There shall be an annual review of the benefit rates provided for in Schedule 2, Part 1, paragraphs 10, 11 and 12 and Schedule 2, Part 2, paragraphs 6 and 7 of this Act.—[Mrs. Shirley Williams.]
§ Brought up, and read the First time.
§ Mrs. Shirley Williams (Hitchin)
I beg to move, That the Clause be read a Second time.
The purpose of the Clause which we have tabled since the Bill was dealt with in Committee is to secure that there should be an annual review of retirement pensions, particularly because of the present inflationary situation.
The main reason the Clause has been tabled in this form on Report rather than in Committee is that since the Committee stage ended, there has been the phenomenally disturbing news about the vastly increased rate in the cost of living and in food prices in the last three months. We now know that over the last three months the rate of increase in prices is running at an annual rate of 14 per cent. We now know that in the last two months alone—between March and April—there was an increase of nearly 3 per cent. in food prices. We now know that there was an overall increase in prices of nearly 2½ per cent.
The index of retail prices shows that it is in those commodities which loom largest in the budget—food, housing, water, rates, fares and heating—that the increases have been most marked.
I have said that food prices have risen faster than the cost of living as a whole—at what is now an annual rate of nearly 30 per cent. on the basis of that month. The cost of housing rose by 5 per cent.
780 between March and April. Rates, rent, water charges—these are the necessities of life which pensioners, like the rest of us, have to pay for and which figure much more heavily in their budgets.
In Committee on 18th May we pleaded for an interim increase in pensions if prices and earnings continued to rise at their present rate. They have proceeded to rise at a more rapid rate. I pointed out to the Under-Secretary in Committee that, if the cost of living rose by more than 5 per cent. a year, which Ministers of Pensions have for many years taken to be the average increase in prices, we should wish to press for a further review of retirement pensions. In replying, the Under-Secretary, the hon. Member for Somerset, North (Mr. Dean), said:The commitment by my party at the last election was to ensure that the purchasing power of the pension was maintained. That was a firm commitment. That commitment is being carried out with this increase. I can state confidently that it will show, when it comes into operation in September this year, an increase in real terms in comparison with the last increase introduced in 1969."—[OFFICIAL REPORT, Standing Committee G, 18th May, 1971; c. 89.]If the present rate of price rises continues until September, it will not be for six months that pensioners will benefit from the increase; it will be at most for six weeks. We on this side do not believe that that fulfils the Government's commitment to maintain the purchasing power of pensions, because it will be expected to last for two years. That means that the present rate of increase the value of the pension will drop by over one-fifth over those two years.
Conservative hon. Members will say, "Don't blame us. It is not our fault. It is the fault of earnings, of wage claims." That will be a wholly irrelevant argument. It is the responsibility of both sides of the House, whatever reason they may give for the inflation from which this country is suffering, to make sure that the most vulnerable section of the community is protected from that inflation. Therefore, in view of their own commitment to maintain the purchasing power of pensions, the Government must now either tell us that they are certain that the rate of increase in prices will drop very sharply over the next few months—although we know that there are 781 policies coming forward that are most unlikely to make that the case—or they must in all decency commit themselves to a review of pensions not later than 12 months from when the present increase comes in, so that we shall not be financing our inflation from one of the poorer sections of the community.
In the White Paper issued with the National Insurance Bill, the Government Actuary calculated that there would be an increase of £23 million to the National Insurance Fund for each 1 per cent. increase in earnings. That means that if inflation continues the Fund will benefit by any further increases in earnings that result. It is increasingly an earnings-related pension as far as contributions are concerned, but, as my right hon. Friend the Member for Coventry, East (Mr. Grossman) pointed out on Second Reading, it is not earnings-related as far as benefits are concerned. When it comes to benefits, we are still talking about a flat-rate scheme.
If the Government are to take the view that they will carry out a scheme, which, fantastically, combines earnings-related contributions with flat-rate benefits, they must at the very least review those benefits continually so that they do not gain in contributions from inflation and allow the pensioners to lose in benefit.
I hope and believe that the Amendment may commend itself to the Government, not because they particularly want an annual review but because I believe that anyone who looks realistically at the situation in this country today is bound to accept that it is the only straightforward and simple solution, on the basis of the Government's own scheme, to the devastating effect inflation is having on elderly retired people.
§ Mr. John Boyd-Carpenter (Kingston upon Thames)
The hon. Lady the Member for Hitchin (Mrs. Shirley Williams) was wise to decline to be drawn on the question of the cause of the rapid increase in prices from which we have suffered in the last two years.
§ Mr. Boyd-Carpenter
If hon. Members want me to be drawn into a debate on that I shall be only too happy. I know that they will be delighted. The hon. 782 Lady was quite right to say that from the point of view of the pensioners, and therefore of this Amendment, that cause is irrelevant. I agree with her. What was noticeable about her speech and her very proper reference to the effect of rising prices on pensions—and to many of us on this side that is the worst of all the consequences of rising prices—was that she did not relate the argument at all to the Amendment.
She must admit that this Amendment taken by itself will be of little if any value to pensioners. All it will do will be to compel the Government of the day to review pensions annually. It would not compel them to do anything as a result. [Interrupation.] If hon. Gentlemen will look at their Amendment they will see that this is so. If it was carried the Government would be compelled to review but not to take any action as a result of that review. The suggestion that this Amendment will be of the slightest practical help in a problem which concerns us on this side just as much as hon. Members opposite is completely illusory. In any situation, and much more so in an inflationary situation, any Minister in the position of my right hon. Friend keeps the matter under continuous review—
§ Mr. Boyd-Carpenter
It is not quite fair to say that when my right hon. Friend is taking through Parliament the biggest increase in pension rates in history.
§ Mr. Boyd-Carpenter
Anyone in the position of my right hon. Friend does not confine himself to a review of these rates fixed to any particular date in the calendar. It is his job, as it has been that of his predecessors, to keep the position of pensioners continuously under review and as soon as it seems right to act, regardless of the calendar. There are quite obvious disadvantages from the pensioners' point of view in tying him to a precise date for review on an annual basis. Anyone who knows how government works will know that if three months before the review date a Minister felt disposed to review the situation, all the pressures of Whitehall would be on him 783 saying, "Minister, you are under a statutory duty to review this in October and it may not be reviewed early in July." This is how the machine of government works, and the hon. Lady knows that.
If we look at the Amendment as an attempt to raise the position of the pensioners, then the hon. Lady will attract a great deal of sympathy on both sides of the House. I ask the House to accept that we are very much concerned at the effect of these price rises, continuing and rapid, on the pensioners who are so vulnerable to them. There is no difference between the two sides on this.
Where the hon. Lady passes from an area of general agreement into a very poor position from the point of view of the merits is when she tries to insist that a statutory review at a precisely determined annual date would help the pensioners. We would be kidding ourselves if we were to adopt an Amendment which could do no good and in certain circumstances might do much harm.
§ Mr. William Hamilton
The right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) criticised the wording of the Amendment because it talked about "review". Other things are being reviewed at the moment. The right hon. Gentleman ought to remember that there are some things which we on this side consider to have far higher priorities than he and his hon. Friends would place upon them. If we had had the word "increase" in the Amendment he would have used precisely the same argument. He would have said, with his nit-picking mind, that it could mean a 6p increase and, therefore, was meaningless. So, whatever the wording, the right hon. Gentleman, with his great debating skill, would have demolished the argument, at least to his satisfaction if not to anyone else's. But the people who are waiting outside, the pensioners, will not be impressed by that kind of pedantry, because some of them are literally starving.
§ Mr. Boyd-Carpenter
What I suggest the pensioner outside would be impressed by is not a provision for an annual review or an increase at particular dates, but the solid fact that, whereas in the 13 years of Conservative Government the real value of the pension rose by 4 per- 784 cent., under the six years of Labour Government it rose only by 2½ per cent.
§ Mr. Hamilton
I suspect that the old folks in Bromsgrove and Macclesfield will give the answer to the right hon. Gentleman in due course—and in his constituency, too, which might well be marginal in a few months' time if the Government go on as they are doing.
The old-age pensioners should have the top priority. The £1 per week which they will get in September will be virtually eroded before they get it, and certainly before Christmas, and they will be faced with the prospect of waiting another two years, although the Government are committed to putting up the cost of living.
The Minister of Agriculture, Fisheries and Food was quite right in saying the other day that the Prime Minister was having his little joke in the General Election when he said that he would reduce prices "at a stroke", because he is on record as saying that it is time the housewives and the pensioners paid more for their food. It is the deliberate policy of the Government to put up prices. The Minister of Agriculture has said that the meat tax will not come in until July, but the meat tax will hit the pensioner harder than anybody. We may as well put pieces of beef in the British Musuem for all the old-age pensioner can do about it—
§ Mr. Hamilton
Rents are going up. The Minister for Housing and Construction has said that housing subsidies will be slashed by £150 million a year. That means substantial increases in rents. Who will pay them? Pensioners will. I know that if they fill in a form to say they are poor and starving they will get a few bob knocked off the rent.
The Amendment gets at the very heart of party politics. The Government want to reduce public expenditure. It is not the Government which are giving the pensioners their miserable £1 in September but the higher-paid worker. This House has a strong moral obligation to give the pensioners a handsome increase rather than the miserable pittance which they will get in September.
I have great respect for the debating capacity of the right hon. Member for Kingston-upon-Thames. If there is an 785 indefensible case to argue, the right hon. Gentleman is the one to argue it convincingly, but this does not make the frying pan sizzle for the old-age pensioners. Whatever the right hon. Gentleman might argue about the merits of the wording of the Amendment, I hope that he will accept the principle of it and that the Government will agree to have yearly reviews because they are under an obligation according to their manifesto. I remember that as soon as they got into opposition they were on this tack. They found more poverty in the country than they had ever thought existed.
§ Mr. Hamilton
They think they are giving luxury to 7 million old people by giving them a pound a week. They ought to be ashamed of themselves.
§ Mr. Hamilton
The right hon. Gentleman said that this was the biggest increase ever. I suppose that is so in money terms, but in real terms the biggest increase was in 1946—from 10s. to 26s. at one go. Conservative Members then said that the Labour Government had acted too hastily. Those words have stuck in my gullet ever since. The Conservative Party does not understand and does not care how our old people survive today.
§ 10.30 p.m.
§ Mr. Hamilton
No, I will not give way. The hon. and learned Member for Ruislip—Northwood (Mr. Crowder) is one of the most absent Members of this House. He comes to the House at this time of night, having earned his "corn" outside, and then presumes to intervene in defence of the old people, about whom he knows nothing at all.
The people of this country in the last twelve months have suffered the biggest betrayal since Judas. This is why the Government will reject this Amendment. We will hear all the sob-stuff that we have become used to from the Secretary of State, with great compassion and' humanity, so long as he is not asked to do anything very much. It is the same of his junior Minister. I remember him 786 almost bringing tears to our eyes when talking about all the poverty that had been created by the Labour Government. Under Tory Governments there has been poverty in this country for centuries. We are a long way from solving it. This Bill will hardly do anything to get the old folk out of their great morass of poverty in which a lot of them have been all their lives.
§ Mr. Laurie Pavitt (Willesden, West)
We are here seeking a matter of elementary justice for the sake of the old people. We all know that the white collar workers and professional people get their increases by way of annual increments, which are given automatically, and that the ordinary workers achieve their increases through bargaining, but the old people have no bargaining power.
We understand the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), who at one time was Minister of Pensions, that the form of words does not make it obligatory on the Treasury to find the money. What we must do is to break through the problem of dealing with the elderly throughout the whole of a period, since at one moment their case is looked at as a matter of yearly intervals and in the following year their supplementary benefits are looked at. The result is and has been that at a time when one benefit goes up my constituents immediately say to me that it is taken away with the other hand because it comes off the supplementary benefits next time.
We are demanding a review every year leading to the possibility of marrying up increases in prices with increases in pensions so that we are not giving benefits at two different periods, one in one year and the other in the next year. We want the two to march together.
Nothing is more frustrating or creates a sense of social injustice so much as when old-age pensioners read in the newspapers that they are to get so much more because the benefit has been increased, but find when they go to get it, that what has been given with one hand has been taken away with the other.
In Committee one argument which was put forward on another Clause concerned administrative difficulties. I had a letter from the Minister about this. I thank him for that letter, but I hope that he 787 will give his officials a copy of Sir Ernest Gowers "Plain Words", because, due to the officialese jargon, I had to read it about three times before I could understand it. The argument was that if we had to do this each year we would tie down a number of extra civil servants and it would not be worth doing. The Department has now got itself computerised.
§ Mr. Pavitt
And dehumanised. The Government talk about less public expenditure, but, as everybody recognises, we shall need about 8,000 more civil servants to collect the value-added tax. I would rather spare some of these people to look after the old-age pensioners. They would then be doing a better job. It is neither administratively impossible nor too expensive for the Department to get to grips with the way that this could be done. An annual review would provide an official yardstick by which everybody could measure.
The right hon. Gentleman says that there is no obligation on the Treasury to part with money. Those who have to try to get it out of the Treasury know how difficult it is. But if and when we have an official yardstick to measure by, it will be difficult for the Government to resist.
Throughout the years prices have continued to rise and pensioners and those on fixed incomes have received increases long after prices have gone up. But never in my experience have prices gone up at the rate they have in the last 12 months. This has placed a fantastic burden on old-age pensioners. The Government have recognised this by bringing forward the date for the next increase. They recognise that elderly people will be placed in extreme difficulties if they cannot buy coal at summer prices, but have to wait until winter sets in, because this is one of the greatest costs they have to meet.
I do not understand why the Government cannot concede on this matter which is so important to the elderly. If they refuse to accept the Clause, they are, in effect, saying that they are not prepared to accept the pressure which will inevitably mount after the review when people 788 see the difference between the increases held back over the last few years and the increases in prices.
§ Mr. Tom Boardman (Leicester, South-west)
Anyone who listened to the hon. Member for Fife, West (Mr. William Hamilton) would think that the House was divided on its aims. That is not so. We on this side feel just as deeply about the need for compassion and care of the elderly folk about whom he spoke.
Hon. Members on this side of the House are no less aware of the problems than are hon. Gentlemen opposite. In my constituency I have as many old people living in bungalows on council estates, in the kind of circumstances to which the hon. Gentleman referred, as there are in the constituency of any hon. Gentleman opposite. I feel no less deeply than the hon. Gentleman does about the need to improve their circumstances.
The difference between the two sides of the House lies in the means to be adopted for dealing with the situation. I am sure that I should be out of order if I were to develop further the argument about the need to maintain the value of the pension, and the way in which my right hon. Friends are tackling that problem and the many others with which they are faced.
I recognise the hon. Lady's purpose in putting forward the Clause but, like my right hon. Friend, I do not believe that it would serve its purpose. I am sure that my right hon. Friend has deeply at heart the need to prevent the pension for the old folk from being eroded by rising prices, and our first objective must be to prevent prices from rising. That is our aim, and hon. Gentlemen opposite would serve the cause of these old folk far better if they would stop provoking the inflationary wage spiral.
I am sure my right hon. Friend does not have to be urged to bear in mind the need to prevent the erosion of this pension increase which, as my right hon. Friend the Member for Kingston-upon-Thames said, is the biggest increase in history, and also the need not to fix a time limit for reviews but to keep the position constantly under review so that we can ensure that these old people, who are the most deserving in our society, do not suffer.
§ Mr. Alec Jones (Rhondda, West)
I rise to support the new Clause put forward by my hon. Friend the Member for Hitchin (Mrs. Shirley Williams). I do so because, like many hon. Members on this side of the House, I have always held the view, and consistently expressed it, that there should be an annual review. I notice that the Secretary of State is shaking his head. I said that many of my hon. Friends and I have consistently spoken in support of an annual price review. We take that view not because of the special circumstances created by today's rising prices, but because we believe that it is desirable as a principle.
§ Sir Brandon Rhys Williams (Kensington, South)
The National Superannuation Bill, which we discussed at some length last year, recommended a two-yearly increase. That was his Government's proposal.
§ Mr. Jones
The hon. Gentleman has done less than justice to himself because, prior to taking part in the debate this evening, I checked through the proceedings on that Bill and I found that every back bencher who spoke, including the hon. Gentleman, thankfully, was in favour of an annual price review. That is the point that I am making. Many hon. Members on this side of the House have always argued in favour of an annual price review, and we have been pleased, on many occasions, to have had the support of some hon. Gentlemen opposite.
§ 10.45 p.m.
§ Mr. Jones
I would not want to defend everything that a Labour Government did. I assure the House of that. I have far greater expectations from this party than from the Conservative Party. Many of us have argued against our own Government in favour of an annual review in normal circumstances, so it is reasonable to expect that, in the abnormal circumstances created by the Government, we should feel the need even more strongly.
The right hon. Member for Kingston upon Thames (Mr. Boyd-Carpenter) is a brilliant debater—he must have come from some university or other—but when talking about rising prices he did not call 790 in aid the Minister of Agriculture, who seems to be persona non grata with the other side. The right hon. Gentleman fairly said that the new Clause only calls for a review. He suggested that if we had a review we would not be compelled to take any action. This may be true of the wording, and this may be what he would expect of a Conservative Government, but it is not what we would expect or demand from a Labour Government.
If an annual review were undertaken and showed the need for a pensions increase, we would have it from a Labour Government, but I accept his words that there is some doubt that we would have it from a Conservative Government.
§ Mr. Boyd-Carpenter
Is the hon. Gentleman saying, then, that although there might be each year a need under a Labour Government for a pensions increase, such increase would not be granted unless there was a statutory provision compelling them to review?
§ Mr. Jones
I do not know whether the right hon. Gentleman read the Paper before coming into the Chamber, but we put down not only new Clause 2 but also new Clause 1, in which we suggested even better than an annual review—that if the cost of living rose by 5 per cent. or more we would expect a review, even within a twelvemonth.
The hon. Member for Leicester, Southwest (Mr. Tom Boardman) seemed to think that a difference of means between the two sides was of no importance. Of course there is a difference. This is why we sit on different sides of the House. I cannot see that the means of the Government—6d. off the income tax—will be of much benefit to old age pensioners in my part of the world.
Some time, some Government will have to accept the need for an annual review for our retirement pensioners. Naturally, we prefer that it be a Labour Government, but if the present Government want to steal those clothes today, tomorrow or next week, we will join them and praise them for doing it.
The Secretary of State—this applies to any Government—in resisting the need for an annual review, is rather like King Canute, just as foolishly and hopelessly holding back the tide which both sides support. In Committee on the National Superannuation and Social Insurance Bill 791 under the Labour Government, on the Pensions Increase Bill under the Government and also on this Bill, whenever the issue of an annual review arose, back benchers of both parties spoke in favour of it.
The force of the demand for an annual review has been such that when replying to debates of this kind Ministers of Governments of both parties have had to deal with this issue. In the debates on the National Superannuation and Social Insurance Bill, Mr. David Ennals, the then Minister, said, dealing with an Amendment demanding an annual review moved by my hon. Friend the Member for Manchester, Gorton (Mr. Marks), that the possibility of amending the scheme was not ruled out. That was in February, 1970, and it was clear that the Labour Government were thinking in terms of initiating an annual review. Indeed, in Committee on this Measure the Minister said:The hon. Lady"—referring to my hon. Friend the Member for Hitchin (Mrs. Shirley Williams)would not expect me to give a firm commitment to an annual review today, but I hope that what I have said will reassure her that the matter is open to consideration ".—[OFFICIAL REPORT, Standing Committee G, 20th May, 1971; c. 110.]Front Bench spokesmen have had to agree that one day an annual review will take place, so strong has been the demand for it.
However Government spokesmen disguise and cloak the truth—and I say this of both parties—it is clear that the only obstacle to initiating this annual arrangement is the cost. It is time we treated our old-age pensioners better. Virtually every section of wage and salary earners receives pay increases, but the pensioners must face ever-increasing prices without this benefit. Their food, rent and rates are going up all the time. Fortunately it is clear, even if the Government do not accept our proposal, that the next Labour Government will implement this desirable change.
§ Mr. Nicholas Scott (Paddington, South)
There is nothing like a period in opposition to bring out the big, generous heart of the Labour Party. But if one compares the annual lot of the retirement pensioner under the last Conservative 792 Government with his lot under the last Labour Government, it is clear that he did consistently better year by year under the Conservatives.
I am not surprised that hon. Gentlemen opposite have an attachment to the annual review idea. During their last period of Government they had an opportunity annually to review the pensions of the over-80s. Each year a Bill was introduced by the Conservatives to provide a pension for the over-80s, and each year it was either squalidly talked out or voted out by the hon. Gentlemen supporting their Government.
As so often, the hon. Member for Fife, West (Mr. William Hamilton) gave the real reason for this debate—Broms-grove and Macclesfield. It is a stick with which to beat the Government rather than compassion or concern for the elderly that has prompted the Motion.
There is no magic in the calendar in this matter. I prefer to rely on sustained pressure on the Government of the day from back-benchers on both sides of the House to see that the purchasing power of the retirement pension is maintained and improved.
§ Mr. Michael Meacher (Oldham, West)
I allude to two contributions from the other side of the House, firstly to that of the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter). Very uncharacteristically, he kept to the precise terminology of the new Clause without taking it at all in the spirit in which it was obviously intended. He seemed to suggest that the implementation of a statutory period for consideration of upgrading of pensions would prevent Governments from exercising their enthusiasm for discretionary or earlier improvements in pension levels.
When the right hon. Gentleman was Minister of Pensions and National Insurance he was not chafing at the bit to raise pensions earlier than the normal biennial review at that time. If there were a shred of evidence that this would prevent Governments from improving the lot of pensioners, that would provide some substance for his argument which it otherwise lacks.
I do not wish to be drawn into party politics on this matter, but the hon. Member for Paddington, South (Mr. Scott) made a blatantly inaccurate 793 remark by suggesting that the retirement pensioner faxed worse under the previous Labour Government than he did under the previous Tory Government. If the hon. Gentleman looks at the facts and at journals which have discussed this with academic precision, he will see that the increase in the retirement pension retained its relative value to the end of the biennial review period under the previous Government whereas it only achieved that relationship with average earnings under the previous Tory Government through increases at the beginning of the review period. It is precisely that point which is at issue tonight.
My hon. Friend the Member for Hitchin (Mrs. Shirley Williams) has already made the shock point that the real value of the retirement pension, even after the September uprating, on the latest evidence, will scarcely be preserved above the November, 1969, level, relatively speaking, for any period at all. The aspirations of retirement pensioners for any relative improvement in the real standard of their living over November, 1969, levels have now virtually dwindled out of sight altogether.
But, bleak though the picture painted by my hon. Friend is, the situation is a good deal more serious in at least two ways. The rate of increases in price rises has been accelerating. Although the jump of over 2.1 per cent. in April of this year referred to by my hon. Friend is the biggest single jump in any month in the index of retail prices for the last 19 years, it conceals the fact that the increase in the index of retail prices over the corresponding month for the year previously has been growing steadily over the last 12 months. The figure in April, 1970, for the rise in the index of retail prices over the year previously was 5.6 per cent. By the end of the year it had risen to 7.9 per cent. By April of this year it had risen to the stunning level of 9.4 per cent. over the level prevailing 12 months previously.
If this acceleration of price rises continues—the Department of Employment Gazette shows that, according to the little publicised retail price indices of pensioner households their cost of living has been rising faster than the average—the upgraded pension will fail to achieve any real improvement over November, 794 1969 levels even at the period of its implementation.
The Labour Government made clear their intention to continue the practice of uprating the retirement pension to match improvements in the standard of living of the rest of the community. The White Paper "Public Expenditure 1968–69 to 1973–74" published in December, 1969, provided for an uprating on these lines in the autumn of this year.
Therefore, a double sacrifice has been involuntarily inflicted on retirement pensioners. They are willy nilly being forced to forgo this promised uprating to match the rise in prosperity of the rest of the community. Second, unless the Clause is accepted, they will hardly be able to achieve the relative standard of living prevailing at November, 1969, even at the start of the review period, let alone at the end.
I therefore hope that the Government will accept the Clause as an expression of our sincere and determined concern. It is the only means to hand for the Government at present to ensure that proper safeguards can be provided for a very large and growing section of the community who are, and who always have been, unduly defenceless and unduly dependent on the political favours of the day.
§ Mr. John Gorst (Hendon, North)
I oppose the Clause, because it is important that any review, be it annual or biennial, should accept a principle as regards the elderly retired. We should accept that there are some elderly retired people who are in much greater need than others.
In particular, there are those between 75 and 80, and more especially those over 80, who have been retired for, say, 10 years and who are not merely faced with the problems which are presented to them—to be non-controversial about this—by one Government or another in terms of rising prices and the ability or inability of Governments to deal with inflation. Over and above the problems of rising prices, there is for these elderly people aged from 75 to, say, 90 the problem of the replacement of the equipment that they probably purchased during the early days of their retirement or just before their retirement. 795 There is, therefore, undoubtedly a greater need for some retired people than there is for others. It is because the Clause is concerned universally with benefits for all retired people, without identifying the needs of particularly retirement pensioners, that I intend to oppose it.
Mr. Eric Heffier (Liverpool, Walton)
Some of the arguments used by hon. Gentlemen on the other side have been exceedingly tortuous. The right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), whom we know as an extremely able debater, and the hon. Member for Hendon, North (Mr. Gorst), put forward some remarkable arguments. The hon. Member for Hendon, North in his brief speech reveals the underlying thinking of the Tory Party about selectivity. He is saying that there should be more means tests and that this is what the Government are beginning to introduce. We are finding this in just about everything.
Old-age pensioners are increasingly forced to fill in more and more forms There is the question of prescription charges, dental charges and rent and rate rebates. The hon. Gentleman wants to extend it even further. He wants to get back to the days when there were very strict means tests for any benefits. The Labour Party does not take that view. They believe that certain benefits are payable by right. There are too many means tests. There were far too many even with the Labour Government.
§ Mr. Heffer
It does not work like that. It works the other way round. People do not get benefits unless they fill in forms and subject themselves to means tests. This is the reality of the whole argument of selectivity and means tests.
The right hon. Gentleman put up a magnificent smokescreen of an argument. He said that this proposal would work to the pensioners' disadvantage. If he thinks there should be less than a year 796 between reviews he should have put down an amendment or a new Clause of his own to provide for this.
I am amazed that whenever there are progressive suggestions from whichever side of the House hon. Gentlemen—in particular from the Conservative side, but I am afraid sometimes from our side—can find a million reasons why they cannot be carried out. After 20 years' of argument in the House of Commons they finally go through and not another word is heard about them. It is miraculously discovered that those things which could not be done can be achieved after all. This will be true of the annual review.
There is a real difference between members on this side of the House and those on the Conservative side. When we were in Government our backbenchers were constantly raising the question of an annual review. On all manner of occasions, by Amendments, by speeches or by Questions, Labour backbenchers urged that there should be an annual review.
I get a little tired of this argument about who did better for old-age pensioners. No Government have done well enough for old-age pensioners, whether Labour, Tory or any other. We have left the old people too long to fend for themselves, and we all ought to be ashamed of ourselves.
I remember Mr. Macmillan, when he was Prime Minister, making an extremely interesting speech in which he said that we should do far more for old people. He was right. Let us have something done, and let us stop arguing about whether we did a bit better than the Tories did. I consider that our Government did, in fact, do better, but, irrespective of that, we did not do enough, and certainly the present Government are not doing enough now.
The question of an annual review is of importance for another reason. Many years ago, I sat on a tribunal which heard people's appeals, and one thing which I remember well—one morning in particular—was that a succession of people said to us, "We cannot understand this. They promised us a 7s. 6d. increase"—I think that that was the figure at the time—"but we have ended up with Is. 3d." Why?—because in the previous year they were on supplementary benefit, 797 as it is now called, and along with their increase in pension they found a reduction in something else, in tobacco and sweets tokens, I think it was, which were advantages given to old people at that time.
They said, "We are being kidded". That is what they say on every occasion. They will say it again now. People on supplementary benefit will not have the full increase.
In any case, therefore, we should have both reviews together. There should be an annual review for both pension and supplementary benefit. We are tired of saying this in the House. It seems so obvious and simple—no genius is called for to see what is required—but it seems that Governments can never do the simple and obvious. I do not know why. It is about time we did the obvious. My hon. Friends, notably my hon. Friend the Member for Rhondda, West (Mr. Alec Jones), who have argued this case, are absolutely right. It ought to be done now.
In the last year, there has been an increase of between 8 and 10 per cent. in food prices. At some stage, and inevitably if we go into the Common Market, we shall face the problem of the value added tax. Whether we like it or not, and even if the Conservative Government bring the tax in and do not apply it to food, in due course, when the harmonisation policies of the E.E.C. are put into effect, it will have to apply to food as well. The consequence for old people will be constant rises in their cost of food, and far higher than they are having now.
If we are to face that sort of situation—I hope not, but the decision will be taken by the House at another time—there must be at least an annual review. I hope that it would be less than an annual review, that a year would be the maximum period. If there are rapid price increases within three months there should be a review and an increase within three months. I agree with the right hon. Member for Kingston-upon-Thames at least to the extent that it is no good reviewing something if one does not do something about it. Review in itself is not the answer; we must ensure that an increase results from it.
798 I hope that the Secretary of State will accept our argument, but I do not think that he will, despite his suavity. He is a nice bloke in many respects. Unfortunately, I happen to be on the Committee considering the Social Security Bill. All our persuasive arguments there make not the slightest difference. We just get voted down. Behind the right hon. Gentleman's suave, friendly appearance he has not a heart of gold but a heart of flint. Therefore, I have a horrible feeling that the Government will not accept our argument tonight.
Be it on their head. There is a great deal of common sense in the argument, and it is about time the Government—whichever party is in power—accepted this principle.
§ Sir Brandon Rhys Williams (Kensington, South)
I have listened with the greatest interest to the speeches of Labour hon. Members. I had hoped to hear the answer to a question I frequently ask myself about pensions. All of us will retire one day, and we must all hope for a long and prosperous retirement. Therefore, the desire that there should be a redistribution of the nation's income in favour of the old is not confined to hon. Members opposite. We must all want that.
When we compare the performance of the parties since the war we see that that of my party shines by comparison with that of the Labour Party. That must be admitted. There may not be many pensioners alive today who remember the great inflation of 1950 and 1951. If hon. Members opposite searched their memories and asked themselves what the Labour Party did in those days, they would not be too cocky.
§ Mr. Charles Loughlin (Gloucestershire, West)
The hon. Gentleman must be fair. He knows that the vast price increases between 1950 and 1951 were directly consequent upon the Korean War.
§ Sir B. Rhys Williams
The hon Gentleman has brought a note of realism into his remarks. I accept what he said.
It is of interest that new Clause 1 was ruled out of order and new Clause 2 was selected instead. The reason, unless I am misinformed, is that new Clause 1 requires a charge upon the people. That is what is implicit in all the speeches by hon. Members opposite. But what 799 we have not heard is any suggestion as to how an increase in pensions would be paid for. I hope that no one would ever accuse me of not trying to be specific on questions of social security reform.
My compatriot, the hon. Member for Rhondda, West (Mr. Alec Jones), said that when he and other hon. Members pressed, during consideration of the Superannuation Act, for an annual increase to become automatic, his Government resisted that proposal. But he did not tell us why. If the proposal is resisted by my right hon. Friend the Secretary of State tonight, the reason is very likely to be the same.
§ Mr. Alec Jones
On that occasion we were dealing with not a small Bill but a complete reorganisation of our social security policy. The Minister, David Ennals, who replied, indicated clearly that, because of the scale of the changes we were embarked upon, he had to support a biennial review, but he went on to use the words which I quoted—that he did not rule out the chance of an annual review.
§ Sir B. Rhys Williams
It is self-evident that everybody would like pensioners to be given the best possible deal, but the basic pension is paid for by a system of money-transfer and not out of an accumulation of capital which has been saved by the pensioners. The money arises from those at work and is transferred to those who have retired.
I had hoped that hon. Members opposite, even if they were bound by the rules of order in their selection of the words on the Amendment Paper and therefore were bound to table a new Clause which had little value except as a talking point, would have been realistic in their speeches and would have said precisely what their party would have done. They must convince the House and the pensioners about what they would do. If they propose to increase the redistribution of income under the money-transfer system to give extra benefits to a certain class, they must specify what class of people will do less well. Hon. Members opposite have not told us that.
I dare say that they will say that I am asking too much in expecting them to commit themselves. They have been 800 making electioneering speeches—and God bless them; this is a democratic system—but they must not expect to carry conviction. The oldest people in the community are often the shrewdest, and they know which party is making the promises and which is making the election speeches.
We are in an exceptional year for inflation, and I hope that we shall never see such a year again where change in the value of money is concerned. But what hon. Members opposite must do—and I assure them that hon. Members on this side of the House are doing it—is to work out a specific plan which will protect the pensioners. The hon. Member for Liverpool, Walton (Mr. Heffer), in his sensible but too brief speech, stopped short of being specific. He mentioned Harold Macmillan, who said, "The pensioners are the people who have brought us to where we are". The object of that remark was to show that now we must carry them with us where we are going. But we must devise a mechanism for this. It is not good enough for the House simply to make election speeches and to use the pensioners as an electoral punchball. We must make specific recommendations, and we have not heard any tonight. Until the House is ready to be specific as to how the money is to be raised to give the increase in pensions, it is not reasonable to expect the Government to act.
§ Mr. Pavitt
The hon. Gentleman has asked us to be specific. This year the Conservative Party raised £330 million by a number of charges and gave £350 million back in the form of a sixpenny reduction in income tax. In 1964 the Labour Government pledged to give the pensioners £300 million. We gave it in the only way possible—by putting sixpence on tax and sixpence on petrol. That was a great act of courage. That is fact, not theory.
§ Sir B. Rhys Williams
The hon. Gentleman is ignoring that there are two ways to increase the availability of money for pensioners. One is by increasing productivity. High taxation works against increases in productivity. That must be accepted by hon. Members opposite. In the long run, we shall aid pensioners best by increases in productivity. But, in the short run, we can do it only by increasing charges on the working people. I hope 801 that before this debate closes we shall hear specific commitments from hon. Members opposite that that is the way in which the Labour Party would do it.
§ Mr. Loughlin
I will detain the House for two minutes and I will not appeal to the other side of the House because I know that any appeal that I make on behalf of the great mass of the working-class people, let alone working-class pensioners, would be to no avail. I have given up hope of their ever looking at any issue involving working-class people on a compassionate basis or even on a fair basis.
I want to deal with two points and the first is that raised by my hon. Friend the Member for Liverpool, Walton (Mr. Heffer). I do not wish to oppose him but it is necessary to explain things a little so that pensioners are not hoodwinked into believing that an increase is given with one hand and taken away with the other.
The review of the supplementary pensions on a yearly basis was a method by which an additional advance payment was made. If we take the increases in pensions over the last six years and the increase in supplementary pensions we would find that there would be a difference of 6p. Paying the part pension one years as supplementary pension does not mean that old-age pensioners are being robbed, it means that those on supplementary benefits are getting half of the two-yearly review in advance. That ought to be made clear because we ought not to perpetuate this myth.
My second point is to do with the annual review. The right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) said that the new Clause was not specific in that it only said that a review should take place. I have never heard a more barren argument. I would assume that if this House gave what would almost be an instruction to the Government of the day to review pensions on an annual basis it would be looked upon as an instruction to produce an increase in pensions annually. True the new Clause does not say that there shall be an increase but there have been many such clauses introduced into legislation. I find it surprising that this argument should be used by the right hon. Member because if anyone knows anything about pensions and methods of introduction and 802 improvement it is him. I have no faith in hon. Members opposite; I have no hope for them. I hope only that they will go.
§ Mr. R. A. McCrindle (Billericay)
I am constrained to make a short intervention because I get the clear impression from hon. Members opposite that they feel that no one on this side of the House is in favour of an annual review. If they will consult the reports of the Standing Committee or ask their colleagues who sat on that Committee with me they will see that when the hon. Lady moved a similar Amendment I indicated support for the idea.
Mr. William Hainling (Woolwich, West)
How did the hon. Gentleman vote?
§ 11.30 p.m.
§ Mr. McCrindle
If the hon. Gentleman will look at how some of my hon. Friends voted on another Clause, he will not accuse us of lack of courage. We finally voted against the Amendment on the annual review, and herein lies my whole argument. It is not sufficient merely to dismiss the argument of my hon. Friend then, which I suspect will be put again by him tonight. To indicate to old people that by waving a magic wand we can introduce an annual review and then find that administrative machinery is not available is no contribution. This was a valid argument put forward by the Labour Government, and it is no less valid now. Hon. Members should accept that they are pushing at an open door in pressing for a move towards an annual review. They should be pressing this Government, as they pressed the last Government, to create the machinery for an annual review. This would be a much more realistic approach.
I accept that inflation affects old people particularly, especially rising food prices. We on this side of the House have compassion for the old people. We accept that there is a movement towards the annual submission of wage claims by working people, and believe that there is a strong argument in favour of assisting old people towards a similar position. When old people have to look two years into the future for the prospect of an increase, the situation can be difficult. An annual review would provide a lifebelt for old people, and to that extent 803 I accept the idea. But we run the risk of misleading the old people if we pretend that all we have to do is to press a skinflint Government to be more generous and all will be well. We must press for the creation of machinery.
The hon. Member for Gloucestershire, West (Mr. Loughlin) says that he has given up hope that from the Government side of the House there will emerge any generosity or compassion. As I listen to him, I give up hope of any real possibility of pensions being finally taken out of the inter-party discussion which ranges across the Floor of the House. The idea behind the new Clause has my general support but I hope that when, as I predict, we hear from the Under-Secretary of State that there are administrative reasons why it cannot be introduced now. hon. Gentlemen opposite will think again.
§ Mr. R. C. Mitchell (Southampton. Itchen)
I deplore the yahoo sort of debate that often takes place between the two sides on pensions. This consists of saying which Government have done the most in past years. But that sort of argument really gets the pensioner nowhere. We may have our differences on the matter of selectivity, social benefits, and so on, but I believe that among hon. Members on both sides there is a real compassion for pensioners.
Surely we must try to take pensions out of party politics. It certainly does not matter to the individual pensioner who takes the credit for anything he gets. What the pensioner is concerned about is the amount of his pension and whether it will be enough to cope with the prices this week, next week and the week after that. We must try to move towards a comprehensive pension scheme which automatically gives pension increases linked either to the cost of living or, even better, to average earnings. I hope that we shall do something on these lines very quickly.
This new Clause is a real first step towards the much more comprehensive system that most of us would like to see. I hope that the Government will not reply with all the administrative arguments. If what is proposed can be done without administrative difficulties on an annual review basis in Sweden and Germany, why cannot we do it here? I hope that even at this late stage the Government 804 will change their mind and say that they will grant this first step towards an annual review.
§ Mr. Kenneth Marks (Manchester, Gorton)
Last year I moved an Amendment to my own Government's pension legislation to provide for a biennial instead of an annual review. The arguments then put forward called in aid administrative difficulties, the burden of cost involved and also the fact that annual rises in costs were not sufficient to justify what I was suggesting. Two of those arguments have been completely destroyed by the rise in the cost of living in the last twelve to fifteen months. The only argument left is that of cost.
I do not accept that it would be difficult to carry out an annual review of pensions. Almost every other arrangement is carried out on an annual basis, including the Budget, local authority rating, and supplementary benefits. Furthermore, increases in incomes or dividends occur at annual intervals. Why should the pension be excluded from this general rule. During the period of office of the Labour Government, David Ennals mentioned in terms of the loss to pensions a figure of £80 million a year, and this injustice has continued for a long time. There is confusion among old-age pensions because supplementary benefits are increased annually whereas the National Insurance pension is not. There is no valid reason why there should be this distinction.
Concerning the increase being paid in September, I think that the Government have got their priorities wrong. I know that it takes five months from making the decision to paying the increase. I accept that it cannot be done in less time because of the administrative arrangements. Had the decision and the announcement to increase pensions been made at the same time as the announcement to knock sixpence off income tax, the old-age pensioners could have had their rise in March or April. That is what the Labour Government did in 1966. That is what this Government should have done.
§ The Under-Secretary of State for Health and Social Security (Mr. Paul Dean)
The new Clause asks for an annual review of pensions and other 805 benefits. My right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) has pointed out that a request for an annual review does nothing for the interests of pensioners. The Government are committed to keep the rate of pensions and other benefits under continual review—that is the thing which matters—so that they can respond to needs and circumstances as they arise and take the necessary action on them.
§ Mr. Dean
Perhaps the hon. Gentleman will allow me to proceed with my argument. I think he will probably find that I shall deal with the point he has raised on another Bill upstairs with which he has been concerned.
It is strange to find the hon. Member for Hitchin (Mrs. Shirley Williams) coming forward at this late stage with what, for the Opposition, is a completely new policy. The previous Bill to reconstruct the National Insurance scheme, which was brought forward in the last Parliament, contained no indication of annual reviews. In fact, quite the contrary. It clearly stated—the hon. Member for Manchester, Gorton (Mr. Marks) nods, and the hon. Member for Rhondda, West (Mr. Alec Jones) knows this, too—that reviews were to take place every two years; no more, no less. That was the then Government's position at that time.
When they brought forward that Bill the cost of living was rising very fast. It had risen by over 11 per cent. between the increase in pension in 1967 and the increase in 1969. Despite that position, the commitment was for a two-year review rather than for an annual review. Today we find the Opposition coming forward with a completely different policy and story.
§ Mrs. Shirley Williams
The hon. Gentleman must not produce such 806 amazing indignation at this stage. He will recall that in Committee I asked the specific question:… will he give the Committee the promise that there will be an interim up-rating for pensions to bring them in line with the cost of living should it continue to increase at something very much more than the estimates of all previous Ministers that that increase would not be more than 5 per cent. a year?"—[OFFICIAI REPORT, Standing Committee G. 18th May 1971; c. 89.]The hon. Gentleman cannot pretend that I am coming forward on Report with a brand new idea.
§ Mr. Dean
This is completely different At least two hon. Gentlemen opposite have frankly admitted that their own Front Bench was at fault; that they were urging annual reviews and their own Front Bench refused to concede the point. This is powerful evidence which is being produced by hon. Gentlemen opposite. It is a strange situation that we get this sudden change of front and are presented with a new Clause which would do nothing in practical terms to help pensioners.
May I deal briefly with the Government's position on this. The first point is that this increase, which, if the House approves the Bill, is due to operate in September, is the biggest increase ever, and we can say with confidence that it will more than restore the value of the rate of pension that was introduced in November, 1969.
§ 11.45 p.m.
§ Mr. Dean
Over and above that, there is the age addition for those over 80, and there is the chronic sick package. That will mean that these most needy sections of the community will not only get the biggest increase ever in money terms on their basic benefit, but will get something over and above that to reflect the additional needs which we believe they have.
§ Mr. Dean
May I deal with this, because I think that I shall cover the point made by the hon. Gentleman.
The next point—and this is action, which speaks very much louder than words—is that the Government have already responded to the price situation 807 by advancing the increase in benefits from November, which would be the end of the two-year period, to September of this year. There is, therefore, value in having the flexibility which the present situation gives us.
The next point is, of course, the supplementary benefit, and here the hon. Member for Gloucestershire, West (Mr. Loughlin), with his experience as a Minister in the Department where I now am, corrected his hon. Friend the Member for Liverpool, Walton (Mr. Hefter) when he said that because the increase in supplementary benefit which has been customary for some years comes each year, it means that when it comes in the year in which the pension is being increased it is not as high as for the National Insurance pensioner because an instalment, as it were, had come the year before, but the total for the two years was the same. I confirm that that is right, and I emphasise to the House that for those who are most in need, those who are most vulnerable to rising prices—namely, those on supplementary benefit—it has been customary for some years for the increase to be made annually.
§ Mr. Heffer
No one has corrected me. I understood the position perfectly well. My hon. Friend the Member for Gloucestershire, West (Mr. Loughlin) was explaining the position, and what he said adds weight to the case for an annual review to bring the two things into line. Even if there is a full explanation of the position, pensioners still feel that they are being cheated. That is the important thing, and that adds strength to the argument that the two reviews should be brought into line.
§ Mr. Dean
I understand the hon. Gentleman's point, and I concede that it is not altogether easy to explain to those who are on supplementary benefit the complicated arithmetic that has to take place in the year when National Insurance pensions are increased. But, having conceded that, I put it to the hon. Gentleman that if we are to respond readily, and at frequent intervals, to those who are most vulnerable to price increases, the increase each year is the best way to do that. What the hon. Gentleman is really saying is that we should increase supplementary 808 benefits only every other year, or that both benefits should be increased every year.
But as long as we have an annual increase, which has been customary for some years now, this is the best way in which we can help those who are most in need. These are ways in which we have already shown that we are responding to the price situation and that we are doing our utmost to see that pensioners, the very old, the sick, the disabled and those who are unemployed get an increase in their benefit which will more than restore the purchasing power of that benefit.
When one considers the record of this Government in this field over a short period of 12 months one realises that we are entitled to be taken at our word when we say that we intend to go on as we have started, caring for the interests of those who are in receipt of benefits, National Insurance and supplementary benefits. The first Bill which this Government put to this Parliament was a Bill to provide pensions for the over-80s and for widows between 40 and 50, and to start the attendance allowance for the severely disabled. Actions speak louder than words.
My right hon. Friend is entitled to be believed when he has made a firm commitment that we shall go on looking after pensioners and others in future as we have done this last 12 months.
§ Mr. Loughlin
Before the hon. Gentleman sits down, how many of the over-80 pensioners were receiving supplementary benefit in excess of the pension which they will receive when they are entitled to it?
§ Mr. Neil Kinnock (Bedwellty)
The fact that several of my hon. Friends would have liked the opportunity to answer some of the points which the Under-Secretary made at the end of his speech more or less imposes an obligation on me to try to answer them, although I did not take part in the lengthy Committee 809 stage. Unfortunately for the hon. Gentleman and his party's credibility—he is not helping by reiterating these half truths—the pensioners know so well how the Conservative Government stole so much of their so-called pensions programme of the last year from the Labour Government.
If the hon. Gentleman went to a pensioners' rally or a pensioners' meeting like those which I and my hon. Friends have attended in the last 12 months and said the same words with the same conviction as he has in the last five minutes, he would be laughed out of that meeting by a generation of people who are a great deal less abrasive than my generation and are prepared to give much more welcome to guests. His remarks would have showed so much contempt for their understanding of the pensioners' situation that he would have deserved every bit of the ridicule that he would doubtless have received.
My hon. Friend the Member for Willesden, West (Mr. Pavitt) made a trenchant point when he referred to the letter which he had received from the Department. He said that it was in an obscure officialese, a special language. The person who is writing that letter must be the same person who is writing the series of forms that it has been our displeasure to know in the post offices and social security offices.
Hon. Members who do constituency work will know that many people who are collecting these forms—old-age pensioners and persons who qualify for the various benefits—are finding the documents incomprehensible. Constituents of mine have asked me to do a comprehension exercise on forms from the Department.
§ Mr. Dean
The letter which I wrote to his hon. Friend, copies of which I sent to other hon. Members who I thought would be interested in the subject, was on a highly detailed administrative matter. I thought that, as a matter of courtesy, it would be well to tell them of the administrative complications that were involved in the point they had raised and with which I was not able to deal fully in Committee. That is why the letter was complicated.
§ Mr. Kinnock
I appreciate that, and I hope my point about the confusing wording 810 of other documents published by the Department will not be overlooked. I assure the hon. Gentleman that we are grateful for the detailed treatment he gave to the point raised by my hon. Friend and dealt with in his letter.
Requests have been made tonight, as they were in the Supply Day debate we had recently on pensions, to take the question of pensions out of politics. The hon. Member for Paddington, South (Mr. Scott) thought that the interests of pensioners could be safeguarded by the efforts of back benchers as they battered away at Governments on behalf of the aged. I suggest that the pensioners would not have much confidence in that suggestion or in our ability to see that they have sufficient money to keep them going throughout the year.
At the General Election and since the Government have shown their desire to apply a system of selectivity to social service provision generally. This will probably be their future policy, although there is a basic weakness in it, particularly when applied to the pension. The overwhelming majority of pensioners—indeed, almost all of them—are in the category of the needy. It is pointless to talk about selectivity in this context and of the needy and the less needy, and for us to talk in terms of redistributing the pool of wealth among them is contemptible.
§ Question put and negatived.