§ The Secretary of State for Social Services (Mrs. Barbara Castle)I will, with permission, Mr. Speaker, make a statement about increases in social security benefits. My right hon. Friend the Chancellor of the Exchequer yesterday announced the main features.
The increases in benefit will take effect in the week beginning 7th April 1975. Thus, in view of the recent rapid inflation, benefits are to be increased eight and a half months after the previous general uprating in July of this year. My right hon. Friend went further and made it clear that the Government are planning another increase to take effect in December 1975 but that it is our intention to return to an annual cycle of upratings as inflation is brought under control.
We are committed to increasing the level of pensions and other long-term benefits in line with the movement in national average earnings, unless the movement in prices would be more advantageous for those concerned. The latest known movement in earnings over a period of nine months—roughly the length of time between the upratings last July and next April—is about 15½ per cent. Over the same period prices rose by just over 12½, per cent. We are increasing pensions and other long-term benefits by about 15½ per cent. before rounding.
The standard rate of retirement pension, together with invalidity pension and widows' pension, will go up in April by £1.60 to £11.60 a week. Married couples will get an increase of £2.50, bringing their joint pensions up to £18.50 a week at the standard rate. Younger widows, 417 and pensioners on reduced rate pensions, will get proportionate increases. Old persons' pensions, which are payable to those over the age of 80 who do not get a normal national insurance pension, will go up from £3.70 to £4.30 for wives and from £6 to £6.90 for others.
My right hon. Friend the Secretary of State for the Environment has authorised me to say that he proposes, after consulting his advisory committee, to make corresponding increases in the needs allowance for rent and rate rebates and rent allowances. As in the last uprating, therefore, increases in social security benefits will not generally have the effect of reducing housing benefits. Similarly, supplementary benefits will be kept in line. And my right hon. Friend the Chancellor yesterday announced new and improved tax allowances for all elderly people over 65.
Short-term national insurance benefits for unemployment and sickness will be increased by £1.20 for a single person and £2 for a married couple, making the single person's rate £9.80 and the married couple's rate £15.90 a week. These are increases of about 14 per cent. Maternity allowance and injury benefit will go up by the same amounts. I should remind the House that many short-term beneficiaries get an earnings-related supplement on top of their flat-rate benefits. The higher rate of attendance allowance will go up from £8 to £9.20 and the lower rate from £5.35 to £6.20.
The 100 per cent. war and industrial injuries disablement pensions will go up from £16.40 to £19. The standard rate of war widow's pension will be increased from £13 to £15 and the industrial injuries widow's pension from £10.55 to £12.15.
I turn now to support for families. My right hon. Friend has announced that we propose to raise family allowances for the first time since they were increased by a Labour Government in 1968. The increases in family allowances—which will he subject to normal tax only—will also take effect in the week beginning 7th April. We propose to end the distinction between second and subsequent children, and the rate will become £1.50 for all qualified children.
418 The Government are committed to extend the family allowance to the first child under their child allowance scheme, and I shall be making a statement on the timing and other details of this scheme in due course. In the meantime, we are doubling the earnings disregard for supplementary benefit which is of such importance for one-parent families.
Increases in long-term benefits in respect of children will go up to the level of £5.65 for each child, inclusive of family allowances—at their new levels—where these are payable. Short-term benefits will be increased to £3.10 in respect of each child, inclusive of family allowances where payable. These rates for children do, of course, apply also to first children.
I shall be bringing before the House shortly proposals for increasing in 1975 the prescribed amounts for family income supplement.
As I have said, the increases in the main scale rates of supplementary benefit will be the same as the increases in the corresponding national insurance benefits; and the increases will come into force at the same time. Thus, married supplementary pensioners, and other couples who qualify for the long-term supplementary benefit rates, will get the £2.50 increase proposed for retirement and invalidity pensioners. If they live alone, supplementary pensioners, and other supplementary beneficiaries who qualify for the long-term rate, will get the increase of £1.60 proposed for national insurance long-term benefits. A supplementary pensioner living alone will therefore become entitled to have his income brought up to at least £12 a week, and a married couple receiving supplementary pension to at least £18.85 a week, plus rent and rates in each case.
The supplementary benefit ordinary rates, which are payable to persons who are neither of pensionable age nor qualify for the long-term rates, will go up in line with the increases in the short-term national insurance benefits, by £2 for a married couple and £1.20 for a person living alone.
The cost of all these increases in social security benefit in Great Britain will be about £1,125 million in a full year, of 419 which £207 million is for family allowances. A sum of £810 million will fall on the National Insurance Fund. As my right hon. Friend explained in his Budget Statement yesterday, the inherent buoyancy of revenue from fully earnings-related national insurance contributions is expected to be sufficient to cover this additional fund expenditure. This means no further change in the rates of national insurance contributions to apply from April 1975 contained in the Social Security Amendment Bill which is now before the House.
For the convenience of the House I am circulating details of the new rates of benefits in the OFFICIAL REPORT. These, with copies of my statement, are available in the Vote Office. The uprating Bill, accompanied by the Government Actuary's report, is being published today. The Bill will provide for the increases in benefits under the national insurance, industrial injuries and family allowances schemes. The increases in the supplementary benefit scale rates will be made by regulations which will be brought before Parliament in due course; the increases in benefits under the war pensions scheme will be made through instruments under the Royal Prerogative.
The Bill also includes two other provisions which I am sure will be welcomed on both sides of the House. First, it will provide the legislative framework for two of the proposals—a new non-contributory invalidity pension and a new invalid care allowance—contained in my report on "Social Security Provision for Chronically Sick and Disabled People".
Secondly, the Bill will provide for substantial improvements in supplementary benefit disregards, which it is our intention to bring into effect as soon as operationally possible after the main uprating. The amount of savings which will be completely ignored in calculating benefits will be increased from the present band of £300 to £800 to a flat £1,200. The disregards of income will be increased and simplified and, in particular, the doubling of the earnings disregards to which I have already referred will enable a lone parent to earn up to £4 a week without benefit being affected. This is a positive step towards implementing one of the important recommendations contained in the report of the Finer Committee.
420 There is one other matter, relating to the disabled, which I ought to mention. I recognise that the increase in value added tax on petrol announced yesterday by my right hon. Friend the Chancellor of the Exchequer will cause some difficulty for disabled drivers. I am considering this problem urgently with my right hon. Friend and with my hon. Friend the Minister with responsibility for the disabled.
These various increases and improvements make clear the Government's determination to protect the interests of pensioners and other social security beneficiaries, and to afford them the social justice to which we are deeply committed.
§ Sir G. HoweThe right hon. Lady will not expect me to comment in detail on a very long statement. Will she accept that my right hon. and hon. Friends and I welcome her conversion to the need for more frequent upratings of benefits while inflation persists at its present rate, and in particular her recognition of the fact that prices have increased in the past nine months at the rate of 12½ per cent. and not at an annual rate of 8.4 per cent., as the Chancellor said? Will she recognise that we also welcome the improvement in disregards which she has announced? Can she say whether she would propose to disregard altogether the earnings by teenage children in families dependent on supplementary benefit?
Can she also tell us by how much and when the Government propose, as foreshadowed by her right hon. Friend the Secretary of State for Education, to increase the charges for school meals? Can she say, when that takes place, what will be the net value of the increased family allowances for families paying the standard rate of income tax? Can she further say why in the light of the intention of the Chancellor, well understood, to raise energy prices as soon as possible, she proposes no increase in heating allowances? Can she try to justify the Government's intention to reintroduce the quite unjustified increases in taxation on savings income, even of pensioners who can hardly be regarded as well off, at a level of £30 a week?
§ Mrs. CastleThe right hon. and learned Gentleman, however hard he tries, will not be able to dredge any credit for our performance out of his party's unfulfilled 421 promises. He will be well aware that when we took over in March we discovered no evidence of any intention or preparation by the former Tory Government to introduce any six-monthly reviews. Indeed, the speed with which we proceeded to introduce our uprating at the end of a period of nine months led to intense difficulties with our own staff because the previous administration had cut their numbers rather than expanded them to prepare for any more frequent reviews.
May I point out to the right hon. and learned Gentleman that from when the previous Labour Government took office in March 1974 until the next uprating, pensions will have been increased by almost 50 per cent.—and that is in a period of just over a year. If the right hon. and learned Gentleman believes that the House will accept that he would have done any better, then he is living in a fool's paradise. He will know that school meals are a matter not for me but for my right hon. Friend the Secretary of State for Education. My right hon. Friend will be considering the point to which reference has been made.
Turning now to the question about heating allowances, the House will know that the Supplementary Benefits Commission increased the figures for heating additions by one-third in July this year as part of the uprating introduced then. Since then it has reviewed the criteria for heating allowances and has this month circulated full details in a new leaflet, a copy of which I shall make available in the Library, if it is not already there. I say seriously to the House that I believe that these new criteria can lead to a considerable extension of the number of those qualifying for heating additions. I ask all hon. Members to examine these new criteria closely and to ensure that their constituents get the benefit of them. The Supplementary Benefits Commission will, of course, be keeping the whole heating position under review.
§ Mr. George CunninghamWill my right hon. Friend accept that the admirable package announced today and yesterday has one severe flaw? I refer to the continuation of the earnings rule in relation to the normal retirement pensioner. Is my right hon. Friend aware that it will seem extremely wrong for the Chancellor to use £280 million yesterday 422 to reduce the tax incidence on people over the age of 65 when half of that money could have been used completely to abolish the earnings rule for retirement pensioners? Can she offer any hope that the earnings rule can be abolished in the near future?
§ Mrs. CastleAs my hon. Friend knows, we have relaxed it substantially in the last uprating. My hon. Friend also knows that it would cost £160 million completely to abolish it. It is a moot point whether, given a choice, old-age pensioners would have made the choice he has mentioned ill contrast to that offered to them by the Chancellor. It remains our policy to keep this under review. We cannot give a further relexation this round, but we are intending to relax the rule increasingly as resources allow.
§ Mr. WoodBefore the right hon. Lady gets too excited on the subject of uprating, may I ask whether she can confirm that review and uprating will continue twice a year in 1976 if prices are still rising considerably at that time? Can she also say whether the 12½ per cent. increase in prices since the last review—compared with the 14 per cent. to 15½ per cent. increase in benefits—applies to the situation now or does it take into account a further rise before the up-rating takes place in April?
§ Mrs. CastleDuring the election we told pensioners quite clearly that our policy was to uprate pensions as frequently as necessary. We did not commit ourselves as a matter of philosophy to six-monthly reviews. It will be the hope of the whole House that the country at some time in the future will be able to bring this exceptional inflation under control. We have said that we shall have two uprating in 1975 because of the exceptional conditions but that we shall then move to annual reviews in so far as inflation has been brought under control. That is a clear, fair and proper statement of what the policy should be.
As to the rise in prices, the position today is that the value of the increase that came into operation in July is still 12.4 per cent. for a single pensioner and 11.5 per cent. for a married couple, taking the latest price figures available, those for September this year. It would obviously be wrong and impossible for me to attempt to forecast what will be the 423 movement in prices up to the period ending in April next year.
§ Mr. Frank AllaunI am a growing admirer of my right hon. Friend. She is doing very well and she must have fought hard for her corner in the Cabinet. May I put a question to her? Would it not have been fairer, instead of reducing the claw-back, to grant the family allowance to the first child earlier than she intends?
§ Mrs. CastleThere is no relation between the Government's decision not to claw back the family allowance increase and the inability to announce now the extension of family allowance to the first child. The first decision rests on its own merits. To have clawed back this family allowance increase, as my right hon. Friend explained yesterday, would have meant that a number of families would have been worse off. A number of quite humble families would have been brought into the tax range when otherwise that would not have happened. Therefore, I think that it was entirely right that we should say that this increase should be subject to ordinary tax. This problem will not arise when we get our child allowance scheme into operation, because that will involve a merging of the child tax allowance and the family allowance in one comprehensive child allowance. But I cannot say any more at this stage as to when we can introduce this scheme. I have said that I shall be making in due course an announcement about the timing and other details of the extension of family allowances to the first child—a cause which is as close to my heart as it is to that of my hon. Friend.
Mr. MeCrindleMay I ask about the situation which exists until such time as the Government feel able to move to the situation in which family allowance will be paid for the first child? Will the right hon. Lady say whether any consideration was given in the recent review to the use of family income supplement as a means of bridging the gap between the present situation and the desirable situation to which she has just referred?
§ Mrs. CastleIt is our desire to get rid of family income supplement as soon as possible. It is an inadequate and counter-productive means-tested scheme. It was the Opposition's alternative, when 424 they were in Government, to keeping their election promise to raise family allowances. They never kept that promise. Instead, they gave us a scheme which contained so many disincentives and such a poverty trap that its take-up is only 50 per cent. Clearly, I shall be completely reviewing family income supplement in connection with this uprating. To us it must remain as an interim palliative until we can get our proper child allowances scheme into operation. I have already said, in the statement that I have just made, that I shall be making a statement shortly about the extension of this uprating to FIS.
§ Mr. Arthur LewisMay I ask my right hon. Friend why she has been unable to make an announcement about a petrol allowance for the disabled? Surely she must have known about the matter. Will she give an assurance that when this allowance is introduced it will be retrospective? Will she bear this matter in mind, because she knows, as does everyone else, that the cost of petrol is likely to rise to £1 a gallon by the end of the year? That is a fact. [HON. MEMBERS: "Oh."] Perhaps I am wrong. Perhaps I should say that everyone knows that that cost will go down. Nevertheless, the physically disabled are in great difficulty. Can my right hon. Friend, here and now, give an assurance that those who receive this allowance will have it retrospectively and that by next week she will be able to announce that this money will be paid?
Finally, I wish that the Chancellor had given way to me yesterday. I should not then have had to telephone about this matter this morning or to have asked this question.
§ Mrs. CastleI assure my hon. Friend that the Chancellor keeps his Budget secrets very close to his chest. Therefore, it has been a question of taking this on board only in the last few hours. We do have a little time. The increases do not come into effect until next Monday. I assure my hon. Friend that I have had a sympathetic response at once from the Chancellor. We are considering urgently the details of what should be done about this problem.
§ Mr. RidsdaleI welcome the increases proposed by the right hon. Lady. However, is she aware of the grave difficulties facing retirement pensioners in rural 425 areas? They feel this difficulty particularly when they see that concessionary fares are given in London but not in rural areas because local councils cannot afford to do it. What will the Government do about this matter?
§ Mrs. CastleThe answer lies with the local authorities. The hon. Gentleman says that the rural authorities cannot afford these concessionary fares, but all that I can say is that many poor industrial areas, under Labour local authorities, have managed to find the money.
§ Mr. UrwinI join in expressing my personal admiration for my right hon. Friend's proposals, which I am sure will be warmly welcomed throughout the country. In pursuance of the implementation of the pledge firmly to link retire
| MAIN INCREASED NATIONAL INSURANCE BENEFIT RATES | ||
| Proposed Weekly Rate | Existing Rate | |
| £ | £ | |
| Standard rate of invalidity, widow's and retirement* pensions and widowed mother's allowance | 11.60 | 10.00 |
| Increase for wife or other adult dependant | 6.90 | 6.00 |
| Standard rates of unemployment and sickness benefits: | ||
| Higher rate | 9.80 | 8.60 |
| Increase for wife or other adult dependant | 6.10 | 5.30 |
| Lower rate | 6.90 | 6.05 |
| Widow's allowance (first 26 weeks of widowhood) | 16.20 | 14.00 |
| Maternity allowance | 9.80 | 8.60 |
| Invalidity allowance payable with invalidity pension, when incapacity began before age: | ||
| 35 | 2.40 | 2.05 |
| 45 | 1.50 | 1.30 |
| 60 for men or 55 for women | 0.75 | 0.65 |
| Attendance allowance: | ||
| Higher rate | 9.20 | 8.00 |
| Lower rate | 6.20 | 5.35 |
| Pensions for old people (over the age of 80): | ||
| Higher rate | 6.90 | 6.00 |
| Lower rate | 4.30 | 3.70 |
| Guardian's allowance | 5.65 | 4.90 |
| Child's special allowance and increases for children of widows, invalidity and retirement pensioners: | ||
| First child | 5.65 | 4.90 |
| Second child† | 4.15 | 4.00 |
| Any other child† | 4.15 | 3.90 |
| Increases for children of all other beneficiaries: | ||
| First child | 3.10 | 2.70 |
| Second child† | 1.60 | 1.80 |
| Any other child† | 1.60 | 1.70 |
| * An age addition of 25p is payable to retirement pensioners who are aged 80 or over. | ||
| † Family allowances bring the total payments up to the amount payable for the first child. |
§ ment pensions with industrial wages in particular, will my right hon. Friend tell the House what percentage of industrial wages she is aiming to achieve concerning retirement pensions?
§ Mrs. CastleThe current policy of the Government at its regular upratings is to uprate in line with the movements which have taken place in average earnings, where these are more favourable to the pensioner. As the figures I have given in my statement show, these are certainly more favourable to the pensioner at present.
§ Mr. SpeakerOrder. We must move on towards the Budget debate.
§ Following is the information:
427| MAIN INCREASED INDUSTRIAL INJURIES BENEFIT RATES | ||||
| Proposed Weekly Rate | Existing Rate | |||
| £ | £ | |||
| Injury benefit*† | … | … | 12.55 | 11.35 |
| Disablement benefit (100 per cent, assessment)* | … | … | 19.00 | 16.40 |
| Unemployability supplement‡ | … | … | 11.60 | 10.00 |
| Special hardship allowance (maximum) | … | … | 7.60 | 6.56 |
| Constant attendance allowance (normal maximum) | … | … | 7.60 | 6.60 |
| Exceptionally severe disablement allowance | … | … | 7.60 | 6.60 |
| Industrial death benefit: | ||||
| Widow's pension during first 26 weeks of widowhood | … | 16.20 | 14.00 | |
| Widow's pension now payable at £10.55 rate | … | … | 12.15 | 10.55 |
| Widow's pension now payable at £3.00 rate | … | … | 3.48 | 3.00 |
| * Increases will also be made in the juvenile rates. | ||||
| † Increases for adult dependants and children will be the same as those for unemployment and sickness benefit—see National Insurance table. | ||||
| ‡ Invalidity allowances and increases for adult dependants and children will be the same as those payable with invalidity pensions—see National Insurance table. |
| MAIN INCREASED WAR PENSION RATES | ||||
| All ranks receive the same increases, officers' rates being expressed in pounds per annum. | ||||
| PART I: DISABLEMENT BENEFITS | ||||
| Proposed Weekly Rate | Existing Rate | |||
| £ | £ | |||
| Disablement pension for private at 100 per cent, rate | … | … | 19.00 | 16.50 |
| Unemployability allowances*: | ||||
| Personal allowance | … | … | 12.40 | 10.75 |
| Increase for wife or adult dependant | … | … | 6.90 | 6.00 |
| Comforts allowance: | ||||
| Higher rate | … | … | 3.20 | 2.80 |
| Lower rate | … | … | 1.60 | 1.40 |
| Allowance for lower standard of occupation (maximum) | 7.60 | 6.56 | ||
| Constant attendance allowance: | ||||
| Special maximun | … | … | 15.20 | 13.20 |
| Special intermediate | … | … | 11.40 | 9.90 |
| Normal maximum | … | … | 7.60 | 6.60 |
| Half and quarter day | … | … | 3.80 | 3.30 |
| Age allowance with assessments of: | ||||
| 40 and 50 per cent. | … | … | 1.40 | 1.20 |
| 60 and 70 per cent. | … | … | 2.10 | 1.80 |
| 80 and 90 per cent. | … | … | 3.00 | 2.60 |
| 100 per cent. | … | … | 4.20 | 3.60 |
| Exceptionally severe disablement allowance | … | … | 7.60 | 6.60 |
| Severe disablement occupational allowance | … | … | 3.80 | 3.30 |
| Proposed Annual Rate | Existing Annual Rate | |||||||||
| £ | £ | |||||||||
| Clothing allowance: | ||||||||||
| High | … | … | … | … | … | … | … | … | 29.00 | 26.00 |
| Intermediate | … | … | … | … | … | … | … | 19.00 | 17.00 | |
| Low | … | … | … | … | … | … | … | … | 10.00 | |
| * Invalidity allowances and increases for adult dependants and children will be the same as those payable with invalidity pensions—see National Insurance table. |
| PART II: DEATH BENEFITS | ||||
| Proposed Weekly Rate | Existing Rate | |||
| £ | £ | |||
| Widow's pension—private's widow: | ||||
| Standard rate | … | … | 15.00 | 13.00 |
| Childless widow under 40 | … | … | 3.48 | 3.00 |
| Rent allowance | … | … | 5.80 | 5.00 |
| Age allowance for elderly widows: | ||||
| Between age 65 and 70 | … | … | 1.50 | 1.30 |
| Over age 70 | … | … | 3.00 | 2.60 |
| Widower's pension | … | … | 15.00 | 13.00 |
| Widow's children: | ||||
| Eldest child | … | … | 5.85 | 5.10 |
| Other children with family allowance | … | … | 4.85 | 4.60 |
| Other children without family allowances | … | … | 5.70 | 4.95 |
| Motherless and fatherless children aged: | ||||
| Under 15 Eldest child or other children with no family | 5.85 | 5.10 | ||
| Over 15 allowances | … | … | 7.35 | 6.60 |
| Under 15 Other children with family allowances | … | … | 4.85 | 4.60 |
| Over 15 | … | … | 6.35 | 6.10 |
| Adult orphans | … | … | 11.60 | 10.00 |
| MAIN INCREASED SUPPLEMENTARY BENEFIT RATES | |||||
| Proposed Ordinary Weekly Rate | Proposed Long-Term Weekly Rate* | Existing Ordinary Rate | Existing Long-Term Rate* | ||
| £ | £ | £ | £ | ||
| Ordinary scale: | |||||
| Husband and wife | … | 15.65 | 18.85 | 13.65 | 16.35 |
| Person living alone | … | 9.60 | 12.00 | 8.40 | 10.40 |
| Any other person aged: | |||||
| Not less than 18 | … | 7.65 | 9.65 | 6.70 | 8.40 |
| Less than 18 but not less than 16 | … | 5.90 | — | 5.15 | — |
| Less than 16 but not less than 13 | … | 4.95 | — | 4.35 | — |
| Less than 13 but not less than 11 | … | 4.05 | — | 3.55 | — |
| Less than 11 but not less than 5 | … | 3.30 | — | 2.90 | — |
| Less than 5 | … | 2.75 | — | 2.40 | — |
| Blind scale: | |||||
| Husband and wife: | |||||
| If one of them is blind | … | 16.90 | 20.10 | 14.90 | 17.60 |
| If both of them are blind | … | 17.70 | 20.90 | 15.70 | 18.40 |
| Any other blind person aged: | |||||
| Not less than 18 | … | 10.85 | 13.25 | 9.65 | 11.65 |
| Less than 18 but not less than 16 | … | 6.80 | — | 6.05 | — |
| Less than 16 but not less than 13 | … | 4.95 | — | 4.35 | — |
| Less than 13 but not less than 11 | … | 4.05 | — | 3.55 | — |
| Less than 11 but not less than 5 | … | 3.30 | — | 2.90 | — |
| Less than 5 | … | 2.75 | — | 2.40 | — |
| Proposed Weekly Rate | Existing Weekly Rate | |||||||
| £ | £ | |||||||
| Non-householder rent allowance | … | … | … | … | … | 0.95 | 0.90 | |
| Attendance requirements: | ||||||||
| Higher rate | … | … | … | … | … | … | 9.20 | 8.00 |
| Lower rate | … | … | … | … | … | … | 6.20 | 5.35 |
| * Where the claimant or a dependant is aged 80 or over a further 25p is added to these long-term rates. |
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- BALLOT FOR NOTICES OF MOTIONS FOR FRIDAY, 29th NOVEMBER 17 words
- BILL PRESENTED
- SOCIAL SECURITY BENEFITS 104 words
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