§ Order for Second Reading read.
§ 5.32 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.
With the exception of the hon. Member for Lancaster (Mrs. Kellett-Bowman), we have had something of a House of Commons "love-in" on the previous Bill. But on the basis of the evidence on the Order Paper—namely, the amendment tabled by the Conservative Opposition—I gather that this is due to end immediately we commence our discussions on this Bill. I do not complain, either to the hon. Member for Lancaster or to anyone else, about some controversy in the House on any subject on which it is sensible to have controversy, although I doubt very much the common sense and judgment of the Opposition in putting forward an amendment such as that on the Order Paper.
The principal provisions of the Bill are those which were contained in the Social Security Amendment Bill which received an unopposed Second Reading on 1st July last. However, progress on that Bill was prevented by the intervention of a General Election. The inevitable delay arising from that happy event—if I may describe it as such to the Conservative Opposition—makes it essential to proceed urgently with this legislation. Any failure to do so would be bound to cause confusion, inconvenience and administrative difficulty to employers and would put at risk the effective introduction of the new earnings-related contribution system, the desirability of which is agreed in all parts of the House.
1112 It is, therefore, all the more surprising that, with this background and in these circumstances, the Conservative Opposition, after giving an unopposed Second Reading to the previous Bill in July—while saying, as they were entitled to say, that there were some provisions in the Bill which they wished to oppose and discuss in Committee—have now decided that they intend to vote against the whole of the contents of this Bill on Second Reading.
I want to tell the Opposition exactly what are the implications of the amendment on the Order Paper and what the results would be if their amendment were carried tonight. First, the contributions which could be levied with the start of the earnings-related contribution system in April 1975 would revert to the levels set in the Social Security Act 1973. If that were to happen, neither the Government nor the National Insurance Fund could pay the £10 and £16 pensions which were brought into operation on 22nd July, let alone put into effect any increases.
In that context, the Conservative Opposition spoke during the General Election campaign about the desirability of increasing pensions as early as January 1975. But it would not only be a reversion of the contribution levels to those set in the Act of 1973, which would quickly bankrupt the National Insurance Fund and prevent the payment of £10 and £16 pensions. We should automatically revert, unless there was further legislation, to pensions and levels set in the schedules to that Act; that is, pensions of £6.75 and £10.90.
I do not believe that any hon. Member who is as intelligent and as experienced as the right hon. and learned Member for Surrey, East (Sir G. Howe), who leads for the Conservative Party on this subject—even though he was one of the principal architects of the Industrial Relations Act—can have failed to look at the full implications of the amendment on the Order Paper. Not only would we go back to the levels of 1973 if the amendment were carried, but we could put at risk the introduction of an earnings-related system of contributions which has been debated and agreed long ago by the House.
The Conservative Party, not for the first time in recent months, is certainly 1113 not carrying out the rôle of a responsible Opposition by tabling this kind of amendment, but is culpable of dangerous irresponsibility in handling the official Opposition.
§ Mr. David Mitchell (Basingstoke)
I have been listening attentively to the Minister. So that we may judge the validity of the point that he has been making, will he say by how much the increases proposed in the Bill would bear on the average employee in industry?
§ Mr. O'Malley
That is precisely what I am about to do. One thing that is in my favour—although perhaps it is not in my favour—is that I have already made a speech on the Second Reading of a virtually identical Bill. If hon. Members want to equip themselves with the kind of facts that I shall be using, although I hope to deploy some new facts, they are available and have been set out in detail. I am sorry that the hon. Gentleman has not had time to do that before coming to a serious debate, although I appreciate that Members of Parliament are often very busy.
§ Mr. O'Malley
The hon. Gentleman must not get touchy. I am not attacking him for not reading my previous speech, although he might have done so.
The purpose of the Bill, which will be welcomed by pensioners, is to continue to bring enough money into the National Insurance Fund to pay the higher level of retirement pensions and widowhood and other benefits—that is, the £10 and £16 pensions and the further increases in line with national average earnings envisaged in the uprating Act of the previous Parliament. Therefore, the purpose is to maintain a level of pensions and an improvement in pensions which was certainly envisaged in the Social Security Act 1973 of our predecessors.
With that in mind, the most useful way for me to proceed will be to describe the impact of the Bill, as the hon. Member for Basingstoke (Mr. Mitchell) requested, on the various classes of contributors.
In this context it is important to bear in mind the merits of an earnings-related contribution system. The difficulty and the great defect of a flat-rate system is that, when it is desired to raise large 1114 amounts of money through such a system, automatically by loading on to the flat rate one begins to impose intolerable levels of contribution in percentage terms upon those who are the lowest paid. Indeed, we had reached that situation long ago. That was one of the reasons why the Boyd-Carpenter graduated proposals were brought forward. Therefore, an earnings-related system is more equitable in that it means that there is payment according to ability to pay. I think one of the few successes following pensions debates which have taken place in the House over the last decade is that we now have an agreed system of earnings-related contributions in operation as from April 1975.
In that context of earnings-related contributions and with a background of the need to bring in substantial amounts of money to pay retirement pensions at the new higher levels for a rapidly increasing pensioner population, the most useful thing I can do is to examine with the House the impact of the Bill on the various categories of national insurance contributors.
I will first consider the contributions which employees in class 1 will pay out of their wage packet.
§ Mr. Kenneth Clarke (Rushcliffe)
The Minister is kind to give way so quickly. Before he turns to class 1, which I understand he is about to do, we on this side would be interested to have an explanation of what has happened to Clause 1 of the Bill as presented to the House on 1st July. That Bill began with important provisions easing the impact of the earnings rule. We trust that the Minister with his customary ingenuity has found an alternative way of dealing with that, because the provisions do not appear in this Bill. We should be grateful for an explanation of what means he has adopted to replace Clause 1 of the previous Bill.
§ Mr. O'Malley
I had intended to give that explanation. I will do so now. As the hon. Gentleman will be aware, the Government announced in the Gracious Speech that there would be further upratings of social security benefits. The hon. Gentleman will therefore expect, as we are bound by law to provide an up-rating not later than next July, that there will be an up-rating Bill coming before 1115 the House at some time in the future. We considered that we should put into this Bill that part of the business dealing with contributions and that the matters to which the hon. Gentleman referred, and specifically the earnings rule, would be better dealt with in an uprating measure which contained schedules giving levels of benefits rather than in this Bill. I assure the House that the Government certainly do not intend to go back on the operation of the earnings rule.
§ Mr. Clarke
I am reassured by that. I may have misunderstood, and I hope that I did. Does the Minister mean that the improvements in the earnings rule contained in the first form of this Bill will now be delayed as a result of this decision and will not come into effect in April 1975, as the provisions of this Bill will, but will have to wait for the next uprating Bill, so that the easing of the earnings rule is now being pushed back by some months to at least July of next year? Is that the position?
§ Mr. O'Malley
The hon. Gentleman is trying too hard. There is no intention of pushing back the operation of an eased earnings rule beyond April. The earnings rule is operating now. Legislation is needed to deal with the post-April situation, and in the uprating legislation which we bring forward all those matters will be dealt with. It was merely a matter of drafting advice as to the most appropriate place for specific pieces of legislation to be. I assure the House that there is nothing sinister about it.
For class 1 contributors the significance of the introduction of earnings-related contribution at 5.5 per cent. in April of next year for employees is that the majority of men and women in employment will pay reduced contributions. On 1st July the hon. Member for Rushcliffe (Mr. Clarke) complained that I was putting a favourable gloss on the contents of the Bill, so I think I should give a few examples to demonstrate the point I have made. I am not making any particular party claims here. It arises because of the nature of the earnings-related system.
All male employees up to well above £60 a week who are not contracted out will pay reduced contributions. I will take it at the top of the range, because 1116 there are reductions all the way lower down. Even a man on £62 a week not contracted out will pay 24p less a week than under the existing arrangements. Even at the ceiling of the scheme—that is, roughly one and a half times national average earnings at the appropriate date —the employee not contracted out will be faced with an increase of only 13p a week. So throughout the whole of the range with the exception of those at the very top there will be reductions for those who are not contracted out.
As for those who are contracted out, there will be reductions in contribution again up to 60p a week. At £62 a week an employee at present contracted out of the present graduated arrangements or partially contracted out will pay 2p a week more. A man on the ceiling of £69 a week will pay 39p a week extra.
Whatever Government are in power, as we move the ceiling up, as Governments will move the ceiling up, as was envisaged in the Social Security Act, as the then Secretary of State and Under-Secretary made clear, inevitably we shall be drawing from a bigger band in money terms and therefore those contributions will rise because the ceiling will rise. That is one of the essential features of the scheme which comes with earnings relation but which is notably absent from a flat-rate scheme.
In the case of female employees not contracted out, up to £62 a week there are reductions in the employee's contribution. For a woman earning £69, there is a 26p a week increase. For women contracted out of the present arrangements, although there is a reduction at the bottom of the earnings ladder, there are increases of 17p a week at £23, 16p a week at £46, and 19p a week at £62. That is in the middle of the range. That reflects the levels of contributions and the disparities of treatment as between men and women in the older scheme. The fact remains that the majority of employees will be paying reduced contributions as from 5th April 1975.
I know that the right hon. and learned Member for Surrey, East has objections in relation to the self-employed and other matters. Is he really saying that those matters are incapable of discussion in Committee? Is not that the normal way to deal with these matters? Are 1117 Opposition Members really opposing and putting at risk the introduction of the whole of an earnings-related scheme which can help all the class 1 employees, the bulk of employed people in this country? That is what would happen if their amendment were carried.
We are already up against au enormously tight timetable. There are already enormous administrative difficulties both for the Department and for employers, and I ask the Conservative Opposition to deal with this matter in the normal responsible way, through the Committee and Report stages, where matters on which we are at issue can be properly discussed, so that we can make proper progress in the normal parliamentary manner.
Secondly, with class I contributors, what about contributions of the employers? My right hon. Friend the Secretary of State announced in May that it was estimated at that time that a contribution level of 8.75 per cent. would be required from employers. In fact, we were happy to be able to say that that 8.75 per cent. estimate could be reduced to 8.5 per cent., where it stands in the Bill. Therefore, it leaves the share of national insurance contributions as between employers and other contributors roughly as it is in the existing arrangements.
The broad pattern is one of reductions in contributions paid by employers in respect of lower-paid workers and increases for the higher-paid workers. The range of increases is between 12p and 69p a week higher than the 7.5 per cent. level of contribution al the Social Security Act 1973. There was no argument about this in July, that by proposals of this kind, and only this kind, one can pay better pensions.
The country must be clear that if we are talking of helping our retirement pensioners, at a time when the working population is hardly likely to grow at all, and the pensioner population is quickly rising, that alone means that there is a bigger burden to be shared through taxation and contributions by employers and employees. We cannot provide better pensions without imposing bigger burdens on the working population as a whole, on industry and on the resources of the nation.
1118 Thirdly, there is a minor but nevertheless welcome change in the Bill which affects the contribution requirement by retirement pensioners with some employment—those people who draw a pension but who are operating within the earnings rule, those over retirement age but not retired, who cannot meet the retirement contributions in category A, and women over pensionable age, not retired and subject to the half test. We propose in our White Paper "Better Pensions" to get rid of the half test. It has been the constant bane of all Members of Parliament and a grievance to large numbers of married women who, having paid contributions for a significant part of their working lives, found themselves getting little or no pension for their contributions.
What we propose to do in this Bill is to take away completely the liability on those people who have limited resources. In the 1973 Act there was a requirement for 0.6 per cent. contributions. We are removing any such liability. It is a small relief but we think it will be helpful and will be appreciated by the people concerned who, although they make no payments, will be covered for industrial injury purposes.
Continuing the list of the various categories, I come to two categories which concern the Conservative Opposition. I will deal first with the position of opted out married women and widows and secondly the self-employed, in respect of which I understand there is some difference between us. In fact, it amazed me that the Conservative Opposition should have believed that they could make enormous political mileage out of this during the General Election. The way they treated what I shall demonstrate was the structure of a Bill which they passed when in government was not only dangerously irresponsible but showed how they were prepared to wriggle in every way possible to get any short-term political advantage which seemed to be going.
The Opposition complain that the contributions of opted-out married women and widows, which we set at 2 per cent. as opposed to 0.6 per cent. in the 1973 Act, mean that those women will be paying an unfair share of the cost of better pensions. I ask the House to judge this. That statement is a gross distortion of the 1119 truth. If I were speaking outside the House I would use rather stronger language, although I would be going beyond the normal parliamentary conventions if I were to do so in the House, and certainly with you in the Chair, Mr. Deputy Speaker, I would not attempt to do that because I know that you would stop me immediately.
I want to illustrate what hon. Members opposite describe as an unfair share of the cost of better pensions. I say this against a background of 8 million pensioners and a work force growing hardly at all—that is what all the estimates show— for the rest of this decade and indeed into the 1980s. Hon. Members complain that we are putting up the married women's and widows' contributions to 2 per cent. and that we are being unfair to these married women.
Let us see what the change will be. I am dealing with a non-contracted-out married woman on the reduced rate under the present arrangement and comparing it with the new arrangement in April 1975 about which the Conservative Opposition are complaining. What does "grossly unfair treatment" mean? It means that a woman on £23 a week, not contracted out, will pay 38p a week less than she is doing now. A woman on £46 a week will pay £1.18 a week less than she is paying today. It goes on, up to the ceiling, so that a woman on £69 a week will pay £1.57 a week less than she is paying at the moment.
Taking contracted-out women, a woman on £23 a week will pay 1p more. Because of the incidence of the scheme it hits the person who is lower down. In the case of a woman on £46 a week, contracted out, the sum is 80p less; £60 a week, £1.33 less, and £69, £1.19 less. That is what hon. Members opposite call gross unfairness to married women.
I know what the argument is. The Opposition say that those married women were paying contributions and that those contributions brought in graduated benefits. Well, that was a good deal, was not it? For every £9 that they paid, they got an uninflation-proof 6d—2½ new pence. If they had earned that 2½p in 1965 and retired in 1995, they would get 2½p in money terms, unchanged. With decreases of this kind at a time when 1120 there is a chronic need to help retirement pensioners, and when there are heavy burdens on single women, married men and employers, especially when they have liquidity problems—we must not underestimate the difficulties of industry in the present economic circumstances—the Conservative Opposition tell that kind of tale to the House. I shall be amazed if they have the full support of their own party, let alone of the other parties in the House whose Members will be taking the trouble this evening to listen to the facts of the case.
§ Mr. Kenneth Clarke
The comparisons which the Minister has just drawn are entirely comparisons between what people will be paying and what they paid when paying Boyd-Carpenter contributions. It is no good attacking the level of the benefit under the Boyd-Carpenter scheme. They will not have the benefit. They were buying a commodity which will be taken away completely, so, needless to say, they will pay nothing in future for the Boyd-Carpenter sixpence, because that benefit has been withdrawn.
Will the Minister make the proper comparison, since his Bill is to amend the 1973 Act, between what people will pay under his Bill and what they would have paid under our legislation if it remained unamended? Will he not concede that there is this obvious difference, that the graduated contribution is being more than trebled for this category of women, and will he show where in the rest of the Bill any other category is treated in that way?
§ Mr. O'Malley
I can tell the hon. Gentleman straight away that if that graduated pension scheme were put on sale in any shop, the Department of Prices and Consumer Protection would quickly have to send its inspectors in. There was no real benefit. It was entirely derisory. But what will interest women is whether there is an increase or a decrease for them next April. I have demonstrated on the figures beyond peradventure, as the lawyers say, that there are substantial decreases for those women.
If the hon. Gentleman then says that that is all very well but the level of contribution which these women will be paying is higher than was assumed under the Social Security Act 1973, I take that 1121 as a fair question and I answer it at once.
Everyone will be paying more under our proposals—[Interruption.] I shall deal with the matter if only the hon. Gentleman stops muttering and shaking his head. Everyone will be paying more under our proposals than under the Tory Social Security Act 1973. The reason is plain. On the actuary's advice which the then Conservative Government received, all that could be paid in retirement pension in real terms out of the money which came in under their contribution levels was £6.75. That in itself was inadequate then, and, what is more, one could not pay the £10 and £16 pensions from the level of contribution which the Tories set in their 1973 Act.
I do not for a moment hide that employed persons will be paying 5.5 per cent. instead of 5.25 per cent. I do not deny that employers with class 1 contributors will be paying 8.5 per cent. instead of 7.5 per cent. I do not attempt to hide that the women to whom we have referred will be paying 2 per cent. instead of 0.6 per cent.
I make no apology for it. We have to raise that kind of money in order to pay decent pensions. There might be a point in the argument if we were putting massive increases on the categories to which the hon. Gentleman refers, but, on the contrary, even at 2 per cent. they are to have substantial, and in some cases quite massive, reductions. I am sure that the Conservative Opposition are misjudging the mood of the country. This country is prepared to pay better pensions and to pay the contributions necessary to provide them.
Now, I come to the self-employed. As in the case of the married women who exercised the option, the Conservative Opposition complain that we are putting an unfair share of the necessary financial burden on many self-employed persons.
If it be true that we are putting an unfair share of the burden on these categories, it must follow that someone else is to have an unfair privilege. What should be realised is that from the 2 per cent. £47 million will come, and from the levels set for self-employed contributors £21 million is estimated to come in a full financial year. That is £68 million. If we drop that £68 million— 1122 any hon. Member can look at the state of the National Insurance Fund—where do the Opposition propose that we should raise £68 million? Would they put up the level of employers' contributions from 8.5 per cent. to some higher figure? Do they suggest putting up the level for employees from 5.5 per cent. to some higher figure? Or do they want extra money from a Treasury supplement? They have always opposed an extra Treasury supplement. Let us work our way through the logic of the situation.
§ Mr. David Mitchell
I am grateful to the hon. Gentleman for giving way, because I am still probing for an answer to the question which I tried to put earlier and he has now come to the edge of it. He has given us the actual amount, the additional sum, which will be raised from the self-employed. What will be the additional sum raised in totality from employees?
§ Mr. O'Malley
The figures as I have them here are as follows; from employers £2,821 million; from employed earners, class 1 contributors, £1,748 million; and from the self-employed and voluntary contributors, £221 million.
Let us quickly look at the position of the self-employed. In this argument the first point to note is that the structure of self-employed contributions—that is, class 2 and class 4—was established by the Conservative Government, not by a Labour Government. Of course, if the Tories had been introducing 5 per cent. for class 4 contributors in April, there would have been some objection from people who do not like to pay any new kind of tax or contribution. But the formula which was set down in 1973 was based on current earning levels then. It was to charge the self-employed man on average earnings from Schedule D income something over 60 per cent. of class 1 contributions for comparable benefits. This ratio, subject to soundings and the need to move class 4 contributions in percentage figures, is roughly maintained in this Bill for that average income on Schedule D. There is virtually no change.
Just as he refused to defend his right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) in the debate on Friday, the right hon. and learned Member for Surrey, East is now trying 1123 to disown the very pension structure which was passed by his Government in 1973.
We are making no substantial change in the ratio envisaged as between self-employed and employed persons in the 1973 Act. What we say, however, is that we should assist the self-employed with lower income, which the Social Security Act did not.
§ Mr. R. A. McCrindle (Brentwood and Ongar)
The hon. Gentleman will agree that it is easy to mislead the House by citing pence per week up or down in one category and percentage increases or decreases in another. Will he do something for relatively simple people such as myself and compare in terms of pence per week what the self-employed on £62 and £69 a week will pay in the same way as he has done for employed persons?
§ Mr. O'Malley
Certainly. That is precisely what I shall do. The hon. Gentleman should know that, since I, too, am a simple man, I prefer to put such things in simple terms, just as he does.
When we put up the level of contributions from 5.25 per cent. to 5.5 per cent. and, in respect of employers, from 7.5 per cent to 8.5 per cent., it was necessary to maintain a balance in the ratio between the payments of one category, the self-employed, and the other category, employed persons. There were only two ways of doing it. We could have put the flat-rate contribution up to £2.70, which with the Treasury supplement would have raised about £25 million. But that contribution had already risen in August, and large numbers of self-employed people—between one-third and one-half I cannot be more precise—are in receipt of Schedule D incomes at or below £1,600 a year. The Government do not want to load on them an extra 29p a week.
We therefore looked for other ways of raising money and we used the formula of earnings relation. We therefore held the class 2 contribution at £2.41 whereas under the traditional formula it should have gone up to £2.70. I make no apologies for trying to help the lower-paid self-employed.
The Conservative Opposition spoke as though they would be uprating the figure 1124 for class 1 contributions in the range between £1,150 and £2,500. That is not true. The Under-Secretary in the Tory Government said in Standing Committee in January 1973 that it was their intention thatthe upper contribution limit in the new scheme should broadly correspond to 1½ times national average earnings."—[OFFICIAL, REPORT, Standing Committee E, 25th January 1973; c. 279.]All we have done it to move the range in which class 4 contributions will be paid, as the former Under-Secretary intended, to between £1,600 and £3,600 in order to reflect the movement in wage levels since that time.
Would the Opposition instead put up the rate to £2.70? If they would, I understand their thinking, but I oppose them because I would not want to impose another 29p on the lower paid. Secondly, do they agree that the range has to be between £1,600 and £3,600?
§ Mr. Kenneth Clarke
The Minister slides magnificently, and he has not answered the question my hon. Friend put to him. It is not true that the Government have simply moved the band of incomes. They have raised the percentage from 5 per cent. to 8 per cent. If the Minister cannot answer my hon. Friend, will he accent that the difference is that self-employed contributors earning £3,600 a year will find that next April their weekly payment will rise by £3.08 overnight? That is the figure the Minister has not yet mentioned. As my hon. Friend said, he mentioned the figures and bands per week very readily in other categories. Will he get down now to the extra £3 a week that some of the self-employed will be paying?
§ Mr. O'Malley
Of course I will. We now have a common basis for discussing the subject. The Opposition agree that one of the options was to put the figure up from £2.41 to £2.70. Presumably they would have used that course and they would therefore have started at a £2.70 base in order to maintain the ratio in the 1973 Act. Secondly, we are agreed that the range of earnings on which class 4 contributions should be payable should be between £1,600 and £3,600 a year. The difference between the parties is therefore narrowed. We say that the figure should be £2.41 plus 8 per cent.
1125 between £1,600 and £3,600. The Opposition say that it should be £2.70 plus 5 per cent. between £1,600 and £3,600.
Now I shall use the figures, because I have been waiting to do so. To use the Opposition formula would mean that self-employed persons with incomes of £11 a week—and there are some of those—would be paying 29p a week more than they will pay under our proposals. A self-employed person at £23 a week would be paying 29p a week more. It is not until we reach the case of someone earning £46 a week that there is a difference of 17p, and at the ceiling there is a difference of between 63p at £62 and 87p at £65. This is the great divide. That is the basis for voting against the Bill and for putting at risk the whole reintroduction of an earnings-related system.
§ Mr. McCrindle
I must press the Minister on one point. He makes great play of saying that there will be a reduction of 24p per week to the employed man on earnings of £62 a week. I ask him a straight question. How much more or less will the self-employed man on £62 a week be paying? If he can tell us that, we can then proceed on a basis of straight comparison.
§ Mr. O'Malley
That is precisely what I have been doing. We have agreed the basis of our discussion and I have shown what the difference is between us. We are re-introducing the class 4 system of contributions which the Conservatives introduced in legislation. It is their structure, and the difference between us ranges from 29p less to 87p more a week. That is what all the argument is about.
The remainder of the Bill is wholly beneficial. There is a clause enabling friendly societies to institute occupational pension schemes. The rest of the Bill is either technical or consolidating. My right hon. and hon. Friends and I are proud of our record and policies on pensions, and we reject those of the Conservative Opposition, who say that they are willing to have better pensions but when it comes to pasing legislation to enable them to do so funk it and try to make cheap political mileage out of the issue.
§ Mr. Deputy Speaker (Mr. George Thomas)
I should have informed the House earlier that Mr. Speaker has selected the amendment standing in the 1126 name of the Leader of the Opposition and his right hon. and hon. Friends.
§ 6.16 p.m.
§ Sir Geoffrey Howe (Surrey, East)
In the light of that delightful news, Mr. Deputy Speaker, I beg to move, to leave out from "That" to the end of the Question and to add instead thereof:this House, while welcoming the provision of improved social security benefits and recognising the need to meet their cost, declines to give a Second Reading to a Bill which seeks to impose an unfair share of the necessary financial burden upon many self-employed people and upon those married women and widows who have elected not to pay insurance contributions at the full rate.I begin by expressing my astonishment at the venom with which the Minister of State has chosen to attack the amendment. It is the extent to which he has been driven into misrepresenting the essentials of the case which leads us to conclude that he is attempting to conceal his own sense of deep unease at what he is putting before the House.
I do not wish to speak at too great a length because the points, although of great importance, are simple ones. Our amendment embodies feelings which are strongly and deeply held inside and outside the House. I wish to make plain the basis of our opposition to the Second Reading of the Bill. The reasons were clearly foreshadowed from the Opposition Front Bench on the Second Reading of the Bill that was before the last Parliament. We are not opposed to improving social security benefits. We welcome that. We fully recognise that they have to be paid for, and we were delighted to hear the lucid way in which the Minister of State expounded the merits of the earnings-related contributions system for flat-rate pensions, to which, as a matter of principle, he was vigorously opposed not very long ago. It may be right to describe earnings-related contributions as closer to a social security tax, but even so it is a sensible system of paying for benefits which we entirely accept because we introduced it.
The Minister expounded with much pleasure the benefit to the lower-paid employed persons through the reductions in contributions involved. Of course, we agree with him because that is part of the concept we introduced.
1127 However, we challenge the basis chosen by the Government in the Bill for distributing the total burden of paying for improved benefits. First we challenge it, as the Minister has anticipated, because of the very large absolute and substantial proportionate increase in the burden of contributions that will be borne from next April by upwards of 1 million self-employed people. That is not simply in our view without justification; it is so unjustified as to be harsh and vindictive. The burdens will fall on a huge range of people who are self-employed, from greengrocers to architects, from milk farmers to chemists and from barrow boys even to barristers.
§ Sir G. Howe
The hon. Member for Newham, North-West (Mr. Lewis) has mentioned Members of Parliament. They are self-employed, but from next April they will be changed to employed, which is why I and, no doubt, the Minister have not declared an interest in the Bill.
The second reason we oppose it is that it imposes a burden on about 5 million married women and widows who have chosen to pay national insurance contributions, as they have been entitled so far to do, at the reduced rate. We are opposed to that because it represents a very large step towards the outright abolition of the married women's option. The Labour Party is committed to the abolition of the married woman's option, and we believe that is wrong, and that is why we are committed to opposing it.
The Minister did not make a fair comparison. The only fair comparison, in considering the position of married women next April, is between what they would have been paying under our legislation and what they will be paying under the Bill. On either basis the Boyd-Carpenter scheme is disappearing. There are sniggers from the Government Front Bench, but it should be recalled that the former hon. Member for Sowerby said that he wished that his party would stop discussing the Boyd-Carpenter scheme as a swindle. It was no such thing. It would have been replaced next April by our own second pension scheme, but as a result of the Government's actions it is 1128 being replaced by nothing, and there will be a yawning gap.
Married women who have opted to pay the lower contributions will be paying three times as much as they would have been paying under our legislation. Even with all the sleight of hand that the Minister has it is impossible for him to disguise or conceal such an increase. It is impossible for him to suggest that that is fair compared with the increase in contributions by the ordinary category of employees from 5¼ per cent. to 5½ per cent—up by one-twentysecond. It is part of the Government's policy to abolish the married women's option and to treble the contribution from next April. Our concern about this is an important part of our amendment.
The Minister acted as though he was genuinely astonished and surprised—indeed, shocked—that our amendment should be before the House, but we made perfectly clear during the earlier Second Reading in the summer that we were to raise these matters in Committee. He had notice of these matters from the beginning of July. Since then he has had months, during the parliamentary recess, to contemplate these matters. The Bill proposed at that time lapsed and then the General Election arose. Throughout the General Election campaign, and in our manifesto, we repeated our contention that changes being proposed were unfair.
As news of the Government's intentions spread throughout the country storms of protest arose in all corners of the land. I assure the Minister that his legislation needed no misrepresentation by us to provoke the storm of protest. The proposed legislation seemed to cry out in such a way as to attract protesters. I have received hundreds of letters from colleagues, from individuals and from organisations representing the self-employed, and I refer the Minister as well to what the Press has said on the matter.
We hoped that the Government would have taken account of our objections we voiced in July and would have reconsidered their proposals. Imagine our surprise to see the Bill, which is generally good in its intention, reintroduced without any changes made on the points we raised. The Minister appears to speak with doom-laden surprise about our approach, and he seeks to blame us for 1129 bringing the National Insurance Fund towards bankruptcy. He accuses us, with breathtaking absurdity, of irresponsibility.
People who are concerned about the state of the National Insurance Fund and about the prospect of higher pensions could be reassured if the Government were now to say, as they should do, that they recognise the importance of the points we have been making in recent months, and if they were to undertake to make a change in Committee. There would then be no trouble. If our amendment is carried tonight, as I hope it will be, and the Minister and the Government slink back into Alexander Fleming House, they could reintroduce the Bill next week. We would not object to that; we would facilitate it. It is sheer nonsense to place any responsibility for the situation on the Opposition. We are seeking to do our duty of raising important points on behalf of the citizens of this country.
Since the 1946 legislation self-employed people have always paid contributions to the National Insurance Fund, and this is in order, because they qualify for certain benefits. They have always paid at a lower rate than that of the combined employee-employer contributions, and that is equally in order, because they were never entitled from the outset to unemployment benefit or industrial injury benefit, nor, initially, did they get a full right to sickness benefit, although later there was a small change in that respect. The position relating to the self-employed has endured, with certain changes, until today.
The Social Security Act 1973 introduced a new principle of graduated contributions for flat-rate benefit up to a maximum of £2,500. It is right that that should apply also to the self-employed. The class 4 contribution was invented and there has been no argument about the principle involved. In every letter I have written and in every speech I have made on this matter I have accepted responsibility for the principle of graduated contributions.
However, there is a profound argument about the method by which, and the scale on which, the principle should be applied. We proposed a band of £1,150 to £2,500, at 5 per cent. from next April. There may be a case for some change in the band because of inflation, but there is no case for hiking up the percentage in 1130 the way proposed. The Government are raising the band from £1,600 to £3,600—together with a change in the rate from 5 per cent. to 8 per cent.
In order to measure the impact of this we must bear in mind that the contribution is not tax deductible. The effect on, for instance, a person earning the maximum £3,600—
§ Mr. O'Malley
I am following the right hon. and learned Gentleman and I am grateful that he accepts that the Conservatives were responsible for the introduction of the class 4 contribution and the structure which is now under debate. Can I take it that he accepts, as did the previous Secretary of State and the previous Parliamentary Secretary, that the band of £1,150 to £2,500 was to be moved to take account of earnings, and that a new band would be justified?
§ Sir G. Howe
I do not accept the precise figures, because the Government have better access to figures than I have; but with proposals on so substantial a scale as those now being put forward we are all the more entitled, bearing in mind that we are in an inflationary period, to challenge an increase from 5 per cent. to 8 per cent.
Our proposals, in relation to a man earning the maximum on our original band, would have meant an extra £67, whereas on the elevated band which the Minister has suggested—I am not sure how the picture of an elevated band will be seen in the minds of people reading HANSARD—a man earning £3,600 a year will have to raise, as a lump sum, £160. He will have to raise it out of taxed income. Leaflets issued by the Department make clear that he will get no extra benefits at all. The effect of this—because the extra contribution is not tax deductible —is that the man will have to earn in cash an extra £238 to stand in the same place in cash terms; and this takes no account of inflation. There are similarly harsh burdens for those on lower incomes.
In reply to our criticism concerning the position of married women, in which we said that the situation would be different if they were to have a massave increase, the Minister said that they would not have to pay more but rather a little less, but in the case which I am now using as an example there is a massive increase of 1131 £238, which will have to be paid by the self-employed in a lump sum. This is rightly seen to be an unjustifiable increase in what amounts to, in effect, a new extra tax.
No doubt our proposals would have aroused some unpopularity as they began to operate, but the position would not have been unreasonable. They would have operated at a lower level—I shall give details of that in a moment—and they would have operated under our Government, under which income tax and other taxes would not have been going up. Under this Government, income tax payable by these self-employed people has already gone up by 10 per cent. Who knows what the Chancellor of the Exchequer may have in store for us next week?
The burden on self-employed people is even greater because most of them carry on their businesses in premises rated as business premises. They have received no relief from the soaring burden of rates. Self-employed shopkeepers have seen the average rate per shop increase since 1956–57 by no less than 529 per cent. It is the piling of burden upon burden that we criticise—rising taxes and rates and then the unfair and unnecessary increase in this surcharge.
I have tried and totally failed to understand the reasoning behind the change the Minister of State has outlined. I invite the House to study the history. In 1946 the self-employed contribution was about 68 per cent. of the combined employer-employee contribution. By 1972 it fallen substantially, to about one-third. Our 1973 Act proposed raising it to about a half: 53 per cent. is the figure I have been given. The Bill goes almost all the way back to the 1946 relationship, practically to the two-thirds then operating.
That is felt to be wrong, for a number of reasons. First, since 1946 a whole range of new benefits has been introduced for employees, for which the self-employed are not eligible but for which they pay in their capacity as employers—graduated pensions, earnings-related supplement for unemployment, sickness and injury benefits and widows' allowance. Admittedly, the total cost of earnings-related supplement is not a large per 1132 centage of the total burden on the National Insurance Fund, but it is something which the self-employed do not receive but for which they pay. They also pay as employers for the redundancy payments for which they do not qualify, on top of all the other rising contributions. As employers, they pay high and rising contributions for their own employees. Under the Bill, the self-employed person who employs other people will have his contribution towards their benefits raised from 7½ per cent. to 8½ per cent.
All this is happening at the same time as the self-employed see reductions in payments by their employees. The Minister was taking credit for that only a few minutes ago. He took credit for the fact that an employee earning £62 a week would be paying £13 a year less in contributions. Yet at the same time, perhaps even in the same shop, the self-employed man earning £62 a week will be having to pay about £120 extra a year. That is the real comparison—the increase in the burden on the self-employed contrasted with the position of the employed man. That is why it is idle for the Minister to speak about the need to spread the load on the working population as a whole. We do not challenge the need, but let us look at the way in which the load has been spread. Look at the unnecessary changes the Government have introduced.
§ Mr. O'Malley
The lines on which the right hon. and learned Gentleman's argument has developed suggest that he would have been in favour, and is in favour, of keeping the rate at 5 per cent. within the £1,600–£3,600 band. To maintain the ratio set down in the Social Security Act 1973 he would therefore be driven to put up the flat-rate contribution, the class 2 contribution, from £2.41 a week to £2.70. That would surely be hurtful to the substantial numbers of self-employed people with very low incomes. Is it not better to try to give some relief to the people at the bottom end of the self-employed category? Is it not much more equitable to try to spread the load among self-employed people with higher earnings, rather than impose a further burden of an extra 29p on those with low incomes?
§ Sir G. Howe
I am not running away from the question, but it is not for me to 1133 be driven to accept this or that alternative thrown across the Floor by the Minister. I say that the alternative he has chosen is manifestly wrong and profoundly unfair, and that it is his business to take further advice from his Department and change the provision.
There is a variety of ways the Minister could have chosen. He could have increased the flat-rate contribution by a smaller amount, not going as far as the £2.70. He could have applied what his right hon. Friend foreshadowed, a larger increase in the contribution of employed people, which was to have been 8¾ per cent. but which has now come before the House as 8½ per cent. It would need the most modest increase on that much larger group of employed people to produce the £29 million we are talking about. To tilt the burden of helping the lower-paid self-employed wholly on to the higher-paid self-employed in this way has produced a result that is nonsense. It has justly earned the Government great unpopularity, and will continue to do so.
The comparison between the self-employed contribution and that of the employee-employer may not be the right one. The right comparison may well be between the burden on the employee and the burden on the self-employed person, because the combined contribution of employer and employee can to a large extent be directly added to the price charged by the employer. In practical terms, it can be counted as a cost of the business, whereas for the self-employed person there is no escaping the fact that this looks and feels more and more like what the right hon. Member for Down, South (Mr. Powell) referred to the other day as a tax. It is a tax.
In 1946 a self-employed person was paying about 1¼ times as much as the employed person. Now, even the basic figure of £2.41 is almost 100 per cent. of the amount paid by the employed person. Therefore, one does not need to raise the self-employed person's graduated contribution much more to put him back in the same relationship to the employed person as he was in 1946. The increases should certainly not have been made on this monstrous scale.
I should like to make one other comparison. As a result of the Bill the contribution to the National Insurance Fund by the employee increases by 36 per cent. 1134 As a result of the Bill the employer's contribution rises by 34 per cent., but the self-employed person's total contribution rises by 100 per cent. That is a measure of the inequity and injustice.
The amount involved totals only about £29 million. It would be a small amount to raise in any one of several ways. The Government have chosen the worst, the most unfair and the most burdensome method possible. The small amount involved has produced the maximum sense of injustice. Giving the Government the benefit of some doubt, I can only conclude that they have acted in this way because they have wholly failed to appreciate what they have done. They have not appreciated, for example, the important rôle in our economy of small businesses, mainly run by self-employed people.
§ Mr. Edward Gardner (South Fylde)
Will my right hon. and learned Friend keep well in mind that there is now in existence a pressure group, which started in my constituency, the National Federation of Self Employed? This group now has hundreds of members throughout the country, and they are very grateful to my right hon. and learned Friend for the support he has already given them.
§ Sir G. Howe
I have that organisation well in mind. I am grateful to my hon. and learned Friend for his intervention. It is interesting that as a direct result of what the Government have done this new organisation has sprung into existence. The Minister of State and his right hon. Friend the Secretary of State may find that they have almost inadvertently set in train a middle-class revolution, the first national wave of Poujadism, provoked almost unintentionally. The Minister has failed to appreciate the rôle played by self-employed people in our economy.
The Minister's proposal has been condemned by the Economist as a heavy swipe at the self-employed. The Daily Telegraph said that it:typifies a growing tendency for governments to treat with respect only groups which have a corporate voice …Hence the National Federation of Self-employed. The Times said:There can be no justification for this inequity.That is the view which I have put before the House. It is a view so clear 1135 that one can only suspect that other motives exist on the part of the Government. They may be unconscious motives. It seems that they have a total lack of sympathy with and understanding of people who work for themselves. May be that leads them into a campaign against men and women who are sufficiently self-reliant and independent to be self-employed. It is possible that psychologically or in practice such people have no place in the Government's vision—Heaven help us—of a Socialist society. It is for that reason that we oppose this measure with such determination. We do so because in practical terms it represents an intolerable injustice upon two groups of people who are entitled to have us represent them in this House.
§ 6.42 p.m.
§ Miss J. Maynard (Sheffield, Brightside)
I come to this House to represent Sheffield, Brightside. It is an industrial seat and part of the great industrial city of Sheffield. It is a city which has more women workers than any city in the country. Some of them are widows. The issue which has been raised with me more than any other is that working widows have their pensions tacked on to their earnings and are thereby heavily taxed. Many of them feel that they would be better off drawing social security benefit although they would rather work.
I come here not only to represent Brightside but as the only sponsored Member for farm workers. My background was entirely rural until I became the Member for Brightside. I am the daughter of a smallholder. As I come as a sponsored Member for farm workers, I speak for one of the lowest-paid groups. At the moment farm workers are on a basic rate of £25 a week. It would be a mistake to think that the only people who like in poverty are pensioners. Low-paid people, and particularly those with families, are often living in poverty.
Low pay in agriculture goes with the tied cottage system. I regret very much that its abolition was not stated in the Gracious Speech. I have tabled an early-day motion to that effect. The tied cottage system is an issue that is vital to farm workers.
Although I represent an industrial seat, I have the full backing and support of my constituency to put forward the farm 1136 workers' case as an issue of vital importance. One reason for my having my constituency's unanimous backing is that my constituents understand the human problems brought by the tied cottage system in agriculture. The system means that a man's home is dependent upon his job. I believe that that is unacceptable. It would be unacceptable to me and I do not like to impose on others that which I consider unacceptable. Some people may be happy with the tied cottage system until they have a disagreement with their employer. They will then find that they can lose their job and the roof over their head. It means that if an agricultural worker has an accident and can no longer work, he will suffer the same fate. It means that those over 50 years of age are likely to be in trouble. It means that if a person is ill he has to struggle against his illness to avoid meeting the same fate. There cannot be a stronger sanction over anybody than the fear that the roof can be taken from over his head.
What is the end product of the situation? The result is that our people are often dragged through the courts despite the fact that they may have given years of honest work. None the less they are eventually dragged through the courts so that their employers may obtain possession of their homes. We can imagine what people feel in that situation. It costs my union £10,000 a year to defend those who go through the courts. We would rather put that money into the union's funds than into the lawyers' pockets. The present position is that 50 per cent. of farm workers live in tied cottages. As the number of farm workers has reduced, the percentage living in tied cottages has increased.
There is a connection between tied cottages and low pay in agriculture. It is clear that if the farmers were not able to offer the bait of a cheap house at the time of a housing shortage, they would have to pay the rate for the job. That is why the tied cottage issue is so important to farm workers. It is clear that it is closely related to low pay in agriculture. When people are consistently on low pay—and nobody has been on it more consistently than farm workers—they tend to lose their self-respect and self-confidence. This may be even worse than being on low pay.
The farmers were given security of tenure by the 1947 Act. If farmers are 1137 entitled to security of tenure, the farm workers must have a similar entitlement. They help to produce 50 per cent. of Britain's food. In doing so they help to control our trade gap. I am sure we all appreciate that we can do with all the help we can receive in that direction.
The position today is that agriculture is in a mess. I believe that that is because of our unconditional entry into the Common Market. The farmers allowed the Tories to take us into the Market without a whimper. The stockmen are now crying about their difficulties but they were asking for the end price. Of course, they could never be sure that they would get it. Today we have high prices in the shops for beef but low prices for the farmers in the markets.
I have a long memory of agricultural matters and I remember that the end price was never any good in the long term. The farmers have burnt their fingers and they are now demanding a return to guaranteed price support. They want the end price when prices are crashing through the ceiling and they want guarantees when they are in difficulties. In other words, they want the best of both worlds.
Agriculture was never better than under the 1947 Act. It then had security and the opportunity to expand. However, even with those conditions the farm workers remained low paid. That is their position today. They are on a basic rate of £25 a week. Agriculture has a twentieth century approach when it is considering new techniques but an eighteenth century approach when it is considering wages. Part of its eighteenth century approach is the persistent fight which is put up to retain tied cottages and low pay. I say that tied cottages must go and that they will go when a Labour Government—I hope it is this one—have the political will to do away with them.
§ 6.50 p.m.
§ Mr. Richard Wainwright (Come Valley)
I have the pleasant duty of congratulating a fellow Yorkshire Member on a most lucid and compelling speech. I and, I am sure, the House were impressed by the remarkable merger of town and country which the hon. Member for Sheffield, Brightside (Miss Maynard) now symbolises and which She expressed 1138 so eloquently. Although I am sure that the hon. Lady's views will not always pass without controversy, none can doubt the great sincerity of her concern about the low paid, on whose behalf she has put in such hard, practical work for so many years in North Yorkshire. I assure her that we share her concern about the low paid and, in particular, their plight during periods of rising prices. We all look forward to hearing many more contributions from her.
As always when national insurance is involved, we are treated by the Labour and Conservative Front Benches to an excursion into a fantasy world, a world which was once described by the right hon. Member for Leeds, North-East (Sir K. Joseph) as a vast rambling Gothic edifice. It is certainly a subject about which they are extraordinarily touchy. For example, there was the pained expression by the Minister of State in his suggestion that the Tory Opposition were jeopardising the whole of this magnificent Bill. That suggestion has already been shown to be nonsense. It has been shown that a better Bill could be facilitated through the House without serious delay.
Liberals are threatened with the story that we might bankrupt the National Insurance Fund, but we are quite unmoved by such a threat because the fund is, and has been for many years, nothing more than an elaborate myth in which, unfortunately, a large number of people have a vested interest. We believe that the whole system of contributions and actuarial reports, which is all a gigantic front and hoax, should be abolished and that we should have a straight social security tax to deal with the whole thing.
Another indication of rather strange thinking was the odd attitude shown by the Minister of State in the pained way he kept repeating that he had to maintain national insurance from a work force that was not growing, as though he were presiding—perhaps the Government expect soon to be presiding—over a primitive agrarian peasant economy in which one has to raise as many sons as possible in order to keep the primitive agriculture going.
The fact that our work force is not growing need not give us concern if only we can get the capital investment to put the horsepower behind it. We 1139 could gain an enormous increase in production, together with the valuable exports that would go with it, if we could give our static work force more power to its elbow.
The presentation of many aspects of the Bill has been given an atmosphere of certainty which is not justified by the facts. Leaflets have been put out to the public saying that the purpose of these contributions is to ensure that certain classes will make a fair contribution. But one only has to turn to the admittedly slender reports of the Government Actuary to find that he makes it clear that there is no certainty behind many of these suppositions. We agree with the comments made by Conservative Members about the unfair treatment of certain women workers in the Bill, and I do not need to repeat the cogent arguments advanced on that score. But on the situation of the self-employed under the Bill I want to emphasise the very slender basis of the calculations in the Bill.
The Government Actuary, in his 1972–73 report on the Social Security Act introduced by the Conservatives said with regard to class 4 contributions that… the estimate for the yield of these contributions is tentative; it seems likely that about one million persons will be liable to pay them.No one could claim that to be a very clear or firm statistical basis for justifying any particular level of contribution. In his report on this Bill, the Government Actuary makes it plain that there has been no important change in any of the assumptions he adopted last time.
The Government ought, first, to be a great deal humbler than they have been in recognising that the statistical basis about the self-employed is shaky and, secondly, should adopt the usual British maxim that the subject should be given the benefit of the doubt.
The burden on the self-employed should be kept within bounds at least until experience of the working of the legislation has shown exactly what people are paying in relation to the cost of their benefits. At the moment, everything is shadowy and it is misleading of the Government to indicate that there 1140 is some very firm basis for all their calculations.
It is clear, however, that compared with the Conservative Act of 1973 the percentage increase in the Bill in relation to the self-employed is almost twice as much as the percentage increase in relation to class 1 contributions. That can be ascertained by a simple correlation of the Government Actuary's report of 1972–73 and his report on this Bill. We should hear much more from the Government by way of an attempted justification of this very much greater increase.
I come now to the overwhelming reason which will lead the Liberal Party to support the Conservative amendment. We believe it entirely wrong that, in this time of inflation, which is not recognised by our tax system, unfortunately, contributions should be based on profits assessed for income tax. It is common parlance that today the tax system trips up gravely in not taking into account the facts of life with regard to inflation. This matter is being widely canvassed in relation to income tax and corporation tax, but the consideration is equally important in relation to the social security contributions of the self-employed, which are to be specifically based on their profits as alleged for the purpose of Schedule D income tax. It is part of our case that profits assessed for this purpose are not really profits but simply the results of inflation, which cripple the trader rather than improve his position.
It is important that the House should recognise this factor because much of the discussion about the unfairness of our tax system in a time of very rapid inflation has centred round corporation tax. Some bodies, especially the CBI, have given the impression—I hope unwittingly —that the only traders adversely affected by inflation are those trading as limited companies.
As the accountancy bodies of the United Kingdom have just pointed out in a letter to the Prime Minister,the serious cash flow problems of the British economy…affect smaller businesses, sole traders and partnerships no less acutely than larger industrial concerns.If the House is so misguided as to accept the figure of 8 per cent. of profits as assessed for income tax as a levy on the 1141 self-employed, we shall run the risk of driving out of business—not merely causing them hardship—the invaluable joiner around the corner, the self-employed plumber for whom we all send when there is a disaster in the home at eight o'clock on Sunday night, the window-cleaner and all those others who rally round at times and seasons when the nationalised bodies do not want to listen to the householder and when all one can get from any of the large concerns is a recording machine saying at the other end of the telephone that the matter will be read over on the machine some time on Monday morning. The danger of the change in class 4 contributions is not only that there will be hardship to the self-employed, which is serious enough in itself, but that there will be great loss to the rest of the community who depend so largely on the initiative, enterprise and willingness to work of self-employed people.
I should also like to stress that, as with all bad law, there will be found ways round some of this iniquitous burden. It is a maxim that over-taxation always produces avoidance, perfectly lawful avoidance, but it consumes a great deal of time and ingenuity that would be better directed towards improving the balance of payments. If, as I hope will not be the case, the Bill is passed as it stands, there is no doubt that many self-employed people will spend valuable hours arranging to employ their wives and making other artificial but perfectly legal arrangements to avoid a burden that is obviously and manifestly unfair.
In view of the unfair treatment that the Bill metes out to certain classes of women and to at least half, if not more, of the self-employed population, we on the Liberal Bench intend to vote for the amendment tonight.
§ 7.3 p.m.
§ Mrs. Margaret Bain (Dunbartonshire, East)
I understand that it is the tradition of the House in one's maiden speech to pay tribute to one's predecessor. It is no onerous task for me to pay tribute to Barry Henderson. As hon. Members are aware, East Dunbartonshire is a new constituency whose boundaries were redrawn for the election in February of this year. Barry Henderson was its Member for seven months, and the slim- 1142 ness of my majority at an election which saw the virtual collapse of the Conservative Party in Scotland is a tribute to the respect that he won.
To represent East Dunbartonshire is to represent a microcosm of Scotland. There are three major burghs within the constituency—Cumbernauld, our space age new town, Kirkintilloch, an older Glasgow overspill burgh, and Bearsden, which is sometimes called the millionaire suburb of Glasgow, although I am sure that the residents of Bearsden do not find that an appropriate title. There are also two mining villages, Croy and Twechar, each with a highly individualistic sense of community, and within the landward area there are farms, smallholdings and so on. As you can see, Mr. Deputy Speaker, it is not easy to categorise East Dunbartonshire.
For me it is a great privilege to represent East Dunbartonshire, since this is the first seat that my party has won in West Central Scotland in a General Election. I trust that my association with the constituency will be a long one, despite the recent attempts by the Labour and Conservative Parties in unholy alliance to unseat me.
I wish to refer to some problems that are confronting my constituency. The subject of this debate is an issue that has caused many constituents to write to me. Many of the self-employed people who are to be subjected to this extra 8 per cent. contribution are not in the superrich category but are small business people, including, for example, local shopkeepers and window cleaners, painters and decorators, and smallholders, and, in older parts of Scotland, those symbolised by the crofters and Harris Tweed weavers. These people serve a vital function in our daily lives, and they are already subject to extreme pressure from the inflationary spiral in our economy. They are now expected to pay an earnings-related contribution over and above the flat-rate contribution, and yet at the end of the day they are to receive no extra benefit.
This is hardly the type of social justice that I should have expected the Labour Government to introduce. It is a discriminatory tax on the self-employed, who are being asked to pay a standard tax rate of 41p in the pound as opposed 1143 to the general 33p in the pound. Given that the Government have already done nothing to relieve the pressure arising from the continuance of VAT exemption levels at only £5,000 annual turnover, at a time of rapidly rising inflation it is extremely difficult for them to make ends meet.
The second major problem currently affecting my constituency is that of education. Since last Wednesday I have been inundated by petitions, telegrams and letters from headmasters, teachers, parents and pupils in the constituency and, indeed, throughout Scotland. Teachers' salaries have fallen so far behind that only an increase of 35 to 40 per cent. will bring them into line with comparable sections of the community.
I wish here to refer to a letter that I received today from the head teacher of Kirkintilloch High School. He mentions the salaries that teachers take home. A principal teacher, a graduate with four year's completed service, takes home £152 per month. An assistant teacher, a graduate BSc, in the first year of service takes home £105 per month. The head teacher's letter says:''When it is realised that some 'months' are of 5 weeks' duration then it must be realised that many teachers are not able to keep up the standards necessary to set a good 'tone' to the school nor in the manner which a profession requires. In fact many can barely supply the basic requirements of their family.In fact, many young teachers are on family income supplement despite years of specialist training.
The actions of the Secretary of State for Scotland last week were a slap in the face for a hard-working dedicated group of people, and, were this not an uncontroversial maiden speech, I would call for the right hon. Gentleman's resignation, confident in the knowledge of the almost complete backing of the teaching profession in Scotland. Since I left my blackboard behind only some two months ago, I suggest that the Secretary of State for Scotland takes a year's sabbatical from politics and returns to teaching. I am sure that he would come back to the House and demand an immedate substantial increase for teachers
I warn the House that the sense of outrage and anger felt among Scottish teachers at the moment is of a proportion 1144 never before witnessed and that their long-standing patience is totally exhausted. I would urge the Secretary of State to reconsider his refusal to grant an immediate interim award and to press for the immediate implementation of the Houghton Report.
The teachers in Scotland are not prepared to wait until December or February for their wage increase. Any nation that neglects the education of the future generation, that ignores the education of its children, is laying up great problems for itself, and unless we now give our teachers in Scotland a decent standard of salary, recruiting to Scottish training colleges will be at an even lower ebb than ever before.
§ 7.9 p.m.
§ Mr. William Hamilton (Fife, Central)
It is a privilege for me to be the one to congratulate the hon. Lady the Member for Dunbartonshire, East (Mrs. Bain) on her maiden speech. It is a pity that more of her party colleagues were not here to listen to her—I count three out of the 11—for they missed a rare treat highly charged with non-controversial subjects.
§ Mr. Hamilton
No. I do not know whether the hon. Gentleman has made his maiden speech, but he is not making it in the middle of mine.
We shall be glad to hear the hon. Lady again, but I must tell her that we need no lessons from her or her party about our concern for the teachers. Nor does my right hon. Friend the Secretary of State for Scotland.
The various parties have shown a belated interest in teachers and nurses. I remember campaigning on platforms for the nurses, demanding an interim payment pending publication of the Halsbury Report. I put a motion on the Order Paper. It was signed only by Labour Members. However, I let that pass. I do not want to disturb the harmonious relations now established between the hon. Lady and myself. I hope that we shall hear from her again, though not too often and not too long, because I guess that her time in this House will be a bit longer than that of her predecessor. This Parliament will last four or five years, and, short of a serious accident, which I 1145 hope that she will avoid, she will be here. I hope that she will make the best of it while she is here, and I hope that we shall hear from her on controversial subjects concerning not only Scotland. She must get out of her parochial parish for a while. She has to accept bad English money for her salary whether she likes it or not, and I hope for her sake that some of the small business people about whom she is concerned are not English or other foreigners, because her party is committed to getting them out.
However, I leave that and come directly to the Bill. The House is concerned to discuss the merits of the Bill and is very tolerant to maiden speakers who stray from the fairly narrow debate that we are having at the moment.
Listening to my hon. Friend the Minister of State and to the right hon. and learned Member for Surrey, East (Sir G. Howe), I felt that I had heard it all before in rather better weather than we are having at the moment. I heard it last July, to be precise. At that time the House agreed that very substantial increases in social security benefits were desirable and necessary. We all agreed on that proposition. Indeed, there were suggestions from Liberal Members and others that not enough was being done. The Liberal who represented Hazel Grove in the last Parliament and who, unfortunately, lost his seat—we are all sad that he is no longer with us—suggested a substantial increase in the death grant. So there is no argument about the desirability of having increased benefits. Indeed, the time has come when we might consider the possibility of threshold agreements for pensioners in the same way as we agreed to them for organised workers in powerful unions. But, having decided to pay these increases to pensioners, to the unemployed and to everyone else who is in receipt of social security payments, we have now to face footing of the bill.
The Conservative Opposition have made great play with the problems which the Government have posed and which they would have posed about the self-employed. Up to now the self-employed have paid a flat-rate contribution only, and even when the Conservative Government introduced their graduated contribution scheme in 1961, the self-employed were left out and continued to pay the 1146 flat-rate contribution. The cost of paying the additional benefits which were handed out between the inauguration of that scheme in 1961 and 1973 was placed largely on the shoulders of those unfortunate enough to be caught within the net of the graduated pension scheme. In fact, that was the clear purpose of the graduated scheme. The idea was that social security benefits could be increased, and the graduated element was increased to pay for them. That was the main purpose of the exercise.
In that period the self-employed received the same benefits as the rest except for the exclusion about which we know concerning unemployment benefit, industrial injuries benefit, and so on, because they have not by definition an employer contributory element.
Looking back to the origins of all this, the Beveridge Report of 1942, the principle was expressed and accepted that there would be flat-rate contributions for flat-rate benefits. The Labour Government which subsequently put the Beveridge Report into effect accepted that basic principle, and it was agreed that to qualify for all benefits the self-employed contribution should be not 90 per cent., which was the actuarial figure, but 70 per cent. The actuary said that, in order to get equivalent benefits to those of the ordinary worker, the self-employed person would have to pay 90 per cent. of the combined contribution of employer and employee. But the Labour Government of the day said that it should be 70 per cent. and that the self-employed would be excluded from the benefits which I have described.
That lasted until the Boyd-Carpenter scheme was introduced in 1961. By the early 1970s the contribution of the self-employed had dropped to about 40 per cent. of the employer-employee contribution as against the 70 per cent. introduced by the Labour Government back in 1946.
The 1973 Act sought to include the self-employed in the scheme of earnings-related contributions like the rest of the working people. However, before discussing the consequences of that, I must point out that one consequence of the proportionate reduction in the self-employed person's contribution was the burgeoning of phony self-employed, notably in the building industry with "lump" labour.
1147 I have obtained some figures from the Library showing the extent to which, partly due to "the lump" but also in other occupations—and I do not exclude Members of Parliament from this—the self-employed enjoy considerable advantages which are not available to ordinary workers.
It is many years since my right hon. Friend Douglas Houghton said that there were two classes of taxpayer—"Pay as you earn" and "Pay as you like". That is largely true, and some of the people who are "Pay as you like" are the self-employed. We must not forget that in the context of this debate.
I have before me some figures of the Inland Revenue from 1966 to 1969—the latest date for which figures are available. According to the returns under Schedule A, more than nine out of 10 self-employed people are living on less than £2,000 a year. We know that a lot of them can declare virtually what income they can think of and that they can get away with all kinds of expenses which are not available to ordinary working people. I am no enemy of the self-employed. I agree with the hon. Member for Colne Valley (Mr. Wainwright) that the self-employed plumber, the small tradesman and the shopkeeper perform an invaluable service. It is a great tragedy that inflation is eroding their prospects and endangering their future. The growth of multinational companies and of bigger and bigger units is not necessarily good for the community. I would deny that the Government in this or in any other Bill or in the Budget next week are trying to get at the small man. The greatest enemy of the small man is not the Government but inflation, under whatever party might be in power.
I come now to the 1973 Act. The then Conservative Government sought to include the self-employed in the scheme of earnings-related contributions just like the rest of our workers. Their proposition was that the self-employed would pay at the rate of 5 per cent. on gains or profits in the bracket £1,150 to £2,500 to be effective from next April. That was accepted in principle by the then Labour Opposition.
Subsequent large increases in benefits had, and have, to be paid for by all. Let 1148 us consider some of the figures proposed by the then Conservative Government. They proposed that the self-employed would pay a flat-rate class 2 contribution of £1.99 and the class 4 contribution of 5 per cent. The band of income on which it would be paid—the Government emphasised this and the Act made provision for it—was purely illustrative of the principle that in future the self-employed should pay earnings-related contributions. The Act imposed a duty on the Government to review that banding in the light of increased earnings. That is precisely what this Bill is doing. That banding was related to earnings in 1971. Clearly, this is an updating. I do not know whether it is accurate, but I accept that the Government have taken account of increased earnings during the last three years or so. Therefore, the rate has gone up from 5 per cent. to 8 per cent.
Alternative ways of financing increases in social security benefits have been, and no doubt will be, argued across the Floor of the House. One way is to increase flat-rate contributions from £2.41 to £2.71. That is a substantial increase to ask of any worker on £30 a week. Nobody would pretend that such a man was wealthy. Clearly, that would hit hardest at the lowest-paid self-employed person. It would also have been the second large increase in flat-rate contributions since the 42p increase of August 1974. That would have meant a total increase from £1.99 to £2.70 over that period.
Another alternative would be an increased percentage on earnings above about £30 a week and below about £70 a week, which would ensure that the greatest burden fell on the broadest backs. But it still means that the poorest of the self-employed will pay a higher proportion of their net earnings in contributions than the better off. This is a valid criticism. A self-employed man with earnings of £25 a week will pay 9½ per cent. of his earnings. A self-employed man earning £50 or more a week will pay 8 per cent. of his earnings. I suppose that it can be argued that the self-employed are gravely disadvantaged by this situation.
I think that all hon. Members have had the document from the National Federation of Self Employed. It talks about representing 2 million plus. I doubt 1149 whether it represents 2 million. It is a pressure group. These people are perfectly entitled to organise themselves like this, but I think that one must take their proposals as a kind of special pleading, as is pleading by all pressure groups, and regard their case with a little scepticism. The federation is entitled to put forward its argument, but we are entitled to attach our own worth to it.
I do not believe that the Government are discriminating unduly against the self-employed. Indeed, the facts show that their benefits are subsidised from the contributions of other workers. To pay fully for their benefit entitlements would mean a contribution of 90 per cent. of the combined employer-employee contribution. Even after the proposed increases the self-employed will still be paying only 65 per cent. of that combined contribution, which is more or less in line with what the Labour Government originally proposed in 1946.
Moreover, the worker on the shop floor, who is paying his contributions on gross earnings, gets no relief for his employee contribution, whereas the self-employed man will pay his class 4 contribution on his profits or gains assessed under Schedule D, for which he is allowed to claim generous expenses and allowances by the Inland Revenue. In addition, when the worker pays his contribution he pays it on current earnings, whereas the self-employed is paying a year later when the value of money is that much less in an inflationary situation. Therefore, there is some advantage in delaying his payments for a year in the highly inflationary situation with which we are faced.
Finally, I should like to refer to the married woman. I have reservations about the removal of the option for the married woman. On the other hand, we have stated in the Queen's Speech—the Conservative Party is also on record in this respect—that we want to treat women in all circumstances on an equal footing with men. If we accept that principle we must accept it right across the board with no exceptions. That is why the Government are saying that a woman who is working will pay the full contributions and get the full benefits in her own right and not have to rely on her husband's contributions.
I realise that there are arguments the other way. Indeed, some were adduced 1150 way back at great length and with much venom, as usual, by the hon. Member for Lancaster (Mrs. Kellett-Bowman). But the principle is sound. If women want equality, for God's sake let us give it to them and not squeal when they get it.
§ 7.28 p.m.
§ Mr. David Mitchell (Basingstoke)
I should like to join the hon. Member for Fife, Central (Mr. Hamilton) in congratulating the hon. Member for Dunbartonshire, East (Mrs. Bain) on making her maiden speech and whose vividly descriptive tour of her constituency brought it to life for many of us. The hon. Lady covered the problems of teachers in Scotland in a clear and emphatic way. I think that there will be a wide welcome for her non-controversial call for the resignation of the Secretary of State for Scotland. I am sure that hon. Members on both sides will look forward to hearing the hon. Lady in future debates.
I shall not follow the hon. Member for Fife, Central in his gratuitously divisive remarks about pay-as-you-earn and pay-as-you-like. Our tax system provides not only for the highest level of taxation in Europe but for a higher level of payment of taxes. It does not have the massive loopholes which in some countries —for example, France—operate within the tax system. The hon. Gentleman's remarks were not only gratuitously divisive but inaccurate.
The Bill provides for substantial increases in national insurance contributions but not equally from every group of contributors. Married women have been picked out to pay a large proportion of the total increases, and the self-employed have been particularly picked out. My right hon. and hon. Friends have dealt with the question of the unfairness of the Government's proposals as between one contributor and another. I should like to say a few words about the impact which the Bill will have on the self-employed.
I was glad that the House was honoured with a brief visit by the Minister responsible for small businesses. I am sorry that he has not been able to remain with us, but in view of the pressing problems facing the small business sector he is no doubt properly occupied in defending small business interests 1151 elsewhere. His presence today has stressed the great importance of the Bill to small businesses. If the small businesses are the seed corn from which grow the great industrial giants, the self-employed are the germ within that corn, because it is they who start the businesses which go on to become small limited companies and then become the great companies of this country.
A remarkable range of self-employed people will be clobbered by massive increases in their national insurance contributions from next April—from the publican to the man who cuts and supplies firewood, the blacksmith, the plumber, the window cleaner, the nurseryman, the smallholder, the jobbing builder and the dairyman. On a higher plane, according to one's taste, there are such people as barristers and solicitors. I am not sure about doctors, but certainly consultants will be affected. I had better declare an interest here because, like many other Members I share a secretary and such secretaries are self-employed. They, too, will be clobbered. Hairdressers, shopkeepers and restaurateurs will be caught by the Bill.
What is more important, the Bill will have an effect on people who are thinking of starting businesses of their own. The country benefits enormously from such people, for it is they who invariably bring forward new ideas, who innovate and whose inventions become practical, marketed propositions. Small businesses and self-employed people are the leading exponents of invention and they make a considerable contribution to our economy. They are among the most energetic and enterprising people in the community.
When such people are clobbered by the Government, as they will be next April, it is no surprise that there should be an increase in the queue of people who wish to emigrate to other countries where they can enjoy greater opportunities with less taxation and where less of the rewards of their hard work and effort is taken from them. We need to keep such people in this country for the contribution they make to our economy.
Above all, in an economy in which the cost of living is increasing so fast, the part Which small business men play in competition is of unique importance. Together with a number of my hon. Friends, I 1152 believe that a dose of competition has more effect on the cost of living and on prices in the shops than has any amount of contracts or Government legislation, The deliberate way in which the Government have chosen to pick on the small shopkeeper, who is one of the worst affected by their proposition, is very sad. It will be more than sad for many customers, because there will be an increase in the number of small shop closures, leaving them with less choice. Inevitably people living in the country areas of, say, Hampshire, will have to travel longer distances to supermarkets.
Three results will follow from the proposition in the Bill. First it will reduce the standard of living of small businessmen who will have to pay considerably more in contributions. How much more is astonishing. Under the Conservative legislation a man on £2,500, instead of paying £2.98, will have to pay £3.79—and that is not deductible for tax. For the man on £3,600 the amount will go up to no less than £5.49, an increase of £160 per annum over what it would have been. Those are substantial increases and, since they will not be allowed for tax, substantial additional sums will have to be earned by such people.
Secondly, the cost will in part be passed on to customers. That will increase the prices which must be paid ill the shops. A wife who has her hair done for the weekend will find that the cost has increased, because the hairdresser will have to recover the money.
Perhaps more important than either of those matters is the effect that the Bill will have in making it less easy for people to start a business. It will deter people from starting businesses and in that respect the Government will damage the prospects of industry, because an attack on small businesses is an attack on Britain's future.
§ 7.38 p.m.
§ Mr. Arthur Lewis (Newham, North-West)
I had not intended to take part in this debate until I heard the remarks of the right hon. and learned Member for Surrey, East (Sir G. Howe). I was fascinated to listen to the Minister of State and the right hon. and learned Gentleman arguing about the relative costs of the Bill and the pros and cons of whether the self-employed would be 1153 worse or better off. It is a pity that we cannot get, and have never been able to get, some agreement between Governments and Oppositions on facts and figures. I should like to be able to get from the Departments concerned factual information which is indisputable. Although I am partial towards and biased in favour of the Minister of State, I must say that I thought that the right hon. and learned Member for Surrey, East, probably because he is a lawyer, won the argument.
My hon. Friend the Member for Islington, South and Finsbury (Mr. Cunningham) said that Members of Parliament would be affected by the Bill. Had he been present earlier, he would have heard me intervene in the speech of the right hon. and learned Member for Surrey, East and say that Members of Parliament would be adversely affected by it. I pay tribute to the right hon. and learned Gentleman; he corrected me and said that, as from April, we shall cease to be self-employed. He has kindly loaned me his brief—the first time that I have been able to read from a Tory brief—which says:MPs for National Insurance purposes have up to now been regarded as self-employed, but their position has been rather an anomalous one. A written answer [6th April 1971, c. 93.]"—you will not be surprised, Mr. Deputy Speaker, to learn that it was to a question by me—stated: 'Although Members of Parliament pay National Insurance contributions under Class II, for tax purposes they are not self-employed but assessable under Schedule E as holding an office'.".In other words, we pay self-employed national insurance contributions but are taxed under PAYE.
I have never understood this system. I thought that a self-employed person was one who could sack himself and was not therefore, liable to be sacked by someone else. Members of Parliaments have always been sackable, and not by just one employer; I, for instance, have 65,000 employers. They have never sacked me, and I do not suppose they will, but there are other hon. Members who will be sacked by their electorate.
So this is an anomaly. Members of Parliament are classified as self-employed for national insurance purposes, pay tax under PAYE as non-self-employed and 1154 are liable to be sacked at any time, at the whim of the Prime Minister if he calls an election but ultimately by the electorate.
In December 1971 the Boyle Committee, reporting on the pay of Members, said:…the position of Members under the National Insurance Act should be re-examined. We recognise that, given the present limited structure of classes of insured persons under the Act, there might be difficulties in attempting to transfer Members to the 'employed' class. The opportunity for a solution may, however, lie in the restructuring of the National Insurance Scheme, which will be required under the new Government pension policy. This is intended to take into account the situations of groups, like Members of Parliament, who are self-employed for national insurance purposes but who are assessed for income tax under Schedule E (covering incomes from offices and employment). For Members of Parliament we suggest that provision might be made for the payment of the necessary 'employers contributions' from the Exchequer via the House of Commons Vote".Later, another Written Answer, on 17th May 1972, said that the results of the Boyle Committee's review, which affected not only Members, would be in the Social Security Act 1973. It went on to say that there were others who would be included in that.
I must here declare an interest in two ways. First, I am affected like all hon. Members in that from next April we shall cease to be self-employed for national insurance purposes. Second, I have an association with commercial travellers. Will the reclassification of certain self-employed people for national insurance purposes affect commercial travellers? They are not strictly "employed". They employ themselves by taking on a commission or an agency, and they can decide whether or not to throw it up. But in another way they are like us. If their agent or company does not want them, they can be sacked.
If we are to get the benefit of this provision to what extent will other categories of "quasi-self-employed" be affected? This could apply also to a doctor who employed his wife as a receptionist-secretary. The hon. Member for Basingstoke (Mr. Mitchell)—I am sorry he has left the Chamber; Members normally wait to hear the next speech —mentioned MPs' secretaries. Is a Member's secretary self-employed? If a Member and his secretary fall out, the 1155 Member can dismiss the secretary or the secretary can ask for her cards.
I am glad that an obvious anomaly relating to Members is to be put right—that is long overdue—but this treatment should be extended to others in a similar category.
§ Rev. Ian Paisley (Antrim, North)
Is the hon. Gentleman aware that ministers of religion are also classified as self-employed, yet they pay PAYE?
§ Mr. Lewis
I am obliged to the hon. Gentleman. I was going to say that I could keep the House here for the next hour, which would not be very popular, giving dozens of such examples, including doctors, surgeons, clergymen, dentists, journalists, judges and insurance agents.
This proposal will mean—I am now batting against my own side—that the only class affected will be the small businessman and shopkeeper. All the rest can find loopholes. Lawyers can.
§ Mr. Lewis
I agree; the hon. Gentleman has not followed my point. I was about to say that MPs are the only class under Schedule E who pays PAYE. An MP is one of the very few who, although classified as self-employed for national insurance, pay PAYE. Yet he is liable to be dismissed at any time when the Prime Minister decides to go to the country. But some solicitors would be paving, although perhaps not all. I hope, therefore, that if we are to have this anomaly rectified, others in a like position will be treated on a similar basis.
I could quote dozens of examples, but my main concern is the question of commercial travellers. They are finding matters very difficult. I must not bring 1156 the Chair into the debate, but I know that there is someone in the Chamber at present who knows very well the difficulties of commercial travellers in this matter. They have all the problems of the high petrol tax, of parking and of carrying their goods around and not being able to reach certain shops because that is prohibited on certain days, and so on. If in addition to that they find themselves having to pay this excessive increase in contributions, they will start to appeal to Members of Parliament saying that they ought to be exempted. They will say "You have exempted yourselves, and we are in a similar situation." All Members of Parliament will have difficulty in explaining to such people that they should pay the higher rate when we, as Members of Parliament, are exempted.
I hope that the Minister, perhaps later, will look into all the classifications and write to me or deal with the matter in Committee.
§ 7.52 p.m.
§ Mr. James Kilfedder (Down, North)
As I do not belong to either of the two major political parties, I do not have to fight the General Election all over again in this debate. I appreciate what was said by the hon. Member for Newham, North-West (Mr. Lewis). We witnessed the scene of the two Front Bench speakers arguing between themselves. I agree with the hon. Gentleman that it is a pity that we cannot find some way in which figures could be agreed upon. However, it has always been known that satistics can be used on both sides of an argument and that they are very unreliable unless one has all of them.
I have listened with respect to the Front Bench speakers and to other hon. Members, including our two new very eloquent lady Members. In due course I shall go into the Division Lobby to vote for the amendment. I do not know what my colleagues from Northern Ireland will do but, although there are merits in the Bill, I cannot support the Government for reasons to which I shall refer briefly. I shall support the Conservative Opposition's amendment.
However, I am glad that at last we are to ease the earnings rule for retirement pensioners. We have all heard the financial arguments for not doing this. They have been repeated year after year. I listened to the Minister's explanation of 1157 the position. The Explanatory and Financial Memorandum tells us that the cost of this will be about £5½ million next year.
When I consider the number of people who are over retirement age and eager to work, or eager to work for longer hours and earn more, I wonder whether the gain to the country will not outweigh the cost to the National Insurance Fund. So many retired people have industrial knowledge and skills which are in demand that it must be to the advantage of most urban and rural communities to see more of them in part-time or full-time work, quite apart from the great benefit which would be conferred upon such retired persons. So often they are prevented from playing a larger part in the economic and social life of the community because of the very tight earnings rule.
The arrangements for checking earnings are unsatisfactory. Honest pensioners who readily declare their earnings are penalised. Those whose earnings vary from week to week often have their pension books withdrawn for weeks on end until their actual earnings have been ascertained by officials in the local office. For many retired people, the pension book is the most important document that they possess. It is pathetic to see the effect on some pensioners of having their pension book taken away. I feel very strongly about this matter. To them, it is like taking away their sole means of livelihood.
Elderly constituents have come to me with this problem. This Ministry, this foreign alien Department to them—because they cannot get to grips with it —has taken away their book and they cannot get their benefits. I hope that the Minister will deal with that point. That is what many pensioners feel. Some do not understand why the book has been taken away. They do not understand the delay. Often the delay is unjustified. Some of them get frightened—I use that word deliberately—when the pension book is not returned to them by the next pension day. Sometimes it is not returned for weeks on end. That does not happen in every case but it happens often enough to worry me. It ought to worry the Government. I am sure that the Minister will share my concern about this matter.
1158 Where this does happen, the effect on the elderly person is as though a curtain has been lowered and all is darkness and despair. He does not know where to turn. He has no money. We know how difficult it is today to survive. I know people who cannot obtain sugar in some shops because they have to buy a large amount of groceries in order to be allowed to buy it. Our elderly people need to be looked after in a better fashion than they have been in the past. I hope that the Secretary of State will look into this matter and see what can be done in the local offices to improve the situation.
As a Northern Ireland Member, I want to draw attention particularly to the class 2 and the new class 4 contributor. In Ulster we have 38,000 farmers, most of whom farm less than 60 acres. I am not talking of farmers such as those in England with their broad acreages, but of small farmers who will be adversely affected by these increased contributions.
There are thousands of shopkeepers throughout the Province, many of whom are in a relatively small way of business, and they will be hurt badly by these new rates. Many other people fall into the same category of the self-employed, such as handymen, some fishermen and builders. They will now be forced to bear this additional burden. There are many others who are self-employed. I shall not rehearse all the categories which have been mentioned so far, but they are all affected. For years many of these people have experienced difficulty in paying for the old class 2 or self-employed stamp. Those who are required to purchase the class 4 stamp under this Bill will have to pay 8 per cent. of their income from between £1,600 and £3,600 a year. This is a monstrous imposition. No doubt it is easy enough for most employed persons, including company directors who have thriving businesses to pay for their stamps, but it is difficult for self-employed people.
I was glad to hear the maiden speech of the hon. Lady the Member for Sheffield, Brightside (Miss Maynard), who spoke eloquently, as one would expect of the daughter of a smallholder. As the son of a small farmer, I have particular sympathy for farmers. Therefore, I share the hon. Lady's feeling. Indeed, as a student I worked on farms in England 1159 during my vacations and talked to farm labourers here. I know something about the problems of farmers in England and in Wales.
Speaking of Wales, I hope that the Government will do something to remedy the disgraceful situation in which a tenant farmer can be continually harassed by his landlord and ousted after he has improved his land and outbuildings. However, that is perhaps outside the scope of the Bill.
With the farmers of Northern Ireland making no money this year, particularly since the beef market has collapsed, what hope has the small farmer of paying £2.41 a week, or 8 per cent. of his earnings in other cases? Farms have been running at a loss. In many cases farmers will not be able to feed their animals. Farmers are selling off their animals now at a great loss. Anyone who has anything to do with the farming community should speak on the Floor of the House with all the fervour at his command in an effort to persuade the Government to aid the farmers, particularly those in Northern Ireland, where the farms are small and depend on imported feedings stuffs and fertilisers. Bankruptcies among small businessmen, as well as amongst farmers, are worse this year than ever before. It might help hon. Members to make up their minds in this debate if the Government were to give figures of such bankruptcies. This extra burden in contribution is too much to bear. For some it will be the proverbial last straw.
I must speak up on behalf of the self-employed in Northern Ireland, whilst acknowledging all the merits that the Bill has. The Government should consider imposing a much more modest increase in the cost of the class 2 stamp, and the class 4 contribution should continue at the existing rate of 5 per cent. instead of rising to 8 per cent. at this time of extreme difficulty. I recognise that inflation is bound to have its consequences for social security contributions, but are not the Government contributing to the spiral of increasing prices by introducing higher contributions at this time?
I notice that the cost of publication of the Gracious Speech has risen by 60 per cent. I do not know whether anybody 1160 has yet referred to this fact during the debate on the Queen's Speech or even noticed it. The cost of the Gracious Speech on 12th March—only seven and a half months ago—was 5p. It has risen to 8p for this Gracious Speech, which uses the same amount of paper and contains as far as I can judge the same amount of print. I do not know whether one can rely too much on what is contained in the Speech. I do not think there is value for money in it. How can the Government justify a 60 per cent. increase? They are directly responsible, because the Speech is published by Her Majesty's Stationery Office.
Class 2 contributions will be almost doubled, yet for paying an increase of that order the contributor will not get any extra benefit. Is that justice? Is that fair? Is that what we are to expect from a Labour Government? I had expected better of them. I hope that the Government will think again about this.
It is no use the Government saying that a self-employed person may claim the small income exemption if his income is less than the statutory amount. If he claims exemption, stamps will be missing from his card, which will worsen his insurance record and must eventually affect his pension rights. I therefore hope that the Secretary of State will discuss the whole question of insurance contributions by the self-employed with her Cabinet colleagues who are responsible for agriculture, trade and commerce before the Bill goes into Committee.
Changes would have to be made in the Bill. The average self-employed person cannot go on if he is to be penalised by social security contributions. As every report by the Government Actuary shows, the self-employed take out of the National Insurance Fund far less proportionately than class 1 or employed contributors. The self-employed person is not entitled to unemployment benefit. The self-employed bear this heavy burden but get little in return. That is not fair.
I welcome the provisions for the improved social security benefits, but I regret, as the Conservative amendment sets out, that married women and widows are also affected, thosewho have elected not to pay insurance contributions at the full rate.1161 I must demonstrate my feeling by going into the Division Lobby against the Bill tonight.
§ 8.7 p.m.
§ Mr. R. J. Maxwell-Hyslop (Tiverton)
I gladly follow where the hon. Member for Down, North (Mr. Kilfedder) left off, because my concern is very similar to his.
I note that printed on the back of the Bill is the statement:Presented by Mrs. Secretary Castle, supported by Mr. Chancellor of the Exchequer"—that is ominous—Mr. Secretary Ross"—that is even more ominous'—Mr. Secretary John Morris.If that does not give us all the warning we need to have about the Bill's contents we have not kept our eyes and ears open. It is in the areas which those two Secretaries of State represent and in Northern Ireland and in the area which I represent that the self-employed, particularly farmers and more particularly the livestock section of the farming community, are most desperately at risk.
The Bill is entitled "Social Security Amendment Bill". What are the glaring gaps in social security for the self-employed? A farmer now going bankrupt because of the progressive collapse of livestock has income tax to pay on the last financial year's profits. It was said. "Pay as you like", by some quite uninformed hon. Members opposite from well away from here in Scotland. A farmer cannot pay till he has his assessment. He may well have an assessment that he has made a profit on which he must pay income tax, not because he has any money, but because the value of his stock at the end of the financial year was marked up. He then has to pay income tax with money he has not got because the stock has not realised in the market 60 per cent. of what it was valued at for income tax purposes. He is now being loaded with these enormous contributions.
§ Mr. O'Malley
I am glad to be able to tell the hon. Gentleman that the farmer concerned will be assisted by the formula which we have devised. If during the period for income tax assessment, April 1975–76, his income has been so eroded as the hon. Gentleman has described, by our formula he will be paying no more 1162 in class 2 contributions than he is at the moment. He will certainly not pay any in class 4 contributions. That is surely a better alternative than that which the Conservative Front Bench is putting forward, involving an increase in class 2 contributions which would hit the farmer to the extent of £30 or £40 a year.
§ Mr. Maxwell-Hyslop
But a farmer does not know what his income is till the end of the financial year. A person receiving a weekly or monthly cheque on which PAYE is payable knows what his income and assessment are, but a farmer does not know what his tax assessment is to be till after the end of the financial year.
§ Mr. O'Malley
I am trying to help the hon. Gentleman. I understand the problems of agriculture. There would be no assessment of a class 4 contribution till the end of the financial year, and perhaps even later than that, because Schedule D earnings are sometimes not assessed for 12 months and sometimes two years after the relevant income tax year. The point to notice is that, first, there would be no assessment on him for class 4 contributions till such time as his accountant had agreed his Schedule D earnings; and secondly, if his Schedule D earnings were very low indeed, which is the proposition which the hon. Gentleman puts forward, there would be no obligation on him, if his income were below £1,600 a year, to pay any class 2 contributions at all. The class 2 contributions would have to rise under the proposition postulated by the Conservative Front Bench, and I would prefer to hold down those contributions to help the kind of person to whom the hon. Gentleman is referring.
§ Mr. Maxwell-Hyslop
The hon. Gentleman means well. His limitation is not his intention but his sheer lack of understanding. He has not grasped the point that I was making. The price of cattle in the market now is less than the price for which they were purchased, and they have been fed for a year. In the case of those who remain in business and who are not bankrupted in the next few weeks, what will the stock valuation be for the next financial year? It will show a paper profit because they will be valued up, but there will not be any money in the till. The assessment of farm profits 1163 includes the difference in stock valuation. A farmer can be shown, for income tax purposes, as having made a profit when he literally does not know where to turn for half a new penny. That is the point that I was making, and, with respect, the Minister's formula does not encompass that.
This is the problem. They are being burned at both ends of the candle. I am concerned about the farmer who is driven out of business because the Government have refused to carry out the pledges of their own Minister of Agriculture concerning beef. Such a farmer cannot draw unemployment benefit, despite the self-employed contributions that he has always paid. His assets till he has sold up are likely to be such that he cannot get anything from the Supplementary Benefits Commission. He loses his home. If he has been an owner-occupier he cannot get even a council house for himself and his family because so many councils have a rigid rule that they will never allocate a council house to anyone who has been an owner-occupier.
This is the sort of desperate position of the agricultural community. If there were an option for self-employed people to pay a higher rate of contribution and to have insurance against losing their livelihood they would indeed have the same measure of social security as other people. They are not insured against industrial injuries. The self-employed person has to be able to put aside savings to use when in extremis, when he has no income, when he has got to pay his weekly contributions. The farmer, the shopkeeper, the commercial traveller and such people, when they have no money coming in, still have to pay their self-employed national insurance contributions. They have to pay out of nil income.
We need a Social Security Amendment Act which is meaningful, instead of crucifying the self-employed who do not enjoy the security that other people on exactly the same income enjoy, the security of knowing that if their source of earned income is terminated employed people can get benefit, which self-employed people cannot—
§ Mr. Kenneth Marks (Manchester, Gorton)
Has the hon. Membre had any 1164 demand from his self-employed constituents—I have not—that they should pay additional contributions to qualify for industrial injuries and unemployment benefit?
§ Mr. Maxwell-Hyslop
I am particularly concerned at the moment with the plight of law-abiding people who have been driven to extremities of which some hon. Members are not even yet aware. These people live in tied cottages they live in the farmhouse. When they can no longer pay their rent because their income has collapsed, out of the house they go, as well as out of the farm. An owner-occupier cannot sell his farm without selling the farmhouse as well. This is a section of our society whom even a Labour Government would call productive, I presume—since they divide people into productive and non-productive categories—who are being crucified in this Bill as well as crucified in their livelihoods. That is why it was to be hoped that a Social Security Amendment Bill presented under the conditions which exist today would contain provisions to encompass this crucial situation.
I wish the Secretary of State were here to wind up the debate—if she were I am sure the House would give her leave to do so—and then would tell self-employed people what she expects them to do when they have lost their livelihoods. What does she expect livestock producers to do when they have had to shoot their beasts and bury them because there is a three-week queue for the slaughterhouse, their grass is finished and they have no money with which to buy fodder to feed those beasts for three weeks? I wish the right hon. Lady would say what people are to do when they cannot draw unemployment benefit, though their livelihood has been driven away by this Government. although they have paid their national insurance contributions year after year. I wish that she would tell them either what they should do or what she proposes that Parliament by this Bill should do for them.
If the Secretary of State does not do that, and if no other Minister does it, 1165 she will be inviting these people to arrive at a sad conclusion, the conclusion that the Government and Parliament can offer them no solution to their problem, and that state of mind and of affairs is what moves people to take action which all of us in the House would deplore. Cannot the Minister understand the likelihood of that reaction, when Government and Parliament, knowing of the desperate plight of these people, and at the same time introducing a new measure to bring social security up to date, say to them, "You are all left out of it"?
§ 8.20 p.m.
§ Mr. George Cunningham (Islington, South and Finsbury)
The hon. Member for Tiverton (Mr. Maxwell-Hyslop) made an interesting speech about the situation in agriculture, which he ingeniously managed to bring within order on the Bill, but does he seriously believe that the problems of farmers and the necessity they feel to shoot beasts and so on could be solved by anything which could have been put into the Bill?
The hon. Gentleman suggested that a proper way of dealing with unemployment among farmers, which one hopes will not be a long-term problem for them, would be to permit them, I presume, to pay both the employee and the employer contributions for social security, thereby entitling themselves to the forms of benefit to which they are not entitled at the moment by paying only the self-employed rate.
That is an attractive idea and I think we should pursue it. Indeed, it has been pursued in respect of some groups of people. One would have to draw a distinction to identify those groups whose unemployment could manifestly be shown to be outside their own control. I am sure that that could be shown to the hon. Gentleman's satisfaction in respect of his farmers, and in particular circumstances it could be shown in respect of farmers in general. But it certainly could not be shown in respect of all self-employed people in all circumstances.
That is why from the beginning of the system, from 1949, one has not given to all self-employed people the option of paying both the contributions and receiving all the benefits, since they would then be able at their own wish to make themselves unemployed and derive the benefits.
§ Mr. Maxwell-Hyslop
I did not suggest that the Bill was a vehicle to enable farmers to keep farming. However, it is a vehicle, I suggest, that should enable them not to starve when they have no income. In response to the hon. Gentleman's other comment, I say only that if a self-employed person were to draw benefit fraudulently, that would be just as culpable and just as punishable as the fraudulent drawing of other social security benefits by other persons.
§ Mr. Cunningham
It would be fraudulent and punishable, but if it were not detectable that would be the problem. Unless the hon. Gentleman acknowledges that, he does less than justice to my argument.
There has been reference to the position of Members of Parliament in relation to the Bill, and I am confused as a result of what has been said. Although this is a domestic House of Commons matter, when we are legislating for the community as a whole I think it right for us to be clear on what we are doing about ourselves.
I take it—though I had not been aware of it until now—that we are providing that in future under our national legislation it will be possible for Members of Parliament to be regarded for these purposes as employed, and the Exchequer will pay the employer's contribution and we shall pay privately the employee's contribution.
The legislation may permit that, but I do not recall ever having voted—as one-six-hundred-and-thirty-fifth part of my employer, as it were—that public funds should be used for providing the employer's contribution to that end, and before it is done, if it be proposed that it should be done in April, I wish to be consulted. I shall decide how I wish to vote, on a resolution of the House, which would be appropriate for this sort of purpose, on whether it is right that we should go over to that system.
§ Mr. O'Malley
As I recall the matter —I am not speaking from a brief, and perhaps the hon. Member for Rushcliffe (Mr. Clarke) will confirm what I am saying—during the proceedings on the Social Security Bill in 1973, on which my hon. Friend played a distinguished part, the decision was taken that office holders, which included Members of Parliament, 1167 judges and directors of public companies, should be treated as class 1 contributors.
As I understand it, the position which will arise in April, when Members of Parliament are to become class 1 contributors, stems directly from the decision taken during the consideration of the Bill in 1973. Moreover, if I recall aright as a member of the Opposition at that time, the respective Whips' Offices of Opposition and Government conducted soundings among their Members at that time.
That is the reason for it, and that is the history of the present position according to which Members of Parliament will become class 1 contributors along with Her Majesty's judges and certain other groups of people as from April next year.
§ Mr. Cunningham
Quite so, Mr. Deputy Speaker. I recall that matter vaguely in relation to the 1973 Act now that my hon. Friend reminds me, but it does not altogether remove my problem. I quite see that national legislation may make it possible for that to happen, but it seems to me nevertheless that a decision that that money shall be paid is required by the House not in its capacity as a legislature but in its future capacity as an employer. My hon. Friend says that the Whips took soundings. I took part in no soundings, and I should hope to be consulted. I think it necessary for the House to take a decision by means of a motion that the employer's part of it should be treated in that way.
§ Mr. Cunningham
I would rather not, if my hon. Friend does not mind, because I feel that it would be more appropriate to conduct this aspect of the matter in the way I have described. The public will not now be able to complain that they were unaware of it.
§ Mr. Cunningham
Well, as somebody said about Plato "wherever I go in my mind I meet the hon. Gentleman coming back".
It has been suggested that the self-employed are being clobbered, the word used by the hon. Member for Basingstoke (Mr. Mitchell), or crucified, the word used by the hon. Member for Tiverton, by the provisions of the Bill. It is incontestable that the self-employed are being asked by the Bill to pay a marked increase in their contributions. and a higher increase in their contributions than applies in the case of other contributors as a class, although there certainly will be some self-employed who will be contributing very little, if any, more than at the moment.
As a group, however, the self-employed will be paying a larger increase than others, although that surely is not the question. The point is whether they will in future be paying a fair contribution in relation to the benefits which they will in future be deriving. My right hon. Friend the Secretary of State has given the House important relevant statistics—namely, that if the self-employed were to pay a contribution equivalent to the benefits to which they are entitled, and which they draw, they would have to contribute 90 per cent. of the value of the combined employer and employee contributions.
It never has been the case, apparently, that the House of Commons was prepared to impose that fair contribution upon the self-employed, even as far back as 1949. Instead they were charged a contribution which amounted to only 70 per cent. of the combined contributions of employer and employee. Over the years the value of that contribution fell to something below 50 per cent.—I believe close to 40 per cent.—of the combined contributions. Now, as I calculate the figures, they will be contributing between 57 per cent. and 68 per cent. of the combined contributions, whereas they should be contributing 90 per cent. Whether they contribute at the lower end or the upper end of the 57 per cent. to 1169 68 per cent. range will depend upon their income.
That contribution seems to me to be more than fair to the self-employed, and it would be fair even if we were starting from scratch. If we were starting from scratch, an objection to those figures would be that they entailed a subsidy from the employed person to the self-employed, and in logic that could not be defended. However, we are not starting from scratch and we are moving over to a new figure from one which was unreasonably generous to the self-employed. I can see that some people would regard that as too abrupt a transition. It is not too abrupt because of other factors, but that is the strongest argument that can be mounted against the Bill.
One of the reasons why it is not too abrupt is that on the whole the self-employed person is treated very generously by our taxation system—over-generously in fact. The self-employed man is entitled to allowances on a more generous definition than the employed person. The difference is well known and is not relevant to the content of the Bill. I cannot therefore go into it in detail.
On the whole, the self-employed person has nothing to complain about in the tax system. He pays his tax later than other people do in relation to the income on which it is charged. He enjoys a more generous definition of allowances. These are all legal differences, and in practice he has, to put it moderately, a greater scope for defining his income at the lower end of the range rather than at the upper end. The bus driver, on the other hand, has no scope for arguing with the Inland Revenue about how much he is paid. His employer notifies the amount to the Inland Revenue. The bus driver never sees his tax money because it is taken away before it reaches his pocket.
The self-employed person, in addition to the legal differences to which I have referred, has considerable scope for playing down the income he receives. This has been done and is now being done more widely, not by the kind of deserving case described by the hon. Member for Tiverton (Mr. Maxwell-Hyslop) of the farmer in difficulties but, for example, by the television producer. He arranges 1170 not to be employed by the television company but to be on a contract and is therefore classed as self-employed. He then finds it easy to claim for half his house as an office and for his wife and daughter as his secretaries and so on. By that means he manages to have a net income from his salary which is effectively much larger than it would be if, as is correct, he were treated as employed.
Given that the self-employed come out of things pretty well under the tax system, the transition from the overgenerous arrangement of recent years to a position half way between that and what would properly represent the benefits which the self-employed draw from the system is not too abrupt a jump. In any future review of these matters the natural course would be for the self-employed to pay a contribution actuarially calculated to reflect the exact benefits to which they are entitled.
§ 8.35 p.m.
§ Mr. Walter Clegg (North Fylde)
The hon. Member for Islington, South and Finsbury (Mr. Cunningham) has argued that the contribution from the self-employed person is going up merely a little too fast in the circumstances, and that that is the most that can be said about the matter, but I do not follow him in that argument. He is entitled to his point of view: it is a little more reasonable than other arguments from the Government Front Bench. But the hon. Gentleman made an implication—the hon. Member for Fife, Central (Mr. Hamilton) made a similar implication—that a great many self-employed people are fiddling their taxes.
That implication will be bitterly resented outside the House. I do not think that it affects the argument before us at all, but if the situation is to be put right—if abuses exist—it should be put right fiscally; and it should not form part of the argument we are debating here.
I do not think that the Minister and, indeed, the Government Front Bench in general realise the deep anger being felt over this matter. I can illustrate this feeling by relating a constituency experience. Last Sunday I was asked to address a meeting of the National Federation of Self Employed, the body to which the 1171 hon. Member for Fife, Central referred. The meeting had been called to inaugurate a branch in my constituency and the surrounding Fylde area. I expected to find 30 or 40 people present, but on a cold, rainy day 270 people turned up. They were in a passion. I have never known such a wide range of people in one audience. I confess that I did not see a TV producer, but there were fishermen, barmen, butchers and bakers, and many other categories of self-employed. They were all incensed.
If one judges an audience not by what it says but by what it does after a meeting one can more clearly gauge the feeling. The audience I am speaking about was asked to join the federation. The subscription is not small. It is about £12 a year, and most members of the audience decided to join. So they were putting their money where their mouths had been during the discussion.
I make this point because it is not only in relation to the matter we are discussing but in general terms that self-employed feel that they are being picked on. The hon. Member for Fife, Central said, I think, that the Labour Party almost liked the self-employed and that they were reasonable people, but the Government have the strangest way of showing this—
§ Mr. O'Malley
I understand the arguments that are being used by individuals in the community who are self-employed, but it was a Conservative Government who brought in this structure. It is perfectly clear that the only difference between us is whether the figure should be 5 per cent. or 8 per cent. on the band that is being discussed. No matter what action a Conservative Government might have taken the hon. Gentleman would still have encountered the sort of meeting he has been speaking about. There are times when Members of Parliament, 1172 having made a joint decision on structure, should have the guts to stand together and tell people that this has been a joint decision of all the parties in the House of Commons.
§ Mr. Clegg
It has not been in doubt from the beginning of the debate, and it has never been denied from this side of the House, that the Conservative Party set up the structure. I agree with the hon. Gentleman that there would probably have been a row anyway when the situation became apparent. It was like an unexploded bomb that suddenly goes off. But the fact that we introduced it and the Labour Party backed it does not mean that we shall not listen to what the self-employed have to say. It seems clear that Labour Members are all for the employed person, but they have shown no real concern today for the self-employed.
§ Mr. George Cunningham
In July exactly the same provisions were introduced into the House, and the Opposition did not vote against them. If they had felt in unison on the matter, the Opposition parties could have defeated the provisions or amended them. Why did they not do so? Were the provisions right then but wrong now, or is it that they are still right and the Conservatives are cashing in on the popular crusade?
§ Mr. Clegg
If the hon. Gentleman had heard my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe), he would already have the answer. It was the Opposition's intention to raise the matter in Committee, as we were entitled to do.
Deep anger is felt outside the House. As my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) said. unless the House takes note of anger and reacts to it, we shall all be in difficulties in Parliament.
§ 8.42 p.m.
§ Mr. Kenneth Marks (Manchester, Gorton)
One way to get a big meeting in any constituency is to make people pay for something for which they have not paid in the past, whether or not it is fair for them to do so. That applies that it was a Conservative Act that to rates and many other matters. I wonder whether the hon. Member for North Fylde (Mr. Clegg) told the meeting 1173 increased the contributions for self-employed people. If such a meeting had been held in my constituency, I wonder whether self-employed shopkeepers in a clearance area or employees of the various factories there would have been able to put down £12 as a contribution on the same night.
§ Mr. Marks
I am grateful to the hon. Gentleman.
I must apologise for not having been here when the opening speeches were made. I was on other parliamentary duties.
One of the big talking points on pensions and benefits in my area during the election was the tax on widows' pensions and national insurance retirement benefits. I realise that it is not a matter for my hon. Friend the Minister of State, but many widows and retirement pensioners who receive a pension of £10 a week and earn £10 a week have a bit of a shock when they pay tax on the whole £20. That is an important matter that I hope my right hon. Friend the Chancellor of the Exchequer will consider. I have asked him to do so.
The problem of the increase in self-employed contributions is largely one of the suddenness of the increase. We have faced the problem in a number of ways recently. In March there was the introduction of a much fairer system of rates. The Conservatives' Local Government Act and the Labour Government's domestic relief both introduced a fair system, but there was a sudden jump which angered people greatly. The Government did something about it later. Often fairness means a big increase for some people, because they have been doing very well in the past.
Much of what we are discussing arises from the Social Security Act 1973. I served on the Committee considering that measure. The hon. Member for Brentwood and Ongar (Mr. McCrindle) heavily defeated his own Government in Committee and almost defeated them in the House.
In the past there has been a bias in favour of the self-employed. It was estimated by Beveridge that the self-employed 1174 should contribute roughly 90 per cent. of the combined employer-employee contribution, but it was originally put at 70 per cent. and at the moment is only 40 per cent. of the combined contribution. That has meant that there has been a racket. Many people have transferred to self-employment. That is one of the problems in the building trade—namely, "the lump". It has been thought worth while to get into self-employment not only because of contributions but because of tax. There have been a great many favourable features for the self-employed. For example, contributions are estimated not on gross income but after certain considerable deductions have been made.
The principle was accepted throughout the House that from April 1975 the self-employed should pay more than they have been paying in the past. Employed contributors had been paying an increased graduated contribution for the increased basic pension. We regarded it as fair that a man earning £50 a week should pay more than a man on £20 a week for the basic pension. Indeed, that was the whole idea of the Conservatives' Act and their new pension arrangements. It was agreed that there should be a percentage of income paid for a flat-rate pension. There is no argument about the principle. The argument is about from where the money should come for the increase which was made in July in pensions and benefits.
The Opposition did not argue whether that increase in pensions was necessary. They may not have agreed with it. They would not have done so if they had come into power. They did not oppose it when it was introduced. Where should the money come from for the increased pensions? Should it come from the employees who are already paying an unfair share? Should it come from the employers? I doubt whether there would have been cries of rapture from the Conservatives had the increase in employer contributions been much higher. Should the money have come from the self-employed.
It was thought fair that it should come from the self-employed so that they could take their share of the burden. Should it be a flat-rate or should it be a graduated contribution? It seems to be fair that it should be a graduated contribution. On the figures used by the Conservative Government in 1973 the earnings band was to 1175 be from £1,150 to £2,500. They now say that they would leave it at that. They certainly would not.
The hon. Member for Somerset, North (Mr. Dean), who was leading for the Conservative Government, said that it was their intention that the upper contribution limit should be around 1½ per cent. times gross earnings. That is what we have done. Although many of my constituents are upset, I must say that the Government have treated the matter fairly. It is said that the self-employed should pay their share as a flat-rate contribution, with the self-employed person on £70 a week paying the same as the man on £20 or £30 a week. If that were put into effect some of the small shopkeepers who have had to suffer a great deal from slum clearance and such problems in the great cities would have to pay a much greater contribution. As it is, contributions will be assessed fairly on income.
It has been suggested that there should be an increased contribution by the self-employed to that they could draw unemployment benefit as well. Fair enough. There is an argument for that. There is an argument for saying to the self-employed "You pay the same as the employer-employee contribution; get the same tax relief and the same benefits." However, I do not think that they would accept it. I must say that the Government have acted in fairness, and I shall support them in the Lobby.
§ 8.50 p.m.
§ Mrs. Lynda Chalker (Wallasey)
Like other hon. Members I welcome any improvement in social security benefits, but although the Government have stated time and again that they aim to be fair I do not feel that they are being fair to women who opted out and wish to continue to opt out. Nor are they being fair to the self-employed.
I was delighted to learn that the Minister now agrees that the pensioner population is rising very fast. I hope that he will remember this when we discuss the Government's second pension proposals based on the actuarial statement that the pensioner population will not be substantially greater in 1998 than in 1978.
I am concerned tonight to look forward to the future for people who are doing their best to keep their economic heads 1176 above water and to create industry. I do so coming from an area with nearly 10 per cent. unemployment. I want to see those with whom we are concerned today, people who want to do well for themselves, getting encouragement. As contributions of various kinds, be they fiscal measures, increased business rates, rising interest charges, or the difficulty of getting a loan from the bank, all encroach upon them, the Government are placing on top a very steep rise which could have been avoided if they had looked a little further.
When the leaflets on this measure were distributed my constituents were in uproar, and many have joined the association we have heard about tonight. They know, through the harsh experience of the last three or four months, that there is no joy when the self-employed man goes bust, when his employees are out of a job. For him there is no redundancy pay. Nor does he get industrial injury benefit. He gets none of the benefits which so many of us have taken for granted for a very long time.
I commend to the Minister the quotation from John Milton used by the Secretary of State for Employment yesterday about our people:a nation not slow and dull, but of a quick, ingenious and piercing spirit, acute to invent, subtle and sinewy in discourse, not beneath the reach of any point the highest that human capacity can soar to.It is this sort of inspiration which is the drive behind self-employed people. They are people who want to do better, to be self-reliant, to exercise individual responsibility. These are the people who will set the lead and put to rights many of the things which are wrong today in our country.
We may all have to take some individual belt-tightening. That we shall accept, and no doubt we shall know all about it next Tuesday, but by this Bill the Government are imposing an unfair burden on top of all the other burdens the self-employed have. We have heard about the beautiful lives of self-employed men who work from home; but they are subject to capital gains tax by using their home place for employment, they are subject to commercial rating. Neither of these things is a prospect to be enjoyed.
How are self-employed people to go on creating wealth? The answer is that 1177 they are not going to do so. The action of the Government in putting this additional burden on them rather than on employed people, which is where, presumably, it could otherwise be, is unfair. There are 6 million people employed by small firms and there are about 1¼ million small businesses. It is not only farmers who are threatened, as my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) pointed out; it is any small business which happens to be a family business, because this Bill is yet another measure from a Government bent on destroying incentive and the initiative of people who want to do better for themselves and to create new wealth. The Government are all set to destroy that incentive and that wealth.
As my constituents go out of business, I do not come lightly to the House to ask the Minister to go back to the drawing board with this Bill. In Committee, if we do not defeat the Government this evening, he must bear in mind the craftsmen and the many businesses that are not dying just for now but dying for good, businesses on which this country has rested before and on which it has depended in times of trouble and to which we turn more and more. There is a great deal that the Government can do to inspire people to do better. That is what they should do, rather than destroy every incentive that those people try to create for themselves.
§ 8.56 p.m.
§ Mr. R. A. McCrindle (Bentwood and Ongar)
I have sat through most of this debate, as I find myself sitting through most of the debates on social security. Unfortunately, because the clock is running against me, I shall have to speak rather more fleetingly than I wish. However, I should start by saying that there is always something of an old boys' reunion about these debates as on both sides of the House there are Members who are regular contributors, but these debates are none the less valuable for that.
As nobody has yet done it, I should like to congratulate the hon. Member for Rhondda (Mr. Jones) on his elevation to junior Minister at the Department. He and I have not always agreed about social security matters, but I have always respected the great sincerity that he brings to them and I was as delighted with 1178 his elevation as I should have been with that of any hon, Gentleman on his side of the House. I wish him a suitably short but appropriately happy stay.
The hon. Member for Manchester, Gorton (Mr. Marks) flattered me out of all recognition when he said that I had inflicted a heavy defeat on the Conservative Government. I must confess that I did not think I had done it single-handed. I remember that in Committee I had the small assistance of himself and the hon. Member for Islington, South and Finsbury (Mr. Cunningham). I shall look forward to seeing the pensions legislation that is brought forward by the hon. Gentleman's Government to see whether, after all the sound and fury in which I was happy to join in those days, the point that we were trying to make is taken up by the right hon. Lady in her legislation. It will be interesting to see the Bill's final form.
I have to make an inevitably short speech and I therefore want to stick to the subject of the self-employed. It is a theme that has been running through every speech from both sides of the House this evening, and mine is no exception. I do so because I genuinely detect an incipient rise of feeling among this class in the community, and I believe that the Government would be unwise to turn a deaf ear to the sounds that are emerging from a section of society that until now has been comparatively taciturn.
I believe that the feeling of unfairness —I emphasise that it is a feeling of unfairness—that emanates from the self-employed, as manifested in their quite extreme opposition to the increasing rates that they are having to pay, is something to which the Government must pay attention, even though they may rationalise it, as some of their more capable Members have tonight rationalised it, as a feeling of unfairness rather than necessarily unfairness itself.
The fact is that, in a society in which to get something for nothing appears to have become almost the order of the day, the self-employed see themselves as being asked to pay something for nothing. This is a twist in the something-for-nothing syndrome. I believe that the Government must pay attention to this sense of injustice. What the self-employed complain of is to some extent less that they are being asked to pay more, than that 1179 they are being asked to pay more for, again as they see it, no additional benefit.
I must be careful. During the long period that I served on the Standing Committee which considered the 1973 Social Security Bill I accepted the principle which basically we are discussing tonight. It can be summarised as a redistribution of income. If any hon. Member cares to consult the record of those proceedings, he will see that I spoke of it in those terms—and comparatively approvingly. I do not speak against the principle of a redistribution of income in this regard, but I draw attention to the fact that, that principle having to be accepted, the seemingly unfair way in which it is being done to the self-employed person is the real source of grievance.
I tried to get some figures from the Minister earlier in the debate—unsuccessfully, I may say. But there lies the kernel of the argument of the self-employed. If we say to them that, at a high level of income, if a person is employed his contribution will go down but that if he is self-employed and earning the same amount his contribution will go up substantially, no matter how the self-employed person rationalises the need to redistribute income that will rankle considerably.
There is a feeling among the self-employed that this proposal represents a transfer of income from the hard-working, the industrious, the independent, the risk-taking sector of society to those who perhaps have not been prepared to show these qualities. At a time when qualities of that kind are progressive at a premium, the Government would be unwise to run the risk of this feeling becoming widespread.
If a self-employed person wishes to provide a reasonable pension for himself, he has to do it under a self-employed pension scheme. Although there are tax reliefs of a sizeable order to encourage him to do so because he does not have an employer to pay the employer's contribution, nevertheless he sees that as his employer's contribution and he cannot understand why the overall benefits that he receives are in his view so inadequate and unfair.
1180 At the heart of this debate is the question of how the present Government view the self-employed man. I wonder whether they welcome the risk-taking, the inpendence, the preparedness sometimes to give up a job with regular hours in order to take on a business which is a major challenge and to work far longer than when one had an employer and to show that spirit of independence which has been the watchword of the self-employed since time immemorial. Do the Labour Government welcome the existence of the self-employed, or is it their eventual ambition so to discourage the whole business of moving into self-employment that in the end the number will recede and disappear?
The other mistake which the Government make is somehow to equate the man who is self-employed with the self-employed barrister or stockbroker earning a very high income. They have to accept that there are thousands of small self-employed people such as greengrocers, newsagents and other shopkeepers. It is they rather than the self-employed stockbroker or barrister who have this sense of grievance. The Government would be extremely unwise to overlook this view which is so prevalent among such people. Even at this late stage, I hope that the Government will pay real attention to the fact that every speech from this side of the House has touched on this one point and that the Minister will ask himself whether, if he continues to insist on pushing ahead with this measure, he will not alienate the self-employed upon whom ultimately every Government depend.
§ 9.5 p.m.
§ Mr. Kenneth Clarke (Rushcliffe)
My first pleasant duty is to congratulate the two maiden speakers whom we have heard enlivening our proceedings on the Bill.
The hon. Member for Sheffield, Bright-side (Miss Maynard) made an eloquent and welcome contribution to the debate. I regret, Mr. Deputy Speaker, that you will not allow me to enter into the discussion about agricultural tied cottages which she managed to introduce into the discussion on the Social Security Amendment Bill. Nevertheless I was fascinated by it. I look forward to similar contributions on the same theme in other debates from the hon. Lady. Of course, we remember her predecessor. Although it is not for me 1181 to give words of advice to anybody, perhaps we should advise her during her tenure in this House not to accept invitations from Tory Members to spend weekends with them for any purpose anywhere since that led her predecessor into some difficulty with his Labour association.
The hon. Member for Dunbartonshire, East (Mrs. Bain) also made an eloquent speech and offered us the support of the Scottish National Party. We welcome the way in which she made her contribution and look forward to hearing her speak again. It occurred to me as the debate went on that the Government and the Minister who is to reply to the debate should take warning from the fact that the Scottish National Party has offered its support to us.
It is not only from the Conservative benches that the Government's proposals are being attacked. The Government are no doubt fearful that one day this strange coalition, as we undoubtedly are, might come together. It has not taken very long for us to win the support of the Liberal, the Scottish National and the United Ulster Unionist Parties, all of whom have taken part in the debate and have said that they will support our amendment in the Division Lobby.
My further pleasant duty is to welcome the new Minister to his responsibilities. This is the first opportunity I have had of welcoming him. All who speak on this subject are familiar with his views. I genuinely join my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle) in welcoming the hon. Gentleman to his position and look forward to his contribution.
I am glad that we have a new Minister replying to the debate. After the period for reflection since the last debate, it is time that we had some new attitudes being brought by the Government to bear on the difficulties they have got into by the way they have framed this legislation.
Reference has been made to the fact that this is our second debate on the subject. It is our second attempt going back to July this year, and the Government have had time to reflect. The Minister of State can hardly be startled to find that this time we are taking a more severe view in both the debate and 1182 the Division Lobby. The Government consistently ignored our warnings in July when we pointed out what we thought must have been inadvertence, and now the Bill comes back quite unaltered on important matters. Indeed, it contains what we see as a savage attack on the independence of the self-employed and on married women who exercise the choice that they are entitled to exercise to pay the reduced rate of contribution. The Bill appears to be a determined and persistent Socialist attack on self-reliance which is presented before the House again.
We must get crystal clear the basis upon which we continue to make our attack. The Minister of State has come back to his seat. In his introductory speech he displayed his usual charm, but sometimes, if I may say so with respect, he is a slippery customer when it comes to presenting such matters. The hon. Gentleman is a past master at covering himself with a smokescreen of the intricacies of the National Insurance Scheme. Those who ask for more agreement on the figures should, when they reread his speech, notice that the figures on both sides are agreed but that the hon. Gentleman slips from percentages in one category to figures in the next and from comparisons with 1973 at one moment to comparisons with the present time the next. The hon. Gentleman has been concealing himself under a smokescreen.
Our position remains clear. We welcome the increases in benefits that the Government believed they were able to afford when they announced them in the spring. We accept that the public appreciate the problems of pensioners and other beneficiaries and are certainly prepared to pay. Increases are easily announced. The skill of the Government in this sphere should be to share the burden of paying for those increases fairly and not to go beyond the capacity of any group to pay. We suggest that that is what they have failed to do.
Fortunately, one of the few things that has become clear is that the Government are building on the proposals in the Social Security Act 1973. We do not go back on them. In fact we are proud to have introduced the concept of graduated, earnings-related contributions to finance the National Insurance Scheme. 1183 It helps us to escape from the previous restraints on the system which meant that the level of the stamp had to be pegged to what the lowest paid could afford to bear. Our new structure means that there is new revenue and buoyancy in the fund.
The 1937 Act always meant that our new graduated contribution would become payable in April 1975. Under our scheme, contributions for the lower paid would always go down. It is no good the Minister emphasising how considerable sections have the burdens reduced. The Conservative Government's reform had that built implicitly into it. Also, I accept that our structure always envisaged increases for the better paid in April 1975. Here we begin to come to what an American would call the rub. It was very welcome, and I shall not say that it was with an eye to a coming election, when the Labour Government increased the benefits substantially in the spring of this year and provided for great improvements in benefit for hard-pressed sections of the community. That is fair enough. That means that the Government are increasing further the increases in contribution which we left in the pipeline even before they have become payable. Therefore, increases which we contemplated are having to be increased to pay for this spring's review.
For that reason, the increases in this Bill are not only increases in the scales of income on which the contributions bear—we had always envisaged that; that would have been right if the Government had done it—but the Government have had to increase the percentage of contribution category by category. Over and above the increases in national insurance contribution which became payable in August of this year on top of the increases in personal taxation which the Chancellor of the Exchequer introduced in the March Budget, they are having to increase the percentages always implicit in our contribution proposals.
I almost say again "Fair enough", because we accepted the increase in benefits this spring and we must therefore accept that the increase in contributions had to go up. But if our proposals for the percentages on which the contribution should be assessed had to be in- 1184 creased, those percentages should have been spread across the board to all categories under the structure which we left behind. Our case is that that has not been done. The Government have intervened in the structure and they have transformed our proposals for two groups, the self-employed and the married women. It is wrong for the Government to pretend that they have not done so. They are hitting some members of those two groups much harder than we proposed or envisaged.
That is the proper basis for comparison with what was envisaged in 1973. The Government have twisted our structure to penalise those two categories by increasing the percentages to pay for this year's increase. The comparison to be made in discovering how the burden has been laid on different categories is this. The employed person's contribution is raised from 5.25 per cent. to 5.5 per cent. over the adjusted range of earnings—a modest increase. That is not so with the other categories whose cause we are taking up.
Let me deal first with the stark difference for married women who opt to pay the lower contribution. The comparison with the small increase from 5.25 per cent. to 5.5 per cent. is that the married woman's option contribution has been more than trebled, from 0.6 per cent. to 2 per cent. if she continues to exercise the option. With the greatest respect, the Minister's figures on that dragged in yet again the effect of taking away the Boyd-Carpenter contributions, which is not too surprising, as the benefit is being totally abolished. The hon. Gentleman cannot possibly try to avoid the implications of the fact that the Government are more than trebling the contribution for married women.
The Government have a case and we know what it is, but they will not put it forward frankly. They want to abolish the married woman's option and are moving towards doing so. That is why they have trebled this percentage. There is no point in their hiding their case. They should not wriggle away and hide among the figures but should clearly state why they want to abolish the option. They cannot hide it in the Bill, because Clause 2(4) gives appallingly open-ended discretion to the Secretary of State to interfere 1185 with the option. We will want to raise that in Committee.
I want to deal briefly with the campaign to end the option. I have found, as many other hon. Members must have found, that many feminist organisations, for lack of a better phrase, have been deceived into believing that this policy is some kind of progressive step towards the emancipation of women. I regret to find that many of them take a superficial look and believe that the apparent step towards parity of treatment is a step towards equality.
This is a gross misunderstanding. Feminist organisations which take that view are allowing women in work to be fiddled by the changes which are to be made. Many of us who believe in the emancipation of women and who like to think that equal treatment should be automatic in modern circumstances in the process of government nevertheless believe that there is a genuine case for the married woman's option to pay a reduced rate.
Three out of four married women at the moment pay that reduced rate. Looked at from their interest as working women and calculated on a financial basis, they are quite right to exercise that option. It is a bad bargain for most married women to pay a full national insurance contribution. The simplest example is that of pensions. A married woman is entitled on her husband's contribution to £6 of pension even if she never goes to work. If a woman contributes for her entire working life she will get only a £10 single person's pension in her own right but is not entitled to that in addition to the married woman's pension of £6 on her husband's contribution. Married women contribute through their working life for an extra £4 only, and if they pay the same contribution as a working man he gets £10 pension and they get only £4 in addition to what they would get on their husband's contributions. The only women to whom it is usually and obviously an advantage to pay a full contribution are women who are older than their husbands, when there can be advantages in getting the single pension much earlier.
Possibly there is a second reason why the Department wants to move towards doing away with the option. It is that 1186 married women could be a valuable source of revenue, a useful way of subsidising the other people in the scheme, if more of them were to pay an increased contribution. The result is that we think it is not so apparently equal as it is made to appear that the married woman's option is envisaged to be abolished.
The immediate effect of the Government's sidling towards its abolition in the Bill is to make a great deal of difference to the position of married women compared with their position under our Act. Under the 1973 Act a woman earning £20 a week would pay 12p. Now, under these proposals she will pay 40p. Under the 1973 Act a woman earning £69 would pay 29p a week, which the Bill will put up to £1.38. That is a swingeing increase, and there will be no increase in benefit. By exercising the option, women get only the National Health Service and industrial injury benefit there will be no improvement in pensions for them at all. That is an increase from 29p to £1.38 each week for the worst affected category of women.
There is an even worse case than that, and that is the position of the self-employed, where again the Government have made a pig's ear of the way they have tried to distribute the burden in the Bill. In the debate in July we warned of the outrage that this particular group would feel once they began to realise what was proposed for them. I should think that all hon. Members, in all parts of the House, now know from the lobbying they have had that that warning has proved right. It has been described by many hon. Members, including my hon. Friend the Member for Basingstoke (Mr. Mitchell) and others, as a wide-ranging group.
It worries one, in a way, that it turned out that the category that we were most troubled about was Members of Parliament and that we were not aware of our precise position under this legislation, which turns out by chance to be that we shall cease to be self-employed in April next year. But worse consequences will hit the rest of the self-employed, such as shopkeepers, window-dressers, the professions, translators and parsons. Those who have premises and those who are businessmen are badly hit by rates from which they have had no relief, and they 1187 are badly hit by increases in personal taxation as well.
That is the particular body whose position I want to analyse in detail. There is no longer tax relief on national insurance contributions. Therefore, when they look at the extra increases in the pipeline for them on national insurance contributions, they know that they will have to pay them out of taxed income, and they have to earn that much more to pay for the increases.
The Secretary of State, and perhaps the Under-Secretary if he is tempted to imitate, cannot retreat into what are, with respect, colouring points. The earnings bracket for the graduated contributions is up, and quite rightly so—it was always envisaged to be so—from £1,150—£2,500, to £1,600—£3,500 now. For the sake of argument I shall accept that the Government have that calculation right and that it remains roughly in the same relationship to average national earnings. At the same time, however, what we are dealing with again is the percentage increase. That is not, for self-employed persons, up by a mere quarter of 1 per cent. The percentage is up from 5 per cent. to 8 per cent. and it has a very dramatic effect.
I should like to give the figures as clearly as I can, because the Minister of State clearly evaded interventions from my hon. Friend the Member for Brentwood and Ongar when he tried to tie him down. They agreed that they were both simple men, as certainly I am. The actual impact in money terms of what we are doing to the self-employed—the House must have this point brought home to it—is that in February 1974. when the Conservatives left office, all self-employed people paid £1.99. In August 1974 that payment rose to £2.41 each week. Our 1973 Act would have reduced the £1,600-a-year man's payment to £2.11 and would have put those above £2,500 up to £2.98. I admit that these are crude figures. This Bill takes the £2,500-a-year man up to £3.79 and the £3,600-a-year man up to £5.49.
I want to dwell on the enormity of the position of the man earning £3,600 a year; he is not a poor man, but that is by no means a king's ransom. If he is a shopkeeper earning that sort of money, 1188 from paying £1.99 each week in February of this year he will be going up to £5.49 each week in April next year. Taking slightly lower figures, the self-employed person on £2,500 each year is going up from £1.99 in February of this year to £3.79 in April next year. At the same time, over that same period, the payment of the employed man receiving £40 a week—that is equivalent to the last case I have mentioned—is going up from £2.15 to £2.21. He will be paying another 6p over the same period. That is the discrepancy that the Government have allowed to come in.
These sudden, swingeing increases in taxation, on any category of people, are utterly wrong in principle. They are quite out of line with the modest increase from 5.25 per cent. to 5.5 per cent. All self-employed persons, in one year, are going from paying less than the equivalent person in employment to paying substantially more.
We said that there was a difficult problem in comparing the contributions of the self-employed with those of the employed sector, because in theory—quite correctly, in a way—one has to look at the employer's contribution as well when one looks at the person in employment. I accept that it can be argued that the self-employed have been treated comparatively well over the years and have got themselves into a position of advantage. My right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) dealt with this point in opening. If such theoretical arguments are introduced and if they have merit, one sudden hike in one year to put them back into a position of equivalence is quite wrong.
We must face the reality. It is a reality made stronger now that we are going over to graduated contributions. These payments are increasingly felt to be, and argued to be, personal taxation on the individuals paying them. I should have thought not only that it is the Scottish Nationals, the Ulster Unionists and the Conservatives that can agree but that across the House we can agree that sudden and dramatic increases for particular categories in personal taxation are highly undesirable in principle, particularly when the unfairness of the situation can be illustrated by the fact that the better-off window cleaner will find that he will be paying more from his earnings 1189 in national insurance contributions than those engaged in middle management.
I will illustrate again how bad the comparison is. The worst effect that will arouse the most dramatic public feelings is the enormous change which is to take place in April 1975. There will be a sudden increase next year. Suddenly in one week people will find that they are paying much more. The employed man on £69 a week is the worst affected: he will pay 39p more each week from April of next year. In the light of pension increases, I do not expect that he will be very excited about that. The self-employed man on £3,600 a year—the equivalent man—will pay £3.08 a week more as an overnight increase in his contribution. If there is meant to be some equity in the Government's sharing of the burden of increased social security benefits, why are the self-employed chosen to have the broadest backs? As several of my hon. Friends have said, we can only infer from these grotesque figures that there are, perhaps sub-consciously, motives of prejudice in members of the Labour Party.
I repeat that the worst-affected category is the band on £69 a week, or £3,600 a year, if self-employed. Let us look at the big discrepancy at that level and bear in mind as a purely random example that that is about the earnings level of a coalface worker in the mining industry. Here we come to the nub of why the burden has been distributed in this way. I ask my right hon. and hon. Friends to try to picture Members of the Labour Party going to a coalface worker and telling him that next week his national insurance contribution was to rise by £3. There is not a chance that a Labour Party Member would act in that way. The Labour Party is not prepared to propose those increases to useful people in the industrial trade unions. Those increases are being reserved for the self-employed. We say that those increases should not be demanded of any section, but a particularly vulnerable section has been chosen.
§ Mr. George Cunningham
The hon. Gentleman has some responsibility for what we are now legislating. Is he claiming that the benefits which the self-employed will derive in future from the scheme will be lower than the contributions which they will pay into the scheme, 1190 or is his objection based purely on the ground that the jump is too rapid in one stage?
§ Mr. Clarke
The actual benefits they receive are restricted, as they are to all the self-employed vis-à-vis the employed. My objection is to the sudden increase in the sharing out of the overall burden which leads to this great discrepancy between the increase demanded of self-employed people and the increase demanded of employed persons. The comparison is dramatic.
The group who are being singled out, because the Labour Party will not single out industrial workers, are a particularly vulnerable group in an inflationary year. On top of the rate increases and personal taxation increases, these changes threaten ruin for small shopkeepers as an obvious category of people. We warned in the debate in July that the outrage that would greet these increases when people really became aware of them in April 1975 would rival the ratepayers' revolt earlier this year. It seems likely that it may coincide with another ratepayer's revolt at about this time next year in any event.
It seems to me and to many of my hon. Friends, all of whom have warned the Government, that there is a serious risk of Poujadism, to quote an hon. Member opposite, and of the rage in these groups burning to an extreme extent when they find the burden placed upon them in April next year. We spelt out all our warnings on 1st July, and a great deal of time has gone by. So far the Government have been completely heedless and have come back with an identical Bill. We want to do all we can as an Opposition to force the Government to rethink and spread the burden fairly. Our arguments were not persuasive in July. They have been reinforced this evening. We intend to reinforce our feelings by dividing the House on our reasoned amendment against the Bill. We are confident that we have the legitimate interests of a worthwhile section of the community in mind when we press the matter to a Division.
§ 9.32 p.m.
§ The Under-Secretary of State for Health and Social Security (Mr. Alec Jones)
Like the hon. Member for Rushcliffe (Mr. Clarke), I begin by following the pleasant custom of congratulating the 1191 two maiden speakers who took part in tonight's debate, and I do so for the first time from this Dispatch Box. It is somewhat appropriate that they are truly "maiden" maiden speakers. [Interruption.] Perhaps I should say that on the assumption that all gentlemen in this House are honourable Gentlemen, all ladies here are honourable Ladies.
I congratulate the hon. Lady the Member for Dunbartonshire, East (Mrs. Bain). Some of us have appreciated her charm as she has walked up and down the corridors in the past fortnight. Having heard her speak, I am certain that many of us were impressed by her sincerity when she spoke on matters affecting the well-being of her constituents. She did not adhere to the convention of being non-controversial. In fact, she tried to do my right hon. Friend the Secretary of State for Scotland out of a job. Perhaps I had better not say too much on that subject at the moment. However, in all honesty I can say that I am sure that all who heard her enjoyed her contribution and that we all look forward, as one of my hon. Friends said, to hearing her—but not too often.
Then we heard the maiden speech of my hon. Friend the Member for Sheffield, Brightside (Miss Maynard), who told us that there were more women workers in her constituency than in any other. I have never counted the women workers in my constituency and I will give her that point, but I should have thought that her speech indicated that the women workers in Brightside have been increased in numbers by one since she represented that constituency. We have known her as a valiant fighter for farm workers and others in another capacity before she came to this House. I am sure we all appreciate the sincerity and determination with which she expressed her concern about the rights and problems of her new constituency. I certainly hope that we shall hear my hon. Friend often, and for as long as she cares to make it.
Perhaps I might add that one reason which gives me ground for confidence that we shall have at least my hon. Friend's support on the Bill tonight is that, according to the figures I have seen, agricultural workers, who have to exist, as she put it, on about £25 a week, will be 27p a week better off as a result of 1192 the Bill and the decrease in their national insurance contributions.
I must say a word now to the hon. Member for Rushcliffe. We have sat opposite one another both in this Chamber and in Committee rooms many times and discussed various aspects of national insurance. I was very grateful to him for his kind words about me. I realise that in the past, because of his previous duties, he has often had to be silent on national insurance matters, but I welcome his contribution today. I did not agree with much of it. I agreed with the nice beginning, and I think I agreed when he sat down, but in between we came to a minor parting of the ways. However, I thank the hon. Gentleman sincerely. I express my gratitude also to the hon. Member for Brentwood and Ongar (Mr. McCrindle), who is threatening us with some awkward votes on subsequent social security questions.
In many ways, I stand at this Dispatch Box today feeling rather like a poacher turned gamekeeper. Having been present at or taken part in almost every debate on social security since I came to the House in 1967, I hope to be as vigilant now as gamekeeper as I strove to be active as poacher.
Our debate today is reminiscent of a television repeat of an old film. We have heard all the major arguments put forward. Those arguments were answered point by point by my hon. Friend the Minister of State in our debate on 1st July, and they have been answered again today. Once again we have had the criticisms, which have become slightly more strident as the months have passed from July to November. I shall try to deal with some of the points, but I am sure that most hon. Members will agree that many of the detailed questions are rightly matters for the Committee, which is likely to turn out to be an extremely interesting Committee. My hon. Friend the Member for Newham, North-West (Mr. Lewis) made a plea for simplicity and suggested that he would be helped if some easily understandable figures were provided. He has my sympathy. I have never found statistics in social security matters particularly easy to handle. Hence, I fear that the Committee which will have to deal with the details is likely to be something of a statistical nightmare.
1193 If we want higher benefits, if we want better benefits, if we want new benefits, we have to accept that they must be paid for and that they have to be paid for by those best able to pay. This is a matter of political judgment. It is a matter of some political controversy and disagreement. But our view is that the Bill strikes about the right balance of contributions among employers, employees, self-employed and women in employment, bearing in mind the benefits which those groups receive.
In social security matters there are two irreconcilables—benefits and contributions. While we would all like to have the highest benefits with the lowest contributions, we have to be realistic. To propose increases in benefits without indicating where the money is to come from to pay for them is an easy proposition but a dangerous one because it raises false hopes among the people in real need. Similarly, to propose a reduction in any one contribution, as some hon. Member have done today, without saying which benefits should be cut back or which contribution should be increased is bordering on cowardice, if not something infinitely worse.
It seems crazy to talk of the contributions being too high unless one is able to explain where the finance would come from if the contribution were cut. Higher national insurance contributions provided for in the Bill will yield about £4,790 million in 1976–77. That sum is vital if we are to fulfil our commitment to increase benefits.
My right hon. Friend the Secretary of State made a statement last March in which she spoke of the pension increases which took effect on 22nd July. All hon. Members welcomed the increased level of benefits. At the same time my right hon. Friend clearly indicated that those benefits would have to be paid for. She said: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.Later she added:We intend to introduce legislation later in the year to secure income to the National Insurance Fund which will still be adequate to the new levels of benefit after April 1975."— 1194 [OFFICIAL REPORT, 27th March 1974; Vol. 871, c. 453–4.]That is what the Bill is all about. We are finding the money to pay for the benefits which the House approved and which all hon. Members have supported at one time or another. In view of the support these increases have commanded and in view of my right hon. Friend's clear indication that the increased contributions would be necessary, I find the turn-about of the Conservatives surprising.
If we were talking merely about benefits—
§ Sir G. Howe
The hon. Gentleman is presenting a naive argument with characteristically attractive naivety. The Secretary of State in her statement said that there were to be increases in contributions. We accept that, and we have made it plain that we accept it. But the legitimate point upon which we quarrel is the distribution of the contributions. I hope the hon. Gentleman will tell his right hon. Friend that if she had been present throughout the debate she would have heard a number of alternative suggestions put forward. What the Government are proposing amounts to a wrongly distributed load.
§ Mr. Jones
I have previously made the point that we are involved with a question of distribution. That has been a matter of political judgment and of disagreement between us. But I do not believe that any hon. Member who has spoken in the debate and who has criticised what we are now proposing has categorically stated an alternative way of raising the money. There have been all sorts of suggestions, and I look forward to the Committee stage when perhaps Opposition Members will tell us how they think the new benefits should be financed.
I shall now try to deal with one or two smaller points raised during the debate before going on to the two major issues. A domestic element is involved. I have in mind, for instance, the point made by my hon. Friend the Member for Newham, North-West. Not being well conversant with income tax regulations I was rather taken aback by the point made by my hon. Friend, but it is true that Members of Parliament will be class 1 contributors from April 1975. I say this because of the confusion that has been 1195 caused. Members of Parliament will be class 1 contributors because they are office-holders who pay taxes through PAYE and because this was laid down in the 1973 Act. It was, apparently, preceded by consultation.
This position will not arise in relation to other people mentioned by my hon. Friend the Minister of State, but I understand that each case has to be judged on its merits. There is provision that the situation will depend largely on the contract of employment and on the terms of that contract.
Another hon. Member referred to the position of ministers of religion. I understand that this matter is still under discussion.
§ Mr. Arthur Lewis
I am obliged to my hon. Friend for confirming what I had at first thought was the position. Should other people who may feel that they have a special case for consideration make approaches to my hon. Friend's Department before the Bill goes through the Committee stage? Would it be too late for them to make approaches afterwards, or does my hon. Friend suggest that they make approaches officially as soon as possible?
§ Mr. Kenneth Lomas (Huddersfield, West)
I hope that it will be borne in mind by the Government Front Bench that it should not be taken for granted on this side of the House that all self-employed people are necessarily rich. I am not going to speak of Members of Parliament in this context, but I have in mind, for instance, vicars and people who run small corner shops. We have a responsibility as a Government to be fair, and we should not think in terms of the self-employed being recognised as people we can milk.
§ Mr. Jones
I am grateful to my hon. Friend for that intervention, but steps that we are proposing in the Bill will ensure that among the self-employed those with the lowest income will have the smallest increases in contributions.
1196 I turn now to the question of the self-employed. It is a vexed question that arouses a great deal of heat and excitement. I say to the hon. Member for Brentwood and Ongar and other hon. Members that I do not dissent from their glowing tributes to the self-employed in which they used terms like "hardworking" and "industrious". [Interruption.] That is a lot kinder than the hon. Gentleman was to employed persons. If one says that the self-employed are hardworking and industrious, without any reference to the others, the implication is that the others are infinitely less so.
It was also suggested that Labour Members are vindictive and hostile to self-employed people. There are self-employed people living in our constituencies as well as those of Conservative Members. It is in our interests to look after them. To suggest that we are deliberately hostile to them was not only nonsense but was to play politics, forgetting that the election is over and that this side won.
§ Mr. McCrindle
If the Minister and the Government were not being hostile to the self-employed, why, having given a Second Reading in the last Parliament to a Bill introducing large and wide-ranging increases to be paid by the self-employed, did they decide, with an election on the horizon, that the best thing they could do was to refrain from taking the Bill to Committee and reintroduce it in the next Parliament?
§ Mr. Jones
Anyone who believes that will believe anything.
There are bound to be differences between us on the question, which we will resolve. But a great deal of the criticism is ill-informed and much is completely inaccurate.
The fears of the National Federation of Self Employed were mentioned. Most hon. Members have received a letter in which the federation says:In a little over a year this"—the self-employed contribution—has been increased by over 100 per cent. to £2.41 weekly.That is nonsense. It does not do the case any good when people exaggerate like that. In 1972 the self-employed contribution was £1.68, in 1973 it was £1.99 and in 1974 it was £2.41. Between 1973 and 1974 the increase was 21 per cent., 1197 and at the maximum, from 1972 to 1974, the increase was 43 per cent. I ask all hon. Members not to accept the points so easily made in such literature.
When the 1948 Beveridge scheme was introduced, the self-employed paid a contribution which was 70 per cent. of the combined class 1 rate. In strict actuarial terms, to pay for the benefits they were to receive—they were denied certain benefits—that contribution should have been 90 per cent. It was deliberately set lower. Over the years it fell to 40 per cent. The Bill restores it to about 65 per cent. From April 1975 the combined class 1 rates will be 14 per cent. of earnings—that is, with the 5.5 per cent. and the 8.5 per cent. The combined class 2 and class 4 rate is equivalent to about 8 per cent. on self-employed earnings of £30 a week and above.
If the original Beveridge ratio were applied, the self-employed would have to pay 9.8 per cent. in April 1975 instead of the 8 per cent. that we propose in the Bill. The April 1975 charges bear more heavily on the self-employed man than on the employed man because since 1961 the employed have had to pay graduated contributions to finance higher pensions while the self-employed have paid flat-rate contributions only. The increases in flat-rate class 2 contributions have not maintained the original 70 per cent. ratio.
The proposals in the Bill show that, far from being discriminated against, the self-employed are still not back to the 70 per cent. contribution which the Beveridge scheme introduced.
The other point of major disagreement is the earnings band. The suggestion has been made that the Conservatives would have kept the present band of £1,150 to £2,500 instead of our proposal of £1,600 to £3,600. That clearly is not so. Throughout the Committee proceedings the hon. Member for Somerset, North (Mr. Dean) clearly indicated that the figures were illustrative and would have
to be revised. On 25th January in Committee the hon. Gentleman said:
I reiterate that the Government have declared their intention that the upper contribution limit in the new scheme should broadly correspond to one and a half times national average earnings."—[OFFICIAL REPORT, Standing Committee E, 25th January 1973; c. 279.]
That is virtually what we have done.
I understood that the right hon. and learned Gentleman wished to retain the percentage contribution of 5 per cent. He was thus tending to accept the suggestion that the band should be raised from £1,600 to £3,600. As a consequence he would find himself having to accept an increase of flat-rate contribution from £2.41 to £2.70. If those premises are right, that is the difference between our proposals and the proposals that the right hon. and learned Gentleman would have to bring to the House. A self-employed man with earnings of £11 a week under our proposals would pay £2.41 and under the proposals of the Opposition would pay £2.70. If we move to the other end of the scale, the self-employed man on £69 a week under the our proposals would pay £5.49 and under the proposals of the Opposition £4.62. That is a saving of 87p. That does not represent a massive, swingeing increase, which the Opposition have suggested.
We have been told by the Opposition that they will vote against the Bill. We have been told that the Liberal Party will join them. This Bill is the same Bill which the then hon. Member for Hazel Grave, Dr. Winstanley, described in July. He said:
the vote will be a formality because the Bill deals only with the basic pension…To that extent the Bill is non-controversial."—[OFFICIAL REPORT, 1st July 1974; Vol. 876, c. 65.]
It is the same Bill tonight. The only change is that we won the election and the Conservative and Liberal Parties did not.
§ Question put, That the amendment be made:
§ The House divided: Ayes 274, Noes 291.1203
|Division No. 4.]||AYES||[10.0 p.m.|
|Alison, Michael||Bell, Ronald||Body, Richard|
|Arnold, Tom||Bennett, Sir Frederic (Torbay)||Boscawen, Hon Robert|
|Atkins, Rt Hn H. (Spelthorne)||Bennett, Dr Reginald (Fareham)||Bowden, Andrew (Brighton)|
|Awdry, Daniel||Benyon, W. R.||Boyson, Dr Rhodes (Brent)|
|Bain, Mrs M.||Berry, Hon. Anthony||Braine, Sir Bernard|
|Baker, Kenneth||Biffen, John||Brittan, L.|
|Banks, R. G.||Biggs-Davison, John||Brotherton, Michael|
|Beith, A. J.||Blaker, Peter||Brown, Sir Edward (Bath)|
|Bryan, Sir Paul||Holland, Philip||Penhaligon, David|
|Buchanan-Smith, Alick||Hooson, Emlyn||Percival, Ian|
|Buck, Antony||Hordern, Peter||Peyton, Rt Hon John|
|Budgen, N.W.||Howe, Rt Hon Sir Geoffrey||Pink, R. Bonner|
|Bulmer, J. E.||Howell, David (Guildford)||Powell, Rt Hon J. Enoch|
|Burden, F. A.||Howells, Geraint (Cardigan)||Price, David (Eastleigh)|
|Butler, Adam (Bosworth)||Hurd, D.||Prior, Rt Hon James|
|Carlisle, Mark||Hutchison, Michael Clark||Pym, Rt Hon Francis|
|Carson, John||Irvine, Bryant Godman (Rye)||Rathbone, T.|
|Chalker, Mrs Lynda||Irving, Charles (Cheltenham)||Rawlinson, Rt Hon Sir Peter|
|Churchill, W. S.||James, David||Rees, Peter (Dover & Deal)|
|Clark, Alan (Plymouth S)||Jenkin, Rt Hon Patrick (Redbr)||Rees-Davies, W. R.|
|Clark, William (Croydon S)||Jessel, Toby||Reid, George|
|Clarke, Kenneth (Rushcliffe)||Johnson Smith, G. (E Grinstead)||Renton, Rt Hn Sir D. (Hunts)|
|Clegg, Walter||Jones, Arthur (Daventry)||Renton, Tim (Mid-Sussex)|
|Cockcroft, J. H.||Jopling, Michael||Ridley, Hon Nicholas|
|Cooke, Robert, (Bristol W.)||Joseph, Rt Hon Sir Keith||Ridsdale, Julian|
|Cope, J. A.||Kaberry, Sir Donald||Rifkind, Malcolm|
|Cordle, John||Kellett-Bowman, Mrs. Elaine||Roberts, Michael (Cardiff NW)|
|Cormack, Patrick||Kershaw, Anthony||Roberts, Wyn (Conway)|
|Corrie, John||Kilfedder, James||Rodgers, Sir John (Sevenoaks)|
|Costain, A. P.||Kimball, Marcus||Ross, William (Londonderry)|
|Crawford, Douglas||King, Evelyn (South Dorset)||Rossi Hugh (Hornsey)|
|Critchley, Julian||King, Tom (Bridgwater)||Rost, Peter (S.E. Derbyshire)|
|Crouch, David||Kitson, Sir Timothy||Royle, Sir Anthony|
|Crowder, F. P.||Knight, Mrs Jill||Sainsbury, Tim|
|Davies, Rt Hon J. (Knutsford)||Knox, David||St. John-Stevas, Norman|
|Dean, Paul (N Somerset)||Lamont, Norman||Scott, Nicholas|
|Dodsworth, G. H.||Lane, David||Shaw, Giles (Pudsey)|
|Douglas-Hamilton, Lord James||Langford-Holt, Sir John||Shelton, William (Lambeth, St)|
|Drayson, Burnaby||Latham, Michael (Melton)||Shepherd, Colin|
|du Cann, Rt Hon Edward||Lawrence, I.||Shersby, Michael|
|Durant, Tony||Lawson, Nigel||Silvester, F.|
|Dykes, Hugh||Le Marchant, Spencer||Sims, Roger|
|Eden, Rt Hon Sir John||Lester, Jim (Beeston)||Sinclair, Sir George|
|Edwards, Nicholas (Pembroke)||Lewis, Kenneth (Rutland)||Skeet, T. H. H.|
|Elliott, Sir William||Lloyd, Ian (Havant)||Smith, Cyril (Rochdale)|
|Emery, Peter||Loveridge, John||Smith, Dudley (Warwick)|
|Eyre, Reginald||Luce, Richard||Speed, Keith|
|Fairbairn, Nicholas||McAdden, Sir Stephen||Spence, John|
|Farr, John||MacCormick, Iain||Spicer, James (W Dorset)|
|Fell, Anthony||McCrindle, Robert||Spicer, Michael (S Worcester)|
|Finsberg, Geoffrey||McCusker, Harold||Sproat, Iain|
|Fisher, Sir Nigel||Macfarlane, Neil||Stanbrook, Ivor|
|Fletcher, Alex (Edinburgh N)||MacGregor, John||Stanley, John|
|Fletcher-Cooke, Charles||McNair-Wilson, M. (Newbury)||Steel, David (Roxburgh)|
|Fookes, Miss Janet||McNair-Wilson, P. (New Forest)||Steen, Anthony (Liverpool)|
|Fowler, Norman (Sutton C)||Marshall, Michael (Arundel)||Stewart, Donald (Western Isles)|
|Fox, Marcus||Marten, Neil||Stewart, Ian (Hitchin)|
|Fraser, Rt Hon H. (Stafford & St)||Mates, Michael||Stokes, John|
|Freud, Clement||Mather, Carol||Tapsell. Peter|
|Fry, Peter||Maude, Angus||Trylor, R. (Croydon N.W.)|
|Galbraith, Hon T. G. D.||Mawby, Ray||Taylor, Teddy (Glasgow, C)|
|Gardiner, George (Reigate)||Maxwell-Hyslop, Robin||Tebbit, Norman|
|Gardner, Edward (S Fylde)||Mayhew, Patrick||Temple-Morris, P.|
|Gilmour, Sir John (East Fife)||Meyer, Sir Anthony||Thatcher, Rt Hon M.|
|Glyn, Dr Alan||Miller, Hal (Bromsgrove)||Thomas, Rt Hon P. (Barnet)|
|Goodhart, Philip||Mills, Peter||Thompson, G.|
|Goodhew, Victor||Miscampbell, Norman||Thorpe, Rt Hon Jeremy (Devon)|
|Goodlad, A.||Mitchell, David (Basingstoke)||Townsend, Cyril D.|
|Gorst, John||Moate, Roger||Trotter, Neville|
|Gow, I. (Eastbourne)||Molyneaux, James||Tugendhat, Christopher|
|Gower, Sir Raymond (Barry)||Monro, Hector||Vaughan, Dr Gerard|
|Grant, Anthony (Harrow C.)||Montgomery, Fergus||Viggers, P. J.|
|Gray, Hamish||Moore, John (Croydon C.)||Wainwright, R. (Colne Valley)|
|Grieve, Percy||More, Jasper (Ludlow)||Wakeham, John|
|Griffiths, Eldon||Morgan, Geraint||Walder David (Clitheroe)|
|Grimond, Rt Hon J.||Morgan-Giles, Rear-Admiral||Walker Rt Hon P. (Worcester)|
|Grist, Ian||Morris, Michael (Northants)||Wall, Patrick|
|Grylls, Michael||Morrison, Charles (Devizes)||Walters, Dennis|
|Hall, Sir John||Morrison, Peter (Chester)||Warren, Kenneth|
|Hall-Davis, A. G. F.||Mudd, David||Watt, Hamish|
|Hamilton, Michael (Salisbury)||Neave, Airey||Weatherill, Bernard|
|Hampson, Dr. Keith||Nelson, Anthony||Whitelaw, Rt Hon William|
|Hannam, John||Neubert, M.||Wiggin, Jerry (Weston-s-Mare)|
|Harrison, Sir Harwood (Eye)||Newton, A.||Wilson, Gordon (Dundee E)|
|Harvie Anderson, Rt Hn Miss||Nott, John||Winterton, Nicholas|
|Hastings, Stephen||Onslow, Cranley||Wood, Rt Hon Richard|
|Havers, Sir Michael||Oppenheim, Mrs Sally||Young, Sir George (Ealing)|
|Hawkins, Paul||Osborn, John||Younger, Hon George|
|Hayhoe, Barney||Page, Rt Hon R. Graham (Crosby)|
|Heath, Rt Hon Edward||Page, John (Harrow West)||TELLERS FOR THE AYES:|
|Heseltine, Michael||Paisley, Rev Ian||Mr. John Stradling Thomas and Mr. Cecil Parkinson.|
|Hicks, Robert||Pardoe, John|
|Higgins, Terence L.||Pattie, Geoffrey|
|Abse, Leo||Evans, Ioan L. (Aberdare)||McCartney, Hugh|
|Allaun, Frank||Evans, John (Newton)||McElhone, Frank|
|Anderson, Donald||Ewing, Harry (Stirling)||MacFarquhar, R.|
|Archer, Peter||Faulds, Andrew||McGuire, Michael (Ince)|
|Armstrong, Ernest||Fernyhough, Rt Hon E.||Mackenzie, Gregor|
|Ashley, Jack||Fitch, Alan (Wigan)||Madden, Max|
|Ashton, Joe||Fitt, Gerard (Belfast)||Magee, Bryan|
|Atkins, Ronald (Preston N.)||Flannery, Martin||Mahon, Simon|
|Bagier, Gordon A. T.||Fletcher, Raymond (Ilkeston)||Mallalieu, J. P. W.|
|Barnett, Guy (Greenwich)||Fletcher, Ted (Darlington)||Marks, Ken|
|Barnett, Joel (Heywood)||Foot, Rt Hon Michael||Marquand, David|
|Bates, Alf||Ford, Ben T.||Marshall, Dr Edmund (Goole)|
|Benn, Rt Hn Anthony Wedgwood||Forrester, John||Marshall, Jim (Leicester S)|
|Bennett, A. (Stockport North)||Fowler, Gerald (The Wrekin)||Mason, Rt Hon Roy|
|Bidwell, Sydney||Fraser, John (Lambeth N)||Maynard, Miss Joan|
|Bishop, Edward||Freeson, Reginald||Meacher, Michael|
|Blenkinsop, Arthur||Garrett, W. (Wallsend)||Mellish, Rt Hon Robert|
|Boardman, H.||George, Bruce||Mendelson, John|
|Booth, Albert||Gilbert, Dr John||Mikardo, Ian|
|Boothroyd, Miss Betty||Ginsburg, David||Miller, Dr M. (E. Kilbride)|
|Bottomley, Rt Hon Arthur||Gould, Bryan||Miller, Mrs Millie (Redbridge)|
|Boyden, James (Bish Auck)||Gourlay, Harry||Molloy, William|
|Bradley, Tom||Graham, Ted||Moonman, Eric|
|Bray Dr Jeremy||Grant, George (Morpeth)||Morris, Alfred (Wythenshawe)|
|Brown, Hugh D. (Glasgow, Pr)||Grant, John (Islington C.)||Morris, Charles R. (Openshaw)|
|Brown, Robert C. (Newcastle)||Grocott, Bruce||Mulley, Rt Hon Frederick|
|Brown, Ronald (Hackney S)||Hamilton, James (Bothwell)||Murray, Ronald King|
|Buchan, Norman||Hamilton, W. W. (Central Fife)||Newens, S.|
|Buchanan, Richard||Hamling, William||Noble, Mike|
|Butler, Mrs Joyce (Haringey)||Hardy, Peter||Oakes, Gordon|
|Callaghan, Rt Hon J. (Cardiff S)||Harper, Joseph||Ogden, Eric|
|Callaghnn, Jim (Middleton & P)||Harrison, Walter (Wakefield)||O'Halloran, Michael|
|Campbell, Ian||Hattersley, Roy||O'Malley, Brian|
|Canavan, Dennis||Hatton, Frank||Orbach, Maurice|
|Cant, R. B.||Hayman, Mrs Helene||Orme, Rt Hn Stanley|
|Carmichael, Neil||Healey, Rt Hon Denis||Ovenden, J.|
|Carter-Jones, Lewis||Heffer, Eric S.||Owen, Dr David|
|Cartwright, John||Hoolay, Frank||Padley, Walter|
|Castle, Rt Hon Barbara||Horam, John||Palmer, Arthur|
|Clemitson, I. M.||Howell, Denis (B'ham Sm H)||Park, G.|
|Cocks, Michael (Bristol S)||Hoyle, Douglas (Nelson)||Parker, John|
|Cohen, Stanley||Huckfield, Leslie||Parry, Robert|
|Coleman, Donald||Hughes, Rt Hon C. (Anglesey)||Perry, Ernest|
|Colquhoun, Mrs Maureen||Hughes, Mark (Durham)||Phipps, Dr C.|
|Conlan, Bernard||Hughes, Robert (Aberdeen N)||Prescott, John|
|Cook, Robin F. (Edin. C.)||Hughes, Roy (Newport)||Price, C. (Lewisham W.)|
|Corbett, Robin||Hunter, Adam||Price, William (Rugby)|
|Cox, Thomas (Wands Toot)||Irvine, Rt. Hon Sir A. (L'pool)||Radice, Giles|
|Craigen, J. M. (Glasgow, M)||Irving, Rt Hon S. (Dartford)||Richardson, Miss Jo|
|Crawshaw, Richard||Jackson, Colin (Brighouse)||Roberts, Albert (Normanton)|
|Cronin, John||Jackson, Miss Margaret (Lincoln)||Roberts, Gwilym (Cannock)|
|Cryer, G. R.||Janner, Greville||Robertson, John (Paisley)|
|Cunningham, G. (Islington S)||Jay, Rt Hon Douglas||Roderick, Caerwyn|
|Cunningham, Dr J. (Whiteh)||Jeger, Mrs Lena||Rodgers, George (Chorley)|
|Dalyell, Tam||Jenkins, Hugh (Wandsworth)||Rodgers, William (Teesside)|
|Davidson, Arthur||John, Brynmor||Rooker, J. W.|
|Davies, Bryan (Enfield N)||Johnson, James (Kingston W)||Roper, John|
|Davies, Denzil (Llanelli)||Jones, Barry (East Flint)||Rose, Paul B.|
|Davies, Ifor (Gower)||Jones, Dan (Burnley)||Ross, Rt Hon W. (Kilm'nock)|
|Davis, S. Clinton (Hackney C)||Jones, Alec (Rhondda)||Rowlands, Ted|
|Deakins, Eric||Kaufman, Gerald||Ryman,John|
|Dean, Joseph (Leeds West)||Kelley, Richard||Sandelson, Neville|
|de Freitas, Rt Hon Sir Geoffrey||Kerr, Russell||Sedgemore, B.|
|Delargy, Hugh||Kilroy-Silk, Robert||Selby, Harry|
|Dell, Rt Hon Edmund||Kinnock, Neil||Shaw, Arnold (Redbridge, Ilf)|
|Dempsey, James||Lambie, David||Sheldon, R. (Ashton-u-Lyne)|
|Doig, Peter||Lamborn, Harry||Short, Mrs R. (Wolv NE)|
|Dormand, Jack||Lamond, James||Silkin, Rt Hn S. C. (Southwk)|
|Douglas-Mann, Bruce||Latham, Arthur (Paddington)||Silkin, Rt Hn John (Lewish)|
|Duffy, A. E. P.||Leadbitter, Ted||Sillars, James|
|Dunlop, J.||Lee, John||Silverman, Julius|
|Dunn, James A.||Lestor, Miss J. (Eton & Slough)||Skinner, Dennis|
|Dunnett, Jack||Lever, Rt Hn Harold||Small, William|
|Dunwoody, Mrs G. P.||Lewis, Arthur (Newham N.)||Smith, John (N Lanarkshire)|
|Eadie, Alex||Lewis, Ron (Carlisle)||Snape, Peter|
|Edelman, Maurice||Lipton, Marcus||Spearing, Nigel|
|Edge, Geoffrey||Litterick, Tom||Spriggs, Leslie|
|Edwards, Robert (Wolv SE)||Lomas, Kenneth||Stallard, A. W.|
|Ellis, John (Brigg & Scun.)||Loyden, Eddie||Stoddart, David|
|Ellis, Tom (Wrexham)||Luard, Evan||Slott, Roger|
|English, Michael||Lyon, Alexander (York)||Strang, Gavin|
|Evans, Fred (Caerphilly)||Lyons, Edward (Bradford W.)||Strauss, Rt Hon G. R.|
|Evans, Gwynfor (Carmarthen)||Mabon, Dr J. Dickson||Summerskill, Hon Dr Shirley|
|Swain, Thomas||Walden, Brian (B'ham, L'dyw'd)||Williams, A. L. (Havering)|
|Taylor, Mrs Ann (Bolton W)||Walker, Harold (Doncaster)||Williams, Rt Hn Mrs S. (Hertford)|
|Thomas, Dafydd (Merioneth)||Walker, Terry (Kingswood)||Williams, W. T. (Warrington)|
|Thomas, Jeffrey (Abertillery)||Ward, Michael||Wilson, Alexander (Hamilton)|
|Thomas Mike (Newcastle)||Watkins, David||Wilson, Rt Hon H. (Huyton)|
|Thomas, Ron (Bristol NW)||Watkinson, John||Wilson, William (Coventry SE)|
|Thorne, S. G. (Preston)||Weetch, Ken||Wise, Mrs. Audrey|
|Tierney, Sydney||Weitzman, David||Woodall, A.|
|Tinn, James||Wellbeloved, James||Woof, Robert|
|Tomlinson, J.||White, Frank (Bury)||Wrigglesworth, Ian|
|Tomney, Frank||White, James (Glasgow P)||Young, David (Bolton E)|
|Torney, Tom||Whitehead, Phillip|
|Tuck, Raphael||Whitlock, William||TELLERS FOR THE NOES:|
|Urwin, T. W.||Wigley, Dafydd (Caernarvon)||Mr. Walter Johnson and Mr. Laurie Pavitt.|
|Varley, Rt Hon Eric G.||Willey, Rt Hon Frederick|
|Wainwright, Edwin (Dearne V)||Williams, Alan (Swansea)|
§ Question accordingly negatived.
§ Main Question put forthwith pursuant to Standing Order No. 39 (Amendment on Second or Third Reading), and agreed to.
§ Bill accordingly read a Second time.
§ Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).