HC Deb 22 March 1972 vol 833 cc1500-17

3.42 p.m.

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

With permission, Mr. Speaker, I should like to make a statement about increases in social security benefits. My right hon. Friend the Chancellor of the Exchequer has already announced the main increases in benefit and contribution rates to take effect in the week beginning 2nd October. After the Easter Adjournment I shall be presenting a White Paper to the House together with a Bill and the Government Actuary's report, and I shall be laying instruments for the war pensions and supplementary benefit improvements.

I am circulating details of the new rates of benefits and contributions and of three minor changes in the Official Report. These, with the copies of my statement, are available in the Vote Office.

The increase of 75p in the standard single rate of retirement pension one year after the last increase represents a bigger annual rate of increase than the £1 extra given last September after a two-year interval. The married couple's rate will go up by £1.20. Other associated benefits will go up broadly in proportion to the main increases, although, as I shall explain, nearly 2 million pensioners—that is, those with supplementary pensions—will on this occasion receive an extra 10p, making their increases 85p single and £1.30 married.

The war and industrial disablement pension for 100 per cent. assessment goes up from £10 to £11.20; the normal maximum of constant attendance allowance goes up from £4 to £4.50. The exceptionally severe disablement allowance will also be increased from £4 to £4.50. Standard war widow's pension will be increased from £7.80 to £8.80 and the industrial injuries widow's pension from £6.55 to £7.30.

We will raise from 33½p a day to 75p the level of earnings a person is allowed from a subsidiary occupation before title to unemployment benefit is affected and make corresponding changes in the similar earnings limits for sickness and invalidity benefits and for the unemploy- ability supplements. None of these limits has been changed for over 10 years.

As the Chancellor mentioned yesterday, we intend, as a move towards the contribution structure proposed in our White Paper "Strategy for Pensions", that the uprating should be financed mainly from graduated contributions, with some addition to the employer's flat-rate contribution, because it is not practicable under the present scheme for employers and employees to pay different rates of graduated contributions. But there will be no increase in the employee's flat-rate contributions. The effect is that the highest increases in contributions will fall on those earning £48 a week or more, who will pay an extra 39p; the £40 a week earner will pay an extra 9p a week; the £30 a week earner an extra 5p a week; for the £20 a week earner the increase will be only 1p a week. The man or woman earning £18 a week or less will pay no extra contributions. The employers will, of course, have to match these increased graduated contributions as well as pay the extra flat-rate contribution for each employee—this will be 10p for each man, 9p for each woman and 8p for each young person under 18.

The increase in the main scale rates for supplementary benefits will be the same as, and will operate from the same time as, the increases to the main national insurance benefits. Thus the scale rate for a married couple will go up by £1.20 to £10.65 and that for a person living alone by 75p to £6.55. We will not therefore have the old "ups and downs" problem of the retirement pension going up but the supplementary pension coming down.

With the agreement of the Supplementary Benefits Commission, we propose two additional changes for older adolescents. Those aged 18 to 20 who are not householders will be assimilated to the corresponding adult rate, which will be £5.20, and those aged 16 to 17 will, for the first time, receive the non-householder rent allowance, which is being raised to 70p.

The Supplementary Benefits Commission also intends to increase certain special additions which are paid at fixed rates. Those for extra heating will go up by 20 per cent. and there will also be increases in those for special diets.

The long-term addition will be increased by 10p—the amount needed to restore its purchasing power—and the amount of the increase will not be taken into account in deciding the amount of any special addition. The increase in long-term addition, allowing for this change, will cost about £12 million a year and will mean that, while the general increases for pensioners will be 75p single and £1.20 married, for those on supplementary pensions the increases will be 85p single and £1.30 married.

The new attendance allowance for the very severely disabled which first became payable in December, 1971, will be increased from £4.80 to £5.40.

This allowance is paid, broadly speaking, to those who need a great deal of attention both by day and by night. We have always made it clear that the restriction of the allowance to those who satisfy that very stringent condition was only the first stage. The Government now propose to extend the scope of the allowance to bring in broadly those whose need for attention arises either by day or by night. For them the allowance will be at two thirds of the day and night rate—that is, £3.60 a week. The allowance is, of course, tax free.

Supplementary benefit claimants who qualify for the new allowance will get the full benefit of it except in a tiny minority of cases where they are already getting a special addition for the cost of personal attendance.

Very large numbers will be involved in this extension—as many as 250,000 may qualify and as many as half a million may claim. This will be a formidable task. Furthermore, although we started the process of take-on for the present allowance as long ago as last June, claims are continuing to come in and there is a heavy load of outstanding review applications. Both have to be dealt with at the same time as we start work on the preparations for the extension. It is, therefore, inevitable that we must phase the extension, and the only practical way is by age groups. The whole process of extension from this winter when we are ready to receive claims will take two years because of the heavy medical and administrative task involved in assessing perhaps half a million claims.

We propose to take those of working age first, then children, then in two stages, the elderly; I will circulate details in the OFFICIAL REPORT.

The total cost of the extension is likely to be about £11 million in the financial year 1973–74 rising to £45 million in a full year when all the new groups have been taken on.

This is the first of our annual reviews. The total cost of our proposals will be about £480 million in 1973–74, of which about £395 million will fall on the insurance funds. The main increases—in general, 75p on the single rate and £1.20 for a married couple, but 85p and £1.30 respectively for the poorest on supplementary pensions—will not only restore the value of pensions and related benefits, but will also give a real improvement, more substantial than we were able to achieve last year. When the extension of the attendance allowance is complete we shall be spending about £70 million a year on this special tax-free benefit for those needing care because of severe handicap. We shall have made during the first half of the 1970s a substantial advance towards the proper treatment of the civilian disabled.

Mrs. Castle

This is a very comprehensive statement, which will need careful examination and debate. May I just make two points at this stage—

Hon. Members

Congratulate the Minister.

Mrs. Castle

May I first say how much we welcome—[HON. MEMBERS: "Hear, hear."]—the change in the provision for the disabled, in particular the changes in the size and scope of the attendance allowance, for which we have been pressing for so long—

Hon. Members

What did the right hon. Lady's Government give?

Mrs. Castle

—and on which we had to divide the House only a few weeks ago? But here again we shall want to examine on another occasion the details as to phasing and so on.

We on this side consider the retirement pension increase to be pitifully inadequate in the context of what the Chancellor has boasted about as the most generous give-away Budget in our fiscal history. Is the right hon. Gentleman aware that in the remaining seven months before the pension increase comes into effect pensioners will be worse off than they were at the time of our last increase in November, 1969? Is he aware that if the current rate of inflation continues a single pensioner will be 20p worse off by the time of the increase than he was in November, 1969, and that in the context of this Budget it is obscene for us to delay relief to this poorest and most helpless section of the community?

We deeply deplore the failure to introduce the increase at an earlier opportunity. We consider that October is far too late, and that it is quite wrong for the House to stand back and see this section of the community get steadily poorer over the next few months. Is the right hon. Gentleman aware that, even with the increase in real terms of about 55p in the pension, pensioners will be falling further behind national average earnings, and that the House should not be content until they keep pace? When the Chancellor is pouring out £300 million in reliefs for unearned income, could he not have found an extra £1 a week by an increase in the Exchequer contribution above the figure of £72 million gross, which is all that the cost to the Exchequer will be of the proposed increase in national insurance benefits?

Sir K. Joseph

I accept that the attendance allowance changes will be welcomed very warmly on both sides of the House.

As for pensions, the House will recognise that the Government made a substantial step forward in moving to annual upratings. As a result of that decision, for which pensioners have asked for years, it is fair to add together the increases that will have been made in the 13-month period from last September to this coming October, during which no less than £1,000 million will have been added to social security benefits. It is true that always between upratings the buying power of the pension is eroded. That was true in times past as well as now. But I think that the erosion in the four months for which we have the figures since the increase last September is less than was the case in the four months after two of the Labour Government's upratings.

The right hon. Lady is absolutely right in drawing attention to the ratio between the single pension and average industrial male adult earnings. Since the Labour Government's good uprating in March, 1965, after 13 years of Conservative Governments left them in a position to do a good uprating, in the subsequent two Labour upratings and in the first Conservative uprating the ratio between the pension and the earnings to which I referred has fallen. I think it will be found when we reach October this year that that fall will have been halted, and I hope reversed, because I believe that when we can measure the rise in prices between now and October the increase of 12½ per cent. announced yesterday by my right hon. Friend the Chancellor will produce for all pensioners and those on social security benefits a real, though modest, improvement in buying power.

Sir B. Rhys Williams

I congratulate my right hon. Friend most warmly on his statement. I believe that all right-minded people welcome the fact that he does not play politics with disability but actually gets something done. May I ask him in particular when he publishes the White Paper dealing with the criteria for the newly-extended disability attendance allowance to be as specific as possible, with a view to avoiding disappointment to those who may apply without being justified?

Sir K. Joseph

I am grateful to my hon. Friend. He is quite right in focusing on the importance of defining as precisely as possible the degree of attendance necessary—it is not disability, but the degree of attendance—to attract the newly-announced benefits. We shall do our best to define it precisely.

Mr. Will Griffiths

Why on earth do successive Ministers occupying the right hon. Gentleman's position have to maintain the average Exchequer contribution? Why on earth should not Governments do more for pensioners by increasing the Exchequer contribution and, by direct taxation, laying the consequent burden on the broadest shoulders? The right hon. Gentleman could then meet the needs of the pensioners and let the richer members of the community bear the heaviest burden.

Sir K. Joseph

The contribution strategy which the Government are following puts a larger share of the burden of paying for social security benefits on the better-off contributor and the employer. That is already happening. My right hon. Friend the Chancellor must obviously make a judgment about the way in which he distributes the various moneys available. The Exchequer is bearing its share of the rising costs.

Mr. Lane

In view of the rather churlish reaction of the right hon. Member for Blackburn (Mrs. Castle), may I ask whether it is not clear that, with the increase in the pensions now announced and the Government's decision to have annual upratings in future, pensioners now have more assurance than at any time since the war not only that they will keep up with the cost of living but that they will keep well ahead of it?

Sir K. Joseph

Precisely so.

Mr. David Steel

Is the right hon. Gentleman aware that in previous years when there have been pension increases there has always been confusion among many pensioners who also receive supplementary benefit, who seek advice from Members of Parliament because they have not received the full advertised increase, and that his decision to end that will be particularly warmly welcomed? The disablement benefit extension is also warmly welcomed. But the right hon. Gentleman must have a large number of cases, some of which have already been drawn to his attention by hon. Members, of people who have already been medically assessed for the present benefit and found not to qualify but might well qualify without further assessment for the new benefit. Is there any way in which he can give such cases priority? Does he accept that the one weakness in the Budget and his announcement today is that working families below the present tax-paying level who are suffering poverty are those who receive no help at all from the announcements?

Sir K. Joseph

I think all right hon. and hon. Members will be glad, in their constituency as well as their corporate functions, of the ending of the "ups and downs" anomaly. But I think I must tell the hon. Gentleman that it will not in my view, be fair to take on the payment of the new allowance to those who happen to have applied early for the existing allowance. It would be unfair, it seems to me, to all those people who fall in the same age group but just have not applied early. But I would nevertheless like to consider what the hon. Gentleman has said.

The hon. Gentleman has given currency to a misapprehension about the Budget. My right hon. Friend and I announced several months ago that the family income supplement would go up by £1 per household in receipt of the supplement—the lowest wage earners with children—in April this year. That closes the gap which the hon. Gentleman referred to and means that low wage earners with children will get the benefit already announced from April next.

Mr. Emery

Will my right hon. Friend confirm that under the Labour Government from 1965 there were three rises in the old-age pension for the single person of 12s. 6d., 10s. and 10s. respectively, totalling £1 12s. 6d., whereas in just over two years the present Government have increased it by the equivalent of £1 15s. which is £l.75p? Therefore, in real terms, have not our two years of office been better for the pensioners than the six years of the Labour Government?

Sir K. Joseph

I agree with my hon. Friend's general conclusion because it is infallibly true that the average annual improvement in the real buying power of the pensions increased by very nearly 4 per cent. per annum in the 13 Tory years as against only 2½ per cent. per annum in the Labour years. I hope that we shall keep up that record. Certainly, we have done so recently.

Mr. Jay

As the Budget Statement shows that the total national insurance contribution revenue will be over £500 million higher in the coming year than in the past year, is it correct to say that the Government have, as a matter of policy, raised the national insurance contributions by about £40 million a year? Does not this put the tax cuts into a rather truer perspective?

Sir K. Joseph

It is correct that the national insurance contributions, which are shared disproportionately between employer and employee—with the employer paying substantially more than the employee—have gone up by the amount to which the right hon. Gentleman refers, but I do not see that that needed putting in perspective because it has always been obvious. Social security benefits have largely always been paid for by contribution increases. What the Government have done is shift part of the burden from the employee to the employer and to save the low paid contributor from any increase at all, which the Labour Government never managed to do.

Sir G. Nabarro

May I be among the first to congratulate my right hon. Friend most warmly on his widespread and generous proposals? I ask him to be equally generous in his treatment of the earnings rule, which is much too low having regard to the increase in wages during the last 12 months. Would it not be realistic to re-adjust the earnings rule to £15 a week now?

Sir K. Joseph

The earnings rule limit was increased by about 25 per cent. last year.

Mr. R. C. Mitchell

I congratulate the Under-Secretary of State for Health and Social Security on making that telephone call about the constant attendance allowance which I asked him to make on Monday night. Can the right hon. Gentleman explain his reason, in the

Proposed Weekly Rate Existing Rate
£ £
Standard rate of unemployment and sickness benefits, maternity and widowed mother's allowances and invalidity, widows' and retirement pensions:
Single person 6.75 6.00
Wife or other adult dependant 4.15 3.70
Unemployment or sickness benefit:
Married woman (normal rate)* 4.75 4.20
Persons under 18 3.70 3.30
Widow's allowance (first 26 weeks of widowhood) 9.45 8.40
Widow's basic pension 2.03 1.80
Invalidity allowance payable with invalidity pension, when incapacity began before age:
35 1.15 1.00
45 0.70 0.60
60 for men or 55 for women 0.35 0.30
Attendance allowance:
Higher rate 5.40 4.80
Lower rate (see later note on phased introduction) 3.60 New Benefit
Old persons' pension:
Wife 2.50 2.20
Any other person 4.05 3.60
* A change is proposed in the rate of unemployment and sickness benefit for some contributing married women. Those who are wives of invalidity and retirement pensioners or of unemployability supplement beneficiaries will be paid benefit at the standard rate instead of the lower married women's rate.

phasing of the allowance, for putting it in the order of those of working age first, children next and older people last?

Sir K. Joseph

I am grateful to the hon. Gentleman for asking that question. I consulted the Attendance Allowance Board as early as last January hypothetically about the order in which to take an extension if an extension were found possible. Its advice was very thoughtfully prepared, and I have accepted it. It is a difficult choice to make. The judgment is that the child tends to need some attention from parents anyway up to a certain age; that some degree of disability is almost inseparable from many people in old age and in some instances lasts a relatively short time; and that the continuing long-sustained burden which is not normally to be expected falls primarily on those who have a working age person to care for. Difficult and invidious as the choice is, that is the logic.

Several Hon. Members rose

Mr. Speaker

Order. These matters can be further pursued in the Budget debate.

Following is the information:

Proposed Weekly Rate Existing Rate
£ £
Guardian's allowance 3.30 2.95
Child's special allowance and increases for children of widows, invalidity and retirement pensioners:
First child 3.30 2.95
Second child* 2.40 2.05
Any other child* 2.30 1.95
Increases for children of all other beneficiaries:
First child 2.10 1.85
Second child* 1.20 0.95
Any other child* 1.10 0.85
* Family allowances are payable for second and subsequent children.
The first group to be taken on will be those who are broadly speaking the working age group—those born between 1st January 1908 and 31 st December 1956 inclusive. It is proposed to take claims from this group from the beginning of December this year and to start making payments to them from from 4th June 1973. Thereafter the next group will be children—defined as those born on or after 1st January 1957. Then the elderly in two groups—first those born between 1st January 1898 and 31st December 1907 and then the older group, those born on or before 31st December 1897. Claims from these three groups will be taken and their allowances put in payment in three successive stages in the eighteen months between June 1973 and December 1974.
Proposed Weekly Rate Existing Rate
£ £
Injury benefit 9.50* 8.75
Disablement benefit (100 per cent, assessment) 11.20* 10.00
Unemployability supplement 6.75† 6.00
Special hardship allowance (maximum) 4.48 4.00
Constant attendance allowance (normal maximum) 4.50 4.00
Exceptionally severe disablement allowance 4.50 4.00
Industrial death benefit:
Widow's pension during first 26 weeks of widowhood 9.45 8.40
Widow's pension now payable at £6.55 rate 7.30 6.55
Widow's pension now payable at £1.80 rate 2.03 1.80
Rates for dependant wives and children are the same as for comparable
National Insurance benefits.
* Increases will also be made in the juvenile rates.
†Invalidity allowances and the higher rate of childrens allowances will be paid as to invalidity pensioners—see National Insurance Table.
All ranks receive the same increases, officers rates being expressed in pounds per annum.
Proposed Weekly Rate Existing Rate
£ £
Disablement pension for private at 100 per cent. rate 11.20 10.00
Unemployability allowances*:
Personal allowance 7.35 6.55
Increase or further increase for wife 3.65 3.20
Increase for adult dependant 4.15 3.70
Allowance for lowered standard of occupation (maximum) 4.48 4.00
Constant attendance allowance:
Special maximum 9.00 8.00
Special intermediate 6.75 6.00
Normal maximum 4.50 4.00
Three-quarter day 3.40 3.00
Half and quarter day 2.25 2.00
Age allowance with assessments of:
40 and 50 per cent. 0.55 0.50
60 and 70 per cent. 0.80 0.70
80 and 90 per cent. 1.15 1.00
100 per cent. 1.60 1.40
Exceptionally severe disablement allowance 4.50 4.00
* Invalidity allowances and the higher rate of childrens allowances will be paid as to invalidity pensioners—see National Insurance Table.
Proposed Weekly Rate Existing Rate
£ £
Widow's pension—private's widow:
Standard rate 8.80 7.80
Childless widow under 40 2.03 1.80
Rent allowance 3.40 3.00
Widower's pensions 8.80 7.80
Widow's children:
Eldest child 3.50 3.15
Other children with family allowance 3.00 2.65
Other children without family allowances 3.35 3.00
Motherless and fatherless children aged:
Under l5 Eldest child or other children with no family allowances 3.50 3.15
Over 15 5.00 4.65
Under 15 Other children with family allowances 3.00 2.65
Over 15 4.50 4.15
Adult orphans 6.75 6.00
Two minor changes which will benefit some war widows are also proposed. The first will abolish the 30p qualifying rent for the widow's rent allowance. The second will amend the warrant so that widows whose husbands had no disablement pension and who die more than 7 years after service have the same appeal rights as other widows.
Proposed Weekly Rate Existing Rate
£ £
Ordinary scale:
Husband and wife 10.65 9.45
Person living alone 6.55 5.80
Any other person aged:
Not less than 21 5.20 4.60
Less than 21 but not less than 18 (to be assimilated to rate for person not less than 21 years) 5.20 4.05
Less than 18 but not less than 16 4.05 3.60
Less than 16 but not less than 13 3.40 3.00
Less than 13 but not less than 11 2.75 2.45
Less than 11 but not less than 5 2.25 2.00
Less than 5 1.90 1.70
Blind scale:
Husband and wife:
If one of them is blind 11.90 10.70
If both of them are blind 12.70 11.50
Any other blind person aged:
Not less than 21 7.80 7.05
Less than 21 but not less than 18 (to be assimilated to rate for person not less than 21 years) 7.80 5.05
Less than 18 but not less than 16 4.95 4.40
Less than 16 but not less than 13 3.40 3.00
Less than 13 but not less than 11 2.75 2.45
Less than 11 but not less than 5 2.25 2.00
Less than 5 1.90 1.70
Non-householder rent allowance 0.70 0.65
Attendance requirements Higher rate 5.40 4.80
Lower rate 3.60 New Benefit
Long-Term Addition:
Aged 80 or over 0.85 0.75
Aged under 80 0.60 0.50
(including National Health Service contribution but excluding Redundancy Fund contribution and Selective Employment Tax)
Insured Person
Present Rate Increase* New Rate
Total Graduated Flat Rate Graduated Total
£ £ £ £ £
Employed Man Contracted-Out
£15 1.04 Nil 1.00 0.04 1.04
£20 1.15 0.01 1.00 0.16 1.16
£30 1.59 0.05 1.00 0.64 1.64
£40 2.02 0.09 1.00 1.11 2.11
£48 2.08 0.39 1.00 1.47 2.47
£15 1.18 Nil 0.88 0.30 1.18
£20 1.42 0.01 0.88 0.55 1.43
£30 1.85 0.05 0.88 1.02 1.90
£40 2.29 0.09 0.88 1.50 2.38
£48 2.35 0.38 0.88 1.85 2.73
Employed Woman Contracted-Out
£15 0.87 Nil 0.83 0.04 0.87
£20 0.98 0.01 0.83 0.16 0.99
£30 1.42 0.05 0.83 0.64 1.47
£40 1.85 0.09 0.83 1.11 1.94
£48 1.91 0.39 0.83 1.47 2.30
£15 1.05 Nil 0.75 0.30 1.05
£20 1.29 0.01 0.75 0.55 1.30
£30 1.72 0.05 0.75 1.02 1.77
£40 2.16 0.09 0.75 1.50 2.25
£48 2.22 0.38 0.75 1.85 2.60
* No increase in flat rate contributions.
Present Rate Increase New Rate
Total Flat Rate† Graduated Flat Rate† Graduated Total
£ £ £ £ £ £
Employed Man Contracted-Out
£15 1.047 0.10 Nil 1.107 0.04 1.147
£20 1.157 0.10 0.01 1.107 0.16 1.267
£30 1.597 0.10 0.05 1.107 0.64 1.747
£40 2.027 0.10 0.09 1.107 1.11 2.217
£48 2.087 0.10 0.39 1.107 1.47 2.577
£15 1.187 0.10 Nil 0.987 0.30 1.287
£20 1.427 0.10 0.01 0.987 0.55 1.537
£30 1.857 0.10 0.05 0.987 1.02 2.007
£40 2.297 0.10 0.09 0.987 1.50 2.487
£48 2.357 0.10 0.38 0.987 1.85 2.837
Present Rate Increase New Rate
Total Flat Rate Graduated Flat Rate† Graduated Total
£ £ £ £ £ £
Employed Woman Contracted-Out
£15 0.891 0.09 Nil 0.941 0.04 0.981
£20 1.001 0.09 0.01 0.941 0.16 1.101
£30 1.441 0.09 0.05 0.941 0.64 1.581
£40 1.871 0.09 0.09 0.941 1.11 2.051
£48 1.931 0.09 0.39 0.941 1.47 2.411
£15 1.071 0.09 Nil 0.861 0.30 1.161
£20 1.311 0.09 0.01 0.861 0.55 1.411
£30 1.741 0.09 0.05 0.861 1.02 1.881
£40 2.181 0.09 0.09 0.861 1.50 2.361
£48 2.241 0.09 0.38 0.861 1.85 2.711
Men's rate includes 1 p for industrial injuries.
Present rate Increase New rate
£ £ £
Men over 18 1.50 0.18 1.68
Women over 18 1.25 0.15 1.40
Present rate Increase New rate
£ £ £
Men over 18 1.20 0.13 1.33
Women over 18 0.94 0.10 1.04