PENSIONERS' PAYMENTS AND NATIONAL INSURANCE CONTRIBUTIONS BILL (Hansard, 20 December 1972)

HC Deb 20 December 1972 vol 848 cc1424-542 1424

§ Order for Second Reading read.

§ 7.36 p.m.

§ The Under-Secretary of State for Health and Social Security (Mr. Paul Dean)
I beg to move, That the Bill be now read a Second time.
Nearly 7¾ million pensioners have received their £10 special lump sum payment in good time for Christmas, and I am sure that the House will wish to pay tribute to the sterling work and the Christmas spirit of the Post Office and Department staff who have successfully carried through this major operation. Many "thank you" letters have been received from those who have benefited from the payment. Perhaps I might read two sentences from one of them which express the sentiments which have been conveyed to the Government from so many quarters. They read: Having drawn my £10 pension as a retirement pensioner yesterday I wish to send my thanks for this kind and thoughtful gesture. It will be a great help to many who have retired, and some form of gratitude is desirable. None the less, there has been disappointment amongst retirement pensioners whose pensions were cancelled under the earnings rule. We now realise, as did the right hon. Member for Blackburn (Mrs. Castle) in her Bill, that because of the urgency and speed with which the lump sum payment was carried out we did not succeed in making it clear that pensioners whose earnings were high enough to cancel their pensions completely were not eligible. Expectations were aroused which were later disappointed. So the Government have responded quickly with this Bill.
Clause 1 enables the £10 to be paid to about 7,000 pensioners who were not entitled to a pension for the week beginning 4th December on account of their earnings. It also includes a pensioner with an entitlement to an increase in his retirement pension for his wife over the age of 60 but who did not receive that increase for the week beginning 4th 1425 December either because of his or his wife's earnings. This Bill, like the last, does not include anyone under the retirement age. The additional cost will be about £75,000, which will be met entirely by Exchequer funds.
As regards payment, I hope that it will be possible for the Department to identify and pay the great majority of pensioners concerned by the middle of January. However, there will be a few pensioners whose identification may not be possible. Any pensioner who has not received the £10 for himself or for his wife by mid-January should, therefore, net in touch with his nearest local social security office.
Naturally, it will be asked why we cannot pay this pension in time for Christmas. I need hardly remind the House of the obvious point that Christmas is very nearly with us. However, the main reason is that the great majority of the 7,000 pensioners concerned do not have pension order books and, therefore, the Post Office has no means of identifying them as being entitled to the payment. The majority will be identified and will get payment by Giro order from our central office in Newcastle, and I hope that this will be during the first week in January. The remainder will be identified and paid from our local offices, and I hope that this will be completed in the second week in January. Clearly, if we could have paid earlier it would have been our wish to do so. But, as I hope the House appreciates, the very speedy operation which was possible with the majority of retirement pensioners who had order books and could be readily identified by post offices is not possible in this case.
Clause 2 removes a legal doubt about the correctness of the basis on which graduated pensions under Section 4(2) of the National Insurance Act 1965 are assessed. When graduated contributions were introduced in April 1961 the intention, which Parliament fully understood, was that the basis of assessment should be the gross remuneration of employees; that is, remuneration inclusive of expenses which they were obliged to meet from their pay for tools, protective clothing and superannuation contributions, for which they could claim relief from income tax. This intention was borne out in practice.
1426 Doubt has now been expressed whether the form of words contained in Section 4(2), which re-enacts Section 2(1) of the 1959 Act introducing graduated contributions, was competent for this purpose on the ground that these allowable expenses are neither remuneration assessable to income tax under Schedule E nor sums from which tax under that schedule was deductible. The Bill, therefore, provides for the collection of graduated contributions to continue on the basis approved by successive Parliaments.
I am grateful to the Opposition and to the whole House for agreeing to facilitate the passage of the Bill, which I have much pleasure in commending to the House.

§ 7.41 p.m.

§ Mr. Brian O'Malley (Rotherham)
The Opposition welcome the Bill which reflects a change of mind by the Government. This change of mind has been forced on the Government first by the pressures of my right hon. Friend the Member for Blackburn (Mrs. Castle) and secondly, we should recognise, by the pressures of the British Press. The Press is often criticised in this House, but on this occasion the part played by national and regional newspapers in persuading the Government to change their mind has been significant.
I think that the Under-Secretary was a little ungracious towards my right hon. Friend the Member for Blackburn. He mentioned that the Bill sought to make payment of the £10 bonus to retirement pensioners who were excluded previously as a result of the earnings rule and that my right hon. Friend's Bill sought to do the same. This Bill appears as the result of the production of a Bill by my right hon. Friend. I suggest, in a very friendly Christmas spirit, that these 7,000 pensioners who are to receive the £10 bonus early in the New Year can thank my right hon. Friend and the British Press for the pressure that they have put on the Government. So this Pensioners' Payments and National Insurance Contributions Bill takes its place in the long saga of inconsistencies which make up much of the history of the present Government.

§ Mr. J. R. Kinsey (Birmingham, Perry Barr)
I should like to point out to the hon. Gentleman that there were pressures 1427 other than those of his right hon. Friend the Member for Blackburn. In fact the 1922 Committee, on a resolution proposed by me, was moving in that direction as well.

§ Mr. O'Malley
I am fascinated to hear a report of the activities and discussions of the 1922 Committee. We look forward to open revelations of this kind in future. We hope to be given detailed information of that kind.
The reason for this Bill is not that the Government made a mistake in the earlier Bill or that they intended all along that pensioners excluded by the earnings rule should receive the benefit. In fact the Government have become so sensitive about repeated charges of incompetence that they made it clear in HANSARD that, as a matter of deliberate policy, originally in the first £10 bonus Bill they intended to exclude, and indeed did exclude, these pensioners. For that we have the evidence of the Under-Secretary of State on 20th November 1972, at column 1028, and the Secretary of State himself who on 12th December, in reply to a question by my right hon. Friend the Member for Blackburn, said: I have seen the case to which the right hon. Lady refers. It was explained to the House that in order to make the payment before Christmas we had to have a rough and ready arrangement—a mechanism by which the Post Office could recognise without error the people who were entitled. For that reason we had to choose those who were entitled to a pension on the week in question. Those who had earnings—and most of them are regular earnings, although not all—disentitled themselves to a pension. For that very small number, that is one of the consequences of making the payment so quickly."—[OFFICIAL REPORT, 12th December 1972; Vol 848, c. 207.] So it was the Government's deliberate intention to exclude 7,000 elderly people from receiving this benefit.
The implication is quite startling. It meant that about 7,000 pensioners would receive £18.25 in earnings and, as the result of those earnings, lose £16.75—the £10 bonus and the £6.75 retirement pension for a single person. Therefore, as a result of earning £18.25 they would have been £1.50 better off, minus tax. The Government were operating an effective tax rate of about 100 per cent. This was the poverty trap with a vengeance and a deliberate decision by the Government to exclude these pensioners from payment.
1428 I believe that the House has substantial grounds for complaint at the Government because they have produced a Bill with a Long Title and a Money Resolution so carefully and tightly drafted that it is impossible for either the Opposition or any hon. Gentleman on the Government side to draft amendments seeking to make payments for widows, the longterm sick, the disabled and the longterm unemployed.
The Under-Secretary has explained that these categories of people were excluded because the Government wanted to make the payment quickly before Christmas. As we are now rightly making payments to people with earnings, whom the Government say cannot be paid before Christmas, may I ask why they cannot do something for widows, the long-term sick and the disabled? These people, who are on pensions of £6.75 a week, need our Christmas best wishes. When I heard the Leader of the House wish us all a happy Christmas only a few minutes ago, I was tempted to ask "What about the widows, the long-term sick and the disabled who are being excluded as a result of this Bill?" Therefore, we are entitled to complain at the tight way the Government have drafted the Money Resolution and the Long Title of the Bill.
The hon. Gentleman said that the Government had received a considerable number of letters expressing satisfaction about the receipt of the £10 Christmas bonus.

§ Mr. Patrick Cormack (Cannock)
More than the hon. Gentleman ever received.

§ Mr. O'Malley
I have received a substantial number of letters from widows, the long-term sick and disabled who ask why they cannot be paid this money. If the hon. Gentleman is saying that this is such a generous Government—

§ Mr. Cormack
More generous than the Labour Government.

§ Mr. O'Malley
That is the implication of the hon. Gentleman's sedentary shouts at me—why does he not persuade his Government—he is a man of influence in the Department; he is a PPS—to make this payment early in the New Year to widows, the long-term sick and other categories?
The Opposition are happy to facilitate the Bill in the closing stages of the 1429 Parliamentary Session before Christmas, because we think it right that these thousands of pensioners who are earning a little extra money for Christmas should receive the £10 bonus along with other retirement pensioners.
Even at this stage the Opposition are prevented from putting down amendments to obtain the benefit for widows and other needy and deserving categories of pensioners and other social security recipients. We cannot make that change, but the Government can. If they will not do it through this Bill, will they ensure that these pensioners get the £10 bonus early in the New Year? They should have received it under the original Bill, and it is sad that the Government, having had the opportunity to make the necessary change, have introduced a second Bill and still refused to provide this benefit for millions of widows and others with families, and many long-term sick and disabled people.
That is one Christmas thought which the Opposition leave with the Government, and I hope that the Under-Secretary of State will be able to do something about it.

§ 7.50 p.m.

§ Mrs. Barbara Castle (Blackburn)
Of course I welcome the Bill, for the simple reason that it is almost identical with the draft Bill that I sent to the Secretary of State on Wednesday, 13th December. I sent it to him because, as my hon. Friend the Member for Rotherham (Mr. O'Malley) said, the Press had done an excellent job in bringing to light this anomaly in the Government's provision. I sent it to the right hon. Gentleman because on Monday of that week I challenged him at Question time on what he was going to do to put right the anomaly and he made it clear that he intended doing nothing about it. My hon. Friend is right. This was not an administrative slip. It was not an instance of something being overlooked. The Secretary of State made it clear—and it has been made clear again since—that the Government intended to exclude this group of people.
Why have the Government changed their mind? I agree with my hon. Friend. Both this evening and during the last few days we have experienced parsimony and a lack of generosity by the Government. 1430 There has been a failure to recognise that it is pressure from the Press and from this side of the House that has compelled the Government to introduce the Bill.
There is only one person who deserves credit for the Bill, and it is not the right hon. Gentleman the Secretary of State. It is my hon. Friend the Member for Romford (Mr. Leonard) to whom I pay tribute. It was he who made it possible for me to announce the introduction of a Ten-Minute Rule Bill which forced the Government to act. I was too late to get a spot of my own in the Ten-Minute Rule list before the House rose for the Christmas Recess, so I went to see my hon. Friend. He had risen at 5 a.m. to get his own Bill in—the LifePeers Change of Style and Rank Bill—but when I explained that this was one opportunity to force the Government to deal with the anomaly in the payment of bonus he replied, "Pensioners come before peers, and I shall give you my place in the Ten-Minute Rule Bill queue:" The Minister knows that if I had not obtained that position in the queue, and that if the draft Bill which proved conclusively that this anomaly could be cured very easily—very much on the lines which the Government had adopted today—had not been sent to his right hon. Friend the Bill now being considered would not have been before the House tonight.
The Secretary of State has been totally perfunctory in his treatment of the House. He ought to have been here this evening. We are still waiting to see him in the Committee considering the Social Security Bill, a major piece of legislation. There have been four sittings of the Committee, but the right hon. Gentleman has not turned up once. What is more, the right hon. Gentleman did not even bother to answer the letter that I wrote offering him the draft Bill, offering to allow the Government to substitute their measure for my Bill, and offering every facility to get it through the House. The right hon. Gentleman did not bother to answer until he had made an announcement to the Press. Equally, he has not bothered to come to the House this afternoon to answer a letter which I sent him yesterday explaining how I thought his £10 bonus could be paid this week for at least a number of the 7,000 people who have been excluded.
1431 The Under-Secretary of State has proved my point. He said that because a number of the 7,000 affected were in permanent employment they did not have a retirement pension book: but there are at least 1,500 who have. That is the figure that I have obtained from our own research department and from the hon. Gentleman's Department. There are at least 1,500 casual workers who have a retirement pension book. I wrote to the Secretary of State and asked him to consider, before tonight's debate, the possibility of somebody from his Department going on television this evening and saying that anybody who has a retirement pension book that has not been stamped because the bonus has not been received can go to the post office before Christmas and get the money.
Does not the hon. Gentleman realise that it is the casual workers, the people who are not in regular, high-earning employment, who need this 10 quid before Christmas? If the Secretary of State had felt not only the need for courtesy in his dealings with the House but a sense of sympathy for and identification with the needs of humble people, he would not have continued ignoring my appeals to him and gone to the country and tried to claim credit for the generousheartedness of the Government. If the Government really cared it would be possible to make an announcement tonight that the bonus will be paid.
I shall not hold up the passage of the Bill. I shall keep my promise to facilitate its passage. It will go through all its stages tonight, and there is no reason why at least 2,000 hard-hit retirement pensioners should not get the bonus this week. I deeply regret that the Secretary of State has not done the House the courtesy of explaining why the arrangements which I suggested in my letter cannot be carried out.
The procedure is simple. My own mother had her £10 bonus paid automatically on her retirement pension book. No identification was needed, nor were any elaborate administrative changes necessary. Her authorised agent presented her book in the week beginning 4th December, found there was a £10 bonus in the packet, and her book was stamped accordingly. There is no reason 1432 why that should not be done this week for any of the people who carry a retirement pension book, and I deplore the casual heartlessness of the Government.
The Under-Secretary of State was very smug. He said that he had to read at least one letter of gratitude. Let me tell him that I have received about 400 letters on this issue since I announced that I was introducing my Bill, which I have now withdrawn in favour of the Government's Bill. Many of the writers said "Thank you for raising this anomaly. Keep up the battle and help us to get the bonus because we need it." The vast majority of the letters were from people who said "When you introduce your Bill will you carry it a little further? I am a widow "—or a war widow, or on an invalidity pension, or chronically disabled—" and the money would help." One group of people feel particularly bitter about the Government's policy. I am thinking about the wife of the old-age pensioner who is not allowed to get her £10 because she is not 60, although the family is dependent upon the retirement pension.
All these points were raised in Committee on the Government's original Bill. We pressed our amendments but we were turned down, and I join my hon. Friend the Member for Rotherham in saying that our pleasure in having forced the Government to act as they have done is tempered by our deep regret that they have not been generous to all those who are in need.

§ 8.0 p.m.

§ Mr. Dean
With your leave, Mr. Deputy Speaker, and that of the House, perhaps I might reply briefly to some of the points raised.
I very much regret that the right hon. Member for Blackburn (Mrs. Castle) should have used this occasion to make an attack on my right hon. Friend.

§ Mrs. Castle
He is not here.

§ Mr. Dean
My right hon. Friend is well-known for his courtesy to the House and for his practical support for pensioners—

§ Mrs. Castle
Where is he?

§ Mr. Dean
—and the other people for whom this very large Department is responsible.
1433 With regard to the reply, the right hon. Lady knows that my right hon. Friend replied to her on Friday afternoon and that he took considerable trouble to ensure that the reply was personally delivered to her and that she knew on the telephone what was in it.

§ Mrs. Castle
That reply was not sent to me, nor were the contents divulged to me, until after the Government's announcement had been made on the one o'clock news. The first notice that I had of the Government's intention to respond to my overtures came from the Press, because the Secretary of State's letter to me at that time had not even been signed.

§ Mr. Dean
I am afraid that the right hon. Lady has misunderstood this. Anything which was said on the one o'clock news that day did not emanate from the Department. It may have been speculation on the part of the Press, but it did not emanate from the Department. She received the letter, or details of what was in the letter, at the earliest possible moment.
The right hon. Lady asked whether it would not be possible to pay the bonus before Christmas to those who have order books; she recognised that it would not be possible for those who have not. The answer, I am afraid, is that it would mean sending detailed instructions to all the post offices in the country, and that simply is not possible, given the best of good will, between now and Christmas.
The hon. Member for Rotherham (Mr. O'Malley) rather pulled our legs for changing our minds. We are proud to change our minds if events prove that we should do so, and that is what we have done in this Bill.
The hon. Gentleman also mentioned widows and other people, invalidity pensioners and the like, under the age of 60. But it was necessary to decide, in a speedy operation of this kind, where to draw the line. The most practical and effective line was to draw it at the retirement age. But these deserving sections of the community are now benefiting from the annual review of pensions and other benefits which the Government have introduced for the first time. This Bill is part of a major operation which we are very glad that we have been able to carry out in very quick time.

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§ 8.2 p.m.

§ Mr. Alfred Morris (Manchester, Wythenshawe)
My right hon. and hon. Friends have spoken not only briskly but with marked restraint. The Minister seemed to resent what he called a severe personal attack on his right hon. Friend. What my right hon. Friend the Member for Blackburn (Mrs. Castle) was mainly emphasising is that the Secretary of State should have been in the House for this important debate. We have still had no explanation of his absence.
We are, of course, pleased to facilitate the passage of the Bill. It removes one anomaly, but regrettably, only one. As already noted, there are other important anomalies in the legislation. The Minister knows how much I regret the exclusion of widows, the long-term sick and the disabled. In far too many cases today both "disablement" and "widowhood" are but other words for poverty.
It is well acknowledged that the poorer one is the more of one's income is spent on food and warmth. For some of the very poorest people there often has to be a choice between food and warmth. It is a very sombre choice. Even if the cost of food and warmth'is ignored the living costs of disabled people are higher than those of other people. This was eloquently explained by the Government themselves in a circular dated 17th August 1970 which went to all local authorities in England and Wales.
This occasion is one for paying special tribute to my right hon. Friend the Member for Blackburn. She generously informed the House of the help given to her by our hon. Friend the Member for Romford (Mr. Leonard). It has been emphasised that the Government's Bill is almost identical to that presented by my right hon. Friend. Yet there is perhaps one important difference. I am sure that my right hon. Friend would have been not only more prepared but anxious to accept amendments which would benefit the long-term sick and disabled than are the Government.
The hon. Gentleman referred to one letter among many that he has received from those who are grateful for this bonus. He has not said how many letters he has received from those who have been left out. He may like to know that I have been inundated with letters from widows, as well as from long-term sick 1435 and disabled people, who say "We are among the poorest in the country. Why should we have been excluded?"
Nevertheless, we have made it clear that we will facilitate the passage of the Bill, and we are pleased to agree that it should go forward with the minimum possible delay.

§ Question put and agreed to.

§ Bill accordingly read a Second time.

§ Bill committed to a Committee of the whole House.—[Mr. Goodhew.]

§ Further proceedings stood postponed, pursuant to the Order of the House this day.

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