NATIONAL INSURANCE CONTRIBUTIONS

HC Deb 15 May 1969 vol 783 cc1727-86

7.22 p.m.

Lord Balniel (Hertford)

I beg to move, That this House condemns the irresponsibility of Her Majesty's Government in announcing increases in social insurance and other benefits without revealing what extra burden this will impose upon employed people, employers and general taxation. A month has now passed since the Budget speech, and the Finance Bill has been published and is now in Committee. On the very day on which the Budget speech was made—indeed, throughout the Budget debates—we condemned the Government's irresponsibility in announcing changes in National Insurance benefits without disclosing how the cost would be met. Still today, a full month later, we have been told nothing of how much extra taxation will be required and how much extra contribution from employed people, how much extra contribution from industry, how much of an extra burden on general taxation. The financing of National Insurance benefits is as important as taxation, because, exactly as taxation, it affects the take-home pay of every family in the country.

I am glad that, at the last moment, the Secretary of State for Social Services has decided to take part in this debate. I was told just before the debate that he did not intend to take part. With my usual good nature, I assumed that he had forgotten the debate, as he had forgotten the recent local elections. It would though be for the convenience of the House if the right hon. Gentleman could make up his mind and stick to it for five minutes at a time. What I suspect has happened is that, as a result of the Motion, he found himself in a completely untenable position and has therefore found it necessary to take part in the debate. He is very welcome.

I am bound to say, with the Chief Secretary present, that I am astonished that no Treasury Minister is taking part. Overwhelmingly, the Motion criticises the Chancellor of the Exchequer. I fail to understand how the Chancellor could put before the House a Budget judgment, announcing increased benefits from the National Insurance Fund, without disclosing the increased taxation which will have to be levied to meet those increases. The failure of any Treasury Minister to take part in the debate seems to compound the irresponsibility which our Motion condemns.

It is the right hon. Gentleman's duty, of course, to reply to the general debate, but we understood from the Leader of the House, during Business Questions today, that he intends to make a statement about the Health Service charges on dentures and spectacles. I should like to ask him two questions. The right hon. Gentleman said that he hoped that the announcement of increased charges on dentures and spectacles would be announced in the Budget. Why did he hope that it would be in the Budget, and why was it excluded from the Budget?

Second, when he announced the increased charges on dentures and spectacles, we were given to understand from his statement that the money which would be raised would be used for other parts of the National Health Service. In particular, he mentioned the possibility of using the finance for hospitals for the mentally handicapped. These are charges which bear most hard on the elderly. We now understond that the additional revenue raised will be spent on comprehensive schools. Could this be cleared up. May we possibly be told whether the additional revenue will be raised for the Health Service or for comprehensive schools, as we read in the paper today?

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

I understood the noble Lord to say that he expected me to intervene on the subject of the contributions which are the subject of this debate. It is news to me that the subject of charges has been introduced.

Lord Balniel

Probably the right hon. Gentleman left the Chamber before the Leader of the House made his statement, but I understood that one of my hon. Friends referred to the increased charges and the Leader of the House said that a statement would be made by the Secretary of State for Social Services. If I misunderstood the right hon. Gentleman——

Mr. Crossman

I think that there was some misunderstanding. The point is that I hoped to suit the convenience of the House by discussing the subject of the contribution levies which we were making and this, I thought, was the subject of this debate.

Dame Irene Ward (Tynemouth)

My hon. Friend may not have read the reports in tonight's Evening Standard and Evening News to the effect that the Secretary of State for Education and Science had no idea that the increases on spectacles and false teeth were to be diverted to comprehensive education.

Lord Balniel

I think that we had better leave the matter there, for this emphasises that we have a dithering, disintegrating Government.

The Budget was designed to increase taxation by £272 million in the current year and by £340 million in a full year. This was clearly explained to the country, apart from some minor evasions about where the burden would fall. This vast increase in taxation is widely understood; and it is also widely recognised that it is the third hardest Budget this country has experienced in peacetime.

It was not clearly explained that a similar amount would have to be raised to meet the changes in National Insurance benefits in the autumn simply to restore the purchasing power of the pension. The Chancellor was exquisitely precise in announcing the benefits. He was studiously vague in disclosing the burdens. That perfect balance which the right hon. Gentleman tried to achieve—of announcing the benefits but hiding the burdens—seems to epitomise the economic mismanagement of the country at present.

The Chancellor said that the cost of the increased State insurance benefits would be about £250 million in a full year. He went on: … but substantial extra provision will have to be made on top of this, to take account both of the existing imbalance between income and expenditure of the main National Insurance Fund, and of the continuing increase in the number of pensioners in relation to the working population."—[OFFICIAL REPORT, 15th April, 1969; Vol. 781, c. 1014.] I shall return to the question of the imbalance of the National Insurance Fund shortly, since a great deal of explaining needs to be done. Explanations have no doubt been given to the International Monetary Fund on its three-monthly audit of Britain's economy but the House of Commons is also entitled to have an explanation before the debate ends.

We repeatedly, throughout the Budget debates, pressed the Government to say how this cost would be met. We asked them to say how much extra weekly contribution would fall on employed persons, how much extra weekly contribution would fall on the shoulders of industry and how much extra burden would be placed on general taxation. The Government consistently refused to answer these key questions.

We are, after all, not talking about small change. The explanations we require about this taxation involve sums of money which are comparable with the totality of the Budget. In other words, the sum which will have to be raised in contributions is about equal to the total which is being raised in taxes. Yet the Government have refused to answer these questions on the ground that they are still working out the sums.

I have made inquiries to confirm my memory of previous pension increases. On all five occasions when, under Conservative Administration, increased benefits were announced, the increased contributions were announced absolutely simultaneously. Normally we thought it right that the statement should be made by the Minister responsible—then the Minister of Pensions and National Insurance—but I concede that there was one occasion, in very special circumstances—it occurred in the 1952 Budget following the crash of the economy in 1951 under Labour—when there was, in that unique circumstance, an announcement of increased benefits made by the Chancellor in his Budget speech. At the time the Chancellor was my noble Friend Lord Butler. But in his Budget speech he announced not only the increased benefits but, simultaneously and down to the last ½d., what increased contributions were required.

I recognise the urgency of the situation and I could read the Chancellor's mind clearly as, in the Budget, he piled tax on top of tax. The purchasing power of the State pension is falling rapidly and I agree that it urgently needs to have its value restored. Food, gas, electricity, coal, bus fares—I read about this in the evening papers—rates, rent, clothing, beer, and cigarettes—all these items of everyday life are costing more.

In my constituency the water rates this year are being increased by 42 per cent. Many other costs which particularly hit the elderly are increasing; for example, the charges on dentures and spectacles. While this might seem a rather absurd example of how rising prices particularly hit the elderly, the increase in the tax on pet food will have a big effect. Many elderly people are lonely and a great number of them have pets to keep them company. Indeed, between 30 per cent. and 40 per cent. of all elderly people are known to have pets. The cost of keeping a dog will be increased by about 4s. a week, The Budget as a whole will give a further twist to the price spiral, with its increase in S.E.T., a tax which has a direct impact on the cost of living.

I cannot understand the Government's extraordinary self-satisfaction with the position. I accept that, like decent human beings, hon. Gentlemen want to be generous towards our old people. I am the first to confirm that directly they were returned to office they substantially increased the value of the State pension, paying for it out of the prosperity of those times, which seem a long time ago.

But the economic mismanagement since then—emphasised by this incident in the Budget which we are debating today—results in the purchasing power of the State pension being substantially below what it was in 1965. The latest figures, issued in March, 1969, show that, compared with similar figures for four years ago, there has been a drop of 5.1 per cent. in the real purchasing power of the pension.

It is impossible for us to make exact forecasts, but it is reasonable to anticipate that, within six months of the pro- posed November increases—the increases which will take effect this autumn—the purchasing power of the pension will again have fallen to below the 1965 level. This will be exactly the rate of erosion which followed the 1967 pension increase. Under the Government's proposals there will be a regular two-yearly review, but already, long before the pension increases have come into force, we know that within six months the pension will have fallen to below its purchasing power of 1965.

The tragedy is that these heavy increases in contributions, however they will be distributed—perhaps we will be told today—which should achieve an improvement in the standard of life of our old people, will have lost their meaning within six months. In other words, these heavy increases are necessary not to secure a real improvement in their standard of life but purely to compensate for the tide of rising prices.

Just as it is wrong to announce benefits in isolation, so it is wrong to consider the burden of contributions in isolation. Contributions are part of that complex of taxes and prices which affect people's take-home pay. Our poor battered families are facing the treble impact of higher contributions, higher taxes, and higher prices—prices which rise every day. Since 1964, the National Insurance contributions have gone up by 40 per cent., while average weekly earnings have increased by 27 per cent. In 1964, an employed man, not contracted out of the graduated scheme, paid 11s. 8d. a week. Today he pays 16s. 8d. a week. That is an increase of 5s. a week.

During that same period taxation has been increased by over £3,000 million, which means that for every £1 taken in taxes by the Government in 1964, over £2 is being taken today. In that same period between 1964 and January of this year, prices have risen by 21 per cent.—4s. 3d. in the £. This is a very different picture from that in which the Conservatives increased pensions five times and, at the same time, made large cuts in taxation.

In view of this treble impact of higher contributions, higher taxes and higher prices on our working population and on industry, it simply is not fair or straight not to have announced the details of how the higher benefits would be paid for at the same time as announcing the higher benefits themselves.

There can be only two possible explanations why the Chancellor of the Exchequer did not make that announcement in his Budget speech. Either he knew how they would be paid for and did not wish to increase his personal unpopularity by announcing them then, or he did not know, in which case the Government stand convicted of incompetence and irresponsibility. I will not attempt to distinguish whether the reason was the personal vanity of the Chancellor of the Exchequer or the Government's ignorance. Hon. Members opposite can take their choice. But it must be one of those two reasons.

I turn now to the National Insurance Fund, and to that part of the Chancellor of the Exchequer's speech in which he indicated that an unspecified increase in contribution is needed over and above what is needed for the payment of the increase in benefits … to take account … of the … imbalance … of the … Fund …".—[OFFICIAL REPORT, 15th April, 1969; Vol. 781, c. 1014.] It is very disturbing to hear about this imbalance of the Fund. I hope that before we rise for the Whitsun Recess—and presumably it will be when the Secretary of State introduces his Bill—we will have the Government Actuary's Report explaining the situation.

It is very disturbing to hear that the National Insurance Fund has run into deficit again, because, only so very recently, steps, and extremely unpleasant steps, had to be taken to put the National Insurance Fund in balance. When the last pension increase was announced, the Government Actuary's report published in June 1967 as Cmnd. 3321 said: Table 4 shows that the proposed contribution increases will be more than is needed"— more than is needed: to meet the direct cost of the increases in benefit rates, the balance of the extra income being required to meet the deficits which would accrue before 31st March 1970 if present rates of benefit and contribution were continued. Contributions at the proposed new rates should therefore be adequate to support the increased benefits over that period. Then, just a very few months later—on 16th January, 1968—the Prime Minister announced that an extra 6d. a side increase in the National Insurance contribution was needed … to prevent the National Insurance Fund from going into deficit."—[OFFICIAL REPORT, 16th January, 1968; Vol. 756, c. 1588.] This was the first time in the history of the National Insurance Fund that contributions had been put up without a corresponding increase in benefits.

When we challenged the then First Secretary of State, now the Foreign Secretary, to say what was wrong, he said: There are limits to human capacity for far sightedness."—[OFFICIAL REPORT, 19th February, 1968; Vol. 759, c. 355.] That may be true, but there are also limits for short sightedness.

This is not the end of the story. As my hon. Friend, will remember, only last December—again, I think, for the first time—no less than £200 million was transferred from the Reserve Fund to the main National Insurance Fund. This was done, according to the Government spokesman, to put the Fund … in a better financial position to meet demands which may be made on it. He went on to say: This is a precautionary transfer and it is possible that the money transferred will not actually be drawn upon."—[OFFICIAL REPORT, 12th December, 1968; Vol. 775, c. 717–20.] Now, four months later, the Chancellor of the Exchequer tells us that substantial extra provision will have to be made because of the imbalance.

The International Monetary Fund has, without any question, been given an explanation of the situation. The House also is entitled to know what has gone wrong. The House is entitled to know what is the total cost of the increased benefits; of the pensions, and of the related benefits such as sickness benefit and unemployment benefit. Unemployment benefit, incidentally, has soared from £45 million in 1965 to £125 million last year.

The House is entitled to know what is the increased cost of the supplementary benefit which is proposed this autumn; and, perhaps most important of all, what is the increased cost of again putting the Fund in balance. The House is entitled to know, and it should have been told at the time of the Budget, exactly how the burden is to be distributed between different employees; what additional burden is to be imposed on industry, and what additional extra taxation is to be levied to meet these changes in the National Insurance Fund.

The failure to give that information in the Budget speech which announced changes in benefit was wrong in principle. It was absolutely unprecedented. It was deceitful towards the general public, and it was completely irresponsible from the point of view of the general management of our economic affairs. This Motion condemns the Government for their irresponsible action at the time of the Budget speech.

7.48 p.m.

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

I certainly agree with the noble Lord on one thing, and that is the importance of this subject, and vast sums with which we are dealing and the very big decisions we have to make. He has not exaggerated there at all. We have an immense job. In that job we are reviewing the whole range of National Insurance benefits and allowances—industrial injury, supplementary benefits and war pensions. They are all being reviewed in terms of benefit and contribution. That has been my job and that of my hon. Friend the Minister of State who specialises in the subject in the Department.

I admit that when I looked at the Motion I was in two minds, as the noble Lord said, whether to ask my hon. Friend the Minister of State to deal with the narrow and, I must say, slightly pettily expressed issue in the Motion, or myself intervene to deal briefly with that aspect and rather more widely with the big issues which the noble Lord raised towards the end of his speech. I came to the conclusion that the House would not be content in this debate—indeed, would be disappointed—if I did not speak. I therefore decided that the best thing that I could do was to make as full an interim explanation to the House as possible, and to answer as many of the questions that the noble Lord has put to me as I can.

I will deal this evening, I think in adequate detail, with one subject the noble Lord has raised—that is, the National Insurance Fund and the amount to be raised. I shall not be able to deal in detail with the exact methods of con- tribution because they are enormously complicated, though I will deal with the general principles of benefit.

There is one special reason for this which I shall come to towards the end of my speech. Since the White Paper was published, and as a result of its publication, there has broken out in pension circles, which are extraordinarily private circles in the sense that very few people understand what is going on, a major dispute about one paragraph in the White Paper. It dealt with the highly technical, but very important for millions of ordinary people, subject of what is to happen to the benefit which people have earned as a result of the Boyd-Carpenter pension—the benefit they get from the bricks they acquire, or the pension entitlement from the graded element in the contribution.

This controversy was started by a representative of Unilever, I think, from the National Association of Pension Funds. It has been clear that there is an immense discussion going on, and this issue is one which we cannot avoid and which we have to take a decision about. As I said, my White Paper was a White Paper with green edges. I meant it. This is certainly one of the issues where I am prepared to think, and I am indeed thinking again. Since this in a sense does indeed relate to the Bill, though it would not be included in the Bill, a statement about this must be made before the Bill is considered so that the Bill can be seen on its merits. I have decided that this discussion must continue.

I therefore think that the best thing that I can do is to give the description to the House this evening of what we are up to and to describe the issue. We will give the full details after the Recess. Then we shall come to present the Bill and the actual White Paper which accompanies it. That is the programme of action which I have put to myself, and I hope that it will commend itself to the House.

My speech will be divided into four parts. First, I will deal briefly with why my right hon. Friend the Chancellor made an announcement in his Budget speech. He did not announce the details of the benefits. He announced only the main benefit to indicate the line. Second, I shall deal with the costs and the state of the National Insurance Fund. Third, I shall say in principle how the contribution will be raised. Then, finally, I shall tackle the special subject of the problem arising among pension funds about the future of the benefit accruing on the graded element in the Tory Government's scheme.

I will try to deal with the same sense of gravity as the noble Lord employed with the issue of the Chancellor's behaviour. The noble Lord asked me why the Chancellor announced this. I will tell the noble Lord quite candidly why my right hon. Friend made the announcement. He made the announcement to reassure pensioners that the Government intended to implement their pledge to protect them against price increases, and to do so before the winter. Very naturally, the Chancellor knew full well that if he had not made that statement in his Budget speech a number of people might have been anxious that they were going to suffer the same kind of fate as that which befell them normally under a Tory Government.

I looked back and saw what happened about pension renewals under our predecessors. After the increase in 1958 it was three years and three months before the next increase came. Before that it was two years and nine months. Before that it had been two years and six months.

We have written in the White Paper the proposal that there should be statutory biennial reviews. Our last review was exactly after two years. What the Chancellor was telling the pensioners was, "Yes. Whatever happens, you will get it in the two-year period which we have promised and which is a good deal shorter than happened under our predecessors." [Interruption.] If I think of that period of thirteen years, sometimes prices went up more and sometimes less. I am coming to the prices now, because the noble Lord raised the important question of the value of the pension.

The truth of the matter is—let us give the facts as they are; I do not think that the noble Lord and I really disagree on these facts—that the current retirement pension still at this present time provides 10 per cent. more spending power—more real value—than the pension had when the Tories were in office. The real value—that means the real income of pen- sioners —has been substantially raised Even in this difficult period before we do the 10s. increase, it is 10 per cent. above the income which people had before we took office, and it will be 20 per cent. above when we have completed the change next autumn. That is a very simple fact. The autumn increase—the noble Lord asked me about the increase—will restore the value of the pension to the October, 1967, level. That is 20 per cent. higher in real terms above the 1964 level. In money terms the increase represented by the new £5 pension for single persons compared with the 1964 pension of £3 7s. 6d. is £1 12s. 6d., or nearly half as much gain.

I shall not spend much time arguing, but I think that pensioners knew this very well. We did in fact make a major shift. This was a redistribution. We said to the workers, "Look. We have promised it. The retired must have a larger spending power, even if it is at the cost of us all spending rather less during our working lives".

Sir Brandon Rhys Williams (Kensington, South)

How much?

Mr. Crossman

I am talking about 1964. I am surprised that the hon. Gentleman should have to ask how much. The increase this year will be 10s. for the single person. All the other corollary rates will have the relevant increases. That will restore the value. The hon. Gentleman, who is an expert on pensions, will recognise that the pension is in real value one-fifth greater than the pension which the Tory Government felt the people deserved. That is a very big difference. It is a difference we have sustained over a very difficult economic period and despite the great difficulties of the period.

I would simply say that in a Budget review of the economic situation I should have thought it would have been most extraordinary to leave that out. The Chancellor also had a very special reason for doing this in his Budget Statement, because he was making a series of reforms and tax changes specially designed to suit old people. For the third time since 1964 he increased the income limits up to which elderly people of 65 or over qualify for age exemption from income tax. He made another concession, in that from now on the taxpayer aged 65 whose income does not exceed £1,000 will be able to claim relief equivalent to two-ninths income relief on his investment income. My right hon. Friend also proposed to raise the income limits on allowances for those maintaining an elderly or infirm relative. My right hon. Friend took a great number of small steps.

Obviously, if my right hon. Friend was making all those small tax changes, he had to relate them to, and enable them to be seen against, the increase in the pension, because one of the most important things to do if the pension is increased is not to lop off the increase by letting the tax level be at a point where the pension is subtracted from by tax. This needs to be done. It is petty to say that this is something which the Chancellor should not have done, because he made it clear in his speech also that substantial extra provisions need to be made on top of this, and he made it clear that we would have to pay a very heavy price in contributions.

So I come to the second point, which is the burden of contributions, the detailed scheme of which we are now working out. Before I come to the figures, let me first give the reasons why this burden has increased. It is not simply the increase in the value of the pension. As the noble Lord rightly said, there is a substantial amount more which we receive above what is needed to increase the pension.

Why are we doing that? We have drawn attention to one of the factors, which is quite simply that the number of pensioners is increasing in proportion to the rest of the population. Their numbers are growing faster and faster than ever. We draw attention to this in our White Paper, which gives figures showing that the ratio of people over minimum pension age to the population of working age will increase from 25.2 per cent. in 1967 to 28.3 per cent. in 1980. In the early 1960s the number of retirement pensioners was increasing annually by numbers ranging from 100,000 in 1961 to 170,000 in 1964. This is remarkable. Since 1964 the increase has been about 200,000 a year. At the end of 1968 retirement pensioners numbered nearly seven million.

The hon. Gentleman asked why retirement pension contributions must go up. One of the major factors is our success in keeping our old people alive longer. It is a success that we must pay for, just as our success in education means that our children cost us more. Our dependants at both ends of the age range are costing us more and more, while the size of the working population tends to decline. Unless the population trends change remarkably in the years ahead, we shall have to look forward to the working population having deducted from their earnings larger proportions even to maintain the value of the pension, far less to increase it, as I would like to do. It is a formidable problem when we have an extra million pensioners in seven years not only to maintain the pension value as we want, and as I think the hon. Gentleman wants, but also to see that the individual pensioner receives a larger share. So much for the pensioner.

There are other factors which increase the contribution. One is the disconcerting fact that although in the past three winters fewer old people died, more working people claimed sickness benefit. There has been a very heavy increase in sickness benefit during this period. It is partly due to our earnings related sickness benefit scheme for the first six months of sickness. This is a very generous scheme, like the generous scheme for unemployment benefits, which the hon. Gentleman did not mention. One reason why unemployment benefit costs again went up is that we pay very much better benefit now. It is true that the six-months' earnings related benefits for sickness and unemployment, which most hon. Members opposite must admit to be an enormous improvement not only in principle but in practice, is a very costly improvement. It is a cost that we have to bear, and if the scheme continues at that standard it will cost more.

As the hon. Gentleman rightly said, the number of unemployed also increased in that period. These changes might each seem somewhat marginal but we are dealing with £2,000 million a year and what are marginal in statistics can be formidable differences when they are worked out. It does not take more than a statistically small number on sickness benefit to produce an enormous increase in cost.

Therefore, the result of the changes was that we had many more old people to look after, many more people going sick and claiming sickness benefit, and somewhat more unemployed. In the financial year just ended, the National Insurance Fund had a deficit on current working of £80 million because of the continuing growth in the number of pensioners. After making reasonable allowance for present trends, it is clear that if steps were not taken the deficit would grow over the next two or three years. Our estimate is that by 1971–72 it might be as high as £220 million at present rates of benefit and contribution. So we can see the scale of the problem.

This autumn we must not only pay for the increased pensions and allowances, which no one in the House will grudge, but must act promptly to ensure that the Fund is kept properly in balance now and in the immediate future. This means that we shall need to find a total of about £430 million. But this will not all have to come from increased contributions. About £70 million is automatically the Exchequer contribution. We shall accordingly need to raise from increased contributions about £360 million. That is a very large sum, but essential if we are to fulfil our obligations to the pensioners and others with benefit entitlement and keep the National Insurance Fund on an even keel.

I hope that the hon. Gentleman is satisfied. I think I have answered his main section on the state of the National Insurance Fund and the amount to be raised.

I turn to the second matter about which I was asked——

Mr. Iain Macleod (Enfield, West)

The right hon. Gentleman said a moment ago that he was in effect assuming present trends. I do not ask for precision in his reply to this, but am I right in saying, therefore, that he is assuming something like, seasonally adjusted, the present level of unemployment, and that that is implicit in the figures he is giving to the House?

Mr. Crossman

I would ask the right hon. Gentleman to let my hon. Friend the Minister of State reply. I think it is a question of whether it is the last two months or which period is taken. I do not think that we have anything to disguise on that.

We have a formidable sum to raise. How to raise it? There was one temptation I would mention to the House. It would have been possible to argue that we should not raise it all now but should wait for the quinquennial review. The Conservative Government, envisaging that increases without increased benefits might be necessary to keep the fund in balance, made provisions for quinquennial reviews, and the next is due next April. So we could have had two bites at—not "this cherry", because it does not have the taste of one—this stone, once now and again next April. We decided that it was more sensible to do both jobs together in this way.

Having dealt with one method of avoidance, I come to how the money is to be raised. There are several alternatives, and we have analysed them all very carefully. It is possible to argue that we should put the bulk of the increase on the employers. Many European countries do this. In Sweden, a country whose pensions I greatly admire, there is a splendid earnings related pension scheme where the employee pays nothing and the employers pay 10 per cent. of earnings every year. The employers say it makes the trade unions so modest in their wage claims that they are overwhelmingly repaid by this arrangement. I doubt whether that would happen here. I do not think that our employers can be blamed for saying that they do not want to follow the Swedish example.

We are in the middle of a great export drive. To put it crudely, if we put the increase on the employer we put it on the cost of goods, and it would not help us now to overload him. We are therefore retaining the strict parity between the employer and employee which we have written into the White Paper. We continue to try to keep the two contributions roughly equal. The contribution will not be off-loaded on to the employer as it is in France, Italy and Belgium as well as Sweden.

Could one off-load it on to the taxpayer? One could do it by increasing the Exchequer contribution, but we are keeping the Exchequer contribution to the same proportion. Could we increase it? It is my considered view that we should not. I am very concerned about the up-rating being one moving towards the new scheme. I want it to be in conformity with the principles of the scheme, in which the Exchequer contribution is about 18 per cent. If we avoided our difficulties in the next two or three years and made the Exchequer pay more now we should upset the balance of the new scheme. The level of taxation is high enough today [HON. MEMBERS: "Hear, hear."] I notice that I have won some support.

If we agree that the increase should not go on taxation, and if we think that it is very doubtful whether it is wise to put it on the employer, we are driven back to the fact that we must share it between the employer and contributor, knowing very well that with pensions it is only the contributor who really pays, whatever happens, because the employer puts the increase on the cost of goods. We may as well face it.

How does one put the increase on the contributor? If I had followed the example of my Conservative predecessors I should no doubt have increased the flat-rate benefit by the necessary amount. That is what they did every time in their long period in office. They did not vary the graded element during the period after it was introduced. I have always hated flat-rate contributions. One of the greatest objects of the new scheme is to abolish the flat-rate poll tax and to make sure that the worse-off person pays less and the better-off person pays more. This was a principle we fought for, and I want to sustain it.

In 1961 the flat-rate contribution for a man earning £12 a week represented 4.1 per cent. of his pay. It is now 6.9 per cent. But for the man earning £30 a week it is only 2.8 per cent., and even with a graduated contribution it is only 4.4 per cent., against 8.2 per cent. on earnings of £12. These contrasts are intolerable, and the main thing I thought we should do was to see to it that we spread the burden as far as we could.

There is another figure that I think the hon. Gentleman would like to hear. To raise the money we need by a further increase in the flat-rate contribution would mean a rise of well over 3s. each for employer and employee in the stamp. In my view, this would have been intolerable.

We concluded that it would not be right to follow the example of our predecessors, and therefore we have been at work on a method of adjusting the flat rate by as small an increase as possible, plus an increase in the graded element. This has been the reason for the delay. It is on this complicated manipulation for the first time of these two areas that we have been at work, and it will be found in the White Paper when it is published.

Our decision to raise the graded element and put a portion of the increase on it, and not merely on the flat rate, makes urgent the problem I mentioned at the beginning of my speech. If I increase the graded element of the Conservative graded scheme, what do I do about the graded benefit? In order to explain this problem, I should remind hon. Members briefly how the Conservative swindle, as I have described it, works. It is constructed on the "brick" system. Each £7 10s. 0d. that a man pays in graduated contributions, matched by the same payment from his employer, earns him 6d. a week pension. As we pointed out at the time, the weakness of the scheme is that that will still be 6d. 30 years later. The pension is not revalued in terms of money values at the time it is paid out. Therefore, though the contributions are of great value to the Chancellor, because he gets the full value, what one draws out may be virtually worthless, and certainly keep one far below supplementary benefit level.

This pension brick remains fixed in cash terms however long the interval between payment and receipt of the pension. The lack of any provision to re-value the pension to keep pace with changes in prices or earnings has always seemed to me inconsistent with what a State pension should provide. The arrangements for contracting out of the graduated scheme were so constructed, however, as to take no account of the possibility that in future years the cash value of the pension brick would need to be improved.

It was the difficulties in relation to the contracted-out employees which lead us to the conclusion, in paragraph 101 of the White Paper, that graduated pensions earned under the present scheme would have to be excluded from the biennial review, which has been a feature of the new scheme. It is this proposal which has raised a storm of indignation from those employers and employees who had faithfully and loyally stayed contracted-in—and they are the great majority of firms and employees.

They said, "Look what has happened. We have been loyal, we have been in since the beginning of the scheme and you are winding it up in 1972". During that period the value of the pension has dwindled, because of the reasons given. But the employer who contracted-out—that is instead of paying a contribution, retained his money, which could be invested in equities—did extremely well. The pension fund, which would go into the swollen equity market, could give to those members outside the scheme something equivalent to dynamism, whereas the person in the scheme was getting nothing. They said, "Before you wind this scheme up you must give us justice."

Justice would be—and this is the proposal put to us—what is called the dynamism of the bricks from 1972 on. That is to say, every sixpence or whatever is collected would be revalued along with the flat-rate pensions. It always seemed illogical that we revalued the flat-rate pension every two years, but this little Conservative piece stuck to it was left like an appendix, dying away smaller and smaller, when everything else was changing. The proposition was, "Will you revalue that as well?" We think that is common justice to the people in the scheme. It becomes urgent to consider this problem at a time when we are proposing to upgrade the graded element of the contribution. I find it difficult to upgrade that element without giving something in return in benefit for what we have upgraded. My bias is therefore in favour of upgrading.

I have to admit that those who are contracted out do have, and are making, a powerful and serious case. They say that they made a contract on a certain basis and that we are not entitled to change the terms of the contract, although I think that in winding up a concern like a pension scheme we are entitled to do so. The debate has started. I thought it was my duty to tell the House of the debate because it involves the nationalised industries. It involves 65,000 pension schemes, which are lined up and working it out. I have already had long consultations with the C.B.I., the T.U.C., the National Association of Pension Schemes and the Life Offices Association, and I shall be seeing others too.

We need to be careful about this. Whatever we do someone will be disappointed; that is one of our difficulties. Those who are contracted-in will be bitterly resentful of a Government which, as they say, have done nothing for them before the scheme is wound up. As I have said, this is a pension scheme, or a White Paper with green edges. It is true that we have to listen to the discussion a bit later, but it will be essential that when after the Recess we are considering the full details, the "across the range" details of the White Paper and the Bill we should also incorporate a statement on the future. That statement I am not ready to make yet, but I hope that discussions will be completed in time to make it soon after the Recess.

Hon. Members

Swindle!

8.20 p.m.

Mr. Paul Dean (Somerset, North)

The Chancellor did not complete the picture. What we may call the dirty end of the stick, he left to his right hon. Friend the Secretary of State for Social Services. We have the most astonishing position here where the Chancellor in his Budget Statement announces increases in taxation amounting to something like £340 million. No wonder he did not say anything about the increases in taxation, which is in effect what the contributions are for the workers of the country, when they amount to a far bigger figure than that which he is actually raising in the Budget.

The right hon. Gentleman has lifted some of the veil this evening and has said that the additional sum required is no less than £430 million—a quite significantly larger figure than the very steep increase in taxation announced in the Budget. For the working people, those who pay their stamp week by week, this additional impost has to be added to the impost which has already been put on by the Budget. Listening to the right hon. Gentleman's calculations it appears that even this vast sum of £430 million extra may be something of an under-estimate of requirements in view of the other figures which the right hon. Gentleman gave.

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

It would be unfortunate if we were stuck with a wrong figure, and this is what the hon. Gentleman is using. My right hon. Friend said that there was a total amount of £430 million which had to be raised. He said that £70 million of this would be the normal Exchequer supplement, and that £360 million was the amount to be raised by contributions. It would be a pity if the higher figure were thought to be associated with the amount that is to be brought in from increased revenue from contributors.

Mr. Dean

I have taken that second figure into account and am coming to it soon. The point about the £430 figure is that this is additional money required. It will have to come out of the pockets of people, either through the weekly stamp paid by employer or employee, or out of taxation. The total additional burden on the people is £430 million, this is my first point. In other words the Secretary of State is raising a bigger sum from the people than the Chancellor is raising in his Budget. No wonder the Chancellor did not want to spoil the effect by announcing that! He left the dirty job to be done by the Secretary of State.

The second figure that the Minister of State mentioned is £360 million, which the right hon. Gentleman calculated would have to be raised by contributions, in other words from employers and employees. Doing a quick calculation I wonder if this figure will be adequate. We were told by the right hon. Gentleman, and the Chancellor in his Budget speech, that £250 mililon would be required for National Insurance benefits. I assume that this includes all the National Insurance benefits, long and short term, plus the Industrial Injuries Scheme. I also assume that in addition to that there will be an equivalent in war pensions. If it is on roughly the same basis as last time, I calculate that it will cost somewhere between £12 million and £13 million extra.

I will also assume, and I think the right hon. Gentleman has confirmed this, that there will be an increase in supplementary benefits too. If that were to be on the same basis as the increase last time I calculate that it will cost an additional £44 million a year. The total figure involved is something like £307 million. That is the additional amount which I calculate, from the right hon. Gentleman's figures, will be required to meet the increased costs of benefits which will be introduced in the autumn, plus the equivalent increases in war pensions and supplementary benefits.

If that is the case, as I calculate it, the sum left over to meet the imbalance—and the right hon. Gentleman said that this deficit was one which would increase substantially between now and 1972 unless further action were taken—is something like £120 million. I very much doubt, if my calculations are correct, whether that sum will be adequate. If it is not, it means that we can look forward to still further increases in contributions before the new scheme comes into operation, without any increase in benefits, but simply to keep the Fund in balance. I would say that the right hon. Gentleman is painting a very grim picture about the additional costs of these benefits, but I doubt whether it is grim enough, and whether still further increases in contributions will not be required from the people between now and the possible introduction of the new scheme in 1972.

The right hon. Gentleman said that he was having considerable difficulty in deciding how these contributions were to be found to meet this substantial Bill. No wonder he has had difficulties about this and no wonder it has taken him a long time. It was clear that he would reject the idea of a flat rate increase in contributions. He is on record on many occasions as saying that to increase the flat-rate contribution would be a totally unfair burden on the lower-paid members of the community. This is an understandable and acceptable argument. Having agreed that it is not practicable to offload a greater proportion of the cost on to the employer—and that the Chancellor will not pay more than his percentage, quite naturally—through taxation, then the right hon. Gentleman was inevitably left with some way of juggling around with some form of graduated contribution in return for a flat rate benefit.

This looks to me very much what it will amount to. We shall clearly want to see, and shall study with great interest, the details when they are produced. From the details we have had from the right hon. Gentleman I am almost speechless when I think of his words about a Tory swindle. If a Tory Government introduced a swindle into pension schemes, I do not know how to describe the situation which I suspect we shall see with the relationship between contributions and benefit when the right hon. Gentleman's White Paper and the Bill are published either next week or shortly after the Recess.

The other matter on which I want clarification is what appears to be the new doctrine enunciated by the right hon. Gentleman about the way in which contributions and charges raised in the various services for which he is responsible should be used. We had the most astonishing statement reported in the newspapers this morning strongly suggesting that the increase in charges for teeth and spectacles would not be used to finance improvements in the service for which the right hon. Gentleman is responsible or to prevent cuts which would otherwise take place but would be siphoned off to another Ministry for a completely different purpose; namely, to assist it with comprehensive schools.

Not only is that a strange doctrine but it completely contradicts the assurance of the right hon. Gentleman himself on 5th May when, in answer to questions following his statement, he made crystal clear that the increase of £3½ million in revenue to the Health Service would prevent cuts which would otherwise have to be made in that service.

We are entitled to an explanation—this is closely relevant to the debate—because, if money raised for a service for which the right hon. Gentleman is responsible is to be siphoned off and used on a completely different service, how can we be sure that the same will not apply to contributions raised through the National Insurance Scheme? It is all very well for the Minister of State to chuckle away about this. I hope that he will take it rather more seriously than he and his right hon. Friend appear to be doing. It could be a highly dangerous doctrine.

If the right hon. Gentleman is prepared to say—and this is what he appeared to be doing yesterday—that he can put on charges or contributions and the money will not go to improve the service for which he is responsible but may be siphoned off elsewhere, we have an entirely new and most undesirable doctrine entering into our social service arrangements. We are at least entitled to know, so that the House and the country may judge what both the right hon. Gentleman's statements and the additional burdens which he imposes actually mean.

I am immensely disturbed by the speech which the right hon. Gentleman made and by its implications for the stiff additional burden of contributions to be put on employers and employees, with very little prospect, in my view, that they will be adequate to meet the commitments for increased pensions and other benefits which we all recognise to be necessary in view of the substantial rise in the cost of living under this Government.

8.31 p.m.

Mr. Peter Archer (Rowley Regis and Tipton)

The House will be grateful to my right hon. Friend for having announced in advance of the Second Reading debate on his new Bill the figures applicable to it, so that we have an opportunity to study them.

I listened with no less attention to the hon. Member for Somerset, North (Mr. Dean) and his noble Friend the Member for Hertford (Lord Balniel), and I tried to relate their speeches to the Motion. I was puzzled to know what it is that the Government are alleged to have done wrong. Having heard them, I remain puzzled. If the Government had announced these increases in the Budget statement as though the question of cost did not arise, my right hon. Friend the Chancellor would have been irresponsible in the highest degree.

We all know that politicians do not give benefits to the public, whether they come from the Government or from measures suggested by hon. Members opposite at the very time when they urge us to cut public expenditure. This is not largesse distributed by politicians. Benefits of this kind arise from the resources created by the work of our constituents. But my right hon. Friend the Chancellor made clear that the increases would have to be paid for; he said so specifically. He even made some assessment of the cost.

As I understand it, it is not disputed that the arithmetic relating to the contributions remained to be done and there was still more work to be done on the survey. In the circumstances, I gather that all that is alleged against the Government is that they ought not to have announced the increase until they were in a position to give precise details of how they were to be financed. What it amounts to is that they should not have offered this piece of good news to retirement pensioners. They should have kept it a closely guarded secret, as a matter of top security, to be kept, at all costs, from foreign espionage agents, until they were in a position to announce the details of how it was to be financed.

I wonder whether right hon. and hon. Members opposite have acted wisely. The public may conclude that, if that is the worst they have to say about the Government, there cannot be a great deal wrong with the Government.

If the Opposition had said that, perhaps, the increase was a little less than generous, some of us on this side might have felt inclined to be sympathetic with their view. It is perfectly true that the real purchasing power of pensions after these increases will be 20 per cent. higher than when hon. Members opposite were in power. But history may decide that 20 per cent. better than the previous Government still leaves a great deal to be desired. Yet that is not the criticism made.

It certainly convinces me of this. From time to time those of us on this side of the House find matter in announcements from the Government to criticise. We have in common with hon. Members opposite that not everything announced by the Government is beyond reproach, but there our common ground ends. I am convinced that my hon. Friends and I are not likely to advance the causes which we have at heart by substituting for the present Government a Government consisting of right hon. Gentlemen opposite.

It has not been suggested that these increases ought not to have taken place, and if they ought to have taken place, they have to be paid for. And the only question which arises is how that may best be done. In the Budget debate it was suggested that my right hon. Friend the Chancellor of the Exchequer might have budgeted for a deficit. If I pursued that line of country I should be ruled out of order, and in any event the House has decided that we are not to pass the burden of paying for these increases to our children.

I take issue with my hon. Friend as to whether a greater proportion of the burden might not have been placed on income tax. From time to time I have queried the advisability of the whole contributory system of paying for social service benefits. Income tax is by definition a method of imposing burdens in proportion to people's ability to bear them. My right hon. Friend has taken a commendable step in that direction by imposing graded contributions, but they still take into account only differences in earnings. They do not distinguish between sizes of families, or the costs of living in different areas, or between families with no special needs and those which include a disabled member. These may well be the kinds of inequalities which can be put right only by a national wages policy, but it might have been a step in the right direction if a greater proportion of the burden had been imposed on income tax rather than contributions.

I do not believe, as hon. Members opposite appear to believe, that we are a highly over-taxed country. About 64 per cent. of our national income is spent privately as against 61 per cent. in the United States and 57 per cent. in Germany. It is also worth noting that the effect of having a contributory system is that all too often it shuts out people from social security benefits because they have failed to meet the contributory requirements, just in the case of those who have already had the rawest deal from life.

On reflection, I would probably go some of the way with my right hon. Friend. I appreciate the force of the argument that when there is a contributory element, people feel a sense of entitlement, which is a healthy and satisfying feeling, and that it might discourage future Chancellors of the Exchequer from seeking to reduce benefits. And it may be true that people like to see some connection between their contributions and their benefits.

But do the Government take the view that the proportion of 18 per cent. Exchequer contribution in the new pension scheme is sacrosanct? If it is not, might it be possible to assess a figure in excess of 70 per cent. as attributable to income tax in order that the contribution from wage packets may be a little reduced?

I cannot speak for the constituents of other hon. Members, but my constituents have told me again and again that they believe that retirement pensions are too low, particularly for pensioners who will not benefit from the scheme announced by my right hon. Friend a few months ago. When I have explained that if they want increases in pensions they must be prepared to pay, they have said straightforwardly and honestly that they are prepared to pay. I echo something which was said a few months ago by my right hon. Friend the Member for Sowerby (Mr. Houghton). He begged my right hon. Friend to ensure that the contributions for the new scheme were assessed at a realistic figure, so that we would not find that the scheme had run into deficit and in the process had imposed a burden on our children. It would be wrong if we were to maintain our standard of living at a level higher than we can collectively afford at the expense of our children and grandchildren.

We are discussing tonight those sections of the population who sometimes find it difficult to speak for themselves and to form pressure groups. One section whom we should bear in mind as not being in a position to state its case is posterity. If my right hon. Friend the Minister assesses the contributions at a realistic figure, I hope that he will not get complaints from this side of the House that the cost is too high. Some of us on this side of the House may from time to time be critical of my right hon. Friend when he imposes burdens on those who are not in a position to bear them—on the older members of the population, those who normally need dentures and spectacles. But when he seeks to impose burdens on the young to give a fair deal to the old, burdens on the fit to give a fair deal to the unfit, and burdens on the lucky to give a fair deal to the unfortunate, we on this side will not complain.

8.42 p.m.

Mr. John Pardoe (Cornwall, North)

There is no doubt that what we have heard from the Secretary of State means that we are in a very serious mess concerning pension policy. I support the Motion, perhaps for a slightly different reason from that put forward by the noble Lord the Member for Hertford (Lord Balniel). I made a note in the middle of his speech saying that he was not being particularly constructive. I proposed to ask him what he would do and whether he would, for instance, again introduce a graduated pension scheme. I was utterly horrified when the Secretary of State stole my words and did precisely that. All that the Government are proposing to do is to out-swindle the Tories in their swindle. They christened it a swindle, and I believe that it was. Those of us who have asked why the Government kept the graduated pension scheme when they took office committed to getting rid of it know now that it was to save them when they got into the appalling mess which has been described today.

It is almost a burden to have to say in debates on the National Insurance Fund that I was right, but many people have for some time pointed out in the House—I certainly have—that the trends, such as earlier retirement, sickness absenteeism and an ageing population, inevitably meant that the National Insurance Fund would run heavily into the red. These trends have been obvious for many years. The Secretary of State's statement this evening is not just an indictment of his Government for having done nothing in the last few years. It is an indictment of Governments of both parties which have had the management of our Insurance Fund for many years. It was precisely because the situation was so obvious, certainly to me, two or three years ago that we introduced the dynamic idea of the payroll tax to finance our social security scheme. As long as the Government try to finance this burgeoning expenditure by means of a static undynamic contribution, obviously they will run into trouble.

I have said, and I repeat, that I am against the whole business of having to come to the House and make these announcements at two- or three-yearly intervals. I would much rather have the pension rate tied by law to the average wage in industry. I should like to see the rates go up automatically at, say, six-monthly or yearly intervals but not to have to come begging whatever Government may be in power for ad hoc increases whenever it seems that we can no longer allow the old-age pensioners to do without them. If one is to have automatic increases, one must have a contribution or tax system which will allow the income for the increases automatically to rise at the same time.

We were told by the right hon. Gentleman—it is by no means the first time we have been told, and it has been obvious to many of us for many years—why the Insurance Fund has run into the red in the way that it has; pensioners are growing as a proportion of the total population and working people have to pay more for pensions in the future. This would not be catastrophic if we had economic growth. It becomes catastrophic because we have had stagnation for far too long.

It does not matter too much to an individual if he is told that the cost of his mother's or father's pension will add an additional amount to his contribution provided that it comes out of additional income. If he knows that his income is rising at the same time, it is not too bad. As with an individual, so with the country as a whole. If only we had been financing these increases all the time by a dynamic growth economy, there would not have been too great a danger.

I foresee real social danger ahead in this situation, however, and particularly the situation of the ageing population, because unless we can get an economic growth to take away the worst effect of these increases, we will have an almost revolutionary social situation where people simply down tools and refuse to pay the increased contributions which are to be put upon them.

The second reason given by the right hon. Gentleman was that there was more sickness absenteeism. The last time we debated the National Insurance Fund in any detail, I begged the right hon. Gentleman's predecessor as Minister of Social Security to set up an investigation into the reasons for the dramatic increase in sickness absenteeism. The right hon. Lady waived the suggestion aside and said that it was impossible for Governments to take decisions on the basis of market research. I do not believe that it is. I believe that it would have been absolutely right to have set up that kind of investigation. It is right to do so now.

We chase our tails around this House trying to find out how to cure the problem of 4 million working days lost through industrial stoppages. What about the 300 million working days lost through sickness absenteeism or the 23 million working days lost through industrial injuries?

Let us take simply the 300 million days. If a tiny proportion of the effort which is to be spent in trying to reform our industrial processes and get the Industrial Relations Bill through the House was spent on trying to sort out the problem of the 300 million days that are lost through sickness absenteeism, we would have a much better pay-off in the long run. The Government had better take note of this, because I should hate to see the National Insurance Fund in the red for a third time and to be faced with another large bill.

It is time that the problem was investigated. There have been considerably earlier retirements, which result in drawings on the Fund if people are over pensionable age. This again is something which we must look at carefully. If it is an increasing trend, and it may well be, the Insurance Fund will run into the red whatever we do. The Minister must not think that the extension of the Tory swindle will do the job. I do not believe that it will. It is an indictment of the last Conservative Government that they thought that the last Tory swindle when it was introduced would do the job. They should have seen then that it would manifestly fail to measure up to the task ahead.

Neither do I believe that the right hon. Gentleman is right in being optimistic about the chances of his new scheme contained in the White Paper with green edges solving the problem. I do not believe that scheme will bail us out of the serious financial problems which I see ahead for the Fund or for any financing of the social security system. I see ahead a dangerous situation, not just financially but socially, and we must consider this problem of the long-term social trends in this light.

8.51 p.m.

Mr. Kevin McNamara (Kingston upon Hull, North)

I wish first to comment on the rather novel idea put forward by the hon. Member for Somerset, North (Mr. Dean) that the suggestion that the increased charges for spectacles and dentures should be used for schools was a most dangerous precedent, and that money should always be used for the purpose for which it was raised. Carried to its logical conclusion, this would mean that money raised on beer should be spent on bigger and better breweries and bigger and better pubs. I do not accept this idea.

We should be grateful to my right hon. Friend the Secretary of State for having spelt out to us what the options are. This has never before been done properly. He explained how we could achieve what we wished to achieve and how it could be paid for. He explained the methods of taxation, both fair and unfair, the poll tax and the graduated system. Although hon. Gentlemen opposite threw up their hands in horror and laughed at the astronomical sums mentioned by my right hon. Friend we have yet to have a suggestion from them how these increases can be paid for. The question must be put squarely to them: do they, or do they not want these increases and, if they do, how will they pay for them? They may say that they would never have reached this point, but I tend to suspect that approach because of their record on pensions. We are faced with this situation and the Government must deal with it.

If increased pensions are to be paid across the Board, they must be paid for, and the £430 million must be raised. I feel that the Exchequer contribution could have been more generous. A system of taxation which is based upon ability to pay is the fairest system, as one does not pay unless one has the money to do so. The figures given by my right hon. Friend of the percentage of income in terms of flat rate contribution dramatically illustrated the inequity of the present stamp system. I should like to have seen a greater contribution from the Exchequer.

My right hon. Friend, although he dangled the bait and the ideas before us, left us in the dark on how the proposed graduated system will work. I should prefer a system which advances progressively, with the low wage earner paying little, if anything, on the stamp, and a proportionate increase up the scale. There will be people who will complain that they do not like it. They object to having to pay the money.

I have always found that if I sit down with my constituents and spell out what it means—explain where the money is going, what it is being used for, and show that it is necessary to have this increase in the stamp—they are more ready to accept it. It is a question of explaining that this is not—as so many hon. Members opposite seem to think—just another piece of vicious taxation; this is an opportunity of insuring oneself for one's old age, for one's sickness, and for periods of unemployment.

I have found that when I have talked to my constituents about questions that interest them—questions of the disabled, the mentally handicapped, and others who are less fortunate and fit than they are—they are prepared to carry this burden, which becomes progressively less onerous as they become aware of the benefits that their payments are making not only for themselves in the future but for the less fortunate citizens around them.

I welcome my right hon. Friend's statement, as I welcomed the statement made by the Chancellor in the Budget, but I regret the fact that it has taken such a long time to introduce a system based upon the ability to earn—a system which will contain within it a reasonable redistribution of money.

8.59 p.m.

Mr. Tim Fortescue (Liverpool, Garston)

As the hon. Member for Kingston upon Hull, North (Mr. McNamara) said, this debate has concentrated mainly on pensions, although the Motion refers to all sorts of National Insurance and other benefits. I therefore assume that it will not be out of order to refer briefly to some other benefits, since although we have not been vouchsafed the information that these benefits will be increased in proportion to the proposed increase in pensions we may surely assume that they will be.

Even the remarkable non-statement of the right hon. Gentleman referred mostly to pensions contributions. It seems from what the Minister deigned to reveal that we are soon to have a system of graduated pensions to pay for flat-rate benefits. This is a far cry from the grandiose scheme in the White Paper, published not long ago. We are now to have a graduated contribution to provide a flat-rate benefit at a subsistence level. That is the exact opposite to what we were promised.

I want to concentrate the attention of the House for a few minutes on unemployment benefit rather than pensions matters. The question of unemployment was not mentioned once in the two hours 20 minutes of the Chancellor of the Exchequer that we were lucky enough to have on 15th April. This was rather like a critic reviewing "Hamlet" without mentioning the Prince of Denmark, or a political critic today writing of the political situation without mentioning the Home Secretary.

Unemployment was mentioned once or twice in the ensuing debate, but generally this nasty subject was swept under the carpet. This is understandable in present circumstances, but it would not be fair to the House to let this opportunity go by without reminding it of the facts. They are plain to see. We have had unemployment of over half a million now for two years, and it has been as high as 600,000 several times. Unfilled vacancies are running at about 300,000 and the cost to the taxpayer of unemployment benefit has increased from £58 million in 1966 to £125 million in 1968.

These facts are obvious, but what is not so wellknown or appreciated in the country is that this Government, for their own reasons, are deliberately keeping unemployment at that figure. This may be disputed, so I want to state the proof for it. On the first page of the Financial Statement issued after the Budget, we read: Relatively fast growth in output during 1968 was reflected in the labour market. Overtime working increased and towards the end of the year unemployment was falling sharply and unfilled vacancies were rising. It was against this background, combined with the need for a vast improvement in the balance of payments, that further measures to restrain consumption were required in November. Those further measures required that the unemployment figure, which was falling so dangerously for the Government's plans, had to be increased again.

Last July the then Minister of Social Security saw that there was a certain amount of cheating in claims for supplementary benefit by unemployed people, and with great forethought and skill—I have commented on this before—in a statement on 25th July she said that she intended to ensure that benefits were not claimed unjustly and improperly at Ministry offices. She said that two steps would be taken. One was that all new claims from unemployed people under 45 would be carefully scrutinised, and if a man was not genuinely seeking work, he would be told that he must do so or his Supplementary benefit would not be paid.

The second step she took was to announce that most fit young single people would be told that, whenever work was available in their locality, they should take it and that after four weeks without work they would not be paid a supplementary allowance. This, to my mind and in the view of the whole House, was a proper announcement and one on which the right hon. Lady should be applauded.

Since then, I have many times tried to discover from the Department the result of this action, but have received no information except the number of people who have been screened in this way. I have tried to discover how many were found to have been claiming benefit improperly but I have never had the information.

But what disturbs me is that, with this recognition in the Ministry that action was necessary to cut the cost of supplementary benefits to the unemployed, no parallel action has been taken by the Department of Employment and Productivity to ensure that claimants for unemployment benefit in the first year of their unemployment should be screened in this way. I am delighted to see that the Secretary of State has returned. If ever he has a spare moment—I mean, before the General Election—it would be a good idea for him to spend some time in an employment exchange. After the General Election, he may be doing that anyway, but I suggest that, in his capacity as a Minister, he should sit behind the counter for a few hours to see what happens.

This is a very revealing experience. I was lucky enough last Christmas to spend a fortnight at my local labour exchange listening to the interviews with claimants for unemployment benefit. It was clear to me, as it would be to any hon. Member, that the claimants were in many cases getting away with murder. They were treated with great kindness and compassion by the clerks, but they recognised this and by setting almost impossible conditions for the employment they wanted they continued to draw their unemployment benefit for the first year without ever intending to take a job.

The Secretary of State referred today to the earnings-related benefits which such people have drawn. I welcome this, but the fact that it applies for six months means that there is not much incentive to find a new job in that period. The earnings-related benefit rate is being taken advantage of by unemployed people. There are all sorts of devices for drawing benefit improperly. One can say that one wants a job at £30 within 10 minutes walk of one's home and refuse anything else. One can say that one wants a job which is just not obtainable in that place.

When I visited my employment exchange, a gentleman who had obviously seen better days, judging from his clothes and his whole appearance, said that the only job that he would accept was one as a croupier. I doubt whether he had ever been a croupier. There are such jobs available in Liverpool, but I doubt whether, if he had applied, he would have been offered one. As long as he insisted that he was a croupier and wanted that type of job he was able to draw unemployment benefit because such a job could not be found for him. One can make oneself so unattractive to one's prospective employer that, on being interviewed, one will be turned down. There are many other ways of remaining uneemployed.

All of these devices were foreseen in the National Insurance Act, 1965, in which the legislators, in their wisdom, stated: … after the lapse of such an interval from the date on which he becomes unemployed as in the circumstances of the case is reasonable, employment shall not be deemed to be unsuitable by reason only that it is employment of a kind other than employment in his usual occupation". A great deal of money is to be saved on unemployment benefit simply by telling clerks at employment exchanges that after a reasonable time—it might be a month— of a man not having accepted any of the jobs offered to him, he should be told, "You have had your chance. There are jobs available which you could do, and while you may not want to do them, you must either accept one of them or forfeit your unemployment benefit."

Mr. James Dempsey (Coatbridge and Airdrie)

That happens now.

Mr. Fortescue

When did the hon. Gentleman last sit behind a counter at an employment exchange and hear what goes on?

Mr. Dempsey

I admit that I have not sat behind such a counter. However, I have been the chairman of a committee responsible for seeing that those who require work get work Without exception, when we told men that we could not find jobs in their particular skills but could find other jobs for them which they either had to take or have their insurance benefit disallowed, they took the jobs. I assure the hon. Gentleman that what he is recommending has been standard practice in Lanarkshire for many years.

Mr. Fortescue

The hon. Gentleman is referring to cases which were brought to his attention. I am referring to cases which arise at employment exchanges where the clerks show claimants a generous and compassionate attitude which allows them to get away with refusing to work for considerable periods.

Mr. Crossman

I appreciate how much the hon. Gentleman knows about this subject from practical experience. Would he perhaps agree—I speak with knowledge of supplementary benefits—that the clerks at employment exchanges tend to take a certain view according to the amount of unemployment in the area? In an area of full employment they tend to take the view which the hon. Gentleman is recommending. In an area of relatively heavy unemployment they probably reasonably realise that not quite the same view need be taken.

Mr. Fortescue

The right hon. Gentleman makes a fair point, but in Liverpool, the area about which I am speaking, we have a comparitively high unemployment rate. Although the unemployment figures are running at about 3.9 per cent, many unskilled jobs are available. For example, about 200 Liverpool buses are off the roads because drivers and conductors cannot be found to man them. It seems that the people of Liverpool do not want to work on the buses, even though many who could be trained for this work are drawing unemployment benefit.

I have calculated that the cost of increasing the unemployment benefit by 10s. a week in November will be £15 million a year. That sum could be paid for if the number of fully unemployed were reduced by about 10 per cent. I therefore suggest that before the right hon. Gentleman sets his mind to raising £15 million for this purpose by increasing contributions, he should consider the possibility of instructing, through his right hon. Friend—although that would be necessary, unemployment benefits are his responsibility, since they are paid through employment exchanges—clerks at employment exchanges to tighten up and ensure that claimants for unemployment benefit do not receive payment for more than a certain time without their cases and attitudes being carefully examined. After all, instructions of this type are issued to clerks in the offices of his Ministry. The decision to increase contributions is being taken too facilely, and I hope that my comments will be borne in mind by the right hon. Gentleman.

As for pensions, I agree that something drastic must be done. When one considers the other benefits, however, much more should be done administratively before one need take the last refuge of increasing taxation.

Am I right in believing that the Government are not entirely enthusiastic about lowering the rate of unemployment? Do their old Socialist dogmas and theories now reside in a supreme being in Washington, which is demanding that the level of unemployment be kept quite high to demonstrate that we are deflating the economy?

9.14 p.m.

Sir Brandon Rhys Williams (Kensington, South)

I was shocked, as were all hon. Members, by the cynicism of the Secretary of State's explanation of the Chancellor's extraordinary omission to give an indication of the method by which the pensions increase would be financed and by the announcement of the enormous extent of the deficit which has evidently opened wide in the National Insurance Fund.

But more shocking to me than the action of the Government in these matters is the existence of a system which makes it possible to offer to the public benefits in one speech, without any explanation of how they will be paid for, and then, in a speech on a subsequent date, to give a vague and indefinite suggestion of the way in which the money may be raised.

It has been one of the problems of the National Insurance Fund from its very initiation by my great countryman, Mr. Lloyd George, as he then was, that its budget has been incomprehensible. We all remember the slogan of "9d. for 4d." with which Lloyd George launched the scheme. The swindling element was there from the beginning, because it was perfectly plain that honesty could not go hand in hand with such a slogan. It was perfectly plain that it was a political stunt from the beginning. It seems unfortunate that people's entitlement, people's money, people's contributions should be wrapped up in a political stunt, and not in strictly correct mathematical principles.

I am reminded of the jingle: Oh, what a tangled web we weave When first we practise to deceive. Just look at the stage that National Insurance has come to now after 60 years of deception. The public think primarily of the benefits. People have been taught to regard National Insurance as a bran tub. Carefully, over the years, politicians have been obliged to prevent the public from thinking of costs, so we have a built-in attitude among the voters all the time to demand more and more from National Insurance because they have been taught to forget that they themselves have to pay for it.

The second dangerous fact, where so much money is involved, is that even in a mature democracy such as ours, the accounts of the Fund are absolutely incomprehensible. We have reached the stage, unfortunately, where the whole contraption is collapsing as we watch. None of us can be glad about that. With National Insurance it is obvious that we have reached virtually the point of bankruptcy and breakdown. Here is a system with no funds—because the funds are only make-believe; with no commitments—because no one can predict 10 years hence what his entitlement under National Insurance will be; and with no principles at all.

And now the Government's problem is how to raise £430 million. I commend the courage of the Secretary of State in deciding to tackle the problem with one stroke instead of with two strokes. That was the right way to do it.

What ways are open to him? He ran through them, but he did not say all that he might have done about the different methods. Last year the Government resorted to taking £200 million from the reserves. That was pure inflation, as no one was able seriously to deny. I suppose that the supervision of the International Monetary Fund has now come so close that resorting to that particular tap is no longer possible. But we still have had no explanation of whether that £200 million is to be paid back from increased contributions or from the Revenue, even after this lapse of time.

The right hon. Gentleman referred to the possibility of drawing more money from employees. The employees were always, from the very beginning, part of the "9d. for 4d." They were expected to put in 4d. No one quite knew at the time, or knows now, precisely why the employers were expected to put in 3d., or why the Revenue was expected to put in 2d. All that was veiled in mystery. Yet these strange anomalies which were imported into that first scandalous National Insurance prospectus are with us still.

If the £430 million is to be raised from employees, the problem at once arises as to which of the two coexistent systems should be used. If the extra cost is laid on the flat-rate contribution, the Secretary of State will be doing what he himself has condemned and, in the view of everyone who has studied the subject, has quite rightly condemned. The flat rate poll tax is bitterly regressive, and so far from National Insurance being the cure for family poverty, the contribution is now so high that it has become one of the contributory causes of it.

From the White Paper, which many of us have studied with the greatest possible care, we have deduced that in future it is the Secretary of State's aim, which we support, that those below the national average wage should have their burden lightened so far as it is possible to do so; people earning up to about £18 a week, I think, under the original White Paper plan would have some remission of their burden, because the flat rate system would go and the graduated system would leave them somewhat better off than they are now.

This is an excellent idea, but if in the meantime there has to be a temporary increase in the flat-rate contribution it will make the jolt as we change from the existing system to the new system ever more marked. I therefore quite understand why the Government were not able to screw the £430 million from employees via the flat-rate contribution; they could not possibly do so.

Then there is the question of the graduated scheme. The Government, wrongly, are crucifying themselves here on the principle that, if there are graduated contributions, there must also be graduated benefits. I shall return to this question later on. While the Government persist in this quite unnecessary attitude, they are simply running into further problems.

I come to the possibility of raising more from the employers. What the Secretary of State did not say was that the burden on employers already, thanks to the Budget increase in S.E.T., is such that there would be an outcry and a revolt if this extra charge was put on them, and it might be impossible to raise that money from employers, because the burden of taxation would become so severe that the system would break down.

Finally, there is the wretched taxpayer's contribution to National Insurance. The right hon. Gentleman glibly said, as though it were just a matter of the simplest arithmetic, that £70 million would be taken from the taxpayers—one has only to snap one's fingers and £70 million comes from the Budget; nobody knows exactly how it is financed or paid for; nobody can find it in the Financial Statement and Budget Report. It is just the way the Government carry on—the taxpayer can lose £70 million; transfer it to National Insurance, and nobody need be any the wiser. I can see that the suggestion might have been made that the taxpayer's contribution should have been even more than £70 million; but the Exchequer has evidently stuck at that.

We are moving towards graduation, and the only graduated scheme available is the old Conservative graduated scheme. The Secretary of State, eating all his words, has now decided that the stone which the builders rejected must become the head of the corner. As the right hon. Gentleman himself said, the Conservative graduated scheme is made up of bricks. It is now made up of a large number of bricks and the right hon. Gentleman will find that he is ramming his head against a brick wall if he thinks that he can tinker with the arithmetic of it. Although the arithmetic may be hard, and although it is easy to say that a system which simply gives a person back what he has put in, without large increments of interest and without allowance for inflation, can be called a hard scheme; but it is at any rate a mathematically precise one. If the right hon. Gentleman begins to lay his hands on that scheme and tries to take more out of it than his is putting in, he will find that he is dashing his head against a brick wall, because it is a scheme built upon principle. If it is once decided to water down the principle of that scheme, the repercussions will be so great that no amount of blarneying talk with the Life Offices Association, or the Association of Pension Funds, or the representatives of employers, will make it possible to hide what is happening.

I hope that the Secretary of State, in the dilemma in which he finds himself, will be prepared to think again about the principles in his White Paper, because they are not tenable. He should look at the whole of the basic principles which govern this tremendous cash movement which goes on in National Insurance. In his White Paper he has muddled two elements together which ought at all times to be kept separate. One element is the principle of charity, which gave rise to the concept of National Insurance, which is based on the idea of money transfer from the fortunate to the unfortunate. The other element is the concept of self-help, which in this century has given rise to the whole movement towards national savings. The concepts of charity and of self-help are incompatible, but the Secre- tary of State is trying to run them into one great scheme.

We have seen today the problems which he is giving himself by so doing. If he would only concentrate upon the need, through the National Insurance system, to relieve poverty, and would neglect the idea that National Insurance should be directed towards interfering with the whole movement of private savings and personal provision for retirement through people's own foresight, he would find his finances a great deal easier to manage. I will give him some brief words of advice. Do not compete with the private sector in things which the private sector does best. There is no point in trying to devise, as in the White Paper, a backstairs way of taking into the State's hand the benefits of people's natural wish to provide for themselves. Secondly, do not raise taxes in order to give the most money to the people with the least need.

It is possible to approach the problem of eliminating poverty in three ways: by selectivity, which gives the most money to the people with the greatest need; by universal benefits, which treat everyone the same; and by graduated benefits which give the most money to the people with the least need. The British people will revolt against more and more taxes being pushed upon them to satisfy the nostrum of the Secretary of State about this. He must think again about this idea of State graduated benefits right across the board.

I am not saying that there is not a place for graduated benefits, particularly for maintenance or income during short-term periods of sickness and unemployment. The concept in his White Paper is quite wrong if he feels that he will fasten on us for all time a State system which would take away from the private sector this function of assisting people to provide for themselves.

Thirdly, he should take the element of redistribution completely out of the rest of the Budget. The Budget could be defined as a double-yolked egg in this respect. Part of what is raised in taxation is required to pay for what the Government need to do for themselves. Part of what is raised in taxation is used to redistribute money again to the rest of the community. The Government are acting in a two-fold capacity. First, they are raising money for themselves and, secondly, they are raising it in order to pass it back, probably in many cases to the very same people who have subscribed it. They are running these two operations into one and doing them simultaneously. I ask the Secretary of State to look at this entire redistributive activity of the State, which is now incorporated in the Budget, to separate it completely out, and to study the net effect of what is happening.

Some months ago I put down a Question asking what was the net effect of all State compulsory transactions with the individual, in both directions. I was informed by the Treasury that it could not give the reply because it had never worked the figures out. After I pressed the matter they did, with great courtesy, work the figures out for me. But it took them several months to let me know the simple transactions, which are already obligatory, and what their effect was.

The national minimum wage study, which is an extremely interesting paper, has some rudimentary tables arriving at the net effect of taxes, National Insurance contributions, family allowances and the other types of benefit to which the individual is entitled. But it is only at the most rudimentary stage. While the Government have not done their simple sums they will always be at sea when facing the problems of long-term National Insurance policy.

Will the Secretary of State define the purpose of National Insurance, because I am sure that at present he has not got a very clear idea as to what it is for. Let him clarify the obligations of the National Insurance Fund as he sees them; let him spell them out. I hope that he will come to the House and do so. Let him also clarify what he considers the sources of its income ought to be. Let him look at this great simultaneous movement of cash into the Exchequer and out again, let him understand all the different ramifications of these inward and outward movements and then he will be able to set out his National Insurance charges in a form which our democracy will be able to bear. If he refuses to do that, as I can see from his face he intends to do, then National Insurance will remain in the eyes of the public an incomprehensible swindle.

9.30 p.m.

Mr. Patrick Jenkin (Wanstead and Woodford)

I do not think we could have had a better justification for this debate than the speech by the Secretary of State for Social Services. We are still very little wiser as to the details of how the pensions announced in the Budget Statement will be paid for, or to whom they will be paid. It is true that some of the veils have been lifted, but there is still a great deal to be disclosed. No employer, no employee, no self-employed person has as yet the slightest idea of the additional contribution he will have to pay, and he is no wiser as a result of the Secretary of State's speech.

It was suggested by the hon. Member for Rowley Regis and Tipton (Mr. Archer) that perhaps this Motion was out of place, because, he said, if this was the worst that could be said of the Government, then we might perhaps be misleading the public. The only implication of the hon. Gentleman's speech was that he knows that there is a very great deal worse to be laid at the door of this Government.

Mr. Archer

I rise merely to correct the record. What I said was that the public might conclude that if that was the worst right hon. Genelemen opposite could say of the Government, then there was not much wrong with the Government.

Mr. Jenkin

The implication is that the hon. Gentleman knows that there is a great deal more wrong with the Government. Before I develop the case that we have made in this Motion, there are three points I want to press on the Minister of State arising out of the speech made by his right hon. Friend.

My right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) asked the Secretary of State whether his estimates, which he said were based on present trends, were based on current levels of unemployment. This is immensely important, and I hope the hon. Gentleman will answer that. Second, the Secretary of State told us that the Exchequer contribution to the total sum of the £430 million, which will have to be raised, will be £70 million in a full year. That means that there will be about £20 million, or perhaps a little under, to be raised in the last quarter of 1969–70. In addition to that, I would estimate that we shall need about £15 million for war pensions and supplementary benefits. Will the Minister of State tell the House whether these sums, together about £35 million, are provided for in the estimates on the basis of which the Chancellor made his Budget Statement?

Third, we come to perhaps the most curious thing of all in the right hon. Gentleman's speech—the question of timing. No doubt there were a number of right hon. and hon. Members opposite who heard their right hon. Friend's speech upstairs yesterday. To judge from the way the Press has reported that meeting very fully this morning, everyone gained the impression that the White Paper would be published before Whitsun and that the Bill would be presented before we rose for the Whitsun Recess. Twenty-four hours later the Secretary of State has told us that this will now come after the Recess. We have become used in the past few weeks to some pretty odd antics by the right hon. Gentleman, but to turn upside down in the course of 24 hours the timing of an important Bill of this sort seems the most curious of all.

The Opposition have tabled the Motion of censure partly to express our condemnation of what seems to many in the House and outside to be a pretty disreputable episode, and partly to give right hon. and hon. Members, particularly my hon. Friends, a chance to probe the Government's intentions, and the Government a chance to explain what they were up to. In part we have succeeded on the second object, and I shall proceed mainly with the first.

I should like to say one thing in supplementation of what my hon. Friend the Member for Hertford (Lord Balniel) said about the Minister of State, Department of Health and Social Security being put up to defend this case at the end of the debate. The principal object of our attack is the Chancellor, for it was he who in his Budget Statement sparked all this off. Although there will be many questions of a social security nature that the Minister may wish to answer, our accusation is against the Chancellor because of the effect all this will have on his Budget judgment, of which he made no mention, and the part it will play in the Budget strategy in the current year. Why is no Treasury Minister answering the debate? We know that the Treasury Ministers have serious preoccupations with the International Monetary Fund and others, but they must realise what is at stake is the credibility of the Government's economic policy. Is not a single Treasury Minister prepared to defend the Chancellor? Where are they?

It is bad enough that the nation should suffer the serious errors of judgment which led to an even more strict supervision by the I.M.F., but it is worse still that the Chancellor should not face up to the consequences and ensure that at least a Treasury Minister is here to defend and explain what he has been doing. There is a great deal of explaining to do.

I return to the basic question: why was the statement of the benefits included in the Budget Statement? It is abundantly clear that no one—not even the Secretary of State—then knew what the contributions would have to be, and how they would be paid. The Government were not ready to make an announcement about contributions, so why did they announce the details of the pension increases? The Chancellor gave no reason in his statement but simply introduced this with the words: I am now able to announce that …"—[OFFICIAL REPORT, 15th April, 1969; Vol. 781, c. 1014.] It is the exception that such an announcement should be made in a Budget speech. It is true that my noble Friend Lord Butler did it in 1952. But why? It was because he was dealing with a package, of which pension increases were a part; consumer food subsidies were cut, taxation was reduced and welfare benefits to those at the lower end of the scale were increased. The present Home Secretary mentioned pensions in his Budget Statement in November, 1964, but he did it because he said this was the Government's top priority. I suppose that in those heady days we could forgive them that. Every other single pension increase has been announced outside the Budget. I shall not weary the House with all the details; I have the dates.

Perhaps more significant is that on every single occasion, including that when the Home Secretary announced a pension increase in the Budget, it always included full details of the contributions that would have to be paid, often in the same sentence. Here only the benefits were announced in the Budget; yet they were totally irrelevant to the Chancellor's Budget message. They were no part of a general package of tax changes, though the Secretary of State tried to pretend that they were. I have searched the Budget statement for a link between the pensions and allowances he mentioned. It was not even part of any coherent strategy for the social services.

One is driven to the conclusion that the benefits were put in for no other reason than an attempt to sugar the pill that the nation was having to swallow. There can have been no other conceivable purpose. The Chancellor of the Exchequer would have had three harsh Budgets. He could not face the mauling that he would receive at the hands of his party, and had to have a sweetener. Therefore, he put in the pension increases and brazened out the consequences, though I am willing to bet that there must have been times during his winding up speech in the Budget debate when he wished he had left it out.

This explanation is entirely consistent with the rest of the Chancellor's strategy. We have the business of the health charges. The Secretary of State said on the radio the other day of the statement about health charges: This is a statement which we've had for a very long time. I had hoped to see it in the Budget speech. But, of course, he was not allowed to have it in the Budget speech. The Budget was to be Roy's day; nothing was to be allowed to tarnish the glitter and glory surrounding the Chancellor's big day of the year. Nothing was to muffle the big cheers as he sat down at the end of his speech. Therefore, we had charges out and pension benefits in. It is a squalid, disreputable story of which the Chancellor and all who participated and connived in it should be deeply ashamed.

It is not merely that they are seeking to conceal from the people the true cost of the Budget announcements, though that is bad enough. Far more serious is the fact that they are putting at risk any remaining confidence our creditors overseas may have in our financial integrity as a nation. Are we to believe that the I.M.F. and its party under Mr. Richard Goode had nothing whatever to say about this when they were here at the time of the Budget? How does it look to our creditors and the cold and unsympathetic eyes of those to whom this spendthrift Government have put Britain deeper and deeper into pawn when they see the Chancellor even now, after devaluation, after the trade figures and after the worst year we have had for decades, still trying to pretend that welfare benefits can be enjoyed without being paid for?

Hon. Members opposite who squeal and kick when our creditors seek to impose conditions before granting us further indulgence should ask themselves: Do episodes like this establish confidence in the Government's credit overseas? Do episodes like this enhance the Government's reputation for financial responsibility? Or do they not further undermine faith in the determination of right hon. and hon. Members opposite to put their affairs in order, to behave responsibly, and to live within the nation's means?

It is not merely a question of appearances, for the whole Budget strategy is affected. Perhaps it was more than a Freudian slip when the announcer on the 8.30 news this morning called it the "Budget's tragedy", though he corrected himself. The Chancellor said nothing about this aspect in his Budget statement. The Secretary of State said nothing about the effect on the Budget strategy this evening, and I have little confidence that the Minister of State is capable of throwing any light on this aspect of the matter.

Yet, always, improvements in social security benefits increase the burden on the Exchequer, always they increase the burden on employers and put up costs, always they take money from savers and put it into the hands of spenders. Was none of this of any account in the Chancellor's Budget strategy? I remind the House that 70 per cent. of the increases which he announced have to be borne by industry, in S.E.T. and corporation tax. This stamp increase of an unknown amount—we still do not know how much it will be; it could be £200 million—is likely to land on industry. Is that not relevant to the Budget intentions? It is a further charge on companies' liquidity and it is bound to have an effect on investment.

What about the effect on the individual firm which has to make up its estimates for the future and, perhaps, for tenders? I quote here from a letter from a firm of builders in my constituency: We have another problem in our industry regarding the unknown increase in the National Insurance contributions. A lot of work is carried out on what we call in the industry 'fixed price tenders', and we are expected to include in our estimates for increases such as this, but it appears that information will not be available until our Prime Minister decides. Just another problem that our present Government presents to industry. Did the Chancellor give a moment's thought to that, or would he have cared a twopenny damn even if he had when his own vanity was at stake? The truth is that we have been treated to a "Dance of the Seven Veils" which would have put Salome to shame. The Government have tantalised the House with a striptease performance which would have been entertaining were it not about a deadly serious matter at a desperate time in our national fortunes.

Look at what has happened. At first, the total amount was entirely unknown—£250 million plus "a substantial extra provision". Today, we have been told that the total is £430 million, and even that includes nothing for war pensions and nothing for increases in supplementary benefits. [Interruption.] If the Minister of State wishes to correct that, he will have his opportunity. But the contributions are not £250 million. They will have to be £360 million, that is, £1 million a day extra in National Insurance contributions. It is a shattering figure.

At first, we had only the vaguest idea of how it would be split. The Chancellor said that it would be done fairly. Under pressure, he conceded, somewhat reluctantly, I can assure the House that there is no question of employers being made to pay more than their normal share of the contribution … What is the normal share for the employer?—the same as when the increase of 10s. was made last time? Of course not. It will be a great deal more. How on earth can firms budget when the uncertainties are as great as that?

Under further pressure, the Chancellor added: … we have to work out the details how, in the transition to an earnings-related pension scheme, this can most fairly be placed on different individuals."—[OFFICIAL REPORT, 21st April, 1969; Vol. 782, c. 154–7.] Today, that was elaborated by the Secretary of State. He tried to blind us with jargon. I must say that tax jargon is pretty awful, but social security jargon is just frightful. We heard of "dynamising the bricks". But what did emerge is that employees' contributions will be graded by income.

But there is to be no real difference to the benefits. There is a vague indication that a small slice of the pensions of those who are contracted in—the graduated bit of the pensions of those contracted in—may be kept in line with the cost of living; but there is to be nothing whatever for the millions who are contracted out. Graduated contributions and flat-rate benefits—and no wonder the Chancellor was not too worried when he had to leave that out of his Budget, for it is indistinguishable from a tax; the Chancellor has boasted that for two successive Budgets he has not put up the rates of direct taxation, and we are back again with his devious behaviour.

Amidst all the elegance of language, all the lucidity of expression, the House now realises that there lies revealed another shabby Socialist trick—pensions are put up and the cost is left to be announced. The Secretary of State has been the Chancellor's fall guy. But is not the real victim of this miserable story the wellbeing of the nation?

In supporting this Motion in the Lobby tonight, my right hon. and hon. Friends will not only be condemning the irresponsibility of an act of crass stupidity, but will be condemning the Government as utterly unfit to remain in office.

9.47 p.m.

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

It is clear that the hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin) must have prepared that speech several days ago. It bore no relation to the debate. Without any disrespect to my hon. Friends or to hon. Members opposite who have spoken, this censure debate ended when my right hon. Friend replied to the noble Lord. My right hon. Friend frankly gave answers to the questions put to him without any attempt to conceal.

I say straight away that the accusations against the Chancellor of the Exchequer by hon. Members opposite were totally unjustified. He made no attempt whatever to conceal the facts and he said with clarity that substantial amounts would have to be raised in addition to the sums needed in order to pay for the increased benefits. In case I should miss saying so later, let me make it clear that we are talking about retirement pensions, sickness, unemployment and other benefits, about industrial injuries benefits, war pensions and supplementary benefits, and let there be no mistake about that.

There was some talk of the deceit of the Chancellor, of his attempting to hide the burden, of squalid tricks and so on. It is clear that he made no attempt to conceal and he did not in fact conceal. During the course of the debate, I have been trying to work out what the Opposition's case was. What are they complaining about? For one thing, they seem to be worried whether the Bill will be presented to the House before or after Whitsun. I do not see what difference it makes, but the Opposition will not be allowed to push us into bringing the Bill forward before we have completed our consultations.

Lord Balniel

It has been announced today that the increased tax and contributions will amount to £430 million. Every newspaper I read this morning reported that the Secretary of State for Social Services had informed the Parliamentary Labour Party that the Bill would be published before the Whitsun Recess. It is now announced that it will not now come out until after the Whitsun Recess. Why has there been this change of plan within the last 12 hours?

Mr. Ennals

My right hon. Friend made clear why he had decided that it would be better, because of the important issues which he had outlined and which some hon. Members seem not to understand, to have further time to consult others. If right hon. and hon. Members opposite look back through their record they will see that on many occasions they have brought forward uprating Bills at times very much closer to the date when the increases came into effect.

I have tried to understand what the Opposition are saying. They claim that the Chancellor of the Exchequer should perhaps have delayed making an announcement until the whole package was tied up. Why should he have done so? Surely it was important that retirement pensioners and others should know that they would get increases in the autumn to protect them against rises in prices. It was important that the Chancellor should say that. There would have been a great deal of consternation and misunderstanding had he not done so.

Mr. Dean

rose——

Mr. Ennals

I will not give way. I have already given way.

Mr. Dean

rose——

Mr. Speaker

Order. If the Minister does not give way the hon. Member for Somerset, North (Mr. Dean) must keep his seat.

Mr. Ennals

The noble Lord said—[HON. MEMBERS "You cannot take it."] I have already given way to the noble Lord, and I was given very little time in which to reply.

The noble Lord talked about the Labour Party's record in pension increases. The standard rate of benefit is £4 10s. 0d. for a single person and £7 6s. 0d. for a married couple. Those rates were introduced in October, 1967. They are one-third higher than the corresponding rates when we took office in 1964. Even after taking into account the changes in the cost of living between mid-October, 1964, and mid-October, 1967, they provided an increase in real value of 20.2 per cent. for the single person and 20.7 per cent. for a married couple compared with the October, 1964, rate. When the increase is introduced in the autumn this year the pension rates will again return to 20 per cent. in real terms above the figure in existence when we took office.

Hon. Members have criticised the administration of the National Insurance Fund. Their accusations were empty. They know from their own experience that trends can never be forecast with total accuracy. This applies to the increase in the number of old people. It is interesting to note that in 1948 retired people were 20.4 per cent. of the population, in 1967 25.2 per cent. and in 1970 will be 26.4 per cent. The number of old people in our society is constantly increasing, of which we have good reason to be proud because it is largely due to the benefits of the Welfare State. It is not possible to be certain about either the number of old people there will be to receive pensions or, for example, the level of sickness benefit during a particular year.

I have been waiting to hear during the debate what the Conservatives would do. At no time have they indicated what their line would be. As far as I can see, their minds are a total blank, except that of the noble Lord, whose mind seems to be cluttered. What would they do? Would they postpone the increases for another year, as they did when they were in power, at the expense of the old people and others entitled to benefit? Would they have brought in a smaller increase? Would they, as the hon. Member for—I have forgotten his constituency for the moment—

Mr. Dean

Somerset, North.

Mr. Ennals

Exactly right. [Laughter.]

Mr. Speaker

Order. We enjoyed that. But let us get back to the debate.

Mr. Iain Macleod

I simply want the Minister to answer the question about unemployment trends. We were promised an answer.

Mr. Ennals

They are based on current trends.

When we had that happy laughter across the Chamber I was laughing to myself because when the hon. Member made his speech, at one moment he said that we would have to call forth too much in contributions and the next moment he was saying that we would not be raising enough. That is typical Conservative policy; you put your money and you take your choice. There is no need to take a position; every variation is given.

I found it difficult to understand what are the intentions of the Conservative Government—[Laughter.]

Mr. Speaker

Order. We must hear both sides.

Mr. Ennals

That was very great laughter, but I wonder what would have been the reaction of those who will benefit from this pension increase had they been listening to the attitude of right hon. and hon. Members opposite at that moment. They would, perhaps, like to have known, even if the House is to be denied that right, what Conservative policies are on these questions.

If the party opposite believe that there needs to be an increase in benefits and, therefore, an increase in contributions, and if they believe that the National Insurance Fund should be put into balance, as I am sure they do, how would they raise the contributions? Would they have done as they always did in the past and put it entirely on the flat rate? Would they have seen that this would be a very heavy burden on the low-paid workers and would they not agree—I have no doubt that my right hon. and hon. Friends will agree—that it was exactly the right policy to determine that this burden should be spread: that those who earn least should pay least and those who earn more should pay more? This, of course, is the principle of the new scheme which we will be introducing to the House.

I very much share the point of view expressed by the spokesman from the Liberal benches, the hon. Member for Cornwall, North (Mr. Pardoe), who said that he did not like the necessity of constantly coming to the House to get an Act of Parliament to increase pensions. Neither do we. That is what we have written into our new scheme.

Not only will we in future have a scheme which will be earnings related in contributions and earnings related in benefits, but there will be a guarantee for existing pensioners that they will not have to wait the three years or more which they had to do in the days of the Conservative Party but that automatically, every two years, they can be assured that their standards will rise.

The Opposition are simply playing politics with pensions, as they are seeking to do with every issue on which they can lay their hands. We are determined, as we always have been, to put at its proper place the welfare of those who are in sickness or unemployment or are old. We are convinced that it is our responsibility as a society to protect those who are in need and that this must be borne by those who are in employment. Those who are fit must be responsible for those who are in distress. I have no doubt that the Motion will be defeated.

Question put:—

The House divided: Ayes 218, Noes 273.

Division No. 221.]	AYES	[10.0 p.m.
Alison, Michael (Barkston Ash)	Grant, Anthony	Nabarro, Sir Gerald
Allason, James (Hemel Hempstead)	Grant-Ferris, R.	Neave, Airey
Amery, Rt. Hn. Julian	Gurden, Harold	Nicholls, Sir Harmar
Astor, John	Hall, John (Wycombe)	Noble, Rt. Hn. Michael
Atkins, Humphrey (M't'n & M'd'n)	Hall-Davis, A. G. F.	Nott, John
Awdry, Daniel	Hamilton, Michael (Salisbury)	Onslow, Cranley
Baker, Kenneth (Acton)	Harris, Frederic (Croydon, N. W.)	Orr, Capt. L. P. S.
Baker, W. H. K. (Banff)	Harris, Reader (Heston)	Orr-Ewing, Sir Ian
Balniel, Lord	Harrison, Brian (Maldon)	Osborn, John (Hallam)
Batsford, Brian	Harrison, Col. Sir Harwood (Eye)	Osborne, Sir Cyril (Louth)
Beamish, Col. Sir Tufton	Harvey, Sir Arthur Vere	Page, Graham (Crosby)
Bell, Ronald	Harvie Anderson, Miss	Page, John (Harrow, W.)
Bennett, Sir Frederic (Torquay)	Hastings, Stephen	Pardoe, John
Bennett, Dr. Reginald (Gos. & Fhm)	Hawkins, Paul	Percival, Ian
Berry, Hn. Anthony	Hay, John	Peyton, John
Biffen, John	Heald, Rt. Hn. Sir Lionel	Pike, Miss Mervyn
Biggs-Davison, John	Heath, Rt. Hn. Edward	Pink, R. Bonner
Birch, Rt. Hn. Nigel	Heseltine, Michael	Pounder, Rafton
Black, Sir Cyril	Higgins, Terence L.	Powell, Rt. Hn. J. Enoch
Blaker, Peter	Hiley, Joseph	Price, David (Eastleigh)
Boardman, Tom (Leicester, S. W.)	Hill, J. E. B.	Prior, J. M. L.
Body, Richard	Hogg, Rt. Hn. Quintin	Pym, Francis
Boyd-Carpenter, Rt. Hn. John	Holland, Philip	Quennell, Miss J. M.
Boyle, Rt. Hn. Sir Edward	Hooson, Emlyn	Ramsden, Rt. Hn. James
Braine, Bernard	Horden, Peter	Rawlinson, Rt. Hn. Sir Peter
Brewis, John	Hornby, Richard	Rees-Davies, W. R.
Brinton, Sir Tatton	Hunt, John	Renton, Rt. Hn. Sir David
Bromley-Davenport, Lt.-Col. Sir Walter	Iremonger, T. L.	Rhys Williams, Sir Brandon
Bruce-Gardyne, J.	Irvine, Bryant Godman (Rye)	Ridley, Hn. Nicholas
Bullus, Sir Eric	Jenkin, Patrick (Woodford)	Ridsdale, Julian
Burden, F. A.	Jennings, J. C. (Burton)	Robson Brown, Sir William
Campbell, B. (Oldham, W.)	Johnson Smith, G. (E. Grinstead)	Rossi, Hugh (Hornsey)
Carlisle, Mark	Jones, Arthur (Northants, S.)	Royle, Anthony
Carr, Rt. Hn. Robert	Jopling, Michael	Russell, Sir Ronald
Channon, H. P. G.	Joseph, Rt. Hn. Sir Keith	Scott-Hopkins, James
Clark, Henry	Kerby, Capt. Henry	Sharples, Richard
Clegg, Walter	Kershaw, Anthony	Shaw, Michael (Sc'b'gh & Whitby)
Cooke, Robert	Kimball, Marcus	Silvester, Frederick
Cooper-Key, Sir Neill	King, Evelyn (Dorset, S.)	Sinclair, Sir George
Cordle, John	Kitson, Timothy	Smith, Dudley (W'wick & L'mington)
Corfield, F. V.	Lambton, Viscount	Smith, John (London & W'minster)
Costain, A. P.
Craddock, Sir Beresford (Spelthorne)	Lancaster, Col. C. G.	Speed, Keith
Crouch, David	Lane, David	Stainton, Keith
Crowder, F. P.	Legge-Bourke, Sir Harry	Stoddart-Scott, Col. Sir M.
Cunningham, Sir Knox	Lewis, Kenneth (Rutland)	Summers, Sir Spencer
Currie, G. B. H.	Lloyd, Rt. Hn. Geoffrey (Sut'n C'dfield)	Tapsell, Peter
Dalkeith, Earl of	Lloyd, Rt. Hn. Selwyn (Wirral)	Taylor, Edward M. (G'gow, Cathcart)
Dance, James	Longden, Gilbert	Taylor, Frank (Moss Side)
d'Avigdor-Goldsmid, Sir Henry	Lubbock, Eric	Temple, John M.
Dean, Paul	McAdden, Sir Stephen	Thatcher, Mrs. Margaret
Deedes, Rt. Hn. W. F. (Ashford)	Macleod, Rt. Hn. Iain	Thorpe, Rt. Hn. Jeremy
Dodds-Parker, Douglas	McMaster, Stanley	Turton, Rt. Hn. R. H.
Donnelly, Desmond	Macmillan, Maurice (Farnham)	van Straubenzee, W. R.
Doughty, Charles	McNair-Wilson, Michael (W'stow, E.)	Vaughan-Morgan, Rt. Hn. Sir John
Drayson, G. B.	McNair-Wilson, Patrick (New Forest)	Waddington, David
du Cann, Rt. Hn. Edward	Maddan, Martin	Walker, Peter (Worcester)
Eden, Sir John	Maginnis, John E.	Walker-Smith, Rt. Hn. Sir Derek
	Marples, Rt. Hn. Ernest	Wall, Patrick
Elliot, Capt. Walter (Carshalton)	Marten, Neil	Walters, Dennis
Emery, Peter	Maude, Angus	Ward, Dame Irene
Errington, Sir Eric	Mawby, Ray	Weatherill, Bernard
Eyre, Reginald	Maxwell-Hyslop, R. J.	Wells, John (Maidstone)
Farr, John	Maydon, Lt.-Cmdr. S. L. C.	Whitelaw, Rt. Hn. W'lliam
Fisher, Nigel	Mills, Peter (Torrington)	Wiggin, A. W.
Fortescue, Tim	Mills, Stratton (Belfast, N.)	Williams, Donald (Dudley)
Foster, Sir John	Miscampbell, Norman	Wilson, Geoffrey (Truro)
Galbraith, Hn. T. G.	Mitchell, David (Basingstoke)	Wolrige-Gordon, Patrick
Gilmour, Ian (Norfolk, C.)	Monro, Hector	Wood, Rt. Hn. Richard
Gilmour, Sir John (Fife, E.)	Morgan, Geraint (Denbigh)	Woodnutt, Mark
Glover, Sir Douglas	Morgan-Giles, Rear-Adm.	Wylie, N. R.
Glyn, Sir Richard	Morrison, Charles (Devizes)
Goodhart, Philip	Mott-Radclyffe, Sir Charles	TELLERS FOR THE AYES:
Goodhew, Victor	Munro-Lucas-Tooth, Sir Hugh	Mr. R. W. Elliott and
Gower, Raymond	Murton, Oscar	Mr. Jasper More.
NOES
Albu, Austen	Gardner, Tony	Mahon, Peter (Preston, S.)
Allaun, Frank (Salford, E.)	Garrett, W. E.	Mahon, Simon (Bootle)
Anderson, Donald	Ginsburg, David	Mallalieu, E. L. (Brigg)
Archer, Peter	Gordon Walker, Rt. Hn. P. C.	Mallalieu, J. P. W. (Huddersfield, E.)
Ashley, Jack	Gray, Dr. Hugh (Yarmouth)	Mapp, Charles
Ashton, Joe (Bassetlaw)	Greenwood, Rt. Hn. Anthony	Marquand, David
Atkins, Ronald (Preston, N.)	Gregory, Arnold	Marsh, Rt. Hn. Richard
Atkinson, Norman (Tottenham)	Grey, Charles (Durham)	Mason, Rt. Hn. Roy
Bacon, Rt. Hn. Alice	Griffiths, David (Rother Valley)	Maxwell, Robert
Bagier, Gordon A. T.	Griffiths, Eddie (Brightside)	Mayhew, Christopher
Barnes, Michael	Griffiths, Rt. Hn. James (Llanelly)	Mellish, Rt. Hn. Robert
Barnett, Joel	Griffiths, Will (Exchange)	Mikardo, Ian
Baxter, William	Gunter, Rt. Hn. R. J.	Millan, Bruce
Beaney, Alan	Hamilton, James (Bothwell)	Miller, Dr. M. S.
Bidwell, Sydney	Hamilton, William (Fife, W.)	Mitchell, R. C. (S'th'pton, Test)
Binns, John	Hamling, William	Morgan, Elystan (Cardiganshire)
Bishop, E. S.	Hannan, William	Morris, Alfred (Wythenshawe)
Blackburn, F.	Harper, Joseph	Morris, Charles R. (Openshaw)
Blenkinsop, Arthur		Morris, John (Aberavon)
Boardman, H. (Leigh)	Harrison, Walter (Wakefield)	Moyle, Roland
Booth, Albert	Hart, Rt. Hn. Judith	Mulley, Rt. Hn. Frederick
Boston, Terence	Hattersley, Roy	Murray, Albert
Bottomley, Rt. Hn. Arthur	Hazell, Bert	Neal, Harold
Boyden, James	Healey, Rt. Hn. Denis	Newens, Stan
Bray, Dr. Jeremy	Heffer, Eric S	Noel-Baker, Rt. Hn. Philip
Brooks, Edwin	Henig, Stanley	Norwood, Christopher
Broughton, Dr. A. D. D.	Herbison, Rt. Hn. Margaret	Oakes, Gordon
Brown, Hugh D. (G'gow, Provan)	Hilton, W. S.	Ogden, Eric
Brown, Bob (N'c'tle-upon-Tyne, W.)	Hooley, Frank	Oram, Albert E.
Brown, R. W. (Shoreditch & F'bury)	Horner, John	Orbach, Maurice
Buchanan, Richard (G'gow, Sp'burn)	Houghton, Rt. Hn. Douglas	Orme, Stanley
Butler, Herbert (Hackney, C.)	Howell, Denis (Small Heath)	Oswald, Thomas
Callaghan, Rt. Hn. James	Hoy, James	Owen, Dr. David (Plymouth, S'tn)
Cant, R. B.	Huckfield, Leslie	Padley, Walter
Carmichael, Neil	Hughes, Rt. Hn. Cledwyn (Anglesey)	Page, Derek (King's Lynn)
Carter-Jones, Lewis	Hughes, Hector (Aberdeen, N.)	Paget, R. T.
Conlan, Bernard	Hughes, Roy (Newport)	Palmer, Arthur
Corbet, Mrs. Freda	Hunter, Adam	Pannell, Rt. Hn. Charles
Craddock, George (Bradford, S.)	Hynd, John	Park, Trevor
Crawshaw, Richard	Irvine, Sir Arthur (Edge Hill)	Parker, John (Dagenham)
Crosland, Rt. Hn. Anthony	Jackson, Peter M. (High Peak)	Parkin, Ben (Paddington, N.)
Crossman, Rt. Hn. Richard	Janner, Sir Barnett	Parkyn, Brian (Bedford)
Darling, Rt. Hn. George	Jay, Rt. Hn. Douglas	Pavitt, Laurence
Davidson, Arthur (Accrington)	Jenkins, Hugh (Putney)	Pearson, Arthur (Pontypridd)
Davies, Ednyfed Hudson (Conway)	Jenkins, Rt. Hn. Roy (Stechford)	Peart, Rt. Hn. Fred
Davies, G. Elfed (Rhondda, E.)	Johnson, Carol (Lewisham, S.)	Perry, George H. (Nottingham, S.)
Davies, Dr. Ernest (Stretford)	Jones, Dan (Burnley)	Prentice, Rt. Hn. R. E.
Davies, Rt. Hn. Harold (Leek)	Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)	Price, Christopher (Perry Barr)
Davies, Ifor (Gower)	Jones, J. Idwal (Wrexham)	Price, Thomas (Westhoughton)
Delargy, Hugh	Jones, T. Alec (Rhondda, West)	Price, William (Rugby)
Dell, Edmund	Judd, Frank	Probert, Arthur
Dempsey, James	Kelley, Richard	Pursey, Cmdr. Harry
Dewar, Donald	Kenyon, Clifford	Rankin, John
Diamond, Rt. Hn. John	Kerr, Mrs. Anne (R'ter & Chatham)	Rees, Merlyn
Dickens, James	Kerr, Dr. David (W'worth, Central)	Richard, Ivor
Driberg, Tom	Kerr, Russell (Feltham)	Roberts, Albert (Normanton)
Dunn, James A.	Lawson, George	Roberts, Rt. Hn. Goronwy
Dunnett, Jack	Leadbitter, Ted	Roberts, Gwilym (Bedfordshire, S.)
Dunwoody, Dr. John (F'th & C'b'e)	Lee, Rt. Hn. Frederick (Newton)	Robinson, Rt. Hn. Kenneth (St. P'c'as)
Eadie, Alex	Lee, Rt. Hn. Jennie (Cannock)	Rodgers, Williams (Stockton)
Edwards, William (Merioneth)	Lee, John (Reading)	Roebuck, Roy
	Lestor, Miss Joan	Rogers George (Kensington, N.)
Ellis, John	Lever, Harold (Cheetham)	Ross, Rt. Hn. William
English, Michael	Lever, L. M. (Ardwick)	Ryan, John
Ennals, David	Lewis, Arthur (W. Ham, N.)	Shaw, Arnold (Ilford, S.)
Ensor, David	Lewis, Ron (Carlisle)	Sheldon, Robert
Evans, Albert (Islington, S. W.)	Lipton, Marcus	Shinwell, Rt. Hn. E.
Evans, Fred (Caerphilly)	Lomas, Kenneth	Shore, Rt. Hn. Peter (Stepney)
Evans, Ioan L. (Birm'h'm, Yardley)	Loughlin, Charles	Short, Rt. Hn. Edward (N'c'tle-u-Tyne)
Faulds, Andrew	Luard, Evan	Silkin, Rt. Hn. John (Deptford)
Fernyhough, E.	Lyon, Alexander W. (York)	Silverman, Julius
Finch, Harold	Lyons, Edward (Bradford, E.)	Skeffington, Arthur
Fletcher, Rt. Hn. Sir Eric (Islington, E.)	Mabon, Dr. J. Dickson	Slater, Joseph
Fletcher, Raymond (Ilkeston)	McCann, John	Small, William
Fletcher, Ted (Darlington)	MacColl, James	Spriggs, Leslie
Foley, Maurice	Macdonald, A. H.	Steele, Thomas (Dunbartonshire, W.)
Foot, Rt. Hn. Sir Dingle (Ipswich)	McKay, Mrs. Margaret	Stewart, Rt. Hn. Michael
Foot, Michael (Ebbw Vale)	Mackenzie, Gregor (Rutherglen)
Ford, Ben	Mackie, John	Stonehouse, Rt. Hn. John
Forrester, John	Mackintosh, John P.	Strauss, Rt. Hn. G. R.
Fowler, Gerry	McMillan, Tom (Glasgow, C.)	Taverne, Dick
Fraser, John (Norwood)	McNamara, J. Kevin	Thomas, Rt. Hn. George
Freeson, Reginald	MacPherson, Malcolm	Thomson, Rt. Hn. George

Thornton, Ernest	Wellbeloved, James	Wilson, Rt. Hn. Harold (Huyton)
Tinn, James	Wells, William (Walsall, N.)	Wilson, William (Coventry, S.)
Tomney, Frank	Whitaker, Ben	Winnick, David
Urwin, T. W.	White, Mrs. Eirene	Woodburn, Rt. Hn. A.
Varley, Eric G.	Whitlock, William	Woof, Robert
wainwright, Edwin (Dearne Valley)	Wilkins, W. A.	Wyatt, Woodrow
Walden, Brian (All Saints)	Williams, Alan (Swansea, W.)
Walker, Harold (Doncaster)	Williams, Mrs. Shirley (Hitchin)	TELLERS FOR THE NOES:
Wallace, George	Williams, W. T. (Warrington)	Mr. Ernest G. Perry and
Watkins, David (Consett)	Willis, Rt. Hn. George	Mr. Neil McBride.
Weitzman, David

BUSINESS OF THE HOUSE

Ordered,

That the Proceedings on Consideration of the Lords Amendments to the Immigration Appeals Bill may be entered upon and proceeded with at this day's Sitting at any hour, though opposed.—[Mr. Grey.]