§ Order for Second Reading read.
§ 4.55 p.m
§ The Secretary of State for Social Services (Mrs. Barbara Castle)
I beg to move, That the Bill be now read a Second time.
In moving the Second Reading I repeat my expressions of gratitude for the cooperation from right hon. Gentlemen, and, in the end, from hon. Gentlemen opposite, towards getting the Bill through all its stages today. Judging from the Order Paper, this unusual procedure does not seem to have inhibited the hon. Gentleman who has just been making protests. He has put down a lot of challenging amendments and we shall be dealing with those which the Chair decides to call.
I also pay tribute to one of my distinguished predecessors whose death I am sure we all mourn, Mr. Richard Crossman. He was a great Secretary of State for the social services. I am conscious, as I stand in his shoes this afternoon, of how much pioneering work he did in this sector and of how hard I shall have to work to begin to live up to the standards of excellence which he set.
Social security legislation is so complicated that one can get bogged down in detail, and one tends to lose sight of the overall effect. The Bill embodies a welter of detail on all the aspects of the uprating which has already been announced. If we are to assess how far any particular uprating Bill takes us along the road to certain agreed social goals we must look beyond the details and judge the Bill in relation to agreed terms of reference. It is very easy to start arguing about 10p on this or 20p on that, and so one loses sight of the overall social situation. It would be a pity if in judging a major uprating Bill of this kind we were to be obsessed with the detail rather than with the path along which we are trying to go.
There are, broadly, two points of reference in our social policy. First, there is the relief of poverty and its eventual abolition. Secondly, there is the aim to roll back the carpet of means-testing 464 which has now settled over social policies and which has such disincentive and humiliating effects, and which in our view ought not to be part of the social provision which we make for the disadvantaged or handicapped.
Although we believe that in the Bill we are doing something to achieve our first goal—the diminution, or at any rate reduction in the levels, of poverty —we have done nothing towards the latter goal. The Bill does nothing to reduce means-testing. It has been said in earlier debates that this year it was particularly urgent to concentrate on the relief of poverty, that it was essential to give this priority. That is why in the Bill we not only increase national insurance benefits but introduce parallel increases in supplementary benefit. This means that no people will be taken off means-testing, yet equally it means that those who are most in need of help will be assured through the Bill of getting it.
The moral on which we might cogitate some other time—this is not the occasion to develop it—is that it will always be difficult in short-term upratings to reduce means-testing. We shall only do that by much more fundamental changes in our overall social policy. Our longterm policy seeks to do that through the introduction of the child endowment scheme and through long-term pension provisions in respect of which I hope to publish a White Paper before long. Indeed. I hope it will be possible to publish it this summer, because the matter involved is an important background to our discussion of the overall situation. There is also the Finer Report, concerned with making provision for closing other gaps in our social provision, and the review of social security provision for the disabled, which I am committed to put before the House this autumn.
These are long-term goals. It is by a combination of such measures that we can launch the most effective attack on the exercise of means-testing. But at this time, in the Bill, we must concentrate in the short term and as quickly as we can on a meaningful uprating. An increase of 29 per cent. in the single person's standard rate of pension is the greatest single uprating since the National Insurance Scheme was introduced 25 years ago. It gives a big margin with which to deal with price increases since 465 the last uprating. There has been an increase of just over 5 per cent. in prices since the last uprating, according to the latest figures in February. The increase in the standard rate also gives a margin in hand to deal with problems of inflation which lie ahead. The uprating of the standard rate is backed up by a whole range of Government policies, some of which I shall briefly reiterate.
Judging from what hon. Members say, and from my constituency postbag, a large number of people are still confused and unnecessarily anxious about what the increases will mean to them. I would like to put the position on record again. An hon. Member told me today that he had letters from pensioners stating that it was no good putting up pensions because all the extra money would be swallowed up in rent increases. That is not true. I have announced in previous debates, and I announce again, that my right hon. Friend the Secretary of State for the Environment has made quite clear to the House, through me, that the increases in pensions and other benefits will not affect existing rent and rate rebates and rent allowances.
I hope that hon. Members will bring this fact home to their constituents and that they will also stress the decision of the Supplementary Benefits Commission, to which I have referred in previous debates, at the same time as the increases come into operation to increase discretionary heating allowances by 30 per cent. There will also be increased provision for dietary needs. It is vitally important that these points are realised by constituents. Another form of supplementary help, for women pensioners, came into operation on 8th April. I refer to the abolition of prescription charges for women aged between 60 and 65 years. These details do so get lost in Press reports or television summaries. So I hope that this fact. too, will be made widely known.
The Chancellor's increase in the age exemption relief will prevent the pension increases from being clawed back through taxation. So we have tried to think of all the ways in which this uprating could be eroded and to close the loopholes so as to make the increase real and enduring, so far as Government policy can do so. Of course, the problem of inflation has not been solved yet, but the Govern- 466 ment's action has been designed to make an impact at the points of most importance to the pensioners and other beneficiaries —the level of rent and rates, of food and fuel prices.
The House will realise that the increases in supplementary benefits as well as those in the family income supplement of which I gave details on 28th March are not dealt with in the Bill but will be dealt with separately by means of regulations in due course. War pensions will also go up. There seemed to be some doubt in some people's minds about this. The increases will be effected by means of instruments under the Royal Prerogative.
The Bill embodies the benefit increases that I have already spelled out in considerable detail in my statement on 27th March, and I do not want to spend the time of the House repeating what is already on record in HANSARD. The Bill is backed by the Government Actuary's Report, Cmnd. 5587, which also includes details of the new benefit rates. As the time for the uprating is so short, we decided to dispense with a White Paper, but I hope that hon. Members will find the Explanatory and Financial Memorandum clear and informative about the principal benefit increases.
§ Sir Brandon Rhys Williams (Kensington)
I think that the right hon. Lady may be leaving the subject of benefits and I wanted to ask whether the implementation of supplementary benefit for pensioners will coincide with the higher rate of benefit for the people entitled under national insurance. Or will they get their benefit later, or earlier?
§ Mrs. Castle
No, they will coincide. The aim is to make it all take place at the same time. But I was not leaving the benefits. I am just reminding hon. Members where they can get the full details.
I was about to say that these new rates of benefit are dealt with in Clauses 1 and 3 and Schedules 1 and 3 and they implement our election pledge. By now, everybody will realise that the standard rate of retirement pension for a single person is to go up to £10 and that for a married couple to £16, but I have found that there is still considerable confusion as to which other groups will benefit and to what extent.
467 I have, surprisingly, met the comment from widows "Why have you done nothing for us?" It is therefore worth while to spell out a little more fully than I have so far been able to do just what the Bill does for widows. The widow's allowance which is payable for the first 26 weeks of widowhood will go up from £10.85 to £14, with additional amounts for children. The widowed mother's allowance and the widow's pension at the standard rate will go up from £7.75 to £10, with added benefit for children.
The widow's basic pension, the old 10s. pension, which the last Labour Government increased to 30s. and which remained stuck there during the life of the last administration, will go up to £3, which restores its relationship to the full widow's pension. The age-related pensions for younger widows will go up and will range from £3 for a woman widowed at the age of 40 or whose widowed mother's allowance ceases at that age, up to the full rate of £10 for a woman widowed at 50 or over.
As I have already said, the increases in benefit in respect of dependent children will also go up, and the total effect on a widowed mother with two dependent children, for example, will be an increase of benefit from £14.45 to £18.90. So I am sure that the House will agree that it would be wrong to suggest that we have forgotten the widows. On the contrary, we have included them among our urgent priorities.
The same applies, of course, to the chronically sick and disabled. The invalidity pension which normally replaces sickness benefit after the first six months is also to be increased from £7.75 to £10. This means, for example, that an invalidity pensioner whose incapacity began before the age of 35, and who is, therefore, on the highest rate of invalidity allowance, will have his income increased from £9.35 to £12.05 a week. If he has a dependent wife and two children, his benefit will go up from £20.80 to £26.95
The industrial injuries disablement pension is also, of course, going up. For the man with 100 per cent. assessment it will rise from £12.80 to £16.40, and there will be increases also for his dependants.
I now turn to the short-term benefits such as unemployment and sickness bene- 468 fit. The increases that the Bill proposes are such that, for example, a man entitled to unemployment benefit and increases in respect of a dependent wife and two children will find his rate of benefit rising from £15.60 to £18.40, quite apart from any earnings-related supplement to which he may also be entitled. The injury benefit which is paid under the industrial injuries scheme for the first six months of incapacity is to be increased from £10.10 to £11.35 for a single adult and from £14.65 to £16.65 for a married couple.
The right hon. and learned Member for Surrey, East (Sir G. Howe) complained in our last debate that I somehow had not explained the reason for the differential between the treatment of the short-term and that of the long-term benefits. But when his Government introduced that differential last year, my hon. Friend the Minister of State accepted that it was perfectly proper that a Government should feel free to choose their priorities and that, give certain conditions, there was no inherent reason why in one year a Government should not decide to give one section of beneficiaries slightly more generous treatment than another section. But my hon. Friend also laid down two conditions which would be necessary, he felt, before it would be proper to do so. He said, first, that there must be an equitable overall tax system, and, second, that the level of benefits should be at a much higher rate than existed then. We do not claim that we have as yet fully satisfied both those conditions, but we are certainly well on the way to doing so.
It is in that context that we have retained the differential for this uprating. The whole package of improvements proposed by the Government, leaving aside the changes proposed in family income supplement, will cost £1,268 million in 1975–76. Of this total, £46 million will be for war pensions and £81 million for supplementary benefits. The improvements which are included in the Bill will cost about £1,140 million, of which £1,120 million will fall on the National Insurance and Industrial Injuries Funds
This brings me to Clause 2 and Schedule 2, which deal with contributions. I have already explained to the House that the principle which we are following here is that we think that the 469 broadest backs should bear the biggest burden. That is why the flat-rate employee's contribution for adults will be reduced by 9p, while the employer's share will rise by 44p for a man, 38p for a woman, 29p for a boy and 25p for a girl.
The weekly limit up to which graduated contributions are to be paid is to be raised from £54 to £62, and the rate paid by both employers and employees is to be increased by ½ per cent. This combination, therefore, ensures that we protect the lower-paid wage-earners from any additional contribution burden. The combined effect of the changes means that male employees earning less than £27 per week will not have their contributions increased and those earning less than £20 per week will have their contributions actually reduced by at least 3p a week, while employees earning more than £62 per week will pay an additional 57p a week.
The result of this is that of some 22½ million employees normally contributing to the National Insurance or Industrial Injuries schemes about 3,250,000 will pay contributions at lower rates than the present rates, about 3,250,000 will continue to pay the same amount as they are paying now, about 10,750,000 will pay less than 10p a week more, and about 5,250,000 will pay over 10p a week more. The weekly rate of contributions paid by self-employed and non-employed persons, who, as the House knows, pay only flat-rate contributions, is to be increased broadly in proportion to both increases in benefit expenditure and the average joint contribution for employed persons. Self-employed men will pay an extra 42p a week and self-employed women will pay an extra 34p per week. There will be proportionate increases for juveniles. The proposed flat-rate and graduated contribution rates will come into force on Monday 5th August.
Clause 4 provides for a relaxation of the earnings rule. We are proposing to increase from £9.50 to £13 the level of earnings above which the retirement pension of a man aged 65 to 69, and of a woman aged 60 to 64, is reduced. The effect will be that the standard rate of pension for a single person will not be extinguished until his or her earnings reach £25 per week—instead of £19.25 at present.
470 At present, the earnings of dependent wives of retirement pensioners—that is to say, wives who have not themselves reached the pensionable age of 60—are treated differently from the personal earnings of retirement pensioners. For the wives, earnings over £11.50 are taken fully into account, whereas for pensioners themselves earnings up to £13.50 lead to only a proportionate reduction in pension. We are taking the opportunity in the Bill to bring the rule for dependent wives into line with that for retirement pensioners—a change which the whole House will welcome. This applies not only to wives of retirement pensioners but to wives who live with invalidity pensioners and industrial injuries disablement pensioners with unemployability supplement. The increase of benefit for these wives will not be extinguished until their earnings reach £21—instead of £15.25 at present. The cost of the changes that we propose in the earnings rules is about £9 million.
Clause 5 amends Section 39 of the Social Security Act 1973 so that for longterm benefits—those paid to the elderly, the chronic sick, the disabled and widows—the annual review is to be based on the extent to which the current rates of benefit have retained their value in relation to the general level of earnings, rather than the general level of prices, unless at a particular review it would be more advantageous to beneficiaries to have regard to the movement of prices.
The clause also provides that a review in the income tax year beginning in April 1975 shall come into force not later than the end of July 1975—in other words, not later than 12 months after this year's increases take effect. In this way our pledge to increase pensions annually in proportion to the movement in national average earnings will become a statutory obligation. Subsequent legislation will deal with the years after 1975.
As the House knows, the Social Security Act 1973 comes into operation in April 1975. I have already made it clear to the House that we find our predecessors' long-term pension plan embodied in that Act unacceptable. As I said earlier, I shall be publishing a White Paper as soon as possible, embodying our own long-term plans. I also told the 471 House that we shall want to make interim changes in our predecessors' scheme. I promised a statement on that as quickly as possible. The right hon. and learned Member for Surrey, East pressed me on this point during the Budget debate. I fully recognise the importance of what he said. It is true that the pensions industry and others are eagerly awaiting details of these interim changes which we propose. I am sure that the right hon. and learned Gentleman and the House will recognise that I have been in my present job for only about five weeks and that I have had to give priority to this very complicated and comprehensive uprating. But I realise the need for speed, and I assure the right hon. and learned Gentleman that I shall be making an early statement on the interim proposals after the Easter Recess.
I come finally to Clause 6, which makes some minor amendments to social security legislation which are of a technical and non-controversial character. They include amendments needed to prepare the way for the consolidation of social security legislation, which I am sure the House will agree is highly desirable. I shall not detain the House by going into all the details, but should there be any points on which hon. Members require clarification, my hon. Friend the Minister of State will be glad to answer them when he winds up the debate.
This, then, is the Bill which I am commending to the House. It is a Bill which benefits 11½ million people and will give pensioners and other long-term beneficiaries a bigger increase, both absolutely and proportionately, than they have ever been granted in an uprating Bill under the National Insurance scheme. At the same time, the Bill embodies in legislative form the commitment which we made to the country during the election campaign that we would link the increase in long-term benefits to average national earnings. This change, which at last links the increases in pensions and other benefits to movements in wages, is long overdue. I hope that it is a principle which will be accepted and welcomed by the whole House.
The changes in the Bill are costly. I do not conceal from the House that the cost is heavy. It is an expensive uprating. Some people have suggested that it is too 472 expensive an uprating. I do not believe that the House will say that this afternoon. I think that hon. Members will say that it is a cost the community will be willing to bear. In our view it is essential to give urgent help, priority help, to groups of people in our community who have been desperately hard hit as a result of the inflationary pressures of past years and have been at their wits' ends to know how to make ends meet. It is in the spirit of bringing them urgent help that I commend the Bill to the House.
§ 5.26 p.m
§ Sir Geoffrey Howe (Surrey, East)
I begin by joining the Secretary of State in her tribute to our late colleague, Richard Crossman. Hon. Members on the Opposition side of the House have the same kind of respect and affection for him as a person as has the right hon. Lady. During my years in opposition, outside the House I had the privilege of working on an advisory policy group which served Richard Crossman when he was Secretary of State —a rather unusual relationship. I echo everything the right hon. Lady said about him.
I also renew the general welcome the House has given to the increases in the Bill, a welcome given by my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) at the end of the Budget debate.
I appreciate the compact way in which the right hon. Lady has tried to set the matter before the House, because we may want to come on to the Committee stage as quickly as is convenient. The right hon. Lady again said that the Bill is being brought into effect by reference to the most restrictive timetable ever. She won the admiration of her predecessor for her success in having achieved that—if she is able so to do. We wish her well along that road.
Therefore, it is in no tendentious spirit that I ask the right hon. Lady whether she is satisfied about the extent to which there has been consultation with all the staff associations and unions involved. I have heard some rumblings of anxiety on their side about the capacity of the system to deliver what the right hon. Lady requires of it. Can she or the Minister of State give us assurances about that? Will they undertake to tell the House if at any time there appears to be any doubt about the capacity of her 473 staff to carry through this very rapid programme?
I have already made plain in previous debates in this Parliament that we on this side of the House are as anxious to eliminate poverty and to help the most hard-pressed members of our society as are members of any other party in the House. That is why we welcome the measures in the Bill. Even so, we have real doubt whether not so much the Bill but the context in which it is brought forward provides a viable basis for a sustainable social policy in the context of the entire economic policy of this minority Labour Government.
Three main anxieties occur to me at this stage. We make no complaint—apart from the important point that may be raised by my hon. Friend the Member for Kensington (Sir B. Rhys Williams) in one of the amendments—about the general distribution of the burden of the Bill. But we are anxious because it is introduced in the context of a Budget that is likely, viewed as a whole, seriously to impair the capacity of industry and the entire economy to sustain these advances in social provision, let alone further advances. It is the overall burden on the productive dynamo of our economy, against which the measure must be viewed, that causes us some concern.
Secondly, we are concerned—and I know that the right hon. Lady has acknowledged this in the scale of the increases proposed—about the extent to which the increases are likely during the 12 months from July this year seriously to be eroded by the impact of inflation. We shall be debating that matter later as well.
The Secretary of State for Prices and Consumer Protection said yesterday:Prices are rising at a rate which may reach about 12 to 15 per cent. or even more by the end of the year. Some of the most reliable estimates given by independent economic sources suggest possible rates of inflation as high as 18 or 19 per cent. by the end of this year.—[OFFICIAL REPORT, 9th April 1974; Vol. 872, c. 256.]The right hon. Lady did not say how far she and her colleagues went along with those reliable, independent economic sources, but if that is the kind of setting to which we must look forward, there is real cause for anxiety about the impact of inflation.
474 We are concerned not so much with the impact of the cost of contributions, because they had to be raised in any event, nor, taken by themselves, with the impact of increased fuel prices, transport prices, and postal and other telecommunications prices—although they are cumulative in their effect. We are concerned with the additional burden of indirect taxation imposed by the Government, which in itself exceeds the value of the subsidies, with the additional burden of direct taxation imposed on a wide range of wage-earners by the Government, and with the effect of all that on the spiral of wage earners by the Government, and Bill is designed to protect the beneficiaries. We can consider later on the desirability, in that setting, of a more frequent review of the rates of benefit
The third factor which causes us concern is the extent to which this part of the right hon. Lady's social policy cannot be seen as part of a coherent pattern of social priorities. I do not wish now to dwell on the previous Government's record, particularly in the area presided over by my right hon. Friend the Member for Leeds, North-East, save to remind the House that dawn in matters of social provision did not break on 4th March this year. The previous Government made major improvements—[Interruption.]—the hon. Gentleman must listen to this—in all social benefits, making the largest improvements in favour of the pensioners and the chronically ill. They introduced six entirely new benefits to the advantage of 2 million new beneficiaries. They instituted a national scheme of rent and rate rebates. All that was part of a coherent pattern for advancing social provision
Alongside that, one must look with apprehension at the incoherent and predominantly indiscriminate pattern of social provision that lies behind the Bill —£500 million pledged for food subsidies; £50 million pledged, for the third time since 1948, to the abolition of prescription charges; a figure larger than that pledged to a rent freeze, although that will impose a large additional burden on ratepayers and mortgage payers, poor as well as rich. It is that indiscriminate background to the right hon. Lady's proposals that causes us concern
The tragic consequence of that approach is that it will gravely restrict 475 the scope for more selective, certainly, but much more urgently needed, improvements in social provision for particular categories which we all have in mind. One can start with the—at first sight modest, but I dare say not so modest—implications of the Sharp Report, and go on to those covered by the review the right hon. Lady is obliged to make by October this year in relation to the disabled, especially perhaps the disabled housewives, who are unable to look after their families or homes, and those born so disabled as to be unable to earn any significant wage. We can think again of the important category the right hon. Lady mentioned, those likely to be covered by the Finer Report
We can also think—whether at this stage one thinks of a family endowment pattern or a tax credit scheme—of the huge areas of poverty yet to be conquered. With resources as short as they are of our aspirations, and as short as they always will be, we are anxious about whether it is right to have as much general provision as is implicit in the Government's approach, to the disadvantage of those special groups to which I have referred
The indiscriminate approach is all the more unwise when the present Government have recognised the need for prudence in public spending. The cuts of £1,200 million in public spending which were made by my right hon. Friend the Member for Altrincham and Sale (Mr. Barber) last December have been accepted by the present Government. The rate support grant total remains unchanged. The need for prudence is emphasised by the extent to which the right hon. Lady has accepted—and I appreciate that she has not in her own mind done so for all time—the need for a continuation of a wide range of means —tested benefits without any reduction in the numbers involved. I understand that it is her aspiration to see a rollback of the carpet of means tests. That is a view which I share. I have made that plain to the House ever since I became a Member. Means tests are only likely to be eliminable by the application of the methods implicit in the tax credit scheme or something like that
It is against that background that I am glad to welcome the Government's 476 conversion to the acceptance of the distinction between long-term and short-term benefits. I appreciate that the right hon. Lady quoted from the speech of her hon. Friend the Minister of State last year and explained his recognition of the legitimacy of making some such distinction. It is, of course, an important distinction. As I understand it, the promise which was made in the Labour Party's manifesto was to improve benefits for all the main categories, including the sick and the unemployed, to £10 and £16 in the first parliamentary Session. That is not what we see being done. It is a welcome illustration of good sense that the Government have recognised the case for maintaining the distinction between long-term and short-term benefits
The right hon. Lady used the word "retained". The truth is that the present Government have substantially increased the differential. I make no complaint about that but seek only to draw attention to it. The differential for the married couple rate in existing terms was 60p. Under the new proposed weekly rates the differential between long and short term becomes one of £2.10. That is an increase in the scale of the differential from about 5 per cent. to about 13 per cent. We are glad to notice the extent to which the Minister of State's recognition of the legitimacy of selective wisdom has had its part to play in the construction of the Bill
The House will be familiar with what the Government Actuary says in paragraph 12 of the report on the Bill. He points out that the pattern of benefits and contributions that is proposed will mean that there is likely to be a shortfall of some £200 million. I ask the Minister of State to tell the House what will be the consequence of that shortfall. How will it be met? How can the resources be found for the kind of improvements that we all want in the categories which I have mentioned, including the disabled, in the light of the October review? How are the figures to be reconciled? Can he promise on behalf of the Government the publication of a White Paper which will set out the effect of higher earnings, on the one hand, and of higher contributions and higher benefits on the other, so that the House can in due course consider the position as a whole 477 when the time comes to consider the consequences of the October review?
I renew my expression of concern about the impact of the Government's thinking and strategy for the long-term development of occupational pensions under the terms of the 1973 Act. I recognise that it is legitimate, and that it always would be so, to discuss some possible changes in the long-term structure regarding, for example, the position of women. I know the extent to which there is a division of opinion about that. When the right hon. Lady produces her proposals for interim changes I hope that she will give us a clear answer about how far married women will retain the option to pay lower contributions in the context of any changes that she proposes
I welcome the right hon. Lady's statement that there will be an early statement on the interim changes that she has in mind. I gather that they are by no means root and branch, although not insignificant. I remain concerned about the extent to which she is still promising that in general, and at some unspecified date, there will be a substantial major replacement or change in the provisions of the 1973 Act. In the debates of 28th March the right hon. Lady said:We are committed to replace it, and that remains our long-term policy ".—[OFFICIAL REPORT 28th March 1974; Vol. 871, c. 647.]That was underlined by an intervention from my hon. Friend the Member for Kingston-upon-Thames (Mr. Lamont). It is that which I find regrettable. It is that which promises us a period of long-term uncertainty, however much the right hon. Lady recognises the importance of the anxieties of those concerned in the industry. I ask her to think seriously about the desirability of continuing that procedure
I am challenging not what the right hon. Lady has said about the interim changes which she proposes but the prospect of continuing under a long-term shadow of the threat of replacement at the hands of what I must remind the House is a minority Labour Government. That is something that could do extreme damage. It could cause the persistence of confusion for employers and workers and those concerned with advising them on the development of pension schemes. I shall quote from a speech which was 478 made by our former colleague, Douglas Houghton in an address to the Financial Times Pension Conference which was held on Wednesday 12th December 1973. Douglas Houghton was then discussing what might happen if the Labour Party were to return to Government at any time when the 1973 Act was on the statute book. He said:While the Labour Party has many criticisms of the present Government's 1973 Act, I am convinced that it would be a great mistake for a Labour Government (should there be one after the next General Election) to suspend the operation of the new scheme. That, I am certain must go on.Prophetically he continued:Apart from other reasons, Labour's consideration of its own next step in this field is not yet completed.Nor is it yet completed. He continued:The policy document presented to the October conference was tentative and cautious in its commitments. It restated some guiding principles and that was all. The Crossman Scheme of 1970 cannot be revived in anything like its old form.A little later he said:I conclude, therefore, that the 1973 Act should stand for a while before embarking on the next move forward. I see no alternative to that in the short run.I urge the right hon. Lady in no tendentious or partisan spirit to give close consideration to that advice. I do not challenge what she says about the interim as opposed to the substantial and fundamental changes, but it would be of great service to present and future pensioners to let those concerned with arranging better provisions be given consideration, and to let that part of the provisions for the people who are or who will be in substantial need go ahead on the basis of that which was enacted in the last Parliament. That would be a great service which the right hon. Lady could perform, and I urge her strongly to do so
§ 5.44 p.m
§ Mr. E Fernyhough (Jarrow)
The right hon. and learned Member for Surrey, East (Sir G. Howe) said that the great new dawn did not begin in March 1974. I should like to tell him that it certainly did not begin in June 1970. If he cares to look back at all the social legislation which has meant so much to the ordinary people he will find that, with an odd exception, it all belongs to Labour Governments.
479 It was a Labour Government in 1948 who brought in the Health Service Act; it was a Labour Government in 1948 who abolished the workhouses; it was a Labour Government who substantially raised pensions, who brought in permanent sick pay for permanently sick people without any reductions, who abolished the means test for the unemployed, who brought in wage-related benefits who increased widows pensions—
§ Sir G. Howe
The right hon. Gentleman is getting carried away by his historical enthusiasm. Wage-related benefits were introduced by Lord Boyd-Carpenter, as he now is
§ Mr. Fernyhough: That is
correct. We introduced redundancy payments. If we look at the long list of benefits which have accrued to the ordinary people it will be seen that nine-tenths of them are the result of a Labour Government
§ Mr. Fernyhough
We introduced redundancy payments. Thousands of workers in the hon. Lady's constituency were very grateful that we did so
The right hon. and learned Member said that he was concerned about the nation's capacity to meet this bill. The right hon. and learned Gentleman did more through his speeches at the Dispatch Box to poison industrial relations than almost anyone else. I hope he realises that without a Bill of this magnitude and generosity we could not get in the mines, the workshops and the factories the kind of atmosphere we need if Britain is to be able not only to pay this bill but to overcome the legacy which the right hon. and learned Gentleman and his Friends left to us
Of course, there must be a viable basis. That will depend upon co-operation between employer and employee. We can fix all the pension rates we like but at the end of the day what we are able to produce determines largely not only what pensions will be paid but our standard of living generally. If we had not introduced the Bill two things would have happened. First, we would have broken our pledged word. The Government were committed to this. Secondly, the reaction 480 among those upon whom we substantially depend for the increased productivity which the nation needs would have been very bitter
We have to look at the Bill in the context of the impact it will have in the mines, workshops and factories. This Bill makes the ordinary British worker feel that he has a Government who are paying attention to the things about which he has been arguing. Even though there may be a price to pay, he is prepared to pay it because he sees in the Bill a measure of redistribution and greater fairness
I was alarmed by the interventions of the hon. Member for Kensington (Sir B. Rhys Williams) who questioned the speed at which we plan to take this Bill through the House. The hon. Member has been here for a long time. He was a member of a party which, when in Government, suddenly discovered that all our soldiers in Northern Ireland had been acting illegally. In one day we enacted a Bill, which was disposed of by 10 p.m., to give our soldiers the legality which they had not had. That Bill raised fundamental issues but everyone knew that it was necessary to give protection to our soldiers. There was no real objection to its being rushed through
Similarly, this Bill will mean a lot for a lot of people. If we do not get it as quickly as my right hon. Friend wishes it will mean that many old people, pensioners, war pensioners, the disabled and so on, will not be getting the benefits they expected as quickly as they expected. As a consequence, they will feel let down. It will be no innovation if the Bill leaves the House tonight in exactly the same way as it is now printed, without any amendments. There were no amendments made to the European Communities Act, nor to the Industrial Relations Act when they were passing through the House. Furthermore, both of those measures had a guillotine imposed upon them. I cannot see why the Opposition should feel that they are not being given a fair crack of the whip because we are trying to get this Bill through in one day's sitting
§ Sir B. Rhys Williams
Can the right hon. Gentleman explain why we in this House have to deal with the Bill in one day whereas the Government have arranged that in the other place the Bill 481 should be tackled over the space of a fortnight?
§ Mr. Fernyhough
The hon. Gentleman ought to know that from tomorrow we are going away for a fortnight. Perhaps he would have preferred the Easter Recess to have been shortened. He may nod in agreement with that, but I am sure that he speaks only for himself. That much was proved yesterday, because the Opposition could have voted to shorten the recess so that there would have been more time to discuss the Bill. They did not do so. There is nothing new in legislation of this magnitude being pushed through quickly
I accept that there are administrative difficulties. Like you, Mr. Deputy Speaker, I have been in this House for a long time. I remember a time when Lord Boyd-Carpenter, as he now is, was Minister of Pensions and National Insurance. It took about seven months from the time that he introduced a Bill to the actual paying out of pensions. I remember that at that time I was in the home of an old collier. He was putting his noughts and crosses and his ones and twos on a piece of paper. He said to me "You know, Ernie, it is absolutely marvellous. Littlewoods tomorrow will get millions of these. It will not be until 5 o'clock on Saturday afternoon that they will know who has got anything to come, and yet by Monday everybody will have had it." I thought "Why cannot we introduce some kind of system which will enable us to pay out benefits as quickly as Littlewoods and Vernons? They have a lot of calculating to do but are able to send out, having gone through millions of coupons within 48 hours, the money that people expect."
§ Sir G. Howe
We all relish expedition on this scale within the social security system but it is fair to remember that most unhappily for most of us, Little-woods and Vernons pay out to only a tiny selected minority
§ Mr. Fernyhough
But they have to examine millions of documents to see whether anyone has got anything coming. I am welcoming the fact that for pension increases we have almost halved the time normally taken. This is a step in the right direction. I hope that when my right hon. Friend introduces the next Bill, which I am sure will be within the next 482 12 months, she will have halved the time again so that we shall be getting much nearer to the point that I was making
§ Mrs. Jill Knight (Birmingham, Edgbaston)
Is the hon. Gentleman advocating private enterprise instead of nationalisation for paying out pensions?
§ Mr. Fernyhough
If war broke out today. we would move millions of children and call up millions of Service men by next week, otherwise we would have a revolution. It would not be possible to call up millions of Service men and say "You will have to wait six months before you get your pay"
Of course we would do it. I am glad that we have halved the time. What I am saying is that I hope that when my right hon. Friend introduces her next Bill the time will be halved again
I welcome the Bill. I know that it will be welcomed by the country. I hope that it will be given a quick and unopposed Second Reading because I believe that this is what the people of the country expect of the Labour Government. We are keeping faith, and if we do that, there is no question that whenever the next election takes place we shall still he on these benches
§ 5.58 p.m
§ Mr. Kenneth Clarke (Rushcliffe)
The right hon. Member for Jarrow (Mr. Fernyhough) finished as he began, using the Bill as the basis for a short flag-waving exercise on behalf of the Labour Party, making some rather sweeping claims for the unique virtue of his party's attitude to social security which raised eyebrows on this side. Let me set his mind at rest. I shall not today attempt to detract from his flag waving
I begin by welcoming the fact that the Government feel able to produce such a massive increase in national insurance benefits and produce such a shift of resources to retired persons and those dependent on benefits generally. All of us in this House, certainly all those who take part in these debates, clearly share a general commitment to the alleviation of poverty and the position of the groups we are dealing with today. However, I trust that when the right hon. Gentleman and the Labour Party have got their flag waving off their chest they 483 will continue their policy on a considered basis and attempt to keep up the record
§ The Minister of State, Department of Health and Social Security (Mr. Brian O'Malley)
If the hon. Gentleman listened to the statement made by my right hon. Friend the Secretary of State on 27th March and looked at the terms of the Bill, he must know that for the first time there is a commitment written into legislation that pensions will in future be upgraded in line with the movement in national average earnings
§ Mr. Clarke
I realise that in the Bill the Government have committed themselves statutorily to an annual review and therefore to keeping and maintaining the present position they have reached. If it turns out that they have committed themselves to more than they might have achieved had they not put in that statutory obligation, instead of their again not being able to maintain the improvement of benefits at all this time—as happened under the last Labour Government—they may get themselves into even more difficulty in trying to keep to that obligation, with which they have burdened themselves and successive Governments
Those doubts are not likely to materialise, I trust, but there is this background. Under the last Labour Government we found ourselves in a similar position politically. In 1964 the Labour Party came into office having overbid the previous Conservative Government and put into its election patform an attractive commitment to increase national insurance benefits, with a particular commitment to pensioners. One of the first actions of the Labour Government when they took office in 1964 was to produce legislation giving effect to their election commitment. There was a considerable increase in the real purchasing power of the pension and other associated benefits
I will not enter into the arguments as to whether that rapid commitment in the circumstances of the time led in some measure to the financial crisis which later dogged the Labour Government but, sadly, they were never able to carry on from the particular base they had set themselves in 1964. There was a massive increase in the purchasing power of the retirement pension in 1964, but that purchasing power vis-à-vis prices remained 484 absolutely static for the six years that followed
Since 1970 there has been not a sudden acceleration at any one stage but a steady improvement of the purchasing power of benefits alongside prices. We on this side gradually accepted a commitment to keep those benefits going up at least as fast as prices and finally, after a considered period, saddled ourselves with a statutory commitment to an annual review to keep benefits in line with prices. It was not a sudden surge on that occasion. It was a continual improvement and an extremely respectable record over four years
Now we find ourselves in some ways in a similar position to that of 10 years ago, when the Labour Party then took over. The Conservative Government had won a great deal of respect and support amongst those people who were benefiting from what we were doing, but Labour overbid what we did and have begun their social policy, as they began last time, by putting into effect what is merely an election commitment-—an election slogan—which I believe began as a gleam in the eye of Mr. Jack Jones of the Transport and General Workers' Union in his attempts to improve the public relations of his union at difficult political times
Nevertheless, the Labour Government have overbid what was happening before to a slight but appreciable extent. I concede that what they are doing exceeds modestly our commitment—the review based on prices on a six-monthly basis—and they are, therefore, now going to bring in this new obligation. They are placing upon themselves and on successor Governments a statutory obligation which future Governments will have to live with. That very statutory obligation seems to me, with respect, to be entirely based on sheer overbidding of what we were doing. Something had to be found for the election platform. Our statutory obligation was to keep benefits in line with prices. The Labour Government have now brought in the proposal to keep benefits in line with average wages or prices, whichever is the most beneficial for those in receipt of benefits. They have accepted that obligation quickly—so quickly, indeed, that the right hon. Lady had to accept that she had not had time to consider detailed policy 485 problems and needed further legislation to sort out long-term priorities
The right hon. Lady had no time to deal with detailed choices of priorities and small amendments that could have been made. She has not the resources to do very much to the substance of the National Insurance Scheme this time. The Committee stage of the Bill might as well be truncated because so much is swallowed up by this election commitment that, where there are gaps in the present system, no resources have been left which the House could possibly use to plug them
The Labour Party found itself in opposition from 1970 to 1974 with a not very good record in government. It faced a Conservative Government who were achieving success with social policy. Now, the Labour Government have launched out on policy based on an election commitment. They must settle down now to the serious business of relating their social policy to the resources of Government expenditure and to a slightly more —if I may say so without sounding too patronising—responsible approach to the development of social policy than this particular legislation represents
Finally I visualise, even in the short term, some difficulties being faced in taking on the burden and the obligation which is implicit in this legislation and this review of benefits. One matter I should like the Minister to deal with is the way in which the national insurance contributions have been raised, the method which has been used and which has placed such a heavy increase upon the employer
I am not today advocating that the House should oppose doing this. I am not suggesting that the Bill should not be given a Second Reading because of the expense of any feature of the contribution problem. However, what the Government are doing in the Bill already indicates the difficulties that we shall get into in financing this sort of commitment entered into on such a blanket basis because of an electoral slogan
The large increase in the employer's contribution is a payroll tax and, as there are many right hon. and hon. Members on the Government side who genuinely believe in the fiscal merits of payroll taxation, I hope that the Minister will face 486 up to that and give us some justification for the way in which so much of the burden has been put on the employers. A payroll tax of nearly 50p is being placed on employers. That is what is underlining this change. There was much advocacy in the Labour Party for a payroll tax before the Budget. That is what is presented here. This is the beginning of a payroll tax, one that will have a significant impact on some small employers
I ask the Minister to give us some straightforward justification of the basis of a payroll tax and to tell us how his Government felt able to embark on it in the form of these increased national insurance contributions. Also, in the light of the Labour Government's experience of selective employment tax, can the Minister reassure the House on the likely effects on employment of such a sudden increase in the employer's contributions, particularly as regards the lower paid, those nearing retirement and those groups in marginal employment who proved to be so badly affected under selective employment tax? Will the Minister review the principle of this if there is the possibility of a downturn in demand, a recession in the economy or an increase in unemployment over the coming year? It is an important change in the burden of taxation
I hope that the Minister will not simply repeat what was said in the Budget Statement about merely bringing employers into line with the continental level of contributions, because that comparison cannot be made without bearing in mind the other level of corporate taxation on employers on the Continent
I hope the Minister will accept that in effect the Government have chosen—perhaps they are able to defend themselves and to justify it—a payroll taxation basis for financing a substantial part of the burden of the Bill, and I hope that he will deal quite straightforwardly with that part of the matter when he replies to the debate
§ 6.8 p.m
Mr. Ioan Evans (Aberdare)
I congratulate the Minister on bringing the Bill forward so early in this Parliament. The hon. Member for Rushcliffe (Mr. Clarke) said that we cannot afford this measure. I will not deny that the 487 country is in a financial and economic mess. We inherited that situation from the Tories. However, I remind the hon. Member that a similar situation existed at the end of the war when Sir Winston Churchill, then Prime Minister, told the American Presidential Adviser, Mr. Morgenthau, that Britain was bankrupt. Despite the financial bankruptcy of the nation, in 1945 the Labour Government introduced the Welfare State. The Labour Government passed the National Insurance Act 1946, despite the financial, economic and industrial problems of those days. That Act introduced the most imaginative and generous system of comprehensive social security that this country had ever known
The 1945 Government established the Welfare State and we in Wales are very proud of the fact that it was two Welsh Ministers who were responsible for the great amount of social legislation that went through that Parliament. Jim Griffiths, as Minister of National Insurance, and the late Nye Bevan. as Minister of Health, played a leading part in putting that vast social legislation on the statute book. There were measures governing national assistance and national insurance for industrial injury and the National Insurance Act. My right hon. Friend the Member for Jarrow (Mr. Fernyhough) has given a long catalogue of the achievements of the Labour Government, and it was in those early days that this vast programme of social legislation was put forward
§ Mr. Ivor Stanbrook (Orpington)
I wonder whether the hon. Gentleman has heard of the Beveridge Report and knows that the Welfare State he was talking about was the subject of all-party approval
If the hon. Gentleman will be a little patient, that is the next item. The legislation was put forward because of the demand created during the war years in the fight against Fascism. Those who wanted to fight the evil in Europe also wanted to fight the evil conditions in Britain in the prewar years. The Beveridge Report was the result of deliberations of a committee set up by Lord Greenwood, who was Minister without Portfolio in the Coalition Government, with the agree- 488 ment of all parties. The Beveridge Report had a tremendous response from the people of Britain at that time because they wanted radical changes
If, however, the hon. Gentleman looks back to the debates that took place at that time, he will find that there was then, as there is now, a great division between the Tory Party and the Labour Party, because, although we say that we want things done and we do them, the Tory Opposition say that they are desirable but always find excuses for not doing them
§ Mrs. Elaine Kellett-Bowman (Lancaster)
While he is referring to the implementation of the Beveridge Report, the hon. Gentleman might pay a slight tribute to the Americans for financing it via Marshall Aid
I do not know whether that is relevant to a national insurance debate, but we have allowed the hon. Lady to make her point
Great progress was made during the 1945 Labour Government. But the two periods of Tory Government, 1951 to 1964 and 1970 to 1974, acted as a brake on the building of the Welfare State that had been established in 1946. Whereas from 1945 to 1950 Britain could claim to be leading the rest of Europe in provisions in the social services and national insurance benefits, many European countries are now ahead of us in such provisions
Once again we have a Labour Government, unfortunately a minority Government. Just as in 1945 we had a Labour Government to clear up the aftermath of the war, and just as in 1964 after a 13-year period of Tory Government we had to deal with financial difficulties, so in 1974 we have to clear up the accumulated difficulties in our economic and social affairs brought about by one of the most disastrous administrations the country has ever seen
In 1974 we do not have the ravages of war that we had in 1945; we do not have a deficit of £700 million as we had in 1964. We now have to deal with a deficit running at the rate of £4,000 million, which is our inheritance from the Tory Government
As they have said, there is all the reason in the world for the Government 489 to take the line of least resistance and to avoid fulfilling their promises to national insurance beneficiaries and pensioners. Over 11½ million people will benefit as a result of the Bill. First, we have the financial difficulties which I have mentioned. Secondly, we do not even have a majority in the House to ensure that we get the Bill through
Despite that, and with great political courage, day by day the Government are endeavouring to meet their commitments to the people. That is why the Government will go down in history as endeavouring to fulfil their promises. Here we have an argument from hon. Members opposite to renege on our promises. The Tories are experts at that
We said that we would introduce strict price controls on essential foods. Under the Prices Bill, £500 million is to be provided to subsidise essential foods. That will help the pensioners particularly, as well as every one else, by stabilising prices. We said that we would prevent the rent increases that were pending. The present Housing Minister's first action was to impose a freeze on all rents, both public and private, until the end of 1974. That will help the pensioners who are not in receipt of a rent rebate. We said not only how we would spend the money but how we would raise it. That is why my right hon. Friend the Chancellor of the Exchequer has introduced a programme of tax reforms. Within three weeks of taking office he has introduced a Budget to reverse the inequalities between rich and poor. The wealth tax is already announced to be on the way, and in the meantime a new gift tax is in operation. That will go some way towards the provision of the Government finance needed to meet the commitment in the Bill
One of the most important promises that Labour made as a party was the pledge that the standard rate of pension would be raised immediately to £10 for a single person and £16 for a married couple. Thereafter the pension is to be firmly linked to average national earnings. These pensions, as my right hon. Friend has already said, will mean the biggest increase in the history of the national insurance scheme. If the Bill goes through all its stages, 22nd July will be the earliest date from which those increases will be paid. Furthermore, we are giving 490 the same increases to people receiving long-term supplementary benefits
The influence of the trade union movement on all this has been mentioned. This is a demand made by the old-age pensioners. They have said that this is what they feel that we as a nation should be providing for them in order to meet their difficulties. I am pleased that the trade union movement, the Transport and General Workers' Union, Jack Jones and the TUC have said that they wish the Government to make the sort of provision that is being made today
There are sometimes accusations against the trade unions that they are concerned only with their own interests. Here they are, however, supporting an overdue social measure, and that is why I am pleased that the Government are bringing forward the Bill so early in this Parliament
Finally, may I say how much I regretted in the debate on the Queen's Speech to find that the Scottish and Welsh Nationalists were opposing the Bill by opposing the Queen's Speech itself. I do not know whether they are familiar with the working of Parliament. They voted against the Government's legislative programme, and had there been enough Members to support them in their Lobby the Government would have been defeated. We should have needed another General Election, and we should not have had the Bill before us today. I think, therefore, that the Scottish and Welsh Nationalists have a lot to account for to the people of Wales and Scotland to explain their opposition to the Bill
I am aware that the other parties in the House have expressed dissatisfaction that there has not been more time to look at the Bill line by line and clause by clause. I hope they realise that while it might put us to some inconvenience to be debating this matter all through the night, as it may well be if many Members participate, the inconvenience to us will be little compared with the inconvenience to old-age pensioners if the Bill is not passed at the earliest opportunity
I hope, therefore, that the Second Reading will go through promptly, that we shall deal with the Committee stage promptly and that once more Parliament will have played its part in ensuring that 491 the country again re-establishes the Welfare State and makes the provision for old people that is wanted by everyone
§ 6.20 p.m
§ Mr. Robert Boscawen(Wells)
The hon. Member for Aberdare (Mr. Evans) must have spent a long period in hibernation while he was not a Member of the House. During the past three and a half years the Conservative Government raised the level of pensions by 55 per cent., which is almost double the increase during the period for which the uprating Bill is being produced today. I therefore do not understand how the hon. Gentleman could talk all that rot and bore the House in that way. He had better return to his period as a dormouse. We should be better for it
Like my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe), I should like to make my protest at the fact that the Bill is being rushed through in such an incredibly short period. This Second Reading debate is an enormous travesty of what a Second Reading debate should be on such a wide and vitally important subject. It affects a large number of people but not quite everybody as well and as justly as it should. We should have liked to have had a good deal of time in Standing Committee, as happened with all previous uprating Bills introduced by the former Government, in order to improve these provisions
§ Mr. O'Malley
There is much to be said for Bills of this nature going to Standing Committee for detailed consideration. The stark fact is that had that happened we would have been unable to put the increased benefits into payment on 22nd July. That is why the Bill is being handled in the way it is today
§ Mr. Boscawen
I do not think that is a very satisfactory answer. We could have had a Committee stage upstairs if we had had a Second Reading last week. Secondly, the right hon. Lady suggested that she wanted the House to clarify its ideas on the Bill to help her staff to introduce it. I cannot see that the House can clarify its ideas on this enormous Bill in such a short time
We welcome what I regard as a magnificent uprating Bill. It goes a very 492 long way to helping a large number of people. However, I think there is a danger that, by devoting such a large sum to this wide sweep, on pensions only, the needy groups, the smaller groups and the lesser groups will be forgotten. Once they are forgotten they are apt be pushed behind, as we know from experience. I will mention one or two of these groups later. There is a danger when such a large sum is devoted to the flat-rate increase of the retirement pension and other benefits
I turn to some of the casualties that may suffer from such an uprating. The first thing that I do not think is good is the increase in the supplementary benefit at exactly the same rate as the retirement pension, because the tendency will be to increase the number of people on supplementary benefit. We all know that that happens. We are not saying that we are ashamed of it, but it is essential in the system. We wish to see the means-tested supplementary benefit phased out. It could have been dealt with by widening the differential between the two, by not raising the supplementary benefit quite so high but saving money by doing it—putting it on by increasing the pension a little. In that way we could gradually have moved away from the means-tested benefit, because at some stage it must be done
The tax-credit scheme gets away from the means-tested benefit for those at the higher end of the scale but not for those at the bottom end. I had hoped for new ideas from the Government on that subject. This is one casualty of rushing the Bill. Another issue is that we must study further the question of the married woman's option. We must consider the difference between two single persons contributing in full and drawing their retirement benefit. On the one hand a person gets £20, while on the other hand the married woman who has taken her option draws £16. There is thus a difference of about 25 per cent., and this situation has not been changed
No great thought has been given in recent years to the difference in needs of the single person living in a house alone and of two people living together. That needs more study. Is the differential between the married couple in which the woman opts out and the married couple 493 in which the woman is counted as a single person correct? I think that that should be considered and I should like to hear the views of the Minister, who I know takes a great interest in the matter
Another matter—a detail but one which will concern many people—is the terrific increase in the contributions of the self-employed and the non-employed. I am thinking especially of the woman who cares for aged parents or relatives. She will continue to struggle to keep up her contributions so that when her parents or relatives have passed on she will be able to draw a reasonable pension in her own right. This is a harsh increase in contributions. Some of these people, the non-employed—in name only —and the self-employed, are amongst the poorest in the country. Self-employed people are hit hard from many angles such as unemployment benefit and rent and rate rebates. This is a matter that the House ought to examine carefully in Committee
I am concerned that nothing has been done about grants. Occupants of the Front Bench know that I am especially concerned about the death grant, which has not been increased. When in opposition the Labour Party supported us in trying to get this improved. I am concerned about the small group of aged, needy people who do not get the grant at all, or who get it at a reduced rate. I hope to bring that matter up in Committee
All in all, though we welcome the broad sweep of the Bill, we may well find it detrimental to a number of small groups of people. It was those small groups for which my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) did so much during the three and a half years we were in office. My right hon. Friend tried to extend the frontiers of aid to small, needy groups of all kinds, in particular to the most needy group, the long-term chronically sick and disabled. That represents a casualty of the Bill, and I look forward to hearing a good deal more from the Government—if unfortunately they are to remain in office—about what they will do to help the long-term disabled
§ 6.30 p.m
§ Mr. Bruce George (Walsall, South)
I am proud to be speaking from the Gov- 494 ernment benches so soon after my hon. Friend the Member for Aberdare (Mr. Evans), who represents the constituency in which I spent most of my early life. I welcome him back to the House, and I assure hon. Members that, with his 11,000 majority and because he is such an able Member of Parliament, there is little prospect of his returning to hibernation for a long time to come
I shall be brief. I wholeheartedly endorse the Bill. The Opposition apparently have condemned it for the speed of its introduction. All I can say at this stage is that my constituents would not agree with that condemnation. When I return to my constituency at the weekend, they will be delighted to tell me how pleased they are that this measure has been introduced so speedily
My hon. Friend the Member for Aberdare and I represent areas which knew poverty 30 or 40 years ago and still experience it today. It is easy to think that in this modern age poverty has vanished. It may have in some constituencies, but certainly not in many constituencies represented on this side of the House
The Bill will not eliminate the problems of poverty, but it will go some way towards solving many problems. The Bill is not confined to one narrow area. Some people may think it is confined to old-age pensioners, but I was pleased to hear the Minister say that widows' benefits are to be increased. I believe that in the past widows have been sadly neglected, and when canvassing at the election many hon. Members were made more than aware of the inequalities and of how people felt about the law relating to widows and widows' benefits
I am pleased that the earnings rule for widows is to be changed, and I hope that in the not-too-distant-future this rule will be relaxed even further
I listened with great interest to what Opposition Members said they had done for the poor and for the underprivileged, but the fact is that they managed to throw more people into the area of poverty than had been done for more than a century. Independent research has shown that about one in five of the population today are living on, just below or just above the poverty line. That is not an indictment of the previous Government; it is an 495 indictment of Governments in general that in 1974 we still have, and apparently still tolerate, such a large proportion of our population living in poverty
§ Mr. Timothy Raison (Aylesbury)
Does the hon. Gentleman acknowledge that every time the supplementary benefit rates are raised, by definition one automatically increases the number of people living at or below the poverty line? Is he arguing that the supplementary benefit rate should not be increased?
§ Mr. George
No. Clearly, the definition of poverty and the poverty line varies considerably. It depends how one defines it
Pensioners are pleased with what has happened. It may be that the present pension proposals originated in the glint of one person's eye, but I think probably not, because at a time of economic crisis the Government realised that they had to honour the pledges that they had made to the electorate just a few weeks ago. At a time of economic crisis it is not right to say that we should not raise benefits. A time of economic crisis and inflation is the very time at which we should look after those who are least able to look after themselves
In an article published a short time ago, Mr. Frank Field a spokesman for the Child Poverty Action Group, said:The Government deserves credit for increasing pensions and other benefits .. This represents a real boost in the incomes of a large number of poor people, and has been accomplished at a time of severe economic difficulties.We have been accused by hon. Gentlemen opposite of over bidding. We have not done that. I am proud that, despite the problems facing the Government—problems that are not of their making—they have decided to embark on something that will be expensive, that will not be simple to finance, but something about which many people outside the House—pensioners, the disabled and those who do not enjoy salaries of £4,500 a year and more—will be elated
§ 6.36 p.m
§ Mrs. Elaine Kellett-Bowman (Lancaster)
Like my right hon. and hon. Friends I welcome the pension increases, but I share the disquiet of my hon. Friend 496 the Member for Wells (Mr. Boscawen) that the Bill is not as just as it should be. I feel strongly, like my hon. Friend, that we should have been able to discuss the Bill at greater length in the wider context of Government spending. There are many people in my constituency, for instance, who feel that the money being spent on free contraceptives for schoolgirls and other unmarried people would have been better spent on raising the death grant for the very elderly or providing a death grant for those over 90 years old who get no grant at all
§ The Under-Secretary of State for Health and Social Security (Mr. Robert C. Brown)
Does not the hon. Lady think that it would be more honourable if she conceded that her right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) intended to introduce free a contraceptive scheme?
§ Mrs. Kellett-Bowman
That is not in the least true. The hon. Gentleman is totally misinformed. My right hon. Friend stuck firmly to his guns in making prescription charges for contraceptives except for socially necessitous people who required them. The hon. Gentleman is mistaken in his belief. My constituents feel strongly about this matter
When I was canvassing during the General Election campaign—I go round from door to door between elections, not only during election campaigns —I found that the people I met preferred the steady approach that the Conservatives had to the improvement of welfare and benefits to the once-for-all, flash-in-the-pan approach of the previous Labour Government to which reference has already been made
One provision that has been missed out of the Bill but which was greatly appreciated by many people—a large number have mentioned it to me—was the £10 Christmas bonus. I hope that the money now being spent has not pre-empted that particularly useful provision
I look too at the £500 million to be spent on food subsidies which is the equivalent of £62.50 per pensioner. One wonders whether an indiscriminate subsidy of that dimension across the board is good value for money. I shall not detain the House further, because I know that we have a great deal of work to get 497 through, but I submit that we should have had a chance to discuss the Bill in much greater detail
§ 6.39 p.m
§ Mr. William Hamilton (Fife, Central)
The hon. Lady the Member for Lancaster (Mrs. Kellett-Bowman) has been com mendably brief and I shall try to emulate her example
I have taken part in several debates on this subject, and they become somewhat like auction marts. It is not a bad thing, I believe, for the parties to compete in this sphere if it improves the lot of those who deserve help. That is what both parties have done. I pay tribute to the right hon. Member for Leeds, North-East (Sir K. Joseph), my right hon. Friend's predecessor. He did what he could in his own light and he has a record of which he need not be ashamed. That is not to say that another party cannot do better. Indeed, it should try to do better. I have no doubt that after the next election the Government in power will do better still. This is the essence of progress in our Welfare State
The important principle that tends to be overlooked is that for the first time the pension will be tied to average earnings. It simply means that for the first time in our history pensioners will have union bargaining power. This is an important principle far outweighing the figures enshrined in the Bill
I agree with the hon. Member for Lancaster and my hon. Friend the Member for Walsall, South (Mr. George) about the Bill going into Committee. All Bills should have detailed examination. It is not a convincing argument that if we are to get the increases in the agreed time we must get through all stages in one day, because we could have a retrospective clause. We could have a full Committee stage on the understanding that the proposed increases should be retrospective to Second Reading or the day on which the Committee stage began
Many people are interested in these matters, and inevitably there is criticism about exclusions. The death grant has been mentioned. Indeed it is mentioned repeatedly in every debate on social security. Of course, other priorities have also been mentioned
The hon. Member for Lancaster referred to contraceptives. I do not think 498 that was part of our social contract with the trade unions. This Bill is part of it. The whole success of the exercise depends on the other party to the social contract, or compact delivering the goods
The right hon. and learned Member for Surrey, East (Sir G. Howe) rightly said that unless we produce the wealth we cannot distribute it, still less redistribute it. I said earlier that the most important principle enshrined in the Bill was that the pension was related to average earnings. There is a considerable redistributive element in that. The crucial test of a welfare provision is whether it is redistributive. Politics in this House concern how we redistribute the wealth of the nation
The Bill is an attempt, albeit imperfect and subject to all kinds of criticism, to divert resources from those whom we think have too much to those whom we think have too little. The argument across the Floor of the House will always be about who has too much and who has too little. It is one of the basic conflicts between the two major parties
The Tory Party, generally speaking, looks after the wealthy. A succession of Conservative Government Budgets enshrined this principle. Of course, they give a few crumbs to those who are entitled to family income supplement. That is all right in principle, but it is little more than a crumb of comfort to many people
The hon. Member for Lancaster referred to the £10 bonus. That was the charity approach by the Tory Party that we found extremely objectionable. It was an admission that the basic pension was inadequate. We want to get rid of the charitable element in social security. I hope we will make a commitment not to give the £10 bonus but to ensure that the pension is adequate to make the bonus element unnecessary
The Bill is entitled to a fair wind. I hope that we shall not have another such Bill dealt with in this way. I ask that consideration be given to the retrospective element. I do not think that the period between Second Reading and implementation of the provisions of the Bill can be reduced substantially, although we do not know what automation can do. I am sure that a certain element of retrospection will satisfy many people. We do it with wage claims. Surely what 499 applies to wage claims should apply to some extent in the social security sphere
I hope that the Government will bear in mind, when next they introduce a Bill. that it must be examined in detail in Committee and that there might be consideration of the retrospection element
§ 6.45 p.m
§ Mr. R. A. McCrindle (Brentwood and Ongar)
I sense that the House is anxious to move on to the next stage of the Bill, so I will simply welcome the broad outline of what is contained within it. It would be churlish in the extreme not to pay tribute to the Government for honouring their election commitment as early as they have done. Indeed, there are many parts of the Bill with which few on this side will find it necessary to disagree
I shall try to adopt a similar tone to that adopted by the hon. Member for Fife, Central (Mr. Hamilton). but I slightly challenge one point that he made. He alleged that the £10 Christmas bonus was seen as some kind of charity by hon. Members opposite. I do not accept that. Many hundreds of pensioners to whom I have spoken welcome the receipt of this money and do not see it as charity. I cannot understand why, when we try to improve the situation of pensioners at a time of the year when certain festivities take place by giving them an extra £10, that should be singled out as charity
I should like to make four points on the Bill. The first concerns the earnings rule. I am disappointed that in a Bill which takes such a wide sweep at the reform of national insurance a rather broader attack on ending the earnings rule has not resulted. I have listened to explanations by Government after Government for the earnings rule not being abolished but simply abated
I understand that £160 million would be the cost of complete abolition. Therefore, we must be careful not to recommend irresponsibly that this be done. On the other hand, I wonder whether the Government are aware of the intense opposition among many old people to the operation of the earnings rule. They see it as somehow qualifying the independence to which they have looked forward for such a long time. When told that it is the retirement pension and technically 500 they have not retired and so it is a fair rule to adopt, few accept it. I wish that there had been a wider attack on the ending of the earnings rule
Secondly, I refer to maintaining the value of the pension. In this connection I should like to take up another point made by the hon. Member for Fife, Central. He said that to tie the pension to earnings was to bring the bargaining power of trade unions to the side of the pensioners for the first time. Looking back on the period of the Conservative administration, he will find that, far from pensions having just kept pace with earnings, they went ahead faster. I do not have the figures to hand, but I recall that average earnings went up by about 48 per cent. and pensions went up by about 55 per cent. in that period. I do not necessarily dissent from the hon. Gentleman's view, but I do not wish him automatically to assume that pensioners will do better under that rule under his Government than by the approach of the previous administration
Thirdly, I refer to the reviewing of pensions. The idea of constantly reviewing pensions is accepted on both sides of the House. My right hon. Friend the Member for Leeds, North-East (Sir K. Joseph), the former Secretary of State for Social Services, introduced that innovation in 1971. The Conservative Party, in its election manifesto, indicated that in future pensions and benefits should be reviewed at six-monthly intervals. I regret that the Government have not taken advantage of introducing that proposal into the Bill. In a period of almost unprecedented inflation, which hits very hard the section of the community about which we are concerned in the Bill, reassurance on the maintenance of the value of pensions and benefits on a regular basis, as proposed by the Conservative Party in its election manifesto. would be extremely welcome
I wish to echo the points made by my hon. Friends the Members for Wells (Mr. Boscawen) and Lancaster (Mrs. Kellett-Bowman) about the death grant. I deeply regret that this has been omitted from the Bill. I hope that the Minister of State, for whom I have considerable regard, will not be too put out if I recall the passion with which he attacked the Conservative Government for failing to increase the death grant in the 1972 or 501 1973 uprating Bill, a point on which he was supported by the right hon. Member for Blackburn (Mrs. Castle).
I was one of those Government back benchers who on that occasion, with some temerity, abstained and also voted against the Government to express dissatisfaction on the matter. I hope the Minister of State will understand how disappointed we are, with all those election promises of the Labour Party being implemented, to find that one which goes to the very heart of poverty is still not being enforced. I know that Rome was not built in a day, and that will probably be the line adopted by the Minister in reply, but was no thought given to introducing temporary assistance to those in greatest need? Could consideration not have been given to increasing the death grant where the deceased or the beneficiary was in receipt of supplementary benefits?
The hon. Member for Rotherham (Mr. O'Malley) accused us two years ago of paying only £30 when £70 was the average cost of a funeral. It will not have escaped his notice that with inflation continuing apace the cost is now closer to £100. I hope that the Minister will come back on this point as quickly as possible with a recommendation for an increase.
I turn now to a subject which I raised with my own Government, the failure to extend any of the benefits outlined in the Bill to British citizens resident abroad. I hope that the Government will pay particular attention to this point. In the last Parliament the Labour side tended to dismiss it as an attempt to provide benefits for people living in Spain and Portugal who did not require them. I say with all possible compassion that this is demonstrably not so. These people have no Member of Parliament, and since I championed their cause I have received vast quantities of correspondence. I have letters which I should be delighted to show the Minister which reveal that much hardship is suffered by people who may have gone to those countries almost entirely for health reasons and now find, with inflation rampant, that they still receive only the pension which prevailed in this country when they left. Very real hardship is being experienced.
Like their predecessors, the Government are being blind to these cases. Many of these people are faced with the simple choice of continuing to press 502 for an increase in the pension or returning to this country and becoming a burden on the National Health Service. For those reasons I hope that the Minister will be able to say what progress has been made in the discussions between Britain and Spain and Portugal on a reciprocal agreement. If there is no likelihood of that agreement bearing fruit in the near future I hope that the Government will be prepared to take interim measures to protect this section of British society which feels it has been long neglected.
§ 6.57 p.m.
§ Mr. William Molloy (Ealing, North)
I thank the hon. Member for Brentwood and Ongar (Mr. McCrindle) for his generous remarks about the Government's endeavours in the Bill. I add my congratulations to those already offered to the team that was responsible for preparing the Bill and thus implementing the Labour Party's General Election pledge. It is a healthy sign when all parties are competing to see who can do best in social services. The former Government's health and social security team tried hard and endeavoured to do a good job. Ironically, their greatest adversaries were sometimes sitting alongside them, and in that respect their endeavours were indeed brave.
We must not be too complacent about our progress so far. The massive social reforms which were introduced by James Griffiths and Aneurin Bevan are now 25 years old, and progress since their day has been far too slow. The political parties may be prepared to compete, but often the real pressure is exerted by people outside the House of Commons. I wonder whether the time has not arrived to accept that there are people pf retirement age who are frustrated from contributing to the economy by the earnings rule. I congratulate the Government on easing that situation, but the time has now come to abolish that rule.
In spite of our economic troubles and the prices problems, we must now move on to the ultimate stage of abolishing the contributory element under which the employer and the worker buy a fancy-coloured stamp which is subsequently defaced. We must move to the simple solution produced by Nye Bevan, in spite of the blandishments of the experts, 503 of a free comprehensive health service. The health service should be paid for out of general taxation and should cover all aspects of health from the cradle to the grave.
§ 6.58 p.m.
§ Mr. Ivor Clemitson (Luton, East)
The Bill in some ways takes a useful step towards making contributions more equitable with a reduction of the flat-rate contribution by 9p, the raising of the upper limit below which graduated contributions are to be paid, the increase in the percentage of graduated contributions, and so on. These are moves in the right direction but I should like to see a further move along that road. I should like to see measures introduced into the graduated contribution system by which the lower paid would pay less and the higher paid more. Eventually I should like to see the flat-rate contribution, which is nothing more than a form of poll tax, eliminated. I want to see emphasis on the principle of payment according to ability and receipt according to need.
The increases are extremely welcome. This is the largest single rise ever and it represents the fulfilment of clear election pledges. The Government have linked the increases with average earnings rather than with the retail price index. These things are extremely welcome.
However, we must be careful not to be carried away by euphoria. Figures in April last year showed that the lowest average earnings for male manual workers over 21 years were £37 a week. Even using these figures, which are almost a year old, the new pension for a married couple is only 43 per cent. of that amount. It must now be below 40 per cent. if one is to take the latest lowest average earnings figure.
We must not only keep pace with rises in earnings but we must over the years increase the percentage which pensions and other benefits represent in relation to earnings. I welcome the Bill for its increased benefits and because it is a clear fulfilment of election promises and moves towards a greater redistributive element in contributions, but let us never be satisfied with our progress in this sector.
§ 7.1 p.m.
§ Mr. Timothy Raison (Aylesbury)
The debate this afternoon reminded me of something which was apparent in the last Parliament. Day in and day out in discussion of social policy Conservative back benchers had much more to contribute than Labour back benchers. Anyone who has heard today's debate will acknowledge that there has been from the Opposition a string of speeches with important and relevant points, whereas the greater part of Government backbench contributions consisted of either references to admirable figures such as Aneurin Bevan and Jim Griffiths or pure party polemics.
I exempt from that criticism the hon. Member for Fife, Central (Mr. Hamilton), who made a reasoned speech, but he may be in for a little disappointment when he stays to hear discussion on the tying of the pension to average earnings. The clause relating to that shows that the matter is not as simple as he thinks.
The Opposition welcome the uprating embodied in the Bill. I congratulate, in her absence, the Secretary of State on her achievement. When we have listened to her during the last few weeks, the right hon. Lady has reminded us from time to time of a magniloquent actress carrying out a series of farewell engagements. But we respect her and hope that the day of her retirement comes soon and that she enjoys the pretty village in my constituency, where no doubt she will be spending it.
If I were a Secretary of State for Education and Science I would not share the enthusiasm which has been felt on the Government side. It is evident in the short time of this administration that while the Secretary of State for Social Services has scooped the pool, the Department of Education has had nothing at all.
We must recognise that the Bill raises problems. There will be imposed on industry a heavy burden—my hon. Friend the Member for Rushcliffe (Mr. Clarke) was right to stress this—at a time when there are serious problems in industry regarding profitability. Higher contributions will do nothing to case the situation and they could also hit hard some self-employed people.
505 In the strategy of which the Bill is part, the commitment to massive food subsidies seems particularly perverse. If £500 million is to be spent on relief for housewives, what could be done if the same amount were spent on family allowances? It is relevant to the discussion of the overall strategy to quote Frank Field, formerly of the Child Poverty Action Group, who stated in an article in The Guardian on 2nd April:It is now clear that the reason why family allowances were not increased in the Budget was that they are given a low priority by the TUC; lower than food subsidies, for example. But not only are food subsidies a less effective way of protecting the living standards of the most vulnerable group—i.e. families with children—than family allowances, but this approach may prove to be a very expensive miscalculation.
§ Mr. O'Malley
Before the hon. Gentleman starts complaining or quotes people who say that the Labour Party gives a low priority to family allowances, he should be aware that his party gave no priority at all to family allowances. The late Iain Macleod gave a promise in 1970 to Frank Field and the Child Poverty Action Group, but that promise was never kept.
§ Mr. Raison
Our party came up with a tax-credit scheme which represented the most positive way to tackle poverty yet put forward. We welcome the benefits in the Bill, but the Government have got themselves boxed in by a combination of the benefits and their foolish commitment to enormous food subsidies. In spite of what the Secretary of State said, the Government do not have a strategy for family poverty.
When in opposition, the Secretary of State said in the Standing Committee on the Social Security Act 1973:We want family allowances increased on a statutory basis every year."—[OFFICIAL REPORT, Standing Committee E; 1st March, 1973, c 755.]The right hon. Lady voted for that, as did the Minister of State, and she slated the family income supplement. She also sought an annual review of death grants and maternity grants, as well as an earnings review. But we are not seeing these things now. Worse still, we see that the tax-credit scheme is being dropped, or is at least disappearing into limbo. What is needed is progress towards the first stage of tax credits, a 506 stage at which it would be possible to help families, in particular in regard to the first child. The Government have a vacuum in their social policy rather than a coherent strategy as the Secretary of State has argued.
We should like to see more encouragement to people drawing benefits to earn as much as possible. We welcome the improvement in the earnings rule, but the time is coming when this should be included in general review procedure. In addition, we should like to see the disabled have a better chance to earn while drawing benefit. We should also like to see general improvements in the disregards for supplementary benefit, which have not changed since 1966. For instance, there is an assumption in assessing entitlement to supplementary benefit that modest savings of £1,800 are assumed to provide an income of £6 a week, and £1 of this is disregarded. That is not realistic. Who could derive that income from such a sum? There is also a case for different arrangements concerning disregards for married couples as opposed to single people. These points must be pressed in the months ahead.
We have severe criticism of the Government's overall social and economic strategy, and during the Committee stage this evening we shall particularly press the question of the six-monthly review. However, taken in isolation we welcome the help given to pensioners and other groups in the Bill and we shall support its Second Reading.
§ 7.8 p.m.
§ Mr. O'Malley
Listening to the hon. Member for Aylesbury (Mr. Raison), I found it hard to believe that he was speaking for a party which failed so badly over its period in office to look after the interests of families in which child poverty has been endemic and rampant, and failed completely to deal with even the basic financial requirements of retirement pensioners. After the progress which the hon. Member for Rushcliffe (Mr. Clarke) claimed for retirement pensioners under the Conservative Government, when his Government went out of office the single retirement pension represented a lower percentage of national average earnings than in 1967, nearly six years before. That was the kind of progress made for pensioners under the Conservative Government.
507 Both the hon. Member for Aylesbury and the right hon. and learned Member for Surrey, East (Sir G. Howe) talked about everything but what is in the Bill. They talked about the Budget and family poverty in general but were loth to criticise any details of the Bill. The right hon. and learned Gentleman said that this Government had no coherent plan on social provision. Our plans for child endowment and our long-term pension plans will certainly not condemn millions of retired people to dependence on means-testing as the Conservative Social Security Act 1973 would have done.
Many voices have spoken from the Conservative Party tonight. They have not spoken with one voice. The right hon. and learned Member for Surrey, East was careful to welcome the Bill and to make no criticisms of its content, but that was not the case with his back benchers. The provision written into the Bill for guaranteeing pensions to rise in future in line with national average earnings is a new, indeed a historic, feature of legislation in this country, yet the hon. Member for Rushcliffe, apparently, unlike his right hon. and learned Friend, was worried about it. He said that it was not "responsible" financing. That is an example of what the hon. Member for Aylesbury called the superior contributions of Conservative Members—a suggestion that we should move back from a system in line with average earnings to the inferior price-proofing formula of the last Government.
§ Mr. Kenneth Clarke
I hope that the hon. Gentleman will recall that I was contrasting the way in which we moved over a period to a statutory commitment to a regular annual review in relation to prices and managed to carry out that commitment steadily, having made it as part of a coherent strategy, with the way in which his Government have rushed in with this Bill, immediately, breathlessly, after an election simply to overbid our achievement. I hope that he will read what he has said. His approach is not reassuring me that this commitment, however important, is being undertaken in a responsible fashion.
§ Mr. O'Malley
I am grateful. The hon. Gentleman is making my task easier by the minute. According to him, this 508 Government "rushed in" with a major rescue operation for retirement pensioners, for widows and for other longterm beneficiaries who were in such difficulties as a result of the previous Government's policies. We make no apologies for rushing in; rather the reverse. I am sorry that he apparently does not favour bringing in this substantial increase by 22nd July, the first available date.
§ Mr. Peter Hordern (Horsham and Crawley)
The Minister is making a big point about the last Government's record on pension increases and the commitment of the present Government with respect to average earnings. I think that he will allow that this record demonstrates plainly that, under the last administration, the increase in pensions exceeded the level of the average increase in earnings. He was very selective in his choice of 1967 as the date for his example of what proportion of earnings was represented by the pension. How does the Conservative record compare with late 1969?
§ Mr. O'Malley
My figures are not wrong. If we compare the situation in 1969 and that towards the end of the Conservative period of office, we see that there was not a forward progress, as the hon. Member for Rushcliffe claimed. In fact, pensioners were gradually but inexorably moving backwards.
I need not have raised all these contentious matters. I had thought that this debate would be a happy affair and that we should be able warmly to congratulate each other, but hon. Members opposite have made provocative speeches to which I thought it necesary to reply at least in some measure. Public opinion and the opinion of hon. Members generally has given a warm welcome to the Bill. This kind of increase is badly needed by the pensioners.
I am delighted—I say this in all friendship—that the Conservative Party has changed its mind about whether there should be an uprating to £10 and £16 and whether that was a responsible thing to do. On one of the last occasions on which I was engaged in Parliamentary Questions, I asked the then Parliamentary Secretary, who knew this subject so well during his stay in office:Is it not clear that the best way to help the pensioners is for the Government 509 to give an immediate pension increase of £10 for single persons and £16 for married couples? If this Government will not take that step, then after the election the Labour Government certainly will.The hon. Gentleman gave me a birthday present when he said in his reply:Would the hon. Gentleman now like to say how much his extravagant promise to the pensioners would cost, and who would pay for it?"—[OFFICIAL REPORT, 22nd January, 1974; Vol. 867, c. 1429–30.]We are keeping that "extravagant promise" and I am delighted that no hon. Member—or almost no hon. Member—believes any longer that it is extravagant. If anyone who wanted to take that view says that this is a U-turn, it is a U-turn which every person of good will in the House can welcome and respect.
The hon. Member for Rushcliffe asked about the decision that employers should pay what my right hon. Friend described as the lion's share of the cost of the uprating. Employers will be paying 68 per cent. of the total cost, employees 11 per cent. and the Exchequer 18 per cent. So far as our social contract with the trade union movement is concerned, therefore, 86 per cent. of this uprating will be met by Exchequer supplement and the employers, and only 11 per cent. from employees.
I could enlarge on the justification for that, but what we are doing is strictly in line with what the previous Government did in the Social Security Act 1973, under which, by April 1975, employers would have been paying an annual rate of about £350 million more than under the National Insurance and Supplementary Benefit Act of 1973 at the current contribution rate. So I do not think that there is any difference between us, as official parties, that employers should be required in future to pay a higher percentage of the total cost than in the past.
The hon. Member for Brentwood and Ongar (Mr. McCrindle) mentioned the death grant. We are very conscious that provision about this is not in this Bill. The hon. Member had no need to remind me and my right hon. Friend of our speeches on this subject. We looked those speeches up when we were considering what could be done in the uprating. Quite simply, apart from the global cost 510 of £1,268 million in a full year of the uprating, it was imperative on this occasion to slim down and streamline the legislation as much as possible. That is the basic reason why this is a much simpler Bill than many others of its type. We are concentrating resources on the £10 and the £16 pension.
The hon. Member for Wells (Mr. Boscawen) took a different view from that of his Front Bench. On 27th March the right hon. and learned Member for Surrey, East had welcomed the fact that supplementary benefit rates were to be moved in line with pension rates. But the hon. Member for Wells thought that that should not have been so. In a period of rapid inflation such as we are experiencing today, it would have been indefensible to have said to retirement pensioners on supplementary benefit—who, therefore, are by definition the poorest section of retirement pensioners in the community—that they should receive less in total as a result of the uprating than any other section of retirement pensioners. I grant to the hon. Gentleman that it is desirable, as my right hon. Friend the Secretary of State said, to get a move and a switch, not only with retirement pensioners but also with other beneficiaries, away from dependence on means-tested supplementary benefit.
The right hon. and learned Member for Surrey, East asked about the capacity of the staff to carry through the uprating. The House generally knows the problems of staffing that we have and the problems arising from the complex and sophiscated nature of our social security system. I believe that the staff, on whom we have to rely so much, will do their utmost to see that these pensions and benefits are brought in on the appointed date. But if the right hon. and learned Gentleman wishes to be kept informed of any developments, no doubt he will table Questions, which I should be pleased to answer.
The right hon. and learned Gentleman commented about the fact that short-term benefits had not risen by as much as long-term benefits. That is true, but they will be increased by 17 per cent. over present rates. This increase can be expected, even at the present rate of inflation, to exceed the move in retail prices over the period between the last uprating and the proposed uprating, 511 which period covers 10 months. So we are raising these rates by 17 per cent. The previous Government gave an 8.9 per cent. increase in short-term benefits over a period of 12 months.
The right hon. and learned Gentleman asked how we would make good the shortfall mentioned in paragraph 12 of the Government Actuary's Report. As my right hon. Friend the Secretary of State has said, we shall be introducing any necessary legislation and informing the House of how we shall be making good that shortfall.
Lastly, the right hon. and learned Gentleman asked about the future of the Social Security Act 1973. I say two things to him. We have made plain our opposition to the type and level of provision of that Act from the day it was published as a Bill, through all its progress through the House of Commons and subsequently. We are not prepared to see an Act remain on the statute book unamended when it treats women as second-class citizens and condemns millions of our people in retirement—well into the twenty-first century—to having to depend on means-tested benefits of one kind or another.
It is appropriate for my right hon. Friend the Secretary of State and myself to consider carefully everything that the right hon. and learned Gentleman has said on this subject. I know of his pedigree and stable on this matter. Along with Mr. Arthur Seldon, the right hon. and learned Gentleman was a member of the "STOP" campaign when the Crossman Bill was going through the House. The right hon. and learned Gentleman has put forward serious views, and we shall consider them.
We on the Government benches are not hostile in any sense to the provision of good occupational pension schemes. Such schemes are highly prized, rightly and understandably, by men and women who are fortunate enough to be in good schemes. Therefore, in any future policy emanating from the present Government, that will be one of the basic principles and premises on which we shall operate.
§ Mrs. Kellett-Bowman
Millions of married women like the married woman's option. Will the Government be depriving them of that option, which we always allowed them?
§ Mr. O'Malley
I understand the hon. Lady's point, but it would be wrong on Second Reading of this Bill to indulge in long-term thinking about the shape of future pension schemes, including the married woman's option.
§ Mr. McCrindle
On the question of occupational pension schemes, it is important that there should be a message coming forth very clearly from the Government Front Bench tonight to the industry and to the many employers who are now well advanced in making their arrangements under the Social Security Act 1973, accepting that the Government will no doubt want to introduce amendments in accordance with the philosophy which they have outlined over the years. But can the hon. Gentleman at least say that his advice to employers and to people in the pensions industry would be to go ahead with the arrangements for these occupational pension schemes in the knowledge that the basic structure of the Social Security Act is unlikely to be changed?
§ Mr. O'Malley
I am in communication with many of the most important organisations which are concerned with this matter in the pensions world, and my right hon. Friend will be making a statement to the House at the earliest possible opportunity, a statement which clearly has to be absolutely consistent with our policies in the past.
§ Sir Geoffrey Howe
This is a matter of importance to the House as well as to those concerned with the provision of pensions. I beg the hon. Gentleman to study seriously the speech that I quoted made by his former right hon. Friend, in particular the sentence:If the swing of the political pendulum is to swing the pensions pendulum as well, we may be in for a period of quite appalling uncertainty.Will the hon. Gentleman and his colleagues do everything possible as quickly as possible to end that uncertainty?
§ Mr. O'Malley
Certainly my right hon. Friend the Secretary of State will announce our decisions on our interim proposals affecting the Social Security Act 1973 at the earliest possible date. It would be going further than the contents of this Bill to say more.
513 In giving a second reading to the Bill, which I hope the House will do in a few moments' time, we shall be giving a Second Reading to one of the most important measures which the present Government will be introducing in this Parliament, because we are making a beginning with this uprating in transferring resources on a massive scale to the poorer and the older in the community. It is on that basis that I commend the Bill to the House.
§ Question put and agreed to.
§ Bill accordingly read a Second time.
§ Bill committed to a Committee of the whole House.—[Mr. Dormand.]
§ Further Proceedings stood postponed, pursuant to the Order of the House this day.