HC Deb 21 November 1980 vol 994 cc115-32 9.44 am
The Secretary of State for Social Services (Mr. Patrick Jenkin)

The Opposition, as is their right, have chosen to debate social services today. We had a full day's debate on the National Health Service only two or three weeks ago, so hon. Members will not be surprised if I devote the main part of my remarks to social security. Towards the end of my speech I hope to make an announcement about smoking and the outcome of the Government's negotiations with the tobacco industry.

The Gracious Speech refers to next week's increases in pensions and other social security benefits. It is not necessary to rehearse all the details, but the increase in the pension will be the biggest cash increase ever. The total cost of the increases that come into effect next week will be no less than £3,000 million in a full year. They will bring the cost of the whole social security programme to £20 billion a year or more.

Yesterday we listened to the Leader of the Opposition—the right hon. Member for Ebbw Vale (Mr. Foot)—make a speech that at times was mildly witty but was totally unconstructive throughout. The right hon. Gentleman obviously enjoyed himself but he gave no inkling that he had any understanding of the problems confronting the nation. In his references to social security he seemed to imply that spending programmes on the scale of our social security programme could simply go charging merrily ahead irrespective of the nation's ability to afford the cost.

I do not believe that the public are under any such delusion. They know that benefits have to be paid for. They know that many people in work are receiving pay increases well below the rise in the cost of living, that many people are receiving no increases and that, indeed, many hundreds of thousands of people are losing their jobs. It is frankly absurd to believe, as the Labour Party seems to believe, that people, including elderly people, do not understand those facts of life.

It is for my right hon. and learned Friend the Chancellor of the Exchequer to report on the outcome of the Cabinet's discussions on public expenditure. The House will understand that I cannot today enter into any discussion on next year's review to which reference is made in the Gracious Speech. The Government are fully alive to their responsibility to look after those people who, through age, infirmity or family circumstances, are unable without help to manage on their own. We shall stand by the pledges that we have given.

It would be wrong to move on from next week's benefit increases without referring to the other major changes in the system which will take effect at the same time. I refer to the reform of supplementary benefits.

Many hon. Members in the Chamber spent long hours debating the first Social Security Bill in the last Session. However, hon. Members will not necessarily be aware of the enormous amount of work behind the scenes involved in drafting regulations and making the other preparations to bring the new supplementary scheme into effect. We have had to devise new instructions for local office staff on how to operate the new scheme. We have had to engage in substantial training programmes. We have had to produce all the new publications, including the dew supplementary benefits handbook, a copy of which I hope has reached all hon. Members.

Mr. W. R. Rees-Davies (Thanet, West)

Hon. Members will share my view that the handbook is first-class. It is beautifully produced, clearly understandable, and cogent. Since we spend so much time criticising Government Departments, it is right that the House should take the opportunity to praise this first-class production.

Mr. Jenkin

I am grateful to my hon. and learned Friend. I shall see that his kind remarks are drawn to the attention of those responsible for the publication. I pay tribute to the Under-Secretary of State, my hon. Friend the Member for Wallasey (Mrs. Chalker), who has taken a close interest in the publication and production of the document.

When I announced the uprating earlier this year, I warned the House that we were asking such a lot of the staff that we might not get through the uprating by the due date. It had to be combined with preparations for the new supplementary benefits scheme. A great deal of training has taken place, and we had to maintain normal service. It is all the more gratifying, therefore, to be able to report that all the new and extra work has been successfully completed. Out of more than 500 local offices, there are probably less than a dozen that still have to clear up the final loose ends of the uprating. If any beneficiary does not receive his uprating by the due date next week, it will follow quickly with payment of full arrears.

I wish to thank the staff of the local offices, who have performed nobly this year when dealing with a complicated combination of administrative changes. I am sure that the right hon. Member for Salford, West (Mr. Orme) will join me in recognising that local office staff have to bear a considerable burden in the ordinary course of their work. They give good service to the overwhelming majority of those whom they serve.

In the press and elsewhere there has been much totally unmerited criticism of civil servants. We must give credit where it is due. DHSS staff have responded loyally and efficiently to the challenges of introducing one new scheme after another during the past two decades. They have done it again with the new supplementary benefits scheme this year. It has been one of the biggest, one of the most intensive and one of the most successful operations. When I say "Thank you" to all concerned, I am sure that I do so on behalf of the whole House.

Of course, there will be teething problems. One cannot make major changes in a scheme with such wide ramifications without some problems. I hope that right hon. and hon. Members will not be too censorious if it takes a little time to get things working smoothly.

Mr. Tam Dalyell (West Lothian)

It is true that there has been an enormous amount of criticism of civil servants. Will not the Minister, as a senior Minister, have a word withhis hon. Friend the Member for Aberdeen, South (Mr. Sproat), who deluges the Scottish press with unsubstantiated anti-civil servant propaganda? It is the Minister's responsibility to do something about that.

Mr. Jenkin

My hon. Friend the Member for Aberdeen, South (Mr. Sproat) has called attention to what he sees as abuses of the system. The hon. Member for West Lothian (Mr. Dalyell) knows that many of the steps that we are taking, not least those in the area of supplementary benefit reform, are designed to cut down the abuse of the system. We have found additional staff to fulfil the jobs of unemployment review officer and special investigation officer. No doubt my hon. Friend the Member for Aberdeen, South is capable of answering for himself.

Along with the changes in benefits are the changes in the new bodies to monitor the system. Next week will see the birth of the Social Security Advisory Committee. Before the recess I announced that the chairman of the body would be Sir Arthur Armitage, who is a distinguished figure in the academic world. I recently announced the names of the committee members. We are determined to ensure that that committee has full independence and autonomy, in accordance with the wishes expressed by the House during our debates. In no way is it to be the poodle of Ministers. I have made that clear to Sir Arthur. His predecessor, the chairman of the Supplementary Benefits Commission — Professor Donnison, to whom I pay tribute — established a high reputation for the independence of the views that he expressed, not always to the comfort of Ministers of either party. I have made it clear to Sir Arthur that he must feel as free as he wishes to pursue the same course. I wish the committee well.

Mr. J. Enoch Powell (Down, South)

As the body is a United Kingdom body that provides, for the first time in 60 years, a uniform system of advice for the whole of the kingdom, does the Minister accept that its appointment is welcome in Northern Ireland? Northern Ireland Members will look forward to having the advice of the chairman and the body, as they have had from the local body in the past.

Mr. Jenkin

I am grateful to the right hon. Gentleman for his remarks. We see this measure as an advance. Not only does it bring supplementary benefit and national insurance under one roof; it brings the four constituent parts of the United Kingdom under one committee. That is an improvement.

Mr. Stanley Orme (Salford, West)

The Minister spoke about independence for the new chairman of the committee, which I welcome. Under the Supplementary Benefits Commission that independence was underlined, because it could produce an annual report that could criticise the Government and be independent of the Government. Ministers in the previous Labour Administration were sometimes aware that that criticism went deep. Will the same facilities apply to the new body?

Mr. Jenkin

That is a matter for the committee. It is free to report as and when it wishes. The Supplementary Benefits Commission never had any statutory authority for its wider advisory role. The new committee expressly has that authority under statutory provision passed by Parliament. To that extent its position is strengthened.

I turn to other issues in the area of social security. The first concerns the efficiency of the system. I wish to say something about our plans to modernise the administration and to take maximum advantage of new technology. The House already knows that we have been looking intensively at the method of paying benefits. Earlier in the year the Social Services Select Commitee heard evidence and reported its views about our proposals, which had been drawn up with the advice of Sir Derek Rayner. We have studied that report with great care. We have reached preliminary views on how to proceed. We shall publish shortly a response to the Select Committee in the form of a consultative paper. It is clear that there are a number of issues to be discussed and a number of bodies whose views we need on the precise proposals that we shall put forward. We shall publish in full the original report of the scrutiny team. The House and the public will be able to compare their proposals with our proposals. Some hon. Members may have seen a report in The Times earlier this week referring to an earlier document that has long since been overtaken.

When we debated the matter earlier in the year I promised that we should consult all the main interests involved before reaching final decisions. Of course, the House, if it wishes, will have an opportunity for a debate before we go ahead. The changes envisaged in this exercise, including the option for payment by automated credit transfer into a bank account, are only a start.

A number of my hon. Friends—my hon. Friend the Member for Horsham and Crawley (Mr. Hordern) has been among the most insistent critics—have repeatedly pressed me and other Ministers to get better value for money, and tighter administration. Nowhere is that more important than in the administration of social security. The House knows that we employ over 80,000 officials to administer the social security scheme. The cost of that amounts to a staggering £940 million a year.

Social security staff have faced many new pressures in recent years. New benefits have been added, new rules and procedures have been applied, and work loads have moved upwards — under Goverments of both parties. My predecessor, the right hon. Member for Norwich, North (Mr. Ennals), whom I am glad to see in his place, knows that the staff have coped well with the pressures. But there are still too many cases where things go wrong. We still do not give a good enough service to the public.

What are we to do? One answer must be a simplification of the rules. Next week's changes in supplementary benefits are only the first stage of the simplification of that scheme. We intend to press ahead with further simplification whenever we can. Another answer is the constant search for greater efficiency. The Rayner scrutinies are proving invaluable in that task, and a number of changes are in the pipeline. But piecemeal changes can never be enough. We need a more radical approach if we are to modernise the way in which we run the system and give the public a quicker and more accurate service. We also want the staff to have more worthwhile jobs with greater satisfaction.

To put it shortly, the whole operation needs to be modernised. It is a huge task, and we are still in the early stages, even though work began before the last election. In doing this we have to carry the public with us. For that reason I propose an exercise in open government. I intend shortly to place in the Library of the House and to make available to interested bodies outside a brief working paper setting out the stage that we have reached. The paper will describe the problems and some of the ways in which the system might be improved over the next decade.

We shall not be presenting firm proposals. Our object is to clear the ground for decisions that will have to be taken later. The paper will indicate that it is our aim to make the best use of modern technology to handle routine administrative work and so release staff partly to achieve savings, but more importantly to give a better and more personal service to the public.

Mr. Dick Douglas (Dunfermline)

Will the right hon. Gentleman concede that in going for modern technology we must remember the human factor? Does he agree that one of the most important aspects is privacy for the client?

Mr. Jenkin

The hon. Gentleman will be relieved to know that that is a matter very much in the forefront of my mind. The hon. Gentleman will recognise that computers and all the modern peripheral equipment that goes with them should enable the system to give a swifter and more accurate service to the public, better advice on entitlement to benefits, quicker settlement of claims and, perhaps most important of all — one has been conscious of this especially in relation to the disabled—the ability to deal with the individual "in the round". By that I mean that as much as possible of a person's social security business should be handled together instead of in a series of separate benefit-by-benefit transactions.

To achieve this, we shall have to have a modernised communications and recording system. We shall need to draw together the information that we already hold about people in different parts of the system. We shall have to bring the information about their entitlement to different benefits together-at the point where it is needed. That will be not merely in the back office, where the complex calculations are made, but, if possible, at the counter, where staff deal face-to-face with the claimant who may be seeking advice. This will require capital investment. I must make it clear that any capital investment will have to be fully cost effective and justified against other competing claims on resources. There is reason to believe that we can make savings and provide a better service if we make a proper use of what technology is now able to provide.

Such a system would bring other benefits. It would avoid duplication of work and of records. It would reduce the scope for overpayments and other mistakes and make fraud a great deal harder to perpetrate. One route that we could follow would be to use the national insurance number throughout the social security system. That is not the only way. There are other routes.

I turn to the point raised by the hon. Member for Dunfermline ( Mr. Douglas). There are implications that rightly arouse concern about any move in the direction that I have described. Computers can always be made to sound like "Big Brother". That is not a fanciful fear. In our planning we shall have to pay, throughout, the closest regard to security and privacy. These are issues of cardinal importace. No modernisation could ever be recommended to Parliament that did not make proper provision for them. Those who give information to the Department on their personal circumstances must know that it is secure, in the sense that those outside the Department cannot get hold of it and that only those in the Department who are entitled to see a person's records have access to them.

Sir David Price (Eastleigh)

In the context of reforming the social security administration, has my right hon friend abandoned the allied reform of taxation, which we used to know as the tax credit system, or the negative income tax system? it seemed to some of us that it would be better to go the whole way.

Mr Jenkin

Any computer scheme that we adopted would have to be fully compatible with the Inland Revenue's computers if we were going to the tax credit scheme. When considering proposals on the tax front, my right hon. and learned Friend the Chancellor of the Exchequer and I constantly bear in mind the desirability, ultimately—when it can be afforded—of achieving the tax credit objectives that were studied so exhaustively in the Parliament before last.

I attach great importance to minimising the vulnerability of any future computer system to breakdown or disruption. That must be a prime requirement. We have been discussing these issues with the trade union side of the Department. I hope to begin discussions with others outside the Department who we think can help and advise us. I hope that by bringing our thinking into the open and by sharing it not only with hon Members but with interested bodies we shall demonstrate our commitment to open government and help to build a really modern and efficient social security system. We hope to do so by drawing on the skills and wisdom of those who are experienced on these areas.

I turn from the longer-term startegy to a specific proposal that is referred to in the Gracious Speech, namely, the scheme to put an obligation on employers to provide sick pay for their employees during the early weeks of sickness. The House will remember that the proposal was set out in detail in the Green Paper entitled "Income During Initial Sickness: A New Strategy", which was published last April.

I shall bring the House up to date. In round numbers we had about 1,000 responses to the Green Paper. The vast majority supported our objectives to save £400 million in public expenditure, matched by a cut in employers' national insurance contributions, and to reduce the size of the Civil Service by about 5,000—the largest single saving in the number of officials in any Department that is likely to be achieved in this Parliament. Thirdly, our objective is to bring into tax—this is common ground between the two sides of the House—over 90 per cent. of the claims for sickness benefit.

There is reference in this morning's press to the continuing anxieties of the CBI. I quote the CBI's response to the Green Paper: The CBI supports the objectives set out in the Green Paper of reducing public expenditure, bringing sickness benefits into the tax net and thus helping to ensure that employees are not better off when sick than at work. The CBI shares the Government's overall economic objectives, including a reduction of public expenditure and keeping the number employed in the public services at an efficient minimum. The Green Paper's intention of fulfilling both objectives is, therefore, welcomed.

Mr. Clement Freud (Isle of Ely)

Does the right hon. Gentleman agree that it is wrong to keep talking about public expenditure when at least 50 per cent. of the revenue comes from earnings-related benefits from the employed and the self-employed?

Mr. Jenkin

The hon. Gentleman will know that in the conventions the spending by the national insurance fund is part of public expenditure. I made it clear that the reduction in public spending would be matched by a reduction in contributions, as any reduction in spending may be matched by a reduction in taxation. I do not think that there is anything wrong or erroneous in saying that. The substantive objectives are reductions in the number of staff in my Department and bringing the payments into taxation.

Mr. Orme


Mr. Jenkin

We have another objective in putting forward our suggestions. We propose to provide a minimum standard for arrangements that already exist widely in industry. As long ago as 1974, 80 per cent. of employees were covered by some form of an employer's sick pay scheme. If our proposals are accepted by the House and implemented, they will do away with an absurd duplication of effort between my Department and industry.

There are many employers who recognise that short-term sickness cover is a proper responsibility of the employer, as part of the total employment package.

Mr. Orme

The right hon. Gentleman referred to 1,000 responses and quoted the CBI, which in the main represents large companies. How many small employers gave endorsement to the plan, and how many opposed it?

Mr. Jenkin

I ask the right hon. Gentleman to hold his horses. I am coming to some of the criticisms.

It is common knowledge that the details of what was proposed in the scheme have been widely criticised. That is one purpose of putting them forward in a Green Paper. If one is introducing what will be a fairly controversial new scheme affecting industry, it does not make sense to go ahead without taking the views of both sides of industry. That is what we have done. Moreover, we should listen to the responses and react appropriately.

The original proposals in broad outline were for statutory sick pay for up to eight weeks for every employee for whom national insurance contributions were payable, with the exception of married women who are opted out; secondly, that the sick pay should be at the rate of £30 a week—that is at 1979 rates—and be subject to the three waiting days for which the House has already legislated; thirdly, in order to compensate employers for the extra expense, that their national insurance contribution liability should be reduced by an amount that would be calculated as roughly equivalent to the extra wage costs that they would bear, which we put at half of 1 per cent. of the wage bill on which contributions are paid; and, fourthly, that there should be a special reimbursement scheme in respect of new employees—those on the books for eight weeks or less.

The main criticisms have turned not on the substance of the scheme but on the level and inequity of the compensation for industry and the disproportionate burden that it was said would fall on small firms. In the light of those criticisms, we have had a rethink of the scheme. When we introduce our Bill we shall come forward with what I might call the mark 2 scheme. The changes from mark I will go a long way to meet the anxieties that have been expressed.

Perhaps I might outline what we have in mind. The contribution reduction originally proposed would have fully compensated industry as a whole for the extra wage costs, but I have been impressed by the evidence that there will be indirect costs in addition. The statutory scheme will cut across some arrangements already in existence and firms will find themselves, as it were, incurring extra costs in making provision for sick pay and administrative costs. Many firms will be able to resist pressures for extravagant provision, and there will often be good reasons for limiting the availability of private benefits. However, some firms will want to make minor changes for their own purposes, and I am certain that we should recognise that there will be additional costs.

One also recognises that there will be gainers and losers. Some industries will gain and some will not, particularly those with a poor sickness record. The only practical way to pay out the compensation is through a reduction in the national insurance contribution, but, with the best will in the world, that cannot take account of variations in sickness experience. In any case, where an industry has a higher level of sickness than the average, that will already be reflected, as it should be, in the cost of its goods or services to the purchaser, and the proposals that I ant making will add only marginally to that.

However, I accept the case, and, both for the indirect cost and for the apparent inequity, we are prepared to offer additional help in the form of an extra £100 million in round figures to help industry. It will take the form of an extra 0.1 per cent. reduction in the employer's contribution liability, making it 0.6 per cent., which is a 20 per cent. increase. I am satisfied that that will go a long way towards helping industry at large.

Mr. Laurie Pavitt (Brent, South)

How will the scheme affect the quota of the disabled that is statutorily required to be employed?

Mr. Jenkin

We have that very much in mind. As the hon. Gentleman will know, because he follows these matters closely, there is widespread evidence that the sickness record of the disabled is substantially better than that for employees as a whole, for the very good reason that whenever they have a job they have every possible incentive to keep it. Although we have looked carefully at the arguments that have been addressed to us about the disabled, we do not see any reason for making an exception, and certainly it could not be based on registration, because many of the disabled do not wish to be singled out through the registration scheme.

Small businesses pose a different problem, and they have raised considerable arguments for modification of the scheme. They have higher than average costs, but many small firms already have sick pay arrangements and should not have extra costs because of the scheme. However, there is a vast difference between a firm of five people where ore goes sick and a firm of 500 where one goes sick, and we must take account of that. We are therefore proposing a package of extra help for small businesses. It will take the form of a reimbursement scheme, of which the main features will be, first, the reimbursement of 50 per cent. of statutory sick pay paid out above a certain level in respect of each employee who goes sick and, secondly, an increase in the level of reimbursement to 100 per cent. of sick pay above a certain level for new employees—that is to say, to those who have been in the job for less than eight weeks. That was one point made very strongly by small firms.

The small firms that will benefit from that package will be defined by reference to the the total amount of annual earnings on which the employer is liable to pay national insurance contributions. We are aiming at firms employing up to, on average, between seven and 10 people. However, because the scheme is based on average earnings, if a firm pays less than average earnings, a bigger firm will qualify. If it pays more than average earnings, a smaller firm will qualify. It also has the advantage that, because it is based on annual earnings, casual work in a short period will not necessarily take the firm out of the reimbursement scheme, which is of great importance, particularly to farmers, horticulturists and small firms in the building trade.

The full details of the scheme remain to be settled and we need to consult further—

Mr. Orme


Mr. Jenkin

I hope that the right hon. Gentleman is not criticising that. We need to consult further with the interests involved, particularly small business interests, before we make up our minds finally. However, the total package of reimbursement will cost around £40 million and the great bulk of that will go to small firms. I am grateful to my hon. Friend the Under-Secretary of State of Industry for his help and advice in devising the package.

If a package on those lines is accepted, 70 to 75 per cent. of all employers will qualify for the reimbursement scheme, including the overwhelming number of the self-employed, which seemed to be the only point that worried the right hon. Member for Ebbw Vale. In addition, employers will get the 0.6 per cent. reduction in the employer's national insurance contribution.

In those changes we are making a good start on a fresh scheme which will prove attractive. It will achieve our objectives of saving staff in the Department, of making the benefits taxable and of recognising the absurdity of the great overlapping and duplication between my Department and employers both paying short-term sick pay.

Finally, I come to the announcement about smoking, which concerns the discussions that we have been having with representatives of the tobacco industry on what should follow the voluntary agreement between Health Ministers and the industry on such matters as advertising and promotion, the health warning on cigarette packets and product modfication. In the debate on 9 May I undertook to report to the House as soon as those discussions had reached finality, and this they did a day or two ago.

The agreement reached in 1977 by the right hon. Member for Norwich, North was intended to last for three years. It was extended by mutual agreement while the negotiations continued. My duty as a Health Minister, as was the right hon. Gentleman's, must be to seek to reduce the toll of disease and death brought about by smoking. I do not need to repeat all the arguments to the House. We debated them fully on 9 May. They have recently been reinforced by the representations that the conference of medical Royal colleges made in its well-publicised letter to me of 13 November. It wants the House to legislate, and it is not alone in that. However, despite those pressures, I have been determined to try to get a genuinely voluntary agreement, if that is possible.

Naturally enough, the industry wanted the certainty and stability that would flow from an agreement lasting several years, so for many months it pressed for a four-year agreement, and I tried to meet the industry on that. However, from the health standpoint I had to secure terms that I could commend to the House as a sufficient advance to warrant tying our hands for four years, because that is what it would amount to. That has proved impossible. The industry could not accept proposals on reducing advertising and promotion which seemed to me to justify a four-year agreement.

Four years would have taken us up to 1984, beyond the likely end of this Parliament. Given the limited concessions that the industry was prepared to make, I took the view that that was not on. We therefore proposed last summer a two-year agreement on the main issues other than product modification. I shall come to that in a moment. The two years would run from 1 August 1980 to 31 July 1982 and so would leave the House free, if it wished, to take action in this Parliament.

I am today placing copies of the new agreement in the Vote Office, but I shall mention here some of the main points covered. We took the view that cigarette posters were the most obtrusive and influential form of advertising. Expenditure on these is running at more than £20 million a year. In the year ending 31 July 1982 this type of expenditure is to be cut to 70 per cent. of the 1979–80 level, a cut of £6 million, with reductions also in the preceding eight months.

There will be four new wordings for the Government health warnings and 50 per cent. more room on posters for them. In addition, the smoker will buy cigarette packs with different warnings at different times. There will be other restrictions on promotion and advertising. For example, the industry will take steps to stop poster advertising next to schools and playgrounds. It will not advertise on television tobacco goods that bear the same name as cigarette brands. It will take steps to discourage manufacturers of non-tobacco products from including tobacco brand names or designs on goods that have a special appeal to young people. The unaddressed and anonymous promotional offers that come through the post will in future be confined to named adult smokers.

On product modification we need to press ahead with reducing tar yields, because that is certainly important. The recommendations of the independent scientific committee on smoking and health have been taken into account. The industry has agreed to undertake, in a supplementary agreement, to reduce tar yields of cigarettes to an average of 15 milligrams by the end of 1983. The present average tar yield is about 16½ milligrams.

I did not find a satisfactory basis for a major agreement extending beyond the summer of 1982. I have made it clear to the industry that the House must be free to continue to express its view on smoking and to initiate such action as it sees fit. I have indicated to the industry that I can give no undertaking on behalf of the Government to obstruct legislation in the meantime. I have said only that I would seek to persuade the House not to implement any legislation during the currency of the main agreement—that is, before the end of July 1982.

The two-year agreement—it now has only one year and eight months to run—provides a modest advance along the road to reducing the toll of disease and death from smoking, while leaving the House free thereafter to take such further steps in the same direction as might be thought appropriate. I commend it to hon Members.

Mr. David Ennals (Norwich, North)

I am certain that the Secretary of State will have done his best to get a better agreement than he has, but does he realise that most of us on the Labour Benches regard the agreement as wet? Is he aware that those of us who negotiated the original three-year agreement did it to buy time during which there would be a change in public opinion so that we could then go the whole hog and ban advertising? In view of the right hon. Gentleman's comments, the pressure from the medical profession and the assurance from the Labour Front Bench that our party would support legislation, why cannot he proceed now with legislation instead of with this unsatisfactory agreement?

Mr. Jenkin

If I had not had an agreement and had indicated instead that I was proceeding with legislation, it would have been many months before that legislation could have been enacted. In the meantime I should have had no control over poster advertising, warning systems, product modification and all the other matters that we have sought to include in the agreement.

My first responsibility in this issue was to secure and improve upon the existing safeguards. That we have done. I am sure that the right hon. Gentleman recognises that we have gone further in many directions than his agreement. That could have been achieved in the immediate future only on a voluntary basis. Legislation would be controversial and, in the view of many, an action of last resort. My second responsibility has been to leave the Government and the House the maximum freedom to respond to the circumstances. I made that clear to the industry. Of course, we shall want to listen carefully to opinion within and outside the House on the controversial question of legislation. I was, however, determined not to tie my hands or those of the House with a four-year agreement, which was what the industry wanted, on terms that I could not commend to the House.

Mr. Peter Bottomley (Woolwich, West)

Does my right hon. Friend accept that this is a limited advance, which in itself is welcome? He is right to go for a two-year agreement rather than a longer one. Will he spell out more clearly what the Government's attitude would be to legislation promoted during the two-year period that would come into effect or give my right hon. Friend powers to bring it into effect immediately after the end of the present agreement?

Mr. Jenkin

I have no doubt that legislation introduced in that way would have to be the subject of a free vote in the House. This is one of those issues on which it would be impossible to whip hon. Members one way or the other. In those circumstances, the Government would express their view on the proposal that was put forward. The only undertaking that I have given is to seek to prevent implementations of controls on promotion and advertising before the two-year period runs out. I might not succeed, but that is what I have undertaken to do.

Mr. Orme

Is the right hon. Gentleman aware that we shall want an early debate on the agreement? At first reading it seems exceedingly feeble. It falls far short not only of the proposals that we have been putting forward but of what Professor Black and his committee propounded and the resolute action that they proposed. We shall certainly be considering legislation during the coming months, because we feel that only by legislation will we achieve positive results. The Secretary of State's limited achievement fails to deal with advertising in sport, the use of television and all the other factors.

Mr. Jenkin

The sponsorship of sport is not a matter for my Department. It is the responsibility of the Minister with responsibility for sport, my hon. Friend the Under-Secretary of State for the Environment. That was the case under the previous Government, when the right hon. Member for Birmingham, Small Heath (Mr. Howell) made his arrangements with the tobacco companies, as we are doing now. I take note of the right hon. Gentleman's request for a debate.

Mr. Geoffrey Rippon (Hexham)

I greatly welcome my right hon. Friend's assurance that if there were to be legislation, which would be the wrong way to deal with the matter, there would be a free vote. What is the Government's attitude towards cigar smoking? Does he agree that it is much less dangerous than smoking cigarettes and that in any event there are fewer statistics about it?

Mr. Jenkin

I recognise that my right hon. arid learned Friend enjoys a cigar. He will know that the major risks from smoking—they are not the only risks—come from inhaling. On the whole, cigar smokers do not inhale to the same extent as do cigarette smokers. For that reason, cigars are regarded by the medical profession as less of a hazard. However, one of the terms of the agreement is an end to the television advertising of cigars in the same trade name as cigarettes. In that way, we hope to reduce the attraction of cigarettes of those names.

I have touched on a few of the main concerns that will engage our attention in the year ahead. There are many others. We shall proceed steadily with the reorganisation of the Health Service. We shall reply to the Select Committee reports on expenditure and perinatal mortality. We shall publish guidance on the strategy on the health and personal social services. We shall publish a White Paper on services for the elderly. We shall play our part in the International Year of Disabled People. A number of hon. Members were present the other day when the ten thousandth Motability car was presented to a disabled family by the Prime Minister outside No. 10.

That is an all-party venture and an excellent example of the partnership that can exist between voluntary and statutory services. That is the characteristic of our approach to the International Year of Disabled People.

The aims of the year are to further the integration and participation of disabled people. Integration means that, to the greatest extent possible, they should be able to live full and dignified lives in the community. Participation means that disabled people should be involved in all decisions that affect them. It is the year of disabled people and not the year for disabled people. The Government's main legislative contribution will be in the sphere of education, in the Bill to implement the Warnock report, to which my right hon. Friend the Prime Minister referred yesterday.

The Session on which we are embarking will be one of steady progress and reform. Of course, getting the economy right must dominate everything that we do, but that is no reason for battening down the hatches and just waiting for better times. The public we serve deserve better than that, and in the Gracious Speech we point the way.

10.30 am
Mr. Stanley Orme (Salford, West)

The Secretary of State concentrated a great deal on administration and said little about the Health Service or the benefits side of social security. The reason is obvious. It is fair to look at the Government's record over the past 18 months. It is there for all to see. That record is not a promise in a manifesto or a Bill before the House but lies in actions and decisions taken by the Secretary of State and Cabinet colleagues.

The Secretary of State said at this year's Conservative Party conference: We believe that it is the duty of the strong to help the weak, and that is why we seek to help the most vulnerable in our society. These words are not just pious platitudes. Look at the record. Let us look at that record. In the previous Session many of us were involved in a battle to try to prevent the Government from dismantling the Welfare State as we know it. Direct attacks were made on the elderly, the mentally ill and handicapped, the sick, the disabled, the unemployed, children and families, through cuts in expenditure on the NHS, social security benefits and grants to local authorities.

It was odd that the Secretary of State should finish his speech with a reference to the year of the disabled. He endorsed that year, but he has been responsible for cutting the benefits to the disabled.

Mr. Patrick Jenkin

Does the right hon. Gentleman agree that the rate of pension payable next week will be the highest in the history of this country and that we are spending more on the NHS than was spent in any single year of the Labour Government?

Mr. Orme

I shall come to that point; I will not avoid it. However, the right hon. Gentleman must recognise that cash limits and the imposition of VAT have led to the closure of wards and, in some instances, hospitals. Cuts in capital expenditure have led to maintenance and the improvement of buildings being neglected and to new building plans being shelved. In addition, prescription charges are to go up to £1 per item next month.

The lack of adequate funding has given rise to private fund-raising activities — lotteries and so on. That is gambling with the health of British people. I was astonished by a circular from a fund-raising organisation advising people how to raise money to finance hospital services. That is obscene and we are totally opposed to it.

There was nothing in the Queen's Speech, but we have had a great deal of information in the press and in statements by the Minister for Health, about the possibility of an insurance element being introduced into the NHS. When shall we see any proposals? Is it likely that we shall have a Green Paper from the Government during this Session? We keep reading reports in the press and the Minister for Health continues to make statements about the matter. The kite is flying and we should like to know the Government's intentions.

It goes without saying that we are opposed to any such developments. The Minister for Health has spelt out some of the ideas. He talked of the costing of treatment, whereby about 75 per cent. or 80 per cent. of the cost would be reimbursed. We have questions to ask. How will the poor, the unemployed and the elderly meet that gap? Even more important, what would such a scheme mean in terms of administrative costs and numbers to be employed? Those are valid questions and we are entitled to answers.

The Secretary of State does not have to take our word on such a proposal. The Royal Commission on the NHS was clear about it. It said that to introduce an insurance element would be a breach of the main principle that access to health care should be according to need, not ability to pay. That is where we stand.

We have seen the personal social services suffering. Cuts in the home help service, meals on wheels, aids and adaptations for the disabled, residential care and field work have all resulted from the lack of Government funding to local authorities. The Secretary of State knows that, by the charges that have been imposed, particularly for home helps, he has closed the door to those on supplementary benefit being reimbursed for such costs.

The social security Acts that were pushed through in the previous Session have had devastating effects. The Secretary of State asked me about pensions. Some of my colleagues and I spent many nights in Committee on the first Bill, which broke the link between earnings and prices. If that had not been done, a married couple would be entitled to £2.20 a week more later this year. The pensions link is only with prices.

Mr. Patrick Jenkin

I think that the right hon. Gentleman means the link between earnings and pensions. If we could break the link between earnings and prices we should achieve the economic millennium.

Mr. Orme

The Secretary of State is trying to be clever and it does not suit him. Under the Labour Government, pensions were raised in line with earnings or prices, whichever were the higher. The situation is clear. The link with earnings was removed by the first Bill. The effect is that because earnings are running 4 per cent. or 5 per cent. higher than prices, there is a difference of £2.20 a week to a married couple. That is the reality.

I turn to the 54-week year—the two-weeks swindle. Pensioners are becoming aware that in the uprating married couples have lost £12.30 over those two weeks. I hope that they are making their views known to the Secretary of State. The feedback that I am getting is that pensioners feel that they have been robbed.

The earnings rule was frozen by the Government under those Acts, and we have had a direct cut in real terms in the short-term benefits for the unemployed, the sick and those on invalidity and industrial injury benefits. Cuts have been made, and we have had the first reduction in real terms in the unemployment benefit for 50 years, at a time of rising unemployment, some of which has been deliberately created by the economic policies of the Government.

The Secretary of State referred to the year of the disabled, 1981. My right hon. Friend the Member for Manchester, Wythenshawe (Mr. Morris), who is unfortunately away on another engagement today, will play a prominent part in the year of the disabled because he will chair the international committee. He is a worthy person to carry out such duties on behalf of this country. But, while paying lip service to the year of the disabled, the Secretary of State is cutting benefits for the disabled.

One of the meanest actions of the Government is the cut in real terms in invalidity benefit. In Committee we were promised that that cut would be reviewed, but the immediate effect is a 5 per cent. loss. We have also had a reduction in linkage in benefits for the sick. Despite election pledges, plans for the disabled have been ditched by the Government.

During the term of office of the Labour Government, despite some of the economic difficulties, new benefits were introduced and we took positive steps to help the disabled. Now, those advances are being eroded by the actions of this Government.

The earnings-related supplement is to be phased out and abolished by 1982. That will affect 70 per cent. of all women, because widows' benefits and benefits to mothers will also be affected. There has also been a delay in implementing the EEC directive on social security proposals. It has been delayed to almost the last possible date in 1984.

One of the most important areas that the Government have invaded is that of insurance. The Government are considering an insurance principle for the National Health Service, but at the same time they are considering dismantling the insurance principle on contributory benefits. That break is serious because many of the benefits are self-financing through the insurance principle to which people contribute. The move away from it is to be regretted.

Child benefit is an area where the Secretary of State and his right hon. Friends are most vulnerable. There has not been an increase for 18 or 19 months, and the increase to be paid on 24 November will be 45p per week below the rise in the cost of living. Despite promises by the Secretary of State and his right hon. Friends to maintain its real value, that has not taken place. The Government are considering monthly payment of benefits, although the Secretary of State glossed over it in his remarks. Not least would child benefit be affected. A document leaked by the Child Poverty Action Group showed that if the Government paid the benefit in arrears they would save £50 million a year.

Mr. Patrick Jenkin

Does the right hon. Gentleman realise that that can happen only in one year?

Mr. Orme

That is once too many. Again, this is where the Government are cheeseparing, making savings in the crucial areas of family and child benefit. I think that the Government hoped that it would not be noticed and that it would not even need to be mentioned in a Green Paper on the subject. That is a dishonest approach, and I am glad that the Child Poverty Action Group has been able to expose it.

With increasing unemployment and the economic circumstances that exist in our society today, child benefit is an essential and crucial factor to millions of working families. There are Conservative Members who would have supported an increase in child benefit, and I believe that we have all been cheated. The Government argue that they have maintained a safety net of supplementary benefit, but the Supplementary Benefits Commission says in its annual report: For most people, current rates of benefit do not allow people to participate fully in the community. The real cost of children is not reflected in the scale rates, and differentials operate to the disadvantage of the majority.

The Supplementary Benefits Commission report continued: We de not believe it is sufficient to increase benefit in line with movement of prices. That brings me to two points in the Queen's Speech. It is stated in the paragraph dealing with social benefits: Pensions, war pensions and other social security benefits will be increased on 24 November and reviewed again next year. What does the word "reviewed" mean? I have looked back to 1973 and I have not found the word used in any previous Queen's Speech. Does it mean that the Government are contemplating cuts in supplementary benefit? Can the Secretary of State say that the linkage, as it now exists, will remain for all benefits, or is that one of the measures that we shall hear about on Monday?

Mr. Patrick Jenkin

Wait and see.

Mr. Orme

The Secretary of State says "Wait and see". That is a significant statement, because if the Government are to cut supplementary benefit it is a direct attack on the poorest section of our community and it flies in the face of every commitment that they have made, both in their manifesto and in statements inside and outside the House. The word "reviewed" has important connotations. We shall wait with interest, but I fear that we may be in for some shocks.

I warn the Secretary of State that he will not get any support whatever for measures such as these. Already changes have been made which are having a direct effect upon the living standards of millions of people. If there is now to be a further inroad into what had become an established right—the link between prices and benefits—it will be clear that nothing is sacrosanct, in spite of agreements and understandings which had been established in this area.

I now turn to the question of sickness benefit and the points that the Secretary of State made this morning concerning the Bill that he is to introduce. In listening to him, all could envisage was an increase in bureaucracy, an increase in paper work for small businesses, the moving about of claims of people who were or were not entitled to benefit, and so on. A figure of £100 million was mentioned for the purpose of reimbursing small employers. All these things are to take place in order to enable the Government to move away from the insurance principle which has so far been firmly established. In its place there is to be a complicated bureaucratic system which will hit both employees and employers.

This is a real hotchpotch of a proposal, and I ask the Secretary of State to take it away and scrap it. He gave no evidence to the House as to the employers who were in favour of it. He did not name any such employers. He did not give us the numbers of those opposed to it. I am sure that the vast majority of the 1,000 replies that he has had were in opposition to the proposal.

The Secretary of State is now talking about Green Paper mark 2. It is no improvement on the Green Paper mark 1. It brings forward all sorts of complications and difficulties. Again, it attacks the main national insurance principle. It will mean extensive record-keeping by employers and an undermining of the confidentiality of information from employers, unions and doctors in regard to national insurance. All these bodies have opposed this proposal for all sorts of reasons, and we ask the Government to take it away and scrap it.

In the next year we shall see the unfolding of the Government's measures for the Health Service. We are threatened with further actions connected with the breaking of the proposals concerning short-term benefits and, not least, supplementary benefits. There is to be the hotchpotch of a sickness scheme.

We shall deal with all these proposals against the background of the Government's current economic policy. The Prime Minister admitted yesterday to my right hon. Friend the Leader of the Opposition that the increase in unemployment had increased the pressure on public expenditure and the borrowing requirement. It is necessary to tackle these problems at source and not to try to resolve some of them by attacking people and their benefits—benefits to which they are justly entitled. This is the basis on which we shall be dealing with the Government's programme during the Session.

There is much that the Government could be doing. The Secretary of State could implement the Black report. There are proposals in that report across a wide range, relating to social security, health, education and housing, which could be to the benefit of our society and the people who live in it. But no, we are to be faced instead with the Government's arid economic policies. We are to have from the Chancellor of the Exchequer on Monday a mini-Budget statement which will make further inroads into people's rights in our society.

We are facing a bleak winter, and I want to say to the people who will come under attack—some of the most vulnerable in our society—that Labour will be standing by them and fighting with them, not only to get a change of policy from the Government but to get rid of the Government altogether.

10.55 am
Mr. W. R. Rees-Davies (Thanet, West)

The speech of the right hon. Member for Salford, West (Mr. Orme) was a hotchpotch. Not only was it a hotchpotch of ideas, hardly knit together, but it ended with a suggestion that the Black report should be considered and possibly implemented. The proposals in the report are about the most expensive that one could possibly find. To implement them would involve an expenditure of untold millions of pounds at a time when we are trying to get efficiency and good housekeeping within the Department.

My right hon. Friend the Secretary of State is to be congratulated on the tenor and nature of his speech. He is showing the way towards a period of continuing consultation in the matters that he is seeking to put before the country. He was right to produce the first Green Paper dealing with sickness benefit. He was also right to produce another document, taking a fresh look at maternity benefits, because, obviously, the maternity benefits are part and parcel of the package deal relating to sickness benefit. The two must go hand in hand. When my right hon. Friend produces the legislation for the former, it must at the same time contain any necessary changes arising from maternity benefits.

It is extremely difficult to get the package absolutely right in its administrative detail. My right hon. Friend is right in saying that it must be done by first giving compensation to those in industry who have to implement the scheme to provide for the eight weeks of sickness pay. I note that he has carefully considered the scheme that is in existence in Germany. Under that scheme, which is effective and runs extremely well, employers are obliged to pay 100 per cent. of the gross earnings, up to a prescribed maximum, for the first six weeks, provided that a medical certificate of incapacity for work is produced within three days of the incapacity beginning. There is also an arrangement under the scheme to cover small firms for the economic risks that they run under the scheme. Employers who regularly have not more than 20 workers can receive various advantages in relation to it. Thereafter, the State takes over. Broadly speaking, that is the right way to look at the problem.

The difficulties of administration can easily be ironed out. They would best be ironed out if we could look at them ourselves. I shall therefore invite my colleagues on the Select Committee next week to give immediate consideration to the sickness benefit scheme and to the maternity benefit proposals. This can be done quickly, as evidence has already been given and can be obtained quite easily. Legislation will probably be introduced in February. Before then, I hope that some useful ideas will be put before the Secretary of State to show that the sickness and maternity proposals can be implemented effectively.

On a point of order, Mr. Speaker. Would you prefer me to resume my seat and continue my speech later?

Mr. Speaker

The hon. and learned Gentleman was about to resume his seat in any case.

It being Eleven o'clock, MR. SPEAKER interrupted the proceedings, pursuant to Standing Order No. 5 (Friday sittings).