HC Deb 03 May 1971 vol 816 cc1011-92

Order for Second Reading read.

3.32 p.m.

The Secretary of State for Social Services (Sir Keith Joseph)

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

The House will already be aware from my statement, from the White Paper and from the Government Actuary's Report accompanying the Bill, of the proposals which the Government are putting before the House. The Bill which we are debating today covers only the national insurance and industrial injury ingredients of the total set of proposals. There will be an Instrument laid for war pensions in due course, and before long we shall be laying before the House an affirmative Resolution connected with the Supplementary Benefit Regulations.

This Bill breaks new ground in several directions. Although it must share with the Act of 1959 introduced by my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) and with the Act of 1966 introduced by the Labour Government the distinctions of making the largest changes in the national insurance scheme, it has other distinctions all its own. It is the longest National Insurance Bill since the original Measure was piloted through the House in 1948, it disposes of the largest aggregate sum of money in any National Insurance Bill since then, and it introduces the most varied package of improvements.

The Bill will be memorable, not just because it is the longest and in terms of money the largest National Insurance Bill since 1948, but because it makes a real start in filling the very large gap in our social security system, namely, in regard to the needs of the disabled and chronic sick. The Government are not pretending that the proposals which are now in the pipeline represent the final story of what is needed for the disabled and chronic sick. That would be very far from the truth. However, we maintain that 1971 will have been a notable year for two substantial steps in filling the needs of these two large and hitherto neglected groups of the population.

There is first of all the £24 million of gross expenditure for the chronic sick embodied in the Bill, which will come into effect in late September this year, and then there is the £10 million coming into effect in December by way of an attendance allowance for the very severely disabled. I will explain the chronic sick package deal in its place, but I would draw particular attention to it at the start of my introduction of the Bill as the outstanding feature of the proposals which the Government are laying before the House for the National Insurance Scheme.

The basic proposal for the standard weekly rate of national insurance benefit will be found in Clause 2 and Schedule 2 of the Bill. These provide that the rate should go up by £1 a week for a single person and by £1.60p for a married couple: from £5 to £6 for a single person; from £8.10p to £9.70p for a married couple from the week beginning 20th September this year. The other rates will go up in proportion, that is to say by about 20 per cent.

I say with diffidence that there have never been bigger increases in money terms. I say "with diffidence" because we are passing through, and pensioners in particular are enduring, a very high rate of price inflation. Despite that factor, the Government are confident that these increases will make good the erosion in the value of the benefits since they were last increased in November, 1969. Since that increase until the last known date in March this year, there had been a fall in real value of national insurance benefits of 11.6 per cent. Therefore, there is a gap between March, 1971, and September, 1971, of a considerable amount. This is why we are confident that when the increased benefits come into payment they will represent a real improvement upon the benefits as increased in November, 1969.

These all-round increases in benefits will be welcomed by millions of people. There are 7½ million retirement pensioners. Some 10 million people in a normal year draw sickness benefit for a greater or lesser length of time and all of them will get an increased benefit. Some 3 million people in a normal year draw unemployment benefit for a greater or lesser period and all will get an improvement. Those are the central changes in national insurance benefits proposed in the Bill.

There are two smaller changes in the basic scheme that will be welcomed by hon. Members on both sides. As pledged by the Government, we are modifying the earnings rule. In Clause 2 the House will see that pensioners will be entitled to earn, after 20th September, £9.50p instead of, at present, £7.50p before their national insurance pension is abated by their earnings. This will help thousands of national insurance pensioners while still preserving intact the retirement condition on which successive Governments have remained firm.

Then there is an improvement in the increments drawn for deferred retirement. The increment goes up from 5p to 6p per week for every nine flat-rate national insurance contributions paid. This will, in time, benefit about 300,000 people who have deferred their retirement in order to continue earning and who are still, therefore, paying national insurance fiat-rate contributions. There will be resulting increases in their retirement pension, when they come to draw it, either by retiring or by reaching the absolute entitlement age of 65 for a woman and 70 for a man.

I have passed relatively quickly over the changes proposed in the basic benefits. I come now to the group of selective improvements for which the Bill will be particularly welcome by hon. Members on both sides.

Mr. John Mendelson (Penistone)

Before the right hon. Gentleman does that, and in view of the particularly accelerated increase in the cost of living in the last seven months—I am not deliberately choosing the date of the change of Government; the cost of living has jumped particularly in recent months—has he any later figures to give of the erosion of the proposed increase of £1 since the Government announced it?

Sir K. Joseph

No. The last figure I have for the cost of living relates to March, 1971. I am afraid that I do not have a more up-to-date figure.

One of the election pledges of the Conservative Party was to give priority to those most in need, and we referred to the over-80s without pension, the elderly disabled, the chronic sick, and children in families below the poverty line. Hon. Members will recognise that some progress has already been made in most of these directions. The family income supplement comes into payment at enhanced rates this August. Last December those who had no chance to join the national insurance scheme and are over 80 were brought into the old persons' pension arrangements, and the rates that they were then paid, £3 single and £1.85 for a married woman, are being raised by this Bill to £3.60 and £2.20 respectively. We have already passed into law the attendance allowance for the very severely disabled, which comes into payment this December. It was announced at £4 per week and by this Bill it is being raised to £4.80 and will be tax free.

We are proposing by the Bill to complete the task accepted in our election commitment by extending the benefit to all those over 80, whether or not they have the chance to join the national insurance scheme, who either have no retirement pension or who have a pension of less than £3.60 for a single person or £2.20 for a married woman. This remaining group of over-80s, about 50,000 in number, will get the old persons' pension from the week beginning 20th September. Thus, there will be no person over 80 after that date who will not have either a retirement pension or the old persons' pension.

I come now to the chronic sick package, which the House will find in Clauses 3 and 4. When I made the announcement to the House I spoke of the chronic sick as a "neglected group". As the House will realise, there is no distinction in the sickness benefit payable for a person whether he is sick for six days or six years, except for the period between the end of the second week and the end of the 28th week of sickness. No distinction is made between the short-term and long-term sick. That is a defect which both parties have recognised, but the Government are glad to have the opportunity to take the first steps to put this defect right.

The proposal in Clause 3 is that there should be a long-term benefit for everybody incapable of work and continuously sick for six months or more. There will be a change of nomenclature for such people, from "recipients of sickness benefit" to "recipients of invalidity benefit." They will receive an invalidity pension at the standard national insurance rate, which is £6 for a single person under the Bill and £9.70 for a married couple, plus an invalidity allowance for those who fall sick more than five years before the pension age, that is before 60 for a man and before 55 for a woman.

The amount of this invalidity allowance will depend on the age at which the incapacity for work began. The thought in our mind is that during a normal working life a man or woman should perhaps be able to put aside something towards old age. If that working life is interrupted by continuous chronic disability that capacity to put aside some reserves is eroded. That is why we propose that the invalidity allowance should be at its maximum earlier in working life at which the person is struck by chronic sickness.

We do not pretend that the rates at which we are beginning this invalidity allowance are anything but modest. However, they make a start. They represent a new benefit and we will have to see how they work.

The proposal is that there shall be a £1 per week invalidity allowance for those whose chronic sickness begins before the age of 35; a 60p invalidity allowance for those whose chronic sickness begins between the age of 35 and 45; and a 30p invalidity allowance for those whose chronic sickness begins between the ages of 45 and 55 for a woman or 60 for a man.

The existing chronic sick who are under pension age will draw invalidity allowance from the week beginning 20th September, provided their chronic sickness began before the age of 55 in the case of a woman or before 60 in the case of a man.

I wish to be sure that the House fully understands this point. The invalidity allowance will carry through into retirement. If it is still in payment at the date of retirement it will continue as a lifelong benefit. Hon. Members may not fully appreciate how quickly people will get the advantage of what we are proposing.

Provided a person is under pension age—under 60 for a woman and 65 for a man—on the appointed day when this benefit comes into payment, and provided the chronic sickness for which the invalidity allowance is due started before, in the case of a woman 55 and in the case of a man 60, then at once from late September of this year the invalidity allowance will come into payment and will be a life-long benefit right through retirement.

This is by no means the only improvement we are proposing for the chronic sick. Under Clause 4 we are seeking deliberately to help those chronic sick households where the wife of a chronic sick person is struggling to help the household income. Only too often the House has to help those who cannot help themselves; that is one of our prime functions as a Government. How much we rejoice to be able to help those who are struggling to help themselves.

This is the case of a household in which the normal breadwinner is chronically sick but where the wife is able to work. We realise that there are many such households where there is no wife, or where the wife cannot go out to work because of her personal circumstances, because there are small children, or because the husband needs too much attention. Obviously we are not seeking to draw any moral judgment, but where the wife can and does go out to work she is at the moment subject to a very arbitrary and total cut-off rule. If at the moment she earns more than £3.10 a week, which is the level of the dependent wife's benefit, that benefit totally vanishes: the household is not entitled to a penny for that chronically sick person's wife; whereas the retirement pensioner is entitled to earn up to £7.50 now, which is to be increased to £9.50, before his pension is abated in any way.

What we propose—it is the proposal suggested by the previous Government in the Bill which fell at the election—is that the working wife of a chronic sick man shall be entitled to the same abatement rules for earnings as the retirement pensioner—that is, instead of an all or nothing cut-off at £3.10, which is increased to £3.70 under the Bill, there will be a right to the full dependant's benefit of £3.70 provided that the wife's earnings do not exceed £9.50 as the figure will be under the Bill. The wife's benefit, therefore, will not totally vanish until her earnings exceed about £14 per week.

Mrs. Jill Knight (Birmingham. Edgbaston)

Has my right hon. Friend given any consideration to a tax allowance in these circumstances, such as the allowance which is granted to a man who has a housekeeper? This would be an important aid for a woman in the circumstances that my right hon. Friend describes.

Sir K. Joseph

This is entirely a question for my right hon. Friend the Chancellor of the Exchequer. I am sorry not to be able to give my hon. Friend an immediate reply.

So far we have broken new ground compared with the last Government only as to timing. Under the last Government's proposed legislation an invalidity allowance would have been paid but only over the years and according to earnings, so that the £1 invalidity allowance we are proposing would have taken many years—I believe about seven years—to come into payment. The improvement where the wife is earning would have been introduced by the previous Government.

The third component of the chronic sick package in the Bill breaks entirely new ground. We are for the first time proposing to treat the children of invalidity pensioners more generously. After all, one of the most tragic results of chronic sickness is the strain on the standard of living of a family containing children. We are recognising that, and are proposing to provide for the children of an invalidity pensioner children's benefits at the same rate as those now provided for widows instead of at the normal rate for those who are sick. This will produce an improvement of £1.40 per week per child in the households of the chronic sick.

All these improvements will be provided automatically for the chronic sick. There will be no need for applications or for a take-up campaign, mercifully. Those who have been sick for more than six months, provided that they fall within the age rules, will automatically receive the improvements.

Mr. Charles Curran (Uxbridge)

We all warmly welcome the details which my right hon. Friend is announcing of this package. How many men and women will benefit? How many chronic sick are there who will benefit from these proposals?

Sir K. Joseph

I have a few more points to make before I come to that subject.

I do not want to mislead the House. Some people who are chronic sick will get no benefit from this package. If they are within five years of retirement pension, what they will get will be the £1 improvement in their basic single benefit or the £1.60 for a married couple or the equivalent benefit on supplementary benefits. There are some who are in the lowest bracket for an invalidity allowance and who will get only 30p per week on top of the basic increase—that is, £1.30 per week improvement for the single man and £1.90 improvement for the married couple.

At the other end of the scale, where a man has fallen chronic sick under the age of 35, where he has a working wife who is earning more than £3.70 a week, and if he has one, two, three or more children, the transformation in the household income will be dramatic, and there may be improvements for individual households, even some small number of thousands of such households, ranging up to £400 a year as a result of the basic improvements in the chronic sick package in the Bill.

I repeat that this is not what the Government regard as the end of the story, but it is a very worthy start to bring help to these households.

In answer to the question asked by my hon. Friend the Member for Uxbridge (Mr. Curran), there are about 415,000 people who have been sick for more than six months. About four out of five of these will benefit from the new invalidity allowance—that is, four out of five were struck by chronic sickness before the age of five years before pension and are not themselves pensioners. The House will realise when I give these figures that people over pension age are excluded. Pensioners in the future may gain from the invalidity allowance if they carried it through into retirement.

About one-third of this number are on supplementary benefit and will have that benefit reduced by the improvement of which we are speaking. The cost to the National Insurance Fund in a full year will be £24 million, with £6 million offset for supplementary benefit sickness; so there will be a net cost of £18 million for the chronic sick package.

Clause 5 deals with the very elderly. I have already explained that, subject only to a residence test, all persons over 80 will be entitled to a pension. The Government now propose to go further and to give every retirement pensioner over 80, whether they are normal national insurance retirement pensioners or whether they are old person retirement pensioners—they are the two groups brought into benefit by the December, 1970 Measure or by the Bill—an age addition of 25p per week. This age addition recognises, albeit in a small way, the special claims of very elderly people who on the whole need help rather more than others. I well remember the constant emphasis that the right hon. Member for Sowerby (Mr. Houghton) laid upon the plight of elderly widows. A very large number of the over-80s are widows, and by this age addition we are giving a small recognition to their need. As they grow older their possessions wear out and they need help for the necessary jobs which they used to do themselves.

Therefore, the single person over 80 on the full standard rate pension will get from the appointed day £6.25 a week as against £5 now, and the married couple, where both are over 80, will get £10.20 a week as against £8.10 now. Those are increases of 25 per cent. and 26 per cent. respectively. 1.2 million people will benefit from this age addition. A third of them are on supplementary benefit and will therefore have the age addition offset against their supplementary benefit, but they—that is the third whose age addition is offset against supplementary benefit—will be helped by the parallel improvement proposed in the supplementary benefits scheme, which it would not be proper to discuss today but reference to which the House will find in paragraph 39 of the White Paper, whereby we propose an increase of 25p in the long-term addition on supplementary benefit, making it 75p as against 50p where a claimant or a dependant living in the household is over 80.

The cost of the age addition will be £16 million in a full year of which £5 million will be saved in supplementary benefit, but then the increased long-term addition on supplementary benefit will cost £4 million in a full year. The total cost to national insurance or public funds will thus be £15 million.

I turn to Clauses 9 and 12 which cover industrial injuries and diseases, All the main benefits in the industrial injuries scheme will be increased by the general uprating. The disablement pension for 100 per cent. assessment goes up from £8.40 to £10; injury benefit from £7.75 to £8.75; and the industrial injuries widows pension from £5.55 to £6.55.

The selective improvements for the chronic sick and the very elderly, to which I have already referred, will be extended to industrial disablement pensioners receiving unemployability supplement and will be payable to them where appropriate in addition to their industrial injury benefit.

A small but useful selective improvement peculiar to the industrial injury and war pensions scheme is proposed which will enable industrial death benefit to be paid to the widow or other dependants of a disablement pensioner if he was receiving constant attendance allowance at the nominal maximum or a higher rate at the time of his death, even though his death was not due to his industrial injury or war injury.

Clause 11 gives power to bring industrial injury benefits into line with national insurance benefits as regards adjustments when the beneficiary has received free hospital in-patient treatment for prolonged periods.

I turn to the relatively complicated subject in Clause 6 of earnings-related supplement. We propose no change this year and next year in the main provisions relating to the earnings-related supplement for the first six months of unemployment, sickness and widowhood. But for new cases starting in or after May, 1973, changes are proposed. The lower limit will be increased to £10 to take some account of the considerable increase in earnings since these supplements were introduced in 1966. The higher limit will be increased to £42 to correspond with the new upper limit of graduated contributions. Supplement will remain at one-third of earnings between £10 and £30 a week and will be 15 per cent. of earnings from £30 to £42 a week. Those whose supplements depend on earnings in the tax years before 1972–73 will not be affected by these changes.

The limit on total weekly benefit of 85 per cent. of average weekly earnings will remain and will apply after the appointed day to cases where earnings-related supplements are paid in addition to industrial injury benefit.

I now come to another rather complicated subject of unemployment benefit for occupational pensioners. Clause 7 is long and complicated and I will try to express its purpose as simply as possible. It deals with a problem which has been exhaustively examined by the National Insurance Advisory Committee, then by the previous Government, and now by the present Government. The granting of unemployment benefit and contribution credits to certain occupational pensioners who are not effectively in the field of employment can be regarded as a misuse of benefit funds. To counteract this, we propose, as recommended by N.I.A.C., that there should be a test of further work and a sliding scale reducing unemployment benefit for those over 60 who have occupational pensions above certain amounts. For those with occupational pensions of over £18 a week—the N.I.A.C. recommendation was £10—unemployment benefit will be reduced by the amount of the excess. If the occupational pension is £30 a week or more—N.I.A.C.'s recommendation was £20—neither unemployment benefit nor contribution credits will be awarded unless the claimant has worked for not less than 21 hours a week for an employer in a new job for at least six months in the year before the claim and since retirement.

Although not covered by Clause 7, a related change proposed is to exempt all non-employed men between the ages of 60 and 65 from liability to pay contributions. This arises from the strong feelings expressed by some occupational pensioners about their liability to pay a weekly non-employed contribution till 65 for any period when they are not working and are not entitled to credits. They often complain that it is this liability which forces them to attend employment exchanges and register for work in order to have contributions credited on grounds of unemployment. We propose to make such contributions voluntary instead of compulsory, although failure to pay could result in a reduced rate of retirement or widow's pension.

Clause 13 deals with a subject—polygamous marriages—included in the Bill following the Law Commission's Report earlier this year on family law. The Clause confers power on the Secretary of State to make regulations in this field in relation to social security benefits, and we have it in mind that in the regulations to be made we shall bring into benefit those cases where the marriage was once polygamous but is so no longer—for example, because the first wife has died or was divorced before the parties came to this country.

I turn finally to the methods of financing the increases and improvements proposed. The total extra cost falling on the National Insurance and Industrial Injuries Funds as a result of the increases and improvements proposed in the Bill is £537 milion and £20 million respectively in the first full year 1972–73. Under Clauses 1 and 8 and Schedules 1 and 3 we propose that the fairest way of linking this cost is to increase the percentage rate of the graduated contributions paid on earnings over £18 a week and to extend the upper limit of payment of such contributions. There will on this occasion be no increase in flat rate contributions for the main body of employed persons, and this is the first time that this has happened. In this way we shall ensure that the lower-paid worker receives the higher cover provided by the Bill at little or no extra cost to himself. We shall also be moving towards the Government's objective of fully graduated contributions for employed persons—

Mr. Stonley Orme (Salford, West)

Before the Minister continues, may I ask him whether he is aware that this proposal of graduated contributions for flat-rate benefit is running contrary to the form in which it was originally understood the previous Government would bring it in? Is the right hon. Gentleman also aware that this will fall heaviest on the average wage-earner in our society and on those just above, and that in effect they will have to pay these increased contributions for the lower-paid worker instead of the money coming out of the Exchequer grant which at the most is 18 per cent. and which originally was proposed to be 33 per cent.? I know that the previous Government did not implement that proposal, but many of us on this side of the House feel that that is the way in which the money should be found.

Sir K. Joseph

The hon. Gentleman is reaching steeply back into history when he quotes a figure of 33 per cent. Successive Governments have kept an Exchequer contribution of 18 per cent., and it remains at 18 per cent. under our proposals. As for the impact of the graduated contributions on the average industrial wage earner, I can only say that the man earning £30 a week will pay an increase of 15p, which is half the increase at that level proposed by the previous Government, for a benefit now double the size proposed by the previous Government. So the person earning £30 is four times better off in this respect under our proposals.

We are proposing that the graduated contributions paid by employees and employers on earnings above £18 a week should be increased from 3.25 per cent. to 4.35 per cent. and that the upper limit of earnings for such contributions should be increased from £30 to £42 a week. The table on page 10 of the White Paper shows what these contribution changes will mean for a man at various earnings levels. The lowest wage earner will pay nothing more. A man earning £20 a week will pay 3p a week more. I have just referred to the extra 15p a week which the man earning £30 a week—now almost the current national average—will pay. The most a man will pay extra is 65p a week, that is, if his earnings are £42 a week or more. These increases are to be compared with what happened at the last uprating under the Labour Government, as I said, when everyone, even the lowest paid, had to pay more.

I have seen some comments that the extra contributions proposed will in some cases more than offset the advantages gained from the recent changes in income tax proposed by my right hon. Friend the Chancellor of the Exchequer. I have even seen tables purporting to show net losses and gains from the total impact of the Budget changes, the October mini-Budget changes, the social security changes, and the changes proposed by the present Bill. Even such tables have been able to identify very few people indeed in the main small ranges of incomes of single men and married men without children who are shown as being worse off. But the conclusions, it seems to me, are fallacious.

The basic error is to include the national insurance costs, that is, the increases in graduated contributions, on the debit side, but to omit altogether on the credit side the better benefits provided. The extra contributions under this Bill will go entirely towards providing higher or new benefits. A large proportion of the people of this country, through retirement pensions in due course for themselves or retirement pensions immediately for their parents, through sickness benefits for themselves, or —alas, though a smaller group—in unemployment, widowhood or industrial injury benefits for themselves, will have, if not immediately then within a matter of months, either personally or for their parents a more than 100 per cent. return for the extra contributions which they are paying. In the first full years, there will be nearly £500 million of extra contributions collected, and well over £500 million will be paid out in extra benefits.

I have not so far referred to the position of self-employed and non-employed persons. As they do not pay graduated contributions, it is proposed to increase their flat-rate contributions by 26p per week for a self-employed man or 21p per week for a non-employed man, so that they will pay their share of the cost of the improved benefits. The Bill proposes to increase the limit below which self-employed and non-employed people need not pay contributions at all from £312 a year—£6 a week—to £468 a year—£9 a week.

In addition to the Exchequer supplement paid automatically as a fixed proportion of flat-rate contribution income, the Bill proposes an increase in the special Exchequer payments provided for in the 1969 Act so as to restore the total Exchequer support for the next two years to about 18 per cent. of contribution income.

The higher benefits and contribution rates and the new benefits proposed in the Bill are due to start in the week commencing 20th September. My right hon. Friend the Chancellor described this in his Budget statement as the earliest practicable date, and so it is. It is six weeks earlier than the date of the uprating due in the normal course under the two-yearly cycle to which the Opposition were proposing to tie themselves statutorily under their plans for the future.

In the special circumstances prevailing this year, we were anxious to advance the date as much as possible, but it is a mammoth operation and even 20th September will be hard to achieve. It involves some risks in view of the very heavy programme, quite apart from the uprating, facing the staff of my Department in the next few months, the result of the aftermath of the postal strike and the benefit changes and new benefits already approved. My staff will be hard pressed to achieve what we are asking them to do, but they have never yet failed to respond to such calls, and I am confident that they will do their utmost to see that these improvements are effected on time.

I apologise for having taken so much time, but there has been a fair amount to explain. The Bill proposes substantial improvements in benefit for many millions of people, and additional selective help for well over 1 million especially deserving people. As such, it will, I hope, be welcomed by the whole House.

4.17 p.m.

Mrs. Shirley Williams (Hitchin)

The Bill makes considerable changes in what has always been the basic principle of national insurance. National insurance in this country has always been our main means of tiding people over years of need or periods in which, for one reason or another, they cannot sustain themselves and are dependent, to a lesser or greater extent, on the community or on their own contributions in the earlier years to help them to do so.

Basically, we have always had a flat-rate system to which certain graduated elements have been attached. The right hon. Gentleman the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) will remember that his graduated pension scheme did not greatly commend itself to the Opposition because we felt that it was minor in its effects and actuarily not entirely fair.

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

What the hon. Lady says is true of the verbal reaction, but, on the basis that actions speak louder than words, she will remember that her Government maintained and, indeed, extended my scheme throughout their six years in office.

Mrs. Williams

The right hon. Gentleman will recognise also that the Labour Government prepared carefully to abandon his scheme and to replace it with something quite different, and it was only the exigency of the election which prevented that being carried through. In addition, the Labour Government added two new elements, the graduated national employment and sickness benefit and then, for the first time, took these benefits up to a level rather close to that which people earned when in work or when in good health.

Fundamentally, what the right hon. Gentleman has done in this Bill has been to depart considerably from the national insurance principle. He has related contributions much more closely to earnings—we shall in a few minutes see how far he has gone in that direction—but he has not related the main benefits, which are, of course, the retirment pension, to those earnings in any effective way. As my hon. Friend the Member for Salford, West (Mr. Orme) pointed out a few minutes ago, we are presented with an extraordinary arrangement of earnings-related contributions for a flat-rate benefit. I believe that when the people of this country recognise the true nature of what they are being offered, they will regard it as a pretty poor deal.

As my right hon. Friend the Member for Coventry, East (Mr. Crossman) pointed out in questioning the right hon. Gentleman when he made his original statement on social security, the country is being presented, in effect, with a social security tax. When it comes to the payment of earnings-related contributions for the band between £30 and £42 a week, we are moving very close indeed to a social security tax which has no actuarial relationship to the benefits paid.

Sir K. Joseph

Why is it any more a tax when we move the top of the bracket up to 1½ times average national industrial adult earnings than it was when the hon. Lady's Government did just the same and put it at £30?

Mrs. Williams

Because the right hon. Gentleman knows that he is not proposing to move the benefits on to an earnings-related scale [Interruption.] We proposed to do so in the National Superannuation and Social Insurance Bill. That was exactly the proposal before the House, that benefits should be earnings-related. I do not understand why the right hon. Gentleman appears to disagree. I am not denying that it would have taken some years to build up to the full amount, but the right hon. Gentleman will not deny that over the whole period from the introduction of the Bill onwards there would have been a gradual movement toward something like 50–75 per cent. return on earnings-related pensions. That is quite different from anything he is planning to do.

1 turn to what the right hon. Gentleman said about the increase in pensions he is making in money terms. He said that the increases, which are overall about 20 per cent., are the largest in money terms made at any time. I do not quarrel with him on that. He also said, perfectly fairly, that they were very large in money terms but that there was an inflationary situation which had not been reached before. I do not think he will disagree that the largest increase made in real terms, apart from that made when the national insurance system was first changed in 1948, was made in 1965. That was a relative change which brought pensioners in line with the increase in earnings, which has not happened since. The relative position of the retired as compared with the rest of society is worsening. The right hon. Gentleman will find the authority for that statement in the first edition of "Social Trends" for this year, which showed a real increase of 12 per cent. in 1965. This compares with a real increase of 3.8 per cent. in 1971. Since that is a Government document, I rather doubt whether he will disagree.

Sir K. Joseph

But there was an increase in 1955 of 15.4 per cent. in real terms.

Mrs. Williams

In that case, I defer to the right hon. Gentleman, but I stick to my point that the current increase does not compare in relative terms with the increase in 1965. The relative position of the old continues to worsen. We are still a society that accepts that to be old is to be poor. The great opportunity presented by the National Superannuation and Social Insurance Bill to deal with the problem of poverty among the old once and for all, in a radical way, has been abandoned by the Government, and there is no sign of its being reintroduced.

In his Budget speech, the Chancellor of the Exchequer referred to the Conservative election manifesto. He said: … we promised to review retirement pensions every two years to ensure that they at least maintain their purchasing power,"—[OFFICIAL REPORT, 30th March, 1971; Vol. 814, c. 1374.] I take that phrase to mean that pensions increases would be in line with prices. I pointed out on 31st March that, on the basis of prices increasing at 8 per cent. a year, which was the forecast of the National Institute for Economic and Social Research, the pension would be worth about 18 pence more in real terms for a single pensioner at 1st September and 30 pence in real terms for a married couple at the same date compared with November, 1969. But since then the latest figures for the annual increase in prices show an increase of 81. per cent. If that is projected on the current basis, then five months after the increase introduced by the right hon. Gentleman the value of the pension will fall to the level of November, 1969, and only a month after that it will fall below it.

The Government are giving themselves a great deal of credit for the increase in money terms, but the increase in real terms will have virtually disappeared by next winter. They must either tackle inflation with much greater zeal than they have yet shown or adopt the principle of an annual review. The right hon. Gentleman made the fair point that the last Government were dedicated to a two-year review, but he should admit that the level of price increases in 1969, when that proposal was made, was considerably below the level now. We are talking about 9 per cent., which is a near-50 per cent. increase. I am not using in this argument the figures for the pensioners' budget, which would show a higher relative increase than I am using.

While the Government have gone some way to maintain the purchasing power of pensions—though they will not maintain it for long—they have done virtually nothing to maintain the relative position of the pensioner, which depends upon the level of incomes rises throughout society. Here the position is even worse than that which I have already stated. In 1970, earnings rose by 14 per cent. Over the two years to September 1971, again taking the National Institute figures, they should show an increase of 25 per cent. This means that the relative position of pensioners, with an increase of 20 per cent., is deteriorating. I think that the right hon. Gentleman and his Government accept that there is such a thing as relative poverty. In accepting the Bill, we are straightforwardly admitting as a country that we are still prepared to see pensioners fall into a position of growing relative poverty. I believe very strongly that this position would have been altered, though I admit that it would have taken some time, by the last Government's Bill, and I am extremely sorry that it has been abandoned.

An Hon. Member

The Crossman Bill?

Mrs. Williams


I shall later indicate the parts of what the Government are doing which should be accepted and welcomed by the whole country, but first I want to deal with one other serious gap in their proposals. They have done nothing about family allowances, although family allowances have lost value to the extent of 4s. in the £ pound since they were last increased by my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins). There is a very large number of hard-pressed families who fall between the family income supplement level introduced by the right hon. Gentleman and the level now affected by the increased social and other charges across the board. Even those who are so poor that they come within the 190,000 or 200,000 who will benefit from F.I.S. will pay their increased contributions but will receive no benefit from F.I.S. until August. That is a considerable delay.

But the crucial point is that an increast in family allowances, which it was open to the Chancellor to make at the cost of his increasing child tax allowances would have benefited families which are not now paying tax but are above the F.I.S. level. There are many hundreds of thousands within that group.

F.I.S. make-up levels are half the difference between incomes and supplemen- tary benefit levels, and tax levels for families with two or more children run at just above supplementary benefit level. In this space—between the F.I.S. makeup level and the level at which taxes are paid—there are, I am advised, several hundred thousand families who will not benefit either from F.I.S. or from the extra child allowance against tax. It is this group of hard-pressed families who would have benefited from an increase in family allowances. This remains the major broken pledge of the Government. They are not benefiting those families with which they claim to be concerned.

Another important point is that family allowances do not present the disincentive to work that is presented by a special means-tested allowance of the kind the right hon. Gentleman is making. He is well aware of this factor. The reason is that the marginal tax rates are now so high.

Mr. Stanley Orme (Salford, West)

My hon. Friend will probably recall, as many of us on this side do, the statement of the late Mr. Iain Macleod about the need to increase family allowances. Although he felt that this would be politically unpopular for either party, he advocated this his party should increase them. This pledge has not been honoured.

Mrs. Williams

That is true. I mentioned that this was, in my view, a major broken pledge by the Government.

Sir K. Joseph

The hon. Lady and the hon. Member for Salford, West (Mr. Orme) are ignoring the fact that the net cost of F.I.S., after allowing for the offset of increased family allowance against national insurance dependency allowances, is more than the Iain Macleod pledge would have provided, so that the poorest families are doing much better in real terms through F.I.S. than through any conceivably practical family allowance proposal.

Mrs. Williams

The right hon. Gentleman makes a fair point, but he knows that he is talking of a minute section of the people, less than one family in 100, whereas we are talking of a much larger group—not the 200,000 within the F.I.S. scheme but a much larger group who would have benefited from family allowance adjustment.

Sir K. Joseph

Because of the abominable way in which, under the right hon. Member for Birmingham, Stechtford (Mr. Roy Jenkins), the tax threshold was lowered in nominal and, even more, in real terms for families with children, there was, when we came to office no gap above the supplementary benefit level for the use of family allowance with claw back. By the Chancellor's improvement in child tax allowance, almost every family with children will benefit, either from lower tax or from F.I.S. The hon. Lady's mention of hundreds of thousands of families who will benefit from neither is a very large exaggeration.

Mrs. Williams

It looks as if we are going to play ping-pong like the Chinese. I make two responses to the right hon. Gentleman. It is the case that an increase in family allowance across the board with no change in child allowances was open to the Chancellor, but this would not have had the consequences to which the right hon. Gentleman has just referred. We are talking about an across-the-board increase in family allowance, subject to the normal taxation procedures, and I am advised—I will argue this further with him in correspondence—that it would have been possible to do that. If the right hon. Gentleman says that it would not have been possible, then it would have been possible to have had a tax-free increase in family allowances which would have run into none of the difficulties to which he has referred. I am also advised that a substantial number of families would have benefited more—and this is the crucial point—from an increase in family allowances which would have come to the same amount as the Chancellor's child taxation reliefs.

Several Hon. Members rose

Mrs. Williams

We will have to pursue this through questions, because clearly we are not going to agree about it.

Mr. Curran

Would not the hon. Lady agree that no increase in the family allowance will make a copper's worth of difference to the one-child family? Does not she agree that it is the one-child family, alas, where so much poverty is concentrated?

Mrs. Williams

The hon. Gentleman must look to the Secretary of State rather than to me, because the Secretary of State has had a chance to cover that point in the Bill and has not done so. It is a fair point and I sympathise with the hon. Gentleman. As he has said, there is no family allowance for the first child and nothing has been done to change it. I agree that there is no family allowance for the first child. But it is his right hon. Friends who are now the Government, so he should address his remarks to them and not to me.

Several Hon. Members rose

Mrs. Williams

I have given way a number of times already. This has been a most useful argument, but I think I should now get on.

I want to turn now to the starting point for earnings-related benefit, which is about to move up from £9 to £10 but which I cannot find that the Bill also relates to contributions. It looks as if people will be paying contributions between £9 and £10 which are earnings-related, but will not be getting earnings-related benefit. If I were a worker in this bracket—and there are many women workers in it—I would feel at least cheated in that I was paying a contribution on a graduated basis and getting nothing for it. It is also the case that, because of the increase for the £ at the bottom at every level there will be a reduction of 33p—or one-third—in earnings-related benefit all the way up the benefit scales. This point, quite understandably, has not been made by the Government, but we should be clear that the reduction will take place across the whole range. It will be a reduction of 33p per week for all earnings-related benefits. This is something which hon. Members opposite in all their glee should have noticed. It will affect the workers on fairly low earnings most. Such a worker will lose 33p. and if he is earning £9 or £10 a week that will have the serious effect of reducing the benefits he is getting. In all fairness, one should not ask people to pay additional contributions for no benefit at all.

It is also equally true that, at the other end of the earnings range, as my hon. Friend the Member for Salford, West has pointed out, the deal becomes a very bad one. Men who are earning between £30 and £42 a week—and this number will be increased by the effect of earnings inflation—will be paying an additional contribution of 4.35 per cent., which is a brand new contribution because they were outside the graduated contribution level before this Bill, but they will be getting benefits scaled down by half—a 15 per cent. graduated benefit instead of the 33⅓ per cent. which applies in the band below. So they are going to pay a 4.35 per cent. contribution, starting from nothing, for a benefit which is more than halved. The right hon. Gentleman took the example of a £30 a week man paying only 15p more. But in this band £30 to £42—they get 2 per cent. off tax but 4.35 per cent. on insurance contributions, so their so-called benefit will be, instead of 6p off, 8p on.

The right hon. Gentleman will say in a moment, if I do not move on quickly, that this is reflected in additional benefits. But I have already made the point that additional benefit, although it exists, is very sharply scaled down on a basis that was not perhaps improperly described the other day by The Times as one which no decent private insurance company would look at.

So the Government are introducing another swindle, a swindle on the upper grade contributor earning between £30 and £42 a week. Before the right hon. Gentleman says to me, as he no doubt will, "What about the last Government?", I say at once that in the Social Insurance and National Superannuation Bill which we introduced in the 1969–70 Session we offered a 25 per cent. earnings-related benefit for this range. The present Government, however, are providing little better than half of that, only 15 per cent. Granted the speed of inflation today, by the end of the next two-year period the average wage will be in this bracket, because it is already £28 a week. On the National Institute's projection, the average wage will be in that bracket with all the consequences the right hon. Gentleman appears so far to have refused to see.

Sir Brandon Rhys Williams (Kensington, South)

Is the hon. Lady suggesting that under the national insurance scheme proposed by the right hon. Member for Coventry, East (Mr. Crossman) the contributors who made earnings-related contributions at the upper end of the wages range were to have had a benefit which was actuarially related to their contributions?

Mrs. Williams

Yes. Taking the period as a whole, that is broadly speaking correct. The 25 per cent. is very close to an actuarial calculation over the period of the build-up of the scheme. The 15 per cent. here is very far from being that and is a very strange deal indeed.

I come next to two other facts which are of extreme importance. The Secretary of State pointed out that no additional benefits would be paid—we are talking of the 15 per cent.—until May 1973. In fact, contributions will not even be earning benefit until a year before that. This means that from when benefit contributions go up in September until they first start earning benefit in spring 1972 there will be in effect a free gift of contributions to the National Insurance Fund of about £200 million, for which no benefit will be paid whatever. This is what we on this side mean by saying that this is actuarially a swindle. Nothing will be paid out for this money. It will just go to prop up the National Insurance Fund and will be earning no benefits whatever.

I want now to say something about two other groups mentioned by the Secretary of State—the non-employed and the self-employed. The non-employed, for whom the increase is to be 21p a week, include a number of people whose position I very much hope the right hon. Gentleman will reconsider. I refer particularly to a group which gains a great deal of sympathy in the House—those single women with dependent relatives. They stay at home to look after those relatives, but they are in a very weak position to prepare for their old age unless they keep up the stamp. I shall ask the right hon. Gentleman in this instance and in the instance of the self-employed—who are sometimes on very low incomes, small shopkeepers, window cleaners and so on—to consider what under the present system is called the concession to poverty, that is to say, that they need not pay if they get less than £9 a week—although, as we all appreciate, they thereby lose any pension rights they may have—and some extension of the rating relief system for those at the very bottom of the national insurance pyramid.

I do not expect a reply to that this afternoon. However, we are now reaching insurance contributions which, especially the non-employed and the self-employed who are very low paid, not everyone can bear, and it is up to those of us who are interested in this subject to do something for those who will otherwise be ground into poverty.

Another subject with which the right hon. Gentleman dealt at length—and I do not blame him, because it is an important departure—was the invalidity allowance. We warmly welcome the fact that he has taken into legislation the increase in earnings for wives. We should like to congratulate him on the additional allowance for children, which, as he rightly said, is undoubtedly his own work. It is only fair to say that my hon. Friend the Member for Manchester, Wythenshawe (Mr. Alfred Morris) deserves some credit for the proposal about earnings for wives, because this proposal originally appeared in his Bill, was subsequently taken over by the Labour Government in their Superannuation Bill, and is now to be found in this. We welcome these changes so far as they go, and I think that they are imaginative and helpful.

The right hon. Gentleman said with engaging frankness that the invalidity pension was a renaming of the long-term sickness benefit, and of course it is; we are witnessing a change of nomenclature. He went on to say that the invalidity allowance was completely new, which indeed it is. I do not want to crib about the invalidity allowance, and I am glad that the right hon. Gentleman has introduced it, but I should like to ask two questions which arise from it, because they concern issues which deserve reconsideration.

The first is the extent to which the allowance is graduated to the age at which people become chronically sick. As the right hon. Gentleman said, his Department makes the assumption that those who are not chronically sick until later in life have had longer in which to build up savings. It is fair to say that there is no strong evidence on this point. The only evidence we have had does not bear out the Department's assumptions in this respect. I refer to the recent book, "Registered as Disabled", by Miss Sally Sainsbury, which covered a survey of disabled people in London and the Home Counties.

Of those she interviewed, a considerable number of disabled people, two-thirds of those aged between 16 and 34 had savings of less than £50 and one-tenth savings of more than £200. In the older age group covered by the invalidity allowance, three-quarters of the men aged between 45 and 60 and three-quarters of the women aged between 45 and 55 had savings of less than £50—three-quarters instead of the two-thirds in the younger group—and one-tenth, the same as for the younger group, had savings of more than £200.

In other words, there is no evidence to bear out the argument that those who become chronically sick later are more likely to have built up savings over a lifetime. Granted that the great bulk of those who are handicapped under the age of pensionable retirement fall within the low age groups—indeed, 8 per cent. only of those who were severely or seriously handicapped were under 49—I suggest to the right hon. Gentleman that when he makes changes in the scheme he should look again at this sharp differentiation in graduation between the ages, which I suspect has as much to do with the Treasury's desire to save money as it has with the problems of the chronically sick and disabled.

Sir K. Joseph

Miss Sally Sainsbury's book was useful on this as on many other subjects. The hon. Lady is failing to take into account that responsibilities tend to be larger at the younger ages, particularly family responsibilities.

Mrs. Williams

I do not want to engage in a sort of ping pong with the right hon. Gentleman, but I should have thought that family responsibilities were greatest over the age of 35 and under 50, that is to say, when children are at the most expensive stages, rather than under the age of 35. After all, we are talking about a fairly large-scale difference in benefits, nearly a doubling.

Much more serious than this and something which I hope my hon. Friends will agree with me needs to be pressed is the position to which the right hon. Gentleman admitted when he said that supplementary benefits would be reduced by the extent of the invalidity allowance. The great bulk of those who are not retired and who are disabled or chronically sick draw supplementary benefit. A survey undertaken last November by the Supplementary Benefits Commission shows that no less than 86 per cent. of those sick and disabled on the basis of more than three months' sickness and disablement were drawing supplementary benefit. They will not benefit from invalidity allowance.

This means quite simply that 17 out of 20 of those who are chronically sick and disabled will not benefit from the Bill. I find it difficult to believe that those who have so few resources that they are on supplementary benefit have needs which are less than those who are not. Granted that the long-term supplement is not payable for two years, although admittedly it comes after that, I think that the right hon. Gentleman ought to look very closely again at the position of the disabled and chronically sick drawing supplementary benefit between six months and two years, that is to say, over that 18 months.

Because it is of crucial importance I repeat that supplementary benefit receivers will not gain from the invalidity allowance and we know that 17 out of 20 of the chronically sick are under the age which the right hon. Gentleman is talking about. I understand that of all those who are chronically sick and disabled, including those over retirement age, 29 per cent. are on supplementary benefit only. I get these figures from official sources which say that 164,182 people under the age of 55 and 60 respectively are getting National Insurance benefits and that of those 158,577 are getting supplementary benefits. These are people who are chronically sick and disabled and who have been drawing sickness benefit for more than three months. Of those drawing national insurance benefit, more than half were drawing some form of supplementary benefit in addition, bringing the total to 86.2 per cent. of those drawing sickness benefit alone, that is to say, those not in receipt of retirement pensions.

Sir K. Joseph indicated dissent.

Mrs. Williams

If the right hon. Gentleman disagrees, two bits of his Ministry appear to be in disagreement with each other.

I should like briefly to comment on the calculations by the Government Actuary. The White Paper is that on which the financial assumptions for national insurance are based, and they are likely to be found to be based on rapidly shifting sands. The Government Actuary assumed an earnings increase of 8 per cent. a year, which is the average for the last five years. I have already pointed out that earnings rose 25 per cent. in the last two years and for each 1 per cent. earnings increase over 8 per cent., so we are informed by the Government Actuary, an additional £23 million is paid into the National Insurance Fund. In the long run this is against benefit, but, to quote the Government Actuary, changes in earnings. will have a significant effect on the yield of graduated contributions, but the effect on the outgo on benefits will be comparatively small. Unless the Government head up into the levels of unemployment which the Opposition sometimes fear, this means that there will be a considerable increase over the Government Actuary's figures in the amount flowing into the National Insurance Fund.

Because the contribution made by the Exchequer is struck after any surplus has been used, in effect he might find that the 18 per cent. figure he has given in the debate is very much reduced. That might be offset if unemployment goes much higher because the Actuary took 660,000 as his figure and we know it is already considerably more than that. I simply strike a word of warning, that in discussing the National Insurance Bill the Government Actuary's White Paper is already so far out of date that it gives us very little guidance on the actual surpluses or losses to be made.

Finally, I must warn the right hon. Gentleman that we on this side of the House are very disturbed in the way m which his policies are moving. I am not criticising or quarrelling with him about particular reforms made in the Bill. I am telling him that in principle we are in total opposition as to the way in which he sees, I take it from his Bill, the development of the national insurance scheme in this country. The whole basis of his argument is to create a position especially, as we have pointed out in the higher levels of earnings, where in practice the State scheme will offer what is in insurance terms such a poor deal that there will be a major incentive for the higher-paid worker to clear out of the scheme.

This is fundamental to the philosophy of the right hon. Gentleman's party. It has two vast disadvantages, quite apart from matters of principle. The first is that it creates out of the State scheme an impoverished fall-back scheme which will be largely in existence for the low-paid worker, the occasional, casual, worker, which will therefore be a sector dedicated for ever to the relative poverty of those who have to depend on it through no fault of their own.

My second point is that it leaves wide open the great drawbacks that exist today, and there is little sign of it changing, in occupational pension schemes—lack of transferability, lack of adequate cover for widows, lack of adequate protection for those who for one reason or another are actuarial bad risks. I give the right hon. Gentleman fair warning that we cannot go along this path, we totally disagree with it. We believe it is breaking down a national insurance scheme which could have gone on to be a real answer to poverty in old age. At the end of the day we feel that the right hon. Gentleman and the Government are bound to tinker with the problem of the poverty of the old, the greatest poverty that exists in the country, and that they have essentially abandoned the one way out that has so far been put before the people and that will be put before them once again.

4.53 p.m.

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

Although I will have one or two criticisms to offer on certain aspects of this Measure, I thought that the hon. Member for Hitchin (Mrs. Shirley Williams) was uncharacteristically ungenerous in her description, particularly of the benefits aspect of the Bill, as a pretty poor deal. What is involved is a massive transfer of resources from the working generation to the old, to the sick, and to the widows on a very large scale indeed. Whatever view we may take as to the precise methods by which it is financed, we have to accept that this is a major effort to deal with some of the more serious social problems of our time.

In view of one or two things the hon. Lady said, I am bound to say that I would have thought that this Measure gave the lie to those who charge this Government with a lack of compassion. Compassion is nonetheless compassion because it is employed with an intelligent selectivity. One of the good aspects of the provisions in this Bill, apart from the sheer size of the general improvements, is the way my right hon. Friend has set out to deal with the areas of hardship which most social thinkers believe to be the areas of most intense hardship in our society—the large families with low incomes, the long-term sick as they are called, the invalids as my right hon. Friend's phraseology will describe them, and the very old.

It is one of the great merits of the benefits side of these proposals that in addition to the general increases, my right hon. Friend has been, in the view of many of us, so wisely selective in the areas he has chosen for special, increased provision. When the hon. Lady says, that the relative position of the old has dropped back we cannot altogether overlook the fact that the force of that argument is very much based on what has happened over the last seven years. We cannot wholly forget the figures given on another occasion by my right hon. Friend showing that whereas over the 13 years of Conservative rule from 1951 to 1964 there was an annual average increase in real terms in the value of the main benefits of 4 per cent., this fell to an average of 2½ per cent. for the six years of the last Administration. If there has been a relative falling back it is clear on those figures where the responsibility lies.

To some extent on some aspects of this Bill I am in the position in which the Liberal Party got themselves a few years ago. It is notable, perhaps, that the concern of the Liberal Party on these matters is such that no member of the Liberal Party is present this afternoon. The House will recall that at one of the previous elections, I think 1959, the Liberal Party produced a magnificent brochure describing the benefits which the Liberal Party would confer on the old, the sick and the disabled. It was beautifully illustrated with a charming old lady on the cover. At the end, when we looked to see how this was to be financed, it said this would be dealt with by a subsequent pamphlet. It so happened that the onrush of the General Election prevented that second pamphlet from ever seeing the light of day.

I am in the position of applauding with great enthusiasm the improvements in benefits made by my right hon. Friend but I have some doubts, to which I shall come later, about the methods which he has used to finance these improvements. Before proceeding to that I want particularly to welcome the invalidity changes. I had not appreciated, until I heard my right hon. Friend this afternoon, the particularly sensible and wise provision for increasing the allowance for invalids' children.

When I had certain responsibilities in this matter I took the view that we should increase, disproportionately to other increases, the provision made for the children of a widow. I accept at once that my right hon. Friend is right in regarding as being in a special category also, for basically the same reasons, the children of the disabled or long-term sick. Although it is not more than a beginning, and although many of us will feel that the rates will have to rise sharply in future, this is very real progress in social reform.

I am delighted, because I have urged it on my right hon. Friend and his predecessor, that he is increasing the increments earned by those who stay at work and stay in contribution after pensionable age. The State gets a good bargain out of those who do this, and socially for people who are fit to work and have a job to do, it is good and beneficial in many cases that they should remain at work. It is right that they should remain at work earning better pensions for when they retire.

Perhaps I may be allowed to indulge my curiosity and ask my right hon. Friend what he proposes to do about polygamous marriages, dealt with in Clause 13. I hope the House will not misunderstand if I say that I have a personal interest—let me assure you, Mr. Deputy Speaker, that I am not, as yet, a practitioner in polygamy, but when I was responsible for these matters, I had to deal administratively with the case of a Pakistani gentleman who departed this life in South Wales, bequeathing to the country of his adoption four widows and a number of children who would have made up a com- fortable platoon. There was a question of benefits. No guidance had been given by Parliament.

The administrative decision which I took was to give a full widow's pension to the widow who was senior by appointment and a full provision for each child. I do not know what my right hon. Friend proposes to do. He is taking wide powers in Clause 13. But I think that it would he hard on other contributors if a contribution which, in respect of most of us, provides for a maximum of one widow should, in the case where there is a fuller establishment, perfectly lawfully, provide full pensions for four. I shall be interested to hear how my right hon. Friend proposes to tackle this tricky problem.

Mr. Douglas Houghton (Sowerby)

Did the right hon. Gentleman give supplementary benefit to the junior widows?

Mr. Boyd-Carpenter

The right hon. Gentleman has far too much knowledge of social security administration to ask me that. At the time, that was a matter for the wholly independent National Assistance Board.

I come to the point that I wish to make about the contributions. My right hon. Friend has taken a clear-cut and bold decision to put the whole of the increase, except as regards the limited number of self-employed and non-employed, on to the graduated contribution. With respect, I think that that is unwise. My right hon. Friend may take the point that I am the last man to be in a position to say that to him. But sometimes a difference of degree is so great as to amount to a difference of principle. To put it another way, if my right hon. Friend takes a glass of dry sherry before dinner, it may add to the flow of his urbane conversation. If he drinks four double Martinis, he may become a little noisy and less articulate than usual. If matters are carried too far, something of a change is made.

Here my right hon. Friend is doing some potential damage to the contributory principle. I know that there are people, in the Press outside and in this House, who say that the contributory principle has gone. I do not believe that for a moment. In fact, some £2,500 million is raised each year with the minimum of difficulty from people who feel that they are, and who are in fact, contributing for their pensions and other benefits. This is brought home to them because, if their contributions fall short, their benefits are cut or may become non-existent. It is in truth a contributory system. However, if it is carried so far that the contributions of one man are used to help to finance the benefits of another, to some extent the link between contribution and benefit is broken.

Anticipating what my hon. Friend the Under-Secretary of State may say, there is a profound difference between what was done in the 1959 Act and what is proposed now. Under the 1959 Act, none of the contributions of the better-off went to pay the benefits of the lower earners. What happened was that the better-off paid a very large proportion of the costs of their own benefits, and the Exchequer contribution was concentrated on those who, because of their lower earnings, could not contribute enough to finance their pensions. The selective application of Exchequer money to help those most in need is a good principle.

From the figures in the present Bill, it seems clear that the £2,000 a year man will be contributing towards the flat-rate benefits of the man at the bottom of the scale. This is redistribution, and it seems to me that the proper place for redistribution is not in an insurance scheme but in taxation. The tax system is sometimes unduly redistributive but that is the proper machinery for it, and one damages the insurance concept if one takes redistribution so far as to make a clear transfer from one contributor to another.

Let me ask my right hon. Friend to consider this point. A man's full entitlement to pension still will depend on his contribution record. Take a man on the £2,000 a year scale who is only 30 years in this country and, therefore, contributes for only 30 out of the maximum of 47 years. In those 30 years, he may contribute more than a man at the bottom of the scale for the whole 47 years. When my right hon. Friend awards flat-rate pensions, the man who has contributed more gets a smaller pension because his contribution record averaged over the years is less good. That risks damage to the contributory system, and I attach great importance to the system for this reason. Once one passes from contributions to a social security tax, one is undermining the whole basis of a contributory system and its merit that benefit is obtained as of right regardless of means. Once one taxes the citizen, rich and poor, to provide a benefit, the case for taking means into account begins to rear its head.

It has been the merit of national insurance since Beveridge that all have contributed and all have drawn, in accordance with contribution, equal benefits subject to their compliance with the conditions of the scheme. In the words that the late Sir Winston Churchill applied to the original unemployment insurance, It brings the magic of averages to the service of the millions. It enables the rich man, like the poor, to exercise his right and claim his benefit because he has contributed to it. That has been the strength of the scheme. One draws, as of right, without a means test qualification.

It is wrong to break the link of the man who says, "I have paid for my pension", though he has on retiring paid nothing like the full amount, but has paid all that the State has asked him to pay.—[Interruption.] If the State has increased it to his benefit, that is not his fault. But a man can say, "I have paid all that the State has asked me to contribute to my pension, and I draw it as of right." There are real dangers in shifting to a wage-related pension contribution which is redistributive in effect, as this one must be.

Sir B. Rhys Williams

I have been following my right hon. Friend's interesting argument with interest. Although I am sure that everyone who hears him must agree with the value of the contributory principle, when it is valid, when it is based on a sham—for instance, 18 per cent. Exchequer contribution and the fact that people retiring today have paid only a tiny fraction of the amount that they receive—is not there a danger in regarding that as the underlying principle?

Mr. Boyd-Carpenter

No. It is not a sham. The State has decided to subsidise considerably, but it still remains the fact that a man's title to his pension follows on his contribution record. He has made the contributions laid down as being his qualification for pension. It is difficult to say at what point one breaks the link. I know that my right hon. Friend has major reforms in mind. But there are dangers in the course which he is following here.

There is also the effect of this on the occupational schemes. Here, I must declare an interest as a director of an insurance company, although I have had interest in this subject for longer than I have had the interest which I disclose.

If one takes up 4.35 per cent. up to over £2,000 a year by way of contribution from both sides, one gets into the zone in which occupational schemes may seem less attractive. They also seem less attractive administratively. Under the 1959 Act, a person who was contracted out paid no graduated or wage-related contributions. In fairness, he paid a slightly higher lump sum flat rate but no graduated contribution. Under my right hon. Friend's proposals, even if one contracts out, one will be paying a graduated contribution and a flat-rate contribution to the State, plus the contribution, however based, to the occupational scheme. I cannot help wondering whether the sheer administrative trouble involved may not be a deterrent to the development of private schemes.

There is also the fact that the value of contracting out, though my right hon. Friend is retaining it in absolute terms, is proportionately diminished. Looking at the table, the advantage of lower State contribution, where someone is contracted out, is becoming a smaller proportion of the total contribution than it used to be. In both ways my right hon. Friend may be slowing down the development of those occupational schemes in whose success I know that he and my right hon. and hon. Friends are very much interested. So, here, I should like to give a warning.

The only other point I wish to mention springs from what I said about the dangers of undermining the doctrine of payment as of right. This relates to Clause 7. I accept at once that there is a problem concerning people with occupational pensions retiring at 58 or 60 going off to seaside towns and registering for employment where there is obviously no suitable employment for them. On the other hand, whether it is a problem which is worth dealing with in the way proposed by my right hon. Friend, introducing a kind of means test into the receipt of national insurance benefits, I am inclined to doubt.

I know that my right hon. Friend called in aid the National Insurance Advisory Committee. He did not mention that it wos a majority decision in favour of something of this kind, the dissenting member of that committee being the noble Lord, Lord Collison, now the Chairman of the Supplementary Benefits Commission. I used to deal with Lord Collison when he was chairman of the Social Services Committee of the T.U.C. I found him immensely knowledgeable and wise in these matters. With respect to the other distinguished members of the Committee, I rate Lord Collison's dissent as a very substantial factor. It certainly fortifies my doubt whether my right hon. Friend is right to say that in respect of one form of income, the occupational pension, there shall be diminution of the right that a man would otherwise have to draw unemployment benefit. My right hon. Friend is leaving the multimillionaire with an investment income free to draw any unemployment benefit for which he can qualify.

Sir K. Joseph

If he registers.

Mr. Boyd-Carpenter

Indeed, if he registers. If he does not register, of course not. My right hon. Friend is saying that if a man has an occupational pension it must be diminished or phased out or have separate conditions added. This is carried to the point where, instead of an occupational pension or in addition, the person who wishes to claim benefit has a lump sum payment from his former employer. We are here in the curious situation where getting a lump sum from an employer may prevent a man getting unemployment benefit. If a man wins it on the pools he is all right. This indicates the dangers of what, with the highest of intentions, my right hon. Friend is doing.

This is an enormous Clause—I know that it will be discussed fully in Committee—of great complexity. I think that it will be very difficult to work administratively, and I express doubt whether it is necessary at all.

I believe that the problem could be perfectly well tackled if the Department of Employment were prepared to take a little more trouble and show in certain cases a little more courage. If the Department were prepared to say to someone who comes in to register—a retired bank manager, for instance—"There are no bank managers' jobs, but there is a good job looking after the deckchairs on the front which you can have", the Clause would be unnecessary. If that Department were prepared to take a more robust step to test whether a demand for employment was genuine, all this elaborate apparatus in Clause 7 would be wholly unnecessary.

I dislike it very much because it seems to be the very small end of a very small wedge, but it is a hole in the doctrine which I mentioned, which was accepted for a good many years until the right hon. Member for Coventry, East (Mr. Crossman) laid a Statutory Instrument altering it, that no means, whatever form they may take, should inhibit a man from drawing national insurance benefit. I do not think that the comparatively small abuse to which my right hon. Friend has referred is worth endangering that principle or worth the administrative trouble which he is giving to himself and to his hard-worked and admirable officials.

I say again that, on the benefits side, this is a remarkable reform. It does immense credit to my right hon. Friend and his advisers, and, reading between the lines, to his dealings with the Chancellor of the Exchequer—and to the ingenuity with which a number of the more difficult areas of our society are to receive substantial help.

Obviously the House will not wish to delay the Bill. We shall wish to see it in effect as soon as possible so that my right hon. Friend's officers may set forth on the very heavy task of putting 7½ million retirement pension increases and heaven knows how many million other improvements into effect. We wish them well. I hope that they will be able to start on the work as soon as possible.

5.17 p.m.

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

The House is always delighted to listen to the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) not only because of the felicity of his language but because of the way in which he presents his case on any issue. No matter how much some of us on this side of the House may disagree,—and we do—we really enjoy listening to the right hon. Gentleman.

I propose to confine my remarks to two points concerning the disabled. The recognition by the Secretary of State of the chronically sick as a special category is to be warmly welcomed, because it is a step forward. It is rather like, though less ambitious than, the Chronically Sick and Disabled Persons Bill introduced by my hon. Friend the Member for Manchester, Wythenshawe (Mr. Alfred Morris).

Although this Bill is inadequate and by no means satisfactory to hon. Members on this side of the House, it is nevertheless welcome because it shows that the Government now see the chronically sick as a category requiring action. I assure the right hon. Gentleman that we shall begin to press and push forward and use that concession as a springboard. And although, as I say, it is by no means as ambitious as the Act initiated by my hon. Friend, I hope that in time it may become so.

The first plea that I make is that the next priority should be some provision for disabled housewives. There is a great gap at the moment. I suggest that this category of disabled persons should become the Government's priority. I was delighted when the Prime Minister last week promised to consult the right hon. Gentleman and his colleagues about provision being made for disabled housewives.

The case for the disabled housewife has been advocated most articulately by the Disablement Incomes Group for many years, but as yet no provision has been made. It is a curious anomaly that, although a disabled housewife can receive State medical aid, she cannot receive State social security. I hope that this curious anomaly will be rectified.

The effect of a severely disabled housewife on a household can be catastrophic. In the last few days I have been reading through a large number of case histories of chronically disabled housewives. Their effects on families are heartbreaking and really sad. I think that we make a mistake if we under-estimate the tremendous effects of this disability. I am aware of the economic problems, but I hope that the right hon. Gentleman will take into account the economic and the social problems involved and do what he can to mitigate the major problem which the chronically disabled housewife poses.

There is one other way in which these people can be helped, and that is by changing the qualifications of constant attendance allowance. People can receive this allowance only if they are needing constant attendance day and night. I know that the right hon. Gentleman cannot widen this provision indefinitely, but he should at least widen it to include the chronically disabled housewife who needs attention during the day. If that were done it would represent a considerable step forward and would mitigate a great deal of hardship, without any undue increase in the financial outlay involved.

The disabled who returns to work ought to get some kind of disability benefit. At the moment they get nothing. The recent D.I.G. European Study showed that in all the six countries considered there was some kind of provision for disabled people who returned to work—not only to disabled housewives, but disabled people generally. That is an important provision which could be adopted here, because it would be an incentive to disabled people to return to work.

Work is not only theraputic, although the theraputic effects are important. Work is crucial to the self-respect of severely disabled people, and it is ludicrous that they should have to pay to work if they are severely disabled, because that is literally what it means at the moment. They lose money if they go to work. If that factor could be taken into account and the problem dealt with as I have suggested, this greater help would be greatly appreciated by thousands of severely disabled people.

I conclude by urging the right hon. Gentleman to give sympathetic consideration to those two, I hope, constructive suggestions. He will alleviate a great deal of human misery if he accepts them.

5.23 p.m.

Mr. Richard Luce (Arundel and Shoreham)

On 1st April, of all dates, I was elected the Member of Parliament for the constituency of Arundel and Shoreham. The by-election was caused by the sad death of my predecessor, Captain Kerby. Although I never knew him, by all accounts he was a great servant of his constituency. He was a great champion of individual rights, and quite clearly was a man of outspoken and strong views, which he expressed most forcefully in the constituency. Whether one agrees with his views or not, one should respect any Member who is prepared to speak up for those things on which he feels strongly.

I am pleased to take part in the debate shortly after hearing the hon. Lady the Member for Hitchin (Mrs. Shirley Williams) whom I opposed for four years in the Hitchin constituency. I enjoyed my dialogue with her then, and I look forward to a further dialogue with her in the House of Commons.

My constituency has a great history. In particular, Kings came and went. King John arrived to succeeed Richard I, and Charles II left hastily after the battle of Worcester, to escape to Normandy. Today in Shoreham there is a growing port and it has become the largest wine-importing port in the country.

Arundel is the seat of the premier peer of England and has the distinction of opening the cricket season. The constituency has the largest village in England—or reputedly so—in Lancing, and it is made up of some light industry, it has a strong tourist attraction, there is plenty of farming, and there is a good deal of horticulture, particularly mushroom, flower and apple-growing.

The constituency is a great residential area. Like many other constituencies, it has a wide range of environmental problems. I believe William Blake said in 1800 when he came to the constituency that the people of this area were genuine Saxons, handsomer than the people of London. I think that perhaps rather hastily, I ought to move on to the problem of pensions because clearly a significant feature of my constituency is that so many people come to Sussex when they retire. Whilst in the country about 15 per cent. of the population are retired, in my constituency the figure is well over 30 per cent. It is these people who are suffering from the effects of inflation. The great rise in prices and in rates over the last few years causes lack of security for them, and this was impressed on me most forcefully during the by-election.

In an age of pressure groups when people with bargaining power can demonstrate and exercise their right to strike, it is the old people who deserve the greatest possible support and help from the Government and Parliament. There are many demonstrations with which I do not have a great deal of sympathy, but I should have considerable sympathy with them if 7½ million pensioners were to walk down Whitehall demanding the rights which they so richly deserve.

The argument is always one of priorities, and I welcome the fact that the Government are giving less emphasis in terms of State aid to agriculture and industry, and more to those who really deserve help. Therefore one must welcome, and can only but welcome, the fact that the Government are giving pensions as of right to the old people; that they are introducing a constant attendance allowance; that they are introducing an invalidity allowance; that they are giving the biggest increase ever in the basic disablement pension and war widows' pensions which will benefit no fewer than half a million people; that they are easing the earnings rule; that they are giving the biggest ever increase in pensions to retired people; and that they are for the first time introducing an automatic biennial uprating of pensions, a system which operates in most of the countries of Western Europe.

All that represents an encouraging start, and to those who have accused this Administration of a lack of compassion, I must say that it is wonderful to come to the House this afternoon and be able to support an Administration which really is showing compassion for those in need. I regret that more Members are not present this afternoon, and particularly those on the other side of the House who have criticised this Administration for a lack of compassion. I regret that they have not attended the Chamber this afternoon to give their welcome to the Bill.

Having said that, there are four points that I should like to make briefly. My first point concerns adjustments to pensions. Although I understand that, administratively, it is very difficult to bring forward the date upon which increases are payable, I regret that the increase could not have been made payable this spring. I am glad that we are introducing a statutory two-year review, but I should like the Government to consider the system which operates in Belgium, whereby the pension is automatically uprated whenever there is an increase in prices over a certain percentage.

My second point is this: there is a constant argument over the relationship between cash and community services in relation to the problem of the aged. This must surely be regarded as a combined operation. Of course one wants pensioners to have adequate cash so that one does not constantly have to consider whether they should have exemptions or half-fares on public transport. But there are certain services in which cash is not enough. I should like to see a steady improvement in the community services for the aged to enable more people to live at home and enjoy their lives, to improve the meals-on-wheels service, and to alleviate loneliness.

Thirdly, if we enter the Common Market, the people on fixed incomes, the retired people, those who have a shorter time to live than most of us, will benefit least. We must surely recognise that the retired people would not have the chance to enjoy any long-term benefits. Therefore, if we do go in, I suggest that the Government should give a top priority pledge of special help to the retired in our community.

Surely our ideal in the last part of this century is not just to provide a basic pension which will give a subsistence income in retirement, but to try to produce a society in which everyone has, in the long term, a supplementary scheme which will give him more than enough to live on. I believe that the Government must develop, as they are doing, the strongest possible incentives for people to enter private occupational schemes, by fiscal means or preservation of pension rights, or various other measures.

In the meantime, because there are still many people who do not have the benefit of occupational schemes, it is essential to provide and develop a scheme to supplement the basic pension. This is why I welcome the proposals published last week of the Metropolitan Pensioners Association, which argued in favour of a State reserve scheme. I hope that the Government will seriously consider that.

The mark of a civilised nation is its generosity of spirit to the deserving and the needy. I believe that the conscience of the nation demands that those who have contributed to so much to the country in the past should be able to enjoy their retirement in peace and security.

5.35 p.m.

Mr. Michael Meacher (Oldham, West)

I am sure that all hon. Members will agree that the hon. Member for Arundel and Shoreham (Mr. Luce) has just delivered a speech which was witty, well-informed, confident and very interesting. Having myself recently paid a visit to his constituency—not for electoral purposes, I hasten to add—I entirely endorse his remarks about the magnificent beauty of his constituency. The hon. Member made a speech which showed enormous good sense on a wide variety of points. However, since my own maiden speech is not yet exactly hoary, it would be presumptuous of me to make further comments, and I will leave any further felicitations to some of my more veteran colleagues.

I would take issue with the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) who spoke about the massive transfer of resources represented by the Bill. I should have thought that that was a peculiar description of a series of benefits, which are, in most cases, little more than the provision of a cost-of-living increase.

But my main point of issue with him is on the wider significance of the Bill. It is remarkable that, despite sizeable increases in costs to workers and a substantial shift to an earnings-related contributions system, the Bill is limited to essentially tactical and short-term objectives. Despite superficial resemblances to the national superannuation plan introduced by the last Government, it has none of the latter's strategic sweep, and with only one or two exceptions that I have been able to find, it bears all the marks of the Secretary of State's commitment to the marginalities of tokenism—[HON. MEMBERS: "What does that mean?"] It means very simply that there are small improvements to uprate benefits in accordance with the standard of living, but there is no attempt to introduce a new structure of social security which would give benefits as of right. It is merely a comparatively small improvement in the existing situation relative to what it was two years ago.

It is not simply that the increase in the retirement pension and virtually all the other benefits has been pitched at a level of some 20 per cent. above that reached in November, 1969, when price rises during exactly the same period had done away with about 16 per cent. of the increased value of the benefit, so that the real improvement in the position of the pensioners' purchasing power is about 4 per cent., which at current rates of inflation will certainly be whittled away in about six months. It is not simply that the same relationship with national average earnings will be achieved at the start of this current two-year review period as was maintained throughout the whole of the similar period at the time of the 1965 increase.

What is of vastly greater and longer-term significance is the structural question whether retirement poverty is to be indefinitely perpetuated, with the pension level never finally catching up with the supplementary benefit entitlement, or whether a policy will be pursued of achieving a Beveridge-type ideal of a pension as of right above the poverty line.

It is clear that there remains a major ideological difference here between the parties. The National Superannuation and Social Insurance Bill of the last Government would have provided a pension by the year 2000 high enough to need no means-tested supplementation for all but 13 per cent. of the elderly, compared with about 88 per cent. at present. In the case of this Bill, however, the real meaning of the changes was most starkly revealed by the Secretary of State when replying to the hon. Member for Kensington, South (Sir B. Rhys Williams) on 31st March following a statement on social security benefits and contributions: … the numbers who will be taken off supplementary benefit altogether will, I fear, be only scores of thousands."—[OFFICIAL REPORT, 31st March, 1971; Vol. 814, c. 1507.] Turning to the contributions side of the matter, there is an important difference of philosophy between the parties about who should bear the burden of the cost. The Conservative National Insurance Act 1959, for which the right hon. Member for Kingston-upon-Thames was responsible, imposed a graduated contribution charged on the £9 to £15 earnings range, which was later increased from £9 to £18. Exactly the same basic principle is now being applied with the £18 to £42 per week earnings band, being the relevant earnings range for contributions. In other words, it encompasses the broad mass of manual workers. It is more or less exclusively the working class who will bear the burden of this uprating in social security benefits. This is an enforced restriction by occupational level, which I believe is unjustified on any ground of equity.

Labour's scheme contained a considerably higher ceiling on contribution at £80 a week, so that almost the whole community, rightly and properly, was included in that inter-generational transfer of income. Indeed, a ceiling was imposed at all only to maintain a relationship between contributions and earnings and to cement the partnership with occupational pensions schemes.

Now that this Bill has effectively renounced this relationship with an earnings-related levy matching flat-rate benefit increases, there is no need to impose such a ceiling. In insurance logic, the only necessity is one of deliberate choice. The deliberate limitation at manual worker ceiling has to be seen as part of the Government's wider and more general policy and, at the same time, enhances the possibilities of increasing inequalities in our society. It is difficult otherwise to see any sufficient argument as to why this ceiling has been imposed at this level.

Another criterion for assessing social security systems is the effect in regard to women, inasmuch as it is the prevention of poverty among women which is the most important single change in the social security system. How far is this problem recognised by this Bill, and how far is their status reinforced by the advancement of new rights? There is singularly little evidence of any new departures, though the relaxation of the earnings rule for working wives whose husbands are chronically sick certainly must be welcomed. However, there is absolutely no sign of any acceptance of women as equal partners in social security, which made the Labour Government's national superannuation plan such a break-through and a charter for women, whatever their civil status.

A woman, divorced before the age of 60, obtained a legal right to her ex-husband's dynamised contribution and credits record, both for the period for as well as for the period during the marriage. Widows aged 50 or more obtained the right to their husbands' full personal rate and of the earnings-related pension. Provisions of this kind are unmatched in any social security system in the world, and there is no flicker of recognition of such a break-through in this Bill.

Perhaps the most significant part of the Bill is the dog that did not bark. There is absolutely no mention of any increase in family allowances or of any excuse for this omission on this occasion. On previous occasions such an omission has been justified on the ground that there is a distinction between insurance benefits earned by contributions and family allowances which are not. But the elimination by this earnings-related Bill of any relationship between graduated contributions and the benefits which are bought by them entirely eradicates this excuse. If non-contributory pensions can be paid for out of the National Insurance Fund to improve the position of the over-80's, why cannot family allowances on the same age principle also be raised at the same time? After all, unlike the other benefits in this package, family allowances have not been increased since 1968 and hence the effect of the cost-of-living erosion at some 20 per cent. has been all the greater.

Mr. A. E. Cooper (Ilford, South)

Surely there is a great difference between the two things. If family allowances are increased, that becomes part of the income of the family and is taxed, but the deductions—or reductions—made by my right hon. Friend the Chancellor of the Exchequer in his Budget of £40 per child is a positive improvement to help families with young children. There is all the difference in the world between the two. The hon. Gentleman is asking for an increase in the tax payable by a family. We are proposing a reduction in the tax payable by a family.

Mr. Meacher

It is a remarkable conclusion to say of the family allowances that, because they are a cash benefit and have to be paid for by the general body of taxpayers, they are not of assistance to the poorest families, whereas an increase in the child tax allowances, which is necessarily and selectively geared to those on higher earnings, will give more benefit to the higher earners, which therefore gives no assistance to those at the bottom. Is the hon. Gentleman saying that that is a better alternative? There can be no argument in logic to support such an idea.

Mr. Cooper

That is absolute rubbish. The great majority of people pay some tax and if there is one child in a family then, under the Budget proposals, that family will receive a direct benefit in tax of £40 a year. One cannot argue against that.

Mr. Meacher

I can argue against it, and I would insist on the simple fact that there are many of the poorest families who do not pay tax, or who pay very little. For them, an increase in child tax allowance is of no value at all. Since income tax now starts below the poverty line, the scope for claw-back if family allowance is increased is severely limited, unless the family allowance is extended to the first child, or made tax-free, which I feel would be preferable. But if family allowances had been increased across the board without any continuation of child tax allowances, the poorest families would have gained—and would have gained far more than any other families in the country—while the benefit to the better-off would have been selectively taxed back.

All this could have been achieved without any of the inevitable and undesirable concommitants of the family incomes supplement, which has now had added to it the Secretary of State's "passport system", the advantages being a substantial reinforcement of the stigma upon such people. This could be aptly entitled "a passport to poverty" and will involve the erection of a massive barrier of disincentives. What we have been given as a result of the Bill is both these major disadvantages—no increase in family allowances but a substantial rise in child tax allowances, which, from the point of view of the poor, is by far the worst of all possible worlds.

5.50 p.m.

Mr. R. T. Boscawen (Wells)

With regard to the argument put forward by the hon. Member for Oldham, West (Mr. Meacher), about the poorer family not getting any benefit, I would suggest that, if the hon. Gentleman had suggested an increase in family allowances, he would have put back into the tax bracket a large number of families who do not pay income tax at all, only to have it grabbed back again from them. This is a nonsense, and it is one of the non-senses which have caused a great deal of worry and concern on earlier occasions.

Mr. Meacher

I made it clear that this anomaly can easily be remedied by making child tax allowances either tax free or in the form of an extended payment to the first child. By this means, there would be considerable scope left for clawback.

Mr. Boscawen

When I was a Parliamentary candidate I hoped that pensions would not be made a political shuttlecock or, in more modern language, part of the game of Chinese ping-pong. Not only pensioners but the vast majority of people want to see this whole subject kept out of politics. A few months here taught me that that was quite impossible.

There is a wide degree of agreement between the two sides of the House about the improvements that are necessary and about the importance of the improvements that have been made. The pensioners and disabled in particular do not want to see us adopt a holier-than-thou attitude towards this issue. In any event, neither party has reason to feel holier than thou, and I am dead against us adopting that stance now.

There are honest differences of view between the two sides of the House about how to help those individuals who are particularly in need, and we can certainly argue along those lines, but let us keep our arguments honest and sensible. I believe there is an underlying philosophy which has resulted in our getting right away from the flat-rate approach to this subject. The hon. Lady the Member for Hitchin (Mrs. Shirley Williams) suggested that widows of the non-employed and self-employed perhaps needed more help. There are other individual cases where need is great. We are now adopting a philosophy of helping those most in need instead of helping all on a flat-rate basis.

I applaud what my right hon. Friend has done in the various areas of need which he has identified. He described the invalidity allowance as a modest step forward for the long-term sick. I hope that as soon as this allowance has been in operation for some time, my right hon. Friend will be less modest and timid and will give greater benefits. I agree with the hon. Member for Hitchin about the gap that will exist for women over 60 and men over 65 in respect of the invalidity allowance. As she said, it has not been proved that the people have saved sufficient to meet their needs compared with the long-term sick. I hope that before long my right hon. Friend will find it possible to fill what must be a small gap in this provision.

A great deal of the trouble with national health insurance is that over the years there have been too many sacred cows. We are still finding it hard to get rid of some of them. As every good farmer knows, if one is to build up a healthy flock, there must be deaths from time to time. The sacred cow of the contributory system has been dealt a severe blow by my right hon. Friend's proposals regarding earnings-related contributions at the higher levels, and I do not believe that it will be possible any longer to persuade people of the fiction of calling it a contributory scheme when there is such an element of redistribution, particularly at the higher echelons of earnings-related contributions.

In Clause 5 the Bill deals with the elderly and particularly with elderly widows. They have had small recognition up to now. I welcome the change which give a 25p increase to single persons and a 50p increase to married couples over the age of 80. This seems to be paralleled by the position of those who are in receipt of supplementary benefit. Although my right hon. Friend has not taken this to the point of the invalidity allowance—and where supplementary benefit is paid the recipients lose the benefit of the invalidity allowance—I trust that further thought will be given to this aspect, and I should like to know whether it would be costly to extend it to include the invalidity allowance.

Some people believe that those aged 75 to 80 are not in greater need of cash than the somewhat younger elderly, but require better services like meals-on-wheels, home helps and other voluntary assistance. Nevertheless, they still require cash, and there may be something to be said for them having a little more, in the sense that it might help them to get about more readily, especially in the summer, when they may be taken for bus rides and so on. I appreciate, however, that selective benefits are bound to be rough and ready, especially in the imperfect world in which we live, and I thoroughly support the advances my right hon. Friend is making.

My right hon. Friend referred to the widows of men who had been in receipt of the highest constant attendance allowance and had been war pensioners. These widows will now get the full rate of war widows' pension, which represents an excellent advance, however critical some hon. Members may be of it. Only a relatively few, about 1,500 widows—women whose husbands died either normally or as a result of war wounds; nobody can be sure—will benefit from this change, and I greatly welcome it.

A comrade-in-arms of mine was wounded by the same shell that destroyed my tank. He appeared to recover fully. Recently, however, he fell seriously ill and for a considerable time it was thought that he would die. Fortunately it was discovered that there remained in his body a small shell splinter. This was removed and he has survived. Indeed, he is now back at work. He might have been in the category of people whose widows my right hon. Friend is anxious to help. In fact, had he died, his widow would not have received the benefit.

Compliments are given so rarely in the House that when given they are much more valuable. Having been on the books of the Ministry of Pensions and National Insurance for almost the whole of my adult life, I welcome the opportunity to pay a compliment. Throughout all this period, whatever Government have been in power, whether Tory or Labour, war pensions have been administered efficiently, with great consideration and with promptness. On only one occasion was a benefit late. I have received a tremendous amount of good advice from the Ministry about treatment. The boards which carry out the difficult task of assessing percentages have carried out their task well and with consideration. We should all pay tribute to the way in which Governments have attended to the needs of the pensioners of both world wars.

6.0 p.m.

Mr. Robert Edwards (Bilston)

I apologise for not being present during the earlier part of the debate. Other Parliamentary business kept me away.

All the Common Market countries have an earnings-related pension which works out at 60 per cent. of earnings. In Britain the pension works out at about 30 per cent. of average earnings. I hope that if we enter the Common Market we shall at least harmonise retirement pensions, to the great advantage of our seven million pensioners.

It is scandalous that the increase of £1 is not to become operative until September, by which time the £6 for a single pensioner will be worth about £4. Every week the prices of 200 to 30C household commodities are increased. Electricity and gas charges are increased. The price of paraffin oil, on which many old people rely, has been increased. It takes about one-fifth of a week's pension for an old person to have his shoes repaired.

Few working-class people over 70 eat much meat. For them meat and butter are luxuries. There is a great tendency to forget that millions of people who are now over 70 and who went through the depression of the 1930s, and who consequently lacked job security, to say nothing of their having gone through two world wars, had little or no opportunity to put anything by. Their lives were a constant struggle from the cradle. I know that this is true, because I come from the working class and spend all my time among working-class people. There is great poverty among old people.

When hundreds of thousands of old people retire they do not lose their dignity. They refuse to ask for supplementary benefit because they think that they would be asking for charity, something that they have not paid for. Despite massive publicity to make them aware of the availability of extra facilities, hundreds of thousands of old people, because they were brought up in the tradition of paying for things, are not taking advantage of the facilities.

The reports by welfare officers make tragic reading. A welfare officer who covers the Blackburn area has said that he visited an old lady of 84 who was living on her own. When he went to her house at one o'clock—this was in January—she was still in bed. She said that she would not get up because she could not afford to have the gas on. She had not even had a cup of tea for breakfast because she could not afford it on her little pension. She was the type who would not ask for extra. I am not exaggerating when I say that meat and butter are becoming real luxuries to millions of old people.

Every hon. Member will agree that this pension increase is not adequate to meet the present situation. The hon. Member for Wells (Mr. Boscawen), who made a speech which was acceptable to everyone, mentioned the amenities which can be enjoyed by old folk. It is true that many local authorities have developed amenities such as concessionary fares, meals on wheels, chiropodist services and low-rent bungalows for old people. However, the provision of these facilities is unequal—they are not available under all local authorities. The best service for the old should become the average service. This can be achieved only by legislation.

Old people as of right should have concessionary faces and a chiropodist service, because old age brings illnesses. Illnesses such as arthritis and rheumatism often arise because the sufferers worked in damp atmospheres or lived in damp houses. We do not know enough about the illnesses of old age and we do not do enough about them.

If a home medical service were to be established, hundreds of thousands of old people could be taken out of hospitals, where at present they remain until they die, and allowed to live at home happily among their own people.

We should be ashamed that we are accepting a position where £5 a week for a single retired person and £8.50 a week for a married retired couple is considered adequate. The number of retired people is added to at the rate of 1,000 a day. Our provision far the old is becoming one of the most serious gaps in the whole of our welfare State. The main problem is not poverty but loneliness and ill-health. There should be no reason why old people should go short of the good things of life in this age of scientific development and relative affluence.

I am sorry that more hon. Members are not present, but I suppose that there are good reasons for it. I plead with the Government to think again and to try to make this a retrospective increase of £2 a week—double what they propose.

6.10 p.m.

Sir Brandon Rhys Williams (Kensington, South)

We have enjoyed a number of extremely interesting contributions this afternoon and I am delighted to congratulate our new colleague, the hon. Member for Arundel and Shoreham (Mr. Luce) on his very thoughtful and well-informed speech.

Although we have a small attendance, those who read the Report of our debate will say that in this Parliament there are a number of serious, generous and well-informed Members on both sides of the House who are anxious to contribute on questions of social security. For this we must be particularly grateful to my right hon. Friend the Secretary of State who gives us such splendid leadership in this matter and has inspired so many Members to appreciate the enormous importance and scope of this subject.

Even in a Bill of this complexity there are only two main subjects: one is benefits and the other is contributions. Where benefits are concerned it would be difficult to better the way in which my right hon. Friend is distributing the funds which he has been able to procure.

I listened with great interest to the hon. Lady the Member for Hitchin (Mrs. Shirley Williams) and to the hon. Member for Oldham, West (Mr. Meacher) on the subject of family allowances. I agree fully with the gist of their remarks, although I do not always follow them in detail; but it has always been understood that family allowances are outside the scope of national insurance, and we can enjoy further debates on the subject of family allowances on other occasions.

Granted that this is a Bill primarily about national insurance benefits, I feel bound to pay tribute to my right hon. Friend and to say that I think his sense of priorities could hardly be improved upon. We have a significant increase in basic benefits. Of course, we must regret that for one reason or another we seem to be lumbered with an administrative system which, try as the public officials may—and I know how dedicated they are—does not seem to be quite as responsive to changes in the cost of living or to the intention of this House as the systems in use on the Continent. I hope that study is being given to the introduction of electronic data processing so that on future occasions changes in national insurance benefits can be introduced immediately they are decided upon.

In the Bill we have especially favourable treatment for the chronic sick. We have a significant change for the better in the operation of the earnings rule. Increments for deferred retirement are made better—and quite right, too. We have an age addition for the very old, which indicates the comprehension and the compassion of my right hon. Friend; and—something for which I have campaigned and which I am delighted to see—the possibility of voluntary withdrawal from contributions to national insurance for men at the age of sixty. It has always seemed to me to be an anomaly that since 1940 the retirement age for women has been 60 and for men 65 or later. This is a bed of Procrustes. Everybody must realise that people's life spans are bound to differ, and national insurance ought to take note of this fact and to make it permissible for people to retire at the time which is suitable to them and not at the time which is suitable for the system.

Coming to the question of contributions. It is in the area of contributions this this Bill is momentous and, as my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) said, it introduces significant new considerations. The objections that have been raised this afternoon to the idea of the earnings-related contribution were basically two. One is that it hits the average man in particular. Of course, if one is trying to introduce a Bill which gives special benefit to minority groups, inevitably it is the average man who will be relatively less favourably treated. I have often argued the case for minorities which are tending to be forgotten in our society with the electoral pressures which have resulted from universal suffrage. In this House we must never forget the minority groups who are not able to reach us by electoral pressure but who nevertheless have a command on our attention.

Much the most significant objection, I think, to the idea of the earnings-related contribution for a flat-rate benefit is that it represents a new departure, and its unfamiliarity makes it questionable. I am surprised to hear it questioned by the Labour Party. I cannot resist giving a welcome to a system which will take from each according to his capacity and give to each according to his need. If hon. Members opposite will recall some of the basic tenets of their faith, they will realise that what my right hon. Friend is doing in this Bill is precisely in accordance with what they have always clamoured for. But it is a change which I feel needs to be welcomed from these benches, too, because it is a significant advance in the direction of what I call the social contract.

Of course, an earnings-related contribution to finance a basic benefit is a social security tax. But what is wrong with that? The Welfare State is financed by social security taxes at the moment. One does not need simply to allude to the 18 per cent. subsidy for national insurance. One has only to think of the way in which we pay for education—the enormous subsidy to education from the Exchequer; the way that we pay for the health services; and, since the Exchequer itself is largely dependent upon taxes of an earnings-related character, we may say that we have had earnings-related contributions for basic benefits for many years. This Bill tacitly admits the fact, and that is a step in the right direction.

Let us ask ourselves: what is a contribution to national insurance? Is it money which goes into a personal fund of a capital nature and which builds up a particular personal entitlement? Or is it in effect part of the general revenue of the Government? Much of the misunderstanding and the disputes which arose out of the introduction of the earnings-related scheme by my right hon. Friend the Member for Kingston-upon-Thames were due to the fact that no clear answer seemed to be obtainable to this question, whether the earnings-related contributions were a build-up of personal entitlements or were simply a way of boosting the ailing finances of the national insurance scheme. Possibly the right answer was that they were both.

I was pleased to hear my right hon. Friend make the point this afternoon that the money-transfer element in the earnings-related scheme hinged entirely on the Exchequer contribution, and that the personal contributions that were paid into the earnings-related section of the national insurance pension scheme were strictly related to the benefits which were eventually to be drawn out. Nevertheless the income from the earnings-related contributions was very welcome, no doubt, to the Government of the time in keeping national insurance in some sort of balance. I do not think the Secretary of State is neglecting the income that accrues from increasing current contributions as a way of financing the increased benefits which are set out in this Bill. In fact, he said it quite clearly this afternoon.

We must recognise and not cavil at the fact that the earnings-related national insurance contribution is a social security tax. It is money which goes straight into a system of money transfer or redistribution of income—or repartition, as it is called in France—and a perfectly respectable and straightforward system it is.

Nevertheless, that is not to say that there does not remain room for the buildup of premiums or the build-up of personal contributions of a capital nature. I look forward, therefore—I hope it will come in a few weeks—to the White Paper which we have been promised by my hon. Friend the Under-Secretary of State, who is giving particular study to the future of earnings-related pension benefits, whether by a State-sponsored scheme or by approved private schemes.

I hope that, when we eventually have these two systems running side by side, it will be clear to the public that part of the earnings-related contribution is of a revenue character and goes straight, in effect, to the Inland Revenue in order to meet the Government's outgoings on current commitments in the Welfare State; and that the other part of the earnings-related contribution is not so much a contribution as a premium, and is purely of a personal character, without any significant money transfer element. We have perhaps a job of education to do here, to show that in effect we are splitting national insurance into two parts, the capital account and the revenue account. We must show plainly how the money contributed will in future be dealt with in entirely separate ways.

The hon. Lady the Member for Hitchin—I am glad to see her now in her place—used the rather strong word "swindle". I appeal to her not to use that word again, not because I think that it is particularly damaging electorally but because I feel that in using it she does, perhaps, betray a certain lack of penetrating understanding of what is happening to the contributions of the public in the Welfare State. The hon. Lady is someone to whom we on these benches listen with a great deal of enjoyment. I assure her that, when her party breaks up—as is inevitable in due course now it has finished its work—she will be very welcome on these benches.

Mrs. Shirley Williams

I shall have to disappoint the hon. Gentleman, in spite of his attractively phrased invitation.

Sir B. Rhys-Williams

I assure her that she will find the atmosphere extremely congenial. Her approach, which is humane and well informed, is exactly what we admire, and, what is more, she will find here a particular admirer of her views on the subject of increases in family allowances.

I know that, when my right hon. Friend turns his head in my direction, he fears that he may at any moment find himself looking down the barrel of a gun. There are some subjects, for instance, the preservation of pension rights, on which he knows that I might even be so mad as to fire it. I hasten to assure him, therefore, that there are no severe dangers ahead for him even in the minor provisions of the Bill, except, perhaps, in one or two respects which I shall now mention.

It is a pity that we are, once again, treating the self-employed as though they were undesirable extras who had drifted on to the scene, gypsies, as it were, whom we do not quite know how to tackle. I realise that they present a serious administrative problem. I should rather call it a challenge. I hope that our public officials will find themselves equal to this challenge and that they will be able to reintegrate the self-employed with the general body of the population. Putting them into a separate category, putting them on a flat-rate contribution basis because there is no other way of coping with them, is deeply unsatisfactory. I think that my right hon. Friend knows my views about that.

I regret also the inclusion of Clause 7, which singles out the occupational pensioner for unfavourable treatment in regard to unemployment. I recognise that there is a certain misuse of funds and that there are some black sheep among occupational pensioners, who apply for unemployment benefit when they have no serious interest in ever again securing employment. But I think that the number will be sharply reduced now that it is made possible for them to withdraw from contributing to national insurance at the age of 60.

None the less, it seems to me a pity that the occupational pensioner should be singled out for this type of treatment, when somebody else, perhaps an annuitant, a person living on life savings by running down his capital, or someone who is, in one way or another independent, is apparently to escape the provisions of the Clause.

I realise that it could be said that, since we have moved forward to the recognition of the view that an occupational pension is a form of deferred pay, a man who is living on deferred pay from his previous employment cannot be said to be unemployed. That is a type of argument which I might advance, but I think it dangerous for my right hon. Friend to do so until we have had a much longer look at the implications.

All I say at this stage, not wishing to prolong our proceedings, is that I hope that my right hon. Friend, having reconsidered what he has set down in Clause 7, the unfairness of it and, in particular, the administrative difficulties, will withdraw it when the Bill goes into Committee.

The right way to tackle this question is to tighten up the procedure for ascertaining whether these people are genuinely seeking employment. It is not good enough simply to say, "We cannot solve the problem whether you are really looking for work. Therefore, we shall hit you whether you deserve it or not and, of course, you can afford it". That is not the way to approach the subject of occupational pensions of national insurance benefits. As my right hon. Friend the Member for Kingston-upon-Thames said, it introduces in another unexpected quarter the means test practice from which we hope ultimately to be able to escape altogether.

This long Bill abandons the old basis of national insurance—and good riddance. We are moving forward to a basis for the relationship between the individual and the State which will enable the State to do what the conscience of the British people requires. It will no longer be necessary—because it was impossible to raise the flat-rate contribution any more—to hold down benefits below what the public wishes them to be or to be forced to resort to unfortunate dodges of every kind to get the money from here, there and everywhere. In future, what is needed on revenue account will be raised on the basis of capacity to pay, and I hope that what is needed on capital account will be raised through the stimulus which this Government will give to genuine savings.

I do not consider that the contributory principle will be lost by the introduction of a social security tax. The whole conception of our relationship to the community as expressed in terms of cash should grow up, and we should get away from strictly arithmetical considerations. A tax is a contribution to society. This Bill recognises that fact, and I welcome it because it takes us a significant step towards the achievement of a genuine and satisfactory social contract.

6.28 p.m.

Mr. R. A. McCrindle (Billericay)

I join my right hon. and hon. Friends in extending a general welcome to the Bill, and I shall restrict my remarks to three broad points, one applying to a part of the Bill in the immediate term, the other two applying to a more futuristic approach to, so to speak, the road along which the Bill begins to lead us.

I confess to being in something of a dilemma over Clause 7. I must declare an interest here in occupational pensions. My dilemma arises from the fact that, on the one hand, I can very well see the equity and justice of what is proposed in the Bill and I recognise that it is right to restrict unemployment benefit to occupational pensioners, since this has been anomaly in the system which has developed over the years, but, on the other hand, with my devotion to the extension of occupational pensions schemes, I am a little afraid that they will be seen as being singled out in what is proposed under Clause 7.

Therefore, I ask my right hon. Friend to think just once more about whether it is possible, by administrative methods within his Department, as suggested by my hon. Friend the Member for Kensington, South (Sir B. Rhys Williams), to eliminate the necessity for the Clause. If I am told that it is not possible to do what I have suggested, I must reluctantly come to the conclusion that there could be misuse of public funds, and shall be obliged to go along with the Clause. But I believe that there is possibly an area of opportunity still remaining for my right hon. Friend, and I hope that he will pursue it very thoroughly.

My other two points are points for the future. The flexibility of the age at which a person retires under an occupational scheme has always seemed to be one of the advantages of such a scheme. I use this factor to turn my attention to the whole question of the age of retirement. Must the age of 65 for payment of the national insurance pension go on being a sacred cow for all time? Is it right that a woman should continue to have the differential age of 60 applied to her?

There are broadly two schools of thought on this question. One says that now that we are all much fitter and are living much longer it would be a good idea if we did not retire until 70. There is an equally appealing school of thought that says that as we grow much richer as a nation it should be normal to retire at 60 and enjoy the benefits of retirement five years earlier. It is probably true that 65 as a normal retirement age is with us for a long time, but it appears from the latest statistics that I can gather that the average retirement age under an occupational pension scheme is now about 63.

I know that any move by the Government to reduce the general age at which national pensions are paid would be costly. If there is any recasting of the difference between national insurance provision and provision by occupational schemes, and if the Government retain 65 as the normal date of retirement, should not occupational schemes progressively reduce the retirement age? This would give the opportunity for earlier retirement, and then perhaps three, four or five years after retirement there would be a supplement to an occupational scheme pension in the shape of the national insurance pension.

There continues to be a considerable delay between the announcement of the intention to raise pensions and actually paying the increased pension. I have heard successive Governments over a long period explain why it is impossible to shorten that period. Does my right hon. Friend have evidence that we are using that modern device, the computer, to the maximum? I am no great believer in computers as such. But I understand that there are European countries which manage to pay their pensions rather more quickly after announcing them than we do. Governments are suspect in the eyes of many people on this subject. The people do not understand why there should be such a lengthy delay, and I urge my right hon. Friend to reconsider this question and make quite certain that there is no way of shortening the period.

We are now committing ourselves to a biennial review of pensions. Is not there an argument for an annual review? Well within the period of two years considerable pressures build up from a variety of organisations. On this occasion we are paying the increase one month before we were due to pay. I believe that the pressures will continue, but with an annual review they would not have the same opportunity to occur as they do with a biennial review, and with an annual review there would be less fear among the elderly of the value of the pension being eroded by inflation.

Those are my general observations on the Bill, which I broadly very much welcome.

6.36 p.m.

Dame Irene Ward (Tynemouth)

I congratulate my right hon. Friend the Secretary of State for Social Services on the creative ideas in the Bill. While he and the hon. Member for Hitchin (Mrs. Shirley Williams) were talking so fluently I came to the conclusion that the longer I live the less I seem to know. I always felt that I knew quite a lot about the problems of social insurance and the people who live in this country, subscribe to it, and very often are supported by it. But I have come to the conclusion that with so many new things I know hardly anything.

Therefore, I shall take refuge in saying that I congratulate my right hon. Friend, adding that if some of the provisions do not work out as he hopes and believes they may I am certain that he will be strong enough, with my hon. Friend the Under-Secretary of State, to alter things where they do not go in the direction in which he hopes they will. When we introduce a new type of system it is very difficult to see very far into the future how the new ideas will work out. It is magnificent that my right hon. Friend has been so creative. If things do not all work out satisfactorily, we must have another go. It is tremendously important in legislation that we should not be rigid. We have tended in Parliament in the past to be so rigid that many injustices have continued unnecessarily.

I should like to know a little more about the people who opt out of contributions because their incomes are too low to pay them. There is a large number of people in this category, and they are just mentioned in the House from time to time. Is a survey being made to see whether it is possible to help people who are employed at too low a salary or wage, so that we can discover whether they could be covered by the schemes?

It is very distracting to people to know that they cannot afford the contributions which would enable them to draw retirement pensions at the appropriate time and, when such people finally retire, the supplementary benefits which will have to be paid will increase the burden on the Treasury. In some way, the House has not taken sufficient notice of the problems of these people, so I would like to know whether this side of the subject is being examined. Perhaps, with his creative ideas, my right hon. Friend may find some solution. I hope so, because this is a tremendously important matter.

The problem of increasing family allowances seems to be all mixed up with the Treasury, and taxation, and the rest. I have always thought—though I do not seem ever to have achieved anything about it—that when we get reductions in taxation which are very welcome and which take a large number out of the category of taxpayers, it is rather depressing for those taken out later to see those remaining in getting very necessary and welcome reductions. Public memory is very short, and these people do not remember for long that they were taken out of the tax-paying category. Then they feel that they are being rather neglected by Governments.

Could we not, when giving taxation relief, give something in the way of family allowance to make those people feel that though they are no longer having to pay taxes they are still regarded as a valuable section of the community in their contribution to the national wealth? As my right hon. Friend seems to have got on very well with the Treasury, perhaps he could discuss this subject with that Department.

I am devoted also to my right hon. Friend the Chancellor of the Exchequer, but I am always willing to take part in putting a little extra pressure on him. I have had a considerable exchange of letters with him, and some of the correspondence is very nice. Secretaries of State cannot say, "I have lost the battle with the Treasury," but many of us in the House know when these battles have been lost. We could do a lot to bring about greater co-ordination in order to get done some of the things we want done. Chancellors of the Exchequer take a lot of notice of their financial advisers: I should like to get at the financial advisers.

I am very sorry to have heard only a small part of what I understand was throughout a very interesting speech by my hon. Friend the Member for Arundel and Shoreham (Mr. Luce). He commented on what will happen to people on small fixed incomes if we go into the Common Market, and it is important that that matter should be on the record before we take final decisions. It is equally important that when we legislate to alter the method of support grant to farmers we remember also that the position of those living on small fixed incomes can equally be affected. If we alter the support grant we may find ourselves with the need for an annual review rather than a biennial review.

This is not only a practical problem but an anxiety problem. People living on small fixed incomes, who have done so much for the country in the past, find that the life that has to be led today is very difficult. I do not think that my last letter from the Chancellor of the Exchequer was at all private so I will just put part of it on record, because my right hon. Friend is a very approachable and very humane individual. In writing me a very nice letter about something quite different, he put at the end: You can be assured that I will not forget those in whom you have such an interest. That seems to give an opening to my right hon. Friend the Secretary of State.

During all the years I have been in the House of Commons I do not remember our having such a very good Social Security team. I feel that very genuinely, and I want to say it. But the team's position in relation to overall policy may be not at the top of the priority list. It is up to us to support our Social Security team, so that those engaged on the wider issues, which we all recognise, are not allowed to lose sight of the plight of those on small fixed incomes. We are attempting to give them a better and a happier life. It is no good our thinking just of increased economic advantage, if that be the case, in going into the Common Market. These people, too, must be remembered. We must remember, too, as my hon. Friend the Member for Arundel and Shoreham said, that most of those on small fixed incomes will not live long enough to see the whole developing future if we enter the Community.

Therefore, if the members of our Social Security team want any help I am sure that the House will be delighted to give it to them. I ask my right hon. Friend to make quite certain that the Minister of Agriculture and the Chancellor of the Exchequer know that the whole House will be equally interested, when the negotiations are being discussed, in what is to happen to these people for whom we have to take a very heavy responsibility.

6.50 p.m.

Mr. Alfred Morris (Manchester, Wythenshawe)

This has been a stimulating and suitably controversial debate. It has also been notable for the much less combative, not to say quiescent, mood of the Secretary of State. In the recent past he has been at times very excitable. Today he kept his cool remarkably well. This may be because the criticisms of the Bill have come not only from this side of the House. The right hon. Member for Kingston-upon-Thames (Mr. Boyd Carpenter) and the hon. Member for Kensington, South (Sir B. Rhys Williams) were kindly to the Secretary of State but also somewhat critical of his Bill. I hope that the Secretary of State will take seriously the criticisms expressed on both sides. I thought that he was in danger at one stage, so fierce was some of the criticism on his side, of suffering the fate of Oscar Wilde who after the first night of one of his plays said: The play was a great success, but the audience was a failure! The debate has been characterised also by the engaging and effective maiden speech of the hon. Member for Arundel and Shoreham (Mr. Luce). The House will look forward to hearing him again. He has what appears to be a reasonably safe seat. It may well be, therefore, that we shall hear him on many occasions in the future. My prejudice was aroused in that one of his shrewdest points related to the European Economic Community. I hope that he will make that point again not only in the House but also in the country as frequently as his commitments allow.

We also had a most eloquent speech from my hon. Friend the Member for Stoke-on-Trent, South (Mr. Ashley). He recognised that there are important new propositions in the Bill which make it an extremely important Measure from the point of view of all who are chronically sick and disabled. All of us marvel at the way in which he is conquering—not to say has conquered—his own severe disablement.

Hon. Members

Hear, hear.

Mr. Morris

The speech of my hon. Friend the Member for Oldham, West (Mr. Meacher) was, as always, thoughtful and constructive, as well as deeply informed. We have come to expect from him important interventions when discussing these subjects. I know that he is listened to with great attention on both sides of the House.

The right hon. Gentleman will appreciate that I have a very personal interest in one of the propositions in the Bill. As he said, in cases where a man is longterm sick the wife often becomes the main breadwinner. His proposal is to apply to her earnings the tapered retirement pension earnings rule, eased to £9.50 in place of the all or nothing rule which at present exceeds the increase paid to her if her earnings exceed £3.10.

My hon. Friend was kind enough to recall that this proposition was originally made by me in the original draft of my Chronically Sick and Disabled Persons Bill. I transferred the proposition to my right hon. Friend the Member for Coventry, East (Mr. Crossman) so that it could be included in the National Superannuation and Social Insurance Bill in the last Parliament. It seemed then that my right hon. Friend's was a far stronger vessel than the one I was hoping to steer through parliamentray waters. Nevertheless, the cargo I gave to my right hon. Friend went to the bottom of the sea and it is with great pleasure that I welcome its reappearance.

Mr. Boyd-Carpenter

It has been salvaged.

Mr. Morris

Indeed. But as the right hon. Member for Kingston-upon-Thames knows, this is a profoundly important proposition for the wives of men who become long-term sick.

Mr. Boyd-Carpenter indicated assent.

Mr. Morris

The right hon. Gentleman will recognise that the proposal for an attendance allowance was also a feature of my right hon. Friend's Bill; I note also that my proposal for an Attendance Allowance Board, which again I transferred from my Bill to his National Superannuation and Social Insurance Bill, has been happily revived by the Secretary of State. I am glad also that Miss Mary Grieves, Honorary Director of the Disablement Income Group, has been appointed to membership of the Attendance Allowance Board by the right hon. Gentleman.

I welcome the increase in the attendance allowance, but it cannot be considered as a comprehensive reimbursement of the likely costs incurred. It can only be a limited contribution in a case of, for example, respiratory aided polio, since £4.80 will not pay for very much more than two to three hours of attendance per day and will not enable the husband who has given up his job to look after his wife to return to work. Nevertheless, it is a very important beginning and, with my hon. Friend the Member for Stoke-on-Trent, South, I confirm that we shall be using this as a lever to improve the living standards of those who are very severely disabled.

The House as a whole has welcomed the important new departure in introducing the invalidity allowances. I notice that the allowance will be £1 if the incapacity begins before the age of 35; 60p if it begins before the age of 45; and 30p if it begins before the age of 55 for women and 60 for men. Perhaps we can be told how many claimants the Secretary of State expects there to be in each of these categories. I am convinced that the onset of severe disablement is heaviest in the third category, that is, among those who will qualify for a weekly invalidity allowance of only 30p.

It has been unkindly said that this is the equivalent only of a box of chocolates for the severely disabled or what someone unhappily called a donation. If it is true that the largest group of beneficiaries is to receive the smallest of the three allowances, it would seem as though the Treasury has had a much bigger victory over the right hon. Gentleman than has so far been suggested in the debate. Nevertheless, we welcome this very modest beginning to the recognition of the special problems of the long-term sick and disabled. The House must, however, appreciate that most of the chronically sick and disabled will not receive the invalidity allowances. They are allowances only for contributors. But the contributors are the few and the non-contributors are the many among the chronically sick and disabled. I am impressed by what has been put to every hon. Member by the Disablement Income Group. D.I.G. rightly argues that the socially just basis of provision is need.

The Group says that the Bill does not end present discriminations and will still leave four categories of disabled people: those whose needs are well recognised by war pensions and industrial disablement pensions and their various supplements; those who qualify for the invalidity pension, which is so variable in its relationship to past earnings, and, where appropriate, the attendance allowance; those who qualify only for the attendance allowance and in some cases also have supplementary benefit; and those for whom the Bill makes no provision, probably more than a million, of whom perhaps half are of working age or less. In the absence of provisions in the Bill, what does the Secretary of State propose to do for these people? I have no doubt that the Parliamentary Secretary, who takes a deep personal interest in these matters, will comment on the submissions of the Disablement Income Group when he comes to reply.

Disablement is almost always another word for poverty in Britain today. If one wishes to find a deprived child, one should first find a disabled father. We must ask ourselves what the Bill will do to help the deprived children of disabled fathers. It is extremely melancholy for disabled people that unemployment is rising so rapidly. As the House knows, there are now 814,000 able-bodied people seeking work, but unemployment among employable disabled people is well upwards of 12 per cent. The House should be reminded that disabled people much prefer to be taxpayers than to continue, as most of them have to do, as supplementary pensioners. When things are difficult for the able-bodied, they become even more difficult for the disabled. It is deeply tragic that we are likely to see a substantial increase in the numbers expected to qualify for the invalidity allowance because of rising unemployment.

Sir K. Joseph

The hon. Gentleman speaks with such authority on this subject that I ought to intervene here, because rising unemployment, even if it occurs, will not bring into benefit larger numbers of invalidity pensioners. The invalidity allowance is payable to those who are sick for more than six months and does not reach over into unemployment.

Mr. Morris

I am saying that many beneficiaries of the invalidity allowance will cherish the hope of returning to paid employment, but there will be many who will have to continue on the invalidity allowance because there are now fewer jobs available for the able-bodied let alone those who are disabled. I am glad to see that the right hon. Gentleman now accepts this very real and sombre possibility.

There have been frequent references to the fact that contributions are to be substantially increased, and my hon. Friend the Member for Salford, West (Mr. Orme) expressed deep concern about this. We have had another campaign in the war of statistics in the House. As usual, it was not fully established who won. However, I ask the Under-Secretary of State why the maximum increase in contribution, an increase of 65p, should apply in exactly the same way to the man earning £42 a week, £50, £60, £70 and even £80 a week. The right hon. Member for Kingston-upon-Thames endorsed the arguments recently advanced by the General Secretary of the T.U.C., Mr. Vic Feather, who said that it seems wrong that exactly the same new imposte should fall on a man whose weekly earnings are £42 a week and the man whose earnings are £80 a week. I hope that the Under-Secretary will find it possible to comment on that.

The result of the Budget and the social service charges combined is that a man earning £40 a week and with two children will make a net loss of £14 a year, while the man earning £20,000 a year will make a net gain of a staggering £2,063. The Financial Secretary to the Treasury is present, and no doubt he will consult his right hon. Friends about the morality of this contrast in treatment.

As I have said, the right hon. Gentleman was extremely equable in his introduction to the debate. But recently he has used some extremely exciteable language when commenting on the trade union movement. He has even accused the trade union movement of stabbing the old-age pensioner in the back. In that speech he gave gratuitous offence to the trade union movement. Of course, the movement is now comprehensively offended by the Government and the offence given by the right hon. Gentleman was merely a drop in the ocean. Those manning Labour's committee rooms in localities throughout the country know how offended trade uunionists have become. They are being helped by trade unionists who previously did not recognise the importance of political as well as industrial activity.

I congratulate the Transport and General Workers' Union and other unions and co-operative organisations for cam- paigning, from their own resources, to improve the standard of living of retirement pensioners. Many trade unionists help elderly members of their families. This is one of the realities of life for working people. If they are working, they help those who are not. For they know well that it is impossible for a retirement pensioner to live decently on the present pension. Moreover, it is the average trade unionist, who sees himself as belonging to the next generation of elderly people in need.

The right hon. Gentleman tiled to imply that the trade unions were responsible for rising prices. That is not so. Nor is it fair. The right hon. Member for Lowestoft (Mr. Prior) is not a trade unionist. But it is the right hon. Gentleman who is now needlessly increasing food prices. What is more, food forms a large part of the pensioner's cost of living and the right hon. Gentleman is not only introducing levies on food imports but increasing living costs in other ways. It is the right hon. Member for Worcester (Mr. Peter Walker) who is increasing the cost of housing. What kind of trade unionist is he? When the Labour Party were in Government it was always Ministers who were to blame if the cost of electricity, gas and other fuels went up. What kind of trade unionist is the right hon. Member for Knutsford (Mr. John Davies)? He has spent most of his life as a professional anti-trade unionist. And again, what kind of trade unionists are the hon. Members for Bournemouth, West (Sir J. Eden) and Cirencester and Tewkesbury (Mr. Ridley)?

They regard even Tory trade unionists as subversive. The right hon. Gentleman must also appreciate that the Tory trade unionist is just as prepared to accept the increases in pay negotiated by his trade union as are other trade unionists. I hope that the right hon. Gentleman will not return to the extreme language he has used in attacking trade unionists over their attitude to retirement pensioners.

Dame Irene Ward

As a non-trade unionist, and since everyone else seems to have settled quietly, may I say that I am devoted to many trade unionists, but they could help the country a great deal more if they advocated a fair day's work for a fair day's pay.

Mr. Speaker

Order. I think we are getting a little wide of the subject. The hon. Gentleman did rather bring it upon himself. Perhaps we can get back to the Bill.

Mr. Morris

I bow to your Ruling, Mr. Speaker. I have no doubt whatever that the trade union movement will take note of all that has been said in this debate.

Dame Irene Ward

And my point.

Mr. Morris

Of everything that has been said. I naturally hope that it will give special attention to the points I raised on its behalf. The main point of our attitude to the elderly is that we let people survive, but on the whole this is all that we do. The proposed increase in the retirement pension will just about have been wiped out before it is paid. The retirement pensioners, who suffered badly during last winter, look with no joy to next winter. A high proportion of our 7 million pensioners just cannot share fully in the life of the community.

Mr. Victor Feather, General Secretary of the T.U.C., has said that the purpose of graduated contributions should be to earn graduated pensions. He said that the level of graduated contribution bears no relation to the totally indequate pension provided by the graduated scheme. He goes on: Yet the Government are now proposing to increase the graduated contribution still further, in order to increase flat rate benefits. Mrs. Marion Green, acting General Secretary of the National Federation of Old-age Pensions Associations, has said that the association is concerned that by September inflation will have entirely eroded the increase. She has pointed out also that many pensioners will not receive the full value because the new rate of supplementary benefits will not rise by the same amount. This is a point of great importance for very large numbers of elderly people. Nor do criticisms come only from such organisations. Here is another comment: I believe that the Chancellor has not done nearly enough for those at the lower end of the income scale. But what is really tragic is the lack of any sort of regional element… That comes from Mr. Keith Rassan, National Chairman of the Pressure Group for Economic and Social Toryism, or P.E.S.T., as hon. Gentlemen opposite may like to call it.

I hope the Under-Secretary will comment on the proposition that there should be more frequent reviews of pension and welfare benefits and also on the proposal that has been made, especially strongly by The Guardian, that we should compile a special cost of living index for pensioners and invalids.

The main difference between the two sides of the House is that this side has made proposals, and has a policy, for improving the relative standard of living of all retirement pensioners and others in special need. The party opposite did not know whether to support that policy or to oppose it. The country wants to know the Government's long-term policy for improving the standard of living of elderly people in relative terms. I am reminded of what Sir William Oastler called: "…the serene satisfaction with the status quo." Some of the right hon. Gentlemen's colleagues in the present Government, much more than he, seem to suffer from that serene satisfaction. We shall subject this Bill to deep scrutiny in Committee and shall seek to improve it. We shall seek the review of many other provisions than those I have mentioned. Above all we shall seek to improve the Bill not only for the benefit of elderly people but of so many other groups who are in special need.

7.0 p.m.

The Under-Secretary of State for Health and Social Security (Mr. Paul Dean)

The House has listened with pleasure to the first contribution to our debates by my hon. Friend the Member for Arundel and Shoreham (Mr. Luce). We all echo his tribute to his predecessor, the late Captain Henry Kerby. My hon. Friend spoke on this subject with obvious knowledge, assurance and compassion, and we look forward to hearing further contributions from him on this and other subjects.

It has been an interesting, thoughtful debate in which we have listened to six contributions from this side of the House and to three from the back benches opposite, and I shall deal as quickly as I can with some of the questions which have been put to me.

The selective increases which my right hon. Friend described at length are among the key hall-marks of the Bill, and they have been referred to in every speech. Incidentally, I am sure that my right hon. Friend and I, together with our Treasury colleague, were grateful for the warm tribute which came from my hon. Friend the Member for Tynemouth (Dame Irene Ward). We all hope to continue in her good books.

The significance of the selective increases is that they allocate priority so as to bring more help where the need is greatest, especially to the chronic sick and the over-80s. They do this by categories within the national insurance scheme, and they follow the precedent set by my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) in the preferential treatment within national insurance for the children of widows.

The Bill brings in the existing chronic sick and the existing over-80s. It is not just a plan for the future. It deals with those who, had these provisions been in operation, would have benefited from them in the past. It also carries through into the war pensions scheme and the industrial injuries scheme these new selective increases. As my hon. Friend the Member for Wells (Mr. Boscawen) said, it maintains the preferential arrangements which we have in our war pensions and industrial injuries schemes.

The Bill also reflects in the supplementary benefits scheme. Here, perhaps, I might deal with the age addition point made by the hon. Member for Hitchin (Mrs. Shirley Williams). There will be a 25p addition where there is a person over the age of 80 in the household. As for the chronic sick package, in many cases the supplementary benefits scheme, which is tailored to people's individual needs, reflects the additional needs and requirements of the chronic sick. In addition to that, the figures for which the hon. Lady asked are broadly that, in the case of the invalidity allowance, only about one-third of those now getting sickness benefit and will be getting the invalidity allowance are also getting supplementary benefit. In other words, about two-thirds will benefit from the proposals in the Bill.

Then I come to the figures for which the hon. Member for Manchester, Wythenshawe (Mr. Alfred Morris) has asked—the number of people likely to qualify for the invalidity allowance in the three categories. The estimate is that, at the £1 rate for those who become chronically sick or disabled earlier in life, there are 60,000; for the 60p rate, 70,000; and for the 30p rate, 220,000.

I turn next to the points made by the hon. Member for Wythenshawe, whom we gladly acknowledge as a fellow architect in our arrangements for the chronic sick and the disabled. As my right hon. Friend said, this Bill and the earlier 1970 National Insurance Act represent a four-pronged assault on the cash problems of the chronically sick. There was the attendance allowance in the Act last year which starts in December and there are the three aspects of cash allowances in this Bill, namely, the age of onset allowance, the improved arrangements for the working wife of the disabled man, and those for their children.

To give one example of the increases which are possible and which some families will get under the Bill, I take a man who became chronically sick at the age of 30. who has two children, and whose wife earns up to £9.50. At present, including family allowance, this family receives £11.20. After September, under the proposals in the Bill, the family will receive £16.60, an increase of nearly 50 per cent.

I come next to the short-term benefits, especially the earnings-related supplement. I was sorry to hear the hon. Member for Hitchin again talking about a swindle. Some time ago, I remember how the right hon. Member for Sowerby (Mr. Houghton) admonished us and criticised us very severely. He said that in a debate on social security it was damaging to talk about swindles. I am surprised that the hon. Lady has not learned this very wise lesson from her right hon. Friend. I have learned it, and I am determined not to use the word again.

All the money being raised is going to pay benefits, and, by "all", I mean every single penny. There will be no reduction for people on earnings-related supplement when the change is made in May, 1973. We intend to preserve their entitlement. In the vast majority of cases, the growth in earnings which will take place meantime will more than compensate for the fact that, on the higher bracket of earnings, the earnings-related supplement will be at the rate of only 15 per cent.

What it comes to basically is the allocation of priorities within the scheme. I admit freely that this means a modest re-allocation of priorities as between short and long-term benefits. The welcome that the House has given to the chronic sick package and the provision for the over-80s suggests that we are on the right lines.

The hon. Member for Stoke-on-Trent, South (Mr. Ashley), who also paid a tribute to the package and equally can claim some of the authorship, asked about the gaps still existing. My right hon. Friend acknowledged freely that this is but a start and that there is much more to be done. One of the categories mentioned by the hon. Gentleman, the disabled housewife, who will be helped to some degree by the attendance allowance, is a category of individuals we have very much in mind in considering what our next steps should be.

The other package is the selective increase for the over-80s. The numbers involved are about 1.1 million, of which no fewer than 70 per cent. are women. The right hon. Member for Sowerby has often told us that poverty in this country is basically amongst women. This has been one of the criteria which influenced the Government to propose this addition for people over 80.

My right hon. Friend mentioned two particular aspects in the Bill. First, those who are at present either getting no pension or getting a pension which is lower than the old persons' pension who will be brought in at the age of 80; second, the age addition of 25p which will be available not only for the full retirement pensioner but for the over-80 pensioner.

I should like to give the House one example of an increase which will take place. A married couple on full pension, bothof whom are over 80, now get £8.10. Under the proposals in the Bill, they will receive £10.20; in other words, an increase of 26 per cent.

Other examples—there are many examples of the selective increase—are the earnings rule and the increments, both of which will provide additional encouragement for those who work after retirement age. I am glad that those proposals have been welcomed on both sides of the House.

I turn to what this package will cost and how it will be met. This point has been mentioned by most right hon. and hon. Members who have spoken. Although my right hon. Friend the Member for Kingston-upon-Thames expressed some reservations, he said that, however it is arranged and whatever it is called, it involves a transfer of resources from the working to the retired population. It is, always has been and will continue under the Bill to be, a pay-as-you-go scheme in which we pay the pensions of our grandfathers and fathers, or, more likely, our grandmothers and mothers—because women live longer—in the hope and expectation that eventually when we retire the then working generation will pay our pension. In this sense, it is a contributory scheme rather than an insurance scheme in the way we normally understand the word "insurance". However, it is a scheme in which the contribution creates a title to benefit. That will continue under the Bill. We are trying fairly and squarely to meet the fair distribution of this cost. My hon. Friend the Member for Kensington, South (Sir B. Rhys Williams) particularly mentioned that point. In other words, it is based on the ability to pay.

We are criticised for this by hon. Gentlemen opposite, so let us look at the comparison of the contribution increases in the Bill and in 1969. The actual increase in the basic level of pension and other benefits in the Bill is twice as great as in 1969. A pound under this bill compares with 50p in the 1969 Act.

Mrs. Shirley Williams

Does the hon. Gentleman accept that the only fair comparison is in real terms? If we start talking purely in money terms we have no real basis of comparison at all.

Mr. Dean

I accept that. I am dealing with the other argument which has been put from the Opposition. Although the Bill provides twice has big an increase in money terms—I fully concede this—as the 1969 Act, I want to remind the House what the increases in contributions will be this time compared with 1969.

In 1969 the lower paid contributed an increase of 5p, whereas on this occasion they will pay no increase whatsoever. In 1969 the £20-a-week man paid an increase of 12½p. On this occasion he will pay an increase of only 3p. In 1969 the £30-a-week man paid an increase of 38p. He will now pay an increase of only 15p.

Mr. Orme

Why stop there?

Mr. Dean

I am going on. The £42-ormore-a-week man in 1969 paid an increase of 38p, which was the ceiling. Under this Bill he will pay 65p. So only about a quarter of the working population will be paying a bigger increase than in 1969 for twice the money increase in the benefit being offered. That means that three-quarters of the working population will be paying less than the increase in 1969. In the face of those contribution figures, it comes ill from hon. Gentlemen opposite to make the criticisms which have been made.

There is also an increase in the Exchequer contribution which, broadly, is being restored to a position from which it had slipped under the last Administration-18 per cent. These are substantial figures. It means that the Exchequer contribution—the contribution from the taxpayer—will go up from £491 million in 1971–72 to £537 million in 1973–74.

Another significant point is the comparison between the percentage contribution in this Bill and the previous Administration's Bill which the hon. Member for Hitchin mentioned. The contribution in this Bill is 4.35 per cent., whereas the previous Administration in their Bill envisaged a contribution of 6¾ per cent.—substantially more.

The hon. Member for Hitchin said that only a scheme of that kind held out hope of dealing with poverty most effectively in future. I fear that the hon. Lady forgot that that Bill would exclude existing pensions entirely. The significant point about my right hon. Friend's proposals is that they will bring immediate help—this is not a plan for the future—to those who are most in need.

Mr. Alfred Morris

I hope that the hon. Gentleman has not entirely left the question of contributions. Will he explain why the £42-a-week man should pay exactly the same increase of 65p as the £80-a-week man?

Mr. Dean

For the same reason as that used by his right hon. Friends. They also had a ceiling on the contributions, because they felt that it was not reasonable to expect employees to pay over a certain level. The reason which held good for his right hon. Friends holds good for this Bill, too. If the hon. Gentleman wants confirmation, I am sure that he can get it from his right hon. Friend the Member for Sowerby.

Mr. Meacher

Will the hon. Gentleman give way?

Mr. Dean

I am coming to the hon. Gentleman's point. Perhaps it would be more convenient if I continued. I think that I know the point which he has in mind.

I turn now to the points made by my right hon. Friend the Member for Kingston-upon-Thames and my hon. Friend the Member for Billericay (Mr. McCrindle) about the unemployment benefit for occupational pensioners. My hon. Friend the Member for Billericay said that he, albeit reluctantly, would agree with the proposal in the Bill if he were assured that it was not possible to deal with the misuse of public funds, as he described it, by the availability-for-work test. I assure the House we have looked with the greatest care to see whether it would be possible to deal with this misuse of benefit by redefining that test. The National Insurance Advisory Committee has looked at this matter with extreme care but has reached the conclusion that it would not be possible to deal with the situation in that way.

There are strong reasons against dealing with the matter in that way. First, there is the tendency for men at the age of 60 retiring with an occupational pension to move to another part of the country where there are limited opportunities for sedentary work of the type to which they have been accustomed. But even if work were available, and they were anxious to pass the test, in many cases an employer would naturally prefer a younger man, if one is available. Equally, I think that it would be right and proper for the employment exchange if it is asked to advise, to suggest the younger man, rather than the older. Those are the main reasons why the availability-for-work test will not provide the solution that we have teen seeking to this problem.

I am glad that my hon. Friend the Member for Kensington, South welcomed the voluntary contribution which we propose for the non-employed person from the age of 60.

Mr. Boyd-Carpenter

Before my hon. Friend leaves that, will he deal with the point, which is formally made by Lord Collison in his minority report of the National Insurance Advisory Committee, that this provision is a departure from the principle that national insurance benefits should not be subject to a means test?

Mr. Dean

I was going to answer that. I wanted to deal first with the voluntary contribution point. Many of the criticisms made when the proposal first saw the light of day related not so much to the receipt of unemployment benefit as to the fact that the person concerned had to continue to pay a compulsory contribution whether he wanted to or not. It is to meet that criticism that the Bill proposes that a person who is non-employed at the age of 60 or over shall not have to pay a contribution. The choice will be his, and I think that this provision goes a long way to deal with the criticism levelled at the proposal previously.

The final point is that mentioned by my right hon. Friend the Member for Kingston-upon-Thames. I put it to the House in this way. In the circumstances, what was the choice before the Government? Having satisfied ourselves that the availability-for-work test was not a runner, we had the choice of doing nothing, or of proposing to the House the course set out in the Bill, albeit with its disadvantages, and the criticisms that have been made against it.

My right hon. Friend has before the House a Bill by which he is shifting some expenditure from non-priority areas to greater priority areas. I am referring to provisions on the striker's disregard and waiting days in the Social Security Bill. Surely my right hon. Friend would have been subject to great crticism had he decided to do nothing about the people to whom I have referred. It is the balance of the argument which has resulted in the Clause, and I hope that on reflection my hon. Friends will feel that the balance has been struck the right way.

Now I turn to the question of polygamous marriages, about which my right hon. Friend the Member for Kingston-upon-Thames asked. He instanced the case with which he had had to deal when there were four potential widows.

Mr. Boyd-Carpenter

Actual widows.

Mr. Dean

I stand corrected—four true widows. This is a highly complex matter, as I think the House has gathered. The intention is that in the regulations which will eventually be submitted to the House the test will be whether a marriage which was once polygamous ceased to be polygamous when the woman concerned became a widow. [Laughter.]

Mr. Boyd-Carpenter

I do not think that my hon. Friend has got it quite right. Was not my hon. Friend trying to say that if a man had serveral wives and he died and left one, one is all right? Is not that what my hon. Friend is wishing to say? Will he answer the point that I raised? Can any man, by his death, involve the payment of widow's pension to more than one widow?

Mr. Dean

I think that that shows how wise the Bill is to suggest that this problem should be dealt with by regulations. What we hope to achieve when we have sorted this out and presented the regulations to the House is that if a person, on coming to this country has a wife who is a normal wife under the rules and regulations of this country, she will qualify for widow's benefit in the same way as anybody else. They will be within the rules. That is what we are hoping to achieve. I hope that I have got this right. If not, perhaps I can clear up the confusion at a later stage.

Mr. Boyd-Carpenter

My hon. Friend said that "they would be within the rules", which suggests that there might be a multiplicity of widows for these pensions.

Mr. Dean

Instead of "they" I should have said "she".

I now propose to deal with the questions asked by the hon. Lady the Member for Hitchin and the hon. Member for Oldham, West (Mr. Meacher) about the family income supplement and the family allowance. The complaint is that there is a gap in the Bill. In his intervention my right hon. Friend made it clear yet again that the only course open to the Government at the time to bring effective help was through the family income supplement arrangements, and there is no doubt that these, plus the tax relief on the child's allowance which my right hon. Friend the Chancellor has introduced, will provide substantial help.

My hon. Friend the Member for Billericay asked about the period between the announcement of an increase and the paying of it. He wondered whether it would be possible to speed things up with the introduction of the computer. The answer is that that will be possible in due course, but this is the first uprating on which the computer will be in full operation. We may have teething troubles, but it is not possible to expect a computer, doing this job fully for the first time, to be able to do it more speedily than it is done now. Added to that there is the substantial load on the staff in my right hon. Friend's Department as a result of the other new benefits that are being introduced.

I think I can answer my hon. Friend's question by saying that, in the long term, if we are to have—as we are committed to have—a regular review of pensions every two years, then what will matter will be calculating the period that is needed for the administration, and, as it were, working backwards from that.

Not a great deal has been said about the industrial injuries scheme, but I know that hon. Members on both sides of the House have expressed considerable interest in it, and particularly about possible developments that might be made in it. My right hon. Friend described the improvements in the scheme, which are broadly similar to those being introduced in the national insurance scheme, but some concern has been expressed about industrial diseases, and I should like to tell the House that the Industrial Injuries Advisory Council is engaged in a major review of pneumoconiosis and associated respiratory diseases.

The questions referred to the council raise fundamental issues, and the council has been hearing evidence from many eminent medical witnesses and research workers. Simultaneously, the council has been heavily engaged in trying to find a way round the difficult problems involved in the prescription of occupational deafness under the Act. This is an increasing hazard of present-day industry, with which we are all concerned, and here again the council is examining a considerable weight of evidence from interested persons and organisations, Needless to say, as soon as we receive the advice of the council, we shall consider it in the hope that it will be possible to make advances on these two important fronts.

The Bill fulfils a number of important pledges which the Government gave at the last election. I do not say that in any spirit of complacency or self-satisfaction. After all, we are contributing the money of contributors and taxpayers in this Bill. But it shows that, when we talk about compassion and care for the needy, we mean what we say. We match words with deeds. On that basis, I commend the Bill to the House.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).