SOCIAL SECURITY BILL (Hansard, 28 November 1972)

§ The Secretary of State for Social Services (Sir Keith Joseph)
I beg to move, That the Bill be now read a Second time.
The Bill sets out the lines on which we wish to see State and occupational pensions develop. It implements the proposals which we made a year ago in the White Paper "Strategy for Pensions". The main theme is that everyone should have the opportunity to have two pensions—a basic pension through the State scheme and an earnings-related pension through a satisfactory occupational scheme or, failing that, through a State reserve scheme.
The Bill is a landmark in the continuing development of social security in the same way as the 1946 Act was in its time. Since 1946 there have been so many changes and additions that the social security system now resembles some rambling Gothic pile to which enthusiasts have added a range of well-intentioned improvements in a whole variety of styles. It is generally agreed that the system needs urgent reconstruction.
The Bill does not tinker with the original structure. It is not an amending Bill. It repeals nearly all the existing national insurance legislation. One has only to look at Schedule 25 to see the degree to which existing legislation is repealed. The Bill substitutes a new system embodying the essential purpose of the original but tackling new and important tasks as well.
Before I embark upon the policy let me give the House a glimpse of the problem which in general is familiar to us all. In our community there are about 23 million earners at work. Simultaneously there are about 11 million beneficiaries at any one time. The task of the social security system is to enable the 23 million at work, in their capacity as earners and taxpayers and with the help of their employers, to provide support for the 11 million beneficiaries. That is the scale of the task.
As the Government see the task, the gist is to have a clear distinction between 244 two different elements in social security. On the one hand we have and we retain the pay-as-you-go State basic scheme under which today's workers and their employers provide every week through their contributions most of the money needed to pay today's beneficiaries. Largely, because about 70 per cent. of benefits go to pensioners, this means that those at work today help to support their parents and/or their grandparents. Here is the transfer between generations and between those at work and those unemployed, sick or widowed—the function of the basic pay-as-you-go State scheme.
Today's earners who are supporting today's retired, sick and widowed will expect when they retire to be provided in their turn with a basic income from their children—the then working generation.
The State basic retirement pension is intended as a foundation which people can be sure of receiving but on which they will want to add extra for their own retirement, proportionate to their earnings, and in addition to savings. This extra which people will want to add to the foundation provided by the State scheme is the function of the second pension which we intend should be normal for every retired employee.
To secure this second pension, today's earners need to set aside some money each week for their own retirement to supplement the basic pension that they will look forward to receiving. We believe that this extra saving is best done through occupational pension schemes in which people can build up for themselves a second, earnings-related, pension.
There are two clear and distinct objectives—a basic benefit for all transferring money from the working to the sick, the unemployed, the widowed and the retired, and an earnings-related pension in addition by which, through occupational schemes, those at work set aside money for their own retirement—

§ Mr. John Mendelson (Penistone)
Might not there be some danger, with a heavy emphasis on the addition, that we shall not make the basic pension enough to provide a decent standard of living for retirement pensioners in the future?

§ Sir K. Joseph
In all our economic policies we have to balance the need to take from the earner and the employer 245 money for the public service, either through contributions or taxes, and the need to leave with the employee and the employer the money for their own purposes which include savings and provision for their retirement. This is a compromise which all Governments have to seek.
The Bill provides the structure needed to achieve the two objectives to which I have referred. Large numbers of people have welcomed the chance to build up occupational pension rights in a way suited to the circumstances of their jobs. But many people have had no such chance. We want virtually all earners to be able to build up a second pension during their working lives. The Bill will encourage a partnership of great potential between the State basic system of benefits and the occupational pension scheme movement.
We do not believe in the State trying to do everything. Neither of the parties believes that. There may be a difference of emphasis between the two parties in terms of pension policy, but neither believes in the State seeking to do everything.

§ Mr. Eric S. Heffer (Liverpool, Walton)
There are sections of the community which up till now have not had occupational pension schemes. It is very difficult to introduce such schemes, for example, in the construction industry. How exactly would the proposed scheme work in that industry? Is this a matter for trade union negotiation with employers? Even if there is a trade union agreement, how can it be put into operation, bearing in mind the casual nature of employment in that industry?

§ Sir K. Joseph
I remember initiating talks with employers and trade unions in the building industry 14 years ago with a view to arriving at a federated pension, which did not in fact get off the ground. But it is because there are some industries like catering and construction which present great difficulties—I hope that they will be surmounted by employers—that the Bill embodies the State reserve scheme which in effect is an occupational pension scheme for those whose employers do not provide an adequate occupational scheme. I shall come to that in a moment.
246 The basic system of benefits of which I have been speaking is not altered by the Bill. But the Bill embodies a number of improvements to the basic scheme made during the past 2½ years. They are improvements which have introduced age-related widows' benefits, invalidity benefits, the age addition for those over 80, an improved earnings rule, the attendance allowance, and pensions for those over 80. I am not dwelling upon them. I just remind the House that the Bill does not bring in new improvements to the basic system. It embodies those already introduced.
I draw attention to Clause 38 which fulfils the Government's pledge, welcomed on both sides, that there should be a statutory obligation to review benefits annually. These are our recent improvements to a structure of benefits, flat-rate but in many cases with earnings-related or other additions.
Vast resources are involved. The retirement pension alone now costs about £40 million a week or £2,000 million a year. There are nearly 7¾ million pensioners, or one for every three workers. In 1950 there were five workers for every pensioner, and the number of pensioners will go on rising for some years yet.
The first problem that the Government face and tackle in the Bill is that it has long been impracticable to finance the huge cost of social benefits out of flat-rate contributions. The burden on the low paid at every uprating was an embarrassment to each successive Government. So increasingly over the years successive Governments have financed a larger and larger share of the cost of the basic scheme from earnings-related and not from flat-rate contributions, in the interests of the low paid. We have now taken this to its logical conclusion. The basic scheme is to be financed by earnings-related contributions from employers and employees on all earnings up to about 1½ times national average adult male industrial earnings.
It is true that earnings-related contributions for flat-rate benefits are redistributive, but the basic scheme cannot meet its obligation if its income is held down by the level of contributions that the lower paid can afford to pay. Indeed, the idea of using earnings-related contributions to help pay for the basic pension was first introduced by a Conservative Minister.
247 By increasing these earnings-related contributions the present Government have kept the employee's flat-rate contribution at its 1969 level despite a 35 per cent. increase in benefits.
In the Bill we complete the transition from flat-rate to earnings-related finance. Although some will call the scheme on this account too redistributive, others will say that, because there is a cut-off at 1½ times average adult male industrial earnings above which no extra earnings-related contribution will be paid, we are being regressive, reactionary or some other abomination.
In our view, a cut-off is right for several reasons. In a contributory scheme, which this is, there should be a limit to the extent to which some people pay more than others for the same rate of benefit. So it may well be that the contribution system introduced by the Bill will be criticised from two conflicting extremes as being too redistributive and as not being redistributive enough.
The Bill provides for a second pension to be earned by all employees. A very large number are already in occupational pension schemes. The Bill lays down conditions on which occupational pension schemes will be given recognition by the new occupational pensions board that the Bill will establish. The purpose of this board will be to supervise schemes and to help them to make the necessary adjustments to the new situation.
These occupational schemes have an impressive record of development and growth, slowed down only by the air of uncertainty in recent years which the Bill will bring to an end. What was once a fringe benefit of a few employments for selected white-collar workers is now being made available to a substantial proportion of the work force. It is true that the pension cover of occupational schemes is still far from universal and that not all the schemes in operation are satisfactory. That must be said at once. However, there are encouraging signs that both management and unions are increasingly coming to view occupational pensions in the context of the general working relationship.
In "Strategy for Pensions" we set out the framework of our proposals for occu- 248 pational schemes. We followed this up with a more detailed consultative document. Both these papers were welcomed and were considered in detail by the wide range of people concerned with occupational pensions. The comments we have received have enabled us to develop our proposals more fully and in some respects to modify them. The Bill allows alternative tests to be prescribed for the recognition of occupational pension schemes, tests more suited to the structure of certain common types of scheme.
It is not enough to ensure that everyone should have the chance to acquire an earnings-related pension. We need also to ensure that, having earned it, they do net lose it when they change jobs. Under the Bill occupational pension rights will have to be protected when an employee changes his employment.
Finally—and here I come to the point raised by the hon. Member for Liverpool, Walton (Mr. Heffer)—we shall be establishing a State reserve pension scheme for those without adequate occupational cover.

§ Mr. Edmund Dell (Birkenhead)
Is the right hon. Gentleman suggesting that the only reason for the remarkable fall recently in the number of people covered by occupational pension schemes in the private sector is the uncertainty that has existed? Can he give us any idea of how long it will be before the occupational pensions board has brought occupational pension schemes up even to the minimum standards which the right hon. Gentleman proposes to prescribe?

§ Sir K. Joseph
I hope that the right hon. Gentleman will be patient. No occupational pension scheme will be recognised for the purpose of the Bill unless it is at least at the minimum standards prescribed. It is true that in the four years between the Government Actuary's two reports the number of people in occupational pension schemes fell by about 8 per cent., mainly in the private sector. That fall is due partly to a fall in the working population. Hon. Members would be wise to recognise that there has been an air of uncertainty in this field for some years and that air of uncertainty must have militated against the maintenance, let alone the expansion, of numbers.
249 The reserve pension scheme will provide an earnings-related pension on a value-for-money basis and will be administered by an independent board responsible for its own fund and investment policy. For the reserve pension board we shall be seeking to enlist people with special experience of pension and investment matters as well as members appointed after consultation with the representative organisations such as the Confederation of British Industry and the Trades Union Congress.
All these proposals should be seen in the context of other related factors. As we all know, there is at present a widespread dependence on supplementary pensions. The supplementary benefits scheme provides a flexible form of support for nearly a third of all pensioners. Supplementary benefits will continue for many years to have an important role to play. However, it is common ground in the House that we want as rapidly as we can to lift the income of the elderly so that fewer and fewer of them depend upon supplementary benefits. We must recognise that inasmuch as rents vary enormously throughout the country and between different standards of housing it will remain difficult to lift some of those who pay necessarily high rents off supplementary benefit quickly.
However, there are three trends which over a period will reduce the proportion of pensioners needing to rely on supplementary benefit. First, there are the possibilities of group selectivity within the State basic scheme. I am not putting great weight on that. The examples I would give are the age addition, modest as yet, and the invalidity allowance. Secondly, there is and will be the growth over time of occupational pension schemes. Admittedly the first £1 of such pensions is disregarded so that some occupational pension and supplementary benefit can co-exist in the same person.
Thirdly, and most far-reaching in the medium short term, would be the tax credit scheme if in due course it is put to and approved by the House. The device of paying tax allowances positively as benefit when income is not enough to absorb them can offer a method of bringing extra financial help automatically and without means test to millions of pensioners as well as to low earners in full-time employment.

§ Mr. Sydney Bidwell (Southall)
When?

§ Sir K. Joseph
The proposal in the Green Paper which my right hon. Friend the Chancellor of the Exchequer and myself put to the country is 1977.

§ Mr. Bidwell
Too late.

§ Sir K. Joseph
We would all like to do it sooner if it were practicable, but it first has to go—we hope—to a Select Committee. Then we shall see whether the Government put it to the House and whether the House approves it.

§ Mr. Bidwell
The right hon. Gentleman knows that there is considerable anxiety on this side and also amongst the public about the basic pension and the plight of existing old-age, pensioners who obviously will not benefit from the Bill. Do we take it from what the right hon. Gentleman has said so far that he has no plans to improve this lousy pension of £6.75 for a single person and £10.90 for a couple?

§ Sir K. Joseph
The House has just passed a Bill to provide a modest but very welcome £10 payment to pensioners. Only a few months ago the House passed the Bill to bring in the annual up-rating. This Bill embodies the statutory obligation to review pensions every year, and from what I can tell that is very much appreciated by pensioners.
I turn now, with apologies for the length of my speech, to the Bill itself. The Explanatory Memorandum published as a separate White Paper describes the Bill in some detail and the Financial Memorandum and the Government Actuary's Report describe the financial and staffing implications.
I should like to draw attention to some of the most important features of the Bill.
Part I concerns the basic scheme, and Chapter I deals with the new arrangements already described for contributions. There will continue to be a Treasury supplement of 18 per cent. Stamps for employed earners will go—about time, too, I am sure hon. Members will say—and earnings-related contributions will be collected with PAYE tax.
Flat-rate contributions will remain for self-employed people, and for non-employed and others who wish to keep up their contribution record on a voluntary basis.

§ Sir K. Joseph
I am sorry. I must get on.

§ Mr. Heffer
Will the right hon. Gentleman give way?

§ Sir K. Joseph
I prefer to get on. These are all matters which we can discuss in Committee.

§ Mr. Heffer
Why must we have a magic figure of 18 per cent.?

§ Sir K. Joseph
In addition, self-employed people who earn above £1,150 a year in current terms will also pay an earnings-related contribution. This is solely to ensure that they make a fair contribution compared with other contributors.
Chapter I also sets out, in Clauses 7 and 8, the arrangements for annual review of contribution rates. Any change in contribution rates as a result of the annual review will come into effect at the beginning of the following tax year. The review will be designed to keep the levels and rates of contributions broadly in line with changes in the levels of earnings. There will also be power to review contribution rates at any time to adjust the level of the fund.
Chapter II sets out the benefits provided under the basic scheme.

§ Mr. Brian O'Malley (Rotherham)
Will the right hon. Gentleman answer a factual question on contributions? I refer to the Explanatory Memorandum, Command 5142. Paragraph 13 on page 4 explains: In general, the minimum annual level of earnings required for entitlement to the standard flat-rate benefit will be 50 times this lower earnings limit, i.e. £400 in current terms. Paragraph 14 continues the explanation of how it will work. Does this mean that a higher-paid worker will be able to gain a minimum contribution record for fewer weeks worked than a lower-paid worker? If so, it is a most unsatisfactory part of the scheme.

§ Sir K. Joseph
I think the answer is: yes, he or she will. We can discuss this matter when we come to the relevant part in Committee. However, I think that is the intention.
Since this is not an up-rating Bill but is concerned with the structure of the 252 scheme, the rates of benefit shown in the Bill are those which are now current. The rates will be increased under the normal annual reviews which will occur each year before the new arrangements start in April, 1975. The main changes in the structure of the basic scheme benefits are those needed to adapt the contribution conditions to the new contribution structure.
The contribution conditions for benefit will be based on the level of earnings at which liability for contributions will arise for an employed earner—that is, £8 a week in the Bill. The flat-rate contributions paid by self-employed and non-employed people will be given a value corresponding to that level. The contribution conditions applying to the various benefits will generally be somewhat easier to satisfy than the conditions in the present scheme.
The old person's pension for those over 80, guardian's allowance and attendance allowance, which is now being extended to cover many more severely disabled people, will continue to be paid without contribution conditions.
The short-term benefits for sickness, unemployment and maternity retain under the Bill their present structure of a fiat-rate benefit with an earnings-related supplement. Only the minimum changes necessary to secure compatibility with the new contributions structure are being made in these benefits. The benefits for widows are largely unchanged.
The additional pension, on top of the flat-rate basic pension, earned by those who defer their retirement beyond minimum pension age will be based simply on the amount of pension forgone, and will be increased in line with the basic pension. The graduated pension scheme will be wound up. Any pension earned before the start of the scheme will be preserved in money terms and paid on eventual retirement.
Chapter III provides that employed married women will, as now, be able to choose whether they contribute to the scheme. This choice will determine to what benefits they are entitled. If they choose not to contribute they will pay a small contribution to the cost of the industrial injuries scheme and the National Health Service. Self-employed married women will continue to be able 253 to choose whether to pay flat-rate contributions; but if they earn above £1,150 in a year in current terms they will be liable, in the same way as other self-employed people, to pay earnings-related contributions since these go towards the general cost of the scheme.
Part II deals with occupational pension schemes. I repeat, our aim is a second pension for all—preferably through employers, if not through a reserve pension scheme of which I shall speak later.
We hope that as many as possible will be covered by occupational pension schemes with reasonable standards. We are, therefore providing that schemes that fulfil certain minimum conditions will be recognised. Employees who are members of a recognised occupational scheme and their employers will not be required to contribute to the reserve scheme.
The standard of recognition will require a certain level of personal pension and of widowhood cover. I am glad to see the right hon. Member for Sowerby (Mr. Houghton) in his place, because I well remember his series of speeches about the relative neglect of widows. I hope that the Bill will start to put that particular neglect right.
The standard of recognition will require a provision for increasing pensions in payment, unless a higher rate was provided initially. These minimum standards will define only the lowest levels necessary to satisfy the requirements for recognition by the Occupational Pensions Board. They will not seek to define optimum standards or levels which we hope will more widely obtain. They are intended as a basis above which schemes will be free to develop as those concerned decide.
I must put in a word here in the hope that over the years ahead the trade unions in this country will, as so many have done in Europe—I know that hon. Members opposite agree in general with this proposal—take more interest in negotiations for occupational pensions as well as in routine wage negotiations. I must emphasise that for many existing occupational schemes the achievement even of the minimum standards laid down for recognition will require substantial changes and extra cost to the employers.
We are anxious to maintain flexibility and variety in occupational 254 schemes. We have therefore taken powers in the Bill to prescribe alternative methods of calculating minimum personal pensions. These alternatives will in each case ensure broadly comparable benefits for the employees concerned. They will ensure that occupational schemes are not stifled by oppressive conformity and will help to foster the better and wider cover which is so much a part of our strategy.
What will recognition involve? Simply that the Occupational Pensions Board, which we shall be setting up for this and related purposes, will need to be satisfied on a continuing basis that the scheme rules provide benefits in line with the recognition requirements and that these benefits have sound financial backing. If the board is satisfied it will issue a recognition certificate for the employment concerned. The certificate will remain valid only for as long as the conditions continue to be met. Moreover, the board will continue to supervise the financial arrangements of schemes, even when they are no longer recognised in any such case, for as long as minimum benefits are at stake. The board will also advise and help schemes in adjusting to the new requirements.

§ Mr. Tom King (Bridgwater)
Does my right hon. Friend agree that one of the trends in pension schemes is to meet continually rising expectations and improvements in standards over the years? In view of the long time scale involved in the introduction of these proposals and the higher standards of pensions in Europe, may I ask whether he is satisfied that the recognition standards that are to be established and the reserve scheme will, by the time they are operational, any longer be considered as acceptable minimum levels?

§ Sir K. Joseph
I think that my hon. Friend is not taking sufficiently into account the fact that the basis of the minimum requirement is a proportion of earnings. As earnings rise—and we hope that the component of the earnings rise will be a real one—so the minimum requirement for recognition will rise. I have often said that some pension performances in Europe are better than ours, notably those of the Germans and Dutch, but there are other schemes, for example in Italy and France, which offer nothing 255 like the minimum protection that is offered here. While those schemes are satisfactory on paper, they are nothing like as comprehensive or at as high a level as ours.
The Occupational Pensions Board will, in addition, supervise the arrangements for the preservation of pension rights. Rights in occupational pensions schemes will have to be protected, within the framework of the new rules, when members change their employment, whether or not—and I emphasise this—the scheme to which they belong is recognised. The normal form of protection will be the right to a deferred pension, but a transfer to another scheme will be an alternative if the member agrees.
The proposals will bring about a major improvement. Employers will no longer be able to withhold from an employee who changes his employment the pension that he has been building up by virtue of his service. Equally, we have to ensure that employees themselves maintain their cover for retirement. In future they will not be able to abandon their pension rights by choosing a cash refund of their own contributions instead of a deferred pension. They will still, however, be able to take a refund for service before the proposals come into effect, or in place of the small pensions for service lasting less than five years, except that if minimum benefits from recognised employment are not preserved a premium will have to be paid into the reserve scheme instead.
The Civil Service and other public service pension schemes have already been reviewed by management and the staff associations. Substantial improvements have been agreed which are now in operation in the Civil Service scheme, and implementation is likely to be complete in the other schemes next year. The Government's proposals for recognition and preservation have been taken into account in the reviews, and in a number of respects the new arrangements go beyond the minimum standards in the Bill—for example, preservation well before 1975 and widows' pensions at half the full rate of personal pensions. There will also be much wider facilities for the transfer of pension rights, notably to and from the private sector. We hope that employers and administrators of many 256 private schemes will feel able to follow the Government's lead and to adjust their schemes well ahead of April 1975. Indeed there are already encouraging signs that this is occurring.

§ Sir K. Joseph
I understand that transferability is on the increase in the public sector, and that wherever it is practical it will be introduced as a possibility, though it has not been fully achieved yet.
Part III of the Bill, which is the last part to which I want to refer in any detail, deals with the Reserve Pension Scheme which will be set up to provide earnings-related personal and widowhood benefits for employees not in recognised pensionable employment. Its nature is thus that of a fall-back scheme. We expect that there may initially be a substantial number of employees contributing, together with their employers, to the Reserve Pension Scheme, but we are confident that this number will decline as occupational schemes develop further. There will always, of course, be a need for this alternative scheme. Some small employers may not feel able to introduce an occupational scheme, and many employees will not, for a time, be eligible for membership of their employers' scheme. Besides, there will always be people who go in and out of the labour force or serve on a part-time basis and yet have earnings over the minimum level, and for them the reserve scheme will be a natural cover.
Participation in the Reserve Pension Scheme will be intermittent, and employers and employees alike who contribute to the scheme will lack common group identity. The scheme has therefore been structured on a money-purchase basis, providing a fair return on the contributions paid. It will be fully funded, and there will be no Government subsidy. Contributions will be payable on the same range of earnings as for the basic scheme, and are set out in the Bill at 4 per cent., the employee paying 1½ per cent. and the employer 2½ per cent. Married women who are not in recognised 257 pensionable employment will be required to contribute like other employees, whether or not they have chosen to pay contributions to the basic scheme.
The pension will consist of two parts: the first secured through the payment of contributions in accordance with the scales laid down in the Bill, and the second as bonus additions from the periodic distributions of surpluses.

§ Mrs. Barbara Castle (Blackburn)
The right hon. Gentleman says that the State reserve scheme is to be a kind of occupational pension scheme for those who are not covered by satisfactory private schemes. Will the tax relief on contributions be indentical in both cases? If not, why not?

§ Sir K. Joseph
The State reserve scheme will cater at the start, and increasingly in the future, for the lower paid who pay less tax and who would have less tax benefit from tax relief. Consequently, we have provided a lower share of contributions for the employee in the State reserve scheme than is provided for in private occupational schemes. Under the State reserve scheme it will be on the basis of 1½ per cent. against the employers' 2½ per cent. That is a lower share of the contribution than in occupational pension schemes, and that offsets the fact that in the occupational pensions scheme there will be tax relief.

§ Mr. O'Malley
Surely the right hon. Gentleman recognises that a ratio of 5 to 3 which he is proposing in the reserve scheme and on which there is to be no relief is not unusual in both private and public occupational schemes where there is tax relief?

§ Sir K. Joseph
There are several points to be made here, but I do not want to go into Committee details. There is also an administrative reason for this. The main reasons are that the split is slanted between employer and employee in the reserve scheme in favour of the employee. In any case, because the State reserve scheme will tend to cater for the lower paid the tax relief will not be of the same benefit as in an occupational scheme.

§ Mr. Heffer
Will the right hon. Gentleman give way?

§ Sir K. Joseph
No, I must come to an end.

§ Mr. Heffer
The right hon. Gentleman has got it wrong—

§ Sir K. Joseph
The reserve scheme and its fund will be managed by a board—

§ Mr. Heffer
—as usual.

§ Sir K. Joseph
I doubt that. I do not think that I am wrong on this, but we can argue about it later.
The reserve scheme and its fund will be managed by a board independent of the Government. The board will be statutorily required to conduct its investment and to operate the scheme so as to secure the best pensions for contributors. The board will have almost complete investment freedom, subject to a limitation that it may not own more than 10 per cent. of the voting rights of any public company.
The provisions of the Bill relating to administration, legal proceedings and miscellaneous and general matters are largely unchanged from those under existing legislation, apart from the modifications required by the altered structure of the scheme. The Bill preserves the present arrangements for adjudication which are outlined in the National Insurance Act 1965.

§ Mr. Michael Meacher (Oldham, West)
Before the right hon. Gentleman leaves the State reserve scheme, will he not admit that the defects which he is imposing on it of no Exchequer supplement and no tax relief on members' contributions will mean that the level of benefits will be so low that about one-third of all the members of the scheme will still have a poverty line pension 20 years into the next century? Is not that so?

§ Sir K. Joseph
The scheme does not have a subsidy from the taxpayer. If there were a subsidy, members of occupational pension schemes would grumble because they would feel that they had been badly treated. That is one of the main reasons why there is no subsidy in the reserve scheme.
The Bill is a reforming measure which I am proud to lay before the House. It puts the finances of the State basic scheme on to a buoyant basis and provides for an annual review of benefits. The Bill provides a system in which all employees can look to have two pensions on retirement. It transforms the 259 prospects of those who will be widowed. It does not attempt to set ultimate standards. We are raising occupational pension scheme standards in general, and we are by our requirement of preservation closing the gaping hole through which so many people's occupational pension rights have often, to their own short-term pleasure, fallen.
It is true that there are several desirable features—for example, transferability and invalidity cover in occupational pension schemes—which we have not been able to require and which are not embodied in the Bill. But what we are requiring will already cost the occupational pension schemes substantial extra money and there must be a limit to what can be done at one instalment.
The Bill is both realistic and reforming. It will be an instrument by which the lives of millions will come to be improved. I commend it to the House.

§ Mr. Brian O'Malley (Rotherham)
The Secretary of State's speech almost took the form of an explanatory memorandum. Unfortunately, when challenged there were some important questions which the right hon. Gentleman either avoided or left open, and some to which he was unable to give an answer which satisfied the Opposition. The right hon. Gentleman put forward what we regard as immoderate proposals in moderate language. An important feature of his speech was that he neglected to provide adequately the background facts.
The facts are that one of the most depressing and tragic aspects of life in Britain in 1972 is the poverty in which millions of elderly people live. Of course it can be argued that by setting minimum levels of income below which no pensioner can fall, and making resources available through the Supplementary Benefits Commission, the State shields its citizens from poverty. But poverty is capable of many definitions. It can be defined absolutely, comparatively or personally.
By any criteria which may reasonably be applied in an advanced industrial nation, the elderly form a deprived section of the community. How can it be argued otherwise when 2 million out of 7 million retirement pensioners, in order 260 to be able to live, are dependent on means-tested supplementary benefits? How can we argue otherwise when almost one half of elderly widows, who form one of the poorest sections of the community, are similarly dependent? Many millions of our citizens are subjected to a sharp and often disastrous fall in their income when the head of the household retires. Two million retirement pensioners are dependent on means-tested supplementary benefits, and probably as many as an additional 3 million are only £1 or £1.50 above supplementary benefit level.
An examination of the present rates of supplementary benefits reveals just how unsatisfactory is the position particularly during the roaring inflation which we have seen during the last 18 months. A single person's entitlement under supplementary benefit standard is £6.75, plus his or her rent, plus a long-term addition of 60p.
That is the kind of poverty which is the background to the Bill. Therefore, we must judge the Bill by assessing its impact, both in 1975 and far into the future, on the lives of the elderly, the sick and the widowed—millions of the poorest people in the community. We must ask whether the Bill will solve or reduce the scandal of poverty and help the present generation and successive generations of retirement pensioners in the future. We say that on all those grounds the Bill fails miserably.
When the right hon. Gentleman began his speech he said that the Bill was a landmark. He compared it with the legislation of the Labour Government of 1946. If the Bill is a landmark, it is one of missed opportunities. It will be remembered because it condemns millions of retired people, both now and far into the twenty-first century, as my hon. Friend the Member for Oldham, West (Mr. Meacher) said a short while ago, to dependence on means testing. On any balanced estimate, making reasonable assumptions of the impact and effect this legislation will have on the income of retirement households during this century and the next, there will still be 2 million or 3 million people dependent on means-tested benefits 50 years from today.

§ Sir Brandon Rhys Williams (Kensington, South)
Does the hon. Gentleman 261 agree that it is significant that the Bill introduces a completely new structure? Does he also agree that pressure from both sides of the House will result, in the passage of time, in increases in benefits which will be payable under the new structure without destroying the whole system?

§ Mr. O'Malley
It does not introduce a completely new structure. That is what the Secretary of State and the Under-Secretary of State have been claiming ever since the White Paper was published, but it does nothing of the kind. There has been no new thinking on pensions from the Tory Party since the late 1950s. The situation is not getting better but worse. The hon. Member for Lancaster (Mr. Kellett-Bowman) may raise her head in wonder, but I will point out a little later precisely why that is the case.
I was saying before I was interrupted that the Bill is condemned because it means that millions of retirement pensioners will have to depend on means-tested benefits 50 years from today. Secondly, although the formula for fully related earnings contributions, which we welcome, will provide a valuable dynamism to the national insurance fund, because of the level at which the contributions are set in the basic scheme, the balance between contributions and the Exchequer supplement and the numbers of pensioners compared with the working population, it will not be possible, under the terms of this Bill to bring the substantial improvements which are expected by the present generation of retirement pensioners.
It is apparent from the estimates of the Government actuary that the present state of crisis will continue to exist into at least the middle 1980s as the number of pensioners, in comparison to the working population, continues to grow. Yet the Bill, about which any impartial observed can speak severely, is introduced by a Secretary of State whom we are assured, not only by hon. Members opposite but by people in all walks of life, is a compassionate man who cares about the problems of the under-privileged. If he adopted any posture this afternoon, he adopted a verbal posture of compassion. But that is not translated into reality in the Bill.
262 The Secretary of State is aware, as is the whole House, that the Bill dates from the Selsdon and pre-Selsdon period of Tory thinking. It is a typical product of that period and before. Many other major aspects of policy which were defined and evaluated at that time have now been thrown over. If the right hon. Gentleman has such compassion, I see no reason why he should not be prepared to overturn this aspect of Goverment policy. Consistency is certainly no virtue in this Government. It is worth remembering that the kind of thinking which led up to the scheme which the right hon. Gentleman is introducing.
There was in existence at the time when the Opposition's National Superannuation Bill was going through Parliament an organisation called STOP, Save The Occupational Pension. That organisation liked to quote people with "right" attitudes on this subject. One of those who was quoted was—to quote a pamphlet published by STOP—"Mr. John Nott, Conservative MP for St. Ives". He is now a Treasury Minister. [HON. MEMBERS: "Hear, hear."] I hope that when I have read what the hon. Member said, there will be similar cheers from hon. Members opposite—or perhaps they will think that things have moved on a bit. What he said was: I do not conceive that there is anything very ennobling about receiving a pension from the State if I am able to provide it for myself. He went on: For me, the concept of full income-related State pension benefits seems to involve an infinitely pessimistic view of the British people which indicates that all need the crutches of the social services. This is the quickest way of turning the British people into incurable cripples, so that they lose the will to stand on their own feet and provide pensions for themselves.

§ Mrs. Elaine Kellett-Bowman (Lancaster)
Of course, under the occupational pension scheme, that is exactly what they will be doing—providing pensions for themselves—as the Minister so clearly explained.

§ Mr. O'Malley
I realise, from what the hon. Lady says, that hon. Members opposite still think that it is somewhat demeaning for people to receive income from a State system, but she should remember—the Secretary of State, as a Cabinet Minister who should have sensitive antennae on this subject, will certainly remember—that that kind of 263 speech belongs to the "lame duck" period, that Ministers have been removed from the Department of Trade and Industry and banished to Europe—indeed, Ministers have lost their jobs—as a result of having that kind of view.
I realise that the right hon. Gentleman, at a time when other reputations are falling fast on his Front Bench, wishes to maintain his reputation as a Right-wing Minister who will carry through the creed and philosophy of the Tory Party. The right hon. Gentleman was saying on 7th March, 1970: We shall reject any attempt to teach firms how to run their own businesses or to dictate prices and earnings to industry.' Ministers believed in giving a free hand to the business and professional interests.
That becomes obvious from the right hon. Gentleman's Bill. He may have been turned upside down, with the rest of the Cabinet, on prices and incomes legislation, but on his pensions policy he is still sticking to the original philosophy of the Tory Party.
Indeed, the Secretary of State and the Under-Secretary have gone further than their early proposals. One thing that the pensions industry pushed for—and it has got just about everything that it pushed for—was that, in return for earnings-related contributions, which it favoured, there should be flat-rate benefits. The Government when in Opposition hesitated about this and wondered whether they could get away with it. "Policy Holder", describing a meeting of the CIB Life Society at Leeds on 15th October 1969, addressed by the Under-Secretary, said: Questioned about the National Association of Pensions Funds' proposals for flat-rate benefits with graduated contributions, he found them attractive, but it was the political judgment of some very experienced colleagues that the idea would be unacceptable. He is right: it is unacceptable.
There is only one change—the Secretary of State has given the pensions industry its own way instead of listening to the advice which the Under-Secretary considered long ago.

§ Mr. John Pardoe (Cornwall, North)
I have been a long-time advocate of flat-rate pensions paid for by graduated contributions. Would the hon. Gentleman 264 ask his right hon. Friend what reply he gave to me on this point in the debate when the Labour Government were in power? Both parties are in cahoots on this.

§ Mr. O'Malley
Both parties are not in cahoots in this. The hon. Member, who occasionally speaks for the Liberal Party and who seems to have very little detailed knowledge of pensions at all, is wrong if he believes that the Labour Party in the Crossman proposals suggested anything else but earnings-related contributions for earnings-related benefits.
What is particularly worrying about the stance of the Secretary of State, which has led to his introducing a Bill of this kind, is that it reflects an attitude of mind which has allowed the pensions industry to get just about all its own way not only on the details of the Bill but also on the principle. It is interesting to quote from "Pensioner", published by the National Association of Pension Funds, January 1972.
What I am going to read expresses the views of some members—not all—of the National Association. They felt that, in general terms, the Government had set its sights at about the right level. These members based their view on the fact that the more pension provision which is committed to the basic scheme the less is available to the private sector. That is an utterly damning philosophy. What is being said by at least some in the pensions industry is, "It does not really matter that you will condemn millions of the present generation of retirement pensioners, as well as many in the future, to dependence on means-tested supplementary benefits that is the price that the country has to pay so that ours can be a growth industry."
If that is an accurate reflection of their views, which the Secretary of State has accepted, then it is a disgrace to the House of Commons and to any British Government—Tory or otherwise. What the right hon. Gentleman has done is put the interests of the pensions industry before those of the pensioner and of future generations of pensioners. The House will realise this when examining the various aspects of the scheme that he has introduced.
The basic scheme provides the old inadequate flat-rate pension in return for 265 earnings-related contributions. It was no minor committee point that I raised in an intervention when I asked the right hon. Gentleman whether the higher-paid under this scheme would be able to gain a minimum contribution record for flat-rate benefits as well as for longer-term benefits for fewer weeks' work than the lower-paid. He said that he thought that this was the case; if it is, then this is one aspect of the Bill which we shall expect the Government to change at a later stage.
We on this side support the principle of earnings-related contributions but reject the principle of flat-rate benefits in return for those contributions. Before the national superannuation proposals were published by the last Labour Government, that Government studied the possibility of earnings-related contributions for flat-rate benefits and rejected them on three grounds—first, because they believed that income in retirement should be big enough to live on without-dependence on means-tested supplementary benefits; second, because they believed that the financial return should bear some relationship to the contribution paid and the standards of living achieved over working life; third, the most important consideration, that if this country, under any Government, is to solve the problem of poverty in old age for the existing and coming generation of retirement pensioners, it is obvious that the working population, either through taxes or contributions, will have to make a bigger financial transference to retirement pensioners.
The Opposition believe that there is a much greater willingness to pay higher contributions to provide decent pensions for retirement pensioners if the benefits to be received in return are earnings-related rather than flat-rate benefits. This has been the consistent attitude of the Federation of Professional Workers, which represents a large number of white collar unions, members of which met the Secretary of State a few days ago and expressed their point of view strongly.

§ Sir B. Rhys Williams
Does not that union believe in the redistribution of income?

§ Mr. O'Malley
The hon. Gentleman sat through the whole of the Committee proceedings on the Crossman Bill and 266 will recognise that there was a redistribution factor of about £500 million a year by the time the scheme reached maturity, but also that as a result of the banding and the 60/25 per cent. formula there was a constant redistribution. The hon. Gentleman already knows the answer on that.

§ Mr. J. T. Price (Westhoughton)
As I also sat through all the Committee sessions on that Bill—

§ Mr. Pardoe
I also.

§ Mr. Price
—I am not speaking without practical experience of this situation. The Secretary of State knows of my lifelong interest in this matter. It is not something that I cooked up yesterday or last week. We rejected this principle for a reason more compelling than any of the three reasons mentioned by my hon. Friend, who is so modest and self-effacing that he will not say it so bluntly. We rejected it for the more compelling reason that we regarded such a transaction as dishonest. That is putting it bluntly. It was inequitable and dishonest. I cannot spell this out, although I put it forward in Committee. I would spell it out on a proper occasion and I am prepared to debate it, because I have had to deal with the matter in previous incarnations, of which the House is well aware.

§ Mr. O'Malley
I am grateful to my hon. Friend. As usual, I need not comment further on that. My hon. Friend has made his point absolutely and succinctly.
The position is that the contributions into the basic scheme at 5.25 per cent, provide for annual up-ratings in line with changes in average earnings. There is no room to assist the pensioner, except marginally. It is true that there will be a growing surplus after the mid-1980s, but even then the sums are small compared with the cost of present-day up-ratings. For example, in the year 2006 the Government report suggests that there could be a surplus of £465 million. This is not a major figure bearing in mind that the cost of the last up-rating in 1970–72 was almost £400 million.
So the weakness of the basic scheme is not only the formula but also that there is not the financial scope to pay even 267 the basic flat-rate pension at a reasonably high level in order to be able to pull people from dependence of means-tested benefits.
A recent meeting of the Institute of Actuaries was reported in The Times on 26th October, 1971, as follows: Mr. E. F. Rogers, who led the discussion on the recent White Paper, attacked it for not providing a sufficiently high flat-rate benefit. Both he and following speakers thought the Government should have increased state pensions up to a level where supplementary benefits could be eliminated. The position is that for the present generation of retirement pensioners the Bill offers nothing. It is amusing that the Under-Secretary now says that the earnings-related contribution system will help the present generation of retirement pensioners when the Government set the level at 5.25 per cent. When we set the level at 6.75 per cent. we were told that it would do absolutely nothing for the present generation of retirement pensioners.
It is not only the present generation of retirement pensioners who will get nothing from the Bill's provisions. The older members of the working population will get nothing extra from the basic scheme, and so little from either the reserve scheme or the occupational scheme that they will be left dependent on means-tested supplementary benefit. For decades after 1975—I speak advisedly—widows will remain entirely dependent on long-term, flat-rate benefits. Invalidity pensioners, those who are long-term sick, will not have the earnings-related benefit and all the credits that they would have had under the Labour Party's national superannuation scheme but, again, will receive the old, inadequate flat-rate benefits.
The Disablement Income Group, which has done so much work for the disabled and has achieved so much as a pressure group on successive Governments, feels disappointed that the Bill does nothing for the disabled. That group wants an earnings-related invalidity benefit for the disabled, whatever the cause of injury. The Opposition have a great deal of sympathy for the claims of the disabled. We hope to be able to refer to this matter in detail in Committee to see whether, even at that 268 stage of the Bill, some improvement can be made for disabled members of the community.
Proceeding from the basic scheme, we are entitled to say that if there is no hope for millions from the basic scheme, what about the reserve scheme? If men and women in work are not in the reserve scheme they will in the future be in a recognised occupational pension scheme. The reserve scheme will be a large scheme. Perhaps 7 million people will be in it; perhaps more. The right hon. Gentleman has said that he envisages that it will be made up largely of manual workers and women, those who are most badly pensioned in the occupational schemes at present.

§ Sir K. Joseph
Or have none.

§ Mr. O'Malley
Yes—or have no pension. The right hon. Gentleman went on to say that what the Government were providing under the reserve scheme or the occupational scheme was a second pension. He said, "We are offering something new". But this is nothing new, because since the Boyd-Carpenter legislation everyone has been in a second scheme of one kind or another. They have been in the Government's graduated scheme or they have been contracted out in an occupational scheme, including some of the so-called Q for qualifying schemes. They are fairly modest schemes. There is nothing new about the principle of a second pension. However, that is how the right hon. Gentleman introduced it. On 3rd November, 1972, The Guardian reported as follows: The Secretary of State spoke proudly of the new Reserve Pension Fund, which is set up by the Bill, and said: 'Our occupational pension movement … will have to look to its laurels—and it has laurels—because it NAM have at its flank the reserve scheme, giving a decent level of provision'. Proudly the Secretary of State spoke of it! If he believes that he would believe anything.
Let us look at what the scheme provides. It replaces the Boyd-Carpenter pension scheme. That, at least, is to be interred in 1975. To the last, there is to be no dynamism, no inflation-proofing. If someone earned the old 6d., 2½p. during the period from 1961 to 1975 and retires, even into the next century, he will not get any increase on that 2½p. He will not 269 get 2½p in terms of the value of that time. He will get the 2½p if it is payable, although the sum will be so small that it might seem, at the present rate of inflation, that the coin will have gone out of circulation altogether.
That scheme provided that a man received an extra 2½p for every £7.50 contribution and a woman 2½p for every £9. It is to be replaced by another scheme of such mathematical complexity as to make any general explanation of individual entitlement absolutely impossible. For Conservative Members to have complained that they could not understand the Crossman proposals because they were so complicated and then to produce the proposals in the Bill including the table on pages 176 and 177 defies belief, because no one could estimate from the table just how much he will get in pension unless he is either an accountant or an actuary.
But perhaps it is just as well that the system is complex. Let us examine some of the typical payouts that would be made out of this new glittering second pension which replaces the Boyd-Carpenter pension swindle. Let us examine pension swindle Mark 2 and see what happens. Where under Boyd-Carpenter a man paid—

§ Sir K. Joseph
I wonder whether the hon. Member would ask his right hon. Friend the Member for Sowerby (Mr. Houghton) whether he approved of the use of the word "swindle" in connection with the scheme introduced by a previous Tory Government and carried on for a number of years by the Labour Government. Will he ask whether his right hon. Friend agrees with him in the use of that phrase, because I do not think that it advances public knowledge or benefit.

§ Mr. O'Malley
The Secretary of State need not use that smooth sepulchral voice with me—

§ Sir K. Joseph
Ask him.

§ Mr. O'Malley
What I have to say to the right hon. Gentleman is that under the National Superannuation Act we proposed to dynamise the graduated contributions system. The Government have absolutely refused to do so.

§ Mr. George Lawson (Motherwell)
May I suggest to the Secretary of State that he should read the OFFICIAL REPORT of the proceedings on the Bill about which we have been speaking. He will find that the word "swindle" was used so often that the Chairman asked the Committee whether it could not find an alternative word.

§ Mr. O'Malley
What surprises me is that I did not know there was any longer any argument between the two sides on this issue. I thought that it was generally recognised that the nature of the scheme was such that it should have been buried as quickly as possible. It has been buried and replaced by another scheme which provides some comparative benefits and I should like to describe them. The Secretary of State referred this afternoon to "value for money." I should like to give some examples of his idea of "value for money." Whereas for every £7.50 contributed under the Boyd-Carpenter scheme there was repayment of 2½p, under this new dynamic second pension scheme a man aged 50 receives .301p for each £ of reckonable contribution factor. That means that for each £7.50 he does not get 2½p as under the Boyd-Carpenter proposals, he gets 2.25p.
The Secretary of State says that there might be a bonus—there is no guarantee—but there needs to be, particularly in the case of a woman. Under the Boyd-Carpenter scheme a woman would have received an extra 2½p for each £9 paid in. A woman aged 50 under this scheme would get 1.8p for each £9 plus a bonus if she is lucky, and that is not guaranteed. Therefore, for older people the scheme is even worse than the Boyd-Carpenter scheme. A woman has to be in her 30s to get as good a return under the Joseph scheme as she could get under the Boyd-Carpenter scheme. The net result is that a man aged 55 in the reserve scheme who pays contributions until he retires could get an additional 4 per cent. of his income in pension if he retired in 1985. A man aged 45 could get an extra 8 per cent. and this should be compared with good occupational pensions of 50 per cent. and two-thirds of final salary. A woman aged 50 could get 3 per cent. in 1985 and a woman aged 40 6 per cent. in 1995.
Older contributors could certainly do better in a private occupational pension 271 scheme and, of course, that is one reason why the level is pitched like this; it is designed to give an open market for the pensions industry. It is, of course, true that the scheme gets better as it goes along. It needs only 43 years to mature and at that time, if it starts in 1975, by the year 2019 a man then aged 66 could be receiving a 19 per cent. addition to his basic pension or a woman aged 60 could get a 13 per cent. addition! That, according to a footnote in the Explanatory Memorandum includes bonuses as well. This is therefore a remarkable scheme, and we are entitled to ask why it is so bad. Why is it that the private sector in one advertisement are saying—I paraphrase very roughly—"If you are not careful, your employees could actually land up in the Government's reserve scheme"? All the implications are that it is so bad that no good employer could envisage that prospect for his work people with any degree of satisfaction.
One of the reasons why the return is bad is that the employer's contribution is very low. It is 2.5 per cent. When a survey was made in 1966 by the Government Actuary of occupational pension schemes it was found that employees contributed about 4½ per cent. to manual workers' schemes and about 10 per cent. to non-manual workers' schemes. So we see that this is, in the Under-Secretary's words, a very modest scheme indeed, one in which the employer is asked for a small contribution, and where there is no taxation relief on the contributions of the employee. The Secretary of State was certainly on weak ground when he was defending that aspect of the problem. We shall certainly want to come back in detail to these matters on the Committee stage.
Any examination of the reserve scheme must lead to one conclusion. The scheme has been deliberately set at a low level to leave the field clear for the occupational sector. The Government's philosophy is that this is not a job for the State and the intervention by the hon. Member for Lancaster demonstrated that Conservative back benchers are still adherents to the "lame duck" theory, that there is something demeaning about State schemes and that one should try to pull oneself out of them.
272 Next I turn to the "recognised" occupational pension schemes. The Opposition regard the occupational pension movement as having a valuable and important rôle for savings and provision for retirement. Good occupational pensions schemes, understandably, are rightly and naturally highly prized by those who are fortunate enough to have them. We think it best, however, that there should be an integrated partnership between the occupational pension sector and the national insurance system because we believe that by such integration a wider range of cover can be provided than the occupational pension alone is geared to provide. An example of such cover was the permanent long-term earnings-related widowhood and invalidity provision which was a feature of the National Superannuation Scheme. The widowhood provisions in that scheme were probably at least as good as any scheme anywhere in the world. The deceased husband was credited as having made contributions as though he had lived until the age of 65. It meant that there were substantial earnings-related widows' pensions, whether people were partially contracted out of the scheme or not. There is no such integration in the Bill, and we regard that as a major weakness.
In addition, less than half the labour force is now covered by occupational pension schemes. Many such schemes provide only very small pensions. If a person is starting in a new scheme, or joining an existing scheme, it takes many years to build up. Our objection to that part of the Bill is that in developing the principle of recognised schemes the Bill sets very low minimum standards. The result will be that the manual workers will continue to receive inferior treatment far into the future, and there will obviously be a spate of new schemes tailored for the lower-paid at the lowest cost.
I should like to illustrate, by means of one type of occupational pension, just how modest the proposals are. The simplest example is to be found in the formula for final-salary-type schemes. Although the Bill does not state a figure, I understand that the Under-Secretary explained to the National Federation of Professional Workers a few days ago that the Government's intention was that where final-salary-type schemes applied 273 for recognition they would be required to provide a pension of 0.6 per cent. of final salary per year of service. The result would be to provide a pension of 24 per cent. of final salary after 40 years for a man and one of 16.8 per cent for a women. I ask the House to look at the best type of pension provision in 1972, let alone what the top end of the range will be 40 years from today, to see how low are the standards being set by the Government.
Similarly, in the Government's requirements for recognition of the preservation there is no guaranteed inflation-proofing. The Under-Secretary has apparently explained to delegations that he knows that there should be such inflation-proofing, but that it is difficult to impose as a legal obligation. What he means is that the pensions industry has objected.

§ The Under-Secretary of State for Health and Social Security (Mr. Paul Dean)
No.

§ Mr. O'Malley
If the hon. Gentleman is saying that there are some other technical reasons, I shall be very pleased to listen to what he and the Government have to say on the matter in Committee.
We of course welcome the provision that both occupational pensions and the reserve scheme are to provide 50 per cent. of the husbands' pension entitlement to widows. But there are severe limitations on that provision. Under the Bill, that provision can be voided in an occupational pension scheme if on the appointed day the employee is within five years of retirement.
Schemes are apparently to be entitled to provide less than the prescribed rate—that is, less than the 50 per cent. rate—where the widow is more than a certain number of years younger than the man. This is not a feature of the State scheme as we have seen it. It means that younger widows with children could be in difficulties.
But the major weakness which does not arise from these arrangements but is inherent in this type of scheme, is that there is no system of forward credits for the widow in either the occupational pension or the reserve scheme. That can mean that the widow may well receive 50 per 274 cent. of the husband's entitlement, but without forward crediting that entitlement can be very small and modest.
The Bill is the result of the pressure of the pensions industry and the obsession of the Prime Minister and his Government that private provision is always superior to public service, which apparently demeans, that the total wellbeing and prosperity of the nation can best be assured by the unfettered operations of the market, in so far as that is feasible in the circumstances of today.
The Government have been compelled to make major changes in other aspects of their policy. The tragedy is that in this area of public policy affecting the future of millions of citizens the proposals in the Bill, dating from years ago, remain unchanged.
We welcome some of the features of the Bill, like the annual review, earnings-related contributions, and the move towards preservation. But we reject the philosophy underlying the Bill and deplore the lack of provision for the elderly which its terms imply. Therefore, we shall vote against it tonight.

§ Mr. Airey Neave (Abingdon)
The hon. Member for Rotherham (Mr. O'Malley) took a long time to say many destructive things about this important Bill. There are some good things in the Bill, and there are some omissions from it, to which I shall refer quite frankly. But it was unnecessary for the hon. Gentleman to be so abusive about my right hon. Friend the Secretary of State, to say that he had no compassion and that he had a damning philosophy. That was one of the choice remarks made by the former junior Minister, who is on very weak ground in talking about people not having compassion. He was the junior Minister who helped to vote down the Bill that would have given pensions to the over-80s. I remember that very well, because I had a good deal to do with the Bill. The hon. Gentleman should be a little more careful in using that sort of language in the House, when he has himself been guilty, through his own Government, of acts of that kind, which caused great criticism in the country.
I do not wish to be abusive to the hon. Gentleman. I want only to say 275 that I wished he had told us something about the Labour Party's policy, because I should be interested to know his attitude to the position of married women under the Bill.
The Bill represents great progress. If the hon. Gentleman could have offered us anything like the statutory annual review of pensions which is provided by the Bill and which his Government were never able to produce, he would have had something constructive to say, but in the circumstances he had very little.
I welcome the fact that many married women going out to work will be covered by the earnings-related pension for the first time. That is a tremendous advance, and my right hon. Friend and my hon. Friend the Under-Secretary are to be warmly congratulated on it.
The hon. Member for Rotherham left the good things in the Bill to the very end, when he rushed out a little list and mentioned where he differed with the philosophy of the Bill. But surely he welcomes the fact that married women are to be included for the first time in that way? They retain the right to rely on their husband's contribution. They have an option as regards the basic scheme. They would not have that under the hon. Gentleman's scheme, which he has just announced in Labour's "Programme for Britain". Under that scheme they would have to pay the full contribution if they were in employment. Is not that so? Perhaps the hon. Gentleman does not want to answer that question now. But the fact is that the Bill offers married women a great advantage which does not appear in the latest Labour Party document. The hon. Gentleman should have mentioned that instead of making a large number of destructive criticisms, because my right hon. Friend has produced a much better scheme for married women.
I am much concerned about the question of transferability of pension rights. I have been arguing the matter in the House for many years. I represent many people employed by the Atomic Energy Authority who sometimes wish to transfer to industry, and I remember having many debates with Mr. Frank Cousins, when he was Minister of Technology, on that point, which is very worrying. I am not 276 sure how far we go on this matter. Is it clear that no employee can lose his pension rights as a result of changing his job? Does the provision apply to the change to industry from public authorities and so on? We want some assurance on that.
The rules referred to in Clause 55 must protect the employee. He must not suffer on account of an occupational scheme that does not meet the requirements about the protection of pension rights. We on these benches and many Labour Members have been fighting for this for a very long time and wish to know what progress has been made. It appears to us that this is very much better than it was. I would like to have more detail.
I come to the matter of omissions. My right hon. Friend will agree that a large item of legislation of this kind must contain a number of omissions to which it is right that hon. Members should refer. That does not mean that I do not think the Bill is a great achievement, because it is. It omits married women who do not work outside the home but become chronically disabled. The hon. Member for Rotherham mentioned the chronically disabled and the need for cash benefits. At present they would get supplementary benefit or, in a serious case, the special attendance allowance. This does not include people born with a chronic disability or those who become chronically disabled before reaching working age. These people do not benefit from the Bill but they do benefit from the items I have mentioned. Such groups should not be excluded from any cash benefit. I presume that they are excluded because they are not part of the working population.

§ Mr. J. T. Price
The hon. Gentleman must realise that what we are discussing is a Social Security Bill resting upon an insurance contract. These other aspects of social security, admirable though they may be, are quite another matter. I would be the last to suppose that we could bring them in under this umbrella. We seem to be in danger of forgetting that this is an insurance Bill conferring rights in return for contributions, in other words a social contract.

§ Mr. Neave
I have great respect for the hon. Gentleman but I think that he has got the wrong end of the stick. It 277 is perfectly in order for me to raise this matter now, and I see my right hon. Friend nodding his head. The hon. Gentleman has not quite got the point but it would take up too much time if I were to explain in detail why I believe that I am entitled to raise this matter. If a person has never been able to work or if his ability is seriously impaired should he not have benefit as of right? Perhaps there could be a new benefit apart from those that I have mentioned.
I want to devote the rest of my remarks to Clause 30. I have been associated a great deal with the subject of the death grant. This is not a happy thing to talk about in any debate but it must be mentioned. Hon. Members will know that throughout the 1960s I was engaged in the battle to get pensions for the very old, those previously disqualified under the National Insurance Acts. I am rather shocked to read the following in Clause 30(3): A death grant shall not be payable in respect of the death of a person who attained pensionable age before 5th July, 1948. I am shocked to think that after all these years these very old people should be deprived of this benefit.
The contributory principle has frequently been undermined. I have heard the right hon. Member for Sowerby (Mr. Houghton) raise this often and yet we still have in Schedule 9 of the Bill this harsh rule under the heading: