§ Mr. Kenneth ClarkeI beg to move Amendment No. 1, in page 2, line 19, leave out '6/' and insert '7'.
The amendment touches on the delicate problem of the contribution rates payable by the working population who will be paying into the new pension scheme. Therefore, it is probably as well that I do not move it at an hour when I have time to dwell on it, because it is the aspect of pension policy which is the least attractive to those who discuss it, the aspect that Governments in particular wish to gloss over.
However, I wish to point out that a great cost will fall on the working population, both in the near future, when the scheme comes into effect, and the distant future, when it matures. Although we are trying to reach bipartisan agreement with the Government on policy for the future, we very much regret that they have been so determined to take the State into earnings-related, fully inflation-proofed pensions, on a pay-as-you-go basis that in 20 years' time there will be a great obligation on our children. We must make sure that contribution rates do not reach the limit of the capacity of the working population and their willingness to pay.
To remind the Government of what has already been done, I take the example of a middle-income man hard-pressed by inflation and taxation, a man earning £80 a week and paying the Class 1 contribution. In fact, £80 a week is slightly higher than the middle income, but those in that group are probably the section of the working population most hard-pressed by all the economic difficulties and taxation changes of the past 12 months. Anyone whose pay was £80 545 a week for the past 18 months was paying in February 1974, when we left office, £2.83 each week, contracted out of the graduated scheme. By August 1974 that had risen to £3.40, and by April this year to £3.79, and on the Bill as it stands it goes up to £5.20. Since the day we left office, his contribution has already nearly doubled.
We said in Committee that the figures in the Bill are not a realistic calculation of what the contributions will be in 1978, when it comes into force. The whole thing is based on the assumption that there will be 2½ per cent. unemployment, which is only 575,000 registered unemployed. That will obviously be a dream in 1977 or 1978, as the Government are using unemployment as an economic weapon, and it is reasonable to expect that the figure will be at least double whenever the scheme comes into effect.
With 5 per cent unemployment in 1977 or 1978—not a breathtaking figure, being a little over a million—another l¼ per cent. contribution will have to he raised, and so it will go, with an extra quarter per cent. for an extra half per cent. unemployment.
The Government are so blind to this that the legislation restricts their flexi-
| Division No. 228.] | AYES | [10.00 p.m. |
| Allaun, Frank | Evans, John (Newton) | Lyon, Alexander (York) |
| Anderson, Donald | Ewing, Harry (Stirling) | Lyons, Edward (Bradford W) |
| Armstrong, Ernest | Fletcher, Ted (Darlington) | Mabon, Dr J. Dickson |
| Atkinson, Norman | Ford, Ben | McElhone, Frank |
| Bagier, Gordon A. T. | George, Bruce | Mackintosh, John P. |
| Barnett, Guy (Greenwich) | Gilbert, Dr John | McMillan, Tom (Glasgow C) |
| Barnett, Rt Hon Joel (Heywood) | Ginsburg, David | Madden, Max |
| Bates, Alf | Gourlay, Harry | Marks, Kenneth |
| Beith, A. J. | Graham, Ted | Marquand, David |
| Booth, Albert | Grant, George (Morpeth) | Marshall, Dr Edmund (Goole) |
| Boyden, James (Bish Auck) | Grimond, Rt Hon J. | Mellish, Rt Hon Robert |
| Bray, Dr Jeremy | Hamilton, James (Bothwell) | Mikardo, Ian |
| Callaghan, Jim (Middleton & P) | Hamilton, W. W. (Central Fife) | Millan, Bruce |
| Canavan, Dennis | Harrison, Walter (Wakefield) | Miller, Dr M. S. (E Kilbride) |
| Cant, R. B. | Hatton, Frank | Molloy, William |
| Carter-Jones, Lewis | Hayman, Mrs Helene | Morris, Alfred (Wythenshawe) |
| Cartwrlght, John | Heller, Erie S. | Murray, Rt Hon Ronald King |
| Castle, Rt Hon Barbara | Hooson, Emlyn | Newens, Stanley |
| Clemitson, Ivor | Howells, Geraint (Cardigan) | Noble, Mike |
| Cocks, Michael (Bristol S) | Hughes, Rt Hon C. (Anglesey) | Oakes, Gordon |
| Cox, Thomas (Tooting) | Hughes, Robert (Aberdeen N) | O'Halloran, Michael |
| Craigen. J. M. (Maryhill) | Hunter, Adam | O'Mallay, Rt Hon Brian |
| Cryer, Bob | Jackson, Miss Margaret (Lincoln) | Orbach, Maurice |
| Cunningham, Dr J. (Whiteh) | Jay, Rt Hon Douglas | Ovenden, John |
| Dalyell, Tarn | Johnson, Walter (Derby S) | Owen, Dr David |
| Davies, Bryan (Enfield N) | Jones, Alec (Rhondda) | Palmer, Arthur |
| Davies, Ifor (Gower) | Jones, Barry (East Flint) | Pardoe, John |
| Delargy, Hugh | Jones, Dan (Burnley) | Pendry, Tom |
| Doig, Peter | Kerr, Russell | Penhaligon, David |
| Dormand, J. D. | Kilroy-Silk, Robert | Phipps, Dr Colin |
| Douglas-Mann, Bruce | Lamond, James | Radice, Giles |
| Duffy, A. E. P. | Lee, John | Rees, Rt Hon Merlyn (Leeds S) |
| Dunn, James A. | Lewis, Ron (Carlisle) | Richardson, Miss Jo |
| Dunnett, Jack | Litterick, Tom | Roberts, Albert (Normanton) |
| Ellis, John (Brigg & Scun) | Loyden, Eddie | Roderick, Caerwyn |
§ bility to change matters. If unemployment is over 805,000, they will need new legislation to bring the contribution rates up to the level needed to pay for the beginning of the new scheme. I stress that that is only the beginning. By insisting that the bargain between both sides of the house must be on the basis of State-based, inflation-proofed, pay-as-you-go pensions, the Government are imposing on the willingness of our children to pay out of their earnings for our pensions to an extent to which the current generation are not prepared to pay for the present generation of pensioners. Their assumptions about the cost—
§ It being Ten o'clock, further consideration of the Bill, as amended, stood adjourned.