§ Again considered in Committee.
§ [Mr. RICHARD CRAWSHAW in the Chair]
§ Question again proposed, That the amendment be made.
10.15 pm§ Mr. BuchanI am sorry about the outcome of the interruption. We were hoping that Conservative Members would join us in recognising that such Bills should not be rushed through the House. We should stop the debate now and return next week to discuss the Bill in a proper businesslike fashion. If I have to keep the Committee up until the early hours of the morning, it is the fault of the Government Front Bench.
1159 One of the worst and saddest aspects of the Bill is that, in the face of the biggest economic crisis for 50 years—I believe that it is more serious even than the crisis of the 1930s—the best the Government can do is to extract yet another £1 billion out of the working people to deflate the economy. It is the meanness and pettiness of the action that annoys us as much as anything.
I was interested in the Secretary of State's reasons for this shambles of a method of dealing with the problem and pushing the Bill through tonight. He said that it was being done for mechanical reasons. He made a distinction between the problems with handling PAYE and those with national insurance contributions. He said that the measure had to go through tonight to get the tables in order. It does not have to go through tonight. If the Government want to take £1 billion out of the economy, they can do it through taxes. They do not do so because they are afraid. They made many promises to the country when they came to power to cut taxes. Even so, those cuts have been rendered nugatory by the indirect taxes that they have raised in an attempt to avoid raising direct taxes. There is no excuse for this shabby package being presented to us in this way.
The Bill has little to do with the National Health Service. It is an economic, a budgeting response and is not a matter of national insurance. By taking such measures, by trying to counter the crisis they have created for themselves largely by their deflationary methods, the Government have turned what could have been a short-term crisis of an interim cyclical recession into a major long-term decline. Measures such as this, petty as they are, are part of the package that has been destroying Britain's basic industrial economy. The Government must bear that in mind to understand some of our anger.
The Bill, purporting to be concerned with the national insurance fund but in reality a deflationary economic decision, is self-defeating. The Government have got themselves on a ratchet on which every measure they take creates yet another 100,000 unemployed, and every increase in unemployment leads to an increase in the public sector borrowing requirement. The very measures that they are taking to defeat inflation are therefore expanding the PSBR. If the Secretary of State disagrees with that, let him produce the figures for when his Government came to power and for now. The Government have increased the requirement.
The same applies to the money supply, with which the Government claim to have dealt. We say that the money supply is out of control, and they ask us why we are complaining because we do not believe in that type of policy. It is true that we do not, but they do. They regard it as the fount and origin of the actions they should carry out.
The Secretary of State spoke tonight about the new mood of realism among workers which, he said, would lead to lower wage settlements. The point was raised by my hon. Friend the Member for Wood Green (Mr. Race), who linked the Bill to the problem of wages. There is a new mood of realism, but it is the one referred to by my hon. Friend the Member for Keighley (Mr. Cryer) when he was quoting the speech by the Chief Secretary last night. We want a new mood of realism, and there it is. The 1160 Chief Secretary is beginning to see the error of his ways, and he is one of the pundits in that area. The Secretary of State should follow suit.
In what way do we regard this measure as being not only unnecessary but unjust? Let us compare it with the other financial measures taken by the Government during the past 18 months. In the first Budget, they fulfilled their promise by cutting £4½ billion of direct taxation, of which 37 per cent.—more than one-third—went to the richest 7 per cent. of the community. That is a redistribution of wealth with a vengeance. There was little justice in that. There might have been some economic argument for it if that top 7 per cent. had used the money for investment. They did not, and nor will they, because the other aspect of the Government's policy, the high bank rate and the level of the pound, have rendered nugatory even that release of resources to the investing class.
That increase in finances was at the expense of the workers' pockets. They are being soaked again to deal with the immediate crisis. They had to pay for that increase in the form of value added tax, savage cuts in the social wage and other proposals. We were told that the Government needed to take £1 billion out of the economy to save Britain. It is £1 billion from working people. Yet this week, on the basis of the Rayner proposals, the Secretary of State—for a paltry £50 million as against this £1 billion crisis—changed the method of allocation of money to working and other mothers in proposals for the child benefit allowance.
The Government do not understand how people live. Members on the Government side do not live, as do many Labour Members, with the problems of poverty. As an indication of the rise of poverty in Britain, let us consider the voluntary action of women drawing child benefit. They can draw it weekly, fortnightly, three-weekly or four-weekly. In the past year, the numbers drawing child benfit weekly increased by more than one-third. In June 1979, 35 per cent. drew the benefit weekly. In June 1980, the figure was 45 per cent. That increase of one-third is a direct indication of the strain that is being put not only on the poor but on many others. The 45 per cent. goes well beyond the 20 per cent. that the Government talk about in the peculiar view that they have of the poor in Britain as a caste that must be identified by family income supplement or something else. That 45 per cent. includes reasonably well-off working families. Yet they need to take that voluntary action. It is a nuisance to draw the benefit weekly. It is an indication of the poverty in Britain.
My hon. Friend the Member for Fife, Central (Mr. Hamilton) pointed out that workers earning £40 per week at 1979 prices would keep only 62.25p of every additional pound that they earned. They lose at £40 per week. They have dropped from keeping 68p to keeping only 62p. On the other hand, those earning £500 per week, who a year before could keep only 17p in the pound, can now keep 40p. That more than doubles the amount going into the pockets of the rich. There is a direct loss to the pockets of the poor through taxation.
That is the background against which we must consider the measure before us. Let us consider the arguments in favour of it. One argument was that it would produce incentives. Where is the incentive in the Bill? The Government are increasing contributions on the one hand, and on the other hand they are maintaining the lower limits at which contributions begin. Instead of increasing the incentives for people to work, they are almost deliberately 1161 creating disincentives. They are putting more people into the poverty trap and keeping them there. There will be little incentive for them to do other than campaign even more for higher wages.
The Bill purports to be about social security, but it is nothing of the kind. It is a Bill about taxation. It is a Bill about the failure of the Government to deal with the economic crisis which they themselves have largely created. It results from the Government's own decision to increase taxes. They were afraid to increase direct taxes. What they have done instead is to call for a further contribution from the workers.
Incidentally. Mr. Crawshaw, this has nothing whatever to do with the discussion that we shall be having—no doubt in the early hours of the morning—on the relative proportions of the Treasury allocation and contributions within the national insurance fund. Basically, the Bill is merely raising money.
It is said that the Bill can partly be excused on the ground that ¼ per cent. is given in the unemployment sector. We might have forgiven that ¼ per cent. if it had been allocated between employees and employers. The Government have created more than 2 million unemployed. Having created 2 million unemployed—
§ Mr. Paul DeanThe gist of the hon. Gentleman's remarks is that revenue which would be available under the Bill for pensions and other benefits and for the National Health Service will not now be available, according to the argument that he is using. If he accepts that—and he must, in view of what he said—where is he to raise the money? Is he to increase personal direct taxation? If so, candour requires that he should tell the Committee frankly that that is his proposition.
§ The Second Deputy ChairmanOrder. I do not think that the hon. Gentleman was in the Chamber when the Chairman made some comments about debating where money is to be raised. I am sure that it is not a necessary part of the Opposition's case to say where it is to be raised. It is for the Opposition to press the amendment. I say this because the debate has been getting so wide as to cover every aspect of policy. It is no part of this Committee stage to be debating where the money would be raised. It is a matter of saying whether it is appropriate to raise it in this particular way.
§ Mr. CryerOn a point of order, Mr. Crawshaw. There are one or two Conservative Members who are sniggering about this matter. You have been reiterating a position that you made clear earlier when those hon. Members were not in the Chamber and when several Opposition Members were setting out a number of very cogently argued alternatives for the money. I think that you can confirm that.
§ The Second Deputy ChairmanThat is the reason why I did not want the debate to get any wider. That is why I said that I had already given a ruling on it.
§ Mr. BuchanI am always in support of the Chair. I should very much have liked to suggest ideas, such as increasing the ceiling on contributions. I might even have been tempted to mention the word "defence", but, since you say that it is out of order, Mr. Crawshaw, I shall not mention it. I might even have said that we could reverse the taxation concept here in order to tax the rich to help the poor. But, again, since it is out of order, I shall not, of course, deal with it.
§ Mr. Ioan EvansDoes my hon. Friend agree that working people are concerned with their take-home pay and that it is kidology for the Government to try to tell people that they are reducing taxation when they are moving the burden from direct to indirect taxation? We recall that in their first Budget the Government gave massive concessions to the wealthy. Now, they are proceeding to increase the national insurance contributions of the less-well-off, the low-paid. The workers know this when they look at their take-home pay.
§ Mr. BuchanMy hon. Friend has put it more succinctly than I have been able to do in the past 20 minutes or so. It is not only the working people who see these contributions as tax. Conservative Members also see them as a tax. The Secretary of State said:
Strictly speaking, the sums involved here are not taxation, but I suspect that for most people increasingly their national insurance contributions have more the quality of taxation than they used to do".—[Official Report, 5 December 1978; Vol. 959, c. 1369]The right hon. Gentleman accepts that. The Secretary of State for Trade raised a point of order. Conservatives seem to do a lot of their work through points of order. Perhaps we should learn from them. In 1976 the right hon. Gentleman claimed that the increases in national insurance were a "pure tax increase". I could not have put it better myself.The Minister for Social Security is missing. Where is Reg? I was looking forward to seeing him. Perhaps he is having a day off. Perhaps his old conscience has surfaced. The right hon. Gentleman said:
If we reduce the expenditure from the rational insurance fund and if the contribution is also reduced—I am saying 'if because other factors come into it"—our Reg is a careful lad—we are still fulfilling the objective of reducing taxation because national insurance contributions are a form of tax.That is how the Government see it.Therefore, we are right to argue that, if it is a tax, it should have been introduced in that form. That would have been fairer. We object to the way in which the Government are dealing with this crisis. They are not helping the National Health Service. The cuts will still be there. Those who work as hospital cleaners will still come to our surgeries. The Bill will not raise money for the NHS.
Several objections can be made to the Government's method. They have undermined the people's faith and have attacked their confidence in the social insurance principle. They have increased contributions when the benefits that they are supposedly funding art being savagely cut. Benefits of every variety are being cut, including short-term benefits, such as those for sickness, invalidity, industrial injury and unemployment.
The Government are not content with merely breaking the connection between pensions and earnings or prices, whichever is the higher. We have been forced to accept the connection with prices. If my light hon. and hon. Friends and the leader-writers are right, the Cabinet meeting was a close-run thing. As I said on Tuesday, it was only the "wets" who saved the Government's face. Instead, the Government want to set pensions 1 per cent. lower than inflation. What for? Do they want to drive all our 75-year-olds out to work? What is the point? The only motive is meanness.
§ Sir Frederick Burden (Gillingham)On a point of order, Mr. Crawshaw. Is it right to engage in arguments about old-age pensions? I thought that such discussion was out of order.
§ The Second Deputy ChairmanI think that hon. Members on both sides of the Committee have discussed this matter.
§ Mr. BuchanI thought that I was sticking more to the real nature and purpose of the Bill than did the Secretary of State. I am dealing with the reasons for and the purpose and effect of the Bill.
This measure cannot do anything but damage regard for the social insurance principle if the Government persist in increasing contributions when the benefits are being savagely cut.
There are other reasons why we object to specific parts of the Bill. My amendment seeks to wipe out the 1 per cent. impost. Therefore, it must be in order. The second objection is that the proposal is unjust. Income tax is paid on both earned and unearned income. National insurance contributions are paid only on earned income. Therefore, the workers and some sections of management will pay, and not those who live on interest, dividends and rents.
Income tax has a threshold before one starts to pay. That is not so with these contributions. Contributions begin at £27 a week, which is close to the supplementary benefit level for a single person. Income tax is paid at higher rates if one is better off and can afford it. But these contributions are not paid on earnings above a certain ceiling. I was asked about money. Here is one way in which we can look at money. We could remove the ceiling of £200 a week. After all, that is £10,000 a year. Should not that ceiling have been raised or even wiped out in favour of a graduated return in benefits following that?
There are other ways of dealing with this matter. At the moment, it is unjust—even in the Bill it is unjust—because those who are paying at the bottom end—my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) will keep my figures right on this aspect—will have the limit raised by 22 per cent., whereas the ceiling is raised by only 17 per cent. Have I got it right?
§ Mr. RookerNo. It is the other way round.
§ Mr. BuchanMy hon. Friend is quite right; it is the other way round. The floor has been lifted by 22 per cent., so people are being brought in at £27 a week; but the other end of the scale has not been lifted by an equivalent figure. I have never claimed to be numerate, but I understand this. The imbalance between the two figures means that the poor are clobbered and the rich get richer.
This proposal is unfair also because income tax is graduated—higher earners pay more tax—but national insurance contributions are partly flat rate. By the way, this also affects the friends and supporters of the self-employed. It is a flat rate for the poorer self-employed and, for that matter, the better-off self-employed whom the Conservative Party wooed so assiduously at the election.
I do not want to go much further, although I think that some of my hon. Friends will want to comment on what I and the Secretary of State have said. I should like to finish by quoting from an article by David Wyn Williams in New Society:
National insurance contributions have been quietly converted into a second income tax.1164 He then goes on to analyse why they are more unfair than income tax:Thus in each of these ways, the present rates of national insurance contributions go a considerable way to negate the complex adjustments whereby the income tax system seeks to work social justice between differing taxpayers on account of differing commitments, needs, and sources of income. If the regressive effects of VAT and the other expenditure taxes were brought into the analysis".The thing has become even more unfair because of the overburden of these taxes.We shall shortly be discussing the relationship between the taxation element of the national insurance fund in relation to the contributions. For the moment, we reject this part of the clause, and I call upon hon. Members on all sides—because there must still be some "wets" here even at 10.40 pm—to vote with us.
§ Mr. FieldI rise once again to draw attention to the unsatisfactory nature of the Secretary of State's reply. I want to draw his attention to three points. If I am brief, it may encourage him to respond in a more positive manner than he has done so far.
I turn to the point made by my hon. Friend the Member for Wood Green (Mr. Race) about the Conservative Party's election manifesto, particularly that part which dealt with the high marginal rates of taxation. The Conservative election manifesto was quite clear on this point. It said that high marginal rates of tax operated at the top and the bottom. What we are partly discussing this evening is how effectively, or otherwise, the Government have delivered on that pledge in respect of those on the bottom.
As my hon. Friend the Member for Fife, Central (Mr. Hamilton) did not make full use of the Low Pay Unit brief, I direct the Secretary of State's attention to the figures that it gives for changes in the marginal rates of tax for those at the top and the bottom. For those on the 83 per cent. marginal tax rate when the Government came into power, the rate has been reduced to 60 per cent. If I am right, that is a reduction of just more than 20 per cent. But for those earning around £40 a week there has been an increase in the marginal rates from 31.5 percent. to 37.5 percent.—a 6.25 per cent. increase. If that is taken over the base, it is something like a 20 per cent. increase in their marginal rates of tax.
We have tabled these amendments to draw attention to that fact that while the Government have delivered in respect of high-rate taxpayers—because they believe that it was important—the exact opposite has occurred for the low-paid, although both groups were bound together in the same pledge in the Conservative election manifesto. I am sure that the Committee would be grateful to hear a reasoned reply from the Secretary of State about how he squares that election promise with the reality. If it was good enough for those on high pay, why was not that election promise good enough for those on low pay?
Secondly, I want to develop a little further the main point of the Liberal Party's amendment. It was said that if we adopted that proposal, or a much more modest one that I floated but did not table, given the fact that we accepted how regressive the national insurance contribution was—starting from each pound once one had crossed the national insurance threshold—there might be a case for graduating the contribution for those on low pay. We were told that that was not on, because it would somehow violate the covenant that was made between the 1165 parties in the House and between the House and pension schemes in the private sector. That does not stand up to reason. What private pension scheme will object because the House has decided that the regressive national insurance poll tax should be lessened for those at the bottom of the pile?
Earlier this evening we failed to raise the floor of the national insurance contributions, which was a way of helping low-paid workers, particularly women, who constitute the majority of low-paid workers. We were told by the Secretary of State that that would have covered a mere 200,000 workers. If his figures are right, the number would be equal to the electorate of Daventry, Wallasey and Wanstead. That is the size of the group that was affected adversely by the amendments that were rejected earlier.
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We ate trying to retrieve part of that position now by making sure that either some groups of workers—the lower-paid workers—have a lower rate of national insurance contribution or there is no increase in the national insurance contribution. Will the Secretary of State turn his mind to that point" Does he maintain that if the national insurance contribution were made fairer for the low-paid, the pension funds would be in revolt? If there is to be a further increase in the national insurance contribution next year—as no doubt there will be—and if the right hon. Gentleman expects hon. Members from both sides of the House to support him, as I do, in an increase only for employees, there is a duty on all of us to ensure that the regressiveness of the tax is less for those on low pay.
Thirdly, I should like to draw the Committee's attention to the increases in national insurance contributions, which are not classified as taxation increases in a technical sense, and to the reason why, in the past, we have not viewed national insurance increases as increases in taxation. No previous Government have increased the contributions and in the same benefit year planned reductions in benefits. It would have been easy for Governments to say that this was an insurance scheme and that they were asking for contributions because there would be increased benefits.
We are now at the stage when there will be increased contributions and less benefits. We should view that as an increase in taxation and discuss ways of raising it more fairly if the Secretary of State will not meet our points about the regressiveness of the tax and how it affects workers on low pay—particularly women workers, who compose the army of the low-paid. The more he stubbornly refuses to meet us on these points, the more difficult it is. I apologise for returning to the same point, but it is crucial. If, in the next few years, there is no growth, people will have to face sensibly the question of financing the Welfare State. We must get them to consider how they can spread their lifetime earnings of 40 years over a lifetime of about 80 years. We shall never be able to get that argument on the road if at the time that we are increasing contributions we are cutting benefits.
I should like to emphasise before you leave us, Mr. Crawshaw—I hope only temporarily—that I am asking the Secretary of State to respond sensibly and seriously to our points about the difference in the Government's election promises and their performance in fulfilling them. They have reduced the high marginal tax rates for the rich, but they have increased them for the poor, although they 1166 promised effective action to reduce the marginal tax rates for the poor. Does the Secretary of State seriously maintain that if we did something to mitigate the hardship on the lowest-paid the pension funds would clamour round and lobby and jostle him on his way to his office at the Elephant and Castle tomorrow morning? Does he maintain that this is not an increase in taxation when, at the same time, he is cutting benefits?
§ Mr. Andrew F. BennettWe were disappointed with the Secretary of State's reply, because he seemed more concerned to sit down at 10 o'clock than to answer our questions. We wanted to know more about the ¼ per cent. that is being requested because of the problems of unemployment. I asked whether it was all necessary for the unemployed or whether more people were coming on to pensions. The right hon. Gentleman did not enlighten us.
The Secretary of State reiterated his belief in the so-called deal that he claims was reached on an agreed policy for pensions. He does not accept that he tore up the deal last year when he took away the link with earnings. The whole basis of the deal was that there would be a steady increase in pensions, because pensioners would get the benefit of rises in line with prices or earnings, whichever was the greater—the ratchet effect. That was an essential part of the deal. The right hon. Gentleman cannot change the rules and claim that the deal still exists.
The right hon. Gentleman did not say much about amendments Nos. 7 and 9. He did not answer our question whether the burden could have been shifted on to the employer rather than the employee. He did not give us the breakdown of the incidence of the burdens on the two groups. There is some evidence that the low-paid may benefit a little if the onus is placed on employers rather than on employees. The Secretary of State should have explained why the amendments are unacceptable.
We may be at fault on amendment No. 8, because we have not spent much time discussing it. It draws attention to the fact that if the Government's case were that payments had to go up because extra benefits were being paid, only the ¼ per cent. increase would be needed. As we have pointed out, individual claimants will get less in real terms in future. In that case, the Government's only argument can be that more people will be receiving benefits. I suppose that they will be the increasing numbers of unemployed for whom the Government are planning.
The other ¾ per cent. involves nothing but the Government's monetary policies—a saving on Exchequer NHS contributions and other Treasury money-saving decisions. The ¾ per cent. has nothing to do with the national insurance principle. If the Minister will not accept amendment No. 5 to delete the whole clause, he ought to agree that the only portion for which he has a case is the ¼ per cent. for the unemployed and pensioners. I hope that he will tell us how much is needed for extra pensions and how much for increased unemployment.
§ Mr. CryerThe Secretary of State failed to answer a number of questions raised by the Opposition. While you were out of the Chair, Mr. Godman Irvine, several Conservative Members raised, in a rather jeering manner, the issue of alternative sources of income, and I had to point out that I had spent some time setting out what I thought should be the alternatives. It is important to present a credible alternative when one says that a clause should be removed.
1167 It is true that the Secretary of State did not go down that road, but he did say that the money was necessary for, among other things, the maintenance of the National Health Service, and he had an altercation with my right hon. Friend the Member for Norwich, North (Mr. Ennals) about the relative position under the present Government. But everyone understands perfectly well the situation of the NHS—that it is facing grave difficulties and that the position of the Government is not that they want to maintain the NHS but that they are quite happy to see it eroded. They welcome private schemes and private hospitals and a shift of resources from the public to the private sector. I thought that the Secretary of State's claim that the money was needed for the NHS was particularly weak, especially as we know that a very small proportion of this revenue is likely to find its way there in any event.
The other point that the right hon. Gentleman answered rather inadequately was the question of the 6 per cent. It was pointed out to him that the Government have a policy of a 6 per cent. imposition to limit wages in the public sector and yet wage earners will find that they have a 14 per cent. increase in their rate of national insurance contributions, if these amendments are not carried, at a time when we are facing an annual inflation rate of about 15 or 16 per cent. The increase in contributions is an increase in taxation, as was demonstrated by my hon. Friend the Member for Renfrewshire, West (Mr. Buchan), who pointed out that many hon. Members, not from the Labour Benches but from the Conservative Benches, have referred again and again to these national insurance charges as being a tax.
This rate of tax increase is very high indeed and simply does not square with the Conservatives' much-vaunted claim, in their manifesto, that they would reduce taxation for those at the lowest and the highest levels of income. They have simply said "This is not a tax", but the Secretary of State must accept that the rate of increase in the national insurance contribution under subsection (2) is about 14 per cent. That really is a very large increase, and it is contrary to the Conservative manifesto.
The only way in which the right hon. Gentleman can justify it is by saying that it is not a tax but simply a national insurance surcharge. But the effect of removing money from a wage packet is exactly the same, whether one calls it a surcharge, a contribution or a tax. It is a wholesale breach of the Conservatives' commitment, and it would be far and away better if the Government admitted it and said "We will restore some of the cuts that we made on the marginal rates of the rich"—they were massive cuts—"in order to give ourselves a proper, fairer and progressive source of taxation" rather than use this blunt instrument to raise the money.
§ Mr. DobsonNo doubt the Secretary of State will cavil about the wording, but on page 14 the Conservative manifesto said:
We must therefore be prepared to switch to some extent from taxes on earnings to taxes on spending.That was used to justify the increase in value added tax, but I think that it is clear that tonight we are talking about a tax on earnings.
§ Mr. CryerYes, indeed. My hon. Friend confirms the precise principle of what I was saying—that the Bill represents a clear breach of that commitment; and I hope that the message goes out clearly to all those who were lured into voting Conservative. I must say that they are 1168 very thin on the ground these days. Not many people admit that they voted Conservative, and those who admit it do so with a shamefaced, grudging attitude, recognising the disastrous policies that the Government have been following.
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The Secretary of State is increasing the contributions on behalf of the Treasury. We learn from leaks that he is an enthusiastic supporter of the Treasury view, proffering cuts in his Department without any pressure. At the same time, there is a 5 per cent. cut in benefits. The Chief Secretary to the Treasury has said that if one wills the end one must will the means. The end is not quite the system that the Government inherited from the Labour Government; it is a diminishing end. Therefore, it represents a very bad bargain—contributions increased by 14 per cent. and a reduction in benefits of 5 per cent. If that were done by an insurance company, the organisers might well find themselves without many supporters and, depending on their prospectus, facing criminal charges. The Conservatives' prospectus claimed the reverse of what is happening.
The Chief Secretary is one of the few thinkers in the Cabinet. The Guardian, thanks to a mole among Conservative Back Benchers, tells us that he is now veering away from the targets. His is the right view. If the Conservatives are to prevent the present crisis enveloping us—the crisis that is the reason for raising £1 billion under the clause—they will have to be much more flexible and cease being so oppressive to the person least able to withstand their oppression, the ordinary wage earner.
The Secretary of State said that it was necessary to have the £1 billion. We have shown that the Government's means are not the only ones open. They are adopting them because they are a narrow-minded, petty Government of the rich, by the rich and for the rich. That is why they do not adopt a progressive taxation system. They prefer to put the burden on the backs of the poor.
That is why we oppose the clause and support the amendments. I hope that even at this late stage the Secretary of State will say that the Government are considering alternative ways of raising the £1 billion.
§ Mr. RaceIt would be remiss of Opposition Members not to congratulate my hon. Friend the Member for Renfrewshire, West (Mr. Buchan) on his excellent speech. I am sure that all Labour Members hope that he will make a number of such scathing attacks on the Government over the next few months and in due course make some speeches from the Government Dispatch Box.
We must address ourselves to the Government's arguments for the 1 per cent. increase in the employee's national insurance contribution. As we all know, as we all read the newspapers, the increase was decided upon after a long discussion in the Cabinet about the way in which the Government would raise money for the public service and in particular to reduce the public sector borrowing requirement. It is clear from the Secretary of State's Second Reading speech that the Government's intention was simply to provide money for that purpose.
No doubt the Cabinet discussed alternative methods of financing the PSBR other than the proposals that are set out in the clause. If there were arguments in the Cabinet about the ways in which such a substantial sum could be raised, it is right for the Committee to discuss the 1169 alternatives and to draw attention to the way in which the Government might deal with the situation in which they find themselves.
Every time the unemployed increase by 100,000, the net cost to the PSBR is about £440 million. That is the figure produced not by the Labour Party research department but by the Library in an excellent document on the cost of unemployment. I have no doubt that the 1 per cent. increase in employees' contributions that is called for in the Bill is a direct and inevitable consequence of the Government's policy of allowing unemployment to rip ahead. The more that it rips ahead, the more Bills like this we shall get and the more the Secretary of State will be forced by his Cabinet colleagues to activate the sections in the Social Security (No. 2) Act 1980 that allow for the 5 per cent. cut in unemployment and other benefits in the next financial year as well as in this year.
My hon. Friend the Member for Keighley (Mr. Cryer) drew attention to the increases in employees' contributions hat have been called for at a time when benefits are being out. The No. 2 Act is on the statute book, and I have no doubt that in due course the Cabinet will be discussing whether the relevant sections are to be activated and whether benefits will be cut again in the next financial year.
The political purpose of the clause is clear. It is to fund the Government's central objective, which is to allow unemployment to rise. They will allow the pressure in the labour market to depress wages and to attack the real living standards: of ordinary working people. That is the only way in which they can pursue heir policy of reducing the power of labour in the overall economy.
The impact of such a change in the economy is bound to be substantially deflationary. National insurance contributions from employees or employers have an effect on the level of economic activity and on the level of employment in certain industries. The clawing back of £1,000 million from taxpayers is bound to increase unemployment substantially. It is a straightforward piece of economic deflation.
The Committee would be right to delete the clause. However, I refer to amendment No. 6, the Liberal amendment, which raises an important principle that the Committee should discuss fully. At what point, if any, should the national insurance system be based on the level of earnings of a particular employee? We have a floor and a ceiling, and between those two points the national insurance system tends to work on a uniform basis irrespective of the level of earnings of the individual.
Great play has rightly been made with the argument that the national insurance system is regressive and favours the well-off at the expense of the low-paid. The Liberal amendment seeks to reduce the regressive effects of a national insurance system, if we are to have one at all, by allowing the existing rate of employees' contributions to be levied on those who receive less than £85 a week and the new rate to be levied on those with incomes in excess of that sum.
Why has the Liberal Party chosen £85 as the cut-off point? If a system of graduated national insurance employees' contributions is operated, there is a great deal of sense in having a number of bands activated at different income cut-off points. For example, there would be a case for having a contribution band clearly linked to those groups in receipt of or eligible for certain State benefits, such as family income supplement. There could be a lower 1170 rate band of employees' contribution for a certain range of incomes. There could then be a series of bands of income contributions at higher earnings levels. If we are to have a progressive system of contributions, there should be a series of cut-off points that could be specified by Parliament and changed in accordance with changing circumstances.
However, for the life of me I cannot understand why the Liberal Party has chosen £85 as the cut-off point. It does not relate to the average earnings of the male full-time worker, which at the last count in the new earnings survey were about £125. Presumably it is an attempt to deal with the problems of the low-paid, but the level does not relate to the level of State benefits or the number of people in particular income bands.
If we cannot get the progressive changes that are required in the national insurance system, we should delete the clause and throw the political football right back to the Government to sort out. We should tell them that we do not want that form of extra taxation on the low-paid and workers generally. If they want to solve the problems of the economy, they should solve them in a totally different way and not by imposing further inordinate burdens on ordinary working people.
§ Mr. DobsonOne point not touched on by my colleagues causes me concern. With increasing unemployment, there is a danger of increasing social division. The Government's presentation of the increase in national insurance contributions may, either inadvertently or deliberately, be seeking to provoke enmity between the unemployed and people in work.
In his mini-Budget on 24 November, the Chancellor said about the national insurance fund:
Thirdly, the fund at present receives a substantial contribution from the general taxpayer through the Treasury supplement.… In these circumstances, it is right that those in work should shoulder directly a larger share of the cost of contributory benefits."—[Official Report, 24 November 1980; Vol. 994, c. 316.]11.15 pmMinisters in the Treasury, and especially Ministers in the Department of Health and Social Security, constantly go on about scroungers and proudly announce that they have appointed more and more people to sort out scrounging among social security claimants. We may be witnessing an attempt by the Government to cause those who are in work and whose incomes are reduced to become antipathetic about the level of unemployment benefit paid to those whom the Government are driving to the dole. In that sense, the Bill sows the seeds of an unpleasant social division.
Our stand stems not so much from the content of the Bill but from the way in which it is being presented by the Government and the nature and history of those who have devised that form of presentation. That is a further reason why the Committee should support the amendment in its attempt to reject that concept lock, stock and barrel.
§ The Parliamentary Secretary to the Treasury (Mr. Michael Jopling) rose in his place and claimed to move, That the Question be now put.
§ Question put, That the Question be now put:—
§ The Committee divided: Ayes 251, Noes 81.
| Division No. 19] | [11.17 pm |
| AYES | |
| Alexander, Richard | Arnold, Tom |
| Ancram, Michael | Aspinwall, Jack |
| Atkins, Robert (Preston N) | Greenway, Harry |
| Atkinson, David (B'm'th,E) | Grieve, Percy |
| Baker, Kenneth (St.M'bone) | Griffiths, E.(B'y St. Edm'ds) |
| Baker, Nicholas (N Dorset) | Griffiths, Peter Portsm'th N) |
| Banks, Robert | Grylls, Michael |
| Beaumont-Dark, Anthony | Gummer, John Selwyn |
| Bendall, Vivian | Hamilton, Hon A. |
| Benyon, Thomas (A'don) | Hampson, Dr Keith |
| Benyon, W. (Buckingham) | Hannam, John |
| Best, Keith | Haselhurst, Alan |
| Bevan, David Gilroy | Hastings, Stephen |
| Biffen, Rt Hon John | Havers, Rt Hon Sir Michael |
| Biggs-Davison, John | Hawkins, Paul |
| Blackburn, John | Hawksley, Warren |
| Blaker, Peter | Heddle, John |
| Bonsor, Sir Nicholas | Henderson, Barry |
| Boscawen, Hon Robert | Heseltine, Rt Hon Michael |
| Bottomley, Peter (W'wich W) | Hicks, Robert |
| Bowden, Andrew | Hogg, Hon Douglas (Gr'th'm) |
| Braine, Sir Bernard | Hooson, Tom |
| Bright, Graham | Howell, Ralph (N Norfolk) |
| Brinton, Tim | Hunt, David (Wirral) |
| Brittan, Leon | Hunt, John (Ravensbourne) |
| Brooke, Hon Peter | Hurd, Hon Douglas |
| Brotherton, Michael | Jenkin, Rt Hon Patrick |
| Brown, M.(Brigg and Scun) | Jessel, Toby |
| Browne, John (Winchester) | Johnson Smith, Geoffrey |
| Bruce-Gardyne, John | Jopling, Rt Hon Michael |
| Bryan, Sir Paul | Kershaw, Anthony |
| Buck, Antony | King, Rt Hon Tom |
| Budgen, Nick | Kitson, Sir Timothy |
| Butcher, John | Knight, Mrs Jill |
| Butler, Hon Adam | Knox, David |
| Cad bury, Jocelyn | Lamont, Norman |
| Carlisle, John (Luton West) | Lang, Ian |
| Carlisle, Kenneth (Lincoln) | Langford-Holt, Sir John |
| Carlisle, Rt Hon M. (R'c'n ) | Latham, Michael |
| Chalker, Mrs. Lynda | Lawson, Nigel |
| Channon, Rt. Hon. Paul | Lennox-Boyd, Hon Mark |
| Churchill, W. S. | Lester Jim (Beeston) |
| Clark, Hon A. (Plym'th, S'n) | Lloyd, Peter (Fareham) |
| Clark, Sir W. (Croydon S) | Loveridge, John |
| Clarke, Kenneth (Rushcliffe) | Luce, Richard |
| Clegg, Sir Walter | Lyell, Nicholas |
| Cockeram, Eric | McCrindle, Robert |
| Colvin, Michael | Macfarlane, Neil |
| Cope, John | MacGregor, John |
| Corrie, John | MacKay, John (Argyll) |
| Costain, Sir Albert | Macmillan, Rt Hon M. |
| Cranborne, Viscount | McNair-Wilson, M. (N'bury) |
| Crouch, David | McNair-Wilson. P. (New F'st) |
| Dean, Paul (North Somerset) | McQuarrie, Albert |
| Dickens, Geoffrey | Madel, David |
| Dorrell, Stephen | Major, John |
| Douglas-Hamilton, Lord J. | Marland, Paul |
| Dunn, Robert (Dartford) | Marlow, Tony |
| Durant, Tony | Marten, Neil (Banbury) |
| Dykes, Hugh | Mates, Michael |
| Eggar, Tim | Mather, Carol |
| Elliott, Sir William | Maude, Rt Hon Angus |
| Emery, Peter | Mawhinney, Dr Brian |
| Eyre, Reginald | Maxwell-Hyslop, Robin |
| Fairbairn, Nicholas | Mayhew, Patrick |
| Faith, Mrs Sheila | Mellor, David |
| Farr, John | Meyer, Sir Anthony |
| Fell, Anthony | Miller, Hal (B'grove) |
| Fenner, Mrs Peggy | Mills, Iain (Meriden) |
| Fletcher, A. (Ed'nb'gh N) | Mills, Peter (West Devon) |
| Fookes, Miss Janet | Miscampbell, Norman |
| Forman, Nigel | Mitchell, David (Basingstoke) |
| Fraser, Rt Hon Sir Hugh | Moate, Roger |
| Fraser, Peter (South Angus) | Montgomery, Fergus |
| Fry, Peter | Moore, John |
| Galbraith, Hon T. G. D. | Morris, M. (N'hampton S) |
| Gardiner, George (Reigate) | Morrison, Hon C. (Devizes) |
| Gardner, Edward (S Fylde) | Morrison, Hon P. (Chester) |
| Garel-Jones, Tristan | Myles, David |
| Goodhew, Victor | Neale, Gerrard |
| Gorst, John | Needham, Richard |
| Grant, Anthony (Harrow C) | Nelson, Anthony |
| Neubert, Michael | Steen, Anthony |
| Newton, Tony | Stevens, Martin |
| Normanton, Tom | Stewart, Ian (Hitchin) |
| Ogden, Eric | Stokes, John |
| Onslow, Cranley | Stradling Thomas, J. |
| Osborn, John | Tapsell, Peter |
| Page, John (Harrow, West) | Taylor, Robert (Croydon NW) |
| Page, Rt Hon Sir G. (Crosby) | Taylor, Teddy (S'end E) |
| Page, Richard (SW Herts) | Tebbit, Norman |
| Parkinson, Cecil | Temple-Morris, Peter |
| Parris, Matthew | Thomas, Rt Hon Peter |
| Patten, Christopher (Bath) | Thompson, Donald |
| Pawsey, James | Thorne, Neil (Ilford South) |
| Pink, R. Bonner | Thornton, Malcolm |
| Pollock, Alexander | Townend, John (Bridlington) |
| Porter, Barry | Townsend, Cyril D, (B'heath) |
| Price, Sir David (Eastleigh) | Trippier, David |
| Proctor, K. Harvey | Trotter, Neville |
| Raison, Timothy | van Straubenzee, W. R. |
| Rathbone, Tim | Vaughan, Dr Gerard |
| Rees, Peter (Dover and Deal) | Viggers, Peter |
| Rees-Davies, W. R. | Waddington, David |
| Renton, Tim | Wakeham, John |
| Rhodes James, Robert | Waldegrave, Hon William |
| Rhys Williams, Sir Brandon | Walker, B. (Perth ) |
| Ridley, Hon Nicholas | Wall, Patrick |
| Ridsdale, Julian | Waller, Gary |
| Royle, Sir Anthony | Walters, Dennis |
| Sainsbury, Hon Timothy | Ward, John |
| St. John-Stevas, Rt Hon N. | Warren, Kenneth |
| Shaw, Giles (Pudsey) | Watson, John |
| Shaw, Michael (Scarborough) | Wells, John (Maidstone) |
| Shelton, William (Streatham) | Wells, Bowen |
| Shepherd, Colin (Hereford) | Wheeler, John |
| Shepherd, Richard | Whitelaw, Rt Hon William |
| Shersby, Michael | Whitney, Raymond |
| Silvester, Fred | Wickenden, Keith |
| Sims, Roger | Wilkinson, John |
| Smith, Dudley | Williams, D. (Montgomery) |
| Speller, Tony | Winterton, Nicholas |
| Spence, John | Wolfson, Mark |
| Spicer, Jim (West Dorset) | Young, Sir George (Acton) |
| Sproat, Ian | |
| Squire, Robin | Tellers for the Ayes: |
| Stainton, Keith | Mr. Spencer Le Marchant and |
| Stanbrook, Ivor | Mr. Anthony Berry. |
| NOES | |
| Ashton, Joe | Graham, Ted |
| Beith, A. J. | Hamilton, W. W. (C'tral Fife) |
| Bennett, Andrew (St'kp'f N) | Harrison, Rt Hon Walter |
| Brown, R. C. (N'castle W) | Haynes, Frank |
| Brown, Ronald W. (H'ckn'y S) | Holland, S. (L'b'th, Vauxh'll) |
| Buchan, Norman | Home Robertson, John |
| Campbell-Savours, Dale | Homewood, William |
| Canavan, Dennis | Hooley, Frank |
| Cocks, Rt Hon M. (B'stol S) | Howells, Geraint |
| Conlan, Bernard | Johnston, Russell (Inverness) |
| Cowans, Harry | Jones, Rt Hon Alec (Rh'dda) |
| Craigen, J. M. | Kaufman, Rt Hon Gerald |
| Crowther, J. S. | Kinnock, Neil |
| Cryer, Bob | Lamborn, Harry |
| Cunningham, Dr J. (W'h'n) | Leighton, Ronald |
| Dalyell, Tam | Lyons, Edward (Bradf'd W) |
| Davidson, Arthur | McCartney, Hugh |
| Davis, Clinton (Hackney C) | McDonald, Dr Oonagh |
| Deakins, Eric | McGuire, Michael (Ince) |
| Dobson, Frank | McWilliam, John |
| Dormand, Jack | Marks, Kenneth |
| Dubs, Alfred | Mellish, Rt Hon Robert |
| Dunn, James A. | Mikardo, Ian |
| English, Michael | Mitchell, Austin (Grimsby) |
| Evans, John (Newton) | Morris, Rt Hon A. (W'shawe) |
| Ewing, Harry | Morris, Rt Hon C. (O'shaw) |
| Field, Frank | Moyle, Rt Hon Roland |
| Ford, Ben | O'Halloran, Michael |
| Fraser, J. (Lamb'th, N'w'd) | O'Neill, Martin |
| Freeson, Rt Hon Reginald | Race, Reg |
| Freud, Clement | Richardson, Jo |
| Gilbert, Rt Hon Dr John | Roberts, Ernest (Hackney N) |
| Rooker, J. W. | Stott, Roger |
| Ross, Stephen (Isle of Wight) | Taylor, Mrs Ann (Bolton W) |
| Rowlands, Ted | Tinn, James |
| Shore, Rt Hon Peter | Wainwright, R.(Colne V) |
| Silkin, Rt Hon S. C. (Dulwich) | Welsh, Michael |
| Silverman, Julius | Whitehead, Phillip |
| Snape, Peter | Winnick, David |
| Spearing, Nigel | Tellers for the Noes: |
| Steel, Rt Hon David | Mr. George Morton and |
| Stewart, Rt Hon D. (W Isles) | Mr. Terry Davis. |
§ Question accordingly agreed to.
§ Question put accordingly That the amendment be made:—
§ The Committee divided: Ayes 79, Noes 251.
| NOES | |
| Dykes, Hugh | |
| Alexander, Richard | Egger, Tim |
| Ancram, Michael | Elliott, Sir William |
| Arnold, Tom | Emery, Peter |
| Aspinwall Jack | Eyre, Reginald |
| Atkins, Robert(Preston N) | Fairbairn, Nicholas |
| Atkinson, David (B'm'th,E) | Faith, Mrs Sheila |
| Baker, Kenneth(St.M'bone) | Farr, John |
| Baker, Nicholas (N Dorset) | Fell, Anthony |
| Banks, Robert | Fenner, Mrs Peggy |
| Beaumont-Dark, Anthony | Fletcher, A. (Ed'nb'gh N) |
| Bendall, Vivian | Fookes, Miss Janet |
| Benyon, Thomas (A'don) | Forman, Nigel |
| Benyon, W. (Buckingham) | Fraser, Rt Hon Sir Hugh |
| Best, Keith | Fraser, Peter (South Angus) |
| Bevan, David Gilroy | Fry, Peter |
| Biffen, Rt Hon John | Galbraith, Hon T. G. D. |
| Biggs-Davison, John | Gardiner, George (Reigate) |
| Blackburn, John | Gardner, Edward (S Fylde) |
| Btaker, Peter | Garel-Jones, Tristan |
| Bonsor, Sir Nicholas | Goodhew, Victor |
| Boscawen, Hon Robert | Gorst, John |
| Bottomley, Peter (W'wich W) | Grant, Anthony (Harrow C) |
| Bowden, Andrew | Greenway, Harry |
| Braine, Sit Bernard | Grieve, Percy |
| Bright, Graham | Griffiths, E.(B'y St. Edm'ds) |
| Brinton, Tim | Griffiths, Peter Portsm'th N) |
| Britten, Leon | Grylls, Michael |
| Brooke, Hon Peter | Gummer, John Selwyn |
| Brotherton, Michael | Hamilton, Hon A. |
| Brown, M. (Brigg and Scun) | Hampson, Dr Keith |
| Browne, John (Winchester) | Hannam, John |
| Bruce-Gardyne, John | Haselhurst, Alan |
| Bryan, Sir Paul | Hastings, Stephen |
| Buck, Antony | Havers, Rt Hon Sir Michael |
| Budgen, Nick | Hawkins, Paul |
| Butcher, John | Hawksley, Warren |
| Butler, Hon Adam | Heddle, John |
| Cadbury, Jocelyn | Henderson, Barry |
| Carlisle, John (Luton West) | Heseltine, Rt Hon Michael |
| Carlisle, Kenneth (Lincoln) | Hicks, Robert |
| Carlisle, Rt Hon M. (R'c'n) | Hogg, Hon Douglas (Gr'th'm) |
| Chalker, Mrs. Lynda | Hooson, Tom |
| Channon, Rt. Hon. Paul | Howell, Ralph (N Norfolk) |
| Churchill, W. S. | Hunt, David (Wirral) |
| Clark, Hon A. (Plym'th, S'n) | Hunt, John (Ravensbourne) |
| Clark, Sir W. (Croydon S) | Hurd, Hon Douglas |
| Clarke, Kenneth (Rushcliffe) | Jenkin, Rt Hon Patrick |
| Clegg, Sir Walter | Jessel, Toby |
| Cockeram, Eric | Johnson Smith, Geoffrey |
| Colvin, Michael | Jopling, Rt Hon Michael |
| Cope, John | Kershaw, Anthony |
| Corrie, John | King, Rt Hon Tom |
| Costain, Sir Albert | Kitson, Sir Timothy |
| Cranborne, Viscount | Knight, Mrs Jill |
| Crouch, David | Knox, David |
| Dean, Paul (North Somerset) | Lamont, Norman |
| Dickens, Geoffrey | Lang, Ian |
| Dorrell, Stephen | Langford-Holt, Sir John |
| Douglas-Hamilton, Lord J. | Latham, Michael |
| Dunn, Robert (Dartford) | Lawson, Nigel |
| Durant, Tony | Lennox-Boyd, Hon Mark |
| Lester Jim (Beeston) | Ridsdale, Julian |
| Lloyd, Peter (Fareham) | Royle, Sir Anthony |
| Loveridge, John | Sainsbury Hon Timothy |
| Luce, Richard | St. John-Stevas, Rt Hon N. |
| Lyell, Nicholas | Shaw, Giles (Pudsey) |
| McCrindle, Robert | Shaw, Michael (Scarborough) |
| Macfarlane, Neil | Shelton, William (Streatham) |
| MacGregor, John | Shepherd, Colin (Hereford) |
| MacKay, John (Argyll) | Shepherd, Richard |
| Macmillan, Rt Hon M. | Shersby, Michael |
| McNair-Wilson, M. (N'bury) | Silvester, Fred |
| McNair-Wilson, P. (New F'st) | Sims, Roger |
| McQuarrie, Albert | Smith, Dudley |
| Madel, David | Speller, Tony |
| Major, John | Spence, John |
| Marland, Paul | Spicer, Jim (West Dorset) |
| Marlow, Tony | Sproat, Ian |
| Marten, Neil (Banbury) | Squire, Robin |
| Mates, Michael | Stainton, Keith |
| Mather, Carol | Stanbrook, Ivor |
| Maude, Rt Hon Angus | Steen, Anthony |
| Mawhinney, Dr Brian | Stevens, Martin |
| Maxwell-Hyslop, Robin | Stewart, Ian (Hitchin) |
| Mayhew, Patrick | Stokes, John |
| Mellor, David | Stradling Thomas, J. |
| Meyer, Sir Anthony | Tapsell, Peter |
| Miller, Hal (B'grove) | Taylor, Robert (Croydon NW) |
| Mills, Iain (Meriden) | Taylor, Teddy (S'end E) |
| Mills, Peter (West Devon) | Tebbit, Norman |
| Miscampbell, Norman | Temple-Morris, Peter |
| Mitchell, David (Basingstoke) | Thomas, Rt Hon Peter |
| Moate, Roger | Thompson, Donald |
| Montgomery, Fergus | Thorne, Neil (Ilford South) |
| Moore, John | Thornton, Malcolm |
| Morris, M. (N'hampton S) | Townend, John (Bridlington) |
| Morrison, Hon C. (Devizes) | Townsend, Cyril D, (B'heath) |
| Morrison, Hon P. (Chester) | Trippier, David |
| Myles, David | Trotter, Neville |
| Neale, Gerrard | van Straubenzee, W. R. |
| Needham, Richard | Vaughan, Dr Gerard |
| Nelson, Anthony | Viggers, Peter |
| Neubert, Michael | Waddington, David |
| Newton, Tony | Wakeham, John |
| Normanton, Tom | Waldegrave, Hon William |
| Onslow, Cranley | Walker, B. (Perth ) |
| Osborn, John | Wall, Patrick |
| Page, John (Harrow, West) | Waller, Gary |
| Page, Rt Hon Sir G. (Crosby) | Walters, Dennis |
| Page, Richard (SW Herts) | Ward, John |
| Parkinson, Cecil | Warren, Kenneth |
| Parris, Matthew | Watson, John |
| Patten, Christopher (Bath) | Wells, John (Maidstone) |
| Pawsey, James | Wells, Bowen |
| Pink, R. Bonner | Wheeler, John |
| Pollock, Alexander | Whitelaw, Rt Hon William |
| Porter, Barry | Whitney, Raymond |
| Price, Sir David (Eastleigh) | Wickenden, Keith |
| Proctor, K. Harvey | Wilkinson, John |
| Raison, Timothy | Williams, D.(Montgomery) |
| Rathbone, Tim | Winterton, Nicholas |
| Rees, Peter (Dover and Deal) | Wolfson, Mark |
| Rees-Davies, W. R. | Young, Sir George (Acton) |
| Renton, Tim | |
| Rhodes James, Robert | Tellers for the Noes: |
| Rhys Williams, Sir Brandon | Mr. Spencer Le Marchant and |
| Ridley, Hon Nicholas | Mr. Anthony Berry. |
§ Question accordingly negatived.
The First Deputy Chairman (Mr. Bryant Godman Irvine)Does the hon. Member for Stockport, North (Mr. Bennett) wish to move his amendment formally?
§ Mr. Andrew F. BennettYes, Mr. Godman Irvine, formally.
§ Amendment proposed: No. 7, in page 1, line 15, leave out "7.75 per cent." and insert "7.95 per cent."—[Mr. Andrew F. Bennett.]
§ Question put, That the amendment be made:—
1175§ The Committee divided: Ayes 76, Noes 241.
| Division No. 21] | [11.39 pm |
| AYES | |
| Beith, A. J. | Howells, Geraint |
| Bennett, Andrew(St'kp't N) | Johnston, Russell (Inverness) |
| Brown, R. C. (N'castle W) | Jones, Rt Hon Alec (Rh'dda) |
| Brown, Ronald W. (H'ckn'y S) | Kinnock, Neil |
| Buchan, Norman | Lamborn, Harry |
| Campbell-Savours, Dale | Leighton, Ronald |
| Canavan, Dennis | Lyons, Edward (Bradf'd W) |
| Cocks, Rt Hon M. (B'stol S) | McDonald, Dr Oonagh |
| Conlan, Bernard | McGuire, Michael (Ince) |
| Cowans, Harry | McWilliam, John |
| Craigen, J. M. | Marks, Kenneth |
| Crowther, J. S. | Mellish, Rt Hon Robert |
| Cryer, Bob | Mikardo, Ian |
| Cunningham, Dr J. (W'h'n) | Mitchell, Austin (Grimsby) |
| Davidson, Arthur | Morris, Rt Hon A. (W'shawe) |
| Davis, T. (B'ham, Stechf'd) | Morris, Rt Hon C. (O'shaw) |
| Deakins, Eric | O'Halloran, Michael |
| Dobson, Frank | Race, Reg |
| Dormand, Jack | Richardson, Jo |
| Douglas-Mann, Bruce | Roberts, Ernest (Hackney N) |
| Dubs, Alfred | Rooker, J. W. |
| Dunn, James A. | Ross, Stephen (Isle of Wight) |
| English, Michael | Rowlands, Ted |
| Evans, John (Newton) | Shore, Rt Hon Peter |
| Ewing, Harry | Silkin, Rt Hon S. C. (Dulwich) |
| Field, Frank | Silverman, Julius |
| Ford, Ben | Snape, Peter |
| Fraser, J. (Lamb'th, N'w'd) | Spearing, Nigel |
| Freeson, Rt Hon Reginald | Steel, Rt Hon David |
| Freud, Clement | Stewart, Rt Hon D. (W Isles) |
| Gilbert, Rt Hon Dr John | Taylor, Mrs Ann (Bolton W) |
| Graham, Ted | Tinn, James |
| Hamilton, W. W. (C'tral Fife) | Wainwright, R.(Colne V) |
| Harrison, Rt Hon Walter | Welsh, Michael |
| Hattersley, Rt Hon Roy | Whitehead, Phillip |
| Haynes, Frank | Winnick, David |
| Holland, S. (L'b'th, Vauxh'll) | Tellers for the Ayes: |
| Home Robertson, John | Mr. George Morton and |
| Homewood, William | Mr. Hugh McCartney. |
| Hooley, Frank |
| NOES | |
| Alexander, Richard | Buck, Antony |
| Ancram, Michael | Budgen, Nick |
| Arnold, Tom | Butcher, John |
| Aspinwall, Jack | Butler, Hon Adam |
| Atkinson, David (B'm'th,E) | Cadbury, Jocelyn |
| Baker, Kenneth(St.M'bone) | Carlisle, John (Luton West) |
| Baker, Nicholas (N Dorset) | Carlisle, Kenneth (Lincoln) |
| Banks, Robert | Carlisle, Rt Hon M. (R'c'n) |
| Beaumont-Dark, Anthony | Chalker, Mrs. Lynda |
| Bendall, Vivian | Channon, Rt. Hon. Paul |
| Benyon, Thomas (A'don) | Churchill, W. S. |
| Benyon, W. (Buckingham) | Clark, Hon A. (Plym'th, S'n) |
| Berry, Hon Anthony | Clark, Sir W. (Croydon S) |
| Best, Keith | Clarke, Kenneth (Rushcliffe) |
| Bevan, David Gilroy | Clegg, Sir Walter |
| Biffen, Rt Hon John | Cockeram, Eric |
| Biggs-Davison, John | Colvin, Michael |
| Blackburn, John | Cope, John |
| Blaker, Peter | Corrie, John |
| Bonsor, Sir Nicholas | Costain, Sir Albert |
| Boscawen, Hon Robert | Cranborne, Viscount |
| Bottomley, Peter (W'wich W) | Crouch, David |
| Bowden, Andrew | Dean, Paul (North Somerset) |
| Braine, Sir Bernard | Dickens, Geoffrey |
| Bright, Graham | Dorrell, Stephen |
| Brinton, Tim | Douglas-Hamilton, Lord J. |
| Brittan, Leon | Dunn, Robert (Dartford) |
| Brotherton, Michael | Durant, Tony |
| Brown, M.(Brigg and Scun) | Dykes, Hugh |
| Browne, John (Winchester) | Eggar, Tim |
| Bruce-Gardyne, John | Elliott, Sir William |
| Bryan, Sir Paul | Emery, Peter |
| Eyre, Reginald | Mills, Peter (West Devon) |
| Fairbairn, Nicholas | Miscampbell, Norman |
| Faith, Mrs Sheila | Mitchell, David (Basingstoke) |
| Farr, John | Moate, Roger |
| Fell, Anthony | Montgomery, Fergus |
| Fenner, Mrs Peggy | Moore, John |
| Fletcher, A. (Ed'nb'gh N) | Morris, M. (N'hampton S) |
| Forman, Nigel | Morrison, Hon P. (Chester) |
| Fraser, Peter (South Angus) | Myles, David |
| Fry, Peter | Neale, Gerrard |
| Gardiner, George (Reigate) | Needham, Richard |
| Gardner, Edward (S Fylde) | Nelson, Anthony |
| Garel-Jones, Tristan | Neubert, Michael |
| Goodhew, Victor | Newton, Tony |
| Gorst, John | Normanton, Tom |
| Grant, Anthony (Harrow C) | Onslow, Cranley |
| Greenway, Harry | Osborn, John |
| Grieve, Percy | Page, John (Harrow, West) |
| Griffiths, E.(B'y St. Edm'ds) | Page, Rt Hon Sir G. (Crosby) |
| Griffiths, Peter Portsm'th N) | Page, Richard (SW Herts) |
| Grylls, Michael | Parkinson, Cecil |
| Gummer, John Selwyn | Parris, Matthew |
| Hamilton, Hon A. | Patten, Christopher (Bath) |
| Hampson, Dr Keith | Pawsey, James |
| Hannam, John | Pink, R. Bonner |
| Haselhurst, Alan | Pollock, Alexander |
| Havers, Rt Hon Sir Michael | Porter, Barry |
| Hawkins, Paul | Price, Sir David (Eastleigh) |
| Hawksley, Warren | Proctor, K. Harvey |
| Heddle, John | Raison, Timothy |
| Henderson, Barry | Rathbone, Tim |
| Heseltine, Rt Hon Michael | Rees, Peter (Dover and Deal) |
| Hicks, Robert | Renton, Tim |
| Hogg, Hon Douglas (Gr'th'm) | Rhodes James, Robert |
| Hooson, Tom | Rhys Williams, Sir Brandon |
| Howell, Ralph (N Norfolk) | Ridley, Hon Nicholas |
| Hunt, David (Wirral) | Ridsdale, Julian |
| Hunt, John (Ravensbourne) | Royle, Sir Anthony |
| Hurd, Hon Douglas | Sainsbury, Hon Timothy |
| Jenkin, Rt Hon Patrick | St. John-Stevas, Rt Hon N. |
| Jessel, Toby | Shaw, Giles (Pudsey) |
| Johnson Smith, Geoffrey | Shaw, Michael (Scarborough) |
| Jopling, Rt Hon Michael | Shelton, William (Streatham) |
| Kershaw, Anthony | Shepherd, Colin (Hereford) |
| King, Rt Hon Tom | Shepherd, Richard |
| Kitson, Sir Timothy | Shersby, Michael |
| Knight, Mrs Jill | Silvester, Fred |
| Knox, David | Sims, Roger |
| Lamont, Norman | Smith, Dudley |
| Lang, Ian | Speller, Tony |
| Langford-Holt, Sir John | Spence, John |
| Latham, Michael | Spicer, Jim (West Dorset) |
| Lawson, Nigel | Sproat, Ian |
| Le Marchant, Spencer | Squire, Robin |
| Lennox-Boyd, Hon Mark | Stainton, Keith |
| Lester Jim (Beeston) | Stanbrook, Ivor |
| Lloyd, Ian (Havant & W'loo) | Steen, Anthony |
| Loveridge, John | Stevens, Martin |
| Luce, Richard | Stewart, Ian (Hitchin) |
| Lyell, Nicholas | Stokes, John |
| McCrindle, Robert | Stradling Thomas, J. |
| Macfarlane, Neil | Tapsell, Peter |
| MacGregor, John | Taylor, Robert (Croydon NW) |
| MacKay, John (Argyll) | Tebbit, Norman |
| Macmillan, Rt Hon M. | Temple-Morris, Peter |
| McNair-Wilson, P. (New F'st) | Thomas, Rt Hon Peter |
| McQuarrie, Albert | Thompson, Donald |
| Madel, David | Thorne, Neil (Ilford South) |
| Major, John | Thornton, Malcolm |
| Marland, Paul | Tilley, John |
| Marten, Neil (Banbury) | Townend, John (Bridlington) |
| Mates, Michael | Townsend, Cyril D, (B'heath) |
| Mather, Carol | Trippier, David |
| Mawhinney, Dr Brian | Trotter, Neville |
| Maxwell-Hyslop, Robin | van Straubenzee, W. R. |
| Mayhew, Patrick | Vaughan, Dr Gerard |
| Mellor, David | Viggers, Peter |
| Meyer, Sir Anthony | Wakeham, John |
| Miller, Hal (B'grove) | Waldegrave, Hon William |
| Mills, Iain (Meriden) | Walker, B. (Perth ) |
| Lloyd, Ian (Havant & W'loo) | Sainsbury, Hon Timothy |
| Loveridge, John | St. John-Stevas, Rt Hon N. |
| Luce, Richard | Shaw, Giles (Pudsey) |
| Lyell, Nicholas | Shaw, Michael (Scarborough) |
| McCrindle, Robert | Shelton, William (Streatham) |
| Macfarlane, Neil | Shepherd, Colin (Hereford) |
| MacGregor, John | Shepherd, Richard |
| MacKay, John (Argyll) | Shersby, Michael |
| Macmillan, Rt Hon M. | Silvester, Fred |
| McNair-Wilson, P. (New F'st) | Sims, Roger |
| McQuarrie, Albert | Smith, Dudley |
| Madel, David | Speller, Tony |
| Major, John | Spence, John |
| Marland, Paul | Spicer, Jim (West Dorset) |
| Marten, Neil (Banbury) | Sproat, Ian |
| Mates, Michael | Squire, Robin |
| Mather, Carol | Stainton, Keith |
| Mawhinney, Dr Brian | Stanbrook, Ivor |
| Maxwell-Hyslop, Robin | Steen, Anthony |
| Mayhew, Patrick | Stevens, Martin |
| Mellor, David | Stewart, Ian (Hitchin) |
| Meyer, Sir Anthony | Stokes, John |
| Miller, Hal (B'grove) | Stradling Thomas, J. |
| Mills, Iain (Meriden) | Tapsell, Peter |
| Mills, Peter (West Devon) | Taylor, Robert (Croydon NW) |
| Miscampbell, Norman | Tebbit, Norman |
| Mitchell, David (Basingstoke) | Temple-Morris, Peter |
| Moate, Roger | Thomas, Rt Hon Peter |
| Montgomery, Fergus | Thompson, Donald |
| Moore, John | Thorne, Neil (Ilford South) |
| Morris, M. (N'hampton S) | Thornton, Malcolm |
| Morrison, Hon P. (Chester) | Tilley, John |
| Myles, David | Townend, John (Bridlington) |
| Neale, Gerrard | Townsend, Cyril D, (B'heath) |
| Needham, Richard | Trippier, David |
| Nelson, Anthony | Trotter, Neville |
| Neubert, Michael | van Straubenzee, W. R. |
| Newton, Tony | Vaughan, Dr Gerard |
| Normanton, Tom | Viggers, Peter |
| Onslow, Cranley | Wakeham, John |
| Osborn, John | Waldegrave, Hon William |
| Page, John (Harrow, West) | Walker, B. (Perth ) |
| Page, Rt Hon Sir G, (Crosby) | Wall, Patrick |
| Page, Richard (SW Herts) | Waller, Gary |
| Parkinson,. Cecil | Ward, John |
| Parris, Matthew | Warren, Kenneth |
| Patten, Christopher (Bath) | Watson, John |
| Pawsey, James | Wells, John (Maidstone) |
| Pink, R. Benner | Wells, Bowen |
| Pollock, Alexander | Wheeler, John |
| Porter, Barry | Whitelaw, Rt Hon William |
| Price, Sir David (Eastleigh) | Whitney, Raymond |
| Proctor, K. Harvey | Wickenden, Keith |
| Raison, Timothy | Wilkinson, John |
| Rathbone, Tim | Williams, D.(Montgomery) |
| Rees, Peter (Dover and Deal) | Winterton, Nicholas |
| Renton, Tim | Wolfson, Mark |
| Rhodes James, Robert | Young, Sir George (Acton) |
| Rhys Williams, Sir Brandon | |
| Ridley, Hon Nicholas | Tellers for the Noes: |
| Ridsdale, Julian | Mr. David Waddington and |
| Royle, Sir Anthony | Mr. Peter Brooke. |
§ Question accordingly negatived.
§ Mr. RookerI beg to move amendment No. 10, in page 1, line 16, leave out subsection (3).
I suggest that the size of -be Conservative side of the Committee will reach 100 before we disappear. [HON. MEMBERS: "Rubbish."] It may be that some other Conservative Members have joined our proceedings, because, apart from the hon. Member for Somerset, North (Mr. Dean), no Conservative Member has so far taken part.
1178 The amendment seeks to leave out subsection (3). It may be that Conservative Members do not know I do not intend to read them a lecture, but I should tell them that it puts am impost on widows and married women.
I have looked through the Conservative manifesto to see what was said about national insurance benfits, especially in regard to widows and married women. There was nothing. However, I found a quotation at the front by the nurse of the nation which said:
For me, the heart of politics is not political theory, it is people and how they want to live their lives.It is signed by the Prime Minister. Given that since they came to power the Government have cut widows' benefit—slipped in through the Social Security (No. 2) Act earlier this year—I accept that we are now talking about a residual number of women who are still locked into the old married women's option scheme under the national insurance system. By and large, they are married women and widows. The Government now propose a 37 per cent. increase in their national insurance contribution. That is a large increase. It is larger in percentage terms than the one to which my hon. Friend the Member for Keighley (Mr. Cryer) referred previously. By any stretch of the imagination, a 37 per cent. increase takes a little beating, even under this Government.
§ Mr. Albert McQuarrie (Aberdeenshire, East)Based on nothing.
§ Mr. RookerI do not think that the widows who are paying only 2 per cent.—[HON. MEMBERS: "Of what?"] Of their earnings. If hon. Members wish to intervene, I shall give way to the first hon. Member who rises.
§ Mr. W. R. Rees-Davies (Thanet, West)Will the hon. Gentleman translate that into money terms and not percentages, because we might be able to understand it better?
§ Mr. RookerIt is not my job to give answers from the Dispatch Box. That is the job of Ministers.
I want to ask the Minister a few questions. If she can answer them, we can reach a speedy conclusion to this debate. This is a quite narrow subject by any definition. The increase is from 2 per cent. to 2.75 per cent. [HON. MEMBERS: "How much is that?"] It depends on the earnings of the married woman. I should have thought that that was obvious. In an earnings-related scheme, the amount paid would depend on the earnings between the upper and lower income limits.
If the hon. and learned Member for Thanet, West (Mr. Rees-Davies) had been present earlier, he would probably have been able to work out examples for himself. For the purposes of this debate, however, it does not matter. The fact is that the rate is being changed for the first time in five years. It has been 2 per cent. since 1975. [Interruption.] One Conservative Member says that it is 2 per cent. of nothing, and another says that that is no reason for keeping it there for ever.
We have to look at what the women get for the payment. The number of national insurance benefits that a married woman or widow can obtain for paying the option is limited in the extreme. One is industrial injury benefit, but that is being cut by the Government in the Social Security (No. 2) Act. There is no evidence that more married women and widows paying the small stamp are suffering industrial injuries and creating an impost on the national insurance fund that requires this sort of 1179 increase. If there is evidence, will the Minister give it to the Committee? Given the limited range of benefits, there has to be a rational reason for such a large increase. It could have been ¼ per cent., and we could have accepted that because it is in line with the figure we accept for the Government's forecast of increased unemployment. We want to know why there is such a large increase.
I do not know how many married women and widows are still in this twilight area. The numbers are declining. There must be fewer each year, because no woman now entering the labour market is allowed to opt for this small payment. How much extra money will the Government raise from this declining band of married women and widows by this increase in the option that they pay?
How much is involved? How much will be raised, and why is there such a large increase, bearing in mind that one of the major benefits to which these people are entitled is being cut? Subject to the Minister's reply, I shall leave the matter there.
§ Mr. FieldI am sorry that the Secretary of State is not in his place, because I wanted to address some questions directly to him, partly linked to ideas that he put forward before the election. I wanted to make that link not to taunt him but to show that some of those ideas, had they been followed through, might have stood him in good stead in answering the questions posed by my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker).
Before the election, the Secretary of State was in favour of the idea of having what are called family impact statements in every Bill. In other words, just as we have a financial statement in the Bill, the Bill would carry a statement saying how families and different members of families would be affected by the changes that are proposed.
A number of measures that the Government have proposed and carried through during this Parliament have been favourable to single people and harmful to families. One of the interesting points about the national insurance scheme is that some aspects of it are favourable to women and children. Had we persuaded the Secretary of State to follow through his idea — his interest was second to none before the election—to preface all major Bills and departmental documents with impact statements, he would have been in a better position to answer the questions that my hon. Friend the Member for Perry Barr has raised. What sort of deal is the group that opted for the married women's option — a dying breed in the national insurance scheme—gaining from the scheme? Are the benefits that they receive so much greater than those of others in the scheme, particularly other women, that an increase in contribution was due?
It is sad that we do not have that information. We have been pincered into a debate in which we can consider only the distributional impact of increased contributions. The debate has been one-sided. We have considered only the groups on which contributions are bearing heaviest and most unfairly. If we had information about who benefits most from the national insurance scheme, we could make more sense of the argument about whether the increased contributions are fair.
12 midnight
What do the dying breed of women who have taken the so-called married woman's option get from the national 1180 insurance scheme, compared with other groups of women who pay the full contribution? Is it so disproportionately unfair that it is reasonable to ask them to pay a 35 per cent. increase in their contribution? With that information, we could make better progress.
I hope that the Under-Secretary will tell her right hon. Friend the Secretary of State that if one of his comments before the election had borne fruit afterwards, so that we had family impact statements on major Bills and Government statements, we should be better able to answer the pertinent questions asked by my hon. Friend the Member for Perry Barr.
§ Miss RichardsonI was startled at the start of the debate to hear groans from the Government Benches and a Conservative Member saying "Oh, it is so boring." I wish that the married women and widows whom we are discussing and whose national insurance contributions are being increased by 37½ per cent. had heard that remark. When we get such comments from the Government Benches, I sometimes wish that our late-night debates were broadcast live. Many would be ear-openers.
We need to know how many married women still exercise the option and how many widows are involved. The numbers must be small, because married women are now paying the full stamp. Those whom we are discussing must inevitably be older women who are probably on low earnings. The increase from 2 per cent. to 2.75 per cent. will have a disproportionate impact on them because of their low wages.
The Secretary of State said on Second Reading that married women who opted for the lower-rate contribution were still getting a good bargain. I do not know whether that is the right way to describe it. We are instructing those women that they must pay more tax, and they will not regard that as a good bargain.
I have always wanted to get married women away from this optional small contribution because I did not feel that it was the right way for them to be treated—indeed, not the right way for the whole concept of married women's earnings, contributions and taxation to be treated.
I hope that the Under-Secretary of State will be able to give us some facts and figures which will enable us to judge a little more accurately than we are now able to do precisely what the problem is. She might also care to give us an averaging of what some of the earnings might be of married women who fall into this category.
We have been talking about the fact that married women on the whole, with very few exceptions, earn very much less than men, even when doing similar jobs, I am sorry to say. It would be interesting to know whether the hon. Lady has some figures which would enable us to judge the situation properly.
§ Mr. David Winnick (Walsall, North)I support the amendment. It is particularly vindictive that this substantial increase of 37 per cent. should take place, for undoubtedly it will hit most those married women and widows who are among the poorest in the community. On Second Reading, the Secretary of State gave no justification for the increase, apart from the fact that there had been no increase since 1975. That was it—there has been no increase since 1975, so this sum of money should be raised.
When one compares the manner in which the richer sections of the community have been well rewarded by this 1181 Government, it makes one extremely angry that again it is the poor, the elderly and all those who can least defend themselves who are being made the object of such an attack.
I am justified in pointing out again that in the Government's first Budget 37 per cent. of the tax reduction went to the top 7 per cent. in the community, while this year 14 per cent. went to the top 2 per cent. Those figures are hardly in dispute. If the Government's case is that there is really no alternative but to raise this sum of money, our question is simple. Why not take it from those who have been so well rewarded by the Government? Why take it from the poorest?
Does the Under-Secretary of State dispute that those who will be hardest hit by the clause are the sort of people we have been referring to? Will she deny that, in the main, they are the poorest amongst the wage earners? They contracted out because of their low incomes, because they wanted to retain more money, for the most obvious of reasons. It is therefore extremely unfair that this section of the community should be penalised.
Perhaps one of the reasons why the Tories are now in Government instead of the Labour Party, and with such a large majority, was the promise to reduce taxation. It would be wrong for me as a Labour politician to deny that the propaganda by the Tories worked very well. Many of my constituents who did not vote for me were perhaps swayed by the promise that under a Conservative Governments their taxes would be reduced. But when I ask people now "How much better off are you as a result of the tax cuts which have taken place?" they laugh. They are not better off at all.
At least some of my constituents have gained from the reduction in direct taxation, but it has been offset by the increase in indirect taxation, so there is no net gain. I sometimes try to persuade my hon. Friends that we should use this fact to show that a reduction in direct taxation does not help the average person.
I hope that the Under-Secretary will give us much more information. How many people are involved? Is it not true that they are mainly the elderly and the poorer sections of society? How much money will be raised as a result of what is proposed in the Bill? I hope that even at this late stage the Government will recognise the justice of the amendment and not oppose it.
§ Mr. CryerThe Secretary of State justified the clause in a few lines of his Second Reading speech:
Married women and widows who have opted out of the full payment will pay the increased NHS contribution. They also contribute to the cost of the national insurance scheme, from which they benefit. The increases for them are a little higher, proportionately."—[Official Report, 8 December 1980; Vol. 995, c. 955.]How right he was! The increase is 37 per cent. I wonder why.The beginning of this debate was greeted by sneers and sniggers from the Conservative Members present, none of whom has justified the swingeing increase in tax. One of those to sneer was the chairman of European Ferries, currently receiving around £12,000 a year plus expenses as a Member. It hardly behoves anyone in that position to talk about married women and widows or to criticise the Opposition, who are resisting taxes that we believe are unfair.
I want to speak particularly about the imposition on widows. As a proportion of total earnings, in cash terms 1182 the increase is relatively small, but we are talking about people who have low incomes anyway and for whom a 37 per cent. increase in national insurance contributions is a great deal. They have to budget from week to week and are not saving up to go abroad on holiday by means of European Ferries. They do not have a few thousand pounds in the bank. Instead of saying "Inflation is coming down", they say "Prices are still going up week by week." Their national insurance contribution is going up a good deal faster than prices in the shops, but prices are still going up by about 15 per cent. a year.
§ Mr. WinnickMy hon. Friend has spoken of the sort of people who will not be adversely affected. Does he agree that another group who have done well, and from whom the money could come, are those who have not paid their income tax as a result of the activities of Rossminster? It is they who have the money to contribute, instead of the elderly and poor, who are being attacked by the Bill.
§ Mr. CryerI was not saying that the elderly and poor would not feel the increase. I was pointing out that widows and married women would feel it, even though in absolute terms it might be thought relatively small. We are talking about people whose income is pledged up to the hilt week after week, for whom economic life is a struggle all the time. They do not have money to fall back on if they receive a bigger electricity bill or whatever.
When we were in Government, were there not many bleeding hearts on the Conservative Benches on the subject of widows? They stood shoulder to shoulder. They told us that widows were suffering and asked us what the Government were doing to improve the position of widows. We had it time after time. We still have a few bleeding hearts on the Conservative Benches. However, they do not show the little cross that they wear on their sleeves when they are in the Division Lobby. They slide away or vote for the Government. We know who they are. They were going to give the disabled, the pensioners and the widows so much assistance. Where are they now?
§ Mr. DobsonOn the Government Front Bench.
§ Mr. Richard Page (Hertfordshire, South-West)Where are the hon. Gentleman's colleagues?
§ Mr. CryerIf the hon. Gentleman wishes to intervene, let him stand up to do so and I will give way.
§ Mr. PageIn the previous Parliament that was absolutely true, but I did not notice your side coming into our Lobby when we were on about this. Let us see how many of your people will be voting here tonight. How many hundreds of the Labour Party will be defending the widows when it comes to the next Division? Come on.
§ Mr. CryerThere are enough Labour Members in the Chamber to demonstrate that we are not letting the Bill pass through the House of Commons—
§ Mr. David Waddington (Lord Commissioner of the Treasury)All 10 of you.
§ Mr. CryerThe junior Tory Whip talks about 10 of us, but he knows that many Conservative Members will be kept in the House of Commons tonight to enable the Government to obtain the closures that they will need to force the Bill through the House of Commons. It is a legitimate effort by the Opposition to ensure that the Government cannot say that they obtained the Bill easily. We know that if the Liberals, the Scottish Nationals and all the other rag, tag and bobtail of the various parties on the Opposition Benches supported us in Divisions, the Tories would still win. We understand that. However, we are making sure that the Bill does not pass through the House of Commons easily. We are concerned that it represents an imposition on those who are least able to bear it.
§ Mr. BuchanDoes my hon. Friend agree that if Conservative Members are complaining about being kept up during bits of the night the fault is entirely that of the Government Front Bench?
§ Mr. BuchanThey tried to smuggle the Bill through. That is what landed Conservative Members in this position. The fault lies on their Front Bench.
§ Mr. CryerIf the Bill had passed through the House of Commons in an ordinary manner instead of being rushed through with all its stages having to be completed in one day and one night, it would have been dealt with in a more rational manner. It is entirely the fault of the Government Front Bench that the present procedures are being adopted. The Government are trying to force it through the House of Commons.
During the lifetime of the Labour Government, we had our arguments about widows. One of the improvements in benefit that was introduced during that period was due to the efforts of some Labour Back Benchers. My hon. Friend the Member for Ormskirk (Mr. Kilroy-Silk) was involved in organising a group of Back Benchers to obtain improved benefits for widows. That group voted for those improvements along with some Conservative and Liberal Members. Anyone who checks the record will find that the Labour Members on the then Government Benches were by no means the quiescent hacks that we see before us these days. That applied even with a narrow majority. The Conservative Members who were in the House of Commons during the administration of the previous Labour Government know that we were prepared on many occasions to vote if we felt that an issue was an important aspect of party policy. We were not prepared to adopt the hypocritical position that the Tories were using merely for political pretence.
I return to the position of widows. They will feel the imposition very keenly. It has been argued over the past few years that they have the same costs as a married couple. Heating and lighting cost the same. They cannot light or heat half a room. They have the same rates to pay. They feel particularly keenly that they are suffering as a result of existing legislation and could do with a better deal. Many other sections of the population consider that their lot should be improved, and any Government have to examine the priorities in the light of resources available. However, many widows feel particularly keenly that they are at a disadvantage because their partner is dead. They feel isolated, yet at the same time they have to bear costs which in the case of a married couple are shared.
1184 The imposition on married women is unfair, but widows will consider that it is even more unfair on them because of their isolation and the fact that they have to bear the extra cost on only one income.
It is a particularly cruel imposition. I recall the representations, agitation and speeches made about widows when we were in Government. It is, therefore, clear that the Government are making an about-turn in introducing the 37 per cent. increase in widows' contributions, particularly when their main benefit as a result of the contribution is cut. On the one hand, the contribution is increased. On the other, if they are unfortunate enough to be in receipt of industrial injury benefit, they receive less. That is singularly unfair. How can the Minister justify that position? The action is still unjustified and unfair, even if only a small number are affected.
The Minister may say that only a tiny number is involved and that the Government are interested in the extent of the imposition, but even if an injustice affects only one person we should try to remedy it. Hon. Members on both sides make a very good living out of trying to remedy, individual injustices in the courts. Should we, therefore, let this taxation injustice go through without question? Of course not. I hope that my hon. Friends will support the amendment to delete the subsection.
The voting will be interesting. Even though this is an imposition on widows, I suspect that Government Members will flock to the Lobby—there has been a three-line Whip — as good as gold to support the Government. Alack, alas, whatever the Government do, all Conservative Members troop into the Lobby. Whatever we say is not likely to change their minds.
§ Mr. D. N. Campbell-Savours (Workington)Even the rebels.
§ Mr. CryerI do not believe that there are any rebels. There were four abstentions about 10 months ago, which was the beginning of a controlled explosion, but that whimpered out like a damp squib after about 14 dinners that were widely publicised. All the young men of the Conservative Party, newly elected, believed that they could have a great deal of influence on the Government. That has not happened. They have submitted to the three-line Whip to vote for the measure.
It seems to us that the measure is extremely unfair. It affects a section of the population that is least able to bear the increased tax. It reflects badly on the Government. Those who have had the best tax deal from them are people like the chairman of European Ferries, who has done very well. Conservative Members are all pretty well heeled, with good jobs outside the House as well as their good salaries as Members of Parliament. It is the height of injustice for them all to vote for this imposition on widows.
§ Mr. RaceThese women who opted many years ago for a low rate of contributions and benefits did so in order to maximise their incomes. That was the prime defining factor of the group. By their approach they categorised themselves as low-paid, as needing every penny they could get from their wages. It is most likely that since they were low-paid they will remain low-paid, and this swingeing increase in contributions will undermine their incomes.
1185 These women must be of advancing years because, as my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) explained, it is not now possible for new entrants into the labour force to opt for the lower level of contribution. That means that many of them will be approaching retirement, a lime when they least need to bear the burden of having their contributions increased more than those of any other group.
These older women are, for the most part, part-time workers with take-home pay of £25 to £30 a week. They are employed in the public sector or in the private sector as cleaners or domestics for people like the chairman of European Ferries. The Government must justify concentrating their attack on this group. We oppose all the contribution increases, but particularly this one, aimed as t is at this most defenceless group. For that reason, the Committee should throw out this obnoxious subsection and retain the 2 per cent. level of contributions.
§ Mr. DobsonAs my hon. Friend the Member for Wood Green (Mr. Race) has already said, this measure will bear most heavily on older women in part-time employment on low pay. All three of those characteristics generally go together. As has been pointed out already, the general trend of the economy is having a more damaging effect on the employment of women than it is even on the employment of men. A disproportionately high number of women work part-time. They tend to be the first to be pushed out of employment when companies shed employees. Considerable numbers are being pushed out of the public sector, almost as a deliberate part of the Government's policies.
As was pointed out when we discussed an earlier amendment, other women who suffer are those in the wage brackets round the minimum who are paying the full rate of national insurance contribution rather than opting for the reduced rate. I think that someone in the DHSS was Oven the task of looking to see whether there were any women that the Government were not getting at. He rushed in and said to the Secretary of State "Sir, Sir, I have found another little group. Perhaps we could damage them also. We could put them in our nasty, squalid, little Bill."
It is a nasty, squalid piece of legislation that is being peddled by the Secretary of State and his friends. This is an especially squalid little put of the squalid little Bill. It will not bring in a significant income for the Government. It will not even save very much money for the rich, whom the Government are trying to look after. It will not bring about the savings that the tax evasion companies have been bringing about for the well-off. It will not put the Government in a position in which they can make significant tax concessions to those who have already received tax concessions. It will not make much difference to the totality of the income or outgoings in this measure. It is as if someone went out for a vengeful look for people who had not been caught.
But those women have already been caught by the equally squalid Social Security (No. 2) Act 1980. The train benefit to which they are entitled is the industrial injury benefit, which the Act cut. This is another example of the way in which the Government, in their petty-minded, rotten way, are doing down any persons or groups who are not well-heeled, well-advised and, consequently, well able to protect themselves. It is the most disgraceful part of the Bill. It is not financially significant. I do not 1186 suppose that the Chief Secretary to the Treasury rubbed his hands with glee at the thought of the amount of money that the Treasury would not have to find.
I wish that some Conservative Members would show a little rebellion every now and again. The only rebellions are those on the question of whether they will have a two-line Whip on a Private Member's Bill on this very day—as we have now reached Friday. I understand that they are feeling rebellious about that. I wish that they would feel rebellious about matters that are more important. I hope that they will rebel over this miserable little measure and show that they have a little heart left, instead of trooping into the Lobby after the Secretary of State.
§ Mr. Andrew F. BennettAt the start of this short debate, there seemed to be a good many comments from the Conservative Benches on how much money was involved. The trouble with money is that it depends on how much of it one has and how much it is worth. The extra amount to be paid each week by someone earning £50 is 37½p. Many Conservative Members would not think that that is very much, but I remind them that it still buys a dog licence. Most of the people concerned, on low income, have to save up for many of their expenditures, and they begrudge having money taken away from them, apparently for no good reason except that the Government feel that they can be taxed. There can be no pretence that it is other than a tax. The group of people concerned get no benefit other than industrial injuries benefit from the national insurance system.
My hon. Friend the Member for Keighley (Mr. Cryer) put most of his emphasis on widows, and I spent a good deal of time trying to devise an amendment that would separate widows from married women. Eventually I gave up in despair, because it was very difficult to devise an amendment which would have any chance of being in order. Then I started to reflect that there was no justice in trying to separate the two. The variation in individual cases is startling. In many instances married women can be in just as difficult a financial position as widows. What is needed is to take into account their ability to pay when the tax is being imposed.
Consider first the woman who is widowed relatively early in life and who has contracted out at an early stage of her employment. She then finds that she has to go back to work. She has a fairly small widow's allowance. On her small income she will be counting every penny. That was the sort of case that my hon. Friend the Member for Keighley was citing. What about the married woman whose husband has left her? She finds that she has to go back to work because she has no maintenance coming in. Having contracted out, she can get no benefits. She may well be forced to accept low-paid work. She still has a considerable number of commitments—a house and so on.
What about the married woman with a sick husband? She finds the payment of what Conservative Members may regard as only a few pence to be a considerable imposition.
Even worse off than that woman is the married woman in a low-paid job whose husband is unemployed and has been unemployed for a long time, so that he has exhausted his benefit. If he were the only source of income, the family would be entitled to go on to supplementary benefit, but because the wife goes to work he will not qualify for it. So, although the wife is not entitled to any benefits—or virtually no benefits— as a result of her contributions, she is supporting a husband who has 1187 exhausted his eligibility to benefits. I suggest that the woman in that category is at least as deserving as the widow.
Then there is the married woman whose husband is earning an average or above-average wage. The deduction from her income is of much less significance to that household.
One could go on with a whole series of examples, but they all make the point that this tax takes no account of the ability of the family to pay.
§ Mr. DobsonDoes my hon. Friend agree that if the Bill goes through several of the categories to which he has referred will be in the group referred to in the Conservative manifesto, where it speaks of far too many people who are
little or no better off at work than they are on social security"?
§ Mr. BennettI am aware that those are the categories to which the document was supposed to refer. Most of these people want to work, not just because they want to be independent but because they feel that there are many other benefits. They are just the people who will be the least likely to give up work if it is drawn to their attention that they might be better off in work than out of it. They are the people who have the least right to be clobbered by this increase.
We ought to be told the global sum that the Government hope to raise and how they justify imposing this increase on this group of people. Some of them will find it extremely difficult to cope with this increase. I suggest that the Minister should take away this part of the Bill and accept our amendment.
§ Mr. Campbell-SavoursI do not profess to have any great specialist knowledge of this area, but I thank my hon. Friend the Member for Stockport, North (Mr. Bennett) for informing me that this amendment was to be put to the Committee. I say that because it is an important amendment for hon. Members who do not specialise in this matter. Those who do not specialise are inclined to look at sensitive areas of legislation such as this and to speak on such matters when given the opportunity.
We have the pleasure this evening of having with us the Minister of State, Treasury, the hon. and learned Member for Dover and Deal (Mr. Rees). He may recall that during our debates on the Finance Bill some months ago he said that whenever sensitive issues came before us he would price them—for want of a better term—and on a number of occasions when controversial measures were to be put to the Committee he was kind enough to ensure that the information was available to us prior to the debate. If this area of debate has dragged on this evening, it may be because that kind of information has not been made available to us. It might have helped us if we had had such information, because it might have enabled us to establish, not only in the minds of my hon. Friends but perhaps also in the minds of Tory Members, what our priorities should be.
I recall the occasion during our debates on the Finance Bill when one Tory Member, who has now left the Chamber, moved an amendment that would have added £200 million to the public sector borrowing requirement. It was only when the Minister of State made the necessary information available to the Committee that we were able 1188 to treat the amendment with the ridicule that it deserved and press our amendments to deal with far more sensitive and important areas of the Bill.
12.45 am
If there is a particular reason why we on this side rise to speak on amendments such as these, it is that we see within such measures great injustices. It might be worth establishing what sorts of Members organising what sorts of surgeries are inclined to attract to those surgeries people who have problems of the kind to which my hon. Friends have referred tonight. I wonder whether the hon. Member for Huntingdonshire (Mr. Major), who was enjoying the debate earlier with a few laughs at the comments of my hon. Friends, could think back to the last surgery that he held. I am sure that at that surgery he was confronted with people who fall within the groups to which the amendment refers. I am sure he would agree that invariably at surgeries we are inclined to attract the lower-paid groups, because they have problems. Therefore, one would have thought that when hon. Members, having been confronted by such people at their surgeries, come to the House of Commons they would do their best to protect the interests of those people.
However, that does not happen. Conservative Members are very quick to allocate tens—indeed, hundreds—of millions of pounds to the better off—the more well-heeled—in society and are often inclined to discard the interests of those who have very little. That is a derogation of our function as Members of Parliament, because my understanding has always been that we come here to protect the underprivileged.
§ Mr. MajorIs the hon. Member aware that, as a Member of Parliment, he should seek to look, as I believe that my hon. Friends do, at the problems of the country in the round rather than in the specific? Does he not realise that if an hon. Member picked up every individual case irrespective of the general circumstances of the country and pleaded the sort of dishonest case that his hon. Friend the Member for Keighley (Mr. Cryer) did, the borrowing requirement—about which the hon. Gentleman was sarcastic—would soar to unprecedented levels? Would the hon. Gentleman care to comment on what the level of taxation on everyone, including widows, might be if the borrowing requirement were the £18 billion that the right hon. Member for Leeds, East (Mr. Healey) suggested and the minimum lending rate were reduced to 12 per cent.?
§ Mr. Campbell-SavoursTo refer to a borrowing requirement of £18 billion and a reduction in MLR to 12 per cent. is to state only half of the argument. One aspect of debate which characterises this Parliament is that whenever hon. Members question where my hon. Friends stand in the economic debate they are very selective and choose areas which they think will help them in their argument. Conservative Members do not mention such matters as import controls and the alternative economic strategy which is being pressed upon the Government by my hon. Friends.
§ Mr. Campbell-SavoursYes.
§ Mr. Campbell-SavoursI take your point, Mr. Godman Irvine as does the hon. Gentleman, I hope.
The hon. Member referred to the need to deal in the general rather than in the specific. An examination of the distribution of personal incomes between 1949 and the last year for which figures are available—1977—shows that the bottom 30 per cent. of income groups increased their share of all income by only ⅓ per cent. When one considers the legislation that the Government have introduced—
The First Deputy ChairmanOrder. We are dealing not with the low-paid but with married women and widows.
§ Mr. Campbell-SavoursI should have thought that it was in order to refer to those who will suffer as a result of the Government's refusal to accept the amendment tabled by my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker). I should have thought it in order to refer in passing to that group of people and their problems. Their share has increased by only one-third of 1 per cent. over a period of 28 years.
In the past year and a half, the Government have introduced two Finance Bills. It is clear that a massive redistribution is being made in favour of those who do not fall within that bottom 30 per cent. I remind the hon. Member for Huntingdonshire that the House is under an obligation. The amount of public expenditure involved is not vast. There will not be any draconian effect on the public sector borrowing requirement. Indeed, some of the amendments tabled by Conservative Members during discussion of the Finance Bill would have had a draconian effect. Such amendments would not have been of any benefit to my constituents.
Hon. Members would be unfair if they did not consider those who fall within these particular income groups. Income could be raised from several other sources. Only 10 days ago the Government made a statement to the effect that they would allocate a further £350 million to those who enjoyed stock relief. A marginal reduction in that amount—which would not have any great effect on the companies that claim stock relief—
§ Mr. FieldOn a point of order, Mr. Godman Irvine. Given that we are rushing through a Bill that seeks to raise taxation by more than £2 billion, is it not in order to ask where the Secretary of State is? Should he not be present at such deliberations?
The First Deputy ChairmanThat is not a matter for the Chair, but it is for the Chair to ensure that hon. M embers discuss the specific amendment.
§ Mr. Campbell-SavoursYou suggested, Mr. Godman Irvine, that my remarks were not in order. I suggest that they are in order. If the Government intend to use the increase from 2 per cent. to 2.75 per cent. as a means of raising revenue, I should have thought it in order to mention other ways in which the same amount of revenue could be raised.
The First Deputy ChairmanI am not sure whether the hon. Gentleman was in the Chamber earlier I have given a ruling on this subject.
§ Mr. WinnickOn a point of order, Mr. Godman Irvine. It is a perfect point of order. I refer to the absence of the Secretary of State. While I recognise—
The First Deputy ChairmanOrder. The hon. Gentleman has been in the House long enough to know better than to proceed along those lines.
§ Mr. WinnickCan we have an apology or an explanation for the right hon. Gentleman's absence?
§ Mr. Campbell-SavoursThe House should reconsider the changes that have been introduced. A special case can be made for those who can ill afford to pay the Government's debts. The Government have clearly lost control of the economy because they are unable to reach the monetary targets that they originally set. They should not impose these costs on the underprivileged, who can ill afford to pick up the bill.
§ Mrs. ChalkerI was beginning to wonder when the moment would come for me to answer the many questions posed by Opposition Members.
One question was: how many married women are paying the reduced or opted-out payment? About 3½ million married women in employment pay the reduced payment. About a quarter of a million widows pay the reduced payment. A further quarter of a million women, not now in employment, who have been opted out from previous employments and are now in the immediate two-year post-employment period, are still eligible for reduced payments.
I was asked what money comes into the fund. The total is £47 million—not quite as small as some Opposition Members seemed to think—£31 million of which goes into the national insurance fund. The remaining £16 million will go into the National Health Service. If Opposition Members care to read the Government Actuary's report on the Bill, they will find many other useful figures.
We made clear in earlier debates—hon. Members who arrived after midnight will not have heard those debates, of course—that on the advice of the Government Actuary, working on estimates put to him by the Treasury, we must ensure that the national insurance fund remains in balance.
We have already discussed the full class 1 contributions. We are now discussing what happens to the reduced rate for married women and widows who for the past five years have been paying 2 per cent.
The hon. Member for Birmingham, Perry Barr (Mr. Rooker) made great play of the fact that the increase from 2 per cent. to 2.75 per cent. for women who are opted out was an increase of 37½ per cent. The hon. Gentleman failed to note that women who are opted out of the full contribution have always paid the National Health Service allocation. That is reflected as an increase of 0.25 per cent. in all the primary class 1 contribution rates. So of that 0.75 per cent. increase 0.25 per cent. is going direct to the National Health Service. The remainder is the general cost of the scheme from which married women and widows can benefit through additions to benefit for dependants and through industrial injuries benefit. They also benefit in the long term because they are making contributions to their retirement pensions.
When rates have not changed for some time, it may seem fair to ask "Why change them now?" Every speaker in the debate has missed one point. When the reduced rate was set in 1975, the standard class 1 rate was 5½ per cent. 1191 In other words, the reduced rate was 3½ per cent. below that. Even after the increase now proposed, the difference will be 5 per cent.—that is, 2.75 per cent. compared with 7.75 per cent. It will be slightly greater than the 4.5 per cent.—that is, the difference between the old basic 2 per cent. contribution and the 6.5 per cent. contribution which applied from April 1978. That was when the Labour Government's legislation required married women to consider their position in the light of the new pension scheme. Therefore, the married women's option will now represent a better bargain than when they made their decision to pay at the lower rate.
The Government are in no way impervious to the problems that face many widows and people on low pay. As the hon. Member for Stockport, North (Mr. Bennett) said, a woman earning £50 a week would experience an increase of 37½p as a result of this part of clause 1.
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In view of the need to ensure that our national insurance fund remains in balance, and in order to make sure that the resources that we want for the NHS are available, I do not think that—at a better bargain than the Other increases—this is too much to ask of a group of the population that is by no means all in the categories so avidly described by Labour Members. I am sure that many will not begrudge contributing 37½p if they are on £50 a week.
§ Mr. RookerThe Minister gave us the figures for which we asked. Perhaps she can give one more figure. She mentioned the 3½ million and the 250,000, the 250,000 being the widows. How much of the £47 million is attributable to the 250,000 widows?
§ Mrs. ChalkerI do not have my calculator with me, and I do not trust my mind at 1 o'clock in the morning, but I am quite sure that the hon. Gentleman and I can work out this figure.
§ Mr. RookerIs it proportional?
§ Mrs. ChalkerIt is proportional, as far as I know. From what I have read, I cannot think of any reason to believe that it would be other than proportional. That was my immediate reaction, but I was trying to think whether there was anything that I should add. I believe that it is a proportional amount.
§ Mr. DobsonIt seemed to me that the Minister dismissed as virtually irrelevant and trivial the increase of 37½p a week for a woman earning £50 a week. Can she say what the sum was, or give us the total benefit in taxation, which such a woman would have received from the Government's changes in taxation that were introduced in their first Budget?
§ Question put, That the amendment be made:—
§ The Committee divided: Ayes 30, Noes 221.
| Division No. 22] | [1.02 am |
| AYES | |
| Buchan, Norman | Dobson, Frank |
| Campbell-Savours, Dale | Dormand, Jack |
| Canavan, Dennis | Dubs, Alfred |
| Cocks, Rt Hon M. (B'stol S) | English, Michael |
| Craigen, J. M. | Evans, John (Newton) |
| Crowther, J. S. | Ewing, Harry |
| Cryer, Bob | Field, Frank |
| Cunningham, Dr J. (W'h'n) | Freeson, Rt Hon Reginald |
| Davis, T. (B'ham, Stechf'd) | Graham, Ted |
| Haynes, Frank | Rowlands, Ted |
| Johnston, Russell (Inverness) | Spearing, Nigel |
| Leighton, Ronald | Welsh, Michael |
| McCartney, Hugh | Winnick, David |
| McDonald, Dr Oonagh | |
| Race, Reg | Tellers for the Ayes: |
| Richardson, Jo | Mr. Walter Harrison and |
| Rooker, J. W. | Mr. Andrew F. Bennett. |
| NOES | |
| Alexander, Richard | Grant, Anthony (Harrow C) |
| Ancram, Michael | Greenway, Harry |
| Aspinwall, Jack | Grieve, Percy |
| Atkinson, David (B'm'th,E) | Griffiths, E.(B'y St. Edm'ds) |
| Baker, Kenneth (St.M'bone) | Griffiths, Peter Portsm'th N) |
| Baker, Nicholas (N Dorset) | Grylls, Michael |
| Banks, Robert | Gummer, John Selwyn |
| Bendall, Vivian | Hamilton, Hon A. |
| Benyon, Thomas (A'don) | Hampson, Dr Keith |
| Benyon, W. (Buckingham) | Hannam, John |
| Berry, Hon Anthony | Haselhurst, Alan |
| Best, Keith | Hastings, Stephen |
| Bevan, David Gilroy | Havers, Rt Hon Sir Michael |
| Biggs-Davison, John | Hawkins, Paul |
| Blackburn, John | Hawksley, Warren |
| Blaker, Peter | Heddle, John |
| Boscawen, Hon Robert | Henderson, Barry |
| Bottomley, Peter (W'wich W) | Heseltine, Rt Hon Michael |
| Bowden, Andrew | Hicks, Robert |
| Braine, Sir Bernard | Hogg, Hon Douglas (Gr'th'm) |
| Bright, Graham | Hooson, Tom |
| Brinton, Tim | Howell, Ralph (N Norfolk) |
| Brittan, Leon | Hunt, David (Wirral) |
| Brotherton, Michael | Hunt, John (Ravensbourne) |
| Brown, M.(Brigg and Scun) | Hurd, Hon Douglas |
| Browne, John (Winchester) | Jenkin, Rt Hon Patrick |
| Bruce-Gardyne, John | Johnson Smith, Geoffrey |
| Bryan, Sir Paul | Jopling, Rt Hon Michael |
| Buck, Antony | Kershaw, Anthony |
| Budgen, Nick | King, Rt Hon Tom |
| Butcher, John | Kitson, Sir Timothy |
| Butler, Hon Adam | Knight, Mrs Jill |
| Cadbury, Jocelyn | Knox, David |
| Carlisle, John (Luton West) | Lamont, Norman |
| Carlisle, Kenneth (Lincoln) | Lang, Ian |
| Carlisle, Rt Hon M. (R'c'n) | Langford-Holt, Sir John |
| Chalker, Mrs. Lynda | Latham, Michael |
| Channon, Rt. Hon. Paul | Le Marchant, Spencer |
| Churchill, W. S. | Lennox-Boyd, Hon Mark |
| Clark, Hon A. (Plym'th, S'n) | Lester Jim (Beeston) |
| Clark, Sir W. (Croydon S) | Lloyd, Peter (Fareham) |
| Clarke, Kenneth (Rushcliffe) | Loveridge, John |
| Colvin, Michael | Luce, Richard |
| Cope, John | Lyell, Nicholas |
| Corrie, John | McCrindle, Robert |
| Costain, Sir Albert | Macfarlane, Neil |
| Cranborne, Viscount | MacGregor, John |
| Crouch, David | MacKay, John (Argyll) |
| Dean, Paul (North Somerset) | McNair-Wilson, P. (New F'st) |
| Dickens, Geoffrey | McQuarrie, Albert |
| Dorrell, Stephen | Madel, David |
| Douglas-Hamilton, Lord J. | Major, John |
| Dunn, Robert (Dartford) | Marland, Paul |
| Durant, Tony | Mates, Michael |
| Dykes, Hugh | Mather, Carol |
| Eggar, Tim | Maude, Rt Hon Angus |
| Elliott, Sir William | Mawhinney, Dr Brian |
| Emery, Peter | Maxwell-Hyslop, Robin |
| Eyre, Reginald | Mayhew, Patrick |
| Fairbairn, Nicholas | Mellor, David |
| Faith, Mrs Sheila | Meyer, Sir Anthony |
| Farr, John | Miller, Hal (B'grove) |
| Fell, Anthony | Mills, Iain (Meriden) |
| Fenner, Mrs Peggy | Mills, Peter (West Devon) |
| Forman, Nigel | Miscampbell, Norman |
| Fraser, Peter (South Angus) | Mitchell, David (Basingstoke) |
| Gardiner, George (Reigate) | Moate, Roger |
| Gardner, Edward (S Fylde) | Montgomery, Fergus |
| Garel-Jones, Tristan | Moore, John |
| Gorst, John | Morrison, Hon C. (Devizes) |
| Morrison, Hon P. (Chester) | Stainton, Keith |
| Myles, David | Stanbrook, Ivor |
| Neale, Gerrard | Steen, Anthony |
| Needham, Richard | Stevens, Martin |
| Nelson, Anthony | Stewart, Ian (Hitchin) |
| Neubert, Michael | Stokes, John |
| Newton, Tony | Stradling Thomas, J. |
| Normanton, Tom | Tapsell, Peter |
| Onslow, Cranley | Taylor, Robert (Croydon NW) |
| Osborn, John | Taylor, Teddy (S'end E) |
| Page, Rt Hon Sir G. (Crosby) | Tebbit, Norman |
| Page, Richard (SW Herts) | Thomas, Rt Hon Peter |
| Parkinson, Cecil | Thompson, Donald |
| Parris, Matthew | Thorne, Neil (Ilford South) |
| Patten, Christopher (Bath) | Townend, John (Bridlington) |
| Pattie, Geoffrey | Townsend, Cyril D, (B'heath) |
| Pawsey, James | Trippier, David |
| Pink, R. Bonner | Trotter, Neville |
| Pollock, Alexander | van Straubenzee, W. R. |
| Price, Sir David (Eastleigh) | Vaughan, Dr Gerard |
| Proctor, K. Harvey | Viggers, Peter |
| Raison, Timothy | Wakeham, John |
| Rathbone, Tim | Waldegrave, Hon William |
| Rees, Peter (Dover and Deal) | Walker, B. (Perth ) |
| Rees-Davies, W. R. | Wall, Patrick |
| Renton, Tim | Waller, Gary |
| Rhodes James, Robert | Ward, John |
| Rhys Williams, Sir Brandon | Warren, Kenneth |
| Ridley, Hon Nicholas | Watson, John |
| Ridsdale, Julian | Wells, John (Maidstone) |
| Sainsbury, Hon Timothy | Wells, Bowen |
| St. John-Stevas, Rt Hon N. | Wheeler, John |
| Shaw, Michael (Scarborough) | Whitney, Raymond |
| Shelton, William (Streatham) | Wickenden, Keith |
| Shepherd, Richard | Wilkinson, John |
| Shersby, Michael | Winterton, Nicholas |
| Silvester, Fred | Wolfson, Mark |
| Sims, Roger | Young, Sir George (Acton) |
| Smith, Dudley | |
| Speller, Tony | Tellers for the Noes: |
| Spicer, Jim (West Dorset) | Mr. David Waddington and |
| Sproat, Ian | Mr. Peter Brooke. |
| Squire, Robin |
§ Question accordingly negatived.
§ Mr. RookerI beg to move amendment No. 11, in page 1, line 23, leave out '£3.40' and insert '£3.00'.
§ The Second Deputy Chairman (Mr. Richard Crawshaw)With this we may take amendment No. 12, in page 2, line 5, leave out '£5.15' and insert'£4.70'.
§ Mr. RookerThe Committee will be pleased to hear that I shall be able to spend less time moving amendment No. 11 than I spent on amendment No. 10, but it is incumbent on me to explain why we dreamt up the figures of £3 and £4.70 in the amendments. Basically, we want to know why the Government have chosen the figures in the Bill.
1.15 am
Amendment No. 11 relates to the class 2 self-employed contribution, which is at present £2.50. We simply propose to increase that figure by 20 per cent. in line with average earnings. That is how we get the figure of £3. We want to know why such a large increase is proposed by the Government for this part of the self-employed contribution.
Amendment No. 12 relates to share fishermen. The hon. Member for Aberdeenshire, East (Mr. McQuarrie) is just about to walk out of the Chamber. Normally, when there is reference to fishermen, he rises to his feet. Perhaps he will be able to contribute to this debate. He may even be able to tell us whether we have share fishermen in the 1194 EEC. I do not know whether that is so. I asked an hon. Gentleman who is a member of the Liberal Party and is now on the night sleeper, but he could not give an answer.
The present impost on share fishermen is £3.90. The Government propose a substantial increase, to £5.15. We have taken the 20 per cent. increase that we propose for the self-employed, which would give a rise of 50p on the £3.90 in the case of the share fishermen; we have then taken ¼ per cent. of average earnings—which takes us back to the unemployment contribution to the national insurance fund. That gives us 30p. We have not endeavoured to be more accurate than that. That gives us an 80p increase on £3.90. Hence we arrive at a figure of £4.70. These figures have not, therefore, simply been dreamt up out of thin air.
We could not understand why the Government proposed such large increases. In any event, it seemed the worst possible time to impose a further impost, above what was required by the increase in average earnings, upon those involved in the fishing industry. Hence these two amendments.
§ Mr. Patrick JenkinI regret that I cannot advise the Committee to accept these amendments, but, judging by the tone in which the hon. Member for Birmingham, Perry Barr (Mr. Rooker) moved them, they are perhaps more in the nature of probing amendments than an indication of the Opposition's policy.
The short answer is that the increases that are proposed for the class 2 contributions, the flat-rats contribution for the self-employed and the special rate for the share fishermen, are precisely what would be required to maintain the same relationship between the self-employed class 2 contributions and the combined employer and employee class 1 contribution.
The reduction in the Treasury supplement would account for about 30p of the 90p increase. The increase in the NHS allocation would account for a further 15p of that total, and the balance would be the appropriate share to go to the national insurance fund for the self-employed, relative to the contributions of employees. The effect of the amendment—the hon. Gentleman did not say whether this was the intention—would be to leave only the contribution to the fund and make the self-employed flat-rate contribution contribute nothing for the reduction of the Treasury supplement or for the Health Service.
If amendment No. 11 were carried, the loss of revenue would be about £16 million, but much more important than the amount of money involved would be the fact that it would mean that the relationship between class 1 and class 2 contribution rates would no longer be maintained. That would upset the relativity that has existed for a number of years.
The hon. Member may ask how class 2 and class 4 are fixed. The answer is that they have been fixed precisely according to the rules that were explained in the Government Actuary's report of 1977, in paragraphs 27 and 28. I shall not weary the Committee by reading out the paragraphs. I shall simply summarise them.
The rates for the self-employed are fixed on the total class 1 rate, which itself is set at a level adequate to keep the national insurance fund broadly in balance, taking account of the Treasury supplement. For the self-employed, this class 1 rate is abated to take account of the benefits for which they are not eligible—unemployment and industrial injuries benefits—and the earnings-related 1195 components in the benefits. Nearly all the abatement is on account of pensions. It is based on the actuarial value of the pension rights forgone. This method was adopted by our Labour predecessors in 1977, and we see no reason to change it.
We have launched the promised investigation into the relative contributions and benefits to the self-employed. A paper was published in October, and that investigation is now under way. The increases do no more than maintain the existing relativity. They in no way prejudice the conduct or the possible outcome of the investigation.
I believe that we are treating the self-employed absolutely fairly, in exactly the same relationship as employers and employed. In those circumstances, the Committee may wish to reject the amendment.
I turn to amendment No. 12. The contributions and, therefore, the increases are somewhat larger for share fishermen, because they are based on the standard class 2 rate, but an addition is made in respect of the share fishermen's entitlement to unemployment benefit and industrial injuries benefit. The increase proposed in the Bill reflects the increases of 65p for inflation and 45p for the NHS and the effect of the Treasury supplement reduction, as for the normal class 2 rates, and 15p corresponding to the further ¼ per cent. on class 1, because they are eligible for unemployment benefit.
I hope that the Committee will agree that both increases are justified. They are entirely fair in relation to other groups whose contributions are being increased. I therefore advise the Committee to reject the amendments.
§ Mr. BuchanThe Secretary of State will not expect us to accept his proposition. We reject the 1 per cent. and the combined employer-employee ratio that he proposes in the rest of the Bill, and we reject them equally in relation to the groups in question. We are not being inconsistent; on the contrary, we are being consistent.
We heard a great deal before and during the election campaign about the Tory Party's affection for the self-employed. We have heard something about it since, but we have not seen much in the way of deeds. The right hon. Gentleman must know that the self-employed are among those who are being pressed hardest. Many small one-man businesses are going bust under the present Administration. The strain is as heavy upon the unemployed as it is on other working people. This is hardly the time to introduce the spurious 1 per cent. provision that the Government regard as an insurance levy. I know something about share fishermen, as does the hon. Member for Aberdeenshire, East (Mr. McQuarrie). I was in the hon. Gentleman's constituency a few weeks ago—
§ Mr. McQuarrieThe hon. Gentleman never told me.
§ Mr. BuchanI was not there for political purposes. I was making a film for BBC on, among other things, fishermen.
As the hon. Gentleman knows, my family comes from the fishing folk of his constituency, I am sorry that they are being so badly represented. There is a problem facing fishermen. I declare an interest. I have no direct connection with fishing, but I have a sentimental interest in the industry and the people in it because of my family connections. The problem that they are facing was 1196 occasioned by the Conservative Party taking the United Kingdom into the Common Market without any guarantees on fishing policy. The fishermen are now facing the consequence. Herring is being landed in Boulogne while the fishermen off our shores have to dump herring into the sea and waste it if they catch it accidentally instead of sprats.
The problem facing the fishermen is in line with that faced by the unemployed. That is another reason for not accepting the impost that the Government have introduced.
§ Mr. McQuarrieThe hon. Gentleman will remember that when he was Minister of State, Ministry of Agriculture, Fisheries and Food in a previous Labour Government he said that he could not understand why that Government had not properly renegotiated the common fisheries policy. Surely, he is as much to blame as anyone else for the lack of a common fisheries policy today. The hon. Gentleman should not blame the Conservative Party for the lack of a common fisheries policy. As for the representation of my constituency, Lord Boothby well represented Aberdeenshire, East and I have tried to emulate him since entering the House of Commons in fighting for the fishermen. I shall continue to do so.
§ Mr. BuchanI seem to have gaffed a pike. I resigned from the Labour Government to whom the hon. Gentleman has referred over the Common Market. A great deal of my reason for doing so was their failure to include the fishing element in the renegotiations.
§ Mr. McQuarrieThe hon. Gentleman said that he was surprised that there were not proper renegotiations on the common fisheries policy.
§ Mr. BuchanOf course I did. That was why I resigned. What news is the hon. Gentleman giving me? I resigned because that was not done, among other things. Therefore, I take no blame. The main responsibility lies with the agreement, the Treaty and the Act that took us into the Common Market without first securing—
§ The Second Deputy ChairmanOrder. We are going wide of the subject that we are discussing. I hope that we have got these other matters out of our system for the moment.
§ Mr. BuchanI recognise that we are travelling wide. However, the Committee wants to know my history and I am giving it. Those fishermen face a particular problem because of the common fisheries policy. Therefore, this is not the time to place a fresh impost on them. That was the simple point that I was making when, innocent as always, I was led off it by the subtleties of the hon. Member for Aberdeenshire, East.
§ Mr. Campbell-SavoursWill my hon. Friend explain, for the benefit of those of us with no great knowledge of the fishing industry, what share fishermen are? I assume that they have some share equity in their boats. Are they affluent people who can afford the contribution, or are they reeling under the effects of the Government's policies in other areas that we are not discussing?
§ Mr. BuchanThey are reeling under the effects of Government policy. There have been periods of relative affluence in the fishing industry, but it is facing major 1197 difficulties now and for the future because of overfishing and failure to adopt proper conservation methods, partly because of the inhibitions placed on it by the EEC.
Share fishermen are men who go to sea, but they are not quite in an employee-employer relationship with the skipper or owner of the boat. Part of their earnings comes from their share in the catch. They are not only paid a wage. In fact, some are not paid a wage at all; they have a share of the profit of the boat as their payment. Fishermen, I am afraid, are highly individualist hunters, and they tend to prefer the chance of a haul—even a small haul—to a regular wage.
§ Mr. Campbell-SavoursHas my hon. Friend been able to assess the cost of the increase to the fishermen? What will the Exchequer gain by increasing the contribution.
§ Mr. BuchanThe latest figure that I have is £11 million for the self-employed and the share fishermen. I do not know what element of that £11 million will be lost if the amendment is carried. Perhaps the Minister can tell us.
§ Mr. Andrew F. BennettWhat happens to the share fishermen who, under Common Market regulations, have to put their catch back into the sea? If there is no catch, the share fisherman will get no income.
§ The Second Deputy ChairmanOrder. The debate is ranging very wide of the mark. The hon. Gentleman will next be asking what happens if a fisherman goes out on a stormy day and has no catch.
§ Mr. BennettI was coming to the essential point, Mr. Crawshaw. Is the fisherman entitled to unemployment benefit, as it is supposed to be one of the privileges of the share fisherman? That is an important and relevant question.
§ Mr. BuchanThat question is better answered by the Government. However, the fisherman does not get a share if the catch is dumped overboard. The other day the equivalent of a £5,000 haul had to be dumped, when people in this country could have done with the valuable protein from the fish.
§ Mr. Campbell-SavoursMy hon. Friend gave the figure by which he believed that the Exchequer would benefit. Perhaps the hon. Member for Aberdeenshire, East (Mr. McQuarrie) could intervene to tell us what effects he believes the increased contributions will have on fishermen in his constituency.
§ Mr. BuchanI shall be generous, as always, if the hon. Gentleman wishes to intervene to defend his constituents.
§ Mr. McQuarrieIt must be remembered that share fishermen share in the catch, which can be small or large. The national insurance contribution will be based on the physical takings of each share fisherman on the catch. It is right that they enjoy a measure of unemployment benefit, again based on the amount of money they earn It s a question of the income from the catch. Fishermen can earn up to £2,000 on many occasions in a week or 10 days at sea. When, they come back, they pay a proportion of that. We are talking about the flat rate, and the increase on the flat rate will make the difference.
§ Mr. BuchanI am surrounded by experts, but I am not sure that the hon. Gentleman is right. I understand that a flat figure rather than percentage applies. Perhaps the Secretary of State will confirm that.
§ Mr. Patrick JenkinThe Committee seems to be getting into difficulty. We are concerned in amendments Nos. 11 and 12 with the flat-rate element of the self-employed national insurance contribution, amendment No. 12 relating to the special position of share fishermen, who, as my hon. Friend rightly said, are remunerated not by a normal wage or even a wage related to work but by a share or by a mixture of a wage and a share. They are, however, entitled to unemployment benefit, and in that way they are unlike the normal self-employed who are not entitled to unemployment benefit. That is why they pay a special, higher rate of contribution and why the increase, which is directly proportional, is, in money terms, bigger than for the self-employed.
The hon. Member for Renfrewshire, West (Mr. Buchan) asked me how much of the total sum for the self-employed would be attributable to share fishermen. We do not have up-to-date reliable information, but it would be unlikely to exceed £1 million. The principal issue here, therefore, is not the sum of money but maintaining the same relativity between the different categories of contributor when one is making a change such as that contained in clause 1. That is our justification for the increases for the self-employed and that special category, the share fishermen.
§ Mr. BuchanIt is for that reason that we shall oppose it. We do not accept the original impost, and we are being consistent in our opposition. I invited the hon. Member for Aberdeenshire, East to make a comment in the defence of his constituents. I am not sure that he has succeeded in doing that yet. No doubt the Buchan Observer would be glad to print his remarks if he were to support us. We would welcome him in our Lobby—indeed, we need him in our Lobby.
There remains the question of fish that is dumped. In such a case, the fishermen lose the benefit.
§ Mr. McQuarrieI must take the hon. Gentleman to task on the question of the share fishermen. He should know as well as any hon. Member, because he comes from Buchan, that the fishermen there do not object to any increased contribution so long as the take from the share is coming in. Whether the Buchan Observer prints it or not, I am sure that my fishermen constituents will not object, if they can earn hard cash from good fish, to paying what the Government want.
§ Mr. BuchanThe hon. Gentleman is right in that my peole are notoriously generous. I am sure that they would not complain. Sometimes, however, we have to protect people from their own generosity. The House of Commons is magnificently empowered to do that. I do not doubt that all my family, past and present, would be willing honourably to serve society and pay the impost that is laid upon them, but I do not think that we should make the imposition upon them. They would pay just as willingly if the charge were a good deal lower.
§ Mr. Andrew F. BennettMy hon. Friend still has not said what happens to the share fisherman whose catch has to be thrown away. He has no income from the catch. Is 1199 he entitled to unemployment benefit or not? He will have been employed, but it will not have brought him any money.
§ Mr. BuchanPerhaps we should send for the Secretary of State for Employment to answer this question for us. It is interesting to ask whether, after a three-day trip, if the fisherman lost his catch, that would count as three days' unemployment out of seven. What is the definition of unemployment in such a situation? I do not know, but my hon. Friend—
§ Mr. McQuarrieI might be able to help the hon. Gentleman. The fishermen are not entitled to unemployment benefit on a three-day catch if it is thrown overboard.
§ Mr. BuchanThat is as I thought. The hon. Gentleman has confirmed it. The extra amount for unemployment is if a fisherman is not employed or participating in a share position. I hope that that answers the question raised by my hon. Friend the Member for Stockport, North (Mr. Bennett). If anyone wants to know anything more about the fishing industry, I shall be glad to help.
§ Mr. FieldMy contribution is a question to the Secretary of State. I am genuinely confused about his explanation of why the amendments should be rejected. I am confused whether his arguments relate to the self-employed or to the share fishermen. Was he saying that the contribution for the self-employed would be worked out on the basis of the increases that employees and employers would pay? If so, how can that be a special rating when employers are not paying any increase in their rates? If the former is correct, is it not a departure from the way that the increases for the self-employed have been worked out, which in previous years were based not on the weighted increase of both employers and employees but on the lesser rate? The lesser rate was justified because the self-employed do not receive equity and benefits compared with employees for whom benefits are paid from contributions based on both employees and employers.
§ Mr. Patrick JenkinI hope that I can help the hon. Member for Birkenhead (Mr. Field). I am not expecting my remarks to be printed in the Wanstead and Woodford Guardian. I wish to draw attention to the details in the 1977 Government Actuary's report, in which he spelt out precisely how the contribution of the self-employed was calculated. Paragraph 27 states:
The Government have decided that after April 1978 the rates of contribution for the self-employed should be derived on lines similar to the rates for contracted-out employees, by making allowance for the average cost of self-employed contributors of providing for themselves benefits comparable to the new earnings-related additional components of pension to which the contributions of employees fully participating in the state scheme will be securing title.Paragraph 28, the key paragraph, states:On this approach the contribution rates for the self-employed will be obtained by making two deductions from the joint rate for employees who are not contracted-out; first, an adjustment to exclude that part of the contributions for employees which relate to the, mainly short-term, benefits under the present scheme for which the self-employed are not eligible and, secondly, a deduction to allow for the value of the new earnings-related benefits to which employees will be building up title after April 1978.It obviously does not matter in what ratio the employees' and the employers' contributions stand to each 1200 other, because it is the sum of the two—the joint contribution—that provides the basis on which the self-employed contribution is calculated, after making the deductions to which the Government Actuary's report refers. I beg to differ from the hon. Member for Birkenhead in his suggestion that the Bill creates any new position. On the contrary, we have gone to great lengths to ensure that we increase the self-employed contribution to maintain precisely the same ratio to the joint employer-employee contribution as has pertained hitherto. We have done that quite deliberately so as in no way to prejudice the investigation that is currently under way and which we promised at the last election.
§ Mr. DobsonDoes the Secretary of State recall his speech in Canton on 19 April? I mean Canton in Cardiff, not the one near the enterprise zone. At least, on that occasion the right hon. Gentleman had the courage to go to Cardiff. One understands from today's Daily Express that the Prime Minister is willing to go to Cardiff, but only if the chairman of the British Steel Corporation—
§ The Second Deputy ChairmanOrder. The hon. Gentleman has already made this speech once tonight.
§ Mr. DobsonThe amendment refers to the self-employed. They are frequently referred to by the Secretary of State as small business men. I wonder whether he recalls his statement in Canton when he said:
The list of what we are now doing to encourage small businesses is a long and exciting one.I wonder whether this exciting little measure was included in the long and exciting list of measures that he was introducing to stimulate small businesses. As in many other instances, this is simply another effort to increase the take from the natural insurance fund in order to try to keep down the general level of taxation.The argument that has always been put forward with regard to small businesses is that the general level of taxation was penalising them. This is another example of simply shifting the burden from the general taxpayer on to the small self-employed person—the small business man. It is likely to damage those people to whom the Secretary of State's party apparently pays so much attention.
§ Question put, That the amendment be made:—
§ The Committee divided:Ayes 25, Noes 212.
| Division No. 23] | [1.47 am |
| AYES | |
| Bennett, Andrew(St'kp't N) | Freeson, Rt Hon Reginald |
| Buchan, Norman | Haynes, Frank |
| Campbell-Savours, Dale | Johnston, Russell (Inverness) |
| Cocks, Rt Hon M. (B'stol S) | Leighton, Ronald |
| Craigen, J. M. | McCartney, Hugh |
| Crowther, J. S. | Race, Reg |
| Cryer, Bob | Richardson, Jo |
| Cunningham, Dr J. (W'h'n) | Rooker, J. W. |
| Dobson, Frank | Welsh, Michael |
| Dormand, Jack | Winnick, David |
| Dubs, Alfred | |
| English, Michael | Tellers for the Ayes: |
| Evans, John (Newton) | Mr. Walter Harrison and |
| Ewing, Harry | Mr. Terry Davis. |
| Field, Frank |
| NOES | |
| Alexander, Richard | Baker, Nicholas (N Dorset) |
| Ancram, Michael | Banks, Robert |
| Atkinson, David (B'm'th,E) | Bendall, Vivian |
| Baker, Kenneth (St.M'bone) | Benyon, Thomas (A'don) |
| Benyon, W. (Buckingham) | Hunt, David (Wirral) |
| Berry, Hon Anthony | Hunt, John (Ravensbourne) |
| Best, Keith | Hurd, Hon Douglas |
| Bevan, David Gilroy | Jenkin, Rt Hon Patrick |
| Biggs-Davison, John | Johnson Smith, Geoffrey |
| Blackburn, John | Jopling, Rt Hon Michael |
| Blaker, Peter | Kershaw, Anthony |
| Boscawen, Hon Robert | Kitson, Sir Timothy |
| Bottomley, Peter (W'wich W) | Knight, Mrs Jill |
| Bowden, Andrew | Knox, David |
| Braine, Sir Bernard | Lamont, Norman |
| Bright, Graham | Lang, Ian |
| Brinton, Tim | Latham, Michael |
| Brittan, Leon | Le Marchant, Spencer |
| Brooke, Hon Peter | Lennox-Boyd, Hon Mark |
| Brotherton, Michael | Lester Jim (Beeston) |
| Brown, M.(Brigg and Scun) | Lloyd, Peter (Fareham) |
| Browne, John (Winchester) | Loveridge, John |
| Bruce-Gardyne, John | Luce, Richard |
| Bryan, Sir Paul | Lyell, Nicholas |
| Buck, Antony | McCrindle, Robert |
| Budgen, Nick | Macfarlane, Neil |
| Butcher, John | MacGregor, John |
| Butler, Hon Adam | MacKay, John (Argyll) |
| Cadbury, Jocelyn | McNair-Wilson, P. (New F'st) |
| Carlisle, Kenneth (Lincoln) | McQuarrie, Albert |
| Carlisle, Rt Hon M. (R'c'n ) | Madel, David |
| Chalker, Mrs. Lynda | Major, John |
| Channon, Rt. Hon. Paul | Marland, Paul |
| Churchill, W. S. | Mates, Michael |
| Clark, Hon A. (Plym'th, S'n) | Mather, Carol |
| Clarke, Kenneth (Rushcliffe) | Maude, Rt Hon Angus |
| Colvin, Michael | Mawhinney, Dr Brian |
| Cope, John | Maxwell-Hyslop, Robin |
| Corrie, John | Mayhew, Patrick |
| Costain, Sir Albert | Mellor, David |
| Cranborne, Viscount | Meyer, Sir Anthony |
| Crouch, David | Miller, Hal (B'grove) |
| Dean, Paul (North Somerset) | Mills, Iain (Meriden) |
| Dickens, Geoffrey | Mills, Peter (West Devon) |
| Dorrell, Stephen | Miscampbell, Norman |
| Dunn, Robert (Dartford) | Mitchell, David (Basingstoke) |
| Durant, Tony | Moate, Roger |
| Dykes, Hugh | Montgomery, Fergus |
| Eggar, Tim | Moore, John |
| Elliott, Sir William | Morrison, Hon C. (Devizes) |
| Emery, Peter | Morrison, Hon P. (Chester) |
| Eyre, Reginald | Myles, David |
| Fairbairn, Nicholas | Neale, Gerrard |
| Faith, Mrs Sheila | Needham, Richard |
| Farr, John | Nelson, Anthony |
| Fell, Anthony | Neubert, Michael |
| Fenner, Mrs Peggy | Newton, Tony |
| Forman, Nigel | Normanton, Tom |
| Fraser, Peter (South Angus) | Onslow, Cranley |
| Gardiner, George (Reigate) | Owen, Rt Hon Dr David |
| Gardner, Edward (S Fylde) | Page, Rt Hon Sir G. (Crosby) |
| Garel-Jones, Tristan | Page, Richard (SW Herts) |
| Goodhart, Philip | Parkinson, Cecil |
| Gorst, John | Parris, Matthew |
| Grant, Anthony (Harrow C) | Patten, Christopher (Bath) |
| Greenway, Harry | Pattie, Geoffrey |
| Grieve, Percy | Pawsey, James |
| Griffiths, E.(B'ySt. Edm'ds) | Pink, R. Bonner |
| Griffiths, Peter Portsm'th N) | Pollock, Alexander |
| Grylls, Michael | Price, Sir David (Eastleigh) |
| Gummer, John Selwyn | Proctor, K. Harvey |
| Hamilton, Hon A. | Raison, Timothy |
| Hampson, Dr Keith | Rathbone, Tim |
| Hannam, John | Rees, Peter (Dover and Deal) |
| Haselhurst, Alan | Renton, Tim |
| Hastings, Stephen | Rhys Williams, Sir Brandon |
| Havers, Rt Hon Sir Michael | Ridley, Hon Nicholas |
| Hawkins, Paul | Ridsdale, Julian |
| Hawksley, Warren | Sainsbury, Hon Timothy |
| Heddle, John | Sr. John-Stevas, Rt Hon N. |
| Henderson, Barry | Shaw, Michael (Scarborough) |
| Hicks, Robert | Shelton, William (Streatham) |
| Hooson, Tom | Shepherd, Richard |
| Howell, Ralph (N Norfolk) | Shersby, Michael |
| Silvester, Fred | Trotter, Neville |
| Sims, Roger | van Straubenzee, W. R. |
| Smith, Dudley | Vaughan, Dr Gerard |
| Speller, Tony | Viggers, Peter |
| Spence, John | Wakeham, John |
| Spicer, Jim (West Dorset) | Waldegrave, Hon William |
| Sproat, Ian | Walker, B. (Perth ) |
| Squire, Robin | Wall, Patrick |
| Stainton, Keith | Waller, Gary |
| Stanbrook, Ivor | Ward, John |
| Steen, Anthony | Warren, Kenneth |
| Stevens, Martin | Watson, John |
| Stewart, Ian (Hitchin) | Wells, John (Maidstone) |
| Stokes, John | Wells, Bowen |
| Stradling Thomas, J. | Wheeler, John |
| Tapsell, Peter | Whitney, Raymond |
| Taylor, Robert (Croydon NW) | Wickenden, Keith |
| Taylor, Teddy (S'end E) | Wilkinson, John |
| Tebbit, Norman | Winterton, Nicholas |
| Thomas, Rt Hon Peter | Wolfson, Mark |
| Thompson, Donald | Young, Sir George (Acton) |
| Thorne, Neil (Ilford South) | |
| Townend, John (Bridlington) | Tellers for the Noes: |
| Townsend, Cyril D, (B'heath) | Mr. David Waddington and |
| Trippier, David | Lord James Douglas-Hamilton. |
§ Question accordingly negatived.
§ The Second Deputy ChairmanIs a Division required on amendment No. 12?
§ Mr. RookerYes.
§ Amendment proposed: No. 12, in page 2, line 5, leave out "£5.15" and insert "£4.70".—[Mr. Rooker.]
§ Question put, That the amendment be made:—
§ The Committee proceeded to a Division.
§ The Second Deputy ChairmanOrder. As a result of a report that I have received, I propose to call the Division off and to put the Question again, the Tellers to be put in.
§ Question put, That the amendment be made:—
§ The Committee divided: Ayes 22, Noes 211.
| Division No. 24] | [2.08 am |
| AYES | |
| Bennett, Andrew(St'kp't N) | Haynes, Frank |
| Buchan, Norman | Johnston, Russell (Inverness) |
| Campbell-Savours, Dale | Leighton, Ronald |
| Cocks, Rt Hon M. (B'stol S) | McCartney, Hugh |
| Crowther, J. S. | Race, Reg |
| Cryer, Bob | Richardson, Jo |
| Dobson, Frank | Rooker, J. W. |
| Dormand, Jack | Welsh, Michael |
| Dubs, Alfred | Winnick, David |
| English, Michael | |
| Ewing, Harry | Tellers for the Ayes: |
| Field, Frank | Mr. Terry Davis and |
| Freeson, Rt Hon Reginald | Mr. Walter Harrison. |
| NOES | |
| Alexander, Richard. | Braine, Sir Bernard |
| Ancram, Michael | Bright, Graham |
| Atkinson, David (B'm'th,E) | Brinton, Tim |
| Baker, Kenneth(St.M'bone) | ' Brittan, Leon |
| Baker, Nicholas (N Dorset) | Brooke, Hon Peter |
| Banks, Robert | Brotherton, Michael |
| Bendall, Vivian | Brown, M.(Brigg and Scun) |
| Benyon, Thomas (A'don) | Browne, John (Winchester) |
| Benyon, W. (Buckingham) | Bruce-Gardyne, John |
| Berry, Hon Anthony | Bryan, Sir Paul |
| Best, Keith | Buck, Antony |
| Bevan, David Gilroy | Budgen, Nick |
| Biggs-Davison, John | Butcher, John |
| Blackburn, John | Butler, Hon Adam |
| Blaker, Peter | Cadbury, Jocelyn |
| Boscawen, Hon Robert | Carlisle, Kenneth (Lincoln) |
| Bottomley, Peter (W'wich W) | Chalker, Mrs Lynda |
| Bowden, Andrew | Channon, Rt. Hon. Paul |
| Churchill, W. S. | Mawhinney, Dr Brian |
| Clark, Hon A. (Plym'th, S'n) | Maxwell-Hyslop, Robin |
| Clarke, Kenneth (Rushcliffe) | Mayhew, Patrick |
| Colvin, Michael | Mellor, David |
| Cope, John | Meyer, Sir Anthony |
| Corrie, John | Miller, Hal (B'grove) |
| Costain, Sir Albert | Mills, Iain (Meriden) |
| Cranborne, Viscount | Mills, Peter (West Devon) |
| Crouch, David | Miscampbell, Norman |
| Dean, Paul (North Somerset) | Mitchell, David (Basingstoke) |
| Dickens, Geoffrey | Moate, Roger |
| Dorrell, Stephen | Montgomery, Fergus |
| Douglas-Hamilton, Lord J. | Moore, John |
| Dunn, Robert (Dartford) | Morrison, Hon C. (Devizes) |
| Durant, Tony | Morrison, Hon P. (Chester) |
| Dykes, Hugh | Myles, David |
| Eggar, Tim | Neale, Gerrard |
| Elliott, Sir William | Needham, Richard |
| Emery, Peter | Nelson, Anthony |
| Eyre, Reginald | Neubert, Michael |
| Fairbairn, Nicholas | Normanton, Tom |
| Faith, Mrs Sheila | Onslow, Cranley |
| Farr, John | Osborn, John |
| Fell, Anthony | Page, Rt Hon Sir G. (Crosby) |
| Fenner, Mrs Peggy | Page, Richard (SW Herts) |
| Forman, Nigel | Parkinson, Cecil |
| Fraser, Peter (South Angus) | Parris, Matthew |
| Gardiner, George (Reigate) | Patten, Christopher (Bath) |
| Gardner, Edward (S Fylde) | Pattie, Geoffrey |
| Garel-Jones, Tristan | Pawsey, James |
| Goodhart, Philip | Pink, R. Bonner |
| Gorst, John | Pollock, Alexander |
| Grant, Anthony (Harrow C) | Price, Sir David (Eastleigh) |
| Greenway, Harry | Proctor, K. Harvey |
| Grieve, Percy | Raison, Timothy |
| Griffiths, B.(B'y St. Edm'ds) | Rathbone, Tim |
| Griffiths, Peter Portsm'th N) | Rees, Peter (Dover and Deal) |
| Grylls, Michael | Renton, Tim |
| Gummer, John Selwyn | Rhys Williams, Sir Brandon |
| Hamilton, Hon A. | Ridley, Hon Nicholas |
| Hampson, Dr Keith | Ridsdale, Julian |
| Hannam, John | Sainsbury, Hon Timothy |
| Haselhurst, Alan | St. John-Stevas, Rt Hon N. |
| Hastings, Stephen | Shaw, Michael (Scarborough) |
| Havers, Rt Hon Sir Michael | Shelton, William (Streatham) |
| Hawkins, Paul | Shepherd, Richard |
| Hawksley, Warren | Shersby, Michael |
| Heddle, John | Silvester, Fred |
| Henderson, Barry | Sims, Roger |
| Hicks, Robert | Smith, Dudley |
| Hooson, Tom | Speller, Tony |
| Howell, Ralph (N Norfolk) | Spence, John |
| Hunt, David (Wirral) | Spicer, Jim (West Dorset) |
| Hunt, John (Ravensbourne) | Sproat, Ian |
| Hurd, Hon Douglas | Squire, Robin |
| Jenkin, Rt Hon Patrick | Stainton, Keith |
| Johnson Smith, Geoffrey | Stanbrook, Ivor |
| Jopling, Rt Hon Michael | Steen, Anthony |
| Kershaw, Anthony | Stevens, Martin |
| Knight, Mrs Jill | Stewart, Ian (Hitchin) |
| Knox, David | Stokes, John |
| Lamont, Norman | Stradling Thomas, J. |
| Lang, Ian | Tapsell, Peter |
| Latham, Michael | Taylor, Robert (Croydon NW) |
| Le Marchant, Spencer | Taylor, Teddy (S'end E) |
| Lennox-Boyd, Hon Mark | Tebbit, Norman |
| Lester Jim (Beeston) | Thomas, Rt Hon Peter |
| Lloyd, Peter (Fareham) | Thompson, Donald |
| Loveridge, John | Thorne, Neil (Ilford South) |
| Luce, Richard | Townend, John (Bridlington) |
| Lyell, Nicholas | Townsend, Cyril D, (B'heath) |
| McCrindle, Robert | Trotter, Neville |
| Macfarlane, Neil | van Straubenzee, W. R. |
| MacGregor, John | Vaughan, Dr Gerard |
| MacKay, John (Argyll) | Viggers, Peter |
| McNair-Wilson, P. (New F'st) | Waddington, David |
| Madel, David | Wakeham, John |
| Marland, Paul | Waldegrave, Hon William |
| Mates, Michael | Walker, B. (Perth ) |
| Maude, Rt Hon Angus | Wall, Patrick |
| Waller, Gary | Wilkinson, John |
| Ward, John | Winterton, Nicholas |
| Warren, Kenneth | Wolfson, Mark |
| Watson, John | Young, Sir George (Acton) |
| Wells, John (Maidstone) | |
| Wells, Bowen | Tellers for the Noes: |
| Wheeler, John | Mr. Carol Mather and |
| Whitney, Raymond | Mr. Tony Newton. |
| Wickenden, Keith |
§ Question accordingly negatived.
§ Mr. RookerI beg to move amendment No. 13, in page 2, line 7, leave out '£3.30' and insert '£2.90'.
We take the same view on voluntary contributions as we took on previous amendments, and I do not need to go into detail on the amendment. Basically, we have put a 20 per cent. increase on what is being paid.
We should like up-to-date information on how many voluntary contributions are paid. I once paid such contributions, but I was never caught in the trap of changing rates. Students sometimes pay contributions in a lump sum in order to gain a pension accrual for the future. What rate will they pay? Will it be the rate that is current when they make their back payment or will they have to pay the rate that was in force during the period for which they are buying stamps?
§ Mr. RaceMy hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) has raised an important matter. Students are often asked to catch up with contributions that they have not made because of their studies. Those in post graduate education in universities and colleges have to make up their contribution record in a lump sum.
At what rate will students have to make the lump sum payment? Will it be the rate at which contributions are levied when they make their payment, or will it be the rate that applied during the period when they should have been making contributions?
We are talking about substantial increases in such lump sums. The money will not be taken as weekly deductions from a wage packet. The amendment raises different problems from those that have arisen in our discussion of sometimes relatively small weekly amounts paid in increased national insurance employee contributions. The Government's proposals may have a detrimental effect on students and others.
§ Mr. Campbell-SavoursIf students are unable to make contributions, when they take up work the DHSS informs them what contributions they must make in order to establish a full entitlement. I was abroad for some years in the 1960s and on my return I made arrangements with the Department to make up payments in line with the current provisions.
I do not understand why it is necessary to increase these contributions, because the payment would be made anyway, through supplementary benefits, if those concerned had insufficient pension entitlement at the age of 65. If the Bill goes through in its present form, the Government will have introduced a disincentive to people to make contributions.
I should have thought that it would be the Government's objective to ensure that people made as many contributions as possible, thereby relieving the State of the possibility that later in a person's life it might be required to pay supplementary benefits rather than pensions.
§ Mr. Andrew F. BennettI ask the Under-Secretary of State to give us a little more information. I presume that the hon. Lady will suggest that the reason for this increase and the figures proposed is that they are in line with and on the same scale as all the other figures. But there is a particular problem here.
We are looking at two groups of people. First, there are those who are out of the system at a particular time—now—and who want to make a contribution. Secondly, there are those who did not make a contribution in the past. In the case of those who for some reason do not make a contribution now, it is surely logical that they should be charged at whatever is the going rate. But those who, for example, did not make payments last year or some time in the year before should, if asked to make back payments, pay at the rate that applied at that time.
I hope that the hon. Lady can assure me that if a person is making a back payment he will pay at the rate that was current at the time his contribution was missing rather than at the rate pertaining now. It would be unfair to raise the repayment rate now, because of extra levels of unemployment, for those making back payments.
§ Mr. RaceAs I recall it, people who have a contribution record which is deficient and which would affect their level of pensions or benefits in the future have a period of seven years in which to catch up on their contribution record. After that time, they are deemed not to want to make that contribution. Therefore, the point that my hon. Friend is making is a genuine one, because we could be talking about national insurance rates that were payable seven years ago and not last year alone.
§ Mr. BennettSome people are not able to make their back payments because of financial difficulty. Will the Under-Secretary of State tell us whether, under the uprated levels, their difficulties become greater or whether they are able to pay at the existing rates?
I come across a surprising number of people who opt out of the system. In several instances they are at very low income levels. It is marginal to them whether they are barter off trying to make up the payments. This sort of increase may well tip some of these people into not making up their contributions. The hon. Lady said earlier that it was important to encourage people to make contributions. Does she not agree that this son of increase is likely to discourage people from doing so?
I give the example of an artist who is not very successful at selling his pictures and may have virtually no income from that source for some period. Many people in that situation do occasional lecturing, which is their only source of income. They face problems in making up their contributions. This sort of increase may discourage them from trying to do so and cause them difficulties in the future.
§ Mrs. ChalkerThis amendment is consequential upon amendment No. 11, which the Committee has declined to accept, but I will answer the questions asked upon it from the rather depleted Opposition Benches.
About 100,000 people pay class 3 contributions. I have been asked about the going rate for these voluntary contributions. The payment rate that is applicable is that for the period of the gap in the contributions record. Therefore, in the case of a student who can pay not up to seven years back but up to six years back the rate is the rate applicable where the gap in his contributions was. 1206 Another person able to pay up to two years back would similarly pay the applicable rate for the gap in the contributions record.
The reason for raising the class 3 rate from its present level of £2.40 to £3.30 is exactly the same as the reason for the increases in the other rates. The contribution paid leads to entitlement to retirement pension. The class 3 rate contribution paid by voluntary contributors is at present l0p less than the class 2 rate. The class 3 rate proposed in the Bill maintains that relationship. The amendment would alter that arrangement and not be acceptable to the Government.
§ Question put, That the amendment be made:—
§ The Committee divided: Ayes 20, Noes 204.
| Division No.25] | [2.30 am |
| AYES | |
| Bennett, Andrew(St'kp't N) | Harrison, Rt Hon Walter |
| Buchan, Norman | Haynes, Frank |
| Campbell-Savours, Dale | Johnston, Russell (Inverness) |
| Cocks, Rt Hon M. (B'stol S) | Race, Reg |
| Cryer, Bob | Richardson, Jo |
| Davis, T. (B'ham. Stechf'd) | Rooker, J. W. |
| Dobson, Frank | Welsh, Michael |
| Dormand, Jack | Winnick, David |
| English, Michael | |
| Ewing, Harry | Tellers for the Ayes: |
| Field, Frank | Mr. Hugh McCartney and |
| Freeson, Rt Hon Reginald | Mr. Ron Leighton. |
| NOES | |
| Alexander, Richard | Dunn, Robert (Dartford) |
| Ancram, Michael | Durant, Tony |
| Atkinson, David (B'm'th,E) | Eggar, Tim |
| Baker, Kenneth(St.M'bone) | Elliott, Sir William |
| Baker, Nicholas (N Dorset) | Emery, Peter |
| Banks, Robert | Eyre, Reginald |
| Bendall, Vivian | Fairbairn, Nicholas |
| Benyon, Thomas (A'don) | Faith, Mrs Sheila |
| Benyon, W. (Buckingham) | Farr, John |
| Berry, Hon Anthony | Fell, Anthony |
| Best, Keith | Fenner, Mrs Peggy |
| Bevan, David Gilroy | Forman, Nigel |
| Biggs-Davison, John | Fraser, Peter (South Angus) |
| Blackburn, John | Gardner, Edward (S Fylde) |
| Blaker, Peter | Garel-Jones, Tristan |
| Bottomley, Peter (W'wich W) | Goodhart, Philip |
| Bowden, Andrew | Gorst, John |
| Braine, Sir Bernard | Grant, Anthony (Harrow C) |
| Bright, Graham | Greenway, Harry |
| Brinton, Tim | Grieve, Percy |
| Brittan, Leon | Griffiths, E.(B'y St. Edm'ds) |
| Brooke, Hon Peter | Griffiths, Peter Portsm'th N) |
| Brotherton, Michael | Grylls, Michael |
| Brown, M.(Brigg and Scun) | Gummer, John Selwyn |
| Browne, John (Winchester) | Hamilton, Hon A. |
| Bruce-Gardyne, John | Hampson, Dr Keith |
| Bryan, Sir Paul | Hannam, John |
| Buck, Antony | Haselhurst, Alan |
| Budgen, Nick | Hastings, Stephen |
| Butcher, John | Havers, Rt Hon Sir Michael |
| Cadbury, Jocelyn | Hawkins, Paul |
| Carlisle, Kenneth (Lincoln) | Hawksley, Warren |
| Chalker, Mrs. Lynda | Heddle, John |
| Channon, Rt. Hon. Paul | Henderson,, Barry |
| Churchill, W. S. | Hooson, Tom |
| Clark, Hon A. (Plym'th, S'n) | Howell, Ralph (N Norfolk) |
| Clarke, Kenneth (Rushcliffe) | Hunt, David (Wirral) |
| Colvin, Michael | Hunt, John (Ravensbourne) |
| Cope, John | Jenkin, Rt Hon Patrick |
| Corrie, John | Johnson Smith, Geoffrey |
| Costain, Sir Albert | Jopling, Rt Hon Michael |
| Cranborne, Viscount | Kershaw, Anthony |
| Crouch, David | Kitson, Sir Timothy |
| Dean, Paul (North Somerset) | Knight, Mrs. Jill |
| Dickens, Geoffrey | Lamont, Norman |
| Dorrell, Stephen | Lang, Ian |
| Latham, Michael | Ridsdale, Julian |
| Le Marchant, Spencer | Sainsbury, Hon Timothy |
| Lennox-Boyd, Hon Mark | St. John-Stevas, Rt Hon N. |
| Lester Jim (Beeston) | Shaw, Michael (Scarborough) |
| Lloyd, Peter (Fareham) | Shelton, William (Streatham) |
| Loveridge, John | Shepherd, Richard |
| Luce, Richard | Shersby, Michael |
| Lyell, Nicholas | Silvester, Fred |
| McCrindle, Robert | Sims, Roger |
| Macfarlane, Neil | Smith, Dudley |
| MacGregor, John | Speller, Tony |
| MacKay, John (Argyll) | Spence, John |
| McNair-Wilson, P. (New F'st) | Spicer, Jim (West Dorset) |
| McQuarrie, Albert | Sproat, Ian |
| Madel, David | Squire, Robin |
| Mates, Michael | Stainton, Keith |
| Mather, Carol | Stanbrook, Ivor |
| Maude, Rt Hon Angus | Steen, Anthony |
| Mawhinney, Dr Brian | Stevens, Martin |
| Maxwell-Hyslop, Robin | Stewart, Ian (Hitchin) |
| Mayhew, Patrick | Stokes, John |
| Mellor, David | Stradling Thomas, J. |
| Meyer, Sir Anthony | Tapsell, Peter |
| Miller, Hal (B'grove) | Taylor, Robert (Croydon NW) |
| Mills, Iain (Meriden) | Tebbit, Norman |
| Mills, Peter (West Devon) | Thomas, Rt Hon Peter |
| Miscampbell, Norman | Thompson, Donald |
| Mitchell, David (Basingstoke) | Thorne, Neil (Ilford South) |
| Moate, Roger | Townend, John (Bridlington) |
| Montgomery, Fergus | Townsend, Cyril D, (B'heath) |
| Moore, John | Trippier, David |
| Morrison, Hon C. (Devizes) | Trotter, Neville |
| Morrison, Hon P. (Chester) | van Straubenzee, W. R. |
| Myles, David | Vaughan, Dr Gerard |
| Neale, Gerrard | Viggers, Peter |
| Needham, Richard | Waddington, David |
| Nelson, Anthony | Wakeham, John |
| Neubert, Michael | Waldegrave, Hon William |
| Newton, Tony | Walker, B. (Perth ) |
| Normanton, Tom | Wall, Patrick |
| Onslow, Cranley | Waller, Gary |
| Osborn, John | Ward, John |
| Page, Rt Hon Sir G. (Crosby) | Warren, Kenneth |
| Page, Richard (SW Herts) | Watson, John |
| Parris, Matthew | Wells, John (Maidstone) |
| Patten, Christopher (Bath) | Wells, Bowen |
| Pattie, Geoffrey | Wheeler, John |
| Pawsey, James | Whitney, Raymond |
| Pink, R. Bonner | Wickenden, Keith |
| Pollock, Alexander | Wilkinson, John |
| Price, Sir David (Eastleigh) | Winterton, Nicholas |
| Proctor, K. Harvey | Wolfson, Mark |
| Raison, Timothy | Young, Sir George (Acton) |
| Rathbone, Tim | |
| Rees, Peter (Dover and Deal) | Tellers for the Noes: |
| Renton, Tim | Lord James Douglas |
| Rhys Williams, Sir Brandon | Hamilton and |
| Ridley, Hon Nicholas | Mr. Robert Boscawen. |
§ Question accordingly negatived.
§ Mr. RookerI beg to move amendment No. 14, in page 2, line 10, leave out paragraph (a).
§ The Second Deputy ChairmanWith this we may take the following amendments:
No. 15, in page 2, line 14, leave out '£3,150' and insert '£3,200'.
No. 16, in page 2, line 15, leave out paragraph (c) and insert—
'(c) the words "and does not exceed £8,300" shall be omitted.'.
§ Mr. RookerLet me at the outset say that amendment No. 16 seems pretty meaningless. In our drafting, or in its transmission to the Table Office, there has been an omission. It is technically deficient.
§ Mr. Andrew F. BennettIf my hon. Friend looks at subsection (7) he will see that it reads: 1208
In sections 9(2) and 10(1) of the principal Act".If one relates the amendment to that, it makes sense.
§ Mr. RookerThe amendment did not make sense to me when I originally read it, and I have not been able to make sense of it in the past couple of hours. However, my hon. Friend is probably right. I am not throwing the amendment away, but I am not happy about the drafting, and I shall not be too upset if the Government criticise it.
The main thrust of the amendments is to ease the burden on the self-employed, which is no contradiction coming from the Labour Benches. As the Secretary of State is aware, there was considerable dispute with the Government when the proposal was introduced in 1975. Originally, the figure was 8 per cent., and there was a major row over getting it changed.
We do not see why the self-employed should be subjected to these imposts. Most of the amendments have related to the 1 per cent. increase. I suspect that the Government's answer to this point, and in relation to the figures that they have used for the earnings band in which the self-employed pay their earnings-related contribution, will be more or less the same as their answers on the previous three amendments.
Did the Government take into account the possible consequences of the implementation of the Green Paper on sickness benefits? The self-employed are aggrieved about the proposal, as the Minister is well aware. We do not have a legislative proposal in front of us, but there will probably be a further change in the percentage rate for the self-employed, possibly in the same financial year as the legislation on sickness benefit, which the Government intend to put through this Session, according to the Queen's Speech. Will there be two changes in the rate for the self-employed in one year?
I can imagine that most big employers will be able to cope with the rate changes just as they can cope with the various tax changes, but I suspect that there will be a considerable outcry from the self-employed if they are asked to accept two changes in the rates, especially when the reason for the second change could have been foreseen when the first change was put through the House—that is, tonight.
§ Mr. CryerThe amendment would delete the 0.75 per cent. increase in contributions on earnings and would raise the lower limit to above £3,200. I take it that amendment No. 16 would raise the upper limit, so that the overall effect of the amendments would be to improve the position by relating contributions by the self-employed to a lower level of earnings. I remember that when just over a million people were unemployed under the Labour Government the National Federation of Self Employed and Small Businesses Ltd. claimed that if only a few modifications were made to the Employment Protection Act its members could each take on one additional employee. Since there were around a million self-employed sole proprietors, it believed that it would solve the unemployment problem. That has clearly not happened. I never thought that it was realistic. A very large number of sole proprietors are literally just that. They are employed not in manufacturing industry but in shops, for example. Many of them could not sustain an additional employee.
The self-employed—the small businesses—are facing difficulties. This proposal will create even more difficulty 1209 for them. The burden will clearly increase. If the Government are serious in their claim that small firms—sole proprietors as well as incorporated enterprises—will provide jobs, they must accept that this provision will be more a disincentive than an incentive for that to happen.
These firms are facing the burden of high interest rates. The wife of a self-employed electrician contacted me last week to explain that she is having to pay more for the stock that her husband has to keep if he is to undertake the wide variety of jobs he is called upon to perform. Her husband is experiencing difficulty because he has a big overdraft. The high level of interest rates means that he faces a heavy outlay in that direction just to keep the firm ticking over.
The electrician in question is a Labour supporter, but I do not argue the case from a sectarian point of view. I suspect that the bulk of self-employed people voted Conservative at the last election. I doubt that they would do so now, but their inclination then was to favour the Conservative Party because it said that their enterprise would be rewarded. The Labour Government produced restrictive legislation on the employment of individuals, which they did not like. I did not agree with them. Clearly, they will not be impressed, to say the least, by these additional contributions.
I well, recall when the previous Labour Government increased contributions for the self-employed. The increase was first set at 8 per cent. and then changed to 5 per cent. That caused a considerable amount of controversy. Members of the National Federation of Self Employed and Small Businesses Ltd had a certain affinity with the view that the Labour Government were doing it because they were not sympathetic or understanding. I am sure that they will say exactly the same about the present Government—namely, that they are not a sympathetic or understanding Government because they are increasing the national insurance contributions.
§ Mr. Campbell-SavoursMy hon. Friend said he thought that the small business lobby had pressured the Government. The Conservative Party 1978 guide refers to the pressure exerted through the Conservative Party by the small business organisations on the Labour Government. In the guide, the Conservative Party claimed the credit for the reduction from 8 per cent. to 5 per cent. It is there in black and white. If I am called, I shall quote from it.
§ Mr. CryerThe reduction from 8 per cent. to 5 per cent. was claimed as a victory for the federation through its lobbying of the Government. Everyone wanted to get on to that bandwagon. The Labour Government of the day made the reduction as a demonstration of their genuine intention to help small firms.
I mention the matter because I think that the Secretary of State would agree that his Green Paper "Income During Initial Sickness: A New Strategy" has not met with warm enthusiasm from the federation. It has produced a critical document about his proposals. Paragraph 30 states:
It is the Government's intention that employers as a whole should be; compensated for meeting these extra costs and that such compensation, to the extent that it did not take the form of direct reimbursement to employers … should be through a once-for-all reduction in their contribution liability. This reduction, it is estimated, would be of the order of one-half of a percentage point.The Government propose that employers should have the burden of administering sick pay during the first eight 1210 weeks. They propose that that additional burden should be compensated by a reduction in the employer's national insurance contribution of one-half of a percentage point.The self-employed could legitimately argue that the sickness scheme, which they do not like, is being imposed upon them and that they are being offered some very modest inducement to carry it out, after having had to face the burden of an increase in their own national insurance contributions. It is a case of taking with one hand and giving back a proportion with the other. That is the view that they will take. I should be grateful to hear the Secretary of State's comments about the relationship of those increases to the Government's proposals for a reduction in the employer's contribution under the sickness scheme.
I am opposed to the sickness scheme. I do not want to delve into it in any detail, but I am opposed to it. It is a wrong idea. Small firms will suffer, as will their employees, under the scheme. There is an indirect link, because my argument about taking with one hand and giving back a proportion with the other will be raised. I should like to hear the Secretary of State's comments on that position.
The Labour Government gave rather more assistance to small firms than has been generally recognised. We included among those small firms the self-employed and the sole proprietors, who often employ two, three or four people, although they call themselves self-employed. There are the plumbers, the electricians, the decorators, the shopkeepers, the restaurant owners and so on. We have from time to time instituted provisions for giving them assistance by means of the small firms; advisory service, the small firms counselling service and so on, which were instituted by the Labour Government on a nationwide basis. Those services proved to be of great help. The take-up has been high. The test of their helpfulness has been the reaction of the small firms themselves, not our own assessment.
It is reasonable to suggest that the self-employed will find the charges a burden which will inhibit their efforts to develop their businesses and to create jobs. We know that in today's economic climate it is the small firms that are being clobbered most of all. They are facing Slighter interest charges; they are facing difficulties with rate burdens. Local authorities, because of Government action, are desperately trying to maintain services and in some instances have had to raise a supplementary rate levy. That again is a difficulty. Now, the small firms are being faced with this additional charge on their national insurance contributions.
The big firms are also experiencing difficulties due to the Government's policy of high interest rates, the high exchange rate of the pound and cuts in public expenditure, so that they in turn are having to cut back on the smaller firms which supply them with components or services. Where a local authority cuts back on public expenditure, it is sometimes the small firms, the self-employed, who are finding that the contracts are being brought to an end.
The Government have a moratorium on new council house building contracts, new public sector building contracts. In England and Wales, 92 per cent. of council houses are built not by direct works departments but by private enterprise contractors. I have no doubt that there will be some self-employed or sole proprietor firms among 1211 that number. In Scotland, the figure is even higher—98 per cent. of the council houses are built by private enterprise firms.
The Government are inflicting a burden on the very people who, I imagine, in many instances supported the Conservative Party at the last general election. They have imposed this additional insurance charge, together with the high interest rates. There are the diminution in business and all the problems which the present crisis and recession are presenting to everybody. There is also the new sickness scheme. We know that it has not yet been instituted, but there is a Green Paper and the matter is causing uncertainty. It is causing a lack of confidence in the small business sector, among both employers and employees. I hope that it will never come into existence. Nevertheless, it is another matter of concern, and the insurance increase will be a yet further matter of concern.
What we have suggested is a fairer application of the burden. It can be reasonably stated to be a better and fairer arrangement than the Secretary of State's. Therefore, I hope that it will have the support of my hon. Friends. I also hope that it may have support from the Conservative Members who are here tonight to vote in great numbers for increased insurance contributions for the self-employed.
3 am
I have been to a couple of meetings of the National Federation of Self Employed and Small Businesses Ltd., one a big one at the Central Hall in Westminster, where I suppose there were about 2,000 people present, and the other the annual meeting at Blackpool, where I suppose there were 200 or 300 present. I was then a Labour Minister, and I suppose that the welcome that they gave me was not wildly enthusiastic. In fact, it was a bit wild, but not enthusiastic. The situation has probably changed. There are not many Labour supporters amongst their numbers—but I think that the number is growing—and I can therefore say that we are not doing this from a partisan point of view but are putting forward a case that a fairer position can be achieved, and we have tried to achieve a fairer position in their national insurance contributions.
There is a certain amount of irony and amusement in the Conservatives going into the Lobby on the principle of an increase in contributions by the self-employed, the sector which, during the Labour Government's period of office, they said was inhibited by burdens and charges and that if only they could get into office the energies of all those people would be released. Well, all their energies are being released — in the bankruptcy courts, in evergrowing numbers, I regret to say. It is a sad business that so many people should be in the dole queue and so many should be facing the trauma of bankruptcy, because it must be an enormous problem and sense of failure to get into that situation, even though it may not be the fault of the self-employed. Therefore, I urge even some of the Conservative Members here tonight to consider either abstaining or voting for these improvements.
§ Mr. RookerOne reason for our complaint about the Bill being bounced through the House is that no one, so far as I am aware, has had adequate time for consultation. Perhaps my hon. Friend will invite Tory Members, or the Minister, to say what consultations the Government have had with the self-employed over this measure.
§ Mr. CryerI am grateful to my hon. Friend for that intervention, because I think that the federation, now that it has got over its teething problems, provides information for its members. It has produced a document on "Income During Initial Sickness: A New Strategy", of which it has kindly sent me a copy. I disagree with many of the points made by the federation, but it is a comprehensive document that represents its point of view. I should have thought that it would have been reasonable for the Secretary of State to have delayed the Bill a little so that the federation, which is specifically affected, could have got its comments together.
The Secretary of State does not know, but the federation might have been glowing in its praise of the right hon. Gentleman. It might have said that it wanted public expenditure to be curtailed—I imagine that that is the federation's view, although I do not know—and that this was the best way of doing it, that it was willing to make this contribution and that it was happy to put forward that point of view and support the Government. On the other hand, the federation might well have been critical of the Government and said that there were alternative means of raising this amount of revenue. I shall be interested to know the total sum that the Government envisage in a full year. I know that they cannot be completely accurate—because many of the people will be bankrupt by the end of a further full year of Conservative Government—but some sort of estimate would be of use to the Committee, and we look forward to that.
My hon. Friend is right in saying that in getting legislation through the House it is important that we provide people with the opportunity to give us their comments, particularly for a Committee stage. I well recall saying to members of the National Federation of Self Employed and Small Businesses, Ltd., when they were critical of legislation—I accept that they were critical of some of our legislation—that Parliament represented a democratic process. We must recognise that some of the members of the federation were not too enamoured of democratic endeavour. They said "You talk too much. You should get it done and get it out of the way." I explained to them that in the parliamentary process one of the possibilities was that in Committee on a Bill people and organisations could put forward ideas and hon. Members could table amendments for debate. In this case there has not been time to give full effect to that process. We have tabled amendments. It would have been proper to give representatives of the self-employed a breathing space in which to put forward their views. The National Widows' Association might well have been asked for its views.
§ Mr. Campbell-SavoursMy hon. Friend referred to the number of bankruptcies. He may be interested to know that at a meeting of the parliamentary retail group yesterday the Retail Consortium produced statistics to show that 32,500 businesses have de-registered for VAT in the past 12 months. That is a horrifying statistic. Conservative Members challenged the figures. The director-general of the consortium confirmed that the figures were correct.
§ Mr. CryerThat bears out my point that these increases in national insurance contributions will be hard-felt. If people are de-registering for VAT, it indicates a diminution in their turnover. We know that the cash flow of many small businesses is under pressure. In an earlier 1213 speech I referred to a constituent of mine who told me that her husband—an electrician—had had to increase his stock and pay higher interest charges to maintain that stock, and that she had had to raise money on property and had experienced difficulty in that regard.
The Government have floated the idea of enterprise zones on the basis of assisting small firms, including self-employed persons, to take premises in enterprise zones and to develop job opportunities. I do not think that enterprise zones will be of much advantage. I have always taken the view that small firms do not want to be seen to be inferior and that their standards of employment should be as good as those of large firms.
There is a lack of consistency in the Government establishing, on the one hand, enterprise zones to encourage firms and, on the other, increasing the national insurance contributions of small firms. There may be times when the national insurance contributions can be increased They were increased by the Labour Government, but at that time the number of bankruptcies was declining and the number of registrations of companies was increasing, certainly in the last two or three years of Labour Government. No account of size is taken in company registration, but the fact that they were new registrations is indicative of the fact that they were small firms. That indicated that there was a growth in the number of small firms.
It is inconsistent for the Government to impose this levy at a time when everybody knows and understands that manufacturing and service industries are going through a bad time. Through no fault of their own, they are losing profits and losing contracts. Indeed, they are losing their very existence. More and more firms are going to the bankruptcy courts.
The Secretary of State may argue that the Labour Government increased insurance contributions, but the climate then was different. Industry recognises that. Many industrialists, including those involved in small firms, have told me that they made a mistake when they voted Conservative. I recently visited one industrialist who had received a begging letter from his local Conservative association. He threw it on to the desk and said that it would not get a penny from him. He said that he had made a mistake at the general election and that he did not intend to repeat it.
The person who borrowed £80,000 at a much lower rate of interest under the Labour Government—because he wanted part of that sum for pollution control equipment—was deeply disillusioned with the Conservative Party. He did not make any claim, and neither do I-—
§ The Second Deputy ChairmanOrder. The hon. Gentleman is stressing that point unnecessarily. He has said the same thing two or three times.
§ The Second Deputy ChairmanOrder. The hon. Gentleman cannot continue to mention individual firms all right. If he does, the debate could go on indefinitely. The hon. Gentleman can instance certain cases, but so far he has repealed several things.
§ Mr. CryerI am summing up, Mr. Crawshaw, and I am bound to repeat some of the items that I have mentioned.
§ Mr. Michael Welsh (Don Valley)Of all the letters that you have had—I have had many—have you had any that support the increase?
§ The Second Deputy ChairmanOrder. "You" refers to the Chair. I have not had any letters.
§ Mr. CryerI have received several letters that have been very critical of the Government. They have covered a wide range of issues, such as energy prices. Indeed, those prices have caused grave difficulty to firms in my constituency. They have also covered postal charges. However, I have not received any letters on this subject, because, unfortunately, the self-employed have not had time to write. That is a serious criticism of the way in which this legislation has been introduced.
I hope that I have not strained your patience too much, Mr. Crawshaw. You have been very indulgent and patient. The measure represents an additional burden. Given the economic situation, the self-employed cannot bear it easily. Like the rest of the legislation the measure will prove regressive. It will serve to reduce the number of jobs and job opportunities.
§ Mr. WinnickOn Second Reading, the Secretary of State admitted:
Some anxiety has been expressed about the impact of the Bill on the self-employed. No doubt this is something that we shall wish to explore in detail in Committee"—[Official Report, 8 December 1980; Vol. 995, c. 955.]If we did not have to rush through the Bill in one night, we should have more opportunity to explore the impact of increases on the self-employed. My hon. Friend the Member for Keighley (Mr. Cryer) was right. The Secretary of State will correct me if I am wrong, but it appears that the self-employed have not been consulted. We can understand the reaction of the self-employed to these increases.3.15 am
I have been glancing at the Conservative "Campaign Guide 1977". The Conservative Party in Opposition was very critical of the increases introduced by the Labour Government. It refers to the increases starting in April 1977 and describes them as a form of disguised tax. Under the heading
National Insurance and the Self-employedit states:The Party voted against the measures due to be introduced in April 1977.Clearly, in those days the Conservative Party's attitude was very different from what it is today. The increases were a disguised tax; they were terrible, shocking. Apparently the Labour Government were betraying the self-employed.There does not seem to be any wish by hon. Members on the Government Benches to contribute to the debate. Conservative Members are here tonight as Lobby fodder. At least, we can ensure that they are present throughout the night.
Apart from the election manifesto, I have taken the opportunity—
§ Mr. FieldBefore my hon. Friend leaves that point, will he make sure that we have all grasped what he was putting? Was the point that in 1977 the Conservative Opposition went into the Lobby to vote against a 5 per cent. rate and that now the Conservative Government are proposing a 5.75 per cent. rate?
§ Mr. WinnickYes, that is correct. My hon. Friend has illustrated the point very well. When the insurance contributions were proposed to be increased, the Conservative Opposition voted against them. If I am wrong, the Secretary of State will no doubt wish to intervene. I assume that he has no wish to deny that that was the position.
§ Mr. WinnickI shall not read it again. In the Conservative Party's manifesto there is a chapter headed "Small businesses". The Conservatives promised to do certain things. They said:
The creation of new jobs depends to a great extent on the success of smaller businesses.That is true to a certain extent. The point is that small businesses have understandably been feeling the brunt of the recession. A number have gone into liquidation. Many self-employed people have found the going increasingly difficult in the past 18 months. Recession, large-scale unemployment and severe cuts in public expenditure are bound to have an effect on the self-employed.It is not surprising that many self-employed people, who were promised a new deal by the Conservative Party in Opposition, feel very bitter. They are getting not a new deal but a raw deal. Many of the self-employed who voted Conservative are not likely to forget it or to do so again.
When there is so much pressure on the self-employed because of the economic situation, it is wrong to add an extra burden. On Second Reading the Secretary of State said that he recognised some of the anxieties. I hope that he will explore those anxieties when he replies to the debate.
This important aspect of the Bill cannot be taken on the nod. It is often said that people are cynical about politics. It is not surprising when what is promised by the party in Opposition becomes the opposite when that party forms the Government of the day.
Conservative Members should think seriously about and ponder upon the attitude that they have adopted towards small businesses and the self-employed. Not so long ago, at the general election and previously, they made promises that have come to naught. Unfortunately, there is no opposition to this measure from Conservative Members, even though it will increase the difficulties of the self-employed. For example, a number of people in my constituency who have been affected by the cuts in housing—small builders and the rest—will not be very cheerful when they discover that, on top of all the other problems they face, they will face increased national insurance contributions.
I therefore hope that the amendment will be seriously considered by the Government and that it will not be dismissed out of hand, because I believe that there is a great deal of merit in it.
§ Mr. Andrew F. BennettI shall not follow my hon. Friends the Members for Birmingham, Perry Barr (Mr. Rooker), for Keighley (Mr. Cryer) and for Walsall, North (Mr. Winnick) in their advocacy of amendment No. 14, because they have, done a perfectly adequate job. Little more needs to be said.
I should like to devote a few minutes to amendments Nos. 15 and 16. I assure my hon. Friend the Member for Perry Barr that we got the wording of amendment No. 16 right, otherwise it would not have been selected. The 1216 amendment goes into the whole question of whether or not there should be an upper limit. We made it absolutely clear at the beginning that as we would have the opportunity, in the clause stand part debate, to go into the whole principle of the upper limit it would be unfair to press that amendment at this stage.
Amendment No. 15 would give some relief to some of the firms at the margin. It is the sort of amendment that the Secretary of State, at this time in the morning after a long sitting, ought to be prepared to concede in order to make some progress. That would be much welcomed by the self-employed. I suspect that the Secretary of State will not be able to make that sort of concession, because he will be worried about the progress of the Bill and the fact that there may have to be a Report stage, which can be avoided if no amendments are passed.
It would be a tragedy if, because the Government are so determined to chase the Bill through with such speed, he is not even prepared to consider a small amendment such as No. 15, which would do a lot to ease some of the problems of the self-employed.
§ Mr. Campbell-SavoursI shall be brief. We have had a remarkable debate. Conservative Members have been silenced in a discussion on the self-employed, and Labour Members have been rising to defend the interests of the self-employed. I am sure that many hundreds of thousands of people would be fascinated if only they could watch this debate on television, listen to it on radio or, indeed, read it in the national press tomorrow. Of course, they will not be given that opportunity.
One of my hon. Friends referred to the number of his constituents who send letters perhaps congratulating the Government on their policy as it affects the self-employed—inasmuch as it puts many of them into financial difficulties. It is significant to note that for years before I became a Member of the House Members of Parliament were frequently loaded down by mail from self-employed constituents who objected in principle—despite the efforts made by the Labour Government—to their existence and to the sort of measures that they were introducing, because they felt that such measures attacked their interests.
Many are now embarrassed, and it is only when one faces the self-employed across the business table that one finds that they are willing to pour out their hearts. I often ask them whether they will be willing to provide me with correspondence that I can use on the Floor of the House in debate. Few are willing to provide that correspondence. They cannot come to terms with the new reality that it is the Labour Party that stands for their interests and that the Conservative Party is letting them down.
When I talk about letting them down, it might be interesting to reflect on the comments of the present Secretary of State for Industry on 11 October 1977, in a pamphlet entitled "Small Business—Big Future". I am sure that Conservative Members will remember the publication of that document. It was produced by a committee chaired by the present Under-Secretary of State for Industry. In the foreword to that document, the Secretary of State for Industry outlined the need for a completely new economic climate. He said:
Governments cannot create prosperity"—which was followed by a further pearl of wisdom:but they can prevent other people from creating it".That is what this Government are doing. They are preventing other people from creating prosperity. We all 1217 know that many hundreds of thousands of self-employed people art; being prevented from creating prosperity. The Under-Secretary went on to say:At present, that is what the Labour Government is doing"—The cheek of it! He continued:Nothing less is needed for the revival of small businesses than a new economic climate. We believe that our approach and our proposals will create the conditions in which firms, both large and small, can thrive, prosper and expand.
§ Mr. Campbell-SavoursThose were the comments of the Secretary of State for Industry. It is not surprising, and it is significant, that although the Conservative Benches have been fairly full the Secretary of State for Industry has not attended the debate. Perhaps he thought that some Labour Members would find it irresistible to bring forward quotations such as I have just made.
It is interesting that that same document—"The Campaign Guide Supplement" for the Conservative Party in 1978—said of the unemployed:
In December l977, the Government announced new national insurance rates under which the self-employed, as from April 1978 will have their 8 per cent. earnings-related contribution cut to 5 per cent., and their flat rate contributions reduced from £2. 56 for week for men and £2.55 for women to £1.90 for both men and women.The Conservative Party then claimed the credit. The document continued:These changes are a result of pressure exerted on the Government by the Conservative Party and the small firm sector".We are entitled to know what that same small firm sector is saying.
§ Mr. CryerDoes not my hon. Friend accept that the reason why the contribution went down from 8 per cent. to 5 per cent. was that the Labour Government recognised that in certain respects the benefits were being diminished, and we also wanted to end a burden that was the subject of criticism by the self-employed? Basically, we recognised that if the benefits diminished the contributions should also diminish. The Conservative Government are doing the reverse. They are reducing the benefits and increasing the contributions.
§ Mr. Campbell-SavoursThat is something which one notes about all the legislation that the Government have introduced in this area. They seem to be increasing contributions all round while reducing benefits. I have just been informed that there is in the House one of the hon. Members responsible for producing the document, and I cannot believe that the hon. Member for Bath (Mr. Patten) will be able to resist the opportunity of intervening to comment on the words that he wrote two years ago.
3.30 am
It would be wrong for me to finish without commenting on the wider implications for small firms that will stem from any increase in any of their expenditure. All hon. Members know that small firms are going through a difficult period. I do not blame the Government alone. There is an international recession, and the Government's inability to follow a policy in line with the monetary targets that they set is only part of the problem.
Small firms are suffering other problems. Many have properties that are subject to old lease agreements. With the fall in rental values of property, many small companies arc paying rents that they would not be paying if their lease 1218 fell in tomorrow and had to be renegotiated. A number of charges fall on small businesses stemming from agreements made before the recession, and they should be taken into account by the Government when they introduce charges that affect small businesses.
A major problem affecting small firms is the collapse of demand. Hon. Members who were present at yesterday's meeting when the Retail Consortium outlined the problems in the economy will appreciate that it was clear from the document and the subsequent discussion that the downturn in demand is destroying much of our retail sector. Unless we preserve that sector, we shall damage considerably the possibility of its future expansion.
It may be easy to close a firm merely by putting a padlock on the door. But companies are far more difficult to reopen, and any firm that is forced out of business due to a policy introduced by the Government which effectively clobbers the cash flow of the company is in a position which could have been avoided if the Government had pursued another strategy.
In introducing any policy that may affect small businesses, the Government should reflect in depth on the possible damage that may be caused by that policy, because they may force out of business a company that will not be able to start up again and may have to lay off labour, which will fall as a burden on the Exchequer through unemployment and supplementary benefit payments.
After the memorable statement by the Chancellor of the Exchequer which led to a row that lasted all week and clearly shook the Prime Minister and the Government, I asked a question which remains unanswered. I asked how industry and business would be affected—
§ The Chairman (Mr. Bernard Weatherill)Order. I hope that it is a question that the Minister will be able to answer.
§ Mr. Campbell-SavoursThe Secretary of State can answer it. He can tell us whether he feels that it is in order for his Department to introduce changes in national insurance contributions that have the effect of damping down demand in the economy, particularly when, the country is reeling in the current economic climate.
§ Mr. DobsonMy hon. Friend the Member for Workington (Mr. Campbell-Savours) has read out a number of statements issued by the paid propagandists of the Conservative and Unionist Party before the general election. They included a personal contribution setting out the hopes, aspirations and dreams of the man who is now Secretary of State for Industry.
In relation to small businesses, the Secretary of State for Industry was entitled to have his dreams. To anyone who thought about it, they may have seemed rather strange and to be based on some perverse Chicago economic doctrines. Nevertheless, the right hon. Gentleman was entitled to them, and to some extent we are criticising them with hindsight, because we know that what has happened to small businesses since the Government took office has been extremely bad.
But perhaps even more criticism can be levelled at the Secretary of State for Social Services, because he, apparently, does not realise even now that things are going badly. When he spoke in Cardiff on 19 April he said, according to the official press statement from Conservative Central Office: 1219
The list of measures to help small businesses is a long and impressive one. Already there are signs that the climate is changing. Up and down the country there is beginning to be"—
§ The ChairmanOrder. I am sorry to interrupt the hon. Gentleman, but he must relate his remarks to insurance and not to general matters.
§ Mr. DobsonI was attempting to demonstrate that, despite the present economic circumstances of small businesses, the Government are proposing to introduce a further imposition on them by way of this increase in the national insurance contribution for the self-employed.
That springs partly from the apparent view of the Secretary of State for Social Services, as enunciated in his Cardiff speech, that things are actually improving for small businesses. He went on to say that new businesses were starting up and new ideas were being developed. That simply is not true. As my hon. Friend the Member for Keighley (Mr. Cryer) has pointed out, the number of bankruptcies is increasing while the number of new registrations is going down.
§ Mr. BuchanMy hon. Friend may be a little behind the times in suggesting that new ideas are not developing. The Prime Minister made a speech last night in Cardiff in which she said that a major plank in her programme was now constructive intervention—which sounds very much like a U-turn to me.
§ Mr. DobsonI am sure that many people in small businesses in Wales would look forward to constructive intervention. I fear that a lot of people in Wales and in the rest of the country will find what the Government are proposing tonight to be destructive intervention, because it will destroy or reduce some of the funds at present available to small businesses and the self-employed, to whom the Government have attached so much importance in their economic policy.
The Secretary of State pointed out in his Cardiff speech that when larger firms invest it is often in new labour-saving machinery, so that increased output may not mean increased employment. He added, rather exaggerating his case:
If small firms start up, then because they are labour-intensive more jobs are at once created.That has always been a doubtful theory, though it applies in some cases. Nevertheless, on the right hon. Gentleman's own views, by these measures he will reduce the amount of money left in the pockets of small entrepreneurs, whom the Government intend to galvanise, to keep in their businesses and do whatever it is that small entrepreneurs are supposed to do with their money when putting it into their businesses.It is not simply that the Secretary of State for Industry was indulging in wild dreams. Despite all the evidence, the Secretary of State for Social Services still believes that those dreams are coming to fruition.
I hope that the Committee will support the amendments, which will help in small measure to protect the small businesses on which the Government have set such store.
§ Mr. Patrick JenkinWe had an enlightening, somewhat strange debate about the problems of the self-employed. Perhaps "crocodile tears" is not too unkind a 1220 phrase to use about what we have seen. I remember the rows when the Labour Government, immediately on coming to office in 1974, slapped up the class 4 rate for the self-employed from 5 per cent. to 8 per cent. It was only after two years' battling in the House and outside that they saw the light, and in 1978 the rate came back down to 5 per cent. Therefore, one treats the remarks of Labour Members about their sympathy with, and friendliness towards, the self-employed with several large handfuls of salt.
The hon. Member for Keighley (Mr. Cryer) was right when he said that overwhelmingly the self-employed supported parties other than Labour, because the Labour Party stands for principles and attitudes that are anathema to the vast majority of those who have the freedom and enterprise to run their own businesses. Therefore, I am not sure how seriously we need to treat the panegyrics from the Labour Party.
The self-employed are an important part of economy. My hon. Friend the Under-Secretary of State for Industry, the hon. Member for Basingstoke (Mr. Mitchell), has carried out a notable task in the past 18 months in a whole range of measures designed to help the self-employed and small businesses. He deserves every commendation for that.
Contrasted with the swingeing penalty that Labour imposed on the self-employed, the increase proposed in the Bill—from 5 per cent. to 5.75 per cent. in class 4—is small. It is wholly in line with the increases in contributions that are being sought from other classes of contributor.
On an earlier amendment I referred to the method by which the contributions of the self-employed are calculated, as spelt out in the Government Actuary's report in 1977. It is fair to maintain precisely the same relativity as has been sustained over the past three or four years, pending the outcome of the investigation that we launched in October. That is exactly what the clause achieves.
§ Mr. WinnickDoes not the right hon. Gentleman agree that at present—it has been so for the past year or so, despite the efforts of the Under-Secretary of State for Industry—the self-employed have been especially hard hit? There have been many bankruptcies. Surely it must be obvious to him that, however slight he might consider the increase to be, it will cause extra burdens to fall on those who are already under great pressure.
§ Mr. JenkinBusinesses as a whole are going through a difficult period during a serious recession that is having an effect on the whole of the Western world. I do not detect any signs that the self-employed are undergoing any more serious difficulties than any other group. On the contrary, I have the impression that the general resilience and enterprise of the self-employed are keeping firms afloat and prosperous even in today's difficult circumstances.
§ Mr. Campbell-Savours rose—
§ Mr. JenkinI feel that at a time when the Government consider it appropriate to raise a substantial additional sum by way of national insurance contributions—the Bill was, of course, given a Second Reading—the self-employed will accept that they should pay a strictly proportional share on the same basis as that which has applied in the past.
1221 The hon. Member for Birmingham, Perry Barr (Mr. Rooker) asked about the statutory sick pay scheme. He asked whether there would be further changes when the statutory sick pay scheme took effect. In the clause and the amendments, we are talking about the national insurance contributions paid by a self-employed person in respect of himself and his family. There is nothing in the Green Taper, or in what I have called the mark 2 scheme, that has an effect on that. The self-employed person in business on his own account who falls sick will be entitled to sickness benefit from the national insurance fund as at present. There will, however, be changes in certain arrangements for the first eight weeks for employees, including those in small firms and employees of the self-employed. As the House of Commons will remember, in any speech on the Gracious Speech I outlined the substantial changes that the Government were prepared to make in response to the representations following the publication of the Green Paper. It was a consultative paper. We have listened to the representations that have been made, including many from my hon. Friends, and have come forward with a package of changes that have received a fairly warm welcome. There is no question of two changes as the hon. Member for Perry Barr suggested. We are talking of two different matters.
I am not sure that I can add much more to the debate. We have had long speeches from the hon. Members for Stockport, North (Mr. Bennett), for Keighley and for Workington (Mr. Campbell-Savours). However, apart from saying that a burden would be added to the self-employed, I am not sure that they said very much. It is a small additional burden that is being added that is directly proportional to that which others are being asked to accept.
§ Mr. Andrew F. Bennett rose—
§ Mr. JenkinNo, I shall not give way. If I say that the reduction in the income to the national insurance fund would be about £6 million and the reduction in the contribution to the National Health Service would be about £3 million if the amendments were accepted, and the relationship that has existed for some years between the self-employed and other categories of contributor would be upset, I think that the Committee will recognise that it would not be wise to accept the amendments. I do not advise the Committee so to do.
§ Mr. CryerI shall make a brief contribution. The Secretary of State has been rather demeaning about our contributions and comments. I do not think that he is fair in answering the debate in such a brief way and saying that the loss of revenue would be about £9 million and, therefore, he cannot recommend the Committee to accept the amendments. It is such a small amount that we are justified in saying that the burden may be disproportionate having regard to the economic difficulties which small businesses, including the self-employed, are now undergoing.
The Secretary of State nude slighting remarks about the tone of our contributions. He said that the Labour Government did not help small businesses, so why should he take notice of our comments. I believe that the right hon. Gentleman used the phrase "crocodile tears". I remind him that we, the Labour Government, set up small firms information centres and the small firms counselling service nation-wide, involving the expertise of small businesses, including the self-employed. We introduced 1222 various grant schemes, such as the market entry guarantee scheme, to help small firms exporting—which the right hon. Gentleman's Government have continued, so it must have had value; but we introduced it. We, the Labour Government, had a small firms employment subsidy scheme to give direct cash assistance and stimulus to small firms to take on new employees, contributing to the employment of some 50,000 people.
§ Mr. DobsonWill my hon. Friend give way?
The First Deputy Chairman (Mr. Bryant Godman Irvine)Order. We do not want to get into a debate on what the previous Administration did for small firms. Hon. Members must relate their remarks to the Bill.
§ Mr. DobsonI should like to raise with my hon. Friend what the present Administration are doing to small firms.
§ Mr. DobsonI shall try very hard. I have received representations, which I have passed to the Secretary of State for Trade, from small businesses, some of which will almost undoubtedly be affected by these measures. They complain to me that the export credit guarantee limits have been changed in a way that is damaging to them.
§ Mr. CryerI do not want to follow that path. However, it is fair, as I have done already, to emphasise that the Labour Government's record throughout their term of office with regard to small firms is very reasonable indeed. It is wrong for the Secretary of State to say that our comments tonight are not made from any genuine concern. Our record in office demonstrates that we have genuine concern. Many small firms claim that the CBI does not represent them accurately.
The increase may well tilt the balance for a small firm's existence—possibly a self-employed person employing a few people. It is no good the Secretary of State coming out with such platitudes as that the resilience of small firms will see them through. He knows, I know and the remainder of the House, including the Tory Members, knows that small firms are under great pressure and are increasingly going to the wall—to the bankruptcy courts.
§ Mr. Campbell-SavoursIs it not significant that when the Secretary of State referred to the international recession and its effect on small businesses he did not refer to the need to insulate them against it? It is particularly significant as we understand that the Conservative Party is preoccupied with insulating the groups that it believes have a contribution to make to the national economy.
The First Deputy ChairmanI appreciate that the hon. Member for Keighley (Mr. Cryer) was once the Minister with responsibility for small firms, but he must relate his remarks—I am sure that he will do so—to the insurance principle and not to these other matters.
§ Mr. CryerI shall conclude my remarks. I do not want to be accused of self-justification. I am picking up the Minister's attack. It is not unfair to say that self-justification occurs a few times too many.
The insurance increase may well tilt many small firms into bankruptcy. That is a danger and we do not want it to happen. That applies not only to small firms. This is not a good way of raising revenue. It is a bad part of a bad Bill. The self-employed will be affected by this clause and other groups by other clauses. That is why the Government should pursue alternative means.
1223 We are opposed to the Bill, but we have tabled our amendments in a spirit of compromise. We are doing what the Daily Express, The Sun and the Daily Mail want, and that is to be a united and constructive Opposition. We are trying to raise the lower income bracket of the self-employed to exempt those on the lowest incomes from the increases. We want to keep the increase down in any event.
§ Mr. WinnickMy hon. Friend referred to the undoubted burden that the self-employed will face from these increases. The Secretary of State regarded that as a slight matter, as no extra burden. However, not one Conservative Member has argued on matters related to the self-employed. Bearing in mind how frequently the Conservative Party claims to represent small business and the self-employed, is it not amazing that Conservatives do not argue points on this subject?
§ Mr. CryerThe Secretary of State said that the majority of the self-employed support the Conservative Party. That raised a cheer from his Back Benchers. But he and his hon. Friends know that while that was true in 1979 it is true no longer. As the self-employed have experienced the bitterness and difficulties of being governed by a Conservative Administration, they have shifted their allegiance towards the Labour Party to provide them with the Government they need.
§ Question put, That the amendment be made:—
§ The Committee divided: Ayes 16, Noes 197.
| Division No. 26] | [3.59 am |
| AYES | |
| Bennett, Andrew (St'kp't N) | Johnston, Russell (Inverness) |
| Buchan, Norman | McCartney, Hugh |
| Campbell-Savours, Dale | Race, Reg |
| Cocks, Rt Hon M. (B'stol S) | Rooker, J. W. |
| Cryer, Bob | Welsh, Michael |
| Dobson, Frank | Winnick, David |
| Dormand, Jack | |
| Ewing, Harry | Tellers for the Ayes: |
| Field, Frank | Mr. Walter Harrison and |
| Haynes, Frank | Mr. Terry Davis. |
| NOES | |
| Alexander, Richard | Budgen, Nick |
| Atkinson, David (B'm'th,E) | Butcher, John |
| Baker, Nicholas (N Dorset) | Cadbury, Jocelyn |
| Banks, Robert | Carlisle, Kenneth (Lincoln) |
| Bendall, Vivian | Chalker, Mrs. Lynda |
| Benyon, Thomas (A'don) | Channon, Rt. Hon. Paul |
| Benyon, W. (Buckingham) | Churchill, W. S. |
| Berry, Hon Anthony | Clark, Hon A. (Plym'th, S'n) |
| Best, Keith | Clarke, Kenneth (Rushcliffe) |
| Bevan, David Gilroy | Colvin, Michael |
| Biggs-Davison, John | Cope, John |
| Blackburn, John | Corrie, John |
| Blaker, Peter | Costain, Sir Albert |
| Boscawen, Hon Robert | Cranborne, Viscount |
| Bottomley, Peter (W'wich W) | Crouch, David |
| Bowden, Andrew | Dean, Paul (North Somerset) |
| Braine, Sir Bernard | Dixon, Donald |
| Bright, Graham | Dorrell, Stephen |
| Brinton, Tim | Douglas-Hamilton, Lord J. |
| Brittan, Leon | Dunn, Robert (Dartford) |
| Brooke, Hon Peter | Durant, Tony |
| Brotherton, Michael | Eggar, Tim |
| Brown, M.(Brigg and Scun) | Elliott, Sir William |
| Browne, John (Winchester) | Emery, Peter |
| Bruce-Gardyne, John | Faith, Mrs Sheila |
| Bryan, Sir Paul | Farr, John |
| Buck, Antony | Fell, Anthony |
| Fenner, Mrs Peggy | Normanton, Tom |
| Forman, Nigel | Onslow, Cranley |
| Fraser, Peter (South Angus) | Osborn, John |
| Gardiner, George (Reigate) | Page, Rt Hon Sir G. (Crosby) |
| Gardner, Edward (S Fylde) | Page, Richard (SW Herts) |
| Garel-Jones, Tristan | Parris, Matthew |
| Goodhart, Philip | Patten, Christopher (Bath) |
| Gorst, John | Pattie, Geoffrey |
| Grant, Anthony (Harrow C) | Pawsey, James |
| Greenway, Harry | Pink, R. Bonner |
| Grieve, Percy | Pollock, Alexander |
| Griffiths, E.(B'y St. Edm'ds) | Price, Sir David (Eastleigh) |
| Griffiths, Peter Portsm'th N) | Proctor, K. Harvey |
| Gummer, John Selwyn | Raison, Timothy |
| Hamilton, Hon A. | Rathbone, Tim |
| Hampson, Dr Keith | Rees, Peter (Dover and Deal) |
| Hannam, John | Renton, Tim |
| Haselhurst, Alan | Rhys Williams, Sir Brandon |
| Hastings, Stephen | Ridsdale, Julian |
| Havers, Rt Hon Sir Michael | Sainsbury, Hon Timothy |
| Hawkins, Paul | St. John-Stevas, Rt Hon N. |
| Hawksley, Warren | Shaw, Michael (Scarborough) |
| Heddle, John | Shelton, William (Streatham) |
| Henderson, Barry | Shepherd, Richard |
| Hooson, Tom | Shersby, Michael |
| Howell, Ralph (N Norfolk) | Silvester, Fred |
| Hunt, David (Wirral) | Sims, Roger |
| Hunt, John (Ravensbourne) | Smith, Dudley |
| Jenkin, Rt Hon Patrick | Speller, Tony |
| Johnson Smith, Geoffrey | Spence, John |
| Jopling, Rt Hon Michael | Spicer, Jim (West Dorset) |
| Kershaw, Anthony | Sproat, Ian |
| Knight, Mrs Jill | Squire, Robin |
| Lamont, Norman | Stainton, Keith |
| Lang, Ian | Stanbrook, Ivor |
| Latham, Michael | Steen, Anthony |
| Le Marchant, Spencer | Stevens, Martin |
| Lennox-Boyd, Hon Mark | Stewart, Ian (Hitchin) |
| Lester Jim (Beeston) | Stokes, John |
| Lloyd, Peter (Fareham) | Tapsell, Peter |
| Loveridge, John | Taylor, Teddy (S'end E) |
| Luce, Richard | Tebbit, Norman |
| Lyell, Nicholas | Thomas, Rt Hon Peter |
| McCrindle, Robert | Thompson, Donald |
| Macfarlane, Neil | Thorne, Neil (Ilford South) |
| MacGregor, John | Townend, John (Bridlington) |
| MacKay, John (Argyll) | Townsend, Cyril D, (B'heath) |
| McNair-Wilson, P. (New F'st) | Trippier, David |
| McQuarrie, Albert | Trotter, Neville |
| Madel, David | van Straubenzee, W. R. |
| Major, John | Vaughan, Dr Gerard |
| Marland, Paul | Viggers, Peter |
| Mates, Michael | Wakeham, John |
| Mather, Carol | Waldegrave, Hon William |
| Maude, Rt Hon Angus | Walker, B. (Perth ) |
| Mawhinney, Dr Brian | Wall, Patrick |
| Maxwell-Hyslop, Robin | Waller, Gary |
| Mayhew, Patrick | Ward, John |
| Mellor, David | Warren, Kenneth |
| Meyer, Sir Anthony | Watson, John |
| Miller, Hal (B'grove) | Wells, John (Maidstone) |
| Mills, Iain (Meriden) | Wells, Bowen |
| Mills, Peter (West Devon) | Wheeler, John |
| Miscampbell, Norman | Whitney, Raymond |
| Moate, Roger | Wickenden, Keith |
| Moore, John | Wilkinson, John |
| Morrison, Hon C. (Devizes) | Winterton, Nicholas |
| Morrison, Hon P. (Chester) | Wolfson, Mark |
| Myles, David | Young, Sir George (Acton) |
| Neale, Gerrard | |
| Needham, Richard | Tellers for the Noes: |
| Nelson, Anthony | Mr. John Stradling Thomas and |
| Neubert, Michael | Mr. David Waddington. |
| Newton, Tony |
§ Question accordingly negatived.
§ Question proposed, That the clause stand part of the Bill.
1225§ Mr. BuchanThank you, Mr. Weatherill, for granting a clause stand part debate. We recognise that during the debates on the amendments we explored a great deal of what is in the clause, but there is one matter which, for technical reasons, could not be brought within the Bill and we appreciate the opportunity to raise it now.
We attempted to raise the matter in our new clause 2, but it was not technically in order and could not be brought into order. The point at issue is the upper limit for contributions. We had some discussions on this matter earlier, in the context of what we saw as an unfairness between the 17 per cent. lift at the bottom and the 22 per cent. lift at the top. We felt chat that constituted an element of unfairness between the rich and the poor, deliberately brought in under the Bill.
There is, however another aspect that I wish to raise. If we are right in saying that the clause—and, indeed, the Bill and what has been said by the Chancellor of the Exchequer—represents the development of a poll tax—a reduction in the Treasury element, with taxation coming later—perhaps we should treat it as a form of taxation and inject into it something of the social justice and fairness that we associate with taxation. The great advantage, in social terms, of taxation over contributions is that there can be graduations and social fairness.
We think that, on the figures that have been given, there is an element of social injustice here, and not parity of treatment. Secondly, by having a certain ceiling—now proposed at £200—there is an area of contributions that could be covered if we were to abolish the upper ceiling —an area of contributions that could help to finance the national insurance fund, which has brought all this on our heads over the last two weeks. If the contributions are to be used in the pension concept as a form of taxation, and if that is to be treated in all ways as a form of taxation, let us ensure that those who are richest pay more.
The problem that we had was to relate that to the return in benefits, because we wished to be just to the rich. It would not be possible, on the one hand, to treat as a form of contributions unlimited payment over that if it was technically an insurance scheme without some return. Equally, we are not prepared to allow that return to reach inordinate levels of benefit. Therefore, it would have been necessary to associate with it continually downward graduations of benefits in return for the contributions paid. That would make some sense of the concept that is developing of using national insurance pension methods as a form of tax to deal with an economic crisis.
Quite apart from that immediate consideration, other ideas are now emerging, such as the reduction in the Treasury element — the 18 to 14 per cent. element. There is also the breaking of the consensus that was established when Brian O'Malley spoke on our behalf as a Minister. There was a general consensus on pension problems, allied to the problem that affected the Conservative Party, namely, the question of private pensions.
All those things are getting cracked. The social basis of national insurance is getting cracked. Using the contributions to the fund in the way that we have seen over the last fortnight is cracking that consensus. Because of that, it is time that we considered the matter afresh. If we require revenue—and the Government say that this is a source of revenue — is there not now a case for the upper limit to be abolished?
1226 We should like to hear the Minister's views. I am sorry that the Secretary of State is not here. On the other hand, a Treasury Minister is on the Government Front Bench and he might like to reply to the debate. This is a serious matter. It is one that should be considered, because it has been brought to the forefront by the actions of the Government. If they wish to refer to the consensus, we may choose to be more considerate. If not, we shall have to give serious consideration to the matter.
§ Mr. RaceThe case for abolishing the upper Limit is very strong. I shall contrast the Government's attitude to the upper limit with their attitude to the lower limit. The Government's attitude is scandalous. They say that they will increase the upper earnings limit by 22 per cent. That is an increase by the full amount. That means that they want to protect the highest-paid in society from this form of taxation and they are prepared to engage in that kind of policy for their own supporters, who are the highest paid in society. Yet they are not prepared to embark upon a policy of protecting the lowest-paid from their policy. That is the political contrast that needs to be made in this debate. The lower threshold is frozen at £27 per week. The upper limit is increased to the maximum possible under the primary legislation.
If and when national insurance contributions become tax-deductible there may be a different policy on the question of the upper earnings limit. Once national insurance contributions become tax-deductible, part of the pressure to protect the highest-paid in society from this kind of approach will disappear from the Treasury's thinking, because the ability of those in the highest-earnings section to trade off their national insurance contributions against tax may be a very attractive proposition. Some may argue that their contributions should be brought into the tax net for that purpose. For a person earning large amounts it is very important that he should be able to trade off some of his contributions against income.
This measure is inequitable, because at the same time as the Government are increasing contributions they are cutting benefits. An argument that has been used in the past is that increases in contributions protect the value of benefits. That is not an argument that can be sustained by this Government at this time, because of their action in the Social Security (No. 2) Act, which cuts benefits this year and provides for the Government to cut benefits by specified amounts in the next financial year. That is a denial of the principle that increases in contributions protect benefits.
This is an argument not about social welfare or social insurance but about income tax. That is why the upper earnings limit has been pushed to the limit, and that is why the Government are indexing the higher tax bands. They are trying to protect the better-paid from increasing unemployment. As has been said, the people will draw their own conclusions. They will see national insurance contributions as part of the stoppages that they suffer every week. People will not be able to distinguish between national insurance contributions and the amount of income tax that they pay each week, just as many council tennants do not distinguish between the amount of rent and the amount of rates that they pay each week. It is the overall sum that matters.
1227 Those at the lower end of the income scale will contrast their position with that of the higher-paid, who have once again been protected against the economic crisis. This measure is presumably part of the incentive package that the Conservative Party pledged to introduce before it came into office. When will we see a quantifiable result from that so-called incentive package?
§ Mr. FieldThis debate will have been time well spent if it results in a clear statement from the Under-Secretary on why the Government cannot lift the ceiling. Those who have listened to and participated in the debates this week have formed the impression that the Government would like to lift the ceiling but that there are immutable forces acting against that.
There seem to be two forces at work. First, we are told that if the ceiling is raised it will break a crucial part of the pension settlement of 1975. I have talked to some of those who helped to formulate the 1975 Act. They are certain that the principle behind setting the ceiling was simple. They were concerned that the graduated national insurance contributions should hit a cut-off point just before reaching the higher tax rates. If that is so, the Budget changes, particularly those made in 1979, allow the Government to operate on that front.
We are all aware that the income tax bands have been greatly widened. The first band at the higher rate is now at a considerably higher level. If the Government wish to stick to the argument that there was some agreement in the Social Security Pensions Act 1975, will they spell it out? Do the Government maintain that those who have not contracted out, and who are now asked to pay a graduated contribution over a wider band of income, will have a significant effect on pensions in the private sector? I should like an answer. These are important questions to which all of us, including Conservative Members, would like answers.
It would be foolish for anyone to think that this is the last Bill of this kind that we shall see in this Parliament. Because of the Government's difficulty in meeting their monetary and public sector borrowing requirement targets, there will be a similar Bill next year. The argument that at a time of growing unemployment it would be wrong to put any of the increased cost of national insurance on employers and that therefore the total weight of the increase should be put on employees would gain greater weight in the country if the employees' contributions could be graduated in some way. That could be achieved if the ceiling were raised and if we took out of national insurance taxation those at the very bottom.
What is the argument to which the Government are sticking at this late stage in this one-week Bill? Is it something connected with the Social Security Pensions Act 1975 that prevents them from operating on the ceiling? If so, for the first time this week will they spell out what that connection is? If not, what is the reason? Am I right in thinking that those who drew up the 1975 Act saw it purely in terms of preventing those who were paying the old surtax or the higher rates of tax also paying graduated contributions above the then ceiling?
These are important, not academic, questions because as each year of this Parliament passes we shall have similar Bills to the one that we are considering today. If we can build some flexibility into the system by getting extra 1228 revenue from those at the top to make national insurance taxation less regressive, the passage of the next Bill may be slightly easier than this one.
§ Mrs. ChalkerThe questions that have been posed in this stand part debate were put forward earlier by the hon. Member for Birkenhead (Mr. Field). I shall seek to answer those questions.
Whereas some hon. Members may feel that there is a strong argument for the abolition of the upper earnings limit, the Government do not. At the risk of repeating what I said in earlier debates, I shall try to make clear one of the firm reasons why we do not believe that with the arrangements that we have in the Social Security Pensions Act 1975 it would be advisable, practicable or even possible to abolish the upper earnings limit.
If the upper earnings limit were removed there would be no limit on the size of the pension that could be earned by the very high earners. If we were to limit that pension entitlement and at the same time were to remove the upper earnings limit, those high earners would not be getting value for their contributions.
There are several reasons why it would not be possible to remove the upper earnings limit. First, as I have said, we need an upper earnings limit for pension purposes and it needs to be fixed at about the existing level to accommodate the contracting-out arrangements. Those contracting-out arrangements represented the fundamental principle on which agreement was reached between all parties in the Social Security Pensions Act 1975. The contribution rates for the contracted-out would run at the full rate up to the lower earnings limit, the contracted-out rate from there up to the upper earnings limit, and the full rate from the upper earnings limit upwards.
If we were to abolish the upper earnings limit the change would emphasise the need to secure much greater accuracy in the employer's deduction documents in regard to earnings in the middle range. Although I cannot expect hon. Members to understand the detail of this, I can assure them that from my investigation and from the working processes that aim to get the pensions paid accurately it is crucial that the accuracy in the deduction documents that are handled by the employers should be maintained.
4.30 am
We would be in the state of having three variable rates, because without an upper earnings limit, the additional components for the State scheme pension simply could not be calculated without having three separate calculations. The guaranteed minimum pensions, which are a prime feature of the second pension scheme, depend entirely on these records.
I am not saying that at some future time, when all companies were computerised and kept their records absolutely perfectly, such a complicated arrangement could not be achieved, but I must tell the Committee that, from my knowledge of the present system and from the present information supplied to Government Departments by employers, it simply could not be done within the confines of the present system and the present computer capacity of a large number of employers. We would produce total chaos in the calculation of the added components. While that is not the complete argument, it is a severe practical restriction on what could be done at present.
We know that there have been heavy errors in the present deduction document recording system because of 1229 the inability of many employers to fill in the documents with the accuracy that is required to enable us to calculate the additional components and the guaranteed minimum pension that depend on them.
We have had so many years of political football with regard to the pension scheme.
§ Mr. BuchanWe are having it again.
§ Mrs. ChalkerWe are talking about the upper earnings limit. Perhaps some Labour Members do not realise what an achievement it was in 1975 to reach this degree of success between the private occupational schemes and the State scheme. An enormous part has been played by industry. We sometimes forget that when we talk about the difficulties experienced by Government in calculating things correctly. Industry, particularly the pensions industry, has put in an enormous amount of work in order to accommodate the 1975 legislation. It would be totally undesirable, as well as quite unfeasible in the present computer capacity of employers' schemes, to start disturbing or dismantling the arrangements so soon after they have starred.
One hon. Member suggested that we might make national insurance contribution tax-deductible. Some hon. Members may remember that before 1965 part of the national insurance contributions that went towards the taxable basic pension was indeed tax-deductible, while the part of the contributions that went towards the non-taxable short-term benefits was not. In other words, they were not taxed twice. That was altered in 1965 by the right hon. Member for Cardiff, South-East (Mr. Callaghan), I believe. I shall give the reasns why the relief was then finally abolished and personal allowances increased at the same time.
First, there was a regressive anomaly in this. By that I mean that the higher an individual's contributions the higher was his relief. The compensating personal allowance was able to benefit more people than the original lax deductibility of the national insurance contributions. Looking back on old schemes, I have no doubt that the administrative complications between taxing one part and not taxing the other part of national insurance contributions were an added factor.
My hon. Friend the Member for Norfolk, North (Mr. Howell) asked some time ago what would happen if relief were applied to contributions and what would be the cost. It would be between £1½billion and £2 billion, which would then have to be made up by increases either in contribution rates or in taxes.
I hope that I have said enough at this late hour to explain that it is not feasible to dc away with the upper earnings limit, and there is not as strong a case for abolition as some hon. Members, would have us believe. We must maintain a period of constant working in our pensions industry if we are ever to make sure that those second pensions, for which we are encouraging people to contribute either through their occupational scheme or through the State scheme, are to become a reality without putting insuperable burdens once more on the British people. I hope that Labour Members will see the sense and wisdom that was shown by the late Brian O'Malley when we achieved this consensus before, and which I hope we shall retain this evening.
§ Mr. BuchanI thank the Minister for making such efforts in anticipating the nature of the discussion and 1230 preparing for it. However, she will accept that it is less satisfactory to an Opposition to be told that there are difficulties than to have an outright rebuttal of the arguments involved. We are not satisfied.
On the question of the unevenness of payment, the concept that could be developed if we move towards abolition is to regard the insurance fund as a social fund, in the same way as taxation is a social income which is used for the good of the community and paid into according to the means of the individuals in the community.
There are considerable problems on private pension funds, and I admit that I do not know them. I have held this position for 48 hours, and I accept that there are major difficulties. I know that this area requires investigation. We can never use the practical difficulties of schemes as an excuse. It has happened too often in history that the practical has been used to prevent thought. I hope that the Department will look into the matters as deeply as possible—certainly Labour Members will—to see whether there is progress to be made. The attitude of the Government—I am being as pleasant as I can—has broken much of the consensus on both sides of the House in relation to the pension structure and its involvement and co-operation with the private sector. We shall have to look at the matter over the next 12 or 24 months.
§ Question put, That the clause stand part of the Bill:—
§ The Committee divided: Ayes 194, Noes 16.
| Division No. 27] | [4.39 am |
| AYES | |
| Alexander, Richard | Dunn, Robert (Dartford) |
| Atkinson, David (B'm'th,E) | Durant, Tony |
| Baker, Nicholas (N Dorset) | Eggar, Tim |
| Banks, Robert | Elliott, Sir William |
| Bendall, Vivian | Emery, Peter |
| Benyon, Thomas (A'don) | Eyre, Reginald |
| Benyon, W. (Buckingham) | Faith, Mrs Sheila |
| Berry, Hon Anthony | Farr, John |
| Best, Keith | Fell, Anthony |
| Bevan, David Gilroy | Fenner, Mrs Peggy |
| Biggs-Davison, John | Forman, Nigel |
| Blackburn, John | Fraser, Peter (South Angus) |
| Blaker, Peter | Gardner, Edward (S Fylde) |
| Bottomley, Peter (W'wich W) | Garel-Jones, Tristan |
| Bowden, Andrew | Goodhart, Philip |
| Bright, Graham | Gorst, John |
| Brinton, Tim | Grant, Anthony (Harrow C) |
| Brittan, Leon | Greenway, Harry |
| Brooke, Hon Peter | Grieve, Percy |
| Brotherton, Michael | Griffiths, E.(B'y St. Edm'ds) |
| Brown, M.(Brigg and Scun) | Griffiths, Peter Portsm'th N) |
| Browne, John (Winchester) | Gummer, John Selwyn |
| Bruce-Gardyne, John | Hamilton, Hon A. |
| Bryan, Sir Paul | Hampson, Dr Keith |
| Buck, Antony | Hannam, John |
| Budgen, Nick | Haselhurst, Alan |
| Butcher, John | Hastings, Stephen |
| Cadbury, Jocelyn | Havers, Rt Hon Sir Michael |
| Carlisle, Kenneth (Lincoln) | Hawkins, Paul |
| Chalker, Mrs. Lynda | Hawksley, Warren |
| Channon, Rt. Hon. Paul | Heddle, John |
| Churchill, W. S. | Henderson, Barry |
| Clark, Hon A. (Plym'th, S'n) | Hooson, Tom |
| Clarke, Kenneth (Rushcliffe) | Howell, Ralph (N Norfolk) |
| Colvin, Michael | Hunt, David (Wirral) |
| Cope, John | Hunt, John (Ravensbourne) |
| Corrie, John | Jenkin, Rt Hon Patrick |
| Costain, Sir Albert | Johnson Smith, Geoffrey |
| Cranborne, Viscount | Jopling, Rt Hon Michael |
| Crouch, David | Kershaw, Anthony |
| Dean, Paul (North Somerset) | Knight, Mrs Jill |
| Dickens, Geoffrey | Lamont, Norman |
| Dorrell, Stephen | Lang, Ian |
| Latham, Michael | Ridsdale, Julian |
| Le Marchant, Spencer | Sainsbury, Hon Timothy |
| Lennox-Boyd, Hon Mark | St. John-Stevas, Rt Hon N. |
| Lester Jim (Beeston) | Shaw, Michael (Scarborough) |
| Lloyd, Peter (Fareham) | Shelton, William (Streatham) |
| Loveridge, John | Shepherd, Richard |
| Luce, Richard | Shersby, Michael |
| Lyell, Nicholas | Silvester, Fred |
| McCrindle, Robert | Sims, Roger |
| MacGregor, John | Smith, Dudley |
| MacKay, John (Argyll) | Speller, Tony |
| McNair-Wilson, P. (New F'st) | Spence, John |
| McQuarrie, Albert | Spicer, Jim (West Dorset) |
| Madel, David | Sproat, Ian |
| Major, John | Squire, Robin |
| Marland, Paul | Stainton, Keith |
| Mates, Michael | Stanbrook, Ivor |
| Mather, Carol | Stevens, Martin |
| Maude, Rt Hon Angus | Stewart, Ian (Hitchin) |
| Mawhinney, Dr Brian | Stokes, John |
| Maxwell-Hyslop, Robin | Stradling Thomas, J. |
| Mayhew, Patrick | Tapsell, Peter |
| Mellor, David | Taylor, Teddy (S'end E) |
| Meyer, Sir Anthony | Tebbit, Norman |
| Miller, Hal (B'grove) | Thomas, Rt Hon Peter |
| Mills, Iain (Meriden) | Thompson, Donald |
| Mills, Peter (West Devon) | Thorne, Neil (Ilford South) |
| Miscampbell, Norman | Townend, John (Bridlington) |
| Moate, Roger | Townsend, Cyril D, (B'heath) |
| Montgomery, Fergus | Trippier, David |
| Moore, John | Trotter, Neville |
| Morrison, Hon C. (Devizes) | van Straubenzee, W. R. |
| Morrison, Hon P. (Chester) | Viggers, Peter |
| Myles, David | Waddington, David |
| Neale, Gerrard | Wakeham, John |
| Needham, Richard | Waldegrave, Hon William |
| Nelson, Anthony | Walker, B. (Perth ) |
| Neubert, Michael | Wall, Patrick |
| Newton, Tony | Waller, Gary |
| Normanton, Tom | Ward, John |
| Onslow, Cranley | Warren, Kenneth |
| Osborn, John | Watson, John |
| Page, Rt Hon Sir G. (Crosby) | Wells, John (Maidstone) |
| Page, Richard (SW Herts) | Wells, Bowen |
| Parris, Matthew | Wheeler, John |
| Patten, Christopher (Bath) | Whitney, Raymond |
| Pattie, Geoffrey | Wickenden, Keith |
| Pawsey, James | Wilkinson, John |
| Pink, R. Bonner | Winterton, Nicholas |
| Pollock, Alexander | Wolfson, Mark |
| Price, Sir David (Eastleigh) | Young, Sir George (Acton) |
| Proctor, K. Harvey | |
| Raison, Timothy | Tellers for the Ayes: |
| Rathbone, Tim | Mr. Robert Boscawen and |
| Rees, Peter (Dover and Deal) | Lord James Douglas- |
| Renton, Tim | Hamilton. |
| Rhys Williams, Sir Brandon |
| NOES | |
| Bennett, Andrew(St'kp't N) | Johnston, Russell (Inverness) |
| Buchan, Norman | Race, Reg |
| Campbell-Savours, Dale | Rooker, J. W. |
| Cocks, Rt Hon M. (B'stol S) | Wainwright, R.(Colne V) |
| Cryer, Bob | Welsh, Michael |
| Dobson, Frank | Winnick, David |
| Dormand, Jack | |
| Field, Frank | Tellers for the Noes: |
| Harrison, Rt Hon Walter | Mr. Terry Davis and |
| Haynes, Frank | Mr. Hugh McCartney. |
§ Question accordingly agreed to.
§ Clause 1 ordered to stand part of the Bill
- Clause 2
- ALTERATION OF TREASURY SUPPLEMENT TO CONTRIBUTIONS 840 words, 1 division
- Clause 3
- ALLOCATION OF CLAUSES 1,190 words, 1 division
- Clause 4
- SUPPLEMENTAL 851 words, 1 division
- New Clause 3
- AMENDMENT OF PRINCIPAL ACT (NO.2) 2,830 words, 1 division
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