PENSIONS FOR WIDOWS AGED 40 TO 50

HC Deb 15 July 1970 vol 803 cc1570-8

Sir B. Rhys Williams

I beg to move Amendment No. 4, in page 2, line 42, leave out 'at that time was' and insert: 'is at the time of payment'. This raises again a matter which we discussed when this proposal was originated. We debated it at some length in the Standing Committee, so one need not go over the ground in detail now. The purpose of the Clause is to do away with the hard edge which has been felt for some years to be a cause of injustice. It does away with the problem of the widow who becomes a widow at age 49—perhaps, even approaching her 50th birthday—and who up to now has not been eligible for any benefit whatever. If her husband had lived, perhaps a fortnight or a month longer so that she passed her 50th birthday, she would have been eligible for pension.

Everyone has regarded that as unsatisfactory and has wanted something done, so we welcomed this innovation when it was brought in by the previous Secretary of State, and we welcome it again now. There is, however, still an element of hardship or, at least, anomaly in a system which gives pensions of different amounts to different people on account of widowhood, the different amounts being determined simply by reference to their age. The figures proposed in the Bill are that the woman who becomes a widow at age 40 has a pension of 30s. a week and one who becomes a widow at age 50 receives a pension of £5 a week. The difference is substantial.

Although we are glad that those widowed at 40 will have 30s. we should look ahead to see what is likely to happen with the passage of time. Before too many years have elapsed, there may well be a state of affairs in which two widows, both of whom have been widowed for a number of years and both of whom are the same age, receive different pensions. I take the example of two widows both aged 58. If one has been a widow for 18 years, as the Bill stands she will still be eligible for a pension of 30s. a week, but if the other has been widowed for only eight years, as I read it, she will be eligible for a pension of £5 a week.

Looking at the matter with a fresh eye, one must ask whether it is easy to define precisely why society should give such different pensions to two people whose circumstances are almost identical, that is, both aged 58 and both widows.

This leads one to ask: if there has to be a difference in the treatment of those two people, which of them is most deserving of the higher pension? One might say that the woman widowed at the younger age was forced to re-enter employment at a time when she had been away from employment less long, so that, presumably, it was easier for her to pick up the threads once again and find for herself an established career after her husband's death. Possibly, therefore, it may be said that she is less deserving of consideration.

But it is easy to make the precisely opposite case. One could say that if she has been out on her own in the world for a longer period she has probably more years during which she has been obliged to draw upon such savings as she may have had or inherited from her husband, a longer period during which it will have been hard for her to accumulate savings, and a longer period for the household necessaries which she inherited from her husband to wear out and need be replaced.

Therefore, I feel that the ideal at which we should aim is that after-50 widows should have the same pension. In a written reply to a Question which I asked on 15th May I was told that this would cost £20 million, which is a substantial sum. It makes me hesitate about whether we could amend the Bill in this way now.

But it is necessary to give the subject an airing. We probably do not have to take a decision on the matter now, because the problem with which I am dealing is one that will emerge only over the years. If my hon. Friend is prepared to concede, as I hope he will, that the point I am making is not altogether unreal and deserves to be looked at further, I shall not want to press the Amendment to a Division.

Mr. Patrick Wolrige-Gordon (Aberdeenshire, East)

I have considerable sympathy for the Amendment, and I support the quest of my hon. Friend the Member for Kensington, South (Sir B. Rhys Williams) for information. I agree that unfairness is inevitable in any scheme where we have to draw a line, as we shall do, albeit at a less harsh and abrupt line than in the past. But I believe that an arrangement whereby the pension can be scaled up as the widow approaches the age of 50 is possible. Has this been considered?

Mr. Dean

I am grateful to my hon. Friends the Members for Kensington, South (Sir B. Rhys Williams) and Aberdeenshire, East (Mr. Wolrige-Gordon) for raising an important point about the so-called scaled down widows' pensions which are proposed. I readily acknowledge that we have taken the provision from a Bill brought forward by the previous Administration, and we are grateful for the work they did on that.

The main reason why I find it rather difficult to agree with the point my hon. Friends are making is that the main intention behind the Clause is to try to get rid of the disparity, the hard line, which now exists between the widow who is just over 50 and is entitled to the full rate of widow's benefit and does not have to pay contribution, and the woman of just under 50 with no dependent children, who is entitled to no pension and must pay the full contribution. The scaled down pension is really intended to try to get rid of that hard line.

It may be said that we have merely shifted the line from 50 to 40, but by providing a scaled down pension at 40 we have tried to deal with that problem. That is very largely the reason why we feel that it is right to have the scaled down pension and to maintain the scaling down arrangements when the widow reaches 50. If we adopted the suggestion made by my hon. Friend we should be re-creating the sharp disparity, but doing it in a slightly different way.

Equally, as my hon. Friend the Member for Kensington, South acknowledged, the effect of the proposal would be to add about £8 million to the cost of the provision—an increase of about 60 per cent.

Perhaps it would help put the matter in context if I said a word about the contribution proposals, which I think my hon. Friend would feel are very relevant in judging whether the scaled down pension is appropriate.

5.45 p.m.

We propose that there shall be a contribution option for the widows who will be entitled to this pension. This is an important provision. The contribution option will apply to the flat-rate contribution but not to any graduated contribution which widows may pay. In other words, it will put them in the same position as widow pensioners now.

We feel that it is appropriate to give this choice, first, because it is in line with the existing widow pension provision, and, second, because if there were a compulsory contribution some widows would gain very little from it. I am thinking largely of the widows at the top end of the scale; for example, a widow at the age of 49 who would be entited to a pension of £4 13s. would be expected as an employee to contribute 15s. a week for very little additional benefit.

We also feel that it is right wherever possible to give a choice, and for many widows the contribution is a very big burden. That has been one of the grievances of the present "30s. widow."

If the widow chooses to pay the contribution she will qualify for the short-term benefits, but the rate will be reduced to take account of the widow's pension she is already receiving. Any earnings-related supplements will be dealt with under the normal rules. If she decides not to pay, she will not qualify, although here again the earnings-related supplement will be available under the existing special rules.

The position with regard to the retirement pension is somewhat different. The flat-rate benefit payable depends on the widow's average contribution record over her insurance life, but she may use her husband's record over the period up to the date of his death. The widow who chooses not to pay will qualify at least for a retirement pension at her widow's pension rate.

Widows under the age of 45 would usually qualify for rather more than this by means of the husband's record alone. For example, a woman widowed this year at 40 will qualify for a retirement pension of £2 10s.

The widow who chooses to pay the contribution and whose husband's record is also complete will qualify for a £5 pension on retirement. This will replace the widow's pension.

The Committee will see that in bringing into context the scaled down pensions that we propose it is also valid to take account of what we regard as the valuable contribution option which we are proposing these widows should have.

Sir B. Rhys Williams

In view of the very full way in which my points have been dealt with, I should like simply to thank my hon. Friend for his explanation and to beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Question proposed, That the Clause stand part of the Bill.

Mr. O'Malley

The Under-Secretary was helpful when he explained some of the provisions of the Clause in response to the Amendment. The Opposition welcome the Clause. As the Under-Secretary pointed out, this formula for providing a widow's pension to women without children and left widowed between the ages of 40 and 49 was drawn up and conceived by the Labour Administration and formed a Clause in the National Superannuation and Social Insurance Bill, which was considered at length before the General Election.

As not only in this Clause but with other legislation arising from the Department of Health and Social Security and other Departments the Government are using legislation drawn up by the Labour Administration, I remind the Under-Secretary that there is plenty more where that came from. If the Government are short of legislation, there is the National Superannuation and Social Insurance Bill. It would be a great help if the hon. Gentleman were to explain that, because we know that he understands these things. We look forward to other legislation which has been the brainchild of the Labour Government.

There is a side effect which is inherent in the introduction of scaled-down pensions of this kind. The existing situation is that a widow over 50 qualifies for a normal flat-rate widow's pension of £5. She then has the married woman's and widow's contribution option, and she may elect to pay 7d. to be covered for industrial injury. If she does that, she is not entitled to unemployment or sickness benefit. There would be no point in her paying for such unemployment or sickness benefit, because under the overlapping benefit regulations she would not gain financially. It has therefore been a valid and useful argument for a widow drawing the full widow's pension and over 50 to say that it would not be worth her while to pay the contribution. Such women have opted to pay merely the 7d. industrial injuries contribution.

Different considerations will apply to the group of widows who are now to get scaled-down pensions. Let us consider the example of a woman without children and left widowed at 41. She would receive as a widow's pension not £5 but 30s. Generally speaking, such a woman would be obliged to seek employment, unless she had some other form of widow's superannuation, and those of us who examined this matter in detail in the last Parliament know how inadequate widowhood cover often is, even with some of the better superannuation schemes.

She would be faced with the choice that she could exercise her right—and it remains a right—to pay the flat-rate contribution, or opt out and pay merely the 7d. in respect of industrial injuries. In many ways, that woman does not have much of a choice. If she falls out of work, she will not be properly covered by a pension of 30s. for unemployment or sickness benefit, and she would therefore be most unwise to choose not to make the contributions.

The contribution will often be not much use to the younger childless widow with a scaled-down flat-rate pension and the contributions would represent quite a burden to her, for a woman earning £450 a year would pay 15s. a week and a woman earning £630 a year would pay 18s. 1d. a week, if she was not contracted out. As we have now created this new graduated and reducing widow's pension scheme according to age, for as long as the Government continue with a flat-rate contribution system there will be a need not for the option not to pay but for a system of contributions by which the widow is allowed to pay reduced National Insurance contributions, so that if she becomes sick or unemployed she is able to draw not 100 per cent. of the relevant benefit but an amount which, together with the widow's pension, would take her to the same minimum level of, for example, the widow of more than 50 drawing full unemployment or sickness benefit.

There is a difficulty. The hon. Member knows that whatever one does with National Insurance provision, one always creates new and sometimes difficult problems. The problem would be eased if contributions were earnings related rather than flat rate. I give an example from a booklet which we used a great deal in a previous existence and which was entitled "The New Pensions Scheme". With contributions at 6¾ per cent. of relevant earnings, a woman on £450 a year and now paying 15s. a week would pay 11s. 7d., whereas the woman earning £12 a week would pay 16s. 5d. instead of 18s. 1d. A system of earnings-related contributions, unlike a flat-rate contribution system, does not bear most heavily on the lower paid, among whom one must number many women.

Until such time as a system of earnings-related contributions is introduced, and I understand that to be the Government's intention, I ask the hon. Gentleman to consider whether there is any way of introducing a provision in the Bill to provide for the payment of lower contributions by women who are widowed in these circumstances. Otherwise, major problems will be posed, problems which could be avoided by legislation which it ought not to be too difficult to introduce into the Bill.

Mr. Dean

I should not like the hon. Member for Rotherham (Mr. O'Malley) to think that because we have adopted one or two of the provisions of a Bill in the previous Parliament, he can draw conclusions from that. We have made it abundantly clear on many occasions that the largest part of a Bill which many of us spent many hours discussing in the last Parliament is now dead and buried.

The hon. Member mentioned the example of a widow widowed at 41 who would be entitled under the Clause to a pension of 30s. She is the type of widow who would be more likely to benefit by paying the additional contribution and thus getting the additional benefit than the woman widowed at 49 who would be quite close, only 7s. short, to the full rate. This problem is more readily dealt with with a fully earnings-related contribution system than with a flat-rate system. This is a point which we shall bear in mind in our studies of the future of our National Insurance arrangements, but the hon. Gentleman will appreciate that it applies much more to a future Bill than to this Clause.

6.0 p.m.

Mr. Albert Booth (Barrow-in-Furness)

The Minister is right to say that part of the legislation which we discussed in the last Parliament relating to national insurance is dead and buried. However, it is dead and buried only while the Conservatives are in office. Further, the problems are not dead and buried, though the people experiencing them may be dead and buried before the Government solve them.

My hon. Friend the Member for Rotherham (Mr. O'Malley) was unduly modest when he pressed for the Government to consider that part of the problem which is left untouched by the course they propose. In so far as there is a case for paying a pension to a woman who is widowed between 40 and 50, to ensure reasonable justice as between one widow and another—indeed, to ensure justice between widows and spinsters—consideration should be given to the degree to which National Insurance payments and benefits relate to the ability of widows and spinsters in this age band to meet these insurance payments.

The Clause ensures that an anomaly will be created which we shall have to solve in years to come. I refer to the anomaly between women widowed at, say, 40 and those widowed at, say, 48. One will have a lower pension but will have a greater necessity to make higher flat-rate contributions. From my experience of talking with women of this kind, I cannot see them accepting a lower pension very lightly. They must insure themselves against the inability to earn at times of unemployment or sickness by paying a higher percentage of their income when they are working, compared with women who are widowed later in life and who will receive a higher pension in any event.

Question put and agreed to.

Clause 2 ordered to stand part of the Bill.