RATES OF BASIC SCHEME BENEFITS

HC Deb 29 January 1975 vol 885 cc461-538

The Under-Secretary of State for Health and Social Security (Mr. Alfred Morris)

I beg to move Amendment No. 1, in page 1, line 19, at end insert: (b) in section 32(4)(a)(ii) for the words "either of the rates" there shall be substituted the words "the rate";' This is a further purely technical amendment, springing from an oversight in the original drafting. It is consequential upon the repeals in Part I of Schedule 6.

The change proposed under Clause 9 produces a uniform rate of family allowance, which in turn means that the number of rates of dependency benefit in respect of children is reduced from three to two. Thus a qualifying child must be an only, an elder, an eldest or an additional child. Section 32(4)(a) of the Social Security Act 1973, which concerns increases in retirement pensions in respect of child dependants, was drafted in terms of three possible rates, with a special rate for a second child. The repeals in Part I of Schedule 6 and the amendment are necessary as a result of the disappearance of the rate for a second child.

Amendment agreed to.

The Minister of State, Department of Health and Social Security (Mr. Brian O'Malley)

I beg to move Amendment No. 2, in page 2, line 14, leave out from 'substituted' to end of line 19 and insert '£13.00;'.

Mr. Deputy Speaker

It will be convenient to discuss the following at the same time:

Government Amendment No. 3.

Amendment No. 4, in page 2, line 28, leave out subsection (5).

Amendment No. 5, in Clause 4, page 4, line 8, after 'addition)', insert: 'and the sums specified in sections 26(1) and 35(2) of the Social Security Act 1973'.

Mr. O'Malley

If I might run the risk briefly of being out of order, Mr. Deputy Speaker, I understand that it is your birthday. I should therefore like to wish you, on behalf, I think, of all hon. Members, many happy returns. May I go further than that, so that you will feel assured that the House has a continuing interest in your well-being? While realising that the Chair is at all times impartial, I would mention that we are about to discuss a subject which could result in a further income for you in the future of at least £10. I am sure that you will be grateful.

Mr. Deputy Speaker

May I express my deep gratitude and say that that is the best speech I have heard the Minister make?

Mr. O'Malley

I shall try to be in order for the rest of my comments.

I do not need to tell the House that we are about to discuss the earnings rule. I suppose that that is why a large number of hon. Members are present for this debate. However, it will be helpful to look briefly at some of the background and history of this subject so that we can take a balanced view of it and put it into the broader context of overall levels of public expenditure and within the budget of the Department.

It was a Labour Government who, on coming into office at the end of February last year, immediately decided that as from 22nd July 1974, as part of one of the speediest upratings in the history of national insurance—when the levels of pensions were raised to £10 and £16—they would also relax the earnings rule. We relaxed the earnings rule from the figure which we had inherited, from £9.50 to £13, as recently as last July. One of the reasons why it was necessary to make a jump of £3.50 was that the previous Conservative Government—for reasons which I am neither defending nor attacking but am merely noting at present—found themselves unable, at a time of competing priorities, to relax the earnings rule, either in 1972 or 1973.

One has to begin, therefore, by looking at the credentials of the present Government and of the previous Conservative Government on that subject. So it was that the Bill went into Committee with the proposal to continue from April 1975 the relaxed earnings rule, at the initial rate of £13 which had been implemented by a Labour Government immediately on coming into office—after a neglect of this subject on two Budget occasions by the previous Conservative administration.

In Committee, following quite long discussions about the earnings rule, amendments were carried. So we have a Bill before us in which the earnings rule is to be relaxed, as the Bill stands, from £13 to £20 in the year following the coming into force of the Social Security Act 1973—that is, during 1975–76. In the year following that it is to be raised to £35, and in the year after that it is to be raised to £50.

There was also inserted into the Bill in Committee subsection (4) of the clause, which provides that the earnings rule shall cease to have effect as from 5th April 1980.

I should explain that the purpose of Amendments Nos. 2 and 3 is to restore the Bill to the condition is was in on this subject before it went into Committee. I want to explain why the Government propose this course now.

It has been the case from the inception of the National Insurance Scheme in 1948, as the result of the recommendations that were made in the Beveridge Report, that the pension payable to large numbers of people—to men on reaching the age of 65 and to women on reaching 60 years of age—has never been an old-age pension. It has been a retirement pension.

Successive Governments since 1948 have defended the principle of the retirement pension. The previous Conservative Government did it as recently as 1973. The present Government are the first who have not sought to defend the earnings rule on the principles on which it has been defended by successive administrations. Indeed, my right hon. Friend the Secretary of State and myself, from the earliest speeches we have made on this subject since coming into power, have made it clear that we were not defending the earnings rule in principle. We have made clear that we recognise, as do my hon. Friends in numbers in the Parliamentary Labour Party and as do members of the broader Labour movement, that what was acceptable in 1948 has caused anxieties, resentment and dislike by retirement pensioners who have been affected by the earnings rule. Therefore, we have not used the arguments that are traditionally used, including the arguments used by the Conservative Government of 1970–74 when there were attempts in the House to relax or get rid of the earnings rule.

The only difficulty we face as a Government and as a House of Commons with a responsibility to the nation is the question of the cost which would be incurred by implementation of the amendments made in Committee which the Government are now seeking to delete.

6.45 p.m.

To abolish the earnings rule completely, at the level of pensions which will be in force as from April of this year, dealing with retirement pensioners alone, would cost £175 million, but the total cost would be £225 million because the dependent wives of invalidity pensioners and wives under 60 of retirement pensioners—as the Bill is currently drafted—would also be excluded from the operation of any earnings rule. Complete abolition, therefore, in April 1975 terms, would amount to £225 million.

My hon. Friend the Member for Islington, South and Finsbury (Mr. Cunningham) may well say to me, as he has said in Committee and on other occasions, that there will be some tax clawback from that. It is right, therefore, to say in relation to the cost of abolition, taking into account the return to the Exchequer through the tax system and on the best estimate I have, that the £225 million would be reduced to £170 million. This would mean an increase of about ½ per cent. on contributions.

Hon. Members on both sides of the House may well say "That is not very much. It is worth paying ½ per cent. on contributions." But there are some broader considerations which I ask particularly my hon. Friends to bear in mind. They are these. In September last year we published our White Paper "Better Pensions." In the near future we hope to be introducing a Bill based on the proposals contained in "Better Pensions". These proposals are, in their way, a departure as radical as anything, either before or since Beveridge, in the history of insurance in this country.

The White Paper made it clear that in order to pay for better benefits, the rate of contribution we would have to set would be at about 16½ per cent.—as opposed to the 14 per cent. which will be payable as from April 1975. It is not, therefore, only a question of ½ per cent. and that being the end of it. We, as a party and as a movement, have a scheme which has been welcomed and supported by the TUC and the whole of the Labour movement and is a manifesto commitment of the party which already will require contribution increases of 2½ per cent.

Mr. Edward Gardner (South Fylde)

On a point of order, Mr. Deputy Speaker. Is it right that the Minister should be addressing the House as though this were a meeting of the Labour Party and refer- ring to "the party"? This matter is something which interests the Opposition side of the House and the country as a whole. It should be a duty for the Minister to address the House in that spirit.

Mr. O'Malley

There are Members from the Labour Party in the House—rather more Members from the Labour Party than of the Conservative Party—and, furthermore, Members of the Labour Party whose appearances in this Chamber are rather more frequent than those of the hon. and learned Gentleman.

It is relevant not only to my hon. Friends but also to Opposition Members that the Government will be bringing forward legislation which will involve a substantial increase in the total level of contributions which will be payable by industry, by employers and by employees. It is right that we should set any contribution increases of the kind which would result from a complete abolition of the earnings rule in this broader context.

Of course, we have to have priorities and I shall deal with some of them later.

Sir B. Rhys Williams

The Minister's estimates about costs are inevitably based on assumptions. What are his assumptions about the pattern of employment for the future since this proposal is not likely to be implemented until 1980? What does he estimate will be the employment pattern in 1980? What is the estimate on which he has based his tax clawback figure?

Mr. O'Malley

I had intended to say something about that later. It is relevant, however, that in its report on the earnings rule—I am not making too much of this point but merely wish to quote the evidence—the National Insurance Advisory Committee said in January 1967 that it was doubtful whether it is realistic to suppose that there is any adjustment to the earnings rule which in itself would lead to any substantial addition to the number of elderly people in employment"— I stress the words "substantial addition", although the report conceded that it was likely that increases in the limit do result in somewhat more work being done by some pensioners". By that it meant pensioners who were already in employment.

I shall not stick at that. I concede immediately to the hon. Member for Kensington (Sir B. Rhys Williams) that none of us can make fine judgments and fine estimates on this matter. I believe that if the earnings rule were abolished numbers of people who in present circumstances might well retire would not then retire. Even if that were the case the figure of £225 million, or £170 million taking account of tax clawback, would be a substantial one. That expenditure has to be set against other competing priorities.

I had not finished discussing the overall cost of the proposals. I dealt first with the cost of complete abolition of the rule in April 1975 terms. The House will wish to know the effect of the proposals contained in Clause 1(3) which would relax the rule up to £20, £35 and £50 respectively in the coming three years. The cost to the National Insurance Fund and to public expenditure would be £60 million in 1975–76, £110 million in 1976–77 and £145 million in 1977–78. Of course there would be money coming back through the tax system, although that would not in itself help the National Insurance Fund. Even after taking account of that we should still be dealing with substantial amounts of money—£45 million in the first year, £85 million in the second year and £110 million in the third year.

I have not so far argued a case. I have taken a line which no previous Government have taken. I am not defending the earnings rule on the principles on which it was defended from 1948 to February 1974. Secondly, I am pointing out impartially and dispassionately what would be the cost of the proposal.

Of course, we need to know where the Opposition stand on this issue because the hon. Member for Rushcliffe (Mr. Clarke) made it perfectly clear in Committee that the Opposition's intention in supporting the two amendments which were consequently written into the Bill was to ensure that the subject was debated on the Floor of the House. If that is their purpose, I welcome the opportunity to give details of the Government's position. However, I understand the Conservative Party's position from its manifesto. It said: We have relaxed the earnings rule in the past and we will relax it further. We will abolish it as soon as resources allow. The Conservatives have been saying that since 1959. Why was nothing done between 1959 and 1974? Why did they make no improvement in the earnings rule in 1972 and 1973? I do not argue with the proposition that they want to relax the rule and abolish it as soon as possible. I see the hon. Member for Somerset, North (Mr. Dean) nodding his head. He did not make so much progress on this point although he did something in 1971.

I know how my right hon. Friend the Secretary of State dealt with the question of the complete abolition of the rule when the hon. Member was defending the rule. I am not defending the rule tonight. Instead I am approaching it from a different point of view. My right hon. Friend acted with a responsibility which I am sure we can expect to be matched from the Opposition Front Bench this evening. She said: All of us stand back a little warily from total abolition at this stage, on no other principle than that of cost—which is really the only principle involved. We hesitate to pre-empt £100 million as a priority at this stage—or £115 million as the hon. Member said."—[Official Report, Standing Committee E, 27th February 1973; c. 690.] The hon. Member for Rushcliffe is a responsible Member and I believe that he will match the attitude adopted by my right hon. Friend in opposition when, if we had wished, we could have pushed for complete abolition. Nevertheless we acted responsibly because we know that there are competing priorities and other claims on available public resources in the Department of Health and Social Security.

I understand that the Opposition cannot support these amendments in view of the speeches from their own senior Front Bench spokesmen. I know that a leadership crisis would not lead the Opposition Front Bench to act irresponsibly. They would not wish to go back on the firm words of their Shadow Cabinet Ministers.

On 13th November 1974 the right hon. Member for Carshalton (Mr. Carr) said: The second essential ingredient in our plan is this. It's the same for governments as for individuals. We must stop spending what we haven't got. Mr. Healey almost seemed to acknowledge this, but then he did not. In the end he said that he proposes to allow public expenditure to rise by almost three per cent. a year in real terms. Of course, this would be a harsh cut on present expectations, but it isn't enough. The blunt fact of life is that we cannot afford any increase in public spending until we can see that we have turned the corner. And that won't be next year. By that he meant not 1975.

The right hon. and learned Member for Surrey, East (Sir G. Howe), who is away on urgent business in Canada, wrote in an article in the Daily Telegraph on 17th December that there was a need for a planned restraint in the money supply and a gradual, but clearly spelt out, reduction in the rate of growth of public sector cash spending programmes. If I quoted what the Leader of the Opposition has said, I could spend all night saying what we should be doing about the general levels of public expenditure. There is a case which I must argue with my hon. Friends, but I do not have to take anything from the Opposition.

7.0 p.m.

The House should calmly examine where the earnings rule should be placed in our priorities. We must set out the background to the discussion, which is that the Government have a record on pensions and social security matters since they came to office in late February 1974 which is unmatched by any administration during the whole of the post-war period. The July increases cost an extra £1,270 million of public expenditure. The Bill involves another £1,150 million.

Let us examine what the relaxation of the earnings rule would mean, whom it would involve, where it stands in a proper order of priorities and what we should do about it. First, the people who are directly affected, people who are retired, total 20,000, of whom 10,000 have reduced retirement pensions because of the operation of the earnings rule. The pensions of the other 10,000 are completely extinguished by the earnings rule. A further 200,000 retired people are at work but are not affected by the earnings rule where it begins to operate at £13, because their earnings are below that level.

Hon. Members on both sides of the House could say "But if the earnings rule were raised, some pensioners would or could earn more than that". That is a fair point, but I am describing the present situation. The retired people whom I see at my surgeries or who write to me, who are doing some work, are not fortunate enough to be able in substantial numbers to have employment which brings them more than £13 a week. But I concede the point, because it is a fair one, and we should face all the facts before we come to a decision.

Sir Derek Walker-Smith (Hertfordshire, East)

Is there not another relevant consideration? The main part of the subsection which was introduced in Committee, and which the amendment would remove, looks forward to 1980. If we carry the present inflationary factor forward to that date, we get very different figures from those which the Minister has just put before us.

Mr. O'Malley

The figure of £225 million that I gave as the cost of complete abolition is expressed in April 1975 terms. On the assumption that the general movement of prices and earnings is upward between now and 1980, which on the whole is likely, it will be higher then. But I want to comment on the 1980 proposition a little later.

Mr. George Cunningham (Islington, South and Finsbury)

I am aware that at some point in his speech my right hon. Friend will qualify the modest figure he has just given of the number of people involved. But I am bothered in case anyone listening to those sentences and perhaps not catching the others should be left with the wrong impression. If we divide the £225 million by 20,000 we have a figure of over £10,000 a year. Therefore, as everyone will recognise, there is another point to be considered. I hope my right hon. Friend will come to that point, so that people will realise that the true number of those affected is 300,000.

Mr. O'Malley

Hon. Members know me well enough to know that I do not mislead the House. It is a foolish politician who tries to do so, but in any case, with my hon. Friend the Member for Islington, South and Finsbury around, I should soon be in trouble if I tried to do so on this subject.

There are 20,000 people in retirement who are affected, but I was going on to say that if the earnings rule is abolished the retirement condition goes out of the window. The reason why it would be so expensive to abolish the earnings rule, or relax it to the extent to which it is relaxed by the Bill as it now stands, is that a further 190,000 persons who are still in full-time work and with 100,000 dependent wives would also be entitled to full pensions. Incidentally, if the figure were £10,000 a year I should want to be one of those lucky 20,000 people.

We must look at competing claims. When we consider the 190,000 men fortunate enough still to be fit enough to do a full-time job at 65, what worries me is that there are so many ex-miners, ex-steel workers and men formerly employed in heavy engineering and manual work who are in no condition to have any kind of job once they reach that age.

I want only to put the facts fairly to both sides of the House. When I have set out the case we must say what else needs to be done. We must decide our order of priorities. The Department's budget will lose out on other things. The hon. Member for Wells (Mr. Boscawen) believes that the death grant should be substantially increased. So do I, as the hon. Gentleman knows. There is no difference between us on that. My hon. Friend the Member for Welwyn and Hatfield (Mrs. Hayman) asked a question yesterday about maternity benefits for women who have no contributory record. Is there not a case for those women?

Is there not a case for doing more for the disabled? There are still great gaps in the disablement cover, even when we have NCIP and ICA, which are included in the Bill. Is there not a great deal to be done for the "Finer" families? Before I came into the Department I argued—and no doubt I shall argue in the future—that we should help people with their heating costs, because there are problems of hypothermia. I wish that we had the resources to do so.

I am merly setting out as fairly as I can what the cost would be and asking who would benefit. I recognise all the anxieties and grumbles about the earnings rule, but are we saying that the top priority should be given to the earnings rule, to the exclusion of the death grant, the maternity grant, the disabled and one- parent families? All those items must be contained within the Department's budget.

Mr. R. C. Mitchell (Southampton, Itchen)

My right hon. Friend is arguing internal departmental priorities. Some of us might have views about interdepartmental priorities which are rather different. One place where the earnings rule operates harshly is where a person does not qualify for a full pension. I think, for example, of the case of a single lady who, because she looked after an invalid mother and father for 30 years of her working life, qualifies for a pension of under £4 a week and yet is still barred by the £13 earnings rule. If my right hon. Friend looks at nothing else, will he look at that?

Mr. O'Malley

I intend to say something about the Government's future attitude towards the earnings rule. I say straight away to my hon. Friends that there is a clear case for examining precisely the kind of situation which my hon. Friend the Member for Southampton, Itchen (Mr. Mitchell) has described where people have very reduced pensions. Until my right hon. Friend the Chancellor of the Exchequer announced the changed age allowance in his Budget Statement it was the case that my hon. Friends were generally satisfied that we could not abolish the earnings rule in present circumstances. At that stage there was no complaint about the upward movement from £9.50 to £13.

Mr. Frank Hooley (Sheffield, Heeley)

Is my right hon. Friend saying that, if the House puts the Bill back to where it was, the £45 million will be used for some of the deserving cases he has mentioned?

Mr. O'Malley

I shall answer precisely that point. It is a fair question which must be answered. If my hon. Friend feels that I have not answered his question before I sit down, I shall gladly give way to him. I want to satisfy him on precisely that point. The argument raised by my hon. Friend the Member for Itchen was that it was not departmental priorities which concerned him but interdepartmental priorities. There has been argument about the age allowance announced by my right hon. Friend the Chancellor in his Budget Statement. I shall leave my hon. Friend the Minister of State, Treasury to deal with the details. I shall try to deal with the situation briefly.

The age allowance package announced by my right hon. Friend benefits 2½ million pensioners, whereas the earnings rule at best concerns 300,000. Secondly, over £200 million of the package goes to pensioners with under £2,000 a year or £40 a week. Many people have modest occupational pensions and receive very little in addition to their State pension.

A substantial part of the cost of the package was made necessary by the need to increase the age allowance so that pensioners were not brought into taxation as a result of the increase in retirement pensions. Successive Governments have done that. There is little point in increasing the national insurance retirement pension and not moving the Inland Revenue rules. When that is done it is found that Governments are taking money away from people and bringing large numbers of pensioners into the tax thresholds because they have not pushed up the tax rates.

We cannot increase retirement pensions and leave tax thresholds at their present levels. If we did that, the whole situation would become a nonsense.

Mr. George Cunningham

Will my right hon. Friend say exactly what he means? He has referred to a "substantial part" of the £285 million. Will he say how much?

Mr. O'Malley

Perhaps I might leave the details of the scheme, for reasons which the House will understand, to my hon. Friend the Minister of State, Treasury. Having seen the briefing on this subject, I am sure that he is more competent to deal with matters of detail than I am. I felt it right to say something about the matter and to point out why it costs so much. The fact is that it helps 2½ million retirement pensioners.

I shall now set out the Government's position on the earnings rule.

7.15 p.m.

Mr. Bruce Douglas-Mann (Mitcham and Morden)

Will my right hon. Friend elaborate on what he said about the numbers of pensioners who might go back to work or who might work longer hours? There must be some basis of estimating that is available to him. The increase in the gross national product that can result from having even a few thousand people working additionally must be of considerable benefit to the economy generally and must offset substantially the costs to which my right hon. Friend has referred.

Mr. O'Malley

There are no such reliable estimates. I take my hon. Friend's point. Even a few thousand additional workers in the workforce can bring benefit to the nation as a whole. We must set that consideration alongside the competing priorities and alongside the total cost of getting rid of the earnings rule completely.

I shall give some assurances to the House. I am not opposing root and branch any proposition to get rid of the earnings rule. I am saying that we must consider the costs. It seems to us that it would be wrong for us as a Government in 1975 to commit our successors—there will be another Government in 1980, whether it is a Labour Government or some other Government—on how they should decide their priorities in the light of the economic and financial circumstances of the time.

Having said that, I wish to give some assurances to the House and particularly to my hon. Friends who are concerned about this matter. First, it is our firm intention that there should be a progressive relaxation of the earnings rule as rapidly and as largely as our financial and economic circumstances permit.

Mr. Hooley

rose—

Mr. O'Malley

I have not finished. If my hon. Friend wishes to intervene before I sit down, he is in a position to do so.

We are not defending the earnings rule in principle. We want to effect as speedily as we can a progressive relaxation of the earnings rule. Secondly, I give my hon. Friend the assurance that there will be operating in the autumn of 1975 a review which will include the level of the earnings rule. Thirdly, within the near future we hope to bring forward to the House our proposals on better pensions. I refer to our long-term pension proposals.

A new range of considerations apply once we provide everyone with a fully earnings-related pension partly from occupational pension schemes and partly from the State scheme. I give the House the assurance that the full implications of that scheme and any implications which have a bearing on the equity between the existing generation of retirement pensioners on the one hand and future generations of pensioners on the other hand will be taken into account.

We shall publish our pension proposals when we bring forward our Bill in the coming weeks. I hope that my hon. Friends will wait to see the detailed proposals which we shall be bringing forward on the earnings rule within our long-term pension scheme. I think that we can better discuss the long-term future of the earnings rule in terms of the new system rather than in terms of the system which is now dying. We are towards the fag end of that system.

I give the House and my hon. Friends who have expressed concern a firm assurance that their representations will not go unheeded. We do not wish to be committed to public expenditure levels of the kind that would be involved at this time as there are other priorities which must be given consideration. However, within those priorities we shall give a place in the level of public expenditure to the relaxation of the earnings rule.

I know of the anxiety and concern that has been felt by many of my hon. Friends who have received representations in their constituencies. I think that the long-term story will be that once again it will be a Labour Government rather than a Conservative Government who progressively improve or get rid of arrangements which are unsatisfactory to the public at large. The Conservative Party is good when it is in opposition, when it can act irresponsibly, but when in government it takes on a different complexion. I ask my hon. Friends to trust this Government to keep their pledges.

Mr. Kenneth Clarke

I find the Minister of State's speech deeply disturbing. First, it was disappointing in its first ten minutes, which I shall not attempt to match, when the right hon. Gentleman tried to adopt his knockabout and rather party political style, as he will do on occasion. In a serious debate, I shall try to avoid following him in that line.

When the right hon. Gentleman talked about costs and priorities, he got bogged down in an interesting use of figures. I would never accuse him of misleading the House, but we are accustomed to hear him using experience and expertise in national insurance in a way of which he seems barely conscious himself. He makes seemingly careful use of statistics and figures, but, as the hon. Member for Islington, South and Finsbury (Mr. Cunningham) has pointed out, occasionally he uses for one part of his argument a basis totally different from that which he uses for another.

Mr. O'Malley

In which part did I use a different basis of figures?

Mr. Clarke

The right hon. Gentleman used a quite different basis on the cost part of his speech, maximising the cost on the assumption that 200,000 people were involved. Then he used a different estimate of 20,000 people directly affected when he came to the benefits which would flow from altering the earnings rule.

The right hon. Gentleman's speech will be greatly disappointing to many thousands of people who had been looking forward to relaxation of the earnings rule following the decision in Standing Committee. I give the right hon. Gentleman the credit for giving up the argument in principle. He accepted that there was no case in principle that he could put forward for the permanent existence of the earnings rule. He made no attempt to dissuade the House from adopting the principle of looking to the abolition of the earnings rule. All he would argue were questions of timing and cost against doing it now in the way in which the Bill has been altered by the Government's defeat in Committee. These were the only arguments the right hon. Gentleman presented. Yet those same arguments failed to deter hon. Members on both sides of the Committee, and he had little further to add.

What assurances did he give? We are, after all, now debating this matter on the Floor of the House, which is to us of first importance, as we pointed out in Committee. The right hon. Gentleman put forward three points. First, he said that he would listen carefully to all our representations. Secondly, he said that the whole matter would be borne carefully in mind in the next up-rating in autumn 1975.

Hon. Members who are, perhaps, not regular attenders at Question Time for the Department of Health and Social Security will perhaps not be aware that one of the right hon. Gentleman's regular replies on all claims for priority—it is perfectly proper—is that all the representations will be borne in mind, that the matter will be kept under review, that it will be looked at in the next annual review, and so on.

Thirdly, the right hon. Gentleman mentioned that pensions legislation is coming on the basis of the White Paper, "Better Pensions", which would enable the House to look at the matter again. However, the White Paper makes no mention of abolition of the earnings rule, so such abolition would be additional to the White Paper proposals if it were to be done. When the legislation comes we shall be bogged down by arguments of great complexity and importance about the future of occupational pensions and other matters, and it is absurd to say that we shall be able to go back to this whole matter of the earnings rule and consider it at that stage.

I am astonished that, in his difficult position, having been defeated in Committee and, therefore, anxious to appease his own suporters, the Minister has been empowered to say so little. Someone earlier referred to my having been a Government Whip. If the Minister of State, having been defeated in Committee, and knowing of the high level of concern among his own supporters, is empowered or prepared only to say the sort of things the right hon. Gentleman has just said, it is tantamount, if the Government have a competent Whips' office, to giving up. In truth he has been empowered to say nothing and to give no assurance which would go any part of the way towards meeting the view of the Standing Committee.

It is clear that if the House wants to turn the right hon. Gentleman's remarks about the principle of the earnings rule into action it will have to defend the amendment carried in Committee against the Government. The House should want action, because we are all agreed on the principle and are more or less committed to it. The Conservative Party was pledged to phasing out the rule in both of its last two election campaigns. In 1973, when my hon. Friend the Member for Somerset, North (Mr. Dean) began to make concessions in debate on the earnings rule, there was no defence of the principle. Labour Ministers do not defend the future existence of the rule. I am assured that the Liberal Party, the Scottish and Welsh National Parties and the United Ulster Unionists support the ending of the rule. When a Standing Committee has carried the day against the kind of case which the Minister of State has put forward, Parliament should put its vote where its voice is and maintain the view of the Committee.

One of the priorities stated by the right hon. Gentleman was the Finer Report and the needs of the one-parent families. Earlier, he persuaded Labour Members through the Lobbies to vote against bringing in, by new Clause 2, family allowances for the eldest child of a one-parent family. He used the three-line Whip to clear the Tea Room of his supporters and marshal them into his Lobby. Now, he uses the same argument against ending the earnings rule. I grant that, because of the Opposition's view of the need to restrain public expenditure, we did not vote officially and he had an artificially high majority of 100 on new Clause 2. [Laughter.] If some hon. Members opposite would recall their election commitments and what the Government have said about the family endowment scheme and family allowances they would not be laughing, because they should be unhappy about what the Government are now doing. When we are united in this House on a principle, as we are today, we should put our vote where our voice is, particularly after a speech such as that just made by the right hon. Gentleman.

Mr. Lewis Carter-Jones (Eccles)

There is one point which confuses me. The hon. Gentleman seems to be giving the impression that the Opposition in Committee knew what they were doing. Before my hon. Friend the Member for Islington, South and Finsbury (Mr. Cunningham) said that he would press his amendment the hon. Member for Wells (Mr. Boscawen), who was the other Opposition Front Bench spokesman, said "No, we cannot afford it". Let us get this straight. In my view, someone in the Opposition in Committee saw a political advantage and took it. That is shabby.

Mr. Clarke

I will deal with that point. The same claim was made by the Minister of State. The hon. Member for Eccles (Mr. Carter-Jones) was present in Committee and will recall that the disputes which took place there were about the precise form in which the amendment should be carried. The amendment to abolish the earnings rule by 1980 was never in doubt, but a confused discussion took place, on an all-party basis, about what hon. Members wished to do. In the end an understanding was hammered out and the amendment of the hon. Member for Islington, South and Finsbury was carried against the wishes of the Government. I remind the hon. Member for Eccles that he carried an amendment about disabled housewives. Having got his way with that, he is not, I hope, now rushing to the support of the Minister of State to show undying loyalty, because he will find that some of us doubt it.

Mr. O'Malley

The hon. Member for Rushcliffe (Mr. Clarke) cannot be allowed to get away with this. In Committee on 5th December the hon. Member for Wells (Mr. Boscawen), who is sitting next to the hon. Member for Rushcliffe, referring to the hon. Member for Eastleigh (Mr. Price), who had recognised that this was not his own top priority, said that … if any of us had £133 million, or whatever the net figure is, to spend on social security measures in the best way we thought, there would be other priorities close to our heart … I think that we are a responsible Opposition and we recognise the country's grave economic difficulties … which is why, regrettably, we cannot go the whole hog, as the amendment of the hon. Member for Islington, South and Finsbury (Mr. Cunningham) seeks."—[Official Report, Standing Committee B, 5th December 1974; c. 61.] Will the hon. Member for Rushcliffe now explain that?

7.30 p.m.

Mr. Clarke

I shall come to that later. [Interruption.] Very well, I shall deal with it now. If the Minister wants to mix it we will mix it. I shall deal with priorities in expenditure and come to the sub- stance of the case later. The point mentioned in the quotation was the Government's figure of expenditure—£170 million, as it has become today. I shall come to that in a few moments. That figure is not sustainable when examined in detail.

Mr. O'Malley

rose—

Mr. Clarke

The Minister of State began his speech on a belligerent note, which is one of his styles when he is in difficulty. If he intends to do this he might give me the opportunity of answering the first point before he rises to raise a second one. [Interruption.] I hear some of his hon. Friends expressing my sentiments and asking when we are to reach the substance of the debate. As the Minister is challenging my hon. Friend the Member for Wells (Mr. Boscawen) and me about what happened in Committee, let me point out that that Committee report is clearly of a discussion between hon. Members on all sides and my hon. Friend the Member for Kensington (Sir B. Rhys Williams) about the amendments which were to be carried by the Committee.

The intention was to try to work out a serious timetable moving towards abolition in 1980, which the whole Committee thought should be done. In the end, the timetable put into the Bill was supported by the entire Conservative Opposition, by the Ulster Unionists Member from Mid-Ulster (Mr. Dunlop) and by one of the Minister's hon. Friends. I accept that the amendment is a combination of the three-year timetable and ultimate abolition in 1980. It is a clumsy amendment. That is why it gave rise to difficulties in Committee. However clumsy it may be, it was put forward in the hope and on the assumption that the Government would bring forward their own timetable in a better legislative form.

Eventually we voted for a clumsy, cobbled-together timetable, in the expectation that the Government would produce a neater timetable. If we re-examine that amendment we can see that what we cobbled together in an exercise in open democracy of an unusual type in Committee was a perfectly workable timetable. It has the desirable effect that it produces worthwhile stages over the next three years—raising the earnings rule to £50 a week in three years' time—and commits future Governments, as we wish them to be committed, to total abolition by 1980. If the Minister is criticising the way in which this was put together in Committee I criticise him for having no proposal to meet our wishes, expressed so clearly in Committee.

Let us now get back to the question why we had to have that earnest discussion in Committee and why we defeated the Government, as I trust the House will tonight. Let us talk the language of priorities and examine the seriousness of the case for ending the earnings rule. We all know that great resentment is felt by 'those who are affected by the rule. It is believed by men over 65 and women over 60—if they are affected—to be the equivalent of a tax imposed at a penal rate compared with taxation imposed on the rest of the population.

The rule is a direct financial penalty on the efforts of such people. It is a financial penalty which is unfortunate, in that it falls only on the elderly—and only on those elderly people who are trying to keep themselves in work. For that reason it is felt to be particularly unfair. It has a serious disincentive effect on those trying to continue to work. As the hon. Member for Mitcham and Morden (Mr. Douglas-Mann) said, this country cannot afford such a serious disincentive to work, which damages our economic performance.

The Government say—the Minister was saying it at one time—that what I am talking about affects only 20,000 people. But they are the people who, despite the rule, work and suffer as a result. What no one knows, and what no one can estimate, is the number of people who are put off working at all because the earnings rule means that it is not worth their while. My opinion is that the problem for that group of people is not only the loss of income and independence which their choosing not to work results in. The rule also reinforces our undesirable custom of having a rigid retirement age for far too many people.

We have got into the rather grisly practice of declaring that men who have led a full and active working life should suddenly stop work at the age of 65 and turn from active employment to garden- ing or pottery, or something more fulfilling, if they have had the opportunity to make preparations. Everyone knows that this sudden retirement, enforced by the earnings rule, has harmful mental and physical effects upon the well-being of many people.

It is said that if we end the retirement rule we are not paying the full pension only to those people; we are paying a pension to those now working in full-time employment. This is where the Minister, in his use of figures, switches from 20,000 or so few that it is hardly worth making the change, to 200,000, who make it staggeringly expensive and impossible for the House to contemplate.

Of course we accept—we canvassed it in Committee—that if this change is made we are moving from a retirement pension to an old-age pension and making a quite significant change in principle. Is that so illogical? When we consider the present system we must ask: is it making matters any more unfair? The first thing to bear in mind is that unearned income is not affected at all at the moment. If hon. Members are worried about relaxing the earnings rule for people in full-time employment what about the millionaire living on unearned income who gets the full rate of pension at the moment and is unaffected by the earnings rule? The man over 70 in full-time employment, or the woman over 65, regardless of income, is not affected by the earnings rule which lasts for only five years.

There are deep illogicalities in retaining the rule. We are not introducing an injustice by going over to an old-age basis. We can appreciate that people have been induced to feel that by their National Insurance contribution—because it is contributory and not means-tested and because it has the features I have described of being payable even to those receiving unearned income—that they have paid for the pension. The public at large call it an old-age pension. This is unfortunate for Members of Parliament and Department officials who have to spend their time trying to explain that it is a retirement pension.

There is a burning sense of injustice which is, in our opinion, justifiable. If we look at this in terms of the language of priorities there is no reason why we should not say that this has a high priority and affects many people. It is a worth while reform which must be carried out now. If it is not, the kind of speech which the Minister has just made can be made time after time, year after year, and we shall never get round to giving it the highest priority.

There is also the argument about the expense. I can assure the Minister of State that the Opposition are extremely mindful of the argument on public expenditure and are trying to behave in a way which postpones many of our expectations in view of the present public expenditure position. We are even more mindful of expenditure when we appreciate that tomorrow the Government intend to spend another £1,000 million on indiscriminate food subsidies. I was interested to hear what the Minister had to say a few moments ago, and I could not help wondering, since he would not allow us to spend £11 million for one-parent families, what he intends to do in the vote on this £1,000 million.

Let me challenge the case put forward by the Government. It is that it will cost £185 million net of tax. I almost intervened during the Minister's speech, because he mentioned, totally irrelevantly, the figure involved before giving credit for tax. The use of £220 million was solely for the purpose of scaring the House. That is not the cost at all.

Mr. O'Malley

The hon. Gentleman surely realises that the £225 million, as opposed to £170 million with a tax return, is of significance, not only because it is an accurate estimate in public expenditure terms, which the hon. Gentleman understands, but because it means £225 million to the National Insurance Fund. It is therefore relevant in that respect.

Mr. Clarke

In terms of overall public expenditure it would create interdepartmental problems and difficulties in financing the fund. On the basis which the right hon. Gentleman uses, £225 million is perhaps worth mentioning, although in terms of public expenditure net, in view of the tax savings, apparently £170 million is now his estimate. It was higher earlier.

We seriously question whether that figure should deter us from making the changes suggested. Reference has been made to the way in which one calculates the economic benefit from people who are working. There are substantial tax savings and they are difficult to calculate. People who work in retirement pay taxation on their pensions because they are taxed as earned income.

However the Government's figure is mainly based on the theory that all the people in full-time employment who have not retired and who do not draw pension will do so if we accept this proposed change. I seriously question whether all the extra 180,000 or 190,000 people will draw the pension if we abolish the earnings rule. Would it significantly inflate the number of 20,000 people who are directly affected?

I am unable to understand why many do not draw the pension at the moment by notionally retiring but that is by the way.

But if these people are in full time employment, a significant number will be tempted to defer taking the pension to obtain the benefits of the increments that one gets by delaying taking the pension for five years. Those increments are not very attractive, although one receives an increased pension if one does not take it for five years. However, the Government propose—I give them credit for this—to bring forward legislation in the near future improving those increments, so that people will get an extra 6½ per cent. per year in pension for every year that they delay taking the pension. If a pensioner who delays retiring for five years is in full employment and does not take his pension for five years, he will receive 32½ per cent. more in pension at the end of the five years.

7.45 p.m.

I suspect that a large number of people in full-time employment will continue to live on their incomes and will choose to draw a pension one-third higher if they delay taking the pension. The Minister is in a cleft stick. Either he is minimising the importance of the increments and saying that an extra one-third pension is no inducement, or he admits the attractiveness of his new increments and then his figure of 200,000 people in question is melting away. They are in full-time employment and the right hon. Gentleman is giving them every inducement not to take the pension. The figure of 200,000 for people in full-time employment is the basis of the Treasury's estimate of £170 million. I have not a precise estimate of the cost of abolition based on the 20,000 directly affected, but it is trivial compared with that put forward by the Minister.

The Committee was not persuaded that the figures which have been bandied about to scare the House were justifiable in terms of what is likely to happen. We are being put off a worthwhile reform by speculative figures. We believe that the Committee's decision was entirely worth while.

I have tried to deal with the matter in terms of the priorities which the House should choose and the financial implications of the change made. The final implications are political. When the House is agreed in principle, it must stick to its opinion. When a Minister who is sympathetic to a case is denied by other Ministers the facilities necessary to carry a reform into effect, it is time for the House to force it upon them. If a proposal is supported on an all-party basis by a committee which considered it with care, and if it is agreed to in spirit by the whole House, it is time for us to stick to our guns, to defend the Bill as amended and make sure that this reform is put on the statute book—spread over five years, but delayed not a moment beyond 1980, which is later than many of us would like.

Mr. Hooley

The core of the Government's defence in their attitude to this matter is the question whether, in present circumstances, the country can afford the expenditure involved in the coming financial year, which, net of tax, is, I understand, about £45 million.

The fallacy of their argument is that in real terms there need be no extra charge on the economy. It is a transfer from people who will pay the extra £45 million, either in insurance or in tax, to make sure that those who have retired and those in the category we are discussing may enjoy the pension for which many of them have paid contributions for 45 or 50 years, whether or not they decide to take up full-time work.

The essence of the economic case is that it is a switch of money, from those who are below retiring age and gainfully employed and are contributing to the national economy to the people in the category we are discussing. There is no extra real charge on the resources of the country. Therefore, the Government's argument does not hold good.

The old-age pension for a single person is about 20 per cent. of average industrial earnings. In other words, we expect people to live on a sum which is about one-fifth of the sum which their fellow workers live on if they receive the average industrial wage. What is being said to people on that level of income is that if they have the impudence to contribute, in a modest way, towards enhancing the output of the economy by doing a useful job and earning £25, they forfeit the pension for which they have worked for 45 or 50 years, for which they have paid their stamp, and to which, by any standard of equity, they are entitled. If they go to work and earn £25, they will pay tax. The Inland Revenue will not let them off simply because they are 66 or 67 years of age. It is a form of penal taxation on people, most of whom are on very low incomes.

What is even more extraordinary—I find it staggering—is that the Government appear to be unmoved by a situation in which a retired person drawing unearned income suffers no such penalty but the man who works as, for example, a night watchman, and potters round for 30 or 40 hours a week because he cannot manage on 20 per cent. of the sum which most of his fellow citizens are getting, is told that this is socially outrageous and that he will not get that £10 if he has the impudence to obtain a job which pays him £25 a week.

My understanding of Socialism is extremely imperfect. I would not claim to argue with a great many of my colleagues about Socialist principles, equality and so forth, but if that situation is Socialist I simply do not understand the meaning of the word.

Mr. Paul Dean (Somerset, North)

I have vivid memories of this subject and of standing at the Dispatch Box on the Government side of the House and saying "No" when I would have preferred to say "Yes". The Minister of State, in introducing the debate, was in much the same position. I understood his arguments and I sympathise with him in having to put those arguments, but I knew what he would say before he said it, and he went on and said it.

The only argument that the right hon. Gentleman used tonight, and the only argument that was used by the previous Conservative Government, was the argument of cost, resources, public expenditure and priorities. I agree with him that that is the only argument one can use. The hon. Member for Sheffield, Heeley (Mr. Hooley) doubted the arguments used by the Minister of State on the net cost of what is proposed in the Bill. I do not want to go into detail, but I believe that a fairly substantial cost would be involved. The House must address itself to a question whether that cost can be afforded and, if the sum of money, whatever it may be, is available, whether it should be used to help those who are able to earn and supplement their pension and are fortunate enough to have jobs when they are in retirement. Those are the two questions which the Minister of State fairly said must be answered.

They are strong arguments, but they are financial arguments—control of expenditure arguments, Treasury arguments. This subject tends to be thought of too much in terms of the Department of Health and Social Security Vote rather than the effect that it would have over Government expenditure as a whole and on broad social policy considerations. Those are the things that matter.

Equally, having supported much of what the Minister of State said, I find it difficult to follow his arguments on priorities. When the Government are spending, in a totally indiscriminate way, about £700 million on food subsidies—a figure soon to be substantially increased—and when those sums are so much bigger than any figure we can think of now, I find the argument of priorities not made out. Food subsidies are a clear case of money going to rich and poor alike and, in the case of milk, not only to human beings but to our pets—our dogs and cats. The priority argument used in the context of the Government's food subsidy policy is difficult to follow and to find convincing.

Apart from these economic arguments, there are important social arguments which all point strongly the other way. They point in favour of the Bill as it stands. Those social arguments become stronger year by year as the expectation of life in retirement grows. By 1980, the expectation of life of a person living in a town will almost certainly be even higher than it is now.

Should we encourage people to go on working? Surely, the social argument there is emphatically "Yes". Should we try to create a situation in which retirement can be gradual? The answer there is also emphatically "Yes". Considerable social problems are created by forcing people into retirement and by the sudden break between full-time work and full-time retirement, and they are increasing year by year because the period of retirement tends to increase as the expectation of life increases. The social arguments are, therefore, overwhelmingly in favour of the Bill as it stands.

There is another consideration, which is what the Bill proposes. If it were proposed that the earnings rule should be abolished overnight, I should not be prepared to support it. That is not what is being proposed. The proposition may not be technically perfect, but the interesting part of it is that it proposes phasing out over a period. It does not propose that the strain should be taken all in one year, but it proposes phasing out over a period ending in 1980. That is an important consideration.

I come to my key argument. I believe that no Government will ever abolish the earnings rule, and possibly not even phase it out, unless the House of Commons pushes them into it. I say that with bitter experience. The very fact that I stood at the Dispatch Box and said "No", and that the right hon. Gentleman stood there tonight and said "No", shows that clearly. It is very much a House of Commons occasion, and unless the House of Commons pushes the Government into it and names a date, no Government of any political colour will be able to do it. The reason is simple. At the end of the day in the Government's mind the public expenditure argument will triumph over the social arguments. The Treasury will win and the DHSS will lose.

If the House of Commons believes that the time has come to get rid of the earnings rule by phasing it out, this is the opportunity for the House to say so, loud and clear. Nobody tonight will support the principle of the earnings rule. Most hon. Members, on both sides of the House, believe that it should go, and I suspect that DHSS Ministers are of the same opinion. So why not take this opportunity tonight to help DHSS Ministers?

If the amendment is carried the DHSS Ministers will be able to say to the Chancellor of the Exchequer "Chancellor, we did our best; we developed all the arguments with as much enthusiasm as we could muster, and the House of Commons would not have it." So DHSS Ministers can go to the Chancellor with an absolutely clear conscience.

I suggest to both sides of the House that the right thing to do tonight is to support the DHSS Ministers, to be kind to them, by voting to phase out this unloved earnings rule.

8.00 p.m.

Mr. George Cunningham

There is only one hon. Member in the House tonight who could persuade me to go into the Government Lobby, and that is the hon. Member for Somerset, North (Mr. Dean)—and he nearly did so. Had he gone on much longer he would certainly have done so, because he recalled to my mind the same battle as occured towards the end of 1972 when he resisted the same arguments as he has put forward today. He then fought hard to prevent his back-benchers doing the sensible things which some people on this side of the House have suggested.

I agree with the last point made by the hon. Gentleman. What we have to do tonight is to assist the Department of Health and Social Security and its Ministers in achieving an objective which in their hearts they want to achieve. Throughout the whole of this affair the departmental Ministers deserve the Treasury award for loyalty to collective decisions, far beyond the call of duty and certainly beyond the call of common sense. I am only sorry that when they are standing in the white sheet of innocence I should be clothed in different colours.

The argument breaks down into three parts. The first is the general case against the earnings rule, which has been well canvassed and into which I do not need to go in detail. Secondly there is the question of cost. Thirdly there is the question whether there is anything special about the present time which justifies us in taking a different decision from that which has been taken in the past. I take a different decision now than I did last April and June when the hon. Member for Kensington (Sir B. Rhys Williams) last proposed the abolition of the earnings rule. I shall later explain the reasons why I take that view.

The Minister said that he was not defending the earnings rule. For a man who was not defending that rule, he certainly did a good job in trying to keep our hands off it. However, I take it that in principle he was not defending the rule.

The case against the rule breaks down into the fact that it applies only to earnings and not to other forms of income. That is an outrageous affront to the people who are its victims. It is an indefensible position. If the Government are saying that we should hang on to the earnings rule, I should like to see legislation brought in providing that the pension shall be dependent on income—all income. There would then be an element of fairness. If, however, they are not taking that view, I shall not stand for the retention of that unfairness.

Secondly, there is the point that the rule constitutes 100 per cent. taxation on the amount earned. In other words, it is a disincentive to work for those who want to work because they seek to pass the time and do not want to become "cabbages". It is also a disincentive to work for those who have a defective stamp record and thereby are not entitled to full pension. We must also consider that it penalises women between the ages of 60 and 65 who feel that they do not want to stop work at that age. Furthermore, it penalises men from the age of 65 to 70 since that age is close to the normal death age of the average male. Therefore, the average male suffers the earnings rule very close to the end of the lifetime expectation.

A further point which has not been mentioned in the debate is that the rule is an enormous encouragement to dishonesty. The Department has come up with the information that there are 20,000 people who are subject to the rule. But there are probably tens of thousands of others who ought to be subject to the rule but who have fixed it with their employers not to report it. If 20,000 people are said to be subject to the rule, this means that there are 30 such people in each constituency. I ask any hon. Member who has talked to his constituents in the last year how many times he has come across grumbles about the earnings rule. The number is far greater than has been suggested.

There are some particularly unacceptable features about the rule. It has been said that it cuts a reduced pension. If a widow has only £5 pension because of a defective stamp record, the rule does not excuse her. It takes away the last £5 of her pension, at the same point as it would take away the first £5 of somebody on a £10 pension.

There is another insane anomaly to which in the past this House agreed blindly, as it often does, which is totally indefensible. Let us take a person who has retired and takes a post-retirement job and who is paid £15. He is subject to the earnings rule, so that £1 is knocked off his £10 pension and he ends up with £9 pension. Let us then consider a person who has not retired but who has an income of £15—in other words, a person of retirement age who has not in fact retired. Because his income is over £13, under the rule he is not treated as if he had retired. He is subject not to the earnings rule but to the retirement condition. He gets no pension whatever. If he were paid only £13.10, he would receive no pension whatever. Obviously he would go to his employer and say "Take 15p off my pay, because I shall then be better off". That is the rule which we are being invited to defend. If the rule contains such idiocies, we should certainly not defend it to the last ditch.

Let us consider the taxation position. At up to £13 the victim will pay tax of 33 per cent. in the pound. If the figure is £13 to £17, he will lose half the pension and 33 per cent. of the remainder. That will make an effective deduction rate of 66 per cent. With earnings running from £17 to £25 there will be a 100 per cent. deduction. From £25 upwards he reverts to the original position with effective taxation of 33 per cent. Therefore, as one goes up the band of earnings the figures run from 33 per cent. deduction to 66 per cent. and then to 100 per cent., and then back to a deduction of 33 per cent.

Mr. Douglas-Mann

Will my hon. Friend also bear in mind that such a person is liable to lose money in respect of the loss of rent and rate rebates and could be paying as much as 120 or 130 per cent. tax?

Mr. Cunningham

Yes, I agree with my hon. Friend. It was said in Committee that in certain cases a person would be worse off as a result of earning an extra £1 because of a combination of restrictions.

Mr. Alec Jones

Will my hon. Friend say how a person receiving pension and earning £13 per week can possibly come into the category of those entitled to supplementary benefit? If he were not in that category he could not possibly lose it.

Mr. Cunningham

Perhaps when my hon. Friend intervenes he will be able to answer those points because they are directed at him. I shall answer one point which I recall being raised in Committee. In certain circumstances, in addition to tax deductions superannuation and other similar deductions are made from pay. If those sums were added, the person concerned could end up with a deduction of more than 100 per cent.

Mr. Kenneth Clarke

There are over 20 means-tested benefits of one kind and another available to people above the tax threshold. If the Minister is not aware of the extent of poverty surtax, I invite him to look at the grave difficulties caused by the present situation.

Mr. Cunningham

It has been suggested that it is a fundamental principle of our system that the pension is a retirement pension and not an old-age pension. Let us kill that once and for all. It is not. It is an old-age pension. It becomes an old-age pension at age 65 for a woman and at 70 for a man. Beveridge sliced in, under the old-age levels of what had always been an old-age pension dating back to Lloyd George, a five-year period during which there were the earnings rule and the retirement conditions. There is no fundamental principle in that.

It might be useful to consider what the effect of inflation has been on the level of the exemption rate as it now exists. The rate was raised last summer by the Labour Government, which was a highly desirable thing to do. It was last raised before then in 1971 to a level of £9.50. If it had to keep the same real purchasing power now as £9.50 in September 1971, we would require not £13 but £13.70. In other words, the effective exemption level of the earnings rule now is less than it was put at in September 1971. It was put then at £9.50, and the present level is equivalent in purchasing power to £9 at that time.

One could go on making these comparisons. I use the retail price index and not the earnings index. Taking for example the 1969 figure, which was put at £7.50, that would be equivalent to £12.60 last month. By April—the time we are talking about—that £7.50 figure for 1969 would be equivalent to £13.20. If the Bill remains as the Government wish, in April—it will be worse still for the rest of that financial year—we shall have a lower level than we had in 1969.

The 1969 figure was £6.50. If we apply the index to that, by April 1975 it will be £12.88. By the end of the financial year of which we are speaking we would have an exemption level which was roughly the same in real terms to the figure which was set in 1964. That is a totally unacceptable position.

As to the cost, there has been a lot of talk about figures. I must say something about the Government figures. There have been some revisions of the figures. I do not suggest that there has been any fiddling of the figures. I have no doubt that the improvements in the figures have all been desirable and necessary to introduce greater accuracy. I only know that some figures have gone up and some have gone down. The ones that have gone up are those which it is in the interests of the Government's argument should go up, and the ones that have gone down are those which it suits their argument to go down.

I do not suggest that there is anything inaccurate in the figures which the Government have produced. I only say that it is a pity they did not get them right in the first place, especially since all the figures I have been working on derived from specific parliamentary Questions directed to exactly this subject, and I take serious exception to replies to parliamentary Questions not giving the right answers in the first place.

It is the cost that matters to us. In the year 1975–76 the cost of the Bill as it stands will be £60 million gross, or £45 million net after taxation. If we were meeting that by an increase in national insurance contributions, what would be the increase required since an increase in contributions is the natural way of meeting an increase in benefits? The amount of £60 million—forgetting the tax return—constitutes approximately 0.9 per cent. of the outgoings of the National Insurance Fund in the year in question. Therefore, we should in principle raise contributions by 0.9 per cent. The employee now pays 5.5 per cent. We should make him pay 5.55 per cent. The employer ought to pay not 8.5 per cent. as is proposed but 8.58 per cent.

8.15 p.m.

If I dare to mention without provoking discussion the self-employed contributions, the self-employed person ought to pay not 8 per cent. but 8.08 per cent. The Government Actuary does not work to the second decimal point. If the Government Actuary had been told that he had to assume this change in working out the contributions required, he would still have come up with the same figures for contributions as he has brought forward. The amount of money involved is well within the inaccuracy factor in working out the National Insurance Fund and he would have ended up with the same contributions—5½ per cent. for the employee, 8½ per cent. for the employer and 8 per cent. for the self-employed. It is too minor to take into account in any other way.

This is why I am steamed up about the matter. In November the Chancellor announced the new age allowance for everyone over the age of 65. I welcome the procedural change which is involved from the old-age exemption to the new age allowance. No one understood the old-age exemption. This is a highly desirable procedural change. However, no sooner had the Chancellor finished the sentences in which he announced that change than I muttered to myself that it was daft to spend money in preference to abolishing the earnings rule. It came as a great surprise to me to discover—this has been admitted by Ministers—that this decision was taken without considering the alternatives, between the age allowance on the one hand, in the taxation sector, and abolishing the earnings rule in the social security sector. That was done because taxation was regarded as such a secret Budget matter that nobody outside the Treasury, even in the Government, had to know about it.

I think that matters might be different in the future as a result of the hoo-ha which has been created. If a Government botch something—as they admit they did on this matter—we cannot expect half a million people outside to pay for it. We cannot say to them that it is perfectly true that none of us defends the earnings rule. We are all against it. As soon as we can get our hands on the money for changing it, we shall do so.

Unfortunately, however, the Treasury spent at least as much money as it will cost to abolish the rule on a different purpose of lower social priority. The Government made the mistake and they will have to live with the consequences. I am not prepared to say to my constituents "I am sorry, but you will have to wait another five years for someone to come up with the same amount of money again".

The Treasury, even now, could recover a large part—perhaps all—of the cost of the proposals in the Bill by reducing the cut-off point for the new age allowance. The Treasury proposes that the age allowance should be extended to people over the age of 65 who have incomes of up to £3,000 a year. People in retirement with incomes of up to £3,000 a year are not the highest social priority in my book. Some of the money could be recovered in that way.

If the Minister says, as I have no doubt he will, that it is too late to do that in the year 1975–76, I accept that. However, in April 1976 the question will arise of whether the £3,000 limit has to be raised to take account of inflation. Inflation will be our ally in this case. The Treasury will simply need to say "We botched it before. We shall not botch it again. We shall not raise the limit for a long time." As a result, in the later years when the phasing out of the rule is most costly, it will be able to recover some of the money.

One detailed point is that, although the Treasury's tax proposal in some degree overlaps the earnings rule abolition, it does not do so for women. Women will get the benefit of the tax proposal only when they are over the age of 65, whereas they are subject to the earnings rule only when they are under the age of 65.

In considering the fact that the cost in the first year would be very modest, we ought not to forget that the money was available but that the Treasury foolishly spent it on a less desirable purpose. We should say that we are prepared to introduce the change now. If the Treasury says that it has announced it, I reply that it has not been through the House, that there is no financial resolution relating to it and that the Finance Bill relating to it will not come before us before the summer. If the Treasury says none the less that we have to vote upon it, this is government by pronunciamento. If only on that ground, it should not be allowed to pass.

I am very disappointed at the offer which the Government have made today. We have been offered the assurance of a progressive relaxation as rapidly and as large as the economic situation permits. There will be an uprating in the autumn of 1975, and the Government will review the earnings rule in the course of that, but without commitment about whether it will be changed in the autumn of 1975. It will be taken into consideration when working out the new long-distant pension scheme. Finally we have a firm assurance that our representations will be taken into account fully.

I cannot see anything there which makes me feel that we should back down. If the Government had said that they would not accept these figures in the Bill, that they would take a more modest figure in April—possibly £17 instead of £20—with a further change in April 1976, and if they had given a firm assurance, on those figures, on which we could reply for a change in the Bill at a later stage, I would have been prepared to vote with the Government. But, in view of the fact that they have given nothing but assurances of sympathy for the future and no indication of change, either this April, next autumn or the April after that, I do not feel able to support them.

I shall therefore vote against Amendment No. 2. I am inclined to vote for Amendment No. 3 which would kill the abolition of the rule in 1980. After all, 1980 is so long away that we can do all sorts of things before then. The main thing is to get the process properly started this year and to continue it. Therefore, I shall vote against Amendment No. 2.

I want to make it clear that I am not voting against the Government, and if that is suggested I shall resent it. I am voting against the earnings rule, and I very much resent also being forced to vote in the opposite Lobby from the Government in order to do so.

Sir Derek Walker-Smith

When we debated the position of the self-employed before Christmas, I had the great good fortune to be called immediately after the hon. Member for Islington, South and Finsbury (Mr. Cunningham). On that occasion, as now, he made a very close and careful analysis of a difficult problem and demonstrated his great experience and mastery of these matters. For anyone with substantially the same point of view as the hon. Gentleman, that makes it a great deal easier and enables him to make a briefer contribution.

I have a double good fortune in that on both occasions I have had the pleasure of hearing my hon. Friend the Member for Rushcliffe (Mr. Clarke) speak from the Opposition Front Bench. He made a cogent case this evening, as he did on the earlier occasion to which I have referred.

I did not have the good fortune to serve on the Standing Committee whose labours we are now discussing. I regret that, the more so as that Committee came to such a sagacious and constructive conclusion in regard to the earnings rule. It would be a great pity if a conclusion arrived at following such close and careful consideration were to be overturned by any automatic response to the Division bell induced by, a conditioned reflex to a three-line Whip. Therefore, I was glad that the hon. Member for Islington, South and Finsbury said that to a substantial extent he intended his vote to follow his voice when the time came to be counted on this matter.

It would be a great pity to reverse the decision of the Standing Committee, because of the natural disappointment and dismay that it would bring to many existing pensioners and many future pensioners—we are looking ahead to 1980 in this matter. It would also be a pity because it would have an adverse effect on the good repute of Parliament if, having come to this conclusion in Committee and raised these expectations, we were now to go back on it and disappoint those pensioners.

In presenting the Government's case, the Minister sought to say that the principle of the earnings rule was not involved. He said that he was not defending the earnings rule. He may not have been defending it in words, but he was in fact.

If we consider what he is doing rather than what he is saying, we see that he proposes to retain the earnings rule in all its existing rigidity and harsh precision. I believe that it is wrong to do so, and I want to add one or two short comments to what has already been so well said from both sides of the House.

First, with regard to cost, there have been two defects in the presentation of the cost aspect. The financial assessment has been presented in limited departmental terms rather than in the broader context of public expenditure as a whole. Secondly, the aspect of cost should be looked at in an economic rather than an exclusively financial context, but the Minister has not presented to us any full cost-benefit analysis on a real economic basis. If he had, he would have taken account not only of the impact in the financial context of public expenditure but also of the advantage to the gross national product which would accrue from continued working and continued contribution to national resources.

That leads me to the related but broader consideration: what should be the natural position now and in the future of this relatively narrow range of sexagenarians with whom we are here concerned? I say "relatively narrow range" because we are concerned with only a five-year range, resulting from the illogicality of this time-encrusted formula which says that the earnings rule ends in any event at the age of 70, or 65 for women.

What should be the normal and acceptable position, in the last quarter of the twentieth century, of people in the 65-plus age bracket? As we look to the future, we should not take the view that there is any presumption or assumed normality of sudden retirement at 65. It should be regarded as at least equally reasonable and probable that people will elect to continue in work. Indeed, they should be encouraged to do so. That is the logic of the changing pattern of population and of the inflationary tendencies in the economy.

After all, on both those matters the pattern has changed very much since the days of Beveridge. I remember—a long time ago now, alas—when I first became closely concerned with the problems of the age structure of the population and of the aging pattern of population when I was Minister of Health, seeing what a great change had come about since, for example, the start of the century when only one person in 21 was over 65, compared with the proportions of today.

The logic of that and of the economic inflationary tendencies is that people should normally, where at all possible, be encouraged to continue in work and defer retirement and accept the increments. Indeed, I am proposing shortly to follow precept with practice and do that very thing myself. I believe that this recipe is right on psychological as well as economic grounds. Looked at in terms of the happiness and fulfilment of people in this age bracket, it is right to encourage a continuance in work rather than to impel people to what nature would now consider a premature and unnecessary retirement.

8.30 p.m.

I have never liked the earnings rule, or fixed ages of retirement. I am not attracted by the sort of argument that the Minister put in the forefront of his case for some part of his speech—that because this has not been done by one administration or the other in the past there is some convincing reason that we should be estopped from doing it now. This point was made in particular in regard to my hon. Friend the Member for Somerset, North (Mr. Dean) who recently had departmental responsibility for these matters.

My own withers are unwrung in this matter. I did not hold office during the 1970 Government, nor during the Douglas-Home Government, nor in the twilight of the Macmillan Government, but during all that time and before it I have been an advocate of doing away as soon as possible with the earnings rule. I have received, as have other hon. Members—only I have received them perhaps over rather a longer time than most—[Interruption.] The Patronage Secretary has added his always agreeable presence, for whatever tactical reasons may be uppermost in his mind. I should like to think that he had come into listen to me, but I know that that is not so—that other matters are engaging his attention.

The Parliamentary Secretary to the Treasury (Mr. Robert Mellish)

I cannot take too much humbug. Is it not a fact that the Conservative Party was in power for over three years? If they had all these hundreds of letters, not only now but then, why did not the right hon. and learned Gentleman's own Government do something about it?

Sir D. Walker-Smith

No party has yet achieved the absolute abolition of the earnings rule. But the right hon. Gentleman is doing himself less than justice—

Mr. Mellish

No, I am not.

Sir D. Walker-Smith

Yes, he is. I know that he does not often have the opportunity to make contributions to our debates, other than to move, "That the Question be now put", or some other feast of rhetorical delight of that sort; but he is putting forward the very argument which I had just said was not an argument to appeal. It is an argument which would condemn us to a static situation and prevent all progress if it were sufficient merely to say that because a thing had not been done in the past, therefore it should never be done.

I was saying that I have favoured this move for a long time. I have heard more representations than most. The right hon. Gentleman has served in the House for exactly the same time as I, but he represents so far fewer constituents than I—

Mr. Mellish

You are joking: I have 56,000 now.

Sir D. Walker-Smith

And I have 90,000. If the right hon. Gentleman intends to delight the House by these unexpected rhetorical contributions, he must do what we humbler Members do—a little homework, to try to get at least a nodding acquaintance with the merits of the matter and the facts of the case under discussion. I apologise for the fact that this unexpected pleasure of the right hon. Gentleman's attendance and intervention has prolonged what I was going to say.

I was concluding by saying that in common with other right hon. and hon. Members, but perhaps for rather longer, I have had long and continuing evidence of the importance attached to the matter by many of my constituents. Although we are debating the matter this evening primarily in economic terms, we should not forget the human aspect behind it and the strong feelings that many of our constituents have in regard to it, the disappointment they will feel if we fail them now, and the pleasure and relief that they will experience if Parliament is able to adhere, as I hope it will, to the wise decision of the Committee.

Mr. John Dunlop (Mid-Ulster)

As the Member for Mid-Ulster whose name has been bandied about during this debate, I should like to begin on a non-antagonistic note and offer to the right hon. Gentleman the Minister of State the congratulations of the Ulster Unionist Party on his elevation to the peerage of the House of Commons. I tried to do that in Committee but the opportunity did not come my way.

When I saw the composition of the Committee and noted that the front runner for the Government had the rich Irish name of Brian O'Malley, I said to myself "Shades of Brian Boru". He was an Irish hero king who wielded a mighty sword to dispel the Danes from Ireland. He was so busy fighting the Danes that he never troubled about the British at all. We have no record of his ever coming to the north of Ireland. Possibly he was frightened by the ancestors of the B men.

I shall not enter into technicalities or mathematics. The hon. Member for Islington, South and Finsbury (Mr. Cunningham) said that he would not do that, but he did it very effectively. He mentioned many of the matters that I would have mentioned, so I shall not bore the House by repeating them. All I want to say is that this earnings rule is an attack on wages. I do not use terms such as "income", "emoluments", "salary" or anything else. I use the good old trade union term of "wages". This earnings rule is an attack upon the wages that a man may earn when he reaches pensionable age.

In Committee I was trying to defend myself against the slanderous charge that I had been brought in as Lobby fodder for the Opposition. A look at the record of voting, in Committees and in the House, will convince hon. Members that the United Ulster Unionists have not come here to be Lobby fodder for any of the major parties in the House. We have come to take a meaningful part in Parliament. That is what we intend to do, and that is what I tried to do in Committee.

I want to speak only about my experience and my position. Come May of this year I shall have been paying national insurance contributions, in some form or other, for 50 years. I started off with 4d. being deducted from my pay of 7s. 6d. a week as a junior assistant in a big multiple grocery concern. In fact, my wages were so small that I was unable to pay my tram fare, and had to walk about two and a half miles a day. At three-monthly intervals my father used to wonder what had happened to my boots or shoes, because they were walked off my feet in going to and from work.

What hits me is that after paying national insurance contributions for 50 years, in some form, when I attain pensionable age—my hon. Friends will know of the turbulent nature of politics in Northern Ireland and what the uncertainty of our tenure in this Parliament could mean—I could be looking, perhaps, for a job as a security officer for a few pounds a week. That would be a great job in the Northern Ireland of these days. Yet this measure will provide that if I earn £13 or more a week I shall lose some of my pension. That is very bad. It is unjust and anti-Socialist, and as a trade unionist and the son of an ardent trade unionist, I am against it.

I hope that the conclusions reached in Committee will be supported again tonight. When the Minister of State talks about the cost, I wonder what the Government are doing contemplating giving large sums to the tottering giant, British Leyland, and the other big industrial concerns which will receive millions of pounds to keep them in business. How relatively small will be the cost of abolishing the earnings rule? I hope that all fair-minded hon. Members will tonight confirm the decision taken in Committee.

Dr. Colin Phipps (Dudley, West)

As my right hon. Friend the Chief Whip will know, it is not my habit to vote against the Government and I do not approach that prospect with any pleasure tonight. I do not wish to join in a statistical joust, but I have 76,000 electors and at the two election campaigns in 1974 I found that the earnings rule and dissatisfaction with it came very close to being the most popular topic for discussion on their doorsteps. I am sure that is true not only of my constituency. The only subject which vied with it was the problem of widows, and about half of those cases were related to the earnings rule.

I have been urged to read the brief supplied by my right hon. Friend the Minister of State and I have done so. I was urged to attend the debate in order to hear what the Minister had to say. I came hoping that we would be offered something which would enable us to go into the Lobby with the Government tonight. So far, nothing has been offered.

It is worth bringing to the Minister's attention yet again the feelings of the electorate about the earnings rule. People one meets on the doorstep do not see the rule in terms of the difference between old-age pensions and retirement pensions. They see it as an issue of a tax which starts at a rate of 50 per cent. They know that for a family to be paying tax at the rate of 50 per cent. it must be earning about £10,000 a year. The pensioners reach that rate at £13 a week. That is a gross unfairness and it bears most heavily on Labour supporters.

It is not good enough for the Minister to say that he will do all he can when the opportunity arises. The position seems to me to be no different from the assurances which the Conservatives gave in 1959 and which my right hon. Friend was mocking not long ago. The then Conservative Government gave identical assurances that something would be done when the money was available. In 1975 the same assurances are being given, albeit by a Labour Minister.

8.45 p.m.

On the question of priorities, my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) asked where the £45 million that would be saved would be spent. My right hon. Friend said that he would answer my hon. Friend in the debate, but I do not recall that he did so and I do not know what priorities he would have for spending that money. Many Labour Members feel that it is a question not so much of "either or" but "neither nor" when it comes to priorities for that £45 million.

But priorities are not always priorities on things which might be done. There are also priorities on things which are being done. My right hon. Friend is in effect suggesting not only that this measure is of a lower priority than other things which he might do but of a lower priority than all the other things on which the Government spend money. I find that difficult to believe. It is difficult to believe that in the huge portfolio of Government expenditure there is not at least one item worth £45 million which is of a lower priority than the earnings rule.

If Labour Members are to be persuaded to vote with the Government tonight, we must have something to take back to our constituents, to take back on to the doorsteps to answer our constituents' pleas and to answer the letters we continually receive. I should be disposed to vote for the abolition of the earnings rule if it did nothing else than to save my having to write so many letters trying to justify the unjustifiable. I am sure that many Labour Members have the same problem.

I plead with my right hon. Friend to think again before the end of the debate and to give us something to take back to our constituents. If he wants my vote and the votes of some of my hon. Friends, he will have to do something.

Mr. David Penhaligon (Truro)

I have not followed the various aspects of the matter as closely as some hon. Members who have spoken today, because obviously I am not old enough. My retirement comes in the year 2011, and therefore I have no wish to declare an interest.

However, during the time I have been involved in politics I have more than once been collared by a few people who have expressed amazement at the apparent generosity with which the Government treat some people who do not want to work compared with the way in which they themselves are treated because, although they have reached the age of 65, they wish to work. There is substantial support in the country for the idea that work should be virtually compulsory till 65, allowing for the fairly obvious cases where that might not be possible, and that after that it should be voluntary.

The retirement pension is little more than 20 per cent. of the national average wage, yet the person who works after retirement is, in effect, taxed at 66 per cent. on £13 a week. Therefore, work after the age of 65 is not really voluntary but probably comes into the classification of masochism.

What has struck me about the debate is that it approaches only earnings and not investment income, annuities or company pensions. We must ask, what is wrong with work? Some people argue that there should be compulsory retirement at 65 in an attempt to deal with the unemployment problem, which looks as if it is becoming worse. On the same argument the compulsory retirement age could be reduced to 50 or even 45. There would then be no unemployment but we would have no economy either.

One of the figures that I looked up some time ago was the ratio of people who are of pensionable age to those who work. When I speak of workers in that context I mean anyone who works for a living. We are now in the position of having 277 pensioners for each 1,000 people who are under 65 and working. There are approximately 2.9 million people in the broad range of the 65–70 age group for men and the 60–65 age group for women. I am told that in 1951 31 per cent. of men in that age group pursued full-time employment. The figure dropped to 19 per cent. in 1971.

I have no wish to put any great pressure on the age group we are discussing. All I want to do is to remove a disincentive. If we could persuade 12 per cent. of the 3 million people who come into this working age group to return to work, there would be an increased labour force of approximately one-third of a million.

For the Government to say that there would be a net cost to our economy if there were one-third of a million more people working after reform than before does not strike me as having much logic. Of course, the strength of that argument lies in departmental isolation—namely, that we have to balance each bucket. It does not matter about balancing all the money among all the buckets. What we have to do is to balance the money in each bucket. If these extra people decided to work, the nation would have to provide from the increase in the gross national product to an extent that would more than make up for the obvious losses to the Exchequer.

My next point is one that I have often made in politics—namely, credibility. It is a matter that was faced in Committee. There is now a chance that we will reverse our decision. If we look back through old copies of Hansard we will find that there has always been virtually a unanimous vote on the Opposition benches for the reform of the earnings rule. It appears that Members go through some sort of conversion when they escape from opposition to government.

Mr. John Ovenden (Gravesend)

And the other way round.

Mr. Penhaligon

We have not been on the Government side of the House for a long time, but that is by the way.

People feel that they are being badly treated. Often they have worked for 50 years for their pension, and for earning as little as £13 a week they begin to see their pension disappear. People believe that they are having a bad deal. They are cynical when they hear politicians of all parties expressing support for reform and then doing nothing about it. The Liberals will tonight support the retention of the amendment that was passed in Committee. We believe that it will do much to reduce the cynicism of the people.

Mrs. Margaret Bain (Dunbartonshire, East)

I felt it was high time that the voice of a Scottish Member was heard in this debate. It has been interesting to note that the only party which has consistently been present to represent the views of the Scottish pensioners has been the Scottish National Party. We have had a great deal of statistics—.

Mr. Tam Dalyell (West Lothian)

That is not factual.

Mrs. Bain

The hon. Member for West Lothian (Mr. Dalyell) has only just come in. I have been sitting here for five hours waiting to speak.

I have found this a fascinating debate. The Scottish National Party believes in principles, but we have found, time and again, that opponents of principle move away from principle and try to blind us with statistics. That is what we have been getting today on this issue, especially from the Government.

I shall not go into great detail about cost, and so on, but we have been told by the Government that we cannot afford to abolish the earnings rule because we would have to find other ways of paying, and people would have to pay further contributions. The magazine, Pre Retirement Choice of December 1974, in an article not perhaps as famous as the one written by the right hon. Member for Finchley (Mrs. Thatcher), said that there is evidence from surveys carried out on behalf of Age Concern to suggest that most people would be willing to pay some higher contributions to improve the lot of the elderly here and now. Few people object to this kind of priority to look after old people, and yet, consistently, from Westminster Governments we get priorities very much in the opposite direction.

We in the Scottish National Party believe that the earnings rule is a discriminatory tax against people who want to work or who have to work. People at the age of 60 or 65 do not want to go on the scrap heap. Many want to go on contributing to society and have a spirit of independence which urges them to continue in employment. Many others have to work because pensions are inadequate to cope with the cost of living. I appreciate that the Government are considering that issue, but they have taken their time over it.

In Scotland, many pensioners are forced to work—the more so because of the higher cost of living in Scotland, particularly in respect of food and fuel—and, of course, our climatic conditions mean that people have to spend more on food and fuel and thereby find themselves in a disastrous situation.

Before the debate, I had expected some promise—some real concession—from the Government to the feeling that is so obvious in the House. That has not happened. Unless something much more substantial comes from the Government, the Scottish National Party will oppose the Government in the Lobbies on this issue.

Mr. Dalyell

Before the hon. Lady sits down—

Mrs. Bain

I have sat down.

Mr. Dalyell

This would cost at least £20 million on a Scottish basis, and some of us think that if £20 million is to be spent it can be spent better.

Mr. Deputy Speaker (Mr. Oscar Murton)

Order. The hon. Member for Dunbartonshire, East (Mrs. Bain) indicated that she had resumed her seat permanently.

Mr. Douglas-Mann

I shall not detain the House for long, but as this the first occasion on which I have found myself in a situation in which I think I shall be voting against my own party's Whip, I want to make a last-minute appeal to my right hon. Friend the Secretary of State for Social Services—I am glad that she is here—to make some concession and to present some more effective argument than has been presented so far in the debate.

The argument on the issue of retaining this provision in the Bill has been overwhelming in the debate, particularly as presented by my hon. Friend the Member for Islington, South and Finsbury (Mr. Cunningham), but the specific point which I do not think has been stressed adequately is that the cost involved in the provision is really incalculable. We have been given a ceiling of £60 million for the current year and £45 million after taking account of the clawback of taxation. What is not taken account in these figures is the number of people at present deterred from going out to work, and not only the income tax which they would pay on what they would earn but their contributions to the national productivity which results from people being able to work rather than being dependent on State benefits.

9.0 p.m.

We all know, from the letters we receive and from our experience, how this compulsion to retire early causes people to die prematurely. We know that if people are enabled to continue at work they will contribute to society and live more satisfactorily. At present there is a penal rate of tax for those who continue working after the official retirement age. My hon. Friend the Member for Islington, South and Finsbury gave examples of the circumstances in which the rate of tax can rise to 100 per cent. for certain rates of income. When we take into account, too, the loss of many other means-tested benefits we see that the tax rate could rise to 120 per cent. or even 130 per cent.

The Under-Secretary intervened to challenge my hon. Friend on this matter. I found it surprising that he was unaware that there were a large number of means-tested benefits for which a person could be eligible, even though his income was well above supplementary benefit level.

This has been a one-sided debate, in that the arguments presented initially by the Minister of State were not convincing. I came into the House today having weighed up the issues very seriously over a considerable period. I was one of the signatories to the Early Day Motion on the subject, but I had decided that, on balance, I ought to accept the Government's view.

Having listened to the debate, I have come to the conclusion that the cost has been greatly exaggerated and that there are many factors to mitigate that cost, if not to cancel it out altogether. I sympathise with the Secretary of State. She has a fixed departmental budget. The amount involved in this proposal is relatively small. It may be very much smaller than has been suggested. This is an inter-departmental problem. We, as back benchers, must decide it in the context of overall Government policy. We must ask the Government to put this right.

There may have been a lack of consultation between the Treasury and the relevant Departments when it was decided to raise the threshold for tax purposes. I do not think that I can accept that that must bind me. The Secretary of State is reported to have said that this was an issue which he was prepared to take as one of confidence. I implore her to reconsider that and to take steps now to say that she will, at the least, accept the provisions in subsection (3)(b) for 1975–76—that is, the raising of the earnings rule to £20. If we can get a pledge to the effect that amendments will be introduced in another place to deal with this for 1975–76, and that the position will be reviewed thereafter, I shall be prepared to accept half a loaf. Without even a crust I must, for the first time, go into the Lobby against the Government Whip.

Sir B. Rhys Williams

The case put forward by the Government has been so completely demolished by the hon. Member for Islington, South and Finsbury (Mr. Cunningham) that I do not need to dwell upon it at length. I owe it to the House to explain why there was a confused debate in Committee and why the amendments that have come from the Committee have a certain roughness about them. The hon. Member tabled his amendment and I tabled two amendments which had the effect of attacking the earnings rule. When we came to the debate the hon. Member's amendment had the misfortune still to be starred, and was not selected. I do not know whether he would have carried the Committee with him, but he would certainly have had my support.

Rather to my surprise, both my amendments were selected, the Chairman ruling that they were not incompatible. The Committee was able to consider one or other, or both of my amendments. To my gratification it carried them both. One of them concerned the timetable, reducing the operation of the earnings rule up to 1978 and raising it to £50; the other abolished it in 1980 but left latitude, in between, to the Secretary of State.

Of the two, I prefer the absolute abolition in 1980 rather than the timetable, because the timetable does not succeed in killing this monster. With the process of inflation and the passage of years, the Department may reinstate the earnings rule if we do not take a clear-cut decision. I implore hon. Members who care about this matter to recognise that we must go for abolition in 1980. We shall then be expressing the will of the House and of the public.

Much has been made about the claims on the Budget, but do pensioners do more to increase the nation's wealth by staying at home, doing nothing, and living on their savings, or by working? It is self-evident that they contribute more to the nation by working than if they do not. Spurious calculations based on narrow, departmental budgetary considerations, forgetting the overall national interest, no not deceive the House and do not convince the public. We have had enough of all those arguments.

There are deeper considerations, and I propose to touch on one rather unwelcome aspect, not dealt with in the debate. In industry and at work there is a rancid atmosphere of mistrust and cynicism, and of connivance. There is widespread concealment of pensioners' earnings. The reason is that the Government are confronting deeply-held public beliefs about the entitlement of pensioners. There is therefore widespread connivance in evading the earnings rule.

It is dangerous Government policy to insist on maintaining the application of a rule which has totally lost public respect. I have dealt with the question of entitlement so often that I do not need to go over it at length. Are entitlements to national insurance benefits related to the need of the beneficiary, to the contribution, or to citizenship—which I would prefer? We reject the concept of need as the root of entitlement to pension. Nobody likes the means test. We are therefore in agreement. It is either the pensioners' contribution record or his citizenship which gives entitlement to pension. It is nothing to do with his income.

Only yesterday the Secretary of State said in reply to the hon. Member for Southampton, Test (Mr. Gould), who I regret is not present: … there has been an enduring feeling in this country particularly among the trade unions, that there is a kind of guarantee about a contributory scheme—a guarantee that would not obtain in the same way if the scheme were financed entirely out of taxation."—[Official Report, 28th January 1974; Vol. 885, c. 186–7.] What private pension scheme based on contributions could possibly operate on the basis on which the Government try to operate the national insurance scheme—that if a person is earning he loses the entitlement for which he has paid through contributions?

If the Labour Party believes in the contributory principle it must believe in the abolition of the earnings rule. The argument about the rule applying at 65 but not at 70 makes nonsense of the principle. Savings income is disregarded, but income which derives from earnings results in the deprivation of pension. The whole House is ashamed of the earnings rule. It is being invited to vote for expediency instead of principle and to support the Treasury in the teeth of public opposition. I do not think it should.

This proposal has not been given high priority. As the Bill stands, it will take five years to get rid of this odious rule. But there is reason for us to take time about it. It will take time for employers to provide work, on a large scale, of a kind which will reflect the greater readiness of pensioners to work but possibly only short hours. Equally, older workers approaching retirement, as well as those who have retired, will need time to adapt their plans and way of life.

It seems to me that the year 1980 offers a reasonable compromise, and I hope that the Committee will be supported by both sides of the House in the vote. We want to make a fair society. We want to give our old people a better deal. The arguments which have been advanced from the Government Front Bench are totally unconvincing. Now is the time finally to get rid of this odious rule.

Mr. James Lamond (Oldham, East)

Despite having listened to the entire debate I have not yet made up my mind how to vote tonight. Unlike some Labour back benchers who have spoken, I have on one occasion voted against the Government and I might be prepared to do so again. But there is no Secretary of State against whom I would vote with greater reluctance than my right hon. Friend. In considering what I should do I take into account all that has been achieved by her Department in the short time since the February election. I have not forgotten the generous increases that have been made to retirement pensions, or the compassionate extension of the Christmas bonus to groups of people who were not considered suitable for it by the Conservative Government.

It cannot have escaped the attention of my hon. and right hon. Friends on the Front Bench that every speech that has been made by Labour back benchers has been against the amendment proposed by the Minister of State. I should be happy to see a small chink of light which would enable me to go into the Lobby cheerfully to support the Government.

All the arguments I have heard are ones which my instinct is to support. The Government argument is based on the difficulty of meeting the necessary expenditure at the moment. Various estimates of the expenditure have been made. The Minister did not give us a complete list of the benefits that could be set against that expenditure. Considerable benefit to the economy would arise from the provision in the Bill.

When I voted against the Government I did so because I was dissatisfied with the alleged cuts that were proposed in defence expenditure. I contrast sharply the ease with which additional money is found for defence expenditure, and the total defence expenditure, with the difficulty that arises whenever sums of £40 million or £50 million are mentioned for the social services.

I am confident that not only Labour Party activists and supporters in my constituency but also the majority of my constituents—even some who did not vote for me—would support the view I am putting in support of the measure. They would prefer money to be spent on that much-needed social measure than on defence.

I hope that the Government will make a concession to enable me to support my right hon. Friend the Secretary of State, whose work I so much admire.

9.15 p.m.

Mr. Bradford

It is doubtful whether any debate since the debate on the interim Budget will have captured the attention and imagination of our people more than the present debate. There is an existentialist content about the debate, because many pensioners regard it as a matter of life or merely existence. If the amendment is not agreed to, it will be an existence of great deprivation. It is important to put on record that the United Ulster Unionists will vote against the Government tonight.

To try to put the matter in layman's terms, the issue seems to be as follows: everybody is most anxious to help the pensioners but, to date, nobody has had the courage or determination to make a final effort. The Government seem to be saying that we have a choice. It is a matter of priority. On Clause 6 we shall debate a great area of need which seems to us to be more important even than this matter. Therefore, it is not a question of either Amendment No. 2 or Clause 6, but of both.

The expenditure involved is not beyond the competence of this House. It has been said that £45 million would be needed to meet the requirement. This House has given permission for the expenditure of many millions of pounds on projects such as the European Economic Community—

Mr. O'Malley

The figure is not £45 million but £225 million. I would add to that the total sum of the cost to the British taxpayer of our present Northern Ireland policies.

Mr. Bradford

The Minister has his own party members to deal with when he bandies statistics around.

The point I wish to make is that we have thrown away many millions of pounds on issues like the Common Market—money we shall never recover, because of the stupid terms to which we agreed—yet we are depriving a group of pensioners of a greatly needed increase in income.

I should like to make three very brief points. In this provision the Government are attacking wages. We must not lose sight of that basic fact. It is the wages of pensioners which are the subject of that attack. The Government are putting wage-earning pensioners in the same class as those who have never contributed a penny to the National Insurance Fund. They seek to deny pensioners their total pension if they earn more than a certain figure. One of my constituents earns about £20 a week, and the tax which she pays as a pensioner is £10. Therefore, the Government are effectively robbing her of her total pension. The rule which we are discussing tonight actively discourages people from working during the vital first years of retirement. I stress that point.

Other hon. Members made the point that the principle of related earnings ceases at the age of 70. That disparity is nonsense. Why should it apply at 65 and not at 70? The average age of death of a man today is 68, while that of a woman is 72. We have the terrible problem that the majority of men never escape this iniquitous taxation. There is a myth abounding that the old-age pension stage of life is a rather less expensive time. That is a myth. Most of such people have the same commitments as they had when they were working. In many cases pensioners are moved to other accommodation, which requires expenditure in terms of furniture, and so on.

It is a myth that the twilight years of one's life are a less expensive age. Assurances have been given that the Government will examine the problem of related earnings. It is clear that pensioners need not pie in the sky but pie in their ovens and cupboards. I shall not be a party to decimating still further the widow's mite.

Mr. Kenneth Marks (Manchester, Gorton)

Doubtless in lists circulating on both sides my name appears as a doubtful.

I listened carefully to the speech of my hon. Friend the Member for Islington, South and Finsbury (Mr. Cunningham) because I have a very great respect for the study he has made of the subject and for his ability to put a case in a simple yet detailed manner. I remember what he said during the Committee stage of the Social Security Bill 1973, a Conservative measure which increased and made the self-employed contribution earnings-related, as well as other measures which are now unpopular with the Opposition.

In the Committee stage of the 1973 Bill, my hon. Friend did the same as the hon. Member for Kensington (Sir B. Rhys Williams) has done in regard to this Bill. He put forward an amendment concerning tax relief on a second pension. Eventually he won the support of his Opposition colleagues and of some Government supporters.

Let us not be mealy-mouthed about what happened during the proceedings on the 1973 Bill. A Second Reading debate on that Bill took place. I do not recollect anybody going into the raptures we have heard from the hon. Member for Belfast, South (Mr. Bradford) about the earnings rule. There was a lot of talk about the self-employed. I did not hear the representative of the Scottish National Party, hon. Members representing Northern Ireland constituencies or Opposition Members going into details and saying that the earnings rule was a great matter of principle. The amendment carried in Committee was not an official Opposition amendment. No amendments were tabled by the minority parties. Nor was an amendment tabled either by my hon. Friend the Member for Islington, South and Finsbury or by any other Member of the then Opposition.

Mr. George Cunningham

I tabled an amendment to abolish the earnings rule. That was done at the relevant time. However, through incompetence on my part it was a "starred" amendment and, therefore, the debate took place on the basis of the amendments proposed by the hon. Member for Kensington (Sir B. Rhys William). But I tabled an amendment. I also discussed the matter on Second Reading.

Mr. Marks

I apologise to my hon. Friend. It is not easy to check amendments tabled to a Bill during its Committee stage. I did not see my hon. Friend's proposed amendment to this Bill, although there may have been one in regard to the April Bill.

In any event, this is not a matter about which the Opposition feel strongly or have any deep principles. When they were in government they increased the earnings rule only once. That was in 1971. They increased it to £9.50. In 1972 and 1973, when there were very considerable increases in the cost of living, they did nothing.

The hon. Member for Somerset, North (Mr. Dean) suggests that no Government will abolish the rule, and he says that the House of Commons must tell Governments what to do. I like that idea, but there is a danger. Hon. Members are under pressure from their constituents to demand the abolition of the earnings rule, immediate increases for one-parent families, increased family allowances and the rest of it. The same happens in local councils. For 11 months of the year councillors will demand everything, then they moan when the rates have to go up. The same applies in this House when individual Members and minority parties make demands, although they are not prepared to meet the costs.

The costs have to be met. My hon. Friend the Member for Islington, South and Finsbury says that it will involve only £60 million. That itself is debatable. We do not know how many people who work on instead of retiring would retire if they thought that they would get their full pensions. The increase which they get at the moment if they work until the age of 70 is about £3. If they can have all their wages and their full pension as well at the age of 65, it is likely that a considerable number of them will remain at work.

Then again, my hon. Friend supports the Opposition amendment. However, I warn him that the Opposition will not support him when he comes to say that we should get rid of this increased tax allowance up to £3,000.

Mr. George Cunningham

I know that they will not support me on that. But we shall not need their support on that, because we have a majority to carry it.

Mr. Marks

We know how large our overall majority is at the moment. It needs only a small group of Government supporters interested in a topic like social security to carry the day against the Government. There is a great danger of that happening on this occasion.

If the cost comes from contributions—I think that it will have to—it will mean the family man earning £30 a week having to pay increased contributions. I do not care how little the increase is likely to be. I can assure hon. Members that that family man will not like it, especially when it is to go to people who say that they have retired, who are receiving their pensions with perhaps some superannuation as well, and who may be earning as much as £50 a week. I am not sure that that is a priority which I would recommend.

Although I should like to hear firmer assurances from the Minister about the future, I feel that it would be unwise to put a figure on it of £20 or, in certain years, of £50. We know what changes in the cost of living and in terms of inflation can occur. Not so long ago, £10 for a single person and £16 for a married couple were regarded as magnificent. Though we have made those increases already, our Government are saying that they ale not enough and are increasing them.

Having considered this matter fully, for those reasons I shall go into the Division Lobby to support the Government.

9.30 p.m.

The Minister of State, Treasury (Mr. Robert Sheldon)

We have had a long debate on what everyone has accepted is an important matter and well worthy of our time. My right hon. Friend the Minister of State, Department of Health and Social Security, said that he would not attempt to defend the earnings rule, and that is my position too. My right hon. Friend rested his defence mainly on the grounds of the large cost. I hope later to explain what the Government propose in the light of the question of my hon. Friend the Member for Manchester, Gorton (Mr. Marks) about formal assurances about the future.

The threshold for the earnings rule was £7.50 in November 1969. Under a Tory administration it was raised in September 1971 to £9.50, and last summer we raised it considerably to £13. We thereby showed that this was a matter of great concern to us. When we had undertaken large pensions expenditure of a kind unmatched under previous Governments, at the same time, in very difficult circumstances, we made provision to improve the earnings rule.

An earnings limit of £20, if introduced in April 1975, would cost £60 million for the whole year 1975–76. After receipts of tax, as my hon. Friend the Member for Islington, South and Finsbury (Mr. Cunningham) said, this would be reduced to £45 million. My hon. Friend also mentioned some inaccuracy in a parliamentary reply. I am not aware of the case he cited and I have tried to conduct a hasty investigation, but I shall be delighted to take this up with him. I can assure him, however, that if there is any inaccuracy it is not intentional. He probably knows enough about how these matters are dealt with to accept my assurance.

Mr. George Cunningham

I was thinking not of a reply relating to that point but of an answer I received on 19th November about the cost of abolishing the earnings rule, which I was told would be £175 million a year. That figure has been raised to £225 million by reinterpretation in the last two days. I think that £225 million is right, although it includes a large element of guesswork, but I was given a firm estimate of £175 million some weeks ago.

Mr. Sheldon

I note what my hon. Friend has said, and I shall go into the matter further for him. It should be clearly understood that the public expenditure implications of the abolition of the rule in total are the figure of £225 million and that the cost to the Revenue is £170 million after taking tax into account.

Sir Brandon Rhys Williams

In making his assessment of what would be recovered through tax, what estimates has the Minister made of the number of pensioners who would come into the tax system as a result of the abolition of the rule, and what basis is there for those estimates? They must be very sketchy.

Mr. Sheldon

In discussing these matters no one can say that the estimates have an accuracy which the facts themselves cannot provide, because there are certain uncertainties in this matter. What I would say very strongly is that I find it very difficult to accept the criticisms made by former Ministers about the earnings rule when they had so long to bring about the changes themselves. There was extreme conviction in the feelings about the earnings rule voiced by certain hon. Members, whom I much respect. At the same time, however, it is very difficult for the Government side of the House, when confronted with our own splendid record on pensions, earnings rules and all these benefits which we willingly provide to the aged, to have thrown into our face the fact that we have not produced any solution in the short time available on the earnings rule itself.

Mr. Paul Dean

Will the hon. Gentleman address himself to an argument which has been used in this debate? That is that the argument on priorities has been devalued under the present Government, because no less than £700 million is available, in a totally indiscriminatory way, for food subsidies, and the Government are about to come to the House to increase them.

Mr. Sheldon

I note what the hon. Gentleman now says. I find it very sad that there is such a change of heart in matters which affect so many people so fundamentally.

Mr. Kenneth Clarke

May I take the Minister back to the point about the figures? I believe that he has come here mainly to defend those figures which did not persuade anyone in Committee. So far he has simply reasserted them. Is it right that the £170 million, which he is again quoting, is based on the assumption that everyone in full-time employment at present not drawing a pension would draw his pension once the earnings rule was abolished? If that is so, will the Minister address his mind to the fact that a large proportion would not draw the pension but would prefer to defer taking it so as to have the benefit of the substantial increments after the five years' delay?

Mr. Sheldon

I understand that point. The only assumption we can make is the assumption based on what has happened when the earnings rule has been relaxed in previous years.

Mr. Clarke

rose—

Mr. Sheldon

The hon. Gentleman must allow me to develop the point. What really matters here is that the first stage would be an increase of a kind not dissimilar from those which have been made on previous occasions. The first stage is an increase, not an abolition.

Mr. George Cunningham

Will my hon. Friend give way?

Mr. Sheldon

I have given way a great deal. I should like to have got a little further.

Mr. Cunningham

I am grateful to my hon. Friend. We understand that we are trying to conduct a running argument during a normal debate, but there is a tremendously important point involved. In April, for the first time ever, deferring one's pension becomes a worthwhile thing to do. We all know that in the past that has not been a worthwhile thing to do. In April, under the Social Security Act, it becomes worth while because one gets 6½ per cent. added to one's pension for every year one delays it. The point that has just been made is tremendously important. If the Government are saying that the figures they are using do not take that into account, the figures are not worth anything at all.

Mr. Sheldon

I cannot believe that this has quite the significance that my hon. Friend attaches to it. But there will be a marginal difference. I accept that. However public expenditure implications are matters which must concern the House. They certainly concern the Government at a time of great economic difficulty, which remains with us.

I shall shortly say what the Government propose, and I shall offer what my hon. Friend the Member for Gorton asked for—these firm assurances for the future.

Perhaps I may comment on the changeover from the age exemption to the age allowance. I believe that there have been a number of misunderstandings as to what this involved. What it is about is this. We decided, in my view quite rightly, that the age exemption had a number of great problems for the people who were involved.

For the married couple the age exemption started at £1,170. If they had earnings or income greater than that, they had to pay 55 per cent. on the excess. This was a matter of enormous concern and extensive correspondence. I speak with some authority about the matter because I have written hundreds of letters about it to hon. Members whose constituents could not understand why they were paying tax at the marginal rate of 55 per cent. To bring this nonsense to an end, and because of the increase in the retirement pension which made it impossible to continue, we proposed to convert this to an age allowance and it was readily accepted by the House. It was of great value. It meant that most people will not be brought within the scope of the 55 per cent. rate, and it makes it very much easier for the ordinary person to understand the situation.

There are, of course, one or two problems which result from inflation and which increase the need for changes in personal allowances. These are complications which we do not need to go into now, although I shall explain them to anyone who is interested.

I shall now say something about the chink of light which an hon. Member asked for. Both the Chancellor and I accept the case for phasing out. The House must accept that the last spring Budget saw a substantial increase in the threshold—an increase which the House readily approved. We recognise the need to continue this progress over the forthcoming years until the earnings rule is removed. I hope that this assurance will appeal to the House and that it will endorse the Government's view in due course.

At this precise moment in our economic circumstances I cannot commit the Government to a precise amount or to precise timing. Any increase in expenditure must be met by raising revenue. This is the kind of commitment which no Government can enter into. However, I think that the House will be able to accept what the Government propose and I believe that it will confirm the Labour Party in the responsible attitude that it takes for the proper running of the economy. At the same time, it will reinforce the reputation it justifiably has as a party which is devoted to deep concern and the practical solution of the problems of old people.

Mr. George Cunningham

Are we to understand that my hon. Friend is offering that this matter will be seriously looked at in the course of the Budget to see whether it is possible to increase the figure of £13? Have I given a reasonable paraphrase of the situation? Does it not mean that we shall have the figure of £13, which is already worth less than it was in 1971, which will continue for many months? Is it not possible for the Government to offer £17 in April and a further rise a year later? That would remove this difficulty.

Mr. Sheldon

It is impossible to carry on budgetary debates of this kind. I would have thought that I had gone very far by saying that we would continue this process through the forthcoming years until the rule is abolished. The financial implications will have to await the Budget, but I thought that what I had given would in general terms command the support of the House.

9.45 p.m.

Mr. Kenneth Clarke

With the leave of the House, I should like to speak again briefly. I shall delay the House for only a minute or so, because I gather that the general feeling is that we now wish to come to a vote.

Towards the end of his speech, the Minister of State reached the concession that the House has wrung from the Government. It came in the carefully prepared statement which he read out. I need not take up the interjection of the hon. Member for Islington, South and Finsbury (Mr. Cunningham). It was scarcely worth the hours of preparation and careful thought that no doubt went into it, because it carried the matter no further.

I had looked forward to the Minister of State's intervention, because throughout our proceedings in Committee we had cast doubt on the alarming figures of public expenditure which the Treasury had put forward. We had looked forward to the hon. Gentleman's justifying them in the face of the detailed criticisms put forward by my hon. Friend the Member for Kensington (Sir B. Rhys Williams), the hon. Member for Islington, South and Finsbury, and all the rest of us. All that we had was a mere reassertion, and what appeared to me to be an admission by a

Division No. 77.]	AYES	[9.46 p.m.
Abse, Leo	Cook, Robin F. (Edin C)	Fowler, Gerald (The Wrekin)
Allaun, Frank	Corbett, Robin	Fraser, John (Lambeth, N'w'd)
Anderson, Donald	Cox, Thomas (Tooting)	Freeson, Reginald
Archer, Peter	Craigen, J. M. (Maryhill)	Garrett, John (Norwich S)
Armstrong, Ernest	Cronin, John	Garrett, W. E. (Wallsend)
Ashley, Jack	Cryer, Bob	George, Bruce
Ashton, Joe	Cunningham, Dr J. (Whiteh)	Gilbert, Dr John
Atkins, Ronald (Preston N)	Dalyell, Tam	Ginsburg, David
Atkinson, Norman	Davidson, Arthur	Golding, John
Barnett, Guy (Greenwich)	Davies, Bryan (Enfield N)	Gould, Bryan
Barnett, Rt Hon Joel	Davies, Denzil (Llanelli)	Gourlay, Harry
Bates, Alf	Davies, Ifor (Gower)	Graham, Ted
Bean, R. E.	Davis, Clinton (Hackney C)	Grant, George (Morpeth)
Benn, Rt Hon Anthony Wedgwood	Deakins, Eric	Grant, John (Islington C)
Bennett, Andrew (Stockport N)	Dean, Joseph (Leeds West)	Grocott, Bruce
Bidwell, Sydney	de Freitas, Rt Hon Sir Geoffrey	Hamilton, James (Bothwell)
Bishop, E. S.	Delargy, Hugh	Hamling, William
Blenkinsop, Arthur	Dell, Rt Hon Edmund	Hardy, Peter
Boardman, H.	Dempsey, James	Harper, Joseph
Booth, Albert	Doig, Peter	Harrison, Walter (Wakefield)
Boothroyd, Miss Betty	Dormand, J. D.	Hart, Rt Hon Judith
Bottomley, Rt Hon Arthur	Duffy, A. E. P.	Hattersley, Rt Hon Roy
Boyden, James (Bish Auck)	Dunn, James A.	Hatton, Frank
Bradley, Tom	Dunnett, Jack	Hayman, Mrs Helene
Bray, Dr Jeremy	Dunwoody, Mrs. Gwyneth	Healey, Rt Hon Denis
Brown, Hugh D. (Provan)	Eadie, Alex	Heffer Eric S.
Brown, Robert C. (Newcastle W)	Edelman, Maurice	Horam, John
Buchan, Norman	Edge, Geoff	Hoyle, Douglas (Nelson)
Buchanan, Richard	Edwards, Robert (Wolv SE)	Hughes, Rt Hon C. (Anglesey)
Butler, Mrs Joyce (Wood Green)	Ellis, Tom (Wrexham)	Hughes, Mark (Durham)
Callaghan, Jim (Middleton & P)	English, Michael	Hughes, Robert (Aberdeen N)
Campbell, Ian	Ennals, David	Hughes, Roy (Newport)
Canavan, Dennis	Evans, Ioan (Aberdare)	Hunter, Adam
Cant, R. B.	Evans, John (Newton)	Irvine, Rt Hon Sir A. (Edge Hill)
Carmichael, Neil	Ewing Harry (Stirling)	Irving, Rt Hon S. (Dartford)
Carter-Jones, Lewis	Fernyhough, Rt Hon E.	Jackson, Colin (Brighouse)
Cartwright, John	Fitch, Alan (Wigan)	Jackson, Miss M. (Lincoln)
Castle, Rt Hon Barbara	Fitt, Gerard (Belfast W)	Janner, Greville
Clemitson, Ivor	Flannery, Martin	Jay, Rt Hon Douglas
Cocks, Michael (Bristol S)	Fletcher, Ted (Darlington)	Jeger, Mrs Lena
Coleman, Donald	Foot, Rt Hon Michael	Jenkins, Hugh (Putney)
Colquhoun, Mrs Maureen	Ford, Ben	Jenkins, Rt Hon Roy (Stechford)
Conlan, Bernard	Forrester, John	John, Brynmor

Treasury Minister who has been stiffening up his DHSS colleagues to resist us throughout that he does not understand the implications of what is happening next year—the higher increments if one delays one's retirement. It is clear that he does not know the assumptions on which his figures are based. When we point them out, he cannot defend them. His contribution was not worth making.

I strongly advise my right hon. and hon. Friends, and every other hon. Member who has the interests of the elderly at heart, to resist Amendments Nos. 2 and 3. I trust that there will be no need for us to come to Amendment No. 5, on which I ask for a separate Division only in the unlikely event of the Government's carrying the day.

Question put, That the amendment be made:—

The House divided: Ayes 265, Noes 280.

Johnson, James (Hull West)	Morris, Alfred (Wythenshawe)	Skinner, Dennis
Johnson, Walter (Derby S)	Morris, Charles R. (Openshaw)	Smith, John (N Lanarkshire)
Jones, Alec (Rhondda)	Morris, Rt Hon J. (Aberavon)	Snape, Peter
Jones, Barry (East Flint)	Mulley, Rt Hon Frederick	Spearing, Nigel
Jones, Dan (Burnley)	Murray, Rt Hon Ronald King	Stallard, A. W.
Judd, Frank	Newens, Stanley	Stewart, Rt Hn M. (Fulham)
Kaufman, Gerald	Noble, Mike	Stoddart, David
Kelley, Richard	Oakes, Gordon	Stott, Roger
Kerr, Russell	Ogden, Eric	Strang, Gavin
Kilroy-Silk, Robert	O'Halloran, Michael	Strauss, Rt Hon G. R.
Kinnock, Neil	O'Malley, Rt Hon Brian	Summerskill, Hon Dr Shirley
Lambie, David	Orbach, Maurice	Swain, Thomas
Lamborn, Harry	Ovenden, John	Taylor, Mrs Ann (Bolton W)
Lamond, James	Owen, Dr David	Thomas, Jeffrey (Abertillery)
Latham, Arthur (Paddington)	Padley, Walter	Thomas, Mike (Newcastle E)
Leadbitter, Ted	Palmer, Arthur	Thomas, Ron (Bristol NW)
Lestor, Miss Joan (Eton & Slough)	Park, George	Thorne, Stan (Preston South)
Lewis, Ron (Carlisle)	Parker, John	Tierney, Sydney
Lipton, Marcus	Parry, Robert	Tomlinson, John
Litterick, Tom	Perry, Ernest	Torney, Tom
Lomas, Kenneth	Prentice, Rt Hon Reg	Varley, Rt Hon Eric G.
Loyden, Eddie	Price, C. (Lewisham W)	Wainwright, Edwin (Dearne V)
Lyon, Alexander (York)	Price, William (Rugby)	Walker, Harold (Doncaster)
Lyons, Edward (Bradford W)	Radice, Giles	Walker, Terry (Kingswood)
McElhone, Frank	Rees, Rt Hon Merlyn (Leeds S)	Ward, Michael
MacFarquhar, Roderick	Richardson, Miss Jo	Watkins, David
McGuire, Michael (Ince)	Roberts, Gwilym (Cannock)	Watkinson, John
Mackenzie, Gregor	Robertson, John (Paisley)	Weitzman, David
Maclennan, Robert	Roderick, Caerwyn	Wellbeloved, James
McMillan, Tom (Glasgow C)	Rodgers, George (Chorley)	White, Frank R. (Bury)
Madden, Max	Rodgers, William (Stockton)	White, James (Pollock)
Maguire, Frank (Fermanagh)	Rooker, J. W.	Whitlock, William
Mahon, Simon	Rose, Paul B.	Willey, Rt Hon Frederick
Marks, Kenneth	Ross, Rt Hon W. (Kilmarnock)	Williams, Alan (Swansea W)
Marquand, David	Rowlands, Ted	Williams, Alan Lee (Hornchurch)
Marshall, Dr Edmund (Goole)	Ryman, John	Williams, Rt Hon Shirley (Hertford)
Marshall, Jim (Leicester S)	Sandelson, Neville	Wilson, Alexander (Hamilton)
Mason, Rt Hon Roy	Sedgemore, Brian	Wilson, William (Coventry SE)
Meacher, Michael	Selby, Harry	Wise, Mrs Audrey
Mellish, Rt Hon Robert	Shaw, Arnold (Ilford South)	Woodall, Alec
Mikardo, Ian	Sheldon, Robert (Ashton-u-Lyne)	Woof, Robert
Millan, Bruce	Short, Rt Hon E. (Newcasle C)	Wrigglesworth, Ian
Miller, Dr M. S. (E. Kilbride)	Short, Mrs Renée (Wolv NE)	Young, David (Bolton E)
Miller, Mrs Millie (Ilford N)	Silkin, Rt Hon John (Deptford)	TELLERS FOR THE AYES
Mitchell, R. C. (Soton, Itchen)	Silkin, Rt Hon S. C. (Dulwich)	Mr. John Ellis and
Molloy, William	Sillars, James	Mr. Laurie Pavitt.
Moonman, Eric	Silverman, Julius

NOES
Adley, Robert	Chalker Mrs Lynda	Fell, Anthony
Aitken, Jonathan	Channon, Paul	Finsberg, Geoffrey
Alison, Michael	Churchill, W. S.	Fisher, Sir Nigel
Amery, Rt Hon Julian	Clark, Alan (Plymouth, Sutton)	Fletcher, Alex (Edinburgh N)
Arnold, Tom	Clarke, Kenneth (Rushcliffe)	Fletcher-Cooke, Charles
Atkins, Rt Hon H. (Spelthorne)	Cockcroft, John	Fookes, Miss Janet
Awdry, Daniel	Cooke, Robert (Bristol W)	Fowler, Norman (Sutton C'f'd)
Bain, Mrs Margaret	Cope, John	Fraser, Rt Hon H. (Stafford & St)
Baker, Kenneth	Cormack, Patrick	Freud Clement
Banks, Robert	Corrie, John	Galbraith, Hon T. G. D.
Beith, A. J.	Costain, A. P.	Gardiner, George (Reigate)
Bell, Ronald	Craig, Rt Hon W. (Belfast E)	Gardner, Edward (S Fylde)
Benyon, W.	Crawford, Douglas	Gilmour, Rt Hon Ian (Chesham)
Berry, Hon Anthony	Crouch, David	Glyn, Dr Alan
Biffen, John	Crowder, F. P.	Godber, Rt Hon Joseph
Biggs-Davison, John	Cunningham, G. (Islington S)	Goodhart, Philip
Blaker, Peter	Davies, Rt Hon J. (Knutsford)	Goodhew, Victor
Body, Richard	Dean, Paul (N Somerset)	Goodlad, Alastair
Boscawen, Hon Robert	Dodsworth, Geoffrey	Gorst, John
Bowden, A. (Brighton, Kemptown)	Douglas-Hamilton, Lord James	Gow, Ian (Eastbourne)
Boyson, Dr Rhodes (Brent)	Douglas-Mann, Bruce	Gower, Sir Raymond (Barry)
Bradford, Rev Robert	Drayson, Burnaby	Grant, Anthony (Harrow C)
Braine, Sir Bernard	du Cann, Rt Hon Edward	Gray, Hamish
Brittan, Leon	Dunlop, John	Griffiths Eldon
Brotherton Michael	Durant, Tony	Grist, Ian
Brown, Sir Edward (Bath)	Dykes, Hugh	Grylls, Michael
Bryan, Sir Paul	Eden, Rt Hon Sir John	Hall, Sir John
Buchanan-Smith, Alick	Edwards, Nicholas (Pembroke)	Hall-Davis, A. G. F.
Buck, Antony	Elliott, Sir William	Hamilton, Michael (Salisbury)
Budgen, Nick	Emery, Peter	Hamilton, W. W. (Central Fife)
Bulmer, Esmond	Evans, Gwynfor (Carmarthen)	Hampson, Dr Keith
Burden, F. A.	Eyre, Reginald	Hannam, John
Carr, Rt Hon Robert	Fairbairn, Nicholas	Harvie, Anderson, Rt Hon Miss
Carson, John	Fairgrieve, Russell	Hastings, Stephen

Havers, Sir Michael	Maxwell-Hyslop, Robin	Shelton, William (Streatham)
Hawkins, Paul	Mayhew, Patrick	Shepherd, Colin
Hayhoe, Barney	Meyer, Sir Anthony	Shersby, Michael
Heath, Rt Hon Edward	Mills, Peter	Silvester, Fred
Henderson, Douglas	Miscampbell, Norman	Sims, Roger
Heseltine, Michael	Mitchell, David (Basingstoke)	Sinclair, Sir George
Hicks, Robert	Moate, Roger	Skeet, T. H. H.
Higgins, Terence L.	Molyneaux, James	Smith, Cyril (Rochdale)
Holland, Philip	Monro, Hector	Smith, Dudley (Warwick)
Hooley, Frank	Moore, John (Croydon C)	Speed, Keith
Hooson, Emlyn	More, Jasper (Ludlow)	Spence, John
Hordern, Peter	Morgan, Geraint	Spicer, Jim (W Dorset)
Howell, David (Guildford)	Morris, Michael (Northampton S)	Spicer, Michael (S. Worcester)
Howell Ralph (North Norfolk)	Morrison, Charles (Devizes)	Spriggs, Leslie
Howells, Geraint (Cardigan)	Morrison, Peter (Chester)	Sproat, Iain
Huckfield, Les	Mudd, David	Stainton, Keith
Hurd, Douglas	Neave, Airey	Stanbrook, Ivor
Hutchison, Michael Clark	Nelson, Anthony	Stanley, John
Irvine, Bryant Godman (Rye)	Neubert, Michael	Steel, David (Roxburgh)
Irving, Charles (Cheltenham)	Newton, Tony	Steen, Anthony (Wavertree)
James, David	Nott, John	Stewart, Donald (Western Isles)
Jenkin, Rt Hon P. (Wanst'd & W'df'd)	Onslow, Cranley	Stewart, Ian (Hitchin)
Jessel, Toby	Oppenheim, Mrs Sally	Stokes, John
Johnston Russell (Inverness)	Page, Rt Hon R. Graham (Crosby)	Tapsell, Peter
Jones, Arthur (Daventry)	Paisley, Rev Ian	Taylor, Teddy (Cathcart)
Jopling, Michael	Pardoe, John	Tebbit, Norman
Kaberry, Sir Donald	Parkinson, Cecil	Temple-Morris, Peter
Kellett-Bowman, Mrs Elaine	Pattie, Geoffrey	Thatcher, Rt Hon Margaret
Kimball, Marcus	Penhaligon, David	Thomas, Dafydd (Merioneth)
King, Evelyn (South Dorset)	Percival, Ian	Thompson, George
Kirk, Peter	Peyton, Rt Hon John	Thorpe, Rt Hon Jeremy (N Devon)
Kitson, Sir Timothy	Phipps, Dr Colin	Tinn, James
Knox, David	Pink, R. Bonner	Townsend, Cyril D.
Lamont, Norman	Powell, Rt Hon J. Enoch	Trotter, Neville
Lane, David	Price, David (Eastleigh)	Tugendhat, Christopher
Langford-Holt, Sir John	Pym, Rt Hon Francis	Van Straubenzee, W. R.
Latham, Michael (Melton)	Raison, Timothy	Vaughan, Dr Gerard
Lawrence, Ivan	Rathbone, Tim	Viggers, Peter
Lawson, Nigel	Rawlinson, Rt Hon Sir Peter	Wainwright, Richard (Colne V)
Le Marchant, Spencer	Rees, Peter (Dover & Deal)	Wakeham, John
Lewis, Kenneth (Rutland)	Rees-Davies, W. R.	Walden, Brian (B'ham, L'dyw'd)
Lloyd, Ian	Reid, George	Walder, David (Clitheroe)
Loveridge, John	Renton, Rt Hon Sir D. (Hunts)	Walker, Rt Hon P. (Worcester)
Luce, Richard	Renton, Tim (Mid-Sussex)	Walker-Smith, Rt Hon Sir Derek
McAdden, Sir Stephen	Rhys Williams, Sir Brandon	Walters, Dennis
MacCormick, Iain	Ridley, Hon Nicholas	Watt, Hamish
McCrindle, Robert	Ridsdale, Julian	Weatherill, Bernard
McCusker, H.	Rifkind, Malcolm	Wells, John
Macfarlane, Neil	Rippon, Rt Hon Geoffrey	Welsh, Andrew
MacGregor, John	Roberts, Michael (Cardiff NW)	Whitelaw, Rt Hon William
Macmillan, Rt Hon M. (Farnham)	Roberts, Wyn (Conway)	Wiggin, Jerry
McNair-Wilson, M. (Newbury)	Ross, Stephen (Isle of Wight)	Wigley, Dafydd
McNair-Wilson, P. (New Forest)	Ross, William (Londonderry)	Wilson, Gordon (Dundee E)
Madel, David	Rossi, Hugh (Hornsey)	Winterton, Nicholas
Marshall, Michael (Arundel)	Rost, Peter (SE Derbyshire)	Young, Sir G. (Ealing, Acton)
Marten, Neil	Royle, Sir Anthony	Younger, Hon George
Mates, Michael	Sainsbury, Tim	TELLERS FOR THE NOES:
Mather, Carol	St. John-Stevas, Norman	Mr. Adam Butler and
Maude, Angus	Scott, Nicholas	Mr. John Stradling Thomas.
Maudling, Rt Hon Reginald	Scott-Hopkins, James
Mawby, Ray	Shaw, Giles (Pudsey)

Question accordingly negatived.

It being Ten o'clock, further consideration of the Bill, as amended, stood adjourned.

Ordered, That the Social Security Benefits Bill may be proceeded with at this day's Sitting, though opposed, until any hour.—[Mr. Walter Harrison.]

Bill, as amended (in the Standing Committee), further considered.

Amendment proposed: No. 3 in page 2, line 24, leave out subsections (4) and (5).—[Mr. O'Malley.]

Question put, That the amendment be made:—

The House divided: Ayes 293, Noes 258.

Division No. 78.]	AYES	[10.2 p.m.
Abse, Leo	Evans, John (Newton)	Lyons, Edward (Bradford W)
Allaun, Frank	Ewing Harry (Stirling)	MacCormick, Iain
Anderson, Donald	Fernyhough, Rt Hon E.	McElhone, Frank
Archer, Peter	Fitch, Alan (Wigan)	MacFarquhar, Roderick
Armstrong, Ernest	Fitt, Gerard (Belfast W)	McGuire, Michael (Ince)
Ashley, Jack	Flannery, Martin	Mackenzie, Gregor
Ashton, Joe	Fletcher, Ted (Darlington)	Maclennan, Robert
Atkins, Ronald (Preston N)	Foot, Rt Hon Michael	McMillan, Tom (Glasgow C)
Atkinson, Norman	Ford, Ben	Madden, Max
Bain, Mrs Margaret	Forrester, John	Magee, Bryan
Barnett, Guy (Greenwich)	Fowler, Gerald (The Wrekin)	Maguire, Frank (Fermanagh)
Barnett, Rt Hon Joel	Fraser, John (Lambeth, N'w'd)	Mahon, Simon
Bates, Alf	Freeson, Reginald	Marks, Kenneth
Bean, R. E.	Garrett, John (Norwich S)	Marquand, David
Benn, Rt Hon Anthony Wedgwood	Garrett, W. E. (Wallsend)	Marshall, Dr Edmund (Goole)
Bennett, Andrew (Stockport N)	George, Bruce	Marshall, Jim (Leicester S)
Bidwell, Sydney	Gilbert, Dr John	Mason, Rt Hon Roy
Bishop, E. S.	Ginsburg, David	Meacher, Michael
Blenkinsop, Arthur	Golding John	Mellish, Rt Hon Robert
Boardman, H.	Gould, Bryan	Mikardo, Ian
Booth, Albert	Gourlay, Harry	Millan, Bruce
Boothroyd, Miss Betty	Graham, Ted	Miller, Dr M. S. (E. Kilbride)
Bottomley, Rt Hon Arthur	Grant, George (Morpeth)	Miller, Mrs Millie (Ilford N)
Boyden, James (Bish Auck)	Grant, John (Islington C)	Mitchell, R. C. (Soton, Itchen)
Bradley, Tom	Grocott, Bruce	Molloy, William
Bray, Dr Jeremy	Hamilton, James (Bothwell)	Moonman, Eric
Brown, Hugh D. (Provan)	Hamilton, W. W. (Central Fife)	Morris, Alfred (Wythenshawe)
Brown, Robert C. (Newcastle W)	Hamling, William	Morris, Charles R. (Openshaw)
Buchan, Norman	Hardy, Peter	Morris, Rt Hon J. (Aberavon)
Buchanan, Richard	Harper, Joseph	Mulley, Rt Hon Frederick
Butler, Mrs Joyce (Wood Green)	Harrison, Walter (Wakefield)	Murray, Rt Hon Ronald King
Callaghan, Jim (Middleton & P)	Hart, Rt Hon Judith	Newens, Stanley
Campbell, Ian	Hattersley, Rt Hon Roy	Noble, Mike
Canavan, Dennis	Hatton, Frank	Oakes, Gordon
Carmichael, Neil	Hayman, Mrs Helene	Ogden, Eric
Cant, R. B.	Healey, Rt Hon Denis	O'Halloran, Michael
Carter-Jones, Lewis	Heffer Eric S.	O'Malley, Rt Hon Brian
Cartwright, John	Henderson, Douglas	Orbach, Maurice
Castle, Rt Hon Barbara	Hooley, Frank	Ovenden, John
Clemitson, Ivor	Horam, John	Owen, Dr David
Cocks, Michael (Bristol S)	Hoyle, Douglas (Nelson)	Padley, Walter
Coleman, Donald	Huckfield, Les	Palmer, Arthur
Colquhoun, Mrs Maureen	Hughes, Rt Hon C. (Anglesey)	Park, George
Conlan, Bernard	Hughes, Mark (Durham)	Parker, John
Cook, Robin F. (Edin C)	Hughes, Robert (Aberdeen N)	Parry, Robert
Corbett, Robin	Hughes, Roy (Newport)	Perry, Ernest
Craigen, J. M. (Maryhill)	Hunter, Adam	Phipps, Dr Colin
Crawford, Douglas	Irvine, Rt Hon Sir A. (Edge Hill)	Prentice, Rt Hon Reg
Crawshaw, Richard	Irving, Rt Hon S. (Dartford)	Price, C. (Lewisham W)
Cronin, John	Jackson, Colin (Brighouse)	Price, William (Rugby)
Cryer, Bob	Jackson, Miss M. (Lincoln)	Radice, Giles
Cunningham, G. (Islington S)	Janner, Greville	Rees, Rt Hon Merlyn (Leeds S)
Cunningham, Dr J. (Whiteh)	Jay, Rt Hon Douglas	Reid, George
Dalyell, Tam	Jeger, Mrs Lena	Richardson, Miss Jo
Davidson, Arthur	Jenkins, Hugh (Putney)	Roberts, Gwilym (Cannock)
Davies, Bryan (Enfield N)	Jenkins, Rt Hon Roy (Stechford)	Robertson, John (Paisley)
Davies, Denzil (Llanelli)	John, Brynmor	Roderick, Caerwyn
Davies, Ifor (Gower)	Johnson, James (Hull West)	Rodgers, George (Chorley)
Davis, Clinton (Hackney C)	Johnson, Walter (Derby S)	Rodgers, William (Stockton)
		Rooker, J. W.
Deakins, Eric	Jones, Alec (Rhondda)	Rose, Paul B.
Dean, Joseph (Leeds West)	Jones, Barry (East Flint)	Ross, Rt Hon W. (Kilmarnock)
de Freitas, Rt Hon Sir Geoffrey	Jones, Dan (Burnley)	Rowlands, Ted
Delargy, Hugh	Judd, Frank	Ryman, John
Dell, Rt Hon Edmund	Kaufman, Gerald	Sandelson, Neville
Dempsey, James	Kelley, Richard	Sedgemore, Brian
Doig, Peter	Kerr, Russell	Selby, Harry
Dormand, J. D.	Kilroy-Silk, Robert	Shaw, Arnold (Ilford South)
Douglas-Mann, Bruce	Kinnock, Neil	Sheldon, Robert (Ashton-u-Lyne)
Duffy, A. E. P.	Lambie, David	Short, Rt Hon E. (Newcasle C)
Dunn, James A.	Lamborn, Harry	Short, Mrs Renée (Wolv NE)
Dunnett, Jack	Lamond, James	Silkin, Rt Hon John (Deptford)
Dunwoody, Mrs. Gwyneth	Latham, Arthur (Paddington)	Silkin, Rt Hon S. C. (Dulwich)
Eadie, Alex	Leadbitter, Ted	Sillars, James
Edelman, Maurice	Lee, John	Silverman, Julius
Edge, Geoff	Lestor, Miss Joan (Eton & Slough)	Skinner, Dennis
Edwards, Robert (Wolv SE)	Lewis, Ron (Carlisle)	Smith, John (N Lanarkshire)
Ellis, John (Brigg & Scun)	Lipton, Marcus	Snape, Peter
Ellis, Tom (Wrexham)	Litterick, Tom	Spearing, Nigel
English, Michael	Lomas, Kenneth	Spriggs, Leslie
Ennals, David	Loyden, Eddie	Stallard, A. W.
Evans, Gwynfor (Carmarthen)	Luard, Evan	Stewart, Donald (Western Isles)
Evans, Ioan (Aberdare)	Lyon, Alexander (York)	Stewart, Rt Hn M. (Fulham)

Stoddart, David	Varley, Rt Hon Eric G.	Willey, Rt Hon Frederick
Stott, Roger	Wainwright, Edwin (Dearne V)	Williams, Alan (Swansea W)
Strang, Gavin	Walker, Harold (Doncaster)	Williams, Alan Leo (Hornchurch)
Strauss, Rt Hon G. R.	Walker, Terry (Kingswood)	Williams, Rt Hon Shirley (Hertford)
Summerskill, Hon Dr Shirley	Ward, Michael	Wilson, Alexander (Hamilton)
Swain, Thomas	Watkins, David	Wilson, Gordon (Dundee E)
Taylor, Mrs Ann (Bolton W)	Watkinson, John	Wilson, William (Coventry SE)
Thomas, Dafydd (Merioneth)	Watt, Hamish	Wise, Mrs Audrey
Thomas, Jeffrey (Abertillery)	Weetch, Ken	Woodall, Alec
Thomas, Mike (Newcastle E)	Weitzman, David	Woof, Robert
Thomas, Ron (Bristol NW)	Wellbeloved, James	Wrigglesworth, Ian
Thompson, George	Welsh, Andrew	Young, David (Bolton E)
Thorne, Stan (Preston South)	White, Frank R. (Bury)
Tierney, Sydney	White, James (Pollock)	TELLERS FOR THE AYES:
Tinn, James	Whitehead, Phillip	Mr. Thomas Cox and
Tomlinson, John	Whitlock, William	Mr. Laurie Pavitt.
Torney, Tom	Wigley, Dafydd

NOES
Adley, Robert	Fell, Anthony	Lamont, Norman
Aitken, Jonathan	Finsberg, Geoffrey	Lane, David
Alison, Michael	Fisher, Sir Nigel	Langford-Holt, Sir John
Amery, Rt Hon Julian	Fletcher, Alex (Edinburgh N)	Latham, Michael (Melton)
Arnold, Tom	Fletcher-Cooke, Charles	Lawrence, Ivan
Atkins, Rt Hon H.(Spelthorne)	Fookes, Miss Janet	Lawson, Nigel
Awdry, Daniel	Fowler, Norman (Sutton C'f'd)	Le Marchant, Spencer
Baker, Kenneth	Fraser, Rt Hon H. (Stafford & St)	Lewis, Kenneth (Rutland)
Banks, Robert	Freud Clement	Lloyd, Ian
Beith, A. J.	Galbraith, Hon T. G. D.	Loveridge, John
Bell, Ronald	Gardiner, George (Reigate)	Luce, Richard
Benyon, W.	Gardner, Edward (S Fylde)	McAdden, Sir Stephen
Berry, Hon Anthony	Gilmour, Rt Hon Ian (Chesham)	McCrindle, Robert
Biffen, John	Glyn, Dr Alan	McCusker, H.
Biggs-Davison, John	Godber, Rt Hon Joseph	Macfarlane, Neil
Blaker, Peter	Goodhart, Philip	MacGregor, John
Body, Richard	Goodhew, Victor	Macmillan, Rt Hon M. (Farnham)
Boscawen, Hon Robert	Goodlad, Alastair	McNair-Wilson, M. (Newbury)
Bowden, A. (Brighton, Kemptown)	Gorst, John	McNair-Wilson, P. (New Forest)
Boyson, Dr Rhodes (Brent)	Gow, Ian (Eastbourne)	Madel, David
Bradford, Rev Robert	Gower, Sir Raymond (Barry)	Marshall, Michael (Arundel)
Braine, Sir Bernard	Grant, Anthony (Harrow C)	Marten, Neil
Brittan, Leon	Gray, Hamish	Mates, Michael
Brotherton, Michael	Griffiths Eldon	Mather, Carol
Broughton, Sir Alfred	Grist, Ian	Maude, Angus
Bryan, Sir Paul	Grylls, Michael	Maudling, Rt Hon Reginald
Buchanan-Smith, Alick	Hall, Sir John	Mawby, Ray
Buck, Antony	Hall-Davis, A. G. F.	Maxwell-Hyslop, Robin
Budgen, Nick	Hamilton, Michael (Salisbury)	Mayhew, Patrick
Bulmer, Esmond	Hampson, Dr Keith	Meyer, Sir Anthony
Burden, F. A.	Hannam, John	Mills, Peter
Carr, Rt Hon Robert	Harvie, Anderson, Rt Hon Miss	Miscampbell, Norman
Carson, John	Hastings, Stephen	Mitchell, David (Basingstoke)
Chalker, Mrs Lynda	Havers, Sir Michael	Moate, Roger
Channon, Paul	Hawkins, Paul	Molyneaux, James
Churchill, W. S.	Hayhoe, Barney	Monro, Hector
Clark, Alan (Plymouth, Sutton)	Heath, Rt Hon Edward	Moore, John (Croydon C)
Clarke, Kenneth (Rushcliffe)	Heseltine, Michael	More, Jasper (Ludlow)
Cockcroft, John	Hicks, Robert	Morgan, Geraint
Cooke, Robert (Bristol W)	Higgins, Terence L.	Morris, Michael (Northampton S)
Cope, John	Holland, Philip	Morrison, Charles (Devizes)
Cormack, Patrick	Hooson, Emlyn	Morrison, Peter (Chester)
Corrie, John	Hordern, Peter	Mudd, David
Costain, A. P.	Howell, David (Guildford)	Neave, Airey
Craig, Rt Hon W. (Belfast E)	Howell Ralph (North Norfolk)	Nelson, Anthony
Crouch, David	Howells, Geraint (Cardigan)	Neubert, Michael
Crowder, F. P.	Hurd, Douglas	Newton, Tony
Davies, Rt Hon J. (Knutsford)	Hutchison, Michael Clark	Nott, John
Dean, Paul (N Somerset)	Irvine, Bryant Godman (Rye)	Onslow, Cranley
Dodsworth, Geoffrey	Irving, Charles (Cheltenham)	Oppenheim, Mrs Sally
Douglas-Hamilton, Lord James	James, David	Page, Rt Hon R. Graham (Crosby)
Drayson, Burnaby	Jenkin, Rt Hon P. (Wanst'd & W'df'd)	Paisley, Rev Ian
du Cann, Rt Hon Edward	Jessel, Toby	Pardoe, John
Dunlop, John	Johnston Russell (Inverness)	Parkinson, Cecil
Durant, Tony	Jones, Arthur (Daventry)	Pattie, Geoffrey
Dykes, Hugh	Jopling, Michael	Penhaligon, David
Eden, Rt Hon Sir John	Kaberry, Sir Donald	Percival, Ian
Edwards, Nicholas (Pembroke)	Kellett-Bowman, Mrs Elaine	Peyton, Rt Hon John
Elliott, Sir William	Kimball, Marcus	Pink, R. Bonner
Emery, Peter	King, Evelyn (South Dorset)	Powell, Rt Hon J. Enoch
Eyre, Reginald	Kirk, Peter	Price, David (Eastleigh)
Fairbairn, Nicholas	Kitson, Sir Timothy	Pym, Rt Hon Francis
Fairgrieve, Russell	Knox, David	Raison, Timothy

Rathbone, Tim	Shersby, Michael	Townsend, Cyril D.
Rawlinson, Rt Hon Sir Peter	Silvester, Fred	Trotter, Neville
Rees, Peter (Dover & Deal)	Sims, Roger	Tugendhat, Christopher
Rees-Davies, W. R.	Sinclair, Sir George	van Straubenzee, W. R.
Renton, Rt Hon Sir D. (Hunts)	Skeet, T. H. H.	Vaughan, Dr Gerard
Renton, Tim (Mid-Sussex)	Smith, Cyril (Rochdale)	Viggers, Peter
Rhys Williams, Sir Brandon	Smith, Dudley (Warwick)	Wainwright, Richard (Colne V)
Ridley, Hon Nicholas	Speed, Keith	Wakeham, John
Ridsdale, Julian	Spence, John	Walder, David (Clitheroe)
Rifkind, Malcolm	Spicer, Jim (W Dorset)	Walker, Rt Hon P. (Worcester)
Rippon, Rt Hon Geoffrey	Spicer, Michael (S. Worcester)	Walker-Smith, Rt Hon Sir Derek
Roberts, Michael (Cardiff NW)	Sproat, Iain	Walters, Dennis
Roberts, Wyn (Conway)	Stainton, Keith	Weatherill, Bernard
Ross, Stephen (Isle of Wight)	Stanbrook, Ivor	Wells, John
Ross, William (Londonderry)	Stanley, John	Whitelaw, Rt Hon William
Rossi, Hugh (Hornsey)	Steel, David (Roxburgh)	Wiggin, Jerry
Rost, Peter (SE Derbyshire)	Steen, Anthony (Wavertree)	Winterton, Nicholas
Royle, Sir Anthony	Stewart, Ian (Hitchin)	Young, Sir G. (Ealing, Acton)
Sainsbury, Tim	Stokes, John	Younger, Hon George
St. John-Stevas, Norman	Tapsell, Peter
Scott, Nicholas	Taylor, Teddy (Cathcart)	TELLERS FOR THE NOES:
Scott-Hopkins, James	Tebbit, Norman	Mr. Adam Butler and
Shaw, Giles (Pudsey)	Temple-Morris, Peter	Mr. John Stradling Thomas.
Shelton, William (Streatham)	Thatcher, Rt Hon Margaret
Shepherd, Colin	Thorpe, Rt Hon Jeremy (N Devon)

Question accordingly agreed to.

Mr. Speaker

Amendment No. 4, therefore, falls.

Mr. Edward Heath (Sidcup)

Mr. Speaker, would you be prepared to accept a motion to enable consideration to be adjourned so that a spokesman for the Government may give an indication of the Government's thinking on the previous amendment, which was carried by the House against the Government?

Mr. Speaker

I put to the House at 10 o'clock a proposition that the Bill should be considered until any hour. Having done that, and it having been agreed to, I am afraid I cannot entertain the right hon. Gentleman's motion.

Mr. Heath

rose—

The Chancellor of the Exchequer (Mr. Denis Healey)

rose—

Mr. Speaker

Order. Only one at a time.

Mr.Heath

rose—

Mr. Healey

rose—

Mr. Speaker

Order. I call Mr. Heath.

10.15 p.m.

Mr. Heath

In that case, Mr. Speaker, may I put a point of order to enable the Government to clarify their position? The amendment which the House carried against the wish of the Government will be of great benefit to those who have retired and who wish to work. From 1976 it will increase the limit of their earnings to £20, then to £35, and then to £50.

I wish to ask the Government spokesman what is now the Government's attitude to the amendment. Will the Chancellor of the Exchequer, who seems so anxious to leap to his feet, give an undertaking that the Government, following a financial decision of the House of Commons, will not attempt to use their majority in the House of Lords to overthrow the open declaration of the Chamber, elected by the people of this country, to help our old people to have a better life and to enable them to contribute to the production of this country?

We want a firm declaration from the Chancellor that he will no longer screw down the faces of those who have retired, but will accept the decision of the House to give them a better standard of living in their old age.

Mr. Healey

Further to that point of order, Mr. Speaker. If I can master the wave of nausea which swept over me when I heard the hypocritical humbug coming from the mouth of the right hon. Gentleman the Leader of the Opposition, I must tell the House that I recognise that the Conservative Opposition have voted for a substantial increase in public expenditure. They were supported by the right hon. Member for Down, South (Mr. Powell) and his colleagues from Northern Ireland. I hope that we shall have no more hypocritical claptrap from the Opposition benches in future about the need to keep public expenditure under control.

The House will know that for three and a half years the Leader of the Opposition, in circumstances which he claimed were very much more propitious, economically, did not lift a finger to bring about the result for which he and his colleagues have voted tonight. Let me assure the right hon. Gentleman that I am not prepared to see the public sector borrowing requirement increased by this vote. Therefore, I shall ensure that the necessary revenue is raised from those who are best able to provide it. I hope that I shall be able to count on the right hon. Gentleman's honour in support of any measures which I shall introduce to that end.

Mr. John Peyton (Yeovil)

rose—

Mr. Speaker

Order. This is an abuse of the procedure of the House. If I may say so, with the greatest respect to both the Leader of the Opposition and the Chancellor of the Exchequer, I think they have gone too far. It is the custom to allow a business question. One allows one question and an answer, but it is wrong for the House to expect me to allow hon. Gentlemen on either side of the House to go into the merits.

Mr. Peyton

On a point of order, Mr. Speaker—[Interruption.]

Mr. Speaker

Order. I have been firm on this point on earlier occasions with hon. Members.

Mr. Peyton

I wish to raise a different point, Mr. Speaker.

Mr. Speaker

I have taken exactly the same attitude with parties on either side of the House. It has been my practice to allow only one question and one answer, and, with respect, both the question and the answer went a good deal wider than they ought to have done.

Mr. Peyton

Mr. Speaker, I apologise. I realise your difficulties. However, I rise on a different point of order. The Chancellor of the Exchequer was heard distinctly to use the words "bloody humbug"—[Interruption.]

Mr. Speaker

Order. If the right hon. Member was applying those sentiments to another right hon. Member, it is out of order. If the words were applied to an argument, I deprecate the epithet very much. The noun is not out of order.

Mr. Healey

I withdraw the word "bloody" and substitute "revolting".