§ Order for Second Reading read.
§ 3.56 p.m.
§ The Secretary of State for Social Services (Sir Keith Joseph)
I beg to move, That the Bill be now read a Second time.
I shall seek to make a short speech because we have only a relatively short time for the debate.
The Bill stems from the announcement first made by my right hon. Friend the Chancellor of the Exchequer in his Budget speech and the more detailed statement that I made the next day. The Bill is backed by a White Paper, Cmnd. 5288, and by the Government Actuary's Reports, Cmnd. 5287.
The Bill provides for the second of what are now annual increases in national insurance and supplementary benefits. The increases are intended to come into payment exactly 12 months after the 1972 uprating, in the week beginning 1st October this year. The main increase is £1 per week in the single rate of retirement and invalidity pensions, widows' pensions and widowed mothers' allowances, taking the weekly rate from £6.75 to £7.75. For a pensioner married couple the increase is £1.60, from £1090 to £12.50 a week. In both cases the increase is nearly 15 per cent. It will be the largest cash increase ever made in any period of 12 months.
I can confidently predict to the House that when the benefits come into effect in October they will provide a significant real increase in buying power. Since Labour's last uprating in November 1969 the pension will have risen, by early October, by no less than 55 per cent. in cash terms. Between November 1969 and March this year—the date of the last cost of living increase report—the cost of living had risen just under 30 per cent., so I am entitled to claim a real and continuing improvement in pensioners' buying power under this Government.
I turn to short-term benefits for the sick and the unemployed. These are being increased by 60p for a single person, from £6.75 to £7.35 a week, and by £1 for a married couple, from £10.90 to 806 £11.90 a week. Maternity allowance and Industrial Injury Scheme injury benefit will be increased correspondingly. We are confident that these increases will honour the Government's commitment to protect benefits against price rises.
We believe that the extra that we are deliberately providing for the more than 8} million persons on long-term benefits will be generally welcomed. Of course, we would like to do more still for pensioners and other long-term beneficiaries, but the House must face the reality that extra benefits have to be paid for in extra contributions or extra taxes and that if the increases are too sharp one of the results must be higher prices.
In addition to these broad general improvements, the Bill contains two selective improvements. The first is that, whereas the general percentage increase in cash terms is just under 15 per cent., invalidity allowance will go up by no less than 40 per cent. The result will be that in October about 60,000 people whose age at the onset of incapacity was below 35 will get an increase of £1.45 a week—£1 in the single rate of their invalidity pension and 45p increase in the invalidity allowance. Another 70,000 people, whose age at onset of incapacity was between 35 and 45, will get £1.30 a week more, and about 200,000 people will get £1.15 a week more. In addition to these increases, many of those invalidity pensioners will get an increase if they have wives or children.
While dealing with provision for the long-term sick and disabled, I want to mention also attendance allowance. The Bill provides that the present higher, day and night, attendance allowance rate of £5.40 will go up by the same proportion as other long-term benefits and will become £6.20 a week. This benefit is tax free. Similarly, the lower, day or night, attendance allowance rate, which will first become payable from 4th June this year to the working age group— broadly, those between 16 and 65—is also being increased. It will go from £3.60 to £4.15 a week. In practice, therefore, the £3.60 rate will be payable for only four months, from June to September inclusive.
Payment of the lower, day or night, attendance allowance rate is being phased in at what had up to now been planned 807 to be six-monthly intervals, but so far fewer claims have been received from the working age group than we had expected. That is perhaps not altogether surprising, as the higher, day and night, attendance allowance rate is now being drawn by about 90,000 as against the 50,000 originally expected.
I am therefore glad to be able to tell the House that payment of the new lower rate allowance, at £4.15 a week, to the next age group—children—will begin from 1st October instead of from December 1973 as originally envisaged. Arrangements will be made to invite claims from parents and others caring for severely disabled children. If it is found possible to bring forward also the starting date for payment of the lower rate allowance to the two remaining age groups of older people born before 1908, this will be done in due course. I am sure the House will welcome the accelerated payment of the lower rate attendance allowance for children.
The second selective improvement that the Bill contains gives effect to the decision that heating allowances under the supplementary benefits scheme, which are at rates of 30p, 60p or 90p a week according to the state of a claimant's health or accommodation, or both, will from October be paid in full on top of the new long-term supplementary benefit scale rates. Those who benefit will be, first, people who have extra heating needs but now receive no heating addition because their extra expenses in this respect are fully covered by the long-term addition. They will therefore receive a heating allowance for the first time.
Secondly, there will be people now receiving reduced heating allowance because their extra expenses on this score are partially, but not wholly, offset against long-term addition. They will receive the full heating allowance for the first time.
Our best guess is that, if we take these two groups together, about 400,000 people in all will benefit from the change. The majority are likely to receive 30p a week in full in the future, and it is on that basis that we estimate the cost at about £6 million a year.
However, I must emphasise that some will receive more than 30p a week extra. 808 Many single supplementary pensioners living on their own—probably the most vulnerable group—will receive not only the extra £1 of the general increase going to long-term beneficiaries under both the national insurance and the supplementary benefits schemes but will also receive the 30p. They will receive an extra £1.30 in all in October, a bigger increase than ever before in cash or real terms.
§ Mr. Michael Meacher (Oldham, West)
The change with regard to heating allowance was not a concession by the Government but was forced from them by the result of a High Court case. As the heating grant will no longer be offset against the long-term addition, will the same provision apply to other exceptional needs grants, such as special dietary allowances and clothing grants? If not, what is the logic of making this one change?
§ Sir K. Joseph
The hon. Gentleman is completely wrong. The High Court decision was concerned with the use of discretion by the Supplementary Benefits Commission. In part of the Bill the Government have clarified the position in this regard. The change to prevent the heating addition being off-set against the long-term scale rates, however, constitutes a specific change of Government policy.
I avoided the word "concession", because I do not regard changes recommended by both sides of the House as being in the nature of concessions. The change in question is one that I think both sides of the House have welcomed. It was deliberately introduced by the Government and is quite separate from the clarification of the law, which, as the hon. Gentleman correctly says, has been put in some doubt by a High Court decision. That clarification is made in a different part of the Bill.
§ Mr. A. W. Stallard (St. Pancras, North)
How will the Bill affect those receiving rent rebates, for instance? Will there be a deduction, or will there be an adjustment in the rent rebate?
§ Mr. Brian O'Malley (Rotherham)
The right hon. Gentleman need not be so coy about the implications of the Simper case. We understand that the Government were put in a difficult position, as was the Supplementary Benefits Commission, as a result of that judgment. Will the right hon. Gentleman make clear whether other discretionary benefits will be treated in the same way as heating allowance?
§ Sir K. Joseph
I beg the hon. Gentleman's pardon. I failed to answer that part of the question of his hon. Friend the Member for Oldham, West (Mr. Meacher). I must make it clear that the change affects only the heating addition, and that, as has been clear from the first announcement—the hon. Gentleman, who follows these matters closely, need not express surprise—any additions made for diet, laundry or other purposes will continue to be offset against that part of the supplementary benefit that replaces the long-term addition.
Apart from the change I have just explained, the Bill does two main things on supplementary benefits, in Clause 6 and Schedule 4. First, as on this occasion the Ministry of Social Security Act 1966 needs amendment, the Bill sets out new scale rates of supplementary benefits to be operative from the week beginning 1st October, instead of their appearing in separate and subsequent regulations subject to affirmative resolution, as is normally done. But I can assure the House that this way of proceeding this year is in no way a precedent.
Secondly, in providing increases in supplementary benefits corresponding to those in national insurance benefits— £1.60 for a married couple on long-term supplementary benefit, £1 for short-term, married beneficiaries, £1 for single householders on long-term supplementary benefit, and 60p for the short-term single householder beneficiary—the Bill in addition incorporates the existing long-term addition of 60p into the long-term scale rates. The receipt of the long-term addition constitutes the qualification for receiving the long-term as distinct from short-term level of increases in the supplelementary benefit scale rates.
This is a complicated matter, both conceptually and in drafting, and I am sure that hon. Members will wish to go 810 further into it in Committee. At this stage it will perhaps suffice for me to say that what seems technical and complex in print is intended to have the effect of ensuring parallel improvements in supplementary benefits to those being made in national insurance benefits, and to consolidate the long-term addition, which has given rise in the past to confusion and has not been well understood by many recipients. After October the result should be simpler and better for the great majority of those concerned.
Nearly all supplementary beneficiaries have provision made for their rents in addition to the scale rates. The House may like to know the present basic income of a supplementary pensioner and compare it with what he or she will get from October. I am using rent figures which unfortunately are no more recent than November 1971. Those are the latest rent figures available.
§ Sir K. Joseph
The hon. Gentleman is wrong about that. I am making the point that the Supplementary Benefits Commission in nearly every case takes into account the current rent in assessing the amount of supplementary benefit. A single householder supplementary pensioner now gets £6.55 on the basic scale, plus 60p long-term addition, plus rent, which, on a national average in November 1971, was about £2 a week. Taken on a national average, the single householder supplementary pensioner now gets about £9.15 a week. When I say he gets that, I am being inaccurate. What he gets from the Supplementary Benefits Commission depends upon his resources. His allowance would amount to £9.15 a week, including the average rent of November 1971. In London in 1971 the average rent was about £3 a week, so the figure for a single householder supplementary pensioner would be £1015 a week in the GLC area.
As from October the rates will be £8.15 basic—the long-term addition will have been consolidated and the increase applied—plus rent. There will be a total of £10.15 a week for a single householder supplementary pensioner using the national average rent, or £11.15 for those in the GLC area. For a married couple 811 the figures from October will be £14.85 or £15.85 respectively, including rent as described before, at November 1971 levels. The House may like to have on record those average figures. They do not take into account any additional discretionary payments that may be made in any particular case.
Other weekly rates of national insurance and industrial injuries benefits are going up, with increases for dependants and children matching increases in appropriate main benefit rates. In particular, old persons' pensions—pensions going to persons over the age of 80—are being increased from £4.05 to £4.65 for a man and £2.50 to £2.85 for a wife That will be found in Schedules 1 and 3 of the Bill.
No increase is being made on this occasion in maternity grant or in death grant. That, I know, is of concern to hon. Members on both sides of the House. Neither of those grants has been increased, except at very irregular intervals, and the Government have decided as a deliberate decision on priorities, that neither should be increased. That has enabled the Government to concentrate on increasing the long-term and continuing benefits, to which I have already referred.
I shall give a brief explanation of Clauses 4 and 5. Clause 4 ensures that civil servants who have opted for unabated sick pay instead of claiming sickness benefit or other benefits, will go on to invalidity pension after six months in just the same way as anybody else. It also provides for public funds to be reimbursed by the Insurance Fund for the unclaimed benefits of the first six months.
The first part of Clause 5 sets out formally the traditional interpretation of incapacity for work for the purposes of the insurance Acts—that is, incapacity for work that the person concerned can reasonably be expected to do. A recent High Court case caused some confusion about this matter and made it necessary to spell it out.
Clause 5(3) is a technicality consequential on the Domicile and Matrimonial Proceedings Bill of my hon. Friend the Member for Perth and East Perthshire (Mr. MacArthur). That Bill introduces separate domiciles for husband and wife. 812 We need to be able to deal on traditional lines with a technically new situation regarding the effects on national insurance benefits.
The cost of the Bill's improvements in benefits will in the first full year, 1974–75, be £550 million. Of that, just under £500 million will fall on National Insurance Funds, and just over £50 million on the Consolidated Fund, for old persons' pensions, the attendance allowance and supplementary benefit. We are proposing to meet these costs mainly by increasing graduated contributions paid on earnings of over £9 a week and by increasing flat-rate contributions paid by employers. In that way we continue to moderate the burden on the low-paid and to place a higher percentage of the total contribution on employers, in preparation for the changes envisaged in the Social Security Bill now before the House.
The weekly earnings limit up to which graduated contributions will be payable will be raised from £48 to £54 from the beginning of October. The rate of graduated contributions for both employers and employees will be increased by ¼per cent. —the rate will become 5 per cent. instead of 4.75 per cent.—on earnings between £9 and £54 a week. Persons who have contracted out of the graduated pensions scheme will continue to pay at a lower rate—the rate will be ¾per cent. instead of ½ per cent. as hitherto—on earnings between £9 and £18 a week.
The adult employee's share of the flat-rate contribution will be reduced by 4p a week. On the other hand, the employer's share will be increased by 14p a week for men and 12p for women. Of that increase, 2p a week goes towards the increased cost of industrial injuries benefit under the Bill. I apologise to the House for this torrent of figures, but it is necessary in order to explain where the large sums of money will go in order to secure improvements.
There will be increases in the flat-rate contribution paid by the self-employed and non-employed men of 25p and 19p a week respectively. Regulations will ensure that the earnings threshold at which contributions normally become payable will go up from £6 to £7 a week, that the earnings level at which a self-employed person's contributions normally become payable will be increased from £5 to £6 813 a week and that the level at which a self-employed or non-employed person can claim exemption from liability to pay contributions will go up from £468 to £520 a year.
The Exchequer contribution to the National Insurance Fund will be increased as a consequence of changes in flat-rate contributions by £27 million in a full year. In addition, the lump sum payment from the Consolidated Fund to the National Insurance Fund for 1974–75 will go up from £190 million to £275 million. Thus the Exchequer supplement will be maintained, in accordance with established arrangements, at about 18 per cent. of the contribution income of the National Insurance Fund. There will also be an increase in the Exchequer supplement to the Industrial Injuries Fund because of the increase in industrial injuries contributions. Therefore, the active working population is being asked to pay more for the old, the sick and others who are dependent.
I apologise again for inflicting so many figures on the House. The Bill makes a further real and important step in progress which has, during the lifetime of the present Government, provided pensioners and other beneficiaries with an improvement in living standards. I commend it to the House.
§ 4.18 p.m.
§ Mr. Brian O'Malley (Rotherham)
Having listened to the introductory speech of the Secretary of State, I feel that it is no wonder that the House of Commons is so badly attended on so many occasions. All that the right hon-Gentleman has done is to give a description of the Bill which every hon. Member could have read in the relevant documents before coming to the House. It seems a great pity that the right hon. Gentleman should make no attempt to put the Bill within the general policy and the philosophical context of the Government's attitude, and should spend nearly half an hour telling us what we already know. That does the House of Commons no good at all. I propose to make some general statements which seem to be relevant in the broader considerations arising out of the proposals made in the Bill.
I believe that there is a greater awareness today of the problems of the aged, the sick and the disabled than there has been for many years. That awareness stems 814 from growing public understanding of the cruel effects of the inflation which has been fostered by the Government's policies. The public mood is not confined to sympathy. There is a willingness to shoulder the financial obligations inherent in eradicating poverty among pensioners and the deprivations which they are suffering in the 1970s. All recent opinion surveys have demonstrated that willingness, and I believe that it is significant that the trade union movement is campaigning for increased pensions and for pensioners more strongly than at any time in its history and that it has expressed the preparedness of its members to play their full part in meeting the costs of the radical improvements which are necessary.
It is, therefore, tragic that the Bill fails to reflect the mood of the country adequately. In the Budget debate on 8th March, the Secretary of State admitted what had not been previously admitted. He admitted that, if the 1971 and 1972 measures brought any improvement at all, the improvement was at best marginal. Yet, those were years uniquely favourable for any Government to make substantial inroads into the problems of poverty facing the aged, the sick and the disabled.
Now, the Secretary of State expresses optimism that the Bill will provide, as he said on 8th March, "significant improvements". I have read that speech and I listened to him today, and I heard his replies to questions asked when he announced these proposed improvements. All of them add up to the type of selectively edited information, in particular, selectively edited statistics, about which the right hon. Member for Wolverhampton, South-West (Mr. Powell) was rightly complaining in criticising the Government in his speech at Chesterfield during the weekend.
Therefore, the optimism of the Secretary of State requires examination. We have to make it against the background of policies which, over the last three years, have put vast sums into the hands of the wealthy—those who receive income from investment, those who benefit from capital gains, those who benefit from reductions in the payment of estate duty.
It should also be noted at this juncture that the Government are continuing 815 to keep the Treasury supplement at 18 per cent., at which it has stood for a number of years under successive Governments. I have pointed out before that this is not a magic figure and that there is no reason why it should remain at 18 per cent. One might, with justification, say that, as the Government found themselves able, in the last financial year, to give away £3,000 million in tax release, there was a strong case for examining the possibility of substantially increasing the Treasury supplement at least over a period.
More than that, if the proposals which the Labour Government put forward but which fell at the General Election had now been in operation—[Laughter.]—the hon. Member for Tynemouth (Dame Irene Ward) had better wait—even if the 18 per cent. Treasury contribution had remained at that figure, there would have been by 1974–75 about £150 million more from the Treasury towards the payment of pensions than there will be under the present Government's Social Security Bill.
Pensioners should be aware that if the Government, who have given vast tax handouts, had been prepared to increase the Exchequer contribution by 10 per cent., about £300 million extra would this financial year have been available for the benefit of pensioners.
§ Mr. Julian Ridsdale (Harwich)
Surely what affects the pensioner is the increase in the gross national product, which is increasing at three times the rate that the last Government achieved.
§ Mr. O'Malley
The tragedy is that, whatever is happening to the gross national product, the pensioners are getting very little out of it. I shall come to the relationship of national average earnings to average pensions, when the hon. Gentleman will see that the pensioners have not only not improved their position but, as a result of this Bill, will find themselves in an even worse position than as long ago as 1967 under the last Government. The degree of satisfaction and optimism expressed by the Secretary of State is not shared by the National Federation of Old-Age Pensions Associations, or by the TUC, or by numerous pressure groups such as "Help the Aged" and "Concern".
816 Before I look in detail at the defects and the vast gaps in the Bill, I want to welcome the increases. I listened with interest to the hon. Gentleman's comments and the additional information on the attendance allowance. We believe that it is right that there should be no increase in the flat-rate contribution but a greater emphasis on earnings-related contributions. The Under-Secretary of State is keenly aware, and the Government should be aware, following our debates in Committee on the Social Security Bill, that the Labour Party is opposed to a system of national insurance which provides flat-rate benefit for earnings-related contributions. We believe that if earnings-related contributions are to be made, there should be earnings-related benefits in return.
The Bill splits into three convenient parts. Retirement pensioners and the recipients of long-term benefits will get a "large monetary increase", as the right hon. Gentleman described it, of £1 a week for the single person and £1.60 for the married couple. The right hon. Gentleman was almost saying that these are unprecedented figures. But these are unprecedented times. It takes the incapacity of the present Government to produce an inflation and madhouse economic and food policies—the latter now being haggled over in Brussels by the Minister of Agriculture and his European counterparts.
The Secretary of State has claimed that for the retirement pensioners and the recipients of long-term benefits there will be real improvement. At this point, I remind the hon. Member for Harwich (Mr. Ridsdale) that on the Government's own figures the pension for a single person will represent only about 19 per cent. of national average earnings. It is likely that the figure will be 18 per cent. by next autumn and it could well have fallen by October 1974 to an alltime low during the post-war period. This 19 per cent. is lower than the 1967 figure and is one of the vital statistics and considerations which must be taken into account when assessing the merits of what the right hon. Gentleman described as an "unprecedented increase".
The Secretary of State went on to compare movements in the monetary value of pensions and movements in the retail 817 price index, but the retail price index is not a good guide when assessing the financial ability of pensioners. What is far more significant is the movement in food prices. I am of course aware that the movement in food prices is somewhat higher than the movement in retail prices which the right hon. Gentleman described as having taken place during the past two and a half to three years. Nevertheless, we are faced with a situation in which we are setting the rates for retirement pensions and other long-term benefits not for 12 months ahead, even though it is an annual uprating, but for 18 months ahead, and we do so against the background of the lunacy of the common agricultural policy in the European Economic Community of which we are now a member.
It is significant that in January of this year the food price index moved up by 2 per cent.; in February, it went up by 1.8 per cent.; in March, it went up 1.9 per cent. So in the first quarter of 1973 alone the food price index moved up by 5.7 per cent. I am not making estimates of what is likely to happen in the rest of the year and in the six months after that, but we can all recognise that that first quarter represents a movement in food prices at an annual rate of 22.8 per cent.
Of course there will be seasonal fluctations with the coming of the summer, but there can be little confidence, in view of the state of world commodity markets and the present arrangements in the EEC, that those vast figures will be drastically reduced—certainly it is not the view of most informed commentators on the subject that they will be reduced.
But it is not only the official figures that are interesting. Some of the random surveys are also of interest. In the Observer of 22nd April there appeared the "Observer Shopping Basket" in which one of the reporters of that newspaper said that she had returned to Slough where last October she had gone shopping with a housewife to find out which local stores gave best value for money. She found that between October and April there had been a movement in prices in a whole list of goods amounting in Tescos to 13.6 per cent., in Sainsburys to 12.2 per cent., in Waitrose to 12 per cent. and in Safeways to 13.7 per cent.
818 Those figures are extremely significant. While the Government are claiming that they are bringing down some prices as the result of the introduction of VAT, they are allowing food prices to rocket. We are entitled to ask for how much longer they will allow our basic foods, our staple foods, to remain unsubsidised, for how much longer we are to continue with the dear food policies that have characterised the Government's policies since they took office.
All the Government can claim—if I may be selective for a moment—is that, according to the Sunday Times of 22nd April, if one wants to buy a four ounce Cologne spray of Yves St. Laurent Rive Gauche, its price has come down between 5 and 7 per cent. I am sure that every pensioner will regard that as being of enormous significance. The Government say that tennis rackets, too, are likely to come down between 4½ and 6½ per cent. On behalf of the pensioners, we are entitled to ask, as are hon. Members opposite, when we are to see at least some stabilising of food prices, let alone the reductions of which the Government are boasting for some of the luxury goods that concern pensioners not at all.
Since stage 1 of the Government's prices and incomes policy began, meat prices have rocketed by 40 per cent., and there seems no hope of those prices coming down in the foreseeable future. Over the two and a half years to December 1972, fares rose by 42½ per cent. With such movements in prices, it is clear that these figures of £1 and £1.60 will assume a different significance in the incomes of pensioners. It is no wonder that the pensioners and their organisations and others concerned with the problems of family poverty are worried about the general level of retirement pensions over the next 18 months.
I conclude on that section by agreeing with a spokesman of Age Concern who was reported as having said of the increase which the right hon. Gentleman regards with such optimism:It represents the smallest possible increase the Chancellor could have made.
§ Mr. Sydney Bidwell (Southall)
Has my hon. Friend observed that many medical men are warning that price increases are occurring mainly among protein foods and that what will happen 819 is that many old people will therefore buy carbohydrates, which might make them appear to be healthy, but which in fact will greatly increase the incidence of skin disorders and affect the blood?
§ Mr. O'Malley
I am grateful to my hon. Friend for that intervention. I believe that every pensioner organisation and every pensioner and everyone who visits the homes of pensioners realises how they have been driven away from high protein foods simply because of prices, and I refer particularly to their visits to butchers' shops.
The Secretary of State has been remiss in not at long last increasing the disregards available to retirement pensioners when they apply for supplementary benefit. It is years since the disregards were fixed. The result is that many pensioners who could benefit from these small increases in their pensions in fact will find themselves with no advantage.
I come from the coalfields, and the mining community has a particular problem. It will affect many pensioners who have a small occupational pension. I speak feelingly on this subject because my own mother is in receipt of the miner's widow's pension, which is a half of the 30s. that is to go up to £3. All of us appreciate how small and inadequate that type of pension is, but let us see what happens when the miner's pension goes up from 30s. to £3.
Substantial numbers of men who have worked in the mines all their lives have to depend on supplementary benefit to be able to live at all. They will gain 30s. in their retirement pension—for which they have negotiated and which they obtain from the National Coal Board— but they will lose all of it as a result of the Secretary of State's failure to make any change in the disregards, a change that has been demanded from both sides of the House over the past two years.
Another significant omission from the Bill is any increase in death benefit. The level was set at £20 in 1949. It had reached only £30 in 1967. Originally it was intended that the level of the death benefit should be sufficient to provide a funeral of a minimum standard. At a time when a funeral of a minimum standard costs £65, £70 or even £75, quite 820 clearly the death benefit should be raised. I know from what has been said in earlier debates on the subject that the right hon. Gentleman will come under a great deal of pressure during the later stages of the Bill to do something about this glaring omission.
Next, it is regrettable that the Secretary of State, having declined to dynamise the graduated pensions—the little old sixpences which are paid under the Boyd-Carpenter scheme—should continue to refuse to allow such pensions to be disregarded for the first £1 as occupational pensions are. I wish that the right hon. Gentleman would look at this. It is not a major point. But since we cannot agree across the Floor about the need or the justice for dynamism, I hope that, before the Committee stage of this Bill, he will see whether it is possible to give recipients of graduated pensions the same treatment for disregard purposes as those whose employers decided to opt out of the State scheme and to provide an alternative to the Boyd-Carpenter graduated scheme.
I turn now to heating allowances. Now that the long-term addition has been absorbed into the general scale rates there is no logic in saying that the heating allowance will be estimated without taking into consideration such long-term addition but that the others will stay as they are. We welcome the administrative change which the right hon. Gentleman has announced because it will bring limited aid to many. However, we believe that other discretionary allowances should be similarly treated, especially in view of the integration of the long-term addition into the basic scale rates.
In spite of all that the Secretary of State has said about the merits of the changes that he has announced in the heating allowance system, there are still many millions of people who will not be entitled to a heating allowance. The majority of old people drawing supplementary benefit will still not be entitled to it and the majority of those who are entitled will receive only 30p to assist them with their heating. When one looks at the evidence now available, from the Fox Report to the detailed comments on this subject which have been made in the Press in recent months, it is clear that the situation is still highly unsatisfactory 821 and that the heating allowance amendments proposed by the right hon. Gentleman go nothing like far enough.
The Secretary of State explained that short-term benefits were to rise by 60p for a single person and by £1 for a married couple. There is not even movement with national average earnings for this section of the community. The Government say that they will give them price proofing, and price proofing, incidentally, on some optimistic assumptions about the movement of general price levels during the next 18 months. But it is a misnomer to describe some of the payments made under this heading as "short-term benefits".
At the last count on 12th February 1973, of those unemployed, 110,700 were men and women who had been unemployed for between 26 and 52 weeks—in other words, any earnings-related entitlement had disappeared completely—and 176,000, including 160,000 men, had been unemployment for more than 52 weeks. It is alarming that since June 1970 when the present Government came to office the number of men and women—but predominantly men—who have been and remain unemployed for more than 52 weeks has risen by 78,000. It is intolerable that the Secretary of State should deal with this class of claimants as short-term claimants and attach to them a lower poverty line than is attached to numbers of other national insurance and supplementary benefit recipients.
It is also alarming to read in page 5 of the Reports of the Government Actuary:I have been instructed to assume for purposes of illustration … that in both the years 1973–74 and 1974–75 the number of unemployed, excluding school leavers and adult students, will average 600,000 …".We are likely to see the tragedy of the long-term unemployed remain with us for as long as the present Government are in office.
It is scandalous that such recipients of benefits should be treated in this way. How can one run a supplementary benefit system which traditionally has set a poverty level and said that below that level none of our citizens must fall and then say that we are now setting two poverty levels whereby a deserted wife, for example, who has been deserted for 18 months will be on a different scale 822 of income from that of a deserted wife who has been deserted for two years or more. I do not see the logic of the situation, and I do not believe that the Secretary of State or anyone else can defend it.
It is also regrettable that in the payment of short-term benefits the Government continue to treat married women as second-class citizens by insisting that they should receive lower benefits than men. It is time that this House erupted to stop this kind of Victorian discrimination against women, especially in view of the fact that over the past two decades increasing numbers of women have gone out to work whose incomes are an essential part in the budgets of married households to pay bills and to meet mortgage payments under this Government.
§ Sir K. Joseph
Is the hon. Gentleman saying that a married woman who chooses to pay full contributions so as to have full benefit should receive the same as a married woman who chooses not to pay full contributions realising that she will get only dependant's benefit later?
§ Mr. O'Malley
The Secretary of State is now demonstrating publicly that he could not be bothered to turn up the Committee stage of his Social Security Bill in the course of which we answered every one of these points—
§ Mr. O'Malley
It is simple to answer it. We have said that we are not in favour of the married woman's option. I believe that the same goes for most of the women's organisations. We do not believe that it is fair that lower-paid men and single women often on low earnings should be asked to carry the burden which married women should be asked to share to pay for the pensions of their mothers and fathers who are the retirement pensioners of this generation.
I turn finally to the broader question of family poverty. Whenever we discuss it the Secretary of State and his hon. Friends fall back on the family income supplement scheme. Now they are beginning to admit that the FIS scheme is not the answer to family poverty that they thought it was. The Secretary of State came as near as any Minister who has piloted a Bill through the House 823 could come to admitting that the whole thing was a terrible flop when he said in the Budget debate that the family income supplement scheme was not a triumph, but nor was it a failure. How could it be described as anything but a failure when there is only a 50 per cent. take-up? In the higher ranges we were told that it was a 75 per cent. take-up and that that was not too bad.
But the relevant fact to put forward relating to the massive problem of family poverty is that the Government are prepared to expend £10 million a year. How can one defend something as not being a failure when only 75 per cent. of people are claiming entitlement? There would be an outcry in this House if a Treasury Minister came to the Box and said, "The system is not a failure because only 25 out of every 100 people are not paying their taxes properly to the State." Yet that is the situation in the benefits structure where 25 out of every 100 people entitled, even at the top range, and 50 per cent. over the range as a whole, are not receiving the benefits which they should have.
The right hon. Gentleman has admitted that the numbers receiving and applying for free welfare milk are not high enough. At a time of massive tax reductions, against the background of successive Budgets brought generally topsy-turvey by the Chancellor of the Exchequer, on what evidence there is, there are probably 500,000 children living in poverty or near the poverty line. Therefore, the Government have not fulfilled their election promise to the public and to the Child Poverty Action Group that if and when they were returned to power they would raise the level of family allowances. It will not do for the right hon. Gentleman to say that it is the fault of the tax threshold which the Labour Government left in 1970. They have now been in office for nearly three years. It is nonsense to say, "The system is too difficult for us. We cannot deal with the tax threshold, and the clawback system would be difficult to operate."
How can any hon. Member on either side defend a tax benefit structure in which the poor receive less help from the State and the rich, particularly surtax payers, get more help? That is true. The Under-Secretary shakes his head. 824 He does so in ignorance. I suggest that he asks the Department for some briefs on the subject showing the effect of child tax allowances, family allowances, and the clawback system. He will then see the truth of what I am saying. It is regrettable that the Government have done nothing about the general question of family poverty by raising the level of family allowances, which would have been possible if they had the political will to do so.
The Bill fails to live up to the hopes and needs of pensioners, of the sick and of the unemployed. Nothing short of a radical reform and a fundamental redistribution of wealth will abolish poverty in Britain. Again, in this Bill, the Government have refused to face that challenge.
§ 4.54 p.m.
§ Sir Brandon Rhys Williams (Kensington, South)
There are many comments that one might make in favour of the Bill. The most favourable is that it has become an annual event. One of my right hon. Friend's great successes was to put uprating on an annual basis.
I have often made the point that the annual Budget falls into two halves: the aspect concerned with the Government raising money for their purposes and expenditure; and the increasingly important element concerned purely with the redistribution of income. We are dealing today with the annual redistributive budget. We have not yet reached the stage of excitement which Budget Day still attains. However, this should be a matter of concern not only for hon. Members on this side of the House but, as I look at the rather depressingly empty benches opposite, for hon. Members on the other side too.
Sir Herbert Tetley, the Government Actuary, in his analysis of the Bill has shown that £4,219 million is eventually due from contributions in 1974–75. That is a large total sum of money. Therefore, it is important that we should look at the wider implications and not consider only the particular changes which are being made. To that extent I welcome the remarks of the hon. Member for Rotherham (Mr. O'Malley). I believe that we are missing an opportunity of looking thoroughly at the whole sphere of the redistribution of income. We 825 ought to cover all the cash transfers which are taking place in the redistributive system operated by the Government, including housing subsidies, to which I want to come back, health, education, family allowances, which have already been touched upon, and local authority rates and services.
Although the Bill proposes large increases in benefits, right hon. and hon. Members must be disheartened that even when its effects have been felt we shall still have a depressingly large number of people dependent on supplementary benefit. I do not know whether the figure will still be above 4 million people at Christmas this year, but I fear that that will be so. The Department must realise that the nation wants something to be done to reduce the number of people who are dependent upon means-tested benefit, with all the humiliation involved in that. I am not a critic of the Supplementary Benefits Commission and its splendid staff in the offices all over the country. They carry out their job as humanely as possible in difficult circumstances, trying to tackle the casework of such an enormous number of applicants. Something must be done by an act of will at the centre to reduce this number as much and as quickly as possible because the public insist upon it. I hope that the Department will give this matter urgent study. We cannot coast on from year to year with this enormous number of citizens dependent upon means-tested benefit.
I have often made the point that if we are to have better benefits there must be bigger contributions. No one will run a campaign in favour of larger contributions. Yet no one can deny that if we are to do for the large number of our old people in need what the nation wants done for them larger contributions must be made. I believe that if my right hon. Friend took a lead and insisted on larger contributions being made he would find that he had the support not only of the 7 million pensioners who would benefit but of the whole nation, because something must be done. We are looking to the Government to take a lead.
Contributions are effectively becoming earnings-related. I find it distressing that the Labour Party is drifting away from its old cry for a contribution from each according to his capacity to each accord- 826 ing to his need. Now it wants to bring in an amendment to that. It does not normally amend its constitution, but it is amending this to say "to each according to his contribution" as well. It is not concerned about the poor any more, but about the wealthy who pay to make the party possible. It is not the poorest people; it is those who have used the power of organised labour to raise their standard of living and wages so that they are no longer in the area where they need benefits on account of poverty. Therefore, they want contributions and benefits to be related.
§ Mr. O'Malley
The hon. Gentleman is sometimes engaging and frequently annoying with his misquotations of Labour Party policy. He knows as well as I do that the Labour Government's proposals would have meant a redistribution factor towards the lower paid of about £500 million a year when the scheme was operational. I wish he would accept and admit that which has been brought to his attention on a number of occasions.
§ Sir B. Rhys Williams
If the hon. Gentleman is speaking of the Crossman Bill, it fell between two stools in this respect as in so many others. It was not as redistributive as the Government's Social Security Bill, but it had the appearance of being redistributive because it offered all the benefits on one plate instead of serving the meal on two different plates. But there is nothing more redistributive which can fairly be offered to the public than earnings-related contributions and flat-rate benefits, and I adhere to the principle that we should give to each according to his need. "To each according to his contribution" is a new-fangled concept, and I hope that for the sake of the poor the Labour Party will drop its campaign in favour of that.
My right hon. Friend referred to two or three ways in which, as a result of the higher contributions introduced in the Bill, the structure of benefits is to be made somewhat more selective. Obviously one follows him in the increase which he is proposing in the invalidity allowance, the attendance allowance, heating allowance, and so on—this is all good stuff and will be approved by both sides of the House—but more has to be done, and I think we should do it by introducing a further element of selectivity 827 rather than by struggling to make blanket increases across the board for large numbers of beneficiaries.
We want to see where the largest categories of need arise, and I have suggested that it might be advisable to go further in the direction than my right hon. Friend has gone in introducing a special higher rate of pension benefit for the over-80s. We could examine the possibility of an intermediate step for those over 75, or possibly over 70, and this would help to give back self-respect to those who cannot at present manage and have to go to the Supplementary Benefits Commission for help.
More specifically, we want to analyse the structure of benefits as between single people, those living together with their families, and those living as husband and wife. I should like to put specific questions about the precise reasons why the figures have been changed in the way that they have been. I listened to what my right hon. Friend said, but I do not think he gave the House an indication of his thinking on this matter.
An analysis of the old structure of the basic benefit for pensioners shows that a couple receives £10.90 and will receive £12.50. Within that structure, for a single person the benefit at present is £675 and will become £775. The benefit for a dependant is now £415 and will become £4.75. The element which can be calculated as being the common element which is deemed to exist where two people are living together is £2.60 and will become £3.
I wonder why there has been that increase in the flat element, which can be deemed to be the cost of joint household benefits, at the same time as we are introducing housing allowances across the board, and not only for people living in local authority housing. I am not saying that it is necessarily wrong, but I feel that we need to analyse these figures which mean so much to so many people and to know precisely what is the Department's thinking in proposing this specific amount.
If it had been decided to increase the benefit for a couple from £10.90 to £1250 it would have been possible to leave the common element at £2.60 and take into account the fact that, we hope, a very 828 much larger number of pensioner couples, not too well off, will be able to get the benefit of rent allowances for which they were not eligible last year.
That would have made it possible to increase the single person's allowance to £4.95 instead of £4.75. It is possible that there would have been an unacceptably higher element of cost in doing that, but perhaps the figures might have been adjusted within the total money available to take into account the fact that housing subsidies are now becoming available.
My right hon. Friend might say that although these allowances are becoming available the take-up is not on a large scale. I think that for people living in local authority housing it is reasonable to expect benefits under the Housing Finance Act to be taken up at about 100 per cent. I hope that where those entitled are eligible for supplementary benefit too, the rent allowances will be taken up at 100 per cent. But, speaking from the experience of my borough, which I admit has not had an opportunity of making a thorough analysis as the benefits have not been available for long enough, I have the feeling that people not in local authority accommodation and not eligible for supplementary benefit have not been swift to apply for their allowances.
I believe that we shall be faced with the same problem of take-up as there has been with the family income supplement, or perhaps an even worse situation. The national campaign was perhaps the reason for the relative success of the family income supplement. I am not certain whether the local authority campaigns to take up housing allowances will be equally successful, particularly among elderly people. I should like the Department therefore to make a serious study of the next stage, which is the amalgamation of rent allowances with the pension and, in particular, with this detectable element in the pension which is the common household element both for single persons and married couples.
I have pointed out, and I made the point in a memorandum to the Select Committee considering the tax credit scheme, that the same household benefit element appears in the structure of negative allowances in the income tax system. It would be a valuable 829 exercise to study the implications of the situation that will arise after the tax credit system is introduced, because it is bound to have effects on national insurance which have not been dealt with in the Green Paper. It needs to be studied now in view of the large implications and the need to phase in over a period of years any reforms which may be seen to be necessary.
The tax credit system will attack national insurance and will make it fall into two parts: First, the continuous benefits such as pensions which, once a recipient has qualified, will continue, probably for many years; and, secondly, contingency benefits under National Insurance which may be available for only a few weeks, such as unemployment benefit, industrial injury benefit and sickness benefit.
I hope that my right hon. Friend is studying the relationship between what he is doing in the Bill and what will happen when tax credits are introduced, the future relationship with housing subsidies and, next—a matter which arose particularly during the Committee stage of the Social Security Bill—namely, the status of women. The mood of the country demands that we should move towards some sort of unisex treatment under national insurance so that male and female alike are seen to be getting the same treatment and precisely the same benefits in return for their contributions.
There was an interesting debate in Committee on the nature of the married women's obligation to pay contributions, and at this stage my right hon. Friend is rightly resisting those who think it would be a good plan for the married women's contribution to be brought up to the level of that paid by the single worker; but when there is equal pay for equal work the situation will be different, and at that point I shall be ready to accept the argument in favour of the woman's contribution being the same as a man's whether she is married or single.
It is necessary to look at the problem of the one-income and two-income families, and to recognise that at present the two-income family is given substantial help. It pays lower contributions and taxes, and the one-income family will become a depressed area which will need subsidy and assistance if the married 830 woman who stays at home is not to be put at a particularly heavy disadvantage. I am ready to accept that, not now, but in a few years, it will become proper for married women's contributions to be put on the same basis as men's.
Similarly, we then need to look at the two kinds of retired women—those who opted to pay a higher contribution when they were earning as married women—in past years it was not much higher—and those who preferred to pay the minimum and to depend on their husband's benefit. There are anomalous cases which need attention. Perhaps in the coming months my right hon. Friend would be profitably engaged in looking at the relative status of women in retirement in relation to the actual record of contribution which give rise to the differences in their rates of benefit.
These problems range widely and I do not know whether there will be opportunities in Committee for any of them to be gone into more deeply this year. Naturally, I hope there will. I have made this speech because these points should now be occupying the Department's attention. I hope that my hon. Friend in his reply will be able to assure us that all these things are indeed receiving active study.
§ 5.11 p.m.
§ Mr. Alec Jones (Rhondda, West)
Several of the hon. Members present have served together on Committees dealing with national superannuation, social security or national insurance. When we were joined by the Secretary of State, all that I learned from him today was that he is a wonderful reader and a super-optimist. I only wish that all of us, and particularly the old-age pensioners, the sick, the unemployed and the disabled, could have some confidence in his optimism.
We are getting used to this annual up-rating occasion. We all welcome the relief of an annual system to those on social security benefits, but that is like saying that half a loaf is better than no bread. Even hon. Member opposite will agree that the reliefs in the Bill are still inadequate. There are still "two nations." Although one does not see evidence of starvation, there are still millions in this country living in poverty, hardship and deep misery, and the Bill 831 does not touch the fringe of those problems.
An annual uprating allows us to focus attention on the specific problems of those who depend on social security. We must recall on these occasions that we are dealing with millions of people—not just the old, but the sick, the disabled, the unemployed, the injured and the widows. We are used to having a three-hour debate on this matter, but it should not always be so limited. It may be said that few hon. Members are present, but attendance is related to the time available.
As we said on last year's Bill and in Committee, the present level of old-age pensions is far too low, certainly as a percentage of our average national earnings. The figures given by my hon. Friend the Member for Rotherham (Mr. O'Malley) about the food price index show that this uprating is inadequate. People are prepared to pay more now if they can be assured that pensioners will get the benefits.
Some hon. Members will have seen a survey carried out by a lecturer at the London School of Economics, Mr. David Piachaud, which confirmed our view that the public accepts that pensions are too low. It showed that 94 per cent. believed that pensions were either inadequate or very inadequate. The House would be unwise to ignore that view.
Those who took part in the survey considered that pensions should be, on average, about 60 per cent. higher, which would mean an uprating from £6.75 to £11.10 for a single person and from £10.19 to £17.50 for a married couple. The Government will say that we cannot afford that, and the Secretary of State talked about priorities, but there is plenty of evidence that people are becoming more concerned than the Government or the House with the plight of the elderly.
The survey also showed that 85 per cent. of working people would accept being worse off themselves if they could be assured that the money would go to the pensioners. Six out of seven of those interviewed would have been prepared to give up 85p per week on that basis. I cannot judge the survey's validity, but it supports the view that I have gathered from personal experience and it provides a serious challenge to the Government 832 and the House to match their actions with the views of the public.
The hon. Member for Kensington, South (Sir B. Rhys Williams) referred to the depressingly large number of people still dependent on supplementary benefits. We have to accept that these benefits will be with us for a long time, even after the passing of the new Social Security Bill.
There are anomalies, which should be investigated, in the so-called disregards. The disregard was introduced in 1966, and it is time for it to be re-examined. If there is need for a disregard—in my opinion, there is—the disregard itself ought to be uprated. The £1 and £2 disregards introduced in 1966 are worth far less today than they were at that time. The retail price index stood at 116.5 in 1966, and in February 1973 it had risen to 172.4, a 48 per cent. increase. Therefore, to match the original level of the disregard, the £1 ought now to go up to about £1.50.
Moreover, under the disregard arrangements, different incomes are treated differently. I find it strange and difficult to justify when people question me about it that there should be two levels of disregard. For example, if part-time earnings of a man are in question, why is the disregard £2 unless that man is unemployed and registered for work at the employment exchange? Why should £2 be disregarded in respect of disablement and war widow's pension, but only £1 of other income? If the disregard is necessary, it is logical and right that it should be uprated and that the disregard should be similar for income from any source.
I am concerned also that the so-called disregard is taken into account on certain occasions. For example, those who apply for a special diet allowance are, in the main, not only poor but suffering from a health problem which gives rise to the need for a special diet. I see no sense in saying that we disregard £1 of income in assessing supplementary benefit but, if the claimant is so ill as to need special diet, that which we have previously disregarded is taken into account in assessing entitlement to special diet allowance.
Not only should the disregard arrangements as a whole be overhauled but there should be an immediate uprating 833 alongside the uprating now proposed for many of the other benefits.
As to the attendance allowance, we all welcome the increases from £3.60 to £4.15 at the lower rate and from £540 to £6.20 at the higher rate. But there is still considerable concern throughout the country at the working of the Attendance Allowance Board. I mean no criticism of the members of the board as individuals. My concern is that we, as a House of Commons, may be putting too heavy a burden on them. Is there not a better way of going about it?
We all know from our constituencies that there are many disappointed claimants, and that many general practitioners believe that certain of their patients ought to have the allowance although their applications have been turned down. The Minister has had many cases referred to him by Members on both sides, and we have had several debates on the subject. It would be a mistake to believe that everything in the attendance allowance garden—an awful mixed metaphor—is working nicely and smoothly.
I was pleased to hear the Secretary of State announce the new timing for the phasing-in of the lower-rate attendance allowance. I have argued about this for a long time, and I am glad that something is being done. In my view, it was cruel and inhuman, and it still is, to say to the oldest people of all that they must be left to the end before being able to claim the attendance allowance at the lower rate. I had occasion this weekend to try to help a man of 85, and I had to tell him that he could not put in a claim for the allowance at the lower rate because of his age. He is condemned to wait till the end, and the chances are that he will not be here to benefit from it when the time comes.
I welcome the improvement which will come as a result of bringing the phasing-in forward from December to October 1973, so that children will receive their payments in October rather than December, but I again emphasise how necessary it is to give proper attention to the problems of the most elderly.
I have confined myself to the problems of the old-age pensioners, of those on supplementary benefit, and of those who claim attendance allowance payments to help the disabled, because those three 834 groups are, I believe, the most deserving of all. They both need and deserve far more than the Bill provides.
§ 5.26 p.m.
§ Dame Irene Ward (Tynemouth)
The House ought to pay a great tribute to the Secretary of State and his Ministers for the work which they have done and the amount of work which they have been able to put behind the Bill. Having been a Member of Parliament for a long time, I tend to judge Ministers by the way they care for their Departments and the work which they do to enable their Departments to do their duty.
We have a remarkable team in the Social Security Department now. It has been said, and I believe it to be largely true, that the country is now ready to do everything it can to help the more unfortunate. I come from an area which is by no means wealthy, but I know that people realise that we have a first-class team in the Department, and I want that put on record.
Life itself does not always deal with people fairly. Some people are born with more brains than others. Good health is not an endowment which is justly bestowed. Unfortunately, some people do not have good health.
I certainly criticise my Government from time to time, sometimes when it is not even necessary, but I do so to help my hon. Friends to tell Treasury Ministers or other Ministers that they are being pressed by that tiresome woman the hon. Lady the Member for Tynemouth.
History is worth studying. I was very proud that in the 1930s, which was a difficult period for Parliament, we had considerate Prime Ministers and Secretaries of State, though of course in those days, before so many Departments were reorganised, the titles were different. The then Chancellor of the Exchequer decided on provision for maternity benefits and maternity centres. We should pay tribute to the medical profession's efforts to ensure that research is conducted where necessary. This has resulted in a great improvement in children's health compared with the days when I first came to the House. I am proud, of my party's record in general, and in particular, of my right hon. Friend the Secretary of State's record in introducing the Bill.
835 I am delighted with the decision about the heating allowance. I fully understand the problem about food prices, because I see a great deal of my constituents, but the lack of heating is a very sad matter for some people. My right hon. Friend the Secretary of State sometimes forgets to boost himself. I had to ask him to confirm my impression that the heating allowance was to be paid over the whole year. This will make a great difference. I congratulate the Department on this decision, because it will relieve great anxiety. In the North there is far more poverty than there is in the South.
As I am not very good with statistics I shall not bother with them. I have lived too long among statistics. They are sometimes right, sometimes wrong. Sometimes they bore me. I know that the family income supplement has caused the Government anxiety. Those who come to see me about their problems are rather fragile people and are very nervous of going to a Government Department. I fully accept that the Supplementary Benefits Commission does everything it can to help the cases I raise with it.
However, the people about whom I am concerned hear all about family incomes supplement in a rather vague way. I am sure that the Government believe genuinely that advertisements are necessary—they have spent a great deal of money on advertisements—but those who are entitled to FIS do not always read newspapers or advertisements, or if they read them they cannot always understand them.
This is why it is so important to have good social service workers in every area. We have a tremendous number of dedicated people. They could go to interview these people and persuade them to overcome their fears and apply for FIS. After all, fear is a very important emotion: it takes a long time for a new Member to overcome his fear of being shot down for doing something stupid.
It always takes a long time to persuade the general populace to accept and understand any new scheme, however worth while and whether it is in relation to local government, getting into Europe, or taxation. I am sure that it is the fragile nature of those who really should apply for FIS that accounts for the very low take-up of this benefit.
836 I listened with great interest to the speech of my hon. Friend the Member for Kensington, South (Sir B. Rhys Williams), who knows so much about all these problems. He suggested many worthwhile courses of action. I sometimes wonder how my hon. Friend would enjoy coping with these problems if he had to tackle them in my part of the world. Although the British people are generous and want to do the very best for those who are not as fortunate as they are, very different analyses are called for in view of the contrast between the more well off South and the hard part of the world where I come from.
In part of my constituency there is above the average of retired people and, consequently, a greater proportion of people living a pretty restricted life and not so many people earning from which to contribute as there are in the South. These problems are not as easy as some hon. Members on both sides seem to think.
Many hon. Members opposite come from industrial areas. They have their thoughts. I have mine. This is a matter of humanity. Both sides want to do the very best for those in difficult circumstances. However, those who talk without really understanding the whole problem stir up feelings in my part of the world. My people ask "Why do not the militants stir up the people to strike?" I always return to my philosophy that if throughout the country everyone could do a fair day's work for a fair day's pay there would be much greater opportunity for hon. Members on both sides to argue with the Treasury, because we should have much more to spend.
I do not wish to be controversial, but in view of what was said by the hon. Member for Rotherham (Mr. O'Malley) —and he said a lot of wise things with which many of us will agree—I wonder why, if the Opposition are so dissatisfied with this Bill, they have not come along to say so. If I am nothing else, I am a Member with a certain amount of experience, and I know that if there is tremendous feeling on any issue the House fills. I realise that there are not many Members on the Government benches. At the same time, we have a Government of whom we are proud. But the Opposition say that the Government have not done enough. In that case, why 837 are not the Opposition benches filled with Members? I find this situation extraordinary.
The hon. Member for Rotherham kept saying what ought to be done. Would he not have felt happier if he had had a cheering multitude behind him? We are all human. I recognise that there is a great deal to be done. I dare say that if I mentioned all the things that I thought ought to be done I would find myself in disagreement with many hon. Members opposite, but I know that the Department of Social Security acts with sympathy.
There are some very nice homes for the elderly. The other day I was invited to Whitley Bay, which is in my constituency, where we have above the average number of retired people. The young men who belong to the Round Table— when one reaches the age of 40 one has to leave and join the Rotary Club—do a great deal of good work for the elderly. They have provided a minibus for one of the old people's homes in Whitley Bay. In that part of the country there are many generous people who have not got much money but they express their generosity in the good work that they do, and they gave this wonderful minibus to this old people's home.
The trouble was that, being in the North-East, it was so cold that it was difficult for me to find a suitable place in the grounds for the presentation of the bus where the old people could see the ceremony from the windows. However, although we were nearly blown away, we managed to do it.
I am certain that the present Social Security Department team will continue to provide many of the necessities, as it has done under the present Government. I am sure that we could not have a better informed or more generous Chancellor of the Exchequer. But the Chancellor has got to decide his priorities. The Secretary of State for Social Services has got to get his priorities right, and then he has got to find the money. I take this opportunity of congratulating them. May they continue for many years, sure in the knowledge that the people know that they have a first-class team who will do all they can to meet the essential requirements of the elderly, sick and disabled and ensure that they have the 838 maximum support and comfort that this country can afford to give.
§ 5.45 p.m.
§ Mr. Sydney Bidwell (Southall)
I am sure that the hon. Lady, the Member for Tynemouth (Dame Irene Ward) will not expect me to share her tremendous enthusiasm for her Front Bench.
§ Mr. Bidwell
I am sure that whoever comprises the Government Front Bench will for ever be grateful for her eternal militancy. She seems to deride militancy in other quarters, but I would respectfully suggest that she has, through her long and distinguished presence in this House, subscribed a considerable amount of militancy for various causes which she thought were just. So we do not denigrate militancy provided that it is for proper social purposes and for respectable aims, and provided that it is conducted by peaceful and persuasive means and within the law.
Tomorrow when the demonstrations take place in support of the TUC and the London Labour Party against the Government's policies in general, because it is felt by a wide section of our population that those policies are unfair, at many of the meetings, and certainly at the meeting which I shall address in my constituency, the plight of the aged and infirm will be mentioned over and over again. That will certainly be among the objectives of trade union leaders of the calibre of Mr. Jack Jones, the General Secretary of my union, the Transport and General Workers Union, and Mr. Hugh Scanlon, the President of the Amalgamated Engineering Union— two of the biggest unions—and the officials of other unions will also be referring to our inability as a nation to fulfil our obligations to the infirm and aged. They will not be pulling any punches.
If there is an element of realism in this country, it is in the trade union movement. Our leaders will not be paying compliments to previous Labour Governments and being content to castigate the present Government. They will be suitably critical, as I am, and as I always have been since I have been in this House under a Labour Government, and under the present Government, of our inability to face the problem of our aged people, and of our failure to move the requisite resources towards making the 839 necessary and overdue improvements and reforms.
§ Mrs. Elaine Kellett-Bowman (Lancaster)
Is the hon. Gentleman suggesting that bringing industry to a halt will assist our old people?
§ Mr. Bidwell
Yes. I would like the hon. Lady to understand, whether or not she agrees, that there are millions of people who support such a demonstration. They have produced results in the past. This demonstration is brought about partly by the detestation on the part of the trade unions of the unnecessary Industrial Relations Act, which has now largely been placed on the shelf. There are many instances in our history of peaceful, meaningful demonstrations having some effect. It may be that such demonstrations would not find favour in the stony ground of the hon. Lady's mind.
This is a one-day demonstration on Labour's traditional international May Day. In many other countries there will be demonstrations for similar reasons. If we had a decent Government we could declare 1st May a national holiday. There are plenty of people in the Labour and trade union movements who believe that we should have an all-out national general strike.
This is an annual uprating Bill and, because of that, does not merit the same attendance as a motion of censure. It is not the height of controversy. There is no cliff-hanging decision to be made about whether old-age pensioners should get more than £1 in the case of a single pensioner or £1.60 in the case of pensioner with a dependent wife.
I return to the contents of my Ten-Minute Rule Bill, which has a direct bearing on much of the argument about the urgency of relating the national retirement pension to national average earnings. Support for the idea of a better deal for the aged as of insurance right as distinct from supplementary benefit and other means-tested benefits is widespread. Many people, including those who support the Conservative Party, are in favour of this idea. I know from conversations I have had with Conservative Members that they regard this as being necessary.
840 I am sick and tired of the Government boasting about how much better they are doing than the previous Labour Government.
§ Mr. Bidwell
Let us relate this to the pension. The Government can tell that to the Marines or, better still, to the old-age pensioners. Let them tell it to a single pensioner receiving £6.75 a week who is to get another £1 on 1st October and who is frightened to death by the crescendo of continuously rising food prices, particularly those for protein foods. Let them tell it to the old-age pensioners association and to Age Concern, an organisation which includes many people not necessarily sympathetic to the Labour Party.
I was not too familiar with Age Concern until I introduced my Ten-Minute Rule Bill. Members of its task force—an energetic group of young people who assist the aged—came here quite spontaneously. I was thrilled to know that they had got the message about my Bill. I have a document produced by this organisation which is not ultra-critical of the Government. The Government ought to be pleased to receive any bouquets from this organisation. It speaks in glowing terms of the Social Security Bill.
It is often said that we are lagging behind other EEC countries. Old-age pensioners in West European countries get incomes as of right without means-testing. That is the important point. The problem here is not to do with the pros and cons of the arrangements we make for future generations of workers. It is to do with the urgent arrangements that we ought to be making for the 8½ million pensioners of today. The hon. Member for Kensington, South (Sir B. Rhys Williams) put his finger on the weakness of our attitude towards an ageing population. This attitude reveals a British weakness—I might almost say "a British sickness". We are lagging behind in making these provisions. The hon. Member for Kensington, South says that there is a worrying tendency for the amount of supplemental benefit to increase. To me it reveals the weakness in the present system and shows that the true value of the retirement pension has been declining. It shows that a pensioner has to go for supplemental benefit 841 in order to maintain anything like a minimum living standard. Of course, many pensioners do not claim the benefit and the Department is forced to engage in costly campaigns to persuade them to take up their benefits. I would be interested to know the comparable take-up of family income supplement, other benefits that can be obtained only through means-testing and the supplemental benefits for old-age pensioners.
It seems that the older people get the more dignified they become and the more likely they are to tighten their belts, buy cheaper food and put the grocery item back on the shelf because they cannot afford to pay at the check-out. I believe that is the situation facing a large number of the old-age pensioners, because 2 million out of the 8 million or so go for the supplemental benefit.
My Bill is a Ten-Minute Rule Bill, but it has received more attention in this Parliament than a comparable Bill did in the previous Parliament. It comes up for Second Reading on Friday, and some people have doubts about whether it will be successful. If it is not given a Second Reading it will not be for lack of merit. I shall be presenting the Bill or Bills embodying a similar principle time and time again as long as I am a Member of the House because a large proportion of a whole generation of people had no chance to contribute to decent pension schemes in their working lives and attention to their problem is long overdue.
§ 6.3 p.m.
§ Mr. Robert Boscawen (Wells)
How much more valuable it would be if the Labour Party were to declare one day of work instead of one day of strike and to contribute the proceeds of the day of work to the long-term disabled.
The hon. Member for Rotherham (Mr. O'Malley) began his speech by saying that there was no philosophy behind my right hon. Friend the Secretary of State's Bill or speech. As usual the hon. Member's blunt gramophone needle is well and truly stuck in the groove. I detected a true philosophy behind the Bill in its emphasis on providing greater benefits in the long term. That is an important factor. It is the long-term disabled and sick and those who are retired who suffer the greatest hardship and poverty.
842 Therefore, I welcome much of what is in the Bill. I have some misgivings about its omissions, and I deplore one omission in particular. The philosophy of giving help to the broadest number of people means that some specific and selective needs have had to be left out. In particular, that applies to the very elderly. It was wrong to have left the very elderly age allowance at 25p. That should have been increased and paid for out of contributions. Perhaps less should have been given to those below the age of qualification for the very elderly age allowance. Why do we have to stick at 25p? This affects the people whose need is greatest now.
There is one glaring omission in the Bill concerning those who do not get any death grant—again the very elderly over the age of 80. My hon. Friend the Under-Secretary said in Committee that he was not unsympathetic to this small group of people being included, even though they had not paid a contribution for the grant. I hope that in Committee we shall be able to press him again on the matter. It is serious and urgent for a small number of people, and it would not be a costly measure.
We must look much more carefully both now and in the future at benefits paid to those who are suffering from long-term incapacity, whether it is a disability from birth or a disability from an accident at work or in the home. I realise that the Government are moving slowly and surely towards some form of disability income by means of the attendance allowance and the disability allowance, but there is a long way to go and there are many anomalies.
§ Mr. O'Malley
On the point about long-term benefits, does the hon. Member think that older men particularly who have become unemployed and whose prospects of getting further employment are virtually nil in many areas should be regarded as long-term beneficiaries and should get a higher rate and not a lower rate as set out in the Bill?
§ Mr. Boscawen
The hon. Member has hit on a valid point but I still think that the greatest priority should be given to those who are incapacitated from work through disability at a younger age, particularly those who are incapacitated 843 at work, in their homes—such as housewives—and, of course, those who are unable to do any work because of disability from birth. The problem is not straightforward. I do not wish to see the emphasis put on the earnings-related benefit for those disabled at work, because that is not the priority. The priority for the House should be to see that the severely disabled do not have to seek recourse to social security supplementary benefits because of their disability. Our aim should be to organise our affairs so that supplementary benefits do not need to be paid in such cases, so that their incomes are sufficient to meet their needs. If we were to organise our affairs properly, such a move would not cost the contributor or the Exchequer any more. These people should be able to receive as of right an income because of their disability which is sufficient to take them outside the supplementary benefit level.
Perhaps my hon. Friend will say how many people will be taken over supplementary benefit level by the increase in the long-term benefits in the Bill. It would be useful to know how far we are along the road which I wish to travel. Undoubtedly, we have made substantial increases in the current uprating Bill. The fact that it is the second uprating Bill is something we are extremely pleased about. All of us on this side congratulate my right hon. Friend on his achievement, first, in bringing about an annual uprating of pensions, and, secondly, in seeing that the second of those annual upratings has been very significant.
But let us examine some of the anomalies that still exist and come forward very soon with a sensible and practical plan for helping those who can no longer earn because of some form of long-term disability.
§ 6.10 p.m.
§ Mrs. Elaine Kellett-Bowman (Lancaster)
Because I have only about three minutes available to me, I shall speak briefly about the death grant, which was mentioned by my hon. Friend the Member for Wells (Mr. Boscawen), the increase in the disregards, the improvement in the position of women with a defective contribution record and the needs of the disabled who are in employment but 844 whose earning capacity is reduced because of their disability. They merit the Government's attention just as do those whose inability is such that they cannot be employed.
I have received numerous letters about the death grant from elderly people who are deeply distressed to feel that they will be a burden on their relatives when they die. That is a spectre that hangs over those who were excluded from the scheme in 1948. Like many of my colleagues, I believe that it is high time a Government with the present Government's record of humanity and care put the matter right, at relatively low cost. The raising of the grant for those who already receive it is a lesser necessity, but I should like to see a step forward on that in the not too distant future.
I also receive a large number of letters on the subject of disregards, many of which I send to my hon. Friend the Under-Secretary, who always treats them with the greatest care. The time has come to increase the level of disregard so that people who have earned a disregard are not penalised as compared with those who do not have one.
I turn next to the improvement in the position of women with a defective contribution record, a question that overlaps another Bill before the House. A number of women who have opted out of paying contributions find at a rather late stage in life, perhaps when their husband is suddenly taken very ill, that they wish to contract into the scheme. Possibly many of them are capable of working from 60 to 65, doing socially useful work such as nursing, as many do in my constituency. They would like to be able to work towards a full pension for themselves rather than merely the abated pension and the abated increments they can now earn.
§ 6.13 p.m.
§ Mr. Michael Meacher (Oldham, West)
The Bill will be remembered for one reason only, apart from the fact that its omissions are a great deal more significant than its contents. That reason is that for the first time the Government have given a precise indication of what they mean by fairness.
The short-term sickness and unemployment benefit is being increased by 845 60p a week for a single person, but for a pensioner the increase is to be £1 a week. That means that by October the short-term benefit will be worth about 19.2 per cent. of national average earnings, while the retirement pension will be worth about 20.2 per cent.
Fairness, therefore—or, as the Secretary of State put it in his post-Budget statement,The Government feel that it is right to do more for the pensioner"—apparently amounts to raising the pension by precisely one percentage point in relation to national average earnings. If that is fairness, I can only say that it is almost invisible.
The Labour Party is committed to the £10 and £16 formula for pensions, to be financed partly by changing the contribution rates, the contribution ceilings and the level of the Exchequer supplement, and partly by redressing the grossly regressive slant of the tax handouts under the present administration. The formula aims broadly at a single person pension of one-third of national average earnings and a married couple's pension of half national average earnings. On that basis the Labour Party's view of fairness for the pensioner is to raise the pension by no less than 14 percentage points in relation to national average earnings compared with the Government's one percentage point. So much for this year's pension bonanza.
There are three main issues in the Bill. One is how fair the Bill is in the immediate situation to pensioners and others with such low incomes that State supplementation is required. The second is how far it proceeds to what I take it is the central aim of national insurance and supplementary benefit Bills—the elimination of poverty. The third, at a time of fairly rapid social change, is how far the Bill shows signs of adjusting the social security system in line with changes in social values in Britain.
On the immediate question of fairness, the Secretary of State is at once on sticky ground. He claimed last month, with a fair degree of premature flourish, that:This is an uprating which redeems our promise of price protection for all the 11½ million people who will benefit from it."— [OFFICIAL REPORT, 7th March 1973; Vol. 852, c. 413,416.]846 First, price protection is an exceedingly modest objective, but there is plenty in the Bill to be modest about. Even so, there must be considerable doubt at this stage whether the Secretary of State will achieve even his excessively modest goal.
No doubt the right hon. Gentleman had not expected that price inflation would increase after the imposition of what has so inaccurately been termed a freeze, but that is precisely what has been happening. In November 1972 prices were 76 per cent. up on what they were a year before. In January 1973 the figure was 7.7 per cent. and in February it was 7.9 per cent. The March figure is likely to be 8 per cent., and we can expect prices to rise further under phase 2. At this rate it is quite possible, and indeed likely— contrary to the Secretary of State's boast earlier today—that the sick and unemployed will not have their income price-protected, as their rise next October will amount to only 8.9 per cent. This suggests a new dimension to the Government's concept of fairness.
Hitherto sickness and unemployment benefit has broadly maintained its relationship with earnings over the past 25 years, which has meant that it has increased substantially faster than prices. Now, however, it has been downgraded to merely keeping up with prices while the rise in the retirement pension, which does no more than merely preserve the old relationship with earnings, is being eulogised as fair. Penalising the sick and unemployed in order to demonstrate otherwise imperceptible fairness to the pensioner must be the cheapest con trick in the social security business for the present Government, whose self-praise for their benefit-cutting ingenuities is so notorious.
I warn the Under-Secretary and his right hon. Friend that they had better not make any claims about fairness for the Bill outside the House, or they might find themselves prosecuted under the Trade Descriptions Act for false and deceitful advertising.
Even on the Government's own premises, how fair is it for the Secretary of State to be dispensing extra pennies for the pensioners while the Chancellor of the Exchequer is shovelling out extra pounds for surtax payers with unearned income? In this year no less than £300 million is 847 being squandered on the rich in tax reductions on unearned incomes. No less than 90 per cent. of this uncovenanted gain will go to the richest 10 per cent. of the population. Those are the Government's figures, given in HANSARD on 1st May last year.
If that money were devoted to the pensioners and those in need instead of to the rich, the level of increases under the Bill would be more than half as much again. What is the fairness in that? Contrary to the Secretary of State's boast about the protection which he says he has given to the lower-paid workers against contribution increases, the increases could have been cut by more than half if the £300 million had been used morally. Another alternative is that the cut in rates for the lower-paid workers could have been considerably enlarged. Who is being fair and to whom?
There is another striking example in the Bill where the Government, after their sudden conversion to fairness because of economic expediency, are seeking to make a virtue out of necessity. It is surprising that no Government statement has mentioned Mrs. Julie Simper. It may have been thought that the Secretary of State would have given credit where credit was due. It is Mrs. Simper, and the Citizens Rights Office of the CPAG, which championed her cause, who are largely responsible for Section 6 and Schedule 4. By winning their case in the High Court in February they forced the Government to end the scandal whereby the award of heating grants to supplementary benefit recipients is multiplied on the ground that the money is already being received in the long-term addition.
I can give the Secretary of State some credit. He knows how to keep his cool. When a High Court decision might benefit up to 2 million claimants, it takes a bit of nerve promptly to change the law to restrict the break-through to 400,000 claimants only and then to present a Bill as a major gain for the elderly. That is precisely what the right hon. Gentleman is doing.
First, the concession which has been extracted from the right hon. Gentleman has been made with thoroughly bad grace. The Supplementary Benefits Commission in the meantime is unrepentantly 848 adhering to its policy of automatically offsetting these grants against the long-term addition. It is arguing that it is doing so on the basis of the discretion which previously it denied that it possessed.
Secondly, the concession has been illogically limited to heating grants alone. How in equity can heating grants not be offset agains the long-term addition when clothing grants, laundry grants and special dietary grants and allowances are offset? The Secretary of State gave no answer to that question.
Finally, on the issue of fairness, there is one glaring omission—that is the low-paid worker. He has been well and truly hammered this year by the Government's double pincer movement of letting both family allowances and the tax threshold sink lower and lower. Family allowances are now worth no more than two-thirds of their value in 1968. The tax threshold before next year's spring Budget will have fallen to an all-time low in relation to national average earnings. The effect of that double neglect this year is to load the poor with most of the burden of what can only be described as a £600 million fiscal drag tax. Is that what the Secretary of State and the Undersecretary of State mean by fairness?
The real purpose of Bills of this kind is the systematic reduction of the extent of poverty. Admittedly the Government have confused the issue by varying the level of means-tested State supplementation. In fact, there are now four poverty lines in Britain. They are, in descending order, for pensioners, for the unemployed and sick, for the working poor on family income supplement and for the 50 per cent. of the working poor who are entitled to family income supplement but do not claim it.
There is a fifth poverty line which the Government invented when Professor Kaldor drew the attention of the Select Committee on Tax Credits to the fact that these proposals gave only £150 million out of £1,300 million to those with incomes below £1,000 per year. In reply —the matter was sufficiently embarrassing for the Government to produce a reply —the memorandum of the Department of Health and Social Security redefined the poor as follows:families whose income will be below the break-even point.849 On that basis no less than 42 per cent. of the total net cost of the package would be seen to go to the poor. In other words, the Government change their definition of poverty to suit their convenience. If they are giving State aid to the unemployed or the sick, they restrict the entitled poor below a very low income line. If they are trying to sell as an anti-poverty measure a scheme that gives greater and concealed help to the better-off, the number of the poor is expanded with unprecedented generosity.
No doubt this is the first and the last time that the Inland Revenue will suggest that there are no less than 20 million poor in Great Britain. But even if the more conventional definition is used—that is, a more restricted definition—the number of poor in Great Britain today is far bigger than is imagined. Apart from the 5 million persons in households in receipt of supplementary benefit, there are probably 1 million to 1½ million persons living below the supplementary benefit line. Of course, there are supposed to be none at all.
In a statement on the recent family income supplement uprating the Undersecretary of State implied that there were more than half a million persons living in families where the man was in full-time work but bringing home a week's wage below his supplementary benefit entitlement.
The official figures also reveal that some 150,000 unemployed persons, including the families of those who are married, are receiving neither unemployment benefit nor supplementary benefit. The most likely estimate of the number of pensioners entitled to supplementary benefit but not claiming it is three quarters of a million.
An answer I received three months ago indicated that there were about 150,000 persons in single-parent families who were entitled to but were not receiving supplementary benefit. Together with sick and disabled persons in such a situation, the total must be near 2 million persons below the poverty line in Great Britain. Even that excludes those who are deliberately pushed below the poverty line by official procedures. That involves the wage-stopped—that is about 50,000 persons, including their families—the rent-stopped, which is another 75,000, the unemployed who are deprived of benefit 850 under the four-week rule—that is 10,000 to 50,000 at any one time—and women and children who are deprived under the cohabitation rule; that is another 10,000.
Even more striking, a recent survey by the Home Office's Community Development Project found that 45 per cent. of a sample of those in receipt of supplementary benefit were not getting their full entitlement. That was largely because of administrative errors but also because of the non-award of special needs grants. Altogether that suggests that the number of persons in Britain entitled to supplementary benefit but not getting it at all or not getting their full entitlement is well over 3 million.
It is a staggering indictment of the Bill that not one of the 3 million persons in that category will be taken out of poverty as a result of the Bill. Worse still, the number of persons in poverty has increased under the present Government. The latest Supplementary Benefits Commission returns reveal that there are more than half a million more people in poverty—that is based on 312,000 extra regular supplementary benefit claims— than at the time of the last election. Moreover, under the Tories the poor have become poorer. A married man with two children on supplementary benefit received in 1968 about 45 per cent. of national average earnings. In 1972 he received only 41 per cent. That information was given in HANSARD on 13th February 1973.
A similar picture about the working poor emerges from the Treasury's publication "Economic Trends", November 1972. Taking low-paid workers, who form one-fifth of the population in terms of income, a married man with four children in that group had an income of 79 per cent. of the national average earnings in 1970. By 1971, the latest date for which figures are available, his income was down to 72 per cent.
Worst of all, it is clear that the Government have no intention of remedying the situation. Apart from uprating the family income supplement, which goes to a minute number of families and to only half of those entitled, the Government are doing nothing about the increasing poverty in Britain. Ministers have said repeatedly that all redress is now postponed in the light of the tax 851 credit system. Yet even if that system is implemented, its implementation is four or five years away. More importantly, it is not an anti-poverty measure.
If the tax credit structure at nil cost is compared with the present situation, which is the fairest form of comparison, a Treasury answer which was given to me shows that the low-wage earner on £15 a week with two children would lose 30p a week while the £5,000-a-year man with exactly the same family responsibilities would gain £1.14p a week. The present posture of the Government towards the poor is consistent with the attitude in the Bill— "Nothing doing until the tax credits in 1977–78"—even though the tax credit proposals are patently an emanation from the Treasury and are not geared to reducing poverty.
But the most important thing about the Bill is its omissions. It is a vista of lost opportunities. One item so conspicuous by its absence, as the hon. Member for Wells (Mr. Boscawen) rightly identified, is any advance towards a national disability income. Not a word is breathed about this particularly crucial issue, and we are still having to wait even until 1975 for the full introduction of the lower tier attendance allowance. Yet even that will cover only about one-quarter of the severely and appreciably handicapped.
This is unforgivably slow progress for perhaps the single largest most underprivileged group today when, at the same time, the Government are giving priority to extending tax options for top executives up to four times their gross salary with unlimited capital gains written in. It is symptomatic of the Government's "Get rich quick and the Secretary of State take the hindmost if you're lucky" type of society.
But there is another vital omission. This is the failure of the Bill to begin to adjust our social security system to the profound changes which have taken place in our society in the rôle and place of women. It is now becoming not merely common but usual for women to work. The wife's wage has increasingly become an essential element in total family income without which many families would sink back into poverty. It is precisely for this reason that the family expenditure survey 852 shows that families with children under the age of five are twice as likely to live at or near the poverty line as the family with older children.
The clear indication of this changing situation is that women are now seen to have and themselves expect to have the right either to work or, in forgoing work, to be rewarded for the essential economic and social function of rearing children or caring for elderly or disabled relatives at home. Yet wives who do the latter are penalised by dragging down the family income when it is needed most, while at the same time the wives of much better-off husbands who stay at home are allowed the married tax allowance without any responsibilities.
In fact, more than four-fifths of persons with a standard of living more than twice that of subsistence level have no dependent children and most of these are couples with no dependent children with the wife staying at home. Furthermore, at least 90 per cent. of those who live at a level five times the poverty standard have no dependent children, yet the wife still draws a valuable tax allowance.
For a Government with pretentions to the last quarter of the twentieth century and who purport to believe in concentrating help where need is greatest, this situation is ludicrous; and when women stay at home to look after aged or disabled relatives and thereby save the State residential or hospital accommodation costs, now ranging between £14 and £70 per week, it is inexcusable. It is adding insult to injury when, under the tax credit scheme, the Government propose to abolish even the £100 dependent relative tax allowance that now exists.
What equity now clearly and loudly demands is the award of a home responsibility payment to women who are not employed but who look after young children or aged or disabled relatives at home. If this were paid at an untaxed rate of £4 a week it would cost the Exchequer £850 million. But it could very largely be paid for by withdrawing the married tax allowance from wives who neither work nor have these home responsibilities, which would save the Exchequer £750 million a year.
But of such vision or more imaginative social policy this Bill is not made. It is a pedestrian product of a plodding and 853 unenterprising approach, and although we will not vote against the Bill we shall certainly seek to infuse it with some life in Committee. Otherwise it is difficult to believe that the Bill will achieve more of a place in the historical records than as a monument to the fact that, after only three years, the Government have largely run out of ideas.
§ 6.35 p.m.
§ The Under-Secretary of Stale for Health and Social Security (Mr. Paul Dean)
A Bill like this rarely gets much publicity and unfortunately this one will get even less than usual because of the newspaper shutdown tomorrow. But the Government are committed to improving pensions and other benefits each year to ensure that their value is at least maintained. Therefore, this is an annual Bill and one of very great significance to a very large number of people. About 11½ million people will benefit from the increases in pensions and other benefits, which will be paid for largely by those who are in work.
The Bill also involves a very large sum of money, an additional £550 million a year. This means that for the National Insurance Scheme alone the income and outgo of the scheme will reach over £4,000 million a year. But the increase in pension of £1.60 for a married couple and £1 for a single person is the largest cash increase ever in any 12-month period. We are confident that it will provide a significant real increase in the buying power of the pensioners. Therefore, such Bills as this are of major social, economic and financial significance.
§ Mr. O'Malley
As the food index has moved up by nearly 6 per cent. in the first quarter of the year, on what statistical evidence does the hon. Gentleman base his optimistic view that the Bill will bring about a real improvement in the pensioners' standard of living?
§ Mr. Dean
My right hon. Friend deliberately said he was confident that the Bill would provide a real increase. I repeat that. The hon. Member is far too old a hand in government to believe that I shall fall into the trap he has so nicely tried to lay for me. I stick to what my right hon. Friend and I have said.
854 I am grateful to my hon. Friend the Member for Tynemouth (Dame Irene Ward) for her generous tribute to my right hon. Friend and those of us who work in the Department with him. I assure her that it will encourage us to try to do better in years to come. I am glad that she welcomed the improved arrangements for the heating allowance and that it will be paid throughout the year. She has played a great part in bringing about improvements in the allowances. She has been working for them for a very long time and I am glad that it has been possible to move further in this direction.
The hon. Member for Rotherham (Mr. O'Malley) mentioned the rise in prices, particularly of food. We are all concerned about rises in prices because nothing is more damaging to the pensioners. But the Opposition's criticism in making these very fair points would be much more effective and would carry much more conviction if the Government had had a little more support from them for our counter-inflation policies. It carries no conviction for the Opposition to be weeping crocodile tears about what is happening to prices and yet to be doing nothing whatever to support the counter-inflationary measures of the Government.
The hon. Member for Rotherham made the point that there had been virtually no change in the ratio of the pension to average earnings over the past 20 years or so, and I accept that that has been broadly the position under all Governments. But we have to take into account the fact that the number of old people has grown substantially over that period. The ratio of people of working age to those of pension age in 1948 was about 5: 1; it is now about 3¾: 1. That has meant a massive transfer of resources from the working population to the pensioner.
The best way in which I can illustrate this is to say that if the age structure of the population had remained as it was in 1948, it would have been possible for the pension to be about one-third higher than it is on the existing level of contributions. To put it another way, in 1949 expenditure on pensions was 2.24 per cent. of the gross national product; by now it is well over 4 per cent. of GNP. One has to take into account 855 those figures as well as the figures that the hon. Member mentioned.
In his extravagant and therefore ineffective speech in closing for the Opposition, the hon. Member for Oldham, West (Mr. Meacher) committed the Opposition to the £10 single and £16 married rates of pension. I noticed that the hon. Member for Rotherham was more cautious in his opening. How unconvincing it is for the Opposition, in the light of their record in office when they had responsibility, to say that they would find it comparatively easy to raise the additional £1,400 million on top of the £550 million in the Bill, because that is what the hon. Member's proposal means.
§ Mr. O'Malley
The Under-Secretary puts my hon. Friend in an invidious position. The hon. Gentleman knows as well as anyone that the official position of the whole of the Labour movement is that retirement pensions should be increased to £10 for a single person and £16 for a married couple.
§ Mr. Dean
I hope that the hon. Gentleman will be a little more specific about how the additional £1,400 million is to be found. If his answer is to withdraw the tax reliefs that have been given under the present Government, tax reliefs which are widely spread throughout the community and which benefit most family men, he should say so. Furthermore, the Opposition have already spent this money 10 times over. That argument is not convincing.
My hon. Friend the Member for Kensington, South (Sir B. Rhys Williams) said that he supported the concept of earnings-related contributions for basic benefits. Indeed, he pulled the leg of the hon. Member for Rotherham on this subject and, as always, the hon. Member rose to the bait. I agree with my hon. Friend that earnings-related contributions are the fairest way of paying for increases in benefit. As a result we have managed on this occasion to get a reduction in the level of contribution by a person earning less than £30 a week. The man earning £30 a week will pay only lp more than now and the rest will come from those getting more pay. I agree with my hon. Friend that when we consider earnings-related pensions we should look to occupational pension schemes and, in default 856 of that, the reserve pension scheme as the most appropriate way of making provision.
My hon. Friend asked whether there was a possibility of further selective improvements for the elderly, and he mentioned a possibility for those aged 75. We have started with the 25p addition for those who reach the age of 80. I assure my hon. Friend that the thoughts which he has expressed during the debate and on other occasions will be considered by the Government. He knows that in this as in all other matters we must have priorities.
My hon. Friend made the plea that he has frequently made that we should consider tax allowances and housing subsidies and tax credit schemes and so on as one subject. I believe he feels that the Government's tax credit proposals will bring together the social service arrangements and tax arrangements in a way that has not previously been done. It may well be that the new rate rebates and rent allowances will also open up new possibilities of the sort of co-ordination that my hon. Friend has mentioned.
Speaking of disability and especially of the attendance allowance, the hon. Member for Rhondda, West (Mr. Alec Jones) made some criticism of the working of the scheme. I do not say and I have never said that the scheme is perfect; it is not and we are learning from experience. But it is only fair to remind the House that it is a very new scheme, that the Attendance Allowance Board and those who serve it have done a marvellous job in getting no fewer than 90,000 allowances into payment in a comparatively short time. They are now working extremely hard on the extension of the allowance and my right hon. Friend was able to announce the acceleration of the second phase of the lower rate of allowance.
It was after careful thought and on the advice of the Attendance Allowance Board that the order of priorities was decided. What matters now is to get the allowance to everybody entitled to it as fast as we can, and that the Government are determined to do with the willing help of the board and those who serve it.
My hon. Friend the Member for Wells (Mr. Boscawen) mentioned anomalies 857 among the civilian disabled, and I very much agree with what he said. There are still many anomalies and there is a long way to go before any of us can be satisfied that we are providing anything like a complete or adequate service for the disabled. It is for that reason that my right hon. Friend has given such high priority in uprating Bills, including this, to improving the arrangements.
My hon. Friend asked me to say how many people would be taken off supplementary benefit by the proposals for the chronically sick and disabled. It is not possible to give a figure, but I can assure my hon. Friend that some certainly will be. I was grateful for his welcome of the higher rate of increase for the long-term cases, including those on pension.
The hon. Member for Rotherham was somewhat critical of this and seemed to give the impression that this was the introduction of a completely new principle. He knows that the concept of short-term and long-term levels has been included in the arrangements for supplementary benefit for a considerable time. What we are doing now is to extend it into areas where it has not existed before.
My hon. Friend the Member for Wells made a plea for the increase in the age addition for people aged over 80 and for an increase in the death grant, and the death grant was also mentioned by my hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman). I assure hon. Members that this year, as every year, the Government carefully considered what the priorities should be. Ultimately it is a question of picking the most urgent priorities at any one time.
The subject of disregards was mentioned by the hon. Member for Rotherham, the hon. Member for Rhondda, West, and my hon. Friend the Member for Lancaster. I can assure the hon. Member for Rhondda, West that since November 1972 the Supplementary Benefits Commission has not taken disregarded income into account against exceptional circumstances additions, and its power to do so is contained in paragraph 4(2)(b) of Schedule 2 to the Ministry of Social Security Act which is terminated by this Bill. I hope that what I have said will reassure the hon. Gentleman on that point.
The hon. Member for Rotherham instanced the case of someone, perhaps on 858 a modest level of occupational pension, who has had increases but gets little or no benefit from them as a result of the reduction in supplementary benefit. One accepts that this is one of the problems that exist on the margin. I am not saying for one moment that there is not a case for improvement in the disregards: all I say is that an improvement in disregards, like improvement in benefits, is a call on resources. It costs money. One therefore has to ask oneself each year which are the highest priorities, and at least those who have additional resources have resources over and above the supplementary benefit level, which is not the case with those who are poorer still.
I therefore make the point, not unsympathetically but to persuade the House that here, too, as in all the other aspects I have mentioned, there is this harsh reality of priorities which the Government have to consider. But, as has been said on a number of occasions from this Dispatch Box, disregards have not been improved for a long time now and the time will come when they should and rightly will come to the top of the priority list.
§ Mr. Meacher
When talking about cost of disregards will the Minister bear in mind that the Government are at present running a Budget deficit of £4,423 million? Would it cost more than £5 million to double the disregards?
§ Mr. Dean
We are here talking about a Bill which improves benefits to the tune of £550 million a year. It is in that context that improvement of disregards or anything else has to be considered.
The hon. Member for Rotherham mentioned family poverty and said that the family income supplement scheme had been a failure. The fact is that although take-up is not as good as we would like, it is bringing much-needed help to 100,000 of the poorest in the land, to the extent in some cases of £5 a week, and that in itself is a significant factor.
The hon. Gentleman knows perfectly well in relation to family allowances which he mentioned that although the tax threshold has been somewhat improved under the present Government through the actions of my right hon. Friend the Chancellor of the Exchequer, there is still very little maneouvring room for an improvement of family allowances 859 Without clawback it would mean that nine-tenths of the cost of the increases would go to those above the threshold of improvement. With clawback it would mean that nearly all families with two or more children would be brought into tax, and a family when it had an additional child would find that it was paying more rather than less tax. It is not good enough for the hon. Gentleman to dismiss so lightly such arguments which remain valid although the situation is not as bad as it was before the present tax-reducing Government came into office.
The Bill continues two themes which are now well established in the Government's social security policy. The first theme is annual increases in all the main benefits, and new benefits or higher rates of benefit for priority groups. The second feature is illustrated this year in this Bill in the bigger increases for pensioners and other people on long-term benefits, the 40 per cent. increase in invalidity allowances, the acceleration of the programme to extend the attendance allowance and the improved arrangements for heating allowances. We in this Government are never satisfied that enough is being done but we believe that the Bill represent significant improvements, and as such I commend it to the House.
§ Question put and agreed to.
§ Bill accordingly read a Second time.
§ Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).