§ The Secretary of State for Social Services (Mrs. Barbara Castle)With permission, Mr. Speaker. I should like to make a statement about increases in social security benefits and contributions.
My right hon. Friend the Chancellor of the Exchequer yesterday announced the main proposals. The increases in 451 benefits will take effect in the week beginning 22nd July. This means 17 weeks from now—and in the last three years the shortest timetable achieved has been 25 weeks The 17-week timetable can be met only at a risk that some beneficiaries may not receive their increases until shortly after the operative date We will do our best to avoid this happening but, given our overriding objective of introducing the increases at the earliest possible date, I am sure the House will agree that it is a risk we should be prepared to take
The standard rate of pensions—that is, of retirement pensions, invalidity pensions and widows' pensions—will go up by £2.25 for single persons Married couples will get an increase of £3.50 Thus our pledge to increase pensions to the levels of £10 for single persons and £16 for married couples will be honoured. Old persons' pensions will go up from £2.85 to £3.70 for wives and from £4.65 to £6 for other people.
Short-term benefits—namely, unemployment benefit and sickness benefit—will be increased by £1.25 for a single person and £2 for a married couple, making the single person's rate £8.60 and the married couple's £13.90 a week. Maternity allowance and injury benefit will go up by the same amounts.
We are thus giving the highest priority to the long-term beneficiaries—the pensioners, the chronic sick and the widows. Nevertheless the increase in short-term benefits will be more than sufficient to maintain their purchasing power, and I should remind the House that short-term beneficiaries can receive an earnings-related supplement which can itself bring their benefits up to levels in excess of £10 or £16.
Attendance allowance where attendance is required both by day and by night will go up from £6.20 to £8; and where attendance is required by day or by night the rate will go up from £4.15 to £5.35.
The 100 per cent. war and industrial injuries disablement pension will go up from £12.80 to £16.40. The standard war widow's pension will be increased from £10.10 to £13 and the industrial injuries widow's pension from £8.30 to £10.55.
452 For the older war disabled and war widows we propose a further improvement in addition to the increases in the basic pensions themselves. The age allowances, which a war widow receives at the rates of 65p at the age of 65 and £1.30 at the age of 70, and which a disabled man with an assessment of 40 per cent. or more receives at the age of 65 at rates varying from 60p to £1.80, will all be doubled. Thus war widows will receive an age allowance of £1.30 at the age of 65 and £2.60 at the age of 70; and a disabled man with an assessment of 100 per cent. will get an allowance of £3.60 at the age of 65. Over 40,000 disablement pensioners and over 50,000 war widows will benefit from this special help. The net cost will be £4.5 million in a full year.
The earnings rule will be relaxed as part of the uprating so as to increase the amount at which the rule starts to operate from the present £9.50 to £13 a week.
I turn now to supplementary benefit. The increases in the main scale rates will be the same as, and will come into force at the same time as, the increases in the related national insurance benefits. The increase of £3.50 for a married couple—proposed for retirement pensioners—will also go to supplementary pensioners and other supplementary beneficiaries who qualify for the long-term rates. The increase of £2.25 proposed for single retirement pensioners will also go to supplementary pensioners and other supplementary beneficiaries who qualify for the long-term scale rates, where they live alone. Thus a supplementary pensioner living alone will become entitled to at least £10.40 a week plus rent and rates—£10.65 plus rent and rates if he is over 80. A supplementary pensioner couple will become entitled to at least £16.35 plus rent and rates, or £16.60 plus rent and rates if one of them is over 80.
The supplementary benefit ordinary rates—for persons who are neither of pension age nor qualify for the long-term rates—will go up by £2 for a married couple and £1.25 for a person living alone, to match the increases in the short-term national insurance benefits.
The prescribed amounts which govern title to family income supplement will also be increased.
453 The cost of all these increases in social security benefits will be over £1,250 million in 1975–76. Over £1,100 million of this cost will fall on the National Insurance Funds.
Next I come to national insurance contributions. My right hon. Friend explained to the House yesterday how we are proposing to allocate the extra contribution burden so as to put most of it on the employer and, in particular, to help the lower paid.
The net effect of our proposals is that men earning £20 a week will pay 3p less than they do now and that, in general, no man earning less than £27 a week will have to pay more than he does at present, while the highest increases in contributions will fall on those earning £62 a week or more. These men will pay an extra 57p a week; and men earning £40 a week will pay an extra 7p a week. Women's contributions will be changed correspondingly. All the contribution changes are proposed to come into effect on 5th August. The Treasury contribution will continue at about 18 per cent. of the income from contributions.
For the convenience of the House I am circulating details of the new rates of benefits and contributions in the OFFICIAL REPORT. These, with copies of my statement, are available in the Vote Office. I should add that I shall shortly be presenting the necessary Bill, which will be accompanied by the Government Actuary's report.
Before I end I should say a word about financing after the end of the 1974–75 financial year. The proposed contribution rates, together with the associated Treasury supplement, will provide sufficient income to cover the cost of benefits at the new levels whilst the present national insurance scheme lasts. However, if the new structure and level of contributions provided by the Social Security Act 1973 were to come into force in April 1975, the income of the National Insurance Fund would not be sufficient to finance an uprating of the basic pension on the generous scale we propose. We have not yet decided precisely how we are going to deal with all the interim problems raised by the Social Security Act, but I can say now that we intend to introduce legislation later in the year to secure income to the National Insur- 454 ance Fund which will still be adequate to the new levels of benefit after April 1975.
I conclude by reminding the House that we are pledged to work for a greater measure of social justice. The proposals I am putting before the House will take us along that road. The increases in pensions will be the largest ever within the national insurance scheme, both in money and in real terms. The Government intend to build on this foundation by ensuring that in future pensions will be increased annually in proportion to increases in average national earnings. This is a pledge never before given to the most vulnerable members of our society. It is a pledge long overdue.
§ Sir Geoffrey HoweHon. Members on both sides will welcome the increases announced by the right hon. Lady and will particularly congratulate her both on the speed with which she has been able to effect them and on the provision for war disability and war widows' pensions. We shall, however, want to look with more care at the changes which she may or may not have in mind for financing the higher pensions by changes in the provisions of the Social Security Act 1973.
We also welcome the fact that the right hon. Lady is continuing to distinguish, as did my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph), between the short-term and long-term benefits. We also welcome the relaxation of the earnings rule, but can she say whether the cost of relaxing this rule is included in the £1,250 million which she mentioned as being the total cost. Precisely how much will this particular change cost?
§ Mr. George CunninghamThe Tories refused to do it last year.
§ Sir G. HoweWe also welcome the increases in supplementary benefits. We welcome, too, the right hon. Lady's conversion to the prospect of continuing the family income supplement scheme. Can she confirm that by increases in supplementary benefits and family income supplementary benefits the numbers of beneficiaries on means-tested benefits will remain at least at the present level?
We notice that the right hon. Lady intends to increase pensions annually. 455 Does this mean that she has rejected our proposal for a six-monthly review of pensions?
What is the total size of the sum being raised by increased contributions from employers, and what estimate has the right hon. Lady made of the impact on the retail price index—which affects pensioners' purchasing power—of the increased employers' contributions?
What estimate has the right hon. Lady made of the impact on the retail price index, particularly with reference to pensioners, of the higher taxes announced by the Chancellor of the Exchequer yesterday on tobacco, beer and other beverages, and certain food items?
Further, what estimate has the right hon. Lady made of the impact on the retail price index of the higher prices for coal, transport, electricity and postal services announced yesterday? Does she, in the light of those increases, have any proposals for considering the level of the heating allowances payable to pensioners? Why has the right hon. Lady done nothing to vary the disregard, an important element in the social security scheme, as a means of encouraging thrift?
§ Mrs. CastleIt might be an abuse of the procedure of the House if I were to attempt to answer in detail all of the right hon. and learned Gentleman's questions, particularly as we are to have a debate on these matters tomorrow, which will enable us to deal in fuller detail and at greater length with all the points involved. However, I shall try as briefly as I can to answer as many of the right hon. and learned Gentleman's questions as I can recall.
With regard to the six-monthly uprating, the right hon. and learned Gentleman asked whether this meant that we had turned our backs on the proposals which the Conservatives thought up rather at the last minute in the middle of the election campaign. [HON. MEMBERS: "No, no."]. I am entitled to say that, in view of the fact that the Conservative legislation of 1973 provided for annual reviews and never mentioned six-monthly reviews. If we had had the return of a Conservative Government pledged to six-monthly upratings, that Government would, presumably, have given the pen- 456 sioners only half of what in any case would have been a lower uprating.
With regard to the family income supplement, I shall be giving, in due course, fuller details of the application of the increases to the prescribed amounts. I remind the House that the Government remain—as they have always been—opposed to the principle of means testing which underlies this scheme. We do not like it, and we intend to replace it with something better within the normal lifetime of a Parliament, but in the meantime we cannot allow the poorest in the land to be left relatively worse off.
The second question was about the earnings rule. The cost of the concession will be £9 million, and I think that I am correct in saying that that figure is included in the total that I gave, but I am subject to checking on that point. The right hon. and learned Gentleman referred to our retention of a different rate for short-term benefits, a proposal, of course, which was included in the Conservative legislation last year. On this occasion, we felt that the urgent priority was to give the maximum possible help to pensioners and other long-term beneficiaries.
However, our increase in the short-term benefits is one of 17 per cent. for the single person, introduced less than 10 months after the last uprating, whereas the Conservative Government gave them an increase of only 8.9 per cent. after a 12-month interval. So there again we have done substantially better than they did. I cannot remember the rest of the detail of the right hon. and learned Gentleman's questions, but I think that other hon. Members should be given a chance to get in a word.
§ Mr. Arthur LewisFirst, I congratulate my right hon. Friend both on an excellent statement, and, more particularly, on the speed and expedition with which she intends to pay these old-age pensioners in July. She will know that many of them may unfortunately be dead come October, the usual date for which they would have to wait. Since the right hon. and learned Member for Surrey, East (Sir G. Howe) said that he welcomed the statement, will the Secretary of State take an early opportunity to have a ministerial broadcast on this matter? 457 Many old people and many of the sick and disabled would like to hear from her personally exactly what all this means.
§ Mrs. CastleI am very grateful to my hon. Friend for appreciating that this was administratively the earliest possible date that we could put these huge increases into payment. The delay will be only 17 weeks, compared with the 29 weeks that elapsed between the last Conservative Government's announcement and the actual uprating.
I must point out that these proposals will mean putting the staff of my Department under considerable strain. I want to pay tribute to them. I want them and the House to realise that it means asking a great deal of them in the way of overtime and extra pressure, and I am sure that they will accept this burden on behalf of these weaker members of the community, whom we are trying to help as quickly as possible.
I will certainly bear in mind my hon. Friend's suggestion about a ministerial broadcast, because the details are complicated. It is essential to bring reassurance to the old people on all the detailed points about which they have been wondering.
§ Sir B. Rhys WilliamsWhile the House is delighted that the pensioners will get their increase in 17 weeks, is the right hon. Lady aware that, on the Continent, machinery has been in use for a number of years which makes it possible to introduce changes of this kind in less than a fortnight?
§ Sir B. Rhys WilliamsWill the right hon. Lady now see to it that the administration of this and her Department are modernised?
§ Mrs. CastleThe administrative methods that I inherited from my predecessor made it impossible to do it at any greater speed than I propose.
§ Dr. M. S. MillerWill my right hon. Friend accept that her statement will be welcomed not only by the people who will benefit but by all sections of the community? Will she undertake a review in her Department of the attendance allowance, since it is to a great extent limited and does not go to many people who well deserve it?
§ Mrs. CastleI am sure that my hon. Friend will appreciate that we have made a substantial increase in the rates. This will be of immediate considerable benefit to many disabled people. I have already told the House that I shall be reviewing the whole of the social security provisions for the disabled and will be reporting in the autumn. Of course, this will be one of the things that we shall be studying.
§ Dr. WinstanleyIs the right hon. Lady aware that we on this bench greatly welcome these proposals and assure her of our fullest and enthusiastic support for their implementation? But would it not have been administratively easier and even cheaper, considering all the factors involved, to abolish the earnings rule rather than merely fiddle about with the qualifying level? Is it not also regrettable that she has not seized this opportunity to change the £2 disregard for the part-time earnings of wives whose husbands are on supplementary benefit? This is very low in present circumstances. Could she not have raised it to bring the family income at least up to the family income supplement level? Finally, will she take active steps to see that these new proposals are brought to the notice of those whom they are intended to benefit?
§ Mrs. CastleI am grateful for the spirit in which the hon. Gentleman has responded to my statement; I had hoped that the whole House would have welcomed it in the unqualified way that he has done. I agree, of course, that there are many points still remaining to be dealt with—among them, the disregards. I recognise that the purchasing power of the disregards has fallen considerably. My answer to the hon. Gentleman must be partly that I cannot do everything at once, but it is also an administrative answer. I was concerned to get the main increase into payment as early as possible, and, therefore, I had to say to my Department "There are many other detailed aspects that we could have dealt with and eventually must deal with, but let us streamline our attack on this point since this is the only way administratively that I can get it through by the end of July." The hon. Member is a little optimistic to say that there would be an administrative saving in abolishing 459 the earnings rule altogether. The cost of that abolition would be £160 million.
Mr. R. C. MitchellWould my right hon. Friend be prepared to have another look at the heating allowances?
§ Mrs. CastleYes, the Supplementary Benefits Commission already has them under review.
§ Mr. RidsdaleMay I congratulate the right hon. Lady on having followed the example of the previous Government in the proper care of the elderly, and also press her, as one of her back benchers did, about the attendance allowance? This is something which, with inflation, many people in my constituency who are
| DETAILS OF NEW RATES OF BENEFIT AND CONTRIBUTIONS | ||||||||
| MAIN INCREASED NATIONAL INSURANCE BENEFIT RATES: | ||||||||
| Proposed Weekly Rate | Existing Rate | |||||||
| £ | £ | |||||||
| Standard rate of invalidity, widows' and retirement pensions and widowed mothers' allowances: | ||||||||
| Single person | … | … | … | … | … | … | 10.00 | 7.75 |
| Wife or other adult dependant | … | … | … | … | … | … | 6.00 | 4.75 |
| Standard rate of unemployment and sickness benefits: | ||||||||
| Single person | … | … | … | … | … | … | 8.60 | 7.35 |
| Wife or other adult dependant | … | … | … | … | … | … | 5.30 | 4.55 |
| Married woman (normal rate) | … | … | … | … | … | … | 6.05 | 5.15 |
| Persons under 18 | … | … | … | … | … | … | 4.75 | 4.05 |
| Widow's allowance (first 26 weeks of widowhood) | … | … | … | … | … | … | 14.00 | 10.85 |
| Widow's basic pension | … | … | … | … | … | … | 3.00 | 2.33 |
| Maternity allowance | … | … | … | … | … | … | 8.60 | 7.35 |
| Invalidity allowance payable with invalidity pension, when incapacity began before age: | ||||||||
| 35 | … | … | … | … | … | … | 2.05 | 1.60 |
| 45 | … | … | … | … | … | … | 1.30 | 1.00 |
| 60 for men or 55 for women | … | … | … | … | … | … | 0.65 | 0.50 |
| Attendance allowance: | ||||||||
| Higher rate | … | … | … | … | … | … | 8.00 | 6.20 |
| Lower rate | … | … | … | … | … | … | 5.35 | 4.15 |
| Old persons' pensions: | ||||||||
| Wife | … | … | … | … | … | … | 3.70 | 2.85 |
| Any other person | … | … | … | … | … | … | 6.00 | 4.65 |
| Guardian's allowance | … | … | … | … | … | … | 4.90 | 3.80 |
| Child's special allowance and increases for children of widows, invalidity and retirement pensioners: | ||||||||
| First child | … | … | … | … | … | … | 4.90 | 3.80 |
| Second child* | … | … | … | … | … | … | 4.00 | 2.90 |
| Any other child* | … | … | … | … | … | … | 3.90 | 2.80 |
| Increases for children of all other beneficiaries: | ||||||||
| First child | … | … | … | … | … | … | 2.70 | 2.30 |
| Second child* | … | … | … | … | … | … | 1.80 | 1.40 |
| Any other child* | … | … | … | … | … | … | 1.70 | 1.30 |
| * Family allowances are payable for second and subsequent children. |
§ looking after members of their families need examined very carefully. Will she do so as quickly as possible?
§ Mrs. CastleI assume the hon. Member is referring to the criteria rather than the rates. I think that the House will agree that the increase in the rates is a good one and that that is what the House is concerned with, rather than the eligibility criteria. I repeat that we shall be looking at this as part of our comprehensive review of the provision for the disabled.
§ Mr. SpeakerOrder. As the right hon. Lady said, this is all debatable tomorrow.
§ The following is the information:
461| MAIN INCREASED INDUSTRIAL INJURIES BENEFIT RATES: | |||||
| Proposed Weekly Rate | Existing Rate | ||||
| £ | £ | ||||
| Injury benefit*† | … | … | … | 11.35 | 10.10 |
| Disablement benefit (100 per cent assessment)* | … | … | … | 16.40 | 12.80 |
| Unemployability supplement‡ | … | … | … | 10.00 | 7.75 |
| Special hardship allowance (maximum) | … | … | … | 6.56 | 5.12 |
| Constant attendance allowance (normal maximum) | … | … | … | 6.60 | 5.15 |
| Exceptionally severe disablement allowance | … | … | … | 6.60 | 5.15 |
| Industrial death benefit: | |||||
| Widow's pension during first 26 weeks of widowhood | … | … | … | 14.00 | 10.85 |
| Widow's pension now payable at £8.30 rate | … | … | … | 10.55 | 8.30 |
| Widow's pension now payable at £2.33 rate | … | … | … | 3.00 | 2.33 |
| * Increases will also be made in the juvenile rates. | |||||
| † Increases for adult dependants and children will be the same as those for unemployment and sickness benefit—see National Insurance table. | |||||
| ‡ Invalidity allowances and increases for adult dependants and children will be the same as thoss for invalidity pensions—see National Insurance table. |
| PART II: DEATH BENEFITS: | ||||
| Proposed Weekly Rate | Existing Rate | |||
| £ | £ | |||
| Widow's pension—private's widow: | ||||
| Standard rate | … | … | 13.00 | 10.10 |
| Childless widow under 40 | … | … | 3.00 | 2.33 |
| Rent allowance | … | … | 5.00 | 3.90 |
| Age allowance for elderly widows: | ||||
| Between age 65 and 70 | … | … | 1.30 | 0.65 |
| Over age 70 | … | … | 2.60 | 1.30 |
| Widower's pension | … | … | 13.00 | 10.10 |
| Widow's children: | ||||
| Eldest child | … | … | 5.10 | 4.00 |
| Other children with family allowances | … | … | 4.60 | 3.50 |
| Other children without family allowances | … | … | 4.95 | 3.85 |
| Motherless and fatherless children aged: | ||||
| Under 15 | Eldest child or other children with no family allowances | … | 5.10 | 4.00 |
| Over 15 | 6.60 | 5.50 | ||
| Under 15 | Other children with family allowances | … | 4.60 | 3.50 |
| Over 15 | 6.10 | 5.00 | ||
| Adult orphans | … | … | 10.00 | 7.75 |
| Proposed Weekly Rate | Existing Rate | |||||||
| £ | £ | |||||||
| Non-householder rent allowance | … | … | … | … | … | … | 0.90 | 0.80 |
| Attendance requirements: | ||||||||
| Higher rate | … | … | … | … | … | … | 8.00 | 6.20 |
| Lower rate | … | … | … | … | … | … | 5.35 | 4.15 |
| * Where the claimant or a dependant is aged 80 or over a further 25p is to be added to these long-term rates. |
| PROPOSED NEW RATES OF CONTRIBUTION POR ADULTS: |
| CLASS 1—EMPLOYED PERSONS—EMPLOYER (including N.H.S. contributions but excluding Redundancy Fund contribution): |
| Class 2—SELF-EMPLOYED PERSONS (including N.H.S. contributions): | ||||||
| Present Rate | Increase | New Rate | ||||
| £ | £ | £ | ||||
| Men over 18 | … | … | … | 1.99 | 0.42 | 2.41 |
| Women over 18 | … | … | … | 1.67 | 0.34 | 2.01 |
| CLASS 3—NON-EMPLOYED PERSONS (including N.H.S. contributions): | ||||||
| Present Rate | Increase | New Rate | ||||
| £ | £ | £ | ||||
| Men over 18 | … | … | … | 1.56 | 0.34 | 1.90 |
| Women over 18 | … | … | … | 1.23 | 0.26 | 1.49 |