AMENDMENTS RELATING TO UP-RATING

HC Deb 18 March 1980 vol 981 cc321-74

Mr. Freeson

I beg to move amendment No. 2, in page 1, line 13, after 'prices', insert: 'and to the increase in the general level of earnings over the whole period commencing on 17th November 1980'.

Mr. Deputy Speaker (Mr. Richard Crawshaw)

With this we may take the following amendments:

No. 3, in page 1, line 16, leave out from 'earnings;' to end of line 22.

No. 4, in page 2, line 10, leave out subsection (3) and insert— '(3) In section 126(5) of the Social Security Act 1975 the words "12 months" shall be replaced with the words "6 months" and in section 125 (1) after "1975–1976 and" there shall be inserted the words "twice in" and after "tax year" there shall be inserted the words 'after 1980".'.

Mr. Freeson

I shall confine my remarks to amendment No. 2. Other hon. Members will no doubt wish to speak to the other amendments.

On behalf of the Opposition, I should start by making it perfectly clear, as is indicated by amendment No. 1, that we still stand by our view that it is wrong to accept clause 1(1) of the Bill, which breaks the earnings link with pension increases that has operated since the Act of 1975.

9.15 pm

We argued long and hard against the policy contained in the Bill, both on Second Reading and in Committee. We stand by all the arguments that are on the record and our votes against the Government. I make that clear, because that is not what is immediately before us to night, and there should be no misunderstanding.

What is now before us is a proposal that stands on its own merits whatever divisions there may be between the two sides of the House on the clause. Indeed, I hope that we shall carry at least some Government Members with us on this matter, as we have the support of most people outside the House who are concerned with the policy and legislation relating to retirement pensions.

Whatever the divisions on clause 1, it is fair to say that the principle of an earnings-related pension is fundamentally accepted by the House and by people outside by virtue of the support that we had for carrying through the Social Security Pensions Act 1975, which ultimately established the proposition of full earnings-related pensions in future years. That Act will be phased in gradually. It does not directly benefit all State pensioners at present. It will gradually benefit them as the decade proceeds. I do not think that the new State scheme operating under the 1975 Act will have much effect until we approach the year 1990. There will be a gradual introduction of the benefits under that Act, but it will not be anywhere near fully operative until 1990. In other words, it will take a long time for the earnings-related system introduced by the Act to take effect.

If it is accepted that the earnings-related principle is the right one—and we must presume that it is, because we all support the operating of the 1975 Act, which is based upon that principle—how do we apply the principle now? How can we do so without having the so-called ratchet effect, which so concerns the Government and which led them—so we must accept, though we never understood the argument—to introduce clause 1? We never accepted the argument, because the so-called ratchet effect has never operated in practice, despite all the arguments of the Government. It has had no financial effect yet, and we argued in Committee and on Second Reading that it could not possibly have an effect until later this decade. Even then it would be gradual and would be overtaken in 1990 by the full operation of the 1975 Act.

However much that does not worry us, and others concerned about pensions outside the House, it concerns the Government. For the moment, therefore, it matters not that it does not worry us. What matters is the concern of the Government, combined with, we must assume, their acceptance of the principle of the earnings-related pension, which will operate under the 1975 Act.

If we could rid ourselves of the problem that worries the Government and looms so large in their mind and at the same time link pensions to the level of earnings, I should expect and hope that we could establish common ground between the parties in the House. The answer to that, as I sought to argue in Committee, is that it is possible to do it. The amendment shows the way. It offers a way of guaranteeing pensioners their share of rising living standards without the ratchet effect of the present uprating formula, if it were still operating, later this decade.

The effect of the amendment would be that pensions would normally rise in line with earnings over a period and not year by year. In any year when prices rose more than earnings pensions would be increased in line with prices. They would continue to rise in line with prices only until the 1980 relationship between earnings and pensions was restored. It will be recalled that in Committee we argued for a different dateline.

If the Government seriously intend pensioners to share in rising prosperity when it comes they cannot logically oppose the formula. It is the formula suggested in an article by Tony Lynes, which appeared in New Society on 17 May 1979 and which the Secretary of State has repeatedly quoted with approval. I stress that the amendment before us would ensure that pensions did not fall in real value by tying them to the price index, which is what the Government propose to do.

The amendment would require the Government, as and when the real value of average earnings rises above the 1980 level, to give pensioners a similar percentage increase provided that the ultimate relationship between 1980 levels, in real terms, is maintained. That is the objective. Over the next few years—I accept that there may be the odd year out, as occurred in 1979—no one expects annual earnings to rise higher than the present inflation rate. If that were not so the Government would not be expressing so much concern about the need for austerity and for holding back—in other words, suffering economic restraint to get back on a path of expansion at a later date. I am assuming that there is general acceptance that although there may be a fluke period from time to time, from now onwards, for the next two or three years, we may generally expect merely a holding, and possibly a lowering, of our standard of living. I put it no stronger than that.

If that is to be the position, the operation of the amendment, were it to be accepted, would not produce any of the dire effects that have caused the Government to be fearful of the proposition until now. It would not produce a situation in which pensions would outrun the general standard of living. Even on the basis of what we would say are the wrongly based fears that have been expressed about the operation of current legislation, the operation of the amendment would merely mean that over a run of time the relationship between pensions and the standard of living as at 1980 would be maintained.

In due time the new State pension scheme operating under the 1975 legislation will take over. By so doing it will be floating the bulk of pensioners off the supplementary benefit scheme. One of the benefits of accepting and operating the amendment is that ahead of that time there would gradually be a floating off of a greater number of State pensioners—certainly more than at present—from the supplementary benefit scheme. That would be good in itself for the pensioners as individuals. It is also in direct line, in certain respects, with the objective of the Bill.

We have been told that one of the ultimate objectives for which the Bill is a base is that as benefits can be improved beyond the no-cost basis of the Bill more and more recipients will be taken off supplementary benefit into the normal State social security system. The effect of the amendment would be to enhance that gradual movement for State pensioners.

The ratchet arguments cannot be used in this context. Hon. Members cannot argue that it will put a burden on public expenditure, at least at this stage. I accept that ultimately it might do that, but is will depend on the flow of the economy and the relationship between prices and incomes in the years ahead. The proposal will not produce the ratchet effect about which there have been complaints. It cannot be argued that it will impose a burden on public expenditure above that which can be carried at present.

The proposition can be accepted in principle. I have gone over the arguments that we had in Committee in my short introduction to the amendment. I cannot see that the Government can oppose the amendment on either of those grounds. There is a case for accepting the principle as it affects pensioners. I hope that the Government have reflected and that they now accept that which we thought they accepted in principle when they noted with approval the approach in the New Society article, which they have quoted at us. I hope that we shall have the Government's support.

Dr. Brian Mawhinney (Peterborough)

The amendments fall into two parts. They propose to restore an element of linkage between pensions and earnings, which was removed by the Government in the Bill. They also propose to pay pensions on a six-monthly basis. At present unemployment and sickness benefits are linked to prices only. Pensions and other long-term benefits are linked to prices or earnings, whichever is more favourable. The Bill removes the earnings link for pensioners.

The Opposition's proposal does not quite gel with past experience. In November 1976, for example, the Labour Government increased pensions by 15 per cent. That was less than the increase in earnings, which was 19.4 per cent., and the increase in prices. That was done by changing the basis on which pensions were calculated. In doing that the Labour Party deprived pensioners of about £500 million in a full year.

In November 1978 the Labour Government gave a pension increase of 11.4 per cent., although earnings rose by 13.3 per cent. In March they proposed a pension increase of 12.8 per cent., when earnings were rising by about 15 per cent. On top of that, the right hon. Gentleman who was Secretary of State at the time admitted that the earnings link was not necessarily enforceable in a court of law. When he was tackled about the 1978 pension deficiency he said that there was a statutory obligation to take those figures into account and that he had done that. He said that those figures referred to earnings, but that there was no statutory obligation to get them right.

On the basis of that record it seems to me that the Opposition do not have a strong case or compelling reasons to show why we should retain the link with earnings, by which they chose not to put any great store.

9.30 pm

Mr. Freeson

I do not wish to go into details in an intervention, but this canard was trotted out several times on Second Reading and was also discussed in Committee. If the hon. Member would do us the courtesy of reading the record more accurately and fully, he would not repeat that canard. It is not even relevant to the matter that we are now discussing.

Dr. Mawhinney

It is relevant to the extent that it goes to the force of the Opposition's argument about whether we should take this set of amendments seriously.

I turn my attention primarily to amendment No. 4, with which I have great sympathy. Hon. Members on both sides of the House will know that one of the first things that I did on coming to this House was to table an early-day motion in somewhat similar terms to this amendment. That early-day motion urged the Government to give early consideration to paying pension increases twice a year. That is still my commitment and I believe, for reasons that I shall expand upon shortly, that we should uprate pensions every six months rather than every 12 months. I have made it clear that I take my stand this evening in support of the amendment as part of the commitment that I made to my constituents before and during the general election.

I believe, if my memory serves me right, that in my election address I said that I would work to try to achieve six-monthly pension increases. Because I believe that integrity is an important aspect of the life of a politician I am trying to give voice to that commitment this evening by supporting the amendment of the hon. Member for Stockport, North (Mr. Bennett).

I understand the problems facing the Government. To increase pensions every six months would increase administrative costs, and that is a particularly unattractive prospect at present. There would be two aspects of increased costs. One would be the administrative costs of increasing pensions every six months, and the second would be the cost to the Exchequer of the second half-yearly increase on the first half-yearly increase. In other words, if pensions were increased in line with prices after six months, the second six-monthly increase would be on the increase accorded over the first period.

That is not necessarily a large sum. If we assume that pensions are now paid at an annual figure of £8,000 million, with inflation running at 20 per cent. the increase in this aspect amounts to 1 per cent. of the total cost, or £80 million in a year. If inflation fell to 10 per cent., the increase in costs would be only ¼ per cent., or £20 million per year. The main obstacle to an increase of the kind that I advocate, which I expect the mover of the amendment had in mind, would be the increase in administrative costs.

We are entitled to ask my right hon. Friend the Minister what his Department is doing to reduce the administrative costs of pension payments. Could some other way be found to pay pensions which would reduce administrative costs? It should not be beyond the ingenuity of the Department to find a mechanism to reduce the cost, essentially, to zero. For example, would it be possible to print pension books that did not have a specified amount on them? The amount could be raised quickly and easily, without having to reprint books every time an increase was announced. There are a number of ways to solve the problem. In a previous debate my right hon. Friend mentioned the problem in relation to child benefits. What are the Government doing to reduce the administrative cost to zero and remove this stumbling block to the pensions increase proposal?

That is a Government problem. On the other hand, they must understand the strength of feeling in the country about the payment of pensions and the role of pensioners in our society. First, there are economic pressures on old people, many of whom are solely dependent upon the State pension. Those pressures are becoming stronger in the face of rapidly rising energy prices. Old people face an insecure future. They experience a difficult change in their circumstances when they leave work. Many of them have little to look forward to in their declining years. Some of them simply sit at home waiting to die.

In that situation, there is no question but that the pressures in their minds lead them to make extravagant overstatements of the difficulties and the economic pressures upon them. The Government must be aware—as are hon. Members with active pensioners' federations in their constituencies—of the pressures that old people face. Some pensioners are old enough to remember a time when economic pressures, without the benefit of State aid, were intolerable and scarred them for the rest of their lives.

There is the argument that pensioners contributed to the welfare of this country over many years. If the country does not owe people something when they retire, at least it has a responsibility to ensure that they are not unduly burdened. We ask not that the Department should treat them extravagantly but that it should treat them perhaps slightly more kindly than is the case at the moment.

Next, and perhaps most vexatious of all, there is the time-lag argument. It is a source of considerable aggravation to pensioners that an award is announced in April but is not paid until November, and that in many cases a considerable part of the increased value of that award is eroded before they get their hands on it. Of all the arguments in favour of increasing pensions on a six-monthly basis, this is unquestionably the strongest. It is certainly the factor that most annoys, upsets and irritates the pensioners in my constituency, and I have great sympathy for their argument.

Again, I think that we are entitled to ask the Minister what his Department is doing to try to reduce this time-lag. It is an argument that is constantly advanced as a reason for not doing anything, but equally there is no concomitant commitment to try to do something to reduce that time-lag. So I hope that when the Minister winds up the debate he will make it clear what steps his Department is taking, or planning to take, to tackle this problem.

I wish that I could have spoken after the hon. Member for Stockport, North (Mr. Bennett) introduced his amendment. If I understand the amendment correctly, it seems to me that he is saying that the Government should look every six months at the increase in prices and pay a pension increase every six months in line with the rise in prices. If that is the essence of his amendment, I find myself in support of it—support which is not recently generated, but which I have maintained.

As I have pointed out, if the Government could find a device to remove the administrative cost of such an uprating, the actual cost to the Exchequer of the uprating itself would vary from £20 million to, perhaps, £50 million in a year. Bearing in mind all the arguments which the Government will advance about reducing and containing public expenditure—with all of which I agree, and to all of which I, together with my hon. and right hon. Friends, am committed; on which I campaigned and from which I do not deviate—it seems to me that within the pension budget of the DHSS it ought to be possible to find this small amount of money in order to enact something that would have considerable effect in the country.

The benefit that would accrue from this move would be out of all proportion to the cost to the Government. It would be a reassurance. It would be, as it were, a vote of confidence in the people who have devoted their lives to the benefit of this country, and it would reaffirm for the minority—and we acknowledge, as was acknowledged in the last debate, that there is a minority—who have a suspicion that our party does not care—a suspicion which I reject but which is felt by a number of people—that we do indeed care. It would be an earnest of the commitment of this Government to try to protect those who, in many cases, are least able to help themselves.

From what I have said it will be clear to right hon. and hon. Members that I shall not have any difficulty in supporting the Government on amendments 2 and 3, but I have to say quite honestly that, because of the commitment that I have made to my constituents, I shall have to listen very carefully indeed to the reply which the Minister gives before I can make any similar commitment on amendment 4.

9.45 pm

Mr. David Winnick (Walsall, North)

There were certain aspects of what the hon. Member for Peterborough (Dr. Mawhinney) said that I would tend to agree with. When he spoke about the plight of the elderly he was echoing the feelings of those of us on the Opposition Benches. One of the most unfortunate actions of the Government has been the decision which has been rightly very much criticised outside the House as well as by the Labour Party to discontinue the practice of increasing pensions in line with price increases or earnings, whichever happens to be the greater. I must say straight away that the decision which the Government have taken has undoubtedly meant an attack on the living standards of the poor and elderly in our community.

I do not wish to be personal, but the people who are responsible for making those decisions do not live the sort of life that many elderly people live, neither are they likely to suffer the same hardships when they, the policy-makers, retire.

A feeling has grown up recently that the position of retired people has improved substantially. That view is somewhat exaggerated. I believe that the standard of living of the elderly has improved, mainly as the result of the previous Government's actions, but it started from a very poor base.

Many of the elderly in our community have to rely solely on the State pension and supplementary benefit. Members of Parliament do not lead isolated lives. We go to our constituencies and speak to elderly people. We know what it means, in face of present-day prices and other pressures, to keep up a decent standard of living with only the State retirement pension and supplementary benefit to live on. It is a tremendous ordeal for many of our elderly citizens to try to make ends meet, and they suffer great hardship in trying to live on a small income.

Recently I raised the question of fuel prices and the need to ensure that people on low incomes receive assistance with their fuel bills. I have received a number of letters, some from my constituents and some from other parts of the country, explaining what a great hardship it is for pensioners to meet their fuel bills.

One of my party's main concerns is to ensure that when people retire they are able to have a fair standard of living. We must end the present position whereby when people with no private income retire they automatically suffer a substantial reduction in their standard of living and many have to endure poverty. Retirement should not mean hardship, poverty and not knowing from day to day how to make ends meet. That is what we are trying to get away from.

It is unfortunate, to put it mildly, that, whereas the Labour Government, by increasing the retirement pension in line with the increase in prices or earnings, whichever was the greater, at least ensured that the standard of living of pensioners improved, the Conservative Government have reversed that policy. There are many actions of the Government which I deplore, but to hit out at the people in our community who have to live on such a small income after working for years is shameful and degrading. That is why the attempts that are being made by our amendment to put the matter right should be supported.

Mr. John Carlisle (Luton, West)

If the hon. Gentleman so much deplores the actions of the Government, will he not deplore the Labour Government's action in 1975 and 1976 in withdrawing the Christmas bonus?

Mr. Winnick

No doubt one could deplore that. As a critic of certain aspects of the Labour Government's policies, I nevertheless believe that their record on pensions is a good record which was appreciated by many retired people, not all of them Labour voters. There can be no doubt that pensioners, faced with the latest decision of the Government, will adopt the same attitude as the Opposition. That is understandable. The action of the Government means that their standard of living will be reduced.

Perhaps the Minister can give some indication of an announcement of help for pensioners in paying their fuel bills. Action is needed following the substantial increase in gas prices and the fact that the price of electricity is to rise by a substantial amount. Hon. Members were told a few weeks ago that there was to be an announcement. It is about time that the House and the country were told what action is to be taken to provide assistance for many people on low incomes in meeting their fuel bills.

If the Labour movement—I cannot speak for the Government side of the House—wishes to ensure that the elderly get a fair deal and that those who retire do not become isolated from the rest of the community, there needs to be the closest connection between the trade union movement and the retired. When someone retires, there is sympathy and understanding. But these people are not always looked upon as part of the general working population. They have retired from the working community.

I have always held the view that retired people should be active in organisations in their locality. They should certainly have a strong pensioners association. That association should also be strong nationally. I hope that the day comes when the TUC will be flexible enough to say that, although people have retired, they can remain affiliated, as an organisation of pensioners, to the TUC. If retired people are to get a fair deal, the Labour movement has to ensure that the retired and elderly and those living on limited incomes are not isolated but are seen as part of the general community. I believe that, when there is a Labour Government again, we can put right what the present Government are now doing for they are harming people who can least afford to be harmed.

Mr. Paul Dean

The right hon. Member for Brent, East (Mr. Freeson) described the amendment as modest and added that he did not expect that it would have any ratchet effect. I found difficulty in following his argument. There were many questions that the right hon. Gentleman left begging in introducing the amendment. The main argument against what he seeks to achieve is that a statutory link with earnings has a pretty unhappy history. There have been endless arguments about the precise definition. There have been different interpretations in different years.

We on the Government side feel that one can demonstrate, clearly, by the record of the previous Government, that they failed in most years to achieve the statutory objective laid down. When one gets into a situation in which pensioners feel so aggrieved and so cheated of their statutory rights that they have to haul the Government before the courts, it suggests that there is something unsound and unsatisfactory about the position. Looking at the history of this so-called statutory link, I do not regret that the present Government have decided to move away from it. It seems to me a more secure and better understood base of security for pen- sioners to be given a guarantee that their pensions will be linked with prices rather than any other more artificial criteria.

It seems to me that the Government are on sound ground. This does not mean that in setting a modest, well-understood objective they will not do better in practice. We hope that if the economy improves it will be possible for the wealth of the community to increase and for pensioners and other beneficiaries to share in that increase. That is the aim of the Government. That is what previous Conservative Governments were able to achieve in practice when the link, as hitherto, was to prices rather than to earnings.

Mr. Freeson

Does the hon. Gentleman agree that a month or two ago the Government refused to make good the shortfall in their forecasting? Earnings rose higher than prices last year by a significant amount, which was against all the forecasts upon which the pension increase was based. The pensioners lost out by £195 million.

Mr. Dean

That is precisely my point. I said, in criticism of the right hon. Gentleman's earlier speech, that the present basis for pension increases was unsound. It is difficult to understand. Pensioners thought that they had been mislead and cheated by the previous Administration.

It is far better to link the pensions to prices, and to do better than that if possible—as was the case in many instances under a previous Conservative Administration.

Mr. Stallard

rose—

Mr. Dean

I shall not give way, because many other hon. Members wish to speak. I have to take into account the fact that we are debating on a timetable.

I turn to another important issue, namely, the need to retain flexibility within our pension arrangements. We know that the number of pensioners in our community will grow over the years to come for as far ahead as we can foresee. That must be taken into account. The proportion of the elderly in the community will grow in relation to those who are of working age.

We find that the growth of the economy is not keeping pace with additional burdens. We must think more carefully about the priorities within our social security arrangements. We must try to maintain as much flexibility as possible. I regret that we have not been able to do more for the very old. There is a strong case for saying that as pensioners become older, frailer, and less able to cope with the household chores—it becames increasingly difficult for a man to paint the outside or the inside of his house—the business of living becomes more costly. There is the additional factor that clothing wears out.

In recent years we have not given sufficient priority to the frail elderly. Their numbers will increase substantially over the coming years. If we set ourselves too high a target for pensioners as a whole, the arrangements will not be sufficiently sensitive to deal with the especially vulnerable groups among those over pension age.

There is the fuel allowance. Many people have well justified fears about their fuel bills, and it is one of the problems that the elderly dread most. If we are to have a reconstructed fuel scheme, covering all types of fuel, without the disadvantages of the old scheme, more resources will need to be made available.

10 pm

I turn to the question of the Christmas bonus. I had something to do with the introduction of that bonus and I am glad that the Government have reintroduced it. However, we must accept the fact that it is extremely expensive—it cost more than £100 million. In order to restore its real value, that £10 bonus would now need to be about £20.

Within the pension arrangements I want some manoeuvering room for the Christmas bonus. That lump sum at Christmas does enormous practical good for the people concerned. The fact that an elderly person can allocate some of this money to buying Christmas cards or gifts for grandchildren is most important to that person. We should not underestimate the enormous psychological effect of the bonus.

If we want to maintain flexibility within the arrangements, we must not set ourselves too ambiguous targets for pen- sioners as a whole, otherwise we cannot be sufficiently sensitive to the varying needs within the pensioner group.

Mr. Andrew F. Bennett

Is the hon. Member not aware that the only reason why the Christmas bonus is necessary is that we do not give our pensioners a decent amount each week? If we raised the pension to a decent level we would not need to give a Christmas hand-out. Anyone who advocates a Christmas bonus is merely emphasising the fact that the present level of pensions is inadequate.

Mr. Dean

The hon. Member is being wholly unrealistic. With the resources available it is not possible to raise the substantial proportion of pensioners above supplementary benefit level. If the money were available, who would benefit from it? The beneficiaries would be those who are already above supplementary benefit level.

We must maintain the most flexible mechanism, and above all that means maintaining the reconstructed supplementary benefit scheme. We will find that money for the special needs allowances within the supplementary benefit scheme will be required as well.

My hon. Friend the Member for Peterborough (Dr. Mawhinney) raised the question of increases in pensions twice a year rather than once a year. I have been attracted to that proposition as well, particularly in these days of heavy inflation. But I wonder whether the real problem here is not presentational. We hope that an increase in pensions will be announced in the Budget next Wednesday. Then probably months will elapse before the increase actually comes into operation. Understandably, people will say that the increase should either be backdated, as wage increases are if the negotiations take some time, or that there should be clear evidence that the cost of living between the date of the announcement and the date of operation is taken into account.

Rather than have an increase twice a year, I would prefer to see the increase announced in the Budget backdated to Budget day. The presentational effect would be considerable, and it would mean an increased cost in the first year while we were moving into the system. Perhaps the presentational problem might be best dealt with in that way.

In the long run, this amendment will not be satisfactory for pensioners. It will not give the firm, clear criterion on which they can calcuate, and it is likely to inhibit any Government in introducing the sensitivity and flexible arrangements that are required to meet the many different needs and circumstances of a large number of pensioners. For those reasons I hope that the House will not accept the amendment. If the Opposition persist with it, I shall vote against it.

Mr. Raymond Ellis (Derbyshire, North-East)

If this group of amendments is not enforced, I am convinced that we shall all have been betrayed. The amendments are directed to clause 1, which would, if unamended, break solemn and binding pledges that were made to the electorate by the Prime Minister during the general election campaign under the full glare of national television publicity. In context, the Government said, in effect, that whatever else happened the standards of living of pensioners would not be eroded in any way, shape or form.

We all have a vested interest, because we are all embryo pensioners. Some people will try to opt out of responsibility by saying that they should not be expected to contribute in areas where they cannot expect to become beneficiaries—for instance, in the area of child benefit. In spite of the fact that today's children are tomorrow's wealth producers, there are still a few childless couples and others who will argue that they should not be expected to keep other people's kids.

We all aspire to become pensioners one day. Even young people in the first flush of youth who may maintain that they do not wish to become old and decrepit invariably change their minds when, at the age of 65, they face the stark reality of the choice of either public benefit or public borrowing. There is no choice. They prefer to be pensioners. We are all involved, and I am convinced that we are all under attack.

The standards of pensioners have been attacked on many fronts. Clause 1 of the Bill would remove from pensioners the right to share in the future growth of the economy—whenever a future Labour Administration return to power and make that possible. If this clause is enacted it will preclude for ever any improvement in real terms in the standard of living of those people who have given a lifetime of service to the nation.

When the previous Labour Government introduced a wages link for pensions they did so not only in order to recognise the rights of pensioners to partake in prosperity they were urged on by the altruistic eloquence of Ministers in this Administration. The previous Opposi- tion paid lip service and brought pressure to bear to bring about improvement, not only on pensions but right across the spectrum of benefits. However, their eloquent altruism in opposition is matched only by their persistent parsimony in office.

Pensioners are also being attacked in respect of prices. A closer look at clause 1 reveals that there is an implied ambiguity with regard to the measuring of price increases. Price increases have traditionally been measured by the retail price index. The Government have created a new index. Inflation has been reduced from 20 per cent. in real terms to 16 per cent. in paper terms. Tax relief has been discounted. Hon. Members will note that tax relief applies mainly to those in the upper income brackets.

The Bill empowers the Secretary of State to use the new index or any other index. The new Government index will take account of income tax reductions. However, pensioners are generally so impoverished that they do not pay any income tax. The Secretary of State is therefore saying RIP to the RPI. He can introduce something that is indefinable, unquantifiable and a pig in a poke. Indeed, it will be worse than that. The alternative index can be weighted to the detriment of pensioners, because they do not usually pay income tax. The amount that we contribute towards pensions through our national insurance payments is related to earnings. Pensions should also be related to earnings. Of course, that will be denied.

In the 10 short months since the Government were elected, pensioners have been attacked by massive increases in VAT. Most pensioners have received no benefit from the reductions in income tax. They have been subject to increases in the cost of all fuels. Most of those increases were Government-induced. That cannot be denied. Prescription charges and bus charges have increased. Predominantly geriatric hospitals in my area, such as Ashgate hospital, in Chesterfield, have been closed. Rents have also increased. It has been forecast that the Budget will bring about swingeing increases in the tax levied on drink and tobacco. All those increases have been carried out in the name of reducing expenditure.

In the darkest days of the immediate post-war period we did not treat our pensioners in such a way. The nation was then in dire straits. However, the pensioners' tea and tobacco allowance was sacrosanct and tax-free. We are now awash with North Sea oil. Nevertheless, the Government have selected the helpless and elderly people of Britain for this punitive attack. They are prepared to renege on their pre-election pledges.

The Bill has not yet been enacted. The law now indicates that the pensioner and his wife should receive an extra £26 a year as a result of the shortfall between prices and incomes. That shortfall has existed since last November. Hon. Members often mention the £10 Christmas bonus. However, that pales into insignificance when compared with the £26 that has, been filched from pensioners. That money should form an intrinsic part of all pensions. The Government have welshed on their moral obligations. If we endorse these amendments we shall reject the false prospectus on which the Government were elected. We shall regain some credibility and respect for this House. I therefore ask hon. Members to endorse these amendments.

10.15 pm

Mr. Bowden

I apologise to the right hon. Member for Brent, East (Mr. Freeson), who is not in his place, for not having been present for most of his opening comments.

As the House knows, I voted against the Second Reading of the Bill, and I intend to vote for the amendment.

It is eight years since I became joint chairman of the all-party parliamentary group for pensioners, a position that I hold with great pride. In my early days in that position my co-joint chairman was Mr. Arthur Latham, the former hon. Member for Paddington, who was not reelected at the last election.

Earlier this evening the hon. Member for Ormskirk (Mr. Kilroy-Silk), who I am glad to see has just entered the Chamber, made some general comments about me and about the way that we have debated the Bill. He expressed regret that these debates were not more vicious, angry or nasty.

One of many reasons why I am deeply proud to be an hon. Member of this House is that although there may be differences between hon. Members, we conduct our proceedings in a civilised and reasonable manner. There were many political issues on which Mr. Arthur Latham and I could not agree during our joint chairmanship, but we worked in our own way for the interests of pensioners. We put our disagreements to one side and did not allow an unpleasant, personalised or vicious attitude to enter our relations.

Any hon. Member who preaches such attitudes in a democratically elected House of Commons does no service to democracy or to our party political system. If that is what the hon. Member for Ormskirk meant, he has shamed this House. If I have misinterpreted him, he will no doubt explain that to the House in due time.

Mr. Kilroy-Silk

The hon. Gentleman obviously does not mean what he is saying, because of the attractive and wholesome smile that adorned his face when he joined us in the Lobby earlier. The hon. Gentleman is making far too much of this.

The earlier debate was civilised, polite, affable and amicable, and I decry none of that. However, one element was lacking—justifiable anger and discontent with successive Governments of both parties for not having raised the death and maternity grants in 1967 and 1969 respectively. It is extraordinary that the House can debate that disgrace and scandal in an almost academic, supine manner. I am sure that the hon. Gentleman wishes the House properly to represent the deeply held views of hon. Members and their constituents.

Mr. Bowden

The House is grateful for that explanation. However, I emphasise that a great hallmark of our democracy, which has taken many years to develop, is that we can show the world that however strong our feelings or deep our emotions we still behave in a civilised manner. There is no need to have false anger to personalise debates in order to make them effective. A calm, sensible debate, where reasonable views are exchanged among all hon. Members, is one of our greatest blessings. Those who seek to destroy them only play into the hands of our enemies.

I turn to the essence of the amendment—the link between prices and earnings and its application to pensions. It would be wrong to break that link, but that, in effect, is what clause 1 will do. I shall tell the House why I hold this view.

Let us first examine the retail price index. My right hon. Friend the Secretary of State for Social Services has made it clear that the Government's pledge will be at least to maintain the value of the pension in relation to the RPI. The Government hope to do everything possible—I have no doubt that they will—to do more than that. But what worries me is that the RPI, upon which immediate increases may well be based, does not truly reflect the increase in prices and living costs of pensioners. Our pensioners spend disproportionately more of their incomes on three major items—housing, food and heating. They spend a much higher proportion of their incomes on these three items than do the vast majority of people who are in full-time employment.

Inevitably, housing costs rise. Food has always tended to be well in front of the RPI figures. Invariably pensioners have to buy in small quantities, often do not have the advantage of the freezers or refrigerators that are available to a high percentage of our population, and cannot stock up with food when it is cheap as a balance against times when it is expensive. So they lose out in that area.

Inevitably heating and fuel costs will rise substantially over the next 12 months. There have been various heating schemes. The electricity discount scheme of the previous Government was far from satisfactory. It did not help those who used gas, paraffin and solid fuels. To the average pensioner, the scheme meant less than £8 in total. I must also say that the present scheme of my Government is far from satisfactory, but at least it concentrates a real degree of assistance upon a section of our elderly who need it—namely, those over 75 and in receipt of supplementary pensions—to the tune of £50 a year, which is not an insignificant sum.

However, in the light of the increases that will come over the next 12 months, I urge my right hon. Friend to ensure that the Government prepare and present to the House an effective heating discount scheme that covers just not electricity but all fuels, and helps not only those over 75 on supplementary pensions but all pensioners.

I am unhappy that it is now the Government's intention to make it their minimum obligation to increase pensions only in line with the RPI, because that index does not reflect the true cost of rising prices to the vast majority of pensioners.

In recent years when the previous Labour Government were in office, the link that some Labour Members tried to pretend was sacrosanct and must not and could not be broken was broken. It was broken not once but twice. It was on the way to being broken a third time. There is no doubt that it would have been broken a third time if the nation had made the tragic mistake of returning the Labour Party to power.

Mr. Orme

I am following the hon. Gentleman's argument closely. He is courageous in the way in which he deals with the Government and we are prepared to accept criticisms of the previous Labour Government. However, he knows that it is not correct to suggest that the previous Government did not meet the shortfall when the forecast was wrong. He knows that because of the link with earnings pensions were increased 20 per cent. above the rate of inflation during the five years of the Labour Government.

Mr. Bowden

I am amazed that the right hon. Gentleman intervened. He will recall that he did precisely the same thing on Second Reading. He will also recall that I quoted to him, chapter and verse, the precise and exact increases of prices and earnings on two occasions during the administration of the Labour Government when the link was broken. He did not challenge my figures. I do not believe that he is attempting to challenge them now. I invite him to get a copy of my speech on Second Reading.

Mr. Orme

I have read it.

Mr. Bowden

I shall try to keep going long enough to enable the right hon. Gentleman to read it again. If he wishes to return to the Chamber to challenge the specific figures that I gave the House on Second Reading, I shall be only too pleased to allow him to intervene again.

Mr. Field

I do not think that my right hon. Friend the Member for Salford, West (Mr. Orme) need consult Hansard. The previous Labour Government did not break the commitment over matching pensions with prices, whichever was the greater. In fact, they fudged it. As a result of the court case in which some of us had a hand, it was impossible to fudge it any more. That is why clause 1 appears in the Bill. There is no more room to manoeuvre within the formula. That formula was strangling the Government. Instead of meeting the commitment they are trying to cut loose. To his credit, the hon. Gentleman is trying to prevent them from so doing. However, I think that he undermines his contribution by trying to make party points based on my right hon. Friend's contribution while in government.

Mr. Bowden

I have great respect for the hon. Gentleman's work in social services and pensions. However, he is not credible when he says that the previous Government did not break the link but fudged it. What he means is that they fiddled it. They produced a set of figures to suit themselves at that time. If the House is to be honest with itself, and if the Labour Party is to be honest with itself, as I have tried to be in this debate, let Labour Members say frankly and bluntly that they were unable to meet the obligations embodied in the 1975 Act.

Although I disagree with the position that has been taken by my right hon. Friend the Secretary of State for Social Services—

Mr. Kilroy-Silk

Do not get angry. Calm down.

Mr. Bowden

Although I disagree with that position, it is a totally honest one. My right hon. Friend is saying "We cannot take any further obligation than to increase pensions in line with prices, but we shall do our utmost to try to do more in future." I do not find credible the statement made by the hon. Member for Birkenhead (Mr. Field), any more than I find credible the statements of those who said that the 1975 Act was not enforceable in law and that it should be changed. My argument is that we should enact a measure that is enforceable. That is part of the responsibility of the House. Although I disagree with my right hon. and hon. Friends on the Government Front Bench, at least they have taken an honest position, although I believe it to be a rotten one.

10.30 pm

I turn to a comment made by my hon. Friend the Member for Peterborough (Dr. Mawhinney). He said that the country did not owe pensioners certain obligations and he went on to develop his speech in that context. I believe that this country does owe our pensioners something specific and clear. All of us who have been in this House for any length of time have a responsibility to the pensioners, because we have destroyed their savings. The pensioners of this country, many of them having been through two world wars and all of them through one world war, are owed something for that loss of savings. Do we not have a responsibility to them in the light of their service and their hard work? Should not their savings maintain their value and should not their living standards be protected in future?

Dr. Mawhinney

I would point out to my hon. Friend the Member for Brighton, Kemptown (Mr. Bowden) that he is, perhaps, making more of my choice of the word "owe" than is justified. It seems to me that he and I are in entire agreement. I was trying to propound the idea that we have a responsibility to pensioners and that it was that responsibility that I wish to see demonstrated by the twice-yearly increase.

Mr. Bowden

I am most grateful to my hon. Friend for that clarification, because it leads me to my next point.

I support my hon. Friend in his view that when inflation reaches 10 per cent. there is a real obligation upon the Government to review pensions on a twice-yearly basis. The last Government failed to do that and the present Government have not yet given any indication that they are prepared to do it. I hope that they will reconsider this carefully, because there is deep resentment among millions of pensioners who realise, when they receive their pension increase in November each year, that that increase has been largely whittled away and destroyed by inflation. I hope that we can find a way of increasing pensions on a much fairer basis than any Government have been able to do in the past.

I shall vote for amendment No. 2 not because I have faith in the policies of the Labour Party—the contrary is the case—but because I believe that this House has not provided the elderly with the pensions that they deserve. I believe that it is our duty to do everything in our power to protect their savings and their standards.

Mr. Andrew F. Bennett

I rise primarily to speak to amendment No. 4. I had waited to speak to that amendment because I had hoped that the main debate would have taken place on amendments Nos. 2 and 3, which seemed to me to deal with the more important issues. I had intended to spend some time on amendment No. 4 at the end of that debate. I realise that some difficulty has also been caused to Conservative Members who had proposed to address their remarks to amendment No. 4.

I begin, however, by speaking to amendment No. 2. It seems to me that the question that the House must ask itself in discussing pensions is whether pensions are adequate. It is clear, bearing in mind the number of people whose pensions have to be supplemented by benefit to afford them even a minimum standard, that pensions are not adequate. If they are not adequate our first task should be to get them raised to an adequate level.

I know that in the long term the earnings-related provisions will eventually bring pensions up to the desired level, but if in the meantime pensioners benefitted by having their pensions increased by whichever went up most, earnings or prices, we would not be pushing pensions up to an extravagant level. They would still be below a minimum acceptable level for another five years. It is indefensible to say that we cannot afford to allow pensioners the benefit of the two forms of indexing and that we must take one of them away.

Amendment No. 2, in an unsatisfactory manner, aims to maintain some linkage with earnings. We debated that issue at length in Committee and we are limited in the amendments that we can table at this stage. At least the amendment has the merit of trying to maintain the double linkage. The main argument against the linkage is that it has a ratchet effect. Nobody has been able to prove that pensions would rise too quickly. The odds are that in the next two or three years the linkage with earnings will have no effect, because of the rate at which prices are rising. If the Government manage to contain inflation most of the problems will be overcome and the country should have no difficulty in paying the pensioners the little extra involved in the linkage with earnings. It is amazing that the Government want to get rid of the linkage.

Perhaps the Government are waging an attack on the whole question of linkage. Perhaps they are not de-indexing pensions alone. Perhaps they want to cut back on all benefits. Many leading articles suggest that the indexing of benefits is dangerous. We should understand that indexing ensures only that those involved remain relatively the same as everybody else. We do not suggest that they should do better than anybody else but that they do as well as others.

De-indexation means that those involved have to make a special sacrifice, which amounts to a greater sacrifice than that made by everybody else. That is totally indefensible. By retaining indexation we shall say to those on supplementary benefit and pensions that they should benefit—or not benefit—to the same extent as everybody else and that they should not be asked to make a special sacrifice.

One could argue that such people should not be asked to make a sacrifice and that there is a minimum standard below which we cannot ask people to fall. A famous cartoon of the 1930s shows a ladder rising out of the water. People are standing on each rung. The man at the top is saying "One step down". That means that each man's view is a little worse. Those near the bottom will probably get their feet wet, but the man at the bottom of the ladder sinks below the water. By asking for equality of sacrifice one must assume that everybody has something to sacrifice, but many pensioners have such a low standard of living that it is unreasonable to ask them to make any sacrifice. Some people are so poor that even when the country has to tighten its belt they should not be asked to make a sacrifice.

The amendment does not go that far. All that we say is that there should be an equality of sacrifice. Those who argue against indexing are saying that they want those people on benefits to be relatively worse off. There is no justification for saying that people on pensions should be worse off and make more sacrifices than the rest of the population. I hope that Conservative Members other than the hon. Member for Brighton, Kemptown (Mr. Bowden) will have the courage to vote against the Government and in favour of the amendment.

Amendment No. 4 deals with the way in which pensioners are paid. It will not cost the Government anything. I do not claim that twice-yearly upratings will result in making more money available to pensioners. I am basically concerned about the injustice suffered by pensioners. They must wait six months for their up-ratings, yet everyone else receives his increases much quicker. Pensioners must meet extra costs. They cannot delay for six months. I should like more money to be made available, but a change from one annual uprating to two does not automatically increase costs.

Dr. Mawhinney

Does the hon. Gentleman agree with my figures? He says that there would be no increase in cost. There is a small increased cost in the second half of the year over the first half-year's increase. I put this at £20 million with inflation at 10 per cent. and at £80 million when it is 20 per cent. Does the hon. Gentlemen accept those figures, even though they are small?

Mr. Bennett

I do not accept those figures. The argument that there should be twice-yearly upratings does not imply that more money should be made available. There should be more money. However, there can still be two upratings and the money can be shared in such a way that there is no additional cost, unless we are going to argue about administrative costs.

In arguing this amendment I do not want to argue about costs. There should be much more frequent upratings. Obviously the costs depend on the first and second increases. There is a strong argument for spending more money, but that is not essential to this amendment.

The Government studied the ways in which they could save on administrative costs. It is amazing that the Rayner inquiry examined the way in which pensions were paid out through the post offices and considered the possibility of making small savings, which would have done a great deal of damage to the service provided to pensioners. It did not seem to spend much time considering the rest of the bureaucracy involved in the paying out of pensions. It would have been much more useful for it to consider the way in which pensions books were organised than the post office end. It caused a great deal of anxiety and worry to pensioners and offered little improvement to the service.

Let us consider what happens at the moment. There is an announcement in the Budget of what will be paid out in November. People wait for six months until they get their money. Most people have spent it several times over and have begun to think that the sum is greater than it is. When they receive the uprating most of them are pretty disappointed. Some of them do not live to see the uprating. This is what upsets them most. Just as it is announced in the Budget that pensioners will receive an uprating in November, through the door comes a demand from the town hall for increased rates. It is likely that pensioners' rents will go up. They also receive increased water rates demands.

None of the authorities says that it will put up the rates in six months' time, it puts them up immediately. That causes pensioners a great deal of upset. In addition, if pensioners receive supplementary benefit for rates or rent they are told to wait for some months for that to increase. They may even have to go into arrears, as, for administrative reasons, the increase cannot be made. Most pensioners feel resentful about that. They ask, justifiably, "If some increases can be made at four or five weeks' notice, why cannot the pensions go up in the same period?"

10.45 pm

At least the Labour Government, when it had a high level of inflation, once, and only once, managed to put the benefits up twice in the year. Certainly, with the inflation rates that we have got this year, there is a strong argument for the Conservative Government doing the same. Once we managed to get the uprating done by July, following the Budget announcement, rather than waiting for November. There are some people who say that, having done it once, there was so much difficulty getting it done by July that a guarantee was given that it would never be done in less than six months. Whether or not that is true, I do not know.

The important thing is to look at the system. If only we could relieve the majority of pensioners from having to depend on supplementary benefit there would be no need to link these together. The only reason why the uprating is so complex is that the pension goes up and all the supplementary benefits have to be adjusted at the same time. That is what makes it complicated; that is what creates the need for the delay. It would be most useful to get the majority of pensioners off supplementary benefit. Then it should be possible to put the pension up pretty quickly.

There ought to be ways of doing it at the present moment. The major problem is that we still print a figure in the books and then new books have to be issued, or that figure has to be overprinted, and it involves a great deal of administration. I have never been able to understand why figures instead of letters have to be put into the books. There could be a chart in the post office giving the letter and the amount that it represented—A equals a certain amount, and so on through the alphabet, if necessary using several letters to indicate a sum of money. Then, when the pension changed, a new chart could be put up showing the new amounts that the letters represented because of the uprating.

It seems to me that that would be a relatively simple way of doing it and I would have thought that within the resources of the Department it ought to be possible to find ways in which that uprating could be done quickly. A large amount of administration could be saved, which ought to make more money available for the Department to carry out the uprating.

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

Far be it from me to explain the Government's position, but I think there are more than 26 different varieties of pension payment—in fact, there are probably thousands. But the alternative that my hon. Friend has implied is that we could make the second uprating a flat-rate uprating and the original calculations could be done on the same basis, so that the single flat-rate second time round, halfway through the year, could be quite easily done, and this would not add to administrative costs because there would only be one calculation.

Mr. Bennett

I understand my hon. Friend's argument but I suggest to him that, first, there is not much of a problem with the letters of the alphabet, because we can have permutations, which would provide many possible rates. I agree that the second uprating could be a flat-rate uprating, which would not have to vary all the other rates.

There are many different ways. As an illustration, I do not like the Christmas bonus because I believe that pensioners ought to get an adequate amount, but if a bonus can be paid one week it is perfectly possible to pay a bonus for 26 weeks in the year, of whatever amount is felt to be necessary. This is illustrated to us time and time again by the way in which people put up pensioners' costs. If the town hall can put the rents up and the rates up that quickly—and, of course, it is happening all over the country—why on earth cannot their pensions go up as quickly?

It seems to me that there ought to be a serious look by the Government at ways of uprating quickly. If amendment No. 4 were accepted and the Government made a commitment for next year, not this year—and if inflation continues at the present rate they are certainly going to need twice yearly upratings—they would have the administration for the future so that they could uprate if and when pensioners' costs went up dramatically.

Mr. J. F. Pawsey (Rugby)

It is always a great pleasure to follow the speech of the hon. Member for Stockport, North (Mr. Bennett). That appears to have been my habit in this House over the past few months.

One of the things that has intrigued me in the past about hon Members opposite is the bland assumption that is so often made by them that only they understand what the words "care" and "compassion" really mean. We on the Government Benches also have the poor and the pensioners in our constituencies, and we know and care just as much as the Opposition do about the aged, the sick and the unemployed.

Social security was intended for those in need, whether by virtue of age, sickness or any other disability. It is necessary to strike a balance between what is desirable and what is feasible. To paraphrase a remark by the right hon. Member for Huyton (Sir H. Wilson), one man's benefit is another man's tax. That is where clause 1 requires explanation.

Pension increases must be in line with price increases, and pensions and benefits must be protected against the effects of price increases. Those who are in receipt of pensions and benefits are protected against the fear of losing their independence and not being able to pay their way; they are protected against the effects of poverty.

Mr. Stallard

Does the, hon. Gentleman accept that the effect of inflation is worse for old-age pensioners, as was pointed out by the hon. Member for Brighton, Kemptown (Mr. Bowden)? Pensioners spend a greater proportion of their meagre income on goods and services, on which inflation is higher. Does the hon. Gentleman accept that that difference should be reflected in the way we treat pensions?

Mr. Pawsey

I note what the hon. Gentleman says. We do not have to link pensions with wages. Perhaps what he says might act as a restraint upon those who make irresponsible wage demands. Perhaps those with industrial muscle will take note of the effect of irresponsible wage demands on people with fixed incomes, and pensioners in particular.

Just as the family learns to live within its means, so must the State. For far too long that fact of life has been omitted from economic thought. Hon. Members must surely be concerned about the consequences of overspending and living beyond our means.

Since 1974, when the legislation came into force, it has been disregarded twice: first in November 1976, when pensions were not increased by either the earnings or the prices yardstick and again in 1978 when pensions were increased by 11.4 per cent. The Labour Government failed to increase pensions in line with wage increases.

Mr. Rooker

The hon. Gentleman knows full well that the shortfall in November 1978 was not discovered until January 1979. The Labour Government made a firm commitment to make the shortfall good, and that was followed through by the Conservative Government. It is not true to say that there was a shortfall which was not made good. It was impossible to discover the shortfall earlier, because earnings figures are always two months out of date. That argument cannot apply. The hon. Gentleman must be honest with the House.

Mr. Pawsey

If the hon. Gentleman is underlining the complexities within the system, does not that mean that the system is unworkable? With respect, that is what he is implying. Since coming into power the Conservative Government have increased pensions by almost 20 per cent., by £6.10. They have raised the earnings rule from £45 to £52 per week. I argue that the Government are in those terms the pensioner's friend.

This House believes in the Welfare State. We must be careful, however, not to undermine the basic family responsibility. The State is no substitute for the family. The family, in this context, means the three generations, the grandparents, the parents and the children. I do not subscribe to the view, sometimes mooted by Opposition Members, that the State always knows best what is right for me, for my neighbour or for any thinking individuals capable of making decisions for themselves—and the majority of British people fall into that category. They should be allowed to make decisions.

I agreed with every word of my hon Friend the Member for Brighton, Kemptown (Mr. Bowden) on the heating discount scheme. Too many old people and pensioners suffer grievously from the effects of hypothermia and really feel the cold. The Government should treat pensioners with special consideration and formulate a suitable scheme.

Mr hon. Friend the Member for Somerset, North (Mr. Dean)—I am sorry that he is not in his place—referred to the delay in the announcement of a pension increase and its actual payment. Few items cause people more distress. I hope that my right hon. Friend can devise some system for bringing closer together the date of the announcement and the payment of the increase in pensions, for there is no doubt that pensioners resent the five months' delay, the five months' frustration, that occurs. I do not believe that it is beyond the wit of man to produce a system under which pensioners could be paid sooner, so avoiding considerable hardship.

Mr. Kilroy-Silk

I support the attempt to maintain the link between the increase in pensions and the increase in prices or earnings, whichever is higher. That link was first established by the previous Labour Government. It is the fact, despite what Conservative Members say, that the last Government established this important link to enable pensioners to experience the rising prosperity of the community as a whole and to share in that prosperity.

More important, at the end of the period of the previous Labour Government, as a result of the link, pensioners were 20 per cent. better off in real terms than at the start of that Government's term of office. The present Prime Minister, during the last general election, was photographed extensively and lavishly with pensioners, announcing that they, of all people, would be protected if the Conservative Party came to power. In the relatively short period that the Government have been in office, pensioners, together with others, but more so than others, have been hit dramatically by increases in value added tax, increases in gas and electricity prices, increases in rent and rates and the general level of price increases. Those price increases will be exacerbated in the next few months.

To make matters worse, the Government now propose to break faith with the pensioners, established when the Labour Government's Act was enacted, and to remove the mechanism whereby pensions will be increased with earnings or prices, whichever are higher. The hon. Member for Brighton, Kemptown (Mr. Bowden), my hon. Friend the Member for Stockport, North (Mr. Bennett) and others have indicated that pensions at their present level are not adequate or acceptable. Many pensioners live on supplementary benefits. One-third of pensioners are at the poverty level of subsistence income.

Few hon. Members would regard the present level of pensions as acceptable in a so-called compassionate, civilised society. Many of us accept that we have a responsibility to pensioners, as the hon. Member for Kemptown emphatically indicated. We have a responsibility not least because pensioners are some of our most vulnerable and disadvantaged fellow citizens. We have a responsibility to ensure they share fully in the rising prosperity of the rest of the community. We have a moral responsibility to ensure that they do not fall behind because of inflation or because the general population, through earnings increases, move ahead at a faster rate. The previous Labour Administration attempted to prevent any major or rapid decline in the value of the pension, so that it could be maintained at the level of inflation or the level of earnings increase.

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The Government, while proclaiming concern about protecting pensioners and wanting to share in the attribution of compassion and care, are not only swindling the pensioners out of the increase to which they are entitled; they intend to swindle them on a continuing basis by ensuring that they will be discriminated against. The pensioners will no longer share in the rising prosperity of the community. They will suffer a real cut in their living standards and in their pension. The Bill proposes a cut in the pension that the pensioners would have otherwise received. There will be some increase in pension, but not to the extent to which they are entitled.

This is the first step—that we shall witness again and again in the Budget and elsewhere—to cutting social and welfare benefits across the board, whethey they be pensions, unemployment pay, social security benefits, or child benefit.

The Government will have to answer for the disgraceful way in which they are treating pensioners and families with children. They have much to answer for. Conservative Members who dislike and resent the Government's proposals should take action tonight in the Lobby to prevent their carrying out the proposals in practice.

The Minister for Social Security (Mr. Reg. Prentice)

It has been an interesting debate, which has gone further than the strict subject matter of amendments Nos. 2, 3 and 4. No one will object to that. It has provided an opportunity to debate the fundamental issues raised in clause 1, and, perhaps, to go wider than that.

I wish to discuss amendment No. 2, moved by the right hon. Member for Brent, East (Mr. Freeson). His speech was confined to the amendment. The Opposition have been opposed to clause 1 from the beginning. It is the most controversial part of the Bill. It featured in the Second Reading debate. There was an argument about it, and we got the better of both the argument and the vote.

In Committee the Opposition moved a number of amendments to delete the whole or parts of the clause. Now they are trying once more, quite legitimately, to edge the Government away from the basic concept of the clause. The Opposition are limited in what they are able to do because parliamentary convention does not allow them to repeat amendments tabled in Committee.

The right hon. Member for Brent, East gave a description of amendment No. 2. I shall give my description of it, which is similar to his. It is important that the House should recognise what we are discussing. The amendment, in a sense, meets the point about the danger of the ratchet effect. The right hon. Gentleman said that he did not accept our argument about that. The intention of amendments Nos. 2 and 3 is to provide an earnings link, in addition to a price link, without the ratchet effect of the present provisions. Pensions would rise in line with earnings unless prices rose more. In the latter case pensions would be increased in line with prices, but only until the 1980 relationship between earnings and pensions was restored.

The amendments are similar to amendment No. 3, which we discussed in Committee, except that in that case the base year was 1978 instead of 1980.

The right hon. Gentleman said, quite rightly, that here is a relationship between the amendment and the ideas promulgated by Tony Lynes in his article in New Society. The right hon. Gentleman should not assume that my right hon. Friend or I quoted Tony Lynes with quite the degree of approval that he attributed to us. We do not accept his solution. We made the point that it was significant that Tony Lynes, as a senior adviser of the Labour Party on these matters, accepted the existence of a rachet effect and accepted that some action had to be taken on the matter. His answer was different from the answer in clause 1, but he provided an alternative similar to that in the amendment.

My preference is for a solution in these terms: first, that the Government should be committed to a minimum legal guarantee to review pensions in the light of price increases; and, secondly, that any increase beyond that should be decided by the Government in the light of the circumstances every year, the state of the economy, and other relevant matters. This should then be put to Parliament for Parliament to judge whether it is right or wrong. That gives maximum flexibility to the Government to decide whether, and if so, by how much, they should go above the statutory minimum.

Mr. Freeson

Unless one believes that such flexibility would be used by the Government from time to time to increase pensions at a rate higher than the earnings rate, which might be higher in that year than price increases, the only flexibility that the Government seek is a flexibility to provide pensions that are lower than the rate of earnings. Therefore, the flexibility argument is rather oblique. It means flexibility downwards and not upwards.

Mr. Prentice

Of course it is a flexibility downwards. Equally, the Government are prescribing a statutory minimum in clause 1, and it is possible for Governments to do more than the minimum.

I shall make three basic points in favour of our choice. Price protection is what the pensioners want. All the evidence that we have had from the pensioners in our constituencies and the pensioner organisations shows that it is their constant concern to relate the value of their pensions to the cost of living. Pensioners want prices protection rather than earnings protection.

Secondly, in the post-war period both Conservative and Labour Governments uprated pensions and other benefits by the statutory minimum. I quoted the record of the Conservative Government between 1970 and 1974 as an example on Second Reading. In recent years the cost of living went up, in round terms, by 40 per cent., pensions by 55 per cent. and earnings by 55 per cent.

Mr. Gwilym Roberts (Cannock)

The Minister is quite wrong in saying that pensioners merely want to keep pace with the cost of living. Like every other group in society, pensioners want to advance their standard of living in line with technological changes. That is what the amendment is all about.

Mr. Prentice

Of course, everyone in the House would share that aspiration. Several hon. Members have stated that, basically, pensions are too low. I would add that they have always been too low. Whatever the statutory provisions, we have a joint concern and commitment to improve them.

My third argument is that the best way to help pensioners directly and to build the foundations for a healthier economy, which will enable us to pay better pensions, is by fighting inflation effectively. One of the main reasons—probably the most important single reason—why there has been excessive inflation in Britain compared with other Western countries is the tendency of successive Governments to over commit themselves with over-elaborate plans and promises, such as those contained in the 1975 legislation on pensions.

I noted the remarkable speech made by my hon. Friend the Member for Somerset, North (Mr. Dean), in which he said that targets that were too ambitious were not necessarily the best way to help pensioners. Surely that is right. We owe it to pensioners to fight inflation so that their pensions keep their value, so that their occupational pensions—if they have them—keep their value, so that their savings keep their value, and so that we can build the foundations of an economy whereby we can afford better pensions in real terms.

The right hon. Member for Brent, East rightly said that we are aiming at a situation whereby the earnings-related scheme will ultimately float people off the sort of levels about which we are talking tonight. He rightly said that we shall not see that in meaningful operation until 1990. He claimed that the amendment would help to take modest steps towards that now. With respect, I think that he is wrong. He is proposing to alter the basis on which the uprating would occur. He will recall that regulations must be made under another part of the Bill to align pension rates with supplementary benefit rates, so we shall not, in effect, be floating people off supplementary benefits if we make the sort of amendment that he suggests. It may be a good amendment for other reasons that he has advanced, but it does not achieve that.

Mr. Freeson

Does the right hon. Gentleman accept that if he changed his mind and did not break the link as suggested in clause 1, that would certainly float a growing number of pensioners off supplementary benefits over the coming years?

Mr. Prentice

No, Sir, with respect. If the basic long-term rates of supplementary benefit are to be in accordance with the basic provisions for pensioners, people will not be floated off, no matter what formula we adopt.

Mr. Kilroy-Silk

rose—

Mr. Prentice

No, I shall not give way. I must move on. The House will not wish me to address it at too great length at this time of night.

Mr. Dennis Canavan (West Stirlingshire)

Hear, hear.

Mr. Prentice

I am pleased to have the hon. Gentlemen's agreement.

The hon. Member for Walsall, North (Mr. Winnick) and a number of other hon. Members asked about the Government's proposals for helping pensioners and others with low incomes with their fuel bills. A scheme is being prepared, and there will be an anouncement of the Government's plans very shortly—I think within a few weeks. I cannot be more precise.

Mr. Winnick

Will it be before the recess, or after?

Mr. Prentice

The only formula that I can use is that it will be within a few weeks. I do not know whether it will be before the recess or j.ust after.

The hon. Member for Derbyshire, North-East (Mr. Ellis) said two things that must be firmly contradicted. He said that the provision that we are making in clause 1 would preclude for ever any improvement in the real value of pensions. The hon. Member for Ormskirk (Mr. Kilroy-Silk) seemed to be making the same point. He was assuming that if the provisions of clause 1 had been in effect during the period of the Labour Government, instead of the relevant part of the 1975 Act, pensioners would be receiving £5 a week less than they now receive. Both hon. Members were making a fundamental mistake. They were assuming that the minimum provisions in clause 1 would always be a maximum. That is not the case. As I pointed out earlier, successive Governments have uprated pensions more than the legal minimum required. Therefore, no hon. Member has a right to assume—

Mr. Kilroy-Silk

rose—

Mr. Prentice

No, I must get on. The hon. Gentleman's hon. Friend the Member for West Stirlingshire (Mr. Canavan) will tell him how impatient he is for me to finish. No one has the right to assume that any Government will implement the minimum levels. That is not the lesson that is taught by history. The hon. Member for Ormskirk (Mr. Kilroy-Silk) also assumed that future upratings would be made in accordance with the new tax and prices index rather than the retail price index. That is not true. I do not know why he made that assumption. We shall use the retail price index as our guide.

11.15 pm

As always, I was impressed by the knowledge of my hon. Friend the Member for Kemptown. He is dedicated to pensioners' rights. However, with respect, I do not think that he made a reasoned case against clause 1 either today or on Second Reading. I do not question his sincerity but I disagree with his reasoning. The onus of proof was on him and he did not discharge it.

My hon. Friend the Member for Peterborough (Dr. Mawhinney) and the hon. Member for Stockport, North (Mr. Bennett) spoke on amendment No. 4. The case for having a twice-yearly uprating has attracted many hon. Members. My hon. Friend the Member for Somerset, North said that he had been attracted by that idea. Indeed, at times I have also been attracted by it. A good deal of play was made of the administrative argument.

Two basic arguments against twice-yearly uprating can be made. The first concerns public expenditure. If the rate of inflation is taken as 10 per cent. a year—as a modest working assumption—it would entail an uprating of 5 per cent. half-way through that year. In other words, that uprating would be made six months earlier than it would otherwise have occurred. At current levels of pensions and prices, that would cost approximately £400 million a year. My hon. Friend the Member for Somerset, North spoke of administrative costs. The real cost would be much larger, and would have very serious implications for public expenditure.

Dr. Mawhinney

I think that my right hon. Friend made a slip when he said that the cost would be £400 million a year. Perhaps he meant that the cost would be £400 million in the first year. After that there would be no increase. What savings could be made by reducing administrative costs? Those costs are an essential part of the scheme if it is to be effective.

Mr. Prentice

There would be an increase in the administrative cost and in the benefit cost of £400 million. That increase would continue. If upratings were carried out twice a year, the administrative costs would also increase. The larger cost of £400 million would not be confined to one year. An uprating would occur six months earlier every year. If one assumes a regular rate of inflation, half of that rate would have to be built in to an increase in pensions and other benefits six months earlier. The cost would therefore not be a once-and-for-all cost. It would represent a heavy and continuing cost.

There is another argument that the House should consider. The argument in favour of annual upratings is the same as that for wage and salary increases at annual intervals. If salary increases take place more frequently, another twist is added to the inflationary spiral. The extra income is spent and the general pressure on inflation is increased. It is therefore unlikely that any Government will contemplate such an amendment.

If an uprating took place more frequently than once a year that would be perfectly legal. The Bill does not preclude that; nor did previous legislation. Uprating at more frequent intervals could legally have taken place from 1975. The Bill does not alter that. However, I do not accept the amendment because it states that an increase must take place twice a year.

Mr. Canavan

Will the Minister publicly admit that what he is doing tonight is repealing in part legislation which, for about six years as a Labour Minister, he defended? He was then a member of a Government pledged to protect pensioners during a period of hyper-inflation. He is now putting pensioners in the firing line in his Government's losing battle against inflation. He claims that he is conducting a witch hunt against those who are defrauding the DHHS but he is one of the biggest frauds in British politics. He defrauded the people of Newham, North-East for many years.

Mr. Deputy Speaker

Order. Interventions must not develop into speeches.

Mr. Prentice

The hon. Gentleman's ignorance of social insurance is equalled only by his expertise in vulgar abuse. I have learnt something in the past six years, which is more than the hon. Gentleman has. If I was then defending pensioners' rights, I still am.

On that note I shall conclude. Several hon. Members on both sides have expressed deep concern to protect pensioners and improve their living standards. The Government are totally committed to that ideal, above all by fighting inflation and building a strong economy, which will enable us to provide better and more dignified living standards for pensioners and others in the greatest need.

Mr. Orme

What the Minister says is absolute nonsense. He and the Government are breaking the link between earnings and prices. In future, pensioners will have a reduction in their standard of

living, which we have built up over the past five years. No one, including the hon. Member for Brighton, Kemptown (Mr. Bowden), can deny that by linking pensions to earnings or prices we allowed pensioners to share in increased prosperity when earnings were high. That gave a £5 a week increase to a married couple which they would not have had without the 1974–75 legislation.

Clause 1 is designed to save public expenditure at the expense of the pensioner. Pensioners are having to pay for tax cuts for the better-off. The clause has been debated at great length on Second Reading, in Committee and tonight. Amendent No. 2, although not fully covering my point, relates to the basic principle.

Inflation is running at 20 per cent. and pensioners are feeling the full effects of that. Only a few months ago the Government refused to make good a shortfall. They are now changing the base for the legislation from earnings and prices to prices only, and they refuse to make a commitment this year.

I ask my hon. Friends and Conservative Members who wish to maintain the standards of our 8½ million pensioners, which have been built up painfully over a number of years, to support the amendment.

I give the House this pledge: an incoming Labour Government will remove the clause that the right hon. Gentleman and his Government have included in the Bill and will return to the basic principle of earnings or prices. On that basis I ask my right hon. and hon. Friends to vote for amendment No. 2.

Question put, That the amendment be made:

The House divided: Ayes 240, Noes 298.

Division No. 233]	AYES	[11.26 pm
Abse, Leo	Bowden, Andrew	Cohen, Stanley
Adams, Allen	Bray, Dr Jeremy	Coleman, Donald
Allaun, Frank	Brown, Hugh D. (Provan)	Concannon, Rt Hon J. D.
Alton, David	Brown, Ronald W. (Hackney S)	Conlan, Bernard
Archer, Rt Hon Peter	Brown, Ron (Edinburgh, Leith)	Cox, Tom (Wandsworth, Tooting)
Armstrong, Rt Hon Ernest	Buchan, Norman	Craigen, J. M. (Glasgow, Maryhill)
Ashley, Rt Hon Jack	Callaghan, Rt Hon J. (Cardiff SE)	Crowther, J. S.
Ashton, Joe	Callaghan, Jim (Middleton & P)	Cryer, Bob
Atkinson, Norman (H'gay, Tott'ham)	Campbell, Ian	Cunliffe, Lawrence
Bagier, Gordon A. T.	Campbell-Savours, Dale	Cunningham, George (Islington S)
Barnett, Guy (Greenwich)	Canavan, Dennis	Cunningham, Dr John (Whitehaven)
Barnett, Rt Hon Joel (Heywood)	Cant, R. B.	Dalyell, Tam
Benn, Rt Hon Anthony Wedgwood	Carter-Jones, Lewis	Davidson, Arthur
Bennett, Andrew (Stockport N)	Cartwright, John	Davies, Rt Hon Denzil (Llanelli)
Booth, Rt Hon Albert	Clark, Dr David (South Shields)	Davies, Ifor (Gower)
Boothroyd, Miss Betty	Cocks, Rt Hon Michael (Bristol S)	Davis, Clinton (Hackney Central)
Deakins, Eric	Jones, Rt Hon Alec (Rhondda)	Radice, Giles
Dean, Joseph (Leeds West)	Jones, Barry (East Flint)	Rees, Rt Hon Merlyn (Leeds South)
Dempsey, James	Jones, Dan (Burnley)	Richardson, Jo
Dixon, Donald	Kaufman, Rt Hon Gerald	Roberts, Albert (Normanton)
Dobson, Frank	Kerr, Russell	Roberts, Allan (Bootle)
Dormand, Jack	Kilroy-Silk, Robert	Roberts, Ernest (Hackney North)
Douglas, Dick	Lambie, David	Roberts, Gwilym (Cannock)
Douglas-Mann, Bruce	Lamborn, Harry	Robertson, George
Dubs, Alfred	Lamond, James	Robinson, Geoffrey (Coventry NW)
Duffy, A. E. P.	Leadbitter, Ted	Rooker, J. W.
Dunn, James A. (Liverpool, Kirkdale)	Leighton, Ronald	Ross, Ernest (Dundee West)
Dunnett, Jack	Lestor, Miss Joan (Eton & Slough)	Ross, Stephen (Isle of Wight)
Dunwoody, Mrs Gwyneth	Lewis, Ron (Carlisle)	Rowlands, Ted
Eadie, Alex	Litherland, Robert	Ryman, John
Eastham, Ken	Lofthouse, Geoffrey	Sandelson, Neville
Ellis, Raymond (NE Derbyshire)	Lyon, Alexander (York)	Sever, John
Ellis, Tom (Wrexham)	Lyons, Edward (Bradford West)	Sheerman, Barry
English, Michael	Mabon, Rt Hon Dr J. Dickson	Sheldon, Rt Hon Robert (A'ton-u-L)
Evans, Ioan (Aberdare)	McDonald, Dr Oonagh	Shore, Rt Hon Peter (Step and Pop)
Evans, John (Newton)	McElhone, Frank	Silkin, Rt Hon John (Deptford)
Ewing, Harry	McGuire, Michael (Ince)	Silkin, Rt Hon S. C. (Dulwich)
Field, Frank	McKay, Alien (Penistone)	Silverman, Julius
Fitch, Alan	McKelvey, William	Smith, Cyril (Rochdale)
Flannery, Martin	MacKenzie, Rt Hon Gregor	Smith, Rt Hon J. (North Lanarkshire)
Fletcher, Ted (Darlington)	Maclennan, Robert	Snape, Peter
Foot, Rt Hon Michael	McMillan, Tom (Glasgow, Central)	Soley, Clive
Ford, Ben	McNally, Thomas	Spearing, Nigel
Forrester, John	McNamara, Kevin	Spriggs, Leslie
Foster, Derek	McWilliam, John	Stallard, A. W.
Foulkes, George	Magee, Bryan	Steel, Rt Hon David
Fraser, John (Lambeth, Norwood)	Marks, Kenneth	Stewart, Rt Hon Donald (W Isles)
Freeson, Rt Hon Reginald	Marshall, David (Gl'sgow, Shettles'n)	Stoddart, David
Garrett, John (Norwich S)	Marshall, Dr Edmund (Goole)	Stott, Roger
George, Bruce	Marshall, Jim (Leicester South)	Strang, Gavin
Gilbert, Rt Hon Dr John	Martin, Michael (Gl'gow, Springb'rn)	Straw, Jack
Ginsburg, David	Mason, Rt Hon Roy	Summerskill, Hon Dr Shirley
Golding, John	Maxton, John	Taylor, Mrs Ann (Bolton West)
Gourlay, Harry	Maynard, Miss Joan	Thomas, Dafydd (Merioneth)
Graham, Ted	Meacher, Michael	Thomas, Jeffrey (Abertillery)
Grant, George (Morpeth)	Mikardo, Ian	Thomas, Mike (Newcastle East)
Grant, John (Islington C)	Miller, Dr M. S. (East Kilbride)	Thomas, Dr Roger (Carmarthen)
Hamilton, James (Bothwell)	Mitchell, Austin (Grimsby)	Thorne, Stan (Preston South)
Hamilton, W. W. (Central Fife)	Morris, Rt Hon Alfred (Wythenshawe)	Tilley, John
Hardy, Peter	Morris, Rt Hon Charles (Openshaw)	Tinn, James
Harrison, Rt Hon Walter	Morris, Rt Hon John (Aberavon)	Torney, Tom
Hart, Rt Hon Dame Judith	Morton, George	Varley, Rt Hon Eric G.
Hattersley, Rt Hon Roy	Moyle, Rt Hon Roland	Walker, Rt Hon Harold (Doncaster)
Haynes, Frank	Newens, Stanley	Watkins, David
Heffer, Eric S.	Oakes, Rt Hon Gordon	Weetch, Ken
Hogg, Norman (E Dunbartonshire)	Ogden, Eric	Welsh, Michael
Home Robertson, John	O'Halloran, Michael	White, Frank R. (Bury & Radcliffe)
Homewood, William	O'Neill, Martin	White, James (Glasgow, Pollok)
Hooley, Frank	Orme, Rt Hon Stanley	Whitlock, William
Horam, John	Owen, Rt Hon Dr David	Willey, Rt Hon Frederick
Howell, Rt Hon Denis (B'ham, Sm H)	Palmer, Arthur	Williams, Rt Hon Alan (Swansea W)
Howells, Geraint	Park, George	Williams, Sir Thomas (Warrington)
Huckfield, Les	Parker, John	Wilson, Rt Hon Sir Harold (Huyton)
Hudson Davies, Gwilym Ednyfed	Parry, Robert	Wilson, William (Coventry SE)
Hughes, Mark (Durham)	Pavitt, Laurie	Winnick, David
Hughes, Robert (Aberdeen North)	Pendry, Tom	Woodall, Alec
Janner, Hon Greville	Penhaligon, David	Young, David (Bolton East)
Jay, Rt Hon Douglas	Powell, Raymond (Ogmore)
John, Brynmor	Prescott, John	TELLERS FOR THE AYES:
Johnson, James (Hull West)	Price, Christopher (Lewisham West)	Mr. Terry Davis and
Johnson, Walter (Derby South)	Race, Reg	Mr. Hugh McCartney.
Johnston, Russell (Inverness)
NOES
Adley, Robert	Bevan, David Gilroy	Brown, Michael (Brigg & Sc'thorpe)
Alexander, Richard	Biffen, Rt Hon John	Browne, John (Winchester)
Amery, Rt Hon Julian	Biggs-Davison, John	Bryan, Sir Paul
Ancram, Michael	Blackburn, John	Buchanan-Smith, Hon Alick
Arnold, Tom	Blaker, Peter	Buck, Antony
Aspinwall, Jack	Body, Richard	Budgen, Nick
Atkins, Robert (Preston North)	Bonsor, Sir Nicholas	Bulmer, Esmond
Atkinson, David (B'mouth, East)	Boscawen, Hon Robert	Butcner, John
Baker, Kenneth (St. Marylebone)	Bottomley, Peter (Woolwich West)	Butler, Hon Adam
Baker, Nicholas (North Dorset)	Boyson, Dr Rhodes	Cadbury, Jocelyn
Beaumont-Dark, Anthony	Braine, Sir Bernard	Carlisle, John (Luton West)
Bell, Sir Ronald	Bright, Graham	Carlisle, Kenneth (Lincoln)
Bendall, Vivian	Brinton, Tim	Carlisle, Rt Hon Mark (Runcorn)
Benyon, Thomas (Abingdon)	Brittan, Leon	Chalker, Mrs Lynda
Benyon, W. (Buckingham)	Brocklebank-Fowler, Christopher	Channon, Paul
Berry, Hon Anthony	Brooke, Hon Peter	Chapman, Sydney
Best, Keith	Brotherton, Michael	Churchill, W. S.

Clark, Hon Alan (Plymouth, Sutton)	Kaberry, Sir Donald	Rees, Peter (Dover and Deal)
Clark, Sir William (Croydon South)	Kellett-Bowman, Mrs Elaine	Rees-Davies, W. R.
Clarke, Kenneth (Rushcliffe)	Kimball, Marcus	Renton, Tim
Clegg, Sir Walter	King, Rt Hon Tom	Rhodes, James, Robert
Colvin, Michael	Kitson, Sir Timothy	Rhys Williams, Sir Brandon
Cope, John	Knight, Mrs Jill	Ridley, Hon Nicholas
Cormack, Patrick	Knox, David	Rifkind, Malcolm
Corrie, John	Lamont, Norman	Roberts, Michael (Cardiff NW)
Costain, A.P.	Lang, Ian	Roberts, Wyn (Conway)
Critchley, Julian	Langford-Holt, Sir John	Ross, Wm. (Londonderry)
Crouch, David	Latham, Michael	Rossi, Hugh
Dean, Paul (North Somerset)	Lawrence, Ivan	Rost, Peter
Dickens, Geoffrey	Lawson, Nigel	Royle, Sir Anthony
Dorrell, Stephen	Le Marchant, Spencer	Sainsbury, Hon Timothy
du Cann, Rt Hon Edward	Lennox-Boyd, Hon Mark	St. John-Stevas, Rt Hon Norman
Dunn, Robert (Dartford)	Lester, Jim (Beeston)	Scott, Nicholas
Durant, Tony	Lewis, Kenneth (Rutland)	Shaw, Giles (Pudsey)
Dykes, Hugh	Lloyd, Ian (Havant & Waterloo)	Shelton, William (Streatham)
Eden, Rt Hon Sir John	Lloyd, Peter (Fareham)	Shepherd, Colin (Hereford)
Edwards, Rt Hon N. (Pembroke)	Luce, Richard	Shepherd, Richard(Aldridge-Br'hills)
Eggar, Timothy	Lyell, Nicholas	Shersby, Michael
Elliott, Sir William	McCrindle, Robert	Silvester, Fred
Emery, Peter	McCusker, H.	Skeet, T. H. H.
Eyre, Reginald	Macfarlane, Neil	Smith, Dudley (War. and Leam'ton)
Fairbairn, Nicholas	MacKay, John (Argyll)	Speed, Keith
Fairgrieve, Russell	McNair-Wilson, Michael (Newbury)	Speller, Tony
Faith, Mrs Sheila	McNair-Wilson, Patrick (New Forest)	Spence, John
Farr, John	McQuarrie, Albert	Spicer, Jim (West Dorset)
Fell, Anthony	Madel, David	Spicer, Michael (S Worcestershire)
Fenner, Mrs Peggy	Major, John	Sproat, Iain
Finsberg, Geoffrey	Marland, Paul	Squire, Robin
Fisher, Sir Nigel	Marlow, Tony	Stainton, Keith
Fletcher-Cooke, Charles	Marshall, Michael (Arundel)	Stanbrook, Ivor
Fookes, Miss Janet	Mates, Michael	Stanley, John
Forman, Nigel	Mather, Carol	Steen, Anthony
Fowler, Rt Hon Norman	Maude, Rt Hon Angus	Stevens, Martin
Fox, Marcus	Mawby, Ray	Stewart, John (East Renfrewshire)
Fraser, Peter (South Angus)	Mawhinney, Dr Brian	Stokes, John
Galbraith, Hon T. G. D.	Maxwell-Hyslop, Robin	Stradling Thomas, J.
Gardiner, George (Reigate)	Mayhew, Patrick	Tapsell, Peter
Gardner, Edward (South Fylde)	Meyer, Sir Anthony	Taylor, Robert (Croydon NW)
Garel-Jones, Tristan	Miller, Hal (Bromsgrove & Redditch)	Temple-Morris, Peter
Glyn, Dr Alan	Mills, Iain (Meriden)	Thatcher, Rt Hon Mrs Margaret
Goodhart, Philip	Mills, Peter (West Devon)	Thomas, Rt Hon Peter (Hendon S)
Goodhew, Victor	Mitchell, David (Basingstoke)	Thompson, Donald
Goodlad, Alastair	Moate, Roger	Thorne, Neil (Ilford South)
Gorst, John	Molyneaux, James	Thornton, Malcolm
Gow, Ian	Monro, Hector	Townend, John (Bridlington)
Gower, Sir Raymond	Montgomery, Fergus	Townsend, Cyril D. (Bexleyheath)
Grant, Anthony (Harrow C)	Moore, John	Trippier, David
Gray, Hamish	Morris, Michael (Northampton, Sth)	Trotter, Neville
Greenway, Harry	Morrison, Hon Charles (Devizes)	Taylor, Teddy (Southend East)
Grieve, Percy	Morrison, Hon Peter (City of Chester)	van Straubenzee, W. R.
Griffiths, Eldon (Bury St Edmunds)	Mudd, David	Vaughan, Dr Gerard
Griffiths, Peter (Portsmouth N)	Murphy, Christopher	Viggers, Peter
Grist, tan	Myles, David	Waddington, David
Grylls, Michael	Neale, Gerrard	Wakeham, John
Gummer, John Selwyn	Needham, Richard	Waldegrave, Hon William
Hamilton, Hon Archie (Eps'm&Ew'll)	Nelson, Anthony	Walker, Rt Hon Peter (Worcester)
Hamilton, Michael (Salisbury)	Neubert, Michael	Walker, Bill (Perth & E Perthshire)
Hannam, John	Newton, Tony	Walker-Smith, Rt Hon Sir Derek
Haselhurst, Alan	Normanton, Tom	Wall, Patrick
Havers, Rt Hon Sir Michael	Nott, Rt Hon John	Walters, Dennis
Hawksley, Warren	Oppenheim, Rt Hon Mrs Sally	Ward, John
Hayhoe, Barney	Osborn, John	Warren, Kenneth
Heath, Rt Hon Edward	Page, John (Harrow, West)	Watson, John
Heddle, John	Page, Rt Hon Sir R. Graham	Wells, John (Maidstone)
Henderson, Barry	Page, Richard (SW Hertfordshire)	Wells, Bowen (Hert'rd & Stev'nage)
Heseltine, Rt Hon Michael	Parkinson, Cecil	Wheeler, John
Higgins, Rt Hon Terence L.	Parris, Matthew	Whitelaw, Rt Hon William
Hill, James	Patten, Christopher (Bath)	Whitney, Raymond
Hogg, Hon Douglas (Grantham)	Patten, John (Oxford)	Wickenden, Keith
Hooson, Tom	Pawsey, James	Wiggin, Jerry
Hordern, Peter	Percival, Sir Ian	Wilkinson, John
Howell, Rt Hon David (Guildford)	Pink, R. Bonner	Williams, Delwyn (Montgomery)
Howell, Ralph (North Norfolk)	Pollock, Alexander	Winterton, Nicholas
Hunt, David (Wirral)	Powell, Rt Hon J. Enoch (S Down)	Wolfson, Mark
Hunt, John (Ravensbourne)	Prentice, Rt Hon Reg	Young, Sir George (Acton)
Irving, Charles (Cheltenham)	Price, David (Eastleigh)	Younger, Rt Hon George
Jenkin, Rt Hon Patrick	Prior, Rt Hon James
Jessel, Toby	Proctor, K. Harvey	TELLERS FOR THE NOES:
Johnson Smith, Geoffrey	Pym, Rt Hon Francis	Mr. James Douglas-Hamilton and
Jopling, Rt Hon Michael	Raison, Timothy	Mr. John MacGregor.
Joseph, Rt Hon Sir Keith	Rathbone, Tim

Question accordingly negatived.

Mr. Andrew F. Bennett

I beg to move amendment No. 5, in page 2, line 19, leave out "last" and insert "21st".

The amendment raises a fairly small point. It seeks to discover what the Government's intentions are in the Bill. On Second Reading and in Committee the tendency was for the Government to say "We are the good guys. Trust us and everything will be all right", and for the Opposition to say "We do not trust any Minister. We want things to be spelt out in the Bill."

I repeat that the amendment seeks to discover the Government's intentions about this year's uprating and future upratings. To understand what is involved it is necessary to look at clause 1(3). The Government have apparently decided that there is a problem with the uprating. The existing uprating system means that there must be an uprating within 12 months of the last one. That in turn means that, each year, instead of waiting 365 days for the uprating we have had to wait either 364 or 363 days. That has meant that year after year the uprating has moved forward by either one or two days.

I should not have thought that this was a major problem, because the uprating will continue within November and October for over 20 years. That should not produce a major problem for the Government, but they seem to think that there is a problem because the uprating is moving slowly forward each year. They have, therefore, decided that they must do something about it: not by suggesting that the uprating should occur at a fixed time each year, but by saying that they should be able to implement the uprating with one year and half a month.

The Government now propose to make the uprating for this year at some time in November. They have left themselves that discretion. If they were merely concerned about making sure that the uprating occurred exactly a year from the previous one, there was a simple way of doing that. I believe that in the amendment we have got it right by suggesting that the uprating should occur before 21 November.

The suspicion is that this year the Government want to delay the uprating by six or seven days. Instead of the uprating having moved forward by two days this year, so that it would come on 10 November, as opposed to 12 November last year, the Government want to put the up-rating back to 24 November. In other words, this year they are looking to save pennies here and pennies there so that they will all add up. They are saying to pensioners and to those who have their benefits uprated that this year the up-rating is to be slipped back from 10 to 24 November. The uprating will therefore be delayed.

The Minister could cut short this debate by telling us when the uprating will take place. He refused to do that in Committee and we were left to fear the worst, which was that he would use the maximum advantage that he could obtain to save money by the use of this clause. Presumably we shall have to wait until the Budget for the uprating announcement. It seems that it is an important secret to be kept until then. It would have been of great help administratively in the Department if people had known when the uprating was to take place. The only reason that we can assume for the delay in the announcement of the date of the uprating is that the Minister wants to fudge it in with the announcement of the amount so that most people will focus their attention on the amount and not appreciate that the Minister is implementing the uprating a week later this year.

Mr. Allen McKay (Penistone)

Does my hon. Friend agree that the date of the uprating is important to pensioners? They need four things. They need a home, heat, a smoke and a drink. The Government have increased rents and the cost of fuel, and are likely in the next Budget to increase the duty on tobacco and alcohol. That will put those two items out of the reach of the most vulnerable section of our society. Therefore, the uprating date is of great importance to pensioners.

Mr. Bennett

Of course the date is important to pensioners, and against the background mentioned by my hon. Friend the Member for Penistone (Mr. Mackay) it would be particularly mean if the Government, this year, chose to put the uprating back by a week. It seems to me that this is one of those areas in which the Government should have a clear commitment. What is the date of this year's up-rating? They must have some idea.

Are the Government thinking about 17 November or 24 November? The date should Le 17 November. There should be no problem about that. It will cost two days. Do the Government intend to save by uprating on 24 November? The amendment is tabled to find out the Government's intentions. The House will draw certain conclusions if the Government intend to delay uprating by at least a week to save the money to which pensioners are entitled.

11.45 pm

Mr. Freeson

In Committee we had extensive debates and many votes. Many of the issues were major, and on some of those there was a great division between the Government and the Opposition. The Bill deals with many detailed matters and we expected a more sympathetic response to them than we received, even if our amendments were unacceptable in their wording.

Many of our amendments sought to change the Bill in detail without making a thrust against the central object of the Bill, however much we disagreed with certain aspects of it. We were rebuffed as totally on those as we were on major policy issues. We felt that there was a crude, blunderbuss response in the way in which the Government dealt with our many detailed arguments.

The issue which we are now discussing was such an issue. We argued in detail. Our proposals were technically questionable, but there was no sign of response to the general spirit of our argument. The Government did not offer to make detailed proposals of their own to meet our point.

The amendment will remove the anomaly by which the uprating takes place one or two days earlier each year. It will not allow the Government to move the uprating date to the end of November. The amendment is similar to amendment No. 10 which was moved in Committee and which proposed 17 November. The Under-Secretary of State said that that would not achieve the desired effect because different benefits are up-rated on different days of the week, and he went on to reject the general proposition.

Our proposition will ensure that the uprating takes place not later than the week commencing 17 November. Under clause 1(3) the Government can postpone this year's uprating to the week commencing 24 November. That is probably their intention. They hope to claw in or hold back a few million pounds more at the expense of pensioners.

Amendment No. 5 would prevent that, while giving the Government all the flexibility that they need to cure the existing anomaly, about which they are so concerned. If indeed they are so concerned about that anomaly—which is the reason that they gave for subsection (3), in the first place—it would be perfectly open and logical for them to accept the amendment. It would achieve their objective. At the same time it would protect our position and meet the point about which we are so concerned.

Is not that the way in which we should deal with matters of detail of this kind? The Government's objective and our objective will be attained. At least on such matters there can be common ground. I hope that tonight there will not be the general, over-blunt response that we received on this matter in Committee, and as we received on so many matters of subsidiary and technical—but not policy —importance. The Government have one objective. The Opposition have another. The amendment meets both without harm to either side. I hope that the Government will accept the amendment, which I strongly support.

Mr. Prentice

May I first say, in defence of my Under-Secretary of State and myself, that I do not agree that we were totally negative on all occasions in Committee. We accepted some points and agreed to reconsider others. One or two Government amendments tomorrow will result from them; for example, an improvement in the length of time for appeals, and matters of that kind.

I cannot accept the amendment. The hon. Member for Stockport, North (Mr. Bennett) correctly described the creeping forward which was the unintentional result of the wording of the 1975 legislation, in the sense that the operative date became one day earlier per year, or two days in a leap year. In 1975 the pension uprating occurred in the week commencing 17 November. By 1979 it was the week commencing 12 November. In 1980, without this amendment, it would be the week commencing 10 November.

The hon. Gentleman did not think that that mattered very much. It does matter in public expenditure terms. The financial memorandum to the Bill makes that clear. I take a hypothetical example—in the week before the Budget I underline very heavily the word "hypothetical"—of the difference between a commencing date of 10:November and 17 November. The difference in cost would be £35 million. We are talking about substantial sums. The subsection aims to give flexibility, which would be any time up to the last day of the month". The amendment would limit that and insert "21st". The hon. Gentleman said that he sought a statement of the Government's intentions. He remarked that presumably he would be told to await the Budget. Yes, of course, the Budget announcement will contain the details of this year's uprating, the amount and the date. Clearly, it is not for me this evening to forecast the contents of that statement.

Mr. Andrew F. Bennett

Is the Minister confirming that it is the Government's intention to make a saving in this area of £35 million, rather than allow pensioners to receive their uprating as near to a year as possible from the previous one?

Mr. Prentice

I am not confirming anything about the date. I am merely saying that the subsection as drafted would give us flexibility between the anniversary of the last increase and the end of the month. Therefore, it gives greater flexibility than the amendment that has been moved by the Opposition.

Mr. Freeson

Is it right, hypothetically—to use the Minister's word—that if the 24th were adopted, which is what we suspect will be the case, it would provide a saving at the expense of pensioners of approximately £35 million?

Mr. Prentice

I think that the right hon. Gentleman's hypothesis is correct. We can all only be hypothetical about this. Even Mr. Adam Raphael has been silent on this matter. No one can anticipate what will be announced next week.

I remind the House that we are not legislating merely for 1980. We are ask- ing the House to legislate in a way that will prevail for some years to come.

Mr. Andrew F. Bennett

If the Government are actually saving £35 million this year they are limiting the saving for future years, because they will still come up against the problem when it gets to the end of the month.

Mr. Prentice

That is correct. The financial memorandum, as I said, has explained the saving that would result from uprating a week later than would have been mandatory if the old legislation had prevailed.

We come back to the point that it is natural that, with this debate taking place this week and with the Budget next week, hon. Members should ask about the intentions in the Budget, and it is equally inevitable that they should get the reply that we cannot anticipate what the Budget will say. This has applied to many debates during the day. When my right hon. Friend was replying to the debate on child benefit he had to speak in similar terms. The House would expect that.

I repeat that we are not simply legislating for 1980. We trust that this legislation will be on the statute book for many years to come, and we want to take the opportunity in this legislation to give the Government greater flexibility than they have had before. That is the whole purpose of clause 1, the earlier subsections of it referring to the formula for uprating pensions, and subsection (3) referring to the operative date. In both cases the question posed to us by the Opposition, in the last debate and in this debate, was how much flexibility there should be. They are trying to limit our flexibility, to commit us to tighter parameters, and we are asking for a greater degree of flexibility.

For those reasons we prefer the formulation contained in the Bill as drafted.

Amendment negatived.

It being after midnight, further consideration of the Bill stood adjourned pursuant to the Order [25 February].

Bill (as amended in the Standing Committee), to be further considered this day.