§ Before I come to the details of my taxation proposals, there is one important announcement I must make concerning direct help to those most hard hit by inflation—the old-age pensioners.
§ In our election manifesto we promised to review retirement pensions every two years to ensure that they at least maintain their purchasing power.
§ My right hon. Friend the Secretary of State for Social Services will be making a statement to the House about this and related matters, but we thought that it 1375 would be for the convenience of the House if I were today to outline the Government's proposals.
§ We intend to increase the standard pension for a single person by £1—from the present rate of £5 a week to £6. The standard rate for a married couple will be increased from £8.10 to £9.70. Other National Insurance benefits and war pensions will be correspondingly improved. The basic scale rates of supplementary benefits will go up by smaller amounts because of the interim uprating in November, 1970, but the increase from November, 1969, will be the same as for pensions. These increases will take effect from 20th September—
§ Mr. Barber—the earliest practicable date. The period between the announcement and the implementation of the pension increases is about a month less than it was in 1969.
§ Mr. Andrew Faulds (Smethwick)With the same inflation?
§ Mr. BarberThe cost of these improvements in National Insurance benefits is estimated at about £560 million in a full year, and will obviously involve an increase in contributions. On the last occasion when improvements in benefits were announced, in the Budget of 1969, the information concerning contributions was only given later. I think the House will agree that it is best to announce the payments and the benefits at the same time.
We have decided that the fairest way of financing this increase in pensions is by moving towards our long-term objective of fully graduated National Insurance contributions. The ceiling for such contributions will be raised from £30 to £42, and the rate of contributions on earnings between £18 and £30 a week will go up from 3.25 per cent. to 4.35 per cent. a side.
The rate of contribution on the new band of liable earnings, from £30 to £42, will also be 4.35 per cent. The ordinary flat-rate contribution will remain unchanged, although there will of course be increases for the self-employed and the non-employed. The Exchequer will contribute about 18 per cent. of the total contribution income. The pre-Budget forecasts to which I have referred take 1376 into account the increases in both pensions and contributions.