Commons Sitting of 1 July 1974

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRAYERS
  PRIVATE BUSINESS
    GREATER LONDON COUNCIL (MONEY) BILL
    Read the Third time and passed.
ORAL ANSWERS TO QUESTIONS
  INDUSTRY

    Public Investment
    Mr. Rookerasked the Secretary of State for Industry what is his latest estimate of the amount of public funds being directed into private manufacturing industry in the United Kingdom.
    The Secretary of State for Industry (Mr. Anthony Wedgwood Benn): About £700 million, net of repayments, in 1974–75.
    Mr. Rooker: Will my right hon. Friend press this policy of opening up the books of British industry with the utmost vigour and not be put off by the
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    more mediocre sections of British management, as typified by the Chairman of Dorman Smith Holdings, who has probably taken from the State everything he thinks he is entitled to, anyway?
    Mr. Benn: I share my hon. Friend's feeling. The Trade and Industry Sub-Committee recommended that the Government should be open in publishing the figures, and that I intend to be.
    Mr. Tom Boardman: Will the right hon. Gentleman also give the converse—the amount of public funds provided by private manufacturing industry in the form of taxation, direct and indirect, and so on?
    Mr. Benn: I share the right hon. Gentleman's view that the wealth of the community is created by working people and not solely by the boards of private companies in manufacturing industry. The wealth is created by those who work in industry, and those people must know the facts.
    Mr. Skinner: Does my right hon. Friend not find the argument about companies paying tax and being subsidised, as put by the right hon. Member for Leicester, South (Mr. Boardman), more than a little cock-eyed? Surely most working people have to pay tax, and it is part of their tax which goes to help these private companies. Where is the right hon. Gentleman's argument, therefore?
    Mr. Benn: My hon. Friend is right. We shall make sense of these industrial decisions only if more light is thrown on the extent to which we are interdependent, and that is what I intend to do.
    Mr. Eldon Griffiths: I appreciate that the right hon. Gentleman is anxious, for ideological reasons, to pursue this vendetta against private industry. Is it not a fact, however, that during the past five years public sector industries have received £5·3 billion by way of aid from the State? We do not need to begrudge that, but would not the right hon. Gentleman do more for national unity if he refrained from a vendetta against one sector of industry and concentrated on making both the private and the public sectors more confident about the future?
    Mr. Benn: The hon. Gentleman knows that one of the arguments I have already used is that the decision by the previous Government to force the public sector to run at a loss was yet another form of subsidy for private manufacturing industry. The hon. Member would do better to admit candidly that there are figures which should be published, because the public are entitled to them. He should accept that as the basis of the recommendation of the Trade and Industry Sub-Committee, and he should not pretend that this constitutes a statement of Government policy about the firms concerned, which he knows quite well is not the case.

    Companies (Government Proposals)
    Mr. Peter Reesasked the Secretary of State for Industry when he expects to complete his study of proposals to designate 100 top companies which should be subject to planning agreements.
    Mr. Moonmanasked the Secretary of State for Industry when he expects to complete his proposals relating to the planning agreements.
    The Minister of State, Department of Industry (Mr. Eric Heffer): The Government will be announcing their proposals in due course.
    Mr. Rees: In view of the statement by the Chancellor of the Duchy of Lancaster that the Government do not want to engineer a confrontation with the private sector of British industry, will the Minister confirm that should his consultations
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    with industry and the top 100 firms show implacable hostility to his proposals he will, perhaps, abandon his ideas of extending public control over the private sector.
    Mr. Heffer: The proposals will not be my proposals or my right hon. Friend's. They will be the Government's proposals and they will be based upon the manifesto upon which the Labour Party fought the last election. Of course, the 100 top companies were categorised by the Conservative Government in their counter-inflation policy.
    Mr. Roy Hughes: Will the Minister assure the House that he will continue to enlighten the British people about the true situation, since, according to reliable economic forecasts, all they have to look forward to is a level of unemployment exceeding 800,000 in the near future, very low levels of investment for British industry, and a huge trade deficit? That is what the Tories are trying to defend.
    Mr. Heffer: My hon. Friend is correct. The Government intend to enlighten the British people about the present economic situation, and we also intend to deal with the situation by using new methods and new ideas to solve our problems in a positive and rational way.
    Sir J. Eden: Are these to be Government proposals, or are they proposals of the Labour Party? What consultations has the hon. Gentleman had with the chairmen and shareholders of the companies?
    Mr. Heffer: I assume that the right hon. Gentleman is aware that Members on the Government side of the House happen to be members of the Labour Party. They also fought the election on the basis of a manifesto drawn up by the Labour Party. We have made it absolutely clear that full consultations will take place once the proposals are announced.

    Motor Cars
    Mr. Madelasked the Secretary of State for Industry if he will estimate the level of motor car production for the remainder of 1974.
    Mr. Hal Millerasked the Secretary of State for Industry what forecast he has of demand for new cars in 1974 and 1975: and what is his estimate of the

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    implications of that forecast for profitability and future investment in the motor industry.
    The Under-Secretary of State for Industry (Mr. Michael Meacher): Demand for motor cars is sensitive to a number of home and overseas influences and the forecasts are not sufficiently precise to justify publication. Changes in demand are only one of a number of factors influencing production, profitability and investment.
    Mr. Madel: Does the Minister agree that unless there is a much higher level of activity in the motor industry employment in that industry will be at risk? In view of the need to develop engines which use less fuel, which is expensive in development costs, will the hon. Gentleman urge upon the Chancellor of the Exchequer the need to reduce the present level of taxes on the motor industry if we are to guarantee full employment in it?
    Mr. Meacher: The level of activity is very important, but it is a matter for the industry itself, of which it should be expected, according to the level of demand, to be able to take account. We are prepared to consider any assistance requested under the Industry Act, but any relaxation in hire-purchase charges or credit controls, or changes of tax, such as the hon. Gentleman requested, is a matter for my right hon. Friend the Chancellor of the Exchequer. I shall make sure that he is informed of what the hon. Gentleman has said.
    Mr. Ronald Atkins: Is my hon. Friend aware that the motor car industry's production is suffering throughout the world—in Germany, Japan and elsewhere—and that that is not due everywhere to British taxation?
    Mr. Meacher: My hon. Friend is entirely correct to say that a major problem for the car industry is the depressed state of the economies around the non-Communist world. The May 1974 registrations in Japan were down by 45 per cent. The European car market is expected to decline considerably next year. What was a significant disadvantage for the British motor car industry was the three-day working week. The loss of output of both motor cars and commercial vehicles in the first quarter of this year compared with the third
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    quarter of 1973 was no less than 20 per cent.
    Mr. Miller: May I help the Minister with the estimates of the motor car industry itself for production and demand? Its latest estimate, in June, of the demand in the home market—[HON. MEMBERS: "Question."] Is the Minister aware that the motor industry's latest estimate, in June this year, of demand in the home market shows a drop of 27 per cent. compared with last year, and that the estimate for production, although showing a drop of only 6 per cent. depends on the export market and also means that a large number of cars will be going into stock? In view of the cost of money at present, will the hon. Gentleman take steps to ensure an increase in demand in the domestic market for the motor industry?
    Mr. Meacher: I am well aware of the facts to which the hon. Gentleman draws attention, but I draw his attention to the fact that the then DTI investment intentions inquiry undertaken at the end of last year indicated a 13 per cent. rise in manufacturing investment this year, but that as a result of the three-day working week it collapsed almost to zero, although I am glad to say that it has now significantly improved.
    Mr. Heseltine: Will the hon. Gentleman tell the House why the figures to which he refers were collected after the end of the three-day working week?
    Mr. Meacher: The figures to which I referred were collected before the three-day working week, immediatly after, and most recently, some time after it ended. They showed the pattern to which I referred.
    Mr. Heseltine: Does the Minister realise that I have here the document on which he relies, which clearly states that the contributors were asked early in April and that the replies were received in April and May?
    Mr. Meacher: I have already referred to those figures, but I have drawn attention to figures which come after those to which the hon. Gentleman has referred.

    Nickel (Exports)
    Mr. Patrick McNair-Wilsonasked the Secretary of State for Industry if he

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    will take action to limit the export of wrought nickel, in view of the present shortage facing industry; and if he will make a statement.
    Mr. Meacher: No, Sir. Although there is a tight supply position in nickel products there is no evidence that export controls would be warranted.
    Mr. McNair-Wilson: Is not the Minister aware that as a result of the steep increase in the exports of nickel British manufacturers are having to pay a surcharge of between 12 per cent. and 15 per cent. to import the same product, and that this will necessarily be reflected in the cost of their products to consumers in this country? Will he take action to make sure that this international conspiracy in the nickel market is brought to an end?
    Mr. Meacher: The export position of nickel has historically been one in which Britain has been a net exporter. I do not believe that there is a special problem at present, inasmuch as neither producers nor consumers have told us that they have serious difficulties. We have received no complaints or representations about supply. As to the question of an international conspiracy, I draw the hon. Gentleman's attention to the fact that it is as a result of the action of his Government that we can no longer take unilateral action under the regulations of the EEC to impose an export ban.
    Mr. Bruce-Gardyne: Will the Minister examine the role that the Price Commission plays in all this? May we take it that, as usual, it is exacerbating the problems of the customers for wrought nickel and also the balance of payments by pumping wrought nickel out of this country to find more attractive and desirable markets abroad, when it is needed here?
    Mr. Meacher: I seem to recall that the Price Commission did not originate on the Labour side of the House, but I am glad to be able to inform the hon. Gentleman that the Price Code is to be reviewed this summer.

    Investment Intentions (Inquiry)
    Mr. Pardoeasked the Secretary of State for Industry on what date his Department intends to publish the results
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    of its next inquiry into investment intentions.
    Mr. Benn: On 7th October 1974.
    Mr. Pardoe: I am most grateful to the right hon. Gentleman for that reply. Is he aware that the last survey of investment intentions carried out by his Department was done before the Budget results had sunk fully into the consciousness of industrialists, and that therefore they have not had sufficient time to take account of them? If the new survey shows a pessimism corresponding to that of the last one, what steps will the right hon. Gentleman take to encourage new investment? In particular, how does he intend to distinguish between what will be profitable and what will be unprofitable investment?
    Mr. Benn: The hon. Gentleman will no doubt have seen the Financial Times survey of business opinion, published today, which shows that three times as many businessmen are optimistic about the future today as there were in the first three months of this year, when the previous Government left office. He will also know that there has been a general increase in confidence since the previous Government left office, and that during the period of the last Government there was a collapse of investment, in marked contrast to the substantial increase that occurred under the previous Labour Government. He will also well know that the Government's policies for industry will be designed to achieve, and will achieve, an increase in investment.
    Mr. Eldon Griffiths: If the right hon. Gentleman thinks that there has been an increase in confidence he simply does not understand what the English language means. May I ask him two questions? First, in the June survey of industrial investment intentions there is what is described by his own Department as a substantial weakening of investment intentions. What will he do about that? Secondly, will he give an assurance now that the next survey of investment intentions, which is due in early September, will be published on its due date and will not be postponed or suppressed for electoral reasons?
    Mr. Benn: The hon. Gentleman should not assume that we shall do what his

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    Government did in delaying the publication of key figures. If he disagrees with the Financial Times survey, perhaps he will sort that out with the Financial Times. I have quoted the Financial Times survey. I remind the hon. Gentleman that investment rose by 18 per cent. under the last Labour Government and dropped by 15 per cent. under his Government. That is the actual investment performance. I hope that the hon. Gentleman will remember that some of the reasons for the collapse of investment intentions during the last few months of the last Government were, first, the collapse of the boom, second, the oil situation, third, the cuts made by the last Chancellor of the Exchequer in December and, fourth, the disastrous three-day working week, for which the hon. Gentleman shares responsibility.

    Regional Employment Premium
    Mr. Radiceasked the Secretary of State for Industry whether he will now increase the regional employment premium.
    Mr. Heffer: As my right hon. Friend the Chancellor of the Exchequer said in his Budget Statement, we intend to continue the existing rates of payment beyond September 1974 while considering further possibilities for the future.
    Mr. Radice: Does my hon. Friend agree that the REP has been seriously eroded by inflation? Further, does he accept that restoring the REP to its original value would help the regions to provide effective protection against the high level of unemployment that is forecast for 1975?
    Mr. Heffer: I think that my hon. Friend is aware that the determination of the REP is not within the scope of my Department. The Department of Industry, of course, has a view on this matter. We are all concerned about inflation and we feel that steps must be taken to deal with it.
    Mrs. Kellett-Bowman: Will the Minister and his right hon. and hon. Friends bear well in mind that the regional employment premium is extremely damaging to intermediate areas such as the ones that I represent, in Lancaster? Therefore, will the Minister do nothing to increase the
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    premium, and will he try to persuade his right hon. and hon. Friends to abolish it?
    Mr. Heffer: That may be the view of the hon. Lady but it is not the view of the CBI or the TUC. They favour very much the continuation of the REP and they have expressed opinions that it might be increased. Surely the hon. Lady is aware that if the REP had not been introduced the level of unemployment would have probably been greater in the under-developed areas.
    Mr. Wigley: Is the Minister aware that whatever the position may be in intermediate areas, development areas or special development areas, there will be a great welcome for any extention of the REP? Further, does the hon. Gentleman agree that there is a requirement for certainty as to the length of time that the premium will exist for industry's investment plans in such areas?
    Does the Minister appreciate the need for financial incentives for industry to be introduced apart from REP, to overcome, in particular, deficiencies in industrial infrastructure in development areas, such as roads and railways? Such matters are often the greatest hindrance to getting companies to set up in development areas. Will the hon. Gentleman put pressure on the appropriate Ministry?
    Mr. Heffer: The hon. Gentleman will be aware that the Government made clear that the REP would be continued beyond the date that it was due to be phased out and that this has meant reassurance to industry in development areas. He will also be aware that we are very concerned about building up industry in development areas. That is why we shall be bringing proposals before the House to help in that direction. They will be proposals that have not been welcomed by both sides of the House.

    Companies (Public Ownership)
    Mr. Stanleyasked the Secretary of State for Industry if he will publish the list of industries in which the National Enterprise Board will not be making investments.
    Mr. Dixonasked the Secretary of State for Industry whether he will make a further statement about his plans for nationalisation of industry.
    Mr. Giles Shawasked the Secretary of State for Industry how many companies in the food manufacturing industry are likely to be affected by the Government's proposals for nationalisation.
    Mr. Tim Rentonasked the Secretary of State for Industry whether he will undertake not to propose nationalising any of the British metal mining companies.
    Mr. Benn: I must asked the hon. Members to await the Government's proposals for the extension of public ownership, which will be published as soon as possible.
    Mr. Stanley: When considering how far the right hon. Gentleman wishes to expand the activities of the National Enterprise Board, will he give careful consideration to the figures that were given to me by his right hon. Friend the Chancellor of the Exchequer last Thursday, which showed that in the financial year 1972–73—the last year for which complete figures are available—there was a net inflow from private industry to the Exchequer, after taking subsidies into account, of £2,151 million? That is the equivalent of a net inflow of £6 million per day in comparison with a net outflow from the public sector of industry, during the same year, of £1 million per day. Will the right hon. Gentleman take this opportunity to acknowledge that there is a net inflow from the private sector of industry of approximately £6 million per day and that the suggestions that he has made repeatedly that private industry is a net drain on the Exchequer are totally inaccurate and grossly misleading to the House and to the country?
    Mr. Benn: In summary, the hon. Gentleman has said that private industry pays more money to the Government than is received in the support schemes. That has never been in dispute—[HON. MEMBERS: "Oh."] I have never disputed that. The problem that the Conservative Party must face is that despite substantial payments by the taxpayer to private manufacturing industry by all parties since the war we have not succeeded in removing the unfair disparity in regional job opportunities or in attracting enough investment in private manufacturing industry. It has remained difficult even to deal with the non-oil deficit. Those are
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    the problems to which the National Enterprise Board and planning agreements will be directed.
    Mr. Gwilym Roberts: Does my right hon. Friend accept that many of his hon. Friends believe that a rapid extension of public ownership is vital for the future of the British economy and that they would be very concerned if there were any curtailment of the activities of the National Enterprise Board? Does my right hon. Friend accept that our concern is not whether there should be an extension of public ownership but merely what form that extension should take and how democratic it will be?
    Mr. Benn: I share my hon. Friend's view, and I can assure him that we shall bring forward, in the form of a Government statement, what we said in our manifesto. I am glad that my hon. Friend referred to democracy. The element of democratic control will be the new and important dimension.
    Mr. Dixon: When the right hon. Gentleman is contemplating acquiring shares on behalf of the Government, I assume that he will be aware that under the Industry Act he, the Secretary of State, is required to dispose of shares or stock as soon as, in his opinion, it is reasonably practicable to do so? Some of my hon. Friends and I understand that some of the right hon. Gentleman's hon. Friends are under the impression that it will never be—
    Mr. Speaker: Order. The hon. Gentleman must make his point in the form of a question.
    Mr. Dixon: Will the right hon. Gentleman confirm that he would be acting illegally if, in his opinion, the shares could never be returned to private ownership?
    Mr. Benn: I am grateful to the hon. Gentleman and to his right hon. and hon. Friends for giving me legislation that allows me to do certain things. I am well aware of the limitations that that legislation imposes. The hon. Gentleman will no doubt await with keener interest the improvements to his legislation that we have in mind.
    Mr. Thin: As private investors are apparently reluctant to invest their money in private industry to the extent that is

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    currently needed, will my right hon. Friend tell me why the Opposition should be so reluctant for the taxpayer, whose money, apparently, is to be used, to have the same rights of ownership as a private shareholder would expect for his money?
    Mr. Benn: I agree with that. The problem that the House must confront is not that this Government have no confidence in capitalism, but that capitalism in Britain appears to have no confidence in itself.
    Mr. Shaw: Does the right hon. Gentleman agree that his statement today has done nothing to restore confidence and that at present confidence is one of the biggest factors which is weakening British industry? Does the right hon. Gentleman agree that in the food manufacturing industry the problems of primary producers on the one hand and of restrictions on margins in retailing on the other are combining to produce the lowest level of profitability in the industry for many years?
    Mr. Benn: The general problem to which the hon. Gentleman referred in the latter part of his question is a real one. I put it to him that to define confidence solely in terms of what the City of London thinks and not to take into account the confidence of working people as a whole explains exactly why the Conservative Government collapsed in the biggest failure of public confidence that we have had since the war.
    Mr. Cryer: Does my right hon. Friend not accept that the National Enterprise Board is of vital importance to British industry because the owners of capital have been loyally and patriotically exporting it at the rate of £1,100 million a year to countries like South Africa, where people can be exploited to much greater advantage?
    Mr. Benn: My hon. Friend has identified another important failure, namely, that there has been a system in operation under which it was more profitable to put money into empty office blocks or invest it abroad than to put it into the means by which the British people must ultimately earn their living.
    Mr. Renton: The Prime Minister said yesterday that a clear frontier must be defined between private and public in-
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    dustry. Will he tell us where that frontier lies, as there appears to be considerable confusion in the Labour Government and more importantly within the minds of the British public, on this issue? Is the right hon. Gentleman aware that nothing he has said today helps clear up the confusion?
    Mr. Benn: The hon. Gentleman ought to examine the record of his own party. He will find that legislation was introduced which represented an enormous blurring of the frontiers between the public and private sector through the support given by the taxpayer to private manufacturing industry. Of course I share the view of the Prime Minister that in extending public ownership we shall be drawing new and clearer frontiers.
    Mr. Jay: Will my right hon. Friend give us an assurance that when the Government advance public money to private firms some share security or other security will be accepted in return?
    Mr. Benn: Yes. That is our manifesto commitment.
    Mr. Heseltine: Will the—[Interruption]—I must make it clear to hon. Members opposite that the entire country is suffering from a state of total lack of industrial confidence—
    Mr. Speaker: Order. There may be a time and place for doing that. This is Question Time.
    Mr. Heseltine: Will the right hon. Gentleman explain to his colleagues that I will not be shouted down on this matter, here or anywhere else? Will he make them understand that, for the first time that I can remember, four Members of the Government have been put up within a week to try to disclaim the policies of the Secretary of State for Industry—the Prime Minister, the Paymaster-General, the Secretary of State for Energy, and the Home Secretary's PPS? Has that ever happened under any Government before? Will the right hon. Gentleman now explain why the great dialogue of consultation that was to go on, leading to a Green Paper on industrial proposals, has now been superseded by a White Paper? Will he tell the House, following the efforts of his colleagues to tell industry that there is nothing to be worried about, whether he is still pursuing his inquiries

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    into the affairs of 4,000 subsidiary companies in this country? Will he under-stand—
    Mr. Raphael Tuck: "Twenty Questions."
    Mr. Heseltine:—that the crucial difference between our use of the Industry Act, which we passed, and the use he seeks to make of it is that we did not back it up with the bludgeon effect of nationalisation.
    Mr. Bean: There will be consultations on the basis of the White Paper. The uncertainty of which the hon. Gentleman complains has been deliberately created by the hon. Member for Bury St. Edmunds (Mr. Griffiths) and himself, who, being informed that the 20 largest companies were to be asked how much taxpayers' money they had received, converted that into a claim that they had discovered a secret list of companies intended for public ownership. They then went to a published book and discovered the names of the 4,000 subsidiaries owned by those 20 companies and pretended that they had discovered Government policy. Is it not a fact that the two hon. Gentlemen have made absolute fools of themselves?
    Mr. Tebbitasked the Secretary of State for Industry if he will list those companies with which he has discussed his policy of nationalisation.
    Mr. Norman Lamontasked the Secretary of State for Industry whether he will make a statement about his discussions with interested parties about his intentions both about nationalisation and planning agreements with industry.
    Mr. Biffenasked the Secretary of State for Industry if he will list the bodies with whom he has recently discussed the formulation of planning agreements in respect of major companies operating in the United Kingdom.
    Mr. Benn: I have had general and informal discussions with the TUC, the CBI and others about our policy thinking. But, as I have already made clear, detailed consultation must await the publication of the Government's proposals.
    Mr. Tebbit: Will the right hon. Gentleman do us two favours when he comes
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    to that point? First, will he give those concerned more than the 20 minutes he recently gave the CBI to reply to his proposals? Secondly, when he does go to see these companies, will he share the official car with the Chancellor of the Duchy of Lancaster and the Parliamentary Private Secretary to the Home Secretary, so that they do not have to follow him, at additional expense, to try to undo the damage that he has done?
    Mr. Benn: I should always be glad to get a lift from my right hon. Friend the Chancellor of the Duchy of Lancaster, and therefore I take that point. All I would say about the first point raised by the hon. Gentleman—the case of the Court Line—is that, to the best of my knowledge, the Conservative Government did not consult either the CBI or the TUC, and the TUC certainly found that it was able to say that it hoped, whatever the solution, that the jobs in the development areas could be saved. I am not complaining that the CBI felt unable to give a detailed answer, but it is important that those who have general policy views to push upon the Government should also recognise that Governments themselves face very difficult problems at short notice, and that Ministers often do not have a great deal of time to reach their own conclusions.
    Mr. William Hamilton: In view of the serious state of the National Health Service, will my right hon. Friend give an assurance that he will take steps to take over parts of the pharmaceutical industry—which we included in the manifesto—and also, through the proposed National Enterprise Board, establish a public purchasing agency to enable the NHS to make considerable savings by purchasing its equipment through a public board of that kind?
    Mr. Benn: I suspect that my hon. Friend is anticipating a Question which he put down to me and which was to have been transferred to another Minister but could not be so transferred because of an industrial dispute on HANSARD. I understand what he has said, however, and the reasons for it.
    Mr. Biffen: Inasmuch as these discussions will touch on the private sector of the steel industry, does the right hon. Gentleman intend to discuss them, or has

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    he already discussed them with the European Community? Will he indicate whether he has any plans which will touch upon the investment plans of the private steel sector, and whether the Press reports which have appeared concerning his talks with the European Commission are broadly accurate?
    Mr. Benn: I have made no proposal with respect to the private sector, but the hon. Gentleman will recognise that the terms of the Treaty of Paris, which govern the Coal and Steel Community, have, in effect, removed control over the steel industry, both public and private, from national Governments and conferred it upon the Commission. Indeed, when the Conservative Government, in the Counter-Inflation Act, sought to take control of steel prices, albeit temporarily, they fell foul of the Commission. These general problems of the steel industry were discussed by me in the context of what was a purely fact-finding visit to Brussels last week.

    Departmental Work Programme (Trade Union Adviser)
    Mr. Eldon Griffithsasked the Secretary of State for Industry if he will define the functions and give the salary of the trade union adviser whose appointment was made known in his note on the current work programme of his Department.
    Mr. Benn: Mr. K. J. Griffin was appointed to advise me on all aspects of the work of my Department as they affect trade unions. As to salary, I refer the hon. Member to the reply which my right hon. Friend the Prime Minister gave to the hon. Member for Fife, Central (Mr. Hamilton) on 2nd May.
    Mr. Griffiths: Is this paid adviser of the right hon. Gentleman's a candidate for Parliament? If he becomes a candidate, will the right hon. Gentleman cause him to resign?
    Mr. Benn: The hon. Gentleman should do his homework. Mr. Griffin served throughout the whole of the four-year period of the Conservative Government. He was invited by Ministers in the Departments of Trade and Industry to stay on. I have confirmed his appointment to advise on trade union matters, and there is no question of his being a candidate for Parliament.

    Post Office (Investment)
    Mr. Bruce-Gardyneasked the Secretary of State for Industry what is now his estimate of the savings on the Post Office investment programme during the current financial year resulting from the December 1973 public expenditure statement; how this compares with the original estimate; which specific items he has introduced into the programme; and how these additions will be financed.
    Mr. Benn: In accordance with the statement made on 17th December 1973 by the then Chancellor, the Post Office programme for 1974–75, as recorded in the last White Paper on Public Expenditure (Cmnd. 5519), was cut by 20 per cent. For telecommunications, the cut was subsequently reduced by 14 per cent. for the first half of the year, and we have recently reduced it to 12 per cent. so that the cut for this year as a whole will be 13 per cent. Its application is a matter for the Post Office. The partly restored programme will be financed in the same way as the original one.
    Mr. Bruce-Gardyne: Will the right hon. Gentleman confirm, particularly in the light of his spineless incapacity to prevent the Price Commission cutting the revenue to the Post Office by £60 million, that the reinstated programme which he has introduced will further swell the Government's net borrowing requirement and thus fly in the face of the Chancellor's budgetary objectives?
    Mr. Benn: The true position—the hon. Member knows it better than most—is that we have undone some of the damage done by the previous Chancellor to the Post Office investment programme. We are doing what we can to deal with the accumulated deficit relating to telecommunications never made public under the previous Government.
    Mr. Stott: Is my right hon. Friend aware that the reduction of the former Chancellor's capital cuts in the telecommunications industry will be welcomed throughout the whole of that industry? Is he further aware that it will put right a programme which would have set the industry back for at least a decade? Does he appreciate that the membership of my union, the Post Office Engineering Union, welcomes this step?
    Mr. Benn: I am grateful for my hon. Friend's comments. I might add, since there are so many pleas that there should be greater confidence in industry about future prospects for investment, that the partial restoration of the damaging cuts by the previous Government will greatly help confidence in the telecommunications industry and save jobs in the development areas.
    Mr. Peyton: When the right hon. Gentleman refers, as he constantly does, to the difficulty of securing adequate investment in industry, will he undertake to consult—and that means listening to the opinions of other people, as well as voicing his own—those responsible for the difficult task of running industry? Will he pay attention to such people? Does he realise that unless he does so he is in danger of going down in history as a kind of music-hall comedy Mussolini?
    Mr. Benn: I should be happy to have my record compared with the right hon. Gentleman's in history but, beyond that, I think he will agree that in partly restoring the damaging cuts in telecommunications investment the Government enjoyed the full support of the telecommunications manufacturing industry, which would have been worst hit had the last Government's programme of cuts gone forward in full.

    National Enterprise Board
    Mr. Ridleyasked the Secretary of State for Industry what estimate he has made of the cost of the operations of the proposed National Enterprise Board in terms of compensation for assets acquired.
    Mr. Heffer: I must ask the hon. Member to await the announcement of the Government's proposals.
    Mr. Ridley: Is the hon. Gentleman aware that time is running out for the British economy and that every pound of lousy printed money he gives in compensation will bring closer the demise of the economy? Is he further aware that this is not the time for boy scout Fabianism of the sort that the Government are undertaking?
    Mr. Heffer: I did not know that I was a boy scout Fabian, but I do know that I am a Minister of Her Majesty's Government and that that means that once the proposals are totally formulated
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    they will be placed before the House. The hon. Gentleman and his right hon. and hon. Friends should not exaggerate the situation and cause the precise lack of confidence about which they are complaining.
    Mr. Skinner: When the Government draw up their proposals, will they take into account the resolution of the National Union of Mineworkers this week, dealing with the takeover by the National Coal Board of all the manufacturing of mining equipment, especially in view of the massive amounts of money which have been milked out of the NCB and from the ribs of the miners by the roof support manufacturers, as evidenced in the Select Committee report last week? If there is any question of compensation, would it not be a good idea to use the £74 million which it is suggested has been made in excessive profits by the roof support manufacturing firms out of the NCB?
    Mr. Heffer: I am sure that my right hon. Friend the Secretary of State for Energy will take note of the decisions of the NUM, both on this and other points. We have not yet put to the House our proposals about compensation, and I ask all hon. Members to await those proposals before they make all sorts of statements, exaggerated or otherwise.
    Mr. Viggers: Is the hon. Gentleman aware of the value to this country of investment by foreign companies? Is he aware of the massive amount of damage which is being done to the confidence of foreign companies which may be contemplating investment here?
    Mr. Heffer: On a number of occasions Ministers have met representatives of foreign companies which wish to come to this country, and I can assure the hon. Gentleman that they have not been discouraged from investing here. In relation to this matter the present Government are pursuing much the same policy as the last Government did. Hon. Members may shake their heads, but that is the situation. The hon. Member for Gosport (Mr. Viggers) should understand that we also wish to rely on our own efforts in this country to deal with our own problems, and the way to do that is to come forward with our proposals, such as the establishment of a National

    21
    Enterprise Board and planning agreements.

    Concorde
    Mr. Adleyasked the Secretary of State for Industry what further steps he intends to take to aid the entry into service of Concorde, following the recent transatlantic flights.
    Mr. Martenasked the Secretary of State for Industry if he will make a statement on Concorde.
    Mr. Benn: As I said in reply to the hon. Member for South Angus (Mr. Bruce-Gardyne) on 24th June, the Government are pressing ahead with their review of the project. In the meantime, work is continuing on the existing programme with the objective of ensuring that Concorde can be put into service at the earliest practicable date.
    Mr. Adley: In view of the right hon. Gentleman's enthusiasm for manufacturing industry, does he not agree that the low-import high-labour content of Concorde should fit in very nicely with the general thesis that he has been propounding this afternoon? Does he not agree that new orders from airlines for the aircraft are most unlikely to come forward in large numbers until British Airways and Air France have it in service? Will he continue his efforts to ease off the fence as many of his colleagues as possible?
    Mr. Benn: The hon. Gentleman follows this matter carefully and will know that these points have been put forward powerfully to Ministers in the review. He will also have read in the papers that the prospects of possible orders from Iran Air have now come about. [HON. MEMBERS: "No."] If hon. Members would stop booing a moment and listen, they will find that I used the word "possible". HANSARD will confirm it. Prospects of possible orders from Iran Air have come in, and no doubt the whole world will have noted the Atlantic trip of Concorde to Rio de Janeiro and back, demonstrating the superb technical capability of the aircraft.
    Mr. James Lamond: In making this review, will my right hon. Friend bear in mind that British Airways must continue to buy the Boeing 747, with con-
    22
    siderable adverse effect on our balance of payments position, amounting probably to £320 million between now and 1976? Might it not be better to buy fewer Boeings and more Concordes?
    Mr. Benn: The responsibility for British Airways lies with my right hon. Friend the Secretary of State for Trade. Anyone who followed the British Airways figures which were published recently will have drawn from them the clear conclusion that British Airways believes that there will be a creaming-off from subsonic aircraft into supersonic aircraft. At the same time, the figures estimated the effect of this on British Airways' profitability.
    Mr. Marten: Will the Minister persuade the British Aircraft Corporation to fill up a Concorde aircraft with hon. Members who oppose Concorde and flip them across to New York for lunch and back in the evening for the 10 o'clock Division? What is the total cost of Concorde so far, what would be the cost of cancellation, and how many jobs would be at risk?
    Mr. Benn: In reply to the latter part of the supplementary question, I published the figures in March and I am afraid that I cannot, off-hand, give an updated account of the ultimate costs, because they would need to be accurately worked out. I agree with the hon. Gentleman that those who have observed the transatlantic flights would have no doubt whatsoever of the superb technical achievement that Concorde represents.

  JURISDICTION (WORKING PARTY INQUIRY)
  Mr. Loveridgeasked the Attorney-General when he expects the working party of the Law Commission and the Scottish Law Commission set up in May 1972 to consider the basis of jurisdiction of courts in the British Isles to make custody and wardship orders and the question of the recognition and enforcement of such orders in other parts of the British Isles to complete their task.
  The Attorney-General (Mr. S. C. Silkin): The working party is also considering the recognition and enforcement of custody orders made overseas. The

  23
  subject has wide international implications and I regret that I cannot at present say how long the working party will need to complete its task.
  Mr. Loveridge: Is the right hon. and learned Gentleman aware of the sad case in my constituency, where a mother, relying on a custody order from a court in England, allowed her son to visit Scotland, only to find that she lost the custody of her son because of the action of a Scottish court? She found that the English court order had no legal force in Scotland and that she had not even an enforceable right of access to her son while he remained in Scotland. In view of this domestic sorrow, will the right hon. and learned Gentleman, with his colleagues, take steps to speed up the review of jurisdiction between courts of England and of Scotland?
  The Attorney-General: I am well aware that there are problems of the kind referred to by the hon. Gentleman. The hon. Gentleman will also be aware, from some notorious cases that have occurred, that there are similar difficulties between this country and countries abroad. It is important—and it is the view of the Law Commissions—that the whole of these matters should be looked at together and not the one in isolation from the international aspect.
  Mr. Ancram: Will the right hon. and learned Gentleman make clear that his answer in no way implies criticism of the Scottish courts and the way in which they handle questions of custody, as there are people in Scotland who believe that the Scottish courts' view of custody is as good as if not better than that taken by courts in England?
  The Attorney-General: What I said was certainly not intended as a criticism of anyone, or of any procedure. This is a matter which should be considered in depth.
  Mr. Dalyell: Is there a timetable for this consideration, because it is an important matter?
  The Attorney-General: There cannot, unfortunately, be a timetable, because it is a matter which has wide repercussions. I assure my hon. Friend that the Law Commissions are regarding it as a matter of importance and urgency, as it obviously
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  is. It is much more important that we should get it right than that we should produce an answer quickly which may be wrong. My hon. Friend must bear in mind that the law of other countries is involved, in addition to that of our own.

  Trade Directories
  Mr. Ronald Atkinsasked the Attorney-General what is his policy with regard to references to the Director of Public Prosecutions with particular reference to the prosecution of directory firms seeking payment for directory entries which have not been sought under the Unsolicited Goods and Services Act.
  The Attorney-General: The dishonest practice to which my hon. Friend refers has been the subject of a number of successful prosecutions brought by local police and prosecutors. Where there is cause for complaint the public should bring it to the notice of the police, who will normally refer to the Director cases of unusual difficulty which require his advice. My policy is to ensure that the Director's limited staff is deployed to the best advantage.
  Mr. Atkins: Does not my right hon. and learned Friend agree that his Department has a special responsibility here, in that the law is of little value unless it is enforced and, if necessary, tested in the courts? Does he not also agree that there is urgent need to deal with the illegal activities of directory firms, which have been rife in my constituency?
  The Attorney-General: I entirely agree. I said that this was a dishonest practice, and it should be stopped. At the moment I am not satisfied that the local police and prosecutors are unable to deal satisfactorily with the offences, but, as I said, the Director of Public Prosecutions is always available in case of particular difficulty, and he will certainly use his staff to the best advantage to deal with this and other important matters that come before him.
  Mr. Rost: As the bogus trade directory racket is flourishing more than ever, does not the Attorney-General agree that the law, even when enforced, does not provide a deterrent? Will he please consult his colleagues on the Front Bench to see whether legislation can be introduced?
  The Attorney-General: I agree with the hon. Gentleman that there are borderline cases, and it is right to keep the matter under review. I shall see that my right hon. Friend is aware of the point which the hon. Gentleman made.
  Mr. Bidwell: Has my right hon. and learned Friend's attention been drawn to a company that is operating from Hong Kong in an attempt to evade this law?
  The Attorney-General: I understand that that company may be an invisible export from this country, and I have heard of it.
  Sir John Hall: Is the Attorney-General aware that, despite prosecutions, the activities of these unscrupulous firms have not ceased? They overcome the problem by inserting in small print words to the effect that "this statement is not to be regarded as an invoice", which apparently places them within the law. Can nothing be done to stop the practice?
  The Attorney-General: I entirely agree that there are borderline difficulties. When the statute has been in operation sufficiently long—and that stage may already have arrived—it will be right to look at it again to see to what extent it allows matters that should not slip through the net to do so. I shall ensure that my right hon. Friend is made aware of the view which has been expressed on both sides of the House.

  SEDITION
  Mr. Sedgemoreasked the Attorney-General how many prosecutions for sedition have been brought during the past 12 months.
  The Attorney-General: The Director of Public Prosecutions has brought none, nor, so far as I am aware, has anybody else.
  Mr. Sedgemore: Has my right hon. and learned Friend read the speech that was made about two weeks ago by a leading Conservative politician, in which he likened miners and engineers to knifemen, garotters, blackmailers and thugs? Do not such statements, which are designed to stir up emnity and hatred between citizens, constitute sedition? In
  26
  making those statements does not Lord Hailsham bring dishonour to the office which he once held?
  The Attorney-General: I understand that the noble Lord was referring to the offence of treason in certain remarks he made a little while ago. He is entitled to his view, whether the matters to which he referred were or were not concerned with treason. I am not sure that I agree that they went so far.
  Mr. Biggs-Davison: Is it not sedition or treason for members and supporters of terrorist movements and armies against us to parade and provoke in the streets of our cities?
  Mr. Silkin: I do not think that I am qualified to give an answer to that question at short notice, particularly as it touches an area of extraordinary difficulty. I am sure that the hon. Gentleman will get an answer if he consults his hon. and learned Friend the Member for Wimbledon (Sir M. Havers), who is now seated on the Opposition Front Bench.
  Mr. Lawrence: Will the Attorney-General say why offences which in the ordinary way would fall to be dealt with under the Treason Act are not so indicted? Who takes the decision not to indict them, and what criteria are involved in taking that decision?
  Mr. Silkin: That is a general question, which depends on an assumption the accuracy of which I am not aware. If the hon. Gentleman cares to send me details of any case that he has in mind I shall look into it.
  Sir D. Walker-Smith: Is the Attorney-General aware that the speech by Lord Hailsham to which reference is made was an extensive survey of the problems facing the country today and, taken in its proper context and as a whole, was a reasoned defence of the importance of the rule of law and the sanctity of contract as a way of life in this country?
  Mr. Silkin: I am sure that the House will be reassured by what the right hon. and learned Gentleman said. For my part, unfortunately, I have not had the opportunity of reading the speech as a whole, and these days I get very little time to read the newspapers at all.

  COURT LINE LIMITED
  Mr. Bruce-Gardyne: On a point of order, Mr. Speaker. It may not have escaped your notice from reports in this morning's Press that the Secretary of State for Industry was to make a further statement about Court Line Ltd. Would it be possible to seek through you, Mr. Speaker, an assurance that, since no statement is being made on this subject, the right hon. Gentleman will not seek to shelter behind a written answer to my Written Question No. 7 which is on today's Order Paper and by dealing with the matter in that way avoid the opportunity of being cross-questioned by the House?
  Mr. Speaker: The hon. Gentleman knows that that is not a matter for the Chair, but no doubt what he said will be noted.

LONDON WEIGHTING
The Secretary of State for Employment (Mr. Michael Foot): With permission. Mr. Speaker, I should like to make a statement about the Pay Board's report on London weighting.
The Government have today laid before the House and published the report of the Pay Board on London weighting.
The report was commissioned by the previous administration as an independent examination to advise what changes are required in the basis and operation of the London weighting formula, which was generally adopted on the recommendation of the National Board for Prices and Incomes in 1967. On taking office, the Government decided that it was desirable for this review to be completed and have urged all those concerned to await its outcome.
The Pay Board has taken evidence from many groups and has undertaken detailed surveys. It has concluded—as did the NBPI—that the proper purpose of London weighting is to take account of the different costs of working in London from elsewhere in the country, and that it is applicable only to those in London who have national rates of pay and not to those who adjust their rates of pay to the London labour market. London weighting is, therefore, a solution for a largely
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public sector problem and should not be paid to those in the private sector who are not in exactly the same position.
With this in mind the board recommends that London weighting should be made as comprehensive as possible to deal with the measurable differences in the costs of working as between London and the rest of the country. It should take account of housing, travel to work and certain other quantifiable costs, for all of which the board suggests what it regards as valid measures. It also sets a value on certain intangibles, such as relative standards of housing. On this basis it suggests that the level of weighting should be raised to £400 for inner London and to £200 for outer London.
By "inner London" the board means an area within four miles of Charing Cross and for the limit of "outer London" it takes the Greater London Council boundary. It would, however, be left to negotiators to decide whether or not to alter these boundaries to suit their circumstances. If they do so, the board envisages that it would distribute the same total sum of money which the Pay Board's boundaries would have produced for the employees concerned.
The levels of weighting suggested by the board are based on information relating to last April, and the board makes no recommendation on the question of retrospection. Looking forward, the board suggests that there should be a simple annual up-dating operative from 1st July each year and relating to costs in the preceding April as published by my Department. There would be a major review of the whole operation of the scheme after three or five years.
The board says that London weighting cannot be designed to help the first-time house purchaser. It sees this as a major but separate problem with which each employer must deal in whatever way the situation merits. Assistance for first-time house purchasers would raise issues for the public sector which the Government will have to consider in the light of the report. There is little doubt, however, that housing is at least as important as pay in many of the labour supply problems of London.
The Government appreciate the clarity and thoroughness of the report's analysis. The board's examination was set in train when statutory pay controls were in full

29
operation, but the recommendations are entirely applicable to a voluntary situation. These recommendations provide a common set of principles by which substantial improvements can be negotiated in the existing rates of London weighting and by which negotiators can arrange for their objective adjustment in the future. The Government regard the report as a most useful contribution to the resolution of this particular problem and believe that the principles proposed should be applied in negotiations on London weighting both in the public sector and by private sector negotiators who are in the same position.
As I have earlier made clear, it is the Government's intention that employers and unions should be free to negotiate on this matter; and the Government are glad to endorse the report as affording guidance by which negotiations on London weighting can now sensibly proceed. If these negotiations lead to settlements before the statutory pay controls are ended, the Government consider that the report provides the exceptional circumstances to enable me to enter into consultation with the Pay Board with a view to using my consent powers to enable implementation.
Although action on London weighting should help to ease labour shortages in the services affected as between London and the rest of the country, I recognise that it is not a complete answer to the special problem of London Transport, on which a strong case was put to me some time ago jointly by the employer and unions. Action on that special situation will need to be taken in the light of the outcome of the current arbitration on London Transport pay.
Mr. Prior: The right hon. Gentleman will be aware that the report was produced in response to a request from the Conservative Government. I think that hon. Members, and particularly London Members, recognise the hardship and extreme difficulties with which public service employees have had to contend over the past year or two.
Will the right hon. Gentleman comment on the question of pensions and the Government's attitude to suggestions made in the report? Secondly, are the figures grossed up for tax purposes, as suggested in paragraph 157, because that does not seem to be clear from reading
30
the report? Thirdly, is he aware that it seems extraordinary that the figures for inner and outer London should be so clearly defined as £400 and £200? It is difficult to understand how on earth those figures could have been arrived at with that degree of definiteness. Lastly, will he comment on one matter which is always a difficult matter for the House of Commons but is an important point. I refer to the fact that the figures of £400 and £200 have appeared to be fairly common knowledge over the weekend and were on the BBC one o'clock news programme today. What efforts will he take within his Department to find out where the leak occurred and to make sure that it does not happen again?
Mr. Foot: If I may take the right hon. Gentleman's points in the reverse order, let me deal first with the matter of others having anticipated what I have said today. I have read some reports which have guessed right and some which have guessed wrong, but, in view of the ones that guessed right, I agree that I shall need to make some investigations into the matter and see how it may have occurred. The right hon. Gentleman is well aware that this is not a unique development.
As to why there should be such a sharp distinction between inner London and outer London, with £400 recommended for one and £200 for the other, I can understand that this may be thought to be a very sharp distinction, but I invite hon. Members to read the whole report. It is to this conclusion that a lot of the Pay Board's evidence pointed. It will be found in the report and the discussion of these matters how this has arisen.
I think that we are bound to take account of the way in which the board has tried to examine these matters. However, it should be emphasised that the board itself has anticipated the criticism in that it has said that where different boundaries or different divisions might cause difficulty it is open to the negotiators to alter the arrangements and to have a kind of "kitty" system whereby the total amount proposed to be shared amongst the people concerned could be divided in a slightly different way. But that is underwritten by what the Government have said and what I have said in my discussions, that the report is a guideline to what should happen, and that the

31
matter is to be dealt with by free negotiation.
As to whether these figures are grossed up for tax purposes, that is the situation as proposed in the report. It is not an entirely novel principle. It was partly taken into account in the 1967 report, which acted partly on that principle. But perhaps the board on this occasion has acted more deliberately on that principle and is applying its own method of cost comparison, which is the basis of the report itself.
As for pensions, that is a matter which will also be partly open for negotiation, as is indicated in the report.
Mr. Guy Barnett: Is my right hon. Friend aware that there are factors affecting public service workers in London, outside transport and housing, which makes it peculiarly unattractive for people to seek employment there? I have in mind particularly the police and teaching. Does the report take into account these factors in assessing the London allowance to make it more attractive?
Mr. Foot: The police stand to benefit from the report on the same basis as anyone else to whom London weighting applies. The report makes it clear that specific labour supply problems have to be dealt with by employers and unions and their remedies tailored to different cases. A main strand running through the report is the emphasis that the board is not seeking to apply it to remedy labour shortages. That is a different matter which has to be dealt with in different ways. If the board tried to apply the principle of London weighting to deal with labour shortages, it would get into hopeless difficulties, as would anyone seeking to apply it on that basis.
Mr. Pardoe: Is the Secretary of State aware that the problem is largely created by over-centralised wage bargaining and that part of the answer would be for these nationalised industries in the public sector to go over to local or plant bargaining? Can he confirm that it is still the Government's policy to reverse the trend of people and jobs to the South-East, especially to Greater London? Does he think that this report will help reverse that trend or encourage it?
Mr. Foot: This report will be no disadvantage to regional policy. I think that it will merely make the situation clear. The matters which the hon. Gentleman raises were taken into account by the board when it made its decision. Representations along those lines were put to it, although, for the reasons which it gives, it generally rejects them.
As for the hon. Gentleman's suggestion that national rates of pay should be abandoned generally as a solution to the problem, that raises far wider questions. I think that London would be furious if we held up these proposals for London weighting in order to secure the strange remedy which the hon. Gentleman proposes. This report seeks to deal with the immediate injustices which occur for many people working in London, and I think that most people in London will welcome it on that account.
Mr. Raphael Tuck: Can my right hon. Friend explain why the standardisation of boundaries is regarded by the report as being impracticable? Does he realise that he is using a star instead of a circle so that places just outside the trough of the star may be outside whereas places inside the peak of the star may be inside, with the result that people living 30 miles from London are getting the allowance and others living 25 miles from London are not getting it? Why, for example, does Watford borough come outside the allowance whereas Watford rural, which is further away, comes inside?
Mr. Foot: If I could explain that last point immediately, I should be even wiser than I may appear to be at the moment. I cannot explain that problem. But I can say that the whole question of whether the boundaries should be standardised was considered carefully in the report. I believe that one of the reasons why the board did not do it is that, if it had done it, it would have given rise to even greater anomalies. The board has tried to take account of some of the situations which have prevailed in the past—for example, about the inner London boroughs—in making its recommendations. It has also safeguarded the situation by this "kitty" principle which I have mentioned as being one which should be a guide to spread the money wider or in different ways if that is thought desirable by the negotiators. As I have stressed, we believe

33
that negotiators will have to settle some of these questions. That is why we have been so eager that the matter should be restored to a system of free negotiation.
Mr. Grylls: Can the Secretary of State elaborate a little on his reply to the hon. Member for Watford (Mr. Tuck)? It is a matter for concern to those living in the inner Home Counties that the border with the GLC is artificial. The costs of housing and other services for such people as teachers, policemen, firemen and others in the public sector are just as severe as for those living in London.
Mr. Foot: I appreciate the feelings of hon. Members who represent areas just beyond the GLC boundary or other boundaries not affected by this report. There is a large stretch of the rest of the country which is not affected by the report. That is one of the matters into which the Pay Board was asked to inquire, not merely how to distinguish between what should be done in the GLC area and the neighbouring areas but also how it could make proposals which would be fair to London and to the rest of the country. So these matters have to be taken into account. On the specific matter raised by the hon. Gentleman, the board examined it and came down as I have described, for the reasons which he will see in the report.
Mr. Wellbeloved: Is my right hon. Friend aware that there will be widespread disquiet in London at the embodiment of the principle of continuing discrimination against those public servants working in inner London and in outer London? Can my right hon. Friend confirm that it is now open to employers and trade unions freely to negotiate agreements without taking account of that unacceptable discrimination?
Mr. Foot: I answer my hon. Friend directly. As I have said two or three times already, it is open to negotiators to vary the proposition along the lines that I have suggested. They need not necessarily be governed by those boundaries. But that would mean that those in inner London might get somewhat less and those in outer London somewhat more.
Mr. Atkinson: That is not on.
Mr. Foot: The question that is on is negotiation on the basis of these general
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proposals. I said to all those who came to see me on delegations beforehand that we would act immediately the report came out. I think that we have acted swiftly in making these arrangements on the very day that the report is announced. Negotiations will now take place. Those negotiations are to ascertain how best the report can provide a way to proceed. Both in the report and in what I have said, there is considerable flexibility in the way that the matter can be applied.
Mr. Berry: Will the right hon. Gentleman tell us more about the difference between outer and inner London? I do not begrudge the £400 for inner London. The right hon. Gentleman said that one of the criteria was travel to work. He must be aware that it is not half the fare to travel from outer London. Since people in outer London travel long distances, may I ask him to have another look at the matter and consider bringing the £200 much nearer to the £400?
Mr. Foot: This is an independent report. The board examined the question posed by the hon. Gentleman. Obviously, it would not have proposed different figures if it had not examined these facts. I suggest that he and other hon. Members should look at the report and study the reasons for these proposals. I repeat that, to guard against some of those difficulties, the board has suggested how the matter can be made more flexible within roughly the same figures. The Government have said that the matter is now for negotiation. We will not for many more weeks be governed by the statutory system, and that will assist the situation. I believe that the report can be used as a valuable guide for settling the matter, taking into account that the sums proposed are to be fair to London and to the rest of the country. London Members must take that into account as well as the rest of the proposals.
Mr. Atkinson: Does my right hon. Friend agree that the report bristles with the very anomalies that he assured hon. Members he would do everything possible to avoid? Does he accept that it comes as some disappointment to many hon. Members on this side of the House that he has accepted a report which will perpetuate the differentials in London which are clearly unfair, especially when the whole basis of the report is upon postal

35
districts? Is he aware that he adds to that disappointment if he now says that within a global figure of £289 million, or thereabouts, negotiators can, for instance, shift teachers from one postal district to another to conclude agreements that may possibly iron out these anomalies? Therefore, will he assure the House that whoever negotiates—Burham or the London boroughs themselves—it will be possible for teachers who are working and living in areas like Tottenham to get the same amount as those living further from the centre in, for example, Hampstead when it comes to the final negotiations?
Mr. Foot: All those questions can be taken into account in the negotiations. I do not agree that we have accepted all the anomalies and rigidities of the situation. I am sure that my hon. Friend will agree, when he reads the full report, that it overcomes many of those rigidities and anomalies that existed and that the proposals are of a more general character. In the next few weeks we shall be doing away with the statutory controls altogether, and that will greatly ease the situation.
The general figure is not absolutely laid down. However, I think that it ought to be a guide. A London weighting system must be fair to people not only in London but outside London, and that must be taken into account. That consideration figures most prominently in the report.
Mr. McCrindle: Does the Secretary of State agree that his acceptance of the report will create additional consternation in the areas just outside Greater London boundaries? Does he recognise that, even on the present differentials, areas such as Brentwood and Ongar are losing teachers, postmen and the like to Greater London? I wonder whether in those circumstances he would suggest that a further inquiry be set up to consider whether an intermediate area should be created between the Greater London boundary and other parts of the country.
Mr. Foot: It is impossible to deal with the situation by suggesting that there should be a series of intermediate areas outside the London area. The more that suggestion is advanced, the more it indi
36
cates the problems that would arise for the rest of the country if that were so.
The hon. Gentleman said that there were labour shortage problems in the area just beyond the GLC fringe. Labour shortage problems exist in many other parts of the country, particularly in some of the other big cities. The report is not designed to deal with specific labour shortage problems, as hon. Members will discover when they read it carefully. Indeed, they need not read it carefully; a cursory reading will be sufficient. That is not the principle upon which the report is based. Labour shortage problems must be looked at in a different way, as I indicated in the latter part of my remarks. I invite the House to read the report carefully before judging it. No doubt we shall have a debate on the matter. I am certainly eager that we should do so. When we debate the matter, London Members will be able to put their views and hon. Members representing the rest of the country will be able to put their views as well.
Mr. George Cunningham: Does my right hon. Friend accept that the higher the London allowance is placed, the more useful it will be to have two zones, an inner and an outer, to reduce the harshness of the distinction between those in the outer boundary and those completely outside London? Does he also accept that the inner London area proposed by the board is so small compared with the whole of the GLC area that if it were to be spread over the whole of the GLC area the figure that came out would be very close to the lower figure of £200 and very far away from the higher figure of £400?
Mr. Foot: I think that my hon. Friend should study the report before he jumps to all those conclusions. The report, in paragraph 129, states:
"As far as Inner London is concerned we accept that the eight Inner London boroughs should be regarded as broadly equivalent to the 4-mile area."
It then goes on to describe how it should be done. Therefore, the House would be well advised to read the report before passing a verdict upon it.
When said bluntly, as I and the board have to say it bluntly, the distinction between inner and outer London appears very sharp and, in a sense, crude. But I believe that hon. Members, when they

37
have read the whole report, seen the safeguards that are proposed for dealing with the situation, and understand the further safeguards which the Government have proposed for dealing with it, will appreciate that the report offers a great advantage to Londoners and that the vast bulk of them will welcome what is proposed.
Sir B. Rhys Williams: This decision will make it easier for people living in inner London to meet their rents, which we welcome, though not, it seems, the first-time home buyer. How do the Government propose to make corresponding increases in the supply of accommodation to rent, particularly in the private sector?
Mr. Foot: That is a different question which should be put to a different Minister. The hon. Gentleman will understand that the report refers to first-time home buyers roughly in the terms in which I mentioned them in my remarks. Although the board's statement is more elaborate, it makes suggestions which will have to be taken into account by the Government.
Mr. Hayhoe: If the "kitty" principle is applied to the teachers and one figure is set for the whole of the London area, may I ask whether the right hon. Gentleman would indicate or estimate what that would come out at? Does it come out at about £260? It would be helpful if he could give an indication.
Secondly, if teachers and others on the boundary negotiated for a single London allowance for the whole area, it would create the absurdity that a teacher working in Hounslow and living in Spelthorne would be paid the allowance, whereas a teacher who lived in my constituency but taught in Spelthorne would not. These difficulties at the margin may create great dissatisfaction, particularly when the allowance has been raised.
Mr. Foot: Not being a mathematician or anything of that order, I shall not try to guess the figure, but what the hon. Gentleman said underlines the Government's wisdom in proposing the abolition of statutory control. It means that the negotiations about these matters can take
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place and be implemented under a system where statutory controls no longer exist.
That is why, right from the first day when delegations of teachers and others—but teachers were prominent—came to see me I asked them to await the publication of the report and said that they would not be bound by the details of it. We hoped that by the time the report was published we would have reached the situation that statutory controls no longer existed. These controls are to be removed within two or three weeks' time, and I look forward to the enthusiastic support of the Opposition in removing them.

GRANGEMOUTH DOCKS (EXPLOSION)
Mr. Speaker: I call the hon. Member for Stirling, Falkirk and Grangemouth (Mr. Ewing) to raise a point of order.
Mr. Harry Ewing: I apologise, Mr. Speaker, for not giving more notice of my point of order.
There has been a serious development in my constituency today as a result of an explosion at Grangemouth docks which has resulted in one man being killed and several seriously injured, and even now the whole area is still sealed off. There have been further explosions, the electricity supply has been cut off and the situation is extremely serious.
The purpose of my point of order is to ask whether you have had a request for a statement to be made by a Minister who has responsibility for events such as I have described and, if not, whether, if such a request is made to you, facilities will be granted to enable a statement to be made.
Mr. Speaker: I have not received any request for such a statement, but I am sure that what the hon. Member said will be noted.

GRANGEMOUTH DOCKS (EXPLOSION)

  BUSINESS OF THE HOUSE
  Ordered,
  That at this day's Sitting, Mr. Speaker shall put any Question necessary to dispose of Proceedings on the Social Security Amendment Bill not later than Seven o'clock.—[Mr. Golding.]

ORDERS OF THE DAY

  SOCIAL SECURITY AMENDMENT BILL
  Order for Second Reading read.
  4.3 p.m.
  The Minister of State, Department of Health and Social Security (Mr. Brian O'Malley): I beg to move, That the Bill be now read a Second time.
  I begin by congratulating the hon. Member for Rushcliffe (Mr. Clarke) and the hon. Lady the Member for Birmingham, Edgbaston (Mrs. Knight) on what I think is their first appearance at the Dispatch Box. We have never faced each other across the Floor of the House from the Front Benches but we have met on television on at least one occasion. I congratulate both hon. Members on their elevation, if that is the right word, to the Front Bench and express the hope that for a long time to come they will fulfil to the satisfaction of the Conservative Party their rôle as Opposition spokesmen.
  As from April 1975, the majority of men and women in employment will pay reduced national insurance contributions. That is the principal significance of the Bill to employees. In addition, retirement pensioners will welcome the Bill since it will bring enough money into the National Insurance Fund after April 1975 to pay for the new higher levels of retirement pensions—that is £16 and £10—and widowhood and other benefits which came into operation on 22nd July of this year and the further increases in line with national average earnings envisaged in the legislation. These increases were not envisaged in the Conservative Social Security Act 1973, and that is why we have brought forward this Bill.
  Clause 2 is clearly the most important clause of the Bill, and it is to that that I turn first. The House will note that the contributions of employees, that is Class I contributors, are to be at 5·5 per cent. of reckonable earnings, as my right hon. Friend the Secretary of State announced on 7th May, instead of at 5·25 per cent. as set out in the Social Security Act 1973.
  The implication of this change, which will make possible the payment of the substantially increased pensions brought
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  in by the present Government, is that as from April 1975, compared with contributions that will be payable before that date, employed men who are currently not contracted out of the scheme will make a reduced contribution up to the level of income of £62 a week.
  A man on £11 a week will pay 25p less, a man on £46 will pay 27p less, and even the man on £62 will pay 24p less. Only at the ceiling of £69 reckonable earnings will male employees not contracted out of the current scheme have to pay an increase—13p as from April 1975. The broad picture is that male employees not contracted out of the full graduated payments into the State scheme will have substantial reductions in their contributions as from 6th April next year.
  There will be a similar result for men who are contracted out of the existing arrangements. For those at the bottom on £11 a week, the contribution will drop by 28p, and even the man on £62 a week will pay only 2p more in contributions. The man at the ceiling on £69 a week will pay 39p more than he will be paying immediately before 6th April. The purpose of this is to pay for the increased pensions brought in by the present Government. That figure of 39p represents an increase of 17p over what would have been paid under the Social Security Act 1973 had that been left in operation.
  The situation is similar for women. For non-contracted-out women on between £11 and £62 a week—and that includes the vast majority of women in employment who are not contracted out—the contribution will decrease by between 12 and 14p a week, but again there will be an increase at the ceiling. For women who are contracted out, at the bottom end there will be a reduction of 11p a week, although throughout the rest of the range there will be some increase. However, that increase will not be substantially different from the increase that was inherent in the earnings-related formula upon which both sides of the House agreed during the proceedings on the 1973 Social Security Bill.
  The Bill leaves the share of the burden between employers and other contributors in very nearly the same ratio as it will be from August 1974. The House will

  41
  recollect that on 7th May my right hon. Friend said that she estimated that an employer's contribution of about 8·75 per cent. would be required. The House will notice that the contribution rate in the Bill is not 8·75 per cent. but 8·5 per cent., but there will still be sufficient income coming into the fund.
  The broad pattern of employer contributions will be that for male workers there will be reductions, and often substantial reductions for lower-paid workers, although there will be increases, and in some cases quite large increases, for employees at the ceiling. A similar pattern emerges for women employees.
  Employers' contributions are between 12p and 69p higher a week than would have been levied under the terms of the Social Security Act 1973. When the Government's decision on the £10 and £16 pensions was discussed in the uprating Bill—it is now the National Insurance Act 1974—there were no objections from either side at the increases in contributions which were necessary to pay higher pensions.
  Part of the increases by both employers and employees at the top of the scale—that is at £69 a week—is an inevitable concomitant of using the pattern of earnings-related contributions in a range between a quarter and one and a half times national average earnings, on which both sides have agreed in the past, and which was specifically referred to in the White Paper "Strategy for Pensions", and was translated later into the Social Security Act 1973. The House will have noted that Clause 2(1)(a) brings the upper and lower earnings limits from £8 and £48, as set down in the previous Act, to £11 and £69. This represents the average movement in earnings since the Act was introduced. The £8 and £48 figures were the current figures during the period 1971–72. The House will wish to know that although the earnings floor is £11, those earnings below £11, although paying no contributions, will remain covered for industrial injury purposes.
  Clause 2(2) brings a small measure of relief to retirement pensioners with some employment, to those over pensionable age who are not retired but who cannot meet the contribution conditions for a category A pension on retirement, and also to women over pensionable age who
  42
  are not retired and are subject to the half test under Section 24(2) of the Social Security Act 1973. I spell that out in some detail because I realise that Clause 2(2) is at first sight difficult to understand. Under the terms of the Social Security Act 1973 the contribution of those categories of persons to the National Insurance Scheme was set at 0·6 per cent. As from April 1975 there will be no liability at all for contributions.
  The reasons for this are twofold. First, the House will have noticed that the contribution rate exercised under the married woman's option is raised in the Bill from 0·6 per cent. to 2 per cent. I strongly took the view—indeed the Government did—that it would be wrong to levy two rates of contribution, that is 2 per cent. for one group and 0·6 per cent. for other groups; nor did I feel that it would have been right to levy 2 per cent. on those categories of elderly people who are often among the poorer section of the community and who sometimes feel particularly aggrieved at the operation of the National Insurance Scheme. I refer to the operation of the half test which has been the subject sometimes of protracted debates in Committee on successive up-rating Bills.
  Clause 2(2) brings relief, albeit small, to those three categories of national insurance contributors and will represent a saving to those groups as a whole of something less than £1 million a year. Married women and widows who exercise the option would have been paying 0·6 per cent. under the Social Security Act 1973 and the Bill proposes that this figure should move to 2 per cent.
  I wish to refer to a Press report of what was said by the principal Opposition spokesman on this subject, the right hon. and learned Member for Surrey, East (Sir G. Howe). Judging from the report, I think that he has been under some misapprehension about the results of this upward movement from 0·6 per cent. to 2 per cent. I am not speaking harshly of him or blaming him for this because I think the national insurance system as it exists is. as the right hon. Member for Leeds, North-East (Sir K. Joseph) has said, a "vast Gothic edifice" and it is easy to get things wrong and to make mistakes on the different operations and interactions of the system. Comments by the right hon. and learned Member for

  43
  Surrey, East are reported in the Daily Telegraph of 17th June:
  "Three out of four working wives"—
  judging from a later part of the article that is a reference to working wives who exercise the married woman's option—
  "are in for a ' nasty shock ' by way of a sharp increase in the national insurance deduction from their pay, according to Sir Geoffrey Howe, Conservative Front Bench spokesman on social services."
  Later in the report an example is given of a woman on £40 a week paying £21 extra per year.
  "For one who earns £3,500 the annual deduction will increase by more than £40."
  The situation is that the vast majority of married women paying at the reduced rate will pay less, in most cases substantially less, than previously. If we look first at the total collection of revenue during the first full year of a contribution at 2 per cent., the yield to the national insurance fund will be £30 million a year less than previously.
  I wish to give an example in this connection. The right hon. and learned Gentleman estimated that a woman on £40 a week would pay an extra £21 a year as from 6th April 1975. The position is, however, that she would pay not £21 a year more but £50 a year less if she has been contracted into the State scheme and £30 a year less if she has been contracted out. I appreciate—and the right hon. and learned Gentleman has obviously misunderstood the proposals—that I am not asking him to withdraw anything at the moment, but I know that he will bear in mind what I have said and acknowledge the facts of the situation.
  I shall give the reasons for our decision to raise the figure from 0·6 per cent. to 2 per cent. We are asking employers and better-off employees to pay sometimes substantially higher contributions in order to be able to finance better pensions. The working population is at present growing at a much smaller rate than the pensioner population, and this will continue for the rest of this decade. In 1948, for example, for every one pensioner there were 5½ people, in statistical terms, working. But now the ratio is down to just over one in three. In those circumstances it seemed wrong to ask employers, employees and single women with reasonable incomes to pay
  44
  increased contributions to finance the better pensions which we all want to pay and at the same time for a married woman in the work force—they are in the work force in increasing numbers and have been for the last decade—to pay vastly reduced contributions.
  I wish to give some examples of what will happen under the arrangements we are proposing. The non-contracted-out woman at the earnings ceiling will pay £1·57—that is with the 2 per cent. contribution—a week less next April than she will pay from 6th August 1974. At £62 earnings the figure will be £1·71 less, at £46 earnings £1·18 less and at £23 earnings 38p less. The picture is similar to that throughout the higher ranges, if currently they are contracted out of the existing arrangements.
  So, even at 2 per cent. they will pay substantially reduced contributions in most cases. The question which the House has fairly to face is whether, when we are asking employers and the rest of the work force—that is, males, both married and single, and single women—to pay for these increased pensions, it is not appropriate, even within the contributory system, to ask married women in employment to make a little bigger contribution than would have been the case under the 1973 Act for the present generation of retirement pensioners.
  Mr. A. P. Costain: Could the Minister give us a little more detail? If a married woman is working part time, what option will she have under this scheme?
  Mr. O'Malley: First of all, if a married woman who works part time earns under £11 a week after 6th April 1975, she will not be required to contribute to the scheme at all. If she earns over £11 the situation remains as it is now, and married women and widows generally will have the right to exercise the married women's option. Under the Social Security Act 1973, the level of contribution payable under that option was set at 0·6 per cent. The Bill is setting it at 2 per cent.
  The difference in the two—there is no question of changing the categories here—is that, at 0·6 per cent., they would have had substantial reductions in the contributions that they would have had to pay as from April 1975. At 2 per cent. they have reductions—they are quite

  45
  big reductions, of over £1 at the top—but they are not quite as big as they would have been at 0·6 per cent. I have explained frankly why we decided to adopt that course.
  The self-employed will be paying, with the implementation of the basic scheme set out in the 1973 Act, Class 2 contributions plus the new Class 4 contributions which were first provided for in that Act. The Class 2 contributions remain at £2·41—the figure set as from 5th August 1974. If we had raised those flat-rate contributions in line with the change in Class 1 contributions—that is, both the employers' contributions and the employees' contributions—it would have been necessary to raise that figure to about £2·70. In order to help to ease the burden for the self-employed on lower incomes we decided not to raise it.
  Sir Brandon Rhys Williams: Would it not help the situation even more to introduce graduated contributions for the self-employed?
  Mr. O'Malley: The hon. Member and I have discussed this matter in previous debates and we know that no party political point is involved. He knows the difficulties at present in having fully graduated contributions for the self-employed, involving the Inland Revenue and so on. At the moment we are in the position arrived at by his administration with the Class 2 and Class 4 arrangements. It seemed sensible to keep those flat-rate contributions at £2·41 instead of raising them to £2·70, which, with Treasury supplement, would have brought in about £25 million a year.
  The Inland Revenue estimates that, of 1·9 million people with some income falling within Cases I and II of Schedule D, about 1 million—over 50 per cent. of those who will be paying self-employed contributions—had profits or gains below £1,600 a year. So, for that 50 per cent. and particularly for the people at the bottom, it is helpful that the flat-rate Class 2 contribution has not been raised.
  However, in equity to other classes of contributors, it was decided that while moving up the scale of income on which payments under Class 4 had to be made from £1,150 to £2,500, as set down in the 1974 Act, to £1,600 to £3,500, instead of a 5 per cent. levy there should be an 8 per cent. levy. That would bring in pre
  46
  cisely the amount of money which has been lost to the National Insurance Fund—about £25 million—through not raising the £2·41 rate. It seemed to the Government that this was an equitable way of distributing the load on the self-employed, rather than raising the flat rate once again.
  We all know the arguments, which have been accepted on both sides of the House, about the inequities of the flat rate system and about how the flat rate, once it is pushed up too high, becomes an intolerable burden for lower-paid earners, whether self-employed or Class 1 contributors.
  The Secretary of State, who has power under the Social Security Act to prescribe lower Class 2 rates for self-employed women for a transitional period rather than putting them up in one jump, has decided to use those powers to prescribe a rate of £2·10 for the year 1975–76.
  Apart from these changes, the voluntary contribution, the Class 3 contribution, remains at £1·90, or about 80 per cent. of the Class 2 contribution. The small earnings exemption is raised to £675. The National Health Service contribution from Class 4 remains at about 8 per cent. of the total contributions under that category.
  The remainder of the Bill is confined to bringing existing legislation into line with the 1973 Social Security Act and to minor or technical amendments to the basic scheme, which are adjustments that have been thought necessary in the course of preparation. Clause 1 and the Schedule ensure that the benefit provisions of the 1974 National Insurance Act can continue to apply with the repeal of the 1965 Act and that the earnings rule easements can continue.
  This is a short Bill but an important one. There is a short time left before April 1975 to continue preparations for an earnings-related contributory system. It is vital that it starts efficiently and smoothly. The Bill contains the main outstanding information needed. Naturally, details will need to be discussed in Committee, but I hope that we can press ahead quickly now.
  We shall be making arrangements to ensure that the staff in local and regional offices will visit as many employers as possible to help them with advice and to reply to any queries. I hope that

  47
  employers will get in touch if they are in any difficulty. A full and detailed Employers' Guide to the new arrangements will be published in the autumn and distributed to all employers to supplement the leaflets of guidance already given.
  4.28 p.m.
  Mr. Kenneth Clarke: I should like to thank the Minister for the pleasant way in which he welcomed me to the Front Bench. I have, of course, been in touch with him on this subject for two years or so in my then silent capacity as a Government Whip who followed these matters. I hope that the fact that I have now refound my voice will not damage our relationship, and that we shall remain reasonable and reasoned antagonists.
  I should like to start with one conciliatory gesture. It is not our intention to force an official division on the Bill. We accept that these proposals are necessary to prevent the National Insurance Fund from going into the red after the recent uprating of benefits announced by the Government.
  But we certainly wish to draw attention to the fact that the Bill will substantially increase the financial cost of paying the national insurance benefits for significant sections of the population. I marvelled at the Minister's ability to weave his way through the Bill and persuade the House that on the whole it constituted a great reduction of the burden of national insurance for what seemed an even wider section of the population. The national insurance system may be a Gothic edifice, but the hon. Gentleman certainly should not hide behind the corners in that sort of way. If he intends to sell the Bill along those lines to, for instance, married women in employment and the self-employed, he will find that they regard it as not, on the whole, the most straightforward form of salesmanship.
  I would hesitate to call in the Secretary of State for Prices and Consumer Protection or the Director General of Fair Trading, but there were some assumptions lying behind the figures which the hon. Gentleman used which made the way in which he put matters somewhat misleading—although "misleading" is too
  48
  strong a word. Certainly, however, the hon. Gentleman was putting a very favourable gloss on the effects of his proposals.
  For instance, the hon. Gentleman was taking as his base, as I understand it, the August level of national insurance contributions, which no one is yet paying, and which is an increase introduced by his administration, and he was not making a comparison with the level of contributions as we left it. But, even more important, he was claiming that people would be paying reduced contributions by making comparisons with the contributions paid at present by those who are not contracted out of the Boyd-Carpenter scheme. It is true that, as the Boyd-Carpenter scheme is being wound up next year, people will not be paying Boyd-Carpenter-type graduated contributions. But that is hardly amazing. If a commodity is being withdrawn from the market, one does not expect customers to carry on paying for it after next April. One does not take that saving which they have, on the one hand, as some argument for making them happier about the fact that they are paying a very increased contribution for other benefits.
  Mr. O'Malley: If the hon. Gentleman wants comparisons between present contributions and contributions as they will be from April 1975, may I tell him that it is also true, for example, that for the majority of male employees there will be reductions in contributions next April, compared with the contributions which are currently being paid.
  Mr. Clarke: That is taking part of the third point that I was about to acknowledge that the hon. Gentleman had used.
  In structure this scheme is basically the scheme introduced by the previous Government in the 1973 Act. The then Government were able to anticipate increased benefits without increasing the burden significantly on the lower paid. Therefore, it is possible that the majority of working men are not too badly dealt with. But for those who are paying the new graduated contributions, when they would not have been paying even the Conservative level until April next year, the hon. Gentleman is putting up the bill before it has even been presented to them.

  49
  From April next year, certain groups—particularly married women who exercise the option not to pay national insurance contributions at present, and the self-employed with any reasonable level of earnings from their professions—will be heavily penalised. The House should be informed of that fact, should be aware of it and should judge this measure bearing in mind also that the Government, putting up another post-election bill in this way, have also increased the levels of personal taxation and are in the process of increasing the basic national insurance contributions from August this year.
  Before I come to the very difficult position in which it places the majority of married women and the self-employed, perhaps I should begin with a little of the good news contained in the Bill. The Opposition are amazed, but rather delighted, to see that the Labour Party, now that it is in Government, has at last entirely accepted the structure of the basic National Insurance Scheme which the previous Government introduced in Part I of the 1973 Act. For instance, there has been an extremely welcome conversion to the whole principle of graduated contributions for flat-rate benefits, which my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) introduced, faced with strong Labour opposition, in the Act of 1973. This is essential, in our opinion, if one is to have a solvent and successful National Insurance Scheme for the future.
  For some peculiar reason, the Labour Party has always been fiercely opposed to the principle of graduated contributions for flat-rate benefits. We found ourselves urging upon the Labour Party the redistributive effects of this form of contribution for the basic pension scheme. At long last the light has dawned; but perhaps there will be later legislation in which the light will be extinguished again. For the time being, however, that part of the structure of the 1973 Act is being accepted. It gets the scheme away from the basic difficulty faced in the past that it could not be adequately financed out of flat-rate contributions because of the grave embarrassment that that caused to the lower paid when one wanted to raise the contribution revenue.
  As the Government Actuary's report shows, this important change in structure, which the previous Government intro
  50
  duced, gives more buoyancy to the scheme and offers a prospect for the future of increases in the National Insurance Fund, which the actuary says could mean a reduction in contributions, which I am sure we all hope will mean better and perhaps new benefits, if lobbies will only wait until the fund is in a condition to allow that to happen.
  If the Government have been converted to the principle of graduated contributions for flat-rate benefits does this also mean that they have given up at last their constant pressure when in Opposition, that the Exchequer contribution should be raised from the 18 per cent. level, where they appear to be leaving it? It would be somewhat irresponsible, with the inflationary dangers which face the country, to start raising the Exchequer contribution to the National Insurance Fund. The Government urged us to do this when we were in Government and discussing the basic Act. I trust that we are now at last to be told that they have seen the folly off their ways when in Opposition and accept that as well.
  If that is so, we welcome the total conversion to the structure of the 1973 Act. The basic National Insurance Scheme, a very valuable Conservative reform, has been adopted by the present Government, and offers some hope for the future.
  I wish that I could say the same for the Government's attitude towards Part II of the 1973 Act, which relates to the funded second pension that we were about to introduce. But that is the subject of the second debate today, in which we shall deal with the disgraceful way in which the Government have suspended that while they think of something else to put in its place.
  As I have said, there are details of the practice in the Bill which show considerable prejudice on the part of the Government in their treatment of some groups in raising the new higher level of contributions, particularly married women in work and the self-employed, who are disgracefully singled out to pay more than their fair share of increase, above the Conservative proposed levels, in graduated contributions that the Minister is now introducing.
  The cost of Socialism, as my right hon. Friend said in the article to which the

  51
  Minister referred, will be particularly heavy for those groups. Dealing first, with married women in employment—
  Mr. O'Malley: In view of what the hon. Gentleman has said, is he, or is his right hon. and learned Friend, prepared now to admit that he was wrong in what he has said, as his right hon. and learned Friend is reported in the article? If the right hon. and learned Gentleman is not prepared to withdraw something which is blatantly untrue, I hope that the hon. Gentleman will have the decency to do so.
  Mr. Clarke: It is not untrue, as the Minister is inferring. The things that were said are untrue only if one takes the basis of comparison which the hon. Gentleman ingeniously took in his speech. In particular, he must not compare the difference between contributions of those contracted out—
  Mr. O'Malley: I understand that.
  Mr. Clarke: I think that the Minister understands what I am saying. But he drew just that comparison in his speech. He cannot draw any comparison which, in the case of married women, means that a change from 0·6 per cent. of earnings, under our proposals, to 2 per cent. of earnings under the Government's proposals, entitles one to precisely the same limited national insurance benefits, and say that that is not a swingeing increase. The hon. Gentleman is more than trebling the contribution which married women in employment will have to make. In the comparisons that the hon. Gentleman made between married women and, for instance, single or married men and others contributing to the fund, he missed out the fact that other contributors have a whole range of benefits and pension entitlement which they are getting in return. The married woman, whose contributions the hon. Gentleman is more than trebling compared with our proposals, will continue to receive simply the benefits of the National Health Service and industrial injury benefits in return for her contributions. The hon. Gentleman is more than trebling the bill, or the price of the same commodity as was being offered. In the light of that, how can he expect my right hon. and learned Friend to withdraw the suggestions that he made in the article in the Daily Telegraph?
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  We all know that there is more to this than just the finance, because the Labour Party has been committed to the total abolition of the married women's option. By exercising this option married women have, for a very long time, paid a very reduced level of national insurance contribution for reduced benefits. The reality in the Bill is, as the hon. Gentleman knows, that, although the Government have not had the nerve to abolish that option, they are seeking to move towards it by making it very much more unattractive for women who opt.
  I want to examine just what lies behind the Labour Party's desire to make the option that much less attractive and to move in this way. The matter was not wholly argued by the hon. Gentleman today. He did not get on to all the arguments that we had in the past about the married women's option; nor did we hear what lies behind his and the Secretary of State's thinking today. We accept that they are committed to the emancipation of women and to equality of treatment, as I hope that they accept that we are. However, we believe that their views on the married women's option show that their views on equality of treatment would be improved if they were combined with some common sense and regard for the realities of the position of the bulk of married women in employment.
  The position is that in the real world of employment and national insurance three out of four married women in employment—that is, 4 million married women in all—opt to pay a very reduced rate of national insurance contribution and, in return, receive a very reduced level of benefit. That is a choice which they have. It is a choice which the Minister disapproves of. It is a choice lie is seeking to make much more expensive in the Bill.
  Women at work in factories, manning machines and doing assembly work, make this choice for very practical and common sense financial reasons. Many married women who do industrial work take the job for immediate additional cash to supplement the family income when the family is in difficulties. They may be in and out of employment during their working lives and be in no position to acquire any pensions entitlement on a contributions record.

  53
  Often, women in employment work for only the first few years of marriage so as to save some money before having a family. Those women are, for practical reasons, content to rely on their husband's contribution to give them their pension benefits in later life. Indeed, it would be a very bad bargain for most married women in employment if they chose to pay the full level of national insurance contribution.
  There are only limited categories of married women whom it would pay. Women who are substantially older than their husbands, for instance, would get their pension rights much earlier if they had their own contribution records. Most women have practical, commonsense reasons for opting out of paying the full contribution and relying on their husband's contribution to provide for their retirement and other things, and this position will continue. It is not an old-fashioned notion of dependence on their part. It is practical common sense, bearing in mind the finances of their husbands.
  The trend amongst married women in work is not to cease exercising this option. A Written Answer by the Under-Secretary on 20th June showed that over the 10 years 1963 to 1972 the proportion varied by not more than 3 per cent.—from 73 per cent. to 76 per cent.—and in 1972 it was 74 per cent., 1 per cent. more than it had been 10 years earlier.
  Those women will find that, instead of paying what they now pay or would pay—4p a week if they were opted out of the national insurance system, plus the 0·6 per cent. that we were proposing—the graduated contributions they will have to pay will be more than trebled to 2 per cent. I accept that my mathematics are certainly fallible compared with those of the Department and those of my hon. Friends, but they are not fallible when it comes to working out that increasing 0·6 per cent. to 2 per cent. is more than treble the contribution.
  Certainly better-paid women will find a very great difference. If they earn £40 a week, 64p a week more will be paid by women compared with what they would have paid under our Conservative proposals, which is the proper comparison to make—that is, increasing the 0·6 per cent. to 2 per cent. will result in their paying £21 a year more. If they earn £3,500 a year—this illustrates the kind
  54
  of leap—they will be paying £1·16 a week, or £40 a year more, than under the Conservative proposals. That is the effect of more than trebling the graduated contribution from 0·6 per cent to 2 per cent.
  Even if the Minister feels that a change should be made at all, it is unfair to make a change of such dimensions so quickly in the financial contribution made by any group. We on this side believe that if ever there was a case for changing the position of the married women's option, there is no case for making it on this scale in the present hyper-inflationary times. The Minister will damage the budget of some households where both partners go out to work when this increase comes in in April next year.
  That takes me on to the other category which, for reasons best known to the Minister but of which he has not yet persuaded me, is singled out for heavy adverse treatment in the Bill. I refer to the self-employed. Again, the figures in the Bill speak for themselves. The graduated contribution to be paid by the self-employed is raised by an amount greater than for any category of employed persons—from 5 per cent. to 8 per cent. of their graduated earnings—and the upper limit of the earnings on which that is paid is being raised as well.
  The maximum extra graduated contribution which someone at the top of the scale could pay—again on my mathematics—has been raised from about £70 to £158. That is for someone who is earning an adequate amount from his self-employed occupation. That is more than doubling the maximum liability for graduated contributions under this Bill compared with the position that would have prevailed had our Bill been allowed to go forward unamended. It is not an increase which is in line with that paid by other employed persons. The self-employed have been singled out, together with married women exercising the option, to pay much more than their fair share of the extra burden of paying for increased benefits next year.
  We on this side would like to know why the self-employed are singled out for this especially punitive treatment. We suspect that their independence is envied by some hon. Members opposite. We realise that they are more vulnerable than most because, by definition, the self-employed do not belong to a trade union

  55
  and so find no special place in the favour of this Government.
  We can find no possible justification for deciding, in a Bill amending the 1973 Act, that the penalty to be placed on the self-employed should be so great and that their share of the increased burden of paying for higher benefits should be raised so substantially.
  Mr. O'Malley: If the hon. Member accepts, as he has implicitly accepted in his speech, that there must be equity between one section of contributors and another, is he saying that we should have brought the Class 2 contribution up in line with the movement of the Class 1 contribution—both employer and employee? Would he have preferred to put the Class 2 contribution up to £2·70 and left the Class 4 contribution at 5 per cent? Is he saying that he has so little regard for about 1 million self-employed people with incomes under £1,600 a year that he would have preferred the £2·70 figure?
  Mr. Clarke: Again, my understanding was that in his speech the Minister constantly used his own increased August figure as the basis for the self-employed contribution. It is going up to £2·41 as a result of what he has already done. There is no great reduction there for anybody. What he has done is to have a fresh look at the self-employed position compared with our Bill.
  It is true that, this line having been adopted, those at the very lower level of self-employed incomes were not adversely affected across the great range of incomes envisaged in the Bill. However, one does not go very far up the scale to find that the increase is substantial. It is very substantial, so that at the top of the scale which the Minister now proposes he has more than doubled the bill to be paid by the self-employed man. That self-employed man is not earning a king's ransom; he is earning £3,600. A punitive increase in contribution is being paid at that level.
  The self-employed will find a sudden and dramatic leap in the contributions they have to make. It is not only that. If the House disregards, as it should, the fact that people are not going to have to pay for a commodity that they will no longer receive—that is, the Boyd-Carpen
  56
  ter benefit—a wide range of the population will notice a material difference next April when the new contributions come into effect.
  The House should bear in mind when considering the effects of this what the Government have already done to the categories of people we are talking about—married women in employment, the self-employed and some of those in the professions towards the higher range of earnings who are paying graduated contributions.
  The raising of personal taxation in the Budget and the increase in national insurance contributions which will come into effect in one month's time will reduce the take-home pay of significant groups of the population. The combination of the Budget and the August increase will reduce the take-home pay of every man who earns more than £19·50 per week. That same combination of factors will reduce the take-home pay of every childless married couple earning £35 or more per week; it will reduce the take-home pay of every married couple with two children who earn £54 or more per week. Now, lurking beyond an election and hidden away are possible increases in electricity and gas charges and in other matters which the Government would like to postpone payment of for the moment. Next April there will be a further stiff increase in the graduated contributions of national insurance by most sections of the population, and a particularly swingeing increase for two groups unfairly singled out—the married women and the self-employed.
  It is no good the Government saying that there are some categories who are still quite well treated. The whole structure of the Conservative Bill was designed to take account of the lower paid, and they have gained advantage from what we did in the 1973 Bill, but for some sizeable sections of the population the increase next April will be dramatic, especially taken with all the other increases the Government have introduced, and that will happen after a highly inflationary winter. It is no good the House legislating so that some months from now the public will be hit unawares. Most people are unaware that national insurance stamps will go next April and that graduated contributions will be collected with PAYE. They will sud

  57
  denly become aware that they face large increases in some cases, and the anger that will be felt by some of the worst affected groups might mean a repetition of what happened with the increase in rates, which many of those in the know knew was coming but which most of the public did not wake up to until the bill came in.
  Many of the adverse effects are stored up in the Bill, and these people will not be persuaded by the Minister's assurance that there are limited categories of people who are not so adversely affected lower down the income scale. Those who are hard-pressed would not want a modification in pensions and benefits to relieve them of their particular obligations. They are entitled to want a much fairer spread of the burden to pay for those pensions and benefits, however. The House must realise that simply passing an apparently innocuous-sounding Bill, when it makes such marked increases in some contributions for some sections of the population, is not enough. It must be considered against the background of the increase in personal taxation, made to provide hundreds of millions of pounds to finance useless food subsidies, to abolish prescription charges and, presumably, at some stage to pay for the nationalisation of some sections of industry.
  We must bear in mind the effect all this will have on white collar and blue collar and the middle income groups, and the better-off individual who is already facing problems and will be hard hit over the next year. These people feel that, however much they appreciate the increase in pensions and benefits, they will be hard pressed to find this sort of money at the end of a highly inflationary period.
  In that sense we are critical of the Bill and we shall be pressing the Government strongly on its detail in Committee. I hope that the House is aware that the Government have singled out some categories of people for very unfair treatment and that hon. Members will express their views on the matter in the course of the debate.
  4.55 p.m.
  Mr. William Hamilton: If that is the kind of opposition we are to get between now and the election we do not have to be afraid of what the election result will be. We are discussing this
  58
  afternoon substantial increases—across the board almost—in benefits. We are now arguing how we should pay.
  The hon. Member for Rushcliffe (Mr. Clarke) has sought to create discontent among certain sections of the community, notably the middle classes and the married women who are at work. I propose to say a word about each of those. The hon. Member and his party have a nerve talking about this Government postponing increased charges for gas, electricity and other things until after the election. The Tories left enormous deficts in those same nationalised industries and we have had to pick up the bills. The British public are not stupid. They know very well that the bills they will have to pay, whether for gas, electricity or the post, are the fault of the Conservative Government of 1970–74, not of this Government.
  That, however, has little to do with the Bill. The hon. Member spoke about the self-employed being heavily penalised. Certainly they will pay substantially higher contributions, but I guess that given the other side of the coin, given that people are deriving benefit from the Bill, and that those people are far more deserving than most other sections of the community, and knowing, as they do, that it is a form of redistribution of the national wealth, very few of these self-employed would be reluctant to pay.
  I suppose that Members of Parliament will be paying substantially more. I do not object. On the contrary, I take the point of the hon. Member for Rushcliffe, and I have criticised my Government for their view about the sanctity of the Exchequer contribution. I have never accepted that there is anything sacred about 18 per cent. I do not know how the figure was originally arrived at, but there has been a good case for gradually increasing the Exchequer contribution over the years. With a progressive system of taxation, it is a form of wealth redistribution, and that is one of the primary purposes, if not the primary one, of social security. The best way of redistributing wealth from those who are reasonably well off and comfortable to those who are less well off and less fortunate is by a progressive form of taxation and an increase in the Exchequer contribution. That is not, apparently, the view of my party or of the Conservatives.

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  I think that the Liberal Party has long advocated the complete abolition of contributions and stamps and so on, and the introduction of a social security tax. There may be something in that, although it would have to be a fairly colossal tax. But we are talking of fairly colossal weekly contributions. The British public must be educated to understand that if we are to give fair shares, reasonable pensions and allowances to widows and other people in those categories, the rest of us will have to pay much more.
  It is an idle exercise, a bad exercise, for the hon. Gentleman to single out the middle-class self-employed or the married women at work and to say that those two categories are being unfairly penalised. I do not accept that as regards the self-employed, and I am not sure that I accept it as regards the working married women. We are talking about contributions from April 1975. The Equal Pay Act should be operative by about that date, and married women should then be in a much stronger position to pay the increased contributions. However, there are ominous signs that the intentions of the Act are being thwarted, and that married women are not catching up with their male counterparts in industry. I am not sure whether that is the employers' fault or the trade unions' fault, or whether it is a conspiracy of both. I suspect that it is a conspiracy of both.
  The hon. Gentleman made an absurd charge that the Government were trying to penalise—he did not use the word, but that was the implication—the self-employed, because the Government were envious. He said that it was a combination of envy and the fact that, by definition, the self-employed were not in trade unions. The hon. Gentleman must know that that is a complete nonsense. No one on this side of the House is inspired by that kind of consideration. Envy does not enter into it. If we are to give increased benefits to all the groups we are now considering, we must decide how those increases are to be paid for. I have made my position clear. I believe that an increased contribution must be paid by those with high incomes, and particularly through the taxation system rather than through contributions in the existing National Insurance Scheme.
  Mr. R. A. McCrindle: In talking about the self-employed, does not the hon. Gentleman also fall into something of a trap? He and his party continue to imply that the average self-employed man is infinitely capable of continuing to pay the increases. Is it not a fact that there are a whole host of self-employed men, including, I suspect, many in the hon. Gentleman's constituency, who run small shops and the like and who should not be the milch cow which his party keeps tending to make them?
  Mr. Hamilton: My party does not believe that, but we all know that there are men running small businesses who are self-employed and who do not have big incomes—indeed, they have much less than many of the miners in my constituency—and from that point of view the criticism is valid.
  I am not very much concerned with the fellow earning more than £5,000 a year who is called upon to pay the increased contributions. That strengthens my argument, that the benefits should be financed increasingly from the Exchequer, and that we should take more from the £5,000-plus man in the form of taxation rather than through the National Insurance Scheme. That is the whole point.
  I was just criticising the arguments of the hon. Member for Rushcliffe, that we were inspired in our treatment of the self-employed by envy and the fact that they do not belong to trade unions. We are not the prisoners of trade unions. We certainly work in co-operation with them, which is more than the Tory Party can ever say. It will never get the co-operation of the trade unions. It does not deserve it; it does not represent them. The Tory Party has always been the enemy of trade unions, and therefore has no right to expect co-operation from the trade union movement. But we get that co-operation.
  The trade unions are far from being our masters. They are certainly not my masters. I say what I like to the trade unions, and I hope that they say what they like about me and about us.
  We accept in the Bill that, if we are to achieve a better deal for the under-paid and the under-privileged, the better-off and the more highly privileged must pay. How the burdens are shared is a matter

  61
  for political decision. Subject to the reservations I have made, I wholeheartedly support what the Government are doing.
  5.6 p.m.
  Mr. Nick Budgen: I support what my hon. Friend the Member for Rushcliffe (Mr. Clarke) said about the position of the self-employed under the Bill. In doing so, I have to declare an interest since, as a barrister, I am self-employed.
  The Bill makes a considerable attack upon the position of the self-employed person, particularly the self-employed person earning about £3,600 per year. I suspect that the reason for that attack is that it is another part of the large price that the country and all of us are having to pay for the social contract.
  It is obvious why the unions so hate the self-employed. It is because the self-employed obtain their increases in earnings, and find better ways of earning their wages or earnings, by individual bargaining and not by collective bargaining. Moreover, they do it in a way that damages the nation less than the unions do by their collective and monopolistic bargaining, and the self-employed are far less inclined to be party to restrictive practices. That is why a swipe at those who are self-employed is extremely attractive to those who pay and govern the Labour Party.
  I believe that there is only one legitimate criticism of those who are self-employed. It is that in certain instances they use their self-employed status to avoid and evade tax. But that can easily be dealt with by stopping the loopholes, by proper administrative action to make sure that people—on "the lump", for example—do not avoid or evade tax.
  Mr. William Hamilton: Does the hon. Gentleman recall that the Labour Government had a Bill to deal with "the lump", but the Tory Party jettisoned it? That is why we still have "the lump".
  Mr. Budgen: I am not defending the excesses of "the lump". I believe that in certain instances it is right to examine the way in which some people avoid or evade tax, but the Bill tries to put at risk the very existence of the self-employed.
  I suspect that another reason for the attack is the realisation that many self-
  62
  employed people have a great strength in relation to the State, for they are independent of the State, of the unions and of the vast corporations. I believe that this status of self-employment has an important role in preserving the liberty of the individual in a free society. It may be for that very reason that the Government look with such disfavour on the self-employed in our society.
  The self-employed person is also ingenious and responsive to market forces. The man who is self-employed is the living denial of the customary and fashionable view in Whitehall that bigger is better. Throughout the past decade, and during the white heat of the technological revolution, with the theory that there could be growth at any price, there has been far too much encouragement given to the big corporations. It is the little man, the self-employed man, who stands alone. It is he who wishes to work out his own destiny, who is able to respond to the vagaries of the market and who is able to take his opportunity when a new situation arises. It is he who is so disliked by so many of the mandarins in Whitehall and by so many hon. Members—
  Mr. George Cunningham: What a lot of nonsense.
  Mr. Budgen:—on the Government benches.
  I give an example of the ingenuity of those who are self-employed. On Saturday night in Wolverhampton I met a hairdresser in a pub. As I fingered my rather long and greasy locks, which would have been such an affront to my sergeant major 15 years ago, I said to the hairdresser "I expect you are having a difficult time." I imagined that he would be reporting to the Neddy for hairdressers and that hairdressers would be asking it to work out a system of redundancy for hairdressers. I thought that it would be reporting to the Minister or junior Minister, that we would be hearing that there was going to be grave trouble in the hairdressing industry and that there was a need for a massive Government subsidy. I thought "Oh Lord, here is another good Tory who is saying that he dislikes subsidies in general but that he would like a subsidy for his industry."

  63
  Not a bit of it. My hairdresser friend assured me that, although most people do not have their hair cut more than once or twice in the course of a winter, he had responded to the market in that he had found a great new market for toupes. He had to lay off one hairdresser but he had the good fortune to lay on another five men who were making toupees at great profit to himself and to the tremendous satisfaction of the public.
  Mr. William Hamilton: Take off yours now.
  Mr. Budgen: I though that my hairdresser friend was a fine example of the ingenuity and responsiveness of the self-employed man, but I suspect that the Government will not be responsive to the argument that the self-employed show independence and ingenuity in responding to the market economy.
  Is this the right moment to take a doctrinaire swipe at the self-employed? Let us consider for a moment the typical self-employed person. Let us recognise that he is middle class and that in the past he has perhaps supported the Tory Party. He has in the past perhaps demonstrated the qualities of independence and integrity which are so offensive to some people in our society. That person is being hit today as he has never been hit before both by hyper-inflation and by the risk of considerable unemployment in the course of next winter. We see that person being hit by increased taxes, higher prices and, most of all, increased rates.
  The present rate situation is a lesson from which all of us should learn. We all talk about the social discontent which is an inevitable consequence of a high rate of inflation. We are seeing that discontent in respect of the rates and we are seeing it come to light in the most unexpected directions. For example, the sort of person who is in the Tory Party, the retired bank manager or the retired Army officer, is now saying what none of us ever believed he would be saying. Many of my hon. Friends have been embarrassed by the enthusiasm with which people of that sort have spoken of law and order. Many of us have believed that in speaking about law and order they have been overkeen on the punishment side. What do we find now?
  64
  Those same people are now saying that they will break the law. They are threatening not to pay their rates. They have been driven into a desperate corner by the inflation over which the present Government are presiding.
  More and worse is yet to come for the people to whom I have referred, because next winter we can anticipate a great increase in the rate of unemployment. I accept that in the 1930s and in other periods it has been the working class, on the whole, which has had to bear the terrible burden of a high level of unemployment. But let us make no mistake that next winter, when we have a 25 per cent. rate of inflation and perhaps 1½ million unemployed, it will not be the working class alone which will have to bear the weight of unemployment. It will be the middle class, which does not have the support of the unions, which will tend to bear the weight of unemployment just as much as those who historically belong to the working class.
  There may be just one safety valve or escape route for the middle class. It may possibly be able to escape into self-employment. It may be able to retain some sort of dignity. It may, by its ingenuity and responsiveness to market forces, be able to join the great body of the new service industries. It may therefore cease to be a charge upon the State. That escape route is perhaps not being closed but it is being narrowed by the Bill.
  I say to the Government that the people to whom I have referred—they represent a surprising body in our society—will be more and more frustrated as the weeks go by until April 1975. If their escape route is blocked by the Bill, by the time April 1975 comes along the middle class and self-employed will feel so frightened and so frustrated that the one thing that all of us in the House fear may come about—namely, they may be the breeding ground for a Right-wing Fascist dictatorship which some have predicted as we have seen the rate of inflation continuing apace.
  5.18 p.m.
  Dr. Michael Winstanley: I should like to respond to the invitation of the hon. Member for Fife, Central (Mr. Hamilton) and comment on a number of points he made with which I agree. In the interest of brevity, I shall not do so

  65
  save to confirm that the Liberal Party looks forward to a time when we can abolish "the stamp" and substitute a social services tax. My party would like to look at pensions not so much as something that somebody purchases but as a right. It looks forward to the time when those who are now working accept that they are paying the pensions of those who have retired. We must see to it that those pensions relate not to what they earned in the past but to what we earn now. I agree with the hon. Gentleman on general principle.
  It seems that we are embarked upon a curious course. We shall have a Second Reading debate until seven o'clock. That debate will then be followed by a motion on precisely the same topic until ten o'clock. We shall thus be discussing exactly the same topic from half-past three until ten o'clock. At that stage the proceedings will be arbitrarily interrupted for a vote, which will be a virtual formality. As a result, it seems that we shall be entertained to eight Front Bench speeches instead of the more usual four. Whether that proves to be an advantage, time alone will show.
  I said that the vote will be a formality because the Bill deals only with the basic pension and the increases in contributions and benefits which come into effect later this month. To that extent the Bill is non-controversial and I am sure that we shall not oppose its Second Reading.
  There is, however, scope for comment on two fronts. First, what does the Bill say and does it go far enough? Second, what is left out of the Bill in relation to the 1973 Act and occupational pensions? The Bill contains the increased basic pension rates, which are, of course, crucial. The Government have made a vague commitment to ensure that basic pensions keep pace not with increases in the cost of living as the Conservatives sought to achieve, but with increases in average earnings.
  That means an increase of anything between 8 per cent. and 15 per cent. annually, or half that every six months on the basis of the biannual review to which the Government have committed themselves. But this would only maintain the level of the single pension at 22·6 per cent. of average earnings and the married couple's pension at 36·2 per cent., as at present.
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  The Government have talked blandly about targets for the basic pension but they have still to fix them. We in the Liberal Party favour targets of 33⅓ per cent. and 50 per cent. of average earnings respectively for single persons and married couples. If that were implemented at once, it would mean pensions of £14·66 for a single person and £22 for a married couple, assuming that average earnings reach £44 this year. This would cost about £1,000 million, or £1,500 million if supplementary benefits were increased proportionately. If we look at the target for the next 10 years, it would require a 1 per cent. addition each year on top of the increase required to keep pace with the increase in average earnings.
  I turn now to the question of the earnings rule relating to men under the age of 70 and women under the age of 65. The right hon. Lady is raising the exemption limit from £9·50 to £13. We would like to see the rule completely abolished. The argument has been advanced that it would cost too much, but there is a good deal of misunderstanding about the cost and, indeed, about the rule, not only among pensioners but among hon. Members. When we say "You can earn so much without deduction", people often think that we mean without deduction of tax when we mean without deduction from pension. This causes misunderstanding. To do the sums properly, we should look at the complete picture, in terms not only of the cost of the pensions but of what we would gain in additional tax derived from the additional income. We also have to look at the additional total contribution to our economy made by elderly people remaining in work.
  If it is not possible fully to abolish the earnings rule now, we should at least raise the exemption level to a more reasonable figure, perhaps even two-thirds of average earnings. We should not go on discouraging elderly people from continuing in work or from retiring gradually, as it were. We are too fond of regarding retirement as a sudden, sharp shock rather than as a gradual process, as it would be for many people if there were more incentive, or less disincentive, to remain in work part time.
  What does the Bill omit? One of the right hon. Lady's major criticisms of the 1973 Act was that it discriminated in

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  occupational pension arrangements against women. What is her attitude towards the discrimination contained in the different retirement ages for men and women? Although it might not be possible to reduce the retirement age for men now, it might well be possible to follow the example of Jersey and raise the retirement age for women on an optional basis with a raised pension level, while ultimately reducing the retirement ages of men and women concurrently in stages until it is 60 in both cases.
  The right hon. Lady announced her commitment to scrapping those parts of the 1973 Act dealing with occupational pensions and introducing her own scheme. This volte-face is the third change of policy in seven years. First we had the late Mr. Richard Crossman's proposals, then we had the years of the right hon. Member for Leeds, North-East (Sir K. Joseph) and now we have the right hon. Lady's reign. This latest change of policy will cause the utmost confusion and uncertainty in occupational pension schemes. Indeed, it has caused confusion and uncertainty and has done great damage already.
  Many firms will be pressing on with their recommended pension schemes, evolved as a result of the 1973 Act but which may end in further confusion when the proposals in the White Paper are published, when they may find that they have pressed on to no purpose. The right hon. Lady says that many firms were apathetic to the previous scheme and that not one recognition certificate had been applied for. That does not match the information we have been getting from pensions firms. The industry believes that a massive impetus was building up following the heavy advertising campaign earlier this year. In any case, approval did not have to be sought until much later, and there is already considerable evidence of many of these schemes coming into being.
  There is no indication of what is to be the rôle of occupational pension schemes. Is the first priority to be an adequate State pension with occupational schemes as a fall-back? If not, how much pressure is to be exerted on employers to institute their own schemes rather than fall back on the State reserve scheme?
  Mr. Timothy Raison: The hon. Gentleman said that he could not
  68
  understand why we were having two separate debates today. We are talking about two quite separate things. The first debate is about the need to up-rate the present scheme and about various matters concerned with Part 1 of the Social Security Act. The second debate is to be about Parts 2 and 3 of the Act. These are quite separate subjects. The hon. Gentleman is making strong points on the second subject, which has nothing to do with the matter now in hand.
  Dr. Winstanley: I know what this debate and the next are about. They are on the same subject. The motion to be debated later and this Second Reading debate deal precisely with the situation we are in. Presently the Bill will get its Second Reading and then we shall debate the motion, which is nothing but posturing and will achieve nothing. All we can do is wait for the White Paper, although some of us in the Liberal Party feel that we might be better employed with my hon. Friend the Member for Rochdale (Mr. Smith) travelling on a coach around the country. Everything that can be said on the motion to be debated later could be said in this debate.
  Would it not be useful to arrange tax concessions to companies which institute their own approved schemes? Could we not do something to encourage such schemes? Our position is clear. We are in favour of adequate basic pensions without the need to apply for supplementary benefits by those who have no other source of income. That is the first priority. We are in favour of the abolition of the earnings rule as an interim measure before our basic pension targets are reached. We support the equalisation of the retirement age for men and women and a gradual reduction in the age to 60.
  Once the basic pension is adequate the case for a compulsory occupational pension is weakened, but we favour the encouragement of occupational schemes plus the opportunity for employees who wish to contribute but whose firms do not run such schemes to join a central account, supervised but not run by the Government and funded jointly by the employers and the firms without schemes of their own.
  Mr. O'Malley: The hon. Gentleman has said that the Liberal Party

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  is in favour of occupational pension schemes. The Government are in favour of the continuance and development of good occupational pension schemes. However, the Government have decided that they are not in favour of, and find inadequate, the reserve pension scheme for a number of reasons which we shall deploy later. In the Liberal Party manifesto a similar attitude was taken. That manifesto thought it wrong that people should be compelled to join a reserve scheme. Is that still the attitude of the Liberal Party?
  Dr. Winstanley: We accept what the Government have said about the inadequacy of the previous State reserve scheme. We nevertheless also accept that there is great merit in occupational schemes and we believe that where possible they should be encouraged, given the current basic pension rates and the chaos in the occupational pension sphere—caused by successive changes of policy and also perhaps in the hope of achieving what is referred to in the motion on the Order Paper, an all-party kind of attitude,
  "an agreed foundation for pension policy."
  Might it not be better to accept the idea of compulsory and universal commitments to occupational schemes and some kind of State-run reserve scheme? That is a possibility. We have expressed our preference.
  We shall examine in Committee such points as that and the anomalous position of the self-employed. For the moment we are content to give the Bill a Second Reading. To save the House from having to listen to any further Liberal speeches later in the evening, may I say a word about the subsequent motion? We will support the motion because it asserts that the 1973 Act should not have been jettisoned. We will reject the Government amendment which claims that it would have been impossible to retain those provisions and build on them. The Government have never produced any evidence to that effect whatever.
  Mrs. Elaine Kellett-Bowman: On a point of order, Mr. Deputy Speaker.
  Mr. Deputy Speaker (Mr. Oscar Murton): Order. I was about to interrupt the hon. Gentleman. It is perfectly in
  70
  order for him to relate matters dealing with the Second Reading of the Bill to certain matters referred to in the motion. He should not, however refer to the motion as such.
  Dr. Winstanley: If you would prefer us to seek to catch your eye later, Mr. Deputy Speaker, so that we may indicate how we will vote, we will do that. Since the subject matter is the same I thought that we would follow the customary practice during a Second Reading debate and that the rules of order would be given a fairly wide interpretation.
  Mr. Deputy Speaker: Order. It is perfectly true that the Chair allows a fairly wide-ranging debate on Second Reading. Although there may be some similarity between the motion and the Bill, it would not be proper to refer specifically to the motion.
  Dr. Winstanley: I am grateful, Mr. Deputy Speaker, and I shall try to tread a little more carefully so as to incur neither your displeasure nor that of the hon. Member for Lancaster (Mrs. Kellett-Bowman).
  The Secretary of State has said that we have lost nothing by abandoning the State reserve scheme set out in the 1973 Social Security Act. She says that because she believes that the scheme was no good anyway. But have we lost nothing? Have we not, by abandoning that scheme, deprived many workers of a better scheme? I say "workers" advisedly because we are not here dealing with managerial people in the main. Those people already have occupational schemes. We are referring to those lower down in the occupational strata, who would have had occupational schemes if the previous provisions had not been abandoned.
  Have we not also deprived many widows of any scheme at all, women not now provided for, who would have benefited from occupational schemes? I accept that we are not talking about huge numbers.
  Many firms will continue with these schemes because they have passed the point of no return. They have entered into agreements with the unions. We should have no quarrel with that. There is no doubt that improved pension provisions can possibly be used as a way of withstanding potentially inflationary wage

  71
  claims. We should encourage that. There is, however, evidence that some firms which were about to introduce schemes are drawing back because they do not need to do so.
  Many workers will suffer as a result. Many widows will suffer because they will not get the kind of protection that those occupational schemes would have given them. What will occur later tonight in the debate on the motion will be a sterile kind of exercise because by then the Second Reading will have finished and we will have to wait for the White Paper. Then we can argue again about what is to happen.
  Perhaps I can make it clear that my hon. Friends and I will vote for the Opposition motion and against the Government amendment because the Government claim that it would be impossible to retain the State-reserve scheme as it was under the 1973 Act and build on that. We have been given no evidence to justify that view. We maintain that we could have avoided all the confusion and uncertainty by carrying on with the other Act, inadequate though it was, and building on it. Since no evidence has been produced to convince us that this would have been impossible, we cannot support the Government's attitude.
  5.36 p.m.
  Mr. Robert Boscawen: The hon. Member for Hazel Grove (Dr. Winstanley) has betrayed how incredibly ill-thought-out are the policies of the Liberal Party with respect to occupational pensions and the State basic scheme. If he thinks that he could have a State basic scheme for everyone which would eliminate the need for supplementary benefit, which would allow a retirement pension on the State basic scheme of something of the order of one-third or even one-half of the national average wage, and if at the same time he imagines that there could be a thriving occupational pensions industry, he needs to have his head examined. The contributions for the basic scheme would be enormous. I do not think that the hon. Member has thought this out at all.
  Dr. Winstanley rose—
  Mr. Boscawen: The hon. Gentleman has had his opportunity to have his say. I will continue.
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  The Minister of State opened the debate in his customary, polite, charming and innocent way, as we have come to expect. He sought to hide, with his usual skill, just what the Bill is all about. I thought it was incredibly skilful of him never to mention that the change-over in the contributions payable by employed married women and widows will yield another £47 million for the National Insurance Fund. Yet he sought at the beginning of the debate to persuade us that there would be very little change, and for most people a considerable reduction, in what they would have to contribute next year.
  Mr. O'Malley: I quoted a figure. I thought the hon. Gentleman had heard it. I said that under the terms proposed the rate of contributions into the National Insurance Fund for the married women's and widows' options would bring in about £30 million per year less than under current arrangements.
  Mr. Boscawen: I am quoting from the Government Actuary's report, which says that the extra contributions will total £47 million. The hon. Gentleman sought to persuade the House that this could be done painlessly.
  I am the first to accept that the Bill contains some useful points. I am glad to see the continuation of a relaxation in the earnings rule. I am glad that there are small groups of people who will get more relief on their contributions. I think that the hon. Member is trying to get away with murder in the Bill, as I know he can do.
  There are certain groups of people who will face a substantial increase in their contributions as from next April. These include married women at work who exercise the married women's option and who have above-average earnings. They will find themselves facing a considerable extra impost for which they will get nothing more than they would have received under the Social Security Act 1973. I believe that they will be very angry about this. As the hon. Member for Fife, Central (Mr. Hamilton) has said, this is a redistributive form of tax which will affect these women.
  The main argument against allowing the married women's option to continue was that it failed to treat women on an equal

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  basis with men. It treated them as second-class citizens. It provided lower unemployment, sickness and other short-term benefits. Therefore, so the argument goes, it should come to an end. Under the Bill, however, although married women are paying more, they will not get better benefits.
  The basic scheme is now so expensive to the National Insurance Fund that we can no longer afford to exempt those married women from paying a higher rate. The Government should say so and make clear that they are increasing the contributions for married women whose earnings are above a certain level, so that married women will know in advance what is being done and the reason for it.
  Mr. O'Malley: Of course we admit it; it is in the Bill. We are putting up the level of contributions from 0·6 per cent. to 2 per cent. for the reasons I gave. The hon. Gentleman is wrong. As a result of the Bill, next April married women, whether or not contracted out of the existing system, will overwhelmingly be paying less and in significant numbers much less than at present.
  The hon. Gentleman referred to married women at the top of the earnings scale. Next April a married woman will pay 1·57p a week less if she is not contracted out and 1·19p less if she is contracted out than she paid on 5th August 1974, or, on the present position, 91p and 53p less respectively. Married women under the option will be paying less next April than they are at present and less than they will be paying from the beginning of August.
  Mr. Boscawen: With respect, they will be paying more and will not be getting correspondingly increased benefits. I return to the Government Actuary's report, which states that there will be a yield of £47 million more from that group of people. Someone will be paying more to yield that amount of money.
  Mr. O'Malley: There will be a £30 million decrease compared with the pre-April 1975 position. The £47 million increase is compared with the 1973 Social Security Act figures—that is the change from 0·6 per cent. to 2 per cent.
  Mr. Boscawen: That is exactly what I am saying. I have not misunderstood
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  that. Next April people will have to pay considerably more.
  Married women go out to work not because they want to but because they need to increase the family income. That is made necessary in most cases by the increase in mortgage interest rates. If married women did not go out to work, a mortgage would probably be out of the reach of many hundreds of families. Married women's ability to help to pay off the mortgage will be reduced by the Bill, and that is deplorable.
  Matters may be different as we move towards equal pay, but we have not yet gone far along that road. Conditions do not yet obtain throughout the country for achieving equal pay. That married women get good cover from their husbands' insurance contributions is demonstrated by the fact that three out of four married women in work opt for that method.
  A well-loved late Member of the House, Mr. Tom Price, who probably knew as much about national insurance as anyone in the House, said in one of his last speeches—if not his last speech—that a large proportion of women's contributions never achieved the purpose for which they were made, before these women married. Only one-third of the contributions made by married women are repaid to them in benefits. In other words, the contributions of married women are a bonanza to the National Insurance Fund. That is no reason for putting an impost on married women, however high their earnings. I am completely against married women with above average earnings being treated in this way. I hope that in Committee we shall vote to throw out this proposal. Married women who go out to work want their independence and they should be allowed to choose to opt out and to get benefit under the 1973 Act.
  Again, £25 million is to be taken from the self-employed in increased contributions. I do not know how many are involved—it might be 100,000 or 150,000—but they are to be milked of £25 million in Class 4 contributions. The self-employed have been hit all round the clock by the Government for increased rates and increased taxes. They have been hit far harder than anyone else and, naturally, they are beginning to object. Larger shopkeepers, professional

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  people and farmers in my constituency who are self-employed will be angry next April at the swingeing increase that is being made in their contributions.
  One reason why those people will be so angry is that the increase comes all at once, not gradually. The increase at the highest rate—a figure of £82 a year extra on an income of £3,500—is an enormous impost all at once, whereas if it had been spread over a number of years it would not have affected the individual quite as much. Exactly the same happened in respect of some rates increases which rose 100 per cent. in one year. That is why people are so angry, because the impost has not been phased over a number of years and they have been unable to adjust to such a large jump all at once.
  When all these things are added together, it will be found that more and more people in these middle-income groups have become disillusioned with the aims and purposes of the Labour Government. Those people will be right to come to the conclusion that the Labour Government aim at ending the independent spirit which is so manifest in those who undertake self-employment.
  Lastly, I wish to return to my normal theme when taking part in debates on social security matters. I refer to the absence yet again of any mention in the Bill of death grant. Labour Members may laugh about this and say that this is the wrong legislation in which to introduce these matters, but I wish to quote from a social security debate in Standing Committee two years ago:
  "There is an argument for saying that the Bill is not appropriate for insisting on this point. … We do not accept that; but I should accept the argument of urgency, namely, that the Government do not want to wait until 1975 before they take steps to make the death grant far more realistic than it is now. If the Government had asked us to withdraw our amendment on the argument of urgency, we might have been prepared to listen, but instead we have had the exact opposite."—[OFFICIAL REPORT, Standing Committee E, 6th February 1973; c. 381.]
  That was a quotation from remarks made nearly two years ago by the right hon. Lady who is now Secretary of State for Social Services. She then, when in opposition, regarded this as a matter of extreme urgency and in order to introduce a death grant was prepared to vote against
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  the Conservative Government. Two years later she is now sitting in the hot seat as Secretary of State and has done absolutely nothing about death grant.
  I hope in Committee to introduce an amendment on this matter, and perhaps on that occasion I shall have the help of Labour Members as well as my hon. Friends. We might take advantage of this minority Government and win a vote to get the death grant increased. I very much hope that that happens, because it is long overdue.
  5.54 p.m.
  Mr. D. E. Thomas: My main reaction to this Bill is that as it stands it represents a missed opportunity in terms of social security reform. I want to talk not so much about contributions—I shall not attempt to follow some Conservative Members into a middle-class revolution—but about the vexed question of the adequacy of levels of benefits to be made available through this legislation.
  I received some figures from the Department on 18th June which show that in the last 10 years there has been no real increase in the value of pensions and supplementary benefit scales—that is to say, when the social security benefits are expressed as a percentage of the average full-time male manual weekly earnings. If the Minister would give the relevant figure for the other social security benefits which we are discussing in this debate, I have no doubt that the result would be the same. The so-called safety net of supplementary benefit is the lifeline for recipients of other benefits which are inadequate to meet their needs. Although successive Ministers have paid lip service to the principle of lessening the dependence on supplementary benefits, I do not see in the Bill any evidence of positive action in this area. Indeed, the evidence appears to be in the other direction.
  By the levels of benefit proposed in the Bill, and because of the way in which the eligibility of benefits is governed by the Social Security Act 1973 and previous legislation, substantial numbers of the groups to be covered by these benefits will have to revert to supplementary benefit. I already have the figures showing the number of retirement pensioners and widows in Wales who receive

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  supplementary pension. These figures regularly over the last five years have stood at about one-third of all recipients of pension. Again, if we had similar figures for the benefits which we are discussing in the Bill I have no doubt that the position would be similar.
  I should like to discuss the individual benefits covered by the Bill and to refer to the eligibility regulations under the 1973 legislation and the effect of those regulations on the level of benefit, and also to the gaps which exist in the existing benefit net.
  I refer first to unemployment benefit. For the first 28 weeks of payment, sickness benefit and unemployment benefit are paid under similar criteria. However, after 28 weeks the unemployed person can receive no flat-rate benefit and the earnings related supplement comes to an end. There is no equivalent of the invalidity allowance paid to a sick person which can be paid to the long-term unemployed. Can the Minister say in what way the financial needs of a family whose male breadwinner has been out of work for six months are different from the needs of a family in which the male breadwinner has been off sick for six months? Indeed, one could argue that the financial needs of the long-term unemployed are greater than those of the long-term sick since the unemployed person will not have had the benefit of an employer's sick pay scheme.
  The fact that unemployment benefit can be claimed only for 52 six-day weeks and that no claim can then be made for 13 weeks again forces the long-term unemployed person to have recourse to supplementary benefit. In addition, the eligibility criteria can mean a disqualification from unemployment benefit for six weeks if the unemployed person left his last job voluntarily, or with what is described as a just cause, or if he was dismissed or, alternatively, if he refused a reasonable offer of work. These eligibility regulations are backed up by an effective form of punishment without trial whereby the insurance officer can suspend payment of unemployment benefit pending an investigation. If these matters are not to be covered by the Bill, I hope that we can be given a clear idea of the Government's intention to implement these other necessary amendments flowing from the 1973 Act.
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  I am concerned about the operation of the regulations governing the payment of unemployment benefit under the 1973 Act. I come from a country where the unemployment rate is regularly twice the United Kingdom average, where the major town in my constituency has an unemployment rate which is never far below 12 per cent. of the male population and where a large percentage of its people consist of the long-term unemployed of whom I have been speaking. These men are as much casualties of our economic system as are the physically sick. They are casualties of an undiversified local economy over which they have no control. Yet they are subjected to regulations designed to prevent them being "work-shy"—as if they had any real choice of employment available to them. I believe that we should look again at the position of the long-term unemployed and the present eligibility regulations.
  I turn to the question of invalidity benefits, in terms of both pensions and allowances. The invalidity pension is set at the same level as is the retirement pension in the recently-enacted National Insurance Act. The reservations I have expressed about supplementary benefits in respect of widows and retirement pensioners apply equally to the invalidity pension. I am also concerned about the position of the single person who is in receipt of invalidity pension and who under the present level of benefits is totally dependent on relatives for income support as well as for any other physical and welfare support he may need. Although the level of rates for dependants is increased under the provisions of the Bill, in a family where the father is in receipt of invalidity benefit the mother will still have to go out to work in order to supplement the family income.
  I am concerned also with the position, under the 1973 Act and the Bill, of the invalidity allowance—the higher rate, the medium rate and the lower rate increased under the Bill. I fail to understand why no invalidity allowance was paid to people within five years of retirement under the 1973 Act and why the anomaly is not being put right in this Bill, so that anyone becoming long-term sick within five years of retirement might receive invalidity allowance.

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  I shall also be interested to hear whether the Government plan to look at a further aspect of eligibility for invalidity benefit. Since these benefits replaced sickness benefit after 28 weeks, eligibility under the 1973 Act was related to contributions. In these contribution conditions, no invalidity benefit is paid to those who are not able to work and pay contributions. I have in mind disabled persons who have been incapacitated from an early age. For those who do not qualify for an attendance allowance—and they are the less severely disabled—again there is only supplementary benefit. This Bill brings us no nearer closing the gap for the disabled between the attendance allowance and supplementary benefit, and no nearer a disablement income, which we feel strongly should be introduced as soon as possible. Neither the sickness benefit nor the invalidity benefit provides cover for additional expenses resulting from disablement, and I look forward to either an extension of the attendance allowance or the introduction of a disablement allowance to ensure an adequate level of income for disabled people.
  There is also the fact that invalidity benefits are payable only to those who are long-term sick and, by definition incapable of work. This discourages both social and physical rehabilitation procedures, a gradual return to work or even the taking up of part-time work.
  I am concerned too about the relationship between invalidity benefits and supplementary benefit. If an attendance allowance is awarded to a disabled person receiving supplementary benefit, an equivalent amount is added to the supplementary benefit scale when the person's needs are assessed. This does not happen with invalidity benefits. I should like an explanation of the position.
  I shall be interested to hear why the provisions in Part I of the schedule do not include any reference to an increased level of maternity grant. I am especially concerned about the contributory basis of the grant and about the need for it to be reviewed. A substantial number of young unmarried mothers who have not been able to work and so qualify for the required number of contributions have to fall back on the exceptional needs grants of the Supplementry Benefits Commission. They are receiving those
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  grants in lieu of maternity grants, yet the level of exceptional needs grants is always far below even the £25 level of maternity grant.
  I hope that some of these matters will be considered when the Bill goes into Committee. Amendments along the lines that I suggest are essential to the more equitable working of the 1973 Act. If they cannot be incorporated in the Bill, I hope we shall have some assurance from the Government that proposals of this kind will be embodied in further amendments to the Act.
  6.4 p.m.
  Mr. Bob Cryer: I want first to give a general welcome to the Bill since it embodies many of the promises contained in the Labour Party's election manifesto. It is worth emphasising to the world outside that the increase in the earnings rule is another instance where the Labour Government have carried out an election pledge. At the moment there are many voices calling upon the Labour Government to abandon their election pledges—for example, not to hold a referendum on the Common Market—but I am pleased to see in this Bill that the Government are adhering to the programme put before the electorate.
  Although I welcome the increase from £9·50 to £13 to men under 70 and to women under 65, I hope that the final stage will be the abolition of the earnings rule. This has been mentioned once or twice already. We hope that the Government will move rapidly towards that end. However, we recognise the difficult economic circumstances inherited by my right hon. and hon. Friends and that we must move slowly. Nevertheless, there are a number of anomalies to which I wish to draw attention.
  I understand, for example, that councillors who are pensioners are subject to the earnings rule and, as a result, find that their pensions are cut by the extent to which they claim an earnings allowance. Although this is a matter which naturally concerns my right hon. Friend the Secretary of State for the Environment, I suggest that my hon. Friend the Minister of State, Department of Health and Social Security might approach his right hon. Friend to suggest that this anomaly can be eradicated if, instead of an actual payment being made

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  to a councillor in this position, we introduce a system whereby earnings are made up with employers. In this way, the effect of the earnings rule in creating a separate class of councillors, who serve the country as well as any person earning wages, can be eradicated. I look forward to an assurance from my hon. Friend that this possibility will be investigated. This anomaly has been brought to my attention by a constituent of mine, who, incidentally, does not share my political allegiance. He points out to me that it results in a certain number of absurdities.
  A considerable amount of capital has been made about the increase in contributions from the self-employed—the Class 2 contribution from £1·68 to £2·41 and the Class 4 contribution from a levy of 5 per cent. to one of 8 per cent. A number of hon. Members opposite have talked about the sturdy independence of those who are self-employed. These marginal increases in contributions will not affect stable businesses which are well organised and which are serving the public, such as small shops. But if the increase in charges has the effect of putting out of business those who are working on "the lump" it is to be welcomed.
  We have heard from Opposition supporters eulogies suggesting that self-employed people working on "the lump" system show a spirit of initiative. However, in the opinion of my right hon. and hon. Friends, they show an avarice which results in an enormous loss of life and limb on the building sites where many many of them are engaged.
  I wish to make it emphatically clear from the Government benches that my right hon. and hon. Friends and I do not support "the lump". We intend to put an end to it and all that it means in terms of shoddy work, long hours, a lack of safety regulations and the atavistic jungle which "self-employed" generally means. If these increases in charges help to do that, so much the better. They might offset some of the tax avoidance for which those working on "the lump" are well known.
  One Opposition supporter suggested in a somewhat bizarre contribution that if self-employed people find these increases enormously burdensome many of them may slide into Fascism. It does not say much for their political attitudes if that
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  is likely to happen as a result of increased insurance contributions.
  There are one or two other matters affecting the invalidity allowance on which I should like to touch. There are some anomalies. The general increase in allowances is to be welcomed. However, there are people in receipt of invalidity allowances who, though not retired, are in virtually the same category as pensioners who receive the increased allowances from 22nd July but do not get the £10 Christmas bonus. They feel that they are in an identical position but are unable to receive the extra bonus at Christmas. I realise that this is not within the scope of the Bill. However, I ask my right hon. Friend to review the £10 Christmas bonus so that those who receive only the invalidity allowance may be considered eligible for that bonus.
  In general, I welcome the Bill. I ask my right hon. Friend to examine the earnings rule to see whether anomalies in certain situations where local government money is involved can be eradicated. I welcome the general increase in the level of benefits. I re-emphasise that these are election promises being carried out by a Labour Government looking carefully at the election manifesto drawn up by the rank and file of the Labour Party. I recognise the characteristic criticisms made by hon. Gentlemen opposite about those working on "the lump". They seek to support the kind of activity which we wish to diminish. I give the Bill that qualified welcome.
  6.12 p.m.
  Mrs. Elaine Kellett-Bowman: The hon. Member for Fife, Central (Mr. Hamilton), who is no longer in his place, accused my hon. Friend the Member for Rushcliffe (Mr. Clarke) of trying to create discontent among working married women. If the hon. Gentleman were here I could assure him that the Bill will create among working married women not discontent, but sheer unabated fury because they will be the most serious casualties of its provisions. They will be paying another £47 million and getting nothing whatever extra for it. In case the Minister does not believe me, I suggest that he reads the reference to the Government Actuary's report on page iii of the Bill.

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  At present a married woman can opt to be covered by her husband's contributions and pay only at the Class 2 rate. As three out of every four women opt to do that, it shows how highly they regard this option. They do not want to build up a contribution record. They want cash in their hands now when their families are expensive to bring up. With children staying on longer at school and younger children just beginning school, they go out to earn money for extra school uniforms, food or the treats that they want for them. They do not want to build up contributions for 20 or 30 years on. They will bitterly resent having to pay treble the contributions that they now pay under the reduced rate.
  There is one aspect, to which no one so far has alluded, which I regard as infinitely more insidious than anything else. My hon. Friend the Member for Rushcliffe pointed out that the trebling of the married woman's contribution under Class 2 would make the married woman's option more unattractive. In addition, the Bill contains the seeds of the Government's ability to abolish the married woman's option altogether.
  Mr. George Cunningham: Hear, hear.
  Mrs. Kellett-Bowman: That is contained in Clause 2(4)(a). Section 42(2) of the Social Security Act 1973 states:
  "Regulations under this section shall provide for enabling a married woman or widow to elect".
  That is, to pay at the reduced rate. If the amendment contained in Clause 2 were made, the subsection would read:
  "Regulations under this section shall provide, subject to any prescribed conditions and exceptions, for enabling a married woman or widow to elect".
  That means that the Minister could bring in such "prescribed conditions and exceptions" as would abolish the married woman's option altogether. For example, to carry the matter to absurdity, the Minister could say that this would apply to all women earning over £5,000, £6,000 or £7,000 a year. I believe that women want to retain this option. If I have the honour to serve on the Committee I shall strive to see that the option is retained.
  The Bill is not all bad. I welcome the relaxation of the earnings rule, for which
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  I and some of my hon. Friends have been working for some time, when the Conservative Government were in office, and on which we had made some progress.
  But I regard as absolutely crucial the married woman's option. I should like an assurance from the Minister in winding up that the Government have no intention of using this small and apparently innocuous amendment to destroy an option which is greatly valued by the women of this country.
  6.15 p.m.
  Mrs. Jill Knight: The Minister of State in opening the debate in a gracious and charming way sprayed my hon. Friend the Member for Rushcliffe (Mr. Clarke) and me with some extremely kind words. It would be churlish of me not to follow his example.
  The hon. Gentleman said that he hoped that my hon. Friend and I would continue to speak from the Opposition Front Bench. Having listened to his speech, I should like to see him at the Palladium, because he has undoubtedly missed his vocation. I see him as the Tommy Cooper of Rotherham. I should like to see him do the three-card trick. Indeed, he reminded me of the small boy who, when asked to define "Now you see it, now you do not", said "A black dog running over a zebra crossing."
  The Minister talked about reduced contributions as if everyone would pay far less under the Bill. In fact, he talked about a substantially reduced contribution and of a reduction of 11 p per week for married women. I think that some of us us soon saw clearly which cup held the dried pea. The fact is that the hon. Gentleman was using the August figures as though they were the present figures and was talking about the Boyd-Carpenter scheme which is to be wound up in April.
  Let us get it absolutely clear. Women, who, after all, are the more practical of the two sexes, have no objection whatsoever to paying more money provided that they are to get more benefits in return. A mother, who in most cases is the chancellor of the exchequer in the ordinary home, does not object to paying weekly sums so that little Johnny will get a new coat at the end. But she objects root and branch to paying out contributions when there is no new coat for little

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  Johnny, no increased pension entitlement, nothing, at the end of it for her.
  If a married woman continued to pay under the Boyd-Carpenter scheme she would get more for her money. She would get a pension entitlement which she will not now get. That was where the Minister, even using great dexterity, failed to hide the pea in the cup.
  My hon. Friend the Member for Rushcliffe bowled the Minister middle wicket. Although some attempts were made to argue against what he said, they got feebler as time went on.
  The Opposition applaud several things in the Bill, We applaud the graduated contribution theory having been accepted by the Government. We are pleased that the structure of the 1973 Conservative Act has been adopted. We are pleased about the easement of the earnings rule, and we are pleased, too, about the increase in the invalidity allowance.
  Having tried as hard as I can to say kind things about the Bill, I must now come to some criticism of it, because criticism is needed, and it is well deserved. At a time when the Chancellor of the Exchequer's actions have greatly added to the burdens of everyone in Britain, at a time when prices in the shops are soaring and when electricity, postal and gas charges are rising rapidly, we now have this innocuous little Bill that will add one more burden to several backs.
  Married women will find the Bill unreasonable, widows will find it outrageous, the self-employed will find it unfair, and employers will find it worrying because it will add to the price of their goods.
  Mr. George Cunningham: May we take it that, in view of her comments, the hon. Lady will vote against the Bill?
  Mrs. Knight: Perhaps the hon. Gentleman will wait until the Bill gets into Committee, when I hope to have an opportunity to vote against parts of it and to move amendments to it.
  The Opposition do not object to paying for pensions and to putting the whole of the pensions system on to a solid basis. We want extra pensions to be paid out, and we want them to be paid for, but we want them to be paid for fairly. At present, a married women who exercises the option not to pay the full contribution but pays only 4p a week knows that she
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  will be covered by the payment of that sum for industrial injuries and National Health Service purposes. It has been said by several of my hon. Friends that the fact that so many women choose not to pay the full contribution indicates that they do not want this choice forced upon them. Three out of four married women do not pay the full contribution.
  My hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman) was right to draw attention to the fact that Clause 2(4) raises a nasty little cloud on the horizon and suggests to some of us that the married woman's option is to go. I heard the hon. Member for Islington, South and Finsbury (Mr. Cunningham) say "Hear, hear" when my hon. Friend referred to that possibility. There are grounds for considerable concern about the Government's long-term intentions with regard to the married woman's option.
  Under the 1973 Social Security Act we made plans for the contribution to be 0·6 per cent. of salaries between £8 and £48 per week. My hon. Friend the Member for Rushcliffe worked out how much more the married woman who has hitherto exercised her option will have to pay under the Bill. The sum involved will be between 64p and £1·16 a week, according to how much she is earning. If the Minister thinks that there will not be an outcry from married women when that provision comes into force, I assure him that he is wrong.
  The Opposition want to know exactly what extra benefit the married woman will get for her contribution, for the fact that she will have to pay 2 per cent. instead of 0·6 per cent. The effects of the Bill will seem unreasonable to the married woman because she will have to pay a lot more money but she will get no more than she gets now. What is more, the married woman is worried about what may happen to her option in the future.
  The Boyd-Carpenter scheme, which is to be wound up next April, made it plain that the married woman had to pay, but she paid for something concrete. As my hon. Friend the Member for Wells (Mr. Boscawen) said, married women do not work for fun. They work because they have to. In many cases, they work because the money brought home by their husbands is not sufficient to pay the bills.

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  I assure hon. Members on the Government benches that it is not very funny for a married woman to have to work, because all too often when she arrives home after a day at the factory—or in a shop, office, or wherever it may be—she has to turn to and prepare a meal for the family. It is fine for many husbands, because when they arrive home they sit down and put their feet up. I repeat that married women do not go out to work for fun. Most of them do a full-time job, and when they get back home at the end of the day they have to do another full-time job.
  It will be disturbing to married women to be told that they must pay this extra contribution without receiving any extra benefit. What cover will a married woman have for sickness and unemployment that she does not have now? Perhaps that information will be vouchsafed to us. If a divorced or deserted woman pays the contribution under this Bill, will she henceforth have any entitlement to allowances in the way that a married man receives allowances for his children? Will she procure the possibility of a pension of any kind, or any entitlement for any dependants? Many married women have dependants, and not only their children, either.
  There is no justification for a married woman having to pay an earnings-related contribution and receive an inadequate scale of benefits in return. What does the Bill entail for a woman who is separated from her husband? Will the Minister consider the plight of the woman who is alone? Can she, at least, be helped? The Opposition know that the Government have no love for the tax credit scheme—we do not know why, because it is a good scheme—but they should bear in mind the plight of the mother who lives alone, and I hope that the Minister will at least consider opting to implement the child credit part of the tax credit scheme.
  A deserted woman may be unable to pay the extra money that the Bill demands of her. What about a widow who may be in difficulties? I checked on the position of the widow. A widow, with children, drawing the widowed mother's allowance from the National Insurance Scheme who enters paid employment has the same option as a
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  married woman not to pay the full national insurance contribution, and very often she does not do so because it would not add to her advantage. She would not be able to qualify for sickness or unemployment benefit as well as the widowed mother's allowance, and the allowance would automatically be converted into the retirement pension when she reached the age of 60. But she, too, will have to pay the 2 per cent. rate under the Bill instead of the 0·6 per cent. envisaged by the Conservative Government.
  The Opposition would like more information about the Government's long-term proposals. We recognise that this is an interim measure, and we are anxious to know the way in which the Government's mind is working. For instance, how much, in addition to the 2 per cent. contribution under the Bill, will a married woman have to pay under the Government's long-term proposals? Incidentally, when will these long-term proposals be published?
  One tries hard to see the other merits in the Bill which have been as well hidden as the Minister's dried pea. Does the Bill mean that a married woman may be able to get a pension at the age of 60 if she is a lot older than her husband and if he is only 50? The Minister hinted at this difficulty, and it is a problem that has plagued many of us, because a woman who marries a man much younger than herself is not entitled to the old-age pension when she reaches pensionable age. If there is a difference of 15 years in their ages, she can be 80 before she receives a pension. Is it envisaged either in the Bill or in long-term proposals that that will be altered?
  I spoke a few moments ago of the need to show married women that the contributions that they are being asked to make are fair. There was a recent report of a woman who paid national insurance contributions from 1947 to 1965 and is now getting only 10p a week—after all those years of contributions—because she failed the married women's half test. I have a constituency case of a woman who paid for stamps from the age of 14 to the age of 52 and she is getting nothing because she is 123 contributions short.
  The fury of these women over what I consider is most unfair treatment will be

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  nothing to the fury which women will feel next April when they will have to pay more and more money but receive nothing at all for it. Why should a married woman with no dependants, and who may propose to work for only a short period of her married life, insure herself against sickness and unemployment and pay towards a pension when her husband's contributions cover her? Is this the first step to removing the married woman's entitlement through her husband—in these days of women's lib it is perfectly fair that we should probe this point—or is it considered perhaps that the age at which a woman should receive a pension will rise to 65. That may be in the minds of some Ministers who have framed the Bill and who may even now be framing long-term proposals.
  I turn now to another person who is heavily penalised under the Bill, the self- employed person, who has been mentioned by a number of my hon. Friends. At present a self-employed man pays £1·99 a week and a self-employed woman £1·66 a week. In August the contribution for a self-employed man will go up to £2·51 and for a woman £2·01. The Social Security Act 1973 suggested, quite rightly—this is a matter which we are glad the Government have accepted—that the self-employed person with profits over a certain limit should pay an additional contribution in proportion to the profits over and above the flat rate. Our Act would have meant a 5 per cent. payment on profits between £1,150 and £2,500, but under this Bill the figure will not be 5 per cent. but 8 per cent. My hon. Friend the Member for Rushcliffe worked out that the contributions will be double and that a self-employed man earning what is today quite a low wage of £50 a week will have to pay £12·50 a year more than under the scheme which we drew up, and it is very doubtful what additional benefit he will receive. As the scale rises he will have to pay more and more.
  Self-employed people are today very hard-pressed members of society. My hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) pointed out that they were useful and important to society, and indeed they are. In many cases self-employed people are those who are running small businesses, and they have a very difficult time. Reference was made to a self-employed person running a news-
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  agent's shop. There are also many other self-employed persons who work far longer hours than any trade union would support and find themselves hit on every side, with at present massive tax increases and now the thought of the considerable extra contribution which they will have to pay. A self-employed man who is also an employer is hit in all ways. It would be interesting to know what percentage of income it costs him to get the same pension as a self-employed man against what percentage an employee has to pay. Granted a self-employed person has to pay as both an employer and an employee, but there is a definite element of unfairness and I am not sure that the Bill does not widen the gap. The self-employed man gets no unemployment benefit at all.
  Mr. O'Malley: For identical benefits the total contribution of a self-employed person under the Bill and under previous proposals is about 8 per cent., whereas for Class 1 contributors it is about 12 per cent., and the balance of contributions—that is, those paid as a self-employed person on the one hand and as an employed person on the other—is on a basis which was agreed by successive Governments over most of the post-war period.
  Mrs. Knight: My point is not that there has never been any agreement from successive Governments on the position of the self-employed man. I am pleading for the case of the self-employed man under the Bill because he has already been hit very hard.
  We have debated the Bill against a background of steeply rising prices and taxes. Apart from married women and the self-employed, there are others who will not benefit despite what the Minister says. The single man—bearing in mind increased income tax which he has to face and the higher national insurance contributions—even if low paid will have a take-home pay each week less than it is now. I am thinking of the single man earning less than £20 a week, which is a poor wage. Similarly, for married couples with two children, if the man is earning £54, or just over, a week, he will have less take-home pay under these new proposals. Furthermore, married couples with no children will be worse off if earnings are up to £35 a week. I am not speaking here of wealthy people.

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  In 1965 the Labour Government withdrew arrangements whereby national insurance contribution paid by employed persons could count for tax relief.
  I beg the Minister not to look at only one set of figures but to look at the position of all these people I have spoken of, and to take into consideration their income tax increases and higher national insurance contributions. I have been speaking about facts which we shall have to argue further in considering the Bill. In the meantime, there are elements of the Bill which we can welcome and support in Committee, but there is a great deal over which we have the gravest possible reservations.
  6.38 p.m.
  The Under-Secretary of State for Health and Social Security (Mr. Robert C. Brown): My hon. Friend the Minister of State, who was referred to as the "comedian from Rotherham" by the hon. Member for Birmingham, Edgbaston (Mrs. Knight), made reference to the appearance for the first time on the Opposition Front Bench of the hon. Lady and the hon. Member for Rushcliffe (Mr. Clarke). It would be churlish of me if I did not join my hon. Friend in both congratulating the hon. Members on their first appearance on the Opposition Front Bench and expressing the wish that they will continue to occupy a position on that bench for many years.
  Both hon. Members are entitled to be congratulated upon their contributions. The hon. Lady spent some time complaining about my hon. Friend quoting one set of figures, while she was quoting another set of figures—
  Mr. O'Malley: My figures were right.
  Mr. Brown: It is an easy thing to quote figures and I shall have something to say later about spurious figures. But the figures which my hon. Friend has used have been telling figures. I can understand hon. Members on the Opposition Front Bench not liking figures of that sort. Nevertheless, they are valid figures.
  Those hon. Members who mentioned married women tended to overlook the fact that all married women pay some graduated contributions now on earnings
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  over £9 a week, whether or not they have opted out of the flat-rate contribution. Contracted-out people pay less in graduated contributions than participants but they still pay the major part of graduated contributions, and married women are treated no differently from anyone else in this respect. That is a point that hon. Members seem to have missed. Nearly all married women will pay less from April 1975 than they will have been paying before simply because the graduuated scheme will then end. That point, clearly, has been missed.
  Mr. Kenneth Clarke: Would the Minister not agree that both my hon. Friend the Member for Birmingham, Edgbaston (Mrs. Knight) and I referred to that? Would he not acknowledge that those contributions are being ended because those benefits are being ended? There is to be no more graduated pension benefit. The Minister cannot possibly rely on the abolition of the contributions and benefits under that scheme to justify trebling the cost of the other benefits, which, as my hon. Friend said, remain quite unchanged.
  Mr. Brown: Yes, but the fact remains—we are getting perilously close to the subject of the next debate—that the reason why we are abolishing those so-called benefits is that they were derisory benefits. They were not worth a light in the first place, and without dynamism they would have been worth little or nothing in future. No one can deny that.
  Sir Geoffrey Howe: I should be grateful for an explanation on one matter which seems to be the heart of the point raised by my hon. Friends. On either view, on the law as it now stands or on the law as changed by the Bill, those benefits and the graduated scheme will disappear, and the world in that sense will be the same after the Bill is on the statute book as it was before. One change that will be made is that married women who are contracted out, exercising the option, instead of paying 0·6 per cent. of their income will be paying 2 per cent. In other words, the amount they pay will be more than three times what it was. Would the Minister accept that and then tell me what, if any, benefits those women will get for the trebling of their contributions by the Bill?
  Mr. Brown: I am coming to that. It is true that they will be paying 2 per cent. instead of 0·6 per cent. and that we have abolished the reserve scheme, but the fact remains that the right hon. and learned Member for Surrey, East (Sir G. Howe) is quoted in the Press as saying that the majority of married women will be paying more when, in fact, they will be paying less. If one uses a spurious figure, one can prove any argument. The right hon. and learned Gentleman is quoting post-April 1975 figures which are not yet in effect and have not been in effect and will not come into effect. How is it reasonable or fair to say that married women will pay more on the basis of a figure which the right hon. and learned Gentleman knows will not be enacted?
  A woman earning £40 a week on the basis of the rate of 0·6 per cent. of her earnings would be paying £1·53 less; on the 2 per cent. rate she will be paying 97p less. If one argues on a figure which has never been implemented, one can show that she will be paying more, but, in fact, she will be paying less. That is undeniable. If one argues on a 1975 figure which will not be implemented, one can prove that she would be paying more. We have now answered this point. The Minister of State has done so at least six times now.
  Sir Geoffrey Howe: The Minister must accept and explain one point. What we have on the statute book now is a figure of 0·6 per cent. At the same time, the graduated scheme and all that goes with it are already due to be abolished. As a result of this legislation the percentage of the married woman's income that she will have to pay will go up from 0·6 per cent. to 2 per cent. What I was comparing in my speech—it is this comparison that the debate is all about—is the position before the Bill is enacted and the position after. Would the Minister not agree that the Bill will treble the percentage take from the married woman's income compared with what it is today for no additional benefit? Would he accept that that is so and then explain why it should be so?
  Mr. Brown: I will accept that the contribution for the married woman is going up from 0·6 per cent. to 2 per cent. We shall have to pursue this point in Com
  94
  mittee. I now want to go on to some of the other points raised.
  There will be no increase in contributions paid by the self-employed man earnings up to £1,600 a year. Such people will continue to pay the same flat-rate Class 2 contribution of £2·41 which will apply from 5th August next. Above that earning level, the effect of the new earnings-related Class 4 contributions is that people earnings £2,000 a year will pay an extra 61p a week, those on £2,500 will pay £1·38 extra, those on £3,000 will pay £2·15 extra and at the upper limit those on £3,600 will pay £3·08 extra. In the upper range, these are admittedly considerable increases, but the object of the new Class 4 contribution is to ensure that the self-employed pay their full share towards the general cost of pensions. The extent of the increase shows the extent to which they have not done that in recent years.
  The self-employed have over the years paid progressively less and less towards the cost of the scheme because they have escaped graduated contributions and paid only the flat rate while increasing emphasis has been put on holding down the flat rate and raising the necessary money from graduated contributions. Thus, in 1948 the self-employed person paid 70 per cent. of the Class 1 contribution, employer-employee combined. That has now declined to about 40 per cent. of the combined Class 1 contribution for the male average earner. The 1973 Act and the Bill go some way towards restoring the original relationship because from April 1975 the self-employed person will be paying about 65 per cent. of that combined contribution. All we are doing is putting the situation back to what it was in 1948, or near enough.
  The hon. Member for Merioneth (Mr. Thomas) asked several questions about individual benefits. I hope that he will forgive me if I do not attempt to answer them tonight. The Government's proposals for the future of benefits will be published in a White Paper as quickly as possible, and I would ask him to await that White Paper. The Bill is confined to the contribution adjustments necessary to finance the scheme from April next year. The schedule listing benefit rates is simply to ensure that they continue and do not cease in April next year when the existing national insurance legislation is

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  repealed. All the figures are merely a confirmation of the figures in the uprating Bill which the House has already passed.
  My hon. Friend the Member for Keighley (Mr. Cryer) raised the question whether the new allowances for local councillors count as earnings for the purpose of the retirement pensions rule. That is not a matter for me or for my right hon. Friend the Secretary of State. It is a matter for the national insurance adjudicating authorities, the independent statutory authorities—the insurance officer, the local appeals tribunal and the National Insurance Commissioners. In any event, the nature of the new allowances is a matter for my right hon. Friend the Secretary of State for the Environment. The allowances came into operation in England and Wales only in April of this year. Nevertheless, my hon. Friend's point will, I am sure, be noted by my right hon. Friend.
  The hon. Member for Lancaster (Mrs. Kellett-Bowman) pressed my hon. Friend the Minister of State on the question of the £47 million mentioned in the Government Actuary's report. I can only underline—hoping that I am more successful than was my hon. Friend—the fact that the £30 million decrease is to be compared with the pre-April 1975 situation, whereas the £47 million increase is to be compared with the 1973 Act figure—namely the 0·6 per cent.—which, it is admitted, had to be revalued—that is, on the upper and lower earnings limit—apart from the 0·6 per cent. to 2 per cent. change.
  The hon. Lady was clearly pressing her argument on an assumption that the contracted-out paid no graduated contributions. That is not so. Whether they are opted out married men, married women or single women, they pay a certain amount of graduated contributions at present. We shall have to leave the matter there.
  Mrs. Kellet-Bowman: What is the hon. Gentleman's answer to the point that raised about Section 42(2) of the 1973 Act, which is of considerable importance to women, and the amendment proposed thereto?
  Mr. Brown: In view of the time available, I shall have to write to the hon. Lady about that point.
  Mr. Kenneth Clarke: Surely the hon. Gentleman can give a simple answer. The amendment referred to by my hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman) seems to be giving the Secretary of State power severely to limit the right of married women to opt for lower contributions. What are the Government's long-term aims in regard to the married woman's option? Do they remain committed to taking away entirely from married women the right to pay a low contribution?
  Mr. Brown: The hon. Gentleman is tempting me.
  Mrs. Kellett-Bowman: The Minister still has seven minutes.
  Mr. Brown: The hon. Gentleman will have to await the White Paper. I shall not be tempted to say what my right hon. Friend will be putting in that White Paper, which the nation will be delighted to see and to benefit from.
  Mrs. Kellett-Bowman: Surely the hon. Gentleman knows what is being done by the Bill.
  Mr. Brown: If the hon. Lady can contain herself, I should like to come to the matters raised by the hon. Member for Hazel Grove (Dr. Winstanley), who was speaking for the Liberals. I think that he was speaking for the official Liberal Party. He went very wide in his speech. While I do not want to make any reference to the Chair, I thought that the hon. Gentleman was speaking to the motion that we shall be discussing at the conclusion of this debate. He said that the discussion on that motion will involve taking part in a sterile exercise. He said that, having taken part in that sterile exercise, the Liberal Party, to a man, will trot into the Lobby with the Tories to try to down the Government. I have no intention of straying from the rules of order and trying to reply to a debate to which my hon. Friend the Minister of State will be replying, so I leave the matter there. Nevertheless, it is right to put it on record that the Liberal Party will take part in what it calls a sterile exercise with the Tories and then go into the Lobby to try to down the Government.
  Mr. Kenneth Clarke: The Minister will be delighted to see that he has five minutes left in this debate. Will he please

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  state whether it is the Government's longterm intention to take away from married women altogether the right to opt for a lower level of contribution?
  Mr. Brown: The hon. Gentleman will have to learn to be a little more patient and to wait for the White Paper.
  Question put and agreed to.
  Bill according read a Second time.
  Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

  SOCIAL SECURITY AMENDMENT BILL

    SOCIAL SECURITY AMENDMENT [MONEY]
    Queen's Recommendation having been signified—
    Resolved,
    That, for the purposes of any Act of the present Session to amend the provisions of the Social Security Act 1973 as to the rate or amount of benefit and contributions, it is expedient to authorise the payment out of money provided by Parliament of:

    (1) any increase in the sums payable out of money so provided under any enactment where the increase is attributable to provisions of the said Act of the present Session:

    (a) raising to £8·00 and £5·35 the rates of attendance allowance;

    (b) raising to £6·00 and £3·70 the rates of Category C and D retirement pensions or raising the rates of increases (where payable for children and adult dependants;

    (2) any increase in the sums payable out of money so provided by way of Treasury supplements under subsection (5) of section 1 of the said Act of 1973 where the increase is attributable to provisions of the said Act of the present Session altering such contributions as are mentioned in subsection (2) of that section.—[Mr. Walter Harrison.]

    WAYS AND MEANS

      SOCIAL SECURITY AMENDMENT
      Resolved,
      That, for the purposes of any Act of the present Session to amend the provisions of the Social Security Act 1973 as to the rate or amount of benefit and contributions, it is expedient to authorise:

      (1) any increase attributable to the said Act of the present Session in the sums which, under the said Act of 1973, are to be taken as paid towards the cost of the national health service in Great Britain;

      (2) the payment into the Consolidated Fund of any increase attributable to the said Act of the present Session in the sums payable into that Fund under the said Act of 1973.—[Mr. Walter Harrison.]

  PENSIONS
  Mr. Speaker: Before calling the right hon. and learned Member for Surrey, East (Sir G. Howe) to move the motion, I must inform the House that I have selected the amendment in the name of the Prime Minister and the names of his right hon. Friends.
  6.56 p.m.
  Sir Geoffrey Howe: I beg to move,
  That this House deplores the arbitrary decision of the Secretary of State for Social Services not to bring into operation Parts II and III of the Social Security Act 1973; regrets the serious confusion and uncertainty that this will cause; further regrets that this is likely to deprive many people of an early opportunity to secure a second retirement pension; and calls upon the Secretary of State to reverse her decision so as to allow the 1973 scheme to come into effect, while referring any proposals for subsequent improvement of that scheme to an all-party committee, with the intention of establishing an agreed foundation for pension policy.
  This motion is being discussed separately from the Bill which we have just debated because that Bill deals with the financing of the National Insurance Scheme as it now stands. The motion deals with the very important and distinct question of the future of the National Insurance Scheme and other insurance schemes that were to be established as a result of the Social Security Act 1973 with effect from 1st April next year.
  This is very much a critical motion. It is critical because the decision taken by the Secretary of State, quite apart from being one of the most unexpected decisions taken by the present minority Government and not foreshadowed in some of the right hon. Lady's earlier statements, is the least justifiable and one of the most destructive decisions taken by the present Government. Here, surely, one would have expected a minority Government to have shown more humility and restraint in their approach to the subject of pensions than they have done.
  The motion is not only critical. It is also constructive, because, like hon. Members in all parts of the House, we recognise the need, especially in a period of inflation such as that in which we are living, for us all to work out the best ways of helping those who are in retirement and those approaching retirement.

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  In earlier debates we have welcomed improvements in the State basic scheme, we have discsused action taken by the previous Government as well as by the present Government to key the value of pensions to the cost of living and living standards, and we have discussed the possibility of letting that key operate more frequently than once a year. That is not a matter of controversy.
  It is a matter for the utmost regret, however, that the present Government have chosen to reject, as they have done, the opportunity of working on the established foundations laid in the 1973 Act for occupational schemes in the future and of proceeding on that foundation, as many on both sides of industry are already doing, to build pensions in the future and to work out ways of improving or changing the scheme thereafter so far as there is agreement on that. It would have been desirable for such future progress on that foundation to have taken place, so far as possible, with all-party agreement. That is why the last part of the motion calls for the establishment of an all-party committee to consider future pension policy.
  Unhappily, one contrasts with that desirable approach the fact that the Secretary of State has chosen—against, I suspect, her first instincts—to throw the whole of the pension situation back into the political arena so that it becomes, as many commentators have said, a political football. The right hon. Lady will, no doubt, say that, if that is the case I advance, why cannot the same case be made against the failure of the previous Goverment to work upon the foundation of the Grossman pension scheme?
  There are substantial and solid reasons for rejecting that argument. First, the Grossman scheme—I need not take the debate any further this evening—was the subject in itself of at least as many criticisms as those which the right hon. Lady and her friends advanced against the 1973 Act. I could say, but I need not say so this evening, that those criticisms were more formidable and more penetrating, and that the legislation introduced by Richard Crossman was incomprehensible and unlikely to work effectively. In fact far more important than that, the Grossman scheme was not on the statute book—nor was it being acted on by people
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  on both sides of industry; it was still going through Parliament at the time when the 1970 election took place.
  On this occasion, when the right hon. Lady came into office the legislation was on the statute book. The schemes were actually in being. Much work was being and had been done by Government, by employers, by unions, and by the pension industry, to bring schemes into operation.
  Incidentally, there is nothing in the fact which I have seen advanced by some hon. Members opposite that very few recognition certificates had been granted under the 1973 Act procedure at the time the right hon. Lady took her decision. I refer to a Press release by the Corporation of Insurance Brokers Society of Pension Consultants after the meeting which its representatives had with the Minister of State in the Department, which concludes by stating:
  "… the Society said that unless the Secretary of State really did ensure in her new policy that the impetus in the development of occupational pension schemes was maintained the loss to emloyees and their dependants could be very great. The Society, whose members have been responsible for the setting up of the great majority of insured pension schemes, gave evidence of the wide scale on which development had been taking place in recent months and the advanced stage which planning had reached. They explained that this had been obscured by the fact that at the date when the Secretary of State announced the suspension of recognition arrangements the timeable had not allowed the final stage of obtaining recognition certificates to be reached."
  So there is nothing in that argument, and what the right hon. Lady has done has been to deal a severe and unnecessary blow to the work that was well advanced on the basis of the legislation that was on the statute book.
  The House will not be surprised to know that I have received, through my hon. Friends and directly, many letters of bitter and angry complaint from people throughout the country about the Secretary of State's decision. One that reached me through the Smaller Businesses Association, and, I think, in different forms from my hon. Friends the Members for Basingstoke (Mr. Mitchell) and for Doset, West (Mr. Spicer), states:
  "We, and I imagine thousands of other companies, now find ourselves in this position. First, considerable time and expense expended both by us, our actuaries and other advisers in formulating a scheme for our employees has been totally wasted. Secondly, the discussions

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  with employees about the Social Security Act and its implications now become meaningless and since pensions are becoming a vital area of discussion especially since the introduction of Phases I, II, III there must be adverse repercussions to industrial relations. Thirdly, those considerations are damaging enough, but we now know nothing of what will be introduced to replace the State Reserve Scheme—are we therefore to `bash on regardless' must we expect the farcical provisions of the Grossman Scheme to be resurrected—or what? Logically we should do nothing, but this is hardly likely to be acceptable to staff, employees and Unions in the impending round of wage negotiations. The Minister's answer to this dilemma is the vacuous statement that 'the setting up of any good new occupational scheme or improvement of an existing one represents a move in the right direction'. What, one wonders, does she believe that everyone involved with pensions, be they employers, actuaries, life officers, lawyers and a host of others have been doing over the past year to eighteen months?"
  More crisply still, from the Isle of Ely comes this complaint and particularisation:
  "In the belief that the recent Conservative Government's new and enlightened approach to State and private pensions, and in particular the State Reserve Scheme, would be honoured by the present Government, and in the belief that such progress would make many employees more cognisant of the importance of pensions provisions, my company has not only set up its own alternative scheme but has done so twelve months in advance.
  "Our scheme provides the employee with a much improved pension, as well as substantial life cover and other advantages, and involves him in a contribution of 2½ per cent. less tax, which is about 1¾per cent. or only ¼per cent. more than the projected State Reserve Scheme.
  On the other hand, the employer's contribution we have elected to pay amounts by our scheme to 4·7 per cent., compared with the 2½ per cent. of the projected State Reserve Scheme.
  Our employees, both the Labour and the Tory ones alike, were quite stunned to hear of Mrs. Castle's pronouncement on this subject, and have asked us if we can get the whole thing 'frozen' until someone can tell us what is likely to happen under our new Government's administration.
  From the company point of view, I was happy to accept the considerable cost of our contribution at 4·7 per cent. of our wage bill while Government action was engendering a live interest in pensions, so that the payment would be appreciated by the employees. Indeed, it was our opinion that the new approach to pensions involving the State Reserve Scheme would mean that employers would find it necessary to provide good alternative schemes, as an adjunct to the normal terms of service, in order to retain a proper chance of recruiting the right sort of labour. But now, not only do our employees want to freeze or suspend our
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  new scheme, but we ourselves are doubtful whether we can see our way to making our own contributions to it."
  I have read those letters at some length to the House because they are typical of many comments and are representative of the reaction of many hundreds of employers on behalf of many thousands of employees throughout the country. It is for that reason that we regard the Secretary of State's decision as being so destructive.
  The effect of the right hon. Lady's decision can be analysed as follows. First, those employers who already have schemes, intending to introduce them in response to the legislation, will be obliged by the present uncertainty—it is massive—to discontinue those plans. This can have an adverse effect on the pension provision of about 12 million people already covered by occupational schemes.
  Secondly, many other firms intending to introduce schemes in response to the 1973 Act may well not do so. Personally, I hope that they will still continue to do so, but it would be idle not to recognise that a statutory obligation to introduce second occupational pension schemes has now been replaced by ministerial discouragement of the most explicit kind. Indeed, as Mr. Stewart Fleming, writing in the Financial Times on 10th May, said:
  "She—"
  he is referring to the Secretary of State—
  "—has provided a positive inducement to employers to postpone action at least until they have seen the Government's alternative proposals, promised in a White Paper later this year."
  So I would invite the House to conclude that the Secretary of State's decision is clearly wrong as a matter of policy. The error was summarised by Lord Byers, who has a prominent position in promoting compliance with the 1973 Act, when he described the work that had been going on in a letter to the Daily Telegraph on 28th May in these words, though he had made the statement in many other places:
  "All this has gone by the board to the possible detriment of thousands of workers, or at the very best, has been postponed for very many years."
  I have told the House previously of the unhappily not prophetic observations of Lord Houghton, speaking at the Financial Times Pensions Conference in 1973, when

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  he traced out what should have been the reaction of the present Government. He said this:
  "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, … I conclude … 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."
  It is because of that wise forecast—unhappily unfulfilled—that I said at the beginning of my speech that this decision by the Secretary of State was not only a disastrous one but was also a surprising one. It was wrong in policy and wrong, too, as a matter of politics for a minority Government to seek to act in this way.
  I have advanced elsewhere the suggestion that the decision may possibly be wrong as a matter of law as well. That has been considered by the Joint Select Committee on Statutory Instruments, at least from one point of view, and I do not wish to dwell now on it, save to say that the matter could yet be challenged elsewhere. It is certainly a very remarkable thing for an entire piece of legislative apparatus, being acted upon by thousands of people throughout the country, to be suspended—revoked, in effect—by means of an order described ironically as a "commencement order".
  Mr. George Cunningham: Is it not the fact that that order was possible without parliamentary approval because that was the procedure laid down in the Conservative Act? It could have been made subject to parliamentary approval if the previous Government had wanted it to be.
  Sir G. Howe: It could indeed have been done, but what Government in this country, in accordance with our traditions of constitutional government, could have foreseen, notwithstanding the observations and advice I have just quoted from Lord Houghton, that a minority Labour Government at any point within the next 12 months would have acted so irresponsibly as the right hon. Lady has done? One designs legislation to be worked by reasonable men, not by unreasonable minority Governments.
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  The case which the Government may seek to make against the existing scheme cannot justify the decision taken by the Secretary of State. It would be wrong, for example, to argue that the 1973 Act could have been set on one side because the benefits provided were too low and too slow to come into operation. The Act set out prescribed minimum standards, and they could have represented a major advance in pension provision. It established a firm base on which any Government should have been willing and able to operate.
  Experience shows that once a pension scheme is started improvements to it are inevitable over a period. That is why it is absurd for Labour Members to consider that under the 1973 Act the reserve scheme was set for all time. Improvements in due course were not only possible in that scheme but proper and probable, and it was quite wrong to set it aside in this way. On any view, even under the Crossman scheme, there is likely to be a gap till the scheme, whether it is a pay-as-you-go scheme or is funded, reaches full maturity. It has always been sensible to conclude that that gap in provision should be met by tax credit provisions, and that is another reason why we deplore the delay of the Government in bringing in the tax credit scheme.
  The second reason which might be advanced against the 1973 Act is that it did not make sufficient provision for women. That, of course, was the subject of much argument, and it may yet be so hereafter. It is still necessary to bear in mind that women both live longer and retire earlier, and any outcome that ignores those facts is not, whatever else it may be, equal. Even so, it is possible in future to reach different conclusions about provisions as between the sexes under the 1973 Act, possible to consider them again in the future, after the 1973 Act has been activated.
  However, neither of these reasons justifies a refusal to allow the 1973 scheme to come into force. It had very real merits which cannot be provided in any other way. It recognised that a pay-as-you-go alternative—if that is what the Government have in mind—means that there is no guarantee of a second pension. it recognises also that occupational schemes

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  with the consultative provisions imposed under the 1973 Act are far more in tune with the needs of our time than a massive State scheme.
  If one contemplates the flexibility of occupational schemes, the fact that they can be designed by a consultant, employees and employers, one can, see that they may be more attractive at the present time. I quote from the observations of the Chairman of the National Association of Pension Funds, reported in the Daily Telegraph, who said:
  "In my experience most people prefer to be in a well-run private fund. It is much more flexible and usually it is operated on a much more personal basis than a State scheme. Employees are quite rightly having more and more say in the running of funds, and obviously a State scheme cannot be altered except on a nationwide basis."
  Surely that is a second, solid and substantial reason for preferring the occupational schemes the 1973 Act was designed to promote.
  The present situation has very real demerits and difficulties for pensions and future pensioners. On any view it will involve a delay of several years in making a start. We are promised a White Paper later this year with legislation perhaps effected by 1976 and coming into effect by 1978. The right hon. Lady may smile at that with some curious sense of pride, but it is not something to be proud about. I quote from Mr. Haddon-Grant. He said:
  "The worst thing about it"—
  he was referring to the Secretary of State's action—
  "is that for the first time in the history of the pension fund movement something has been taken away without us knowing what is going to be put in its place."
  So, inevitably there will be a hiatus of three years at best, and if the present Government have their way, due to a combination of sloth and arrogance on the part of Labour Governments, the delay before the establishment of a second effective pension scheme will be prolonged.
  It will be one of the most important tasks of the next Conservative Government to repair as quickly as possible the damage done by this minority administration. We need to secure progress as soon as possible in the establishment of the right to a second pension. We need to preserve the value of work already
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  done throughout the industry if we are to achieve just that. The next Conservative Government, therefore, will, with all reasonable dispatch, reactivate the 1973 Act by making a fresh commencement order at the earliest possible commencement date. The question of when that date will be, having regard to the time that has elapsed, will have to be subject to urgent consultation, but it would certainly not be later than April 1976.
  In addition, we shall consider ways in which any future improvements can best be considered—and this I emphasise—on an all-party basis so as to establish, if at all possible, an agreed foundation for future pension policy. It is upon that basis that we should approach the future of pensions provision.
  Perhaps I may now quote The Times leading article which greeted the Secretary of State's announcement. It said:
  "Every Government has the right to have its pension strategy judged by its long-term achievements more than by its interim decisions, but this Government's first move is to surrender ground which had been won in the long struggle to secure a decent pension for everyone in Britain."
  It is that we deplore, and it is upon that basis that I invite the House to join me in supporting the motion.
  7.17 p.m.
  The Secretary of State for Social Services (Mrs. Barbara Castle): I beg to move to leave out from "House" to the end of the Question and to add instead thereof:
  notes that the financial provision made under the Social Security Act 1973 was insufficient to support an adequate level of retirement pension; welcomes the prompt improvements in pensions made by the present Administration; endorses the determination of the Government to ensure that employees are relieved from contributing to a scheme which would have provided inadequate pension cover, especially for women and older workers; recognises that the pension arrangements under the Act could not have served as a sound foundation for an effective and fair pensions policy directed to relating the living standards of pensioners more closely to their earnings and avoiding reliance on means tested benefits; and calls upon the Government to bring forward as soon as possible proposals for public and Parliamentary discussion which would meet the legitimate aspirations of workers in modern conditions and merit the widest possible support.
  The most significant remarks in the concentrated speech of the right hon. and

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  learned Member for Surrey, East (Sir G. Howe) was his last one. In the context of appealing to the House to take pensions out of politics he announced that if the Conservatives won the next election they would immediately reintroduce the reserve pension scheme. That is certainly a great foundation for unity in pensions policy! It is that, in keeping with all this great talk about actions of national unity and rising above party politics, that we are asked to approve tonight. I suggest to the hon. Member for Hazel Grove (Dr. Winstanley) that that is what he will be voting for if and when he supports the motion.
  The Opposition have made certain charges in their motion. The first was an epitome of the double standards that the Conservative Party always applies. The right hon. and learned Gentleman even said—I jotted down his words, hoping that he would fall for it, and he did—that we were making pensions a political football. I had not suspected that the right hon. and learned Gentleman would roll out one which had such whiskers on it, but he did. The double standards, as we noticed in the right hon. and learned Gentleman's criticisms, apply both legally and politically.
  The right hon. and learned Gentleman, very wisely from his point of view, skated over the legal argument that he tried to advance at one stage against my decision by order not to activate the reserve pension scheme. As my hon. Friend the Member for Islington, South and Finsbury (Mr. Cunningham) helpfully pointed out, I had only been using powers set out in a Conservative Government's Act. it does not do for Conservative Members to say "It is all right to have those powers if we are on the Government benches, but it is wrong if Labour Members are sitting there". [Interruption.] It is not a cheap debating point. There have been attempts, through the columns of The Times and elsewhere, to pontificate that I committed a constitutional monstrosity. In fact, I took advantage of a power that my Conservative predecessor took to himself.
  The second sphere for double standards is political. The right hon. and learned Gentleman knows what weak ground he is on when he says that it is outrageous for me to reverse the Con
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  servative Government's scheme, knowing full well that that is exactly what the Conservative Government did to the Richard Crossman scheme. It is no good his saying that there is a subtle difference, because the Conservative Government's scheme is on the statute book. As he himself admitted, it has not been activated.
  Sir G. Howe: The right hon. Lady must not be carried away by her debating ardour. How can she seriously say that there is not a difference between a Bill that is still being debated in Parliament and an Act on the statute book, with regulations having brought it into force, an Act in respect of which many thousands of people were carrying out their obligations? It is wholly different.
  Mrs. Castle: I will give the right hon. and learned Gentleman a recent example of the fact that there is no difference. The Industrial Relations Act is on the statute book. We have set out to repeal it. Are Conservative leaders attacking us for that? On the contrary the Leader of the Opposition has thanked us for removing it from the statute book and has said that if the Conservatives return to power they will not put it back. That is exactly the position on pensions. We have shown that we can improve upon the Conservatives' scheme.
  Mr. Kenneth Clarke rose—
  Mrs. Castle: I will not give way. I am making a valid point. No doubt, if the hon. Gentleman catches the eye of the Chair, he can say whatever he feels about me that is now pent up to bursting point in him.
  It is nonsense to say that because one Government have legislated their successors are committing a constitutional impropriety if they reverse that legislation. Time and again, history has shown that the reversal of legislation has been to the national good. Just as that is happening in industrial relations, it will prove to be the truth in pensions as well.
  The Richard Crossman scheme had been thoroughly discussed in the House. Conservative Members did not like it, and they were free not to like it. On Second Reading the right hon. Member for Welwyn and Hatfield (Lord Balniel) made it clear from the Opposition Front

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  Bench, not knowing whether the Cross-man Bill would ever get on the Statute Book, that
  "We will not follow the Government in this new and unsound pensions structure."—[OFFICIAL REPORT, 19th January 1970; Vol. 794, c. 82.]
  He had a perfect right to do that, and I have a perfect right to do the same today. What is democracy all about?
  Let us get away from the irrelevances and discuss the merits, which the right hon. and learned Gentleman was very careful not to do. It was interesting that his defence of his Government's reserve pension scheme was so lukewarm and tentative. The motion admits that that scheme needs improvements, that it is already out of date.
  The right hon. and learned Gentleman tried to argue that all pensions policies evolve over the years, that when we have had a little experience of them we realise that we have to improve them, and so on. But we have had no experience of the reserve pension scheme. It is not even activated, and already the spokesman of the Government who introduced it is moving a motion appealing for all-party unity on the basis that we can together improve the reserve pension scheme.
  When I listened to the right hon. and learned Gentleman I felt that there was already one bonus from our refusal to rubber stamp our predecessors' policy. Already, before the scheme would have come into operation on their own timetable, they are admitting that it is inadequate. Does the right hon. and learned Gentleman really mean to tell the House that if I had meekly said "I shall introduce the reserve pension scheme", they would have been at the confessional this evening saying that it was in effect inadequate?
  As Liberal Members and Conservative Members rush to the television microphones to tell the country that what we need is a coalition Government, I can only say that the right hon. and learned Gentleman's admission now of the inadequacy of the reserve pension scheme is proof of the value of party government.
  Sir G. Howe: The right hon. Lady must not build too large a structure on a simple proposition. The motion says
  "while referring any proposals for subsequent improvement of that scheme to an all-party committee".
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  That is not admitting the inadequacy of the scheme. Does not the right hon. Lady recognise that it is an attempt to suggest that the proposals put forward by her or by anyone else should be constructively considered upon the basis of a going scheme? That is no admission. It is a sensible proposition.
  Mrs. Castle: If we are to have a sound foundation for pensions policy on a non-party or all-party basis, we had better begin by understanding each other's policies. Is or is not the right hon. and learned Gentleman saying that the reserve pension scheme is inadequate? I suggest that Liberal Members should listen to the right hon. and learned Gentleman's reply, because they will be voting for it. Does he or does he not think that the reserve pension scheme is inadequate?
  Sir G. Howe: I made it perfectly clear in my speech that the reserve pension scheme was sensible and a good foundation for further progress. It was a foundation upon which many occupational schemes were coming forward, all of which are to be retarded through the right hon. Lady's arrogance.
  Mrs. Castle: There would be more validity in the right hon. and learned Gentleman's suggestion that we should find a way of taking pensions out of politics if he had given us an indication of what he now feels is wrong about the reserve pension scheme. Are we voting tonight for the previous Government's scheme or for the possibility of amending it?
  Of course the Liberals could not enter into any such all-party agreement about improving the reserve pension scheme. After all, in their last election manifesto they came out in categorical opposition to it. They said:
  "The Conservative Government's Occupational Pension Scheme incorporates a degree of compulsion which is anathema to Liberals in forcing everyone to contribute to a second pension scheme which will do nothing for today's pensioners."
  Obviously the great national unity front on pensions cannot include the Liberals. That must apply even if any modifications are to be made to the reserve pension scheme or statutory recognition conditions for occupational pension schemes. That must also apply if any scheme contains compulsion for someone to be a member

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  of an all-embracing earnings-related scheme.
  Dr. Michael Winstanley: Our position has not changed. We have said that the State reserve scheme is unsatisfactory. We have said time and again that we would like it to be improved. We would like as an addition a universally available occupational pension scheme to which those who wish to have a second pension can contribute. Will the right hon. Lady tell me what possible reason there could have been for not keeping the present scheme and building upon it? Can she give me any possible explanation?
  Mrs. Castle: I am delighted to do that. This is the centre of the argument. However, the hon. Gentleman cannot say that he has no altered his party line since the manifesto was published on which so many votes were won, because his party's manifesto denounced compulsory membership of reserve or alternative occupational pension schemes.
  The Liberals, if they stand by what they said at the last election, are way out in a one-man band of their own and are not within the central argument in which I am now about to engage. The Labour Party is not as sweeping about this proposition as the Liberals. We believe that people should be made to provide adequately for their old age. If they do not do so, society must pick up the bits. It is better to have provision properly planned and organised.
  Let me tell the House what the Government believe is wrong with the previous Government's scheme. In our view there must be -bur main aims of a pensions policy. The first must be to lift everyone in retirement off supplementary benefit. I am sure that the Liberals will agree with that. The second aim must be to give women full equality. The third aim must be to make adequate provision for widowhood. The fourth aim should be to safeguard the value of pensions against the erosions that inflation can bring.
  One of the tragedies in modern society is that there are still people who contribute to various schemes who have no guarantee that the value of the pensions of those schemes will not melt away before their eyes in today's inflationary world. I put to the House in extreme
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  seriousness the Government's thinking. Pensions policy is a matter of profound seriousness which strikes at the heart of every party's policy and its philosophy of society. I say seriously that none of the aims which I have mentioned would be achieved by the previous Government's reserve pension scheme or by the recognition conditions for occupational pension schemes that were linked with it.
  I go further than that. The previous Government's scheme cannot be amended to provide for the four aims I have listed. That is the challenge every hon. Member must face this afternoon. It is basic to the structure of the reserve pension scheme that many contributors and their widows will still be drawing inadequate pensions well into the twenty-first century.
  Why do I say that that challenge is basic to the structure of the reserve pension scheme? First, under the reserve pension scheme the build-up of entitlement is so slow that a 20-year-old man entering the scheme next year, when it was due to come into operation, would not get his full entitlement until the year 2019. Second, because the level of contributions and, therefore, of pensions is so low, the best that can be achieved under the scheme, on the assumption made by the previous Government about rises in real earnings and bonuses, is one-fifth of a man's reckonable earnings on retirement. That means that by the year 2018 a man aged 22 and earning £30 a week who entered the reserve pension scheme next year would, in terms of today's earnings, earn the magnificent second pension of £5·70. Third, under the reserve pension scheme and under the recognition conditions for occupational pension schemes it is provided, unlike the position in good occupational pension schemes, that women will get a lower accrual rate than men.
  I take a parallel to the male example that I have just given. A woman of 22 on £20 a week, entering the scheme at its outset next year, would, in terms of today's earnings, receive after 38 years a second pension of only £2·60 a week. That is what we are considering. Fourth, a widow under the reserve pension scheme—
  Mr. A. G. F. Hall-Davis rose—
  Mrs. Castle: I do not want to be too long and I must get on.

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  Fourth, a widow is entitled under the reserve pension scheme to only one-half of her husband's already inadequate pension entitlement. Fifth, the scheme gives no guarantee of inflation-proofing. It is a funded scheme. The right hon. and learned Gentleman said that a pay-as-you-earn scheme could not meet its obligations, but such a scheme with State backing or employer backing is the only sort of scheme that can offer inflation-proofing. Can any hon. Member lay his hand on his heart and say that the bonuses which are earned by a funded scheme will be sufficiently strong, as a result of investment, to guarantee to pensioners in future years the inflation-proofing which is so essential?
  We are asked to debate what is called a serious motion of censure. The right hon. and learned Gentleman has not suggested one way in which the basic defects in the reserve pension scheme can be remedied. He has not done so for the simple reason that the defects cannot be remedied through a money-purchase scheme such as the reserve pension scheme except at levels of contribution for older workers which would be intolerable. That is the reality which we must all face if we are seriously talking about taking pensions out of politics. Pensions will come out of politics when everyone feels that he has security in retirement, but not until then.
  It follows that the minimum conditions laid down by the Conservatives' policy for the recognition of contracted-out occupational pension schemes are equally derisory. I was a member of the Standing Committee which discussed the 1973 Social Security Act. I moved an amendment—Conservative hon. Members can laugh, but let them tell the House and country what they thought about the amendment I moved. I thought that it was one of such elementary justice that not even a masculine-dominated House of Commons could have rejected it. My amendment provided that where women worked side by side with men in the same firm they should have the same right as men to belong to the firm's occupational pension scheme.
  My amendment was rejected by the last Conservative Government. I am glad to see that the hon. Member for Somerset, North (Mr. Dean) is present. Why did they reject it? The hon. Member for
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  Somerset, North told me that my amendment would result in some occupational pension schemes being closed down. The difference between the present Government and Opposition Members—this does not apply to the Liberals because they have an entirely different policy—is not that we do not agree that there should be a partnership between the State scheme and occupational pension schemes but that we want that partnership to be only with good occupational pension schemes.
  We say that no occupational pension scheme can be good which refuses to include the women in a firm on the same terms as the men—in which, in other words, if it is too inconvenient to do so, the chaps will close it down. This is the sort of issue we are considering, and I ask the right hon. and learned Gentleman to tell us whether he agrees with what his hon. Friend the Member for Somerset, North said on that occasion. The right hon. and learned Gentleman is wise to refrain from answering, because this question enters into the whole question of partnership with occupational pension schemes.
  We are not talking about people having been robbed of immediate benefits. We are talking about whether we are to scrap a scheme which is, by the Opposition's own admission, now seen to be inadequate. [HON. MEMBERS: "No".] It is not inadequate? So Tory hon. Members believe, do they, that women should be excluded from the right to belong to occupational pension schemes? I am glad to have that point made known. I shall make it widely known among the women's organisations. I recall how even the Women's National Commission bombarded the Conservative Government with protests about the 1973 Act when it was going through the House.
  Mr. John Davies rose—
  Mrs. Castle: No, I am sorry. I am not giving way to you. I will give way to the right hon. and learned Member for Surrey, East if he wants to tell me in what respect he thinks that the Government scheme is inadequate. You cannot speak for the right hon. and learned Gentleman.
  Mr. Davies: No. I speak for myself.
  Mr. Deputy Speaker (Mr. George Thomas): Order. I, too, have no desire

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  to speak for the right hon. and learned Member for Surrey, East (Sir G. Howe) or anyone else.
  Mrs. Castle: I apologise, Mr. Deputy Speaker. I was not referring to you but at that stage I had forgotten the constituency of the right hon. Member who interrupted.
  Mr. Davies: Knutsford.
  Mrs. Castle: I was speaking of the right hon. Member for Knutsford (Mr. Davies).
  It is not a question of robbing anyone of benefits. If the right hon. and learned Gentleman were to look at what would have accrued in the way of additional benefits under this pathetic system, he would have seen quickly how any decent scheme could have overtaken them in less than the time of our postponement of it. The House must never forget that, as against this short postponement, pensioners as from July this year will be enjoying the highest increase in their basic pension in the history of national insurance. This is an essential part of the whole process. We are bringing in increases of 29 per cent. and 28 per cent. in the basic pension.
  Mr. Patrick Cormack: And in the cost of electricity.
  Mrs. Castle: The hon. Gentleman knows perfectly well that the 29 per cent. increase after a period of 10 months is still way ahead of the price increases which that figure was taking into account—far further ahead than was the last increase of the Conservative Government, who gave a rise of 15 per cent. over 12 months, during which the retail price index rose by nearly 10 per cent. We are in a different dimension here.
  Mr. Cormack rose—
  Mrs. Castle: No, I cannot give way. I did not give way to the right hon. Member for Knutsford, for whom I have a very soft spot, simply so that I could make more rapid progress.
  I want to ask the Liberals what on earth they will be voting against if they vote against us tonight. We are told that they will vote against us. It is fascinating. On Second Reading of the Social Security Bill
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  the hon. Member for Cornwall, North (Mr. Pardoe), speaking, I understood, for the entire Liberal Party, said that what they thought was most important was that a married couple should get a minimum pension increase to half the average national earnings. That would have meant at the time £16 a week. The hon. Gentleman added:
  " … it should be done over a period."—[OFFICIAL REPORT, 28th November 1972; Vol. 847, c. 295.]
  We have taken a very big step towards that aim. The figure of £16 is already in operation. I agree that it does not meet the target of 50 per cent. of average national earnings, but we have made it our priority. Apparently, however, that is what the Liberals now object to.
  Dr. Winstanley: Clearly the right hon. Lady has a soft spot for me, for which I am grateful. She asks what we would be voting for and against. We have made our position clear. If the right hon. Lady reads what I have said, she will find that our policy has not changed. We say that by abandoning the 1973 scheme she has caused a great deal of trouble and uncertainty and has deprived many people of rights that they would have had, to no obvious benefit. We see no reason why she should not have allowed that scheme to operate and built upon it. Had she tried to build upon it, she would have had our enthusiastic support.
  Mrs. Castle: I hope that the hon. Gentleman has also paid careful attention to what I have just said. I ask him to go away and talk to his pensions experts, wherever they may be. One cannot achieve the four aims I have set out by a money-purchase scheme—
  Sir Brandon Rhys Williams: Yes one can. It was done in New Zealand.
  Mrs. Castle:—except at contribution rates which would be prohibitive. I ask the hon. Member for Hazel Grove to realise that some of us have spent a great deal of time struggling to understand the actuarial complexities of pensions, and the conclusion is inescapable. Does the hon. Gentleman think that any Government would have gone out of their way to court criticism and misrepresentation when it

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  would have been easier simply to say, "Take it on and then improve on it"?
  It is because we know that mere treatment within the framework of the Conservative Government's policy could not achieve the aims which we believe are paramount that we are compelled to do the only sensible thing—to scrap the reserve pension scheme and start afresh.
  The right hon. and learned Gentleman read bits and pieces from different firms protesting about our decision. Lord Byers is taking a far more forward-looking attitude than the right hon. and learned Gentleman would give him credit for. He says, in effect, "Let us look to the future. We are sorry that the reserve pension scheme is scrapped, but now we must be concerned with what the Government are putting in its place." That is really what the House should be concerned about.
  The right hon. and learned Gentleman read a letter from someone saying that it would cause terrible industrial trouble to postpone the recognition conditions for the introduction of occupational pension schemes. But the TUC is the real expert about what workers feel about occupational pension schemes. Its social insurance committee is very concerned about them. Like the Government, the TUC is 100 per cent. behind good occupational pension schemes. Yet the TUC, after mature consideration, welcomed the scrapping of the reserve pension scheme because it would clear the way, and was the only way to do so, for the provision of a more satisfactory system.
  Hon. Members might better have said "Never mind about arguing as to who was right or wrong in the past. Let us get together and find a way forward for taking pensions out of politics."
  Mr. Leslie Spriggs: I have been listening with great care to my right hon. Friend's speech. She has been making every effort to make the Opposition understand the Government's case. How does she expect the Opposition to understand the case when it was the last Conservative Government which caused the worst industrial disruptions in history through the Industrial Relations Act?
  Mrs. Castle: I agree with my hon. Friend. This certainly shows that they are not the right people to talk about
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  what will cause industrial unrest. My advice was that there would have been profound anxiety and disillusionment in trade unions if the Government had merely proceeded with the Conservative scheme which had been so critically attacked.
  Even if we wished to build an all-party pensions policy, it could not have been done by way of this motion. In the first place—this is a minor but perhaps significant point—the motion is defective in that it talks about my refusal to bring in Parts II and III of the 1973 Act. I have done nothing of the kind because some of those provisions are still to take effect, for example those referring to the preservation of pension rights.
  The motion asks for the administratively impossible. Even if it were carried it would not now be possible to bring the second pension provisions into effect by April 1975.
  Sir B. Rhys Williams: That is your handiwork.
  Mrs. Castle: Whatever the reason, I am explaining the situation.
  Mr. Cormack: You jigged it up.
  Mrs. Castle: All right. Hon. Gentlemen want a few fireworks to make them feel better. That is fine, but they cannot alter the practical, administrative and constitutional position. Their gesture would be meaningless. Regulations have to be made and administrative preparations have to be completed. Employers have to be given time to make their arrangements again. Incidentally there would be absolutely no chance of occupational pension schemes being able to put forward applications for recognition in time for them to be processed by April 1975. Even before the delay over this, the work on that was well behind.
  The scheme cannot be brought into operation next April. As it has to be brought into effect at the beginning of a tax year, if we were to reverse the policy now the first date on which it could be brought into effect would be April 1976. That would bring us even nearer to the starting date for our own scheme and, therefore, make it even more ridiculous to have an interim scheme which would then be superseded.

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  Above all, the motion asks us to amend a money-purchase scheme, which by its nature is substantially unamendable. It cannot take pensions out of politics by lifting pensioners above supplementary benefit. It cannot bring women equality, help widows adequately or guarantee pensioners against inflation. Moreover, by calling for our proposals to be referred to a Select Committee the motion could prolong the very uncertainty which has produced the accusations against me tonight.
  No one who has served on a Select Committee could think that there was any guarantee that at the end of it there would be agreement. For many months we sat in a Select Committee considering the tax credit system. There is no guarantee about agreeing anything. We would simply have taken time and produced further uncertainty and in the end we would have to agree to disagree. There would be more confusion and delay.
  There is already a great deal on which we can agree. We are agreed about the need to move to earnings-related contributions. We are agreed about the need to preserve pensioners' rights and about the need for the State to enter into partnership with good occupational pension schemes. The Opposition might show that little bit of extra humility and admit that it is just possible that, when they see our proposals, they might agree with them. We might have found a better formula.
  Why are we advocating delay tonight? We all know. The motion says it. We do not want a Select Committee to be set up until there are proposals to be referred to it. The House has admitted that thinking on these pension schemes has been moving forward, even in the past two or three years. We have promised that our proposals will be produced as soon as possible, certainly before any Select Committee could get down to work.
  The House has four more parliamentary weeks. No Select Committee could begin to operate effectively in that time. By the time a Select Committee could get together again after the recess, our proposals would be available. I tell the House frankly that I cannot guarantee that we can have them published before the House rises for the Summer Recess.
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  Certainly we will get them published as quickly as possible, certainly before a Select Committee could begin to examine them.
  Mr. Cormack: Before the election.
  Mrs. Castle: I should hope so. The public have the right to know and to choose. They have to know what they are buying. We are not running away from that. What if it happens that our proposals prove broadly acceptable? The House would not want the delay of a Select Committee. It would surely say "Let us move on to legislation as quickly as possible". It would be our intention to give the House and everyone concerned the fullest opportunity of expressing their views.
  How we would do that and what would be the best way must depend on the reception given to our proposals. The House would want it to depend on that. I say let us wait and see what the reception is before committing ourselves. I believe that the White Paper proposals will command widespread support, not least from those who back good occupational pension schemes. In the meantime we are making full use of the Occupational Pensions Board in its advisory capacity.
  I have today made three specific references to the board under Section 66(1)(b) of the 1973 Act asking it to give me its advice on various matters. These are, how we can get better supervision of occupational pension schemes and guarantee their solvency; whether there should be statutory provision for the disclosure of information to members of occupational pension schemes and generally; and to what extent members of a scheme should be involved in its management. That advice will be available to the House in time to influence legislation.
  If the Government are defeated tonight, it will not be because there is some mystic agreed foundation of pensions policy among Liberals and Conservatives. We offer that foundation to all those who genuinely wish to give fair treatment in retirement to everyone, young or old, rich or poor, male or female, manual or non-manual. Those who oppose us are in favour of what? An agreed policy between themselves? Oh! come off it! They offer us a hatch-patch of negative criticisms. I ask hon. Members to stand

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  up and be counted this evening and to say whether they are prepared to give the Government a fair chance to have their proposals examined on their merits.
  8.0 p.m.
  Mr. Paul Dean: I begin by declaring a double interest. In the last Parliament I had something to do with the Social Security Act 1973, and I am now involved in pension schemes outside the House. Former Ministers who make long speeches about legislation with which they have been involved in the past are likely to bore the House, so my remarks will be short, unlike those of the right hon. Member for Blackburn (Mrs. Castle). The right hon. Lady began her speech by referring to "this afternoon" and after 45 minutes ended it by referring to "this evening". It was one of the thinnest speeches I have ever heard the right hon. Lady make from the Treasury bench.
  The right hon. Lady totally failed to answer the question put by my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) and the hon. Member for Hazel Grove (Dr. Winstanley). She totally failed to say why she could not keep the Social Security Act and build on it. The four aims laid down by the right hon. Lady are advanced by that Act. It laid down new standards in all those areas, in most cases for the first time. It made provision for women and widows to be covered, it provided for a pension to be increased after award and it provided for certain people to come into pension schemes for the first time. In all those areas there was some advance, although I agree that in some cases it was modest. That was the cardinal omisssion from the right hon. Lady's speech.
  In 45 minutes the right hon. Lady failed to give any indication to the House, and to those outside the House who are responsible for pension schemes and are anxious about the future of those schemes, of her proposals and her thinking. To try to destroy one piece of legislation without giving an indication of what they wish to put in its place shows up the barrenness of Government thinking.
  I warmly welcome the important statement made by my right hon. and learned Friend the Member for Surrey, East when he explained to the House that the Act
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  is still on the statute book and that the next Conservative Government will reactivate it by a commencement order. I was glad to hear my right hon. and learned Friend say that he hoped that the Act would be in operation at the latest in April 1976.
  I wish to make three main points. My first concerns the way in which the right hon. Lady has set about her task. I was amazed at the way she came down to the House this afternoon at the behest of an Opposition motion to try to explain her conduct. If the right hon. Lady really believed in parliamentary government, surely she could have found a way of doing this major thing which would have given the House the opportunity to debate it. As it is, she has gone sneaking around obscure passages of the Act to find a way to attempt to cancel a major Act passed by Parliament after full debate, on which much work has been done outside. She does it without being answerable to the House in any way until the Opposition drag her down unwillingly to the Treasury Bench today to answer a motion.
  Mrs. Castle: The hon. Gentleman will admit that many weeks ago I volunteered a statement of my intentions and what I was doing under the Act.
  Mr. Dean: The right hon. Lady should not make it worse. Of course she made a statement, as Ministers do when they have something important to say, but she well knows that a statement occupies a small amount of time, there is no opportunity to put amendments and there is very little opportunity to make points. The right hon. Lady should not make it worse. This is a parliamentary outrage, and she knows it.
  The second matter which I should like to examine is the right hon. Lady's statement that nothing will be lost as a result of her attempt to postpone the Act. I suggest that a great deal will be lost, however fast the right hon. Lady works—assuming that she remains in a position to do so. It will take four or live years for a new scheme to be put into operation. That is assuming that she succeeds, and my hon. Friend will recollect that the Labour Party has never succeeded in bringing into operation a pensions scheme. In the meantime, how many

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  people will retire without a second pension who would have been building up for a second pension as from next April? How many men will die in service during those four or five years and leave their widows unprotected? Has the right hon. Lady attempted any calculations? Whatever she may do in four or five years' time, she will find no way adequately to compensate widows who as from next April would have had some cover, however modest. Those who will suffer by the postponement are not those who have good pension schemes now but the most vulnerable sections of the community, and there is nothing that the right hon. Lady can do to alter that unhappy fact.
  Who will pay? The right hon. Lady talks about catching up in some years' time. Already, towards the basic scheme under the Social Security Amendment Bill, to which we have just given a Second Reading, the employer will have to pay 8½ per cent. on payroll, and the employee will have to pay 5½ per cent. on payroll. There must be a limit to the extra contributions which can be put on employers without prices going up. There must be a limit to how much one can put on employees without pay going up.
  There is another lost opportunity in the tax credit scheme, which, had my right hon. Friends been in office, would have been well on the way to the statute book. That held out one of the most hopeful ways, in time, of removing a substantial number of people from supplementary benefit. Here is more delay, not only in the Social Security Act but in the Labour Government's intention not to follow up the tax credit proposals which we had worked out in considerable detail.
  My third point is closely related to the pensions scene. We cannot go on nationalising companies, be it 20, 100 or 4,000, without at the same time nationalising pension rights. It is as well that that should be generally realised outside. It is no accident that the right hon. Lady is one of the foremost supporters of the Secretary of State for Industry in his crusade for more nationalisation. If the right hon. Lady tries in this way to tamper with the pension rights of 12 million people and their families she will light a fire of opposition which will be felt from Land's End to John o' Groats.
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  What must be emphasised is that the nationalisation campaign is doing damage to investments. We are talking not primarily about rich individuals or companies but about life assurance premiums and pension contributions. Millions of people of modest earnings are salting away something for a rainy day or for their retirement. Thanks to wise investment and sound schemes, many pension schemes have been able to go on improving cover for existing members and pensions for existing pensioners, and they are still doing so. But this progress is bound to be at risk if the present uncertainty and depressed state of the market continues for long.
  We are dealing here not only with an important consideration from the point of view of the security of existing and future pensions schemes but with the ramifications of the extreme Left-wing policy of the Labour Government in other fields which will ricochet on today's pensioners and also on tomorrow's pensioners.
  It is easy to destroy, easy to sow uncertainty. The right hon. Lady the Secretary of State for Social Services has sown uncertainty. She has not yet destroyed—and it is up to us, and present and future pensioners, to see that she does not have the opportunity to destroy.
  8.12 p.m.
  Mr. George Cunningham: The hon. Member for Somerset, North (Mr. Dean) began his remarks by declaring his interest. Now, in Opposition, he holds a position in the pension industry outside. Those of us who fought with him on some aspects of social security legislation are not surprised that, having left the Government, he should have been picked up by the pensions industry outside. I congratulate him on his appointment, and I think that he has been only properly rewarded for the valiant efforts he made while Minister, supposedly responsible for looking impartially at these matters in the interests of that industry.
  The hon. Gentleman's support of the industry was limitless. He was even prepared to take over the taxation system and rig it to give an unfair advantage to the private pensions industry against the Government's own State reserve scheme. I can now see on the Opposition benches three hon. Gentlemen, members

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  of the Conservative Party, who felt the hon. Gentleman's action on that point so abhorrent that they were prepared to vote against him upstairs and downstairs when he "whipped" his hon. Friends into the Lobby to undo the amendment which was carried in Committee upstairs. Therefore, I have no doubt he will continue outside to be the spokesman of the pensions industry, and, if the Conservatives, unfortunately, ever return to power, will continue to be the spokesman for the private pensions industry if restored to his position as Minister.
  The hon. Member for Somerset, North referred to the Secretary of State for Social Services "sneaking around" the statute book finding ways in which, without the approval of the House, she could postpone or put off indefinitely the coming into effect of the State reserve scheme. It must be extremely galling for Conservatives that my right hon. Friend has used a statute which was wished on us against our wishes by the Conservative Party. If they botched up the statute so that its working can be undone by an order not subject to either affirmative approval or negative approval of the House, they have only themselves to blame. One well understands that they might feel irritated at the incompetence displayed in leaving such a provision in the statute. I sympathise with them on the fact that this is a point of substance and that it should not be possible to undo an Act of Parliament by an order which is not subject to the will of the House. I see the hon. Member for Somerset, North—who was the Minister in charge of that legislation—nodding his head. Either it was intentional, in which case he has changed his mind, or it was an oversight, in which case he was incompetent.
  Mr. Paul Dean: I hope that the hon. Gentleman will join those of us who feel that it was a mistake. I freely admit that I now feel it was a mistake to allow that sort of provision to go into an Act. I hope we can count on the hon. Gentleman's support to ensure that this does not happen in future legislation.
  Mr. Cunningham: I am always in favour of Governments not having powers to make orders without the approval of the House. I moved an amendment in a different context only the other week to stop the Labour Government from having that sort of power.
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  The hon. Gentleman said it was a mistake. It was not a mistake; it was a botch-up. He did not look at what he was doing.
  The hon. Gentleman spoke feelingly about those people who will retire during the period of delay. He talked of a delay of four or five years. I would be upset with my own Government if the delay approached that sort of dimension. I should have thought a maximum of two years was the most we could tolerate in terms of delay in bringing our scheme into effect. However, let us say that the delay is as much as three or four years. Has the hon. Gentleman worked out how much pension under the State reserve scheme anybody at the end of his working life would receive from a period of contribution of three or four years? The sum would be utterly derisory. It is better than nothing, but it is little to give up as the price of a much improved scheme.
  Nobody will deny—certainly I shall not deny it—that the termination of the 1973 Act was a serious step to take. I am sure the argument was a balanced one of, at best, 65: 35. There are certain disadvantages in putting off the scheme. The obligation is on Labour Members to show what features of the 1973 scheme were bad and the matters which could not be corrected within the confines of that scheme. I hope to suggest a few respects in which it could not have been properly corrected.
  The basic fact is that a pension scheme has an extremely long period of maturity. It has a maturity of 45 years—the length of a man's working life. Therefore, it is important to get a scheme as right as possible to start with, because jigging around with it half way through is a complex process. If the State reserve scheme had been just a little better in a number of respects one could have put up with its disadvantages for a short period and with the inconvenience of changing those features in midstream, but the scheme was so seriously wrong that it is better to put up with a couple of years' delay to get a better scheme right from the beginning.
  The faults of the 1973 scheme were as follows. First, the percentage contribution was far too low to provide a pension which would bear any relationship to anybody's likely final salary. A total

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  contribution of 4 per cent—1½ per cent. from the employee and 2½ per cent. from the employer—does not provide a good scheme at the end of one's life, except possibly for the person who has a level standard of earnings throughout the whole of his life. In those circumstances, 4 or 5 per cent. might give a person a bearable pension, but those are unusual circumstances. In normal circumstances a total contribution from both sides of about 10 per cent. is what is required to buy a decent pension. We should remember that the total contribution in respect of the pension scheme for Members of Parliament amounts to well over that figure; namely, to about 13 per cent. That is what is provided in good occupational pension schemes.
  I accept that that is a feature of the 1973 scheme which could have been changed as we went along. That is a fault of it, but that could have been put right in time without changing the very basis of the scheme.
  Another fault was its treatment of women. I shall not go on about that at any length because it has been dealt with by my right hon. Friend, but there has been no indication from the Opposition Front Bench that the Opposition are now prepared to treat women on an equal basis with men in this respect. Surely it is no longer justifiable, as we said in Committee when we were considering the 1973 Bill, to penalise women for their longer lives. They do not ask to live longer than men. In a general sense, they suffer grave consequences to their incomes for doing so. To say to them that because they live longer they must draw smaller pensions than men is unacceptable.
  It is right to say that, so long as women choose to retire or simply do retire earlier than men, they must draw smaller pensions. There is no justification for paying women at the age of 60 the same pension as that paid to men retiring at 65. I hope that there will not be pressure on us to move to a retirement age for men and women of 60. If anything, we need to move in the opposite direction, with people being free, if they wish, to retire at later ages than 65, because the plunge from working life to total retirement is one which many people find literally killing. But to
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  penalise women only for living longer than men is no longer justifiable. We might as well give people suffering from bronchitis a higher pension on the ground that they will live for a shorter period than other people.
  Again, I accept that in this respect, though the treatment of women would have been more difficult, it would have been possible to alter the 1973 scheme as we went along.
  Thirdly, there was the tax treatment in the State reserve scheme. The hon. Member for Somerset, North bears total responsibility for the gross, manifest unfairness of giving no tax deductibility for contributions to the reserve pension scheme. The hon. Gentleman resisted all efforts in Committee, unsuccessfully, but on the Floor of the House just successfully, to have that put right.
  Mr. R. A. McCrindle: If the hon. Gentleman is concentrating rather more on what we intend to do about pensions rather than on what might have happened under the previous administration, remembering that there were many Conservative Members who joined the hon. Gentleman and his colleagues in voting in favour of tax relief on contributions to the State reserve scheme, if the Government had chosen to move in that direction now they might have been surprised at the support which they received.
  Mr. Cunningham: I remember the debates and votes very well, and the hon. Member for Brentwood and Ongar (Mr. McCrindle) was one Conservative Member who both in Committee and in this House voted against his Government in that respect. That third point of mine is a characteristic in respect of which we would have been able to change the scheme as we went along, but today we are invited by the Opposition to treat the 1973 scheme as though it was perfect, and, in my view, it is legitimate, before I come to what I want to see brought about, to point out the many defects in the 1973 scheme.
  The fourth one was what was to happen to the contributions. They were to be invested in the market. This was a feature of the 1973 scheme which could not easily have been treated differently. The contributions were to go on to the market to be invested, like any normal fund in

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  a private pensions scheme. The effect would not have been simply to increase the amount of money available for investment, which is the purpose of pumping money into the stock market. The effect would have been to blow up share prices. Every year it would have been a godsend to those who wanted to sell. That feature could not have been corrected as we went along.
  I should prefer the new scheme to be at least partially funded. The difficulties of complete non-funding are even greater than the difficulties of funding, but we have to do something useful with the money and not just pump it into the stock market to inflate prices.
  The most serious aspect of the 1973 scheme and the one which could have been altered sufficiently without tearing the scheme apart was transferability. The Conservatives admitted that they had found no solution to transferability. The reason was clear. They insisted on basing their legislation upon the freedom of the private pension industry to provide its chosen model for each profession. The result was that they ordained minimum standards for the recognised pensions to meet, but they did not ordain a model with which a private pension scheme had to comply. The consequence was that transferring from one pension scheme to another presented such great difficulties that they could not find a way of insisting on it. We all recognised that. I see the hon. Member for Kensington (Sir B. Rhys Williams) does not agree. However, I think that that was recognised in Committee as being the principal disadvantage of the Conservative scheme.
  With that scheme in operation, even for someone who was in one or another private occupational pension scheme all his life, it would still be possible for him to reach retirement age with no provision from those private schemes. If he moved from one job to another, spending less than five years in each job, he could have ended his working life without any entitlement from those private schemes. The preservation features in the 1973 Act would have been very unsatisfactory compared with normal transferability.
  Those are the features which ought to characterise any new scheme. First, we must distinguish between the long term and the short term. We should try to
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  create a scheme which, when it has fully matured, when people are retiring who have contributed to it throughout the whole of their working lives, is adequate. Then, having thought about it in isolation, we should go on to think about how we treat those people who are retiring in the meantime. If we muddle the two, we shall fail to get a good scheme in the twenty-first century, which is what we should have our eyes on in devising this scheme.
  Secondly, the benefits must be such that the recipients are not only above but way above the supplementary benefits level. Otherwise people will be forced to pay for what they would be given if they did not choose to save in this manner. Though we often stress, particularly from this side of the House, that social security, supplementary benefits, and so on, are no disgrace, they are felt as a disgrace by those who receive them. That is an inevitable fact. It is desirable not only when we look at individuals, but from the point of view of society as a whole, that we should get rid of dependence on social security after retirement.
  Thirdly, we must provide for a contribution of about 10 per cent. If we feel that that is imposing too high a burden on contributors in the early stages, moving from no contribution to a contribution of 10 per cent.—I think that would be the situation—we must stagger it, but build in the staggering from the beginning so that gradually, perhaps every decade, we move from 4 per cent. to 8 per cent. to 10 per cent.
  Fourthly, we should fund, but make sure that the funded contributions are available for the people who are paying the contributions. It is interesting to think that the people who will tend to contribute to a State reserve scheme are, on the whole, those who do not own their own homes because they cannot afford mortgages. It should not be beyond the capacity of this House to evolve a scheme which allows that money to be used to assist people on and below average earnings to afford houses just like other people in society.
  Finally, there is the relationship of the State reserve scheme, the new one, whatever it is called, to private occupational schemes. I stress again that we require

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  a model for the private schemes. They ought to be able to vary their content. They ought to be able to have different provisions for widows, children and life insurance. These are the frills around the basic scheme. If we could get a consistent central core to which all private schemes must adhere it would be possible to have transferability on that central core with the frills not being transferable. I suggest that only in that way will we avoid people reaching retirement age without full cover.
  We are still in a situation where the population can be divided into two great halves. On the one hand, there are basically the professional people who reach retirement age and are about as well off in retirement as when they were working because their houses are paid for, their children have left home and they have pretty high pensions. On the other hand, we have the wage earners, many of whom do not own houses and therefore must go on paying high council rents, who, when they retire, receive only the basic State pension. There is an urgent call on our social policy to correct that situation. I hope that the Government can bring forward a scheme to do that along the lines that I have suggested and coming into effect no more than two years after the date when the State reserve scheme would have been introduced.
  8.33 p.m.
  Sir Brandon Rhys Williams: The hon. Member for Islington, South and Finsbury (Mr. Cunningham) has, as usual, made an interesting and useful contribution on the subject of pensions. I did not seek to intervene in his speech and I will not attempt to follow him now, as we are short of time, but I should like to register the fact that I did not agree with his point about transferability. The manner of his speech encourages us to feel that if an all-party committee were set up we could enjoy the co-operation of Labour back-benchers in seeking satisfactory answers to the problems. I hope that the Government will not be stiff-necked and wooden about it.
  The Secretary of State's speech did not encourage us. The problem is that she has never quite taken the trouble to
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  understand the potential of the 1973 Act any more than she took the trouble to understand the possibilities of the tax credit scheme. She is still pleased with her handiwork in destroying—or delaying for a year—the coming into effect of the 1973 Act. But I believe that when she looks back over her career that will be one action of which she will not be proud.
  I should like to point to the ways in which I believe that the 1973 Act could he improved. All the points made by the right hon. Lady and by critics of the scheme on both sides could be met within the context of the 1973 Act. We must not allow the Secretary of State or her advisers to believe that the 1973 Act could not meet her four criteria, because it could. I hope to demonstrate how it can be done.
  The Act appears to leave a large proportion of pensioners without sufficient income to lift them above the supplementary benefit level. The only way to put that right is to find more money from taxation or contributions. To try to raise the whole mass of the insured pensioner population simultaneously so that they are all above the supplementary benefit level, even in the most adverse circumstances—for instance, regarding rent—is a foolish endeavour because it will mean going beyond our objective in many cases. We ought to break up the mass of the retired population and ensure that our money reaches the people who are most exposed to need.
  We should begin by considering seriously the whole structure of housing allowances. I should like to see a housing allowance included as part of the tax credit scheme. We already have the beginnings of a housing allowance in the structure of the existing national insurance pension, and we must now study ways in which that allowance can be adapted to the actual housing outgoings of the pensioner or pension couple. We ought to bear in mind too that not all pensioners live in their own accommodation. Many live with families or have made other arrangements for their housing.
  We should look at the age increment. The Conservative Government scored a great success with their policy of separating the over-80s for special treatment. We ought to deal with the over-70s or the over-75's, because an age increment

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  would again go to the people who are most in need.
  We ought to abolish the earnings rule, so that in the first five years after retirement people are given the maximum encouragement to look after themselves. When that rule has been abolished employers will gradually come round to making better use of part-time workers, and this is where pensioners could come in and make a useful contribution to the national product. I recognise, of course, that will not happen overnight.
  We must do more about sickness and disability allowances, and here, too, if we are generous enough in our provision for the sick and disabled, we shall be reaching the people who, when they are coming to the end of their lives, are in the most desperate need.
  We must do more to encourage assistance in kind for pensioners, through meals on wheels, home help and services such as that which pensioners do not find humiliating, whereas many of them feel humiliated if they have to apply for supplementary benefits, and one can understand that.
  We must recognise that the time has come for increments for postponed retirement to be increased. From an answer to a Parliamentary Question I learned that the cost would be only £25 million by the end of the century to offer a fair actuarial return for the benefits forgone by postponed retirement. If that figure is correct, what is the House waiting for? This is obviously something else that should be done to encourage pensioners to look after themselves.
  It is obvious that the administration of the national insurance pension scheme is on the verge of breakdown. During the election the Conservative Government undertook that they would introduce six-monthly upratings, and with inflation as it is such upratings are clearly necessary. Equally clearly, however, it cannot be done under the old system. I understand the feelings of those who are expected to operate the old system. Let us get rid of it and bring in computers, which do these jobs so easily in continental countries. What are we waiting for?
  With regard to the earnings-related pension, one recognises that there is a campaign for women's benefits to be put on
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  the same basis as men's with regard to the annuities they draw if they retire at the same age as men—and the scheme can give them that. Annuities are not the only benefits that pensioners draw from their second pension schemes, and if necessary there can be adaptation of the other benefits for survivors, or one could introduce lump sum benefits which would equalise the value of a man's and a woman's retirement asset at any particular retirement age.
  I mention the possibility of introducing lump sum benefits advisedly, because we shall have to consider the situation that arises when a pensioner wishes to bequeath something to a housekeeper, a close relative or someone who has cared for him out of wedlock. It also belongs to another recommendation I am coming to.
  I accept that the level of benefits under the Act as it stands is not high enough, and therefore the build-up of entitlement is not high enough. The reason is that the level of contributions which it was felt the public were willing to bear is not high enough. One cannot get out of a scheme more than one puts in.
  The Minister of State, Department of Health and Social Security (Mr. Brian O'Malley): There is one further fundamental difficulty which my right hon. Friend mentioned. The hon. Gentleman understands pension schemes, and he knows that to produce adequate benefits under a money-purchase scheme for older workers one has to pay an unacceptable level of contributions. That is what is basically wrong with the structure of a money-purchase scheme.
  Sir B. Rhys Williams: There is, unfortunately, all too wide a frame in which to argue about the meaning of the word "adequate". We have to consider the expectations which people have for retirement in the last years before retirement. A large number of people who have made virtually no provision for retirement are now getting earnings of £60, £70 and £80 per week in the closing years of their working lives, and they will nosedive to £16 per week, which is a serious matter for them. The suggestion that other taxpayers' money should be used in subsidising people in retirement has to be debated. I am coming to a

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  recommendation which I hope will make a contribution to solving the problem.
  We must contemplate at an early date the doubling of the rate of contribution under the 1973 Act. I could contemplate the rate rising from 4 per cent. to 8 per cent. forthwith, if only because it would enable the Government to reduce the general level of taxation because of the higher rate of capital formation involved.
  I believe that to give people better pensions, contributions must be higher—and we need more saving for investment at the same time. Complaints might be made that the Act as it stands increases the funds for investment in equities but not in the gilt-edged market. I hope that what I have to suggest may remedy that difficulty. I recognise that nationalised industries need capital just as much as the private sector, and the instinct to save for retirement is the strongest motive for creation of capital that we have. We should exploit it.
  It may be said that private schemes have a tax advantage against the State reserve scheme. We do not need to go all over this again, but the passage of time since the 1973 Act was passed has shown that it is unnecessary to give private schemes this special selling point. Good schemes sell themselves and bad schemes should not be sold at all.
  The most significant point that might be made against private schemes is that they cannot undertake to give full post-retirement protection against inflation. Some schemes which are not based on final salary or do not have some built-in guarantee may not even give pre-retirement dynamism; but that can be remedied. While an employee is in an employer's service he might feel fully entitled to expect pre-retirement dynamism. But how to give the best protection against inflation after retirement needs study. I understand that the scheme in course of being introduced in New Zealand, which obviously the right hon. Lady and other Ministers will be fully informed about, meets the problems involved. As I understand it, it runs on lines which I shall try briefly to outline. In spite of snags, I believe that there is a will in the House to find a consensus.
  I should like to make one or two suggestions. Firstly, we should dynamise
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  the bricks in the Boyd-Carpenter scheme. We have there an accurate record of employment earnings during the past 10 years which would otherwise be lost; and the money for the same object will have to be found from somewhere. Therefore, let it be applied on a strictly fair and arithmetical basis in the light of the records which the Department retains.
  Secondly, we have to find some system of index-linking for private occupational schemes in the light of the conditions of inflation we have at the moment, which seem all too likely to continue. Should we allow private schemes to buy an indexed stock issued specially for them as they go along? My answer is categorically "No" because it seems to be a sort of benzedrine for the private schemes which gives them an appearance of life and independence whereas it weakens them all the time.
  Should we revert to a Crossman-style abatement scheme, which is what I fear the right hon. Lady has in mind? She gave no inkling of any ideas she may have in her extraordinary speech. I would be deeply opposed to that. Abatement makes private schemes purely subordinate and superfluous as against the State scheme and inevitably introduces an element of incomprehensible complexity. A suggestion which might be worth further study is that schemes which have contributed by putting, say, half their contributions into the gilt-edged market, which I would not oppose, should acquire the right to transfer the eventual accrued asset of each employee at retirement into a Government-guaranteed fund which would then give dynamised benefits afterwards. That suggestion would allow the retention of the sound actuarial principles of private schemes but at the same time would introduce the element of repartition which is inevitable in conditions of inflation.
  Why, one might ask, should private schemes have Government support in this way? My answer would be that in return they must support the Government during the working life of the employee by putting at least half the money raised through contributions into the gilt-edged market. It would be a tonic to that market and it would also give them a claim for an element of support in giving post-award dynamism.

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  There are two final points. We should permit private schemes to offer invalidity cover without losing their tax concessions. Finally, we should now require all schemes that wish to continue to benefit from tax concessions to give transferability of existing accrued rights on change of job. This was the subject of the first speech I made in the House in 1968. I hope that I shall not still be calling for it when I make my last.
  8.47 p.m.
  Mr. R. A. McCrindle: I am sorry that the Secretary of State and the hon. Member for Islington, South and Finsbury (Mr. Cunningham) have left. I wanted to underline the seeming split between the two. The right hon. Lady had great fun finding real and imagined splits between the Conservative approach tonight and that during the period of the Conservative Government, and further entertained us by trying to set off the Liberal attitude and voting intentions tonight against those of the Conservatives.
  The right hon. Lady should now be asked how it is that she should be able to say by implication that she is not attracted to a funded scheme, whereas the hon. Member for Islington, South and Finsbury could say that he hoped that when the Labour Government scheme was introduced it would have a large element of funding. That seemed such a fundamental difference of approach that it would be helpful to find out from the Minister upon which basis the Government's proposals are likely to be introduced.
  Mr. O'Malley: The Secretary of State did not denigrate funding. All she said was that in the present climate of inflation and investment performance there were, as the insurance and pensions industries are now discussing, formidable problems.
  Mr. McCrindle: The right hon. Lady said, I think, that there would be difficulties in funding a scheme, whereas her hon. Friend said that it should be funded notwithstanding the difficulties. One could take that as a difference of emphasis, but I would suggest that it is a basic difference of approach. I shall be interested to see the proposals when they come forward.
  I want to concentrate on four points. First, was the approach of the previous
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  Conservative Government to the Social Security Act the right one? Second, was the Act inadequate in its provisions and if so how? Third, notwithstanding the defects, if any, were the present Government right to overthrow the reserve scheme? Last, following the theme of several hon. Members, is there some middle way in pensions to prevent the undoing by Governments of their predecessors' legislation?
  I am quite unrepentant about the support that I gave to the Social Security Act in broad principle. Although it is an exaggeration, perhaps, to describe it as a social revolution, the introduction of a second pension, no matter how meagre it was likely to be, marked the beginning of a new period in pension provision. Whatever else the Government may seek to change, I hope that we shall be assured that they will not seek to alter that basic change in direction which the Conservative Government took.
  The emphasis that was placed on the development of occupation pension schemes was absolutely right. It gave people the best promise of a buoyant income during retirement. I am the first to confess that, in a period of hyperinflation, for occupational pension schemes to continue to guarantee this buoyancy of income is something which is questionable, but at present I am looking back on the basic philosophy. At the time of the introduction of a second pension, I accepted that it would be a travesty if the opportunity of a second pension were not extended to all in employment. Recognising that demonstrably, by the nature of people's jobs, it was impossible to extend the provision of an occupational scheme to all of them, a State fall-back scheme—as it was described—was absolutely right and proper.
  I believe, too, that a move towards funding of a second pension was something which people understood and supported. It was recognised then, and is still recognised, that the borrowing from Peter in employment to pay Paul who has already retired was something which had been maintained for so long that there was need for a change and some sort of basic funding was clearly desired.
  The other provisions of the Social Security Act—a move towards the preservation of pension rights, an attempt to

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  deal with widows, and some basic form of inflation-proofing—were, and are, important parts of the deal that was extended to the nation under that Act. The broad approach embodied in that Act was right.
  I now ask the question: Was it adequate? Hon. Members on both sides of the House will recall that I argued for a better reserve scheme. The timidity of my hon. Friends in keeping the provisions of the reserve scheme as low as they did was, in retrospect, a mistake. It was not necessary that that should be done to encourage the development of occupational schemes.
  I am also persuaded, particularly with regard to women, that we did not aim high enough. Perhaps we could, and should, have placed them in a position identical to that of men and worked gradually, in various ways, to a common retirement date. Here I echo a remark of the hon. Member for Islington, South and Finsbury—one cannot extend to women the right to the same pension while they retain the right to a preferential retirement date. However, whether that is done in one move or gradually over the years is a matter for debate. Perhaps we should have encouraged women to come into the scheme at an early age and should have allowed them to build up some preserved benefits before they retire to marry and to raise a family. In all those ways, perhaps, we should have been more ambitious in both the occupational pension provisions and the State reserve scheme.
  Reverting to some of the things that I have said in Standing Committee and in the House, I consider that we were wrong not to extend tax relief to the contributions to the State reserve scheme. I led something of a revolution within the Conservative Party when, on a Division, the Government of the day survived by a majority of only four—an experience for which they were loth to extend any gracious thanks to me. That is, perhaps, why I continue to occupy a position on the back benches. Nevertheless, the reserve scheme clearly could, and should, have been better. It could, should, and still can, be improved. Why revoke the whole thing, causing damage and uncertainty, postponing even the minimal provisions of the Act—which the Government concede would have materialised—and
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  pushing the whole business of pensions provision back into the party dogfight? I cannot stress the latter point too much, because I deeply regret it.
  Why did not the Government improve the scheme? Why rescind it? I do not accept what the Secretary of State said tonight. It would be possible, although difficult, to build upon the provisions of the Social Security Act and to achieve some, at least, of the objectives she has in mind without necessarily eliminating for all time her ability to develop a different approach to social security provisions.
  So it is more in sorrow than in anger that even now I ask the Secretary of State, certainly in no partisan spirit, whether she will not think again. The Government can improve on the position of women. They can introduce tax relief under the State reserve scheme without throwing the whole scheme into the melting pot.
  Mr. George Cunningham: Transferability?
  Mr. McCrindle: That is, by the hon. Gentleman's own admission, a much more difficult proposition. I believe that, with the preservation of the provisions which were built into the 1973 Act, it would not be impossible to move at least some way. It made my heart bleed as I listened to the Secretary of State this evening and heard her sheer rejection of any spirit of compromise or of national unity, about which we read so much in the Press. I believe that if she were to listen to such an appeal it could mark the beginning of a new approach to pensions as free as possible of party bias.
  If the Secretary of State is to maintain the attitude that regrettably she showed to the House tonight, she must answer three questions which the House and the country will want answered. What is it in- the reserve scheme that causes her to reject the principle of the scheme when we contend that, if she were so minded, she could build on and improve that scheme? Secondly, why could she not have introduced improved provisions in those areas which grieve her most and allowed the whole Act to go forward? Lastly, how does she justify postponing even the minimal pensions benefit for perhaps three or four years, because it

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  is optimistic to suggest that it could be done within two years?
  These are questions which my electors and the Secretary of State's will ask. If we do not get satisfactory answers in terms of pension provision we shall reluctantly have to assume that the right hon. Lady's approach to pensions is such a doctrinaire one that the House will wish to criticise her for it. However, before we reach that point of criticism, I hope that the Minister, having listened to the pleas which have been made from both sides that she should build upon the scheme rather than reject it, will understand that this is the feeling of perhaps the majority of people in the country and that she will respond to it.
  8.58 p.m.
  Mr. A. G. F. Hall-Davis: My intervention in this debate takes me back to the debates we had in Committee on the Crossman plan. I believe that the Government's decision to abandon the State reserve scheme under the 1973 Act cannot be considered without reference to the background and delay over many years in securing substantial improvements in pension arrangements.
  The right hon. Lady devoted a considerable part of her very long speech to asserting the right of her administration to reverse the legislation of their predecessors. No one disputes that constitutionally. However, we are a practical nation and each decision should be considered against what went before. The previous Labour administration in 1964 took an unconscionable time producing their proposals for improving pension arrangements. They took such a long time that the Crossman Bill, as we call it, was only in Committee at the Dissolution in 1970. The last Conservative administration in a much shorter period placed the 1973 Act on the statute book after lengthy preliminary discussion with those interested in occupational pension schemes. I am not referring only to those whom the hon. Member for Islington, South and Finsbury (Mr. Cunningham) might say had a direct financial interest and not a lot else; I am talking of direct consultation with companies and firms.
  The difference between the 1973 Act and the Crossman Bill is that on the whole the Crossman Bill was not understood, was not liked and was not
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  accepted. I believe that the 1973 Act was understood and was generally accepted. It is against that background that the decision to reverse it and to put the whole issue into the melting pot must be considered, and it is because of that background, because of a 10-year delay in introducing an improved pension structure and because of what was an abortive attempt in 1969–70, that the last Labour administration did not carry the country with them. I am satisfied in my own mind about that, and we all have constituency contacts. I am sure, too, that the 1973 Act did carry the country with it, that it was accepted.
  Mr. George Cunningham: By whom?
  Mr. Hall-Davis: By the great majority of people concerned with pension negotiations which, in the background in which I have been involved, embraced employees and employers.
  There is no doubt that as a result of the 1973 legislation there was a considerable quickening in the pace of provision of occupational pensions. What worries me about the Secretary of State's attitude is that she does not appear to understand why the House of Commons is falling into disrepute in the eyes of the electorate. She chided my hon. and learned Friend the Member for Surrey, East (Sir G. Howe) because Conservatives had actually used the word "improvement" with regard to our arrangements. I believe that the people of this country are having less and less regard for all hon. Members because we are concentrating too little on improvement and construction and too much on destruction and reversing the decisions of our predecessors.
  The issue before us is an outstanding example of just that kind of negative destructive attitude which brings Parliament into disrepute. We were told at the General Election over and over again that we did nothing but slang each other as politicians. I was never sure whether I was meant to take that personally or whether it was just a general remark, but it certainly embraced a political genre generally. People can be slanged by actions as well as by words and the Government's reversal of the decision on the 1973 Act is just the type of approach that the electorate objects to and which brings Parliament into disrepute. I believe that the

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  suspension of the reserve scheme has dealt a damaging blow to the improvement and expansion of occupational schemes, damage which may prove permanent and irreparable.
  I am open to be proved wrong by events but there sometimes comes a tide when things are flowing favourably for a particular course of action. There is no doubt that at the beginning of this year the tide was flowing favourably for the expansion and improvement of occupational pension schemes. The provisions of the statutory pay code, whether one liked them or not, encouraged the improvement of pension schemes. The approach of the reserve scheme had focused employers' attention on the need to give the matter consideration.
  I believe that two things will now happen to reverse that tide. First, I believe that the Labour Party is to introduce some form of pay-as-you-go scheme, which is not easily understood. Until employers understand a scheme, they will not saddle themselves with additional commitments. Secondly, I believe that the impact of inflation on occupational pension schemes, whilst perhaps appreciated by those hon. Members on both sides who have taken part in the debate, is not yet appreciated not only by the country at large but by many of those responsible for the funding and benefits of occupational pension schemes.
  Scheme after scheme will have drawn to its attention by its actuarial advisers, whom many schemes employ far too infrequently to examine ther commitments and liabilities, that there is a large potential deficit in the scheme. The advantage of the reserve scheme was that it drew attention to a pensions structure that was particularly suitable for the small employer. The employer of small numbers is reluctant to introduce a final-salary pension scheme, because he knows that it gives him a liability for what is in effect an open-ended commitment. I know that all pension schemes have the right to be wound up provided that the obligations are met.
  The right hon. Lady said that the only scheme in which one could meet one's obligations in an inflationary age was a pay-as-you-go scheme. I go along with that to the extent that it is the only
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  scheme in which one can meet them for one year. That is one's only obligation—to meet them for one year. It is the strength of a funded scheme that at any one time it can be wound up and be asked to meet the obligations accumulated up to that date. Otherwise, it would not receive the actuary's certificate. That is the sort of fear that inhibited the introduction of occupational pension schemes by small employers.
  The advantage of the reserve scheme was that it served as a model. The hon. Member for Islington, South and Finsbury talked about the need for a model for occupational schemes. He may not have liked that model, but it was one that was particularly suitable for the employer with a small number of employees. That was recognised because a number of chambers of commerce were offering facilities to employers in different parts of the country, or any part of the country in some instances, to join an occupational scheme similar in structure to the reserve scheme but with the flexibility and additional advantages that could be written into a private occupational scheme but could not, certainly in the initial stages, be written into a State scheme.
  If the Labour Government destroy the State reserve scheme based on money purchase, they will have discouraged from getting adequate occupational pensions many people who would otherwise have got them.
  I find it extraordinary that at one and the same time Labour Members attack the 1973 Act and draw attention to the need to overcome the transferability problem. The State reserve scheme of the 1973 Act is the only type of pension arrangement that I have come across which offers total transferability. Under that arrangement the individual owns his own pension. For that reason, I think that many small employers in occupations where people move frequently would have been well advised to consider whether it was not in their employees' interests to let them enter the reserve scheme, in which they would be assured of full transferability.
  When people draw attention to the inadequacy of the State reserve scheme it is worth asking them to cite a few examples. Of course, examples can be as misleading in this area as in any other.

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  We must demonstrate the relative positions of a man who stayed in the State reserve scheme all his working life and a man who moved into five, six, seven or eight occupational schemes with the best transferability arrangements that have been devised.
  I believe that we have our pension arrangements the wrong way round. What we should have is a personally owned pension on the lines of the State reserve scheme with the only obligation being for the employer to contribute to some form of approved pension arrangement and then to top it up with some sort of State approved scheme.
  Mr. George Cunningham: But that is not in the 1973 Act.
  Mr. Hall-Davis: The Government give the impression that they will make some accelerated provision for the person who is now near retirement. If they are to make such provision and if it is within the context of this Government's scheme, whatever it may be, it will be accelerated provision by a subsidy from the young for the benefit of older people as has taken place in almost all occupational pension schemes. Presumably, there will be a subsidy from the young in the State reserve scheme which would not be paid by employers and employees who are not concerned with the second State scheme. If it were to be paid by nonmembers there is no reason for that subsidy not to be given to occupational pension schemes to help them to get off the ground and to help meet some of the problems that arise when introducing such schemes. If that is the intention, it could have been done perfectly well under the State reserve scheme as envisaged by the 1973 Act.
  For all the reasons that I have given, I think that the Government's approach shows a total disregard of the attitude that the country wants the House to take towards its conduct of affairs—namely, to build on what has been done before and not to pull everything to the ground every time there is a General Election. Further, I believe that the right hon. Lady's time scale is totally impracticable. I had the impression at the end of her speech that she could not guarantee whether we would get the White Paper before the Summer Recess. I do not know whether she intends to publish it during the recess. That would be unusual but not unknown.
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  How she thinks that she will get adequate consultation to allow her to introduce legislation in the next Session I do not know. It seems in this day and age that the time scale in everything gets longer and longer. Therefore, it will be a long time before the alternative scheme is produced.
  It will give me the greatest pleasure to vote against the Government amendment and to support the motion of my right hon. and hon. Friends.
  9.14 p.m.
  Mr. Timothy Raison: We have had today a serious debate on a serious topic. I think that the debate as a whole has been thoroughly constructive. The one exception was the speech of the Secretary of State. The right hon. Lady had the least right to approach the debate in such a way. She came into the House and treated us with a great deal of contempt. She spoke at great length and with the minimum of serious content. She made it clear that it is her intention to scrap what is by any standards a major piece of social legislation, however one may argue about its components. However, she gave no indication of what should take its place. All we learned from the right hon. Lady was that we are likely to have her plans some time after the recess.
  The right hon. Lady has adopted her present attitude in an area where continuity above all else is vital. I believe that her speech was a completely cynical piece of politics. I do not want to say more about it now, but I will return to it later.
  The right hon. Lady's approach stood out in marked contrast to the rest of the House in the debate. I think that the hon. Member for Islington, South and Finsbury (Mr. Cunningham) made a serious contribution, arguing his case fully. I believe that the improvements he talked about could all be brought into being under our scheme. Indeed, he himself said that the bulk of them could be. He said, fairly, that transferability is a very great problem. All of us who have studied this problem know that that is true, that transferability is one of the most difficult ingredients. But we should not despair. I do not think that it is necessarily impossible to find some further development in that area.

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  The hon. Gentleman was also right in wanting to see some kind of funded scheme. I have no doubt that the psychology of the country, represented in the overwhelming majority view of those who think about this problem, is that a funded scheme would be preferable. That is one of the merits of our approach. But it appears that the right hon. Lady is against a funded approach. The indications that we have had from her—she has not told us formally of what her answer is—seem to suggest that we are likely to see some kind of pay-as-you-go scheme. I think that the hope of the hon. Member for Islington, South and Finsbury that something could be produced in two years is wishful thinking. I should be surprised if the Under-Secretary of State could give him any serious consolation or support on that point.
  We have had an extremely good debate with a very high level of contributions. All of us who have followed pensions debates over the years know that my hon. Friend the Member for Somerset, North (Mr. Dean) talks to us with enormous knowledge and in an extremely balanced way. I had perforce to spend a large chunk of the weekend reading through the Committee stage of the Social Security Act 1973. I do not think anyone would choose that as a way of passing a June weekend in Buckinghamshire, but I had to do so. Not having served on that Committee, I was profoundly impressed by the way in which, day in and day out, my hon. Friend battled on without a mistake and in a most reasoned way.
  My hon. Friend the Member for Kensington (Sir B. Rhys Williams) is probably the most original expert on this subject in the House. He always has something new to say. I, as a layman, never cease to be astonished by the freshness of his mind. He did a great deal to answer the hon. Member for Islington, South and Finsbury.
  My hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle) talked eloquently about ways, of building on our scheme in the 1973 Act. He asked "Why rescind the scheme? Why not improve it?" I believe that the scheme was the fundamentally right basis for the future. Nevertheless, I think that when
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  my hon. Friend used those words he did catch the flavour of the debate. In other words, he expressed the view that we have something which should be developed, and that the notion of casting the whole thing to the winds is contrary to the mood of the House as expresesd in the debate.
  My hon. Friend the Member for Morecambe and Lonsdale (Mr. Hall-Davis) made another extremely interesting speech. I am sure that he was right when he said that, by and large, the Act was understood and accepted. I think this has been the sign of a very sensible approach. I have no doubt that my hon. Friend was right to condemn the damage which has been done by the right hon. Lady's wanton action, and it is clear that the House does not support her in it.
  The 1973 Act provided something which we had needed for a long time—a long-term basis for pensions—and I am sure the system is the right one for this country. It consists, firstly, of a basic pension which is a pay-as-you-go scheme and has in it an element of redistribution, brought about through the ingredient of variable contributions but flat-rate benefits. It also has a State contribution. I believe that the redistributive scheme provides the best basis upon which we can look at pensions in future. If there are sharp changes in the value of money and so on, at least we have that measure with which to take immediate steps. It is notable that so far the Government have not rejected this ingredient.
  Then we have the second pension, the choice between the occupational scheme or the State reserve scheme. It is important to remind the House of some of the things which this system has brought in. It has brought in a compulsory level of personal provision, death benefit cover and pensions for widows. It has brought in a measure of protection against inflation. I acknowledge that these things are not final and for all time. I remind the House that they all represent important improvements upon what we had before. It is the essence of social policy in so many areas that we proceed by building and improving upon what we have got. That is what our important Act did.
  The second pension is to be financed by contributions, whether through the occupational schemes or the State reserve

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  scheme. The essence of it is that it provides independence. I have a strong feeling that, more and more, the future of social policy will lie in the notion of giving people a feeling of independence. It is right that the State should be there to make sure that certain standards are upheld. That is a proper rôle for the State here. But psychologically, and in many other ways, what people want now is not an ever-increasing dependence on the State and what it has to provide for them, but an ever-strengthening feeling that they can stand on their own feet, that they have rights that they have bought.
  The underlying philosophy of our 1973 Act was entirely in accord with the way in which social policy is bound to develop. It will take time for the State reserve scheme and the occupational schemes to come to fruition. It is nonsense to pretend that there is any easy way to produce quick results. The Secretary of State seemed unable to face up to this. The truth is that we cannot pluck a pensions policy out of the air and say that suddenly everyone will have the kind of level we would all like to see available in the fullness of time.
  I have no doubt that one of the strongest objections to what I suspect the Secretary of State has in mind is that it will be susceptible to political jiggery-pokery in a way in which our type of scheme is not. We do not know what the right hon. Lady has in mind but it seems likely that it will entail substantially increased contributions on the part of industry. There is a widespread feeling at the moment, since the Budget and in the past few weeks, that it is completely intolerable to go on believing that we can pile more and more on to the back of already hard-pressed industry.
  I turn to some of the objections put forward to the 1973 scheme. The first had to do with the time lag before the reserve scheme pension reaches its full level and also the level of benefits. At the moment, as I understand it, about 1,800,000 pensioners are drawing supplementary benefit. This is a substantial number. We ought to remember that when our tax credit scheme comes into being, as it unquestionably will, that in itself will take a substantial number of retirement pensioners off supplementary benefit level. I cannot say how many, but one figure I have seen is 800,000.
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  There is no doubt that the tax credit scheme, if allowed to develop, as it will do when we come back to power, will be of great help. As time goes on, more and more people will be drawing benefit from their pension schemes, and that in itself will reduce the number of people who are dependent on supplementary benefit. That answers at least part of the point.
  The Secretary of State was unfair when she was describing the benefits under the reserve scheme in ignoring completely the fact that there will be bonuses. Admittedly, if we have a Labour Government dedicated to the sort of policies we see at the moment, the bonuses will not be very large. We have seen the effect on British industry of a Labour Government in power. That is a point we have to consider. But it is to take a profoundly gloomy view of the longer-term future to ignore any possibility of the fund behind the reserve scheme increasing in value over the years. An important part of the scheme is that its funds will be invested for the benefit of those who belong to the scheme, and the Secretary of State might have taken notice of that factor.
  We had a reasonable discussion about the position of women in the scheme. The question was raised whether women should be regarded as retiring at an earlier date than men. I believe that at present women, by and large, accept the notion of earlier retirement, but I am not for one moment saying that this will be so for all time. Social habits and social attitudes change with time, and it may be desirable to look again at this. That is exactly the kind of matter that we believe can usefully be discussed by the Select Committee which we propose.
  The hon. Member for Islington, South and Finsbury said that the scheme penalises women for living longer. The scheme is based on arguments which are actuarially perfectly sound, but if there is an increasing feeling in society that women are being penalised in this way—and more and more people may express this feeling in years to come—this again could be looked at, and there is no reason why an appropriate adjustment should not be made. That argument does not justify the scrapping of the whole of our scheme.
  In the reserve scheme widows get 50 per cent. of the pension for men. Much

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  has been said about this. The 50 per cent. represents an enormous advance on what has gone before. For most people there has been nothing, and 50 per cent. is very much better than nothing. We believe that this was one of the most important achievements of the 1973 scheme. But that does not mean that in future this question should not be looked at.
  It has been argued that the whole pattern of provision in the 1973 Act is biased towards occupational schemes rather than towards the State reserve scheme. We certainly want to see occupational schemes developing strongly.
  It has been said that tax relief is not provided for under the reserve scheme for employee's contributions. The arguments put forward in Committee by my hon. Friend were powerful. Many people who will be paying into the reserve scheme will not be taxpayers. It does a person who does not pay tax no good to receive tax relief. The argument for the 1½1 per cent. is based on a solid foundation. In Committee my hon. Friend the Member for Brentford and Isleworth (Mr. Hayhoe) raised the possibility of a scheme similar to the mortgage option scheme, and that, again, might be considered by the Select Committee. The answer is to accept the structure we offer and in time see how it can be improved.
  Mr. George Cunningham: Will the hon. Gentleman say categorically whether the Opposition stand by what they did in refusing tax relief on contributions to the State reserve scheme for those who pay tax, or have they changed their mind?
  Mr. Raison: No; I am simply saying—
  Mrs. Castle: Answer.
  Mr. RaisonAllow me to do so, and I will. I am saying that we believe that what we did was right in the 1973 scheme, but there is no reason why in time one should not take a fresh look at these things. The whole essence of social policy is that it must be allowed to develop.
  Mrs. Castle: Now we know.
  Mr. Raison: I assure the House, and particularly the Secretary of State, that
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  one of the great merits of occupational schemes—and this is one of the reasons why we support such schemes very strongly—is that they are the most flexible way of meeting a variety of needs and desires which exist among different employees. We believe that that is the right structure for the future. Therefore, we are convinced that the 1973 Act provides the best basis for a pensions pattern for this country. There is an extremely strong case for reaffirming this policy, while at the same time setting up a Select Committee to examine the possibilities of some form of improvement in the fullness of time.
  I have no doubt that many people in the country as well as in this House resent the Secretary of State's attitude to this problem. Time and again she speaks as though she, and she alone, knows what women want. She seems to believe that she has a kind of divine right to speak for women. She acts as a sort of high priestess. We cannot believe that this magical power lies with her. She comes to this House not to argue or debate, but to assert and rant. That was her attitude this afternoon. That is a deplorable way to approach this topic.
  We believe that the way in which the right hon. Lady has flouted the House of Commons in refusing to put forward the two parts of the scheme is a disgrace. My right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) set out this argument in the course of his speech. I reiterate that it is a travesty of parliamentary government to use a commencement procedure to scrub a major piece of legislation. It is a particularly blatant travesty for a minority Government to take this course with an election clearly in the offing. Above all, it is a tragedy to do so without offering the House or the country any indication at all of what the right hon. Lady has in mind to put in place of this policy.
  We believe that the right hon. Lady has shown arrogance right across her social policy. We believe that one of the gravest objections to the social policy which she has put forward is that time and again she has aroused expectations which she knows she cannot fulfil. She likes to see herself as a kind of Lady Bountiful. She goes round the country making vague promises. She knows perfectly well that the background against

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  which we are operating is one of tough financial stringency. She well knows that any sort of scheme of the kind she apparently has in mind will cost the country a great deal more at a time when it is totally irresponsible to think in terms of increasing public expenditure.
  In short, the Secretary of State's speech was pure fairground stuff. It was a blemish on this debate. I believe the country as a whole will bitterly resent her approach to this matter. I hope the House will reject the Government amendment and support our motion as being the right basis for a sensible long-term pensions policy for this country.
  9.33 p.m.
  The Minister of State, Department of Health and Social Security (Mr. Brian O'Malley): The two speeches we have heard from the Tory Front Bench in this debate have been among the most flimsy, reactionary, divisive and backward-looking we have heard in this House for a long time. I had hoped, more in optimism than in belief, that today's debate could have been a vehicle for a sensible discussion of pensions policy.
  The Conservative Party could have used the debate for a constructive examination of pensions needs now and in the future. Instead, the right hon. and learned Member for Surrey, East (Sir G. Howe) concentrated the same keen intelligence as created the Industrial Relations Act, and the same blindness to social tensions as is an inevitable concomitant to this and as runs throughout the whole of his policy, on defending, first, a pension structure, about which there has been no argument across the Floor in this debate and which would condemn millions of pensioners now and far into the twenty-first century to dependence on means-testing, and, secondly, a reserve pension scheme which has been expressly denigrated throughout the pensions industry and which was designed, as the hon. Member for Somerset, North (Mr. Dean) knows better than anyone, purely as a vehicle for contracting out. To express it more bluntly, it was designed as a pension dustbin for those whose employment or employers prevented membership of a private occupational pension scheme.
  The hon. Member for Somerset, North opened a market for insurance com
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  panies and others, about whose activities I do not complain, to sell rubbish. It is no wonder that the hon. Gentleman is now a director of such a company. He opened every factory door to slick insurance salesmen selling schemes which would have been a disgrace to the second half of the twentieth century.
  Mr. Paul Dean: The hon. Gentleman must know that he is talking absolute rubbish. For a responsible pensions Minister to make disgraceful remarks of that kind from the Dispatch Box shows how flippantly the present Government treat the serious matter of making better provision for pensions.
  Mr. O'Malley: Not only will I make those allegations; I shall prove them before I sit down. It is on that that my speech will be concentrated.
  It is no wonder that the right hon. and learned Member for Surrey, East and the hon. Member for Somerset, North did not go into any details of the State reserve pension scheme or about the minimum conditions of recognition. Had they spelled them out adequately, they might not even have had the support of the Liberal Party.
  I understand why the Opposition are anxious not to discuss the details of the State reserve scheme. Their contributions show no understanding that it is intolerable and unacceptable to continue a system of two nations in retirement, the two nations being those fortunate enough to be in good occupational schemes, in both the public and the private sector, with half pay in retirement, with post-award dynamism and with a lump-sum when they retire, and the remainder being those who would have been condemned to the inadequate levels of the State reserve pension scheme and the minimum levels set by it.
  How could the managing director of any company in the future defend a situation where his white collar employees were in a final salary scheme whereas for his manual workers on the shop floor any old thing would do? That is what the Opposition were trying to perpetuate in their legislation when they were in government. The very existence and creation of the tax credit scheme was an open admission that their pensions policies were inadequate to provide enough

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  for people to live on in retirement after a lifetime of service.
  After months of insisting that the country was wrong and he was right, the Leader of the Opposition, under the pressures of electoral reality, is now sitting on the penitent's stool and agreeing to bury the Industrial Relations Act. The right hon. and learned Member for Surrey, East should now lay to rest the State reserve pension scheme and the associated low levels of minimum ocupational pensions.
  There are hon. Members on the Opposition benches who know something about pensions. We had some thoughtful speeches from them today. I have in mind the hon. Member for Brentwood and Ongar (Mr. McCrindle) and the hon. Member for Kensington (Sir B. Rhys Williams). They regard the State reserve scheme as unsatisfactory. They made their views known throughout the Committee proceedings on the 1973 Social Security Bill.
  How has the right hon. and learned Member for Surrey, East the intolerable arrogance to speak of seeking national unity, of seeking an agreed policy on pensions and of stopping them from being a political football when his last pronouncement in very strong terms was that if the Conservative Party was returned to office after the next General Election the State reserve scheme would be reintroduced? The Opposition have now made their pensions policy very clear, and we welcome the right hon. and learned Gentleman's statement today.
  The Labour Party rejects as completely unacceptable the minimum levels of provision for occupational pensions laid down in the State reserve scheme. I will tell the hon. Member for Hazel Grove (Dr. Winstanley), who apparently did not appreciate the argument, why it was that the present Government were unable and remained unable, as would any Government, to modify suitably the State reserve scheme in order to attain the objects of policy which my right hon. Friend the Secretary of State set out today and to which the hon. Gentleman nodded his agreement.
  The reason is simple. The hon. Member for Brentwood and Ongar (Mr. McCrindle) should know this, because he asked the question in his speech only
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  half an hour ago. If we are to provide a reasonable level of benefit for older workers—the forgotten generation; not only those in their sixties, but men over 45 and women over 40—we can do it in a money-purchase scheme only by imposing levels of contributions which will be totally unacceptable both to employers and to employees. Therefore, it is not only a question of the level of the accrual set in the scheme, it is also a question of the structure of the scheme. The structure itself precludes the measure of improvement which the Labour Party would find acceptable and which the Liberal Party should find acceptable if it meant what it said in its election manifesto.
  In addition, the low levels of total pension provision envisaged through both the basic and the reserve pension scheme in the Social Security Act are not in accord with the manfesto commitments of the Liberal Party, the SNP or the Welsh National Party.
  The present Government have begun to carry out their manifesto commitments on pensions, and to carry them out not only to the letter, but in the spirit of those commitments.
  It is significant and interesting, as my hon. Friends who have read the Tory motion will have noticed, that there is no mention of the basic flat-rate pension set out in the 1973 Act. There is a simple reason for that. There is something which the Conservative Party must hide.
  Again I turn to the Liberal Party. The finances of the basic scheme were inadequate—the Government Actuary pointed this out in his report on the Social Security Act—to provide a pension greater than the £7·75 pension which was operative at the time or a pension at about that level in real terms. That is why we have had to introduce the Social Security Amendment Bill to put up the level of contributions to a higher rate than the level at which they were set. We could not have paid the £10 and £16 pensions, let alone the higher figure which other parties have mentioned for a flat-rate pension. We could only have provided for a much lower pension. Therefore, the move towards a better pension provision for the present generation of retirement pensioners envisaged by all ether parties except the

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  Tory Party was precluded by the financial arrangements in the basic scheme of the Social Security Act 1973.
  Why have not the Opposition had the guts to admit that today? They did not oppose the national insurance uprating which brought in those £10 and £16 pensions, but when we bring in a Bill to levy the money to pay those pensions they start to oppose. They are in favour of the pensions but they are not in favour of paying the money for them. [Interruption.]
  The hon. Member for Somerset, North nods his head. He and I have spoken across these benches for too many years. He knows that on the very eve of the election he told me that £10 and £16 pensions were extravagant and that they would mean too great an increase in contributions from the working population to pay for them.
  Mr. Paul Dean rose—
  Mr. O'Malley: I will not give way again because of the time. The hon. Gentleman knows that that is an accurate reflection of the situation.
  Mr. Dean: I am trying to follow the Minister's argument. From what he is saying it might be thought that the Opposition voted against the Bill this afternoon, but patently we did not.
  Mr. O'Malley: Before the hon. Gentleman makes comments on proceedings in the House of Commons he should either be present or have read those proceedings. If he had been here earlier today he would have heard some of the nonsense spoken by his hon. Friend the Member for Birmingham, Edgbaston (Mrs. Knight) in her winding-up speech.
  I now turn to the Conservative reserve scheme which is so dear to the hearts of so many Opposition Members and particularly the right hon. and learned Member for Surrey, East. I say in unequivocal terms that the Government make no apology for their decision not to implement the reserve scheme.
  Mrs. Jill Knight: Shame.
  Mr. O'Malley: The hon. Lady says "Shame", but it ill-becomes a political party to say one thing when in opposition
  158
  and another when in Government. [Interruption.] Hon. Gentlemen opposite are rather touchy on this. We all remember the pre-Selsdon Man period and what happened after that. Hon. Gentlemen opposite need not laugh at me. On pensions we are keeping our commitment, and I challenge anybody to show that we are not. Our actions in not bringing that scheme into operation are consistent with every criticism that we made of and every statement that we uttered about the reserve scheme when in opposition, and those criticisms are still valid.
  It is noticeable that those who now commend the reserve scheme are those who would not have been members of it. To those who this afternoon have defended the scheme I ask whether they would be happy if they thought that their pension cover was at the level set out in the reserve scheme and if their families had that kind of cover. All that I am getting are inane middle-class grins from some of the back benchers of the Conservative Party. No figures have been given of what would be the magnificent level of pension provision for which the Liberal Party will vote tonight.
  Over the three years between 1975 and 1978, to take a period quoted by the Tory Front Bench, a man of 62 on £25 a week would earn a pension of 28p, and that is if the bonuses matched prices. We are told about the difficulties of investment. A man on £30 a week would get 34p, a woman aged 57 on £20 would earn 19p, and on a wage of £25 she would earn 23p. I agree that we ought to take note of the best in occupational pension provision in the private sector and see how much of that we can provide for others who do not have the good fortune to belong to occupational pension schemes.
  Let us see what would be provided under the State reserve scheme. A man of 55 who paid into the scheme for 10 years would receive on retirement not half pay, not 50 per cent. or 66 per cent. but 4 per cent., and his widow would get 2 per cent. A man of 45 who retired in 1996 would get a pension not of 50 per cent. but of 8 per cent. and his widow would receive 4 per cent. Anyone unfortunate enough to pay into the scheme until the year 2019 would draw a pension of 19 per cent, for himself, or his widow would receive a pension of 9½ per cent. I invite

  159
  the House to compare that with good occupational pension provision.
  Mr. Robert Boscawen rose—
  Mr. O'Malley: I shall not give way.
  Mr. Boscawen rose—
  Mr. O'Malley: I have only 10 minutes in which to reply to the debate. I normally give way, but I shall not do so tonight.
  A woman aged 50, after paying into the reserve scheme for 10 years, would get a pension of 3 per cent. on retirement. A woman who joined the scheme when she was 40 would get a 6 per cent. pension, and if she joined when she was 22 she would get a final pension of 13 per cent. of her earnings. I invite the Opposition to compare that with good occupational pension provision. The trouble with the Opposition is that they want one level of pensions for themselves and their wealthy friends, and a different level for others.
  Mr. Boscawen rose—
  Mr. O'Malley: No. If the hon. Gentleman allows me to continue, I shall give way later if there is time.
  We were always criticised for the complexity of the Crossman scheme. We want a pension scheme that is capable of being understood by the public. The State reserve scheme was of such mathematical complexity as to make any large-scale explanation of individual entitlement absolutely impossible.
  Mr. Boscawen: The hon. Gentleman has spent 20 minutes talking about the State reserve scheme. Will he say what his scheme is to be? What sort of system will he adopt and who will cross-subsidise whom in that scheme?
  Mr. O'Malley: I said that I was going to give the Opposition some answers, but my first answer was to the Front Bench and to one of the creators of the Tory reserve scheme. It was not only the reserve scheme which was wrong. There were also structures and standards in occupational pension schemes which were as low as those in the State scheme. There were options where there were to be no increases in pensions after they were put into award, no revaluation during
  160
  working life, and even on the best assumptions the levels set in the Tory legislation were far below any reasonable standards in occupational pension schemes today. Those are the reasons why we opposed the Tory pension strategy and why the TUC, representing the millions of workers in this country, opposed that strategy.
  I do not know why the hon. Member for Cornwall, North (Mr. Pardoe) spoke as he did in November 1972. Whenever the Liberals voted on the Social Security Act they did not once support the then Government, but now they tell us, after all the difficulties and disadvantages, that they intend to support the Conservative Party. I can only assume that they take this attitude for electoral reasons. There are no valid pension reasons why they should act in this way. They want to get in bed with the Conservative Party because some members of the Liberal Party realise that had they not made the decision that they made a few months ago they could now be riding around in ministerial cars. The attraction is now too strong for them.
  We must also refer to other parties in the House. I have read the SNP manifesto, but the SNP would not, under the basic Tory scheme, get the level of pension provision which has been talked about for millions of people in 2019. Similarly, the Welsh Nationals say in their manifesto that the people of Wales have always had a deep-rooted concern for social justice and social equality. The Welsh Nations will not find social justice from the Tory Party—any Welshman knows that, no matter what he may think of my party.
  I shall now deal with the future. First, it is essential to end the situation of "two nations" in old age, to get rid of means testing in retirement and to bring to an end the sharp change in an individual household's income which is a tragic hallmark of retirement for many millions of people and would remain so under Conservative proposals. It is also essential that there should be a proper partnership between the State and occupational pension schemes. The TUC, the pensions industry and members of occupational pensions schemes will welcome the Government's intention to recognise the importance of occupational pension provision in this country.

  161
  Further, it is essential to use the occupational pensions board, which will, clearly, have an important rôle in the future, with a large body of expertise. I do not know why the hon. Member for Rushcliffe (Mr. Clarke), who is new to the Opposition Front Bench, should sneer at mention of the occupational pensions board. That attitude will not represent the general policy of his party. [Interruption.] If he stops shouting I will give him an answer.
  What kind of social justice should there be and what have been the Government's guidelines? First, there must be a rate of accrual adequate to look after the older generation of retirement pensioners who could never be brought off means-testing and never be given an adequate pension under the kind of Bill envisaged in the Tory scene. Second, pensions which are generations out of date even before they are paid have no future and there must be the type of pre-award dynamism which one finds in good final salary schemes in both the public and the private sectors. Third, there should be some post-award dynamism so that there can be protection against inflation.
  Fourth, we should get rid of the enormous social problem of poverty among widows. On any count, they are among the most deprived sections of the community. Almost half of all elderly widows in 1974 have to rely on means-tested benefits to be able to live at all. The policies which the previous Government brought forward and the type and scale of widowhood provision would certainly not have met the needs of widows in the twentieth century, even if they had begun to deal with them in the twenty-first century. Last, there must clearly be a build-up of invalidity cover, which is too often lacking.
  So the Government's intention—and, I would have hoped, that of the House—is that there should be the speediest implementation of our pensions policy. We shall introduce our White Paper in the near future setting out the structure
  to achieve our aims. This will be the basis of consultation both within Parliament and without. Our policy will be aimed for the widest possible support in the country. The Opposition must realise when they ask for a Green Paper what they are doing and what would be inevitable in the production of such a paper. It would set back the implementation of any new pension scheme for much longer than the time scale which we are prepared to envisage.
  Our aim simply is for better pensions. On the basis of what has been said tonight we have had no measure of agreement with the Conservative Party either before or during the election. Our decisions so far are in pursuit of the aims I have described. We seek the support of the House in working to achieve them, and in the end it will be not only this House tonight which judges the policy and record of the Government on pensions but the electorate. We shall be delighted to put proposals to the electorate and let them make the comparisons with the shabby arrangements that the previous Government have said they will defend—not only past but future arrangements.
  One of the most disappointing features of the debate is that, while we could have had a realistic and forward-looking debate on pensions, that has not been possible. The country will accordingly take note. I have no doubt that it will choose the policies of the Labour Party, aimed at reducing poverty in old age, as against the policies of the previous Government, which are designed to perpetuate it.
  Mrs. Knight: The Minister made much of the fact the he was sympathetic to widows. If he is as sympathetic as he said, why is he making widows pay—[Interruption.]
  Question put, That the amendment be made:—
  The House divided: Ayes 282; Noes 280.

  Division No. 61.]

  AYES

  [9.59 p.m.

  Abse, Leo

  Barnett, Guy (Greenwich)

  Blenkinsop, Arthur

  Allaun, Frank

  Barnett, Joel (Heywood & Royton)

  Boardman, H.

  Archer, Peter

  Bates, Alf

  Booth, Albert

  Armstrong, Ernest

  Baxter, William

  Boothroyd, Miss Betty

  Ashley, Jack

  Benn, Rt. Hn. Anthony Wedgwood

  Bottomley, Rt. Hn. Arthur

  Atkins, Ronald

  Bennett, Andrew F. (Stockport, N.)

  Boyden, James (Bishop Auckland)

  Atkinson, Norman

  Bidwell, Sydney

  Bradley, Tom

  Bagier, Gordon A. T.

  Bishop, E. S.

  Boughton, Sir Alfred

  Brown, Bob (Newcastle upon Tyne, W.)

  Hart, Rt. Hn. Judith

  Padley, Walter

  Brown, Hugh D. (Glasgow, Provan)

  Hattersley, Roy

  Palmer, Arthur

  Brown, Ronald (H'kney, S.& Sh'ditch)

  Hatton, Frank

  Park, George (Coventry, N.E.)

  Buchan, Norman

  Healey, Rt. Hn. Denis

  Parker, John (Dagenham)

  Buchanan, Richard (G'gow, Springb'rn)

  Heffer, Eric S.

  Parry, Robert

  Butler, Mrs. Joyce (H' gey, WoodGreen)

  Horam, John

  Pavitt, Laurie

  Callaghan, Rt. Hn. James (Cardiff, S.E.)

  Howell, Denis (B'ham, Small Heath)

  Perry, Ernest G.

  Callaghan, Jim (M'dd'ton & Pr'wich)

  Huckfield, Leslie

  Phipps, Dr. Colin

  Campbell, Ian

  Hughes, Rt. Hn. Cledwyn (Anglesey)

  Prentice, Rt. Hn. Reg

  Cant, R. B.

  Hughes, Mark (Durham)

  Prescott, John

  Carmichael, Neil

  Hughes, Robert (Aberdeen, North)

  Price, Christopher (Lewisham, W.)

  Carter-Jones, Lewis

  Hughes, Roy (Newport)

  Price, William (Rugby)

  Castle, Rt. Hn. Barbara

  Hunter, Adam

  Radice, Giles

  Clemitson, Ivor

  Irvine, Rt. Hn. Sir A. (L'p'I, EdgeHI)

  Rees, Rt. Hn. Merlyn (Leeds, S.)

  Cocks, Michael

  Irving, Rt. Hn. Sydney (Dartford)

  Richardson, Miss Jo

  Cohen, Stanley

  Jackson, Colin

  Roberts, Albert (Normanton)

  Coleman, Donald

  Janner, Greville

  Roberts, Gwilym (Cannock)

  Colquhoun, Mrs. M. N.

  Jay, Rt. Hn. Douglas

  Robertson, John (Paisley)

  Conlan, Bernard

  Jeger, Mrs. Lena

  Roderick, Caerwyn E.

  Cook, Robert F. (Edinburgh, C.)

  Jenkins, Hugh (W'worth, Putney)

  Rodgers, George (Chorley)

  Craigen, J. M. (G'gow, Maryhill)

  Jenkins, Rt. Hn. Roy (B'ham, St'fd)

  Rodgers, William (Teesside, St'ckton)

  Crawshaw, Richard

  John, Brynmor

  Rooker, J. W.

  Cronin, John

  Johnson, James (K'ston upon Hull, W)

  Roper, John

  Crosland, Rt. Hn. Anthony

  Jones, Barry (Flint, E.)

  Rose, Paul B.

  Cryer, G. R.

  Jones, Dan (Burnley)

  Ross, Rt. Hn. William (Kilmarnock)

  Cunningham, G.(Isl'ngt'n, S & F'sb'ry)

  Jones, Alec (Rhondda)

  Rowlands, Edward

  Dalyell, Tam

  Judd, Frank

  Sandelson, Neville

  Davidson, Arthur

  Kaufman, Gerald

  Sedgemore, Bryan

  Davies, Bryan (Enfield, N.)

  Kelley, Richard

  Selby, Harry

  Davies, Denzil (Llanelli)

  Kilroy-Silk, Robert

  Shaw, Arnold (Redbridge, Ilford, S.)

  Davies, Ifor (Gower)

  Lambie, David

  Sheldon, Robert (Ashton-under-Lyne)

  Davis, Clinton (Hackney, C.)

  Lamborn, Harry

  Shore, Rt. Hn. Peter(S'pney & P'plar)

  Deakins, Eric

  Lamond, James

  Short, Rt. Hn. E. (N'ctle-u-Tyne)

  Dean, Joseph (Leeds, W.)

  Latham, Arthur(City of W'minster P'ton)

  Short, Mrs. Renée (W'hampton, N.E.)

  de Freitas, Rt. Hn. Sir Geoffrey

  Lawson, George (Motherwell & Wishaw)

  Silkin, Rt. Hn. John (L'sham, D'ford)

  Delargy, Hugh

  Leadbitter, Ted

  Silkin, Rt. Hn. S. C. (S'hwark, Dulwich)

  Dell, Rt. Hn. Edmund

  Lee, John

  Sillars, James

  Dempsey, James

  Lestor, Miss Joan (Eton & Slough)

  Silverman, Julius

  Doig, Peter

  Lever, Rt. Hn. Harold

  Skinner, Dennis

  Dormand. J. D.

  Lewis, Ron (Carlisle)

  Small, William

  Douglas-Mann, Bruce

  Lipton, Marcus

  Smith, John (Lanarkshire, N.)

  Duffy, A. E. P.

  Lomas, Kenneth

  Snape, Peter

  Dunn, James A.

  Loughlin, Charles

  Spearing, Nigel

  Dunnett, Jack

  Loyden, Eddie

  Spriggs, Leslie

  Dunwoody, Mrs. Gwyneth

  Lyon, Alexander W. (York)

  Stallard, A. W.

  Eadie, Alex

  Lyons, Edward (Bradford, W.)

  Stewart, Donald (Western Isles)

  Edelman, Maurice

  Mabon, Dr. J. Dickson

  Stewart, Rt. Hn. M. (H'sth, Fulh'm)

  Edge, Geoff

  McCartney, Hugh

  Stonehouse, Rt. Hn. John

  Edwards, Robert (W'hampton, S.E.)

  McElhone, Frank

  Stott, Roger

  Ellis, John (Brigg & Scunthorpe)

  MacFarquhar, Roderick

  Strang, Gavin

  Ellis, Tom (Wrexham)

  McGuire, Michael

  Strauss, Rt. Hn. G. R.

  English, Michael

  Mackenzie, Gregor

  Summerskill, Hn. Dr. Shirley

  Evans, Fred (Caerphilly)

  Maclennan, Robert

  Swain, Thomas

  Evans, Ioan (Aberdare)

  McMillan, Tom (Glasgow, C.)

  Taverne, Dick

  Evans, John (Newton)

  McNamara, Kevin

  Thomas, D. E. (Merioneth)

  Ewing, Harry (St'ling, F'kirk & G'm'th)

  Madden, M. O. F.

  Thomas, Jeffrey (Abertillery)

  Faulds, Andrew

  Magee, Bryan

  Thorne, Stan (Preston, S.)

  Fernyhough, Rt. Hn. E.

  Mahon, Simon

  Tierney, Sydney

  Fitch, Alan (Wigan)

  Mallalieu, J. P. W.

  Tinn, James

  Flannery, Martin

  Marks, Kenneth

  Tomlinson, John

  Fletcher, Tea (Darlington)

  Marquand, David

  Torney, Tom

  Foot, Rt. Hn. Michael

  Marshall, Dr. Edmund (Goole)

  Tuck, Raphael

  Ford, Ben

  Mason, Rt. Hn. Roy

  Urwin, T. W.

  Forrester, John

  Mayhew, Christopher (G'wh, W'wch, E.)

  Varley, Rt. Hn. Eric G.

  Fowler, Gerry (The Wrekin)

  Meacher, Michael

  Wainwright, Edwin (Dearne Valley)

  Fraser, John (Lambeth, Norwood)

  Mellish, Rt. Hn. Robert

  Walden, Brian (B'm'ham, Lady wood)

  Freeson, Reginald

  Mikardo, Ian

  Walker, Harold (Doncaster)

  Galpern, Sir Myer

  Millan, Bruce

  Walker, Terry (Kingswood)

  Garrett, John (Norwich, s.)

  Miller, Dr. M. S. (E. Kilbride)

  Watkins, David

  Garrett, W. E. (Wallsend)

  Mitchell, R. C. (S'hampton, Itchen)

  Watt, Hamish

  George, Bruce

  Molloy, William

  Weitzman, David

  Gilbert, Dr. John

  Moonman, Eric

  Wellbeloved, James

  Ginsburg, David

  Morris, Alfred (Wythenshawe)

  White, James

  Golding, John

  Morris, Rt. Hn. John (Aberavon)

  Whitehead, Phillip

  Gourlay, Harry

  Murray, Ronald King

  Whitlock, William

  Graham, Ted

  Murton, Oscar

  Wigley, Dafydd (Caernarvon)

  Grant, John (Islington, C.)

  Newens, Stanley (Harlow)

  Willey, Rt. Hn. Frederick

  Griffiths, Eddie (Sheffield, Brightside)

  Oakes, Gordon

  Williams, Alan (Swansea, W.)

  Hamilton, James (Bothwell)

  Ogden, Eric

  Williams, Alan Lee (Hvrng, Hchurch)

  Hamilton, William (Fife, C.)

  O'Halloran, Michael

  Williams, Rt. Hn. Shirley (H't'd & St'ge)

  Hamling, William

  O'Malley, Brian

  Williams, W. T. (Warrington)

  Hardy, Peter

  Orbach, Maurice

  Wilson, Alexander (Hamilton)

  Harper, Joseph

  Ovenden, John

  Wilson, Gordon (Dundee, E.)

  Harrison, Walter (Wakefield)

  Owen, Dr. David

  Wilson, Rt. Hn. Harold (Huyton)

  Wilson, William (Coventry, S.E.)

  Woof, Robert

  TELLERS FOR THE AYES:

  Wise, Mrs. Audrey

  Wrigglesworth, Ian

  Mr. Thomas Cox and

  Woodall, Alec

  Young, David (Bolton, E.)

  Mr. Walter Johnson.

  NOES

  Adley, Robert

  Fletcher-Cooke, Charles

  McAdden, Sir Stephen

  Aitken, Jonathan

  Fookes, Miss Janet

  MacArthur, Ian

  Alison, Michael (Barkston Ash)

  Fowler, Norman (Sutton C'field)

  McCrindle, R. A.

  Allason, James (Hemel Hempstead)

  Fraser, Rt. Hn. Hugh (St'fford & Stone)

  Macfarlane, Neil

  Ancram, M.

  Freud, Clement

  MacGregor, John

  Archer, Jeffrey

  Fry. Peter

  McLaren, Martin

  Atkins, Rt.Hn. Humphrey (Spelthorne)

  Galbraith, Hn. T. G. D.

  Macmillan, Rt. Hn. M. (Farnham)

  Awdry, Daniel

  Gardiner, George (Reigate & Banstead)

  McNair-Wilson, Patrick (New Forest)

  Baker, Kenneth

  Gardner, Edward (S. Fylde)

  Madel, David

  Balniel, Rt. Hn. Lord

  Gibson-Watt, Rt. Hn. David

  Marshall, Michael (Arundel)

  Banks, Robert

  Gilmour, Rt. Hn. Ian (Ch'sh' & Amsh'm)

  Marten, Nell

  Barber, Rt. Hn. Anthony

  Gilmour, Sir John (Fife, E.)

  Mather, Carol

  Beith, A. J.

  Glyn, Dr. Alan

  Maude, Angus

  Bell, Ronald

  Goodhart, Philip

  Maudling, Rt. Hn. Reginald

  Bennett, Dr. Reginald (Fareham)

  Goodhew, Victor

  Mawby, Ray

  Benyon, W.

  Goodlad, A.

  Maxwell-Hyslop, R. J.

  Berry, Hon. Anthony

  Gorst, John

  Mayhew, Patrick (Royal T' bridge Wells)

  Biffen, John

  Gow, Ian (Eastbourne)

  Meyer, Sir Anthony

  Biggs-Davison, John

  Gower, Sir Raymond (Barry)

  Miller, Hal (B'grove & R'ditch)

  Blaker, Peter

  Grant, Anthony (Harrow, C.)

  Miscampbell, Norman

  Boardman, Tom (Leicester, S.)

  Gray, Hamish

  Mitchell, David (Basingstoke)

  Body, Richard

  Griffiths, Eldon (Bury St. Edmunds)

  Moate, Roger

  Boscawen, Hon. Robert

  Grist, Ian

  Money, Ernie

  Bowden, Andrew (Brighton, Kemptown)

  Grylls, Michael

  Monro, Hector

  Boyson, Dr. Rhodes (Brent, N.)

  Gurden, Harold

  Moore, J. E. M. (Croydon, C.)

  Braine, Sir Bernard

  Hall, Sir John

  Morgan, Geraint

  Bray, Ronald

  Hall-Davis, A. G. F.

  Morgan-Giles, Rear-Adm.

  Brewis, John

  Hamilton, Michael (Salisbury)

  Morris, Michael (Northampton, S.)

  Brittan, Leon

  Hampson, Dr. Keith

  Morrison, Charles (Devizes)

  Brocklebank-Fowler, Christopher

  Hannam, John

  Morrison, Peter (City of Chester)

  Brown, Sir Edward (Bath)

  Harrison, Col. Sir Harwood (Eye)

  Mudd, David

  Bruce-Gardyne, J.

  Harvie Anderson, Rt. Hn. Miss

  Neave, Airey

  Bryan, Sir Paul

  Hastings, Stephen

  Neubert, Michael

  Buchanan-Smith, Alick

  Havers, Sir Michael

  Newton, Tony (Braintree)

  Buck, Antony

  Heyhoe, Barney

  Normanton, Tom

  Budgen, Nick

  Heath, Rt. Hn. Edward

  Nott, John

  Bulmer, Esmond

  Henderson, J.S.B.(Dunbartonshire, E.)

  Onslow, Cranley

  Burden, F. A.

  Heseltine, Michael

  Oppenheim, Mrs. Sally

  Butler, Adam (Bosworth)

  Higgins, Terence

  Orr, Capt. L. P. S.

  Carlisle, Mark

  Hill, James A.

  Osborn, John

  Carr, Rt. Hn. Robert

  Holland, Philip

  Page, Rt. Hn. Graham (Crosby)

  Chalker, Mrs. Lynda

  Hordern, Peter

  Page, John (Harrow, W.)

  Channon, Paul

  Howe, Rt. Hn. Sir Geoffrey (Surrey, E.)

  Pardoe, John

  Chataway, Rt. Hn. Christopher

  Howell, David (Guildford)

  Parkinson, Cecil (Hertfordshire, S.)

  Churchill, W. S.

  Howell, Ralph (Norfolk, North)

  Pattie, Geoffrey

  Clark, A. K. M. (Plymouth, Sutton)

  Howells, Geraint (Cardigan)

  Percival, Ian

  Clark, William (Croydon, S.)

  Hunt, John

  Peyton, Rt. Hn. John

  Clarke, Kenneth (Rushcliffe)

  Hurd, Douglas

  Pink, R. Bonner

  Cockcroft, John

  Iremonger, T. L.

  Price, David (Eastleigh)

  Cooke, Robert (Bristol, W.)

  Irvine, Bryant Godman (Rye)

  Prior, Rt. Hn. James

  Cope, John

  James, David

  Pym, Rt. Hn. Francis

  Cormack, Patrick

  Jenkin, Rt. Hn. P. (R'dge W'std &W'fd)

  Quennell, Miss J. M.

  Corrie, John

  Johnson Smith, G. (E. Grinstead)

  Raison, Timothy

  Costain, A. P.

  Jones, Arthur (Daventry)

  Rathbone, Tim

  Crouch, David

  Jopling, Michael

  Rawlinson, Rt. Hn. Sir Peter

  Crowder, F. P.

  Joseph, Rt. Hn. Sir Keith

  Redmond, Robert

  Davies, Rt. Hn. John (Knutsford)

  Kaberry, Sir Donald

  Rees, Peter (Dover & Deal)

  d'Avigdor-Goldsmid, Maj-Gen. James

  Kellett-Bowman, Mrs. Elaine

  Rees-Davies, W. R.

  Dean, Paul (Somerset, N.)

  Kershaw, Anthony

  Renton, Rt. Hn. Sir David (H't' gd' ns' re)

  Deedes, Rt. Hn. W. F.

  Kimball, Marcus

  Renton, R. T. (Mid-Sussex)

  Dixon, Piers

  King, Evelyn (Dorset S.)

  Rhys Williams, Sir Brandon

  Dodds-Parker, Sir Douglas

  King, Tom (Bridgwater)

  Ridley, Hn. Nicholas

  Dodsworth, Geoffrey

  Kirk, Peter

  Ridsdale, Julian

  Drayson, Burnaby

  Kitson, Sir Timothy

  Rippon, Rt. Hn. Geoffrey

  du Cann, Rt. Hn. Edward

  Knight, Mrs. Jill

  Roberts, Wyn (Conway)

  Durant, Tony

  Knox, David

  Ross, Stephen (Isle of Wight)

  Dykes, Hugh

  Lamont, Norman

  Rossi, Hugh (Hornsey)

  Eden, Rt. Hn. Sir John

  Lane, David

  Rost, Peter (Derbyshire, S.-E.)

  Edwards, Nicholas (Pembroke)

  Langford-Holt, Sir John

  Royle, Sir Anthony

  Elliott, Sir William

  Latham, Michael (Melton)

  Sainsbury, Tim

  Emery, Peter

  Lawrence, Ivan

  St. John-Stevas, Norman

  Eyre, Reginald

  Lawson, Nigel (Blaby)

  Scott-Hopkins, James

  Fairgrieve, Russell

  Le Marchant, Spencer

  Shaw, Giles (Pudsey)

  Fell, Anthony

  Lester, Jim (Beeston)

  Shaw, Michael (Scarborough)

  Fenner, Mrs. Peggy

  Lewis, Kenneth (Rtland & Stmford)

  Shelton, William (L'mb'th, Streath 'm)

  Fidler, Michael

  Lloyd, Ian (Havant & Waterloo)

  Shersby, Michael

  Fi berg, Geoffrey

  Loveridge, John

  Silvester, Fred

  Fisher, Sir Nigel

  Luce, Richard

  Sims, Roger

  Sinclair, Sir George

  Temple-Morris, Peter

  Wall, Patrick

  Skeet, T. H. H.

  Thatcher, Rt. Hn. Margaret

  Walters, Dennis

  Smith, Dudey (W'wick & L'm'ngton)

  Thomas, Rt. Hn. P. (B'net, H'dn S.)

  Weatherill, Bernard

  Spence, John

  Thorpe, Rt. Hn. Jeremy

  Wells, John

  Spicer, Jim (Dorset, W.)

  Townsend, C. D.

  Whitelaw, Rt. Hn. William

  Stainton, Keith

  Trotter, Neville

  Wiggin, Jerry

  Stanbrook, Ivor

  Tugendhat, Christopher

  Winstanley, Dr. Michael

  Steel, David

  Tyler, Paul

  Winterton, Nicholas

  Steen, Anthony (L'pool, Wavertree)

  van Straubenzee, W. R.

  Wood, Rt. Hn. Richard

  Stewart, Ian (Hitchin)

  Vaughan, Dr. Gerard

  Woodhouse, Hn. Christopher

  Stodart, Rt. Hn. A. (Edinburgh, W.)

  Viggers, Peter

  Worsley, Sir Marcus

  Stokes, John

  Waddington, David

  Young, Sir George (Ealing, Acton)

  Stradling Thomas, John

  Wainwright, Richard (Colne Valley)

  Tapsell, Peter

  Wakeham, John

  TELLERS FOR THE NOES:

  Taylor, Edward M. (Glgow, C'cart)

  Walder, David (Clitheroe)

  Mr. Walter Clegg and

  Taylor, Robert (Croydon, N.W.)

  Walker, Rt. Hn. Peter (Worcester)

  Mr. Paul Hawkins.

  Tebbit, Norman

  Walker-Smith, Rt. Hn. Sir Derek

  Question accordingly agreed to.
  Main Question, as amended, put:
  The House divided: Ayes 282, Noes 279.

  Division No. 62.]

  AYES

  [10.16 p.m.

  Abse, Leo

  Delargy, Hugh

  Hughes, Robert (Aberdeen, North)

  Allaun, Frank

  Dell, Rt. Hn. Edmund

  Hughes, Roy (Newport)

  Archer, Peter

  Dempsey, James

  Hunter, Adam

  Irvine, Rt. Hn. Sir A. (L'p'I, Edge HI)

  Armstrong, Ernest

  Doig, Peter

  Irving, Rt. Hn. Sydney (Dartford)

  Ashley, Jack

  Dormand, J. D.

  Jackson, Colin

  Atkins, Ronald

  Douglas-Mann, Bruce

  Janner, Greville

  Atkinson, Norman

  Duffy, A. E. P.

  Jay, Rt. Hn. Douglas

  Bagier, Gordon A. T.

  Dunn, James A.

  Jeger, Mrs. Lena

  Barnett, Guy (Greenwich)

  Dunnett, Jack

  Jenkins, Hugh (W'worth, Putney)

  Barnett, Joel (Heywood & Royton)

  Dunwoody, Mrs. Gwyneth

  Jenkins, Rt. Hn. Roy (B'ham, St'fd)

  Bates. Alf

  Eadie, Alex

  John, Brynmor

  Baxter, William

  Edelman, Maurice

  Johnson, James (K'ston upon Hull, W)

  Benn, Rt. Hn. Anthony Wedgwood

  Edge, Geoff

  Jones, Barry (Flint, E.)

  Bennett, Andrew F. (Stockport, N.)

  Edwards, Robert (W'hampton, S.E.)

  Jones, Dan (Burnley)

  Bidwell, Sydney

  Ellis, John (Brigg & Scunthorpe)

  Jones, Alec (Rhondda)

  Bishop, E. S.

  Ellis, Tom (Wrexham)

  Judd, Frank

  Blenkinsop, Arthur

  English, Michael

  Kaufman, Gerald

  Boardman, H.

  Evans, Fred (Caerphilly)

  Kelley, Richard

  Booth, Albert

  Evans, Ioan (Aberdare)

  Kilroy-Silk, Robert

  Boothroyd, Miss Betty

  Evans, John (Newton)

  Lambie, David

  Bottomley, Rt. Hn. Arthur

  Ewing, Harry (St'ling, F'kirk & G'm'th)

  Lamborn, Harry

  Boyden, James (Bishop Auckland)

  Faulds, Andrew

  Lamond, James

  Bradley, Tom

  Fernyhough, Rt. Hn. E.

  Latham, Arthur(City of W' minster P'ton)

  Broughton, Sir Alfred

  Fitch, Alan (Wigan)

  Lawson, George (Motherwell & Wishaw)

  Brown, Bob (Newcastle upon Tyne, W.)

  Flannery, Martin

  Leadbitter, Ted

  Brown, Hugh D. (Glasgow, Provan)

  Fletcher, Ted (Darlington)

  Lee, John

  Brown, Ronald (H'kney, S. & Sh' ditch)

  Foot, Rt. Hn. Michael

  Lestor, Miss Joan (Eton & Slough)

  Buchan, Norman

  Ford, Ben

  Lever, Rt. Hn. Harold

  Buchanan, Richard (G'gow, Spring b'rn)

  Forrester, John

  Lewis, Ron (Carlisle)

  Butler, Mrs. Joyce (H'gey, WoodGreen)

  Fowler, Gerry (The Wrekin)

  Lipton, Marcus

  Callaghan. Rt. Hn. James (Cardiff, S.E.)

  Fraser, John (Lambeth, Norwood)

  Lomas, Kenneth

  Callaghan, Jim (M'dd'ton & Pr'wich)

  Freeson, Reginald

  Loughlin, Charles

  Campbell, Ian

  Galpern, Sir Myer

  Loyden, Eddie

  Cant, R. B.

  Garrett, John (Norwich, S.)

  Lyon, Alexander W. (York)

  Carmichael, Neil

  Garrett, W. E. (Wallsend)

  Lyons, Edward (Bradford, W.)

  Carter-Jones, Lewis

  George, Bruce

  Mabon, Dr. J. Dickson

  Castle, Rt. Hn. Barbara

  Gilbert, Dr. John

  McCartney, Hugh

  Clemitson, Ivor

  Ginsburg, David

  McElhone, Frank

  Cocks, Michael

  Golding, John

  MacFarquhar, Roderick

  Cohen, Stanley

  Gourlay, Harry

  McGuire, Michael

  Coleman, Donald

  Graham, Ted

  Mackenzie, Gregor

  Colquhoun, Mrs. M. N.

  Grant, John (Islington, C.)

  Maclennan, Robert

  Conlan, Bernard

  Griffiths, Eddie (Sheffield, Brightside)

  McMillan, Tom (Glasgow, C.)

  Cook, Robert F. (Edinburgh, C.)

  Hamilton, James (Bothwell)

  McNamara, Kevin

  Craigen, J. M. (G'gow, Maryhill)

  Hamilton, William (Fife, C.)

  Madden, M. O. F.

  Crawshaw, Richard

  Hamling, William

  Magee, Bryan

  Cronin, John

  Hardy, Peter

  Mahon, Simon

  Crosland, Rt. Hn. Anthony

  Harper, Joseph

  Mallalieu, J. P. W.

  Cryer, G. R.

  Harrison, Walter (Wakefield)

  Marks, Kenneth

  Cunningham, G.(Isl'ngt'n, S & F'sb'ry)

  Hart, Rt. Hn. Judith

  Marquand, David

  Dalyell, Tam

  Hattersley, Roy

  Marshall, Dr. Edmund (Goole)

  Davidson, Arthur

  Hatton, Frank

  Mason, Rt. Hn. Roy

  Davies, Bryan (Enfield, N.)

  Healey, Rt. Hn. Denis

  Mayhew, Christopher (G'wh, W'wch, E.)

  Davies, Denzil (Llanelli)

  Heffer, Eric S.

  Meacher, Michael

  Davies, Ifor (Gower)

  Horam, John

  Mellish, Rt. Hn. Robert

  Davis, Clinton (Hackney, C.)

  Howell, Denis (B'ham, Small Heath)

  Mikardo, Ian

  Deakins, Eric

  Huckfield, Leslie

  Millan, Bruce

  Dean, Joseph (Leeds, W.)

  Hughes, Rt. Hn. Cledwyn (Anglesey)

  Miller, Dr. M. S. (E. Kilbride)

  da Freitas, Rt. Hn. Sir Geoffrey

  Hughes, Mark (Durham)

  Mitchell, R. C. (S'hampton, Itchen)

  Molloy, William

  Roper, John

  Tinn, James

  Moonman, Eric

  Rose, Paul B.

  Tomlinson, John

  Morris, Alfred (Wythenshawe)

  Ross, Rt. Hn. William (Kilmarnock)

  Torney, Tom

  Morris, Rt. Hn. John (Aberavon)

  Rowlands, Edward

  Tuck, Raphael

  Mulley, Rt. Hn. Frederick

  Sandelson, Neville

  Urwin, T. W.

  Murray, Ronald King

  Sedgemore, Bryan

  Varley, Rt. Hn. Eric G.

  Newens. Stanley (Harlow)

  Selby, Harry

  Wainwright, Edwin (Dearne Valley)

  Oakes, Gordon

  Shaw, Arnold (Redbridge, Ilford, S.)

  Walden, Brian (B'm am, Ladywood)

  Ogden, Eric

  Sheldon, Robert (Ashton-under-Lyne)

  Walker, Harold (Doncaster)

  O'Halloran, Michael

  Shore, Rt. Hn. Peter (S'pney & P'plar)

  Walker, Terry (Kingswood)

  O'Malley, Brian

  Short, Rt. Hn. E. (N' clle-u-Tyne)

  Watkins, David

  Orbach, Maurice

  Short, Mrs. Renée (W'hampton, N.E.)

  Watt, Hamish

  Ovenden, John

  Silkin, Rt. Hn. John (L'sham, D'ford)

  Weltzman, David

  Owen, Dr. David

  Silkin, Rt. Hn. S.C.(S'hwark, Dulwich)

  Wellbeloved, James

  Padley, Walter

  Sillars, James

  White, James

  Palmer, Arthur

  Silverman, Julius

  Whitehead, Phillip

  Park, George (Coventry, N.E.)

  Skinner, Dennis

  Whitlock, William

  Parker, John (Dagenham)

  Small, William

  Wigley, Dafydd (Caernervon)

  Parry, Robert

  Smith, John (Lanarkshire, N.)

  Willey, Rt. Hn. Frederick

  Pavitt, Laurie

  Snape, Peter

  Williams, Alan (Swansea, W.)

  Perry, Ernest G

  Spearing, Nigel

  Williams, Alan Lee (Hvrng, Hchurch)

  Phipps, Dr. Colin

  Spriggs, Leslie

  Williams, Rt. Hn. Shirley (H'f'd & St'ge)

  Prentice, Rt. Hn. Reg

  Stallard, A. W.

  Williams, W. T. (Warrington)

  Prescott, John

  Stewart, Donald (Western Isles)

  Wilson, Alexander (Hamilton)

  Price, Christopher (Lewisham, W.)

  Stewart, Rt. Hn. M. (H'sth, Fulh'm)

  Wilson, Gordon (Dundee, E.)

  Price, William (Rugby)

  Stonehouse, Rt. Hn. John

  Wilson, Rt. Hn. Harold (Huyton)

  Radice, Giles

  Stott, Roger

  Wilson, William (Coventry, S.E.)

  Rees, Rt. Hn. Merlyn (Leeds, S.)

  Strang, Gavin

  Wise, Mrs. Audrey

  Richardson, Miss Jo

  Strauss, Rt. Hn. G. R.

  Woodall, Alec

  Roberts, Albert (Normanton)

  Summerskill, Hn. Dr. Shirley

  Woof, Robert

  Roberts, Gwilym (Cannock)

  Swain, Thomas

  Wrigglesworth, Ian

  Robertson, John (Paisley)

  Taverne, Dick

  Young, David (Bolton, E.)

  Roderick, Caerwyn E.

  Thomas, D. E. (Merioneth)

  Rodgers, George (Chorley)

  Thomas, Jeffrey (Abertillery)

  TELLERS FOR THE AYES:

  Rodgers, William (Teesside, St'ckton)

  Thorne, Stan (Preston, S.)

  Mr. Thomas Cox and

  Rooker, J. W.

  Tierney, Sydney

  Mr. Walter Johnson.

  NOES

  Adley, Robert

  Clark, A. K. M. (Plymouth, Sutton)

  Goodhart, Philip

  Aitken, Jonathan

  Clark, William (Croydon, S.)

  Goodhew, Victor

  Alison, Michael (Barkston Ash)

  Clarke, Kenneth (Rushcliffe)

  Goodlad, A.

  Allason, James (Hemel Hempstead)

  Cockcroft, John

  Gorst, John

  Ancram, M.

  Cooke, Robert (Bristol, W.)

  Gow, Ian (Eastbourne)

  Archer, Jeffrey

  Cope, John

  Gower, Sir Raymond (Barry)

  Atkins, Rt. Hn. Humphrey (Spelthorne)

  Cormack, Patrick

  Grant, Anthony (Harrow, C.)

  Awdry, Daniel

  Corrie, John

  Gray, Hamish

  Baker, Kenneth

  Costain, A. P.

  Griffiths, Eldon (Bury St. Edmunds)

  Balniel, Rt. Hn. Lord

  Crouch, David

  Grist, Ian

  Banks, Robert

  Crowder, F. P.

  Grylls, Michael

  Barber, Rt. Hn. Anthony

  Davies, Rt. Hn. John (Knutsford)

  Gurden, Harold

  Beith, A. J.

  d'Avigdor-Goldsmid, Maj-Gen. James

  Hall, Sir John

  Bell, Ronald

  Dean, Paul (Somerset, N.)

  Hall-Davis, A. G. F.

  Bennett, Dr. Reginald (Fareham)

  Deedes, Rt. Hn. W. F.

  Hamilton, Michael (Salisbury)

  Benyon, W.

  Dixon, Piers

  Hampson, Dr. Keith

  Berry, Hon. Anthony

  Dodds-Parker, Sir Douglas

  Hannam, John

  Biffen, John

  Dodsworth, Geoffrey

  Harrison, Col. Sir Harwood (Eye)

  Biggs-Davison, John

  Drayson, Burnaby

  Harvie Anderson, Rt. Hn. Miss

  Blaker, Peter

  du Cann, Rt. Hn. Edward

  Hastings, Stephen

  Boardman, Tom (Leicester, S.)

  Durant, Tony

  Havers, Sir Michael

  Body, Richard

  Dykes, Hugh

  Heyhoe, Barney

  Boscawen, Hon. Robert

  Eden, Rt. Hn. Sir John

  Heath, Rt. Hn. Edward

  Bowden, Andrew (Brighton, Kemptown)

  Edwards, Nicholas (Pembroke)

  Henderson, J.S.B.(Dunbartonshire, E,)

  Boyson, Dr. Rhodes (Brent, N.)

  Elliott, Sir William

  Heseltine, Michael

  Braine, Sir Bernard

  Emery, Peter

  Higgins, Terence

  Bray, Ronald

  Eyre, Reginald

  Hill, James A.

  Brewis, John

  Fairgrieve, Russell

  Holland, Philip

  Brittan, Leon

  Fenner, Mrs. Peggy

  Hordern, Peter

  Brocklebank-Fowler, Christopher

  Fidler, Michael

  Howe, Rt. Hn. Sir Geoffrey(Surrey, E.)

  Brown, Sir Edward (Bath)

  Firtsberg, Geoffrey

  Howell, David (Guildford)

  Bruce-Gardyne, J.

  Fisher, Sir Nigel

  Howell, Ralph (Norfolk, North)

  Bryan, Sir Paul

  Fletcher-Cooke, Charles

  Howells, Geraint (Cardigan)

  Buchanan-Smith, Alick

  Fookes, Miss Janet

  Hunt, John

  Buck, Antony

  Fowler, Norman (Sutton C'field)

  Hurd, Douglas

  Budgen, Nick

  Fraser, Rt. Hn. Hugh (St'fford & Stone)

  Iremonger, T. L.

  Bulmer, Esmond

  Freud, Clement

  Irvine, Bryant Godman (Rye)

  Burden, F. A.

  Fry, Peter

  James, David

  Butler, Adam (Bosworth)

  Galbraith, Hn. T. G. D.

  Jenkin. Rt. Hn. P. (R'dgeW'std & W'fd)

  Carlisle, Mark

  Gardiner, George (Reigate & Banstead)

  Johnson Smith, G. (E. Grinstead)

  Carr, Rt. Hn. Robert

  Gardner, Edward (S. Fylde)

  Jones, Arthur (Daventry)

  Chalker, Mrs. Lynda

  Gibson-Watt, Rt. Hn. David

  Jopling, Michael

  Channon, Paul

  Gilmour, Rt. Hn. Ian (Ch'sh' & Amsh'rn)

  Joseph, Rt. Hn. Sir Keith

  Chataway, Rt. Hn. Christopher

  Gilmour, Sir John (Fife, E.)

  Kaberry, Sir Donald

  Churchill, W. S.

  Glyn, Dr. Alan

  Kellett-Bowman, Mrs. Elaine

  Kershaw, Anthony

  Mudd, David

  Skeet, T. H. H.

  Kimball, Marcus

  Neave, Airey

  Smith, Dudey (W'wick & L'm'ngton)

  King, Evelyn (Dorset S.)

  Neubert, Michael

  Spence, John

  King, Tom (Bridgwater)

  Newton, Tony (Braintree)

  Spicer, Jim (Dorset, W.)

  Kirk, Peter

  Normanton, Tom

  Stainton, Keith

  Kitson, Sir Timothy

  Nott, John

  Stanbrook, Ivor

  Knight, Mrs. Jill

  Onslow, Cranley

  Steel, David

  Knox, David

  Oppenheim, Mrs. Sally

  Steen, Anthony (L'pool, Wavertree)

  Lamont, Norman

  Orr, Capt. L. P. S.

  Stewart, Ian (Hitchin)

  Lane, David

  Osborn, John

  Stodart, Rt. Hn. A. (Edinburgh, W.)

  Langford-Holt, Sir John

  Page, Rt. Hn. Graham (Crosby)

  Stokes, John

  Latham, Michael (Melton)

  Page, John (Harrow, W.)

  Stradling Thomas, John

  Lawrence, Ivan

  Pardoe, John

  Tapsell, Peter

  Lawson, Nigel (Blaby)

  Parkinson, Cecil (Hertfordshire, S.)

  Taylor, Edward M. (Glgow, C'cart)

  Le Marchant, Spencer

  Pattie, Geoffrey

  Taylor, Robert (Croydon, N.W.)

  Lester, Jim (Beeston)

  Percival, Ian

  Tebbit, Norman

  Lewis, Kenneth (Rtland & Stmford)

  Peyton, Rt. Hn. John

  Temple-Morris, Peter

  Lloyd, Ian (Havant & Waterloo)

  Pink, R. Bonner

  Thatcher, Rt. Hn. Margaret

  Loveridge, John

  Price, David (Eastleigh)

  Thomas, Rt. Hn. P. (B'net, H'dn S.)

  Luce, Richard

  Prior, Rt. Hn. James

  Thorpe, Rt. Hn. Jeremy

  McAdden, Sir Stephen

  Pym, Rt. Hn. Francis

  Townsend, C. D.

  MacArthur, Ian

  Quennell, Miss J. M.

  Trotter, Neville

  McCrindle, R. A.

  Raison, Timothy

  Tugendhat, Christopher

  Macfarlane, Neil

  Rathbone, Tim

  Tyler, Paul

  MacGregor, John

  Rawlinson, Rt. Hn. Sir Peter

  van Straubenzee, W. R.

  McLaren, Martin

  Redmond, Robert

  Vaughan, Dr. Gerard

  Macmillan, Rt. Hn. M. (Farnham)

  Rees, Peter (Dover & Deal)

  Viggers, Peter

  McNair-Wilson, Patrick (New Forest)

  Rees-Davies, W. R.

  Waddington, David

  Madel, David

  Renton, Rt. Hn. Sir David (H't' gd' ns' re)

  Wainwright, Richard (Colne Valley)

  Marshall, Michael (Arundel)

  Renton, R. T. (Mid-Sussex)

  Wakeham, John

  Marten, Neil

  Mather, Carol

  Rhys Williams, Sir Brandon

  Walder, David (Clitheroe)

  Maude, Angus

  Ridley, Hn. Nicholas

  Walker, Rt. Hn. Peter (Worcester)

  Maudling, Rt. Hn. Reginald

  Ridsdale, Julian

  Walker-Smith, Rt. Hn. Sir Derek

  Mawby, Ray

  Rippon, Rt. Hn. Geoffrey

  Wall, Patrick

  Maxwell-Hyslop, R. J.

  Roberts, Wyn (Conway)

  Walters, Dennis

  Mayhew, Patrick (Royal T'bridge Wells)

  Ross, Stephen (Isle of Wight)

  Weatherill, Bernard

  Meyer, Sir Anthony

  Rossi, Hugh (Hornsey)

  Wells, John

  Miller, Hal (B'grove & R'ditch)

  Rost, Peter (Derbyshire, S.-E.)

  Whitelaw, Rt. Hn. William

  Miscampbell, Norman

  Royle, Sir Anthony

  Wiggin, Jerry

  Mitchell, David (Basingstoke)

  Sainsbury, Tim

  Winstanley, Dr. Michael

  Moate, Roger

  St. John-Stevas, Norman

  Winterton, Nicholas

  Money, Ernle

  Scott-Hopkins, James

  Wood, Rt. Hn. Richard

  Monro, Hector

  Shaw, Giles (Pudsey)

  Woodhouse, Hn. Christopher

  Moore, J. E. M. (Croydon, C.)

  Shaw, Michael (Scarborough)

  Worsley, Sir Marcus

  Morgan, Geraint

  Shelton, William (L'mb'th, Streath'm)

  Young, Sir George (Ealing, Acton)

  Morgan-Giles, Rear-Adm.

  Shersby, Michael

  Morris, Michael (Northampton, S.)

  Silvester, Fred

  TELLERS FOR THE NOES:

  Morrison, Charles (Devizes)

  Sims, Roger

  Mr. Walter Clegg and

  Morrison, Peter (City of Chester)

  Sinclair, Sir George

  Mr. Paul Hawkins.

  Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56 (Third Reading), and agreed to.

  Question accordingly agreed to.
  Resolved,
  That this House notes that the financial provision made under the Social Security Act 1973 was insufficient to support an adequate level of retirement pension; welcomes the prompt improvements in pensions made by the present Administration; endorses the determination of the Government to ensure that employees are relieved from contributing to a scheme which would have provided inade
  172
  quate pension cover, especially for women and older workers; recognises that the pension arrangements under the Act could not have served as a sound foundation for an effective and fair pensions policy directed to relating the living standards of pensioners more closely to their earnings and avoiding reliance on means tested benefits; and calls upon the Government to bring forward as soon as possible proposals for public and Parliamentary discussion which would meet the legitimate aspirations of workers in modern conditions and merit the widest possible support.

  PAKISTAN BILL
  Considered in Committee; reported, without amendment.
  Bill accordingly read the Third time and passed.

  CHURCH OF ENGLAND (GENERAL SYNOD)
  10.32 p.m.
  The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. E. S. Bishop): I beg to move,
  That the Synodical Government (Amendment) Measure 1974, passed by the General Synod of the Church of England, be presented to Her Majesty for Her Royal Assent in the form in which the said Measure was laid before Parliament.
  I move this motion because I was, until a few days ago, the Second Church Estates Commissioner.
  Both this Measure and the Ecclesiastical Jurisdiction (Amendment) Measure 1974 are non-controversial. Both have been scrutinised carefully. During their passage through the General Synod certain changes were made but at no stage was there a Division. The first Measure modifies the 1968 Measure and authorises the Synod to provide for the addition to its membership of nine suffragen bishops, to be elected full members of the House of Bishops of the Church Synod. It simplifies the procedure to be adopted in respect of the relationship of the Church of England to overseas Churches and makes changes with regard to the method of voting in Synod.
  Question put and agreed to.

  CHURCH OF ENGLAND (ECCLESIASTICAL JURISDICTION)
  10.34 p.m.
  The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. E. S. Bishop): I beg to move,
  That the Ecclesiastical Jurisdiction (Amendment) Measure 1974, passed by the General Synod of the Church of England, be presented to Her Majesty for Her Royal Assent in the form in which the said Measure was laid before Parliament.
  This Measure updates the 1963 Measure, to bring it into line with changes Parliament has made recently in other aspects of the law with regard to deprivation of clergy following trial by secular courts. It also provides for discretionary powers.
  Question put and agreed to.

  CHURCH OF ENGLAND (ECCLESIASTICAL JURISDICTION)
    ADJOURNMENT
    Motion made, and Question proposed, That this House do now adourn—[Mr. Golding.]

  ROADS (WASHINGTON NEW TOWN)
  10.35 p.m.
  Mr. Giles Radice: I am raising the question of road closures and alternative routes in Washington New Town not only because they are important to my constituency but because they raise matters of wider interest. Although Village Lane has been closed, the planning decision on which I wish to concentrate concerns Spout Lane which, until it was closed, was the main route joining the north and south of Washington New Town.
  I concede that the road is narrow and, perhaps, unsuitable to be the main north-south link of a growing new town. However, it is important because it connects the health centre, the doctor's surgery and shops in north Washington with the public library, the main post office and churches in south Washington. In addition, it provided a means of speedy access for parents to Washington Comprehensive School and was vital to the social life of the community, in that it provided speedy access to many working men's clubs in the area.

  175
  Washington Development Corporation first gave notice of its intention to close Spout Lane when it published its master plan in 1967. I have no complaint against the way in which the development corporation carried out its obligations to inform the public of what it intended to do. Indeed, in the 1968 and 1973 publications of its review—which goes to every house in Washington—and in several public meetings it went beyond its legal obligations. The county council and the Washington Urban District Council both agreed to the closure and at no stage was there any complaint from the public. I emphasise that, because it will be common ground between the Minister and myself and it is relevant to the case which I wish to develop.
  As there was no protest, the Minister had no choice but to make an order closing Spout Lane, which he did on 4th May 1972. The order was not enforced immediately because of the absence of alternative routes, and only on 22nd November 1973 was it closed. Just before that date, following a public meeting, public protest began to mount. An action group was set up, a petition was organised which immediately gathered about 4,000 signatures and local councillors and the Member of Parliament were called in.
  On 19th November, I wrote to the Minister's predecessor to urge that the closure of Spout Lane be halted until north-south communications were developed. On 18th December, the Minister's predecessor replied that he had no powers to delay the closure. He suggested that I should contact the Development Corporation about the provision of alternative routes. On 4th December 1973 the corporation approached me to assist it in making representations to the Minister about approving funds for an early start to the Northern Expressway. I wrote to the Minister on 5th December about that alternative route.
  On 25th January the Minister replied to my letter of 5th December about alternative routes. He was pessimistic about the chances of the northern part of the Northern Expressway starting in the scheduled year, 1974–75. Meanwhile, after the closure in Washington protests continued at a high level. People began to
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  find that they were seriously inconvenienced by the closure, and 10,000 signatures were collected. Buses had to be re-routed and this caused considerable hardship. Car traffic had to travel an extra mile or two. Doctors, churchmen, shopkeepers, old-age pensioners, parents and housewives were up in arms. People wrote letters to the Press, to their councillors and to their Member of Parliament. There were further public meetings which, incidentally, were the best attended public meetings that I have spoken to in my constituency. Nearly 1,000 people attended.
  Significantly, Washington council in the last few months of its existence changed its mind and asked me to arrange a deputation to see the Minister. Spout Lane became an election issue in the 1974 election. Immediately following the election I asked the new Minister to receive a deputation, but he declined because he stated that he had no further jurisdiction in the matter as the road was closed.
  Important issues are raised by the Spout Lane closure. The first matter is that of timing. Whatever the case for closing Spout Lane—and I concede that it was a narrow road and had its traffic dangers—the timing must be wrong. At present there are no adequate alternatives because there is no adequate north-south link. As a result there is a level of hardship and public inconvenience.
  I wish to ask the Minister two specific questions, of which I have already given him notice. First, what would be the cost of converting Spout Lane into a bus-only link? Such a link would avoid the hazards and would prove of great use to residents. The Northern Bus Company favours such a link. Secondly, what is the cost of providing alternative routes and when are we likely to get them? It is important that we have these two figures so that we can make a comparison of cost and of the time which both projects might take.
  I turn to the question of planning procedure. The striking thing about the Spout Lane closure is that people were aroused to protest only just before and after the closure was announced. Therefore, is there not a case for reviewing planning procedure? Is it not possible to have a trial period of closure so that people may see what is involved? People do not always understand maps and

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  plans—and that includes me. Should we not take this factor into account where possible? It would have been possible to put bollards across Spout Lane and say, "This is what we shall do", so that people could have understood what the closure would mean.
  I am a great admirer of Washington New Town. I believe that it is one of the most exciting and imaginative projects in Great Britain. But I wonder whether the basis on which the new town was planned—namely, that everybody would have a motor car—will be as relevant in the future as it seemed to be at that time. I hope that the Minister will have a word with the corporation and advise its members to be a little more flexible in their approach. It may be that we in Washington should be building fewer urban motorways and providing faster bus services, perhaps subsidised by the corporation.
  I am not saying that the master plan is wrong, but in the light of recent events such as the increase in oil prices and the drop in car sales—which may not be temporary phenomena—we may need modifications of the plan. I thank the Minister for his attention and await his reply with some eagerness.
  10.45 p.m.
  The Under-Secretary of State for the Environment (Mr. Neil Carmichael): My hon. Friend the Member for Chester-le-Street (Mr. Radice) is quite understandably concerned both about the local effects of those road closures in Washington New Town and about some wider related issues of planning and procedure. In the past few months, I have become aware of his great interest and assiduous concern for his constituents on this topic.
  In responding to the debate, I want, first of all, to put this question of road closures into some sort of perspective.
  What we are concerned with is in fact part of the development of Washington New Town; and that means the whole task of creating in that part of the North-East a new economic growth point with a new standard of urban life. It means a lot of change by way of redevelopment of existing built-up areas, fresh development where there was none before, and reclamation of industrial dereliction.
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  No one, I hope, will deny that changes of this kind in that area must be most desirable, or that the new town development corporation, with the collaboration of the local authorities, is generally making a good job of it. But of course, these changes cannot be brought about without a measure of disturbance. In such cases, we simply have to prefer the greater to the lesser good while ensuring, as far as possible, by good planning and careful execution that any disturbance is kept to the lowest level which can reasonably be achieved.
  In developing Washington to take an eventual inflow of 50,000 to 60,000 new inhabitants, the development corporation and the local authorities will have achieved in many ways a better environment for the 20,000 or so who live there already—better general communications, better shopping, better facilities of every kind. But it will be different from what they were used to.
  One feature of the master plan for Washington New Town, which was endorsed in 1967, is the creation of a new pattern of roads to aid traffic circulation within the town and to speed up its links with outside. This is an important feature both for the convenience of those living in the town and as part of the development corporation's successful drive to attract there the employers needed to provide the jobs which are as important in a new town as the houses the corporation builds.
  The new road pattern is based on a one-mile grid of dual carriageway roads with limited access. New north-south and east-west roads will open up the undeveloped parts of the designated area, join up the various parts of the town, and divert through traffic on to less congested and safer routes. There will then be high standards of pedestrian and vehicle segregation. About half this new road system is now open or under construction.
  It follows from the introduction of these new roads that some of the existing roads in Washington had to be closed to through traffic. Inevitably, such closures can cause local difficulties which have to be weighed against offsetting local benefits as well as the benefits of the scheme as a whole.
  My hon. Friend has mentioned the inconvenience to residents caused by the

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  recent closure of two of these roads, Spout Lane and Village Lane. Certainly these were both long-accepted and well-used roads. Spout Lane, in particular, was, until its partial closure in November 1973, part of the main route for the north-south traffic through the original township of Washington—areas now known as Washington, Columbia and Concord. With the growth of the new town, Spout Lane was carrying an increasing load of heavy through traffic, but it was a narrow winding road, in some places not more than 20 feet wide.
  Both Spout Lane and Village Lane have been severed by a major road—the Eastern Highway—which is to link the centre of Washington with Sunderland. So their use by through traffic has been prevented and they are now usable for local access only. Through traffic now takes the recently opened Central Highway and has not been seriously affected. There is still a pedestrian link under the Eastern Highway, but, for vehicles, new local journey patterns must be used for journeys to schools, shops, etc. in one of the older areas of the town.
  These closures did not come about without due publicity and opportunities for objection. My hon. Friend made some interesting suggestions in this connection, to which I may have time to refer. Proposals for the closures were first published in 1967 when the development corporation presented its master plan to the public. No objections were received during the objection period. There was further publicity in the Washington New Town Review which is a quarterly information leaflet published by the development corporation and delivered to householders in the new town. As early as the spring 1968 issue of the review, it was made clear that Spout Lane would be closed in the early 1970s to permit construction of the Eastern Highway.
  Approval for construction of the Eastern Highway was given by the Secretary of State in 1971 under the New Towns Act 1965. The local planning authority, the former Durham County, was, as required by statute, consulted before the approval was given, but put forward no objection to the proposals.
  The actual closures of parts of Spout Lane and Village Lane were made under
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  order by the Secretary of State only after the statutory procedures required under the Town and Country Planning Acts of 1962, 1968 and 1971 had been completed. The statutory notices were published in the London Gazette and in local newspapers and were displayed at the proposed points of closure. Once again no objection was received during the 28-day period. Following the making of such orders there is a right to challenge their validity in the High Court, but no such challenges were made. The order closing Spout Lane came into operation on 4th May 1972 and was brought into effect on 22nd November 1973. The Village Lane Order was made on 5th November 1973 and came into effect on 13th December 1973. In both cases the operative date was made as late as it seemed reasonably possible to make it, given the construction programme for the Eastern Highway.
  The corporation had arranged that when Spout Lane was severed, the buses serving the area would be re-routed via the new town centre. The town centre already provides a very good range of shopping and commercial facilities. The corporation also gave advance warning of the proposed closures in its 1973 summer and autumn issues of the Washington New Town review.
  My hon. Friend suggested that there might be trial periods for road closures so that people would have practical experience of what is involved before they made up their minds. I am grateful for the notice that he gave me of that point. I accept that this is an attractive concept and, indeed, one that might be worth trying in cases where the effect of alternative courses of action can be treated experimentally without undue expense. But in the present case it would not really have been practicable, if only because the experiment would have had to be conducted at a stage when, although the disadvantages of the closures would have been real and apparent, the compensatory advantages of the new developments would still have had to be left to the imagination; and when, moreover, the affected population, at the time of the experiment, would not necessarily have been substantially the same as at the time of the final bringing into effect.
  In all these circumstances, the corporation and the Secretary of State between

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  them did as much as, and, indeed, a great deal more than, the law required to make it possible for the views of the public to be made known and taken into account.
  There was, nevertheless, and perhaps inevitably, a surge of local feeling when the closures actually took place and the need for new journey patterns became an immediate problem. The corporation paid close attention to this and it is doing something about it.
  First, a new bus service has been introduced, helped by a contribution from the development corporation, to improve the links between the severed areas: secondly, a new link road has been provided at a cost to the corporation of £35,000, and another, at a cost of £163,000, will be built as soon as financial circumstances permit. These two sections of road will in fact be on the line of the proposed Northern Expressway in which they would in due course be incorporated.
  I understand from the corporation that local opposition to the closures has now subsided and, indeed, that people living in the affected areas are now beginning to appreciate the improved conditions resulting from the exclusion of through traffic. I hope that my information on this point is reasonably correct. In short, the statutory procedures for these road closures were properly completed and, in spite of all the opportunities offered, at no stage were any objections made. The improved traffic management resulting from the closures is in line with the proposals in the new town master plan, accepted by a previous Government after full consultation with the public and local authorities. The loss of through traffic has compensatory local advantages and the local disadvantages are being mitigated by improved bus services and link roads. The cost of reopening Spout Lane for buses only is in the region of £500,000 and it would require demolition of 26 houses. Moreover, the saving in bus journey times would not be significant.
  Bearing all these factors in mind, my right hon. Friend does not consider that there is a sufficient case for reopening Spout Lane or Village Lane. My hon. Friend referred to the delay in construction of the Northern Expressway, a project which might further ease the diversion problems caused by the closure of Spout
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  Lane. Work on this route was to have started in the current financial year but unfortunately with the cut-back in public expenditure, this has not been possible; and I cannot yet say when this £4 million scheme might now be started.
  I was grateful to my hon. Friend for commending Washington Development Corporation in its efforts to make the effects of development proposals more understandable by the people affected. I share his view that the development corporation has set a fine example in this field, as indeed have many other of our new towns.
  My hon. Friend has suggested, nevertheless, that the corporation, foreseeing the difficulties arising from the closure of Spout Lane, might have delayed that closure until fully acceptable alternatives had been found. The answer must be that we all have something to learn from experience.
  I would, incidentally, take the opportunity to remind my hon. Friend that the corporation is planning a further severance of Spout Lane because of the construction of a bypass at Concord. The statutory order—to which once again no objections were received—was made on 30th November 1973. I can, however, tell my hon. Friend that, in the view of the development corporation, reasonable alternative routes will have been provided in this case.
  My hon. Friend also raised a more general question about the extent to which Washington New Town provides for the use of private motor transport. It is easy to be wise after the event and I will not say that, if we were to start afresh today, everything would look exactly the same: but certainly a new town must offer good transport facilities if it is to attract its industry and its population, and master plans cannot be altered every week. Washington can only stand to benefit from its improved links with Sunderland and Newcastle and with the national motorway system: and diversion of traffic on to these major roads has greatly improved the living conditions in the new town's residential areas.
  My hon. Friend further suggested that more effective participation in road planning was needed. A new procedure for public participation in the choice of trunk

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  road routes was introduced in July 1973. This involves giving to the public details of possible alternative proposals, so that local reaction can be assessed. This procedure has been commended to local authorities for their own schemes but it is not mandatory. It is being kept under review as experience is gained, so that modifications and improvements may be introduced.
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  I hope that with those words and with the suggestion that new techniques are continually being developed my hon. Friend will feel satisfied, or at least glad that he raised this matter tonight. I hope that some of the answers that I have given will be satisfactory.
  Question put and agreed to.
  Adjourned accordingly at two minutes to Eleven o'clock.