HC Deb 17 December 1969 vol 793 cc1355-62

3.48 p.m.

The Minister of State, Department of Health and Social Security (Mr. David Ennals)

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

Yesterday, the Government presented a Bill to replace the existing national insurance scheme with a system of earnings-related national superannuation and social insurance which will bring about a great improvement in the provisions for retirement, widowhood and long-term sickness. The Bill, together with an explanatory White Paper and a report by the Government Actuary, will be available in the Vote Office this afternoon.

The Bill implements the proposals which were published in three White Papers earlier this year—two of which have already been debated in the House. We have recently published a booklet entitled "The New Pensions Scheme" which summarises the three White Papers. There are, however, some changes and additions included in the Bill to which I wish to draw the attention of the House.

The Bill sets out the rate and conditions for the new attendance allowance. The weekly rate will be £4. I want to make it clear that we have quite deliberately concentrated on the most seriously disabled—people who need a great deal of care day and night. We are dealing with a relatively small and identifiable group and we intend to make sure that as far as possible all of them get the allowance. This includes housewives, on their own or their husbands' insurance; and the parents of severely disabled children. The older congenitally disabled will normally be eligible through the supplementary benefit scheme.

Next, contributions. The contribution for the National Superannuation Fund is as set out in the January White Paper and that for the Social Insurance Fund as foreshadowed in the July White Paper. This brings us to the National Health Service contribution. At present, the burden of the flat-rate levy towards the cost of the health service falls largely on the employee. He pays 3s. 2d. a week compared with 8d. paid by his employer. This is an obvious anomaly and our original proposal was to split the new health service contribution equally.

We have now decided that the employer should pay the larger part, in common with the practice in many advanced industrial countries, particularly of the E.E.C. We intend that the contribution towards the new National Health Service levy should be 0.6 per cent. of earnings from the employee and 0.3 per cent. from the employee. This will bring the employer's total contribution to 7 per cent. of his employees' earnings—a marginal increase in the figure foreshadowed in the July White Paper. This enables us to keep the employee's total contribution at 6¾ per cent. applying up to the earnings ceiling of £1,900 a year.

In relation to the preservation of occupational pensions on change of employment, we have not been able, as we had hoped, to cover pension rights accrued before the date on which the new legislation comes into operation. The sole reason for this is the opposition of the employers' representatives to what they describe as compulsory retrospective imposition of unforeseen liabilities which would severely damage the finances of pension schemes.

The legislation will, therefore, lay down that the requirement to offer a deferred pension will apply only to pension rights which accrue in respect of service after the operative date. Unfortunately, this means that it will be 40 years or more—a full working life—before all pension rights are protected. But this will not preclude voluntary provision of retrospection, and the Government, for their part, intend to set an example, in the three areas where they have direct responsibility for occupational pension arrangements, by preserving pensions earned by past service for those who leave the Armed Forces, the Civil Service and the National Health Service after the operative date.

The Bill also makes a change in the trade dispute disqualification for unemployment benefit. In the light of the views of the Donovan Commission, the Government are proposing to amend the law so that a person who is laid off because of a dispute at his workplace will not be deprived of benefit unless he is himself taking part in the dispute or directly interested in it.

We are also proposing to put on a statutory basis the long-standing practice under which, in determining the amount of supplementary benefit payable for a striker's family, his personal income, for example, income tax refunds or strike pay, is disregarded up to the level of his personal requirements for which no provision is made.

The Bill also provides for measures to deal with certain areas where the supplementary benefit scheme may be said to be misused.

First, we shall deal with the situation which exists at the conclusion of a strike and before the striker receives his first wages after returning to work. As matters now stand, the striker, on return to work may be entitled to benefit for himself as well as for dependants for up to two weeks even though he is in paid employment. The result in some recent strikes has been that very large sums have been paid out after return to work, in one instance greatly exceeding the sum paid while the strike was on.

We have included a Clause in the Bill giving the power to make regulations under which the entitlement to supplementary benefit of a striker on return to work will be limited to exactly the same entitlement as when on strike.

Second, we propose to reduce the supplementary benefit entitlement of men who are disqualified for unemployment benefit because they are dismissed for industrial misconduct or leave their employment voluntarily or refuse suitable employment without good cause. At present, if such a man establishes a claim for supplementary benefit the benefit is normally reduced by 15s. but no more.

This deduction is too small to provide effective support for the disqualification provisions of the national insurance scheme and we therefore propose that the deduction shall be increased so that the claimant's requirements, and those of his wife if he has one, will be assessed at one-third less than the normal scale rate—rent and requirements of any children still being met in full.

Under these last two heads the discretionary powers of the Supplementary Benefits Commission to meet urgent need will be preserved intact. These measures, designed to end two clearly defined areas of misuse of the supplementary benefit scheme, linked together with the announcement on Monday of the appointment of 100 additional staff for the work of unemployment review and special investigation, are further indications of the Government's determination to act firmly against abuse of our social security provisions.

Mr. C. Pannell

On a point of order, Mr. Speaker. I think that the statement which we have just heard rather outrages convention. Will you look at the question whether parliamentary statements of this sort should be made in the nature of a Second Reading speech which contains argument? I think that they should be straightforward expositions.

Mr. Speaker

I am not without sympathy for the point raised by the right hon. Member. I hope that when Ministers have to make statements they will make them as reasonably brief as possible, and possibly amplify them with arguments and details in the OFFICIAL REPORT.

I am conscious all the time, and this is my position, of the pressure of Parliamentary business. We have a very important debate ahead. Nearly every day I am in the position of wanting to push on to the business of the day.

Mr. Dean

Is the Minister aware that it is virtually impossible at such short notice to absorb such a very complicated and long statement? Is he aware that we welcome some aspects of his statement, notably the constant attendance allowance for the severely disabled, the move towards the preservation of pension rights in the public service, and measures to deal with abuse, but that we regret that the Bill appears to do nothing for existing pensioners, particularly the over-80s, and will damage occupational pension schemes and savings?

May I ask three short questions? First, how long will members of public service pension schemes be in the dark about their pension rights for future service? Second, will the steep rise in contributions by married women be postponed until after equal pay has been introduced? Finally, what will be the additional cost to industry of this increased contribution?

Mr. Ennals

It is clear that I ought to apologise to the House for making too long a statement. It was perhaps that I read it too slowly, because of the state of my voice, but in any case I apologise to the House.

Three points have been put to me. First, in relation to public service pensioners, there will now be detailed consultation between the responsible Government Departments and the staff interests so that their interests may be fully taken into consideration in reaching decisions on what sort of adjustments should be made in the light of the new scheme.

Second, we are removing the right of married women not to pay contributions only because we are bringing in benefits which are fully equal with those of men. This is consistent with the whole spirit of equal rights for women and of equal pay, with which my right hon. Friend is dealing.

I was also asked about the cost to industry. It is estimated that the increase in employers' contributions compared with the present level will increase labour costs by about ½ per cent. Our estimate is that this will have the effect of increasing the cost of living at that time by about the same amount.

Mr. R. C. Mitchell

Will there be retrospective preservation of occupational pensions in public sectors other than those mentioned by my hon. Friend?

Mr. Ennals

Yes, Sir. The ones I mentioned were those for which the Government have direct responsibility. In other parts of the public service—for instance, local government, police, the fire service, etc.—the main responsibility lies with the local authorities.

While the Government cannot, of course, give an undertaking, our expectation is that the local authorities will act as we will—as good employers. The objective as far as the teachers is concerned is already secured by existing arrangements. It is for the nationalised industries to decide the matter in relation to their own pension schemes, but I have every reason to expect that they will take a generous view of retrospection.

Sir B. Rhys Williams

Does the hon. Gentleman realise the incredulity and dismay that his announcement about the preservation of pension rights in occupational schemes will have caused among hon. Members on both sides and will cause in the country? Will he reconsider his attitude on this question?

Mr. Ennals

We would like to have introduced total retrospection, but it was made abundantly clear to us by the representatives of the employers, especially by the C.B.I., that they would consider this to be retrospective form of action which would impose heavy financial burdens upon occupational pension schemes. It would have been difficult for us to proceed against their will in this matter, although we would like to have done so.

Mr. Pavitt

While welcoming the fact that the Government have recognised, through the constant attendance allowance, that disability goes beyond the person concerned, may I ask whether my hon. Friend is satisfied that they are being comprehensive enough and that the take-up is sufficient? Secondly, will my hon. Friend consider the possibility of somehow making the National Health Service contribution a clearly identified and separate part of national health insurance?

Mr. Ennals

We will consider the latter suggestion.

I agree that this new move on attendance allowance is a very important step forward. Adjudications will be made by an attendance allowances board, which will consist largely of people with medical qualifications. Our expectation is that about 50,000 very severely disabled people will qualify for allowances, of whom probably about 10,000 will be very severely disabled children.

Mr. Lawler

Will the hon. Gentleman clarify the proposals to reduce the supplementary benefit entitlement of men disqualified from employment benefit for certain reasons? Bearing in mind that disqualification begins as a result of allegations either from employers or, indeed, from staff employed by various Ministries, will he accept that it would be wrong, until such allegations are replied to by the defendant, to reduce his requirements by as much as one-third?

Mr. Ennals

There is, of course, a right of appeal for those who object to a decision which is taken, whether it relates to industrial misconduct or to the other categories to which this would apply. Were we not to make some change, and not make a reduction greater than 15s., it would give little support to the national insurance unemployment benefit provisions. This change really had to be made and I am sure that hon. Members on both sides will think it quite a modest reduction. Where there are difficulties, the Supplementary Benefits Commission will be able to use its discretion.

Mr. Booth

Does the Minister's statement mean that the Government are proposing to remove the grade or class provisions and financial qualifications from Section 22 of the National Insurance Act, 1965? If so, this will be welcome in view of the grave anomalies created by those provisions. Will my hon. Friend look carefully at the interpretation put by the National Insurance Commissioners on the words: … participating in … or directly interested … with a view to removing all anomalies arising from this Section at one fell swoop?

Mr. Ennals

We certainly hope to remove anomalies, but it is difficult to find another definition of "directly interested". We will be removing the grade or class and financial qualifications.

Mr. Younger

Is the hon. Gentleman aware that his whole treatment of pension schemes in the Bill is causing personal distress to many people? Will he undertake that, during the course of the Bill's passage, he will look closely at good arguments put forward and make material alterations in favour of occupational pension schemes?

Mr. Ennals

There is personal distress only among those who have misunderstood the proposals or who have been misled. It is true that many people have been under the impression, because of what has been said by certain persons, that, somehow or other, occupational pension schemes are to be taken over, or that they will lose pension rights they have built up by their payments over the years, or that they will not be able to retire earlier or that they will lose their lump sums. Uncertainties have been unnecessarily created, but I think that there is now understanding that the Government have no such intentions in any of these respects.