HC Deb 15 December 1969 vol 793 cc932-6
The Minister of State, Department of Health and Social Security (Mr. David Ennals)

With permission, Mr. Speaker, I would like to make a statement.

The House will remember that increasing public concern about people with substantial occupational pensions who claim unemployment benefit although they have left the active employment field led my right hon. Friend the then Minister of Pensions and National Insurance to refer this questions to the National Insurance Advisory Committee.

The Committee concluded that there was a serious misuse of the national insurance scheme and made recommendations to deal with it. Preliminary draft regulations, broadly along the lines that it recommended were accordingly referred to the Committee last year and we have been considering its full and careful report, for which we are much indebted.

With one member dissenting, the committee supported the preliminary draft regulations but recommended substantial easements to take account of the many representations that it received. We intend to carry the easements a good deal further in order to give more help to those who have to retire early or have smaller pensions.

We propose not to apply the new restrictions to occupational pensioners who are under 60; to apply the condition of further work only where the occupational pension amounts to £25 or more a week; and to taper the payment of unemployment benefit only where the pension amounts to more than £15 a week.

The condition of further work is, broadly speaking, that the occupational pensioner shall have had 26 weeks' employment, after he left his pensioned job, during the 12 months before his claim to benefit.

The Government's modifications to the original draft regulations should ensure that the regulations will not bear unreasonably on younger occupational pensioners and those with smaller pensions. A married man whose pension amounts to £15 a week will still be eligible for full benefit, giving him up to about £30 a week for six months and £23 a week for a further six months if he remains unemployed.

Adoption of age 60 will give an additional "breathing space" to those who are made redundant before age 60, or who, like policemen and members of the Armed Forces, normally retire below that age. It will also effectively remove women from the scope of the proposals.

Thus, the majority of those who retire on ocupational pensions before the State retirement age will not be affected by the limitations which the Government are proposing.

The draft regulations, accompanied by the committee's report, will be laid before Parliament for approval shortly after the Christmas Adjournment.

Mr. Dean

Is the Minister aware that we shall wish to study with care his statement and the report of the advisory committee? Can he give an assurance that there will be a full opportunity for the House to debate this matter on an affirmative Motion?

Can the Minister confirm that this proposal introduces a substantial new principle into the National Insurance Scheme, namely, a means test for occu- pational pensioners who fall within this category? Further, can he say whether the Government gave consideration to dealing with this matter through administrative arrangements and, in particular, possibly through a change in the definition of "suitable work"?

Mr. Ennals

I can assure the hon. Gentleman that there will be a full opportunity for a debate on this matter in the House.

The issue is how far the State ought to go on paying full unemployment benefit to people who have been pensioned. Unemployment benefit is normally meant for employed people who are temporarily between jobs and so have lost their income. Many occupational pensioners, having retired from a lifetime's career, are not unemployed in this sense; nor have the payments for their former employment ceased. They may continue to receive up to two-thirds of their former salary.

The sliding scale is not a means test. A means test involves all kinds of income, whereas the regulations deal with one specific kind. It is the product of special arrangements under which the employee receives an income not merely while working for his employer, but afterwards as well. The generally accepted concept of an occupational pension being, in effect, deferred pay, supports this concept.

Mr. William Hamilton

Can my hon. Friend say whether any estimate has been made of the numbers involved and what savings in expenditure are expected?

Mr. Ennals

The estimated saving in public expenditure will be about £3 million.

On numbers, I can only give a figure that relates to a survey carried out by the Advisory Committee in July, 1966, which showed that of the male occupational pensioners aged 60 to 64 then registered at the exchanges, about 37 per cent. had pensions, taking no account of lump sums, of between £10 and £20 a week and that about 16 per cent, had pensions of £20 or more a week. It is not possible to say how many of the latter had pensions of £25 or more a week. However, this will affect only the minority at the higher level of pension entitlement.

Mr. Boyd-Carpenter

As no limitation is sought to be imposed on people who have a large investment income, does not this limitation amount to a discrimination against one form of income—the occupational pension? Therefore, should not the Minister's reply to my hon. Friend the Member for Somerset, North (Mr. Dean) have been that this is the introduction of a means test into National Insurance, but a discriminatory one, and the worse for that?

Mr. Ennals

We are talking about pensions in relation to an entitlement for unemployment benefit and about a group of people who, if they have requalified for work, will get their entitlement. But many people in this group are not in employment sphere in that sense, because they have retired from their normal work.

Mr. Pardoe

Can the Minister say what are the main differences between the "substantial easements" which he mentioned in his statement, and recommended by the National Insurance Advisory Committee, and those now proposed by the Government?

Mr. Ennals

Compared with the preliminary draft regulations, all occupational pensions will be disregarded up to age 60 instead of 58. The requalification test will not apply unless the occupational pensioner has at least £25 a week instead of £18, and the sliding scale threshold will be £15 a week instead of £6 10s. The hon. Gentleman will see that it is a substantial modification since the original proposal was put forward.

Mr. Bagier

Will my hon. Friend give due consideration to any genuine requests for employment by this class of people? Will he consult his right hon. Friend in the Department of Employment and Productivity to make sure that those who genuinely want employment will be given it?

Mr. Ennals

Of course. Those who genuinely want employment and are able to get it will not fall into this category, because they will not be unemployed. One difficulty is determining whether a person genuinely wants employment. He may register at an employment exchange and, frankly, not be available for work, or not be prepared to accept other than a very narrow range of jobs that may be offered to him. The committee found it impossible to determine whether a man was available for work or not.

Mr. Fortescue

Does not this last criterion apply to many applicants for unemployment benefit; not only to those with occupational pensions? Why is there this discrimination in the Minister's mind against those who have retired on occupational pensions? Does his statement mean that men in the category that he has described will no longer be eligible to have their cards stamped with the National Health Service contribution, which is an important factor in this matter?

Mr. Ennals

Under the proposal, credit would still be given, subject to the normal conditions, to those with pensions of less than £25 a week. Those with £25 or more a week who satisfy the requalification test by having worked for a period of 26 weeks after retiring from their occupational pension job will be able to register for credits even if benefit was extinguished by the sliding scale.

Mr. John Mendelson

Has my hon. Friend's Department been in touch with the Ministry of Power about the position of employees of the National Coal Board who have retired by persuasion at the age of 55, 56, or 57 because of the shortfall in employment in the coal mining industry and will be on special terms of retirement for a period of only three years? They will then be available for work, but might find it difficult to find alternative employment since they have spent a lifetime in the mining industry.

Mr. Ennals

Those who have retired with the special benefit for three years are unlikely to be affected by this, but I will give further consideration to the matter. If one takes the normal employees of the Coal Board who retire on pension, the limit which we are imposing will affect hardly any of them. It is only the administrative Grade 3 who will have retired after 40 years' service which will be affected. The ordinary average worker will not be affected.