of manpower and on industrial relations. The service operates primarily through manpower advisers attached to my regional offices and the advice of specialists in a central consultancy service at headquarters is available to help them. It undertakes short advisory visits and more extensive surveys, particularly on pay and productivity problems.
    Mr. Howie: Is my right hon. Friend aware that she is to be congratulated on the breadth and depth of the services provided? Can she assure me that private industry is sufficiently gingered up to make use of them?
    Mrs. Castle: I agree with my hon. Friend that sometimes one can offer a service of which advantage is not taken. The evidence here goes to show that firms are very responsive indeed to these offers of help that are coming from my Manpower and Productivity Service, which in the first nine months of this year
    1692
    has advised nearly 3,000 firms. We find that they look upon this, quite rightly, as an invaluable free service to them by Government.
    Mr. Higgins: In view of the total failure of the right hon. Lady's prices and incomes policy, would she agree that the best service that can be provided is to ensure that pay for productivity agreements should not be made until productivity has actually gone up, and not when it is merely promised?
    Mrs. Castle: The hon. Gentleman is showing his total ignorance of the policy.

    Government Training Centres
    Mr. Howieasked the Secretary of State for Employment and Productivity what proposal she has to extend the range of skills and crafts taught in Government training centres.
    Mr. Dell: Industry's needs are kept under constant review and new trades are introduced and existing ones modernised. In addition, the courses are being modified as necessary to meet the individual needs of employers nominating their workers for sponsored training.
    Mr. Howie: Am I to suppose that the range of skills and crafts taught is now much wider than it was two or three years ago? Does my hon. Friend believe that the provision of training places in Government centres is yet sufficient to meet the demand?
    Mr. Dell: The range of courses available is now much wider than it was two or three years ago. We are continuing to extend it as necessary. There are two main forms of training available, of which the most important and the one covering the largest number of people is training in industry. The Government training centres are intended to provide skilled training for very much more limited numbers of people. We are getting to the point at which we are meeting the demand, but if demand increases we will take note of that fact and try further to meet it.
    Mr. Scott: Will the hon. Gentleman say whether the Government training centres are still meeting any resistance from unions to so-called dilutees being

    1693
    turned out from the Government training centres?
    Mr. Dell: There are in most areas agreements with the trade unions. There are still occasional difficulties, but over the country as a whole this is not a major problem.

    Resettlement Transfer Scheme
    Mr. Arthur Davidsonasked the Secretary of State for Employment and Productivity what changes have been made in her Department's Resettlement Transfer Scheme.
    Mrs. Castle: I would refer my hon. Friend to the reply which I gave to my hon. Friend the Member for Barrow-in-Furness (Mr. Booth) on 24th July, 1969. The changes mentioned then came into effect on 1st September.—[Vol. 787. c. 430.]
    Mr. Davidson: Is the Minister aware that the improvements to which she refers are most welcome? Can she assure the House that the advantages of the scheme are being sufficiently publicised by her Department, particularly with a view to enabling workers to move into areas where there is a potential shortage of labour?
    Mrs. Castle: Through our local exchanges and other services we give extensive publicity to those schemes, but I can assure my hon. Friend that one of the purposes of the conferences such as that which will be held in his area of North-East Lancashire in January is to bring the Resettlement Transfer Scheme to the attention of workers in the area to meet the very shortage of labour to which my hon. Friend refers.

    Factory Inspectorate
    Mr. Arthur Davidsonasked the Secretary of State for Employment and Productivity what increases there have been in the size of the Factory Inspectorate over the past three years.
    Mr. Harold Walker: The number of factory inspectors in post increased from 497 on 1st November, 1966, to 611 on 1st November this year. The figures for the same date in the intervening years were 515 and 573 respectively.
    Mr. Davidson: The increase will be greatly welcomed, but can the hon. Gentleman say whether he is satisfied that the amount offered as a starting salary to factory inspectors is not too low, and perhaps acts as a disincentive to persons to take up this important work?
    Mr. Walker: The current rate of recruitment is encouraging and the figures I have given the House show an increase of about 10 per cent. per annum in the last two years. This is consistent with the current rate of recruitment. None the less, the recruitment is not going perhaps as well as we would like and we are prepared to look at factors which might provide an incentive to speeding it up.

    Coloured People (Employment)
    Mr. Bidwellasked the Secretary of State for Employment and Productivity what proposals she has to ensure that coloured workers obtain equality of opportunity in obtaining work in new areas of industry.
    Mrs. Castle: My Department is making continuous efforts to extend employment opportunities for coloured people through its employment services, training at G.T.C.s, the language courses which industrial training boards have been invited to sponsor and through the Regional Advisory Service on Race Relations.
    Mr. Bidwell: I thank my right hon. Friend for that answer. Will she not agree that, since investigations have shown that in areas in which coloured workers are to be found there is far less prejudice than elsewhere because people are beginning to be evaluated as human beings, these opportunities will go a long way towards getting the British working people as a whole to realise that people should be assessed as people, not by ethnic origin or colour of skin?
    Mrs. Castle: I entirely agree with my hon. Friend about the importance of widening employment opportunities for coloured workers. I know the interest he takes in this subject as a member of the Select Committee. That is why, despite the successful efforts which we have made, my Department has set up a working group to consider what further measures can be taken to widen employment opportunities still more.

    Race Relations Act
    Mr. Bid wellasked the Secretary of State for Employment and Productivity whether she will make a statement about the working of the Race Relations Act as it affects placements by employment exchanges and careers officers.
    Mrs. Castle: The number of employers seeking to notify vacancies of a discriminatory kind—which was always small—has been reduced to negligible proportions since the passage of the Act. Reports from careers officers show that, since the passage of the Act, more employers are prepared to consider coloured school leavers on their merits.
    Mr. Bidwell: I thank my right hon. Friend for that reply, which is most encouraging and offsets the propaganda suggesting that the introduction of this Act was unnecessary. Will she accept that immigrant workers as a whole are making a most valuable contribution to the British economy because they are composed of age group levels far out of proportion with the rest of the indigenous population?
    Mrs. Castle: I agree with my hon. Friend that the facts I have reported to the House show the value of the Act and that fears about the Act were totally unwarranted. I also agree that immigrant workers have a vital contribution to make to our national production and that we should help them in that task.

    EUROPEAN ECONOMIC COMMUNITY
    Mr. John Fraserasked the Prime Minister when he intends to hold an official meeting with the Chancellor of Federal Germany.
    Mr. Winnickasked the Prime Minister what consultations he has with the Heads of the Common Market countries with regard to the British application to join the European Economic Community.
    Mr. Barnesasked the Prime Minister what plans he has to meet Heads of Government of the European Economic Community countries following the outcome of their Summit meeting at The Hague.
    Sir G. de Freitasasked the Prime Minister what communications he has received during the last week from the Heads of Government of the countries of the European Economic Community regarding the United Kingdom's application to join the European Economic Community; and what replies he has sent.
    The Prime Minister (Mr. Harold Wilson): We are in regular and close contact with the Governments of the Six through the normal channels. We welcome the agreement reached by the Six at their meeting at The Hague earlier this week to open negotiations between the Community and the applicants for membership and we are ready for negotiations to begin as soon as the Six are ready.
    On my meeting with Herr Brandt I would refer to what I said in the House on 25th November. There are no arrangements at present for a meeting with other Heads of Government of the Six.—[Vol. 792, c. 194.]
    Mr. Fraser: When the Prime Minister meets Herr Brandt again, will he congratulate him on bringing a breath of fresh air into European politics? Will he seek from Herr Brandt, and indeed from other leaders, subscription to the moral and philosophical objectives in the declaration by the Italian President on such matters as overseas aid and democratisation of European institutions?
    The Prime Minister: Yes, Sir. I think the House will be encouraged by Herr Brandt's line on a number of issues since his assumption of the Chancellorship and by what he is reported in the Press as having said in The Hague this week. With regard to the declaration mentioned by my hon. Friend, I am sure the whole House will endorse, as will Herr Brandt, the aspirations mentioned by my hon. Friend.
    Mr. Winnick: Is it the Government's intention that there should be some reasonable chance of success before the negotiations begin, say, next July? Is there a possibility that at the end of or during the negotiations the British Government will come to the conclusion that the cost could be too high and therefore decide not to go any further?
    The Prime Minister: The best chance of assessing the prospect of success is to "have a go". I do not think that it is possible to form a clear view of what terms will be available to us except by entering into negotiations. If those terms are possible, if they make it open to us to accede to the Community, that is one thing. If the terms involve too high a price, I am sure that we should all agree that it would be wrong to accept them.
    Mr. Barnes: Would the Prime Minister agree that, following the very encouraging outcome of The Hague summit, many people hope that the Government will make a wholehearted statement of our will to complete these negotiations successfully? Would it not be dangerous to this country to approach negotiations on a "take-us-or-leave-us" basis?
    The Prime Minister: I do not think there is any question of a "take-us-or-leave-us" basis. I have expressed the view that Europe needs Britain at least as much as Britain needs Europe. This is a fair approach. But as to the whole-heartedness of our application, this has been made clear on a number of occasions in 1967 and again this autumn. Obviously one cannot forecast what particular terms will be made available to us. I hope that these negotiations could be over in a much shorter time scale than that indicated by the right hon. Gentleman the Leader of the Opposition in his broadcast last Sunday.
    Sir G. de Freitas: Will my right hon. Friend agree that not only is it encouraging that there is agreement to open negotiations, but also that there is agreement to look at the agricultural front and study the ridiculous surpluses and the equally ridiculous budgetary burdens?
    The Prime Minister: My right hon. Friend speaks with all the authority of a former President of the Council of Europe and is expressing a view that is widely held in Europe as well as in this country. But the whole House will agree that in discussions, whatever our attitude in debates in this House, it is the common agricultural policy and what will be required of us which is the crunch of the issue as regards prices and the cost of living, budgetary contributions and the balance of payments. I see some en-
    1698
    couragement in some of the speeches reported in the summit talks this week both as regards budgetary contributions and, if I read them aright, as regards a matter of great importance to this country, namely the question of production grants as we would call them, hill farming grants and the rest, which might be treated in a different way in the future as compared with the way in which they have been treated in the past.
    Mrs. Renée Short: On a point of order. Did I mishear, Mr. Speaker, or did my right hon. Friend say that he was taking Question No. Q16 with this batch of Questions?
    Mr. Speaker: Order. The hon. Lady did mishear.
    The Prime Minister: As you say, Mr. Speaker, my hon. Friend misheard. As we all know, this is always a very difficult problem. I have run into trouble with the House sometimes for grouping too many Questions. What I tried to do on this occasion, and what I thought was fair, was to group those Questions put down on the same day three weeks ago, but not to group with them a large number which have been put down since then, because it means interfering with later Questions.
    Mr. Thorpe: Does the Prime Minister agree that one of the hopeful aspects of The Hague communiqué is that should negotiations start in July between Britain, the other applicants, and the Six, by then we shall know what will be the general level of agricultural prices, and the general monetary policy to pursue, and therefore our position can be assessed on the basis of a realistic, known future for this country, and not on the basis, as with so many opponents of the Common Market, of wild and usually totally inaccurate statistics?
    The Prime Minister: I hope that it will be possible at any rate to know the background of the C.A.P. in relation to which we negotiate. Obviously, we cannot know what derogations, what changes, will be available through the negotiations. The problem the right hon. Gentleman mentioned is the big problem that we have in preparing our White Paper on assumptions. We are choosing a wide range of assumptions, some of which might become unrealistic by the

    1699
    time the negotiations are well advanced. We shall still go ahead with the White Paper, even though that is so.
    Mr. St. John-Stevas: Does the Prime Minister agree that apart from his own sustained enthusiasm for entry the most important thing is to have an early negotiation on a limited number of major economic and political issues?
    The Prime Minister: I think that the hon. Gentleman is right in saying that. Certainly I hope that the negotiations might start before what was set at the Summit as the latest date. I hope that they will be reasonably speedy, and that there will be a desire in Europe as in this country and in this House that we do not have long tedious negotiations about a lot of small matters.
    Mr. Roy Roebuck: Kangaroo meat.
    The Prime Minister: I have heard that mentioned before. I hope that we should not have long negotiations about smaller matters, many of which are capable of solution after entry if we get the right terms for entry. In our negotiations we should concentrate on the main issues, and there are some very serious issues between us and the Common Market countries. Therefore, I hope, as the hon. Gentleman hopes, that the talks will be reasonably short but directed to the main strategic questions.
    Mr. Shinwell: While my right hon. Friend cannot be held responsible for statements made by the Leader of the Opposition, has he noted that the right hon. Gentleman has stated that we are unlikely to enter the Common Market before 1973 or 1974? Does not that damp down my right hon. Friend's enthusiasm a little?
    The Prime Minister: No, Sir. The right hon. Gentleman the Leader of the Opposition must take responsibility for his own statements. I hope that what he said will not be taken in Europe as any weakening of his will or the will of anyone else in the House in this matter. There is no need for it to take as long as he said. It may be that he thinks that they should wait for him, in which case they will have to wait a very long time.
    Mr. John Page: In view of the known time scale, does not the Prime Minister
    1700
    think that it would be much fairer to the British people if serious negotiations were not started until after the next General Election?
    The Prime Minister: Hon. Members can make their own assessment of the various unknowns in the equation the hon. Gentleman is trying to discuss, both as to the starting date, the length of negotiations, and the timing of the General Election. On none of those three am I in any position to help the House at present. But the hon. Gentleman will know that his own Government in 1959 went into a General Election with most categorical statements about why they could not enter into negotiations, and in that Parliament they started negotiations.
    Mrs. Renée Short: Will my right hon. Friend bear in mind that our relationships, both political and trading, with Eastern Europe are of tremendous importance to this country and should not be allowed to be interfered with by any attempts to enter the Common Market? Will he bear in mind Early Day Motion No. 52—"Relations with the German Democratic Republic"—when he meets Herr Brandt?
    The Prime Minister: I do not think that there are many hon. Members keener on trade with Eastern Europe than I am, or have been more involved with it over many years. There are six countries in the Common Market just as keen on maintaining and developing links with Eastern Europe in the matter of trade as we are.
    Mr. Maudling: As the Prime Minister has commented a little on my right hon. Friend's estimate of the timing, would he care to make his own estimate of possible timing for British entry into the Common Market, and say whether he would regard harmonisation on a value-added tax as part of the things to be negotiated?
    The Prime Minister: I was only very slightly critical of the right hon. Gentleman's broadcast—very slightly. I could do much better if he were here, but I do not think that I should in his absence. It is very unusual that he is absent, and I am sorry that he is not here. But he must take responsibility for that forecast. I do not think that it is for me to give another one, but I do not accept that the

    1701
    timetable need be anything like as long as he said.
    With regard to the second part of the right hon. Gentleman's question, obviously all regulations and decisions made under the Treaty of Rome are matters for the negotiations, including not only the value added tax but other aspects of prices and agricultural policy. Where the right hon. Gentleman and his party seem to indulge in so much masochism for themselves and putatively for the country is that they want to inflict these very big increases in costs and taxation on the country without even obtaining the gains of joining the Common Market.
    Mr. Milne: Is my right hon. Friend aware that while he talks about Britain needing Europe and Europe needing Britain, E.F.T.A. still represents our major foothold in Europe, that improvements in European unity began only when a Social Democrat Government were returned in Germany, and that possibly prospects for reconciliation between Eastern and Western Europe are our best indications at present?
    The Prime Minister: Nobody in this House would under-rate the importance of E.F.T.A. in this connection. When E.F.T.A. was put forward by the right hon. Member for Barnet (Mr. Maudling)—[Interruption.]—when the hon. Gentleman has had time to brief his leader, perhaps I could continue with my answer. When E.F.T.A. was put forward by the right hon. Member for Barnet it was widely applauded in this House, not merely as an alternative or a forcing move against the Common Market but as something right in itself, and so it has proved. But, on the question of E.F.T.A. in relation to the Common Market, my hon. Friend will have noticed the declaration agreed to in 1967, when our application was made, and that still stands.
    Mr. Shinwell: On a point of order. In view of the arrival of the right hon. Gentleman the Leader of the Opposition, Mr. Speaker, may I ask my question again?
    Mr. Speaker: Order. In no circumstances. Sir Harry Legge-Bourke—
    Mr. Faulds: On a point of order.
    Mr. Speaker: Order. I remind the hon. Gentleman that he is cutting into Question Time.
    Mr. Faulds: That is the point I wish to raise, Mr. Speaker. We have now had 13 minutes on one Question, which seems to me highly unreasonable.
    Mr. Speaker: Order. The hon. Gentleman is factually wrong in any case.
    Mr. Faulds: Fourteen minutes.
    Sir H. Legge-Bourke: In view of the Prime Minister's disagreement with my right hon. Friend the Leader of the Opposition over the length of time the negotiations are likely to take, does this mean that he will simply go on from where my right hon. Friend left off, having achieved considerable agreement before the negotiations broke down as a result of the French veto, or is he starting all over again?
    The Prime Minister: The position that we should take up in connection with the negotiations was made clear in the statement of my right hon. Friend the then Foreign Secretary to W.E.U. at The Hague in July, 1967. That set out the basis of our negotiations, and I have said already that it is my hope that they could be related to a relatively small number of strategic issues. A great deal of ground was covered in the early negotiations and, if that is still agreeable to our colleagues in the Six, nothing agreed then need be the subject of prolonged negotiation again.
    Mr. Edelman: Will my right hon. Friend discourage premature optimism about British entry into the Common Market and read the small print in the communiqué and Monsieur Pompidou's gloss on it which makes no mention of a time schedule for negotiating Britain's entry?
    The Prime Minister: I hope that I have said nothing to encourage excessive optimism in this matter. I regard the summit conclusions in the spirit of "so far, so good". They represent a step forward. But we must all be watchful against any dragging of feet, especially against any excessive hardening of the position on other issues in the period between now and the opening of negotiations which might make negotiations more difficult. This is no reason for anyone who is keen for Britain to get into the Common Market to become overexcited. Certainly it is no reason why those who are not keen to get in should

    1703
    take any view except that we are ready to go into negotiations, the door is now opening, we will see how they go, and then put a proposition to the House.
    Several Hon. Members—
    Mr. Speaker: Order. Mr. Heath. Business Question.

BUSINESS OF THE HOUSE
Mr. Heath: Will the Leader of the House kindly state the business of the House for next week?
The Lord President of the Council and Leader of the House of Commons (Mr. Fred Peart): Yes, Sir. The business for next week will be as follows:
MONDAY, 8TH DECEMBER—Debate on Foreign Affairs, which will be continued on Tuesday, 9th December the 4th Allotted Supply Day.
At the end on Monday, Motions on the Milk Marketing Amendment 1933 Scheme and on the Winter Keep (Scotland) Scheme.
At the end on Tuesday, Motions on the British Overseas Airways Corporation (Borrowing Powers) Order and on the Defence Powers (Continuance) Order.
WEDNESDAY, 10TH DECEMBER—Supply [5th Allotted Day]: Until 7 o'clock, a debate on Private Health Insurance, and afterwards, on the Reduction of Employment Opportunities in Scotland both on Opposition Motions.
Prayer on the Town and Country Planning (Control of Advertisements) Regulations.
THURSDAY, 11TH DECEMBER—Second Reading of the Gas Bill.
FRIDAY, 12TH DECEMBER—Private Members' Bills.
MONDAY, 15TH DECEMBER—Debate on a Motion to take note of the White Paper Public Expenditure, 1968–69 to 1973–74, (Command No. 4234).
Motions on the Rate Support Grant (Increase) Order, the Cumberland County Council Order, and the West Riding County Council Order.
The House will wish to know that subject to progress of business it is intended to propose that we should rise for
1704
the Christmas Adjournment on Friday, 19th December, until Monday, 19th January, 1970.
Mr. Heath: I thank the Leader of the House. Is he aware that, on Tuesday, the second day of the foreign affairs debate, which is a Supply day under the Opposition's control, we would wish the debate to be centred on the situation in Nigeria? Can he say to which subject the debated on Monday will be devoted?
Mr. Peart: Subject to your view, Mr. Speaker, it will be open to hon. Members catching your eye to raise such matters as they wish. However, it might be for the general convenience of the House if, on Monday, there was some concentration on Vietnam, and on Tuesday on Nigeria. However, I think that I should metion that, in opening the debate, my right hon. Friend the Prime Minister will want to touch on other issues as well as those two subjects. This must really be very much a matter for right hon. and hon. Members themselves.
Mr. John Mendelson: White welcoming the statement by the Leader of the Opposition this week, in contrast to his attitude last week, has it not clearly emerged that it is the wish of many hon. Members to have one clear-cut debate on Nigeria—
Hon. Members: No.
Mr. Speaker: Order. The House must allow the hon. Gentleman to say what has clearly emerged.
Mr. Mendelson: Has it not clearly emerged from the Order Paper that it is the desire of many hon. Members—and that does not exclude the opinions of other hon. Members—to have a clear-cut debate one day on Nigeria, and to devote the other day to Vietnam? Would it not be subverting the purposes of debate not to have a clear distinction between the two subjects, with one day, Monday, on Nigeria, and the second day on Vietnam, and should not the Government make certain that that is so by putting down a Motion on Vietnam for the second day of the debate?
Mr. Peart: I would have thought that my hon. Friend would have accepted my reply to the Leader of the Opposition. I thought that my reply was reasonable.
Mr. Rossi: Will the Leader of the House give time for the Secretary of State for Employment and Productivity to make a statement on the dispute between the A.E.F. and the N.U.R. as to whose members should be promoted as the mechanical craftsmen of London Transport? The dispute has caused a strike which is now in its 11th week, leading to a reduction in services on the Northern Line—
Mr. Speaker: Order. The hon. Gentleman can ask for a debate, but he cannot debate it at the moment.
Mr. Rossi: It has caused a reduction in services of one-third, a break-down of escalators, and has resulted in appalling travelling conditions in London.
Mr. Fernyhough: On a point of order, Mr. Speaker. Is it not an abuse that, after my right hon. Friend the First Secretary, at Question Time, has asked hon. Members to bear in mind that at this moment negotiations are taking place on this very matter, the hon. Gentleman should take advantage of a business question to make a statement of that kind?
Mr. Speaker: Order. I thought that I had conveyed that to the hon. Member for Hornsey (Mr. Rossi). It is not in order, when asking a business question, for an hon. Member to make the points which he will make if he gets the debate that he is seeking.
The Leader of the House has been asked for a debate on the dispute.
Mr. Peart: Not next week.
Mr. James Johnson: Will the Leader of the House bear in mind the fatal—
Mr. Rossi: On a point of order, Mr. Speaker. I did not ask the Leader of the House for a debate. I asked for time to be given for a Ministerial statement.
Mr. Speaker: The hon. Gentleman is quite right. He asked for a statement, not a debate.
Mr. Peart: I will, of course, represent the hon. Gentleman's views to my right hon. Friend. However, I believe that hon. Members should be very cautious about what they say when there is an industrial dispute and negotiations are taking place.
Mr. James Johnson: May I now ask my right hon. Friend to bear in the mind the fatal consequences of yielding to the pressures of my hon. Friends below the Gangway to muzzle back-bench hon. Members by discussing only two subjects on Monday and Tuesday? We should be allowed to speak on whatever subjects we want, and not be confined to only two aspects of foreign affairs.
Mr. Peart: I thought that I had replied to the Leader of the Opposition on this point. I hope that my hon. Friend will accept what I said earlier to the hon. Member for Penistone (Mr. John Mendelson), that I thought that what I told the right hon. Gentleman was reasonable.
Mr. Bitten: If it is the intention of the Leader of the House that we should concentrate in the foreign affairs debate primarily on Vietnam and Nigeria, will he tell the House next week when we may have a debate on our relations with Europe?
Mr. Peart: It is up to hon. Members to catch Mr. Speaker's eye and, if they wish—[Interruption.] I cannot interfere with the procedure of debate in that way. It is up to the hon. Gentleman to make his case if he so wishes.
Mr. Dickens: Is my right hon. Friend aware of Motion No. 64 in my name, supported by 120 right hon. and hon. Members on both sides of the House?
[That this House, having noted with approval the Government's acceptance in principle of the Services Committee's recommendations that 'provision should be made at public expense for secretarial assistance or an allowance to meet the cost up to a maximum of one full-time secretary per Member' and that 'a substantial increase in the car allowance should be granted' urges the Government to assume immediate responsibility for the salaries, National Insurance, and selective employment tax of Members' secretaries, and to make an early announcement of the revised mileage allowance.]
As four months have elapsed since the Government's acceptance in principle of the Select Committee's recommendations, may I ask my right hon. Friend whether he will make a statement on the matter, preferably next week?
Mr. Peart: I will endeavour to make a statement next week.
Mr. David Steel: Does the right hon. Gentleman recall that the Government have asked for views on the report of the Scottish Royal Commission on Local Government by the end of the year? Will he seek to make arrangements for Members of Parliament to give their views in debate at least in the Scottish Grand Committee, if not on the Floor of the House, before Christmas?
Mr. Peart: I will look into this matter.
Mr. Atkinson: Is the Leader of the House aware that the conversion to decimal currency which is now taking place is having a serious effect on the cost of living and that the Government's advice in the matter is being constantly ignored? Therefore, will he rearrange the business towards the end of next week so that we may have an emergency debate on the effect of the conversion?
Mr. Peart: My answer to my hon. Friend is "No, Sir".
Mr. Amery: Reverting to the foreign affairs debate on Monday and Tuesday, while fully appreciating the desire of the House to discuss Nigeria and Biafra on one of those days, and not underrating the importance of the Vietnamese issue, will the Leader of the House confirm, after the exchanges which have taken place, that it will be in order to raise other matters, such as the Middle East and Europe, which are just as important in the eyes of many hon. Members as the other two issues?
Mr. Peart: I should think that it would be in order to do what the right hon. Gentleman suggests.
Mr. Lawson: Referring to Wednesday's business, in view of the obvious difficulty of right hon. and hon. Gentlemen opposite to understand the plain facts and figures of Scotland's extraordinary recovery, will my right hon. Friend endeavour to persuade the Leader of the Opposition to devote a full day to discussing this subject instead of half a day?
Mr. Peart: This is a Supply day and the Opposition, quite rightly, have chosen two subjects. It is for the Opposition to decide. I cannot go beyond that.
Mr. Scott: In view of the widespread feeling in the country and in the House on nurses' pay, cannot the Leader of the House offer us at least a statement, if not a debate, next week on this vital subject?
Mr. Peart: I will refer this to my right hon. Friend.
Mr. Prentice: In view of the importance of the debate on public expenditure on Monday week, will my right hon. Friend consider whether this should be a two-day debate? If this is difficult in terms of Government time, will he consult the Opposition with a view to seeing whether they will sacrifice a Supply day so as to have a two-day debate?
Mr. Peart: This is difficult, because I conceded a debate on another matter. I hope that my right hon. Friend will understand.
Mr. David Mitchell: Will time be found for a statement by the Secretary of State for Employment and Productivity on the disastrous situation at Tilbury and in the London docks?
Mr. Peart: As soon as my right hon. Friend is ready to make a statement she will. I recognise the importance of this matter.
Mr. Winnick: Obviously, right hon. and hon. Members will want to raise various items on Monday and Tuesday, but will my right hon. Friend accept that for many weeks hon. Members have been pressing him for a debate on Vietnam? Is he aware of Motion 39, signed by 90 of my right hon. and hon. Friends?
[That this House, deeply disturbed at the allegations of mass murder committed by United States troops in a Vietnam village, calls upon Her Majesty's Government to express to the United States Government the deep concern which exists in this country at these reports.]
Mr. Peart: My hon. Friend should not ask me to repeat myself. I gave a clear reply on this matter to the Leader of the Opposition.
Mr. Peter Walker: Will the Leader of the House carefully consider making time available for a statement on Tilbury in view of a report that yet another firm has decided to leave Tilbury?
Mr. Peart: I agree. I thought that I gave a sympathetic reply to the hon. Member for Basingstoke (Mr. David Mitchell).
Mr. Roebuck: Referring to the foreign affairs debate, is my right hon. Friend aware that I have been waiting, since his promise of last July, to hear from the Ministry of Defence and the Foreign Office about the situation with regard to the Greek Army's rôle in N.A.T.O.? Can he assure the House that his right hon. Friend will come to the House on Monday or Tuesday to give us his assessment of the position?
Mr. Peart: I will convey the opinions of my hon. Friend, but I cannot promise that my right hon. Friend will refer to his contribution.
Mr. Michael McNair-Wilson: Will the Leader of the House consider finding time for a debate on the White Paper on Civil Air Transport?
Mr. Peart: I cannot promise a debate before Christmas.
Mr. Frank AUaun: May I remind the Leader of the House that the last time we had a two-day debate on foreign affairs was August, 1968, when one day was clearly devoted to Czechoslovakia and the other to Nigeria? I think that my right hon. Friend must admit that it will lead to tremendous confusion if these and other subjects are dealt with on a "Cook's tour". Is my right hon Friend aware that 140 right hon. and hon. Members have put down their names to a Motion on Nigeria?
[That this House, in the name of humanity and realism, calls for a change in Government policy over the Nigerian civil war, which after two-and-a-half years cannot now be won by either side; and urges Her Majesty's Government to press through the Security Council of the United Nations for an immediate and total embargo on the supply of arms to either side.]
Both Nigeria and Vietnam deserve not only discussion but, if the Government fail to make advances, if necessary, a vote. Right hon. and hon. Members will be put in great difficulty if this is denied to them.
Mr. Peart: I think that my advice to the House is right. I have examined this matter—[An HON. MEMBER: "Not enough."] I must consider other hon. Members. If my hon. Friend catches Mr. Speaker's eye he will be able to make a contribution to the debate.
Mr. Heath: If it would help the Leader of the House, we on this side would be prepared to accept from the Prime Minister on Monday a statement on Europe on which the House could cross-examine him so that he could afterwards devote his speech to Vietnam and to the debate in his party on that subject.
Mr. Peart: I think that it would be right for my right hon. Friend, in opening the debate, to touch on the whole canvas of foreign affairs.
Mr. Philip Noel-Baker: It has been evident for a long time that the House should urgently debate both Nigeria and Vietnam and that we shall get no satisfaction on either of those matters unless the whole time is devoted to them. But is it not also equally urgently important that there should be a debate on the Middle East, where the situation is very dangerous? If the House gets its priorities right, should not the Leader of the House give us another day?
Mr. Peart: My right hon. Friend wishes me to suggest another day for debate apart from the two-day debate— [HON. MEMBERS: "Yes."] I think that my hon. Friends who have pressed me for a two-day debate should be satisfied at this stage.
Mr. Thorpe: Is the Leader of the House aware that whilst in no way wishing to limit the matters which may be raised in the two-day foreign affairs debate, there are many hon. Members in all quarters who, particularly on the issues of Nigeria and Vietnam, would like to be able to express their opinions in a vote? Surely this is not beyond the wit of the right hon. Gentleman to arrange?
Mr. Peart: I hope that the Leader of the Liberal Party will carefully examine what I said when I made my first statement on this matter in reply to a question. I think that he must be sensible.
Mr. Sheldon: I should like to press my right hon. Friend about having a

1711
two-day debate on public expenditure. This really is of extreme importance. We have created a new method of examining how we are spending the vast sums of money which the Government raise. Surely this is worthy of a two-day debate.
Mr. Peart: It is an important matter, but I am pressed for time.
Dame Irene Ward: To help both sides, will the Leader of the House ask the Secretary of State for Education and Science whether he can tell us what his instructions to his two representatives on the Burnham Committee are? I want to know whether it is the Chancellor who is conducting the negotiations or the Secretary of State for Education and Science. If he could tell us what his instructions are we should then know how the Chancellor of the Exchequer was playing the hand and whether the Secretary of State is in favour of the teachers.
Mr. Peart: Much as I like the hon. Lady, I must say, in view of the delicacy of the matters affecting the Burnham Committee, that I do not think that her suggestion is very helpful.
Mr. Molloy: In view of the serious crisis arising in the nursing profession, will my right hon. Friend arrange for a debate in the House on the pay of nurses before we rise for the Christmas Recess?
Mr. Peart: I cannot promise a debate, but I will represent to my right hon. Friend the feeling of many hon. Members on both sides.
Mr. Hugh Fraser: While thanking the right hon. Gentleman for his assurance, and in view of the statement by my right hon. Friend the Leader of the Opposition that on a Supply day we are debating Nigeria, may I ask him to make it clear that the Prime Minister will open the debate on Monday, and that on Tuesday the Foreign Secretary will deal in detail with the Nigerian situation?
Mr. Peart: I cannot at this stage be committed to the order of the debate, but I said that my right hon. Friend the Prime Minister would open the debate. I expect my right hon. Friend the Foreign Secretary to intervene on Tuesday.
Mr. Hugh Jenkins: Is it not a fact that the manner in which the two-day
1712
foreign affairs debate has been arranged means that the Government will not have an opportunity of knowing the opinion of the House on the question of Vietnam? Will my right hon. Friend reconsider the position? Might it not be to the advantage of the Government to know the opinion of the House?
Mr. Peart: I hope that my hon. Friend will not think that I am as naive as that. I know his views, and those of many other hon. Members.
Sir Alec Douglas-Home: The right hon. Gentleman knows that the Opposition have a Supply day next Tuesday, and that we have chosen to concentrate on Nigeria. Will he convey to his right hon. Friend the Foreign Secretary that we shall expect a detailed reply from him on this subject?
Mr. Peart: I shall, of course, do that. I thought that I had said so.
Mr. Albu: In view of the radical and welcome improvement in the method of presentation of public expenditure, which is published today, will my right hon. Friend reconsider his decision about the number of days allocated for debate and accept the Select Committee's recommendation for a two-day debate on public expenditure?
Mr. Peart: I have noted the point, but I cannot go beyond my earlier reply.
Mr. John Page: Will the right hon. Gentleman make a statement before we rise for the Christmas Recess on how a written record of the unveiling of the Churchill statue, including the words of Mr. Speaker on that occasion, can be made available to hon. Members?
Mr. Peart: I shall consider that. If it is possible, we should have a written record.
Mr. Raphael Tuck: I heard my right hon. Friend say, "I am pressed for time". Although the Government are pressed for time, there are many vital issues which will not be discussed—
Mr. Speaker: Order. Only one question at Business Question time.
Mr. Tuck: I am coming to it, Mr. Speaker. As Vietnam, Nigeria, Europe, the Middle East, public expenditure, and other matters are not to be debated, and

1713
as we are apparently having no fewer than 31 days' Recess, would it not be a good idea to extend the term for a couple of days before Christmas, and come back three or four days earlier than intended, so that we can have time to debate all these vital matters?
Mr. Peart: My hon. Friend can no doubt participate in the debate when I move the Motion for the Adjournment of the House for the Christmas Recess. I think that a good holiday is good for a lot of people.
Sir Edward Boyle: Is it not highly desirable that there should be a two-day debate on public expenditure? Is it not clear that many hon. Members will wish to raise not only priorities, but also machinery for controlling Government expenditure, and how we can get the best value for money?
Mr. Peart: I accept that. I suggested earlier that possibly one day, later, we could have a debate on the structure of Select Committees and matters like those mentioned in the report. I cannot go beyond what I said earlier.
Mr. Bidwell: Will my right hon. Friend think more deeply about having two separate days for the foreign affairs debate on the specific items of Vietnam and Nigeria? If we roam all over the world, are we not in danger of going on for ever because some Members are happy about some aspects of the Government's handling of foreign affairs, but not about others? If we all vote against the Adjournment of the House we shall end up in a shambles.
Mr. John Mendelson: So will the Government.
Mr. Peart: I hope that my hon. Friend will study what I said earlier. I cannot go beyond that.
Mr. R. Carr: Can the right hon. Gentleman say whether the Government expect to publish next week their new White Paper on prices and incomes policy, and whether the First Secretary of State will accompany the publication with a statement to the House?
Mr. Peart: I am not sure about a statement, but I shall represent the right hon. Gentleman's views to my right hon. Friend.
Several Hon. Members Several Hon. Members rose—
Mr. Speaker: Order. Only one business question from any right hon. or hon. Member.
Mr. Scott-Hopkins: In view of the obvious importance of Professor Swann's report on antibiotics, can the right hon. Gentleman say whether there will be a debate on it before Christmas? If not, will he say how soon we can have one?
Mr. Peart: Not before Christmas.
Mr. McMaster: May I press the right hon. Gentleman for a statement before Christmas on the continued ban on the operation of container facilities at Tilbury, so that hon. Members on both sides can express concern about the great damage that this is doing to the country's export efforts?
Mr. Peart: I have already answered that question.
Mr. Onslow: Will the right hon. Gentleman bear in mind the need to have a half-day debate soon, in Government time, on the report on the recent outbreaks of rabies?
Mr. Peart: I know that this is of concern to the general public, but I cannot promise a debate.

QUESTIONS TO THE PRIME MINISTER
Mrs. Ewing: As we reached only Question No. Q1 to the Prime Minister, and No. Q3 was not answered, and, therefore, apparently Scotland's vital statistics remain veiled in mystery, I wonder, Mr. Speaker, whether you would use your influence with the Prime Minister to urge him to cut down the length of his Answers, and thus increase his own productivity?
Mr. Speaker: I make no comment on vital statistics. As a matter of fact—and this is why I corrected the hon. Member for Smethwick (Mr. Faulds)—we dealt with four Questions. The Prime Minister was dealing with four Questions on Europe, at a rather interesting stage in the whole matter of Europe, and I thought it right to let it run as I did.

PERSONAL STATEMENT
The Under-Secretary of State for Defence for the Army (Mr. Ivor Richard): With your permission, Mr. Speaker, I should like to make a personal statement.
At Question Time yesterday, I answered a supplementary question from the hon. Member for Moray and Nairn (Mr. Gordon Campbell) on the development of the rocket range in the Hebrides in these terms:
"The hon. Gentleman knows that within 48 hours of having made the statement in the House I wrote to him and to other Members most directly concerned in this matter, correcting that."—[OFFICIAL REPORT, 3rd December, 1969; Vol. 792, c. 1463.]
I now find that, whereas I did indeed write to the hon. Member on 16th October, my letter did not cover the precise point in question, namely, the income to the islands from the rocket range in the current year.
This information was, in fact, given to the hon. Member by my Written Answer to his Parliamentary Question on 22nd October, and in Answers to subsequent Parliamentary Questions on later dates.
I am grateful to you, Mr. Speaker, for the opportunity to correct this error, for which I apologise to the House and to the hon. Member concerned.

BILLS PRESENTED
  LABELLING OF FOOD AND TOILET PREPARATIONS
  Mrs. Joyce Butler, supported by Sir Stephen McAdden, Mr. John Farr, Mr. John Rankin, Mr. Jeremy Thorpe, and Mr. Tony Gardner, presented a Bill to confer powers in relation to the provision of information or instructions on the sale of food and toilet preparations; and for purposes connected therewith: And the same was read the First time; and ordered to be read a Second time upon Friday 20th February and to be printed. [Bill 52.]
  ANTI-DISCRIMINATION
  Mrs. Joyce Butler, supported by Mr. Bishop, Mrs. Freda Corbet, Mrs. Winifred Ewing, Miss Margaret Herbison, Mrs. Lena Jeger, Mrs. Anne Kerr, Miss Quennell, Dr. Shirley Summerskill, and Dame Joan Vickers, presented a Bill to make illegal discrimination against women in respect of employment, education and training, social and public life; to provide for equal pay to women for work of equal value; to establish an antidiscrimination board; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 20th February and to be printed. [Bill 51.]

NATIONAL SUPERANNUATION (WHITE PAPER)
3.58 p.m.
The Minister of State, Department of Health and Social Security (Mr. David Ennals): I beg to move,
That this House takes note of the White Paper on Terms for Partial Contracting Out of the National Superannuation Scheme (Command Paper No. 4195).
I should like to start by saying how sorry I am, as I am sure the House will be, that my right hon. Friend the Secretary of State for Social Services is unable to open the debate because he is suffering from a bout of influenza.
In the debate on the first White Paper, Command 3883, in March, the noble Lord the Member for Hertford (Lord Balniel), who, I understand, is to lead for the Opposition today, made a fiery speech and demanded of my right hon. Friend that he should take back his White Paper, and the hon. Gentleman led his supporters into the Division Lobby at the end of the debate. This time the Opposition have decided not to force a Division. I welcome this. I guess that we are winning the argument, and I warmly welcome that.
When my right hon. Friend presented the third White Paper which we are debating today, Command 4195, on 5th November, the noble Lord described it as being totally incomprehensible. I hope that he was speaking for himself when he made that statement. The subject that we are debating today, and which is being debated in the country, is by no means an easy one, especially to a layman, and most of us in the House are laymen.
The problems of easy comprehensibility are not confined to the State scheme. I was reading a day or two ago the rules of one of the largest and best funds in the private sector. This is what they said on how one calculates one's pension:
"The total retirement pension, including the part of your National Insurance pension described in section 15, is called your 'Gross Retirement Pension'. This will be expressed as a percentage of your Final Pensionable Pay and is calculated by adding together three items: (1) On the first £1,650 a year of Final Pensionable Pay: 1½ per cent. for each year
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of Pensionable Service; (2) On Final Pensionable Pay in excess of £1,650 a year: 1¼ per cent. for each year of Pensionable Service; (3) On total Final Pensionable Pay, a … Service Credit of: 12½ per cent. proportionately reduced if total Pensionable Service is less than 30 years. (But see also section 14 and if you are entitled to benefits from other … Funds section 30.)"
So now we understand.
This is an extremely difficult subject, whether we are involved in a private sector or public sector fund. But there are many ways in which the Government's new scheme is very much simpler than our present hybrid system. First, there are three ways in which we can pay for our pension: the flat-rate contribution levied by stamps on the insurance card; the contribution for a graduated pension collected through the P.A.Y.E. system; and the contribution to earnings-related sickness, unemployment and widow benefit, also collected through P.A.Y.E. Now we have one simple system in which there is one form of payment. By this means we are able to abolish the stamped card. I think that most people will say, "Thank goodness for this simplification".
Secondly, there are now two different types of State pension—flat rate and graduated. In future, there will be one type, linked to earnings by a formula which is simpler than is the case with many occupational schemes. Thirdly, no one can have any idea what State pension entitlement he will have 5, 10, 15 or 20 years from now; it is entirely dependent on the whims of successive Governments. Under the new scheme pensions will have a clear relationship to earnings, as with most occupational pension schemes.
But, fourthly, pensioners at present are entirely left in the dark about the frequency with which they will have their pensions up-rated to cover increases in the cost of living, and so on. It may be less than two years, it may be as much as three-and-a-half years. At present, they are in the lap of successive Governments good, bad and, I was going to say, indifferent, but mainly good and bad. In future, they will know that they can count on a biennial review with a statutory obligation on the Government at least to cover rises in living costs and more likely to follow the trend of earnings.

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Yesterday, we published a popular booklet, "The New Pensions Scheme: Latest facts and figures with examples", which is almost essential reading on pensions for the layman. I am sorry to interpose a commercial, but I hope that this pamphlet will be read because it sets out in a simple way the problems before us.
Today, we are basically debating the terms for partial contracting out, but before I come to the White Paper I should put the problem of contracting out in the general context. No one can seriously doubt the need for a major reform of our present inadequate, archaic system of social security. The pity is that it had to wait this long before being introduced. An increasing proportion of pensioners are dependent, or partly dependent, on supplementary benefits. There is no doubt that unless the scheme were changed the proportion would steadily rise.
We know that as long as that fact exists there is a tremendous disincentive to save by those who know that the State pension is below the level of supplementary benefits and, therefore, they will automatically be able to turn to supplementary benefits. Most people recognise the importance of an earnings-related scheme, learning from the experience in many European countries, with two quite clear advantages, first, that it is a means of producing adequate pensions for the future, better than present pensions, and, secondly, that it is a fairer way of spreading the burden of contributions.
It is unfair—and I have said this before in the House and I think that most people agree with it—that a man on a very low level of earnings of £12 a week spends almost 8½ per cent. of his earnings on his insurance contribution, while a man earning £36 a week is called upon to pay about 4·7 per cent. of his earnings.
The Opposition saw the attractions of introducing a graduated system of payment when, in 1959, they introduced their graduated pension scheme. They obtained extra money to pay for the pensions, but they provided a derisory benefit in return for the contributions. A man who today retires at the age of 65 and who has been paying his graduated contributions ever since the scheme was introduced will have the priceless sum
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of 11s. 6d. to his credit from the Opposition scheme. That sum will gradually shrivel with rising costs, because there is no means of ensuring that that small pittance would do other than stay at precisely the same money figure without any revaluation to take account of the cost of living.
At present, quite a lot of people are saying that work people distrust Government pension schemes. A number of journalists have been saying this. We must look to the scheme which the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) introduced as the explanation for the fact that there is a good deal of doubt about systems of this sort. Not only hon. Members but the public recognise that system as a swindle.
Since the White Paper was published in January no one has suggested a viable alternative to the scheme put forward by my right hon. Friend the Secretary of State. The Opposition have hinted, but have not made clear—and the great advantage of this debate is that we shall get clarification—that the best thing to do is to leave matters to the occupational pension schemes. The development of occupational pension schemes is an extremely valuable addition to the State scheme, quite apart from their savings advantages, which we all recognise. But it is a fallacy to think that occupational schemes can be a substitute for a fair and proper State pension scheme.
We should remind ourselves of the facts. There are 12,200,000 people in occupational schemes. I hope that that number will increase. But no one, including people in the pension world, doubted that even by the turn of the century there would still be about one-third of retirement pensioner households with no occupational pension and who would even then be dependent on a State pension. I do not believe that we could compel employers to provide an occupational pension scheme, as some have suggested.
Mr. Sydney Bidwell: The figure of 12 million people in occupational pension schemes may be a little misleading, because the bulk, or a considerable number of them, are, by our standards, in entirely unsatisfactory occupational schemes.
Mr. Ennals: I should not like to generalise, because some occupational

1721
pension schemes are very sound. But my hon. Friend is right in stating that some still provide a very modest benefit. According to the latest statistics, in 1967, about half of the people receiving occupational pension were receiving £3 a week or less. But we must not overplay this, because in some cases the funds had been in operation for only 10 or 15 years; they had not reached total maturity. I therefore do not want to imply that there are not many very sound occupational pension schemes.
But what we must recognise—as I am sure my hon. Friend does—is that it is possible for a man to be a member of a perfectly sound occupational scheme and then to move to another form of employment, perhaps very good pensionable employment, with the likelihood that such a man takes with him the money he has paid in but no pension entitlement. In fact, only one in 10 of people moving from job to job take with them a pension entitlement.
So, if one moved four or five times, as is not unreasonable, particularly in the private sector, one could be in four or five kinds of employment, each with a good occupational scheme, yet retire with a very modest pension because each time one moved one had received a payment of contributions but not a preserved pension right. It is not the issue to be debated at present, but it is an essential part of the Bill.
Another essential factor is that two-thirds of all occupational pensions give no widowhood cover, and even some of that third make very inadequate provision for the widow. This is very important, when one remembers that two-thirds of women survive the death of their husbands.
The only serious alternative which has been proposed to my knowledge since the White Paper came out in January is that of the National Association of Pension Funds. It said, "We are in favour of earnings-related contributions, but it should be for a flat-rate benefit." That was its conclusion, and it would certainly be a higher flat-rate benefit than at present.
Apart from the cost, which I do not want to go into at present, it must be accepted that it would be grossly unfair to middle and higher wage earners to be
1722
told that the more they earned the more they would contribute, for precisely the same pension right. Nothing could be closer to a form of direct taxation than that. It totally undermines, as the noble Lord the Member for Hertford said in an earlier speech in March, the insurance principle. Also, it denies the advantage of earnings-related pensions to all who are not fortunate enough to be members of private or public sector occupational schemes.
I cannot see—I have tried to consider this—that such a system would give any room for contracting out. I cannot see, either, that there would be any logic or any need to establish a ceiling on contributions in a system which produced only flat-rate benefits. We have analysed this proposal very carefully and have discarded it. Frankly, had the Government come forward with a proposal which would have seemed so unfair to the middle and higher earners, we should have been pilloried for doing so, and hon. Gentlemen opposite would certainly have been among the leaders.
I hope that the Opposition will make their position clear on this scheme. The hon. Member for Somerset, North (Mr. Dean) was reported as telling the C.I.B. Life Society on 15th October that he found the proposal attractive, but that it was the political judgment of some very experienced colleagues that the idea would be unacceptable. Maybe one very experienced colleague is the hon. Member for Hertford who is sitting next to him, because, on 6th March, the noble Lord said in the House:
"… I am saying that there should be a relationship between pension and the man's earnings in his working life."—[OFFICIAL REPORT, 6th March, 1969; Vol. 779, c. 715.]
That was an important statement, and perhaps it has totally cleared up the question of whether or not the Opposition support this proposal.
At least we know that they fully recognise that higher contributions are needed—and, we must say, higher contributions in any case. Were there to be an earnings-related system or not, were we simply to exist with our present hybrid amalgam scheme, we should still have, if we are to improve pensions and pay for the vastly increased number of old people now in retirement, to raise contributions. It is important that both

1723
hon. Members who speak from the Opposition Front Bench have recognised this, so there is no division between us about whether contributions would have to be increased.
If the new earnings-related scheme is essentially the issue, we are really analysing in this White Paper what should be the relationship between the State scheme and occupational schemes. My right hon. Friend could, if he had wanted, have steamrollered our State scheme through without any basis of partnership. So far as I know, no Government, in introducing an earnings-related scheme, have consciously set out to leave a special place for, and to work out a form of partnership with, existing occupational schemes.
Mr. Douglas Houghton: My hon. Friend says that the Government could have steamrollered through a scheme without any contracting-out arrangements. Surely he knows that that would have been politically impossible?
Mr. Ennals: I do. I was about to say that we would never have thought of doing such a thing. I am saying that it would have been possible for a Government to seek to do it, but that we would never think of doing this. First, it would have had a very serious effect upon savings, of which occupational schemes provide a significant part. Secondly, it would have led, inevitably, to drastic cut-back by occupational schemes which were left with the only alternative of living on top of an enhanced State scheme. We genuinely believe in partnership. This is so because each type of scheme—on the one hand, a funded occupational scheme and, on the other, a pay-as-you-go State scheme—has its advantages which enable them to fit together very well.
The first advantage of a State scheme is the automatic transferability. A man can change his job as frequently as he likes and his pension right is always preserved. Secondly, the State can provide, as an occupational scheme cannot, dynamism, by which I mean that the level at which a man's pension is established at the moment of his retirement is based on the earnings levels of the country at that time and, also, that the pension, after he has received it, can be uprated to cover either, as a minimum, rising costs
1724
of living, or, as a maximum, earnings levels or any other maximum which one cared to set. No privately funded scheme can give a total guarantee that a pension will not shrivel somewhat if there are rising costs—
Mr. Peter Tapsell: How can the Government, either, give such a total guarantee for the future?
Mr. Ennals: Because the Government can write into their legislation, as we will do, this statutory obligation. Nor should we imagine that this is a fearful obligation for a Government to take. During the years when the hon. Member's party was in power, even without a statutory obligation, it raised the level of pensions and this did more than cover rising costs. We have proceeded beyond that, but I am simply saying that both Governments have found this possible. There will now be a statutory obligation and it will come at a fixed time, when the pensioners will know it.
But the next advantage, of course, is that a State scheme can give an enhanced pension to a man with a wife and children. It can also give widowhood cover, which is more generous than, so far as I know, any occupational scheme can offer. As the House will recognise, a widow of 50 or over, when her husband dies or her children grow up, will be able to inherit his full rate of earnings-related pension. This is a very important step forward and especially so, because, as I said, two-thirds of wives survive their husbands.
The fifth advantage is that, in a pay-as-you-go scheme, we can introduce a relatively short maturity period of 20 years which could not possible be done by a funded scheme.
On the other hand, there are advantages in a private occupational scheme which the State cannot match. For example, an occupational fund can adapt its conditions to its employees. It can tailor its provisions to suit the needs of individual occupations, with maybe for white collar workers a pension based not on average earnings over a period, but on final salary. It can adjust to meet an early retirement age and it can provide a lump sum.
All these are advantages because of the flexibility of an occupational scheme. There is, therefore, everything

1725
to be said for having the advantages of both State and private schemes. State and occupational schemes can both complement and supplement each other.
The next question is: what is the right mix? This is what partial contracting out is all about. It allows occupational schemes to take over responsibility for part of the State pension in return for a reduction in the State contribution of employees and employers, so avoiding or reducing the need to cut back occupational schemes when the expanded State scheme is introduced.
It was announced in January, when the first White Paper was published, that there would be detailed consultations about the terms of partial contracting out. There have been very detailed consultations indeed. Having had the privilege of being involved, with my right hon. Friend the Secretary of State, in literally dozens of meetings, I pay tribute to the principal organisations with which we were in consultation, such as the National Association of Pension Funds, the Life Offices Association, the C.B.I. and the T.U.C. These were centrally chosen as being particularly representative bodies.
Mr. Arthur Palmer: Would my hon. Friend explain why there was no direct consultation with the public service trade unions, which have had vast experience in this sphere?
Mr. Ennals: It would have been impossible for us to have sought negotiations with all trade unions.
Mr. Palmer: Why not the public service unions?
Mr. Ennals: I am not certain why my hon. Friend thinks that only the public service unions should have come into this. Why not other trade unions which represent other sections of industry? Looking behind me, I see hon. Friends who represent at least 15 trade unions of which I can think immediately. We had negotiations through the T.U.C. and many of the principal unions are directly represented on the Social Services Committee of that body, including a number of unions representing the public service.
Secondly, wherever there was an organisation which wished to put forward its point of view directly to Ministers, we saw that organisation and I have had many meetings with different unions, in-
1726
cluding those in the public service, so that they could put forward their views and I or my right hon. Friend could respond. I therefore pay tribute to those organisations, and I certainly include among them the public service unions which were involved in, so to speak, the second level of consultation; and we learned a great deal from those meetings.
I pay tribute to my right hon. Friend the Secretary of State, who was involved in long days and weeks of consultation. We achieved, through that consultation, a wide measure of agreement. It is often the case, when one is engaged in long negotiations, that at the end of them one argues about a couple of points that are left but not about the main points on which agreement has been reached. So it was in this case, and the main pattern of partial contracting out was accepted.
Two main points were left. The first was how much of the State pension we could agree that occupational pension schemes could take over the responsibility for. There were limiting factors here. If the level of abatement was too high, then the pension paid by the State 30 or 40 years from now might be reduced to a very low figure. Bearing in mind the lack of facilities for transferability, it might be against the interests of all concerned if there were not at least a substantial State pension left when the abatement facilities had been used.
Secondly, if we had set too high a level of pension abatement, this would have been beyond the reach of many of the smaller schemes, which could not guarantee to provide that amount of pension taken over from the State.
We examined the possibility of having two levels of abatement, one for big schemes and one for small ones. Frankly, however, there were so many complicated administrative problems—had we accepted such a system all sorts of difficulties would have arisen—that we reached the conclusion that there had to be only one level.
We reached a wide measure of agreement on this, namely, that it should be 1 per cent. of a man's reckonable earnings for a year. This figure was higher than the Government originally proposed and, by the time it was settled, most of the organisations with which we were in consultation accepted it as being about the right figure. The Government also

1727
agreed that the State, rather than occupational schemes, would accept responsibility for the dynamism, the revaluation, of the part of the pension taken over by occupational schemes.
One can see that it would have imposed a considerable burden particularly on smaller occupational schemes if they had been obliged every two years to do a revaluation of that part of the State pension which they were providing. Thus, the State said, "We will do the revaluation, not only on the part of the State pension which is coming from the State but on that part which is being provided from the occupational fund." This is an important undertaking and, frankly, a costly one for the State.
This, therefore, took us to the last major decision: what should be a fair amount of contribution reduction to match up with the 1 per cent. of pension abatement? This was obviously not a matter on which we, as laymen, could take a snap judgment. We therefore took the advice of the Government Actuary who, as an independent figure, reached his own conclusion. Sir Herbert Tetley's report is set out in the appendix to the White Paper, and the assumptions on which he based his conclusion are summarised in paragraph 20 of the White Paper. His conclusion was that a fair amount of contribution reduction would be 1·25 per cent. This, he said, would be fair for the average scheme.
However, many pension interests said, "That is not enough", and the figure of 1·5 per cent., instead of 1·25 per cent., was proposed by a number of principal organisations. We weighed this up and the Government decided to move beyond what the Actuary had thought was fair, and we moved to 1·3 per cent. We did so because we recognised, as the Actuary had, that if we were to make a movement from 1·25 per cent. to 1·3 per cent. this would help a substantial number of small schemes, and particularly small schemes with only a few members where the administrative costs were inevitably high.
Indeed, in paragraph 9 of his report the Actuary said:
"Since the average ages for the various schemes tend to be closely concentrated about the 'breakeven' point, this improvement"—
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that is, up to 1·3 per cent.—
"in the terms should be sufficient to make them financially acceptable to a further number of schemes covering an appreciable number of employees."
One might ask, "Why did not the Government move further forward; to, say, 1·5 per cent?" If this were an over-generous or unnecessarily generous provision, it would be unfair to those who were contracted out. It is the responsibility of the Government, while those representing pension interests—
Mr. Douglas Jay: Before my hon. Friend continues, I suggest that he meant to use the phrase "contracted in" in his last remarks rather than "contracted out".
Mr. Ennals: It would be very unfair to those who remained contracted in. They would rightly ask, "Why are those people getting an over-generous reduction in contributions?" They would look at the fact that this would produce a more rapid drain on the National Superannuation Fund, and certainly affect the date at which there might be an increase in contributions.
The assessment was made on fair terms. Our task was to strike a balance and to get it right. Did we get the figure right? No doubt some hon. Members opposite will argue that it should have been very much more. It is interesting to see points which have been made since then. The National Association of Pension Funds, which argued for 1·5 per cent., said on 5th November:
"In our view the terms now proposed will probably be financially acceptable to most large employers but they will still appear very delicately balanced for the majority of smaller schemes."
Mr. Dryden Gilling-Smith, a very prominent writer on pension subjects who seems to be writing for almost every newspaper in the country, wrote in the Financial Times on 11th November:
"In fact, it is highly probable that the terms offered may enable you "—
He was directing this to employers—
"to contract out and still be on the right side of the financial break-even point."
Lord Balniel: The hon. Gentleman quoted the National Association of Pension Funds, but he did not quote the next sentence, which said:
"It seems unlikely, therefore, that the contracting-out arrangements proposed by the

1729
Government will serve to encourage the development of new occupational schemes … "Surely that is a very significant sentence?
Mr. Ennals: I was not for a moment suggesting that the Association had given unqualified support. I made quite clear that it argued for the higher figure. I will take up the point it made when I look later at the assessment of the effect on existing occupational schemes.
Noble Lowndes and Partners, very well-known pension consultants and brokers, also seemed not particularly alarmed by the terms, as can be seen by those who read "Like it or Not", which the firm published recently.
The T.U.C. put out a statement saying that it
"noted the Government intention to increase its original figure of contribution abatement for those in occupational schemes from 1 per cent. to 1·3 per cent. The General Council accepted this increase because it would assist those in occupational schemes. They would, however, oppose any further increase in the level of abatement as detrimental to the State scheme because

(a) the loss of income to the National Superannuation Fund would be excessive, and

(b) the difference in the unabated State scheme contributions of those without occupational pensions and the abated State scheme contributions of occupational pensioners, would be greater than the diiference in their pensions would justify."

Mr. Paul Dean: The hon. Gentleman skipped very quickly over the point made by Noble Lowndes. I am sure that he does not wish to mislead the House. Would he agree that the calculations in the Noble Lowndes document are not a direct comparison with what the Government were offering, because one is on the basis of a fixed price contract and the other on the basis of a fixed profits contract?
Mr. Ennals: Yes, but if hon. Members look at page 13 of the pamphlet they will see an age-earnings distribution and contribution-pension ratio which resulted in a figure of 2·2 per cent. as "low" and 2·4 per cent. as "normal". If one reads through the generality of the document one sees that the opportunities for contracting out and making use of and dovetailing with the Government scheme are there, like it or not.
Mr. John H. Osborn: May we come back to what is considered a large occupational scheme and what is considered a medium-size
1730
one? The hon. Gentleman bandied these phrases about. Can he help us?
Mr. Ennals: I agree that I was generalising. It is rather difficult to particularise because the vast numbers of people involved in occupational schemes are in large schemes in the public service, in local government and with large employments. There are several hundreds of thousands of them whereas there are substantial numbers of very small schemes. In talking about very small schemes I am referring both to numbers of individual members, and also the level of benefit and, therefore, of contributions for which they call.
One must ask: what is it likely to mean in terms of members contracting out? What do we expect will be the consequence of partial contracting out of the terms the Government have announced? Of course, we shall not know; the proof of the pudding will be in the eating. The numbers will be dependent on many thousands of decisions still to be taken by employers in consultation with employees between now and the starting date of the new scheme.
The estimate that the Government have made is that there will be at least as many as are now contracted out of the graduated element—that is 5,750,000— and probably marginally more. This is accepted by Mr. Gordon Bayley, Chairman of the Life Offices Association, who said this in a television interview. Even if there were some increase over present figures in partial contracting out, the fund would be building up a surplus for five years or more. It is important to recognise this.
What will those contracted out get in return for their contributions? This is a natural question that all sorts of people in funds of one sort or another have been asking. One cannot give a precise figure, and I should not wish to do so. Because the scheme is dynamic, the level of pensions will be dependent both on the level of earnings of the individual and on the national earning levels at the time when a pension is awarded. It would be the worst service we could possibly do to contributors to fix a monetary sum in advance and to say, "This is what you will get in pounds, shillings and pence 10 or 20 years from now".

1731
None of us can know what will be the changes in the value of money between now and the time when pensions are awarded. Pensions, of course, must reflect rising living standards. If one looks back to 1946 and the 26s. State pension which was awarded then, one sees that if it had only kept pace with prices the 26s. pension would now be very little over £3.
Mr. John Horner: This is a very complicated point. Would my hon. Friend agree that while it is not possible to promise what the contracted-out employee will draw in pounds shillings and pence, nevertheless it might not be impossible to assure the contracted-out employee of a return? After all, he will be paying nearly three-quarters of the nominal contribution rate throughout his entire working life.
There is an ominous phrase in the White Paper which suggests that if the 1 per cent. were much higher a young employee might find himself in a negative position at the end of his working life. Although a certain sum of money cannot be guaranteed, can there not be a floor below which the contracted-out employee will not fall in terms of a proportion of the State pension?
Mr. Ennals: It would be very difficult to do. What we can do is to make an estimate. Suppose that we have had the new scheme over the last 20 years instead of the existing scheme. Bearing in mind the earnings increases which have taken place over that period, we can produce a figure. It is a helpful figure and I will give it to the House since my hon. Friend has asked me to do so. A man earning £18 a week retiring under the present scheme gets £5 8s.—the new level of £5 at flat rate and 8s. as the graduated element. Under the new scheme, if not contracted out, he would have £8 14s. Had he been there for 20 years contracted out, he would have received from the State £6 13s. of that £8 14s. and £2 1s. as part of the pension that he got from his own occupational pension scheme.
Going back over 40 years, which is a much more likely period for a man for the maturity of the scheme, the actual amount of pension abatement would be
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not much less. The £6 13s. which the State would provide would go down to £6.
An average earner would at present get £5 11s. if he retired now—£5 flat rate and 11s. graduated. Under the new State scheme, not contracted out, he would get £10 4s. If contracted out, £7 9s. would come from the State and £2 15s. would come from his occupational scheme. If spread over 40 years instead of 20 years, it would have been £6 12s. and not £7 9s.
A top earner on the ceiling of one and half times national average earnings would now also retire with £5 11s. Under the new scheme he would have got £13 4s. If contracted out, he would get from the State £9 1s. and from his occupational fund £4 3s.
We can produce these figures based on experience over the last 20—or, if we wanted to make it so, 40—years. It would be difficult to make a prophecy what would be an increase in earnings in the future.
It may be that my hon. Friend is worried and thinks that we are not saying that it will be 6 per cent. I am not making any prophecy. Let us suppose it to be quite different and that the earnings increase would be only 3 per cent. or 3½ per cent., that is, much lower. If that were to be so, it would undoubtedly have an effect upon interest rates. If interest rates were substantially different, the terms of contracting out now put forward would also be different.
A person involved in a contracting-out operation can be confident that he will receive from the State a substantial part of his State pension. He will know that he will get the rest of it from his occupational fund. Our calculation is that, even under the most dismal earnings increase, a man would certainly get no less from the State than he gets at current earnings levels.
Mr. Bidwell: It is possible to predict proportions which make it clear to the average person, particularly as there is to be an in-built reassessment or revaluation mechanism. My hon. Friend called it "dynamism", which is an unfortunate word which very few people understand. One can talk in terms of proportions so that people as a whole get the hang of the thing, as it is most important they do.
Mr. Ennals: The difficulty about talking in proportions is that the proportion changes year by year. The best way to give an indication is to give this sort of backwards projection based upon the experience which people have understood over the last twenty years.
Mr. John M. Temple: The Minister talked about a "most dismal earnings increase", which he would not expect. Has that dismal earnings increase been achieved by the present Government over the last few years? If so, what is the figure of the dismal earnings increase?
Mr. Ennals: I do not think that the hon. Gentleman is interested in the subject, but it is an interesting question. The increase to which I referred was spread over 20 years, which included a number of years under this Labour Government, a number of years under the Tory Government, and another number of years under the first post-war Labour Government. Whatever political conclusions one wants to draw, those are the facts of what experience has been over 20 years. Until I was—I will not say "rudely"—interrupted I was asking: what does the contracted out man get for his contribution? I have dealt with that in terms of his own pension.
In addition, the widow will be able to inherit his full unabated pension. The widow of the contracted out man does not merely inherit the part of the State pension that the State pays. She will inherit the full State unabated pension. Further, the Government have agreed to revalue, to uprate, the contracted out element as well as the rest of the pension.
Taking all in all, I believe that this provides very good value for money, whether for the contracted in or for the contracted out. I recognise that the hon. Member for Somerset, North (Mr. Dean) does not agree with this, because he said on television on 13th November:
"I would say we have got a bad bargain here for the majority of people."
As the hon. Gentleman had in an earlier speech recognised that he, like myself, is not an expert, I hope that he will also look at what Mr. Gordon Bayley, the Chairman of the Life Offices Association, has said:
"The White Paper scheme as a whole promises us additional benefits at a future date which on any commercial reckoning would cost
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a great deal more in contributions than the Government is asking us to pay."
I set that against the views of the hon. Gentleman.
The question of contributions should be put into proportion. Under the new scheme, a man on the ceiling level would expect to pay 14s. 7d. more. An average earner would pay only 2s. more. There are approximately 8 million employees as well as their employers who will pay less under the new scheme for a better deal than they get under the existing scheme.
I want to take the value for money argument a stage further. The new scheme is a social security scheme. First, low earners will do proportionately better than higher earners. I shall be interested to hear whether any hon. Member wishes to challenge that. Secondly, married men will do better than single men. This is fair, too, because of their responsibilities. Thirdly, it could be argued that there is a more generous deal for widows than for spinsters. I shall not argue whether this is right or not. There are very great problems for widows. Fourthly, there is more advantage, because of the early maturity of the scheme, for the middle-aged than there is for the very young. These are four perfectly reasonable social objectives written into the new scheme.
What about the suggestion of a drastic cut-back in occupational schemes or even the suggestion that some or many will fold up. The C.B.I. in a statement on 5th November said:
"… for below average schemes there can be no alternative but to discontinue."
This is such an erroneous statement that I challenge it immediately. It is certainly not so.
A scheme which is good enough to contract out can contract out. If its contribution level is very small and therefore it cannot provide the degree of benefits required, it can expand and can then contract out. If it is so small that it cannot even expand, it can live on top of the State scheme. It is absurd to suggest that there are no alternatives.
I am not saying that there will not have to be considerable adjustments to the new scheme by occupational pension schemes. There will have to be all sorts of adjustments which are not necessarily

1735
in terms of cut-backs. There will be a good deal of adjustment which will mean that some will seek to integrate their benefit provisions with the new type of State benefit provision. I do not minimise the problems which will now have to be sorted out and the decisions which will have to be taken; nor would I minimise the importance of close consultation between employers and employees in taking these vital decisions.
Now, a word about the effect on public service pension schemes, a matter about which there has been a great deal of interest. Obviously, I cannot yet say how public service pension schemes will be adapted to the new situation. It would be wrong for me to do so because these also must be a matter of full consultation with staff interests. However, I can illustrate our approach to these matters by quoting one or two extracts from a document which we have just issued to the staff representatives concerned with the occupational scheme for which my Department holds responsibility, the National Health Service superannuation scheme. Here are some of the specific assurances which we have given in respect of that scheme.
First, whatever changes may be necessary after the introduction of the State scheme, benefits earned by previous service in the National Health Service superannuation scheme will not be subject to retrospective change. This means that any changes which might be made will apply only to service after the date of the change. Benefits for service up to that date will be calculated on the present basis. So, at the end of the day, benefits will be calculated in two parts—one in respect of service on the present basis, and one in respect of service on the new basis.
Second, any adjustment to the amount of National Health Service pension to take account of the State pension will apply only to remuneration covered by the State scheme, that is, up to 1½ times national average earnings.
Third, there is nothing in the new State scheme which need affect lump sum retiring allowances. This is a matter about which many people have been worried, and I am glad to give that assurance. The current review of the income tax position of occupational pension schemes
1736
covers lump sums, but it is unlikely to alter the position whereby the National Health Service superannuation scheme can continue to provide lump sum retiring allowances on the present basis.
Fourth, where people retire on pension before the age at which the State pension becomes payable, they will have their full pension from the National Health Service superannuation scheme. Any adjustment to take account of the State pension will, as now, be made only from the date on which that pension becomes payable. Thus, female nurses and so on who choose to retire at age 55 will have the full occupational scheme pension, and this will be adjusted to take account of the State retirement pension only when they reach age 60, which is their State scheme minimum pensionable age. Similarly, the pensions of men who retire at age 60 will not be adjusted until they reach age 65.
Fifth, the legislation on the new State scheme will provide also that, when members of an occupational scheme with certain minimum qualifications as to age and service leave their employment before pensionable age, they will be able, to the prescribed extent, to have their accrued pension rights preserved or frozen until they reach retiring age. Facilities for preservation at least as good as those in the legislation will be provided for members of the National Health Service superannuation scheme.
Those are important assurances. They do away with many of the assumptions which people have wildly accepted that, somehow or other, the rights which they have built up would be taken from them, that someone would grab the pensions for which they had already paid, that people would be obliged to retire later and they would lose their lump sums. Who put that sort of information about I do not know. It is important that the facts should be clearly known.
Now the last major aspect of the matter, the effect on savings through occupational pension schemes. Over the past 10 or 15 years, there has been an impressive growth in savings through occupational schemes, and we can be confident that growth will continue to be the long-term trend. Nevertheless, in the first year or two of the new State scheme, we must expect a temporary reduction in the flow of new savings from

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this source. Any such effect will be substantially reduced by the facilities for partial contracting out which will enable contributions which would otherwise have gone to the State scheme to be channelled through occupational schemes instead.
In order to take advantage of these facilities some occupational schemes may actually increase their own benefit scales when the new State scheme starts. Even so, we recognise that the immediate net effect is likely to be that the funds of occupational schemes grow rather more slowly for a year or two than they otherwise would have done. A small minority of schemes may be wound up, and others will reduce the benefits they provide for future service. As to winding up, it will be only the schemes with a very modest scale of benefits that are likely to consider this course; and they will, no doubt, also consider, in the alternative, either continuing to provide modest benefits to supplement the State scheme benefits—"living on top"—or else increasing their provision sufficiently to qualify for contracting-out terms.
If the immediate effect of introducing the new State scheme is to limit the growth of savings through occupational schemes, the crucial question to be faced is whether this will have an adverse effect on productive investment. Happily, there is no reason to suppose that this will be so; indeed, there are good reasons for supposing the contrary. In the early years of the new State scheme, the increase in contribution income will be greater than the increase in expenditure. The result will be a surplus in the National Superannuation Fund which will reduce the extent to which the Government needs to borrow on the market. This reduction in the Government's borrowing requirement will at least offset, and is likely to more than offset, any adverse effect on the supply of investment funds which might otherwise have resulted from a diminished flow of savings through occupational schemes. In consequence, there is no reason at all to fear that the introduction of the new State scheme will have an adverse effect on productive investment.
I bring my remarks to a close now by putting some questions to the noble Lord the Member for Hertford. As I said, this debate gives us an opportunity to
1738
elicit some clarity in the Opposition's views. First, I take existing pensioners, those for whom, apparently, the Conservative Party's line is that we are not doing enough. One of its principal criticisms of the new scheme is that it does not do enough for existing pensioners. I gather that the Opposition welcomed the pension increase in November. We took part in the Committee stage on the Bill together, and I recall their attitude then. They did not propose a larger increase than we introduced in November. They welcomed, I understand, the promise of biennial increases.
What do the Opposition propose for existing pensioners? Do they insist that the increases should be tied to earnings increases rather than to, as a minimum, price increases? I should doubt it, but it will be interesting to hear what the noble Lord has to say. I suspect that their intention would be to leave things just as they are and to allow the numbers on supplementary benefit steadily to increase.
Second, what about their future attitude to the new scheme? They favour earnings-related contributions. Do they also favour—I believe that they do—earnings-related benefits? If they do, do they argue that we are seeking to provide too good a deal for those who retire after 1972? If that is it, let them make clear to the country that our proposal, in their view, is too generous to future pensioners. We know what experience of their graduated pension scheme has been, and it leads us to suppose that they are all in favour of higher contributions but for derisory benefits. They really must come clean about it. We have had debates over almost a year now in which there has not been a clear statement of Opposition policy on this question.
In Leicester, on 15th November, the right hon. Gentleman the Leader of the Opposition said that the Government, as he put it, intended to impose a State pension scheme which will take away from millions the means to make a little extra provision for their old age and their families. I have not heard a more grossly distorted description of the pension which the Government have announced. Our intention is to do exactly the opposite. The new scheme will provide the means by which there can be a better deal for those in retirement—not just for a privileged section but for the whole of society.
5.1 p.m.
Lord Balniel: I join the Minister of State in regretting the absence, through ill-health, of the Secretary of State for Social Services, and I congratulate the Minister on fulfilling his right hon. Friend's responsibilities so efficiently, albeit with a slightly lengthy speech. In previous debates, I am afraid that Front Bench speeches have occupied a great deal of the time available. I will do my utmost to keep my remarks as brief as possible, so that as many hon. Gentlemen as possible who wish to take part will be able to do so.
It is quite right that we are holding this debate, although it was announced earlier only this week that the debate was to be held and the Motion was placed on the Order Paper only last night. It was quite wrong for the Government to have resisted our request for a debate so fiercely and for so long. This resistance is reminiscent of what happened in the past. In the Budget, the Chancellor announced the usual uprating of the pension to compensate for the cost of living increase. In spite of repeated demands, it was not until we put down a Motion of censure that the figures for the increased contributions were announced.
On this occasion, although one day after the publication of the White Paper, on 6th November, the Prime Minister declared that it would be right to have a debate, it became increasingly apparent that the Government intended to do their utmost to avoid a debate. In fact, this debate has been conceded only because once again we threatened to put down a Motion of censure. I genuinely thank the Leader of the House for his last-minute repentence and for meeting what I regard as the elementary right of the House to debate a White Paper which, after all, is causing a great deal of concern to many thousands of people, and to debate it before publication of the Bill—
Mr. Ennals: I cannot let the noble Lord get away with that. If there had been such enthusiasm for this debate from his side of the House, it might have been possible to take time for it instead of a debate on rural buses. I am not against rural buses, but they decided that that was the subject to take on their last Supply Day.
Lord Balniel: First of all, we have asked for a debate at every Business question time. Second, it is the Government's White Paper and it is their responsibility to provide time to debate it.
Turning to the issue—the care of the elderly, the disabled, the sick, the widowed and the unemployed stand out, perhaps above all other social duties, as the greatest social problem and challenge which this country must face today and in the decades to come. The general theme of how we can best fulfil this social duty and meet this challenge and problem can be more appropriately argued when we discuss the general reconstruction of the National Insurance Scheme. What we are concerned with today is just one of a whole series of crucially important aspects of this reconstruction.
We are concerned with the White Paper which was published on 5th November entitled "Terms for Partial Contracting Out of the National Superannuation Scheme". We on these benches are specifically concerned with the impact of the Government's scheme on savings and on the future growth of occupational pensions. I want to underline right away the great significance which we attach to the growth of occupational pension schemes. I do not deny that it is partially a philosophical attitude. We think it is quite simply right to encourage individual responsibility, so that the young and the middle-aged are encouraged to take on their own shoulders a larger share of responsibility for providing for their own future. Indeed, this emphasis on helping people to stand on their own feet lies at the very heart of Conservative philosophy.
We also believe that people can generally obtain much better value in occupational schemes tailored to meet the special needs of their jobs. As the Minister of State himself said, they are sometimes designed to provide for early retirement at 60, or sometimes earlier. They are often designed—
Mr. Bidwell: Purely on this philosophical front, is it not the case that, historically and right now, these decisions are made by employers and not by workpeople in the matter of occupational pension schemes?
Lord Balniel: It is true that occupational pension schemes are run by industry or trustees who have the advice which enables them to get the best terms for those in the jobs concerned. That is the third interruption which the hon. Gentleman has made in the debate and I thought that they were all designed to encourage the improvement and expansion of occupational pension schemes.
Another factor about occupational schemes is that they are often designed to provide lump sum cash payments on retirement as well as the pension. Another advantage is that they do not include an earnings rule, which has always seemed to me to be one of the features of a State scheme which I believe we should steadily move towards eliminating as fast as we can.
As the occupational schemes grow and expand, there is scope for improving them, suiting them more to individual needs and providing yet better value for money. I am not saying that all occupational schemes are perfect and without defect. It has never been a part of the case which I have argued in the past that they are all perfect. Certainly, inadequate arrangements exist in some of the schemes for the protection of pension rights when one changes one's job. This is something which we should strive to eliminate, because it is a serious limitation to occupational schemes.
What I am arguing, and always have done, is that it would be best to concentrate on putting these weaknesses right rather than on bringing in a blown-up State scheme which does nothing for existing pensioners, which gives the younger generation of people worse value for money and which results, I believe, in a cut-back in the growth of occupational schemes.
We also, in lending our support to occupational schemes, believe that the savings of those schemes, which, after all, form two-fifths of total personal savings and which bring in £800 million extra investment every single year, are vitally important to the economy. These are savings invested in industry and go to create the wealth out of which one pays for the social services, for hospitals, for schools, for the very pensions which we are discussing, for supplementary benefits, for welfare and for all the other services which the State has to provide.
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This question of the future growth of occupational schemes is only one aspect of the reconstruction of social security. But it is certainly true—I agree with the Minister of State—that the question mark which hangs over these schemes lies at the very heart of the Government's pension plans. The House will remember that, in our reasoned Amendment on 6th March, we referred to this as
"… the crucial question of the contracting out arrangements for occupational schemes …"
At that time, only a few months ago, this vital matter affecting the interests of nearly 12½ million people was left by the Government in total obscurity. But at least now the picture has been sketched in, and the professional experts can begin—I emphasise the word begin—to assess the impact of what the Government are doing to the 65,000 occupational pension schemes.
I would like briefly to look at the historical development of the scheme, which has culminated in the publication this month of the White Paper. This is necessary, because only in this way can the public gain some understanding of the design which is being pursued—the production of a pension scheme at the end of the life of a dying Government, with its promise of better State benefits in the far, dim, distant future, and higher contributions which must be paid for after the General Election.
We are told that the scheme is based on the Labour policy document, "Signposts for the 'Sixties", published in June, 1961. According to the Manifesto this was to be
… one of the first jobs of the next Labour Government.
At the 1963 Labour Party conference, just before the General Election, we were told that the scheme was based on
"… detailed and rigorous technical and financial and actuarial advice."
That was the statement of a previous Minister at Scarborough on 3rd October, 1963. But then there was a long silence, and it is only now, six years later, once again just before an election, that probably in the new year of 1970 we shall be debating the Second Reading of the Bill.
In the past few months, White Papers have showered down on the House like confetti. As the Minister of State said,

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a new one was published yesterday to keep people up to date. With each White Paper the incomprehension in the country grows deeper, the scepticism becomes more firmly and deeply rooted, and the Government become more desperate to try to explain the scheme.
With the publication of the White Paper we are debating on the future of occupational schemes, we had a very lengthy statement from the Secretary of State. I admit that I put a very lengthy question after his statement. On the same day we had a four-page Press release from the Press Office of the Civil Service Department. On the same day, we had a seven-page explanation from the Department of Social Services and a sheet with pictures trying to explain the scheme to the public. Yesterday we had a further document, a 29-page guide, very appropriately headed, "Latest facts and figures", because they have changed a great deal from the earlier publication.
Next week we shall have yet another Government Actuary's report, and even the calculations in that will be based on impossibly vague guesses about the number of occupational schemes that will continue. Those guesses must be based on Government estimates and not on the Actuary's estimates. It will also be accompanied, presumably next week, by a Bill of absolutely stupefying complexity.
When I look at that sequence of events, I entirely agree with the Permanent Secretary at the Ministry of Technology who has offered £5 to anyone producing a sensible idea for the reduction of the flow of paper. I will put forward my own contribution.
Mr. Ennals: The hon. Gentleman is saying nothing. He spends a long time complaining to the House and to my right hon. Friend that he did not have the White Paper which we are now debating, that he did not have enough material to understand it, and did not have enough explanation. Now that we have met his wishes, he says that we are giving him far too much. Really!
Lord Balniel: I would like to have all the explanations. One aspect which gave me particular pleasure in the White Paper we are debating was paragraph 9, which explained that the scheme was
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perhaps a little complicated, but added that
"… to keep the scheme understandable is essential to its smooth introduction and effective working".
My point is that after all the great explanatory propaganda which is pouring down on us, the great mass of the public, the Press, the House, the employers and the unions remain completely bewildered by the scheme. The 12½ million members occupational pension schemes cannot possibly know in the next few years what will happen to their pensions. The millions of people who will have to pay much more for the State pensions, which will not reach maturity until 1992, cannot even know how much they will have to pay in 1972, when the scheme begins. What a long way we have come from those simple phrases about half-pay on retirement after seven years!
I strongly suspect that after all this propaganda most married women and widows with a job, for instance, have no idea that they will be forced to pay contributions for the first time whether they want to or not. Today, the overwhelming majority of married women and widows in employment choose not to pay contributions, and pay only the industrial injury contribution of 7d. a week. According to the first White Paper, a married woman earning only £8 per week, which is a pretty low income, will have to pay not 7d. a week but 10s. 10d. a week.
No doubt the Government think that the whole country is daft. But we are not really daft. What has happened is that the Government have departed from any coherent principle. They have turned their back on financial integrity in this scheme. The Minister is in the position of a confidence trickster trying to explain his accounts to an inspector. He can twist and turn, but nothing he does will make the accounts stand up to public inspection. It is all very well for the Minister to smile and for the Government to say that the scheme is no more complicated than ordinary occupational pension schemes. This is simply not true. There can be very few, if any, occupational pension schemes where the harder one works and the more one earns the less is the value of one's contributions. The Government are deliberately muddling the redistribution of income, a task

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which is must better fulfilled by taxation, with insurance which they say will earn benefits in the future. The Government are stirring these things together—the redistribution of income should be the responsibility of taxation and insurance contributions designed to give entitlement to benefit.
Mr. Houghton: Does the noble Lord recall that the fundamental principle of the Conservative Government's scheme of 10 years ago was redistribution accomplished by levying graduated contributions mainly for the purpose of financing the flat-rate scheme?
Lord Balniel: The right hon. Member for Sowerby (Mr. Houghton) knows a great deal about this subject, but on this occasion he is wrong. Each "brick"—the word that was always used—of contribution earned a firm and determined amount of benefit.
Mr. Kenneth Marks: Would the noble Lord explain why—
Lord Balniel: I shall not give way. I want to be very brief, because many hon. Members want to speak.
We believe quite simply that it is right to encourage occupational pension schemes. Yet all the organisations and bodies which are concerned with occupational schemes are convinced that their growth will be harmed. Even the Secretary of State himself on 5th November—column 1017 of the OFFICIAL REPORT—admitted that there will be a slowing down of savings.
The Life Offices Association, which, after all, represents the major life assurance companies and which runs many of the smaller occupational pension schemes, has said in nice simple English:
"It's not on, Mr. Crossman. You will never get your partnership at this rate. Far too many employers will find your price not worth the risk. This means, of course, that armies of people are going to have to depend on the State for their pensions instead of on their firms".
The National Association for Pension Funds points out that 80 per cent. of all pension schemes have fewer than 50 members. As the Minister of State has said, while they accept that the terms may be reasonably acceptable for the large
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employers, they specifically go on to say, as I pointed out:
"it seems unlikely that the contracting out arrangements proposed by the Government will encourage the development of new occupational schemes".
The C.B.I., which represents the employers, who will have to take on their own shoulders the decision whether to continue with their occupational pension schemes, was reported in The Times Business News of 27th November as saying:
"Confederation of British Industry experts have estimated that the number of employees contracting out of State pensions to rely on their company schemes for retirement will slump of 50 per cent. if the Government get their way on the new earnings-related national insurance scheme. Many occupational pension plans provided by private industry may have to be wound up".
Similar expressions of view have been received from a large range of unions and staff associations, from N.A.L.G.O. with its 400,000 members, the Post Office workers, the National Union of Journalists. Every hon. Member has received a flood of letters expressing the utmost concern about the Government's proposals, letters from firemen, nurses, police, doctors and others.
The implications for employees in the nationalised industries and in public service are very far from being clear. My hon. Friend the Member for Somerset, North (Mr. Dean) has put down a whole series of Questions about the implications for the Armed Forces, for the Civil Service, for the National Health Service, for the police, for the fire services, for the teachers, and he has been told that it is too soon to have initiated the necessary consultations. Too soon? I think that they should have been consulted a long time ago.
The Secretary of State has been giving assurances, which were reiterated by the Minister of State, that there will be no retrospective changes, but both he and the Minister of State are silent about the future growth of these schemes. I should like to ask one question which I hope will be answered tonight. May we have a categorical assurance that the negotiations on pension schemes for members of the nationalised industries and the public service, for which the Government are responsible, will be completed before the Bill leaves the House? There is the

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utmost of concern in those industries and in the country, and the elected representatives in the House of Commons should be in a position to try to defend the interests of their constituents.
We are debating only a White Paper, but the general picture which is emerging is of a scheme which certainly has some good points—certainly I concede that—but which is one which does nothing for7½ million pensioners in 1972 when the scheme comes into existence and it is one which almost inevitably will damage occupational schemes.
I should like to make it clear that during the course of the proceedings on the Bill we will do out utmost to defend the interests of public service pension schemes and occupational pension schemes in general. I want to make it quite clear that if the Government cut occupational schemes, as they have already curbed home ownership, the Conservative Government will alter the scheme when we return to office.
We want to see the Government concentrate the resources of the State on the elderly and the needy and the disabled of today. We want to see the next generation increasingly making its own provision over and above the State scheme through genuine savings, rather than being increasingly dependent on the State.
Mr. Ennals: The hon. Gentleman has not answered one of the questions which I put to him. Would he not care to take five minutes more to give some indication of his answers?
Lord Balniel: Certainly. I thought that my answers were implicit in everything I said. The hon. Gentleman asked whether we believed in earnings-related pension schemes. The answer to that question is that we do believe in earnings-related pension schemes, but we believe that the major responsibility for these should be shouldered by occupational schemes, which give much better value for money than anything which the Government are producing.
Mr. Julian Snow: On a point of order. May I draw your attention to the fact, Mr. Deputy Speaker, that there are 50 or 60 young people standing outside St. Stephen's En-
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trance? It is extremely cold and St. Stephen's Hall is empty. The police, with whose work I do not wish to interfere and who are doing a very good job, fear that they may establish a precedent if they allow them into the Lobby. May this matter be investigated? It is very cold outside.
Mr. Deputy Speaker (Mr. Sydney Irving): I am grateful to the hon. Gentleman. I will have the matter looked into.
5.26 p.m.
Mr. Douglas Jay: I was singularly unimpressed by the attack of the noble Lord the Member for Hertford (Lord Balniel) on the Government's pension scheme. He did not seem to make any serious criticism of the main lines of the scheme. He answered none of the questions put to him until further stimulated to do so. As for public bewilderment, I think that the public were just as bewildered by the scheme of the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) ten years ago, because in the nature of the case any scheme of this kind is highly complex and difficult to understand at first sight.
Having listened to both speeches today, it seems to me that the main lines of the Government's scheme are sound and that a fair balance has been struck between the State and the occupational schemes. Experience since the original 1946 Act has established several firm principles which should guide us in pension policy. First, there is an overwhelming case for a contributory scheme on the insurance principle. Theoretically, I suppose, there could be an argument for complete finance of pensions by taxation, as enforced in certain countries. But there seems no doubt that people in this country like to feel that they have earned a pension by their contributions and that they are far more willing to pay a given amount in contribution to their pension at the end of their life than in taxation to other people's pensions now, although economically it could be said that it comes to the same thing.
Secondly—and I am glad that we carry the noble Lord with us here—the case for an earnings-related scheme seems conclusive. If we were to stick to a flat rate, either the contribution would be too

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oppressive to the lowest-paid workers, or the pension would be derisory for those in the middle and higher grades. Therefore, graduation, if we may call it that, is also inevitable, as, incidentally the United States discovered about 25 years before we did.
Thirdly, in our rather complex free society, plus a mixed economy, the private occupational schemes—and I agree so far with the noble Lord—have clearly come to stay and are of great importance, if only because millions have already contributed to them and acquired contractual rights in them. I take it for granted, as my hon. Friend said, that no existing contractual rights will be abrogated in any part of his scheme. It is also desirable that there should be some real choice whether one wishes to provide more or less for the future as compared with the present. I would have preferred that we should give the choice of contracting out to the individual rather than the employer, but I gather that the experts regard this as impractical. For these reasons we must have contracting out, and I only regret that it cannot be for the individual as well as the firm.
Fourthly and perhaps most important for the purposes of the present debate, I am convinced that the main provision for old age must be made through the State scheme and the main responsibility shouldered by it. There are two really conclusive reasons for this. First, despite the spread of the occupational schemes, there are and always must be many millions of people left out of them. We still have a number of industries, notably agriculture, building and distribution, where units are too small or too short-lived for sound occupational schemes to be possible. There are still many thousands of small firms outside those industries.
I sometimes find it ironical that hon. Members opposite who normally pose as the champion of the small firms, the small shopkeepers and so forth, seem to forget about the existence of these employers when they come to talk about pensions and superannuation. The hard fact is that half the employed population, something over 12 million people, are outside of occupational schemes. And that is after allowing for the fact that 4 million people within them are employed
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by the public services. The second reason for putting the primary responsibility on the State scheme is that the greater the provision made by the State scheme, the easier will it be for people to move from one job to another. Surely on all grounds, whether social, economic or human, it is desirable to remove artificial barriers against people moving from job to job if they wish to do so. A great deal of nonsense is sometimes talked about mobility of labour between areas, which is very small and always will be. But mobility of labour between jobs is something that I think we would all agree is highly desirable. This is a powerful argument for an effective and comprehensive State scheme. As my hon. Friend has said, it is only a minority of the occupational schemes which guarantee reasonable pension rates for those who move to another profession.
If we follow the logic of those arguments, I believe we will inevitably end with a scheme substantially on the lines of that now proposed. I am not saying that every detail is perfect; I am not enough of an actuary to say whether the ideal figure for the contribution abatement should be 1.25, 1.3 or 1.35. No doubt that will be argued when we come to the Bill. The practical tests seem to be these: that the plan ought first and foremost to protect the contributor; secondly, that it should ensure the solvency of the State scheme; and thirdly enable sound occupational schemes to continue.
From all that I can learn by studying this White Paper and from what I have heard from those who administer occupational schemes, I believe that sound occupational schemes will be able to survive within the arrangements that the Government are proposing. In addition, we must remember the exceedingly important fact that the Government scheme is undertaking—I try not to use the word "dynamise"—to gear up future levels of pension to allow for rises in prices and earnings after retirement. That applies not to the whole occupational pension, but to that part which replaces the abated State pension.
Mr. Palmer: Would it not be easier to say that the pensions will be paid in real terms?
Mr. Jay: That might be the simplest way between my hon. Friend and myself, but I am not absolutely certain whether the general public would find that to be sufficiently explicit.
In those circumstances, I do not see how it can be argued that this plan is unfair to the occupational schemes. Nor can it be seriously maintained, in spite of what the noble Lord has said, that it is likely to lead to a reduction in savings by the community as a whole. All the evidence shows that the restraint on consumption due to the higher contributions will exceed any reduction in savings as a result of occupational schemes becoming more limited. If the noble Lord doubts that, he should study an article in The Times Business News today which shows pretty conclusively that the scheme, at any rate in the early years, will lead to an increase in savings rather than a reduction. The noble Lord looks highly puzzled. If he studies the article he will probably be a wiser if a sadder man than he now is.
There is only one question I have about my right hon. Friend's White Paper and the Government's policy. This has to do with the apparent absence of any provision or policy to enable and encourage those who want to work beyond the age of 60 or 65 to do so. The real reason why Government expenditure is mounting so rapidly is that people are living longer, owing to better health, and are being educated to a later age. If people live and retain their health and energy for years longer and are educated for a longer period, and if they continue to retire at 65, then what we are doing is unnecessarily reducing the proportion of a person's life which they devote to work and earning.
This is bound to mean a huge increase, much of it unnecessary, in Government expenditure. To put the arithmetic extremely crudely, because, as I say, I am no actuary, if a person worked, as people once did, from the age of 14 to the age of 65 and then lived until the age of 75, he would be working for 51 years out of 75. Someone who works in future, as many will, from 23 until 65, and then lives to 85, will be working for 42 years out of 85, which is a very different proportion.
It follows that if we move far down this road there will be an enormous increase
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in Government expenditure on pensions, as well as a very heavy burden of taxation on the diminishing proportion of the community still at work. To some extent this is already happening. The figures are rather remarkable. In 1931 there were 4·3 million retired people in Britain; by 1961 there were 7·7 million; 8·5 million this year, and probably 9·2 million by 1975. There are two solutions to this problem of the increasing proportion of non-workers in the community which probably no hon. Member of this House would advocate. No one would want to reverse the rise in the age at which education ends. We all want to see that widening out to a larger section of the community. No one would wish to force a person to retire at an age later than 65. None of us would propose a compulsory raising of the age of 65.
What we can do, and surely should do, is to enable and encourage everyone to go on working who is willing and able to do so, as thousands of people are. That is why I have always believed that the so-called increments in the National Insurance Act, 1946, were one of the most valuable parts of it. For each year after 65 that one worked, one earned a higher pension on retirement. I hope that before the debate is over the Minister will make clear whether some provision of that kind is proposed in the revised scheme, because its absence would be a retrograde step. If there were a scheme under which the annual pension on retirement at 70 was no higher than the annual pension on retirement at 65, clearly there would be a very strong incentive for people to retire earlier than they need or might wish to do.
Apart from that and other criticisms which one might make, my right hon. Friend's scheme is based on sound lines. We cannot today pronounce the details to be perfect, but it has suffered very little from the criticism of the noble Lord the Member for Hertford, and I wish it well in its progress through the House in the coming months.
Mr. Deputy Speaker: Order. I have looked into the matter raised by the hon. Member for Lichfield and Tamworth (Mr. Snow), and I am happy to tell the House that the pressure of numbers in the Central Lobby has been reduced and

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that all those to whom he referred are now in the building.
5.43 p.m.
Mr. John Boyd-Carpenter: I am glad to hear from your announcement, Mr. Deputy Speaker, that one aspect of social security has been improved.
Like my noble Friend the Member for Hertford (Lord Balniel), I regret the absence of the Secretary of State and its cause. This scheme, with all its convolutions and complications, is very much his child, and it is no disrespect to the Minister of State when I say that we should have liked to have heard him make the opening speech.
The right hon. Member for Battersea, North (Mr. Jay) was a little unfair to my noble Friend the Member for Hertford when he criticised him for not discussing the main lines of the scheme. That is not what we are debating. We are debating a Motion to take note of the White Paper dealing with the abatement provisions. This is a serious enough matter in itself and quite sufficient for the House to deal with. I assume that there will be an opportunity to discuss the main lines of the scheme on the Second Reading of the Bill.
I therefore differ from the right hon. Gentleman in that respect. But I should like to restore the balance by saying how much I agree with him about the importance of increments in National Insurance. If the Bill does not make adequate provision for improving them, I will join him in an attempt to amend it. He will recall that, happily, thanks to a ruling given many years ago, a National. Insurance Bill is one of the few Measures on which it is in order to table Amendments which would have the effect of increasing expenditure. I therefore hope that the right hon. Gentleman will join me in ensuring that the increments are improved, for the very good reasons which he gave.
I apologise to the Minister of State for the fact that a delayed train bringing me back from a previously made television engagement deprived me of the pleasure of hearing, I am told, the first three minutes of his speech. He went all over the place and saw fit to bring up once again the famous "swindle" argument in reference to the 1959 Act.
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The hon. Gentleman is notably less adroit in these matters than his right hon. Friend who, since he adopted the principles of the 1959 Act, has switched off the swindle argument. I only wish that the Minister of State would follow his right hon. Friend's example in that respect, because it would save us all time. It compels me, as the hon. Gentleman pointedly referred to me across the Floor of the House, to say a few words in reply.
Every penny obtained in contributions under the 1959 Act was used in paying out benefits to existing pensioners. To that was added a substantial Exchequer contribution. It is true that in the early years of the scheme the great bulk was paid in respect of flat rate pensions. So it will be under this scheme, for the same perfectly good reason that all new schemes take a considerable time to build up entitlement. But it is silly this afternoon to drag in this ancient jibe when the very principle to which it was foolishly applied by the right hon. Gentleman is being enshrined in his own legislation.
Let me make one further point, and then I will leave this issue. If the Minister of State thought that the scheme embodied in the 1959 Act was seriously to be described as a swindle, why since 1964 has it been maintained in full operation, nay expanded substantially, and why is it intended to prolong its existence to 1972? If the hon. Gentleman were serious about this, and even if he could keep up with his right hon. Friend, which admittedly is rather difficult, he must face the fact that that means that the scheme will have been operated by a Labour Government for more years than by a Conservative Government. It is proposed that it should run to 1972. Therefore, it will have run for up to eight years under a Labour Government against three years under a Conservative Government. If the hon. Gentleman persists in the swindle argument, he had better be careful or I might find it necessary to turn Queen's evidence against him.
I come to the White Paper, which is the issue that we have to discuss. In my view, it is the clearest indication that it is not possible for good occupational schemes to thrive and grow alongside a National Insurance scheme of this type.

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I believe, for reasons which I will give very briefly, that they are not meant or able to co-exist. This is borne out by evidence from a rather interesting source. The House will be aware that the Secretary of State recently brought out a Fabian tract which has, understandably, attracted some interest in the Press. It contains a passage very much on this point:
"I know there are a number of Socialists who regret that we have to work in partnership with the private insurance interests. In 1957 when we first published National Superannuation we had hopes that our great new scheme, though it would allow good private schemes to contract out, would be able to look forward to a dwindling amount of private insurance and be able to take over most of this field of activity.
But in the decade before we took office and started working on national superannuation the situation had been transformed."
This, incidentally, is something of an unconscious tribute to the 1959 Act.
"Occupational pension schemes have grown to a point where some 65 per cent. of all male employees are members of some kind of occupational pension scheme, and something over half can look forward to a good pension from their employers. Moreover, by the time we took office the occupational schemes had become the largest medium of personal saving, whereas the Government pension scheme we inherited from the Tories was not a savings scheme at all but a pay as you go scheme."
There is the old tag that
"A man convinced against his will
Is of the same opinion still."
This obviously is the mental attitude of the Secretary of State. It shows that basically he agrees with me in what I ventured to say to the House a moment or two ago about the incompatibility of the two.
My reasons are these. First of all the scheme is too big. The Secretary of State is, as it were, appearing in a maxi when a mini would be more stimulating to growth. It goes too far and takes too large a proportion of the resources available for provision for old age.
Secondly, as my noble Friend pointed out, it is redistributive even within the structure of the contributions. Contributions up to half average earnings earn 60 per cent. of that figure on retirement. Contributions above that level earn less than half that, 25 per cent. It will be noted that if one has a scheme of this sort, whatever the social merits, one
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makes effective contracting out extremely difficult to arrange. One provides a very good incentive to people to contract out the subsidisers and leave in the subsidised. Yet if that is done the whole finances of the scheme are undone.
It follows that a Government which persists in a scheme of this sort are bound—and if the Department of Social Security is not bound, the Treasury will see that it is hound—to secure that there is not enough effective abatement to undermine the finances of the scheme. This seems to me to be a reason why these unhappy and unfortunate terms have been devised. It is because it is a scheme which, if a substantial number of people were given an opportunity to abate their pensions on fair terms, the whole finances of the scheme which, like its predecessor is a pay-as-you-go one, would be undermined. The Government therefore dare not do it. Therefore they pay lip service to the occupational schemes and provide a formula which I do not say will spell the death of all of them. The bigger ones no doubt will survive. But it will involve the death of many of the smaller ones and will slow up the expansion which has been the great feature of recent years.
The Minister of State took pride in saying that there are 5¾ million people now contracted out under the act of 1959. He might acknowledge that this was one of the purposes of the 1959 Act. But this process will reverse that. It will damp down the growth of the movement which, apart from its social value, makes up two-fifths of the personal savings so desperately needed in the country today. That is why it is a bad scheme, because it cannot be made to live with a viable system of occupational pensions.
In the sphere controlled by the Government, that of the public service pensions, it is admitted that they must be what is sometimes called "modified" and at other times "cut back". I should like to ask the Minister without Portfolio who is to reply for certain assurances about this matter. It is not good enough to ask the House, as I understand will shortly be the case, to give a Second Reading to a Bill unless we know what will be its effect on many of our constituents who are concerned about these schemes. We should not be asked to give it a Second Reading, which involves acceptance of

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the principle, until at least we know the facts on what will happen to the occupational schemes.
There are some public service schemes which are non-contributory, such as those in the Armed Forces, the Civil Service, and so on. I was given an assurance, which I should like repeated, that the scheme will not touch the non-contributory pensions. If that assurance is repeated it raises two problems. First, towards the bottom of the scale, it means that occupational pension plus National Insurance under national superannuation will be somewhat higher than retiring pay, with all the difficulties which that will entail. Secondly, it will arouse the greatest ill feeling among other public service pensioners, in that those who already have the advantage of a non-contributory pension will be unique in having also the advantage that their pensions alone will not be reduced because of national superannuation. I hope the Minister without Portfolio will be able to clear up that matter when he replies.
There is, then, the point about lump sums and retirement before age 65 to which the Minister of State has referred. He gave an assurance that the lump sum rights of workers in the National Health Service would not be affected, nor would there be any reductions in their pensions payable before 65. Does that assurance apply to other public service schemes? We must be told.
It is intolerable that one public service, however meritorious, should be picked out, reassured and given assurances while all the rest are left in complete uncertainty. If it is possible to work the matter out and give assurances in respect of the National Health Service, it must be possible in respect of all the other public services for which Ministers are responsible. I press the Minister without Portfolio to give similar assurances tonight about the others, if he does not wish to intervene now.
In the private sphere, this means a falling off in investment, the cutting back of schemes, much social damage and wholly unnecessary harm.
The effect of what is being done in the White Paper is plainly to divert a good deal of provision for old age from occupational schemes, public or private, to the National Insurance Scheme. It is
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a step towards the nationalisation of provision for old age.
Let the House reflect what will happen to the pensioners involved. We shall be depriving them of the security of established schemes, in the private sphere mainly funded, with real physical security for their pensions, and in return are giving them what was described in The Times the other day in a fine article as "promissory pensions". What is done in National Insurance is to take contributions from present workers, paying them to the present pensioners, in return for the assurance that when the present workers retire future workers will be paying them specified pensions. There are no physical resources either earmarked or hypothecated. It simply rests on that. Are we certain, as The Times pointed out, when we are talking about the next century, that our successors will be prepared to give priority, over other needs and demands which may seem as important to them in the different circumstances of another age, to these promises given by the Secretary of State today. In considering basic provision, it is reasonable to assume that a Christian and humane society will somehow or other carry it out. But when one goes above that, when it is carried so far up the scale with dynamised pensions and when one makes a bigger absolute payment to the higher earners than the lower, can one assume that the justice of this is so manifestly self-evident that a future generation facing its own problems necessarily will automatically accept it? The Government propose to put on the basis of promisory pensions many pensions which are now well-secured, with legal rights and the physical assets to back them. This is a very big responsibility for anyone to take and it is an excessive responsibility to be taken by a dying Government in a dying Parliament.
6.0 p.m.
Mr. Hugh D. Brown: It was absolutely outrageous of the right hon. Member for Kingston-upon-Thames (Mr. Boyd Carpenter) to suggest that it is unreasonable to issue a promisory note to guarantee someone now earning £18 a week a pension of £9 a week. To suggest that that is going beyond the bounds of Christian compassion is a shocking indictment of the right hon. Member's approach. I do not share his belief that he was the best

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Minister of Pensions and National Insurance which we had, because I had the misfortune to work in the Department when he was the Minister. While there may have been arguments for the introduction of the graduated pension scheme, it was rightly regarded as a swindle in the poor return that it gave—
Mr. Boyd-Carpenter indicated dissent.
Mr. Brown: The right hon. Member can shake his head as much as he likes, but that is how it was regarded.
I am not accepting responsibility for the Government's delay in deciding on its abolition, but it was not a popular scheme and was properly regarded as a swindle—not in the legal sense but in the sense that it did not give value for money.
It is fair to remind the House that 60 per cent. of occupational pensioners get a return of less than £4 a week. Is this the level at which we should aim? This is the point which is being put to us—that we are guaranteeing too much from the earnings of future generations to provide for the old. By the time this time scale takes effect, I shall probably be one of them. Let us establish clearly that, outwith the public sector of occupational pensions the provision is quite inadequate. That cannot be said too often. There are 65,000 different schemes. Even from the point of view of tidiness of mind, is that an efficient way to organise the community's resources in the modern age? How many accountants and legal advisers are being well paid—better than the staff in the Department of Social Services—for doing this job? Hon. Members opposite are prepared to argue for this. There is a lot of good "lolly" to be picked up by people acting as consultants and advisers to occupational pension funds. So if we are to make some assessment of what we get from any investment which we make, let us consider the cost of administration of some occupational schemes.
The last point to be answered by hon. Members opposite who take this line is that it is estimated that, even by the end of the century—we have heard many curious stories about how it will take 20 years for this scheme to reach maturity—a third of our people, even allowing for
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the continuation of the present growth of these schemes, will not be covered by occupational pension schemes. How can it be done for a shopkeeper or those in the shop with only two or three employees? How can it be done for the farmers with a handful of employees? These are practical problems and hon. Members opposite are almost deliberately confusing the issue, as usual, by defending vested interests and not exposing the real nature of the problem which the Government are trying to grapple with—
Mr. Boyd-Carpenter: The kind of people to whom the hon. Gentleman referred and whose interests, I agree, are very important are, in considerable degree, catered for as self-employed persons by the provisions of the Finance Act, 1956, for which the previous Government were responsible—but I would say that that could be brought up to date and expanded.
Mr. Brown: Obviously, I was not making myself clear. I did not mean the shopkeepers or the farmers, but their employees, who are not self-employed. It is true that the owners might be able to make their own provision.
Even with all the complications of a scheme which is undoubtedly difficult to understand—the more difficult to understand something is, the easier it is to misrepresent—it has brought into public discussion the relative merites of a State scheme versus private enterprise. There is nothing wrong with that. That is surely a healthy conflict here and in society. I must admit that I welcome the examination which will require to be made by the Treasury of the extent to which tax reliefs are given to contributors to occupational schemes and the extent to which employers' contributions attract tax relief.
In other words, when we are making this comparison of what we get for our contribution, it is like the examination which needs to be made in housing—to what extent is the person with a mortgage who gets tax relief subsidised by the community? This is a fair point. I am not against that, but the examination should be made so as to compare like with like.
It is like every other insurance company dealing with personal policies. On reason that they are profitable is the number of lapsed policies. There is nothing

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wrong with this, but it is a recognition that a provision needs to be made—in other words, transferability—which is not made at the moment. The number of pensions which die with the contributor are far away in the majority. Therefore, people who argue that occupational schemes, now or in future, can supply and satisfy the needs of the community in my opinion have not a leg to stand on.
There are two other points which should be welcomed in a democratic society. Everyone recognises that there will be problems, because virtually every person in an occupational scheme, whether in the public or in the private sector, will have to sit down and, with the help of his professional body or trade union, reconsider and possibly renegotiate a future scheme in the light of the State scheme. That is not an unhealthy operation in a democracy. It is not unhealthy to be reminded now and again, "Someone has entered into a bargain: let us have a review of it." That is normal business practice. There are all sorts of option clauses to review a contract after three, five or seven years.
Why should we make an apology for recognising that, out of this discussion will come the need to reconsider and renegotiate possibly every occupational pension scheme? I do not need to exercise the same diplomacy and tact which perhaps Government spokesmen do, but I do not think that this is unhealthy.
Finally, why should not we throw some light, in this process, on to the lack of democratic participation in private schemes? Is it not a good thing in a democracy to have public discussion of public funds in public places? If people are doing quite well out of the occupational schemes—either those who administer them or those who contribute—our examination will reveal the facts. If this scheme or something like it had been thought out 20 years ago, we should be in a better position now.
One of its important objects is to lift people above the need to go on supplementary benefit. I regret this because there is always the impression, when one has to admit that, that we are condemning the operation of the Supplementary Benefits Commission or minimising the excellent work that it does. But by lifting out of this orbit, albeit 20 years
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ahead, 2 million pensioners who now have to go for supplementary benefits, surely it is obvious to everybody that one desirable side effect of the new scheme will be that the commission, or whatever body might be in existence, will be able to deal with some of the real social problems that it cannot deal with now because it is so busy handing out money in cases of need. On social grounds, I think that this is an extremely commendable point which would he acceptable to all right hon. and hon. Members.
I am willing to go on to any platform in the country confident in the knowledge that we have produced a good scheme, and that it will be an election winner.
6.11 p.m.
Mr. Tim Fortescue: It seems incredible that the Government ever sought to avoid having this debate. I will remind the House of some of the history. The Government published their first White Paper in January. There was a short debate on it in March, but no back bencher from this side had the opportunity to catch your eye, Mr. Speaker.
The Government then produced their second White Paper on the day before the House went into recess for the summer. That White Paper has never been debated, even though it introduced an important change in the scheme and indicated that the national average wage had increased between April, 1968, and April, 1969, from £22 5s. to £24 a week, so that the median pension contribution would be increased under the new scheme from 29s. 8d. to 32s. 5d. a week.
If wages rise at that rate between now and 1972—and at present they are rising faster than that rate—the median pension contribution, when and if the scheme comes into force, will be 40s. 6d. a week for a man on the national average wage. This is the scale of the scheme about which we are talking.
The Government published their third White Paper last month—probably the least comprehensible of the three—and again hoped to get away without a debate. It was only because we said that if they did not have a debate we would put down a censure Motion that we are having this debate today. It is an incredible series of parliamentary non-events and

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the Government must expect every kind of fresh criticism of the scheme from those for whom this is the first opportunity to comment on the Floor of the House since last January.
As we are debating a Motion to take note of the new White Paper, I wish to take note of one sentence in paragraph 31:
"The new State scheme will replace the existing scheme of national insurance, which provides a basic flat-rate retirement pension with a small graduated addition, by a comprehensive scheme of fully earnings-related national superannuation which will for the first time offer to the general body of contributors, whether or not they enjoy the cover of an occupational scheme, retirement pensions at an adequate level."
This sentence picks up from the first White Paper the notion of earnings-related pensions in a compulsory State scheme, for which no proper argument has ever been advanced, and the notion of an adequate pension on which the Government's thinking has never been explained.
I will, first, examine the case for earnings-related pensions. In the January White Paper, the only substantive argument advanced in favour of earnings-related State pensions was in paragraph 28, where it states:
"If it "—
the State pension—
"were to be kept basically flat-rate, retired people would continue to be divided into two nations—those with good occupational superannuation, and those with little or nothing to add to their basic State pension except supplementary benefit based on a test of means and needs."
The allegedly divisive effect of the flat-rate State pension was repeated at Question Time on more than one occasion by the Prime Minister who referred to those without occupational pension schemes as "second-class citizens in old age". There was no mention by the right hon. Gentleman of the over-80s who have no State pension at all. How would he describe them—third-class citizens in old age?
This slim pretext of "social divisiveness" for introducing a compulsory earnings-related State pension scheme can, I shall hope to show, be dismissed as hypocrisy. The real reason—and this would be a perfectly fair reason if it was advanced more strongly by the Govern-
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ment—is that the Government need more money to pay a constantly rising pensions bill. They must, therefore, increase pensions contributions. This is accepted by the whole House. The most equitable way to do it—and we all accept this—is to introduce earnings-related contributions instead of the present flat-rate contributions.
So far, we are all agreed. But the Government have decided to sugar this pill, as my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) pointed out in his excellent speech, by issuing promissory notes on the future—offering bigger pensions a long way ahead when someone else will have to pay the bill. This is what the Government are doing.
At various times the Secretary of State has defended his proposed earnings-related State pension scheme by pointing out how popular earnings-related private occupational pension schemes are. This is his line. Whenever anyone criticises it, the right hon. Gentleman says, "This must be a popular way of doing it, because the private schemes do it this way." This shows—and it is surprising—his fundamental lack of understanding of the different rôle which the State should play in pension matters from the rôle which the employer should play. These are two entirely different things.
The State's function is to see that a man is adequately provided for in his old age, because, if he is not, it will still be the function of the State to look after him. Therefore, an adequate pension must be provided for. The employers' function is to defer some of that man's remuneration, to invest it for him together with the employer's contribution so that his old age is buttressed by something above the adequate State pension. These two entirely different rôles seem to have been overlooked by the right hon. Gentleman in devising this scheme.
"Earnings-related" is an "in" phrase nowadays, which seems to be accepted uncritically whenever it is applied to any form of social security benefit. But it is important not to lose sight of the real purpose of making a benefit, such as unemployment benefit or sickness benefit, earnings-related. Unemployment and sickness are unexpected events which happen to a man suddenly and create

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an emergency in his social and economic life. Therefore, it is completely defensible that the benefits payable in those emergency situations should be related to what his income has been in the immediate past. We agree that this is right, eminently defensible and fair.
But to become 65 is not an emergency. Every man in this House, with the most honourable exceptions, Mr. Speaker, knows that one day he will either be 65 or dead and that it is his responsibility throughout his working life to plan for his income after he reaches that age. That is not solely the function of the State.
The Minister without Portfolio and Deputy Leader of the House of Commons (Mr. Peter Shore): When the hon. Gentleman says that it is his responsibility, is he referring to the employee? Surely the hon. Gentleman is aware, if that is the meaning, that it is not open to employees to arrange for their private superannuation. They can only be privately superannuated if their employers operate an appropriate scheme.
Mr. Fortescue: This may be the view of the right hon. Gentleman, but it is not mine. There are many ways in which an employee can save for his old age. For instance, he can stop smoking, or he can spend less money on other things. The occupational pension scheme is not the only way in which an ordinary citizen can provide for his old age. He has many ways open to him.
In the words of the first White Paper, for which there can be no justification:
"The new scheme requires people to spread their incomes more evenly throughout their lives, so that they have somewhat less during working life and substantially more during retirement."
What business is it of the right hon. Gentleman, or of the Government, or of the State, to interfere in how a citizen arranges his expenditure during his lifetime?
Mr. Marks: Does not any occupational scheme require the teacher, the local government officer, or anybody else, to do the saving whether he likes it or not?
Mr. Fortescue: The citizen chooses his job. If he does not like the occupational pension scheme offered to him
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when he enters the employment, he can choose not to take up the appointment. That is the difference. The difference of which it seems so difficult to persuade hon. Gentlemen opposite is the difference between compulsion by the State and voluntary ability of the citizen to join what employment he likes, with a pension fund to suit him.
The right of the Government to require anybody to do anything beyond the basic needs of society must always be examined with the utmost care. It is not the Government's job to require people to do things. It is their job to encourage them to do things and to create the climate where they can do those things in their best interests and in the best interests of society.
We shall need to have far stronger arguments in favour of compulsory earnings-related State pensions than are advanced in the White Paper if we are to be convinced of their necessity. The "division into two nations" argument—those with occupational pension schemes, and those without—is insufficient, misleading, and in any case diminishing. Most of those without occupational pension schemes, and with no prospect of having them, are unskilled manual workers for whom an adequate flat-rate State pension would be at the same level as the earnings-related benefit which they will get under the new scheme. The number of higher paid employees without pension rights is a small and declining proportion of the working population.
But even if one accepts the Government's argument, the only argument put forward by the Government, that a compulsory earnings-related State pension scheme is necessary to prevent this divisive effect to which they apparently pay such attention, it is difficult to see how their new scheme will contribute towards preventing it. From its inception in 1972, until well after the end of the century, it will have a further divisive effect among pensioners. Pensioners will be divided into two nations—those on flat-rate pensions, and those on earnings-related pensions, and this will have a far greater divisive effect than anything which exists now.
Everybody who reaches 65 before April 1972, if that is when the scheme is

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introduced, will be on a different pension basis from those who reach 65 after that date, and those who become 65 before 1972 will survive until well after the end of this century. The Government are thus creating a new divisive effect on the pretext of removing one which does not exist in people's minds.
There is another respect in the scheme which is objectionable. I am sorry that he is not here, but the Minister of State said that the Government's scheme was no more complicated than a lot of private schemes. At present, every man who is going on pension knows what his State pension is almost exactly to the penny, and if he does not he can find out very quickly. Under the Government's scheme there will be no way of a man finding out what his pension will be, and no way of understanding it when he gets it. His pension will include at least five variables, which will be calculated by the Government, and which the ordinary citizen will have no means of checking.
These are, first, his own life average earnings. Second, the national average earnings, which are quite different and are calculated from complicated statistics. Third, the revaluation of life average earnings because of changes in the national average earnings. This is another factor which will be brought into the equation by the Government before deciding how big a man's pension is. Fourth, he will be credited at a different rate for those periods when he was on sickness or unemployment benefit. This is another variable which he will have no way of calculating. Finally, there will be the changes in price levels and in general living standards which will be taken into account by the Government before his pension is calculated.
All those variables will be fed into a computer, and the answer will come out at the other end. I believe that the average man has no faith in the accuracy of what people put into computers and what comes out at the other end.
Presumably every pensioner will be told on his 65th birthday what his pension is. He will then ask, "Why is my pension at that figure? The man next door is getting much more—or much less—than that. How can I find out what it should be?" He will write to his Mem-
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ber of Parliament, and hon. Members and the office of the Department of Social Security will be overwhelmed with queries. No one will be satisfied that justice is being done, and there will be interminable arguments, compared with the simplicity of the present position, when everyone knows what his pension is.
Throughout the story the word "adequate" has been used to define the pension which the Government wish to provide. In the first White Paper, issued in April, 1968, an adequate pension for the lowest-paid worker, that is the man who earns up to half national average earnings, is given as £6 12s. as opposed to the £4 11s. which he gets now, an extra £2. Is that intended to be adequate for rent as well? What rent variables are taken into account in providing this adequate pension? Is the single man today expected to find accommodation at a rate of £2 a week? Is that what the Government are saying?
If £6 12s. is thought to be adequate today, and will remove people from supplementary benefits, which is the Government's boast, why does the man at the top of the earnings scale get £12 2s. under the new scheme? If the first one is adequate, why is the second one not adequate? Are the Government saying that adequacy is different for different people? Is this the approach of this egalitarian Government? Are they saying that some people need more to eat than others? Is this the whole purpose of the earnings-related scheme, that the social difference between various income groups should be accentuated?
I have tried to show some of the basic objections which we have to this scheme. Very little of what I have said has been directly relevant to most of the White Paper of which we are taking note, but this is the first opportunity that we have had to express our views, and I thought it right that the Government should know that many of us have the gravest misgivings about the basic principles of the scheme.
6.29 p.m.
Mr. John Forrester: One of the themes which has come from hon. Gentlemen opposite is that they think the people have a distrust of State schemes and computers. I think that that shows a singular lack

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of confidence in their prospects at the next General Election, otherwise they would not tend to think that the public have no faith in their Governments. I prefer to trust the Government, even one of a different complexion from my own, rather than some of the occupational pension schemes that are in operation now.
The hon. Member for Liverpool, Garston (Mr. Fortescue) over-simplified the argument that a person can go to any employment or change it whenever he wishes in order to get the best private occupational pension scheme. I know that he will appreciate that the type of employment that a man may take up depends very much on his aptitudes and abilities and, therefore, that not all spheres of industrial or academic life are open to everyone. I appreciate that people have freedom, given the necessary qualifications, but it is not open to everyone.
The hon. Member for Hertford (Lord Balniel) made great play with the fact that people will not be able to calculate the amount of pension that they will get under the scheme. The White Paper admits that it is a complicated scheme, but it is also true that anyone at present in the teaching profession with 20 years to go cannot accurately say in £ s. d. how much pension he will get. He may know that he will get half of his pay, but he has no idea what that will be in 20 years. For the same reason, he cannot calculate what he will put into the teachers' scheme. All he can say is that it will be a 6 per cent. contribution. In the same way, in the State scheme a man knows that he will pay a 5·75 per cent. contribution, or whatever it is.
I was attracted by the hope voiced by my right hon. Friend the Member for Battersea, North (Mr. Jay) that the Government will be able to consider some extension of the retiring age beyond 65 with adequate pension provisions. But have the Government closed their mind completely to the possibility of pensions for disabled people at the age of 60 or even earlier? Many kinds of disabled people spring to mind. In mining areas, for example, those with pneumoconiosis would benefit from such a provision. It may be that it will be too complicated to work out with the scheme as it is at the moment.
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I understand that my right hon. Friend the Secretary of State said at the weekend that people were prepared to pay contributions willingly, but were not prepared to pay tax very willingly. My experience has been that anything taken out of the wage packet at source of the average working man or woman is regarded as income tax. I have heard people quoting their take-home pay when rents and rates had been deducted at source, and I am told that that was regarded as tax as well. If these contributions are to be deducted in the same way as P.A.Y.E., the general population will look upon them as just another piece of taxation. However, that does not detract from the merits of the scheme as a whole.
My right hon. Friend may have difficulty in selling it to the younger generation. It may not be such a good buy for them. Young people are not greatly concerned with making provision for their old age. It is only when we approach middle age that we become obsessed with the idea of an adequate pension for our later years.
I do not take seriously the criticism that the 20-year maturity period is too long. When one considers that most occupational pension schemes have at least a 20-year maturity period and sometimes even longer—a man has to do 30 years in the teachers' scheme to qualify for a pension—and that the only benefit under the maturity period is the return of one's contributions, I think that that is a fair compromise, especially when one considers what many people have not yet cottoned on to, that a proportion of the contributions will be paid even after the first year of the scheme's coming into force.
I am sure that the House welcomes the extra provisions for women. It may be difficult to sell them the idea that they have to pay full contributions, but the provisions giving widows their husbands' pension rights has been long overdue. The reduction of the qualifying age for a widow's pension to 40 is a step in the right direction. I suppose that all that will happen is that the age of discontent will come down from 49 to 39. It has always struck me that the alternative would be an extra contribution from married men purely for widows' benefits. I have no doubt that that would lead to just as much discontent in the future and might make the contributory system too

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complicated and administratively impossible. I know that my hon. Friend was not prepared to go into the realms of comparing benefits for married women with those for single women. I bow to his discretion there and join him.
The decision to "dynamise"—I cannot think of a better word, though it may not be the best one—the contracted-out part of the State pension is a big concession to private schemes. It relieves them of the obligation of trying to keep up with inflationary pressures. We all know that the vast majority do not attempt to do that, but this raises a problem in terms of pensions which are paid today. In future, the State is to pay a 100 per cent. increase on what is virtually an 80 per cent. Pension. Today, if a man has an 80 per cent. pension, he gets only 80 per cent. of any increase. If I understand it correctly, a person with an 80 per cent. pension would have received only 8s. of the last 10s. increase.
It was put to me rather forcefully that this was a cost of living increase, that the cost of living obviously had gone up the same for everyone, and that it seemed wrong that everyone did not get the full increase. If this is the method that we are to operate in the future, are we to take it that people who have not a full pension now can expect their part pensions to carry the full amount of future cost of living increases?
Amongst the most satisfactory aspects of the scheme are those allowing employees to take deferred pensions when they leave jobs, albeit after five years' employment. In my view, that is the most important part of the Bill. For reasons which I will give in a moment, I do not share the confidence of hon. Members opposite in almost any occupational scheme. It has been conceded that some of them are not very satisfactory.
Unfortunately, many occupational schemes carry all the hall-marks of fostering a depressed and almost slave society. Those may be strong words, but I will endeavour to show what I mean. Even some of the best schemes have very undesirable inhibiting side effects and, if there had been an extension of the private schemes as opposed to a comprehensive State scheme, it would have
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been necessary to provide greater safeguards against abuse in the private schemes than we have now.
I hope that the House will permit me to illustrate my point by quoting a family case which is typical of what can happen in a private occupational pension scheme. It is not unusual, and it demonstrates the pitfalls into which the unwary and the trusting may fall.
My sister worked for a small tile manufacturer in Stoke-on-Trent. Like many other "white collar" workers, she was not very well paid. That is not unusual. For imaginary benefits, many white collar workers fare worse than their fellows on the shop floor. This employer decided to join a group occupational scheme for the few people whom he called "staff members". The scheme would give a pension, after 30 years, perhaps of £5, a typical, unsatisfactory pension scheme, undynamised, but what its real value would be in 30 years' time was anybody's guess.
Whenever an employee in the scheme asked for a wage increase the employer made a point of ascertaining what he was paying towards the superannuation fund. He would then tell the employee that he had to take this factor into account when judging his wages. In other words, wages in this firm were depressed because of membership of the superannuation scheme. As a result of this bargaining system for wages, employees in the firm were, in effect, paying not only their own contributions but their employer's share as well.
After 20 years' service with this employer my sister thought, on leaving, that she would be entitled to the firm's share of the contributions, especially as she had been told that they were part of the wages that she had been receiving. Her employer told her, "Yes, you may have them", and the boss signed the necessary form, which was sent to the insurance company.
However, after my sister left, but before the formalities were completed, the boss withdrew the terms, with the result that she was entitled only to her own contributions; and I suppose that she had no legal right to the contributions paid by the firm, even though she may have felt that the lower wages which she had received had paid for the employer's share.

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In this case there was no contract of employment. My investigations have shown that many employers, especially where wages and conditions are not negotiated by trade unions, do not issue contracts of employment. However, that is not a matter for this debate. I hope that the First Secretary will consider this issue in connection with the Industrial Relations Bill and will not only close certain loopholes, but will prevent victimisation, which is an important point.
The example I have given is not unique. Many private occupational schemes result in employers taking this attitude. Too many of these schemes have been used to keep wages down and many people in such schemes stay in jobs which they would otherwise leave. A scheme which, on the face of it, seems generous can be a millstone round an employee's neck. He may become the unhappy victim of all sorts of miserable circumstances.
Even the best occupational schemes do not allow for transferability—my hon. Friend said that only one in 10 provided this right—and I fear that many people stay in occupations to which they are not suited long after the job has lost its original attractions because they feel that they must stay on to qualify for pension.
They therefore go through the mechanics of their daily tasks, longing for the day when they can retire and do what they really want to do. This creates frustration for employer and employee alike and the firms or institutions for which they work suffer because they are not giving of their best. If they are employed in public institutions the general public may get the backlash of their misery. On the other hand, too much mobility of labour has adverse results. But immobility of labour, especially when it is based on the fear of losing one's pension rights, is no good to anybody.
An employer who has not contracted out of the scheme may superimpose a private scheme on top. In such cases, will the safeguard for the deferment of pension be the same as the safeguards which, I assume, will be introduced for deferred pensions for those who are partially contracted out of the scheme?
I understand that the 1 per cent. abatement is based on the expectation that inflation will continue at an annual rate
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of about 6 per cent. If that were not the case, occupational schemes would, in the end, need to provide a greater share of the pension. I gathered my hon. Friend to say that the private schemes had been satisfied that this was possible. In these circumstances—the White Paper suggests this—when the four-yearly reviews take place will it be possible for an employer who is partially contracted out at that time to change his mind? If so, will the pension which has been earned to that date be deferred for the employee, who will then be fully in the State scheme, and, presumably, not be helped by a private scheme?
Can an employee who has done less than five years' service—after all, this will not be his fault—have his pension rights—the same question applies if the firm has been in the scheme for less than five years—deferred, or will he merely be entitled to his contributions back?
Mr. Ennals: In the circumstances of the employee to whom my hon. Friend is referring the procedure will be for the employer to buy him back in by a payment in lieu so that he is brought back fully into the State scheme again. By that means his pension will be fully established as a State responsibility.
Mr. Forrester: Presumably the private part of the scheme will fall, but that is another problem which I can take up with my hon. Friend on another occasion.
A major overhaul of the nation's pensions system was obviously due. There was little evidence that private enterprise would, of its own free will, step in and provide adequate benefits for the majority of employees. There was even less evidence that it would organise things so as to provide for transferability and a deferred pension. I am, therefore, in favour of the State scheme as proposed, for it will embrace all the population, with a private scheme superimpossed.
There has been much clamour for selectivity in benefits and this clamour will, no doubt, continue. There may be merit in the argument of selectivity. Be that as it may, there should be a basic pension which has contributory principles and which is given of right. If, as the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) said, we

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cannot know what attitude or priorities will exist in 20 years' time, and if by that time there is an even greater clamour for selectivity in State benefits, but if an employee were to have no right by the contributory principle to an acknowledged State pension, we would have the worst features of the means test once again.
For the vast majority of people, at any rate in my constituency, this is an excellent plan. It will bring within their grasp in old age, for the first time, the amenities and comforts which hitherto have been within the grasp of only the wealthy and those fortunate enough to belong to very good occupational schemes. I therefore have no hesitation in supporting the main outline of the Government's proposals.
Several Hon. Members Several Hon. Members rose—
Mr. Speaker: Order. I would remind the House that there is still a large number of hon. Members who wish to speak.
6.50 p.m.
Mr. Tom Boardman: I must, first, declare an interest, in that I am chairman of one of the larger pension trusts.
The hon. Member for Stoke-on-Trent, North (Mr. Forrester) referred to the case of a lady who did not know during her employment that her pension would be sacrificed if she left. This is no precedent on which to condemn occupational pension schemes. It is clearly bad industrial relations and a failure by the employer to provide the contract of service and a book giving all the information.
But similar conditions apply in the public service. The hon. Member should know that, there, the pension is taken into account when people are deciding whether to go in and considering the terms of pay—yet if they leave before their pension rights has matured those rights will be lost. So that is no justification for condemning all occupational schemes.
The hon. Member for Glasgow, Provan (Mr. Hugh D. Brown), who is no longer here, made some unworthy remarks when he condemned those who administer the private pension schemes. He suggested that they were administered largely for the profit or gain of those who ran them. I am sure that he did not mean to condemn them as he did, but, for the record,
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it should be made clear that those remarks were totally unjustified and that such schemes are administered well and efficiently. It is a pity that public funds in Government quarters are not administered with the same economy and efficiency.
There has been reference to the effect of occupational schemes on the economy, my noble Friend the Member for Hertford (Lord Balniel) referred to the need for this source of savings. To get industrial expansion and economic growth, we need to create savings and reduce taxation, the best source of such funds is the occupational pension scheme. Two-fifths of our savings are generated from that source, so anything which penalises them would be tragic and detrimental to the economy. I do not accept the argument which the Minister of State mentioned, and which is quoted in The Times today, about the non-inflationary effect of the proposed State scheme. I will heed your warning, Mr. Speaker, about brevity and will not develop the attack upon that article otherwise I feel confident I could mount. Perhaps I could do that another time.
The occupational pension scheme is one of the vital incentives to which people in industry and commerce look. They first consider their take-home pay, but taxation makes that less and less valuable, so the wish of most men and women during their working lives is to be able to put aside something of their earnings to provide for their retirement in a funded scheme which will not be eroded by inflation or left to the whim of Government.
The Minister of State made great play about the statutory protection which is built into the State scheme. It was quite illogical, compared with what he said earlier, that he would have been able to steamroller through the Bill no matter what its merits. If he can steamroller through legislation without consultation, of course, he or his successor could steamroller through a Bill to revoke any statutory protection—
Mr. Ennals: I do not think that the hon. Gentleman would intentionally twist what I said. I was explaining why the Government have no intention of steamrollering such a procedure through the House. He will recognise that that was what I was saying.
Mr. Boardman: I accept that this is what the hon. Gentleman said, but he did say that it would be possible. We know that, when the Government have a majority, it is possible for statutory protection built in in 1969 to be removed in 1970, 1972, or 1975, if that is Parliament's will.
The Government proposals are still, despite the number of White Papers and explanatory documents, clouded with doubt. I would like the Minister to clear up some of my queries. First, will the State benefits be taken into account by the Inland Revenue when fixing the limit of retirement income? It is vital that industry should know this. There is, as he will know, a maximum limit allowed for retirement pension at the moment.
Another question which he will not be able to answer, but which must concern everyone who has to evaluate occupational schemes, is: what amount of contribution will be payable in 1972—and later—by the employer or the employee? The figures quoted in the White Paper are by way of illustration and the uncertainties surrounding them makes it impossible to give a valid or considered judgment on the course to be taken by occupational schemes. I accept that there will be a breathing space before such decision must be made, but it is unfortunate that figures could not have been quoted upon which better assessments could now have been made.
The effect on the occupational schemes will be to cause a heavy increase in the total cost of schemes with the cost of the State contribution. Those occupational schemes which are kept going will find it possible only by accepting a heavy increase in the cost of labour employed. Many will be wound up, and no new ones will be introduced.
What is particularly unfortunate is that those schemes which have been improving their benefits year by year will no longer be able to do so—
Mr. Ennals: Why not?
Mr. Boardman: Because the burden which will fall upon the occupational schemes, if superimposed upon the State scheme, will make the cost such that the improvements which would otherwise have been possible will no longer be
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possible. The Minister of State must know that.
It will make more difficult the objectives which all concerned in occupational schemes wish to achieve—preservation, and, ultimately, transferability, ideals which both sides of the House will welcome. He will know that, in the process of controlled funding, which is adopted by all the schemes which have been building up over the year, the additional burden which will fall on industry will mean the postponement or curtailment of the move towards preservation and transferability.
There will be a particular penalty for the smaller companies which are less able to digest this extra charge. For—my hon. Friend the Member for Liverpool, Gars-ton (Mr. Fortescue) made the point about the inability of employees to plan for their retirement—there will be uncertainty and lack of information or anything but a rough guess about their position when they reach 65. They will be unable to understand many of the calculations. The Minister of State looks puzzled—
Mr. Ennals: Yes, I look very puzzled, because it will be easier for them to make some assessment of what their State pension is likely to be in relation to their earnings than is possible now under the existing scheme.
Mr. Boardman: That is an argument I cannot accept. It will be a complex calculation, with variations of wages throughout the whole of a man's working life adjusted by the average increase in wage levels which have to be interpreted by a computer. It will be extremely difficult for anyone to make more than a very rough guess as to what his pension is likely to be.
Mr. Ennals: Certainly, it will not be more difficult than in an ordinary occupational scheme, because a man will not know what his final salary will be 20 years hence.
Mr. Boardman: A man in employment knows that his final salary is likely to be something not less than his salary at any given point, and he can estimate the rate of progress with reasonable accuracy. In my experience it is possible to give people a clear indication of their anticipated pension three, four or five years ahead.
Mr. Fortescue: In any good pension scheme the trustees of the fund automatically, at regular intervals, tell each member of the fund what his pension will be at retirement age.
Mr. Boardman: I am obliged to my hon. Friend. He is completely correct and this is up-dated from time to time.
Mr. Speaker: Order. Interventions make for long speeches.
Mr. Boardman: One matter which the Minister of State slipped over rather quickly, and on which he was not prepared to give way when I raised it, is the position of married women. He referred to single women and widows being better off, but a married woman will be worse off for she will be left paying 10s. a week more than she is paying at the moment and, in many cases, she will not draw anything.
The way in which that is put in a small footnote to the explanatory leaflet does not give the sort of clarity to this very important subject which the community would expect to find in a simple guide. I draw attention to the footnote at the bottom of page 10 and the rather fleeting reference to it on page 18. I hope that the position of married women and the way in which they may be worse off in their contributions may be given more publicity.
The hon. Gentleman made reference to there being no retrospective legislation which would prejudice accrued pension rights. I believe that it was limited to the Health Service. My right hon. Friend asked whether this would be extended to the public service generally. I ask: is this assurance also to apply to private pension schemes and rights to lump sum payments which are secured at the moment under Section 388 schemes? Are those to be penalised or jeopardised in any way either by this legislation or by the adoption of a different attitude by the Inland Revenue? An assurance on this is vital.
Generally, the State scheme will be too complicated and too expensive. It is full of promises without security. It will penalise rather than encourage the good employer who has a good occupational scheme and wishes to up-grade it. I would have hoped that after all the years of incubation since this idea germinated in the mind of the Secretary of State we
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could have had a clearer, better and different pension policy from this Government.
7.4 p.m.
Mr. Arthur Palmer: The hon. Member for Leicester, South-West (Mr. Tom Boardman) made a very thoughtful contribution to the debate. The whole debate has been extremely restrained and in marked contrast to some of the hysterical discussion which has gone on outside about the scheme. That is all to the good, because in discussing pension matters we always have to keep a proper balance between advantage and disadvantage.
Because I hope to be a little critical of some aspects of the scheme, I think it right to start by saying that in its general principle I welcome it thoroughly. I do not think anyone could seriously challenge in these days the need for public pension reform, or deny that the alternative to a State flat-rate system is a system of graduated benefits and graduated pensions. The noble Lord the Member for Hertford (Lord Balniel) in opening the debate, for the Opposition, did not challenge that assumption for one moment in all he said.
It must also be accepted in the interests of industry and the country generally that pensions should both be transferable and paid in terms of real purchasing power. All these important contemporary points are contained in the Government's scheme. Therefore, my right hon. Friend the Secretary of State could reasonably hope to be regarded as the Beveridge or the Bismarck of his time. I am not making any predictions, but he yet might be so regarded. I do not think that so far, in the last few months, he has attained that stature. It is something which posterity may grant him, but it has not come right away.
There are two reasons for this. The first is that the scheme is intensely complicated. It is no good my hon. Friend the Minister of State, who may at last understand the scheme, denying its complexity. I have been doing much explaining of the scheme at meetings and I have found it very difficult to explain. There is much good in it, but the good is difficult to bring out. People already understand what they will have to pay in contributions, but what they will eventually

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get in benefit is hard for them to discover. That is sometimes also the trouble with occupational pension schemes; complexity is in the very nature of pension arrangements.
The second reason why the Secretary of State, who, we all regret, cannot be here this afternoon, has not achieved the popular approbation which he will eventually receive is that there is considerable apprehension and fear as to what will be its effect on the position of those already in good occupational schemes. As one connected with technical staff employees in the nationalised electricity supply industry I have had to deal with many doubts and fears which have been expressed in the last few months. They are very genuine doubts and fears, because to people in occupational schemes pensions represent their life savings. They are there to grant them a measure of security in their old age. Therefore, such people are bound to be concerned when a State scheme comes forward which might, for good or ill, affect pension benefits and the amount to be paid for them in contributions.
I wish that the Minister of State would give up talking about those in occupational schemes as being "privileged". Those who negotiate salaries in the public service know very well that contributions to pension funds are simply deferred pay. Members of occupational schemes are not especially privileged. They have had to pay for their pensions and they go on paying for them from the start to the finish of their careers.
Further, on the question of the fears of those in occupational schemes. I must again challenge my hon. Friend. The truth is that the consultation was not very satisfactory. He consulted the Life Offices Association, which are not particular friends of State schemes. He consulted managements of pension funds in the private sector. He certainly consulted the T.U.C. but the T.U.C. covers such a wide range of interests that it is bound to speak with a divided voice. Consultation with the T.U.C. alone from the trade union point of view was never good enough. There are many, I fancy, on the General Council of the T.U.C. who would accept that.
In particular, my hon. Friend should have gone to the public service unions.
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He asked why he should go especially to the unions operating in the public service. The reason is that all the schemes operating in the public service, including the nationalised industries, are statutory schemes for which the Government and this House are responsible.
Of course, since N.A.L.G.O., a powerful local government union, kicked up a tremendous fuss there has been a flurry of consultation. I sometimes think that my hon. Friend has joined that union, since he speaks so often nowadays from its platform. I think that, in effect, the N.A.L.G.O. campaign has been exaggerated and sensational on the contracting-out terms. I am sure the exaggeration of fear was not deliberate, but it was often the effect of the campaign on people.
But the campaign produced answers and assurances that nobody could obtain before, such as the assurance that existing pension rights in occupational schemes would be protected, that pension rights in the existing State scheme would be protected and that the Government have no intention of interfering with occupational schemes. I always took that for granted, but when we had the official assurances it was very much easier to convince rank and file members of occupational schemes. Those assurances could have been given much earlier and it was a pity that they were not.
But what now worries many of those representing employees in industries and services with occupational schemes is that modifications may be made in schemes by the employers so that occupational expectations may be worsened without any truly corresponding compensation from the State scheme. There is the fear that the management of pension funds may be obliged to modify their scheme. I pay full tribute to the improved contracting-out terms which have been proposed, and which represent a marked step forward. But when my hon. Friend says, "Let the unions negotiate with the employers", I must point out one or two facts.
I am sure that my hon. Friend will remember that the right to contract in or out is to be with the employer and not with the employee or the trade unions. Second, pension schemes, unlike wages and salaries, are not negotiable because they are not paid out of the employers

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trading revenues, but out of what is, in effect, a trust fund. Whilst unions can, and I am sure do, influence these matters, to talk of them negotiating on them is not apt. Many employers such as Co-operative societies will not in any case be able to separate out their pension funds.
Often pension scheme membership is a condition of employment. An employee must be in it or he will lose his job, so we must not talk as if the trade unions were on all fours with employers in these matters because they are certainly not. I hope that when we eventually see the Bill we shall find a Clause in it giving the unions a statutory right to object to the pulling down of occupational benefits by employers with no corresponding benefits to take their place on the same terms.
I shall not try to make calculations on the abatement terms in a general debate of this kind. It would be tedious, and I am sure that I would not get them right, anyway. But I still think that after allowing for the new abatement terms the proposed scale of contributions and benefits is unfair to the middle range income man. The man on £33 a week is no plutocrat these days, yet he is expected to bear the brunt of the partial income redistribution which, in effect, the scheme brings about. As a Socialist, I have no objection to redistributing a great deal of the capital and industrial wealth of the country, but when one tries to bring about equalisation between a limited range of salary and wage earners in this way one runs the danger of being unfair to many of them.
I am puzzled—and I have not yet heard any really convincing explanation—as to why there is the cut-off point at one and a half times average national earnings. I believe that it could have been pushed very much higher, because the man or woman with the larger income, whether earned or unearned, is now to move into a new kind of affluent flat-rate pension scheme and it is curious that a Labour Government should accept this.
Finally, I hope that Ministers will be a little clearer soon about their intentions towards the statutory schemes, many of which will need amending legis-
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lation. I believe that there will need to be enabling Acts of various kinds. This will possibly be true of the teachers and it will certainly be true of local government employees. One starts a chain reaction in this business which will go on for some time. What will happen about the amendments that may be necessary—I do not know—in the nationalised industry schemes? They are statutory schemes and the managements of nationalised industries cannot make any changes in them without the Minister's approval as things are at present.
It would be helpful to the course of this debate, and in preparation for the debate on Second Reading of the forthcoming Bill, if my right hon. Friend the Minister without Portfolio, who is to reply this evening, could give an indication of the timetable for the amending legislation that will be necessary for the public service schemes when the main Bill has passed.
I have made these observations in a spirit of realism and as someone speaking in fairly close touch with the public service scene, although I do not profess to be a deep pensions expert. Because I have made these criticisms, on an aspect of the scheme may I assure my right hon. and hon. Friends that, in general, I welcome the proposed legislation which I regard as a great step forward socially. If it is properly handled and explained, my right hon. Friend the Secretary of State may well yet go down in history as the Beveridge of his time.
7.19 p.m.
Mr. John Pardoe: I was surprised not to see an Opposition Amendment on the Order Paper. I thought of tabling an Amendment, but then realised that the chances of a back bench Amendment being called were slim and that I would make my opposition to the Government's scheme patent by the content of my speech.
I had also hoped, like the Minister of State, that today we should at long last hear exactly what the noble Lord the Member for Hertford (Lord Balniel) has in store for us when and if he is returned to power. At the end of his speech, he said that he believes in earnings-related pensions but that the major responsibility for this should lie with occupational schemes.

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I differ from the noble Lord there, because it is not only the major responsibility that should lie with occupational schemes. It is the sole responsibility for earnings-related pensions that should lie with occupational schemes and the State should confine itself, as I have made clear in the House on several occasions, to providing an adequate flat-rate pension.
Unfortunately, we still have no Conservative policy. Every time the noble Lord makes a speech I get nearer to the edge of my seat. As he nears the end of his speech I start biting my nails in eager expectation. Then the noble Lord sits down. I know why. It is because an invisible hand stretches out from the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), tugs at his coat tails, and drags him back; and a silent voice whispers in the noble Lord's ear, "Do not dare say anything nasty about my scheme. Do not deny the perfection of the graduated pension scheme", which is sometimes known by the term "Tory swindle".
Until the noble Lord can say that the graduated pension scheme which emerged from the muddy waters of the Thames at Kingston can go back there, indeed he has difficulty in putting forward an alternative policy. He will eventually tell us that he has abandoned the graduated pension scheme. I do not know whether he will do it when he is in power or before, but it is inevitable that he will have to do it. Then he may eventually come to a sane policy for pensions.
I maintain that the Government's scheme is entirely unacceptable. I have maintained this on several occasions in the House and made clear why. Although I am very grateful to the Secretary of State and his staff for producing this excellent simplified scheme which enables laymen to understand a little more of what it is all about, having read my way through it I have not changed my view that the scheme is in its entirety unacceptable, for these reasons.
First, it offers absolutely nothing to the existing 7 million pensioners. I know that it is the Government's intention to continue to help them. I do not deny that considerable help has already been given. Pensioners are better off than they were when the Government came to power, not only in terms of purchasing
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power, but in relation to the average industrial earnings.
In November, 1959, the basic pension for a married couple was 29·5 per cent. of average industrial earnings. In November 1964, it was 30·1 per cent. In November 1969, although the hon. Gentleman was unable to give me this information in answer to a Question last week because November had not then finished, by my calculations it was about 33·6 per cent. So there has been an upward trend in the relationship between the basic State pension and average industrial earnings. This is no more than I would expect, because, as I have said before, I expect higher standards in these matters from a Labour Government than from a Conservative Government.
However, I do not think that it is good enough. I think that it is entirely wrong that a couple should be expected to live on one-third of average industrial earnings. This is not a standard which an affluent society, even with all the qualifications to affluence that our balance of payments position makes necessary, should tolerate.
Two million out of 7 million pensioners are on supplementary benefits. In recent speeches from defenders of the Government's record it has come to be something of a cause for self-congratulation that 2 million out of 7 million pensioners are on supplementary benefit. I can remember a time when it was not part and parcel of Labour's policy to put people on to supplementary benefit.
Indeed, a book issued before the 1964 General Election and entitled, "The Twelve Wasted Years" says this on page 220:
"Now in 1963, after 12 years of Toryism, nearly 1 in 4 retirement pensioners—1½ million old people—are forced to rely on National Assistance because the pension by itself is inadequate to live on."
I make 2 million in 7 million not much better, and I think slightly worse, than I in 4. So the Government have not improved the situation.
The Government's scheme is unacceptable, secondly, because it retains the earnings rule. It is extraordinary that the Government will legislate the earnings rule into the scheme for 1992. I am not in favour of working throughout a long life. I take a Disraelian view of the importance of leisure. A society

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that discourages people from working can hardly be said to be wholly sane. The Government should look at this question again.
The scheme is unacceptable, thirdly, because it will, through the medium of the State, perpetuate the inequalities of life, not all of which by any manner of means are deserved. People on low earnings, and people who have been sick for long periods of their working life, will still be badly off in retirement under the new scheme, because it is based on average earnings throughout the whole of the working life.
I do not regard the scheme as securing a sufficient redistribution of income from the well-off to the less well-off; nor do I think that it sufficiently redistributes income from the young to the old. I make that position quite clear, because it may be contrary to certain views from other parts of this side of the House that my commitment is that the redistribution has not gone far enough.
The scheme is unacceptable, fourthly, because the averaging of the benefit and the payments over the working life is exceedingly complicated. On page 10 of this very helpful pamphlet the answer to the question—
"How will the pensionable 'life average earnings' be calculated when a worker reaches pension age?"—
is summed up in the last sentence:
"The recording and calculations will be done by a computer."
One hon. Gentleman has already told us the sort of difficulties that this will give rise to. I have no doubt that in 1992 in surgeries throughout my constituency—because I shall still be the Member, and I shall be well under retirement age—people will be bringing me computer slips and saying, "What does this mean?" What kind of appeal procedure is there to be? It is unreasonable to expect that an individual can keep his record of earnings throughout his life. Most of us find it difficult to keep it from one year to the next to fill in our income tax returns. Nobody will do this. If there is an appeal machinery, the only evidence that a man can produce will be the evidence the computer has produced for him. He will not be
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able to challenge this from independent evidence of his earnings.
The scheme is unacceptable, fifthly—this is perhaps a strange reason for the Government—because it will perpetuate the different retirement ages of men and women. We are moving into an era of equal pay. Presumably there will be equal pay in 1992. It is almost as if the Secretary of State thinks that all elderly working men should have someone around the house to bring their slippers. I cannot see quite why this difference is being perpetuated and what is the purpose of this five years.
This may again seem a strange criticism, but I find it rather odd that the Government should not only have increased contributions for women but should also have increased the benefit for widows, in the sense of reducing the age at which they will receive those benefits. This is legislation for a past era. I should have thought that by 1992 most of those who become widowed at 40 will have thought in terms of making a career for themselves after their families have gone out into the world. Fifteen or 20 years of bringing up a family will be the maximum; then women will expect to go out and earn their way in the world.
Mr. Eric Lubbock: Will my hon. Friend make it clear that he is speaking in this context of widows without children? He would not alter the provisions that already exist, and which we hope will be improved, for assisting widows with children under working age?
Mr. Pardoe: I am grateful to my hon. Friend for emphasising the point I have made. I am not talking of widows whose children have gone out to work and who no longer have any children to think of
It is odd that the Government should have distinguished between widows and single women. One can well understand that there must be a distinction today, because one is faced with a situation in which many women become widowed at 40 and do not have a trade or skill and may never have worked for a lengthy period. But in 1992 the situation will have entirely changed.
My final major reason for regarding the Government's scheme as unacceptable is

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that it will undoubtedly discourage occupational schemes, which for philosophical reasons I happen to support. In his pamphlet for the Fabian Society, the Secretary of State paid tribute to the natural partnership between private and public enterprise and said that without both of them consumer satisfaction could not be given. I regard that as a Liberal thought, but I find it strange that he has not accepted just where the line in that partnership should be drawn.
The scheme will have a substantial effect on net private savings and will shift the balance substantially towards the public sector. I should like the Government to say whether the abatement of 1·3 per cent. will be the subject of any tax concessions. I can find nothing about this in the White Papers, nor in the simplified version.
The Minister of State said that the new scheme was simpler than the present, but the scheme which I propose is far simpler still. He said that he was not aware of any alternatives except that which came from the National Association of Pension Funds. I am sorry to hear that he has not listened to my numerous speeches in the House on the subject of pensions. I have put forward precisely this alternative and on occasion he has even tried to answer some of my points.
The scheme is that we should abolish the present system of contributions, abolish the graduated pension scheme, and introduce a flat-rate pension which should be at least half the average annual earnings of a man in industry, and that half-pension should be paid to a married couple. I am not saying that this could be done immediately, and we would introduce it over a period of ten years. This pension and all the other welfare benefits should be paid for by a social security tax based on a pay roll tax, two-thirds being paid by the employer and one-third by the employee.
The Minister of State has enumerated objections to this and the right hon. Member for Sowerby (Mr. Houghton) once dealt with it in a speech on an earlier occasion. The Government's major objection to a flat-rate benefit paid for by earnings-related contributions is political, that many people would feel that they were paying too much for too
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little. But this entirely depends on the relationship between what one pays and what one gets under each of the schemes.
The Government have sought to overcome the political objection of those who will be paying more by them paying them more in benefit, but they can do this only by paying less in benefit to the less well-off members of the community. How much less are they to pay the less well off members of the community and will what they pay provide an adequate standard of living in an affluent society?
Page 13 of the pamphlet gives the rates and shows that the lowest level of benefit under the Government's new scheme will be £270, which I make 22 per cent. of average earnings, and together with the wife's flat rate of £160 that will give a combined pension of £430, which is 37 per cent. of average industrial earnings. It is only when one reaches the figure of £1,000 on 1969 values that the combined pension becomes 50 per cent. of average earnings.
What the Government have done is to buy off the political objection of the better off by ensuring that all those whose incomes in 1992 are the equivalent of £1,000 in 1969 will have pensions less than half the average national earnings. I would have thought that there were grave political objections to that and I have no doubt that there will be in 1992. In fact, I issue this as a warning, because I know what will happen in 1992 and long before that—the lower pensions will be regarded as politically unacceptable, and so increases will have to be made. Those increases will be financed out of general taxation, which will make a nonsense of the whole contributory nature of the scheme, or by higher contributions, and the only people who will be able to pay higher contributions will be the better-off. Why not ask them to face this political objection now instead of deferring it? The Government are burying the political objections today, but they will rise from their graves tomorrow and their ghosts will haunt generations of Governments to come.
I am convinced that the policy operated in Canada, Holland and New Zealand, of flat-rate benefits paid for by wage-related contributions is a much better alternative to the present system than the Government's proposal is. The

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pension must be payable to everyone on reaching pensionable age, and it must also be paid to those who are now over pensionable age and receiving no pension from the State. This would not be a very expensive item today and it will obviously get less.
I do not understand why the Minister says that it would be impossible to enforce compulsory occupational schemes over the whole population. I do not see any objection to doing that. He said that about one-third of households would be uncovered by occupational schemes by the end of the century. Occupational schemes could be enforced and certain minimum standards for those schemes could be enforced. The Minister said that two-thirds of the scheme had no widowhood provisions; why not pass legislation to ensure that they have?
There is the difficulty that the schemes are not transferable. This is a difficulty which is always raised. The right hon. Gentleman once told me in the House that we had 65,000 schemes and that a very large report by some Government Department had proved conclusively that they could not be made transferable. The hon. Lady the Member for Petersfield (Miss Quennell) will be introducing a Private Member's Bill which I hope to sponsor and, although it may be a rather long and protracted affair, I hope that by the end of the day we shall have convinced the Government that it is possible to make the schemes transferable. It may not be possible to do so now or in the next five or ten years, but of course it will be possible in 20.
One or two hon. Members have mentioned those who cannot be covered by private schemes. There is provision for a retirement annuity for employees not covered by adequate private schemes and this would be financed out of a levy paid into a central account, and so there is no problem about that.
The Government scheme is unacceptable; the present situation is entirely unacceptable. But there is a viable alternative, and it happens to be Liberal policy.
7.40 p.m.
Mr. Kenneth Marks: I always find the speeches of the hon. Member for Cornwall, North (Mr. Pardoe) interesting, and tempting
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when he deals with this subject. I had hoped that he would enlarge on the amount of contributions that would be required from the workers in his scheme. We look forward to hearing what he has to say, as we have looked forward for so long to hearing what the hon. Member for Hertford (Lord Balniel) proposes.
I would like to take up the point made by the hon. Member for Leicester, South-West (Mr. Tom Boardman). One of the ways in which occupational schemes survive and do well is through people dropping out and the employers' part of the contribution going into the fund to help it along. The poor worker regarded that as part of his wage.
Dealing with this question of the incidence of taxation, I was glad to hear in reply to a Question I asked the other day that there is to be a review of taxation in connection with National Insurance and occupational pensions. This is a long overdue review. A very considerable proportion of the money which goes into the occupational funds comes from the Exchequer. The high-paid worker who contributes to an occupational fund collects a fair amount of tax rebate on his contributions. The low-paid worker collects nothing like the same amount, and in many cases it is nothing at all. It is high time that the whole question of taxation relief on National Insurance contributions and occupational pension contributions was examined.
The hon. Member for Liverpool, Garston (Mr. Fortescue) mentioned married women on £8 a week, who do not normally contribute to a National Insurance fund.
Mr. Fortescue: That is not so.
Mr. Marks: In that case I beg the hon. Member's pardon. I was convinced that he said something about it.
That woman will have to pay contributions in future. A great many of them pay now so that they can be assured not only of pension rights, but sickness unemployment and other rights, in their own right. The contribution under the present arrangement is far too high. For the woman on £8 a week it is 9 per cent. of her pay and she cannot afford it.
Under the new scheme there will be considerable reductions in the contribution payable by women and other low-paid workers. In examining this scheme

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we have to ask: is change necessary? With 2 million pensioners on supplementary benefit, and great resentment among those pensioners not on supplementary benefit, but on a low occupational pension, receiving only a little over supplementary pension which takes in both their National Insurance pension and their occupational pension, it is time for a change.
The transferability argument has been raised. In this scheme a great step will be taken, if not towards transferability, then towards ensuring that there is continuity in the National Insurance pension when someone has been contracted out. I have mentioned the vast proportion to be paid by women under the present scheme. The other day I was arguing with some older teachers who said that if they went in both schemes they would have to pay 12¾ per cent. of their salaries and they could not afford it. In the main, they were on more than £2,000 a year. But their young teachers on £16 10s. a week have been paying 13 per cent. of their salary and still do. This is one of the reasons why they can talk about a £13 a week take-home pay.
Some easing of this flat-rate contribution has always been necessary and this was recognised by the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter). Part of the graduated contribution went towards the flat-rate pension, as my right hon. Friend the Member for Sowerby (Mr. Houghton) said earlier. After what the right hon. Gentleman said—and I would add that contracting-out employees actually have to pay 2s. 7d. above the basic rate to compensate for that—the noble Lord should withdraw his remarks that my right hon. Friend did not know what he was talking about. The Conservative scheme was unsatisfactory. Parliamentary convention forbids me from using the language about it which the workers in factories in my constituency use.
One of the urgent requirements, and I agree that it should have been done sooner, is for the scheme to be altered. Despite the complication of this scheme, the Government have adopted the right method. It is desirable to insist that a national scheme should ensure an adequate pension and that occupational
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pension schemes should have an opportunity to adjust themselves to the national one.
As a layman, I look to the experts. I was intending to read an extract from a report produced by a study group of the Royal Institute of Public Administration. This group spent some years studying this subject. The summary of its findings, on page 253, would have made an excellent preamble to the Bill. I asked the expert in my union, the N.U.T. the superannuation officer, Dr. Barnes, to say something about the new superannuation scheme after I had received messages from worried teachers following speeches and Press reports.
Dr. Barnes published a reply, in which he said:
"In recent weeks, fears have been expressed by some members of the Union that they will lose their superannuation scheme when the government's new proposals for national superannuation comes into operation. These fears are unfounded. At the present time teachers at retirement receive the teachers' pension and the government pension. When the new Government scheme comes into operation— and it probably will not do so before 1972—teachers will still receive both."
Dr. Barnes goes on later to say:
"The lump sum available in the teachers' scheme can still be expected in full. Any existing benefit secured in respect of teachers' service and contributions will be fully safeguarded."
If there has been confusion on this matter it has been added to by the speeches of the noble Lord and some of his supporters. There are faults in the occupational pension schemes. In many, the pension is based on the last five years' salary. If someone becomes a head in those last five years he is on to a good thing, because he collects a pension far greater in proportion to the contributions he has made.
A man or woman who has not gained that promotion in their later years does not receive the same benefit from the scheme. This last five years business is not as fair as all that, even in the professions. For the manual workers it would not work out at all. In some of the public sector schemes, as in the private schemes, there is the danger that the man who is hard up—and this has happened among employees of my local council—will give up his job to collect his superannuation and then start afresh a few days later.

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Can occupational schemes do the job which can be done with the new Government scheme? I suggest that they cannot. The people not now in occupational schemes will be the most difficult to fit in. All the major industries are covered, together with the public services, and the rest will have to be covered by small schemes operated on behalf of employers by insurance companies. I cannot help feeling that the real reasons behind this debate are the figures 1 per cent., 1·25 per cent., 1·3 per cent. and 1·35 per cent.
The real objection to the Government's proposal is that the abatement of contributions will only be 1·3 per cent. although the Government Actuary argued that 1·25 per cent. was enough. The real reason for the opposition, and I expect the hon. Member for Cornwall, North and the Liberal Party from this, is that there is a great deal of money to be made by insurance companies if the 1·5 per cent. abatement is allowed. The noble Lord gave us no evidence that there would be any harm to existing schemes or contributors. Time and again he said that there would be no new schemes, and, therefore, no growth. Any growth would come from the insurance scheme. The argument in this debate is about whether the abatement should be 1·3 or 1·5 and whether the profits should be more or less.
7.50 p.m.
Sir Brandon Rhys Williams: With the publication of this most recent White Paper, 4195, the Secretary of State has completed his contraption and brought it before the House. They say that a camel is a horse designed by a committee. This is a pensions scheme designed by an extremely fitful and wayward genius. The more that people look at it, the more determined they will be not to buy it. I cannot help reflecting that this horse came from the same stable as the Parliament No. 2, Bill, and it seems to me very likely that it will end up in the same graveyard. At every stage at which the Secretary of State in drafting this contraption has had to take a decision, he has taken the wrong one. It is worth reflecting how he has arrived at the present scheme.
First, let us look at the right hon. Gentleman's general priorities for the
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Welfare State. We know what the public's priorities are: they are concerned about child poverty and the disabled, and they are very concerned about the existing pensioners, particularly the over-80s and public service pensioners. People who study the workings of the Welfare State are extremely concerned about the earning rule and the operation of the wage stop. All these things require urgent attention. But the Secretary of State proposes to raise £400 million in additional taxation in the first year of the operation of the scheme, yet not to use it for any of these objectives, but simply to put it away in order one day to honour an election pledge which was never believed by anybody and which will not indeed even be honoured by his extraordinary scheme.
The question of the relationship to earnings is extremely important. We all accept that the National Insurance contribution can no longer be a flat rate contribution but must be earnings related. But in giving a welcome to this advance, which was inevitable, we must consider much more closely the idea of earnings-related benefits. We are dealing with very large sums of public money and many millions of people, and we should be meticulous about the reasons why we should launch out on earnings-related benefits. I do not say that they are necessarily wrong, but we must be absolutely certain of what we are doing before committing ourselves to this sort of expenditure.
It used to be an old Socialist maxim— and many people think that it is not a bad idea—that money should be taken from each according to his capacity, and given to each according to his need. It seems a very long time since the Secretary of State reminded himself of this maxim. I am sorry that he has never given any explanation why he has abandoned it.
I have said before, but it is worth briefly going over it again, that there are two maxims which have come down to us from Victorian times when we are thinking about providing for old age. One arises from the impetus towards charity which gives rise to an impulse in everyone who has money to share it with those in need; and there is the precisely opposite injunction towards thrift, which encourages us to provide for ourselves and keep our money to ourselves.

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It is not possible to devise a scheme which combines the system of National Insurance, which arose from the Victorian concept of charity on the grand scale, with the system of National Savings, which is the twentieth century follow-up of the movement towards thrift. In trying to do so, the Secretary of State has produced a contraption which will give the most money to the people with the least need, but which will not even give them a fair deal.
The question of redistribution must be tackled. We all accept that there must be redistribution of income to meet people's basic needs. But the latest edition of the child's guide to the scheme contains on page 13 a table showing the way in which the scheme is supposed to operate. A pensioner whose annual average earnings achieved during his working life was £630 will get a fully mature new-scheme pension at April, 1969, earnings levels of £378. When we look to the bottom of the table we find that someone earning £1,900—broadly three times as much—whom we might expect, since this is an earnings-related scheme, to get three times as much, gets only £695 10s. instead of about £1,140. I calculate that that represents a loss in the system of about 39 per cent.
The Secretary of State has introduced the absolutely unacceptable and obnoxious concept of the redistribution of savings. We shall never be able to give people confidence in a State savings scheme which has secreted in it this principle of the redistribution of savings. But if we want to introduce a system which causes people to lose confidence in the currency, this is it.
Let us consider the question of entitlement, because it is vital that we should be clear what we think about it. Is entitlement to be based on need, as it is in the case of our vast special supplements system? Clearly, it is not in the Secretary of State's system, because even after it has been going for 20 years it is admitted that there will still be a need for special supplementation as the scheme will not have caught up with and eliminated need. Entitlement could be based on citizenship, in the same way as family allowances. But that is not the basis of this scheme. It is not even, as we have seen, to be related to contributions, because the relationship with
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contributions is to be so tenuous. There is an unexplained 18 per cent. subscribed to the scheme by the taxpayer for no known reason. Therefore, the taxpayer at the upper end of the scale must contribute twice, although he is the very person who gets the least return from the scheme for his money. All these problems arise because the Secretary of State has tried to mix the impulse towards charity with the impulse towards thrift, which cannot be done.
We must consider the changes likely to take place in the value of money. I think that everybody would agree that the basic scheme, which is to eliminate need, obviously must relate extremely closely to changes in the value of money. We might even wonder whether a two-yearly review will be frequent enough. But if we are to deal with people's savings, is it the right principle to introduce variations related to changes in the value of money when what we are dealing with is the growth of capital?
This matter needs a great deal of emphasis, because it is a major departure in policy that savings in future do not earn interest but are linked to price levels or, at the Minister's discretion, to the national income. This means that, in future, savings will not fructify in the pockets of the people but will be taken into the pockets of the Government from which people will be occasionally awarded a discretionary bonus out of taxation on a scale not identified in advance.
This is a principle which Governments have resolutely refused to apply to their own debts in the past. Certainly our own Government, I am glad to say, have never thought of applying it to the Government debt. It is something which is suggested only in bankrupt economies, and yet the Secretary of State has quietly slipped it into this scheme, and it is a feature of his scheme which has attracted far too little attention. It is a threat to the structure of the capital market, and particularly the gilt-edged market. If the Secretary of State says that the British people no longer have confidence in the value of sterling, how can we possibly expect people overseas to leave their deposits in London earning interest, when we ourselves have become far too sophisticated for that, and have voted ourselves a scheme under which we will be

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given discretionary bonuses by future taxpayers? This is an attack on the whole basis of a capitalist economy. I do not refuse to take a distant view at that idea. In due course we could all arrive in some state of Philadeplhia where we shall all escape from the cash nexus. But that time is not yet. It seems to me to be an ill-thought-out vote-catching and highly dangerous innovation.
There is, then, the question of contracting out. The further we get down the path, at every point taking the wrong turning, the more deeply entangled we all become. One cannot contract out of a system based on redistribution of income because, if we could, all the people would contract out who would be the most likely to suffer. And one cannot contract out of a system which has relationship to price levels, because one cannot predict what one is contracting out of. Thus it is inevitable that there should be universal coverage by a basic scheme which is redistributory and which is related to price levels. Why it is possible to contract out of the existing State graduated scheme, which is an honest scheme, is that it obeys the laws of arithmetic. If there are two schemes, one dealing with accretion of capital and savings and one dealing purely with the redistribution of income, one can contract into the one dealing with the redistribution of income and out of the other dealing entirely with the accretion of savings. But there must be two separate schemes.
The Secretary of State has again taken the wrong decision and has decided on one great galumphing scheme. It is impossible to contract out of this entirely: so one moves on to the stage where one has to find some method of partial contracting out. This means that every one of 65,000 established schemes must be compulsorily changed. Heaven knows how many years it will take for all the 65,000 schemes to reconsider all their plans and settle down as orderly vehicles for the collection of savings.
I have studied with great fascination the ingenuity which has gone into the development of the concept of abatement. It is so beautiful and so ingenious. One feels that it ought to be used for something, but not in a State scheme. It
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is rather like the designs for the Foreign Office which were rejected, but the draughtsmen admired so much they converted them into a railway station. They can now be seen at St. Pancras. I am sure that abatement will find its place in society somewhere, and I would love to be the person who suggested how this marvellous device could be used. But the more we study it the more problems it is seen to give rise to.
What priorities has the Secretary of State in dealing with the matter of partial contracting out, or abatement? His problem is that he either has to extinguish the private sector or will provide the big schemes with subsidies. He hopes that he has found a middle path in which he will extinguish only some of the private sector and hopes that the subsidy for the big schemes will not be so excessive as to cause an outcry. In fact, what he has done is choose a level of abatement which will damage the entire private savings movement. It is not possible to find a procrustean bed which will suit every type of scheme, because the large scheme will have lower administrative expenses than the small scheme and the scheme with a large number of young people will be better placed in terms of the compound interest provisions than schemes in declining industries which particularly need help and in which there is predominantly older membership. Whatever one does about the rate of abatement, one cannot be right.
There have been many different stabs at the problem. First of all there was a suggestion of 0·8 and 1 per cent. in the first consultative document. Then the Government Actuary decided that there could be 1 per cent. and 1·25 per cent. This is not hair-splitting since very large sums of money are involved. Then finally we hear that it is to be 1 per cent. and 1·3 a side. That is the level that the Secretary of State feels right in the circumstances of November/December, 1969. But by the time we reach January/February, 1970 those assessments will already look rather tired.
I see that the Government Actuary has allowed his signature to be printed at the end of the interesting appendix to the White Paper; but if one had seen his writing it would have been rather like Guy

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Fawkes' signature after he had been tortured and a confession was extracted from him. No one as estimable as the Government Actuary would willingly have put his signature to such wild generalisations as he has in the appendix. One cannot help feeling that he has done so under pressure. A lot of people would say that an actuary should not be expected to make estimates of long-term interest rates. He should be given them by whoever is running the scheme and then should be able to say what are the consequences of such assumptions. But the Government Actuary has had to say:
"…I have thought it reasonable to assume that an average yield of 7½ per cent. would be obtainable on new investments in the period in question. Investments made during these four years will themselves produce income which will need to be re-invested until the employees concerned reach pensionable age. I have assumed that the average yield obtainable on such re-investments will be 5½ per cent."
Goodness knows whether a crystal ball, a computer, or mere head-scratching has been the method used to reach those conclusions, but in as short a time as a few months these estimates of interest rates will seem archaic and wrong.
Let us look at some of the other things in the appendix which have been used by the Secretary of State:
"I have assumed that 7 per cent. of the amounts derived from contribution abatements will be absorbed in meeting expenses."
I was aghast at that. Some would think that infinitely too much and others too little, depending on what sorts of schemes are being considered. I will not elaborate further on the embarrassments of the Government Actuary. This will become a sort of locus classicus of actuarial examinations: "How many mistakes can you find in the Government Actuary's appendix to White Paper No. 4195?" If the scheme gives good value for money, it is cheating the taxpayer and subsidising the life offices. Nobody, I am sure, wants to do that. Or it is subsidising employers, which again will cause indignation when it comes out. But if it gives bad value it will force the winding up of thousands of savings schemes with disastrous effects on the capital market.
There is also the other anxiety that estimates are to be subject to a two-yearly return. This is simply building into the system from the start a perpetual element of doubt and instability.
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What are the conclusions to be drawn from all this? There are so many disastrous anomalies that we can be certain that the scheme will never come into effect. What is needed in its place is a new scheme which will keep the arithmetic of redistribution of income completely separate from the arithmetic of savings.
The Government must get their priorities right. They must deal with child poverty and the disabled. They must not leave these matters to Private Members Bills. They should deal with loneliness and the poverty among existing old people. They should clean up the anomalies in the existing welfare state which are crying out for attention; and should deal with the problems facing families of the chronic sick and the long term unemployed. These are the things to which the Secretary of State and his colleagues should be giving attention, and not fantastic contraptions and long term predictions which have troubled the House for many months past.
The Government must put their mind to solving two vital problems in our society. One is the need for a rapid growth of savings. The other is the provision of basic pensions which are enough. I hope that in due course we shall work together towards a property-owning democracy in which there are no poor. But this scheme will not achieve it.
8.9 p.m.
Mr. Douglas Houghton: I must apologise for having had to leave the Chamber earlier for a little over an hour. However, I heard most of the speech of the noble lord the Member for Hertford (Lord Balniel).
This is the debate for which the Opposition have been clamouring, threatening the Government with a vote of censure if they did not get it. Now look.
Mr. John Horner: The happy few.
Mr. Houghton: Most of the debate to which I have listened has not been about this White Paper, but about the previous White Paper, on which we had a separate debate. The Bill is to be published shortly, and then we shall consider it on Second Reading.
I thought that this debate was asked for to probe the detail and fairness of the proposed abatement scheme. I think

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that too little attention has been given to it in the course of the debate.
The noble Lord puzzles me more and more. His speech was full of mischievous and irresponsible criticism both of the scheme and of the Government, with, by the time that I left the Chamber, not a single constructive idea. The noble Lord and the Opposition generally will have to make up their minds very soon what is to be their attitude to the scheme. We have not had a glimpse of it yet.
The Liberal Party has laid its heart bare and told us about its alternative scheme and how unacceptable these proposals are. The Conservative Opposition have nagged and nattered. From the time that these proposals first came before the House, they have moved to strike, but been afraid to wound. We do not know what the Opposition intend to do, and I think that it is imperative that they should soon tell the country what their attitude is to the Labour Government's scheme for the reform of social security.
I have another grievance against the noble Lord. He said that I was mistaken in saying that the 1959 graduated scheme was redistributive. Of course it was. It would not have made sense had it not been. By "redistributive", I mean that contributions are levied upon higher-paid workers in order to transfer the bulk of them to supporting the benefits of lower-paid workers. The 1959 scheme had that as its primary purpose.
Before 1959, the problem that the Government of the day had to face was that the flat-rate scheme was running seriously into deficit. There was what was called an "emerging" deficit in the National Insurance Fund because it was difficult to raise flat-rate contributions to the level necessary to pay for the increased flat-rate benefits. That was the financial problem which confronted the Government in 1959.
Lord Balniel: I am sorry if I misunderstood the right hon. Gentleman's interruption in my speech. What I was criticising in the present proposals was that, the more one earns, the less is the value of one's contribution and, in that sense, was a redistribution which I thought was mistaken in an insurance contribution. Under the old scheme, each person's contribution was of equal value.
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I accept that, if one contracted out of the scheme altogether, one paid a bigger flat rate stamp towards the flat-rate pension.
Mr. Houghton: I am obliged to the noble Lord. Evidently, we were at cross-purposes.
The 1959 scheme was redistributive in the sense that it took away from all the graduated contributors an equal proportion of what they were paying to transfer to financial support of the flat-rate scheme. In the present proposals, the redistribution is of a graduated nature which leads at one stage to the lower-paid worker getting, £ for £ of contributions, almost twice as much in benefits as the highest-paid worker gets £ for £. In that sense, the form of redistribution is different, but there is no doubt that the 1959 scheme was redistributive.
I have furnished myself with the accounts of the National Insurance Fund to prove that, whereas graduated contributions last year produced over £400 million, I doubt whether graduated benefits amounted to £10 million, but still the fund was in balance only to the extent of £116 million at the end of 1968 and ran into the red in 1969.
Mr. Temple: The whole point of the graduated scheme was that the benefits would come later. The cash came now, but the benefits came later. Although the right hon. Gentleman is extremely adroit in these matters and is putting the figures relatively fairly, he is conveying a slightly erroneous point of view.
Mr. Houghton: I am obliged to the hon. Gentleman, but, if the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) were here, I would challenge him to say whether his mind was fixed on the ultimate future of graduated benefits or whether he was looking in the till to see how many million pounds he had to put in to finance the flat-rate scheme.
Mr. Temple: Both.
Mr. Houghton: Yes, but his eyes were on the till. He could not afford to look into the future. However, I think that we have cleared up that difficulty.
For the sake of the prestige of and confidence in national insurance I hope that we will stop talking about "the Tory swindle". It is not good for national

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insurance and does not happen to be true. Probably I shall quarrel with some of my hon. Friends about this, but the truth is that the 1959 scheme was re-distributive, but the Tories of the day dared not say so. They pretended that the graduated contributions were value for money when they were not. But the scheme as a whole was value for money. I am always surprised that the Tories let that label stick. The scheme as a whole is value for money today. There is no deferred annuity of the level of the national insurance pension which can be bought in the market for the price paid by the insured person in the scheme. That will be true of the future as well.
My hon. Friend the Member for Bristol, Central (Mr. Palmer) was on a point, and another hon. Member mentioned the possibility of a revolt later on against the redistributive element of the scheme. That is a possibility. It may be that higher-paid workers will feel that they should not continue to subsidise lower-paid workers to the extent that the scheme requires.
That element of redistribution within a superannuation scheme is a matter of politics as much as of finance, but this is not the only way of securing redistribution. There could be redistribution by asking the employer to pay a much higher contribution. There could be redistribution by asking the Exchequer to make a much bigger contribution. But the method adopted in this scheme is that chosen by the Conservatives in their scheme and, to that extent, the principles of the scheme are hallowed by Conservative precedents.
It does not mean that this form of redistribution will be wholly acceptable all the time. It depends largely on how the movement of workers into the higher income ranges reacts upon their sense of justice within the national insurance scheme as they then see it. They may feel that the subsidy of the lower-paid workers should come out of a wider redistribution and not from within the insurance scheme itself. That is a point which will have to be borne in mind when looking at this in the future.
The hon. Member for Cornwall, North (Mr. Pardoe) had one or two comments to make. He said that the scheme was unacceptable because it did nothing for
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the flat-rate pensioner. We must be realistic. It is clear that no earnings-related scheme can apply to existing pensioners. The hon. Gentleman was no doubt expecting that this scheme would be more generous to the flat-rate pensioner than in the past. If that is his point, then I say that the flat-rate pensioner stands a better chance of generous treatment from the finances of this scheme than from the finances of the present scheme. There will be more room for improvement to be given to the flat-rate pensioner, because initially the financial arrangements will be more favourable.
I have heard this scheme described as the generation contract. One generation undertakes to pay for the pensions of the previous generation in return for a promise from the next generation that its pensions will in due season be paid. But if any generation is asked to pay a much higher proportion of its income to fulfil the promises of the previous generation, tensions are bound to develop between the workers, on the one hand, and the large number of people in retirement, on the other. This has happened in Germany. This is why, when we were debating the matter earlier, I was anxious that the Government should fix the rate of contribution to begin with at such a level that it would be unnecessary to increase the percentage contribution for many years to come.
What does contracting out do to that? It has an adverse effect on the surpluses in the National Insurance Fund in the early years. In Table 7 in the original White Paper we see that the Government Actuary's estimates of the growth of the fund and the period over which it should grow and the percentage by which it should grow were all based on no contracting out. He ignored contracting out in producing his figures. The reason why the Secretary of State has had to drive a relatively hard bargain on partial contracting out is because a reduction in the contribution revenue by too much contracting out would adversely affect the financial basis of the scheme and he would have to begin by increasing contributions in certain circumstances. So we have to look at the partial contracting out proposals in the context of the effect upon the finances of the scheme as well as upon the interests of employees.

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The hon. Member for Cornwall, North again condemned the earnings rule, and I thought that I heard the noble Lord say that the earnings rule should gradually be worked out of the scheme. In no social security system in the world, as far as I know, is there a scheme without a limit of benefits according to earnings. There is an earnings rule in every one that I have seen. The reason is that it is difficult to define the basis of qualification for pension unless there is a retirement rule. With a retirement rule there must be some limitation on earnings thereafter. I know that the heads are shaking, but this will be found to be so when it is examined.
Will the workers of tomorrow be prepared to pay their shillings and shillings a week in contributions to keep people on full pay and full pension after pension age? They will say that it is too heavy a burden to place upon them to maintain people with double incomes in retirement—full wages and full pension. When the pension is lifted to a level where it is virtually a replacement of earnings, it is obviously improper to add that pension to full earnings.
That is why there must be an earnings rule, and we must face it, because people are constantly condemning it as if it was some evil device to prevent them getting additional resources to supplement their pension. But when people are to get more than half pay on retirement—and in retirement normally the level of expenditure falls—it is obviously improper to duplicate their income by providing them with an adequate and full pension to enable them to live in retirement and add that to the capacity for full-time earnings.
I sincerely hope that the scheme will provide—it is not clear now that it does—for additional benefit to be given where a person defers retirement. I presume that on deferment of retirement contributions will continue to be paid and that they will reckon towards the additional calculation of pension.
I give special attention to what was said by the spokesman for the Liberal Party, because that is where all the fresh, bright ideas come from these days— [HON. MEMBERS: "Oh."] It stimulates one's critical faculty. It gives one an opportunity of seeing whether there is
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anything fresh that one has overlooked. We cannot be sure of getting all the bright ideas on these benches.
The hon. Gentleman dealt with the position of women. I agree that women should be brought into line with men both as regards retirement conditions and age of retirement and that they should be put on terms of equality. When women get equal pay I shall press as hard as anyone for equality of men and women in national insurance as in every other sphere of economic and social life.
Mr. Pardoe: Is the right hon. Gentleman suggesting that women will not have equay pay by 1992?
Mr. Houghton: I hope that they will have equal pay long before then. But the scheme has to be drafted on conditions as they are. To expect equal pay and to write it into the scheme by lifting the retirement age of women in anticipation of equal pay, would be politically presumptuous.
I turn now to the effect on occupational pension schemes. There is room for a great deal of misrepresentation and misunderstanding on this. I do not minimise the degree of concern that some people felt initially when these proposals first came out. But there can be nothing simple about any superannuation scheme. My right hon. Friend proved that in the extract that he read from the conditions of a private occupational pension scheme. I nearly interrupted him to say that I could make it sound much more intelligible if I read it with verve and with the right emphasis and understanding of what I was reading, whereas he was really reading a Sunday morning sermon and had got into a private occupational pension scheme rule book by mistake.
All these things are complicated, and it is our job to make them understood. Those who say that everything should be made simple must realise that simplicity is the enemy of equity. This is one of the fundamental principles of administration. We can have a simple income tax, or a simple anything. We have a simple S.E.T., yet it is riddled with anomalies. We can have a simple wages tax, and it is soon riddled with anomalies because people say, "I am a family man with children. Do I have to pay the same as everybody else?" and we begin to make

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allowances for marriage and for children, and then we have to deal with illegitimate children, adopted children, stepchildren, and all sorts of children before we can make the rules.
Coming back to the occupational scheme, I regard this as an opportunity for those in occupational schemes, or the big ones, to negotiate a new, more enlightened, and modernised structure of superannuation than they have already. There is no need for them to worry unduly about that part of the occupational scheme which will be taken over from the State scheme. What they should be getting in their negotiations are better benefits for widows, better breakdown pensions, and better lump sums. There are all sorts of opportunities to renegotiate the superannuation schemes, and this, I believe, is what the big organisations will do.
Most of the occupational pension schemes are inadequate. A lot of them are overdue for reform. Few of them, for example, have any provision for widow's benefit at all. Many of them have no provision for orphans, or for a widower. There is nothing except the straight calculation of pension by reference to length of service.
I notice that some big organisations have wisely been going about their business without making a fuss. We have heard no complaints from the staff side of the Civil Service Whitley Council, and it represents as big a number in an occupational scheme as anybody else. The reason is that it is quietly talking to the Civil Service Department on how it will reshape superannuation to adapt it to the new State scheme. This is what other organisations should be doing. I do not want to be harsh on people who feel anxious about this, but to flood Members with postcards, as one organisation did, is not really the most intelligent way of conveying their difficulties and their grievances. We would like to hear from them what they are.
I do not regard the prospects of the occupational schemes with dismay. I believe that they have an opportunity, that the organisations representing them will be strong enough to get a quid pro quo in negotiating a new scheme. There are all sorts of things to take into account. I am sure that the tax position has been mentioned in the debate. Quite
1810
clearly, there are adjustments to be made with regard to the tax relief on occupational schemes and not on the State scheme.
I am glad that the debate has taken place, disappointing though it has been for the purpose for which it was held. Nevertheless, it may anticipate to some extent the problems with which we shall have to deal when the Bill comes before the House.
8.32 p.m.
Miss J. M. Quennell: I enjoyed enormously listening to the speech of the right hon. Member for Sowerby (Mr. Houghton), but I was getting a little alarmed at all the children who had to be taken into account in our fiscal laws. I believe that the right hon. Gentleman left out godchildren, but no doubt a rule will be brought in shortly to take them into account.
I should like to confine myself to two aspects of the scheme, but first I wonder whether it would be possible for the Minister without Portfolio to clarify one point. In opening the debate, which he did at a high speed for nearly an hour— and it is very difficult to take accurate notes when he is in full voice—the Minister of State said that only one in ten of those in occupational pension schemes have protection of their pension rights when they leave their jobs. I think that this comes from page 25 of the new pension scheme pamphlet which appeared yesterday. I find it difficult to relate that to tables 14 and 15 on pages 31 and 32 of the Third Survey of the Government Actuary which appear to show that in various aspects of the private sector at least 80 per cent. of people are covered.
I think the Minister of State said that we now had two schemes and it would be much simpler when there was only one, the Government's new scheme. I think that that will tend to lead to a little public confusion, because for a period while the new scheme is being phased in, and the old schemes are being phased out, three schemes will be running, not two as at present, and not one as the Minister hoped. This is one of the features which has led to a certain amount of confusion, and it has been mentioned by hon. Members on both sides of the House during the debate.

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I should like to try to clarify the transitional period of the scheme. I have had many letters from puzzled constituents about how they will be affected, and how the new scheme will work out, and it is not helpful for the Minister of State to pretend that this confusion does not exist, or that it has been artificially stimulated. People are genuinely bewildered, and with good reason.
They have taken in the fact that they are to have 60 per cent. retirement pension related to their earnings if their earnings are half the national average when the new scheme is fully in force; that they will get 42 per cent. of their earnings if those earnings are on the national average; that they will get 37 per cent. if their earnings are one and a half times the national average. What they find bewildering is trying to assess what their position will be unless they can also assess what the relationship between the standard of living and the cost of living, between wages and living conditions, will be when the new scheme comes in. This is where the scheme begins to disappear into the realm of the hypothetical for the man in the street, and it is most unfortunate.
They have taken in the fact that the existing scheme is flat rate and that the new scheme will be earnings related. They have taken in the fact that the two will run concurrently for a time and that there must be a period of overlap. What has not yet been taken in is that people retiring before the new scheme comes in in 1972 will not derive any special benefits from the new scheme. The only benefits they will get will be from the two-year review, or "inflation proofing" as the phrase is in the guide which appeared yesterday. I am not quite sure what that phrase means, because it is new. But I am a little critical of it, because I do not think it is one that I would have used if trying to make something simple for the generality of the public to understand.
People retiring between 1972 and 1992 will get some penny benefits on rates intermediate between the present level and the new level. It is when they try to work out what those benefits will be that they get into difficulty. They can take away the appropriate number of twentieths, but when they try to add a
1812
figure they are sunk. The Minister of State has said that we would be wrong to do this and that we can only give them a probable idea of what they will get and our assurance that it will be better than what they are getting now.
It is all very well for Ministers to talk like that. The fact remains that people know that, if they are in their mid-50s, approaching the age of retirement, they will have to meet costs in cash terms. They will want to plan for such things as holidays on retirement or a new car. These things have to be accounted for in cash terms, and when they come to hypothetical sums perhaps they find themselves in understandable difficulties.
The position of women has been mentioned and it would only be honest of me, as I seem to have been the only woman M.P. in the Chamber most of the day, to say that I think they will be adversely affected. Let us look at this "new deal for women", as the two pamphlets refer to it. That sort of "new deal" has another name from time to time.
There are 7 million women in employment at present and some 4 million of them are married. A married woman can at present exercise her right to opt out of the scheme and pay 7d. or 8d. weekly contribution to cover industrial injuries, relying on her husband's contributions to cover her for other requirements. Hitherto, the State has done very well out of this arrangement because their employers have been unable to contract out. They have had to pay their full whack to the State and these women's pensions and all their other benefits have been covered by their husbands' contributions. Thus, the employees' contributions have been buck-shee to the State and have gone into the National Insurance Fund to be redistributed.
When we consider women who are salaried we get a different picture. Their national insurance expenditure has been escalating and, in recent times, escalating very rapidly indeed. If a woman in this category had an employer in an occupational pension scheme she could pay the 7d. or 8d. a week industrial injuries contribution plus 2s. 1d. for the State graduated contribution, a total of 2s. 8d. a week, because her firm's pension scheme was contracted out of the State scheme.

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If she had not been contracted out she would still have to pay about 7d. for industrial injuries, plus 9s. 9d. for the State graduated pension, making a total of 10s. 4d.
Autumn has a habit of giving way to winter. What went in October does not go in November. The temperature has been dropping. At the begining of November her State graduated contribution rose from 2s. Id., if she was contracted out, to 8s. 8d.; and from 9s. 9d., if she was not contracted out, to 16s. 4d. So much for the present scheme.
The new scheme will come as a rude shock to most women employees, let the Government make no mistake about that. Even if her firm decides to contract out on the currently understood basis, her weekly bill for National Insurance contributions will shoot up nearly £2, and it could be very much more if hypothetical national average earnings rise between now and 1972. And if one reflects on recent wage settlements, one can be certain that they will.
It is fascinating to take the two simple guides which have been given to us; the new scheme and its predecessor, which, for some extraordinary reason, was published in apple green print. One document is based on the figures for April, 1968, and the other on the figures for April, 1969, and a comparison of the two sets of figures is fascinating. Examples are given of wages on page 13 of the apple green document and on page 17 of the other. They show an astonishing difference—a variation of anything from £1 to £2 a week in the pension to be received simply because the national average wage has, in the intervening period, risen considerably.
Thus, for the salaried woman the prospect of a rise in national insurance contributions in about two-and-a-half years amounts to a great percentage. I make it nearly 1,300 per cent. I do not know what the P.I.B. would think of that. That is probably what the Secretary of State calls "A new deal for women", but it is not a very fair one and, to do the right hon. Gentleman justice, he has not called it fair.
Married women employees, whether full or part-time, will get a new deal too because while at present they can opt to
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pay 8d. and rely on their husband's contributions, under the new scheme they and all women, be they single, married or widowed, must, if they go to work and come under the P.A.Y.E. scheme, pay the full contributions.
If the Government had achieved any real progress along the road to equal pay I do not think that there would be any criticism of this new penalty, but—let us face facts—they have not. We have had some pious words, but nothing has been achieved in reality. We are faced with a scheme which increases the contributions of women workers of every category to equality with those of their menfolk while the women are on wages which are substantially less and they will still pay the same percentage in each case. So will their employers.
The differential between men's and women's contributions which has always existed has existed in recognition of the fact that a man's family benefits would cost the fund more. The wife's allowance and the children's allowance, if he is sick or unemployed, and a wife's pension or widow's pension or widowed mother's pension allowance, all have to be met out of his contributions.
There has always been recognition that a woman's dependants did not cover such a wide spectrum of likely benefits and therefore this recognition in the contribution. This disappears for the first time under the new deal. The social fact that women still have a much narrower spectrum of dependants than the average man still exists, and the cost of the old differential could still be applied in the new scheme.
Mr. Houghton: I am very interested in this, but, as the hon. Lady knows, under the existing scheme no woman can insure her own widowhood, for example. Is there any reason why women should not regard widowhood as a hazard of their lives and insure in their own right for it, and not be dependent on whether a husband pays contributions or disappears and leaves her probably with no widow's benefit when he dies? Does the hon. Lady disagree with the principle that women should have rights in this scheme themselves for their own contributions?
Miss Quennell: This is one thing we could accept if we had genuine equality of employment and in prospects,

1815
opportunities and equal pay, but at present we have not got it. For a time, therefore, there is an argument for what the right hon. Gentleman says. We have to wait perhaps until 1992, or thereabouts, before it comes into existence. At present it seems that equality of contributions which under the new deal is introduced for women simply represents a new method of finding money for the fund. For goodness' sake let us say so. I do not think that women should be exempted from carrying the burdens of citizenship, but let us be honest about it.
8.45 p.m.
Mr. John Horner: This has been an extraordinary debate. No doubt when my right hon. Friend winds up he will say that it has been a far-ranging debate. As my right hon. Friend the Member for Sowerby (Mr. Houghton) said, the debate has dealt with the structure of the basic scheme which is not before us in detail. We are not having a Second Reading debate on the Bill. One hon. Member opposite went so far as to attack this scheme as an attack on the whole basis of capitalist economy. I want to come back to the essence of the subject under debate, the terms and conditions of contracting out. Only in the last speech or two have there been specific references to problems facing those in occupational pensions schemes.
I am delighted that my hon. Friend made such a clear statement about the existing rights of public service pensioners. Those of us who have been associated with public service pensions for many years must have been disturbed at the presentation given to public servants in some quarters recently about the nature of the scheme and the impositions it was said would be made upon public servants when the problem of contracting out was considered.
Like other hon. Members, no doubt, I have had many letters from public servants asking, "Are they going to take my pension away?" It is greatly to be regretted that the misunderstanding, and in some cases almost gross misrepresentation, which occurred in the summer created this widespread fear in the minds of public servants that they would be hard hit when the scheme became operative.
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An extraordinary situation developed a week or so ago when the Secretary of State attended a mass meeting at Central Hall. However difficult it may be to present the details of the scheme in this Chamber, the Secretary of State is to be congratulated for the lion-hearted valour with which he sought to present the scheme to about 4,500 public servants in Central Hall.
I am delighted that my hon. Friend the Minister of State listed the guarantees being given to one section of civil servants. I join the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) in asking him to expand those assurances. We are entitled to hear from the Front Bench that what was said in respect of a single group of civil servants shall be applied to public servants as a whole.
For many years there have been adequate arrangements for retirement and other pensions for the police and the fire service. The question of dovetailing into a State scheme the very special requirements of a police and fire service pension scheme has presented problems in the past, but they have been overcome. I am confident that the problems presented by the new scheme will be solved.
It may not be known that it was not until 1948 that the police and the fire service were in the State scheme at all. We were "excepted" employees. We did not pay unemployment insurance, because it was not expected that policemen or firemen would become unemployed. We did not pay National Health Insurance, because under the benevolent employment of the Home Office we were entitled to full pay while sick; thus, we were "excepted".
I do not think that any possible outcry which may occur in the police and the fire service in the next few months will reach the proportions of that which took place in 1948 when, rightly, the Government said, "Every employee now comes into the State insurance scheme. Firemen and policemen will come into the State insurance scheme". But firemen and policemen then said, "We have a pension scheme. We are assured of certain benefits. We want special arrangements". The problem was solved.
Firemen, policemen and public servants in general will learn with pleasure from

1817
this debate that existing benefits are secured and that any calculation of future abatement will be in respect of future service only. There is an early retirement age for policemen and firemen because they must be fit and alert. Consequently, there is agreement that there shall be an early retirement age. That very special entitlement earned in this particular occupational pension scheme will be secured, and any abatement which will take place will occur only when the retired fireman or policeman reaches normal retirement age.
Guarantees of that kind will dispel almost completely the misgivings about the effect of the scheme on public service occupational schemes. I hope that we shall hear from my right hon. Friend the Minister without Portfolio that the Bill and the regulations to be made under it, so far as they affect public servants, will enshrine and extend the assurances which were given by my hon. Friend the Minister of State.
I am glad of the opportunity now presented to try to amplify the point which I lamely put in an interjection in my hon. Friend's opening speech. This is a highly complicated matter. One hon. Member talked about a computer. When I first began to study the White Paper, I was reminded that in my constituency we have a large industrial establishment which makes plastic powders for industrial plastics, in about 6,000 different shades and colours. The problem is to mix the shades and keep them the same. This has been done visually by experts. Then recently the firm introduced a computer to do the job. I was puzzled to know how a computer could mix colours, so I asked to be shown the computer and instructed in its operation. I was taken into an enormous room where the computer stood, and the experts took me through each stage. After each stage, they said, "You understand, do you not?", and, when I said that I did, they took me to the next. When we reached the end of the computer process, however, I had to confess that I had lost the thread, and I said, "Would you please take me back and start again?" I remembered that when I read the first White Paper, and I felt that I was going through that computer exercise again.
But one thing is plain. It seems to me that, if a fireman or a policeman says to me, "If I do not contract out,
1818
if the Home Office, the police authority or the fire authority agrees to keep us in, and I pay my full State contribution, I shall be entitled to my full State pension. I shall be paying my occupational pension contribution, and I shall be entitled to my occupational pension", my response must be, subject to other decisions, that that is right and he will be entitled to both. But I should think it highly unlikely that the local authorities as employers will do anything except contract out. So the policeman and fireman, like other public servants, will be expected to pay just under three-quarters of the State contribution—it is a 1·3 per cent. reduction, which means nearly three-quarters.
No one can say what that will produce in terms of a State pension, and the White Paper is quite blunt and honest about it. In paragraph 11—this is what I should have quoted in my intervention earlier—we read:
"With a pension abatement much above 1 per cent. of earnings, there could be no guarantee that, even allowing for rising earnings, abatement would not eventually lead in some cases to the total elimination of the State pension. There would also be a serious risk that contracted out employees, particularly those in the younger age groups at the start of the new scheme, would qualify for lower State pensions than they would have received under the present scheme."
That was one of the reasons why the Government resisted the argument for increasing the abatement by more than 1 per cent. The abatement of 1 per cent. remains.
It would go a long way to help to resolve the doubts and misgivings of those in occupational public service pension schemes if there could be a further examination by the Government. I shall not give a figure tonight, but there should be a safety net, a floor below which the provision of the State pension should not be permitted to fall. In other words, there should be a datum line below which the occupational pensioner knows that the proportion of his combined retirement benefit coming from the State will not fall. I do not see why the Government cannot produce such a figure in the further examination that can be undertaken.
I am with my right hon. Friend the Member for Sowerby. I believe that when the associations in the Civil Service, the

1819
public service, the nationalised industries and the trade unions get down with their employers to work out the effects of the scheme on the occupational schemes the problems will be solved. The history of the past 20 years, certainly in the service with which I have been proud to have been associated, gives me no fear that this will not be so.
9.2 p.m.
Mr. David Mitchell: When we talk about a scheme involving many millions of pounds and the security in old age of millions of people, it is very important that we have our basic arithmetic right, and that we are certain that the scheme is soundly based.
I want, in the few minutes available to me, to ask three practical and realistic questions and to explore whether the answers are likely to be satisfactory. First, what effect will the proposals have on the country's basic prosperity? Second, what effect will they have on the cost of living? Third, can we be sure that pensions will go up in line with prices, in the way which has been advertised to us? Will the scheme affect our ability to pay our way in the world? What effect will it have on our prosperity?
I am very glad that the Minister without Portfolio is to wind up the debate, because in his recent past incarnation he had a lot to do with the country's economic affairs. I think that he will agree with me that the crying need of the country is for more modernisation, more mechanisation, more investment in British industry. One of the main reasons why the Americans, West Germans and Japanese are in many ways much more successful than we are with their productivity is that they have so much more capital behind each of their workers.
Therefore, anything which will seriously affect the amount of money available for modernisation and investment in industry is a matter of considerable concern to the House. Where does industry now obtain its investment funds? There are many different sources, but one of the largest is the private occupational superannuation funds. About £810 million net a year goes in this way towards investment in British industry. That is about 40 per cent. of all the new investment money which comes forward.
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So, in talking about this, we are dealing with a vital key in the future prosperity of this country.
What would be the effect on the cash flow for investment in this way if the "Crossman" proposals in the White Paper go through? The scheme is a pay-as-you-go scheme, rather like a turntable or the old dumb waiter that used to be in hotels. One puts money in one side, turns it round and it pays out the other side. There is no saving element in it.
A private scheme involves putting money by—saving it—for investment in industry and subsequently it is available for paying out. These proposals do the reverse. They pay out tomorrow what they take in today. I shall not go into the technicalities of abatement, but there will be enormous pressure on people to join the new scheme rather than private superannuation schemes.
The Minister of State said that there was bound to be a degree of cutting back in the private side. The C.B.I. has been doing sums on how great this will be and comes up with the answer of a 50 per cent. slump in the number of private schemes. This is a serious matter, because it means that about 20 per cent. of the money needed for investment in industry, and which is now coming forward for that purpose, is at risk and in doubt for the future. That is something the House cannot dismiss lightly or ignore.
My second question concerns the effect on the cost of living. If one takes something like half the amount of money now going into genuine savings through the superannuation schemes—about £405 million—and puts it into a pay-in payout scheme, one is bound to have an enormous surge of purchasing power in the economy. That means rapidly rising prices under the law of supply and demand, or swingeing increases in taxation such as we have become all too used to in recent years. There is growing fear, to say the least, that it will have a highly inflationary effect.
Thirdly, will the pensions really go up in line with prices? On what basis of assurance can the House accept this? The pension level will be decided by politicians. My constituents, and the

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majority of people in the country, would rather that pensions were in an actuarial basis through insurance companies and kept away from politicians. Politicians should have nothing to do with it.
Mr. Ennals indicated dissent.
Mr. Mitchell: The hon. Gentleman may shake his head, but I know my electorate and I am sure that they and many others would prefer to have their pensions kept away from politicians.
Mr. Ennals: I shook my head because no funded scheme can give a guarantee that pensions, after award, can be protected against an unknown degree of inflation in the future. It cannot be done.
Mr. Mitchell: I did not suggest that they could, but I did suggest that the decision should be taken on actuarial and not on political grounds. That is the big difference.
People do not like politicians meddling with their security in old age. The Minister is proposing to take the situation that, in 20 years' time, our sons and daughters, who will then be working, will be prepared to pay out the higher pensions to keep pace with rising prices at that time. How can we guarantee now that they will be prepared to make these sort of sacrifices?
On page 16 of the shortened version of the scheme—for which we are grateful—it is stated that
"the Government will be bound by law to review every two years the main rates of pensions and other benefits."
The Government were also bound by law to implement the findings of the Boundary Commissions, but did not let that stand in their way. So much for the integrity of the Government when the Home Secretary brought in his squalid manoeuvre. We are thus to have a situation in which pensions will be political pensions and will not have the security for old people to which they are entitled.
Time does not permit me to talk about the way in which I should like to see it done. All I would say is that the scheme now proposed is dangerous, in that it would wreck the basis of the modernisation of industry; it is wildly inflationary and I believe that it is dishonest, because no Government now can guarantee what will happen in 20 years' time.
9.10 p.m.
Mr. Paul Dean: With one exception, and that was the Minister of State, every hon. Member who has spoken has agreed that the scheme is complicated. The Minister of State did not agree, probably because he is the one person in the House who understands it. [HON. MEMBERS: "NO."] I believe in giving credit before coming to my criticism.
But I notice that the Secretary of State, who, we regret, is not able to be with us tonight, put a rather different view in that very agreeable way which he has on the television screen. On the programme "News at Ten" on 5th November, he was asked what he thought about the difficulties and complications of the scheme and he is reported to have said:
"It is because if you have actuarial schemes they have their own lingo. Pensioneering is like chess, you cannot play unless you know the gambits."
That is one of our difficulties, and I mean this extremely seriously, because I do not believe that people will trust a pension scheme, or any other scheme, put forward by any Government unless there is a reasonable chance that they will understand at least the elementary principles of the scheme. The people do not understand this scheme and I believe that it will be extraordinarily difficult, with all the eloquence that the Treasury Bench may command, to get them to understand it.
When there is misunderstanding, or lack of understanding, there is suspicion about what the scheme is about, and when to that is added—and it is significant that it has been mentioned in speeches from both sides of the House—the coming of the computer to make all these highly complicated computations, there will be incomprehension and pensions by computer. We are in a situation in which it will be difficult for the scheme to have the credibility that National Insurance schemes run by the State should have.
We hoped that in this debate we would have a much clearer indication of the Government's intentions than we have had. In this respect this has been a disappointing debate. There are many open questions, particularly about the future of occupational pension schemes and the public service schemes, which we hoped the Minister of State would answer. I am sorry to say that he has taken us very

1823
little further from the three White Papers and the Explanatory Memorandum. There are still many urgent questions which are unanswered, and in that respect the debate has not taken us much further.
Let me summarise the underlying difference of view between the two sides of the House as it has come out in the debate. The Government feel—and I am not complaining, for they are perfectly entitled to feel this—that it is the job of the State to decide what pension arrangements every family shall have and to impose those arrangements from the centre through the State scheme. If by some chance people have made their own arrangements through occupational pension schemes, or in some other way, and those arrangements can be fitted in with the State scheme, all well and good; but if they cannot, they will have to be moderated, changed, cut back, or whatever it may be, to fit in with the State scheme.
Mr. Ennals indicated dissent.
Mr. Dean: But the Minister himself said that earlier, and I made a careful note of it. He said that occupational schemes and public service schemes on certain conditions can take over responsibility for part of the State scheme. That is my exact point. We believe that if pensions are approached in that way all sorts of things follow which we regard as bad.
The first bad thing is that we do not think that it is right or appropriate for the State to decide what pensions people should have over and above a fairly basic level upon which they can build. The minute one gets up to 1½ times average earnings in the case of employees and the roof for employers we get a scheme which is far too rigid and which does not take sufficient account of the needs and desires of the individual, and the State is dictating to people to a far greater extent than is required.
The second major criticism, which follows directly from that, is that a colossal pension bill for the next generation is being built up. In this scheme we are writing for ourselves—the present working generation—a much fatter cheque than we are prepared to meet for the existing generation of pensioners, including the over 80s, the disabled, the widows, and the rest.
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The third main criticism, which follows directly on, is the harm which in our view will be done to occupational schemes and public service schemes as a consequence of the size of this. We have already had a clear admission from the Secretary of State and the Minister of State that there will be some cutback in the rate of increase of savings through occupational schemes which would otherwise result.
In our present economic circumstances, I can think of nothing more damaging than a cutback in the increase of savings. One of the things which dogs Britain more than anything else is that we are not putting enough aside as the seed corn for future prosperity. One of the best ways to do that is through occupational pension schemes and funded public service pension schemes. This is a very damaging admission by the Ministers.
What it adds up to is that this is not only bad economic policy, but it is bad social policy, too. My right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), who knows a great deal about these subjects, said that this scheme and occupational schemes were not meant to co-exist. The State scheme is of such a nature that almost inevitably, because there is no firm base for contracting out, it is putting us firmly on the road towards a State monopoly in pensions.
Our approach is very different. We approach the problem by asking ourselves first: what are the existing commitments; how much do we need to pay existing pensions, recognising that this is on a rising graph because of the growing number of pensioners and the increase in pensions which every Government since the war have rightly given to ensure that pensioners have some share in the nation's rising prosperity? How much do we need to meet this immediate commitment? How can we best raise this money without damaging the future growth of occupational pension schemes and of public service pension schemes.
I am prepared to admit that the ultimate solution may not be as different as the philosophical difference may suggest, but it will still be of tremendous importance in the future development of the State scheme and of occupational schemes.

1825
As my noble Friend the Member for Hertford (Lord Balniel) made clear, we on these benches accept completely that in these days pensions should be related to earnings. After all, this concept was introduced into the State arrangements from these benches. We accept that without any argument, so I hope that we need not waste further time on it.
The right hon. Member for Sowerby (Mr. Houghton) managed, as he often does, to administer a rebuke to both this Front Bench and his own Front Bench. It is interesting to note that the rebukes to his own Front Bench are becoming more severe as the weeks and months go by. But it was interesting—and this is one of the most valuable arguments one would expect to be put more from this side of the House—that he said that inevitably in any State scheme there must be a redistribution between generations. On a pay-as-you-go basis, this is one of the main things which we do. But he went on to say that if we try to make any redistribution too severe between the present generation of working population and the present generation of retired people, we risk a kick-back.
I hope that we have for all time got rid of this dreary argument about the Tory swindle. The right hon. Gentleman speaks with great authority on these matters. How nice it was to hear him saying what utter rot it was to talk about a Tory swindle. I hope that this is the last that we have heard of that boring argument.
My hon. Friend the Member for Petersfield (Miss Quennell) referred to the position of women. This is particularly true of widows in respect of whom there are substantial advances in what is being proposed, but when we come to the contribution which married women must make we find from the figures which my hon. Friend quoted that this is nothing like as good a deal for them as opposed to widows as it may sometimes appear.
I turn to occupational pension schemes and some of the arguments used on both sides of the House in the debate. As is well known, occupational pension schemes now provide for well over 12 million members—about two-thirds of all male employees, or probably not far short of 90 per cent. of the population
1826
if we take into account married women who are covered by their husbands' insurance, those, possibly under 21, who are not old enough to join, and those who are not yet able to join schemes because they have not fulfilled the qualifying condition, which may be two or three years' service. If we take all that into account, we find that there has been a substantial increase in the cover available through occupational schemes in recent years. We are quite rapidly approaching the stage at which the overwhelming majority will be able to be covered in one way or another.
These schemes pay out well over £900 million a year in pensions and benefits, and, as my noble Friend the Member for Hertford said, they generate new savings of over £800 million a year—two-fifths of all personal savings. The Minister admits that there will be a slow-down in the growth of this rate of savings under the proposals we are considering.
I know that it is difficult to argue whether the terms of abatement which the Government propose are exactly right or whether they should be a little higher or lower. But we must consider this in the wider context which I mentioned earlier. In that context, it is very significant that there is virtually a unanimous view among the experts in this field that the terms for abatement are not adequate. The Minister of State quoted the Chairman of the Life Offices Association. What he said quite clearly was, "It is not on, Mr. Crossman. You will not get your abatement in these terms. You will get a cut-back in occupational pension schemes."
The National Association of Pension Funds, the C.B.I. and even the T.U.C. have doubts about this matter. The T.U.C. at their conference in August expressed considerable doubts as to the terms. Admittedly the details were not available, but those doubts were voiced and have been repeated again this afternoon.
The Minister of State himself admitted today that some of these schemes would be wound up as a consequence of the Government's proposals and that some would have to reduce their benefits. This tends to bear out how well-founded were the fears of the experts. Such fears are manifested not only from those who run

1827
pension schemes, but also from the members of occupational pension schemes and public service pension schemes. I feel justified in saying that there is an overwhelming majority of people connected with the schemes who have grave doubts as to whether the terms for abatement are adequate.
What are the criticisms brought against the schemes as they stand? One criticism, which was mentioned today by the Minister of State, is that something like a third of the population cannot be covered by occupational schemes. I do not know how the Minister of State calculates that. I do not accept that the figure is anything like as high. It is possible in industries with large turnover of labour, such as the building industry, to have federated or industry-wide schemes. There are many ways in which schemes can still be developed to cover those sections of the community not covered at present. Because there is this gap, which will remain for some time, it is accepted on this side of the House that through the State arrangements there must be the possibility for people to get a graduated pension for themselves.
Another criticism made about the schemes is that the benefits offered are not good enough. But what is often compared is the benefits of a scheme with a maturity in 20 years' time with occupational schemes at the present moment. One hears quoted figures of £2 or £3 in regard to many of these schemes, but when they mature in 20 years' time they will be offering as good as, or in some cases probably better than, the proposed scheme will be able to offer in 1992. We should compare like with like. The Secretary of State has been a big offender in the comparisons he sometimes makes.
We also have had criticism about transferability. We surely want to work as speedily as we can towards the concept of portable pensions, in whatever is the most acceptable and appropriate form. I do not wish to get into arguments as to whether it should be in the form of preservation of transferability, because the matter becomes highly technical, but increasingly we are reaching a position in which pensions are regarded as deferred pay to which a person is as entitled as he is to his monthly pay cheque or weekly earnings.
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This is where Ministers can set an example. There is very little preservation within the public service. In fact there is none whatever outside the public service to any employee under the age of 50. Let us have a little less criticism of occupational schemes and a little more example from the Government of the day and from Ministers.
Another point on this is the Inland Revenue rules. The right hon. Member for Sowerby referred, as he often does, to the position of widows. I do not think that anyone is satisfied with the provision for widows in many occupational schemes at present. One of the reasons why widows are inadequately provided for is that, under Inland Revenue rules, they cannot get more than 50 per cent. of their husbands' occupational pensions at the moment.
Then there was the question whether occupational pensions can provide for the increasing value of pensions which is desirable as earnings and prices rise. Here again advance funding cannot be provided for future pension increases at more than 2½ per cent. a year under Inland Revenue rules. Equally, preservation or transferability is made far more complicated than it would be otherwise by Inland Revenue rules.
There is a strong case for bringing the rules up to date so that they serve the needs of the occupational pension and the public service pension as they have developed. I hope that the Minister without Portfolio will be able to tell us when the result of the examination which is now going on into Inland Revenue rules is likely to be announced to the House.
In view of recent Press reports, I hope, too, that the Minister can give us a clear assurance that the Government have no intention of interfering with the tax relief at present available on employees' contributions to occupational and public service pension schemes.
I turn briefly to public service pension schemes themselves. They are an aspect which has caused more disquiet in the country and amongst members of schemes than anything else. It has become very clear to me what an immense value people who are in public service schemes attach to them. Whether they be members of the Armed Forces, doctors, nurses, firemen, policemen, civil servants or teachers,

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they have a very high regard for the schemes. Many have said to me that the reason why they put up with low pay or dangerous work, or whatever disadvantages there may be in their branch of public service, is that they have a very good pension scheme which provides security and enables them to plan ahead for their future retirement.
Unless these people can be reassured, the Government will be breaking a moral contract. The Minister of State said that these are statutory schemes for which Ministers have a real responsibility. The lack of such a reassurance will also have a very damaging effect on scarce man and woman power. Who wants to see an increase in the brain-drain of doctors and nurses, or teachers going out of teaching? This could be a real problem unless reassurance is given.
In the pamphlet produced by N.A.L.G.O. in August, I was struck by these words:
"Never in recent years has a subject caused so much alarm and resentment among Association members."
One or two to whom I have spoken have added that the worries which they have about the Maud Report on local government are as nothing compared with those which they have about the future of their pension arrangements. I hope that the Minister without Portfolio will be able to give some specific assurances.
I do not want to go into what their fears are because they have all been rehearsed this afternoon. Among them are the age at which they can retire on pension; the lump sum arrangements; what cut-back, if any, there will be before the State retirement age is reached; the fact that pensions are based on average earnings rather than on final salaries in the State scheme; and whether there will be a very big burden on those earning between £20 and £30. Those are some of the fears.
However, I hope very much that the Minister will be able to assure us on two points.
The Minister of State mentioned, concerning the National Health Service scheme, that the lump sums and the retirement provisions which are available before the normal age for retirement will continue in this scheme.
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Two points arise from that. I am not clear whether the hon. Gentleman was talking purely of previous service or of future service, too. Perhaps we can have that point clarified. If he was talking of previous service only, it is of little value. We want to know what the arrangements will be for service in future and, equally, whether the points that he has made concerning the National Health Service superannuation scheme will apply to all the other public service schemes, contributory or non-contributory. Those are the assurances that we want from the Minister without Portfolio, and I hope that he will be able to give them.
Equally, I hope that he will deal with the point made by my noble Friend the Member for Hertford at the beginning of the debate, namely, whether we shall know the answers to these questions before the Bill, which is expected shortly, leaves this House. Unless we know the answers to these questions before the Bill leaves this House, it will be extremely difficult for many of us, particularly those hon Members on both sides who are disturbed about the future of public service schemes, to know what our attitude to the Bill should be.
Many of the fears that have been expressed on both sides of the House today have not, unfortunately, been clarified. I hope that the Minister will be able, at any rate, to give some reassurance to the public service pension schemes, if he cannot do more.
9.37 p.m.
The Minister without Portfolio and Deputy Leader of the House of Commons (Mr. Peter Shore): We are asking the House tonight to
"take note of the White Paper on terms for partial contracting-out of the National Superannuation Scheme."
No one will doubt the importance of this subject. I, for one, welcome the fact that time has been found for a debate this week. The time has, generally speaking, been used very well to deploy many of the problems and, indeed, some of the anxieties which, whether legitimately or some illegitimately, have been aroused and undoubtedly exist in some people's minds about the impact of our new national superannuation scheme on their private pension rights.

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I also accept and agree with those who say not just that this is an important subject, but that it is a complex one. It is indeed. I would hope that during the course of the debate some, at any rate, of the complexities will have been ironed out; but we must face the fact that the process of consultation and negotiation of occupational schemes has yet to be embarked upon—the White Paper, after all, is a recent one—and it is only when this is completed that all the questions in people's minds can be answered.
Because it is a complex subject, I think that it would be helpful to the House if I began by presenting a broad relief map of the territory we are covering rather than attempt to supply a one mile per inch ordnance survey of every bit of the ground. To attempt the latter would not only at this stage be impossible, but would absorb far more time than I can hope to have this evening. Further, to do so now would inevitably mean that the broad perspectives were lost.
Lord Balniel: I apologise for interrupting the right hon. Gentleman, but is the answer to the question which we posed as to whether—
Mr. Shore: Perhaps the noble Lord will be patient. There are many questions to which I am anxious to come and to do my best to answer before my time lapses.
I want, first, to put the White Paper against the background of the main scheme and its aims. As I see them, they are twofold. First, it is our intention through the national superannuation scheme substantially and progressively to improve the standard of living of retired people as a whole. Not only will standards improve absolutely, but they will improve relative to those of the working population. Second, the aim is to make far better pension provision for women in retirement.
In spite of what was said by the hon. Lady the Member for Petersfield (Miss Quennell), I think that we could justify to the hilt the claims that have been made Women will be able to earn more generous pensions in their own right, but, particularly in the condition of widowhood, they will benefit both before and after they reach retirement age.
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For those who have today only their national insurance pension and the small pension of which the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) is the author, the advantages of the new national superannuation scheme are self-evident. I do not intend to go over the ground trying to illustrate how great we believe that benefit will be, but it is very substantial. It is a substantial increase over the present provision of the flat-rate national insurance scheme combined with the small graduated scheme of which I have just spoken. We need not argue about the benefits to this large category of people, perhaps up to 12 million, who are today outside occupational pension schemes.
What we are concerned with tonight, and the subjects on which most of the contributions have been made, are two things. First, whether the undoubted advantages of which I have spoken are, as it is sometimes alleged, to be at the expense of the national economy, whether there will be repercussions and implications of the kind mentioned by the hon. Member for Basingstoke (Mr. David Mitchell) and to which the hon. Member for Somerset, North (Mr. Dean) drew attention.
Second, whether introducing the national superannuation scheme will have disadvantages for people in occupational schemes. Those are the two matters on which I propose to spend as much time as I can.
On the first question, the effects of the scheme on the national economy, the increase in the cost of living which will be attributable to the introduction of this scheme, as the basic White Paper makes clear, will be about ½ per cent. as far as we can judge. That, as I think the hon. Member for Somerset, North will agree, is hardly a crippling or disabling increase. The increase in labour costs is thought to be about ½ per cent. We are all very conscious in terms of our output, and in terms of our exports and imports, that any increase in costs has to some extent to be looked at and scrutinised very closely. But a ½ per cent. increase in labour costs has such small implications for the balance of payments that I think I can leave those two points and turn to the other question affecting the national economy.

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and that is the question of the effect on savings.
I think that my hon. Friend the Minister of State was misunderstood, or not properly heard, by the hon. Member for Somerset, North. My hon. Friend did not say that this would have a net adverse effect on savings. He said perfectly properly, openly, and very frankly, that in our judgment the effect of this scheme would be to slow down the rate of growth of savings of private occupational schemes, which, as we know, make an important contribution to the total of personal savings.
Let us keep it in proportion. The offset to that is the increase in total savings which will come from the fact that, in the first few years of the scheme, it will be running at a substantial surplus which will more than outweigh any anticipated loss of savings as a result of a decline, if there is one, in the rate of growth of occupational pension schemes.
Mr. Dean: I hope that I did not misrepresent the Minister of State. I was careful to say, I hope, that what had been said was a decrease in the rate of growth of savings. But what, in effect, is happening is a transfer from savings schemes to a pay-as-you-go scheme. That is the main point. Equally, it depends upon the so-called surplus proving to be the case and not a myth.
Mr. Shore: That argument is irrelevant to the question of the totality of savings. The right hon. Gentleman the Member for Kingston-upon-Thames, with his greater experience and sophistication, knows that the total savings will not be diminished but increased by our proposals. We should get into perspective the fact that, while occupational pension schemes may contribute 40 per cent. of personal savings, they constitute about 10 per cent. of total savings, and that the great bulk of savings, certainly for investment—which I agree is of great importance—come from ploughed back retained profits. I have no reason to believe that the effects of the scheme will in any way be adverse to the national economy.
The second aspect discussed in the debate has been the effect on occupational schemes. Our basic purpose has been to marry the improved State scheme and existing occupational schemes. We believe this partnership essential because we
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are not starting from scratch but from a position in which about 12 million people are members of existing occupational schemes.
Our task has been to find a formula for abatement which would make it possible for occupational pensioners to enjoy benefits of the State scheme—in particular, benefits such as the inflation proofing which few occupational schemes can undertake—and at the same time to retain substantial benefits from their existing occupational schemes. The negotiations which have taken place have led, with the general approval of the Government Actuary, to the production of a formula which we believe is fair and one which most occupational pension schemes will be able to live with.
I accept that there is a difference in attitudes towards occupational schemes and the State scheme on the two sides of the House. The difference is quite important. The hon. Member for Hertford revealed a clear bias in favour of occupational schemes. He thought that there was a kind of moral value in them because he felt that the people in them were responsible for providing for their own future, for taking it upon their own shoulders, as he said.
The hon. Gentleman laughed when I challenged the hon. Member for Liverpool, Garston (Mr. Fortescue) on this point. I wanted to get it clear. The hon. Member for Garston obviously felt the same as the hon. Member for Hertford, but the conclusions they drew were, however, different. The hon. Member for Hertford ended up in favour of earnings related State benefits—at least he assented, when challenged, that they were necessary—whereas the hon. Member for Garston denied it. I have a feeling that the hon. Member for Garston was expressing in rather cruder terms the basic philosophy animating the hon. Member for Hertford.
The right hon. Member for Kingston-upon-Thames is a kind of inverted Marxist, as I have discovered from a number of debates. He said that he does not believe in the co-existence effect, he does not believe that a good State scheme and a good private scheme are compatible. The right hon. Gentleman was really describing his own state of mind when he introduced his own scheme. It

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is precisely because he believes that a good State scheme and a good private scheme are incompatible that he produced what my right hon. Friend the Member for Sowerby (Mr. Houghton) called "this somewhat dishonestly described scheme".
Mr. Houghton indicated dissent.
Mr. Shore: No. Well, it was something else, then. He acquitted the right hon. Gentleman of one charge only to level another. We must study his words.
Mr. Boyd-Carpenter Mr. Boyd-Carpenter rose—
Mr. Houghton Mr. Houghton rose—
Mr. Speaker: Order. The Minister must decide to whom he is giving way.
Mr. Boyd-Carpenter: The right hon. Gentleman has exactly reversed my argument when he says that I was stating that a good State scheme and private schemes do not go together. I was suggesting that it was a sign of a bad State scheme if it would destroy the private one, if they could not co-exist.
Mr. Shore: That is a very different proposition, and I do not accept that the new State scheme will have that effect. I do not think that anyone accepts that the new State scheme would have this effect. The view has been expressed that it might have an effect, in some cases a worrying effect. No one has seriously said that occupational pension schemes as a whole are in any way under threat as a result of what we are doing.
I have been asked for many assurances, principally over what we are to do in the public sector. My hon. Friend gave very ample assurances. He made it clear that we do not intend to dismantle public service schemes. He also made it clear that we do not intend the benefits earned by previous service to be subject to retrospective change. He said too, that we had no intentions of making any change in the retirement age of those who, because of the special nature of their duties, cannot continue in their present employment until the age at which the State pension comes into payment.
My hon. Friend said that those who retire on pension before the State pension age will still receive an immediate
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pension as good as they get now. Necessary adjustments to take account of the State pension will apply only at the State pension age. Finally, he said that there was nothing in the new State scheme which need affect lump sum entitlements.
The right hon. Gentleman also asked for an undertaking that the assurance given to the National Health Service employees applied with equal force to members of other public service pension schemes. I can certainly confirm that this is so for all the schemes under the direct control of the Government and I shall be surprised if other public service employees see any difficulty about giving a similar assurance.
Mr. Dean Mr. Dean rose—
Mr. Shore: I cannot give way.
Mr. Speaker: Order. I think that the right hon. Gentleman is not giving way.
Mr. Shore: I must proceed because I have been asked for such a large number of assurances. I have also been asked for assurances that the changes that may be made to public service occupational schemes will be finally settled before the Bill leaves the House. This amounts to setting a close term to the period within which discussions with the staff must be completed. We have no intention of limiting discussions in this way. Consultations and discussions are crucial in carrying through an agreed and accepted public sector scheme, married in with the new national superannuation scheme. The issues are complex and it would be unreasonable to insist that staff must master them and say all that they want to say within a limited period. So I cannot help in that respect.
I was also asked by my hon. Friend the Member for Stoke-on-Trent, North (Mr. Forrester) whether the safeguards for deferred pensions under the preservation requirement will be the same as those for employees who have contracted out. Detailed rules will be laid down in the Bill and regulations made under it, but there is an important distinction between the two types of case to which my hon. Friend referred. The contracted-out employee is getting some pension from his occupational scheme which he would otherwise have received under the State scheme and he must have the same absolute guarantee of getting this pension as under the State scheme.

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The deferred occupational pension for a man not contracted out—assuming that he accepts the offer of a deferred pension—must be as well secured as the occupational pension he would have received had he stayed in the employment up to pension age. There must be no discrimination against him because he left early. That is the proper basis of comparison in this case. On those principles we shall proceed.
I have also been asked, not least by the hon. Member for Somerset, North, for assurances about the tax position. Those suggestions that we read in the Press today that tax relief for employees' contributions is to be taken away are completely without foundation. I hope that that will get well and truly on the record. Beyond that the new level of State pension is, of course, bound to raise the question whether the continuance of existing maximum on benefits under approved occupational schemes would be reasonable. [HON. MEMBERS: "Oh!"] This is a perfectly reasonable point. My right hon. Friend the Chancellor of the Exchequer has it under consideration and we believe that he will be able to announce his decision before long.
I wish to end by summarising as I see it the very obvious advantages that people in occupational schemes will get from the new arrangement and from their membership, even in an abated form, of the State superannuation scheme. First, taking their occupational scheme in conjunction with their State scheme, members of occupational schemes and their families can look forward to cover which is not only as good as now but will in a great many cases be better than now.
Secondly, the basis on which widowhood cover is provided under the new State scheme, particularly for the older widow who inherits the full rate of her husband's pension, far outstrips what is at present done under the great majority of occupational schemes. Thirdly, to the extent that the new State pension replaces any part of an occupational pension those concerned will have an assurance that they are receiving something which will be completely protected on any change of job. What occupational scheme offers a corresponding guarantee?
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Finally, occupational scheme members who are in lower-paid occupations, like others not in occupational schemes will have the advantage of lower contribution rates with a substantially improved benefit return. That together with the guarantee against the erosion of the benefit through at least a two years post-award price adjustment gives a tremendous basis and guarantee for the future of all people in occupational schemes that they will not be adversely affected, but will substantially benefit by the new scheme we are introducing.
Question put and agreed to.
Resolved,
That this House takes note of the White Paper on Terms for Partial Contracting Out of the National Superannuation Scheme (Command Paper No.4195).

ETHEL GEE
Motion made, and Question proposed, That this House do now adjourn.—[Mr. James Hamilton.]
10.0 p.m.
Mr. Evelyn King: I can fairly say that neither by background, by temperament nor by heredity, am I the sort of person who would ever be likely to have a temperamental sympathy for a spy, and even less so would the party to which I have the honour to belong.
Hon. Members may therefore ask why, for a period of some months, I have persistently sought to deal with the case of Ethel Gee. I have never set eyes on this woman, and I am glad that I have not done so, because it makes my comments all the more impersonal. It is a tradition of this House that an hon. Member owes a duty to all his constituents; and if one of them be an aged woman, a captive, in misery or in peril, receiving harsh treatment, in frail health or has sinned, so much the stronger is that duty, certainly to put her case, for if that case is not put by him it will not be put by anybody else in the world.
The year 1961 was an unusual one. Two unmarried women civil servants were convicted in criminal courts of disloyalty. Both were in their 40s or 50s. Both fell in love. One was a top civil servant drawing £3,800 a year, and she was sentenced to two years' imprisonment for

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revealing to a diplomat of an Eastern Power confidential diplomatic documents over a long period. The other, a junior clerk, was 46 years of age and was also dominated by her lover. She passed defence documents, which she clearly should not have done, in a way which was criminal, and she was sentenced to 15 years' imprisonment.
Throughout history women in love have, through their emotions, been guilty of this sort of crime, and, naturally, punishments have fallen on them. I believe that most courts have taken—I will not stress this point—a slightly more lenient view towards what they have done than towards what their lovers, or men, have done.
I need hardly outline the crimes, because they are so well known. Naval secrets were sold from Portland to a foreign Power, Russia. However, I must outline the penalties, which were inflicted by the Lord Chief Justice. He described Lonsdale as the master-mind and sentenced him to 25 years' imprisonment. He sentenced both the Krogers to 20 years, while Houghton, on whom I will not dwell, and Ethel Gee, on whom I shall dwell, were given 15 years.
The Lord Chief Justice heard the case, saw these people, heard the cross-examination, and that was his assessment of their relative guilt. I accept his verdict, and had that verdict remained I would not have raised this matter in debate. The political interference with those sentences that subsequently took place is that of which I complain, and it is the inequity that that has caused which I must condemn.
First, however, a comment about the treatment of Ethel Gee in prison. Hon. Members will agree that a prisoner is a defenceless person. For that very reason, I would like to think that any promise or undertaking given to a prisoner would be scrupulously fulfilled. On arrival in prison Ethel Gee was told that if she was a co-operative prisoner she would, in due course, receive her reward. She was, in fact, a model prisoner, and I believe that the Home Office will confirm that. After four years, she did see her reward. In 1965, she was sent to Styal open prison. She was given a study bedroom, with a radio. In one of the letters which she was allowed to write to
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a friend outside, she said that she was overwhelmed with delight. Presumably, the prison authorities thought that by her conduct she had earned that degree of relaxation.
It was unfortunate that at that point Blake, who never had any kind of connection with Ethel Gee and was totally unknown to her, happened to escape from a different prison. As a result, all Ethel Gee's privileges were withdrawn. She was removed at immediate notice from Styal and sent to Holloway. She was there put in a cell, her radio was removed, and a naked light was kept burning in her cell day and night for many many weeks.
On that, I comment thus—and I hope that the Under-Secretary of State will mention it in his reply. First, it was a breach of faith to Ethel Gee. Even in the existing circumstances, I argue not so much that the Home Office was inhumane as that it was singularly silly. Either by sending her to Styal, an open prison out of which she could have walked whenever she chose, the Home Office showed gross negligence, or by sending her to Holloway it showed needless severity. It can take its choice as to which of those descriptioins it thinks it deserves. I say only that the Home Office should not play cat and mouse with a prisoner in that way.
It was at that point that Ethel Gee wrote to me, and I wrote to the Home Office. By now, I think, the Home Office was a little shamefaced. In January 1967, Lord Stonham wrote to me to say that her radio would be restored. That was it—her radio "would be restored", without qualification. With Home Office consent, I told Ethel Gee that this would happen, and hence I became involved in bad faith, too, which I resent. Four months later, her radio had not been restored. Again I wrote.
In May 1967—how many months was it after it was first removed?—I was told that she would have her radio "in about five weeks". She did not receive it in five weeks, although, again, I had written and told her, on the authority of the Home Office, that she would. In October of that year—I think that she actually had the radio a little earlier, perhaps in August—I was finally officially told that it had been returned to her.
To us, a radio seems a small matter. To a prisoner it is not. But I am not

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concerned to argue in this debate whether Ethel Gee should be in Styal or in Holloway, should have a radio or should not, should have a naked light in her cell day or night or should not. But I do argue that, if assurances are given to her—I have quoted the three separate points—it is wrong for the Home Office not to fulfil the promises which it gives.
The argument is that she is an escape risk. There can be no other argument. May we spare a moment to examine that? This is a woman of 54. Her nearest relative is a aunt of 82. Was the escape to be organised by her relatives, or is it suggested that it would be organised by some eastern Power? Let us consider that. The Government themselves had already sent the major criminal, Lonsdale, back to Moscow, and they have sent Kroger back to Poland. Is it tenable that the pawn in the initial conspiracy could conceivably have any information which would be of value to a foreign enemy? Where, therefore, does the risk of escape lie?
Having sketched in a little of the background, I come now to the major point. At the end of July 1969, the Foreign Secretary annnounced that the two Krogers would be freed in exchange for Gerald Brooke. Lonsdale had already been freed in exchange for Greville Wynne. So what happened to the Lord Chief Justice's original sentences? Lonsdale free after serving less than one-eighth of the period to which he was sentenced; the Krogers free having served less than half that to which they were sentenced: the wretched Ethel Gee, the female clerk, left to bear punishment for a crime which clearly she had not planned or initiated. That could not be held to be equitable.
I said once, though this is not the subject of the debate, that I think the whole scheme the Government initiated of exchanging prisoners was a foolish one. It simply invites Russia, on a score of trivial offences, to arrest more Englishmen. I am not in favour of exchanges, but once they made up their minds to follow this course, one would think that at least they would have seen the consequences through. I have a vivid memory of asking the Foreign Secretary immediately after he made the initial announcement, "What about Ethel Gee?" From the look on his face and
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what he said it was fairly clear that he had not thought of that. It must be presumed that if a Government embark on such a course they would have thought through the other consequences which must flow from it.
I understand the Home Secretary's difficulties and the pressures on him. He has said himself that he is sympathetic to this case, and I hope to arouse that sympathy further. He conceded that he would refer the case of Ethel Gee to the Parole Board set up under the Criminal Justice Act, 1967. He then told the House that the Board had recommended against her parole. I do not think that the Board was set up with the idea of taking what has become a political decision. Second, the right hon. Gentleman said categorically that he could not release her without the consent of the Parole Board. How comes it then that the Government were able to release Lonsdale and both the Krogers, as I understand it, without reference to the Parole Board, or did he refer their case to the Board? If he did not, why not, and how can it be that the case of the less guilty woman must be referred to the Parole Board whereas the case of the major criminals does not have to be so referred?
I read last night the Government White Paper of 1965, "Adult Offenders". I am sure the Minister will be familiar with it, but I would quote one sentence:
"Persons who do not of necessity have to be detained for the protection of the public" should be freed after serving an appropriate portion of their sentence. I find it impossible not to include Ethel Gee within the meaning of those words.
"Persons who do not of necessity have to be detained for the protection of the public …"
If the Minister tells me that those words no longer represent Government policy, I understand that. But if they do, I cannot see how Ethel Gee's can be excluded from the meaning they bear.
Why do we send people to prison—punishment, retribution, security? Let us examine those words one by one. She can no longer be a security risk. Retribution or punishment? Ethel Gee is 54 years of age. She is in frail health. Her only relative is an aunt of 82. She is no longer a security risk. She has served nine long years; she has been punished and punished and punished again. Now I think that it is reasonable to ask the

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Home Secretary to use his authority to let her go.
10.15p.m.
Mr. Tam Dalyell: I think that the hon. Member for Dorset, South (Mr. Evelyn King) was less than fair to my right hon. Friend the Foreign Secretary. I remember the occasion when the hon. Gentleman asked that question. My right hon. Friend's reply was:
"I take the hon. Gentleman's point, but this is a question that he must put to my right hon. Friend the Home Secretary.—[OFFICIAL REPORT, 24th July, 1969; Vol. 787, c. 2151.]
Surely it is clear that, given the Departmental responsibilities in Whitehall, my right hon. Friend was saying the correct thing. It was my opinion, on that occasion at least, that he was not surprised by the question.
The other issue is that, since, rightly or wrongly, the United States Government set a precedent in these matters by swopping Colonel Abel—who was a very much more considerable centre of a spy network than has appeared in this country—this must have coloured the actions which Her Majesty's Government should take.
10.16p.m.
The Joint Under-Secretary of State for the Home Department (Mr. Elystan Morgan): I should, first, remind the House briefly of the circumstances which led to the question that we are discussing. The story of what has been called the "Portland Spy Ring" has been told many times, but it is as well that we should recall the threat to national security which the breaking of that ring brought to light. The offence was conspiracy to commit the gravest offence under the Official Secrets Act— that is to say, conspiring together, for a purpose prejudicial to the safety or interest of the State, to communicate to other persons information which might be directly or indirectly useful to an enemy.
The conspirators convicted were Gordon Lonsdale, Peter and Helen Kroger, Harry Houghton and Ethel Gee. Lonsdale—that, of course, was not his real name—was a professional spy employed to seek out military secrets wherever they could be found. The
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Krogers were employed in the transmission of this vital information. It was Houghton and Miss Gee who were the sources of the information, without which the conspiracy could not even have begun. I merely make that point, without labouring it, in an attempt to show to the hon. Member for Dorset, South (Mr. Evelyn King) that they were not the passive pawns that he suggested they were.
Mr. Evelyn King: I did not suggest that they were passive. I said that I accepted the relative sentences imposed by the Lord Chief Justice—25, 20 and 15 years. I hope that the hon. Gentleman does the same.
Mr. Morgan: The hon. Gentleman said that Houghton and Miss Gee did not initiate the crime. What I am saying is that it could not even have begun but for their initiative in that respect.
Both Houghton and Miss Gee were employed at the Admiralty Under-Water Weapons Establishment at Portland. Both had access to information which they knew to be highly classified. At the trial, evidence showed that Houghton and Miss Gee were observed in London on a number of occasions meeting Lonsdale and handing parcels of papers to him. They were in process of handing over a set of Admiralty test pamphlets when the three of them were arrested.
These pamphlets were, in fact, available only to Miss Gee in the course of her official duties. In her own evidence, she admitted that she herself had suggested the test pamphlets as a further source of information, and these had been produced for Houghton to photograph with a view to transmission in due course to Lonsdale.
The gravity of the offences disclosed in the evidence was reflected in the sentences imposed by the court. Lonsdale was sentenced to 25 years' imprisonment, the Krogers to 20 years' each, and Houghton and Miss Gee to 15 years' each. The difference in the sentences may be taken to mark the order of importance of the various conspirators within the spy ring—namely, that Lonsdale and the Krogers were experienced professionals while Houghton and Miss Gee were tools, albeit willing tools.

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Nevertheless, both Houghton and Miss Gee were in a special position of trust. They abused that trust. Both were British subjects. That was not the case with Lonsdale and the Krogers. Houghton and Miss Gee betrayed their country. The court, having had the benefit of seeing and hearing all the defendants, found Miss Gee to be a willing participant for gain and saw no reason to distinguish between the two for the purposes of sentence.
All the defendants subsequently applied for leave to appeal against their sentences, but these appeals were unsuccessful. The Court of Criminal Appeal found no reason to disagree with the sentences imposed by the court of trial.
These, then, were the sentences decided upon by the court, and under our system of law it was entirely a matter for the courts to decide. The Executive, even in a State prosecution of this kind, obviously has no part in this process, either at the trial, or subsequently. Of course, there remain the exceptional powers under the Royal Prerogative of Mercy which may be invoked on the advice of my right hon. Friend the Home Secretary, but, as the House will recognise, it has long been recognised that these powers ought not to be used in such a way as to usurp the responsibility of the courts for deciding sentence upon the evidence which has been placed before them. It is only in exceptional circumstances and when considerations have arisen which were not, and in some cases could not have been, present in the minds of the court that the Executive powers of interference can properly be invoked.
What I have said about the Executive in relation to the courts also bears relevance in relation to the Parole Board itself. The Government as such can have no policy in relation to the Parole Board, contrary to what the hon. Gentleman has suggested. The Home Secretary has duties, of course, under the Act of 1967, but he exercises those duties in a quasi-judicial manner, and that is a different thing.
As it happens, such exceptional considerations have arisen in the case of three of the five conspirators in this Portland spy case. These were considerations which had nothing to do with the merits of
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the sentences which were originally imposed. As the House will recall, Lonsdale was released and returned to Russia in 1964 in order to secure the release of Mr. Greville Wynne. In rather similar circumstances, Peter and Helen Kroger were released in October, this year, to ensure the immediate safe return of Mr. Gerald Brooke.
It is, of course, not for me tonight to go into all the reasons for the arrangements made with the Soviet Government in these cases. It is sufficient to say that exceptional action was taken because of compelling humanitarian considerations relating not to the prisoners detained here, but to the health and welfare of British subjects detained elsewhere.
I fully realise how this will be seen by Houghton and Miss Gee. It is natural that they should feel bitter that they are still detained when those given the longer sentences have been released. It does not follow, however, that because circumstances have compelled the release of one offender, another sentenced with him must also be excused. It is necessary in each case to find special reasons justifying the release of the individual.
Clearly, the exceptional reasons leading to the release of Lonsdale and the Krogers do not arise in the case of Miss Gee, and my right hon. Friend has found no other grounds which could be taken to justify interference by means of the Prerogative with the sentence which the courts thought it right to impose. Furthermore, if these cases were to be given special consideration because of the association with the three people released, many thousands of prisoners not so privileged would feel that they were the victims of an equivalent denial of justice. If there is to be earlier release, it falls to be considered within the framework of the general statutory provisions, which brings me to the question of parole.
I would remind the House that parole is governed by Section 60 of the Criminal Justice Act, 1967, subsection (1) of which provides for early release on licence of persons serving determinate sentences of imprisonment, but that provision makes it clear that an essential prerequisite is a favourable recommendation by the Parole Board. The Home Secretary,

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therefore, cannot act solely on his own initiative.
Under the provisions of the Act, every prisoner serving a determinate sentence is eligible to be considered for parole after serving not less than one third of his sentence, subject to serving at least a term of 12 months. Prisoners are considered automatically unless they choose to opt out. At the first stage each case is reviewed by a local review committee at the prison, comprising the governor of the prison or his representative, with at least three other members appointed by the Home Secretary, including a member of the board of visitors or visiting committee of the prison, a probation officer other than the prison welfare officer and an independent member.
The prisoner is interviewed by a member of the committee other than the governor and, in addition, is free to make written representations to the local review committee. The committee sends to the Home Office its finding as to whether the prisoner is suitable or unsuitable for release on licence. All cases favourably recommended by local review committees are sent to the Parole Board for its consideration.
If the board is not in favour of parole the Home Secretary has no power to grant early release on licence. If the board recommends parole the Home Secretary has power to refuse to approve its recommendation. This is a power exercised very sparingly by him, for example, where in his opinion early release would have entailed an unacceptable degree of risk to the public.
The legal position with regard to parole is exactly the same for spies as it is for all other prisoners serving determinate sentences. The procedure followed is exactly the same except only that the Home Secretary has to take into account any special security considerations. I can say at once that no such considerations arise with regard to Ethel Gee. The local review committee sent forward a favourable recommendation in her case and consequently, in accordance with the normal procedure, her case was referred to the Parole Board. The board informed my right hon. Friend that it did not recommend
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her release on parole and in those circumstances, as I have explained, my right hon. Friend has no power whatever to issue a parole licence.
Mr. Evelyn King: Would I be right in assuming that her case could again go before the Parole Board in the spring?
Mr. Morgan: I was coming to that.
My right hon. Friend has, however, arranged for the case to be considered again in the New Year and we must await the further recommendation of the Parole Board at that time. It is not for me or my right hon. Friend to speculate about the possible findings of the board when it comes to consider the case a second time, but I can undertake that what has been said in the House tonight will be placed before the board at the proper time along with all the other information about the case which it will have.
Mr. Dalyell: Is it within the terms of reference of the Parole Board to consider the wider implications involved in this case, such as the swapping between countries of other persons connected with the same affair? Can this be taken into account by the board, or is it irrelevant to its deliberations?
Mr. Morgan: As I have explained, the case we are dealing with involves an exceptional factor. I know of no rule that specifically debars the Parole Board from taking cognisance of that situation but normally it would direct its mind to more classical criminological considerations.
I turn now to the treatment of Ethel Gee. She was in custody in Holloway Prison and shortly afterwards at Birmingham Prison for a few months. Then she returned to Holloway and transferred to Styal Prison, Manchester, as a long-term star class prisoner in April, 1964. Therefore, the hon. Gentleman must take up the question of the wisdom or otherwise of that decision with Lord Brooke of Cumnor, who was Home Secretary at the time. Secondly, Styal Prison is not an open prison, as he has suggested, and she could not have walked out of it at any time.
After the escape of Blake—and we appreciate that that event brought about very substantial changes—Ethel Gee was returned to Holloway in 1966 and detained

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in the special security wing. It is true that she lost her personal radio set because she was then classified as an A prisoner. At a later date she was given piped radio in her cell. Last February, she returned to the ordinary category C condition at Styal, where she still is.
The Question having been proposed at Ten o'clock and the debate having continued for half an hour, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
Adjourned at half-past Ten o'clock.