HC Deb 31 March 1971 vol 814 cc1501-14

We propose a substantial package of improvements for a neglected group, the chronic sick, to lift them above the basic benefits of the short term sick when their earnings related supplement ceases after six months of incapacity. At this point they will become invalidity pensioners, entitled to an invalidity allowance if incapacity began more than 5 years before pensionable age as well as the full standard rate of benefit. We shall start at a modest level with three rates: £1 if incapacity began before the age of 35; 60p if it began before 45; 30p if it began before 55 for women and 60 for men. We are deliberately favouring those who fall chronically sick young, because they will not have had the same opportunities to build up personal savings or pension rights that an older man had.

The allowance will be paid to the existing chronic sick who are under pension age at the appropriate rate. Well over three-quarters of the existing 400,000 chronic sick are expected to qualify.

In these cases of prolonged incapacity the wife may become the main breadwinner. We therefore propose to apply to her earnings the tapered retirement pensions earnings rule, eased as I have already described to £9.50, instead of the all-or-nothing rule which at present extinguishes the increase paid for her if her earnings exceed £3.10.

The chronic sickness of the father imposes particular difficulties where there are dependent children. We propose to pay the higher rate of children's allowances at present payable only for the children of widows—£2.95 including family allowance after the uprating—for the children of invalidity pensioners, instead of £1.55 as it is now.

At retirement age, invalidity allowances will be carried over to retirement pensions as lifelong benefits, and they will be payable to unemployable pensioners under the war pensions and industrial injuries scheme. All these categories of pensioners will also qualify for the family benefits which go with invalidity pension.

The House may be interested in an example of the changes. The national insurance benefit income of a man who fell chronically sick at 30, with 2 children and a wife who is not working, is today £11.20 including family allowances, and would become £13.40 after the uprating. Under the new arrangements it will be £16.60, an increase of nearly 50 per cent.

Finally, we propose to increase the rate of attendance allowance, due to start on 6th December for the very severely disabled, from £4 to £4.80.

All these proposals, including the main pension increases, will cost about £560 million in a full year. There are still gaps that need to be filled. We have this time put the chronic sick and the very old as our priorities. I am sure that when the House has had the chance to study our proposals in detail they will be seen as a healthy combination of the universal and the selective.

Mrs. Shirley Williams

It will indeed be useful to have rather more time to study these very detailed proposals. I have had exactly 10 minutes to look at this very long statement.

I think that the right hon. Gentleman's hon. Friends and colleagues have been very much taken in by the appearance of a package which is totally inadequate. I should like to tell the House the real value of the increases which the right hon. Gentleman is making. On 20th September, 1971, when pensions are increased and all the benefits which the right hon. Gentleman has announced today are in line with the increase in pensions, the real value of the increase will be exactly 18p for a single pensioner and 30p for a married couple, and it will take approximately three or four months for that total sum to be eradicated by increases in prices.

I should like to ask the right hon. Gentleman the following questions. First, will he kindly justify the introduction of earnings-related contributions to the very great extent he has made, including one which, at £40, totally eradicates the benefit of the child allowance, when he is not introducing earnings-related benefits at all?

Secondly, will he tell us what will be the effects on liquid funds for industry of an increase of £250 million on contributions of employers and what effect it will have on the intention of the Budget to increase economic growth?

Thirdly, has the right hon. Gentleman made an assessment of the increase in unemployment benefits as a result of the increase in unemployment which the Government are doing nothing to reduce?

Finally, are we correct in believing that those pensioners over 80, for whom another increase has just been announced, which we welcome, will once again find that their supplementary benefit allowances are withdrawn and that consequently many of them will be no better off at the end of the day than at the present time?

Sir K. Joseph

I am sorry that the hon. Lady has had only 10 minutes to study the statement. Certainly she should have had half an hour. I apologise.

I cannot see how the hon. Lady can predict the real value of the pension next September. I can assure the House with confidence that the pension will be an improvement in real terms, which is more than the hon. Lady's Government produced in 1969. There will be an earnings-related supplement to short-term benefits payable at 15 per cent. for the tranche of income between £30 and £42, but it will not start until the benefit year beginning 1973.

As for the liquid funds of industry, it was always anticipated by those who pressed for a pension increase that employers would bear their fair share of the cost. It lies ill for the spokesman for a party which imposed S.E.T. with the forced loan on industry to criticise that.

It is not possible to predict the cost of unemployment benefit, but the Government Actuary's Report will set the parameters behind these assumptions.

The hon. Lady obviously did not, in the short time she had to study the statement, take in that the over-80 additional pension will be carried through to supplementary benefit by an increase of 25p in the long-term addition.

Mr. Boyd-Carpenter

Will my right hon. Friend tell the House—I do not think that he did—what will be the increase in the presumably flat-rate contribution payable by the self-employed? Is he aware that the humane selectivity of a package which gives priority to the very old and the long-term sick will appeal to social thinking people inside and outside the House and in all parties?

Sir K. Joseph

I am grateful to my right hon. Friend, who pioneered much in this sphere. The answer to his question is 26p.

Mr. Crossman

First, is the right hon. Gentleman convinced that the general increase will be sufficient to cover over two years the likely increase in the cost of living?

Secondly, I appreciate what the right hon. Gentleman has done about the disability pensions. It is a beginning, and I welcome it very much indeed.

Thirdly, the right hon. Gentleman has not mentioned any increase in the graduated benefit; he has mentioned only an increase in the graduated contribution. Does this mean that we have now moved from a contributory system in which benefit is related to contribution to a social security tax system in which we impose graduated contributions and receive only flat-rate benefits? Is that the way we are really moving?

Sir K. Joseph

I am grateful to the right hon. Gentleman for his welcome to the treatment of the chronic sick. The right hon. Gentleman is wrong about graduated benefit. The graduated pension continues as now; that is, 2½p. for each £7–50, I think, of contribution.

Mr. Crossman

When we put it up in 1969 we related the increase in contribution to an increase in benefit as well. I think what the right hon. Gentleman now says is that the bricks remain the same value and we pay more and, therefore, the graduated element which the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carptener) introduced is being flattened out on the benefits side and swollen on the contribution side.

Sir K. Joseph

That is a fair statement. We are moving towards the declared purpose of an earnings-related contribution. The real value of the pension will, I am confident, be better after the up-rating than when the pension was last increased in 1969.

Dame Irene Ward

I should like to express the very grateful thanks of everybody for the speed with which my right hon. Friend has announced this wonderful treatment. I should also like to express my great pleasure at the team which operates from the Department of Health and Social Security. I suggest that my right hon. Friend pays no attention to the monstrous regiment of men and women who cavil and criticise a scheme which they had neither the money nor the courage to bring in.

Sir K. Joseph

I only hope that my hon. Friends and I will continue to earn my hon. Friend's most welcome commendation.

Mr. Rhodes

Is the right hon. Gentleman aware that today's insurance claw-back after yesterday's taxation hand-out will make many people feel today very much like the morning after the night before?

Since the right hon. Gentleman has expressed such close sympathy for the chronic sick and for the elderly, will he now assure the House that, in the course of the massive prescription charges which he is now planning, he will exempt women between the ages of 60 and 65 and those in need of permanent medication?

Sir K. Joseph

I shall not give such a guarantee. The hon. Gentleman and the House will be aware that every penny which is being raised in contribution from the working generation, and more, because of the Exchequer contribution, will be paid out to the parents of the working generation in increased pensions.

Mr. Tapsell

Will my right hon. Friend accept that there will be widespread respect for a Government which are not only making our society more efficient, but more compassionate?

I should like to ask about the position of the self-employed. As we move further towards a wage-related contribution to National Insurance, is there not a danger that the self-employed will become relatively more badly positioned in relation to the employed? Might there not be a case for increasing the Exchequer contribution for the self-employed?

Sir K. Joseph

I do not think that my hon. Friend has a case there, but I will look at what he has said. I think the whole House wants to see the chronic sick better treated, and this is the first step in a direction which I should have thought both sides would have welcomed.

Mr. Orme

Is the Minister aware that the people who will have to carry the burden of the contributions will be the highly skilled section of the working population, the artisans and craftsmen, in the wage bracket of between £25 and £40 a week, in addition to the other burdens imposed by the mini-Budget which start tomorrow? Why are the Government not making a larger Exchequer contribution so that the whole community, including those who are being exempted from surtax, can pay towards these contributions?

Sir K. Joseph

The Exchequer contribution has been restored to the full 18 per cent. which has been habitual. The increases are proportionately much less in the bracket to which the hon. Gentleman refers—for a benefit increase of precisely double—than they were in 1969 under his Government. The low paid are paying no extra, since there is no increase in the flat rate.

Sir B. Rhys Williams

I congratulate my right hon. Friend on the wisdom with which he proposes to distribute the sum of £560 million a year. Has he prepared an estimate of the number of people who as a result of these measures will be saved from the need for applying for supplementary benefit?

Sir K. Joseph

It is not nearly as large a figure as I would wish. A number will be shifted, particularly the chronic sick, from partial dependence on means-tested benefit to full dependence on insurance benefit, but the numbers who will be taken off supplementary benefit altogether will, I fear, be only scores of thousands.

Mr. Alfred Morris

Does the right hon. Gentleman agree that the heaviest onset of chronic sickness is among men between 45 and 60 and that the invalidity allowance of 30p is, therefore, inadequate? Has the right hon. Gentleman seen the publication of the Disablement Income Group comparing the financial

Proposed Weekly Rate Existing Rate
Standard rate of unemployment and sickness benefits, maternity and widowed mother's allowances and invalidity, widows and retirement pensions £ £
Single person 6.00 5.00
Wife or other adult dependant 3.70 3.10
Unemployment or sickness benefit
Married woman (normal rate) 4.20 3.50
Persons under 18 3.30 2.75
Widow's allowance (first 26 weeks of widowhood) 8.40 7.00
Widow's basic pension 1.80 1.50
Invalidity allowance payable with invalidity pension, when in-capacity began before age:
35 1.00 New Benefit
45 0.60
60 for men or 55 for women 0.30
Attendance allowance 4.80 4.00
Old persons' pensions
Wife 2.20 1.85
Any other person 3.60 3.00
Age addition to retirement pension 0.25 New Benefit
Guardian's allowance 2.95 2.45
Child's special allowance and increases for children of widows, invalidity and retirement pensioners*
First child 2.95 2.45
Second child† 2.05 1.55
Any other child† 1.95 1.45
Increases for children of all other beneficiaries
First child 1.85 1.55
Second child† 0.95 0.65
Any other child† 0.85 0.55
*At present the chronic sick, who will become invalidity pensioners, and retirement pensioners receive the lower rates of increase for their children.
† Family allowances are payable for second and subsequent children.

help we give to the chronic sick and severely disabled with what is made available in neighbouring countries, and, against that background, does he think his proposal is adequate? Finally, what does the right hon. Gentleman propose to do about easing the earnings rule to help the wife of the man who has been sick and off work for more than six months?

Sir K. Joseph

I did say that the rates with which we are starting are modest, but they are a beginning. They are not yet as good as they are in the countries analysed by the D.I.G. pamphlet, which I have read, but it is not for the Labour Party to rebuke us for this, since in six years in office they did precisely nothing about the chronic sick. Secondly, the dependent wife of a chronic sick man will be enabled to earn fully without losing her £3.10 dependency benefit which up to now has been withdrawn if she earned a penny a week over that.

Mr. Speaker

Order. I am advised that these matters may be further pursued during the debate on the Budget.

Following is the information:

Proposed Weekly Rate Existing Present Rate
£ £
Injury benefit 8.75* 7.75
Disablement benefit (100 per cent, assessment) 10.00* 8.40
Unemployability supplement 6.00† 5.00
Special hardship allowance (maximum) 4.00 3.35
Constant attendance allowance (normal maximum) 4.00 3.30
Exceptionally severe disablement allowance 4.00 3.00
Industrial death benefit:
Widow's pension during first 26 weeks of widowhood 8.40 7.00
Widow's pension now payable at £5.55 rate 6.55 5.55
Widow's pension now payable at £1.50 rate 1.80 1.50
Rates for dependant wives and children are the same as for comparable National Insurance benefit.
* Increases will also be made in the juvenile rates.
† Invalidity allowances and the higher rate of children's allowances will be paid as to invalidity pensioners—see National Insurance Table.
All ranks receive the same increases, officer's rates being expressed in pounds per annum.
Proposed Weekly Rate Existing Rate
£ £
Disablement pension for private at 100 per cent, rate 10.00 8.40
Unemployability allowances*
Personal allowance 6.55 5.45
Increase or further increase for wife 3.20 2.60
Increase for adult dependant 3.70 3.10
Comforts allowance
Higher rate 1.70 1.25
Lower rate 0.85 0.63
Allowance for lowered standard of occupation (maximum) 4.00 3.35
Constant attendance allowance
Special maximum 8.00 6.60
Special intermediate 6.00 4.95
Normal maximum 4.00 3.30
Three-quarter day 3.00 2.50
Half and quarter day 2.00 1.65
Clothing allowance (annual rate)
Highest rate 19.00 14.00
Intermediate rate 12.00 9.00
Lowest rate 7.00 5.25
Age allowance with assessments of
40 and 50 per cent. 0.50 0.38
60 and 70 per cent. 0.70 0.50
80 and 90 per cent. 1.00 0.75
100 per cent. 1.40 1.00
Exceptionally severe disablement allowance 4.00 3.00
Severe disablement occupational allowance 2.00 1.00
* Invalidity allowances and the higher rate of children's allowances will be paid as to invalidity pensioners—see National Insurance Table.
Proposed Weekly Rate Existing Rate
Widows pensions £ £
Standard rate 7.80 6.50
Basic rate 1.80 1.50
Rent allowance 3.00 2.50
Age allowance for elderly widows
Between age 65 and 70 0.50 New benefit
Over age 70 1.00 0.75
Widowers pensions 7.80 6.50
Widows children
Eldest child 3.15 2.65
Other children with family allowance 2.65 2.15
Other children without family allowances 3.00 2.50
Motherless and fatherless children aged
Under 15 Eldest child or other children with no family 3.15 2.65
Over 15 4.65 3.90
Under 15 Other children with family allowances 2.65 2.15
Over 15 4.15 3.40
Adult orphans 6.00 5.00
Proposed Weekly Rate Present Rate
Ordinary scale £ £
Husband and wife 9.45 8.50
Person living alone 5.80 5.20
Any other person aged
Not less than 21 4.60 4.15
Less than 21 but not less than 18 4.05 3.50
Less than 18 but not less than 16 3.60 3.05
Less than 16 but not less than 13 3.00 2.40
Less than 13 but not less than 11 2.45 2.20
Less than 11 but not less than 5 2.00 1.80
Less than 5 1.70 1.50
Non-householder rent allowance 0.65 0.60
Attendance requirements 4.80 4.00
(including National Health Service contribution, but excluding Redundancy Fund contribution and Selective Employment Tax)
Insured Person
Present Rate Increase* New Rate
Total Graduated Total Flat Rate Graduated Total
Employed man not contracted out: £ £ £ £ £ £
£10 0.94 Nil Nil 0.88 0.06 0.94
£20 1.39 0.03 0.03 0.88 0.54 1.42
£30 1.70 0.15 0.15 0.88 0.97 1.85
£42 1.70 0.65 0.65 0.88 1.47 2.35
Contracted out:
£20 1.13 0.02 0.02 1.00 0.15 1.15
£42 1.43 0.65 0.65 1.00 1.08 2.08
Employed woman (including married woman not opted out) not contracted out:
£10 0.81 Nil Nil 0.75 006 0.81
£20 1.26 0.03 0.03 0.75 0.54 1.29
£30 1.57 0.15 0.15 0.75 0.97 1.72
£42 1.57 0.65 0.65 0.75 1.47 2.22
Contracted out:
£20 0.96 0.02 0.02 0.83 0.15 0.98
£42 1.26 0.65 0.65 0.83 1.08 1.91
* No increase in flat rate contributions.
Present Rate Increase* New Rate
Total Graduated Total Flat Rate Graduated Total
£ £ £ £ £ £
Employed man not contracted out:
£10 0.947 Nil Nil 0.887 0.06 0.947
£20 1.397 0.03 0.03 0.887 0.54 1.427
£30 1.707 0.15 0.15 0.887 0.97 1.857
£42 1.707 0.65 0.65 0.887 1.47 2.357
Contracted out earnings:
£20 1.137 0.02 0.02 1.007 0.15 1.157
£42 1.437 0.65 0.65 1.007 1.08 2.087
Employed woman (including married woman not opted out) not contracted out:
£10 0.831 Nil Nil 0.771 0.06 0.831
£20 1.281 0.03 0.03 0.771 0.54 1.311
£30 1.591 0.15 0.15 0.771 0.97 1.741
£42 1.591 0.65 0.65 0.771 1.47 2.241
Contracted out earnings:
£20 0.981 0.02 0.02 0.851 0.15 1.001
£42 1.281 0.65 0.65 0.851 1.08 1.931
* No increase in flat rate contributions.
Present Rate Increase New Rate
£ £ £
Men over 18 1.24 0.26 1.50
Women over 18 1.03 0.22 1.25