HC Deb 06 March 1973 vol 852 cc277-9

I come now to pensions and social security benefits. First I should remind the House that the prescribed amounts for Family Income Supplement will be increased next month by sums varying from £1 to £2.50 depending on the size of the family.

The House will recall that until last year, it had been the practice for pensions and related benefits to be reviewed only once every two years. No one has doubted that we were right to change that, and to provide for a review every year.

My right hon. Friend the Secretary of State for Social Services will tomorrow be making a full statement of the Government's proposals but, so that those proposals can be seen in the context of the Budget, I will—as in the previous two Budget Statements—give the House the background to our decisions and the substance of those decisions.

One of the main points of agreement in the tripartite talks last autumn was that the more the Government and the nation act together to counter inflation, the more the low paid, the pensioners and others least able to protect themselves will benefit. It is a fact of life, which is all too obvious to the pensioners, that whatever the Government—any Government—decide to do to improve the position of the pensioner, the result depends on the rest of the community not trying to grab more than their share, and also on being willing to pay the cost.

My right hon. Friend the Prime Minister in introducing the Government's counter-inflation policy, pledged that the pensioners would share in the growth of national prosperity. The first fruit of that pledge was the special once-and-for-all payment three months ago of £20 for a married pensioner couple and £10 for a single pensioner. I hope that everyone in the country will note that it is because we are determined that the counter-inflation policy shall succeed that we are able to make a further real improvement in pensions.

We believe that it is right this year to give priority to pensions and supplementary pensions, the increase of which will therefore be greater than in the case of other benefits.

Short-term benefits—that is, primarily sickness and unemployment benefit—and the basic rates of supplementary benefit will be increased by £1 a week for a married couple and 60p a week for a single person.

Last year the increase in the pension for a married couple was £1.20 and for a single person 75p. This year the pension will be increased by £1.60 for a married couple to £12.50 and by £1 for a single pensioner to £7.75. In addition, of course pensioners and others receiving social security benefits will stand to gain substantially from the Government's other measures such as rent rebates and allowances. The total cost of all the improvements in national insurance benefits is estimated at about £500 million in a full year. This, of course, leads me to the consequent increase in contributions.

The largest share of the increase in contributions will again be met by the employers' contributions, and the increases in employees' contributions will be wholly earnings related. As previously, there will be flat-rate increases for the self-employed and non-employed. The Exchequer will continue to contribute about 18 per cent. of the total revenue from contributions. These are the details.

The employers' flat-rate contribution for men will go up by 14p. The earnings ceiling for graduated contributions will be raised from £48 to £54 a week, and the rate of graduated contributions will go up by 0.25 per cent. on earnings between £9 and £54 a week.

Next, the employees' flat-rate contributions. Last year they were not altered at all. My right hon. Friend and I think that it would be wrong to leave them unaltered this year. In order to protect the lower paid, the employed man's flat-rate contribution will therefore be reduced by 4p a week. This will mean that for all men with earnings below £24 a week, their total payments will be slightly less than at present. I am sure that, in the context of the counter-inflation policy, the House will agree that this is right.

It was announced in December 1971 that, with annual reviews, increases in pensions and related benefits would be paid in November. Because of the early Budget, my right hon. Friend has arranged for the date to be advanced to 1st October.

With this latest increase, the pension will have been increased by the present Government in a period of just over three years by 55 per cent. in cash terms, or more than during the whole of the previous 12 years. Or to put the matter in real terms, over the same period the pension will have been increased by almost twice as much as the increase in prices. That is what my right hon. Friend, the Prime Minister, meant by promising that the pensioners would share in the growth of national prosperity.

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