NATIONAL SUPERANNUATION AND SOCIAL INSURANCE BILL

HC Deb 19 January 1970 vol 794 cc52-175

Order for Second Reading read.

4.23 p.m.

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

I beg to move, That the Bill be now read a Second time.

Mr. Speaker

I wish to announce that I have selected the Amendment which stands in the names of the right hon. Gentleman the Leader of the Opposition and some of his hon. Friends and that I have not selected the Amendment which stands in the names of the hon. Member for Cornwall, North (Mr. Pardoe) and some of his hon. Friends.

The latter Amendment states: That this House, believing that the role of the State so far as occupational pensions are concerned, should be to provide flat-rate benefits in return for earnings-related contributions, is opposed to the system of, earnings-related pensions as put forward by the Government and supported by the Conservative Party, and, therefore, declines to give a Second Reading to the Bill.

Mr. Crossman

Anybody faced with the job of bringing forward a major social Measure of this kind is in something of a quandary. Tradition tells me that I should concentrate on going through the Bill to expound at least the major Clauses, but if I were to do that on this Bill I would not only extend a speech which is, in any event, bound to be long, but would also fail to put to hon. Members the real issue on which we will be voting tonight. That issue is the real significance of the Measure, which will launch the biggest revolution in the sphere of national insurance since the Beveridge Report and the "James Griffiths' Act" which implemented it.

I think that it is not the detail of the Bill which matters on this occasion. That we can deal with in Committee. I must seek to give the House the justification for a Measure which will not only affect every citizen in the country, whatever his or her age, but which will also cause a great deal of disturbance and inconvenience to that large and influential body which comprises what I could call the insurance establishment; the life officers, insurance brokers, the men who run the private enterprise pension funds and the quiet, unknown pension experts who manage the public service and nationalised industries schemes.

I always knew that they comprised a powerful group, but their influence has been brought home to me more than ever since last January. When we published our first White Paper it plopped like a lump of dough into a pool of public indifference. It was only when the pension interests had had time to estimate the significance of our plans and their potential effect on the things with which they are concerned—the occupational schemes—that the public discussion really began. I am grateful to them for making sure that this Bill will be seriously debated outside, as well as inside, Parliament.

Nevertheless, I feel that the way that this discussion started had one distorting effect. National superannuation nas been discussed in the last six months not in the human terms of its impact on the lives of ordinary people, but in the specialised lingo of pensioneering; for example, in terms of pre-award and post-award dynamism, of early maturity, of abatement and the rest.

For those with a taste for it, pensioneering is as good as a game of chess, but during the course of the long arguments which I have conducted with the pension interests I have sometimes been plagued with the fear that the people are coming to the conclusion that they should leave this problem to be argued out by the pensioneers. I hope that the House will agree that this would be a very wrong conclusion to reach. Whatever view one might take about the merits of the Bill, the changes that it makes will be tremendously important to ordinary people.

It is, therefore, vital in the coming months, when the people are estimating the rival merits of the two parties, that the merits of this Act—for it will be an Act in the coming months—should be considered to be one of the acid tests of the election—the criteria by which the parties are judged—because the Bill undoubtedly deals with the greatest social problem of our domestic politics in the second half of the 20th century. It is the problem of how to abolish poverty in old age—that poverty which drives 2 million of our citizens to apply for supplementary benefits under a means test and which must increasingly irk the conscience as our society grows more and more affluent.

Poverty in the 'thirties was infinitely more widespread than it is now, but it was shared by whole communities. It was a mass poverty, while today we have poverty in the midst of plenty. Today, it is poverty from which the working population, even in what were once disstressed areas, is largely excluded. It is poverty concentrated on those who are the weakest and least able to protect themselves; the chronic sick, the widows and deserted wives, the unmarried mothers and, above all, the 14 per cent. of the population who are over pension age.

Over the last 20 years the standard of living for those who work in this country has risen far faster than in any previous epoch of history. When Harold Macmillan remarked, "You have never had it so good" he coined a platitude, since in this period of technological change every industrial nation has almost automatically a higher standard of living this year than in the preceding year. Modern science, modern technology and modern management have solved the problem of poverty in the sense that they have made it possible for nations equipped with these techniques to increase their national wealth year by year.

What they have not done, however, is to formulate a technique to see that that wealth is fairly shared between those who are fit and able to look after themselves and those who are too weak, too sick, or too old to fight for their fair share of it in an affluent society. I suggest that one of the tests by which the Labour Government and the former Conservative Administration should be compared is to ask what precisely each have done to assure to our old people, our sick and our widows their fair share of rising national prosperity.

Let us look at the record of our predecessors. During the 13 years of Conservative rule the scandal of the pensioners' poverty in the midst of plenty became blatantly clear, as did the cause; the system of flat-rate contributions and benefits recommended in the Beveridge Report. I suppose that in 1942, when Beveridge wrote it, we were looking back to a decade of mass poverty, so that it was easy to jump to the conclusion that a just social insurance system should impose fair shares in poverty.

That concept of equality in misery was confirmed by the rationing and queuing which five years of total war required of us. But as soon as we moved out of the war and post-war shortages into an era of economic expansion the whole concept of flat-rate contributions and flat-rate benefits became a complete anachronism, for when people stop earning what they need is not a flat-rate level of subsistence but an income related to what they were getting when they were at work.

By the mid-1950s, when the Labour Party in opposition began to work out its plan for national superannuation, it became clear to anyone who did not wilfully blind himself to the facts that it was high time that we followed the example of nearly every one of our progressive neighbours in the Western democracies by scrapping flat-rate State insurance and moving to a system of earnings-related contributions and benefits. What made the need for change more urgent was the contrast emerging between the lucky minority of members of earnings-related occupational pension schemes and the unlucky majority of national insurance contributors who had nothing but the flat-rate scheme to rely on, through no fault of their own unless it was a crime to work in building or agriculture where there were virtually no occupational pensions.

In the preface to our first policy pamphlet, "National Superannuation", I coined the phrase, "The two nations in old age." I think that it was true then, and it is just as true today except that the proportions have changed. By now, the numbers in occupational schemes have probably just about become a majority. I think that that is an accurate measure of what was achieved for our old people during our predecessors' 13 years. Under them, the number who could look forward to something like security in old age increased, but there are still many millions who, without radical reform of social security, have no prospect of sharing in any genuine security for old age.

I know that that statement will be challenged in this debate and in the months ahead. I shall be told that our scheme is unnecessary and that, if we are prepared to wait, we shall see the occupational schemes expand and develop in such a way that all that the State need do is provide a minimum foundation on which they can rest. However, in my considered view, those who talk like that are practising a wicked deception on the public, and I will give the facts to substantiate that charge.

There are six hard facts on which I substantiate it. The first fact is that, of 1 million employers, only 56,000 have occupational schemes. A great many look after their white-collar staff, but make no provision for their manual staff. I invite right hon. and hon. Members opposite to challenge that.

The second fact is that just over half our insured workers are now members of occupational schemes, but only a minority of those schemes provide the two-thirds or half pay on retirement which is required if they are to make an earnings-related State scheme unnecessary.

The third fact is that there are a number of very important industries with large numbers of employees where there is virtually no pension provision and no prospect of it. I have mentioned the most important—agriculture and building.

The fourth fact is that only 25 per cent. of working women are members of schemes. It is no good saying that that does not matter because married women can rely upon their husbands' pensions. What happens if their husbands die?

That brings me to the fifth fact, which is the inadequacy of widows' pensions in the occupational sector. Only about a third of male members of schemes are unconditionally covered for widows' pensions. The figures are rising, but they are never likely to approach 100 per cent.

The sixth fact is that it is estimated that, by the turn of the century, there will still be a third of pensioner households receiving no occupational pension at all.

Was I unjustified in saying that those who argue that the growth of occupational schemes can be a substitute for a State scheme are practising a wicked deception on the public?

I come to the second point which has been made, and I reply to it now. It is one which the hon. Member for Hertford (Lord Balniel) rather likes. He says that our scheme is too complicated. In his perorations, he never misses saying that it is incomprehensible. Before he says it for the nth time, I will deal with the problem of the so-called incomprehensibility of the scheme.

If it were incomprehensible, that would be a serious criticism of it. However, the fact is that national superannuation, as we have demonstrated clearly in a little booklet, price 1s., is a straightforward pensions plan which is no more difficult to understand than those run by local government, I.C.I., Esso, or the electricity boards, all of whom have produced schemes as easy as our own. Our new earnings-related scheme, with the stamp abolished, a simple percentage deduction from earnings and a single benefit formula, is far less complicated and unintelligible than the mixture of flat-rate and graded element invented by the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) in 1959. In our plan, we are greatly simplifying matters and removing not merely the injustices, but the intolerable complexities of a double contribution system.

Having said that, however, I will give something to the noble Lord. There are three parts of the scheme which are tough going and difficult to understand. I want to explain each of them and why we have included them. I will call them by their pensioneering names. They are pre-award dynamism, the redistributive element in the pension formula, and abatement.

Taking pre-award dynamism first, one question which N.A.L.G.O. members often put to me is why, instead of adopting a clear and simple final salary formula, with half, two-thirds, or 42 per cent. of pay on retirement, we have preferred a vastly more complicated whole-life basis. The answer reveals a vital difference between our scheme and most good occupational schemes.

These schemes, nearly all started for the white-collar workers, began historically as pensions for higher executives. Naturally, for them, it seems common sense to say that, if the aim is to give them a favourable pension, it is best averaged out over the last three years of their work which, by and large, is the period when they earn their highest salary. That is true basically of local government and central Government employees and of most executives in industry. But what sense does that make for a steel worker, a coal miner, or any other industrial worker, whose maximum earnings come in middle age? A final salary pension formula is worth nothing to him. It bears no relation to what he has earned during his working life.

Therefore, we knew that we were not just repeating the philosophy of the private pension. We decided, in the State scheme, to have a pension designed to make sure that it is fair to the man or women whose earnings reach the climax in middle life and fall away in the last 10 years. There is no other answer to the difficulty in terms of social justice.

I know that a whole-life basis is complicated. I do not deny that it becomes even more complicated when it is combined with a system which revalues the pension entitlement each year to keep pace with rising wages. However, if we do not do that, we do not do what corresponds to the with-profits life insurance policy. It is no good having a premium which gives one a fixed sum at the end of one's life. That sum must have added to it sums which give one a share in the rising national income. Unless there is a corresponding revaluation in the State scheme, people will not get their fair share. For that reason, we have to have the complicated whole-life system, with revaluation throughout the working life.

If it is complicated, its justification is that, for the first time, we have a system which is fair to the industrial worker and gives him the earnings-related pension that he needs. Therefore, I take the first of these complicated points.

The second is the redistributive element. It is true that the normal occupational scheme assesses benefits, like contributions, on a straight percentage. The more one pays in contributions, the more one gets in benefit, and there is a strict one-to-one correlation between the two. In our scheme, the contributions are straight percentage, but the benefit is calculated on a weighted formula which provides 60 per cent. on earnings up to half average male wages—that is, £12 a week today—and 25 per cent. from this level to a ceiling of £36 today.

It is obvious that this formula is not only a little more complicated than the straight percentage, but also weighted in favour of the lower-paid worker. The result of the weighting is that a single man on £36 a week—that is, at the ceiling—will receive in return for his 6¾ per cent. a pension of 37 per cent. of his earnings, whereas the man earning £15 will get 53 per cent. of his earnings. That is the difference of the weighting in the formula.

I was amazed when a kind, bespectacled lady came from the Daily Mail to see me and, a few days later, published an article in that newspaper revealing what she called my well kept secret of Socialist redistribution and rebuking me for departing from the principle of commercial insurance. We made every effort to emphasise this non-commercial Socialist aspect of our scheme because, without it, we could not achieve our main objective of abolishing poverty in old age over the next 20 years. Indeed, this lady discovered that redistribution in this way is not the only redistribution of the scheme. It is weighted in other ways as well. It is weighted, according to her, grossly unfairly, in favour of married couples as opposed to spinsters and bachelors because the wife's allowance is added to the husband's in the pension scheme. It is also heavily weighted and biased in favour of the over-45s in order to help them—that is, early maturity during the next 20 years.

The first objective of our scheme is the provision of an adequate pension related to earnings for every contributor right to the top. The second is a social weighting and a social priority, first, to get the lower-paid worker above supplementary benefit as fast as we can, and, secondly, to help the middle-aged contributors, to ensure that the man of 45 can obtain the full benefit of the change to the new scheme in 20 years. Thirdly, it is aimed at married couples and widows. If anyone says that this makes the scheme more complicated, I reply once again that the social aims we achieve with these measures seem to justify that degree of complication.

The third complexity—and far the worst—is the system of abatement. I confess frankly that I am not going into detail because the House debated this subject for a whole day, although, unfortunately, I was not present. I say frankly that this is extremely difficult and extremely obscure and I do not deny that the abatement scheme will be costly not only in money but in skilled manpower to the State and to private firms.

Why, then, have we built it into our scheme? It is because we believe that we can provide a high level of pensions for all only by a partnership between the occupational pensions schemes and the State sector. That is why we have been willing to complicate our scheme in this way. This is an unprecedented way in which we are doing things, and we are the first nation ever to try to do it. Abatement or partial contracting out of an earnings-related scheme have not been attempted in any other country. I challenge the Opposition to give me any example, even from Venezuela.

I believe that the terms we have offered are fair to those contracting out. Indeed my only doubt is whether they are not a bit too fair at the cost of those who remain wholly inside the scheme. This suspicion is confirmed by the curious change which has come over a number of pensions experts since the terms of abatement were announced. In the weeks when I was privately discussing those terms with the pension interests concerned there was a tremendous barrage in the Press and no language was too strong to describe the disastrous effects which would follow if I made far larger sums available out of the National Superannuation Fund in order to offer a bigger inducement to contracting out. I finally made a small concession, but basically we resisted that pressure and stood by the Government Actuary's advice. Since then, what has happened? The whole idea that our terms would be so unworkable, harsh and damaging to the pensions interests as to kill contracting out has been quietly dropped. Even the other day at a meeting of the National Association of Pensions Funds, Mr. Michael Pilch of Noble Lowndes—and one cannot have a bigger pensions pundit than Mr. Michael Pilch—made an informed guess that the number contracted out under the new scheme would be 7 million, compared with the 5½ million contracted out today. What a remarkable change of view by the pundits who were saying that we were bound to create conditions when no one could consider the possibility of contracting out! So much for the suggestion that the Bill would damage the development of occupational schemes. No Government have taken more trouble than we have to protect the pension interests in introducing a new State scheme.

Mr. Tim Fortescue (Liverpool, Garston)

At the beginning of his speech the right hon. Gentleman told the House how very simple this scheme was compared with other schemes. For the last 15 minutes he has been talking about its complications. Would he now explain very simply to the House exactly how a pensioner's pension will be calculated in 1992 so that we can put it to the people who come to see us?

Mr. Crossman

I put it strongly to the hon. Gentleman that we have already put this clearly in our shilling pamphlet. All the calculations are contained in it. It is only the hon. Gentleman's determination not to accept an intelligible explanation which enables him to maintain the view that the scheme is incomprehensible.

The hon. Gentleman complained that I have been taking a long time. The longest time that I have spent has been on abatement. One of the things on which the Opposition do not disagree is that there must be contracting out and that there must be abatement, so they should recognise that this is a complication in the scheme and that it is far the most cumbersome and burdensome of the complications.

Mr. Joel Barnett (Heywood and Royton)

Does my right hon. Friend accept the estimate made by Pundit Pilcher, as he described him, of the number who will opt out? If so, what effect will that have?

Mr. Crossman

I described it as a guess. It is no secret that we based our scheme on the view that we would not have been fair if we had not introduced a scheme in which we could get at least as many individuals contracting out as at present, but we expect more to contract out. We would not be disturbed by that number. It is within the bounds of possibility.

I want not to go through the parts of the Bill but to deal with a few of the controversial Clauses in each part and I begin with "contributions" under Part I. The House will notice that the figures in the Bill are a slight departure from those in the White Paper where the contributions were 6¾ per cent. a side. Clause 2 provides that the employers will pay 7 per cent. That difference does not mean that we have abandoned the principle that employers and employees should contribute broadly equally to national insurance. What I have done is to increase sharply the employer's share to the so-called National Health Service contribution.

At present we are facing the oddity that a total contribution of 3s. 10d. flat rate is divided into 8d. from the employers and 3s. 2d. from the employees. I have always found this weighting an indefensible anomaly and I have taken the chance to put it right, since in my view there is every reason why British industry should pay a larger share of what is, after all, a Health Service levy, not a National Insurance contribution. I shall also be introducing in due course a short Bill designed to increase the employers' share of the present flat-rate levy between now and 1972 when the new contributions are due to begin.

I turn to what I regard as the Opposition's central objection. The Opposition simply say that the contributions will be too heavy. The burden of their complaint is found in one part of their reasoned Amendment in which they ask the House to reject the Bill on the ground that it vastly increases the burdens of taxation and contributions on individual men and women". Before the Opposition commit themselves irrevocably to that proposal, I had better warn them that the facts are against them, and that the longer we debate—

Lord Balniel (Hertford)

rose—

Mr. Crossman

I am in the middle of a sentence.

Lord Balniel

That is the point.

Mr. Crossman

—and the longer we debate pensions in the country the less convincing this charge will seem.

Lord Balniel

My objection to the right hon. Gentleman's statement was that he interrupted a sentence in the reasoned Amendment. The sentence ended with the words "without helping existing pensioners".

Mr. Crossman

I shall deal with existing pensioners separately.

There are two charges. One is that the contributions will be too heavy and the other is that existing pensioners will not be helped. I shall deal with both charges; knowing very well that the noble Lord will make both charges throughout his speech I may as well deal with both before they are put.

Let us remember that under our scheme almost everybody from the top of the scale to the bottom will be receiving greatly improved benefits. To pay for these benefits about 8 million people will be contributing less than they contribute now.

I take as an example the £20 a week man—just a little below average industrial earnings. His present contribution, if he is not contracted out, is 27s. 10d. a week, which represents 6.95 per cent. of his earnings. A change to a 6.75 per cent. contribution will mean that he has a reduced contribution. If he is contracted out, the same will apply. At present, he pays 5.65 per cent. of his earnings. Under our scheme this will go down to 5.45 per cent., or from 22s. 7d. to 21s. 10d. I have not seen in the Press criticism of the scheme very much account of how the £20 a week man will pay less for substantially improved benefits.

I know that I shall be told that the real hardship comes higher up. It can come only between £20 and £30 a week and so I take the example of a man on £25 a week. He is now paying 31s. 1d., or 6.2 per cent. of his earnings. An increase to 6¾ per cent. does not seem unduly harsh. I will leave it to the noble Lord to read out the actual amount in pounds, shillings and pence to show what the actual increases are for men earning between £25 and £30 a week.

The truth is that with the one more up-rating in our present system of contributions, which will almost certainly have to be made before this scheme comes into force, there will be even greater reductions in the present contributions with the coming into operation of an earnings-related scheme.

I have said that because it was important to get rid of one of the Opposition's criticisms, which was that the scheme would require enormous increases in the payment of contributions as compared with those being paid now, or likely to be paid in two years from now, just before the scheme starts.

Mr. Kenneth Baker (Acton)

Did the right hon. Gentleman say that, irrespective of which party is in power, there will have to be an increase in the present proportion of contributions, irrespective of whether a man is contracted in, as there was this year, to bring the level to the 1972 level?

Mr. Crossman

The hon. Gentleman should not draw that assumption. I said that there would have to be a general increase of contributions, and that means either increasing the flat rate, in which case the outrage becomes greater, or increasing the graduated element. It is not for me to say what will be done two years from now, but after that addition there will be very little margin for the claim that the new scheme will impose heavier contributions than the amalgamation of flat-rate and graduated elements invented by the Opposition—if the level of the pension is to be maintained.

I will not deal at length with the short-term benefits, benefits for sickness and unemployment, because there is nothing which I want to add to what has been said in the White Paper on that subject. However, I should like to refer to Clause 17, which is the only new provision and which provides for a constant attendance allowance. I should like to say this personally. There has been a growing demand, of which that remarkable organisation the Disablement Income Group has been the spearhead, for special provision over and above what is already given for anyone seriously handicapped on disablement. We have all been deeply moved by the lives as well as the words of people like Anne Armstrong and Megan du Boisson. Without them it may well be that Clause 17 would never have found its place in the Bill. The Government can claim credit for listening to people who knew all too well what they were talking about.

We expect about 50,000 people, including housewives and children, to qualify for the new allowance at the outset, for it will be paid irrespective of age. We shall be getting together at an early date the best doctors we can find—because this allowance must be administered like a war pension or industrial injuries pension—to make assessments by forming an attendance allowance board which will guide us on the many medical issues and deciding the medical aspects of claims.

I intended to deal with the women's charter, but I do not think that there is likely to be great disagreement in this debate on that subject. Indeed, I get the impression that the Opposition do not have much to criticise on the subject of women's pensions. As I should like to save time, I will leave that subject and not take credit for what is a remarkable women's charter. It is very powerful, and I gather that it is unlikely to be attacked today.

I come to Part VII of the Bill and to Clause 109—the preservation of pension rights. This is one of the most difficult, one of the most controversial, and one of the most unsatisfactory problems with which we have been dealing. I need hardly say that this Clause deals entirely with private occupational pension schemes. The State pension is absolutely and completely transferable, however often one changes a job, but this is not the case with the 65,000 private occupational pension schemes.

What sheer hypocrisy it is to talk about pensions as deferred pay when, in fact, today 60 per cent. of the members of the occupational schemes have no rights to their accrued benefits on change of employment and fewer than one in ten on leaving one employment actually get the accrued pension rights preserved for them! What a scandal it is that our predecessors did nothing whatever to deal with this problem!

The Opposition say that the private schemes are the alternative to an adequate State scheme, but the only possible way in which to make them an alternative is to make them by law fully and absolutely transferable, not just preserved. But the difficulty, as we know from the Ministry of Labour N.J.A.C. report, is that that is impossible because of the nature of the schemes. In a jungle of private schemes, good, bad and indifferent, with every type of quality and every type of condition, full transferability cannot be legally enforced from firm to firm or from scheme to scheme. There is a total mix-up of schemes. Full transferability could be enforced only if all the schemes were rationalised and some rhyme and reason and order were brought into the arrangements, so that at least they were put into classes or groups.

The best that can be achieved by legislation is the preservation of rights, and it is very much a second-best. As a man moves from employer to employer, he freezes each little bit of pension and at the end of his working life he collects perhaps ten or eleven different bits of pension. Once again, one is forced into the most appalling complexity and one is forced into it because of the inability of the private sector to organise itself and the failure of the Tory Government to do anything about this problem over 12 years.

If full transferability is out of the question, we have to have the second-best. I thought that we could legislate for full preservation not only for the future, but with some retrospection for existing pension rights. From our first White Paper it will be assumed that that is what we will do. That is what I had hoped. But our hopes have been dashed. The people who laud the occupational schemes and say there is no alternative will not dream—[An HON. MEMBER: "The unions."] The unions are in favour. I am talking about the employers. The employers are appealing against what they call retrospective legislation. They say that it would mean retrospective legislation and cancellation of contracts. Full preservation can only be done with consensus. Therefore, they have the power to veto this and say, "Because it imposes a cost on us we will not dream of having anything of this sort in retrospect."

I asked whether we could have phasing. No, we cannot have phasing. These self-same people who are pressing the occupational world as being the real alternative, when asked even to legislate retrospectively to make it, at any rate, possible to get full preservation, will not do it.

I am delighted to find that at least we are supported in this by some hon. Members opposite. I welcome the early-day Motion on this subject. It is not up to me to comment on the measure that the Motion urges my right hon. Friend the Chancellor to adopt for this purpose. In my view, an Amendment to Clause 109 would be the right way to achieve it. If those hon. Members opposite who have more influence with the employers and the C.B.I. than I will use their time between now and Committee to persuade them to see the light, to share the shame and humiliation which many progressive employers feel at the behaviour of the C.B.I., I urge them to do so. They will have a Minister in Committee willing to receive with open arms any Amendment made possible for me. There is an offer.

I want now to deal briefly with the charge that our new scheme will damage the savings generated by occupational schemes. It is true that every time we improve a compulsory Government scheme we disturb the occupational schemes which are sitting on top of it, and the bigger the jump from the old Government scheme to the new one the bigger the disturbance. I do not deny that the jump from the miserable Boyd-Carpenter pension to our new earnings-related pension will make it necessary for many occupational schemes to adapt themselves, despite contracting out, if only because our Government scheme with a good occupational scheme on top of it will in some cases produce over-pensioning up to 120 or even 130 per cent. and consequently excess contributions which nobody wants. It is obvious that it will have to be done. Even with contracting out, there may well have to be a cut-back in some schemes to make room for the Government scheme. That is why there is bound to be some slowing up in the first year or two in the growth of pensions funds after national superannuation is introduced. But if hon. Gentlemen opposite believe that this will have a permanent and serious effect on savings, I take issue with them.

In many countries—I am thinking particularly of Sweden, which I recently visited—there have been examples where big new Government earnings-related schemes have been introduced and always, after a temporary slowing up of growth, the expansion of the occupational sector is resumed. It happened in every other country, and it will almost certainly happen here.

Some of our critics talk about savings through occupational schemes as though they were the only form of savings available. We must remember that they constitute only 10 per cent. of total savings. The impact on total savings of the introduction of our scheme will be very small indeed, particularly when we remember that the income of the National Superannuation Fund will exceed expenditure for at least four or five years. This increase in public savings will more than compensate for the temporary reduction in new savings through occupational pension schemes.

It is important to remember one other matter. If, despite all our efforts, the impact of our new scheme on occupational schemes is greater than we would like, the fault for this falls fairly and squarely on the shoulders of the Opposition. By keeping the flat-rate system long after it was completely obsolete and adding to it a miserable graded element they delayed the change-over to complete earnings-relation for a whole decade in the course of which the vacuum was filled by a mushroom growth of occupational schemes which now have to adapt themselves to a modern State scheme. The truth is that the Bill should have been put on the Statute Book at least ten years ago. If that had happened, the disturbance to the insurance establishment would have been correspondingly less.

I come to the concluding words of the Opposition's Amendment—the charge that the Bill does not help existing pensioners. I find this a trifle disingenuous, because the Opposition know, as well as I do, that the earnings-related pensions, which we shall be introducing over 20 years, must be earned by earnings-related oontributions and cannot affect existing pensioners. What they need is not pie in the sky, a promise of a new kind of pension years ahead, but a higher standard of living now in terms of bettering the existing flat-rate pensions. This is precisely what they have got from us since 1964. We have raised the pension three times in five years by a total of 32s. 6d. compared with 37s. 6d. in 13 years of Tory rule. If anybody wants that in terms of real value, as I do, the pension today stands 20 per cent. higher than when the Tories left office.

I should like to say a word not only about old-age pensioners, but about widows. I am glad that the Opposition like the improvements that we promise in future. But the widows, like the pensioners, are concerned not about the future but about what happens now. We have been active for the widows in the last five years. They judge the two parties by the help that they have actually received. They are receiving 20 per cent. more in real terms than when the Tories left office. They have also seen great improvements in the allowances for dependent children, the abolition of the earnings rule, the introduction of the earnings-related supplement to the widow's allowance and the doubling of the period of payment. As soon as we took over we gave concrete help to the widows and pensioners first. Only then did we turn our attention to the Bill and to the long-term job of ensuring that the misery and injustice of the last 20 years should not be repeated upon the next generation in the next 20 years. That is why the Bill got delayed.

The Bill deals not only with future pensioners. It includes one vital benefit for existing pensioners. It provides them with the firm guarantee built into legislation, which they demanded for 13 years from the Tory Government, that the pension should, once and for all, be made inflation proof. When the Bill becomes law it will at last be a statutory obligation to review the level of pensions every two years and to make such increases as will as a minimum compensate for rises in prices in that period.

Ever since I got mixed up with pensions 15 years ago, pensioners have been demanding this statutory up-rating, which should remove the political jockeying and manœuvring which under the system that the Tories perpetuated precedes every election. Under the Bill the automatic up-rating will not be conceded as an act of grace or political calculation; it will be there as a statutory right. I am proud that it is this Labour Government which will put this long overdue reform on the Statute Book.

I can understand why the Liberal Party is opposing the Bill, because it has made clear that it believes in earnings- related contributions and flat-rate benefits. That system operates in New Zealand. It is a tenable view, about which I can argue and explain why I reject it. But there is no such clarity on the Tory side. When we prod and push what do we get? We have great hopes of the speech which will follow mine. I read in the papers that the Leader of the Opposition will insist on a clear constructive Tory alternative to our scheme. I wish the right hon. Gentleman well, but he is not here this afternoon.

We have some agreement. The Opposition think that we must switch from flat-rate to earnings-related contributions to finance any pension scheme. Agreed? Yes. Second, we all agree that we believe in not flat-rate benefits but a system of earnings-related contributions and earnings-related benefits. That is what I am told, in my absence, the noble Lord revealed to the House in the last debate. Third, he said that he believes in all the complexities of contracting out, except that he wants to dole out a lot more out of our funds for the boys. If that is what hon. Members opposite agree with, it is baffling why they are going into the Lobby.

I think that there are two motives which impel hon. Members opposite into the Lobby. First, they believe that there are votes to be gained by systematically exploiting the anxieties felt by many members of occupational schemes, particularly in the public sector, about the effect on their pensions when our new scheme comes into force. These anxieties are inevitable and legitimate, but in some cases they are combined with a less reputable motive—a sense of grievance at the prospect that their own special kind of pension will soon be available to every national insurance contributor in the country by paying his national insurance contribution. Privileges never seem quite so valuable when they are available to the common herd. Naturally, because they are the party of privilege, the Tories have spotted this, and they are determined to work up a pensions panic, a combination of legitimate anxiety and dog-in-the-mangerdom which will make people respond to the slogan—I give it to them free, gratis, and for nothing— "Your occupational pension is in danger. Vote Tory to preserve it". That is what they are out for.

There are two reasons why this campaign will fail long before we come to the election. First, it is untrue that there is any real danger of occupational pensioners being worse off, taking State and occupational pension schemes together, after the new scheme begins than they are today. On the contrary, employers should be able to dovetail the two pensions so as to draw substantial advantages from combining the two, and this is what pension experts are saying in the Financial Times. The panic which N.A.L.G.O. tried to build up is dying down because its members can see that the wild statements made by some of its leaders are untrue. In the coming months we shall be able to announce more facts which will make nonsense of the pensions scare, and that is why I am not afraid of it.

There is a second reason why the Tory campaign will boomerang. In the last 100 years every one of our progressive ideas of social service has been launched by philanthropic or far-sighted employers determined to look after their workers. Among private employers, co-operatives, local authorities and Government Departments one can find endless examples of pioneering initiatives, in social welfare and security, in safety in factories and mines, in sickness schemes, in canteen feeding, in savings clubs, and in retirement pensions.

The story always repeats itself. The pioneering employer starts privately on a small scale. The movement spreads, and after a time society is faced with a glaring contrast between the advantages enjoyed by the lucky workers employed by people who have decided to act in advance and others in miserable conditions outside. There is then a hiatus while a Conservative Government are in power. Then there comes a radical Government who, after years of Conservative delay, are prepared to deal with this problem, not to level down but to level up, not to penalise the good employer but to compel reactionary employers to come into line and so transform the private security which has been a privilege reserved for special groups into the social right of every citizen.

I find it hard to believe that many people, either in the public service or in private industry, who are members of good private schemes will be persuaded by the Opposition to oppose the extension of comprehensive State earnings-related benefits for employment and sickness where they are working to retirement pensions as well. If it is good for sickness and unemployment to be dealt with by way of earnings-related benefits, it must be good for the pensioner as well.

The second reason why the Tories want to find a reason for opposing this Measure is that they calculate that the increased contributions will anyway be unpopular, and they will be able to exploit them in their general effort to present themselves as the champion of the taxpayer. I think that many Tory spokesmen have said that our scheme is bad, that it is too expensive, that it is too lavish, that it is a luxury which the country cannot afford. It is, in fact, a modest foundation. It is not all that lavish. Figures of 37 per cent., 40 per cent. and 53 per cent. of earnings are not staggering. It is a start, but it is interesting to note that Conservatives who find nothing wrong with a two-thirds private scheme are shocked when we introduce even a modest State scheme.

This is an issue on which the country will have to decide. In the 'fifties we entered the affluent society. By the end of the 'seventies we shall be a nation of car-owners, colour television owners, the takers of annual holidays overseas, not to mention the pleasures of the racecourse and the bingo hall. We shall be able to afford all these things if our opponents have their way. The one thing which they say we cannot afford is a scheme of earnings-related State pensions which will remove the scandal of two million fellow citizens, half of them widows, in such grinding poverty that they require a means-tested supplementation to eke out their inadequate incomes; and we have roars of laughter from the Tories even at that suggestion.

I cannot decide which was more scandalous, the determination of the Tory Governments of the 'thirties to tolerate mass poverty on the ground that it was endemic to the economic system or the determination of our contemporary Tories to encourage private pensioneering but to prevent any radical reconstruction of the State pension which alone can deal with the problem of poverty in old age.

I appreciate that the reasoned Amendment is carefully drafted. It does not commit the Opposition to outright opposition to the principle of an earnings-related pension. What it suggests is that a Conservative Government will achieve the same objective, but it will be cheaper. If that is their idea, I hope that they will spell out how they will get contributions down and benefits up. My view is that all that they are doing on this Measure is reconstructing the mistake which they made in 1948 when the National Health Service Bill came before the House. At that time, which was long before the National Health Service was demonstrated to be a great success—indeed it was then an untried and revolutionary idea—it was condemned by many people as a lavish hand-out, inordinately complicated and most complex. All kinds of adjectives were used about that Bill. General practitioners in the B.M.A. were against it, and many so-called health experts predicted that it would fail. So the Conservatives decided to have it both ways. They said that they wanted to show themselves in favour of the idea of a free health service, but they questioned the practicality of the Aneurin Bevan plan. They calculated that that would enable them to wait and see whether it worked, and if it did, to claim that they were in favour of it, and if it did not, to claim the credit for predicting the failure of a piece of Socialism.

History is repeating itself, and I am so relieved that the Tories are going into the "No" Lobby tonight. I gather that they will vote once for certain. Why not vote twice? Why vote only for the Amendment? Why not vote against the principle of the Bill to demonstrate their view? Whatever they do, we on this side of the House will make sure that their position tonight in the Lobby will be remembered against them when the challenge of poverty in old age has been overcome by this Measure and the years which preceded this Measure are viewed as a shabby passage in our national history.

5.19 p.m.

Lord Balniel (Hertford)

I beg to move, to leave out from "That" to the end of the Question and to add instead thereof: this House, while recognising the rôle of the State in providing a firm guarantee of security in old age and welcoming improved provision for widows and the most seriously disabled, declines to give a Second Reading to a Bill which will damage the development of public service and occupational pension schemes and the savings they generate, and which vastly increases the burdens of taxation and contributions on individual men and women and industry without helping existing pensioners. I do not think that any Minister has had a greater personal opportunity of undertaking a major constructive reconstruction of social insurance than the Secretary of State for Social Services himself. All political parties are agreed that the time is now right for another step forward, that the present system of financing is inadequate and that an earnings-related contribution is more appropriate. All are agreed, surely, that there are certain grievous needs in society which have got to be met.

Amongst the general public, I believe, there is strong feeling and, indeed, a growing concern about the care which is provided for the elderly in our society and for the unfortunate. I sense equally amongst the younger generation—amongst the generation of working age—an absolute determination to provide better care for the elderly and that they themselves must be given a better chance, through reduced taxation and encouragement through a redesigned system, to provide for themselves out of their own efforts and savings something over and above what the State can provide.

In these circumstances, it seems to me almost sheer tragedy that the Bill, with certain worth-while exceptions, so blindly and, in my opinion, so stupidly fails to place emphasis where the need is greatest. Indeed, the Bill astonishingly creates a situation where the position of the existing elderly in the State scheme is going to be steadily worsened relative to everybody else in society. There is a built-in discrimination against the elderly of today in favour of the young men and women in this country.

Mr. William Hamilton (Fife, West)

Do not believe it.

Lord Balniel

The Labour Party, I believe, now to its embarrassment, has been presented with a scheme which was worked out by the Secretary of State for Social Services and his small group of professors—they used to be known as the "skiffle group"—15 or 20 years ago.

Out of all the complexity of this Bill one stark fact stands out. It does absolutely nothing for the existing elderly. The emphasis of improvement—if one can call it improvement—the emphasis of change, is not for the elderly but is for my generation. The existing elderly are left on a flat-rate system, but my generation are promised something new. It is no more than a long-range large-scale promissory note issued by a Government who have broken virtually every single short-term promise on which they were elected.

The promise which the Government are making, in simple terms, is surely this, "I promise that our children will make for us a bigger sacrifice out of their taxation and their contributions than we are prepared to make for the existing elderly." So says the Secretary of State.

The philosophy which lies behind our approach to this matter is very different. The philosophy behind our approach is different from the Bill. It is that a prime task of the State is to provide a basic security in old age as substantial as the nation can afford, and that additional care can best, but not exclusively, be provided by occupational schemes. Where the State does have a rôle for an earnings-related element—for those people who cannot be covered by occupational schemes—it should be limited in scale and one should be able fully to contract out of it into a private occupational scheme—not just a partial contracting-out which leaves one locked into an earnings-related State scheme.

We do not believe that young and middle-aged people should be forced into a State-earnings-related scheme. Everybody should have the opportunity of an earnings-related scheme, but they should be free to choose whether it will be a State earnings-related scheme or a private occupational scheme or a public service pension.

Mr. Crossman

Is the noble Lord referring to the notion of individual contracting out, or is he saying, "We would still keep contracting out for the firm of the employer"? If he is referring to the individual, I can tell him that this was looked at for many years and it was turned down by his own Government.

Lord Balniel

I have a little cross marked against those remarks in my notes, which means "Crossman will get agitated. Ask him to wait." I am referring to contracting out of approved occupational schemes. I shall elaborate on this later in my remarks. It is a question of occupational schemes.

We have sketched our criticism of the Bill in the reasoned Amendment, but I should like to expand on the arguments against the Bill. Although this is rather an inelegant way of doing it, I find that the easiest way of doing it is in the form of a catalogue.

Mr. Peter Archer (Rowley Regis and Tipton)

rose—

Lord Balniel

I do not want to give way now. We have rather a truncated debate and I should like to get on.

I believe that a State scheme should be simple and clear. These proposals are complex to the point of being totally incomprehensible. To add to the complexity, the Bill uses currency figures which are not yet the currency of the realm. We are no longer using £ s. d. Hon Members are self-employed persons, and the self-employed person's contribution is laid down in Clause 3(1). It is £1.54 a week. Hon Members all know now exactly what their weekly contribution is. My hon. Friends have already worked it out. It is £1 10s. 10d. This use of decimal coinage which is not yet coinage of the realm is, however, no more than an irritating triviality when compared with the more serious features of complexity.

The National Association of Pension Funds last week reiterated its opposition to the principles on which this Bill is based, and goes on to state: We must preface any detailed commentary with one emphatic protest at the complexity of the Government proposals. This is bound to have considerable impact on occupational schemes, if only because employers, pension fund managers and all advisers concerned with occupational schemes are going to find themselves saddled with the enormous task of trying to explain the new State scheme to employees and justifying (if they can) the intricate calculations which will be necessary to arrive at even a rough estimate of the benefit which employees may expect to receive from National Insurance. This is why I am constantly reiterating my objection to the complexity of the scheme. It is not just that it is difficult for us as individuals to understand the scheme. It is that no one can possibly calculate the benefits which he will receive.

At least five variables are involved. First of all, there are life average earnings which stretch over a whole working lifetime. Another variable is national average earnings. Then there is the revaluation of life average earnings to take account of national average earnings. Another variable is the special credits made for periods of sickness and unemployment which, if I understand the Bill aright, are not yet written into the Bill. A third variable is the revaluation for prices.

Not only is it impossible for any individual to work out what his benefits will be. When people actually receive their benefits—and each individual in each house in each street will be receiving a different benefit—it will be quite impossible for them to check whether they are receiving the correct benefits or not except by arguing with a computer about records stretching back 20, 25, or 30 years. This to me is a very real objection.

My second objection is that the Bill has this built-in discrimination against existing pensioners in favour of a younger age group. The Bill will treat future pensioners more generously than those who have already retired. For the elderly of today, there is absolutely nothing in the Bill except the two-yearly review, which, incidentally, is substantially less than successive Governments have achieved. Existing pensioners will be kept on the flat rate. By putting the younger generation on earnings-related benefits, a gap will be created between the older pensioner and the younger which will grow steadily bigger year by year.

Apart from the morality of this, it would be politically impossible for any Government—a Conservative Government, a Liberal Government, or, in the unlikely event of our ever seeing one again, a Labour Government—to hold a position in which the oldest were less generously treated. The 8 million retired pensioners of today will certainly regard this as totally unfair. Indeed, not only would no Government be able to hold this position: no Government should want to, because it is totally unjust.

Mr. Crossman

I am a little baffled. As I understand, the noble Lord is objecting to the fact that the flat-rate element cannot be modified. But there is nothing in the Bill to prevent any future Government increasing the flat-rate element by any amount they think right.

Lord Balniel

Never for one moment have I said that the flat-rate element cannot be modified. Of course it can be increased. What I am objecting to is the gap which will automatically be created, whereby the older pensioner will automatically be treated worse than the younger pensioner.

Thirdly, the Bill departs from the principle of concentrating help where the need is greatest. Indeed, it stands this principle upside down. Out of taxation, it provides bigger benefits for the higher income groups. This is a new and interesting and rather surprising form of Socialism. I suppose that it could be called the "Winchester model", but I do not think that Webb or Tawney would have regarded this as acceptable.

Also, while it may be logical to tie a flat-rate system to the cost of living, it is not logical to tie an entire State earnings-related system to the cost of living. If the cost of butter, for instance, goes up 6d., the cost of buying it is the same to a poor man as to a rich man. Under the Bill, they will both receive the same proportionate increase. Therefore, the poorest pensioner will receive the smallest increase and the better-off pensioner the largest increase. This does not seem to me to be a logical element on which to base an entire State system.

The fourth weakness of the Bill is that it will damage the future growth of savings. Some occupational pension schemes will be cut back. An intelligent guess by the pension experts is that about 15,000 different occupational schemes will be closed completely because of the Bill. The Minister himself accepts, to quote his words, that there will be a "slowing down of savings"—

Mr. Crossman

The growth of savings.

Lord Balniel

I apologise if I have quoted the right hon. Gentleman incorrectly—"a slowing down in the growth of savings".

But he has given no indication of how rapid the slow down in the growth will be. I am bound to point out that pension experts consider that there will be not only a reduction in the growth of savings but …a reduction in the present amount of resources channelled through occupational schemes, rather than a mere check to growth as predicted by Government spokesmen. Yet these savings are crucially important, not only to the economy but to the future generation of pensioners. They are infinitely more valuable than all the paper promises contained in the Bill.

The more that savings are cut back, the more future generations of pensioners will have to rely on the working population of the day to pay the bill, either through increased taxation or through increased contributions. These occupational pension schemes form two-fifths of all the personal savings in the country, and I believe that any threat to their growth, as is posed by the Bill, is bound to have very serious economic implications.

Fifth, not only will the future growth of savings of occupational schemes and public service pensions be harmed, but the interests of their members will be damaged. About 12 million employed people are in these schemes, which the Bill will inevitably damage. The Government and the Secretary of State have argued that any reduction in the scope of these schemes will be made good for younger people by corresponding increases in the State scheme.

This argument simply does not stand up. Occupational schemes often provide for retirement at 60 or even earlier, whereas the State pensionable age is 65. Also, occupational schemes often provide a lump sum, which is not provided under the State scheme. Again, there is no earnings rule in the occupational schemes, but there is under the State scheme. Yet again, contributions to occupational and public service schemes rank for tax relief, but contributions to the State scheme do not.

Sixth, the Bill builds up enormous commitments for the future. Just meeting today's commitments has the scheme floundering in the red. There will be a deficit next year alone, for instance, of £25 million. This in spite of last month's increase in contributions—the biggest increase ever recorded in history, which was no more than was required merely to top up the pension and to keep its purchasing power the same.

It seems an extraordinarily improvident approach to solve today's problems by building up bigger commitments for the future. Of course, promises are cheap, but it is very unwise to build up commitments in 15, 20, or 25 years, for a time when there will be many more elderly people in our society but the working population who will have to pay for them will be a smaller section of society.

The seventh point is the position of married women. Married women today have the option whether or not to pay the full insurance contribution. Nearly 3 million married women and widows in employment exercise their choice and decide not to pay the full contribution. The Bill will compel them to pay it. This is a highly questionable move, at least before equal pay for women is introduced. At the moment, they pay only 8d. a week towards the industrial injuries scheme. Under the new proposals, a married woman £450 a year or £8 13s. a week—not a high salary—will have to pay not 8d., but 11s. 7d. a week. Higher incomes will result in substantially higher contributions for married women and widows in employment. For instance, a woman earning £1,900 a year, £36 11s. a week, will pay not 8d. a week, but £2 9s. 5d.

I recognise that there are special problems in connection with divorced and separated women, problems largely caused by husbands dodging their responsibilities and failing to pay the maintenance ordered by the courts. My inclination would be to try to devise better methods of enforcement, probably through the P.A.Y.E. system, rather than to pursue the questionable policy of removing the woman's right to opt out of contributions. This will impose a very heavy burden on married women, and we shall look at this very closely in Committee.

My eighth point is that it will increase industrial costs. The decision to make married women in employment pay the full contribution will, of course, be followed by wage demands. The general increase in contributions will also, of course, be followed by wage demands.

The scheme, however, has another new feature. The earnings-related State scheme balloons outwards so as to bring in employees earning not only £18 a week, as under Conservative legislation, but earnings up to one and a half times the national average—up to £36 per week. In addition, there is no earnings limit on what employers will have to pay. They will have to pay the full 7 per cent. of their total payroll and this, taken in conjunction with the present levels of taxation, will impose a very heavy burden on industry. It will hit hardest the industries which pay the highest salaries, those in the advanced technologies, the industries which are playing a major part in the export trade. The figure of 7 per cent. is a new one. All the White Papers have a lower figure. The new figure of 7 per cent. was announced to the House only a day or two before we rose for the Christmas Recess.

My last point in this catalogue is partly one of objection and partly one of commendation. It is scandalous that no pension is being provided as of right to the over-80s. It is disappointing that no attempt is made to eliminate the anomalies whereby those who are injured or crippled by accident at home or outside receive less generous help than those injured at work. If we can afford to build up these big commitments of earnings-related pensions I should have given a higher priority to those groups, whose needs are very real.

But I warmly welcome the improved arrangements for younger widows, the improved benefits for the long-term sick or disabled, and the attendance allowance for the most seriously disabled. These are good things to achieve, and I give the Minister full credit for having incorporated them in the Bill.

Finally, I turn from the Bill's weaknesses to look at the alternative structure we should establish in the future. The Government are dreaming about a towering State edifice of great commitments for the future, with no financial foundations except that they should be paid for by our children. In a year or two their scheme will have tumbled down. It will look like Ronan Point.

The principle which activates the Bill is to extend the rôle of the State of the expense of personal choice and at the expense of public service and private occupational pension schemes. We will not follow the Government in this new and unsound pensions structure. We will implement the proposals for widows, for the long-term sick and disabled, and the attendance allowance for the most seriously disabled. Those are good proposals, and we should try to bring them in before 1972.

Instead of what is proposed, we will encourage the growth and quality of public service and occupational schemes, so that as each year passes more and more young people can rely on those schemes to provide pension security over and above that provided by the State, a pension security based on real savings earned by investment, a pension security which gives better value for money. We shall not cut them back or kill them, as the Government propose.

Mr. Kenneth Marks (Manchester, Gorton)

Will the hon. Gentleman give way, on the point of personal choice?

Lord Balniel

No. I am sorry.

The basic State pension will be flat rate and at least protected against price rises. There will be the possibility of a varying rate, a higher rate, for the more elderly retirement pensioners, amongst whom there is the greatest concentration of hardship. We will provide a pension for the over-80s.

Everyone should have a chance to earn a pension related to earnings. The State will run a reserve, fall-back earnings-related scheme for those employees whose employers are not prepared or able to meet the minimum requirements of a contracted-out occupational scheme.

The intention, however, is to give the maximum encouragement to occupational schemes. The State earnings-related element will in essence be a reserve scheme designed to fill in the gaps in occupational pension provisions. With suitable tax changes and simplification there is scope for an immense upsurge of savings. Approved occupational schemes and public service pension schemes will be exempt from the State earnings-related scheme. There will be full contracting out.

Mr. Crossman

It will be full contracting out of the flat-rate element, too?

Lord Balniel

Full contracting out of the graduated element, of course.

One of the difficulties of contracting out now creating much complexity lies in the present need of direct comparability with the State graduated scheme. We are working on a scheme which will avoid that need, where approval of an occupational scheme will stand on its own feet.

The rules and regulations governing occupational schemes which are contracted out will be brought up to date so as to encourage the best practices, such as insurance cover for widows and the preservation or protection of pension rights on change of job. We want every job to carry with it a good pension scheme. We think it right that people can regard this as their own and take it with them when they change their job.

This is a very different approach from the Government's. We will concentrate our efforts on helping the most vulnerable in our midst. The Bill fails to do that. We will encourage the young and the able to provide for their own future over and above the basic guarantee of security which the State can provide. The Bill fails to do that. We will encourage the growth of public service and occupational pension schemes. The Bill smothers their growth. We will expand personal freedom of choice. The Bill will diminish it.

We believe that a scheme of national insurance should be clear and based on integrity. The Bill is incomprehensible to the general public and when examined carefully is exposed as a skilful fraud.

It is for those reasons that I have moved our Amendment.

5.50 p.m.

Mr. Douglas Houghton (Sowerby)

The first thing I want to do is to welcome my right hon. Friend the Secretary of State for Social Services back to the House in full health and form. The second thing I want to do is to congratulate him on the content, the skill, the imagination and the compassion of the proposals in the Bill. I think that, on this side of the House at any rate, we are indebted to his colleagues and his officials who have put so much into this historic Bill. If I may say so, with great respect to the Fulton Report on the Civil Service, the Bill shows what the gifted amateur can do.

Moreover, these proposals make the Beveridge scheme look like the primer on social security that it was. In its day, the Beveridge scheme captivated the imagination of the whole nation at war. It put fresh heart into the struggle against the Nazis. Many millions of people felt that Beveridge was really what they were fighting for. This scheme comes at a time of relative peace, at a time of more sophisticated expectations, at a time of a sounder promise of economic strength. My right hon. Friend said that the scheme should have been introduced 10 years ago. I wish that it had been introduced three years ago. We are in the sixth year of the Labour Government, and the scheme could have been introduced three years ago.

My main reservation on the proposals has to do with finance, because I believe that there is an element of promising ourselves pensions for the future on the basis of the next generation paying more. But, listening to the hon. Member for Hertford (Lord Balniel), it seemed to me that the Opposition's reasoned rejection of the Bill was based perhaps on the weakest ground that he himself chose. Apart from all else, I thought that his speech was not really an alternative scheme but a pensions manifesto. I think that it would be idle to pursue many of the hares he set chasing around the House which, presumably, will eventually come out in a scheme which will have the authority of the Conservative Party behind it.

My right hon. Friend dealt with two points in the Opposition Amendment. To say that the Bill will not help existing pensioners is nonsense. This is where the help for existing pensioners will come from. There is nowhere else for it to come from except the contributions of those now contributing. There is no fund for improvements to come from for existing pensioners. We have a "pay-as-you-go" scheme now and the improvements that are being given and which will still be given will surely come from current contributions. The question is what sort of contributions and their incidence upon current contributors.

The hon. Member for Hertford said that the existing elderly are left on the existing basis. I remind him—and he has the figures in a document issued by the Life Offices' Association—that over the last 17 years the average increase per year of the flat-rate pension has been 7 per cent.; the average gross increase in earnings has been 5½ per cent.; the average increase in the cost of living has been 3¼ per cent. Therefore, existing pensioners, over the last 17 years, have done better than if their pensions had been related either to the cost of living or to the rise in earnings. To suggest that they are being left behind in the consideration of the future is unjust to what has been done by both Governments.

Existing pensioners, as my right hon. Friend pointed out, can have their pensions adjusted to any figure and on any basis that any future Government may decide. They have no contractual right which either ties them down or proscribes higher expectations. They are promised a fair deal by reference to the rise in prices and the Government are able to go beyond that at any time they feel that it is right to do so. Does the hon. Gentleman suggest that the existing pensioners can be given an earnings-related pension at this stage? If one is switching from a flat-rate scheme to an earnings-related scheme, it is obviously impracticable to go back over the past earnings of people who have already retired and begin to recalculate earnings-related pensions for them. Let us be realistic.

Moreover, although I never attach great importance to whether people have contributed or not, or upon what principle they have contributed, if one does look at contributions, one finds that they have paid, for the most part, a flat-rate contribution and not an earnings-related contribution. I think that the hon. Gentleman will have to spell out his philosophy much more precisely before what he is saying is comprehensible. But I doubt whether it would be profitable to ask all the questions that his speech raised. After all, we are debating the Government's proposals and not the Tory manifesto on pensions.

The other part of the Amendment relates to the damage which the Opposition say will be done to the public service and other occupational schemes and to the flow of savings. Quite clearly, when any new scheme is introduced which has to be universal in its application, it is bound to affect existing pension schemes greater or less according to what the State scheme sets out to do. Hon. Members on both sides will recall that the Beveridge scheme provided for power to be given to pension fund trustees to adjust their pension trusts to take account of the introduction of the Beveridge proposals.

We have a very substantial universal insurance scheme already, notwithstanding the contracting-out arrangements provided for in the scheme of ten years ago. Curiously enough, the universal element of the existing scheme has the higher contribution. That part of the existing two-tier scheme for which contracting out is provided has the lower of the two contributions. The flat-rate contribution for men at present is 17s. 8d. a week and the highest contribution for men in the graduated side of the scheme is 16s. 4d. a week. So the principle of universality has been accepted in the past and we still have it on a substantial basis, and if universality is to be continued in a new earnings-related scheme, clearly it is bound to have some effect on existing occupational schemes. In fact, there has been perhaps a growing effect on occupational schemes already by the rise in benefits and rise in contributions under the existing scheme.

In any case, as my right hon. Friend pointed out, important as the occupational schemes are, important as the flow of savings is, they are not the overriding considerations in dealing with social security for the whole nation. There has been plenty of time for the occupational scheme to show what it can do, but it has not done it. It has not provided transferability. There is more mischief done today to provision for retirement when people leave their occupational schemes than ought to be tolerated if we are to make adequate provision for retirement. Many people leaving their employment have refunds of their contributions often frittered away in current consumption and they are spending provision for their retirement.

I think that there is considerable scope for the improvement of occupational schemes when the worst has been said about the effects of the Bill upon them. Surely the man on £2,000 a year will not be content with the £700 a year pension that this scheme will give him on full maturity. He will want something better. Nor will the civil servant on £2,000 a year be content with the £1,000 a year that his scheme will give him for 40 years' service. Many in occupational schemes have the disadvantage of going in late and not having the full benefit of the schemes they enter. The State scheme will go around with the insured person. That will be a great safeguard for his future.

Experience shows that with demand for higher standards going on the whole time, with a greater sense of the economic significance of retirement, more and more people will want to make provision for themselves over and above what is provided in this scheme. One of the things which is dawning on many people is that retirement inflicts the biggest pay cut they ever suffer. To slash their income by half, or a great deal more than half, is to provide serious economic difficulties on retirement. So far, the life assurance business, the deferred annuity business, the endowment policy business have all flourished notwithstanding increases in standards of social security.

There are, of course, aspects of the future which the noble Lord has described which show how sharply divided the parties are on the philosophy of the provision of social security. The State must go in where other effort has failed. Where voluntary effort and personal choice have made alternative provision it is desirable that it should then be adjusted to universal State provision. As my right hon. Friend pointed out, this is what has happened in many sections of the social services in the past.

I think that we must give some attention to the criticisms which are coming forward from those in occupational schemes, if only because they are the most vocal of the commentators on the Government's proposals. It is perhaps a healthy sign that young people under 43 are not unduly bothered about their superannuatiton. A young generation that goes around worrying about its pensions is not the virile, energetic body of young people that a "with-it" Britain wants in the world today. That is why the older people have to take care of the superannuation of the young. They do not trouble very much about it themselves, but those in occupational schemes are superannuation-sensitive. They understand their own in- terests and their stake in the occupational schemes.

When I addressed a fairly large meeting in my constituency recently of N.A.L.G.O. members—police, firemen, teachers, bank officers and civil servants—I found that two things were worrying them most. First, there was the redistribution of income within the so-called superannuation scheme, and secondly, the uncertainty and fears about the changes in their occupational schemes which might be consequential upon the introduction of the new State scheme. The principle of redistribution within a universal and compulsory State scheme has not been seriously challenged—not even by the noble Lord, not by the new body, the United Kingdom Working Party on Superannuation, which obliged me by sending its document to me. It does not differ from the scheme in principle. Therefore, I am not sure that it is worth while spending very much time on the principle of redistribution within the State superannuaton scheme. By redistribution, we mean that contributions in the scheme will earn lower benefits for the higher-paid workers and higher benefits for the lower-paid workers in proportion to the amounts contributed. The scheme will be weighted in favour of the lower-paid worker.

This principle of redistribution has in modified form already been applied in the graduated pension scheme that the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) introduced 10 years ago. The first thing he did was to raid the graduated contributions so as to transfer money to the flat-rate scheme and so relieve him of the necessity of raising flat-rate contributions too high, but so that those who were fully contracted out should not escape their share of the redistribution of income provided for in the graduated income he imposed on those contracted out a 2s. 7d. a week more flat-rate contribution for the same flat-rate benefit. In that way they did not escape his predatory activities.

I once said that the right hon. Gentleman had turned the Ministry of Pensions and National Insurance into a "bucket shop". I would withdraw that now. Since we look for our Socialism in the most unexpected quarters, I think that I see traces of it in the 1959 scheme. Therefore, I think that we can now turn to that scheme and rely at least on one of its underlying motives in justification for what we have in this Bill.

If we leave aside the principle of redistribution—and I believe that we can—we see a universal compulsory State scheme which is in a sense a form of taxation entitled to have its own internal social priorities. I believe that this has. Objection came from some of my audience who are left in a state of uncertainty as to the future of their occupational schemes. I think that is true. We all recognise that there is bound to be some "give" in some of the occupational schemes to enable an occupational scheme and the State scheme to be dovetailed to provide (a) a reasonable level of contribution, and (b), a satisfactory superannuation benefit. It may, therefore, be that the contributions to some occupational schemes will be lowered in order to provide modified benefits in harmony with the State scheme.

Now they say to me, "I shall be transferring to the State scheme a contribution which will have two disadvantages. One is that the contributions will be switched from a tax relief scheme to a non-tax relief scheme." This certainly is a matter which will have to be considered. The fact that high contributions under the State scheme will have no tax relief yet all contributions under an occupational scheme will be free of tax will certainly raise an anomaly which many people will wish to see removed. The second thing they say is, "Our contribution, switched from the occupational scheme to the State scheme, will not count to the extent of 20s. per £ towards our benefits. An element of redistribution will be imposed upon it."

At the moment, both those things may be true, but I stress that on the credit side they will be given, even though partially contracted out, full widows' benefit on a scale unusual in occupational schemes to-day; secondly, a wife's allowance will be provided, which again is not a usual feature of the occupational scheme; and, thirdly, which is also important, the State will up-value that part of the joint pension which is guaranteed by the occupational scheme. At present the up-valuation of occupational schemes is very ragged and, on the whole, un- certain and unsatisfactory. It is a generous move to dynamise that part of the combined pension which is guaranteed by the occupational scheme. On hearing that proposal when I was dealing with these matters, I was not immediately attracted to it. A further consideration is the preservation of pensions in the public sector. That is a great move forward, even in the public sector.

The structural arrangements for contracting out are skilfully done and, on the whole, they are fair. I am not in a position to discuss whether the remission of contribution should be 1.3 or 1.5 per cent. For myself—and I say this only personally—I think that if many of the people marketing guaranteed annuities think that 1.3 is too low, and if they question the Government Actuary's judgment, I should be prepared to put the matter out to independent review and judgment, if any independent opinion is to be obtained in this field. But I would have no desire to impose a remission of contribution if some people think it unfair. I do not think that, on the whole, it is likely to prove unfair, but the criticism made of it is that the Government Actuary is a theoretician whereas those in the business are testing the market, and the market judgment, they say, is different from that of the Government Actuary.

I come to the fears about the consequences of partial contracting out. They have been exploited and probably exaggerated, but as long as there is uncertainty they cannot be removed. Unfortunately, the process of negotiation on these revised and probably modified occupational schemes will be intricate and lengthy. The uncertainties will persist for months. I presume that they must all be resolved by the appointed day in 1972, because then the new scheme will come into operation and the dovetailing will have to be completed by then. But there are millions of workers in these schemes who will not know where they stand with their occupational schemes until those negotiations are complete.

I raise with my right hon. Friend the Secretary of State the process of negotiation. I do not think that Chapter XIII on page 19 of the White Paper adequately covers this. I mention only one difficulty within my experience. Superannuation in the Civil Service is not within the scope of negotiation on the Civil Service National Whitley Council. Will it be put in?

The noble Lord the Member for Hertford talks about freedom of choice, but in many cases there is no freedom of choice. Pension schemes are usually dictated by the employer. They are very infrequently negotiated with the unions or representatives of the staff. In the Civil Service, since an Act is necessary to modify the Civil Service scheme, there is never any formal negotiation on the Civil Service National Whitley Council about superannuation arrangements.

It is, therefore, the job of the Secretary of State or the First Secretary to ensure that there is adequate machinery everywhere for a review of the occupational schemes in the light of the proposed changes. Otherwise, we may face a certain amount of white-collar unrest, which it would be desirable to avoid.

I come to a question raised by the Life Offices' Association which was repeated in the Economist in a recent article. It suggests that it is wrong of the Government to promise the up-valuation of earnings year by year for the purpose of arriving at reckonable earnings on which the retirement pension shall be calculated. It suggests that all that the Government should promise is up-valuation by reference to the cost of living. Surely this is wrong. If we take life earnings as our basis for assessing pensions, we are bound to do something about writing them up in value so that the final calculation has some regard to the standard of living immediately before retirement.

In the case of a teacher, civil servant, or local government officer, we usually take the remuneration of the last three, five or six years. The assessable earnings for the purpose of calculating pensions are related, broadly, to what a person is getting at the time of retirement, and in most cases he was probably receiving more pay then than at any earlier time in his career. But, as my right hon. Friend the Secretary of State pointed out, the earnings of an industrial worker, as against those of a teacher or a person in the Civil Service, do not go up in a straight line on an incremental progression. They rise to middle age and then begin to fall. That is why it was necessary to take life earnings as the assessable basis for calculating pensions.

But I do not see that it is a fair basis of valuation of earnings at the time of retirement only to up-value previous earnings by reference to the cost of living instead of by reference to the rise in earnings. We are, after all, considering earnings. Therefore, I would reject the suggestion that this is a wrong basis, and yet the Life Offices' Association and the Economist endorse it.

I end on a cautious note. Possibly there is a slight touch of pessimism here. I think that experience shows that in a free society there are distinct limits to the redistribution of income and resources by Act of Parliament. The forces of resistance are very strong indeed. What people are required to give up and do not want to give up they will not give up and, experience shows, do not give up. They will help themselves to the national cake. The corrupting influences of the capitalist system go with its incentives. It remains to be seen—and I am not sure about this—whether the next generation will honour the promissory notes that we are writing into this Bill. This is my gnawing doubt all the time.

The contract between the generations is being signed by only one party. [HON. MEMBERS: "Hear, hear."] I know. I do not always disagree with everything from the benches opposite. The fact that we may have a mutual doubt here does not mean that either of us is wrong. If, however, we are the only signatories to the contract between the generations, we have to be very careful before making the conditions for the next generation too hard.

We should have been on much stronger ground if we gave up to begin with the same proportion of our earnings which we shall ask others to give up later. This is where I may part company with the noble Lord. I think that our capacity and our willingness to forgo a marginal slice of current consumption should be equal to the call that we make upon others. That degree of funding would not be alien even to a pay-as-you-go scheme.

I know that at one time my right hon. Friend the Secretary of State envisaged substantial savings at the beginning of the scheme which could be invested by National Insurance Commissioners, which would give the scheme the benefit of investment in equities and other hedges against inflation. We all know what happens to our money if we invest it with ourselves. We have a national insurance reserve fund of, I believe, £1,600 million, but nobody will ever see it again. It is a phantom fund, because it is invested with the Government. If we ever wanted it, the Government would either have to borrow more or tax more to pay us out, so we shall never see it again. But if we had savings which could be invested elsewhere and under the control of commissioners, we might be on a course which would make sense to the next generation and give us greater satisfaction ourselves.

There is nothing sacrosanct about a pay-as-you-go scheme. The reason we have it is that to have a fully funded State scheme is impossible, for all sorts of reasons. But we could surely save up for part of our pension instead of putting the whole of it on current and future contributions. The generation gap is wide enough already without adding to the tensions of excessive demands of the old upon the young. That is the danger of the scheme. That is why I am more disturbed still to see what has happened to the estimated balances in the earlier years as a result of the partial contracting-out arrangements and the effect upon the contribution revenue.

We are living from hand to mouth in this scheme right from the beginning. This is a very bad start. We could afford to pay more. We could afford to have a contribution which would give substantial margins to begin with and which would produce the benefit of investment later. When we were first looking at this scheme, one of the things that we had to decide was the sort of maximum joint contribution on which to proceed. I heard 14 per cent. mentioned at that time. We are not there yet in these proposals. I should think, therefore, that with greater expectations and with higher standards, we could have gone a little higher still. However, that is the one cloud, as big as a man's hand, hanging over the scheme. Only time will tell whether what we are doing is building soundly for the future without raising the same sort of thing that has arisen in West Germany—the resentment of the young of the future against constant rises in the proportion of contributions in order to honour the promissory notes made out by those who went before. This needs very careful consideration before we finish with the Bill.

6.24 p.m.

Mr. Peter Fry (Wellingborough)

In making my maiden speech on this pensions Bill I had better start by declaring an interest since, as part of my business activities, I sell insurance. But it is not from that point of view that I want to look at the Bill. During the years that I have been meeting the general public, especially during the recent election campaign, I have been struck over and over again by the feeling prevalent among many of the elderly that they have been betrayed by the rest of society.

I received a letter only last week in which a constituent said: To my mind, it appears that in this Welfare State of ours it is a crime to be old". Therefore, in describing their feelings as those of betrayal, I do not think that I am being too extreme. In speaking out as I do, I know that my predecessor for the Wellingborough constituency, although he would have spoken from the benches opposite, never hesitated to speak up on behalf of his constituents and present their problems.

When people drawing the basic national insurance pension see wage awards announced which give increases in wages far higher than the total amount on which they have to live, they know that they are being left further and further behind in the battle to maintain reasonable living standards, and they can hardly be blamed if they feel bitter. It is all very well to talk about the overall level of prices, but pensioners know that the essentials of life—milk, bread and coal, for example—have all gone up in price and will continue to go up by a far greater percentage than is reflected in the general rise in the cost of living. If we want to talk about a just society, it is impossible to avoid the conclusion that the scales have been tipped against the old. It is my opinion that we should now adjust the balance.

I give the Secretary of State full credit for wanting to do something to end the anomalies, and I applaud his motives, but I question whether this is the right way to do it. I suggest that it is not. In the first place, it does absolutely nothing for the many people over the age of 80 who have no pension, and it does nothing really for the many existing pensioners. In a Bill of this scale, it should have been possible to do something for both those categories. Simply tying future pensions to the rise in the cost of living ignores the special needs of the elderly and the fact that increases in the price of one or two basic commodities can completely disrupt their budget.

What strikes me as being so unfair in We Bill is that the new pensions are to be paid for by our children and our grandchildren. These pensions are much higher than we of this generation are prepared to pay our elderly today. We should ask ourselves what right we have to commit posterity to a cost and a responsibility that we are not ourselves prepared to accept today.

The second reason why I oppose the Bill in its present form is that it will mean heavier contributions from employers and from the greater part of the working population before too long at the present rate of inflation. Dress it up as we may, this will still be regarded as a further compulsory burden on the employers and a further compulsory deduction from the wage packet. Pensions should be seen by the contributor as a deferment of the enjoyment of earnings now in exchange for the benefit of an income in the years when one has ceased to work. Only in this light can they been seen as genuine savings.

The trouble with the Government's Bill is that by many it will not be viewed as a method of saving for one's retirement, but as just another attempt to raise taxation. It is the psychological effect of introducing a Bill on this scale which will have so dampening an effect. Under almost all private pension schemes, the employer regards the expenditure as reasonable as an additional benefit given to the employee, and the employee, on his part, willingly gives up his contribution, sees it as a deliberate method of saving and does not immediately ask for a wage increase to cover the cost.

The real danger of the Bill, therefore, as at present envisaged is that it will defeat many of its own declared objectives in that it will be grossly inflationary. This, in turn, can only drive up the level of contributions to cover the increases in benefits which have become necessary. Surely it is more advantageous to the economy as a whole to encourage more and more people to enter into private schemes and to relieve the State—that is, the taxpayers—from the financial responsibility of ensuring that the majority of our elderly are in receipt of adequate income.

To achieve this, the minimum requirements of the private pension schemes, that is to say, the value of the pension, widows' rights, death benefits, should all be stipulated and laid down and approved by the Government. It is quite true that this would still leave many people who would not be able to go into private schemes, perhaps because of their age, perhaps because of the length of their employment, perhaps because they work for a small firm, but if it were possible to ensure full transferability many of these could be taken care of; and surely it would be much easier to deal with these people by adaptation of the present scheme and through supplementary benefits paid for by taxation. It would be equitable so to do, because people in the private schemes would be gaining the benefit of tax relief, not only on their own contributions but on those paid by their employers.

It appears to me to be totally unnecessary to create a monolith which will become a major source of inflation in order to care for what could well be a minority of the population. Why should all the people who are at the moment in private schemes be forced to enter into the new Government scheme? I would suggest that by encouraging the major part of the working population to go into private schemes we shall be able to reduce the inflationary spiral which will result from introducing the Government scheme.

The fundamental need of every retired person is security. No matter how well-intentioned, a scheme which has the effect of continually forcing up prices and continually contributing towards the erosion of savings cannot be regarded as fulfilling this need, and, therefore, the Bill cannot possibly be seen as fulfilling the need to give security. Should the Bill ever become law one of the very real dangers will be that a vast amount of money will no longer be available for investment by the administrators of the private pension schemes. After all, their job is to invest wisely and profitably. Once again, it is a case of the Government professing to know better than the experts whose reputation depends on their own success.

The Government themselves are deliberately planning on such a transfer of funds from 1972 onwards to expand their outlay on pensions, partly by diverting into the State scheme money which would otherwise go into private schemes. The effect of this will be that many people will say, "There is no point in saving any longer: the State will provide". I suggest that it is rather woolly minded of the Government to introduce a Bill of this nature at the same time as they are desperately trying to raise the level of private savings. It would only have the effect of turning savings into consumption, and this is something which, I should have thought, any Government would wish to avoid.

Another weakness of the scheme is the adverse effect it will have on existing pension schemes. The scope of the Bill is such that most existing schemes will have to be considerably modified, and the timed implementation of the Bill can only mean much more confusion, bearing in mind how long it takes to alter a scheme and to get approval of the Inland Revenue. One of the most disturbing effects will be on small pension schemes. I have no hesitation in saying that many small private schemes will completely disappear. This is yet another oblique attack upon the small firms of this country. By and large it will be the large firms which will tend to continue their own private schemes. The small firms will find it more difficult, more complicated, and, therefore, they will have much more difficulty in recruiting suitable labour. There is very great danger in keeping adding to these attacks upon the small firms in our economy.

To sum up, this Bill should not be regarded as an extension of the Welfare State, but rather as another step towards ensuring that only the State can be entrusted with welfare. This I believe to be a most dangerous doctrine, because it strikes at the fundamental need for responsibility to be encouraged in each and every individual to contribute towards his own well-being by making a deliberate and conscious choice in deciding how he will allocate his earnings, how he will spend his earnings on present consumption and how he will save for the future.

For these reasons I support the Amendment and I oppose the Bill.

Several Hon. Members rose—

Mr. Speaker

Order. I would remind the House that this is not a very long debate, that many hon. Members wish to speak, and that brief speeches will help.

6.35 p.m.

Mr. Michael Barnes (Brentford and Chiswick)

I am very glad to follow the hon. Gentleman the Member for Wellingborough (Mr. Fry) and I would like to congratulate him on his speech, although I myself do not necessarily agree with everything he said. I am particularly glad to follow him because at one time he lived and was politically active in the Wycombe constituency, which I contested in 1964. I can tell the House that it was the view of his political opponents that he was a very able politician, and I am sure that this is a view which this House will come to as well before long.

In recent months, and particularly in the last debate before Christmas, so much of the discussion of the provisions of this Bill has been about the terms of contracting out and the terms of abatement. Today I should like to look at the wider issue. What does the new pension scheme offer to the people of this country? First, I would say that surely what we all want out of any pension scheme is that it will for the largest possible number of people close the gap in living standards which they have to face after they stop working when they retire. What I think divides us is, how best this gap should be closed.

We believe that this new, greatly improved State scheme is necessary. There is no argument about the fact that it should be earnings-related, as we believe it should be. We believe it must, as it does, offer benefits which occupational schemes find it difficult to offer, such as widowhood cover, inflation proofing, and the preservation of pension rights when people move from one job to another, and it must, also, in our view, provide a really comprehensive basis for life in old age which is adequate for those who are not covered by occupational schemes.

We believe that it is in everybody's interest, whether in an occupational scheme or not, to take part in this scheme, but that is not to minimise the rôle of occupational schemes. I think that it is rather to say that what they now have to do is to adapt to the existence of this new and greatly improved State scheme.

So I welcome the Bill for many of the reasons mentioned by my right hon. Friend, particularly the reason that it will end the two classes of pensioner we have at the moment—those, on the one hand, who have the present State scheme and an occupational scheme through their jobs, and those who have only the present State pension which has to be supported in so many cases—in over 2 million cases—by recourse to supplementary benefit. The scheme does it by paying, for example, to a man on average wages when he retires, if his pension is fully matured, a pension of £10 5s. a week at 1969 prices, which is revalued in line with earnings as earnings increase, and which is proof against inflation after retirement.

There are several criticisms which have been made and I want now to turn to one or two of them. I think that it was the right hon. Gentleman the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) who, in the last debate, described this scheme as a step towards nationalisation of the provision for old age. I think that it would be more accurate to speak of basic or adequate provision for old age, but I would not quarrel greatly with that description. Hon. Gentlemen opposite use the word "nationalisation" only in a pejorative sense, and they do so here because they see that this is in a very real sense a Socialist Measure. Having recognised it as a Socialist Measure, the mistake they make is to expect it to conform to many of the criteria of the private insurance world.

For example, in certain contexts it is said that the scheme is not a properly funded scheme. Surely a State scheme on a pay-as-you-go basis, in which contributions rise as earnings increase, and which ensures that the standard of living of pensioners is maintained in relation to the working population, is just as sound as a private pension fund, which is subject to the fluctuations of the investment market and offers little protection against inflation after retirement. The scheme is redistributive; it gives people with lower incomes better value for money.

Another criticism that is made is that the redistribution of incomes is the responsibility of taxation and should not be brought into a pension scheme. One cannot through the tax system redistribute income to people who pay little or no income tax unless there is a form of negative income tax. We need to redistribute money to people in this category through pension schemes, so as to get away from the present reliance on supplementary benefit.

In the context of taxation, another point which underlines the need for a scheme like this is that in the years ahead there will be a shift in the balance of taxation from direct to indirect taxation which an increasing number of people—certainly I and some of my hon. Friends—are prepared to accept. If this happens a burden will be placed inevitably on pensioners, and for this reason any plan must provide a solid and comprehensive pension provision.

The only other criticism I wish to refer to is the controversy about what is called the contract between the generations. The criticism which has been made several times this afternoon is that by this scheme the present generation is promising that its children will pay it more generous pensions in terms of the percentage contributions they pay than the present generation is prepared to pay the old of today. If one accepts that criticism entirely, one is making the mistake of talking about this scheme too much in insurance terms and taking it out of the social context of which it is designed to be a part. It is designed, surely, to provide a comprehensive basis for closing the gap between one's standard of living when at work and on retirement.

That society should have such an objective is totally in line with the way we are developing in this country, in the same way as we feel it necessary to devote to the education of our children resources which give them opportunities which many adults of the present generation did not have, so we can surely look to the next generation to continue this task of closing the gap between living standards when people are working and when they are retired.

An earnings-related scheme cannot be achieved overnight, but must be built up gradually over a period of time. We are not talking here about an insurance scheme where money is invested and, having grown, is paid out to the people who have contributed. We are talking about something much more like a social service, a way in which society will provide for the problems of old age. It is a way of providing for old age which is financed separately from taxation, but it could just as well have been financed out of taxation had people thought this was a more acceptable way of doing it. For these reasons I am not nearly so worried about the argument of the unfairness between the generations as the hon. Member for Hertford (Lord Balniel) and my right hon. Friend the Member for Sowerby (Mr. Houghton).

To conclude, the mistake many people make, particularly the Opposition, is to criticise the Bill too much within the context of private insurance schemes, when really their objection is simply a political one. This way of approaching the problem is not politically acceptable to them, but it is politically acceptable to us. I believe that it will be to a large number of people in the country, and increasingly so as they learn more about how the scheme will operate and what it will mean for them. For these reasons, I congratulate my right hon. Friend on the way in which he presented the Bill this afternoon.

6.46 p.m.

Mr. John Boyd-Carpenter (Kingston-upon-Thames)

I should declare a possible interest. As the House, I think, knows, I am chairman of an insurance company, and, although my company does not operate in the life or pensions field, at least I suppose theoretically there might be an interest.

May I join in the congratulations which the hon. Member for Brentford and Chiswick (Mr. Barnes) so rightly expressed to my hon. Friend the Member for Wellingborough (Mr. Fry)? Indeed, I have the advantage over him in that I agree with every word my hon. Friend said, which naturally heightens my appre- ciation of what was a courageous and realistic speech. I am glad that he abandoned the foolish old convention of making a non-controversial maiden speech, and made instead a robustly controversial one on a controversial matter. I hope that we shall hear him often.

The right hon. Member for Sowerby (Mr. Houghton) has the agreeable and likeable characteristic that, however hard he tries, he cannot help letting fairness to the other side break through. He showed this both at the beginning and at the end of his speech. His right hon. Friend had been contrasting, in his characteristic way, the terrible neglect of the pensioner under the Conservatives compared with his own enlightened Administration. But the right hon. Member for Sowerby blew the bottom straight out of that when he said frankly that under the Conservative Government, as under the present one, the pensioners had had an increase in their pension bigger than is provided by the Bill in respect of price increases, and that this happened under both Governments.

This is indeed true. The right hon. Gentleman the Secretary of State gave 20 per cent. as the increase in real terms in the 5¼ years of Labour government. The figure for the 13 years of Conservative government was 50 per cent. for the general level of benefits, and, if I may reply to the right hon. Gentleman's emphasis on certain particular benefits, it is possible to claim on behalf of the Conservative Government that in the sector to which we gave the greatest attention, that of the widowed mother with children, for a widowed mother with three children the increase in real terms between 1951 and 1964 was 100 per cent.

I was, however, a little shaken when the right hon. Gentleman detected bits of Socialism in the 1959 Act. Perhaps that explains why the Secretary of State called it a "swindle". I am indebted to the right hon. Member for Sowerby for the first rational explanation of his right hon. Friend's repeated commentary. However, I would not like to take credit, even in the right hon. Gentleman's eyes, undeservedly, because under that scheme each contribution, whatever the total earnings of the contributor, purchased the identical amount of pension. What was done—I suggest that the same should be done under this Measure—was to use the Exchequer contribution to help the poorer, lower-paid workers so that they might secure a proper flat-rate benefit.

You have pointed out, Mr. Speaker, that time is short in this debate. I will not waste that time, save to mention that it seems a parliamentary outrage that a Bill of this sort, which the Secretary of State himself described as a major social Measure and which contains 129 Clauses and goodness knows how many Schedules, should have its Second Reading in just over five-and-a-half hours.

At Business Question Time before the House rose I asked for two days to be given for this debate. We are now having one day. It is even less than that, for reasons for which the right hon. Gentleman cannot be held responsible, but which might have been foreseen would occur on the first day back after a recess. It is only 5 hours and 35 minutes. The Bill, if it comes into operation—that is a substantial "if" and is even more substantial following the speech of my noble Friend—will affect every one of our constituents, and I therefore protest at its handling by the Government.

I regret, too, that we should be taking this Bill as an avowedly party and partisan Measure. The Secretary of State knows that I begged him for two years and more to appoint a new Beveridge Committee and try to get the changes in pensions which we all appreciate must take place brought forward as the result of a detailed and impartial investigation and so to ensure that those changes have a large consensus of support behind them.

Pension matters, and particularly pension matters of this kind, need that support because, in the nature of things, they must run for a long time. They must endure. The pity of the right hon. Gentleman's handling of the matter in this way is that he has made it absolutely certain that, should the Measure ever come into operation, it will not endure. There will be a great deal of hard work for the able officials of his Department and for people in the pensions sphere generally. There will then have to be further fundamental changes.

The right hon. Gentleman has emphasised this party nature by placing in the title of the Bill the words "National Superannuation". Hon. Members who were in the House in earlier years will remember the right hon. Gentleman coming forward with almost an annual edition of national superannuation. In those days he was on the Opposition benches. To give him credit where credit is due, I believe that his efforts greatly contributed to the victory of the Conservatives at the 1959 General Election.

Now, on the other hand, the label conceals something. In those days the theme was "half pay on retirement". There has been a long retreat from that. That retreat began discreetly in the Labour Party's 1964 manifesto, when it was half pay on retirement, the objective being half pay on retirement for the man on average earnings. Now the right hon. Gentleman has retreated further and it is half pay on retirement for that section of society which is not at present more than 42 years of age and which earns not much more than half average earnings throughout its working life. This has been the long retreat which the label should not attempt to disguise.

I will not weary the House by elaborating a number of points which I have put before, but I must mention briefly the four main reasons why this is a bad Bill and why I am sure that another Government will have to deal with it radically, and, I hope, repeal it. First, it is too big. It goes too high up the earnings scale. It nationalises far too much of the provision for old age.

Secondly, it provides for no real contracting out. Abatement on this modest scale is not contracting out in the true sense. The combination of these two factors will inevitably do damage to the occupational schemes, as the Secretary of State admitted.

Thirdly, one must consider its redistributive effect. This is wrong in national insurance and it aggravates the difficulties involved in providing even a proper system of abatement. If one redistributes between the higher and lower earners, then employers will, of course, want to contract out the higher earners and keep the lower earners in. Thus, one must hedge one's abatement provisions about with all sorts of restrictions.

Fourthly, there is this so-called dynamism on which the right hon. Gentleman so prides himself. This is a wrong principle and I hope that the Secretary of State will not simply take the easy point and tell me, "You are seeking to criticise the generosity of my provision for pensioners." He is not being generous. Indeed, he is not providing a penny for existing pensioners. Existing pensioners will be wholly unaffected by the Bill. What he is doing is bidding for the generosity of another generation, and this is why I very much share the apprehensions and doubts of the right hon. Member for Sowerby, with his gift for biblical quotations and references. I agree with his reference to a cloud not much larger than a man's hand. I am tempted to recall that the devil can cite Scripture for his purpose.

What the Secretary of State is seeking to do by this dynamism is to persuade another generation to allow us to preempt its own priorities so as to provide pensions which go a good deal beyond mere basic provision and in respect of which public money is put in in larger degree the larger the pension one has.

It is not to be assumed that any future generation, with its own problems, will regard this as so self-evidently right that it will necessarily do it; and when we are doing this without putting aside a penny to finance these obligations and without hypothecating any resources to produce the necessary income, there must be real doubt as to whether posterity will De prepared to accept the heritage which the right hon. Gentleman proposes to leave it. It was Jorrocks who remarked, "Beware of presents that eat".

I now want to deal with a number of important points which arise on the Bill itself. There is the departure which is proposed from the principle of national insurance that employer and employee's contributions should match. I am not referring to percentages like 7 as against 6¾ but to the fact that the employer's contribution goes right up the salary scale and, indeed, amounts to a 7 per cent. levy on his wages bill. This is not insurance in any sense, but a tax.

To judge the effect of this one can take the case of a local authority which pays its town clerk, say, £5,000 a year, a not unusual figure. Under this provision the local authority will have to find £350 a year as its national insurance contribution for the town clerk. Even if it abates, it will have to find well over £300. Three-fifths of that will not buy the town clerk any pension whatever. But it will come from the funds of that local authority which otherwise might have been made available for other pension provision for that town clerk. If employers generally are made to pay these very large contributions on the higher salaries, there will be fewer funds available for other pension provisions, even though the contributions are paid on earnings in respect of which the State makes no pension provision.

If one takes, as an extreme example, the sort of earnings which this Government think right to allow to the Steel Corporation, the figures become quite incredible. On the levels of earnings allowed for members of the higher management and Board of the British Steel Corporation, which are between £22,000 and £24,000 a year, the national insurance employers' contribution works out at about £1,680 per year. That will not be helpful either to alternative pension provision or in keeping down the costs of British industry, and it is a singularly unfortunate part of the scheme.

There are only one or two other points about the Bill which I wish to make. There is the failure to provide that an employee's contribution shall be allowed for income tax purposes. It used to be the case that it was allowed as a deduction, but, with the introduction of the 1959 Act, it was thought too difficult because the contributions might vary, and an increase in the personal allowance was made broadly equivalent to the average of contributions. With these very much increased contributions, I would like to know whether the Government are proposing to allow contributions to be treated as deductible for income tax purposes. All the contributions are to be collected through the Inland Revenue, and there would not seem to be any difficulty in securing that that body, if it is not on strike or going slow, should make the calculation and allow the full contributions as a deduction for tax. There are few things more irritating than being taxed on income that one has not got. It is bad for incentives and bad for the temper. I hope that the Government will be prepared to look at this again, because it seems to be extremely unfair. In this respect, the employer is all right. His contribtuion is, I think, allowed for tax. But there is a real difficulty in respect of the employee.

There is a point made in paragraph 62 of the White Paper that contribution increases and benefit increases shall be legislated through by Statutory Instrument. That is an objectionable proposal. I know that it is convenient for the Government in that it saves parliamentary time. But the House will appreciate that it denies us any opportunity of amendment. In respect of benefits, the House has considerable powers of amendment at present. The wisdom of the Chair has ruled that one can move to increase national insurance benefits because the charge falls on the national insurance funds and not on the Exchequer. But if one is faced with a Statutory Instrument in which the Government are making an increase in benefits, the House does not have adequate power. It is presented with the dreary choice between rejecting the increase or accepting an inadequate one. Equally, an increase in national insurance contributions is a major matter of taxation, if it is substantial. Surely we should have the same power to move a reduction when, as on a Finance Bill, a tax increase is proposed.

There is the further complication that the Statutory Instruments and the Motion to approve them would not have the benefit of an unlimited period for debate in the House, as tax Orders do. They would have only the usual hour and a half exemption after 10 o'clock.

As to the proposal about married women, I find it unfortunate. It is said to be in their interests. If it is in their interests, why are they not left to choose? Why are they being deprived of that option? It ill becomes the right hon. Gentleman to say that this is so beneficial that they shall not have the choice that they have at present of opting out.

I come finally to the date on which the Bill is planned to come into operation. I assume that April, 1972, has been long since abandoned. Obviously the administrative proposals are nothing like far enough forward, and obviously the submissions being made are too complicated for that. However, I would like an assurance of that sort, because it would save a great deal of trouble for those concerned.

I would like one other assurance. The right hon. Gentleman is out of the Chamber at the moment, but he was courteous enough to write to me the other day about an answer to a Parliamentary Question which he gave me on 5th November. It related to the very important point about what is to happen to Civil Service pensions if the proposed scheme comes into operation. I understood the right hon. Gentleman to assure me that Civil Service pensions, which are non-contributory, would not be cut back to make room for the contributory national insurance scheme in any circumstances. I read what he said as saying that. I am not suggesting that he tried to mislead the House, because I know how easy it is to give an inaccurate impression in answer to a supplementary question, but his letter to me suggests that he was not meaning to give that assurance. If he was not, a serious matter arises both for the Civil Service and for the Armed Forces. Both have a noncontributory pension as one of their conditions of service. If that is to be eroded to make room for a pension to which they have to contribute, there is a real worsening of their terms of service. With recruiting to the Armed Forces in its present parlous condition, it would be an act of folly to do that.

I could make many more comments on this enormous Bill, which will be quite inadequately discussed tonight. Perhaps fortunately, there is a good deal of unreality about the debate. If the Government had really thought that the scheme would ever operate, they would have introduced it three years ago, as the right hon. Member for Sowerby made clear. I would advise those who manage and are concerned about occupational schemes not to panic. The question of operating this Measure will lie not in the right hon. Gentleman's hands but in other and more competent ones.

Hon. Members may on occasion have had a bad dream and woken up suddenly and been relieved to find themselves in the clear, sane light of day. I think that that will be the experience of those who are concerned with this Bill. The right hon. Gentleman is so free with adjectives about other peoples' proposals that I would like to christen this Measure "Crossman's nightmare". I say to those outside that it is no more than that. When one wakes up, one will find that it has not happened.

7.9 p.m.

Mr. Peter Archer (Rowley Regis and Tipton)

It is not often that it is my privilege to agree with a remark which falls from the lips of the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter). But I share his disappointment at the short time available for this debate. I hope that he will accept that that is why I do not follow him into the many interesting points which he has raised, though I understand that my hon. Friend the Member for Ealing, North (Mr. Molloy) may seek an opportunity to do so later. The right hon. Gentleman must not assume that silence implies assent. We may have other opportunities for discussing his views.

But I am grateful to the right hon. Gentleman for repudiating so vigorously the title of "Socialist". If he had been held up to us as a model of a Socialist, a number of my hon. Friends might have had to do some rethinking.

It is not often that the contents of a Bill are so fully discussed, analysed and debated before they are reduced to Bill form as the contents of this Measure have been. Those of us who have taken part in earlier debates are already familiar with one another's viewpoints, and even debating points. However, I seize this opportunity to suggest that we return to some of the basic principles of the Bill, so that the public may have an opportunity of seeing what common ground there is on those principles and where the issues lie.

I suggest that this Bill is a harmony of three essential principles. The first is that the persons for whom we are providing should receive pensions which are adequate, not only in the sense that they raise them above the breadline—the Speenhamland test—but that they should prevent a sudden fall in the standards to which the people have become accustomed throughout their working lives, and should also provide an adequate share in increasing national prosperity.

The second principle is that the cost should be borne—and seen to be borne— at least partially from contributions which are specifically designated as referable to the benefits.

The third principle is that no person should bear a proportion of the cost which is unacceptable having regard to his income.

I will briefly examine those three principles. The first, that the pensions should be adequate, in the sense in which I attempted to define them, seems to be an issue between us. It is quite clear that right hon. and hon. Gentlemen opposite believe that a scheme which is provided by the Government should have a very different definition of what is adequate. On the Opposition's view, more adequate provision ought to be left to private schemes, notwithstanding the fact that so far we have received no answers to the objection that these schemes are clearly not normally transferable, that they do not provide a number of benefits provided in this scheme, such as those for widows and wives, and that they are not inflation-proof in the same way. Nevertheless it is still maintained by the benches opposite that this kind of provision should be met by private schemes and that the vast majority of employees for whom these schemes are not available should simply reconcile themselves to the fact that it is so much the worse for them.

As I understand it, it is also suggested that it is an infringement of a man's liberty—and the noble Lord the Member for Hertford (Lord Balniel) has said this on a number of occasions—to provide for his own future if he is compelled to enter the kind of scheme we are discussing tonight. I am sorry the noble Lord did not give way during his speech because he might have been able to answer this point. It is by no means clear to me that a person's freedom is greatly enlarged by being compelled to enter a scheme decided by an employer, as compared with being compelled to enter a Government scheme. Perhaps at some stage right hon. Gentlemen opposite will elaborate this point.

One rather gets the impression—I have said this before—that what right hon. and hon. Members opposite are saying is that public schemes of any kind should provide a basic minimum, and that anything over and above a basic minimum should be left to private provision; that the community should provide only those things which are left over for those unable to afford anything better.

This is reaffirmed by the opening sentence of "Social Security in the Seventies", an interesting document which incidentally, Mr. Speaker, was published at 2s. 6d. in 1966, as opposed to ls. which is charged for our publication. That document begins: If we take the community's rôle to be that of ensuring a basic minimum level of security". The document develops the programme from there. That is an issue between us because we on this side of the House do not take the community's rôle as that of providing a basic minimum level of security.

I was rather surprised to see the noble Lord coming out in a new rôle as a leader of the new Left. Some of my hon. Friends have criticised the idea of an earnings-related benefit on the ground that it perpetuated into pensionable age inequalities which existed in the earnings period. There was a time when I was a little exercised by this point. I was a little surprised when the noble Lord said tonight that he is now an egalitarian. My own feelings now are that it is too late to iron out inequalities after pensionable age. The time when we should be doing the ironing out is during the period of earning, and I hope that during the lifetime of this Government we shall be able to do something along those lines. I should be surprised if it came from the benches opposite that they were seriously anxious to iron out inequality in this way.

The second principle—the contributory principle—is one to which I confess I am a fairly recent convert and I hope there will be appropriate joy in the Ministerial heaven. At one time I was seriously exercised that any part of the burden of social insurance should fall upon those least able to bear it, and I should have preferred to see it fall on the Treasury, so that it could be provided from income tax according to a formula designed to impose it according to ability to pay.

I think it was my right hon. Friend the Member for Sowerby (Mr. Houghton) who convinced me that I was wrong about this. I was wrong for the same kind of reason as the hon. Gentleman was wrong in criticising the inequalities in earnings-related benefit. We are not talking about figures, statistics and the sort of things which go into computers. We are talking about men and women who, over a long period, have developed their own ways of life and have their own views on these matters. They want to be consulted. I am a great believer in consultation, and people ought to be able to see clearly some relationship between what they are called upon to contribute and what they receive. Of course there is not a mathematical or actuarial relationship. Indeed, I should have liked to see greater redistribution in the Bill. I am a little sorry that my right hon. Friend stuck to the 18 per cent. Treasury contribution and I hope that he does not regard this as immutable, provided that there is some contributory principle. But it should be clear, and manifestly clear, to the public that some relationship exists. The public should understand that those who contribute to the scheme have a moral right to receive benefits. This principle is now clearly established and is not at issue between the parties.

The third principle is that no one should have to bear any part of the burden in a manner disproportionate to his earnings. This entails, firstly, that contributions should be earnings-related. What was wrong, right from the beginning, with the Beveridge flat-rate contribution was that if one wanted a scheme adequate to modern needs, then the burden of contributions would fall upon the lower income groups in a manner out of proportion to their income. Even with an earnings-related contribution, the same thing can be said about a scheme which is funded in the way in which the Opposition have suggested that they would like the scheme funded.

I have never seen either the moral or the economic necessity of having a funded scheme, provided one could achieve the same objectives without funding. If there is the kind of contract between the generations which no Government are able to break, there is no necessity for a funded scheme. With a funded scheme the burden upon the existing generation of wage earners would be quite impossible. I was rather inclined to put the matter the other way round. I do not share the pessimism of my right hon. Friend the Member for Sowerby about the feeling of future generations that they have a grievance against their elders. Every young person to whom I speak, whatever else he or she might feel—and our discussions usually include violent quarrels—is quite adamant to ensure that he does his part towards providing for the older generation and never seems to feel any resentment at all about it. I would only have wished that we were doing for our parents what we properly expect our children to do for us, that the provision which we made for existing pensioners—and here I agree with certain right hon. Members opposite—had been rather more generous than it is.

Of course it cannot be a criticism of the Bill that it does not do anything for existing pensioners. How could it? But that does not excuse the Government from making adequate provision elsewhere. I accept my right hon. Friend's figures, which show that the provision in real terms is now 20 per cent. better than it was when right hon. Gentlemen opposite left office, but some of us on this side of the House do not regard 20 per cent. better than the Tories as good enough. I would not have complained if a higher burden had been imposed in the interests of existing pensioners.

I would like briefly to mention two criticisms of the Bill which may raise a difference between the Government Front Bench and Government supporters, although I hasten to say that I cannot imagine that we shall obtain the support of hon. Members opposite. The first relates to the arrangement by which it is proposed to calculate the benefits on an average taken over the whole of a person's working life. There must be occasions in everyone's life when, for reasons which to him seem good, he is prepared to accept a period when his earnings are low. It may be that late in life he suddenly realises his true vocation, or the job in which he would be happier, or in which he could make a better contribution, and he may wish to undergo a period of training for it, or at the beginning of his life, before settling down to a steady job, he may wish to go abroad as a volunteer in the developing countries, or to undertake what may be the modern equivalent of the eighteenth century grand tour.

For all of us the pressures to conform are sufficient without adding to them. Let us not discourage the Gaugins of this world from occasionally breaking away. I give notice that in Committee I shall suggest to my right hon. Friend that, in calculating a person's average earnings, he deducts from the total of his working life a maximum of, say, the two years which represent his lowest earnings, so that people are not discouraged from facing a period of reduced earnings.

My final comment arises from Clause 15. We have been promised that something would be done about the provision which disqualifies an employee from unemployment and sickness benefit if he has lost work owing to a dispute at his place of employment. That promise has been honoured. However, there are some of us who are still not happy about the new formula. We are not happy about the use of expressions such as "participating in" or "directly interested in" a trade dispute. We have been there before, and we have seen the way in which in practice these expressions have been construed, and they have not been construed in favour of the employee.

There is still every incentive for employees to insist on a closed shop, so that not all the employees will be disqualified because of one person in the whole of the shop who happens to belong to a different union, and it still places on the employee the burden of proof. Very often it is a burden of proof in relation to matters on which he is no better informed than the national insurance officer, and infinitely worse placed to find out. This, too, is a matter about which some of us do not feel happy and we shall raise it in Committee if we are fortunate enough to be selected for the Committee.

But may I give my right hon. Friend this assurance? He will not necessarily find that we on this side of the House give him a clear run throughout; but he will find that on these matters of principle where there is a deep division between the two sides of the House, we shall be on his side.

Mr. Speaker

Miss Mervyn Pike, whom we welcome back to our debates after her illness.

7.25 p.m.

Miss Mervyn Pike (Melton)

Thank you very much Mr. Speaker. An arthritic back does not make easy sitting in the House of Commons, but now, thank goodness, it is cured and I am afraid that you will have to put up with much more of me in our debates. However, I promise not to over-stay my welcome by following up all the points which have been made in the debate so far. Unlike the hon. Member for Rowley Regis and Tipton (Mr. Peter Archer), I have not had the opportunity to make any of my debating points, or even to comment on these matters. However, I hope to be able to join issue with the hon. Gentleman in Committee.

The hon. Gentleman may be surprised to find that I agree with his penultimate comment. One of my great criticisms of the Bill is that it is socially irrelevant in the circumstances of modern times. It puts our society in a straitjacket and it does not face the sort of conditions of life which young people expect now and which they will increasingly expect over the next 20 or 30 years. I agree with the hon. Gentleman that young people may want to give some sort of community service or to travel the world, but the provision of a flexible type of private occupational scheme would give them a far better chance of meeting conditions of life in the next 20 or 30 years.

My main criticism of the Bill is that in the present situation it is financially irresponsible. We have great responsibilities to those whose standards have been left behind for one reason or another, largely because of the erosion of inflation, largely because of the disparity between their earnings and modern earnings or the disparity between modern earnings and the savings which they were able to make. The hon. Gentleman said that the purpose of the Bill was not just to help them. However, even in the context in which we could help them, we are not to do so, and even in 1972 they will be left in a worse situation. Nothing particular is being done to help them.

The Bill is financially irresponsible also because it is wasteful at a time when we cannot afford to be wasteful. It is administratively wasteful. The White Paper says that its initial cost will be about £106 million. I believe that it will probably be a great deal more than that, perhaps as much as £120 million purely in administrative costs for industry, and this at a time when industry can ill afford additional burdens, at a time when industry is flooded with taxation burdens.

The Bill is administratively wasteful and it will act as a disincentive to saving. This can be argued one way or the other. The right hon. Gentleman, who always manages to blind me with science however much I think that I will not listen to the over-sauveness of his arguments, says that these things have not happened in Sweden and that in Sweden there has been a tremendous increase in savings. But one can go only on one's own judgment and knowledge of the society in which one lives, and I know that a large proportion of the savings of many people is in occupational pension schemes, and when those schemes are wound up, that saving will be largely lost. The right hon. Gentleman says that it is only the growth in savings which will be lost; but that is what is most important. We must have a growth in savings now. To bring in a Measure at this time which militates against an incentive for personal savings is irresponsible as well as a waste of the public well-being.

The right hon. Gentleman tried to preempt all the arguments about incomprehensibility. I know that I do not understand pension computations and problems. In this sort of debate I always feel at a tremendous advantage, because I know that I can be bowled out by an awkward googly question; I always go to the experts, and from them I usually get lots of notes. But in this instance the experts have kept telling me that the matter was too complicated and that the Bill was incomprehensible. Either the experts are wrong or the right hon. Gentleman is wrong.

I think that the experts are right. The more the right hon. Gentleman has tried to convince me that the scheme is simple, the more I have become blinded by its science. If it is incomprehensible to us, that is a serious fault. I accept the criticism that the present scheme is incomprehensible, and that is why I have never liked it. I believe that our pension arrangements must be as simple as possible.

I spend much of my time in industry, and much of my experience comes from industry. One of the great disincentives and one of the great suspicions today concerns the tremendous deductions from the weekly wage packet. No matter how one tries to explain that people are getting value for money, they feel that they are being "done" in some way and that "they" are taking the money away. So higher contributions, particularly of the nature that we will see imposed on the lower-paid income groups, will add to this suspicion and difficulty.

It is impossible to do the calculations. I know the five criteria that we have to accept. I know that we must trust the computer at the end of the day. But those of us who have had any dealings with people facing redundancy and trying to decide what are their redundancy and superannuation payments, and all the rest, know how difficult it is now to convince people that they are getting justice. This will be even more difficult in future.

I think it was the right hon. Member for Sowerby (Mr. Houghton) who said that those of us who have personal superannuation rights take a closer and greater interest in them. My experience in industry is that where a firm has occupational pension schemes the employees of that firm take a great interest in the conditions of those schemes. They probably do not know the first thing about the State scheme; they brush it aside as something that the Government are controlling. But they feel that they have some influence over the firm's scheme.

The Secretary of State for Employment and Productivity said recently that power was moving to the factory floor. To some extent she is probably right. Those of us who have to do with wage bargaining know what tremendous power there is there and how closely the occupational pension schemes are followed. I believe that there is an area of choice in this context. I reject the argument that people are being denied choice because the firm does the choosing. On the other hand, they are getting a far greater choice.

Of course it is unfair to the next generation, however we try to put it. The right hon. Gentleman is a Socialist, and in Socialist terms he thinks that the Bill is right. Nevertheless, I think that we should be careful not to go beyond the limit where we must sign promissory notes for the next generation. Members of the next generation will have a difficult and complex burden when they shoulder all the requirements that we seek to lay upon them. If we ask them to foot this bill they have a right to say to us: "You must build the right sort of society; you must build a strong society; you must build a society that is worth working for and paying for". This is fundamentally my main criticism of the Bill. It will not help us to build a society that will be worth working for and paying for.

The right hon. Gentleman brushed aside a new deal for women in the Bill. I was very sorry. I do not regard myself as a militant feminist, but I think that he is making me into one now. I want a new deal for women, but this is not the kind of new deal that I want.

Unfortunately, women are mainly working in the lower-paid occupations. The average wage for women is about £11 15s., half the average wage for men. The increased contribution that they will have to pay will be a very high proportion of their wage packets.

Women are not in a strong position when it comes to wage bargaining, as we have seen in the past. Nearly four million married women in work today are contracted out. Therefore, the tremendous increase from 8d. to the contribution that they will have to pay from 1972 onwards will be a great impost upon them. Even worse, about half of them are in part-time employment, and they will say, "Why should we work all the hours that make us liable to the contribution?"

Women work for a variety of reasons other than sheer financial necessity. Women want to work. It is socially important. We cannot do without them. We need more nurses, teachers, and women workers in the community. We want them in the play schools, in the nursery schools, and all the way through community service. The increased contribution will be a disincentive to a great many women. They will not bother to go out because they will not want to pay the extra contribution. However the right hon. Gentleman explains it, they will not think that they are getting a better deal.

At the moment woman can choose whether they are contracted in or contracted out. Women are not stupid. They know, if they have husbands older than themselves, that in certain circumstances it is a good deal; but, on the whole, they do not think that it is. In any case, until we get a real new deal—and a new deal we must have; we must get rid of anomalies in taxation and in the law, and we must get rid of discrimination in the labour market as well as getting equal pay—we must not be told that we are to have the great privilege of not bothering to make up our minds in this complicated business whether we should be in or out.

It is all right for me. I have to be in. I cannot get a husband, so I do not have a choice. But for the married woman it is an insult. I accept that the National Council of Women does not oppose these proposals. It is anxious to get equal pay; it is anxious not to lose one card in the game. However, it is a great condemnation of this society if we feel that we must attack the problem in this way. We must not give up any of our rights and choices until we get the whole new deal that we need.

I tend to look at these proposals from the woman's view. My mother was a widow at 45. Therefore, I have always taken an interest in what happens to widows—particularly the difficulties and expense of bringing up children. One question I shall want to ask is: what about the woman whose husband has had a long illness? My father was ill for four years. I know how expensive and what a drain it can be on a family when the breadwinner has a protracted illness, ending in death. Under the Bill, the widow of such a man will be at a disadvantage because the allowances will be based on the last income tax year and on half the national average earnings.

I accept that these points can be brought out in Committee. But in welcoming what is being done for women, invalids, the disabled and all the rest, let us not forget the great complications we have to go into to make certain that all these difficult cases are met.

There are no average cases. This is why we cannot say that the average married woman or the average single woman will be better off. I do not know how many hon. Members came by under- ground today. Hon. Members who did might have looked at the posters, as I always do, giving descriptions of the average man. What is the average woman? She is no doubt 35, 9 st. 10 lbs., has one blue eye and one brown eye, and 2.5 children. She goes out to work for a variety of reasons.

Many women go out because they want to give something to the community as a whole. This is the criterion against which we have to judge all our social legislation. We talk a lot about the values and qualities of life, improving the environment, and community involvement. If these are not to be worn platitudes, we must judge every enactment in this House against the practical results.

Will the Bill free more women to help in the community? Will it enable more active newly retired people to help in the community? Will it encourage more people to end their working lives sooner to make contributions to their communities? Are we having any regard to what people will want in the next 20 to 30 years?

Scientific and technological change means, I expect, that the structure of our society and the whole pattern of our life will change; but it will not mean that personal services will be in less demand. I believe that the future demand for personal services, supporting services, in the community will be greater than before. We must not say that the reward that comes from voluntary work can be shared only by those who can afford to do voluntary work. Nor must we say that the vocational enrichment which comes from doing a worth-while job must compensate someone for not getting real commercial value for his or her expertise. We cannot get nurses, teachers, doctors, priests and social workers on the cheap. We must pay the price for the job, and so we have to restructure many of these jobs. Many of these jobs will have to be done by trained auxiliaries, whether paid or unpaid. They will share the unspecialised work load, and we must make certain that opportunities are provided for people to do that work.

People may want to work hard for the first few years, retire on an adequate pension at 45, and then give their services to the community. Some may want an interrupted career. It is in these instances, apart from the economic and financial considerations, that one finds the most valid arguments for occupational schemes; namely, that people will be enabled to make their real contribution to society as a whole.

We should throw the Bill out because it is irrelevant to what we are trying to do. It is irresponsible in the present context. Let us do the good things in the Bill. Let us get a new deal for women and incorporate it in better provisions for retirement. In the meantime, let us for heavens' sake follow my hon. Friend and make certain that we have a Bill which is relevant, and which will help us to strengthen our society as a whole.

7.41 p.m.

Mr. William Molloy (Ealing, North)

I do not intend to follow the hon. Lady the Member for Melton (Miss Pike) down the various paths along which she meandered. Like you, Mr. Speaker, I welcome the hon. Lady's return to the House, but I am sorry that she marked her return with a speech with Cassandra undertones. Her speech seemed more applicable to the nineteenth than the twentieth century, and the hon. Lady fell into the trap into which so many people fall. People tend to say that young people have too much money, but now the Opposition are saying that we are asking young people to make too large a contribution. I do not know whether this is a hypocritical argument, or whether people simply have not thought deeply about this Measure.

I believe that the Bill contains provisions comparable to those introduced under the Labour Government which embarked on the implementation of the Beveridge scheme in general, and the National Health Service in particular. As my right hon. Friend said there were in this House at the time, and professional people outside, particulrly experts, who threw up their hands in horror at the Government, after the most devastating war in history, embarking on a project like the National Health Service under which people could be attended to by a doctor for nothing, or could be patients in hospitals for nothing, and so on.

We have, today, the same Jeremiah cry about this Bill, and that encourages me, because the people who are moaning and groaning about it are those who said the same things about the introduction of the National Health Service. The Tories voted against that Bill when it was introduced, but they were terrified to destroy it when they assumed power. They nibbled at it, but they did not improve it. They knew that they dare not destroy it, and the probability is that at some time within the next century the Tories will have to deal with this Measure. They will nibble at it, but they will not destroy it.

I believe that in the context of today the Bill is exemplary in the way that it proposes to care for people. It provides by law for young people to contribute not only for their own old age, but for the welfare of people who have now reached old age. What is required today is a degree of moral leadership, and that is precisely what the Bill provides.

Hon. Members on both sides of the House have concentrated today on the pensions aspect of this Measure. Let us not forget that it is much more than merely a pensions Bill. It covers almost every stage of social security. It deals with industrial injuries, unemployment, and so on, and what I believe will be welcomed more than anything else is the fact that when it becomes operative we shall do away with the silly system of printing stamps, printing cards, sticking stamps on the cards, defacing the stamps, and then burning the cards. This is the insane way in which we have been behaving, and one good feature of the Bill is that it will rationalise the social services.

The hon. Lady and one or two other hon. Members said that the Bill is extremely complicated. They appear to suggest that occupational pension schemes are simple and easy to operate, that big business can run them in a straightforward way. I wonder whether the hon. Lady would care to comment on the pensions scheme referred to by my hon. Friend the Minister of State on 4th December, 1969, which said: The total retirement pension, including the part of your National Insurance pension described in section 15, is called your 'Gross Retirement Pension'. This will be expressed as a percentage of your Final Pensionable Pay and is calculated by adding together three items: (1) On the first £1,650 a year of Final Pensionable Pay: 1½ per cent. for each year of Pensionable Service; (2) On Final Pensionable Pay in excess of £1,650 a year: 1½ per cent. for each year of Pensionable Service… I do not know what that means, and I am sure that the hon. Lady does not, either. It is all very well for us from time to time to make debating points, but this is a serious issue, and I think that it would be wrong for anyone in the House to give the impression that private occupational and pension schemes are easy to understand and straightforward, and that it is only the wicked State which brings in the complicated ones.

There are some very good private pension and occupational schemes. The remarkable thing is that the better ones always seem to be concerned with some form of public service. I can understand the view taken by the National Association of Local Government Officers when the Bill was first presented. I do not blame it. It had recruited an enormous number of people because it had been able to negotiate a first-class superannuation scheme, the like of which did not exist in industry or in any other form of employment. The members of that organisation were rightly jealous of their scheme, but it was a wonderful exception. It was not the rule, and now the Bill intends to make it the rule.

We often hear people talking about the need to care for old people. I feel sure that the concern which the noble Lord the Member for Hertford (Lord Balniel) expresses for old people is genuine. He said that we were not doing enough for old people, and I agree with him. Perhaps I might, in parenthesis, ask him to have a word with his colleagues in the London Borough of Ealing, because they have just decided to implement a means test for old people who belong to luncheon clubs. If someone is in danger of getting a full, wicked, Socialist State pension, he cannot qualify for a buckshee lunch, or he may have to contribute something towards it. If the noble Lord has any influence, perhaps he will have a word with those concerned.

I do not accept this hackneyed cry from hon. Members opposite that we on this side of the House do not care for the old-age pensioners. That sort of remark is pretty thick, coming from the other side of the House. I was very proud to be elected to this House in October, 1964, and I do not think that I am letting out any secrets when I say that I remember our first party meeting, when I thought that we would see the Prime Minister with his new Cabinet coming joyfully into the room telling us that they were all set for the future. But they did not seem to be particularly happy men. It was a serious moment for us when they told us that they had been looking into the drawers and the cupboards and had found a number of distasteful things, including a national debt of £800 million, and that all the things we thought we would do in our first 12 months of office would have to wait.

I remember the Prime Minister saying to us in this House that he would not let the burden of a Tory debt fall on the shoulders of the old people. One of the first things we did when we came to power was to give an increase to the old-age pensioners—the highest increase which this nation has ever known, and we have maintained it ever since. Indeed, only a few months ago a number of increases were given. Considerable benefits have been given, despite the cost of living, not only in actual pensions increases but in the form of rate rebates and other welfare services which have been inaugurated by this Government. They may not be sufficient, but they are vastly superior to anything that hon. Members opposite would dream of giving.

I hope that my right hon. Friend, in his discussions with all interested bodies concerned with occupational pension schemes, will not give in too much. We have heard a lot this evening about the good occupational pension schemes. Let me tell the House, including the hon. Lady the Member for Melton, that a former mayor of the Borough of Ealing was in one of these occupational pension schemes for 42 years and he now has the "magnificent" pension of 10s. 9d. per week. It is this sort of thing that we detest, and I hope that we shall carry hon. Members opposite with us. I know that there are some hon. Members opposite who will agree with me that there are a number of so-called occupational and private pension schemes which are an abomination and ought to be done away with.

I can understand that the Opposition, generally speaking, must put on a front and oppose the Bill, because they made a mistake when they opposed the National Health Service. They made a great error when they went into the Lobby against that Measure. They thought that the scheme could not be launched and that it was an impossibility. But they have learned their lesson. They know full well that this Bill is a possibility and that its objectives can be achieved. They know that when it has got under way people will say "Do you remember what you said in 1970? See what is happening now under the Act." By that time, of course, they will have changed their mind.

The Amendment is carefully worded. It wants a little bit from both sides of the argument. Hon. Members opposite are being driven more and more into accepting the principle of the Welfare State. I have heard from hon. Members opposite speeches on the social services which, if they had been heard by members of the old Tory party 80 years ago, would have branded them as extreme Left-wing Marxists. We have done a good job in educating the Tories. The trouble is that when we introduce a new Measure we do not do enough to inform the general public of what we are doing. We on this side of the House can take credit for the National Health Service. When the Bill setting up the Service was introduced there was grave apprehension amongst the general public about its feasibility and practicability, and the same thing is happening about this Bill.

My right hon. Friend and his colleagues in the Ministry, as well as the civil servants who have assisted them, have provided a Measure which hon. Members opposite have found difficult to attack in depth. I am proud that I belong to the Labour Party, because we have shown that we care for other people. There are hon. Members opposite with similar feelings, but they have to be dragged gradually towards accepting our beliefs.

I hope that my country will move up in the chart of nations who care. The Bill provides that the nation shall make every endeavour to care for people in distress and who suffer from sickness and injury, and to ensure that people will not lose their dignity because they have become old. This is the silver light which has glowed throughout this Bill and I am very glad that we have been able to debate it today. I hope that when it is on the Statute Book it will have the support of all hon. Members so that this nation can take its proper place in the category of nations who care.

In the Bill we are enabling Britain to exhibit itself not only as a sane and decent nation, but as a nation which can return to that proud principle which we inaugurated in 1945. We are the nation who care. This may sound objectionable to some hon. Members opposite, although I hope that this is not so, because I believe that they, too, have changed. I do not think that we on this side of the House have changed except that we have become a little leisurely in our approach to the creation of a social democratic State. Hon. Members opposite have been compelled to move towards our thinking and behaviour. They should consider seriously the terms of their Amendment and some of the things which they have said in this debate. If they do so honestly, I do not think that they will vote against the Bill. When it becomes law I believe that Britain will once again have shown itself to be a nation which cares for its own people and will give an example to the rest of the world.

7.59 p.m.

Mr. John Pardoe (Cornwall, North)

It is a great pleasure to follow the hon. Member for Ealing, North (Mr. Molloy). Listening to his peroration was like listening to the J. C. Bach Piano Concerto, when one keeps thinking that one is about to hear the National Anthem but is never sure until it begins.

As the Secretary of State has already made clear, my opposition to the Bill is primarily to its pensions provisions. He made it clear that the Liberal position on this is entirely different from that of the Conservative Party or the Labour Party, although, having heard the speech of the hon. Member for Hertford (Lord Balniel), I am glad to note that he has come into line to some extent at least. When we last discussed pensions—in a debate which should have been about abatement, but was not primarily concerned with that—I said that one day he would come to a sane decision on pensions and would frame a sensible policy which did not include his present graduated scheme. He still has to ditch that, and I think he will, but he has come part of the way.

There are many good things in the Bill, of course—provision for widows and attendance allowances, for instance, are most welcome and they should be hurried along—but the proposals for pensions are totally misguided. They will do untold harm to our society; they are both economically and socially disastrous. I know that I am really the only person who will today put forward, with the backing of my party, an alternative scheme. Individual hon. Members on the back benches of the Conservative Party will, I think, support the kind of scheme which I have put forward on several occasions.

The alternative which I would like would be one in which we paid a flat-rate pension linked to average national earnings. I accept that we cannot continue as we are, that the present pensions are inadequate and that they will be even more inadequate in the future. Yet the great advantage which we have in this country is that this view is widely accepted. We do not have to convert people as for instance we have to do on family allowances, to the view that more money should be paid to old people. It is almost impossible to find anyone who disagrees, so the whole problem is how we organise more money going from this generation to the last generation, to the poorer old people.

In my view, the best way is to allow the individual to do this as far as possible. If we encourage him and give him incentives and cajole and persuade him, at the end of the day he will have done it himself, he will see that it is his decision and he is far less likely to resent this redistribution, which I and most hon. Members welcome.

So to the alternative, which is not thrown up just for the sake of an alternative. The Liberal Party has been advocating it since 1963. It is this increased flat-rate pension linked to average national earnings and paid for by a payroll tax. I agree with what was said about sticking stamps on paper, but why replace the thing with a computer? There is no point in that. If we are here in 1992, we will spend our time explaining to constituents how the computer works. This will be an absolute nightmare. My constituents might accept the computer if it were in Launceston, but, as it will be in Newcastle or somewhere like that, they will not.

We should set targets for the total contribution for each individual's pension. We should say that the State will not tolerate a pension of less than two-thirds of previous earnings, and that it will be met in two parts. One will be the basicflat-rate pension paid by the State and the other will be privately provided through occupational schemes or by other means. I accept that there will inevitably be large numbers, even when one has created incentives for occupational schemes, who are not covered by those schemes, and they should be allowed to put a percentage of their income into a 1956 Act retirement annuity. They can do that with an insurance company or a friendly society and their contributions should be matched by a contribution from a central fund, raised by means of a levy on those employers who do not provide their own occupational schemes.

The Government have never seriously answered this proposal, so I can only guess at the objections. The first is that employers would not be prepared to meet the full cost of these rather high pensions—half the average national wage eventually as a basic pension—through a payroll tax. But the proposal is that the employer should pay two-thirds of the tax and the employee one-third, which is about the apportionment under the present scheme. So the employer will not be asked to pay the whole thing.

Moreover, even if we had an immediate increase in pensions, let us say by 1972, when this scheme starts, of 25 per cent.—that would be £1 0s. 6d. for a married couple and 12s. 6d. for a single man, which would bring a pension up to £5 12s. 6d. for a single man and £9 2s. 6d. for a married couple—it would not cost the Government any more in 1972 than their present scheme will cost. The existing pensioners in 1972—about whom I am much more concerned than the people who will have very high wages to provide for themselves in future—would have these very substantial pensions. They may not be as substantial as we would like—they would not amount to half the average national wage—but, over a period, we can reach that target without too great a difficulty. The transitional period, of course, will depend on the rate of economic growth. I want to move to a pension for a married couple of half the average national earnings.

May we have a comment from the Government about the 18 per cent. Treasury contribution? When the national insurance scheme came in, this figure was up in the 20s., but it has come down to 18 per cent. This does not seem to be a magic figure and bears no relation to the costs of redistribution within the present scheme; I wonder whether the Government can give us some rationale for it. It amounts to between £400 and £500 million a year. If we abolished the Treasury contribution we might be able to put that towards getting rid of S.E.T. If we have a redistributory principle for contributions within the Government scheme, is there any need for a Treasury contribution? Presumably, the original purpose of that contribution was to help to pay for redistribution.

The second major criticism of a flat-rate scheme is that it brings about—the right hon. Member for Sowerby (Mr. Houghton) said this in a previous debate—an intolerable redistribution of income between the rich and the poor. His objection to a fiat-rate scheme paid for by earnings-related contributions was that it would be redistributive. I regard that as nonsense. The Government scheme is redistributive, and rightly so.

A single man earning £33 a week will get a pension of 36 per cent. of his average earnings and a single man earning £11 a week will get a pension of 60 per cent. of his average earnings. If we talk about a flat-rate pension of, say, £7 10s., instead of the present £5 for a single man, a man earning £33 would get a pension of 23 per cent. of his average earnings and a man earning £11 would get 68 per cent.

So what we are asking a man on, say, £33 a week to do, if we opt for the flat-rate scheme with earnings-related contributions, is to accept a pension of 23 per cent. of his earnings over his life instead of 36 per cent., so that existing pensioners can get a substantial increase now. I very much doubt whether a large majority of people would oppose that kind of redistribution. We already have people converted to our view of the importance of provision for old people. That would be an acceptable degree of redistribution. It is certainly one that I would support.

So the Government are running away from the political difficulties of that degree of redistribution. I do not think that those difficulties exist, and, therefore, the alternative stands of a flat-rate scheme paid for by earnings-related contributions. In the long run it is certainly no more expensive. It is far simpler, and would produce a greater degree of social justice than the Government's scheme.

Mr. Molloy

When the hon. Gentleman says "flat-rate pension", do I understand that irrespective of what people are earning they would all receive the same pension at the end of the day?

Mr. Pardoe

They would get the same pension from the State, but would top it up from an occupational scheme. The pension from the State would be related to average national earnings.

I should like to ask the Minister something about the problem of the married woman who stays at home. I am aware of what happens to the married woman going out to work. That is clear from the Bill and the explanatory pamphlet. But what about the woman who stays at home for 15 years of her earning career to look after the children? She does not obtain an income, though perhaps she should. Perhaps society should value looking after children very highly. Some of us might even believe that it was worth more than working in a factory, even perhaps than teaching. What will happen about those 15 years when her earnings are averaged? Is there any way in which she can have a theoretical income written into those years to upgrade the average over the whole period of her working life?

But the most important objection to the Government's scheme is philosophical. It takes away from the individual decisions which can and should be left to him. In modern society it is inevitable that the individual cannot do everything for himself, or make every decision for himself. There is a greater degree of interdependence in a complex society than in a simple society. He cannot, for instance, decide to devalue his own £. He cannot decide to enter his own Common Market. He cannot even decide to build where he likes. For one reason and another the power of decision has been taken away from him, and will inevitably be taken away from him even more. So his freedom of choice is diminished, and it is all the more important that we should preserve those areas in which he can make his own choice, and extend them where possible.

The Bill will mean that millions of decisions now taken by individuals in their own homes will be taken by a Government computer. I regard the purpose of affluence and prosperity as being that the individual should be free, particularly from financial constraints, free to make those choices and decisions that in previous ages were the privilege of the very few. Yet as affluence and prosperity advance in modern society no such process is taking place.

One can think of a thousand ways to illustrate this. One thinks particularly of education. About 200 years ago a few people took important family decisions about the education of their children, while the rest received no education at all. Nowadays we have universal education, and very few more people make decisions about where their children will be educated. The decisions are largely made for them. It is not only in education that this is so.

In pensions we should build a partnership between the State and private provision, with the State laying down an off-the-peg, universal, basic minimum and private insurance undertaking the job of bespoke, tailor-made pensions.

Mr. Crossman

Is the hon. Gentleman's case that a private pension scheme, which usually imposes the contributions as a condition of service, gives more choice to the individual than a State pension scheme?

Mr. Pardoe

It gives him vastly more choice. First, he can argue about it through his union or association. He can decide whether to take the job concerned. Very often he can decide whether he will work for a certain firm within a particular industry. There is a whole host of choices that he can make in that situation that he cannot make if the Bill goes through.

Human personality thrives on choice. By the Bill that choice will be diminished and human personality circumscribed. It is fundamentally wrong. I also believe that it is politically misguided and will be a social disaster of the first magnitude.

Finally, I would like to say something about what the noble Lord the hon. Member for Hertford said this afternoon. He has nearly come round to our way of thinking, or anyway to what I have been pressing him to do. He offered a rather ingenious explanation, though I was not convinced, of why he still clung to his graduated pension scheme, which I regard as nonsense. He said something to the effect that he wanted to leave the rest, but not exclusively—and he turned and emphasised the point in my direction, I thought—to occupational schemes. Why not exclusively? I do not understand the extraordinary attraction the Tory Party feels for this very small bit of earnings-related pensioneering. Why cannot it loose itself from the grip of Kingston-upon-Thames?

What about the existing pensioners? The noble Lord was very critical of the Government, and the Opposition's Amendment is very critical of their failure to deal with existing pensioners. But what are the Conservative Party's standards? Will they relate existing pensions to the average national wage? If so, at what level?

Will the Conservative Party repeal the Bill should it become law by the time they come to power, if they come to power? It may be that the Bill will not be law, but if they come to power, and find that it is, will they throw it out? They owe it not only to the House but to a large number of people who will be involved in dealing with the matter over the next months and years to tell us, because a great deal of work will be done, and many people would find it easier if they knew exactly what the likely alternative Government will do with the Bill.

Lord Balniel

In answering the hon. Gentleman, may I congratulate him on his very interesting contribution to the debate?

I thought that I had made it clear that we will implement that part of the Bill which improves provision for young widows, the sick and disabled and introduces the attendance allowance for the severely disabled. But our proposals for improving the pension arrangements are so different from what the Government propose that we will repeal that part of the Bill.

Mr. Pardoe

I am grateful to the noble Lord for that intervention. It has said rather more about the Opposition's attitude than he said in his speech. I think that it means that he could do away with the Amendment and vote against the Bill in its entirety.

8.18 p.m.

Mr. Leo Abse (Pontypool)

I am not surprised that my right hon. Friend the Secretary of State complained that the debates so far on these pensions issues have been so narrow. I am not surprised because, having heard today's debate and read the others, I find it abundantly clear that if there is to be a genuine dialogue about any blemishes within the existing pension scheme it must be a dialogue between the Secretary of State and the Front Bench and our back benches.

My right hon. Friend does not underestimate the importance of the Bill. He is right to describe it as revolutionary, and one which obviously takes its place amongst our major legislation between 1945 and 1950.

It is nearly six years since I participated in an insurance debate. I do not claim any special expertise. When I took part in 1964, the debate was dominated by the publication by Margaret Wynn of her book on fatherless families. I find it extraordinarily curious, in view of the challenges that work then aroused, that issues which were then so keenly debated should, as I see it, be so strangely smothered in these proposals. If some of the main lessons to be drawn from her work had been learnt, I should not find myself now compelled to say that, essentially, no doubt unconsciously and unwittingly, these proposals, so splendid in many respects, nevertheless work out in a way that, in my judgment, is anti-familial, involving as they do a serious transfer of resources from parent to non-parent and precipitating, as I think they do, compulsory over-insurance for old age at the expense of families with dependent children.

Whatever the weaknesses of the Beveridge plan 25 years ago, as the right hon. Gentleman has adumbrated, and which were referred to by my right hon. Friend, the fact is that it did attempt to take a balanced view of all classes of the community. Expressly, it stated: Better distribution of purchasing power is required among wage-earners themselves, as between times of earning and not earning, and between times of heavy family responsibilities and of light or no family responsibilities. As will be seen from that quotation and, in my view, the whole tenor of the plan's recommendations, Beveridge spoke for the provision for children. That was central to the recommendations. In these proposals, it is old age that is central to the proposals. This may delight perhaps the gerontologist and the geriatrician, but is bound to cause anxiety to the pediatrician and the family man.

Let us take the single pensioner. One will find that he receives, if he was a man earning the average national earnings, some 42½ per cent. of life earnings, up-rated, I understand, for the effect of inflation, changes in earnings levels generally and so on. I have to ask myself whether 42½ per cent. is a reasonable pension for a single man with no dependants.

Let us suppose that the single pensioner who earns this pension once had a wife and three children to support. Would his standard of living be higher or lower as a pensioner than it was as a family man? The answer is clear—that his standard of living as a single pensioner would be substantially higher than it was when he had a wife and three children to support. It would in particular be very much higher than during those years when his children were older and especially, as those of us who have them know, than when his children were adolescent. So a pensioner will find himself in the position that he is much better off than when he was a family man, because, although a pensioner may have to pay extra in fuel, his deterioration in health is provided for already by the National Health Service and he does not need to spend as much on clothing or on food as in middle age, when he went to work every day. As a pensioner, he will not, indeed, need or wish to spend as much on clothing as his wife or a single one of his adolescent children once cost him. The average citizen, as he grows older, spends less on food and clothing even while still working and well able to afford a higher expenditure.

Let us take the position a little further. One finds that a poorer man whose average life earnings are only half the national average receives 60 per cent. of his wage. Did such a man once spend 60 per cent. of his wages on himself and only 40 per cent. on his wife and three children? There are no grounds for such an assumption. It must be remembered that about two-thirds of all the nation's children at any one time are in families with two or more children and 40 per cent. in families of three or more. One of the consequences of the fundamental changes proposed in the Bill is that they would guarantee a standard of living to single pensioners substantially higher than when they were fathers and mothers of dependent children, and would guarantee a standard of living for the pensioner which is substantially higher than that enjoyed by the majority of families bringing up most of the nation's children at the same point of time.

I would make no complaint about these high pensions if, demonstrably, they were not being gained at the expense of family units. I have made a comparison between a family and a single pensioner. Let us take a married couple where the wife has no earnings record and the pension will be 55 per cent. of the man's wage if his life earnings have been at the average national level. At this level, therefore, the pension for a married couple is 1.3 times that of a single pension and, as Margaret Wynn put to me, one man is equated with 3.4 dependent wives. The standard of living of the elderly couple will be substantially lower than that of the single pensioner, but nevertheless still substantially higher than that of the family with three children and higher than the pensioner couple enjoyed when they were the father and mother of the dependent children.

Let us go on a little further. Let us suppose that the wife as well as the husband has an earnings record. The pension should be higher still. The extent to which the wife works, as I understand it, will depend very much on the number of children, because, obviously, the mothers who spend much of their lives rearing their families will receive lower pensions than those wives who escape their family responsibilities in one way or another. The more years she spends in rearing the family, the lower the pension for the average woman. The larger the family, the less the mother is able to work outside her home.

These proposals may delight the celibate and those who think that large families should be dubbed as social delinquents. But those who are aware of the expanding world literature and discussion on the dependence of economic growth upon investment in children, both by education services and by parents, may regard this as a curious moment, however unwittingly and unconsciously it has been done, to weaken in Britain the economic structure of the family. It is all very well to over-insure old age but one has to ask who will pay for these proposals.

I would not mind if the burden were really falling upon the very wealthy but the fact is that the working people will have to pay, except the very poorest who are earning less than £5 5s. a week. The majority of the nation's families with dependent children will have to pay and will be the poorer if the proposals are implemented in the present form, because the proposals are bound to mean transferring substantial resources, many millions of pounds, from households with dependent children to households and, more particularly, pensioners without dependent children. I am bound to be unhappy about such a situation.

There are 1½ million to 2 million mothers with dependent children who go to work. They now contribute but little to National Insurance. These proposals will remove the right of mothers to opt out in this way. With a wage of £8 a week a working mother will have to contribute an additional 10s. 3d. Since it is well known that most of the money received by way of sickness benefit and unemployment benefit will be received by older workers without dependent children, the 1½ million to 2 million mothers with dependent children will be giving money which will go to the benefit of those who have no children at all, or those whose children have grown up.

All the blemishes in these proposals stem from the failure to have a Government family policy. That is why the widowed mothers' children allowances are cruelly not age-related. That is why, as Richard Sleight pointed out in Saturday's Guardian, the invalid's pension leaves the young man with a wife and young children to support with less than will be obtained by an older man with the same incapacity and less responsibility. That is why, although we have 94,000 motherless families and so many in danger of being taken into care, we are now treating mothers as single women and making them pay identical contributions as single women but failing to follow the United States practice of the mother's payment being an insurance on her own life for the benefit of her children.

At a time when it is fashionable to talk of population policy and when abortions are deemed to be socially desirable, it may not be vogueish, despite the need, to demand a Government family policy. But the flaws in this nobly intended pension scheme indicate how dangerous is much of our legislation if it fails to be informed by a sensitive awareness of the family cycle.

There are two paragraphs within the White Paper which refer to the position of divorced women and one-parent families and tell of a committee set up to review their position. I hope the Secretary of State, if he hears me on nothing else, will bear with me on this. There are other legislative changes about which in his preoccupations he may be unaware, but they are legislative changes which I am sure the Law Commission would tell him are likely to have an adverse effect on unmarried mothers. Will he tell us what are to be the terms of reference of the committee which he is setting up on this issue? I hope that he will give sufficient freedom to that committee to take into account something a little wider than the narrower pension and benefit issues raised by this Bill. If we do not do that we are in danger, again unwittingly, of creating great difficulties for the one-parent families, the unmarried mother and divorced women.

This is particularly important when this scheme could have the result that many of these women who have children and no available father find themselves, as a result of the increased payment under the new scheme, in a position where they will be not be attracted to join the main stream of working women and find it necessary, so marginal are their means, to fall back on supplementary payments. Therefore, I hope that the Secretary of State will give attention to this point.

I hope that my constituents will not regard my criticism of the scheme as in any way detracting from the fact that it is a major step forward by a Government concerned in occupying themselves with the problems of old age. It is a choice between what the Secretary of State rightly called insurance interests, which are not concerned with half the population, or the real needs of old age, and the State. I hope that my constituents will understand that and will know that my only desire is to draw attention to blemishes on a great and fundamentally revolutionary scheme.

8.36 p.m.

Mr. John Nott (St. Ives)

I confess that I did not entirely follow all the detailed points made by the hon. Member for Pontypool (Mr. Abse). I would only say in my defence that I have a feeling that the Minister did not entirely understand them either. Nevertheless, they were valuable contributions which I hope will be discussed further in Committee.

The Bill starts from the premise that full and adequate income-related benefits for old age, widowhood, sickness and unemployment should be provided by the State. From a Socialist viewpoint, I suppose that this is an unarguable proposition, even though there is plenty of evidence to indicate that it does not accord with the wishes of the majority of the British people who, if given the opportunity, would much rather provide this protection for themselves. Nevertheless, given that there are still a few Socialists, like the Minister, who think like Socialists, it is a political prejudice on their part worthy of recognition by this side of the House and perhaps even worthy of respect. The only important question which I should like to pose is whether this Socialist prejudice, with its utopian visions of a new Beveridge—all-embracing, comprehensive and uniform—is workable, necessary or desirable.

I must briefly interpose my own prejudices which may appear to some hon. Members opposite as being detestably Right wing. The idea of a benevolent State nobly dispensing in 1992 universal health and pensions for all the people strikes me as very old fashioned because it is expensive, inefficient and not really what people want. I do not conceive that there is anything very ennobling about receiving a pension from the State if I am able to provide it for myself. Although I am perfectly happy to bear, through the redistributive nature of taxation, my share in providing pensions for the poorer sections of the community, I see very little reason why I should have a compulsory levy put upon me—because we are talking of partial contracting out—by which I provide for the pension of someone who is equally as well endowed as myself and who may not wish to save the same proportion of his income as myself.

For me, the concept of full income-related State pension benefits seems to involve an infinitely paternalistic and rather pessimistic view of the British people which indicates that all need the crutches of the social services. This is the quickest way of turning the British people into incurable cripples so that they lose the will to stand on their own feet and provide pensions for themselves. I therefore entirely agree with my hon. Friend the Member for Hertford (Lord Balniel) and the hon. Member for Wellingborough (Mr. Fry), who made an excellent maiden speech, that there is still enormous scope in this country for the encouragement of genuine savings through private schemes.

However, my task is to argue, not the philosophy of the Bill, because agreement between the two sides of the House is not possible on that, but the merits of the Bill considered on the Minister's own terms. When I read it and study it, I have the gravest doubts about the sums and I should like briefly to go into the arithmetic of the Bill. It seems to me that the concept of a partnership with the private sector is a pure delusion, because one cannot be in true partnership with one's competitor. The fact that the Minister has broken off his discussions with the private pension interests is only evidence of the fact that, to a large extent, they are competing with him in the pension field.

A State scheme of these ambitious proportions—it is of ambitious proportions, and I do not niggle at that, looked at from the Minister's side—cannot be viable alongside a continued rigorous growth of occupational schemes, which are a major source of the nation's savings and investment. Even following the increase to 7 per cent. in the employer's contributions and assuming current levels of contracting out, it is my view that higher contributions will be required before the scheme has gone too far, if only because of the inflationary spiral arguments that were made so lucidly by my hon. Friend the Member for Wellingborough; and even that is after what I would describe as rather suspect calculations of equivalent commercial cost.

If one looks at an average quotation in the insurance market today, one finds that a single premium of 2.6 per cent.—the sum of the 1.3 per cent. of the employer and the 1.3 per cent. of the employee contained in the Bill—would provide £1 per annum at 65 to a man aged 43 today. It seems to me to be very dubious whether the average age of the employed pensionable population is 43. If it is not 43 and it happens to be 46, all the Minister's calculations are wrong.

Secondly, I believe that the interest charges which the Minister has taken, at 7½ per cent. and 5½ per cent., are too high and, thirdly, that the expenses appear to be low, at least when compared with the smaller funds. Therefore, although I would not claim that the books are cooked, the whole calculation of the abatement provisions contains assumptions which are of questionable validity.

My belief, therefore, is that the Minister has got to hold to the 1.3 per cent. abatement, and I will shortly explain why. But if he does hold to the 1.3 per cent. abatement, two consequences will follow. First, employers will do their utmost to lower the age of their pensionable employees, to the detriment of elderly and middle aged people in their employment. The Minister recognises this, and this is why the Bill bristles with anti-selection measures. Secondly, the right hon. Gentleman will force insurance brokers into much more risky markets for life insurance and this will lead to a general decline in the quality of pension fund management in the private market.

On the present plans, I do not see how the Minister—who is not listening to a word that I am saying, but I am quite used to that with this particular Minister—can accede to the demand for the 1.5 per cent. abatement which is being made by the private funds without making an even greater nonsense of his present pension scheme, because I believe that the State scheme is probably unviable already, if the Secretary of State goes much further and agrees to 1.5 per cent., the whole edifice could come crashing down around him, requiring either higher contributions or a greater Exchequer subsidy before we start. That being the case, I now come to the detail of what I want to say. The right hon. Gentleman's only alternative is to alter the parameters, which I state as being threefold. They consist of the range of half to one-and-ahalf times the national average wage. The second parameter is the formula of 60 per cent. and 25 per cent. and the third is the 20-year maturity. Those are the things that can be played about with in the Bill as it stands.

If the Secretary of State wants to play around with those parameters and change the range from half national average earnings to national average earnings, and change the formula to 80 per cent. and 10 per cent. from the present 60 and 25, he could still have a viable State scheme and provide proper contracting out arrangements. I personally think he should do this, because if he did so he would then be providing—it seems to me to be the main criticism of the Bill that it does not so provide—pensions for those in need, and leave those who are not in need, leave those who are above the national average wage, to top up their benefits in the private sector. This is, I am sure, what my right hon. Friend was meaning when he talked about the desirability of topping up in the private sector for those who are not in need.

Now I come very briefly, for I am not going on much longer, to what I regard as the worst side of this Bill. The Government have got to raise more cash from somewhere to promise the higher pensions, and they cannot or will not raise this money by taxes, so they resort to the more respectable device of calling it a contribution. This is a well-known political device, to which my own party resorts as well. I think that one day politicians have got to come clean and say that we admit that an unfunded pay-as-you-go scheme is not a contribution at all. Of course, we do it this way because we know that it is easier than putting on a tax, so called; but it is a tax.

What is new in this scheme is to guarantee to private contributors a pension, calculated according to the scheme's provisions, when the pensioner retires; but this is a guarantee which the Minister cannot possibly give, and it is quite wrong for the Government to claim that it can do so. I agree entirely with the criticisms made by the right hon. Gentleman the Member for Sowerby (Mr. Houghton) when he talked of a promissory note which will aggravate the conflict between the generations, and which may not, indeed, ever be honoured.

I ask quickly three brief questions. First of all on the taxation arrangements. I believe that discussions with the Inland Revenue relating to the tax arrangements in the private sector have just begun. Are we to know in Committee the results of those discussions? If not, how can we discuss the relationship of the State to private schemes, unless those private discussions with the Inland Revenue have been completed?

Secondly, are we to know in Committee what all these multifarious regulations will say? I cannot anticipate that the regulations will be published, but unless we have some idea of what they will involve, we cannot come to proper decisions on a number of vital items in the Bill.

Lastly, will the Minister tell us—because he has encouraged us to table an Amendment on transferability, an Amendment which I would welcome—what really did happen in his discussions with the private pension interests? I hope he will tell us in Committee, because my information is—and it may not be accurate—that the Minister shirked it in the end because the unions wanted to retain the right on the part of their members to obtain their cash contributions on withdrawal from a scheme. Was the Minister saying there were some pension funds which did not like the idea because so many funds make major profits, as we all know, from withdrawals each year? But he is the Secretary of State who has to make the decisions upon legislation. Some Government has got to do this. Has he shirked the issue?

Mr. Crossman

The chief opponent was the C.B.I., the Confederation of British Industry, which took the view most strongly that this would mean a retrospective burden, and it put this to me. It was not the National Association of Pension Funds mainly, but the C.B.I.

Mr. Nott

I am grateful to the right hon. Gentleman for clarifying the issue. I do not think the Government have been notable, during their four or five years in office, for doing what the C.B.I. required. If the Minister is really saying that it was because the C.B.I. objected, it is one of the weakest arguments I have ever heard. I simply do not believe it was the true reason, nor will anyone else believe it either.

I conclude by saying that we have a scheme which must be incomprehensible to the vast majority of the British people. No one will be able to understand his own pension entitlement; no one will believe the computer. As the hon. Member for Cornwall, North (Mr. Pardoe) said, how shall we explain to our constituents in 1992, if we are still here, which I doubt, that the computer is right? It simply is not "on".

Secondly, the Bill does virtually nothing for the 7 million present pensioners and those who will retire in the next few years. The only point I would make to the hon. Member for Cornwall, North about flat-rate of earnings-related benefits is that it does not make much difference to pensioners who retire in the next 10 years, in practical terms, but I take the hon. Gentleman's point. I think marginally I would prefer flat-rate benefits.

Thirdly, the Bill contains a guarantee for pension benefits which the Minister is in no position to give. He cannot know that it will be honoured by his successors and by future Governments. Moreover, it is wrong to decide now that the next generation of workers and employers should be committed to paying our generation bigger pensions out of their incomes.

Fourthly, it will bear hardly on those who have already made provision for themselves in occupational schemes, and I will give one flagrant example. The Minister has been prevailed upon to give inflation-proofing to those who are still in the Boyd-Carpenter scheme. This is quite wrong. It is retrospective legisla- tion. When employers came to make a decision on whether or not to contract out of the Boyd-Carpenter scheme, they based that decision upon the then existing facts. Now the Minister has said that he is giving the Boyd-Carpenter pensions inflation-proofing. Although this enables the Minister to pose as a benevolent and charitably minded man, this is retrospective legislation of the wrong type.

I think the Bill is misguided and damaging. I hope the British people will understand it. If they do, I have no doubt that they would prefer to provide pensions for themselves through their employment. Have an important State scheme, yes, but let people who prefer it top up their pensions with private provision rather than force them to rely upon a benevolent and all-embracing State to perform this function for them.

8.52 p.m.

Mr. Jack Ashley (Stoke-on-Trent, South)

I hope that the hon. Member for St. Ives (Mr. Nott) will forgive me if I do not answer the points he has made, but I am most anxious to make a specific point or two of my own.

I want to register some reservations on one or two proposals, but before doing so may I say that I regard the Bill as one of the greatest reforms of social security that this House has ever seen. I believe it is an historic Measure, and that the Government have every right to be proud of it.

I have listened to some criticisms here today and I have heard some outside. I respect constructive criticism, but the spectacle of Sir Paul Chambers donning the cloak of St. George and galloping forward in defence of impoverished old-age pensioners is bound to raise a few cynical eyebrows. The sooner he gets down from his high horse and drops his strident language, the better the debate inside and outside the House.

The primary objective of the Bill is to ensure that poverty is reduced for superannuated pensioners. It is a noble objective, which I have no shadow of doubt the Bill will achieve. Another aim is to provide for the needs of the long-term sick and disabled, and I am astonished that so few people have dealt with this important subject today. I believe that this objective is less likely to be achieved by the Bill.

The provisions for the disabled are a major step forward, as they recognise disablement as a special category for which provision should be made. But I have some reservations, for example, about the invalidity pension. There is, first, no help for the disabled housewife and the congenitally disabled. I realise that the scheme is based on the contributory principle, but this should not prevent the Government from introducing into the scheme an element of flexibility, as they have done with the constant attendance allowance.

I appreciate that this is not an easy matter to resolve and I am not asking that all housewives in this position should be given a disability pension overnight. However, I hope that the Government will reconsider the categories in the Bill and try to extend the provisions in the way I have described.

My second objection stems from my fear that the scheme will discriminate against those who have been disabled the longest; in other words, that the man who is disabled early in his working life will receive the least benefit. This would be a highly undesirable state of affairs. While I appreciate that it is based partly on the contributory principle, we should not forget that the young disabled man probably has family responsibilities, and I therefore hope that the Bill will be improved in this connection, too.

The Bill takes account of disabled persons' contributions, and I have no quarrel with that. However, it requires a new provision to take account of disabled people's needs; for example, the additional expediture which they must incur for, say, clothing, laundry, diet, transport and heating. The disabled who are immobilised certainly do not have the ability to generate the hot air that is frequently generated in this Chamber, particularly by hon. Gentlemen opposite.

I extend a warm welcome to the constant attendance allowance, which I regard as a major step forward. A powerful economic case can be made out for such an allowance and, knowing the attitude of the Government, I am sure that they considered not only that economic case but also the social and humanitarian case that can also be made out.

While I warmly welcome the constant attendance allowance, I trust that I will not be considered churlish in saying that I regard the present proposal as only a beginning, for £4 is inadequate for this purpose. Anybody who requires frequent attention throughout the day, and prolonged or repeated attention during the night, must present the person providing that attention with a considerable task; and £4 a week is not nearly sufficient. I trust that, in due course, the Government will reconsider this provision.

A reservation which I have about the constant attendance allowance concerns the earnings qualification of £325. That, of course, will exclude the very low-wage earner, who is usually the disabled, and also those who are completely unable to work. Provision is to be made for the constant attendance allowance to be paid by the Supplementary Benefits Commission. While I do not wish to detract from the activities of the Commission, which is doing a magnificent job, I suggest that the Government should not always leave the question of allowances for the disabled in the hands of a means test body, so to speak.

The constant attendance allowance is not to be paid until 1972. I am not impressed with the argument that all pensions should be paid immediately. I appreciate that that cannot be done and that I would be out of order to argue for a payment to be made now, but since the chronically disabled are urgently in need of a constant attendance allowance I trust that the Government will consider making a grant in respect of this allowance immediately.

The late Megan du Boisson and her colleagues in the Disablement Income Group campaigned for a long time for the constant attendance allowance, along with other claims. The Government have shown an awareness of the problems of the disabled and a willingness to take practical steps towards solving them. I believe that they should be congratulated. A constant attendance allowance and an invalidity pension mark the beginning of what I hope will be a legislative programme designed to free from penury and enhance the status of our sick and disabled.

9.0 p.m.

Mr. Paul Dean (Somerset, North)

I want, first, to join in the congratulations to my hon. Friend the Member for Wellingborough (Mr. Fry) on his maiden speech. Whatever the House may have felt about what he said, I am sure that hon. Members recognised the knowledge, realism and humanity that he showed in his speech. It is a great pleasure to welcome him to our pensions debates, and we look forward to hearing him on this and other subjects many times in the future.

We are also very glad to see the Secretary of State restored to health and here to introduce this Bill in person. In his speech, I thought that I detected a little nostalgia for 1957 and the first pamphlet that the Labour Party produced in those days. One of the troubles about the Bill is that it bears the stamp of 12 years ago and, to some extent, Labour thinking has stuck there. In many respects, times have changed a great deal since then. The Bill has been almost too long in gestation. It is old before it is born.

Enormous changes have taken place since that first pamphlet was produced, which the right hon. Gentleman himself said a few years later was far too complicated. We have seen a growth in occupational pension schemes. At that time, under 8 million people were covered. Now the total is over 12 million. At that time, the cost of the State scheme was modest compared with the present day. Over that period, the cost has trebled. In addition, there is the growing desire and ability on the part of people to provide for themselves and exercise their own choice over and above the arrangements made by the State. Finally, and perhaps most important, there is a growing disillusion in the country with policies which increase taxation, which increase Government expenditure and interference in the lives of individual men and women. This Bill will do all those things.

One point which has been mentioned many times in the debate, and which was dealt with by the right hon. Gentleman, is the position of existing pensions. I notice that right hon. and hon. Gentlemen opposite are very sensitive about this one. It is one of the fundamental errors and weaknesses in the whole scheme that it excludes over 7 million existing pensioners permanently and irrevocably from its benefits. It creates two nations in old age, with those who retire before 1972 and those who retire after, with a rigid and arbitrary line drawn at that date.

I know that the Bill provides for a two-year review of pensions and a guarantee that those pensions will be price-protected. But, as the right hon. Gentleman said, we know that, since the war, Governments have done better than price-protect the pension. The right hon. Gentleman is writing into the Bill a provision which is more modest and less ambitious than we have been able to achieve up to now. He says that, as a minimum, the finances of the scheme allow only for price protection. If he intends to do more than that, surely it will mean that contributions have to go up more speedily than would otherwise be the case.

Mr. Crossman

It is all in the White Paper. The finances of the scheme assume not only price protection, but wage relation. It is estimated on the assumption that the amounts will rise as fast as average wages. But we have given only a minimum, with the assumption that, over a period of time, it will, in fact, achieve wage relation.

Mr. Dean

What the right hon. Gentleman is doing is making the point that I have just made. He is drawing a distinction between past pensions and future pensions, between past service and future service. As I understand, he is confirming the criticisms which I have just made.

In any event, there will be a feeling of injustice and unfairness on the part of the people who have already retired—the same sort of situation that we have with the over-80s today. People who retire after 1972 will be better off than those who retired before. We shall have the odd situation, as this scheme matures, that the younger pensioner will be receiving a bigger pension than the older pensioner. Surely, in a basic State scheme, it should be exactly the other way round because needs tend to increase with age.

The point has also been made by hon. Members on either side of the House—including the right hon. Member for Sowerby (Mr. Houghton)—that our children will have to pay bigger contributions than we are prepared to pay today for the pensions of our fathers and grandfathers. As my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) put it, we are bidding for the generosity of the next generation.

In our view, these are fundamental weaknesses in the Bill. We say, in contrast, as my noble Friend the Member for Hertford (Lord Balniel) said, that we should start with existing commitments and that the first charge on the scheme should be existing pensioners and others who are in receipt of benefit. That means that the essence of the policy that we put forward is to raise enough money to meet existing commitments and to provide further improvements without damaging the future of occupational pension schemes and similar arrangements.

This means that we do not think it right to create an arbitrary division between those who retire before 1972 and those who retire after. That clearly means that we should build on the existing pension arrangements.

Miss Margaret Herbison (Lanarkshire, North)

Would the hon. Gentleman tell the House exactly how he would finance the increased pensions that he wishes to give to the existing pensioners?

Mr. Dean

I am coming to that, but there are one or two specific points I should like to mention first.

My noble Friend said that we were committed to providing a pension for the over-80s, something which is totally absent from this scheme. We feel that there is much to be said for a higher level of pension for older pensioners than for younger pensioners because needs tend to increase with age. In our view, there is also much to be said for improving the increments. I think that it was the right hon. Member for Battersea, North (Mr. Jay) who, in the debate on 4th December last year, made a powerful case for this. Here is one way in which one can not only encourage those who want to go on working after minimum pension age to do so, but it is one of the quickest ways in which one can encourage and help them to earn a higher pension. The terms offered in Clause 21 are not, in our view, good enough to encourage that process.

We have given a general welcome to the other proposals in the Bill, particularly those concerning widows and the disabled. We also welcome the constant attendance allowance as a very welcome start and it is supported on both sides of the House. We shall want to probe in Committee whether it is the right start and whether the right people have been chosen, bearing in mind that the Government estimate that 50,000 will benefit in the first place at a cost of about £10 million.

Clause 15 deals with unemployment benefit for those involved in strikes. It was mentioned by the hon. Member for Rowley Regis and Tipton (Mr. Peter Archer). It involves a major change and many industrialists feel that it will remove the disincentive to strike action which the present arrangement provides. We shall clearly want to examine it carefully in Committee.

To summarise on this, the Government talk and think big about 1992, but they do not concentrate on the priorities of today and in our view these are the priorities which should have first place.

The right hon. Lady asked how our proposals were to be paid for. We have never said that the commitment for pensions and other benefits was other than a rising bill. A rising bill is an inescapable reality which will face any Government and any scheme. We do not claim, and have not claimed, that any alternative which we put forward would cost significantly less in contributions. But what we claim is that the present proposals are more costly than they need to be, that they try to sugar the pill of higher contributions by building up big commitments for the future and, perhaps much more important, that these big increases in contribution are on top of very substantial increases in taxation of earnings and profits and also on top of the increase in contributions last November of no less than £430 million.

So, although we accept that an increase in contributions will be required to meet the bill for pensions and other benefits, it is emerging that there is a fundamental difference here between our approach and the approach of the Treasury Bench. Our proposals for contributions would be linked with the pledges which we have made with regard to the reduction of taxation on earnings and profits, whereas there is very little hope of that from right hon. Gentlemen opposite.

The right hon. Gentleman made much of the case that the lower paid would pay less under his arrangements. He did not say anything like so much about the substantial increase in contributions which will be paid by those getting average earnings and upwards. For example, a man on £1,900 a year will pay an increase of 5s. 5d. a week and the employer will pay 7 per cent. on his total payroll. The contributions for married women will be even higher, a point emphasised by my hon. Friend the Member for Melton (Miss Pike), who spoke about the disincentive effect which this will have on married women going out to work. It was also mentioned by the hon. Member for Pontypool (Mr. Abse), in his interesting speech about the family in this connection.

There is no doubt that these compulsory contributions by married women will bite very deep. There are about 4 million married women in employment—some working part-time—who pay only 8d. a week, the present industrial injuries contribution. The increases for them will be very steep and will come into operation before equal pay comes into operation. For example, married women earning £450 a year, not a very high salary by any standards, will have to pay an increase of no less than 10s. 11d. a week. A married woman with £1,000 a year will pay an increase of 15s. 10d. a week, while a married woman with a salary of £1,900 a year, the top end of the scale, will pay an increase of no less than £1 12s. 5d. a week. By any standards these are substantial increases in contributions for married women. The Government have not made out a case for making married women contribute compulsorily to the scheme.

Miss Herbison

In dealing with how his party will pay for the scheme which it proposes, the hon. Gentleman said that there will, on the one hand, be cuts in taxation and, on the other, increases in contributions. Does he not realise that the low-wage earner with a family does not pay direct taxation, and that he is the person who, under the scheme which the hon. Gentleman is putting forward, will have the higher contribution to pay?

Mr. Dean

I think that the right hon. Lady has misunderstood what I was saying. I did not explain it fully because of the lack of time. The lower-paid people would benefit from graduation of contri- butions in much the same way as they would under the proposal being put forward by the right hon. Gentleman.

I now turn to the occupational pension schemes, of which 12 million or more people are now members. There is a strong feeling amongst the members of those schemes and amongst the experts that they will suffer and that the abatement terms are not adequate.

I very much regretted one part of the right hon. Gentleman's speech when he made, I thought, rather sneering remarks about what he called the "insurance establishment" and "pensioneers". It comes ill from the right hon. Gentleman to talk about pensioneers and pensioneering. When he talks about the "insurance establishment" he might remember that the expertise and knowledge which the insurance people bring to occupational pension schemes and to other matters is of considerable credit and importance to the economic prosperity of the country.

There is little doubt that here we come to one of the fundamental differences of approach between the Government and ourselves. The Government, in effect, are saying, "We know best what pensions people should have and we intend to impose our will through the State scheme. If people happen to have their own pension arrangements and they can fit them in with the State scheme, then they can do so. If not, they will have to abandon them."

In our view, this is intolerable. It undermines family responsibility and individual freedom of choice, and it makes no sense economically either, because it will enormously increase the eventual cost to the State. Indeed, it is the kind of scheme which, in our view, will put Britain firmly on the road to a State monopoly in pensions.

The right hon. Gentleman admits—he did so again today—that there will be "a slowing up in the growth of pension funds."

Mr. Crossman

For two or three years.

Mr. Dean

All right. The right hon. Gentleman says for two or three years. However short or long a time it may be, this is a very damaging admission to come from any Minister, particularly one who is responsible for the biggest spending Department in Whitehall.

The right hon. Gentleman tries to minimise this by saying that it is only 10 per cent. of total savings. But it amounts to £800 million a year and involves no less than two-fifths of personal savings. The Secretary of State for Social Services can do a great deal to encourage personal savings through occupational pension schemes and the advance of security and a property-owning democracy. On the other hand, he can do a great deal to discourage them. That is the road upon which he has set himself through inadequate arrangements for abatement.

The almost unanimous view amongst experts is that this scheme will damage the development of occupational pension schemes and public service pension schemes and the savings which they generate. The National Association of Pension Funds estimates that about 15,000 schemes covering half a million people may be terminated as a result of the Bill, and the Life Offices' Association also feels that there will be damage to schemes. Inevitably, it will be the smaller schemes, the newer schemes, those which have the greatest growth potential for the future, which will suffer.

We are entirely unclear, and we are no wiser after hearing the right hon. Gentleman's speech, about the future of public service pension schemes, about which hon. Members on both sides of the House are particularly concerned. All we know is that there will be no change in respect of past service and that there will be no alteration before the State retirement age. Those are the assurances which we have had from Ministers up to now. They are welcome assurances, but we would not expect Ministers retrospectively to withdraw rights in occupational pension schemes. Indeed, in many instances they are written into legislation. The Police Pensions Act, 1948, is probably the most classic example of that. Thus, in giving that pledge, Ministers are saying nothing that we do not know already.

What matters is the pension rights based on future service. On that, all we have been told is that negotiations will take place through the normal channels for these matters, and that it will be a long time before they are completed. In other words, unless the Minister of State can tell us something more tonight, it looks very much as though the Bill will pass through the House without any of us here, or any of our constituents who are members of public service pension schemes, having the slightest idea of what their pension rights will be for future service. This is a very unsatisfactory way in which to deal with a Bill of this kind, and with so important a matter. My right hon. Friend the Member for Kingston-upon-Thames referred to the pension schemes for the Civil Service and the Armed Forces, two schemes which are non-contributory at the moment. Are the rights under those schemes to be eroded by some of them being taken over from what is now a non-contributory scheme and transferred to what will be a contributory scheme?

Those are the questions which we have been asking in these debates, and we are still none the wiser. What we do know is that inherent in this scheme there is no firm basis for effective abatement, for effective contracting out, because, inevitably, with a scheme financed as this one will be, the tendency will be for the subsidisers to contract out, and for the subsidised to remain in. And the more that happens, the more the finances of the scheme will be in disarray, and the quicker the increase in contributions will come about than forecast.

The uncertainties have been added to, because I note that under the Bill the previous proposal that there should be a review of the abatement terms every four years, with possible additions at two years if there were exceptional circumstances, has gone, and that Clause 54 now appears to provide for a revision of the terms of abatement at any time. This is, therefore, an additional uncertainty for occupational schemes.

Then there is the effect of the tax rule, which was mentioned by my hon. Friend the Member for St. Ives (Mr. Nott). During the debate on 4th December we were told by the Minister without Portfolio that these tax rules had been looked at, in particular, that the existing maximum benefit was under review, and that there would be an announcement about this in due course. If we are to judge this Bill effectively it is essential to know what changes are to be made. All these doubts and uncertainties—and they are genuine among the members of schemes—will have an effect not only on the terms of service of those who are members of public pension schemes at the moment, but on future recruitment.

If one looks at the situation in teaching, nursing, doctors—in almost any field of public service that one can think of—one can see how damaging is this uncertainty as to the future of these schemes. In our view, people should have the choice to contribute for a pension related to earnings, but this is much better done through approved occupational schemes or similar arrangements for the self-employed. We recognise and we have proposed, as my noble Friend said, that there should be a reserve earnings-related State scheme which would be obligatory on employers not providing an approved occupational scheme. This would be on value for money lines and would be price-protected.

We recognise that occupational pension schemes are not perfect. They have gaps and weaknesses, but they are growing and improving all the time. One of the bars to progress at the moment are the rules and regulations which govern these schemes, which restrict the amount of benefits which can be made available for widows, for example, which make preservation much more difficult than it need be, and also make it difficult for these schemes to make an adequate price protection. Given a simplification of the rules governing these schemes, and amendments to encourage the best practice, given simpler contracting-out conditions and a State scheme which provides a firm base, these occupational schemes can make an immense and growing contribution to saving and security in old age.

The right hon. Gentleman mentioned preservation, and he criticised the C.B.I. in its attitude to this. I hope he has seen—I understand that he has—that the C.B.I. is intending only this week to give very strong encouragement to its members to look at their schemes and, where preservation is not provided for, try to write it in.

Mr. Eric S. Heffer (Liverpool, Walton)

It took them long enough.

Mr. Dean

I am very glad that the Government are setting an example in this respect with regard to the Armed Forces, civil servants and the National Health Service. It is quite right that the example should come from the Government of the day, for we are anxious that preservation or transferability, whichever is most appropriate, should come as quickly as possible. We must recognise, too, that we do not want to put on these schemes burdens which will make it impossible for them to continue.

The scheme which we need for the future should have integrity, simplicity and clarity. The proposal which we are now considering has none of these things. We welcome some of the provisions, especially those for widows and the disabled, but the main part of the Bill dealing with pensions is totally unacceptable. It treats existing pensioners as second-class citizens and, therefore, ignores the first priority of a State pension scheme. It continues to ignore the over-80s. It builds up very heavy commitments for the future—commitments which the next generation will have to shoulder. It means a big increase in contributions and costs on industry, on top of enormous and penal rates of taxation which it has already had. It will damage the occupational pension schemes and the savings which they generate.

Finally, the scheme is introduced by a dying Government in the last gasps of office. It is quite wrong that such a Government, at the end of a Parliament, should impose such a major reform of this kind, and it is for those reasons that I invite my right hon. and hon. Friends to vote for the reasoned Amendment.

9.30 p.m.

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

I should like to begin by congratulating the hon. Member for Wellingborough (Mr. Fry) on his maiden speech. He spoke with a good deal of knowledge on the subject and showed his sympathy for the elderly. He said that the scales had been tipped against the aged. The purpose of the Bill is to see that they are tipped in favour of the aged and of others who are under-privileged in our society—the sick and the widows. I also would like to welcome back the hon. Lady the Member for Melton (Miss Pike) after her illness, and also my right hon. Friend.

There have been some notable speeches in this debate, not least from my hon. Friend the Member for Stoke-on-Trent, South (Mr. Ashley), who was speaking on behalf of the disabled with a great deal of knowledge and experience, and from my hon. Friend the Member for Pontypool (Mr. Abse) on family problems.

This has been an unusual debate. Normally, a debate on Second Reading of a Bill is the beginning of the debate, but we have been involved in a debate for the past 12 months, ever since the Government published their White Paper on 28th January. The debate started pretty sluggishly, when people said they did not understand the scheme. The noble Lord the Member for Hertford (Lord Balniel) maintains his position of being unable to understand it right through to this very day, and proudly proclaims it.

Certainly, the debate became a little more rollicking some months ago when some individuals and organisations proved that they did not understand the scheme by making statements which were so outrageous as naturally to create alarm and despondency in people's minds. Happily, I believe that we have moved out of that period. I think that there is a growing recognition of the value of this scheme. Certainly, the publication of the White Paper on partial contracting out removed a good deal of uncertainty. We have since had statements of approval from the T.U.C. and the recent resolution which the special conference of N A.L.G.O. passed, and there have been a number of other indications that people are understanding the scheme's value.

I did hope that today's debate would allow us to hear an exposition of the Conservative case. After 12 months of debate, the noble Lord treated us to the same oft-repeated criticisms of the scheme. Only in the last few minutes did he suddenly hint at a Conservative approach. I do not know whether he has been taken to task by the Leader of the Opposition, whom we are glad to see beside him tonight. As I saw the shaft of light of this Conservative approach, I wondered what sort of proposal was about to come forward. It looked to me like a non-starter, a botched up job, like the 1959 Act. Writing in today's Daily Mail, Walter Terry referred to "the quantity, the quality and the intensity" of the four years' homework done by the Opposition: he said that it was "awesome". Actually, that was a misprint; he intended to say that it was "awful".

The right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) made a number of interesting Committee points but mainly it was his purpose to water down the Bill, to remove from it some of those significant things which will give hope for the future. He said that the pension provisions were too ambitious. He criticised the procedure for dynamism and for protection against inflation. In the situation which we face, the right hon. Gentleman must bear a heavy responsibility for the fact that all this time has had to pass before we bring in a scheme worthy of our people and of our society. In 1959 he introduced a scheme which was patently unsuccessful. He now suggests that we should postpone our Measure and establish a Commission, giving a few further years to thinking about what should be done. I did not notice that he established a Commission when he introduced his own Measure; it might have been better if he had.

He and a number of other hon. Members—my right hon. Friend the Member for Sowerby (Mr. Houghton), my hon. Friend the Member for Brentford and Chiswick (Mr. Barnes) and the hon. Member for St. Ives (Mr. Nott)—dealt with what they called this "promissory pension", the suggestion that the new scheme imposes heavy liabilities on future generations, which those generations may repudiate. Why do they express those concerns? We as a generation have not let down our predecessors, and I do not see why we should take the cynical view that the next generation will behave irresponsibly towards those in retirement. The 1959 Measure itself provided a promissory pension; the modest benefits now being paid under it are paid by the next generation.

Let us look at the evidence of the past 20 years. We are prepared to pay almost twice as big a proportion of our earnings for pensions as our predecessors when the 1946 Act became law. The increase expected by the Government Actuary for the next 30 years will be, proportionately, substantially less than this. But the increase will be steady and not on the past hand-to-mouth basis. In any case, as living standards rise and a smaller proportion is required for the sheer necessities of life, it is surely reasonable to expect people to increase the proportion of their earnings devoted to provision for old age.

I do not believe that we need fear that, with this modest increase spread over more than a generation, the next generation will not fulfil its responsibilities, as we have tried to fulfil ours.

Mr. Boyd-Carpenter

I think that the hon. Gentleman has missed the point; at least, the point that I tried to make. I questioned why he assumed that a future generation will be prepared to give priority in its expenditure to pension provisions in which the biggest subsidy from public funds goes to the better-off. Is that so manifestly right that one can assume that another generation will act on it?

Mr. Ennals

It is not just public funds. It is individual funds. People will be earning those pensions for themselves. That is what entitlement is about.

We cannot get our pension provision right by not planning ahead, by staggering from two-year period to two-year period with the sort of botched-up job that the right hon. Gentleman produced. We have learned that half-measures are not the answer to the problems we face, and that it is necessary to have the sort of fundamental change which the Bill envisages. When I heard the noble Lord proposing what sounded like another sort of hybrid built on to an existing scheme, I thought that he had simply not done his homework.

Several right hon. and hon. Members have referred to public service pensions, and I want to say a few words on this subject. We have never tried to disguise the fact that our new scheme will mean changes in occupational arrangements. Some people have chosen to take that as meaning that public service schemes would be wound up, or that they would lose their lump sums, or that no one would be able to retire on pension before the State pension age. How these rumours got about, I do not know, but they did and therefore we had to give the sort of assurances that have been criticised.

I want to deal with the assertion that by "adjustments" or "modifications" we necessarily mean a cut-back. This in crude terms is what the Opposition Amendment says. Our aim is to ensure that members of public service pension schemes get the best possible value for money. That is in everyone's interest. It means constructing new arrangements taking account of the new State scheme and without avoidable gaps or duplications.

Anyone would think, hearing hon. Members opposite, that public servants thought the existing schemes were perfect. This is not so. There are many ways in which we and they want to see improvements. Working together with the representatives of the public servants in negotiation, we shall be able to bring about schemes that will be more satisfactory and will meet their needs.

Some concern has been expressed about the effect of the new scheme on savings. My right hon. Friend dealt with the point. He said that, in the short term, the surplus in the State scheme would more than offset the temporary cut-back in new savings through occupational schemes and that, in the longer term, there was every reason to expect the growth of savings through occupational schemes to be resumed.

In view of some remarks in the debate, I should make one or two points about why we feel, with a substantial measure of confidence, that there will be a steady, continuing growth, after perhaps a plateau of the first two or three years, in occupational pension schemes. Not only do we expect this, but we want it to happen.

First, the orderly development in State pension provisions which the new scheme ensures will remove the atmosphere of uncertainty which has existed for a number of years. Secondly, we can recognise the fact that lower-paid workers are not now especially interested in occupational schemes because they know they will have supplementary benefits to turn to and that they would have a pension which might not take them above the supplementary benefit level. We are, in the new scheme, introducing for lower-paid workers pensions which will not only take them above the level of supplementary benefit but be on a contribution level which will be less than they are paying at present. I believe that this will mean that a wider section of the population will want to make some provision for occupational pensions.

One of the criticisms of the new scheme is that we cannot tell a man in money terms what pension he could expect to receive in retirement. Several hon. Members opposite have said, "Tell us exactly what we will get in ten or 15 or 20 years from now." It would be a poor scheme if we could do that. One of the grave weaknesses of the scheme of the right hon. Member for Kingston-upon-Thames was that not only did those who were contributing know that they were going to get a very modest entitlement, but they knew precisely what they were going to get and that it would not take into consideration changes in earnings levels or great changes in prices after the pension had been awarded. If we were ourselves to introduce a scheme which told a man what his pension would be, it would mean that we were not coming to terms with the need for a scheme related to higher earnings levels as well as being protected against higher prices after the award had been made.

I am not sure that we ourselves have been clear enough in our explanations to the new scheme contributors of what the true value of the pension will be. In saying that an average earner will get a pension of about 43 per cent. of his life's average earnings, we have been referring to the single man. Most pensioners are married, however, and will therefore get more. We have ignored taxation considerations. A much clearer way of explanation would be if we were to relate a man's pension to take-home pay. For instance, at the 1968–69 tax levels, a married man earning £1,000 a year would retire with a pension of 80 per cent. of his average take-home pay during his working life, while a married man earning £1,250—the average earnings at present—would retire with a pension of 72 per cent. For a man earning £1,900—one and a half times the average earnings—the figure would be 57 per cent. This, I remind the House, is for a man without an occupational pension at all and shows that he will get a very good deal under the new scheme.

I want to say something in relation to the Government Actuary. My right hon. Friend the Member for Sowerby (Mr. Houghton) referred to him and in a recent statement in the House by the hon. Member for Kensington, South (Sir B. Rhys Williams) there were some derogatory references to him. It is absolutely important that the House should fully understand that the Government Actuary is acting in an independent professional capacity. He does not accept instructions from the Government. He does what his judgment tells him to do. He is highly qualified and experienced. It would be quite wrong, particularly for hon. Members opposite who have been in Government, to make any suggestion that the Government Actuary is not a completely independent figure from whom we can take advice.

Mr. A. P. Costain (Folkestone and Hythe)

Will the hon. Gentleman make clear that when he talks about "take-home pay" he means free of tax?

Mr. Ennals

This is net. In each case I have taken into consideration the tax effect on the pension as well as on earnings. Both figures were net.

I move to the argument of the hon. Member for Cornwall, North (Mr. Pardoe). Whatever one may say, the Liberal Party has at least proposed an alternative to the Government scheme. The party should be given credit for that even though I shall seek to be very critical of it. It proposes an earnings-related social security tax financing a universal flat-rate benefit. Hon. Members of the Liberal Party want to raise the flat-rate pension over a seven-year period to a level which would provide a married couple with half national average earnings. Two-thirds of the cost would be paid by employers and one-third by employees. If this were to be carried out—I understand that the hon. Member may be prepared to have a more modest scheme—the scheme as proposed would cost over £1,000 million a year more than the Government proposals by the end of the seven-year build-up period.

In addition, the heavy burden which would fall on employers would produce a sharp rise in prices which I think would have a very unfortunate effect in this country. If the Liberal Party's proposals were to be put forward they would have a very serious effect indeed on occupational pensions. When hon. Members reflect on it I think they may see this themselves. This idea of moving to an earnings-related contribution with a flat-rate pension is one which now seems to have found a new convert in the noble Lord speaking on behalf of the Conservative Party. He shed a brief shaft of light on his new proposals and this, I understand, is what he was suggesting. If he is to increase the flat-rate pension substantially for all, in my calculation the contribution under his proposal would hardly differ from that proposed in the Government Measure.

I do not know whether the noble Lord will tell us—I expect he will at some stage—what sort of level of contribution he is thinking of. I do not know what sort of level of flat-rate benefit he has in mind. I do not know what his view is, but the effect of his scheme by providing an earnings-related contribution for a flat-rate pension would be quite the most redistributive of any system we could find. What sort of reaction does he expect to get from organisations such as N.A.L.G.O. and others which represent those with middle and higher earnings when they hear that however much they contribute to his scheme it will not affect the level of their pension? We have had some criticism from those organisations but I can promise the noble Lord that if anyone took his proposals seriously he would get a very much sharper reaction. Most people are in favour of earnings-related contributions for earnings-related benefits.

The noble Lord outlined his proposal for only about half a minute. I do not know whether this scheme would have a rapid maturity, as our scheme will have. I do not know whether there would be the element of subsidy which was contained in the scheme which the right hon. Member for Kingston-upon-Thames introduced in 1959. I do not know whether this new pension scheme which has suddenly been dreamed up would take the place of the scheme which the right hon. Gentleman introduced 10 years ago. I do not know, the House does not know, and I do not know whether the noble Lord himself knows.

What is the Opposition's case against the carefully worked out proposals of the Government? Are they saying that we are offering too generous a deal for those who retire under the new scheme? It they are saying that we are providing too generous pensions—and the argument partly has been about promissory notes—they should tell the country that our proposals are too generous for the pensioners. Or are they opposed to the redistributive point that the lower paid will have a proportionately higher pension for their contributions? If so, let them tell the country that they think that we are being too generous to low wage earners who, on the whole, do not have access to occupational pension schemes.

The Opposition have been making great play of what they call the vast increase in the burden of taxation and contributions. This is just sheer misrepresentation. Between April, 1955, and October, 1964, slightly less than 10 years, employees' contributions—[Interruption.]—I should be grateful if the noble Lord would pay attention because I am referring to a period when his party was in office—increased by 2.7 per cent. of average earnings, and employers' contributions by 2.5 per cent. of average earnings. From 1964 to 1969, employees' contributions increased by 0.9 per cent. of earnings and employers' contributions by 1.5 per cent. of earnings. By April, 1972, it will have gone up by another 0.55 per cent. for the employee. But the Government Actuary estimates that between 1972 and the turn of the century the percentage increase will have been 1.5 per side. Therefore, this increase in the demands made on employees and employers is not such a heavy proportionate increase as there has been in the past.

As for taxation—

Mr. Dean rose—

Mr. Ennals

The time is short and I want to bring my argument to a close.

As for taxation, the Exchequer's share will remain unchanged. The hon. Member for Cornwall, North has been asking why it should be 18 per cent. It is difficult to produce a rational explanation for this figure as opposed to 15, 20 or 25 per cent. It seemed to the previous Government and ourselves that this was about the right Exchequer contribution, and therefore it will continue.

Mr. Dean

Would the hon. Gentleman complete this interesting argument by saying what happened to tax rates during the periods he has quoted?

Mr. Ennals

That will be an interesting subject for another debate, but not tonight five minutes before I conclude my speech.

The other major case of the Opposition against our proposal is that it does not do enough for existing pensioners. When we raised the level of benefits last November, there was no suggestion by the Opposition that the increase should have been greater. They have welcomed the biennial increases by which pensioners in future will know for certain that they will be due to get an increase which will at least cover rises in the cost of living. I say "at least" because the noble Lord the Member for Hertford seems to assume that what we have written in the Bill establishes that it will simply cover price rises. This is the statutory minimum. The expectation and hope is that Governments will do much more than that. In fact, the scheme has been costed on the assumption that they will do very much more than that.

I want to ask the Opposition, because they have not made their position clear, if they say that we are not doing enough for existing pensioners, would they put into the Bill a commitment every two years to raise the level of pensions in line, not with prices, but with earnings? We will look forward to their Amendment in Committee if that is what they want to do. The old people would not react very favourably to criticism from the other side that in the plans that we are putting forward the Government are not making proper provision for people in their old age.

The Government's proposals, which will be approved tonight, are a charter for the under-privileged. They will help to meet the needs of most of those in distress in our society. Let us look at some of the principal provisions—[Interruption.]

Mr. Speaker

Order. Mr. Ennals.

Mr. Ennals

Thank you, Mr. Speaker. Perhaps the party opposite are not inter- ested in the principal provisions of the Bill. If they say that they do not understand it, perhaps if they give us four minutes of silence they will understand a little more.

First, the Bill will give a fair deal for existing pensioners with a firm guarantee of pension increases and protection against inflation. Secondly, there will be steadily expanding pensions for the future which will greatly reduce the number of people who will be dependent upon supplementary benefits. Thirdly, there will be a fairer system of contributions. Hon. Members opposite talk about the increased cost of the scheme. Let them not forget that 8 million workers will pay less in weekly contributions under the new scheme than under the existing scheme.

Fourthly, there will be greatly improved provision for older widows in our society who will inherit the whole of the earnings-related pension of their husbands. This is an enormous stride forward. If the Bill did nothing more than improve the provision for widowhood we would be proud of it. Also, however, it introduces a widow's pension for all women who may unfortunately lose their husbands after they have passed their fortieth birthday. This will remove a serious omission in our present widowhood provisions.

Sixthly, there will be three major advances—[Interruption.] It is remarkable that an Opposition Front Bench who claim not to understand the scheme should be talking, chattering and laughing while it is being explained to them. One of the major provisions, as my hon. Friend the Member for Stoke-on-Trent, South said, is the improvements in provisions for the sick and disabled. The new invalidity pension recognises that we have in our society an increasing number of elderly people who are sick enough that they will not return to work. We have, secondly, the more generous earnings rule for the wife of an invalid or a man who is disabled, and, thirdly, the introduction of the new attendance allowance for the very severely disabled.

I believe that the Bill, when it becomes law, will be seen as a giant achievement in the struggle to improve the lot of the under-privileged in our society.

Question put, That the Amendment be made:—

The House divided: Ayes 236, Noes 307.

Division No. 42.]	AYES	[10.0 p.m.
Alison, Michael (Barkston Ash)	Gilmour, Ian (Norfolk, C.)	More, Jasper
Allason, James (Hemel Hempstead)	Glover, Sir Douglas	Morgan, Geraint (Denbigh)
Amery, Rt. Hn. Julian	Glyn, Sir Richard	Morgan-Giles, Rear-Adm.
Archer, Jeffrey (Louth)	Godber, Rt. Hn. J. B.	Morrison, Charles (Devizes)
Astor, John	Goodhart, Philip	Mott-Radclyffe, Sir Charles
Atkins, Humphrey (M't'n & M'd'n)	Goodhew, Victor	Munro-Lucas-Tooth, Sir Hugh
Awdrey, Daniel	Gower, Raymond	Nabarro, Sir Gerald
Baker, Kenneth (Acton)	Grant, Anthony	Neave, Airey
Baker, W. H. K. (Banff)	Grant-Ferris, Sir Robert	Nicholls, Sir Harmar
Balniel, Lord	Gresham Cooke, R.	Noble, Rt. Hn. Michael
Barber, Rt. Hn. Anthony	Griffiths, Eldon (Bury St. Edmunds)	Nott, John
Batsford, Brian	Gurden, Harold	Onslow, Cranley
Beamish, Col. Sir Tufton	Hall, John (Wycombe)	Orr, Capt. L. P. S.
Bell, Ronald	Hamilton, Michael (Salisbury)	Orr-Ewing, Sir Ian
Bennett, Dr. Reginald (Gos. & Fhm)	Harris, Reader (Heston)	Osborn, John (Hallam)
Berry, Hn. Anthony	Harrison, Brian (Maldon)	Page, Graham (Crosby)
Biffen, John	Harvey, Sir Arthur Vere	Page, John (Harrow, W.)
Biggs-Davison, John	Harvie Anderson, Miss	Pearson, Sir Frank (Clitheroe)
Birch, Rt. Hn. Nigel	Hastings, Stephen	Peel, John
Black, Sir Cyril	Hawkins, Paul	Percival, Ian
Blaker, Peter	Hay, John	Peyton, John
Boardman, Tom (Leicester, S.W.)	Heald, Rt. Hn. Sir Lionel	Pike, Miss Mervyn
Bossom, Sir Clive	Heath, Rt. Hn. Edward	Pink, R. Bonner
Boyd-Carpenter, Rt. Hn. John	Heseltine, Michael	Pounder, Rafton
Boyle, Rt. Hn. Sir Edward	Higgins, Terence L.	Powell, Rt. Hn. J. Enoch
Brewis, John	Hiley, Joseph	Price, David (Eastleigh)
Brinton, Sir Tatton	Hill, J. E. B.	Prior, J. M. L.
Bromley-Davenport, Lt.-Col. Sir Walter	Hogg, Rt. Hn. Quintin	Pym, Francis
Brown, Sir Edward (Bath)	Holland, Philip	Quennell, Miss J. M.
Bruce-Gardyne, J.	Hordern, Peter	Rawlinson, Rt. Hn. Sir Peter
Bryan, Paul	Hornby, Richard	Rees-Davies, W. R.
Buchanan-Smith, Alick(Angus, N & M)	Howell, David (Guildford)	Renton, Rt. Hn. Sir David
Buck, Antony (Colchester)		Rhys Williams, Sir Brandon
Bullus, Sir Eric	Hutchison, Michael Clark	Ridley, Hn. Nicholas
Burden, F. A.	Iremonger, T. L.	Ridsdale, Julian
Campbell, B. (Oldham, W.)	Irvine, Bryant Godman (Rye)	Rippon, Rt. Hn. Geoffrey
Campbell, Gordon (Moray & Nairn)	Jenkin, Patrick (Woodford)	Robson Brown, Sir William
Carlisle, Mark	Jennings, J. C. (Burton)	Rodgers, Sir John (Sevenoaks)
Carr, Rt. Hn. Robert	Johnson Smith, G. (E. Grinstead)	Rossi, Hugh (Hornsey)
Cary, Sir Robert	Jopling, Michael
Channon, H. P. G.	Joseph, Rt. Hn. Sir Keith	Royle, Anthony
Chataway, Christopher	Kaberry, Sir Donald	Russell, Sir Ronald
Chichester-Clark, R.	Kerby, Capt. Henry	Scott-Hopkins, James
Clark, Henry	Kershaw, Anthony	Sharples, Richard
Clegg, Walter	Kimball, Marcus	Shaw, Michael (Sc'b'gh & Whitby)
Cooke, Robert	Kirk, Peter	Silvester, Frederick
Cooper-Key, Sir Neill	Kitson, Timothy	Smith, Dudley(W'wick & L'mington)
Cordle, John	Knight, Mrs. Jill	Smith, John (London & W'minster)
Corfield, F. V.	Lambton, Viscount	Speed, Keith
Costain, A. P.	Lancaster, Col. C. C.	Stainton, Keith
	Lane, David	Stodart, Anthony
Craddock, Sir Beresford (Spelthorne)	Langford-Holt, Sir John	Stoddart-Scott, Col. Sir M.
Crouch, David	Legge-Bourke, Sir Harry	Summers, Sir Spencer
Crowder, F. P.	Lewis, Kenneth (Rutland)	Tapsell, Peter
Cunningham, Sir Knox	Lloyd, Rt. Hn. Selwyn (Wirral)	Taylor, Sir Charles (Eastbourne)
Currie, G. B. H.	Longden, Gilbert	Taylor, Edward M. (G'gow, Cathcart)
Dalkeith, Earl of	McAdden, Sir Stephen	Taylor, Frank (Moss Side)
Dance, James	MacArthur, Ian	Temple, John M.
d'Avigdor-Goldsmid, Sir Henry	Maclean, Sir Fitzroy	Thatcher, Mrs. Margaret
Dean, Paul	Macleod, Rt. Hn. Iain	Tilney, John
Digby, Simon Wingfield	McMastsr, Stanley	Turton, Rt. Hn. R. H.
Dodds-Parker, Douglas	Macmillan, Maurice (Farnham)	van Straubenzee, W. R.
Doughty, Charles	McNair-Wilson, Michael	Vickers, Dame Joan
Douglas-Home, Rt. Hn. Sir Alec	McNair-Wilson, Patrick (NewForest)	Waddington, David
Drayson, G. B.	Maddan, Martin	Walker, Peter (Worcester)
du Cann, Rt. Hn. Edward	Maginnis, John E.	Walker-Smith, Rt. Hn. Sir Derek
Eden, Sir John	Marples, Rt. Hn. Ernest	Wall, Patrick
Elliot, Capt. Walter (Carshalton)	Marten, Neil	Walters, Dennis
Emery, Peter	Maude, Angus	Ward, Christopher (Swindon)
Errington, Sir Eric	Maudling, Rt. Hn. Reginald	Ward, Dame Irene
Farr, John	Mawby, Ray	Weatherill, Bernard
Fisher, Nigel	Maxwell-Hyslop, R. J.	Wells, John (Maidstone)
Fortescue, Tim	Mills, Peter (Torrington)	Whitelaw, Rt. Hn. William
Foster, Sir John	Mills, Stratton (Belfast, N.)	Wiggin, A. W.
Fraser, Rt. Hn. Hugh (St'f7ord & Stone)	Miscampbell, Norman	Williams, Donald (Dudley)
Fry, Peter	Mitchell, David (Basingstoke)	Wilson, Geoffrey (Truro)
Galbraith, Hn. T. G.	Monro, Hector	Wolrige-Gordon, Patrick
Gibson-Watt, David	Montgomery, Fergus	Wood, Rt. Hn. Richard
Woodnutt, Mark	Wylie, N. R.	TELLERS FOR THE AYES:
Worsley, Marcus	Younger, Hn. George	Mr. R. W. Elliott and
Wright, Esmond		Mr. Reginald Eyre.
NOES
Abse, Leo	Evans, Fred (Caerphilly)	Lee, Rt. Hn. Frederick (Newton)
Albu, Austen	Evans, Ioan L. (Birm'h'm, Yardley)	Lee, Rt. Hn. Jennie (Cannock)
Allaun, Frank (Salford, E.)	Faulds, Andrew	Lee, John (Reading)
Alldritt, Walter	Fernyhough, E.	Lestor, Miss Joan
Allen, Scholefield	Finch, Harold	Lever, Rt. Hn. Harold (Cheetham)
Anderson, Donald	Fitch, Alan (Wigan)	Lewis, Arthur (W. Ham, N.)
Archer, Peter (R'wley Regis & Tipt'n)	Fletcher, Rt. Hn. Sir Eric (Islington, E.)	Lewis, Ron (Carlisle)
Armstrong, Ernest	Fletcher, Raymond (Ilkeston)	Lipton, Marcus
Ashley, Jack	Fletcher, Ted (Darlington)	Lomas, Kenneth
Ashton, Joe (Bassetlaw)	Foley, Maurice	Loughlin, Charles
Atkins, Ronald (Preston, N.)	Foot, Michael (Ebbw Vale)	Luard, Evan
Atkinson, Norman (Tottenham)	Forrester, John	Lyon, Alexander W. (York)
Bacon, Rt. Hn. Alice	Fowler, Gerry	McBride, Neil
Bagier, Gordon A. T.	Fraser, John (Norwood)	McCann, John
Barnes, Michael	Freeson, Reginald	MacColl, James
Barnett, Joel	Galpern, Sir Myer	MacDermot, Niall
Benn, Rt. Hn. Anthony Wedgwood	Gardner, Tony	Macdonald, A. H.
Bennett, James (G'gow, Bridgeton)	Garrett, W. E.	McElhone, Frank
Binns, John	Ginsburg, David	McGuire, Michael
Bishop, E. S.	Golding, John	McKay, Mrs. Margaret
Blackburn, F.	Gordon Walker, Rt. Hn. P. C.	Mackenzie, Gregor (Rutherglen)
Blenkinsop, Arthur	Gray, Dr. Hugh (Yarmouth)	Mackie, John
Booth, Albert	Greenwood, Rt. Hn. Anthony	Mackintosh, John P.
Boston, Terence	Gregory, Arnold	Maclennan, Robert
Boyden, James	Grey, Charles (Durham)	MacMillan, Malcolm (Western Isles)
Bradley, Tom	Griffiths, Eddie (Brightside)	McMillan, Tom (Glasgow, C.)
Bray, Dr. Jeremy	Griffiths, Will (Exchange)	McNamara, J. Kevin
Brooks, Edwin	Gunter, Rt. Hn. R. J.	MacPherson, Malcolm
Broughton, Sir Alfred	Hamilton, James (Bothwell)	Mahon, Peter (Preston, S.)
Brown, Hugh D. (G'gow, Provan)	Hamilton, William (Fife, W.)	Mallalieu, E. L. (Brigg)
Buchan, Norman	Hamling, William	Mallalieu, J.P.W. (Huddersfield, E.)
Buchanan, Richard (G'gow, Sp'burn)	Hannan, William	Manuel, Archie
Butler, Herbert (Hackney, C.)	Harrison, Walter (Wakefield)	Mapp, Charles
Butler, Mrs. Joyce (Wood Green)	Hart, Rt. Hn. Judith	Marks, Kenneth
Callaghan, Rt. Hn. James	Haseldine, Norman	Marquand, David
Cant, R. B.	Hattersley, Roy	Marsh, Rt. Hn. Richard
Carmichael, Neil	Hazell, Bert	Mason, Rt. Hn. Roy
Castle, Rt. Hn. Barbara	Healey, Rt. Hn. Denis	Maxwell, Robert
Chapman, Donald	Heffer, Eric S.	Mayhew, Christopher
Coe, Denis	Henig, Stanley	Mellish, Rt. Hn. Robert
Coleman, Donald	Herbison, Rt. Hn. Margaret	Mendelson, John
Concannon, J. D.	Hilton, W. S.	Mikardo, Ian
Conlan, Bernard	Hobden, Dennis	Millan, Bruce
Corbet, Mrs. Freda	Hooley, Frank	Miller, Dr. M. S.
Craddock, George (Bradford, S.)	Houghton, Rt. Hn. Douglas	Milne, Edward (Blyth)
Crawshaw, Richard	Howarth, Robert (Bolton, E.)	Mitchell, R. C. (S'th'pton, Test)
Cronin, John	Howie, W.	Molloy, William
Crosland, Rt. Hn. Anthony	Hoy, Rt. Hn. James	Morgan, Elystan (Cardiganshire)
Crossman, Rt. Hn. Richard	Huckfield, Leslie	Morris, Alfred (Wythenshawe)
Dalyell, Tam	Hughes, Rt. Hn. Cledwyn (Anglesey)	Morris, Charles R. (Openshaw)
Darling, Rt. Hn. George	Hughes, Hector (Aberdeen, N.)	Morris, John (Aberavon)
Davidson, Arthur (Accrington)	Hughes, Roy (Newport)	Moyle, Roland
Davies, E. Hudson (Conway)	Hunter, Adam	Mulley, Rt. Hn. Frederick
Davies, G. Elfed (Rhondda, E.)	Hynd, John	Murray, Albert
Davies, Dr. Ernest (Stretford)		Neal, Harold
Davies, Rt. Hn. Harold (Leek)	Irvine, Rt. Hn. Sir Arthur	Newens, Stan
Davies, Ifor (Gower)	Jackson, Peter M. (High Peak)	Oakes, Gordon
Davies, S. O. (Merthyr)	Janner, Sir Barnett	Ogden, Eric
de Freitas, Rt. Hn. Sir Geoffrey	Jay, Rt. Hn. Douglas	O'Halloran, Michael
Delargy, H. J.	Jeger, George (Goole)	O'Malley, Brian
Dell, Rt. Hn. Edmund	Jeger, Mrs. Lena (H'b'n & St.P'cras, S.)	Oram, Albert E.
Dempsey, James	Jenkins, Hugh (Putney)	Orme, Stanley
Dewar, Donald	Jenkins, Rt. Hn. Roy (Stechford)	Oswald, Thomas
Diamond, Rt. Hn. John	Johnson, Carol (Lewisham, S.)	Owen, Dr. David (Plymouth, S'tn)
Dickens, James	Johnson, James (K'ston-on-Hull, W.)	Padley, Walter
Doig, Peter	Jones, Dan (Burnley)	Paget, R. T.
Driberg, Tom	Jones, Rt. Hn. Sir Elwyn (W.Ham, S.)	Palmer, Arthur
Dunn, James A.	Jones, J. Idwal (Wrexham)	Pannell, Rt. Hn. Charles
Dunwoody, Mrs. Gwyneth (Exeter)	Jones, T. Alec (Rhondda, West)	Park, Trevor
Dunwoody, Dr. John (F'th & C'b'e)	Judd, Frank	Parker, John (Dagenham)
Eadie, Alex	Kelley, Richard	Parkyn, Brian (Bedford)
Edelman, Maurice	Kenyon, Clifford	Pavitt, Laurence
Edwards, Robert (Bilston)	Kerr, Mrs. Anne (R'ter & Chatham)	Pearson, Arthur (Pontypridd)
Edwards, William (Merioneth)	Kerr, Russell (Feltham)	Peart, Rt. Hn. Fred
Ellis, John	Latham, Arthur	Pentland, Norman
English, Michael	Lawson, George	Perry, Ernest G. (Battersea, S.)
Ennals, David	Leadbitter, Ted	Perry, George H. (Nottingham, S.)
Evans, Albert (Islington, S.W.)	Ledger, Ron	Prentice, Rt. Hn. Reg

Price, Christopher (Perry Barr)	Short, Mrs. Renée (W'hampton, N.E.)	Wallace, George
Price, Thomas (Westhoughton)	Silkin, Rt. Hn. John (Deptford)	Watkins, David (Consett)
price, William (Rugby)	Silverman, Julius	Watkins, Tudor (Brecon & Radnor)
Probert, Arthur	Skeffington, Arthur	Weitzman, David
Randall, Harry	Slater, Joseph	Wellbeloved, James
Rankin, John	Small, William	Wells, William (Walsall, N.)
Rees, Merlyn	Snow, Julian	Whitaker, Ben
Rhodes, Geoffrey	Spriggs, Leslie	White, Mrs. Eirene
Richard, Ivor	Stewart, Rt. Hn. Michael	Whitlock, William
Roberts, Albert (Normanton)	Stonehouse, Rt. Hn. John	Wilkins, W. A.
Roberts, Rt. Hn. Goronwy	Strauss, Rt. Hn. G. R.	Willey, Rt. Hn. Frederick
Roberts, Gwilym (Bedfordshire, S.)	Summerskill, Hn. Dr. Shirley	Williams, Alan (Swansea, W.)
Robertson, John (Paisley)	Swain, Thomas	Williams, Alan Lee (Hornchurch)
Robinson, Rt. Hn. Kenneth (St.P'c'as)	Symonds, J. B.	Williams, Clifford (Abertillery)
Rodgers, William (Stockton)	Taverne, Dick	Willis, Rt. Hn. George
Roebuck, Roy	Thomas, Rt. Hn. George	Wilson, Rt. Hn. Harold (Huyton)
Rogers, George (Kensington, N.)	Thomson, Rt. Hn. George	Wilson, William (Coventry, S.)
Rose, Paul	Thornton, Ernest	Winnick, David
Ross, Rt. Hn. William	Tinn, James	Woodburn, Rt. Hn. A.
Rowlands, E.	Tomney, Frank	Woof, Robert
Ryan, John	Tuck, Raephael	Wyatt, Woodrow
Shaw, Arnold (Ilford, S.)	Urwin, T. W.
Sheldon, Robert	Varley, Eric G.	TELLERS FOR THE NOES:
Shinwell, Rt. Hn. E.	Wainwright, Edwin (Dearne Valley)	Mr. Joseph Harper and
Shore, Rt. Hn. Peter (Stepney)	Walden, Brian (All Saints)	Mr. R. F. H. Dobson.
Short, Rt. Hn. Edward (N'c'tle-u-Tyne)	Walker, Harold (Doncaster)

Main Question put forthwith pursuant to Standing Order No. 39 (Amendment on Second or Third reading):—

The House divided: Ayes 304, Noes 244.

Division No. 43.]	AYES	[10.13 p.m.
Abse, Leo	Crossman, Rt. Hn. Richard	Golding, John
Albu, Austen	Dalyell, Tam	Gordon Walker, Rt. Hn. P. C.
Allaun, Frank (Salford, E.)	Darling, Rt. Hn. George	Gray, Dr. Hugh (Yarmouth)
Alldritt, Walter	Davidson, Arthur (Accrington)	Greenwood, Rt. Hn. Anthony
Allen, Scholefield	Davies, E. Hudson (Conway)	Gregory, Arnold
Anderson, Donald	Davies, G. Elfed (Rhondda, E.)	Grey, Charles (Durham)
Archer, Peter (R'wley Regis & Tipt'n)	Davies, Dr. Ernest (Stretford)	Griffiths, Eddie (Brightside)
Armstrong, Ernest	Davies, Rt. Hn. Harold (Leek)	Griffiths, Will (Exchange)
Ashley, Jack	Davies, Ifor (Gower)	Gunter, Rt. Hn. R. J.
Ashton, Joe (Bassetlaw)	Davies, S. O. (Merthyr)	Hamilton, James (Bothwell)
Atkins, Ronald (Preston, N.)	de Freitas, Rt. Hn. Sir Geoffrey	Hamilton, William (Fife, W.)
Atkinson, Norman (Tottenham)	Delargy, H. J.	Hamling, William
Bacon, Rt. Hn. Alice	Dell, Rt. Hn. Edmund	Hannan, William
Bagier, Gordon A. T.	Dempsey, James	Harrison, Walter (Wakefield)
Barnes, Michael	Dewar, Donald	Hart, Rt. Hn. Judith
Barnett, Joel	Diamond, Rt. Hn. John	Haseldine, Norman
Benn, Rt. Hn. Anthony Wedgwood	Dickens, James	Hattersley, Roy
	Doig, Peter	Hazell, Bert
Bennett, James (G'gow, Bridgeton)	Driberg, Tom	Healey, Rt. Hn. Denis
Binns, John	Dunn, James A.	Heffer, Eric S.
Bishop, E. S.	Dunwoody, Mrs. Gwyneth (Exeter)	Henig, Stanley
Blackburn, F.	Dunwoody, Dr. John (F'th & C'b'e)	Herbison, Rt. Hn. Margaret
Blenkinsop, Arthur	Eadie, Alex	Hilton, W. S.
Booth, Albert	Edelman, Maurice	Hobden, Dennis
Boston, Terence	Edwards, Robert (Bilston)	Hooley, Frank
Boyden, James	Edwards, William (Merioneth)	Houghton, Rt. Hn. Douglas
Bradley, Tom	Ellis, John	Howarth, Robert (Bolton, E.)
Braine, Bernard	English, Michael	Howie, W.
Brooks, Edwin	Ennals, David	Hoy, Rt. Hn. James
Broughton, Sir Alfred	Evans, Albert (Islington, S.W.)	Huckfield, Leslie
Brown, Hugh D. (G'gow, Provan)	Evans, Fred (Caerphilly)	Hughes, Rt. Hn. Cledwyn (Anglesey)
Buchan, Norman	Evans, Ioan L. (Birm'h'm, Yardley)	Hughes, Hector (Aberdeen, N.)
Buchanan, Richard (G'gow, Sp'burn)	Faulds, Andrew	Hughes, Roy (Newport)
Butler, Herbert (Hackney, C.)	Fernyhough, E.	Hunter, Adam
Butler, Mrs. Joyce (Wood Green)	Finch, Harold	Hynd, John
Callaghan, Rt. Hn. James	Fitch, Alan (Wigan)	Irvine, Rt. Hn. Sir Arthur
Cant, R. B.	Fletcher, Rt. Hn. Sir Eric (Islington, E.)	Jackson, Peter M. (High Peak)
Carmichael, Neil	Fletcher, Raymond (Ilkeston)	Janner, Sir Barnett
Castle, Rt. Hn. Barbara	Fletcher, Ted (Darlington)	Jay, Rt. Hn. Douglas
Chapman, Donald	Foley, Maurice	Jeger, George (Goole)
Coe, Denis	Foot, Michael (Ebbw Vale)	Jeger, Mrs. Lena (H'b'n & St.P'cras, S.)
Coleman, Donald	Forrester, John	Jenkins, Hugh (Putney)
Concannon, J. D.	Fowler, Gerry	Jenkins, Rt. Hn. Roy (Stechford)
Conlan, Bernard	Fraser, John (Norwood)	Johnson, Carol (Lewisham, S.)
Corbet, Mrs. Freda	Freeson, Reginald	Johnson, James (K'ston-on-Hull, W.)
Craddock, George (Bradford, S.)	Galpern, Sir Myer	Jones, Dan (Burnley)
Crawshaw, Richard	Gardner, Tony	Jones, Rt. Hn. Sir Elwyn (W.Ham, S.)
Cronin, John	Garrett, W. E.	Jones, J, Idwal (Wrexham)
Crosland, Rt. Hn. Anthony	Ginsburg, David	Jones, T. Alec (Rhondda, West)
Judd, Frank	Molloy, William	Sheldon, Robert
Kelley, Richard	Morgan, Elystan (Cardiganshire)	Shore, Rt. Hn. Peter (Stepney)
Kenyon, Clifford	Morris, Alfred (Wythenshawe)	Short, Rt. Hn. Edward (N'c'tte-u-Tyne)
Kerr, Mrs. Anne (R'ter & Chatham)	Morris, Charles R. (Openshaw)	Short, Mrs. Renée (W'hampton, N.E.)
Kerr, Russell (Feltham)	Morris, John (Aberavon)	Silkin, Rt. Hn. John (Deptford)
Latham, Arthur	Moyle, Roland	Silverman, Julius
Lawson, George	Mulley, Rt. Hn. Frederick	Skeffington, Arthur
Leadbitter, Ted	Murray, Albert	Slater, Joseph
Ledger, Ron	Neal, Harold	Snow, Julian
Lee, Rt. Hn. Frederick (Newton)	Newens, Stan	Spriggs, Leslie
Lee, Rt. Hn. Jennie (Cannock)	Oakes, Gordon	Stewart, Rt. Hn. Michael
Lee, John (Reading)	Ogden, Eric	Stonehouse, Rt. Hn. John
Lestor, Miss Joan	O'Halloran, Michael	Strauss, Rt. Hn. G. R.
Lever, Rt. Hn. Harold (Cheetham)	O'Malley, Brian	Summerskill, Hn. Dr. Shirley
Lewis, Arthur (W. Ham, N.)	Oram, Albert E.	Swain, Thomas
Lewis, Ron (Carlisle)	Orme, Stanley	Symonds, J. B.
Lipton, Marcus	Oswald, Thomas	Taverns, Dick
Lomas, Kenneth	Owen, Dr. David (Plymouth, S'tn)	Thomas, Rt. Hn. George
Loughlin, Charles	Padley, Walter	Thomson, Rt. Hn. George
Luard, Evan	Paget, R. T.	Thornton, Ernest
Lyon, Alexander W. (York)	Palmer, Arthur	Tinn, James
McBride, Neil	Pannell, Rt. Hn. Charles	Tomney, Frank
McCann, John	Park, Trevor	Tuck, Raphael
MacColl, James	Parker, John (Dagenham)	Urwin, T. W.
MacDermot, Niall	Parkyn, Brian (Bedford)	Varley, Eric G.
Macdonald, A. H.	Pavitt, Laurence	Wainwright, Edwin (Dearne Valley)
McGuire, Michael	Pearson, Arthur (Pontypridd)	Walden, Brian (All Saints)
McKay, Mrs. Margaret	Peart, Rt. Hn. Fred	Walker, Harold (Doncaster)
Mackenzie, Gregor (Rutherglen)	Pentland, Norman	Wallace, George
Mackie, John	Perry, Ernest G. (Battersea, S.)	Watkins, David (Consett)
Mackintosh, John P.	Perry, George H. (Nottingham, S.)	Watkins, Tudor (Brecon & Radnor)
Maclennan, Robert	Prentice, Rt. Hn. Reg	Weitzman, David
MacMillan, Malcolm (Western Isles)	Price, Christopher (Perry Barr)	Wellbeloved, James
McMillan, Tom (Glasgow, C.)	Price, Thomas (Westhoughton)	Wells, William (Walsall, N.)
McNamara, J. Kevin	Price, William (Rugby)	Whitaker, Ben
MacPherson, Malcolm	Probert, Arthur	White, Mrs. Eirene
Mahon, Peter (Preston, S.)	Randall, Harry	Whitlock, William
Mallalieu, E. L. (Brigg)	Rankin, John	Wilkins, W. A.
Mallalieu, J.P.W. (Huddersfiefd, E.)	Rees, Merlyn	Willey, Rt. Hn. Frederick
Manuel, Archie	Rhodes, Geoffrey	Williams, Alan (Swansea, W.)
Mapp, Charles	Richard, Ivor	Williams, Alan Lee (Hornchurch)
Marks, Kenneth	Roberts, Albert (Normanton)	Williams, Clifford (Abertillery)
Marquand, David	Roberts, Rt. Hn. Goronwy	Williams, Mrs. Shirley (Hitchin)
Marsh, Rt. Hn. Richard	Roberts, Gwilym (Bedfordshire, S.)	Willis, Rt. Hn. George
Mason, Rt. Hn. Roy	Robertson, John (Paisley)	Wilson, Rt. Hn. Harold (Huyton)
Maxwell, Robert	Robinson, Rt. Hn. Kenneth (St. P'c'as)	Wilson, William (Coventry, S.)
Mayhew, Christopher	Rodgers, William (Stockton)	Winnick, David
Mellish, Rt. Hn. Robert	Roebuck, Roy	Woodburn, Rt. Hn. A.
Mendelson, John	Rogers, George (Kensington, N.)	Woof, Robert
Mikardo, Ian	Rose, Paul	Wyatt, Woodrow
Millan, Bruce	Ross, Rt. Hn. William
Miller, Dr. M. S.	Rowlands, E.	TELLERS FOR THE AYES:
Milne, Edward (Blyth)	Ryan, John	Mr. Joseph Harper and
Mitchell, R. C. (S'th'pton, Test)	Shaw, Arnold (Ilford, S.)	Mr. R. F. H. Dobson.
NOES
Alison, Michael (Barkston Ash)	Brewis, John	Crouch, David
Allason, James (Hemel Hempstead)	Brinton, Sir Tatton	Crowder, F. P.
Amery, Rt. Hn. Julian	Bromley-Davenport, Lt.-Col. Sir Walter	Cunningham, Sir Knox
Archer, Jeffrey (Louth)	Brown, Sir Edward (Bath)	Dalkeith, Earl of
Astor, John	Bruce-Gardyne, J.	Dance, James
Atkins, Humphrey (M't'n & M'd'n)	Bryan, Paul	Davidson, James (Aberdeenshire, W.)
Awdry, Daniel	Buchanan-Smith, Alick (Angus, N & M)	d'Avigdor-Goldsmid, Sir Henry
Baker, Kenneth (Acton)	Buck, Antony (Colchester)	Dean, Paul
Baker, W H. K. (Banff)	Bullus, Sir Eric	Digby, Simon Wingfield
Balniel, Lord	Burden, F. A.	Dodds-Parker, Douglas
Barber, Rt. Hn. Anthony	Campbell, B. (Oldham, W.)	Doughty, Charles
Batsford, Brian	Campbell, Gordon (Moray & Nairn)	Douglas-Home, Rt. Hn. Sir Alec
Beamish, Col. Sir Tufton	Carlisle, Mark	Drayson, G. B.
Bell, Ronald	Carr, Rt. Hn. Robert	du Cann, Rt. Hn. Edward
Bennett, Dr. Reginald (Gos. & Fhm)	Cary, Sir Robert	Eden, Sir John
Berry, Hn. Anthony	Channon, H. P. G.	Elliot, Capt. Walter (Carshalton)
Bessell, Peter	Chataway, Christopher	Emery, Peter
Biffen, John	Chichester-Clark, R.	Errington, Sir Eric
Biggs-Davison, John	Clark, Henry	Farr, John
Birch, Rt. Hn. Nigel	Clegg, Walter	Fisher, Nigel
Black, Sir Cyril	Cooke, Robert	Fortescue, Tim
Blaker, Peter	Cooper-Key, Sir Neill	Foster, Sir John
Boardman, Tom (Leicester, S.W.)	Cordle, John	Fraser, Rt. Hn. Hugh (St'fford & Stone)
Bossom, Sir Clive	Corfield, F. V.	Fry, Peter
Boyd-Carpenter, Rt. Hn. John	Costain, A. P.	Galbraith, Hn. T. G.
Boyle, Rt. Hn. Sir Edward	Craddock, Sir Beresford (Spelthorne)	Gibson-Watt, David

Gilmour, Ian (Norfolk, C.)	Lubbock, Eric	Rhys Williams, Sir Brandon
Glover, Sir Douglas	McAdden, Sir Stephen	Ridley, Hn. Nicholas
Glyn, Sir Richard	MacArthur, Ian	Ridsdale, Julian
Godber, Rt Hn. J. B.	Maclean, Sir Fitzroy	Rippon, Rt. Hn. Geoffrey
Goodhart, Philip	Macleod, Rt. Hn. Iain	Robson Brown, Sir William
Goodhew, Victor	McMaster, Stanley	Rodgers, Sir John (Sevenoaks)
Gower, Raymond	Macmillan, Maurice (Farnham)	Rossi, Hugh (Hornsey)
Grant, Anthony	McNair-Wilson, Michael	Royle, Anthony
Grant-Ferris, Sir Robert	McNair-Wilson, Patrick (NewForest)	Russell, Sir Ronald
Gresham Cooke, R.	Maddan, Martin	Scott-Hopkins, James
Gurden, Harold	Maginnis, John E.	Sharples, Richard
Hall, John (Wycombe)	Marples, Rt. Hn. Ernest	Shaw, Michaet (Sc'b'gh & Whitby)
Hamilton, Michael (Salisbury)	Marten, Neil	Silvester, Frederick
Harris, Reader (Heston)	Maude, Angus	Smith, Dudley (W'wick & L'mington)
Harrison, Brian (Maldon)	Maudling, Rt. Hn. Reginald	Smith, John (London & W'minster)
Harvey, Sir Arthur Vere	Mawby, Ray	Speed, Keith
Harvie Anderson, Miss	Maxwell-Hyslop, R. J.	Stainton, Keith
Hastings, Stephen	Mills, Peter (Torrington)	Stodart, Anthony
Hawkins, Paul	Mills, Stratton (Belfast, N.)	Stoddart-Scott, Col. Sir M.
Hay, John	Miscampbell, Norman	Summers, Sir Spencer
Heald, Rt. Hn. Sir Lionel	Mitchell, David (Basingstoke)	Tapsell, Peter
Heath, Rt. Hn. Edward	Monro, Hector	Taylor, Sir Charles (Eastbourne)
Heseltine, Michael	Montgomery, Fergus	Taylor, Edward M.(G'gow, Cathcart)
Higgins, Terence L.	More, Jasper	Taylor, Frank (Moss Side)
Hiley, Joseph		Temple, John M.
Hill, J. E. B.	Morgan, Geraint (Denbigh)	Thatcher, Mrs. Margaret
Hogg, Rt. Hn. Quintin	Morgan-Giles, Rear-Adm.	Thorpe, Rt. Hn. Jeremy
Holland, Philip	Morrison, Charles (Devizes)	Tilney, John
Hooson, Emlyn	Mott-Radclyffe, Sir Charles	Turton, Rt. Hn. R. H.
Hordern, Peter	Munro-Lucas-Tooth, Sir Hugh	van Straubenzee, W. R.
Hornby, Richard	Nabarro, Sir Gerald	Vickers, Dame Joan
Howell, David (Guildford)	Neave, Airey	Waddington, David
Hutchison, Michael Clark	Nicholls, Sir Harmar	Wainwright, Richard (Colne Valley)
Iremonger, T. L.	Noble, Rt. Hn. Michael	Walker, Peter (Worcester)
Irvine, Bryant Godman (Rye)	Nott, John	Walker-Smith, Rt. Hn. Sir Derek
Jenkin, Patrick (Woodford)	Onslow, Cranley	Wall, Patrick
Jennings, J. C. (Burton)	Orr, Capt. L. P. S.	Walters, Dennis
Johnson Smith, G. (E. Grinstead)	Orr-Ewing, Sir Ian	Ward, Christopher (Swindon)
Johnston, Russell (Inverness)	Osborn, John (Hallam)	Ward, Dame Irene
Jopling, Michael	Page, Graham (Crosby)	Weatherill, Bernard
Joseph, Rt. Hn. Sir Keith	Page, John (Harrow, W.)	Wells, John (Maidstone)
Kaberry, Sir Donald	Pardoe, John	Whitelaw, Rt. Hn. William
Kerby, Capt. Henry	Pearson, Sir Frank (Clitheroe)	Wiggin, A. W.
Kershaw, Anthony	Peel, John	Williams, Donald (Dudley)
Kimball, Marcus	Percival, Ian	Wilson, Geoffrey (Truro)
	Peyton, John	Winstanley Dr. M. P.
Kirk, Peter	Pike, Miss Mervyn	Wolrige-Gordon, Patrick
Kitson, Timothy	Pink, R. Bonner	Wood, Rt. Hn. Richard
Knight, Mrs. Jill	Pounder, Rafton	Woodnutt, Mark
Lambton, Viscount	Powell, Rt. Hn. J. Enoch	Worsley, Marcus
Lancaster, Col. C. G.	Price, David (Eastleigh)	Wright, Esmond
Lane, David	Prior, J. M. L.	Wylie, N. R.
Langford-Holt, Sir John	Pym, Francis	Younger, Hn. George
Lawler, Wallace	Quennell, Miss J. M.
Legge-Bourke, Sir Harry	Rawlinson, Rt. Hn. Sir Peter	TELLERS FOR THE NOES:
Lewis, Kenneth (Rutland)	Rees-Davies, W. R.	Mr. R. W. Elliott and
Lloyd, Rt. Hn. Selwyn (Wirral)	Renton, Rt. Hn. Sir David	Mr. Reginald Eyre.
Longden, Gilbert

Bill accordingly read a Second time and committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills.)