HC Deb 17 November 1977 vol 939 cc910-36
Mr. Robert Kilroy-Silk (Ormskirk)

I beg to move Amendment No. 1, in page 3, line 12, leave out 'week beginning with 5th December 1977' and insert 'first week in December of each year'. I should like first to congratulate the Minister on having brought forward the Bill and on reintroducing the Christmas bonus. Whatever the merits of such ad hoc payments may be—and we could have many arguments about that—the bonus is extremely popular among the beneficiaries. It will be welcomed by pensioners. As the hon. Member for Wallasey (Mrs. Chalker) pointed out, a whole range of people will benefit, whether they are pensioners, war widows or in some other category, and the bonus will be particularly welcomed in such areas as Merseyside and my constituency.

However, there is a problem. A bonus of £10 was first paid in 1972 and again in 1973. The scheme was extended by my right hon. Friend the Member for Blackburn (Mrs. Castle) in 1974 to cover about 9 million beneficiaries in more or less the same categories as those covered by the Bill. The bonus was not paid in 1975 or 1976, to the great dismay of all those who had previously received it and had considered it a regular feature of their benefits, particularly as it had been paid for three years. It was not unnatural that they should anticipate its continuance.

It was not paid on the grounds that social security benefits had been uprated and that payments were, therefore, being received in a more regular and continuous fashion than by ad hoc payments. Now the benefit is to be paid again in 1977. It was stopped in the face of great controversy, but for some reason we have decided to pay it again this year. Indeed, my right hon. Friend the Minister for Social Security said only on 29th April this year, in a Written Answer, that it was not his intention to pay the bonus to retirement pensioners at Christmas 1977. He said: A bonus payment is bound to be arbitrary in coverage, and to exclude many deserving groups. A general uprating of benefits, such as will take place in November, is an altogether fairer method of distributing the resources which are available."—[Official Report, 29th April 1977; Vol. 930, c. 462.] I agree entirely with those sentiments. The question is: why, a few months later, are we suddenly having a massive reversal of policy and deciding that we shall now pay that bonus? On 29th April this year my right hon. Friend made out a perfectly reasonable case why we should not pay the bonus. Tonight I presume that he has a perfectly good case why we should pay it. If we are to pay it this year it seems to me that we have no option but to continue to pay it in future years.

Mr. Orme

This point is central to my hon. Friend's argument. He has asked a fair question because in April of this year I said—my right hon. Friend the Secretary of State said it a little later— that we would not pay the bonus. We said that against the economic background as it then was. We were still very much in the grip of the IMF position. But as the economy improved during the autumn it became obvious that the Government were in a position again to offer assistance in terms of both public expenditure and tax relief.

It would have been extremely unfair if we had made tax concessions but not taken pensioners into account. We therefore decided to pay the bonus on that basis. I hope my hon. Friend will accept that in no way was this meant to be a sleight of hand. It was an immediate response to the problems of the pensioners because we felt that we could assist.

Mr. Kilroy-Silk

I accept my right hon. Friend's argument. It is one of the arguments in favour of ad hoc payments of this kind. One of those arguments, which specifically relates to this bonus, is that it enables pensioners and other potential recipients to share in the general prosperity of the country. Just as other members of the community get tax rebates or productivity bonus increases, the pensioners, too, are entitled to share in this through such an ad hoc payment. That is a very considerable argument.

In a moment I shall come back to the central point of my right hon. Friend's riposte to my argument. Ad hoc payments of this kind are of crucial help to the aged, to pensioners and to the most disadvantaged and unfortunate members of our community. They are of crucial help and aid to them at a time like Christmas. They assist many who have no savings and do not have the ability to save. These people get what, admittedly, to them is a windfall which enables them to pay the heating bills about which they had been worrying, or to buy an extra present or extra food.

Such a bonus is a very effective means of giving aid directly to the people who need it most. It is extremely effective in that it is tax-free and simple to administer and goes direct to those most in need.

The amendment seeks to ensure that the bonus is paid not only in 1977 but also next year and in following years. The argument in favour relates not so much to the merits or otherwise of ad hoc payments but rather to the psychological damage that is caused by using pensioners and others as a political football. That is basically what my right hon. Friend admitted in his intervention earlier.

At the moment the situation is that we shall have the bonus this year, but we do not yet know whether pensioners will get it next year. There is a tremendous amount of uncertainty. Either the Government are determined to make ad hoc payments, in which case they must give them a place in our social security system on a regular basis in future years, or they must say that they are against such payments in principle. I accept that there are good reasons in principle for being against them. We could give the aid by other means and not use the pensioners and others as a political football, making them susceptible to the whims and caprice of any Government as they are at the moment. There is a great deal of dismay, consternation and controversy that, having once stopped paying the bonus, the Government have now decided to pay it again. If the Government decide to pay it this year it is impossible for them not to pay it in future years. The psychological blow of not paying the bonus to pensioners and others who believe that it will be maintained every year will be enormous.

Mr. George Cunningham (Islington, South and Finsbury)

I understand the difficulties created by resuming payment of the bonus this year and then giving it up again next year. But surely there is a difference between circumstances this year and next year in that next year, whatever money is available for pensioners, it will be possible to build that into the normal rate when that is decided in the spring, to take effect in November 1978. Is that not a better way of doing it?

Mr. Kilroy-Silk

That is what we argued in 1974 and 1975, but it did not stop pensioners believing that in those years they were diddled out of their Ted Heath bonus, as they called it. The pensioners feel that they were given an entitlement which was subsequently withdrawn. Their position may have been improved by the general uprating. But for some reason—I suspect it is to help prime the pump of the economy—the Government have decided to pay the bonus this year. It is morally indefen- sible to hold out to thousands of pensioners the hope, since the bonus is being paid this year, that the Government are putting down a marker for future years and then for my right hon. Friends to decide in future years not to pay it.

I am asking my right hon. Friends to ensure that it will be paid every year. That is the aim of the amendment. In that way the payment will not be dependent upon the charity, caprice or whim of the then Chancellor of the Exchequer. The pensioners are on the edge of a precipice awaiting the announcement that they will get the £10 bonus not at the patronising and charitable discretion of future Chancellors but as of right.

I therefore urge my right hon. Friend to think seriously about the amendment and to enter a commitment on behalf of the Government to accept that, having paid the bonus this year, they must pay it every year in the future.

10.30 p.m.

Mr. Michael Shersby (Uxbridge)

I have some sympathy with the amendment moved by the hon. Member for Ormskirk (Mr. Kilroy-Silk). The Christmas bonus to pensioners has a particular memory for me because it was introduced in Christmas 1972, a few days after I entered this House. During the course of my by-election campaign in Uxbridge I had the opportunity of talking to hundreds, if not thousands, of pensioners who were to receive their bonus, the first to be introduced, from the Conservative Government.

It was clear to me then that the bonus was an important part of every pensioner's budgetary arrangements for that Christmas. I was sad when it was not possible to continue the bonus. There is a strong case to be made for making arrangements to ensure that the bonus is paid annually. We all know that Christmas is an expensive time for us. This is no less true for pensioners. Many of them have children and grandchildren whom they wish to visit in various parts of the country. They have additional expenses at that time of the year and have no extra way of meeting them. It is right that we should introduce the bonus on a permanent basis. There is much to be said for providing for it in the pension book and for the bonus to be dealt with annually with the pension uprating, with inflation being taken into account.

I understand that the cost of the bonus amounts to £100 million. That is a great deal of money but in assessing the costs we should have regard to the contribution made by pensioners to the success of our country, to the contribution they have made to industry and commerce and our way of life generally. We have to recognise the severe hardship they experience in meeting heating costs and the costs of Christmas. It is certainly not impossible for us to consider meeting such costs.

The Government have proposed that the bonus should be paid this year. There are hon. Members who feel that the principle should be adopted on a permanent basis. I favour that because I dislike the suggestion that the bonus is paid only when we are approaching a General Election. That is an unworthy suggestion, and I do not believe that the Minister has introduced the bonus for that reason. I believe that he has done it because he recognises, as we all do, the serious position of many elderly people in these days of hyper-inflation.

I hope that the Committee will give sympathetic and serious consideration to the amendment. I intend to vote for it to demonstrate that I believe that the Government should adopt the proposal It is sensible, humane and charitable. Moreover, it brings help to all pensioners, to whom so many of us owe so much. We would like to make this an annual affair, not to be decided by the annual whim of this House in a separate Bill.

Mr. J. W. Rooker (Birmingham, Perry Barr)

I rise to support the amendment moved by my hon. Friend the Member for Ormskirk (Mr. Kilroy-Silk). It would be political suicide for the Government to leave this matter hanging in the air during 1978. Because the bonus was paid in 1974, stopped, and then brought back, we shall be accused of making the issue a political football in a General Election year, as we were in 1974. I do not want the Government to be in that position next year. I do not want them to have to be asked "Are you going to pay the bonus at the end of the year?" I do not want there to be an item in the next Labour Party manifesto similar to that which appeared in the last one saying "The Labour Government will pay another £10 Christmas bonus this year." I do not want this to be remotely connected with a General Election. If that happens it will turn the pensioners against the Labour Party. They will argue that we are doing it only because of the General Election. I want the Government to get the credit by putting this on the statute book direct so that all know where they stand.

The commitment is not that great. I submit that £100 million is not a great deal of money in terms of the size of the British economy. It is chicken-feed—equivalent to 20p a week on the old-age pension. But if we had put another 50p on the pension in the recent operation we should not have got as much credit for it, because the psychological effect of the Christmas bonus far and away transcends the monetary value of it. It was referred to earlier as the Ted Heath bonus. When I went round the constituency saying what a good job the Labour Government had done in putting up the pension, people still asked about the Christmas bonus.

Mr. Shersby

Will the hon. Gentleman accept that it is not a question of this Government or any other Government getting credit for introducing the increase? It is a question of Parliament deciding that this payment should be made on an annual basis. Surely that is what we are talking about, rather than credit to any particular Government. We are talking about Parliament deciding that the pensioners shall get a fair deal every Christmas.

Mr. Rooker

The hon. Gentleman may not have noticed it but in the last three and a half years I have been playing in the Labour team and not the Tory team. I have even been trying to get credit for my own Government from this year's Finance Bill, even if it has meant putting the boot in to defeat the Government for their own good.

The value of this Christmas payment psychologically, as I was saying, far and away transcends the monetary value involved. When the Bill was passed earlier today to give tax reliefs, it was only because the Treasury could not get its sums right earlier in 1977, and I have no more confidence that the Treasury will get its sums right in 1978 than this year.

We could be in exactly the same position then as we are now, with money in the kitty as a result of the Treasury getting their sums wrong, and with the need for another mini-Budget at that time.

I represent a constituency with more than twice the average number of old-age pensioners. Over 30 per cent. of my constituents are old-age pensioners. I know the value to them of even a very small sum of money. My right hon. Friend will know that this week many of my constituents are £1 worse off than they were last week. They have not achieved the full impact of the rise in the pension because they have lost the special heating subsidy which was received from the Supplementary Benefits Commission by certain people in Birmingham. They are now losing some £50 a year as a result.

I want it to be clearly on record that a sum of money will be made available next year for the old-age pensioners. If it were not for the Ways and Means Resolution we would probably have sought to change the figure of £10, but we are not here to cause trouble. We are here to exercise our rights as individual Members of the House, acting according to our conscience and in the best interests of our constituents. The best interests of my constituents happen to coincide with the best interests of the Labour Government and the Labour Party, and basically I am here to represent the constituents who put me here, the majority of them having voted Labour.

I do not see how my right hon. Friend can make a case against the amendment which can hold conviction outside the House, bearing in mind the change in attitudes of Members over the payment of the bonus over the years. There were cheers from below the Gangway on this side of the House when my hon. Friend said that this bonus was not really the right way to do the job.

My hon. Friend the Member for Pontefract (Mr. Harper), mow a Government Whip, spoke in 1973, when the bonus was to be made for the second time. He said that he had grave doubts whether a bonus was a suitable mechanism. He thought that there should be an adequate pension, so that pensioners would not need such a bonus. He thought that paying a bonus smacked of the poorhouse attitude. That is not my attitude towards the bonus.

But my hon. Friend went on to say: During the past year or two my opinion has changed. I think that the bonus has come to stay. I believe that, whichever party is in power, when Christmas comes the bonus will be there, whatever the amount. It has come to stay."—[Official Report, 19th October 1973; Vol. 861, c. 568.] He is governed now by the rules of the payroll vote, so he cannot speak in the debate, but I have spoken for him. I have quoted what he said four years ago, and there is every indication that in other circumstances he would probably take the same attitude today.

There should be no need for a vote on this amendment because I am sure that my right hon. Friend the Minister for Social Security will give a full commitment to fighting like hell in Cabinet for a Government commitment to annual payment. We know him, but he might not be in his present job very long, and without such a commitment from him now we shall have to get it out of someone else who may follow him.

Obviously, therefore, it is far better to write such a provision into the Bill now. My experience is that it is better to write commitments into a Bill. I ask my right hon. Friend to take on board the representations made from both sides of the Committee. There may be cynicism from the Opposition Front Bench, saying one thing and voting another way, but the hon. Member for Wallasey (Mrs. Chalker) has not the benefit of a public relations firm working for her, otherwise she would not have made the comments she did about the pension increase. The right hon. Member for Wanstead and Woodford (Mr. Jenkin) should really have been here for the Opposition.

I hope that my right hon. Friend can now say that he will accept the amendment.

Mr. Robert Boscawen (Wells)

I think that what has been said in this debate convinces me that I was right in 1972, and am right today, not to like the £10 Christmas bonus. Of course it is popular, and the Government have done a popular thing. It is probably right, if they had this sum of money available at this late stage in the year, that it should go to the pensioners, and that it should go to them in the form of a Christmas bonus. But it would be wrong for the Government to accept the amendment.

But if £100 million is to be made available annually, it should be made available where the need is really great. There are plenty of ways in which it could be spent urgently and where it would do a great deal of good, rather than that it should be spent in giving a £10 bonus to a very large number of pensioners.

Of course the pensioners will like it; it will give pleasure to a considerable number of people—I do not doubt that. But there are certain areas to which we as a responsible House of Commons ought to be bringing more assistance. I shall not go into detail about them, because we all know them. They lie particularly in health and social security services.

10.45 p.m.

When the bonus was introduced in 1972, I accepted it. It had been done, and it was a popular move. But I did not like it then, and I do not like it today. Governments should not be in the business of handing out largesse to certain groups at certain times of the year. That gets us a bad name, and it can be misinterpreted. I am sure that this is not being done for the worst possible reasons and that there was a sum of money available through a change in the economic tide. The Government wanted to get that out as quickly as posible, to a wide field of hands, and felt that this was a sensible way to do that. However, to do it every year would be a mistake. It would be unwise. It would not be a responsible thing to do.

No one can say that during the time I have been a Member of the House of Commons I have not been the first to want to see that less-fortunate people and those in retirement get a fair deal. They should get a fair deal, but this is not the right way for the House of Commons to go about it.

Mr. William Hamilton (Fife, Central)

The assumption behind the amendment is that we are dealing with the poorer sections of the community. That is very doubtful. The people with whom the amendment is concerned are among the poorest, but they are not necessarily wholly the people with whom we ought to be dealing.

My second point concerns the effect of inflation. If we wrote this into the legis- lation, we should have to write in indexation somehow. As the hon. Member for Wallasey (Mrs. Chalker) quite fairly pointed out earlier, to return to the purchasing power of the bonus in 1972 would mean increasing it to £21. I should like my right hon. Friend to indicate what such additional public expenditure would be if this had already been written into the legislation. What would be the reaction of the Tory Party in relation to the increased public expenditure involved in paying a bonus of £21?

My third point is whether it would be wise to do this given the fact that it would lead to considerably increased administrative costs. What are the additional administrative costs in administering this bonus over and above normal national insurance administrative costs?

Fourthly, despite those misgivings, I support the amendment. I revert to what I said earlier. If the Government can pay the enormous sums involved in the Civil List, they can afford to pay this.

Mr. G. B. Drayson (Skipton)

I am very sympathetic towards the amendment, which I do not think goes far enough. I am surprised that we have not had a number of amendments on the Notice Paper increasing the sum involved to £15 or £20. However, I am glad that we have not indulged in "pensioneering". A number of hon. Members have shown that that is something that they heartily dislike.

I should have liked the amendment to say that the Christmas payment would be one additional week's pension. It would then overcome the difficulty raised by the hon. Member for Fife, Central (Mr. Hamilton). Every year it would be index-linked because it would simply be another week's pension. When the Government were considering what the pension for the following year should be, they could take that into account. Therefore, it need not necessarily be an inflationary once-for-all payment. If the Government took into consideration when assessing what the pension should be for the following year that there was to be an extra week's payment in the first week in December, that would overcome the difficulty.

It is a time of year when additional expenses come along. In his maiden speech today, the hon. Member for Birmingham, Ladywood (Mr. Sever) indicated that a large number of his constituents live from week to week with their pay packets. That demonstrates quite clearly that it is not easy for people today to save for special occasions such as Christmas.

The Minister of State recently said that he had received a deputation of old-age pensioners. I can remember a deputation I received when I first stood for Parliament as a young man. I was trying to win back a seat that had been lost by 200 votes. This deputation consisted of one man from the local old-age pensioners. He told me that he was the president, and that he had 500 members in his organisation. His members, he claimed, would do anything that he told them, and he asked me what 500 votes were worth. To me, they were worth a considerable amount, and I certainly hoped to win most of them. He asked me again what it was worth. I must have appeared very dull, because I did not really understand what he was getting at. I said that I had every confidence that the old-age pensioners would reach the proper decision, and that I was sure they would appreciate any advice he cared to give them.

That was my early experience of pensioneering, and we have had many instances of it since in this House. When the Labour Party was in opposition between 1951 and 1964, it would put down motions on the Order Paper asking for an immediate increase in the old-age pension. The Conservative Government would put down a reasoned amendment saying that the House welcomed the good things the Conservative Government had done for pensioners and looked forward to further benefits in future. The motion would be put to the House, and we would vote against it and for our reasoned amendment. Immediately pamphlets from old-age pensioners would go around my constituency saying that I, as the Member, had voted against an increase in the old-age pension. It is very difficult to explain about reasoned amendments, and this is another reason why I have always disliked what I call "pensioneering".

I welcome this suggestion that the bonus should be a permanent feature, but I would prefer it to be one week's additional pay, which would mean £28 for a married couple. I would not mind if it was taxable, which would mean the Treasury could claw some of it back. Equally, I should like to see the annual allowances and age allowance to those in retirement steadily increased so that even if the pension were taxable it would be relieved from tax by increasing the allowances by the equivalent amount.

Reference has been made to the undignified way in which old people have been treated. In April they were told that they would not be getting the bonus; now they are told they will get it. They live in a state of anxiety. It has been called psychological warfare by the Government. I would call it cat-and-mouse treatment that old people have received over the past 12 months.

I welcome the suggestion that the bonus should be a permanent feature that those in retirement can expect in the first week of December.

Mr. Tim Sainsbury (Hove)

I welcome the return of this Bill, and have some sympathy with the amendment tabled by the hon. Member for Ormskirk (Mr. Kilroy-Silk). There are good reasons why we should view with suspicion the fact that Bills of this kind are introduced on an irregular basis—or even a regular basis—at about this time every year. We all know about the risks of turning the whole process into a political football.

Hon. Members on both sides of the Committee have protested, somewhat to my surprise, that there is no suggestion of this measure being introduced for purely political reasons. But I am not sure one should expect pensioners and those outside the House to do other than suspect the motives of any Minister who introduces Bills of this nature at a time when the following year is expected to bring a General Election. I think that is true no matter which party the Minister represents. There must at least be some suspicion that these matters could be manipulated for political reasons. One slips too easily into pork-barrel politics, particularly if at one time in the year there are ministerial statements that such a thing will not happen and then later, mysteriously, because a General Election may be approaching, it becomes desirable to put forward a Bill dealing with the subject.

There is another reason why we should look to the amendment with friendliness. It is not justified to use the pension as a means of finely tuning the economy because of the advent of the latest Treasury report showing that £100 million can be pumped into the economy. One could debate many desirable ways in which that £100 million could be spent. But pensioners should not be treated as the victims of economic fine-tuning and left out one Christmas when it appears that Treasury indicators do not look quite so good. We might also see a situation where Ministers may at one time in the year say that they intend to take certain action and then, having seen the latest Treasury report, they may decide to do nothing. That kind of attitude is not justified at all.

I have in my constituency even more retired people than there are in the constituency of the hon. Member for Birmingham, Perry Barr (Mr. Rooker), and I know that they do not wish their extra Christmas benefits to be determined by the precise state of the economy at any given moment.

It has been suggested that this is not a sensible way of spending £100 million or of helping senior citizens. I am not sure that that argument stands up. One can argue that a bonus payment, far from being unfair, indiscriminate and ineffective, if introduced by some method at about this time in respect of pensions and other benefits specified in the Bill, is a sensible and justified provision.

A number of hon. Members, including my hon. Friend the Member for Wallasey (Mrs. Chalker), referred to the extra expenses which pensioners have to bear at this time of the year. They face winter expenses, fuel being the predominant one. It is no good Ministers saying "What about the action we have taken on that front?" It does not please pensioners who rely on solid fuel or gas heating to be told that there is a special bonus for those who use electric heating. That kind of statement, far from pleasing many pensioners, displeases them. That is the most unfair, indiscriminate and ineffective way of helping people with their heating bills that can possibly be imagined. It is helping only those who happen to use one fuel—it is not a par- ticularly suitable form of fuel—for their space heating.

11.0 p.m.

We must recognise that space heating is something that becomes of the greatest importance at this time of year. Lighting will be used more at this time of year. There will be a need for extra clothes. Even the amount of food that one eats should increase with the onset of the colder weather. All those factors are involved, not to mention matters such as trying to give presents to grandchildren.

There are many justifications for an increase of some sort for pensioners at this time of year. One way of dealing with the issue would be to employ a system that is available elsewhere—namely, more frequent pension entitlement adjustments. However, that is something that even the computers available to the Government seem unable to bring about, in spite of its being done elsewhere.

We must look at other methods, and when we do I suggest that Ministers take account that it is now recognised and documented that one of the features of our democracy is that we shall have a considerable increase in the number of people over 75 years old as opposed to those over 65. Another factor in favour of the amendment is that those who are most at risk and find life the hardest at this time of year are those who have had small savings. As they get older they are most likely to find that their savings, which were especially useful on occasions when extra expense was incurred, have been exhausted. Therefore, some form of bonus payment is most appropriate. However, I am not convinced that this form of bonus payment is the best way of meeting the problem.

In ably moving his amendment, the hon. Member for Ormskirk seemed to be of the opinion that if it were carried it would solve the problem. I do not think it would. One reason is that the Bill includes the amount of the benefit—namely, £10. As has already been said, in real terms £10 is already only half the value of the original benefit. If the bonus were enshrined in the Bill as only £10 we should still be having to consider at Christmas time whether there should be an uprating, and, if so, by how much. We should be back to the game of making pensioners a political football. From that point of view it may be argued that the amendment is, in a sense, defective.

The hon. Member for Fife, Central (Mr. Hamilton) spoke of administrative cost. The costs of paying the benefit are presumably similar in real terms to what they were in 1972, but the real value of the benefit is half what it was in 1972. It can be logically deduced that administrative costs as a proportion of the benefit have doubled since 1972, or slightly more than doubled. That raises a question-mark against a continuing benefit.

I hope that we can find some way of giving additional help to pensioners at this time of year. It may be that the benefit should not be the Christmas bonus in its present form. I have considerable sympathy with the amendment but I do not think that it would entirely solve the problem.

Mr. Tony Newton (Braintree)

If there is one thing for which I shall remember the debate, it will be the spectacle of the hon. Member for Birmingham, Perry Barr (Mr. Rooker) acting as a ventriloquist for somebody on the Government Front Bench. Apart from that, I shall have a nostalgic feeling as I contemplate the hon. Gentleman and the hon. Member for Coventry, South-West (Mrs. Wise). I must confess at the outset of my remarks what some will regard as an unholy alliance with the hon. Gentleman and the hon. Lady, I am entirely with them, and if the hon. Member for Ormskirk (Mr. Kilroy-Silk) chooses to press the amendment to a Division I shall go into the Aye Lobby with him and his hon. Friends.

I support in particular what has been said about the way in which the matter has been handled. I shall not go on about it as I think that hon. Members have made the point already. It seems inherently patronising and cynical for Ministers to say to pensioners, above all others, "We find that we have a little money to spare, so we thought that we would toss it to the pensioners before Christmas." That is no way to treat the pensioners. If Ministers believe that this is the wrong way to give money to pensioners, they should not do it. If they believe that it is the right way to give money to pensioners, they should put it on a more permanent, sensible and regular footing. I go along with the second of those courses.

I turn to the underlying argument—namely, whether this is the best way to pay fuel bills. I take up the strand introduced by my hon. Friend the Member for Wells (Mr. Boscawen). Is it not better to help pensioners by, for example, giving them an extra 20p a week throughout the year, or is it better to pay them an extra £10 at Christmas? One can vary the figures as one wishes, but the question remains whether it is better to have a small extra regular payment during the year or a slightly smaller payment each week and a lump sum, because inevitably over the years money used for a lump sum is money that will not be given to the pensioners on the regular basis.

Far from its being better, as Ministers seem to believe, to pay the extra regular sum during the year, there is merit in paying the lump sum, in this case at Christmas, because it corresponds to the psychological reality. To people living on the margin of their income, as so many pensioners are, a lump sum is much more use than a few extra pence a week during the year. Most of us who have had the happy experience of receiving a rebate from the tax man have found that it is much more fun and much more useful suddenly to receive £10, £20 or £30 than to have 10p or 20p more on our regular payslip.

The other day my children were playing Monopoly. In that game there is a card which sends a player halfway round the board. There are others which say "Bank error in your favour" or "Advance to Mayfair". It is theoretically better that the bank should never make an error, but it is fun to find that it does. The same psychology essentially applies to the pensioners. A lump sum, especially at a time such as Christmas, is more useful to them than a few extra pence a week during the year.

Therefore, I hope that the payment will be put firmly on a regular basis. I do not like the technique of the amendment. I do not like the reference to a figure. I would prefer an extra week's pension, or perhaps two weeks' pension, to be specified. It is important to solve the administrative and indexing problems. But I understand that the hon. Member for Ormskirk could not do as I suggest because of the way in which the Bill is drafted.

I take it that the hon. Gentleman is trying to mount a demo by moving the amendment. I am in favour of his demo, and if he proceeds with it I shall vote for it.

Mrs. Chalker

It is clear from the debate that we are all very conscious of the great attraction of the bonus. We know very well what people think of it.

However, we must also look at the background against which the bonus is being paid, and at its adequacy. My hon. Friend the Member for Hove (Mr. Sainsbury) pointed out that the amendment on its own does not achieve the real intention of the hon. Member for Ormskirk (Mr. Kilroy-Silk) and many other hon. Members, including many of my hon. Friends, because if £10 continued to be paid, as it would if the amendment were passed, its value would soon become meaningless at the present levels of inflation under a Labour Government.

Way back in 1972 the right hon. Member for Blackburn (Mrs. Castle) accused us of just tinkering with the problem, and of doing so in the most ineffective way. It is a much smaller tinker this time than in 1972. Whilst I am not in total agreement with all that the right hon. Lady said then, there is more than a grain of truth in it, and we must judge this bonus against the wider background.

It is well known that we in this country have the most complicated benefits system anywhere in the world. The staff in many of our DHSS offices are almost bemused by the huge variety and complexity of the range of benefits which might or might not apply to their customers. On this occasion the Post Office is having to respond to something which is being agreed at relatively short notice.

We understand all these problems. We also know that the Department, together with the Supplementary Benefits Commission, is thoroughly reviewing the supplementary benefits part of our system. We support that review, and look forward to the findings early next year.

The past years have been full of changes to our system. In some years the Christmas bonus has been paid—in 1972, 1973, 1974 and now in 1977. However welcome, each change has been in isolation. The major common characteristic of all the changes is that they have led to the system becoming much more complicated. We have looked at this problem, and we shall continue to examine it, along with the tax credit system and the much-needed radical changes in our benefit system.

We cannot look at this bonus without looking at the other parts of the system. We can only regret that there is no sign of Government work on a rationalisation of our benefit system other than on supplementary benefits. The situation is constantly changing, and the pensioners, the disadvantaged and the handicapped are always the first to suffer. We must have a system which stands up against these changes.

Thankfully, the rate of inflation is improving. The Minister agreed in this debate that it is thanks to International Monetary Fund policy that there is a bit left over this year for the bonus to be paid. The country needs a system that will hold good under a wider range of fortunes than under a one-on, one-off system.

Let us examine the arguments for and against the bonus. In favour of it is its strong popularity—which would be even greater if it were index-linked. It helps to pay Christmas bills. But we know that it does not always come when the recipient is most in need of a boost. Administratively, it is a great burden on the Post Office staff, however gladly, they undertake the extra work. It does not always reach those who are in the greatest need. Some people are excluded even when their need is greater than those who receive the bonus.

We are happy to accept the Government's change of heart since April for this bonus. But because the system must be simplified we must look at the Christmas bonus in a different manner.

A suggestion was made by my hon. Friend the Member for Skipton (Mr. Drayson), supported by my hon Friend the Member for Braintree (Mr. Newton), which is worthy of closer examination. The suggestion is for a 53-week pension year or a 52-week plus bonus week pension year. The additional or bonus payment could be paid through the usual system at the decisive time which we now regard as Christmas. That would mean that in future it could become an integral part of the pension and benefits system. If it were included in the annual upratings, all the arguments against the one-off, oft-repeated bonus and the difficulties of the "political football" debates that would continue over the size of the bonus if this amendment were passed would be overcome.

This idea has much to commend it, though it might mean that people had a little less each week during the year.

Mrs. Audrey Wise (Coventry, South-West)

The hon. Lady has done us a favour by exposing her thinking on this matter. Does she acknowledge that her proposal is fraudulent? She wants to give the impression that the pensioner will get something extra. However small a £10 bonus may be because of the effect of inflation, it is an extra payment and not a replacement for uprating.

Mrs. Chalker

The hon. Member for Coventry, South-West (Mrs. Wise) is quite wrong. I am saying that the suggestion is worthy of closer examination. I am suggesting that we consider introducing a 53-week pension year or a 52-week plus bonus week pension year so that the bonus is not decided when we come to the Christmas period.

There are two further reasons why we should give careful thought to that proposal. It would save a great deal of trouble for the Post Office staff. There could be a dated voucher in the benefit book. Moreover, it would delight the beneficiaries to know of the bonus not in the short period leading up to Christmas but well before.

Back in 1972, the right hon. Lady the Member for Blackburn said: Our duty … is to look far more imaginatively at the situation."—[Official Report, 20th November 1972; Vol. 846, c. 992.] The Opposition are doing just that, considering the full needs of the elderly, the disadvantaged and the handicapped. But we are happy to let the Government's plan stand tonight, whilst keeping under constant review all needs, including the need for simplification, with a view to seeing whether we can meet them in the coming months.

11.15 p.m.

Mr. Orme

The commentary by my hon. Friend the Member for Coventry, South-West (Mrs. Wise) exposed the type of argument and support which comes from the Opposition—support not based on wanting to do anything genuinely for pensioners. They say now that they are in favour of payments of this kind, but on other occasions and on other aspects of policy they are in favour of public expenditure cuts. I think that their support can be left there, revealed for what it is.

I assure the Committee, and especially my hon. Friends, whose argument I take very seriously, that I put this Bill forward without any apology whatever. The Government's record on pensions over recent years is very creditable. One has only to see how the pension for a married couple has increased. In 1974 we came in with a pledge, a TUC-Labour Party pledge, for a pension of £10 and £16, and this we implemented in full in 1974. In 1975 the pension went up to £18.50 for a married couple, and in November of that year it went up again to £21.20. There were two upratings in 1975. Then in 1976 it went up to £24.50, and this week it has gone up to £28.

As I said earlier, while wage earners took a reduction in real terms of 6 per cent. last year—we all know the reasons and arguments surrounding that—pensioners have been protected, and hon. Members will see when the retail price index figures are published later this month that pensioners will have had an increase in real terms. We shall have done more than meet the amount of inflation for them.

I do not, therefore, offer any apology. It has been suggested that what we are doing is condescending. I did not hear the Opposition say that it was condescending to give tax relief to taxpayers. When we are in a position to make this money available, I do not understand the argument about fine-tuning and the effect it has.

Mr. Sainsbury

It is too complicated for the right hon. Gentleman to understand.

Mr. Orme

The hon. Gentleman should declare his interest, because his stores will probably get a lot of benefit from this £10. A good deal of this money especially among pensioners, will go on food and fuel. As I was saying, there is talk about fine-tuning when we put £100 million into the economy. This £10 is giving spending power which in itself helps the economy. We all know that pensioners will probably use the money fairly soon on fuel and so forth. They will use it as they wish, but it will be spending power put into the economy, which is what so many of my hon. Friends have been urging. They want there to be more, but this will be spending power put into the economy.

My hon. Friend the Member for Fyfe, Central (Mr. Hamilton) asked me two questions. First, he asked what the cost of indexation would be. Instead of £100 million it would be £210 million. In reply to another question by my hon. Friend, the cost of administration is approximately £2¼ million.

It has been alleged that the Government have introduced this pension bonus as a General Election gimmick. I reject that completely. My hon. Friends know where I stand. I was interested in getting this purchasing power for pensioners. I wanted it widened even beyond pensioners. We have widened it to include invalidity pensioners, widows and other groups. As I said earlier, I should have liked it to go to the long-term unemployed if that had been feasible.

Mr. Ron Thomas (Bristol, North-West)

My right hon. Friend said earlier that it was not possible to identify the long-term unemployed. Is it not the case that the long-term unemployed who have been unemployed for more than 12 months are on supplementary benefit and are identifiable?

Mr. Orme

No, unfortunately they are not. They are on supplementary benefit, but it would be a colossal job to try to identify them in each office. The staff would have to do that by going through records. I have studied this matter, and I hope my hon. Friend will accept my word. I have said that this is in no way meant to avoid the question. If we could have done it, we would have done so. Unfortunately, it was not possible.

The main point raised by my hon. Friends was that this should be made a permanent feature. It should be recognised that the Bill is designed to give money to pensioners immediately. Arguments such as whether the bonus should, be paid this year or should be included in the pension and whether people would want more to go to pensioners will have to be considered by the Government.

I understand the thinking of my hon. Friends. My hon. Friend the Member for Ormskirk (Mr. Kilroy-Silk), who moved the amendment, said that he did not think that this was necessarily the best way of proceeding, though he recognised that pensioners will welcome it. When we discontinued the bonus in 1975, there were two pension upratings in one year.

Mr. Rooker

There is a slight problem. I am not sure that my right hon. Friend appreciates it, though certainly my hon. Friend the Member for Coventry, South-West (Mrs. Wise) and I appreciated it earlier this year. As regards social security and national insurance benefits, the House of Commons does not have the opportunity to table and discuss amendments when upratings come forward, whereas the House spends hour after hour and day after day discussing any taxation matter that arises and we can table amendments to various tax changes, whatever the allowances may be. On the other side of the coin, it is not open to the House of Commons to have a discussion on the annual uprating of pensions or any other benefit that arises under the social security or national insurance system. This is a problem for us. We must take the opportunity when it arises on an occasion such as tonight.

Mr. Orme

I take my hon. Friend's point. He will appreciate that the Bill to index pensions covered his points because many benefits are indexed. He will agree also that child benefit is an instance of a benefit which is not indexed but on which hon. Members have expressed their point of view. These decisions are not made solely in the Department of Health and Social Security but are collective Cabinet decisions. The Cabinet took the decision on the principle of paying the £10 bonus.

The Cabinet will take the decision on future policy in this matter. I hope that my hon. Friends will take that point in the spirit that it is made. I am sure that, like me, my hon. Friends do not want to confuse pensioners and start them worrying about next year when they have not yet received this year's money. I do not think that they are worrying yet. They are interested in getting the money to which they will be entitled under the Bill this year. We want them to get it as quickly as possible.

I also want to pay tribute to the Union of Post Office Workers, which has taken the difficult decision of agreeing to assist in this matter, because this causes a great deal of extra work for it members.

Obviously, next year's bonus is a matter upon which the Government have not yet decided and it will have to be looked at next year. However, I can assure the Committee that I can report the strength of feeling on this matter to the Cabinet, and also the arguments that have been presented. I have no doubt that my right hon. Friends will consider them. I hear some of my hon. Friends say that that is not good enough, but I am sure that they will recognise that I am trying to go as far as possible without in any way misleading them. I hope that hon. Members will accept that this will not prejudice any future action that they may wish to take.

Forgetting the Opposition for the moment, I say to my hon. Friends that it is certainly in the interests of our Government that we should look at this in the round. I shall take back the proposals that they have made, and if my hon. Friends wish to discuss the matter with me later they will be welcome. I assure them that their proposals will be put to my colleagues. I hope that my hon. Friends will accept that I have gone as far as possible tonight and that I recognise the strength of their argument and their sincerity.

Mrs. Wise

Does the Minister accept that we believe that the Government will decide to pay the bonus next year, and that that reinforces our view that this should be made clear here and now? Does he realise that we are trying to strengthen his hand just in case there is any problem with the Treasury? We feel sure that most of the Cabinet will want to pay the bonus, and we want to strengthen the Minister's hand to guard against any machinations.

Mr. Orme

My hon. Friend's crystal ball is obviously better than mine. I do not know what the position will be, but this is not the time to decide on the issue. That does not mean that the matter will not be considered seriously, but in this debate it should not be decided. Many hon. Members have spoken tonight, but there are other views that have not been considered. I want to carry the argument further so that when the matter is discussed the Government can take into account the strength of feeling that exists. I hope that we can go forward on that basis, and I therefore urge my hon. Friends not to press the amendment.

11.30 p.m.

Mr. Kilroy-Silk

My right hon. Friend said that we were concerned to ensure that the pensioners got their bonus this year. That is not jeopardised by what my hon. Friends and I are attempting to secure tonight. Our aim is to ensure that they receive their bonus this year, next year and every year. As my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) pointed out, if it had been possible we would have amended the figure of £10, but that was prevented by the terms of the Money Resolution. We want to take the doubt out of pensioners' minds and remove payment of their bonus from the charitable discretion of the Chancellor of the Exchequer.

Mr. Orme

If my hon. Friends force a Division on this issue tonight, as they are free to do, and if they lose that Division, their aims in this direction will be severely damaged. They have made their case clear tonight. I advise them not to be tempted by the Opposition.

Mr. Kilroy-Silk

My right hon. Friend said earlier that the matter would have to be considered and that he would take account of our representations. But this decision is one for the House of Commons. There is no better time to take it than now. That may sound churlish in view of what he has said, but, unfortunately, his words do not go far enough. I must, therefore, invite my hon. Friends to follow me into the Lobby.

Question put, That the amendment be made:—

The Committee divided: Ayes 21, Noes 46.

Division No. 11] AYES [11.34 p.m.
Brooke, Peter Newens, Stanley Stanbrook, Ivor
Cope, John Newton, Tony Thomas, Ron (Bristol NW)
Drayton, Burnaby Prescott, John Wise, Mrs Audrey
Hodgson, Robin Richardson, Miss Jo
Kilroy-Silk, Robert Rooker, J. W. TELLERS FOR THE AYES:
Lamond, James Ross, Stephen (Isle of Wight) Mr. William Hamilton and
Madden, Max Sainsbury, Tim Mr. Leslie Spriggs.
Maynard, Miss Joan Shersby, Michael
Mills, Peter Skinner, Dennis
NOES
Armstrong, Ernest Grant, John (Isington C) Sever, J.
Brown, Robert C. (Newcastle W) Hamilton, James (Bothwell) Sheldon, Rt Hon Robert
Cocks, Rt Hon Michael (Bristol S) Hardy, Peter Smith, John (N Lanarkshire)
Coleman, Donald Harrison, Rt Hon Walter Snape, Peter
Cook, Robin F. (Edin C) Hooley, Frank Stallard, A. W.
Cox, Thomas (Tooting) Johnson, James (Hull West) Strang, Gavin
Cryer, Bob Jones, Alec (Rhondda) Thomas, Mike (Newcastle E)
Cunningham, G. (Islington S) Jones, Barry (East Flint) Tinn, James
Cunningham, Dr J. (Whiteh) Kaufman, Gerald Varley, Rt Hon Eric G.
Davidson, Arthur Kimball, Marcus White, Frank R. (Bury)
Davies, Denzil (Llanelli) McDonald, Dr Oonagh Whitehead, Phillip
Deakins, Eric McElhone, Frank Wrigglesworth, Ian
Dell, Rt Hon Edmund Marks, Kenneth
Dormand, J. D. Orme, Rt Hon Stanley TELLERS FOR THE NOES:
Douglas-Mann, Bruce Palmer, Arthur Mr. Joseph Harper and
Eadie, Alex Price, William (Rugby) Mrs. Ann Taylor.
English, Michael Sandelson, Neville

Question accordingly negatived.

Clause 2 ordered to stand part of Bill.

Clauses 3 to 5 ordered to stand part of the Bill.

Bill reported, without amendment.

Motion made, and Question, That the Bill be now read the Third time, put part forthwith pursuant to Standing Order No. 56 (Third Reading), and agreed to.

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