HC Deb 04 February 1969 vol 777 cc300-21

7.43 p.m.

Sir Brandon Rhys Williams (Kensington, South)

I beg leave to draw the attention of the House to the Supplementary Estimates under the heading Supplementary Pensions and Allowances. An additional provision of £33 million is sought by comparison with the original Estimate of £394 million. I calculate that this represents an increase of about 8 per cent.

It is not because of the amount itself that I feel it necessary to bring this matter to the attention of the House, but rather the way in which it is being spent. In support of the Supplementary Estimate we find that that sum is required partly for the higher numbers of beneficiaries. In passing, I should comment that we are informed that this additional £33 million will cover only 75 per cent. of the increase likely to be required this year. I cannot help asking myself where the 25 per cent. is to come from. I hope, and I feel confident, that we shall hear about that from the Minister. If it is to come from the £200 million which was lately transferred from the National Insurance Reserve Fund to the National Insurance Fund, a drawing on capital account which we were told would be brought in to ease the pressure on the current account, what sum will be released out of that £200 million to go into the pockets of the public before the end of the current financial year?

It is necessary to consider a little of the history of these special supplements. Those of us who have reread the Beveridge Report in recent weeks—if indeed we did not know it before—will recall that his recommendation concerning National Insurance was that it should abolish need. I think that the great man envisaged that there would always be some special cases as a residue which would have to be attended to by a special body, such as the Supplementary Benefits Commission or the National Assistance Board, because it is impossible to deal with the whole of humanity as standard cases. But I do not think that Beveridge ever envisaged that we would use the special supplementary system on the present scale.

Let us look at the growth record in the numbers drawing special benefits. In 1949 it was the already tragic total of 1,157,000 people. In considering these figures I suppose that we ought to take into account too the dependants of the people who are the beneficiaries of this form of assistance. By 1959 the figure had grown to 1,766,000, and in November, 1968, the latest date for which we have accurate figures published, it had risen to 2,637,000, of whom I calculate that 1,847,000 were over pension age.

In January, 1969, those of us interested in the subject avidly read the White Paper on National Superannuation and Social Insurance in which the total of pensioners receiving special supplements is given as 2 million. With the number receiving special allowances as well, we have a figure approaching 3 million people who must be dependent on special assistance of one kind or another.

It appears too, that the cost of paying for special supplements has doubled since 1962–63. When considering this very large number of people—if it is not 3 million, it is certainly in excess of 2½ million regularly in receipt of special supplements—I cannot help asking: how can they all be special cases? It seems beyond the bounds of acceptability to reason that all these 3 million people are special cases.

About six months ago I was informed in this House that the staff of the then Ministry of Social Security was handling about 6¼ million claims per annum for special supplements. It is an impossible task to do the case work of 6¼ million claims per year, and I feel that it is a crying scandal that it should be necessary.

A week or two ago a newspaper reported me as using the word "impersonal" about one of the branches of the Ministry of Social Security. I should like to make it perfectly clear that when I used the word "impersonal" I was referring to the machinery, not to the people who have to handle this enormous volume of work. I have nothing but praise for the people who try to tackle this virtually impossible burden of individual case work. They are doing a magnificent job with good temper and perception and a sense of duty which is matchless. I hope that the newspaper which reported me before will report me again in that context. I claim that the machinery is impersonal because it is using this system of special supplementation in a way that was never intended.

From such case work as I have been able to do, and by drawing on the advice of people who are much better able to judge than I am. I think that the real number of genuine special cases who are probably in need of assistance of this kind may be about 250,000, that is to say about one in ten of the people who are at present getting supplementary benefits. All the others are straight forward, or relatively straight forward cases of people who simply cannot manage on their National Insurance. For how long is this machinery going to be misused? From the very large sum which is applied for in this Supplementary Estimate it seems that for the present at all events there is to be no limit to the number of people who will be dealt with on a non-contributory basis.

Though the White Paper was launched as something "better than Beveridge", I suggest that it should, rather, have been described as an attempt to catch up with Beveridge after the 25 years which have elapsed. I resent the existence in our midst of this large number of people who are in receipt of means-tested charity. Do not let us mince words—that is what it is. I resent it, because to me it seems clear that first and foremost it undermines the saving habit.

If, when someone gets to retirement age, because he has accumulated a certain amount of personal property—I know that there are certain disregards, and I shall return to these—he is not entitled to help from the State, but a man who has virtually no assets when he retires is helped, those who retire without having saved anything are bound to think that they have had a better bargain out of life than the people who have been so foolish as to put money aside.

The present system not only undermines the saving habit. It is also a direct cause of dis-saving. Though the dis-regards are administered with all the mercy that goes into the system, and with all the concessions that go into it, yet the operation of the supplementary benefit system must introduce an element of dis-saving. If there is one thing which is vital to our economy it is to restore to the public the savings habit, and to put an end to the trend, which is gathering speed, towards dis-saving. The Government simply present us with this Estimate and say nothing about the way in which they intend to tackle this problem.

I said that I should return to the question of the disregards. Some time ago I read—it stuck in my memory, and I believe that it is still true—that if a person has assets other than his house of about £2,000, that is taken to be within the limits of the disregard, but the Ministry is not able to inquire what his actual income is from the capital asset of £2,000. The Ministry is obliged to deem that the income from that asset is £7 a week—140s. a week. If anyone in the House knows a stockbroker who can advise me how to invest £2,000 so that with any reasonable degree of security I receive an income of £7 a week, I hope that he will take me to him at once. Remembering the sort of investment into which people who have small resources normally go, I calculate that this provision of the so-called "disregards" requires the pensioner to dis-save at the rate of about £5 a week.

I also object to the presence in our society of this large number of people in receipt of non-contributory means-tested charity, because it undermines their self respect. I know the reason why the first Minister of Social Security, with the best motives, decided that this was the way, in the short run, in which the problem had to be tackled. But the short run is turning into the long run. I think that to some extent one might say that good work was done in the short run in persuading people who up to that time had refused to apply to the National Assistance Board for special help even though they needed it, that rather than continue below the level which society regarded as the subsistence level they should swallow their pride and go to the office and ask for public help. I believe that about 500,000 people are now doing that who were not doing so two or three years ago. I am glad, in some cases, that they are doing that; and yet I am sorry that it should be necessary for them to do it. One still meets many people who say, "I shall manage on what I have, plus what I get from my National Insurance, but I am damned if I am going on my knees to the office to ask for more". These people are foolish by the standards of our generation, but I love them, and I wish that there were more of them.

We are tackling poverty in the wrong way and this Estimate takes us further down the same road. The tragedy is that all hon. Members would accept that. Everyone concerned with the social services must want to know specifically how the Government intend to reduce this growing number. Like others, I waited with the greatest anxiety for the Government's White Paper, from which we hoped for so much. In no party spirit, I say that it is bitterly disappointing because of the things that it leaves unanswered, particularly what to do about people in real need now.

This is not the time to discuss the White Paper in detail—I hope that I may be able to speak on it soon—but in it we can discern the broad outlines of the Government's policy for dealing with need. It is to give the most money to the people who already have the most. That is what graduated benefits mean. The scheme which the Government have in mind to introduce not sooner than 1972 aims to concentrate help not where it is most needed, but where it is least needed. This is a cockeyed sense of priorities. The Government show no sense of urgency and no appreciation of the need by publishing a White Paper in which 1972 is held tantalisingly in front of people who will probably be dead by then. And nothing specific is said about the ways the Government propose to help the rising number who now cannot manage on their own resources.

Graduated contributions are right in principle, because they adhere to the principle of equal shares—the millionaire can pay his proportion towards National Insurance just as the widow does, with her two mites. But graduated pensions are the wrong solution and will do nothing to solve the problem which the Estimate is trying to tackle. If the Government introduce such a system, it will help the poorest only where it slips in some element of redistribution as an incidental, in other words, if it defies the logic of its own mathematics by taking money away from people who, according to the strict application of the system have an entitlement, and hands it downwards to those whom we are discussing, at the bottom of society.

The right solution, as it always was, is the Beveridge solution, to give flat-rate benefits which are enough. Then we would not face this type of alarming increase, in which it is proposed that tens of millions of public money should go down the wrong road.

But I hope that I can prove myself a realist by qualifying that in one respect. I realise that, for people without large personal resources, rent is one of the most important elements making for variation in need from place to place and from family to family. From the Government's publications, I deduce that the allowances given to those receiving supplementary benefits and living in houses owned by private landlords in 1967 were 33s. 5d. on average per week because, no doubt, of the application of rent controls. For those in local authority accommodation, the figure was 42s. 4d. The figure for owner-occupiers was about 20s. 9d.

Yet I am sure that the Parliamentary Secretary knows that, in central London, £4 4s. is not regarded as unreasonably high in certain circumstances for a single person, while a married couple may regularly be paid £5 15s. and sometimes more. That shows the variation, from one place to another and one type of accommodation to another, which rents are bound to cause.

If we took the Utopian solution of giving universal flat-rate benefits to everyone in retirement, we should have to take into account these extreme variations, so I would agree that, at any rate in the short run, in accepting the Beveridge principle, we should do as the great man himself envisaged we might have to do, something special about rents. In this, some rudimentary case work is probably necessary.

The nub of the objection to my recommendation to raise National Insurance across the board rather than special supplements is the total cost. But I should like to ask the question: can we afford not to meet our commitments? The generation which is making these regulations about pensioners is simply profiting from the effects of inflation. A former Prime Minister said that we must not forget the old people, because they had brought us to where we are; but we are forgetting them by forcing them down to the level of means-tested, charity-aided supplicants.

One of the origins of the problem is that National Insurance is not properly funded. On all sides we see the weakness of people dependent on unfunded schemes, who cannot say, "This asset, or this share of this asset, is mine", but who must say, "Because the cost of living has gone up, I can no longer live on what I thought was enough, so therefore I have some sort of claim." But the majority of voters are all too frequently deaf to these claims.

If we are to use the principle of repartition—I make no apology for using that useful old English word, which means precisely what we will have to discuss when debating the Government's White Paper—if we use the principle of repartition or "pay as you go" provision for pensioners, we had better learn from the French the principles by which they administer such schemes. It is no good using the notion of a fund which is not a real fund and then drifting completely away from principle in dealing with people who have claims upon us because of their earlier contributions which were spent at the time and not funded.

It is wrong to say to such people, "We waive your claims, but deal with you instead by gigantic Supplementary Estimates." We cannot afford not to meet our National Insurance commitments as a generation, because we ourselves will one day be pensioners. When we consider how we are treating our own old people, are we able to make such a claim on our children that, when we retire, we shall be entitled to a fat living? We are all disgusted by the spectacle of old people in second-hand clothes picking up cigarette ends, but it can be seen any day in Oxford Street. This is the society in which we are content to live. How can we criticise the young people and the "cadgers" about whom we hear so much, when we ourselves are also paying such scant respect to our elders?

The other question which arises over the problem of cost is this: what would be the extra cost of a flat-rate increase in National Insurance? We know that the Government's method appears to cost £33 million. Of course, by the old-fashioned method of accounting, to increase National Insurance benefits across the board would seem to cost much more to the central Budget. National Insurance has become so inextricably muddled with the rest of the Budget that no one understands it and so it is resented. It makes it almost impossible to raise contributions if people do not know where the money goes.

National Insurance is paid for partly by the contributors themselves. There is a substantial Exchequer grant of hundreds of millions of £s and we are told that, at the present rate, employers are also paying well over £1,000 million a year. I am not against employers being asked to contribute to the Welfare State, but it is hard to specify exactly what they are getting out of it. This is wrong. In spite of all these extraneous contributions to National Insurance from the employers and the Exchequer, it still does not cover more than a fraction of the cost of the Welfare State.

Our way of thinking about our income and expenditure on welfare stems from our confusion over the purposes of taxation. Taxation by central Government should be seen to be of two kinds—

Mr. Deputy Speaker (Mr. Harry Gourlay)

Order. We are this evening discussing not taxation, but the Supplementary Estimate on page 39. The hon. Member must not refer to questions of taxation.

Sir B. Rhys Williams

I accept your Ruling, Mr. Deputy Speaker, but I thought that I would be criticised if, having dealt with an alternative method of coping with real need—a need which has resulted largely from the rises in the cost of living which have occurred in recent years, I did not recommend how the alternative I am recommending should be financed. I trust that I will be allowed to develop this theme to the extent—

Mr. Deputy Speaker

Order. The Chair must obey the rules of order. So must the hon. Gentleman.

Sir B. Rhys Williams

I naturally bow to your Ruling, Mr. Deputy Speaker.

In the explanation which the Government give of their policy which lies behind these Estimates, I trust that they will show that they are working towards the concept of contribution as being the source of the money which is distributed to those in need and to pensioners. While they continue with the 19th century pattern of paying money by means-tested charity rather than as of right, this problem will continue.

In dealing with the National Insurance system the Government have a duty to show what is happening to the contributors' money; from whom the money is coming and to whom it is going. I would like National Insurance to be separated from the rest of the Budget accounts so that one can see the income and the benefits clearly, and define precisely who is paying for what and how.

Insurance is a system for transferring money from the fortunate to the unfortunate as of right. At present the Government are transferring money from the fortunate to the unfortunate, but they are giving it to them not as of right but as a so-called special supplement. Why not, therefore, return to the insurance principle and make it work? This would give the pensioners back their self-respect and if, in the process, National Insurance would be giving somewhat more money to those who are not in actual need, at any rate it would not be falling into the error of giving the most money to those who are not in any need.

I suggest that it would not be inappropriate to have an across-the-board increase in National Insurance benefits as a means of enabling everyone to fend for himself in retirement. For those who are not in actual need such an increase should be seen as a form of reduction in taxation in old age. After all, what one pays in and what one draws out are the two sides of a life-long relationship with the State. In the same way, one cannot look at one side of a tennis court when a game is in process and understand the game. The tennis ball goes to and fro across the net and one must watch its progress in both courts if one is to comprehend fully what is going on. The same applies when we consider what each individual pays in and what he draws out from National Insurance.

I hope that the Government will say explicitly in the near future what they intend to do to stop the advance of this retrograde movement into special supplementation, by which more and more people are being obliged to go down to the office for charity.

8.14 p.m.

Mr. Evelyn King (Dorset, South)

I am sure that the House—I wish there were more hon. Members present—will be grateful to my hon. Friend the Member for Kensington, South (Sir B. Rhys Williams) for raising this subject. I was sorry that the rules of order did not permit him to give a full analysis of his solution, for I was anxious to hear it. I shall not attempt the sort of tour d'horizon which he made. Instead, I will expound two cameos on a point of principle, and both derive, certainly in part, in my constituency.

The first example arose as I was canvassing during the last election. I visited two old ladies living next door to each other, both over 70 and both pensioners. Each was angry with the other and each had a grievance. The first on whom I called was in receipt of supplementary benefit. Her grievance was that, in her view, she was not receiving sufficient to meet her needs, and about that she was angry.

The second old lady, who had known the first throughout her life but was no longer on speaking terms with her, was furiously angry because although throughout their working lives they had earned more or less the same income, the second old lady had contrived to save—not a great deal; something in excess of £1,000—and as a result received no social benefit at all. Meanwhile, of course, her next-door neighbour was drawing a benefit to which the one who had saved objected. After all, had she been less provident, she, too, would have been entitled to benefit.

To whom should our maximum sympathy extend? My sympathy goes to the second who having saved throughout her life, and having shown the virtue which we are always being called upon to show, gets no reward. That is inherent in the system which we are entitled to debate and criticise tonight.

My second point concerns a totally different matter which increasingly alarms me. It is the number of not old but young, sometimes very young, who throughout the summer months—I refer to 17, 18 and 19-year olds—go to seaside resorts in the south of England, who sleep rough under the pier, who indulge in other habits which are undesirable but which are not germane to this debate and who spend the occasional night in a lodging house to secure an address, after which they queue for social security benefits to enable them to live that sort of life.

That was not the purpose for which social security benefits were designed. I am utterly sure that, however much sympathy we may have for the old, the ever-increasing amount which we dish out to the unworthy is something which we must soon investigate and seek to diminish. We cannot consider these points without seeking to establish some sort of principle about the duty of the State. I have no doubt that its first duty must be to bring aid at the sight of poverty or want carried to the point of hunger. The same can be said of housing which is below a certain standard. It must be the function of the State to ensure that such abuses exist no longer, rescue the needy and come to the aid of those who cannot control their own lives.

We all agree so far. The quarrel begins at that point, for I would not admit that it is in any sense the duty of the Slate to come to the aid of those who are not in need of such aid. This is where we come up against the scheme outlined by the Minister last week, in which it is proposed to set up a huge apparatus—

Mr. Deputy Speaker

Order. We are discussing not a scheme outlined last week but the Estimates before the House. We are discussing whether the amount in the Estimates is sufficient or otherwise.

Mr. King

I should have liked to discussed how that money is to be used and to point out that it is not the function of the State to give this money, whether in the form of pensions or supplementary benefits, to those whose means are such that they no longer require it. I accept your Ruling, Mr. Deputy Speaker. I cannot develop the point, but it was worth making.

8.20 p.m.

Mr. Tim Fortescue (Liverpool, Garston)

The House will be most grateful to my hon. Friend the Member for Kensington, South (Sir B. Rhys Williams) for giving us a preview of some of the debates we shall have in the comparatively near future on the whole field of social security, pensions and National Insurance. But for your intervention, Mr. Deputy Speaker, at one time he was about to tell us of his eloquently written and well prepared scheme for a new social contract which so many of us have studied with care and admiration. I should like to have heard him on that, but in the circumstances I well understand why that was not possible.

My hon. Friend took us back to Beveridge, the pure wine undistilled of that great man, as he called him. I am sure we all bow to the great memory. He told us that in his view any new scheme should be arranged rather differently from the arrangement proposed by the right hon. Gentleman the Secretary of State for Social Services. That will be for another day. There will be much opportunity to discuss these matters then.

My hon. Friend the Member for Dorset, South (Mr. Evelyn King) gave us vivid examples of the incongruous way in which the present system sometimes works. His examples of its impact on the old and the very young were especially pertinent. I speak with a little experience in that I was privileged to spend some time in an office of the Ministry of Social Security in my constituency last summer. I remind my hon. Friend of the very considerable difference which the pronouncement made by the then Minister of Social Security on 25th July last year has made to this problem of benefits being claimed in an unwarranted fashion especially by the young. The House will remember that on that date the right hon. Lady said: I have become increasingly concerned about the very small minority of people who are abusing social security provision."—[OFFICIAL REPORT, 25th July, 1968; Vol. 769, c. 213.] She went on to say that she was determined to ensure that supplementary allowances are not paid to those who while unemployed are not genuinely seeking new jobs.

I found when I arrived in the local office of the Ministry in Liverpool in September that the policy she outlined in that statement was already beginning to have effect. I was very impressed by the way in which officers behind the counter and in the back rooms of the office were determined to stamp out abuse and were greatly strengthened in their determination by the way in which the right hon. Lady had spoken in the House.

There are, however, two ways in which abuse of the system still exists. If they could be eliminated Supplementary Estimates of the kind with which we are faced would not be so necessary or at least the sums asked for would not be so great. In her statement last July the Minister referred specifically to fit young single persons who would be told and are being told that when work is available in their locality they should be able to find it within four weeks, if they did not find it within four weeks they would not be paid any more supplementary benefit. This policy was being shrewdly administered at the Ministry's office when I was there.

The phrase "in their locality" worried me because there seemed no reason why fit young single persons should not work elsewhere. Why should they not take up jobs at some distance from their homes? Why should a fit young single person have to remain for the whole of his life in his locality? We have to come many hundreds of miles from our homes to do our job: I cannot see why fit young single persons should not do the same rather than drawing the charity of the State when a job is not available for them on the doorstep. In pursuit of this I asked a Question on 27th January. I asked Does the Minister agree that for a young, fit, single man without family responsibilities, supplementary benefits should be curtailed not merely if there is suitable employment in his locality, but if such employment is available at any distance up to, say 100 miles? The Minister of State replied: that is indeed part of the policy which is being applied. I was delighted to hear that because I thought my point had been conceded but then one of the Minister's hon. Friends was rather worried and asked: When looking into this problem, will my right hon. Friend consider the position of a person sent to work at another place where train services are being cancelled or abolished altogether, making it almost impossible for him to work at a distance of up to 100 miles, as suggested by the hon Member". The Minister replied: Certainly the availability of travel facilities should be taken into account in all these cases".—[OFFICIAL REPORT, 27th January, 1969; Vol. 776, c. 911–12] It was not my intention to suggest that any man should travel 100 miles to and from work every day although some commuters in the London area I believe travel for almost that distance. I suggested that young men should take up residence at the place where a job was available. Why should they live at home on charity? I should like the Under-Secretary to reply to this point.

The Under-Secretary of State for Health and Social Security (Mr. Norman Pentland)

Is the hon. Member suggesting that he would be in favour of direction of labour, for that is what this amounts to?

Mr. Fortescue

No, it would not amount to that. Perhaps theoretically it would, but I suggest that if there is a job somewhere in the country and a fit young single person somewhere else, he should be told that if he did not take up that job he would not be paid supplementary benefit. I do not say that he should be told to go there.

Mr. Pentland

That is the very essence of direction of labour which to the best of my knowledge hon. Members on both sides of the House have always abhorred. I apologise, Mr. Deputy Speaker, for going far beyond discussion of this Estimate, but surely that is what the hon. Member is suggesting.

Mr. Fortescue

I will give an example to show that that is not what I am saying. Last year during my visit to the Ministry office in my constituency a young man came to the office He had four "O" levels, was 20 years of age and left school when he was 17. He had worked for six months and then lost his job and had not worked since. He lived at home on supplementary benefit. When I asked what he did all day he said he helped his "mum". We, the taxpayers, were paying for him to help his mum all day. I said casually, "What would you do if I said to you that we had had enough of this and would not pay you supplementary benefit any more for staying at home and helping your mum? "There was no question of lack of means in this case: the boy came from a comparatively well-to-do family. He looked at me in horror and said," But you cannot do that" I said, "I do not think I can, but I am asking you a theoretical question. What would you do?" He said, "I would get a job".

I say that the work-shy—and, by definition, as was stated by the previous Minister, we are talking about the work-shy—would find themselves jobs if their supplementary benefit were to be curtailed in these circumstances. I do not say that they must be told where to go to find jobs. I say that this charity about which we are talking should not be given to them if there is work available for them.

That is the first form of abuse which I believe could be eliminated or greatly reduced, thereby reducing the need for the Supplementary Estimates.

The whole House is worried about abuses of this kind. The former Minister expressed her concern. There is no political point in this. The abuse of social security provisions brings the whole sysem of social security into disrepute. This is bad for the system and bad for the House.

My second worry is that I found in the office of the Ministry of Social Security that the one case of abuse which officials were powerless to interfere with, where they knew that they were being deceived by the claimant but could do nothing about it, was that of the man with a doctor's note who claims sickness benefit. This is the man who comes in waving a doctor's note and grinning all over his face and saying that he is claiming sickness benefit because the doctor says he is sick.

I made some inquiries among Liverpool's doctors about this matter. The ones to whom I spoke—I admit that it was not a great number, only three or four—admitted to me entirely freely that on many occasions they had given notes to claimants for sickness benefit without being certain whether the men were sick.

Mr. Pentland

Then why did they give the notes?

Mr. Fortescue

They gave the notes for several reasons, the combination of which they found irresistible. The first was that there are conditions which cannot be checked in a brief interview in the consulting room. If a man comes to the consulting room and says that he has a backache, how does the doctor check that he has a backache? The second reason is that many of the patients, if not all of them, are social acquaintances of the doctors, and it is difficult to refuse a sickness note to someone whom you will see socially that evening.

The third reason is that the patients on a doctor's panel are his means of livelihood. If he loses patients, his income obviously diminishes. He does not want to acquire a reputation in the neighbourhood for being the kind of doctor who will not give sickness notes. The fourth reason, which hon. Members may not believe, is that there are examples of doctors' windows having been broken in Liverpool when they have refused to give sickness notes. These four reasons add up to a fairly formidable catalogue.

So on 21st October last I asked the then Minister of Social Security whether she will introduce arrangements whereby medical certificates supporting claims for sickness benefit must be signed by salaried doctors rather than by general practitioners whose practice depends on the good will of their patients", The right hon. Lady replied, as I expected: No. Sickness benefit is paid for incapacity for work and the person best qualified to certify whether a patient's condition is incapacitating for work is the doctor who is responsible for diagnosing and treating that condition."—[OFFICIAL RL'PORT, 21st October, 1968; Vol. 770, c. 209.] I have not taken the matter further, but I still believe that there could be ways and means of overcoming this problem. There must be available in the Ministry's statistics figures showing what illnesses and conditions are mostly claimed for. For instance, the 1967 Report of the Ministry shows that over half a million claims for sickness benefit were referred to regional officers of the Ministry. Of that half million, 55 per cent. were upheld—that is, the men and women were found to be incapable of working. By my simple arithmetic, in 45 per cent. of cases the claims were not upheld, nearly a quarter of a million were found to be capable of work, though they had been given sickness benefit notes by their doctors.

Would it not be comparatively simple for certain conditions to be referred automatically to the regional medical officers, and not at the request of the doctor as now? Would not that be a way of reducing the abuse which undoubtedly exists? The people behind the counter in the Ministry's offices would tell the hon. Gentleman which conditions should be covered in that way. They know. If he talks to his officers and to a few doctors in the big cities, the extent of the abuse will rapidly come home to him.

I have tried to make a few practical suggestions showing how Supplementary Estimates of this size and nature could be reduced or, perhaps, even eliminated in the future.

8.35 p.m.

The Under-Secretary of State for Health and Social Security (Mr. Norman Pentland)

I listened carefully to what the hon. Member for Kensington, South (Sir B. Rhys Williams) said and to his various suggestions for reformulating our system of social security provision. I imagine that the hon. Gentleman will agree that it is impossible for me to enter upon a detailed discussion of the ideas which he has put forward in a debate of this nature falling within a narrow compass. As he said, there will be other occasions when we shall discuss many of the topics which he raised.

The hon. Member for Dorset, South (Mr. Evelyn King) referred to what he called the unworthy people who receive Supplementary Benefit. He has raised this matter with me on more than one occasion, and I am sure that both he and his hon. Friend the Member for Liverpool, Garston (Mr. Fortescue) realise—the hon. Member for Garston accepted it—that we in the Ministry, particularly on the supplementary benefit side, do all we can to end abuse.

I was more interested in the ideas of the hon. Member for Garston about how young people could be expected, with pressure—that pressure being the stopping of their only means of livelihood—to move from one part of the country to another. I could never agree with him about that. However, I should be straining the patience of the House if I were to stray into a discussion of what we regard as the ethics of the direction of labour. In that connection, we should have to have regard also to the direction of industry. The two go hand in hand. The hon. Gentleman raised far too wide a topic for this debate.

I imagine that Liverpool doctors, although the hon. Member for Garston spoke 10 only three or four, will be interested to see what he said tonight. No doubt, they will have ways and means of coming forward on that matter.

In all these cases, as we have said time and again, we recognise that there is a tiny minority who abuse the system. One can find abuse of our social security provision in all its forms. But we must not overlook the decency and honesty of the vast majority of people, who in some cases have to be encouraged again and again to claim what they are rightly entitled to in social security provision. Further, we have said that if any hon. Member knows personally or has evidence of abuse and if he will pass his knowledge or evidence to the Department we shall by all means have it fully investigated. The hon. Member for Garston accepts that that is so. He knows that these cases are carefully scrutinised by our officers, who do everything possible to try to end abuse.

Mr. Evelyn King

I fully understand the hon. Gentleman's difficulties, and I am not unsympathetic, but my point was quite distinct from that made by my hon. Friend the Member for Garston. There is no question of direction of labour. I am concerned about the number of young men and women who deliberately, of their own will, leave their homes during the summer, come for two or three weeks to a seaside resort with the idea of enjoying a holiday, and then go on supplementary benefit. That is the point. The direction of labour could not possibly come into that.

Mr. Pentland

Of course, I could not generalise without the evidence before me of the circumstances of these young people. I should think offhand that it was perhaps a question not so much of enjoying a holiday as possibly of some mental deficiency, for example, which makes them leave home. We have to remember that we do have this type of people in our society. We do have "drop outs". I am sure that some of them migrate to the south of England just as others migrate to London. But if the hon. Gentleman has evidence, as he seems to have, and will send it to us, we will have it. thoroughly investigated. This is the kind of help our officers would gladly welcome in order that we could get to these cases.

It may be helpful if I now explain the basis of the Supplementary Estimates for supplementary benefit. The hon. Member for Kensington, South referred to the transference of money from the National Insurance Reserve Fund. He probably knows that supplementary benefits are financed from general taxation. They are not financed from any contributions. There is, therefore, no question of using any money transferred from the National Insurance Reserve Fund to the National Insurance Fund to meet the extra cost of supplementary benefits such as we are discussing.

Sir B. Rhys Williams

The hon. Gentleman has not explained where the 25 per cent. is coming from.

Mr. Pentland

I will deal with that. The original estimate of the net expenditure on supplementary benefit for the year 1968–69 was £394 million. The additional provision which has been under discussion this afternoon is £33 million. The greater part of this increase is, of course, the direct result of the decision taken by Parliament last summer to raise the supplementary benefit scale rates with effect from 7th October, 1968, for the 2½ million beneficiaries.

The leading rate—that for a single householder—was put up by 5s. from 86s. to 91s. a week. Other rates were increased in proportion and there were improvements in certain other features of the scheme. For example, the long-term addition to the rates for people over pension age and certain other beneficiaries was raised from 9s. to 10s. a week. The cost of these changes introduced last October is expected to amount to £24 million in the period up to the end of the current financial year.

A further £11 million was asked for not on account of the changes in the scale rates themselves but because of minor variations in the number of beneficiaries on the average payments which they are receiving. The net figure is, however, only £33 million, not £35 million, because of an expected increase of £2 million in Appropriations-in-Aid—that is receipts, mainly by way of arrears of National Insurance benefit, and payments from liable relatives.

For certain groups of people these levels are slightly higher than was originally expected. The House will appreciate that since the average payment is the net result of setting on the one hand a person's requirements—the appropriate scale rates, rent, and any special needs—against his resources, such as National Insurance benefit, on the other, changes in the range of resources or the level of requirements can affect the average payments even though the scale rates themselves remain unaltered. I think that that is the question about which the hon. Gentleman was concerned. It is in respect only of that extra expenditure that £11 million was expected to be about 75 per cent. of what the hon. Gentleman mentioned as the expected additional amount needed. The full cost of the uprating during the present financial year has been allowed for. It is stated in the Supplementary Estimate.

Perhaps I may remind the House of the circumstances which led to the increase in supplementary benefit scale rates, and thus to the major part of the Supplementary Estimate that we are discussing. On 16th January, 1968, my right hon. Friend the Prime Minister, speaking in the context of measures following devaluation, pledged the Government to protect the most vulnerable classes of the community from hardship resulting from the effect of devaluation on import costs. In fulfilment of this pledge the Government brought into effect last autumn increases in family allowances, in the qualifying levels for rate rebates and in the rates of supplementary benefit. I have already quoted the main increases in benefit which produced in October, 1968, an increase over the rates introduced in October, 1967, of rather under 6 per cent. As intended, this covered the increase in prices over the same period.

What this meant is that the significant advance in standards of non-contributory benefit which the Government have introduced since they took office in October, 1964, have been maintained despite the grave economic problems which face the country. Thus, in real terms, the main rates of supplementary benefit are a fifth higher than they were in October, 1964, even if no account is taken of the long-term addition. This addition was introduced when the Supplementary Benefits Scheme began in 1966 for all old people on benefit and for people below that age, other than the unemployed, who had been on benefit for two years or more. It is now payable to about 80 per cent. of the beneficiaries on the books of the Supplementary Benefits Commission at any one time, and was raised from 9s. to 10s. in October, 1968. Taken together with the other improvements made when the Supplementary Benefits Scheme started in 1966, all this has marked a real step forward in providing help to many of the poorest in the community.

It is worth considering for a moment to whom these benefits go. By far the largest number, or about 70 per cent., of supplementary benefit recipients at any one time, are old people. The next largest group—about 12 per cent.—are the sick and the disabled, just over half of whom are also receiving national insurance sickness benefit, while most of the remainder are the congenitally sick and handicapped who have never been able to work.

Then come the unemployed, under 9 per cent., followed by fatherless families, including National Insurance widow beneficiaries, with about 6 per cent. Finally, there are certain smaller groups such as childless widows and people who are staying at home to care for sick or aged relatives. All these groups have been helped by improvements in supplementary benefits, while poor families where the father is in full-time work, together with people whose supplementary benefit is "wage stopped", have been helped by the Government's family allowance improvements and other innovations such as rate rebates. These have also benefited many old people just above supplementary benefit level.

The improvement is supplementary benefit standards, which the Supplementary Estimate under discussion helps to maintain, has, naturally, led to an increase in numbers on benefit in most of the groups mentioned above. This has been added to by other factors, in particular the effect of the new scheme of 1966 in attracting people who may have been reluctant to claim. As a result, to take the largest increase as an example, the number of old people claiming supplementary benefit is now some 400,000 more than it was before the scheme began.

I realise that at first sight it may seem odd to be talking in terms of the increases in the numbers on supplementary benefit when the Government have just produced a White Paper advocating a new scheme of contributory benefits whose long-term aim is to reduce very substantially the numbers on supplementary benefit.

Again, I come to a particular point raised by the hon. Member for Kensington, South. He raised the White Paper figure of 2 million retirement pensioners receiving supplementary benefit. This includes the wives receiving supplementary benefit. The figure of 1,848,000 old people receiving supplementary benefit at November, 1968, does not include wives, since they are included with the husbands. It also includes about 170,000 old people not receiving retirement pension. This is not the time to discuss in any detail the new Government proposals, but I should explain that there is no inconsistency in this situation.

The Government consider that for the long term the contributory system is the right way to go. But a new contributory system cannot be brought into effect overnight. It cannot cover people who have not paid contributions under it, and it cannot cover all possible misfortunes of life. For all these reasons the Supplementary Benefits Scheme has a key rôle to play, in the view of the Government, even if the extent of this work will in the long term decline. The Government are determined to provide the best supplementary benefit scheme they can to carry out these tasks.