Social Security and Housing Benefits Bill

HC Deb 13 April 1983 vol 40 cc812-91

Order for Second Reading read.

4.3 pm

The Secretary of State for Social Services (Mr. Norman Fowler)

I beg to move, That the Bill be now read a Second time.

The purpose of the Bill is to change the method of uprating social security and housing benefits from the forecast method that has been used since 1976 to the historic, or actual, method of uprating. The Social Security Act 1975 requires the Government to review certain benefit levels annually for the purpose of determining whether they have retained their value in relation to the general level of prices in Great Britain. Under the Social Security and Housing Benefits Act 1982 the Government have a similar obligation in relation to the needs allowances for housing benefit.

The Bill in no way lessens or changes those obligations. It concerns solely the uprating method and the change from a method based on forecasts of price increases to one based on actual price rises. To judge the proposal it is necessary to consider both the context of the Bill and the reasons why we have the present system.

The context of the Bill is our central concern to protect the living standards of pensioners and others receiving social security benefits. I suggest that that means much more than the annual uprating of benefits. Protection of the living standards of, say, retired people depends also on other economic policies, of which the most important is the control of inflation. Unless inflation is controlled, pensioners' savings are eroded and the value of many occupational pensions is reduced. Therefore, it is not enough for any Government to say that they have kept national insurance pensions in line with, say, the cost of living index and to ignore the rate of price increases, because it is that rate of increase that eats into savings and means that Governments are not protecting the living standards of retired people.

That is why it is of fundamental importance that the Government have reduced inflation to the lowest levels experienced in this country since the 1960s. It marks a decisive turn away from the position under the Labour Government, when inflation rose by 110 per cent. between 1974 and 1979. That rate of inflation is disastrous for any pensioner with any savings or without the benefit of an inflation-proof public sector pension. It is also disastrous for all other social security beneficiaries, because ultimately industry cannot cope with such a position and therefore cannot provide the wealth necessary for the nation to be able to afford adequate social provision.

Mr. Cyril Smith (Rochdale)

What rate of inflation do the Government forecast will be in operation in November, and what will be the percentage rate of increase in pensions for the same period?

Mr. Fowler

I shall come to those matters. As the hon. Gentleman will know, at the time of the Budget the Chancellor forecast that the rate of inflation in November would be about 6 per cent. The increase to be expected in May—that is the figure to which we are moving—will be about 4 or 4.25 per cent. I shall, however, return to that point as it is clearly central to the debate.

The control of inflation is a necessary part of the context of our basic aim—to preserve the living standards of pensioners and others. There should be no dispute about that. Equally, no one would deny that the level of pensions and other social security benefits and the method by which they are increased are also of fundamental importance.

The Government have achieved not only low inflation but an increase in pensions ahead of the increase in prices. In the four years from November 1978 to November 1982, pensions increased by 68.5 per cent. and the retail price index by 61 per cent. That is the second part of the answer to the hon. Gentleman's question. In the same period, the so-called pensioners' price index increased by 58 per cent. The Budget forecast for the five-year period up to November 1983—the period to which the hon. Gentleman refers—shows that pensions will have increased by 75 per cent. and the RPI by 70 per cent., provided that the forecasts are correct. I shall return to those figures later.

There has been increasing concern about the method by which benefits are increased. Since 1976 we have operated on the so-called forecast method for uprating. That means basically that an estimate is made, usually at Budget time, of what the inflation rate will be in the following November. Experience since the introduction of the new method has shown just how inexact that forecast can be. In the past seven years the forecasts have been wrong five times. Sometimes there has been an overestimate of inflation and sometimes an underestimate, but the measure used to determine pensions and benefits for millions of people has been shown to be three times more likely to be wrong than right. The question obviously arises as to why we ever decided to change—

Mr. David Ennals (Norwich, North)

rose—

Mr. Fowler

No, I wish to go on for the moment.

The question obviously arises as to why we ever decided to change over to such a method. The answer to that question is simple: the Labour Government did it for one reason and one reason alone—to save £500 million which, in present terms, would be a saving worth over £1 billion.

Mr. Ennals

rose—

Mr. Fowler

I will not give way. The right hon. Gentleman has just come into the House. I shall allow him to catch up with the argument and then I shall certainly give way to him.

It is indisputable that that was the reason for that change. Both the diaries of Mrs. Castle and the memoirs of the former Chief Secretary, the right hon. Member for Heywood and Royton (Mr. Barnett), set out the unsuccessful battle that Mrs. Castle fought and the triumph of the then Chancellor of the Exchequer.

The arithmetic of the change was also clear. The Labour Government had presided over a period of hyperinflation which reached a peak of almost 27 per cent. in August 1975. By this point, with the eye of the International Monetary Fund on them, even that Government were forced to seek policies to bring down inflation. It was then that they decided on the change in policy, for the reason that if they kept to the historic method and therefore looked back they would have to pay more than if they looked forward and made a forecast for a period when inflation would be lower. The result was that the Labour Government, who should have paid out 21 per cent. on the historic method, paid out 15 per cent. and saved £500 million.

When I read the Opposition amendment, which has even been signed by the right hon. Member for Leeds, East (Mr. Healey), the former Chancellor of the Exchequer, which refers to "technical adjustment" and "a hidden penalty" I am bound to say that it is a charge that comes very strangely from the Opposition. When the then Chancellor of the Exchequer came to the pensions part of his 1976 Budget he ducked the whole issue altogether. He did not even make it clear that he was changing the system. As Mrs. Castle confided to her diary and a couple of million readers of The Sunday Times: All my officials' valiant efforts to make him"— that was the Chancellor— stand up and be counted on the change from the historical to the forecasting method for the pensions uprating have failed. He skimmed over it and so got a cheer from our side for the amount of the increase—whose relevance they did not understand.

Mr. Douglas Jay (Battersea, North)

Does it not follow from the Minister's argument that the Government are making this change because they expect inflation to rise in the future?

Mr. Fowler

It does not. The right hon. Gentleman is incorrect. I will come to precisely that point, but the right hon. Gentleman should understand that when the Labour Government moved, they moved in such a way that eight months of inflation were ignored and taken out of the equation for ever. What will happen under the proposed system is that any inflation between May and November of this year or any subsequent year will automatically be caught in the following uprating. That is a fundamental difference.

The fact is that the Labour Government fiddled the system, with the support of hon. Gentlemen who have since joined the SDP. They saddled the country with an unsatisfactory method of pensions increase. The forecast system was introduced for the wrong reasons and since then it has not worked. The time has come to be shot of it and instead to use an exact measure of inflation rather than a projection of what it could be, and to bring certainty to the whole process. This is what the Bill will achieve.

Under the Bill the upraling will be based upon the actual inflation rate between May 1982 and May 1983. The reason we have chosen that 12-month figure, which will become available in mid-June, is that mid-June is the last date that will enable the Department to carry out the work of uprating and ensure that all the new benefits are paid on time. It is only following 17 June that the uprating order itself can be presented to the House and debated before the summer recess.

Let me say at once that no one would be more pleased than I if we could reduce further the time between the making of the annual uprating statement and the upraling itself. No one wants that time gap to be wide, least of all pensioners who often understandably complain about the time between the statement and the date when the increased pensions are paid. There are two points to be made—

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

On the point the Secretary of State was making about the date in mid-June, 17 June, given that this matter is not unimportant to the 10 million people outside the House who depend in one way or another on the social security system, may I ask what arrangements the Government have made to ensure that the increased benefits will come into payment at the right time if, on 17 June, the House is prorogued?

Mr. Fowler

We would have time either to pass the order before the House was prorogued or immediately a new Parliament came into session. I think that would be possible. If the hon. Gentleman wishes to explore that point, I suggest that we do so at the Committee stage.

There are two points to be made about the timing of the uprating. First, under the proposals in the Bill we are reducing the time between the uprating statement and the date of payment. Under the forecast system there was a gap of about eight months. When the Labour Government used the historic method for the upratings in April and November 1975, the upratings came into effect eight months after the index figure upon which they were based. The new arrangements will be an improvement in that we are reducing the time lag to six months on the index figure or five months from the time of announcement, although I should like to see a further improvement.

The second point on timing is even more fundamental. This was raised by the right hon. Member for Battersea, North (Mr. Jay). When the Labour Government moved from the historic to the forecast method they ignored eight months of rapid inflation and substituted their estimate of what inflation would be in the 12 months to November 1976. The effect was that pensioners and other social security beneficiaries missed out on those eight months, which were literally lost for ever. There is no way in which they could be recovered.

Under the proposed method there would be no gaps at all. Any increase in inflation that takes place between the end of May and November will be caught automatically in the following year's uprating. For example, if inflation in May is, as the Budget forecast suggested—although the forecast might be wrong—4.25 per cent. and inflation in November is 6 per cent., the difference of 1.75 per cent. will automatically be paid as part of the following uprating. The system can operate the other way if inflation falls rather than increases between May and November.

This year pensioners and other beneficiaries also have the advantage of the over-estimate for inflation made in the 1982 Budget. The estimate for inflation then for the 12 months between November 1981 and November 1982 was 9 per cent., but the actual figure worked out at 6.3 per cent., resulting in a 2.7 per cent. overpayment in the current year.

The individual will receive whatever the May figure is, retain the 2.7 per cent. and have the insurance that any increase in inflation between May and November this year will be picked up in the following uprating. Even without that last provision, as the Chancellor of the Exchequer has estimated, in the five years from November 1978 and November 1983 the RPI will have risen by 70 per cent. and pensions will have gone up by 75 per cent. If we had stuck to the forecast method and had automatically adjusted for the overshoot this year—such adjustments were an integral part of the forecast method—the payment in November would be not about 4 per cent. but 3.3 per cent.

Clause 1 amends the uprating provisions of sections 125, 126 and 126A of the Social Security Act 1975. They cover national insurance benefits, attendance allowance and invalid care allowance. The current legislation obliges the Secretary of State to carry out the statutory uprating review during the tax year preceding each November uprating. In practice the review has been carried out in March for the Budget announcement.

The amendments defer the review to June each year. Putting back the review from March to June will move the review closer to the time of uprating, but it will still be consistent with the requirement to secure parliamentary approval for the uprating changes before the summer recess. The clause requires future increases to be based on the actual percentage rise in prices in the 12 months to the end of May each year and gives an absolute assurance that future upratings will no longer have to be adjusted to take account of past errors. The clause also applies to public service pensions.

Clause 2 deals with the housing benefit needs allowances—the other area in which primary legislation is needed to change the method of uprating. The needs allowance is the weekly amount allowed in calculating the benefit for the housing and other benefit recipients who are not on supplementary benefit. Clause 2 makes a number of amendments to section 29 of the 1982 Act to enable the review to be done on a historic basis by reference solely to actual changes in prices and housing costs. The Secretary of State will still have to report to Parliament if he decides after review not to restore any loss in balance.

Mr. David Alton (Liverpool, Edge Hill)

In the debate just before Easter we were told that one-third of people on the unified housing benefit will not receive their money because of the Government's failure to implement proposals on time. How will this affect claimants who are without the unified housing benefit and the 850,000 pensioners who are worse off as a result of the unified housing benefit scheme?

Mr. Fowler

That will be dealt with in the reply to the debate. We have already dealt with one or two of the points raised during the earlier debate, including the Birmingham position. The hon. Gentleman overstates the problem in relation to the rest of the country.

Clause 3 ensures that the reviews under section 125 and 126A of the Social Security Act which, but for the provisions of the Bill, would have to be made in the 1982–83 tax year will be made in June this year. The clause enables a historic review to be made under section 29 of the Social Security and Housing Benefits Bill 1982 in June this year, even if it has not by then received Royal Assent.

The measures must be seen in the context of the other advances set out in the Budget. Not only have we found resources to pay more to pensioners than we would have under the forecasting method, but we have raised child benefit and one-parent family benefit to all-time record levels; we have ended the invalidity trap—which the Labour party never succeeded in doing—we have encouraged savings by raising again the value of the capital limits for supplementary benefit purposes; we have restored the 5 per cent. abatement on unemployment benefit; we have taken steps to assist men over 60 who have either effectively retired or who wish to retire early; and we have assisted war pensioners by introducing a new mobility allowance.

In 1982–83 the Government spent £32½ billion on social security. In 1983–84 we plan to spend £34½ billion on social security. That is a £220 million addition to the figure in the public expenditure White Paper.

Mr. Ennals

What percentage of that is due to the increase in unemployment?

Mr. Fowler

A great deal is because we are dealing with the effects of unemployment. However, much in the uprating this year is due to the Government's deliberate policy to raise child benefit to the highest level ever—certainly to a level higher than the right hon. Member for Norwich, North (Mr. Ennals) achieved when he was responsible for these matters.

The series of measures announced in the Budget represented the most significant programme of social security improvements in the lifetime of the present Government. It was introduced at the same time as my right hon. and learned Friend the Chancellor was able to announce real increases in the levels of tax thresholds, benefiting in particular those on lower incomes and taking 1¼million people out of tax altogether.

Above all, the improvements show the merit of an economic policy aimed at keeping inflation under control. Both sides of the House accept that inflation not only spreads uncertainty and erodes the value of pensions and savings, but causes fear and anxiety to those approaching retirement who do not know whether the careful provision of a lifetime will be enough to secure their planned standard for retirement.

We should remember that hyperinflation prevailed under the last Labour Government which knocked £500 million off the value of pensions. Labour's programme today is based on the same recipe. Renewed inflation on the scale experienced in the recent past would not only increase the burden on the taxpayer, but would completely undermine the value of the pledges for pensions and social security that the Labour party now give.

Mr. Kenneth Carlisle (Lincoln)

I agree that inflation is perhaps the greatest evil that pensioners fear because of its effect on their standards of living. Has any study been made of the effect of inflation under the last Labour Government on the value of savings and pensioners' standards of living?

Mr. Fowler

I do not think that such a study has been made, but if inflation between 1974 and 1979 was 110 per cent., the real value of pensioners savings must have been more than halved.

Mr. Brynmor John (Pontypridd)

rose—

Mr. Fowler

I shall give way to the hon. Gentleman in a moment. He might listen to the reply and then he can come in. What that means for the pensioner is that we should not just consider the upratings that have taken place but the level of inflation that prevailed during the period of office of the Labour Government.

Mr. John

Taking all that at face value, the Minister has admitted previously, and I invite him to admit it again, that, despite that, the real value of the pension rose by 20 per cent. during the period of the Labour Government. Will this Government match that record?

Mr. Fowler

I concede to the hon. Gentleman, as I have before, that the real value of the upratings rose by 20 per cent., and that is clearly more than it has over the period of this Government. However, during that period any pensioner with savings—that is the point my hon. Friend the Member for Lincoln (Mr. Carlisle) was making—had the real value of those savings more than halved. That of course is the other part of the matter.

There is now considerable doubt about what the Labour party is promising or whether it has worked out the cost of its proposals. That point was raised with me by the lion. Member for Birmingham, Perry Barr (Mr. Rooker) during the Budget debate. I may perhaps respond to it. The history is that on 1 March the right hon. Gentleman the Leader of the Opposition published his 12-point plan for pensioners at the time of a pensioners' delegation to the House.

Mr. Cyril Smith

I thought that this was a Second Reading debate.

Mr. Fowler

The hon. Gentleman must understand that the public will want to compare the policies of the major parties. I acknowledge that the hon. Gentleman does not come into this argument because his party has no policies to offer. I am trying to examine the policies of the alternative parties.

Mr. Cyril Smith

On a point of order, Mr. Deputy Speaker. May I draw your attention to the fact that the House is dealing with the Second Reading of a Bill. Ought not the Minister to be dealing with the clauses of the Bill rather than Opposition policies?

Mr. Deputy Speaker (Mr. Paul Dean)

Order. The hon. Member is aware that during a Second Reading it is permissible to range fairly widely.

Mr. Fowler

I would not have raised the point had it not been raised with me on a previous occasion. I am sure that the hon. Member for Rochdale (Mr. Smith) will allow me to respond briefly to what was said then. The Leader of the Opposition published his 12-point plan for pensioners at the time of a pensioners' delegation to the House. On 29 March the Leader of the Opposition launched Labour's plan, which was called "New hope for Britain". That plan contained an emergency programme of action which an incoming Labour Government would carry out immediately. The 12-point plan for pensions is not mentioned. This strange omission was noticed by The Times which seemed to experience some difficulty in finding an Opposition spokesman to explain it. Almost collectively, the Opposition Front Bench took one step backwards leaving the hon. Member for Perry Barr to do the best he could. I quote his explanation from The Times: Labour's commitment to the pensioners was so strong that it went without saying, which is why it had not been said. Of course, the hon. Gentleman is absolutely right.

Mr. Rooker

What is wrong with that?

Mr. Fowler

I think that the House will want to know about all the other policies that are so strong that they have not been said.

Mr. Rooker

The Secretary of State is plainly working hard through his brief, but lie must not misrepresent what is in a published document. The matter is clear. It is no good him raising red herrings and being wide of the mark. Answers to all these questions can be made. They will be made at the appropriate time—when the Prime Minister calls a general election.

Mr. Fowler

I do not know about keeping to my brief, but I think that that was the worst Civil Service reply that I have ever heard. I hope when it comes to the time the hon. Member for Perry Barr, who challenged me to place the costings of his programme in the Library, which I have—

Mr. Rooker

The Secretary of State must not confuse the assessment of the costings of a programme and letters that he writes to me and other hon. Members in which he misunderstands the 12-point plan published by the Leader of the Opposition. The two things are not the same.

Mr. Fowler

I think that this is all very curious. What is the difference between the 12-point plan published by the Leader of the Opposition and Labour's "New hope for Britain"? There is one good way in which the hon. Gentleman and the Opposition can satisfy all these doubts. The shadow Chancellor costs the proposals at, I believe, £500 million, according to The Times. The hon. Gentleman costs them at £3 billion. The costing that I have put forward in the Library is a minimum of between £13 billion and £15 billion.

I ask the hon. Gentleman and the Opposition to place their costings in the Library. Let us know how they cost their plans for pensions. We have had enough of the generalised waffle that comes from the Opposition Front Bench. Let them get down to some specific policy-making and seek to explain the difference between the words and the phrases that are used in the 12-point pension plan, which promises, for example, that they will restore the earnings link for pensioners and presumably other beneficiaries at the first—

Mr. Rooker

That is not what we are saying.

Mr. Fowler

I am grateful for the clarification. They will only do it for pensioners.

Mr. Rooker

No, we are not. The Minister must read what is there.

Mrs. Jill Knight (Birmingham, Edgbaston)

I wonder whether my right hon. Friend is altogether wise in the request that he is making, bearing in mind the waves of shock and horror that would go through the electorate if it thought for one moment that there was the slightest possibility that it would have to foot the bill for the manifesto to which he is referring.

Mr. Fowler

I think that it would probably be a public service. The Opposition do not seem to know what their policy is, judging from the last response.

Mr. Ennals

The Secretary of State is implying that somehow the Leader of the Opposition's statement is not part of the policy document "New hope for Britain". It is set out point by point on page 15 of the document and given prominence. The Secretary of State just has not read it. I shall send him a copy so that he will know what the next Labour Government's policy will be.

Mr. Fowler

I have a copy of it. I am grateful to the right hon. Gentleman. The first thing that he had better do is to send a copy to his Front Bench. It is clear that they have not read it, or if they have, they have not costed it. Perhaps they will then explain why the pension plan promises the restoration of the earnings link for pensions at the first opportunity and the "New hope for Britain" says that that step is no longer immediate but will be taken "as soon as practicable." Why have they changed the phraseology?

With regard to television licences, the pension plan promises unequivocally that We shall give a TV licence to pensioners free of charge. That has become: We will phase out the TV licence for pensioners during the lifetime of the Labour Government. A certain amount of explanation is required from the Opposition. The best way of settling this matter once and for all, and also for the benefit of the right hon. Member for Norwich, North, is for the Opposition to set out their exact proposals, cost them, publish them, and put a copy of them in the Library.

The Government do not intend to make promises that cannot be kept. We intend to safeguard the living standards of pensioners and other people who receive social security benefits. We stand on our record. In the past four years, in spite of the worst recession for 40 years, we have succeeded in raising pensions faster than prices and in improving support for the family and other key social groups such as the disabled. We have done all that while reducing inflation to its lowest level for 13 years. That is the Government's record. The Bill is the latest stage in our strategy to give back to pensioners and those most in need the stability and security that years of inflation had stripped away. I commend it to the House.

Mr. Deputy Speaker

I have to inform the House that Mr. Speaker has selected the amendment in the name of the Leader of the Opposition.

4.41 pm

Mr. Brynmor John (Pontypridd)

I beg to move, to leave out from "That" to the end of the Question and to add instead thereof: this House declines to give a Second Reading to a Bill which through a technical adjustment will fail to compensate social security beneficiaries by the full amount of inflation at the November uprating, and thus impose a hidden penalty on the lowest incomes in the country.

The House could have expected the Bill to be approached in an academic atmosphere to ascertain the most accurate method of compensating social security beneficiaries for increases in inflation. For a while I thought that that was what the Secretary of State was trying to do in his more lucid and sober moments. The importance of the Bill cannot be gainsaid. It affects all those in receipt of state benefits, not only the retired, but the unemployed, widows, invalids, supplementary beneficiaries and public service pensioners. We are talking about some 20 million people, including dependants. Therefore, the size of that population rightly dictates that the debate will be anything but an academic exercise, when the effect upon the recipients is considered.

What is being proposed is clear enough, despite the Secretary of State's speech. It is that this November's uprating will reflect the annual rate of inflation this May. It will be announced and legislated upon some time after mid-June. It will replace the present system, by which an announcement is made at the Budget of the predicted rate of inflation to next November. The Secretary of State has sold that change with all the lack of restraint for which he is becoming famed.

Once the Prime Minister had done her Annie Oakley bit at Prime Minister's Question Time by saying that she would get rid of undershoot and overshoot, the Secretary of State rushed in eagerly to state that the case for the historic method was overwhelming. Today he has banged his way into town as old Doc Fowler, the itinerant medicine man, with a potion that will cure everything from dandruff to diarrhoea. Not for him is there any doubt or balancing of opinions. There is no room for any opinion other than his own. Once we have cut his cackle, is he credible? The answer is that he is not.

The right hon. Gentleman has some justice on his side when he says that the forecast method does not always work, Sometimes, as he has said, it underestimates inflation, in which case we are obliged to make it good. Sometimes it overestimates inflation, but it does not follow from that that we are obliged to claw it back. The Labour Government in 1977 and 1978 did not claw back such an overestimate of inflation. This year, the Chancellor, as we read in The Times, has made a slightly dotty claim that the standard of living has gone up by 5 per cent. under the Conservative Government. The right hon. Member for Wanstead and Woodford (Mr. Jenkin) in opposition and in government pledged that the pensioner would share in a real rise in the nation's living standards. One would have thought that the last thing on the Government's mind would be consideration of a clawback of 2.7 per cent. on last year's estimate.

The criticism of the Secretary of State is not therefore that there are not weaknesses in the forecast method. We recognise that there are. The real criticism is his grotesque pretence that the historic method is flawless. He said today that it is an exact measure. He went further in the press conference that he held on the day of the Chancellor's announcement, which was published to all and sundry, and of which I have a copy in case he is interested or has time to read it when he is not reading the book by my right hon. Friend the Member for Heywood and Royton (Mr. Barnett). He should read his own press announcements, although they are written in worse style. He said at the conference: The historic—or actual—method avoids the possibility of forecasting error and therefore the need for later adjustment of uprating increases. It replaces doubt with certainty based on fact.

The Secretary of State repeated that pretence today. On that day he was Don Quixote and he was hunting many giants. Unfortunately, he forgot to communicate his views to the long-suffering and much put upon Sancho Panza, the Minister of State, the hon. Member for Hornsey (Mr. Rossi). Let us compare the words that the Secretary of State used today and on that occasion with the words that the Minister of State used to the Select Committee on Social Services in December 1982. He was asked a question by the hon. Member for Macclesfield (Mr. Winterton), and said: In other words, even if one went on an historical basis there was a risk of overshoot or undershoot". In fact, that happened. Later, the hon. Gentleman said: So it is difficult in an exercise of this kind ever to get it absolutely right".

That is certainly not what the Secretary of State was saying today. He was saying that it would be absolutely right and that there would be no trouble from now on. The Minister of State, that hapless winder up, who has not been privy to the Secretary of State's great thoughts, went further in the Committee on the Draft Statutory Sick Pay Up-rating Order 1982 on 26 January 1983, less than six weeks before the Budget. He said: Whichever method is used, there will be difficulties. We shall not be spot-on and make sure that in a particular 12 month period the up-rating will match the movement in prices. He went on to utter the immortal words: All that I can say to the hon. Member for Bishop Auckland is that so far as I am aware, the Government have no intention of introducing legislation to change the basis of the historic method for other benefits. "—[Official Report, Fourth Standing Committee on Statutory Instruments, &c., 26 January 1983; c. 11.]

The Minister for Social Security (Mr. Hugh Rossi)

That is perfectly right.

Mr. John

It may be right. That is a great tribute to the hon. Gentleman's honesty. It is a great commentary on how much the Minister of State is trusted by his Secretary of State in these matters.

What the Minister of State said in that Committee is the perfect answer to the nonsensical certainty of the Secretary of State both today and in his press release. There is no certainty in either the historic or the forecast method. We are doing our rough and ready best. If the Secretary of State had said today that it is a fine judgment and a balancing act, and that there are weaknesses in both methods, we would have had much respect for him. Instead, he has done his itinerant medicine man act. No wonder the Secretary of State deserves the Saatchi and Saatchi prize for overseller of the year. He conceded that at best there was a rough and ready choice between two imperfect systems.

My preference is for the forecast system because it tries to anticipate the real world in which people will be living and shopping. Retrospective compensation cannot remedy the problem because the group is not static. It is no good trying to compensate pensioners who may die before the next uprating, or those who have to live, unemployed, through a 6 per cent. rate of inflation with a 4 per cent. uprating, and who then gain employment in that period. They are never compensated for that gap, as the Secretary of State knows.

Mr. R. A. McCrindle (Brentwood and Ongar)

Is not support for this system by the hon. Member for Pontypridd (Mr. John) in some way mitigated by the knowledge that during the period of its operation this Government and previous Governments have got it right on only two occasions out of seven?

Mr. John

This is an important point and it is important how I approach it. My preference is for a forecast method. I concede that it is not without flaws, just as the forecast method is not without flaws. The historic method gets the forecast wrong as well. The Minister must concede that. The trouble with the debate is that the Secretary of State does not concede that. He talks about a mathematical certainty that will never occur, as he knows perfectly well if he takes any departmental advice. The root problem about all pensions—I refer not merely to retirement pensions but to all social security pensions—is not the use of the historic or the forecast method, but the long gap between the date of the announcement of the uprating and its implementation. The Opposition have always understood that the period between the Budget and November, so we were told by the Department when we were in government and by the present Government, was an irreducible minimum period for the uprating of this benefit. It has proved not to be so. This year three months is being shaved off the announcement, because it will not be made until mid-June and the implementation will be in November.

The Secretary of State recently appeared—although I notice that he was anxious to belabour the Opposition in an attempt to forget it—to be anxious about the well-being of pensioners and their confidence. He did not give a categorical assurance on this occasion, as he did previously, that the payment would be manageable in November if the exercise was not commenced until mid-June. I welcome that assurance. I have my doubts and I believe that some of his Department's staff have theirs. To fail to meet that assurance would be cruel. I hold him to that promise for the period that he remains in office.

A longish gap between forecasting and implementation is no longer inevitable. Computerisation will solve this problem. With the aid of computers it is possible to obtain a date which is adjacent to the uprating, such as September if a November uprating date is chosen. Whatever method is used, it is possible that a very small movement between—

Mr. Fowler

The difficulty is the weekly payment system that exists and which most pensioners appear to want. It is possible to implement a credit transfer system or monthly or quarterly payments. As long as the weekly payment system by order book is retained which most pensioners appear to want—the Rayner scrutiny committee has examined this matter—what the hon. Gentleman advocates is not possible.

Mr. John

I am interested in that. Hitherto, supplementary benefit uprating has been done manually, which has been given as the reason for—

Mr. Fowler

rose—

Mr. John

The Secretary of State has had his opportunity to intervene. I wish to finish my point. It is interesting to note that the Secretary of State mentioned the frequency and method of payments. He will know as do I that in the operational plan the computerisation of supplementary benefit payments is due to be introduced in 1984–85. Provided the caveat can be met at that time—I am sure that it can be met because other difficulties have been met—it will be possible to get a much closer conjunction between the announcement of a forecast or the rate of inflation and its implementation.

Mr. Fowler

No one would be more pleased than I if that could be achieved. Progress can be made, but not immediately. By 1987 progress will have been made regarding supplementary benefits. The hon. Member for Pontypridd (Mr. John) is right in that the uprating of supplementary benefit means that there is a considerable delay. By about 1987 the Government should have cracked that problem. However, it is difficult to crack the problem of the payment of weekly benefits, if that is what pensioners want. That is a problem that successive Secretaries of State for Social Services have had to examine.

Mr. John

With respect, that is not such an insuperable difficulty as the right hon. Gentleman states, and certainly not if there is a will to overcome it.

Mr. Ennals

If the Secretary of State looks at the uprating on 22 July 1974, which was the first uprating of the Labour Government, there was a gap of only four months between the date of the announcement and the uprating. If the right hon. Gentleman looks at what happened in the following year of the Labour Government, the gap was five months between 30 November and 7 April. The longest periods have been in the past three years. The upratings in 1980, 1981 and 1982 were eight months, eight and a half months and eight and a half months respectively. The periods have got longer under this Government.

Mr. John

That was not my central point, although I understand that my right hon. Friend makes the point that a much speedier uprating is possible, as happened in the Labour Government's term of office. As is shown in the operational strategy, 1984–85 is the time for considering a change of method when computerisation means that the gap between the estimate or the historic point is close to the date of implementation. Once that happens pensioners will not be so badly affected. From what the Government have said, they are not well disposed towards that suggestion. Perhaps it should be deferred until computerisation is a more attractive possibility.

The Government must explain why we have this Bill at this juncture. The answer is to be found in the Budget and in the surrounding figures. According to the Government, they over-provided by 2.7 per cent. and they were, therefore—this was announced to the House—considering having to claw it back. The reception that that might receive in the House and in the country generally in a possible election year deterred them from that course. Instead of abandoning that suggestion, the Government turned their ever fertile minds to how they could get it back without appearing to claw it back. The inspiration for the fraud came from the Chancellor's forecast for inflation figures. They stated for the month of May that inflation was likely to be 4 per cent., the lowest this year, and probably for many other years both past and future. The Chancellor by his Budget speech candidly conceded that inflation is likely to be running at 6 per cent. That is the figure which will be prevalent when the uprating figures are paid. Using the forecast method, the Government would have had to uprate the pension by 6 per cent. next November, because that is the forecast for inflation then. However, they found that if they could somehow use the month of lowest inflation—May—they could save themselves £500 million. In effect, they could carry out a disguised and, they hoped, unobserved clawback of 2 percentage points, of the 2.7 per cent. that they say was overpaid last year. Thus, we have had a change from the forecast method to the historic and, as a result, this Bill.

The Secretary of State devoted several passages of his speech to the position in 1976. The sales of the book written by my right hon. Friend the Member for Heywood and Royton have been boosted to enormous proportions within the DHSS alone, and there can hardly be an official above the grade of deputy secretary who has not had it on his desk day and night for the past six months. That episode has been quoted at length. However, when the right hon. Gentleman came to the saving of £500 million, I wonder that the words did not choke him. If there is a gap of 2 per cent. between the figure for May and that for November, he is likely to pay the pensioners £580 million less than they would otherwise be entitled to if he had stuck to the forecast figure.

On the assumption that the Minister and the Secretary of State are still on speaking terms and in the same Department, the Minister must be taken to act for the Secretary of State, and he has admitted that he has saved £500 million by cutting the earnings link for pensions. Therefore, he will short change the pensioner by a total of £1.08 billion next November if inflation takes the path that he assumes. The right hon. Gentleman failed to quote the last sentence of that passage in the book of my right hon. Friend the Member for Heywood and Royton, which he otherwise knows by rote. I refer to the fact that there was a 20 per cent. real increase in pensions in the lifetime of the Labour Government. Taking account of all the inflation of which the Secretary of State so movingly and erroneously spoke, there was a 20 per cent. real increase in pensions in that period. As I have said, the Tories will not only be unable to emulate that at the end of their period of office, they will not even try to match it. The Secretary of State very carefully answered an earlier intervention from one of his colleagues. He did not say that inflation had eroded pensions, but the savings of those with pensions. However, that is precisely why we introduced granny bonds, which kept pace with inflation. We did that to protect such savings against inflation.

Mrs. Knight

Is that why the Labour Government stopped the Christmas bonus?

Mr. John

As the hon. Lady knows, the Christmas bonus was stopped and then restored by the Labour Government. Incidentally, I am glad to see that at least one wet, the hon. Member for Woolwich, West (Mr. Bottomley), has oozed his way back into the Chamber, because the wets have been singularly absent today. The Christmas bonus was stopped because there was a real increase in pensions, which was maintained at a time of economic austerity that has been surpassed only in this Government's period of office.

Mr. Fowler

rose—

Mr. John

I shall not let the Secretary of State off the hook yet. We are discussing the effect of the Bill. Depending on the benefit that they enjoy, married couples will lose between 80p and £1.05 per week, and single people will lose between 50p and 65p a week. If the Secretary of State would stop lecturing or programming his Minister and listen to the figures, he might find out that we are talking about some of the poorest people in the land, who are being cheated of 80p to £1.05 a week, or, for single people, by between 50p and 65p a week. That might not matter to the Secretary of State and the Minister, but it matters to them, because they depend on such benefits. It is a scandal that the affair is being dressed up in this technical guise.

The Minister bears a heavy responsibility for the next matter. The Rossi price index on supplementary benefit will incorporate a 0.7 per cent. loss of benefit relative to other benefits unless it is corrected now. I hope that the Minister will take that into account. However, under the Bill all will be losers and there will be no winners, because the rate of inflation in May will never recur.

Mr. Rossi

I am sure that the hon. Gentleman studies the movement of figures carefully—at least he should—and he will realise that housing costs have been rising more slowly than the average of prices on the retail price index. By excluding the housing element, those on supplementary benefit would, on current form, be 1 per cent. better off.

Mr. John

I shall certainly write to the Minister on that. [Interruption.] The Secretary of State has a low amusement threshold. He is probably the only man to laugh at his leader's jokes at a party conference. However, housing benefit was supposed to rise by 0.5 per cent. less than the RPI but the figure was, in fact, 0.2 per cent. over it. That is a difference of 0.7 per cent. I shall give the Minister further details, but that is the fact. The only consolation is that the reverse Robin Hoods who are clobbering the peasants at the behest of Maid Margaret to enable the sheriff of Surrey, East—the Chancellor—to escape have been found out. They were found out in the Budget debate, when criticism was rife in all parts of the House. I need mention only the hon. Member for Macclesfield who had the good sense to walk out on the Secretary of State's speech. Newspaper after newspaper, including The Daily Telegraph—of which the right hon. Gentleman is so inordinately fond—has seen through the ruse. That is why, although this debate could have been an academic argument, it will not be so.

Our interests should be focused on the real world and particularly on those who are already on low incomes and who stand to lose from the Bill. At the beginning of his speech, the Secretary of State said once more that the Government did not intend to use the Bill as a clawback exercise. I have shown my preference for the forecast method, but I would not go to the stake about it. Therefore, I would advise my right hon. and hon. Friends not to vote against the Government tonight as long as the Government give us an assurance that if inflation in November turns out to be higher than inflation in May the Government will immediately move to ensure that the social security beneficiaries do not lose from the change. If the Government give that undertaking, we shall not divide the House against them.

I should like to suggest three ways in which that might be put into practice. First, if there is—as is stated—a difference of 2 per cent. between the rate of inflation in May and December, that is the equivalent of one week's benefit. The Government could therefore pay an extra week's benefit to all the social security beneficiaries who lose under the Bill. Secondly, if that is too difficult, the Government could pay a special Christmas bonus to all beneficiaries within this category. Obviously, it would be a wider category than that for the normal recipients of the Christmas bonus, but an amount could be given that would be equal to the loss as a result of the change. Thirdly, now that the Government have cut the time for upratings, it is perfectly possible this year to have a six-monthly uprating of the benefits to compensate for that loss. So there are three ways in which we could ensure that no beneficiary on low income would lose.

I issue a challenge to the Secretary of State. If he wishes to demolish accusations of deceit and trickery, if he wishes to be believed in his protestations, and if he wants to avoid a Division, let him give the undertaking that I have asked for—if not in the form that I have suggested, in a form devised by his Department, if it can be spared from reading political memoirs long enough to do so. I am prepared to give way to the Secretary of State now so that he may give such an assurance. Will he now intervene to tell me that, if there is a loss in November, he will ensure that the Government will make it good? Will he intervene? He shakes his head. That is what I expected. I assume that the sages of Hansard will record his refusal.

The Bill is now revealed for what it is, the disguise for a clawback, dictated by political opportunism in an election year. It has not worked. To use a technical adjustment to smuggle through a cut in the standard of living of the poorest in the land will outrage fair-minded people. In the absence of any protection for the poor from the Government, this House must provide that protection. It must record its revulsion at this devious trickery by voting for the Opposition amendment in the Lobby tonight.

5.11 pm

Mrs. Jill Knight (Birmingham, Edgbaston)

I say at once to my right hon. Friend the Secretary of State that I warmly welcome the Bill. Without question, the measure is necessary for the very good reason that the present system for calculating increases is a dud.

Much has been said about the fact that, of the seven times that the present system has been used, it has failed to provide the right answer on five of those occasions. Moreover, the situation seems to be getting worse, because the first two were the most nearly right. The last five were getting progressively worse. In fact, the last one produced the result that was the most in error. We might have done better with tea leaves or a crystal ball. No responsible Government could continue to use a method of calculation that was so patently and obviously useless.

The all-party Social Services Select Committee was chaired by the hon. Member for Wolverhampton, North-East (Mrs. Short), who I am sorry is not in her place.

Mr. Ennals

I thank the hon. Lady for giving way. A meeting is taking place at this very moment of the Select Committee of which my hon. Friend the Member for Wolverhampton, North-East (Mrs. Short) is chairman. I escaped from it so that I might be here in the Chamber, but it is not fair to attack my hon. Friend for not being here when she is attending a meeting of that Committee.

Mrs. Knight

I had no intention of attacking the hon. Lady, and if I have done so I apologise. She is interested in this matter, and I fully accept that if she is in the chair at a Select Committee meeting she cannot be in the Chamber at the same time. However, I am sure that she is with us in spirit, because it is not often that the Government follow so carefully her recommendations. Perhaps I might quote what she, as chairman, said in the report: It is apparent that the system is far from perfect. An uprating system based on forecasting rates of inflation is always likely to produce overshoots or undershoots; it has done so consistently since 1978". That is what the hon. Lady's Select Committee said, in its wisdom, and the Government, with a readiness to listen which is part and parcel of the conduct that we always expect from them, have recognised the Committee's view. As a result, this Bill is now before the House.

Perhaps more nonsense is talked in this House about pensions than about almost any other subject, and that is saying something. It is quite disgraceful that some Opposition Members are so keen to make political points about pensions that they make statements that worry and upset pensioners, the very people they say they are trying to help. No clearer example could exist than all the nonsense that has been talked about clawback. I know pensioners who have been desperately worried because they foolishly believed what Opposition Members said. They really believed that something would be taken back from them when the expression "clawback" was used.

Let me make the matter absolutely plain. It has been made plain on several occasions, but the Opposition are either so dense that they do not understand, or so determined to make a political point that they will not understand. The fact is that nothing whatever is to be taken away from pensioners. They will retain all that they have. It is nonsense to suppose that anything different will happen. To a pensioner, clawback means taking something away, but nothing whatever is to be taken away from pensioners.

Mr. John

rose—

Mrs. Knight

No, I shall not give way at this point.

It worries people very much that the pension they are now receiving is to be cut. That is exactly what Opposition Members are saying, and it is quite wrong. No balanced observer who looks at the facts and figures seriously can accuse the Government of not treating pensioners fairly. Pensions will be fully protected against rises in prices. We have said that time and again—it is a pledge that has been consistently upheld by this Government—and the point is made again in clause 1 which provides that the sums specified … are to be reviewed by the Secretary of State in June of each year".

Why is that? Is it because the Secretary of State does not have enough to do? No, it is because he is quite determined that pensions will be fully protected against rises in prices. If pensioners are not so protected, action will be taken. It is here in the Bill, and it is patently obvious from the way that pensioners have been treated by this Government. I am quite disgusted at the way in which the Opposition throw facts overboard in their manic and panic pursuit of the pensioners' vote.

Reference has been made today to the Labour manifesto, where it deals with pensioners' uprating, and so on. One hon. Member said that a promise exists that pensioners will no longer have to pay television licences if there is a victory for the Labour party at the next general election. I warn the Opposition that they are playing with fire if they take the view that, just because an elderly person enjoys watching television, television should be free. Not all elderly people like to watch television. Some may like drinking gin, and some may like eating jelly babies. Is it really suggested that the Government of the day should shove crates of gin in the direction of old-age pensioners just because they like drinking it, or perhaps crates of jelly babies? It is nonsense to suppose that because there is one thing that a person on a pension likes to do, that person should be able to do it free and at the cost of the rest of the taxpayers. It is infinitely wiser to recognise that not all elderly people—or, indeed, ordinary people not of pensionable age—adore watching television. Some do not.

It is up to the Government of the day to produce for our older people the highest pension that they can manage and then to allow them to decide how they spend it.

Mr. Geoffrey Dickens (Huddersfield, West)

Does my hon. Friend accept that the proposal is in the Labour party manifesto for one reason and for one reason alone—to encourage all pensioners who watch television to vote for the Labour party at the next general election? The Labour party is seeking dishonestly to buy votes. Does my hon. Friend agree that pensioners are not that foolish?

Mrs. Knight

Indeed, pensioners are not that foolish. I will tell the Opposition something for nothing. When a pensioner who does not like watching television finds that his neighbour has been given extra help from the taxpayer to help him watch television, there will be an immediate demand for a quid pro quo. Many times in the past special grants have been given for special subjects and special desires and the immediate reaction from those who do not choose to spend their spare time in that way has been that something should be made available to them because they have been left out. That is why it is infinitely wiser to give pensioners the best possible pension and the best possible uprating when inflation occurs and then to leave the pensioners to spend it for themselves. The trouble with the Opposition is that they never dare to allow people to have a choice. The Conservatives do, and that is the difference. My hon. Friend the Member for Huddersfield, West (Mr. Dickens) was right in what he said.

While I am on the subject, I am profoundly disgusted by the way old-age pensioners are manoeuvred for political reasons by Left-wing people to get into buses and to come to the House to lobby. This is done only for political advantage. I have received complaints about this matter from my constituents who have said that they have been offered £15 and a free day out in London if only they will come to the House to lobby. All of them can see their Members of Parliament in their constituencies without the hassle and trouble of coming to the House. How right my hon. Friend the Member for Huddersfield, West was when he referred to the desire and scramble for votes, a manic and panic pursuit indeed.

It is a forlorn hope, but it would be nice if the day could dawn when we could say that Conservatives care about pensioners and increasing pensions as much as possible and the Opposition have the same view. It would be nice to have some measure of agreement instead of this constant effort to manoeuvre for political purposes.

Clause 2 deals with housing benefits and allows for the uprating of rent and rate allowances through housing benefits. I must tell my right hon. Friend how warmly the change in the system with regard to housing benefits has been welcomed by the local authorities. Some people have received a special allowance to pay their rent but have not paid it. The number runs into thousands. Those who fail to pay the rent, especially when the money has literally been put into their hands, are cheating the ratepayer and taxpayer. I welcome the change that has come about for that reason and two others. First, it is infinitely more simple to arrange that the money should be paid straight to local authorities to pay the rent, and, secondly, it is more economic in terms of manpower.

The amendment asks the House to reject the Bill. The Opposition are asking the House to reject the chance for pensioners to be paid more this November than would have been the case had the Government stuck to the forecast method with adjustment.

Mr. John

Nonsense.

Mrs. Knight

No, it is true. It is clear that that is what the Opposition are doing.

Mr. John

rose—

Mrs. Knight

Perhaps it has burst upon the Opposition in a moment of amazement but, if the amendment were accepted and if the Bill were abandoned at this stage, pensioners would be paid less in November and would be worse off. It is thought probable that the 12-month inflation rate—[Interruption.] I have made it plain that if hon. Members wish to intervene, I will give way.

Mr. John

The hon. Lady knows that she is being unfair. I tried to intervene earlier but she refused. If the Bill is not enacted the forecast method will be used. As the Chancellor has estimated that inflation will be 6 per cent. in November, the uprating will be by 6 per cent. If the Bill is enacted the review will be carried out in May, when the Chancellor estimates that inflation will be 4 per cent., so the uprating next November will be 4 per cent. compared with 6 per cent. by the forecast method. Even with the hon. Lady's perverted logic, how on earth can that be right?

Mrs. Knight

I sometimes marvel at how one hon. Member can be wrong so often and so profoundly. I will try to explain to the hon. Gentleman in words of not more than one syllable that pensioners will be paid more this November than would have been the case had the Government not introduced the Bill and had stuck to the forecast method. It has been agreed across the House that the 12-month inflation rate in November will be about 6 per cent. At least we agree on that. Under the forecast method, if last year's overshoot of 2.7 per cent. had been taken into account, pensioners would have received only a 3.3 per cent. rise. On the new basis—

Mr. John

rose—

Mrs. Knight

The hon. Gentleman must listen. On the new basis pensioners stand to gain a rise of about 4.5 per cent. There is a difference between 3.3 per cent. and 4.5 per cent. Pensioners will be better off under the proposed change whereas Mrs. Castle's change in 1976 left them more than 6 per cent. worse off. Perhaps the hon. Gentleman's memory is stuck in that groove—[Interruption.]

Mr. John

Will the hon. Lady give way on this point?

Mrs. Knight

I have already dealt with clawback. If the Opposition do not understand how constant reiteration of that quite misguided phrase upsets old-age pensioners, they should now understand it and stop using it.

The Bill will improve the lot of pensioners, as Conservatives have consistently sought to do. It will jettison a system that did not help the pensioner as it should have. The amendment would torpedo a slightly better position for the pensioner. I know which system I shall choose.

5.28 pm

Mr. David Ennals (Norwich, North)

I wish I could say that I am delighted to follow the hon. Member for Birmingham, Edgbaston (Mrs. Knight). I follow her in Committee every Tuesday morning and Tuesday afternoon and every Thursday morning and every Thursday afternoon. To do so again today is a bit much, particularly in view of what she has just said. With regard to the point that the hon. Lady made in the final part of her speech, it is obvious that if we stuck now to the forecast method the increase would be 6 per cent. and not 4 per cent. Pensioners would, of course, be better off. The hon.

Lady's supposition was that one has to claw back every time. The figures for 1976 and 1977, about which I know a little, show our commitment then to link pension rises with earnings and prices. In 1976 there was a 1 per cent. overshoot on the short term. Did we take back that 1 per cent.? No, we did not. There was a long-term overshoot of 1½ per cent. in 1977, which was 1 per cent. in the short-term. Did we claw that back? No, we did not.

Mr. Dickens

rose—

Mr. Ennals

No, I shall not give way until I have completed my argument. The supposition that it is necessary to damage pensioners' interests if a Government's estimate proves to be wrong is one that I cannot possibly accept.

Mr. Dickens

The right hon. Gentleman referred to 1975 and 1976 with great glee. Does he accept that those were the very two years when the grasping Labour Government removed the Christmas bonus from the old-age pensioners?

Mr. Ennals

The hon. Gentleman is talking about £10. I do not hold any responsibility for having removed the Christmas bonus for one year. I hold some responsibility for replacing the Christmas bonus. The hon. Gentleman's intervention was unfortunate in that respect.

The hon. Member for Edgbaston attacked the Labour party's promise to phase out television licence fees for pensioners during the lifetime of the next Labour Government. That declaration, which appears in a document which the Secretary of State has clearly not read, is most important. For the hon. Lady to compare that promise with the serving of free gin is deplorably to lower the level of debate in the House. Surely she must know that as pensioners become older more and more of them become housebound. They are, therefore, tied to such entertainment as they can find in their homes. They become more and more dependent, not upon gin, which they cannot afford, but on television, which is their door to the world. Surely the Labour party is pursuing the right policy when it says that people in their years of retirement, especially those who are not able to get out and about as most of us are in this place—although one or two of us do not get out and about very often or very far—should not have to pay television licence fees. There was a degree of cynicism in the hon. Lady's argument when she compared that policy with the distribution of free gin. She showed an unsympathetic approach which is not typical of her general approach to the elderly.

The Social Services Select Committee did not recommend which method of calculation should be used. I am a member of the Select Committee and I well remember the discussion that took place. As my hon. Friend the Member for Pontypridd (Mr. John) has said, we realised that there was no system that could guarantee that we would get it right. It is possible to have a system of the sort that is being introduced by the Government that guarantees that there will be a lower level of uprating in November than that to which pensioners are entitled by the application of the historic method. That is why the Government have introduced another system. It cannot be guaranteed that in November we shall get the uprating exactly right, whatever method we employ.

Of course, the Select Committee was powerfully influenced by the Minister for Social Security. When the Select Committee was taking evidence my hon. Friend the Member for Pontypridd asked the Minister Does that mean that you are or are not contemplating legislation, could you tell the Committee? The record reads: (Mr. Rossi.) No legislation is contemplated to alter the basis. All right, that was not contemplated then. I shall come later to when that was contemplated.

Mr. Dickens

When was "then"?

Mr. Ennals

I shall refer to certain parts of the Secretary of State's speech.

Mr. Dickens

When was "then"?

Mr. Ennals

Dear, oh dear. I shall answer the hon. Gentleman's question a little later. I do not want to delay the House now. It was, of course, during the Select Committee's studies.

The Secretary of State made considerable play about the great increase in the total cost of social security expenditure. He knows that the bulk of the increase has been due to the massive increase in the payments of unemployment benefit. He refused to answer when I asked him how much of the increase has been because of the rising level of unemployment. I think that he should have known the answer at the moment when I asked the question and I do not intend to repeat the question.

Secondly, the right hon. Gentleman commented on the gap between the announcement of the uprating and the payment. When the Labour Government took office it was possible for them in only four months to introduce a substantial increase, which the pensioners needed desperately after the misery of the previous Tory Government's administration. That Labour Government inherited inflation from the Tory Government and they were able to increase pensions again in April 1975. On that occasion they took only five months to pay the increase following the announcement. That Government were paying earlier in November but when the present Government took office they decided that they would make a saving by making payments late in November. That meant, of course, that pensioners received their increase later. The period between announcement and payment was eight months in 1980, eight and a half months in 1981 and eight and a half months in 1982. Why did they increase the gap? They created a great feeling of uncertainty among pensioners.

Mr. Rossi

The right hon. Gentleman has made great play about the four months in 1974. Perhaps he will describe to the House—he had some responsibility in those days—the enormous difficulties in which the Labour Government found themselves because they gave themselves only four months. It was an experiment that they never tried again.

Mr. Ennals

I agree that it was extremely hard for the civil servants to implement the increase. However, the Labour Government felt that they had to introduce the increase quickly because the level of pensions that they inherited was grossly unsatisfactory. There were some difficulties but the next increase in 1975 took only five months. In the past two years it has taken eight and a half months to implement the increase. It is no good the Secretary of State shaking his head because I have the figures before me and I know that they are accurate.

In introducing the Bill the Government have adopted a shabby method of treating 10 million penioners and millions of other beneficiaries, who will receive in November an increase that will be significantly lower than that which they would have received if the forecasting method had been carried out. The House knows why the Government have taken this course. The right hon. Gentleman has threatened to claw back what he calls a 2.7 per cent. overpayment. Is there a pensioner who feels that he is being overpaid? I have never met him and I doubt whether any hon. Member has heard a pensioner saying that he is overpaid and is in receipt of too large a pension. I have never heard a pensioner complain that the Government are being too generous to him. I shall happily give way if the Government have found any such person. At the last minute they decided that it would be unpopular to carry through the threat of a clawback so they decided to do it by a subterfuge. The decision must have been taken at the last possible minute. I calculate that it must have been taken at the Cabinet meeting on the Tuesday of the Budget statement. If not, it must have been taken overnight. The documents that were published with the Budget statement assumed that there would be a clawback. There was no suggestion of there being a recasting of the rules of the game.

Mr. Fowler

If the right hon. Gentleman believes what he has just said, he will believe virtually anything.

Mr. Ennals

Can the Secretary of State explain how it was that the Treasury published figures that became available to the House at the same time as the Chancellor made his Budget statement into which the concept of clawback was written? There was no suggestion then that the rules of the game would be changed.

Mr. Fowler

The documents were prepared, published and printed before the Budget anouncements were made.

Mr. Ennals

How long before? Neither the Secretary of State nor the Chancellor will get away with this. The Budget papers are published only one or one and a half days beforehand. Although they do not become available until Budget day, I should have thought that they go to press the day before. There was a change on the morning of Budget day when Ministers—the Secretary of State may have been one—told the Chancellor that it would be extremely unpopular for the Government to be seen to be putting through a Bill which clawed back from pensioners what they were entitled to. The Chancellor made that decision at the last minute.

This is the second time that the Secretary of State has changed the rules of the game. No doubt he has the support of the Chancellor. Perhaps he was told to do so. I do not know what powers he has. He did so first by abolishing the link with earnings and prices which the Opposition said at the time was shameful. That is why pensioners have not done as well under this Government as they did under the previous one.

The second way in which the Secretary of State changed the rules was by basing the uprating on the month which is likely to show the lowest level of inflation—May. It is estimated that inflation will be 4 per cent. in November, That may be so and some economic experts have said that it might be less. It might be 3½ per cent. but there have also been estimates such as that which I have seen in the Financial Times that by November inflation will have increased, not only to 6 per cent. as the Chancellor has estimated, but to 6½ per cent. or 7 per cent. Therefore, if the uprating, is based on the rate of inflation in May, it could be that pensioners will be awarded an increase of 2 per cent. less than the rate of inflation. Indeed, the discrepancy could be as much as 3½ per cent. Pensioners will have to bear that for the following 12 months.

The figures that I have given are not mine but those of people who know much more than me about the likely trend of inflation in the next few months. Because some people expect an inflation rate which is higher than 6 per cent. in November, there is much pressure on the Prime Minister to cut and run and have an early election while inflation is still low.

The Government are not introducing the Bill out of any conviction that one system is better than another. Not only did the Minister of State say that no legislation was contemplated. In 1974 the Minister for Health who was then the shadow spokesman on social security argued the case for the forecasting method as opposed to the historic method. During the Budget debate, the Secretary of State, when talking about the forecasting method, said: The fact is that, since the system was introduced, it has simply not worked. The forecast has been right only twice—in 1977 and in 1979. In other words, it has been wrong in five out of the seven years that it has been used."—[Official Report, 17 March 1983; Vol. 39, c. 356.] He did not point out, as anyone who examines the subject can see, that there was a Conservative Government during four of the five years in which it was wrong. The problem has resulted through the Government's inability to do the arithmetic. In only one of those years was there a Labour Government. The Government cannot estimate the rate of inflation. I suspect that they may have got it wrong again this time. As a result, they have decided to change the rules of the game.

The only reason for the Government's change of course is to avoid implementing a clawback and doing what they intended to do. The Secretary of State and the Chancellor said that they would make a cut because pensioners had been overpaid. Therefore, they intended that pensioners would be underpaid in the following year. The Government decided to do that by subterfuge.

The hon. Member for Edgbaston said that pensioners are not easily fooled. They will see through this one. I assure her that they will realise that the motive behind writing the rules around the lowest inflation rate is a subterfuge. That is unfair to pensioners and others who will be affected. They will receive only a 3½ or 4 per cent. increase when inflation is likely to be between 6 per cent. and 7 per cent. It is a mean and petty measure.

I notice that, in his Budget statement, the Chancellor crowed about the Government's success in looking after pensioners. He said: On the basis I have described, the position for pensioners over the lifetime of this Government is this. Between the November upratings of 1978 and 1983 prices are likely to have risen by some 70 per cent. and pensions by some 75 per cent."—[Official Report, 15 March 1983; Vol. 39 c. 143–4.]

The Chancellor's great victory was that the Government have raised pensions by 5 per cent. He did not add that the pensions will be reduced at the next uprating so that the increase may prove to be only 3 per cent. Nor did he compare that with the Labour Government's record. During the Labour Government's term of office we increased pensioners' earnings by 20 per cent. in real terms. We shall probably find that the increase in pensions under the Labour Government was seven or eight times that which has taken place under the Conservative Government. Even if all of my estimates are wrong, the increase in pensions under this Government cannot be more than 4 per cent. I am sure that the Secretary of State or the Minister will tell me whether I am wrong.

This is a squalid and mean little Bill. How many people will be affected by it? I know that it encompasses retirement pensions, widows' benefits, invalidity benefit, unemployment benefit, children's special allowance, attendance allowance, non-contributory invalidity pension, invalid care allowance, guardian's allowance, noncontributory retirement pensions, industrial injuries disablement benefit, industrial injuries death benefit and public service pensions. All will suffer. How many more will? What will happen to war pensioners?

I had better state an interest in that I am a war pensioner. Will my war pension be affected by the Government's cuts? My previous attempt to elicit an immediate reply from the Minister was so unsuccessful that I shall not try again, but I hope that when he replies to the debate he will tell the House how many people will be affected by this mean, petty and despicable act and whether war pensioners, to whom we have always tried to give preference—I hope that we shall continue to do so, certainly for as long as I am alive—are also affected.

5.50 pm

Mr. Kenneth Carlisle (Lincoln)

Hon. Members on both sides of the House recognise that the elderly always require special help from the Government and from the community as a whole. I am sure that that sentiment is shared generally. The elderly served their country during war time and during the world recession of the 1930s and they deserve our respect and consideration. They deserve to be dealt with in a straight and honest way, and it worries me that the Opposition's arguments tend to cause confusion and to wrap up their record in a haze of sentiment. That attitude does no good to the pensioner, who must face the reality of daily life and who wishes to be certain about his pension.

The facts are very important to the pensioner. They have been stated by my right hon. Friend the Secretary of State, but as they are important in this debate they are worth stating again. First, under this Government, until November of this year, the retirement pension will have increased in real terms by 75 per cent. That is more than the increase in prices, which is about 70 per cent. We made a promise before the general election to maintain the value of the pension, and we have more than fulfilled that promise. We have heard, especially from the right hon. Member for Norwich, North (Mr. Ennals), the Labour party's promises to the pensioner, but the pensioner wants fulfilment of those promises. My fear is that, from the record of Labour Governments and the folly and chaos of their economic policies, they cannot fulfil those promises.

Mr. Ennals

Will the hon. Gentleman give way?

Mr. Carlisle

I shall not give way.

The second fact is that the present method of calculating the pension by forecasting—

Mr. Ennals

On a point of order, Mr. Deputy Speaker. If an hon. Member refers to another hon. Member specifically, surely that Member has a right to intervene.

Mr. Deputy Speaker (Mr. Ernest Armstrong)

It is for the hon. Gentleman to decide whether he wishes to give way. I understand that he is about to do so.

Mr. Ennals

Of course people want to hear promises. The Labour Government promised two things when they came to office in 1974. The first was that we would increase pensions greatly as quickly as possible because they were very low. The second promise was that during the lifetime of the Parliament we would ensure that the real value of the pension was linked with earnings as well as with prices. That is what we did, but it has been undermined by this Government.

Mr. Carlisle

Before I gave way, I proposed to wait until the right hon. Gentleman had resumed his seat after being in another part of the Chamber but I was happy to do so when he rose on that occasion. As I shall show during my speech, the real worry caused to pensioners by the activities of the Labour Government was the rate of inflation. Although I am not anxious to show the present position in France, it is interesting to note how much a Socialist party can offer before a general election but how much of its policy must be changed a year after the election.

The second fact is that the present method of calculating the pension by forecasting the rate of inflation has been wrong in five out of seven years. The right hon. Member for Norwich, North displays his ignorance by suggesting that forecasting is easy. That is a foolish assumption. Those who forecast in the oil world, and certainly those who forecast election dates, are usually wildly wrong.

Mr. Ennals

We got it right most times.

Mr. Carlisle

I wish that the right hon. Gentleman would contain himself. He has already made his speech.

Failure in forecasting has caused genuine worry to pensioners. They have said to me many times, "The forecast was this, but it has not been met and I am worried about how my pension, which is based on the wrong forecast, will meet my obligations." There is no doubt that the pensioner wants security and certainty. The historic calculation of the pension restores that valuable certainty and has another advantage. When the country can afford to give a real increase to the pensioner, which we all want and which we can secure only when the economy is once again healthy, that increase can be carried out in a considered and sensible way. It will not be a hit-and-miss exercise. We can say, "Inflation increased by so much during the past year, so we shall increase pensions by as much as the inflation rate plus X". That will be a certain and secure increase. I support this Bill because it provides security.

The third fact is that the forecasting method introduced by the Labour Government in 1976 was introduced for a cynical reason—to save money. As we know, inflation in the previous year was about 21 per cent., but after the change in method pensions were increased by only 15 per cent. What is the use of increasing pensions by a huge amount one year and then grabbing it back the next year? That, too, destroys the security which the pensioner wishes to have.

Mr. Alton

Does the hon. Gentleman deny that this Bill will save the Government £580 million? If he does not deny it, how does he justify it?

Mr. Carlisle

I do not accept that. The legislation intends to give security to the pensioner so that he may know where he is. It will also fulfil our promise to increase pensions in real terms.

In 1976, the Labour Government, by a cynical sleight of hand, kept back from the pensioners more than £500 million, which in today's terms is about £1 billion. That fact is stated clearly in Mrs. Barbara Castle's diaries. Although I hesitate to read those diaries now, that passage is certainly worth reading. Let us not forget what the Labour Government did in 1976, especially in the light of the Opposition's promises about what will happen if they are returned at the next election.

Mr. John

Will the hon. Gentleman give way on this point?

Mr. Carlisle

No. I have given way many times.

Mr. John

rose—

Mr. Deputy Speaker

Order. It is for the hon. Gentleman to decide whether to give way.

Mr. Carlisle

Other hon. Members want to speak and the hon. Gentleman has had many opportunities.

The fourth fact that the Government must impress upon people is that, despite the real financial restraints of a world recession, despite having imposed upon ourselves the discipline of living within our means, we have substantially increased other benefits to pensioners which have been a real help and cannot be ignored. For example, we are now spending in real terms more than any other Government on heating additions for the elderly. From now on, standing charges for gas and electricity will be no more than the value of the fuel used. Mobility and attendance allowances have increased ahead of prices. In addition, those aged 60 and over who are in receipt of supplementary benefit will qualify immediately for the higher long-term rate of supplementary benefit. Those are the facts. Genuine help has been given to the elderly.

The biggest gain of all to the pensioner is the conquest of inflation. I have no doubt that pensioners who have seen their savings destroyed by inflation have been deeply worried. In addition, there is the constant worry about how they can meet the ever increasing bills and how their occupational pension, if they have one, will keep pace with the increase in prices. How often have old-age pensioners asked hon. Members what is the use of saving and thrift? They ask why they have worked all those years to see their savings go in 100 per cent. inflation over four years.

I was shocked by the somewhat cynical statement of the hon. Member for Pontypridd (Mr. John) that he never expected to see the rate of inflation lower than 4 per cent. again. I want to see the rate of inflation down to zero so that the pensioner may have security. I know in my heart that under a Labour Government inflation will soar and the pensioner will again see his savings destroyed.

Mr. John

Even with his limited intelligence, the hon. Gentleman will know that there is a difference between hope and expectation. I hope to see the Conservatives understand simple arguments; I do not expect it. I hope to see low inflation; I do not expect it under the Government.

Mr. Carlisle

In his intervention, the hon. Gentleman does not attempt to hide what was in his speech a cynical and dangerous statement.

When Labour Members talk about borrowing and printing to spend more than £10,000 million a year, they should bear in mind the effect of inflation on the elderly. It will be stoked up way beyond anything that has happened before. As a result of the Labour party's policy, we should see inflation of 20, 30 or 40 per cent. We all know what effect that would have on pensioners' savings and standard of life. So again I say to the pensioner: beware of glib Labour promises and easy words. They mask the horror of a minefield. High inflation has a crippling effect on the well-being and the happiness of pensioners.

We have had a look at the facts. We have had a look at the Labour party's record and at the Government's record. We have had a look at the Labour party's promises, its economic policy and all the dangers that that holds for us. If the microscope's focus is sharpened to that reality, we shall learn that the pensioner has always done better in the long term under a Conservative Government and will always do so. We have also learnt that they have always done worse under a Labour Government and without a shadow of doubt they will suffer again should we be so unfortunate as to have another.

As we know, the earnings rule limit has been increased to £57. However, I should like the Government to see whether they could do more about phasing out the earnings rule before the end of the Parliament. That is a worthwhile measure and one to which the Government are committed. I should also like to ask the Government about earlier retirement. I read with great admiration the excellent report of the Select Committee on Social Services on the age of retirement. As the Minister will know, it suggested an average retirement age of 63 with flexibility, giving the choice to the pensioner when he should retire between the age of 60 and 65. That was a scheme which all members of the Committee agreed was realistic and was one that Britain could afford. We should move towards that choice over the age of retirement as soon as we can, and I hope that the Government will come forward with a proposal before the general election.

It is easy for the Opposition to promise the world to pensioners. We all want to help the pensioner, but it is no good offering promises that are difficult to fulfil. It is no good offering promises which, because of the huge cost of fulfilling them in increased inflation, take away the security that the pensioner wants. We must look at the performance of Governments towards the pensioner. This Government have been fair to the pensioner. Pensioners know what life is about. They will not be fooled. They will see the reality of the Labour party's promises and the reality of the Government's performance. The reality is that the Government have served pensioners better than Labour.

6.6 pm

Mr. David Alton (Liverpool, Edge Hill)

I am glad to follow the hon. Member for Lincoln (Mr. Carlisle). I am certain that his remarks have been made in a sincere spirit. In particular, I agree with what he said about the need for earlier voluntary retirement and the abolition of the earnings rule—something which many hon. Members feel strongly about. I am not so sure that I agree with other of his remarks about the real effects of this legislation on the pensioner. It is very much mutton dressed up as lamb.

The hon. Member for Pontypridd (Mr. John) was right to talk about the undertakings for which he asked from the Government as being reasonable and for that reason I want to associate myself with the amendment that he and his right hon. and hon. Friends have placed before the House. I intend to vote with the Opposition tonight, not because I want to indulge in pork barrel politics, of which there has been an element this afternoon. We can all be guilty of that, particularly as we approach a general election. However, I think that all will agree that the present system of administering the pension is profoundly unsatisfactory, as the hon. Member for Birmingham, Edgbaston (Mrs. Knight) and others have said.

Hon. Members should not delude themselves about the effects of the Bill. I draw the attention of the House to what Age Concern England says about it. It says that it is our belief that by changing in this year pensioners and other beneficiaries will lose out by 2 per cent. It goes on to spell out the effects and says that a single pensioner will be 65p a week and a married couple f1.05 a week worse off than they would be in November if no legislation were introduced. That deals with the point that the hon. Member for Edgbaston made earlier. Age Concern England estimates that the Government will save approximately £105 million from this manoeuvre on pensions alone in the part year 1983–84. That is a different figure from that given earlier by the Opposition, who talked of £580 million. I should welcome some clarification on that when the Minister replies.

When the Secretary of State addressed the House earlier, he talked about the need to protect living standards and he rightly said that we must try to control inflation. If inflation runs rampant that inevitably has a terrible effect, not just upon pensioners, but upon everybody else. The Government are right to say that people are hurt by inflation and the Secretary of State was right to talk about the fear of inflation. But sometimes they say insufficient about the fear of unemployment. I represent an area where one employment office has 15,000 people now registered as unemployed and only 99 jobs vacant. The fear of unemployment must be taken into the Government's calculations. Fear of unemployment particularly worries people in their mid-50s who are nearing retirement. If they become redundant, the future is extremely bleak. Therefore, while the fear of inflation is important, so too is the fear of unemployment.

The Secretary of State said that this measure does not reflect inflation between May 1982 and May 1983. That is not correct. It actually reflects inflation at May 1982. Inflation may now be running at 4 per cent., but by the time these proposals are implemented in November it may well be 6 per cent. according to the Chancellor's own figures. There will then be a gap, despite what the Secretary of State said. Indeed, the Chancellor has made it clear that there will be a gap.

One need only look at what has happened to the unified housing benefit to see that a gap can occur.

Mr. Rossi

I think that the hon. Gentleman misunderstood my right hon. Friend. My right hon. Friend meant to say that if inflation in November was higher than the rate of inflation in May, that gap would be caught up automatically in the next uprating. That must occur under the historic method, but it could not happen under the forecasting method unless a specific adjustment was made. In this way, the gap is automatically closed year in, year out.

Mr. Alton

Had the right hon. Gentleman been sincere in what he said, he would have ensured that clause 1 would enable the rate of inflation in the month of the implementation of the Bill to be taken into account. Instead, the words used are in the month of June in each year".

Mr. Mike Thomas (Newcastle upon Tyne, East)

Does my hon. Friend recall that in his evidence to the Select Committee the Minister said that the Labour Government found that the historical basis was so out of date that the pensioners and other people were losing out"?

Mr. Alton

That is exactly what was said, and no doubt the Minister will deal with that point when he replies.

The gap to which I have just referred is illustrated by clause 5, which deals with the unified housing benefit. When we debated this matter last summer, we were promised that it would be implemented on time. That is exactly what happened for council tenants last November. However, last Monday—the day on which private tenants were supposed to come into the scheme—about one third of private tenants did not get the benefit to which they were entitled. That figure was given by the Minister in a debate just before Easter.

In places such as Liverpool, Leeds and the Wirral, people have not received the benefits to which they are entitled. In my own city of Liverpool, 14,000 should have qualified, although by last Monday only 7,000 had received the money. It could be late into the summer before everyone receives what he is entitled to.

Mr. Joseph Dean (Leeds, West)

The hon. Gentleman may like to know that only last weekend a local councillor in my constituency dealt with the proposed eviction of someone who had not received the money on time, as a result of which the private landlord was taking action.

Mr. Alton

Last July, when we debated the unified housing benefit, that is exactly the point I made in a series of interventions. Along with other hon. Members, I warned that people could be taken to court and could be evicted as a result of the Bill because a gap was allowed to occur—the very thing that hon. Members have highlighted today.

The Bill is another in a long line of measures aimed at the most vulnerable and weakest in our society. The Government's record over the past four years makes pretty miserable reading. In 1980 they broke the link between rises in pensions and long-term benefits and increases in wages, where those had been higher than prices. In the same year, they cut the value of unemployment and invalidity benefits by 5 per cent., and only in November will that 5 per cent. cut in unemployment benefit be made good.

In 1982, as a result of the unified housing benefit, about 2 million people were made worse off, probably to the tune of 75p a week, including 850,000 pensioners. A third of would-be claimants coming in under the private tenants' provisions were not brought into the scheme last Monday because of the gap to which I have referred. In 1982, the Government also introduced a new index for supplementary benefits as part of the change to housing benefit, which meant that supplementary benefit went up by ½ per cent. less than other benefits last November. In 1980, they abolished the earnings-related supplement for unemployment benefit and held down the earnings rule limit for pensioners, despite their manifesto pledge, referred to by the hon. Member for Lincoln, to abolish it. In 1981, they imposed a 1 per cent. clawback of a small bonus which beneficiaries obtained in 1980 when the Government miscalculated inflation.

All in all, savings made by the Government at the expense of the worst-off members of our community come to more than £2 billion. They affect millions of people such as one-parent and unemployed families, the sick and disabled, pensioners and the homeless—the most vulnerable and weakest groups.

As the director of Age Concern England has said, throughout the past six months, the Government have been playing a cat and mouse game with pensioners and others. Last November, the Chancellor announced that he intended to make an adjustment to pensions and other benefits to make up for his error in estimating inflation. That decision was rightly attacked, not just by pressure groups and Opposition Members, but by more than a dozen Conservative Members. Therefore, instead of a clawback, the Chancellor or his civil servants have come up with a new way of calculating inflation for the purpose of uprating pensions and benefits.

It is astonishing that the Secretary of State should brazenly try to pretend that no clawback is in operation. For six months, he, the Prime Minister and the Chancellor have announced that pensioners will keep their windfall increase. The reality of life for the poor is that under this Government any increase is a windfall. The Government certainly do not believe in deliberate acts of generosity.

In fact, pensioners will keep their modest bonus only until the next uprating day in November. Pensions will then go up by 4 per cent. when, if the Chancellor's figures are anything to go by, prices will be rising by 6 per cent. Therefore, pensioners will more or less be back to where they were last November, before they received their small bonus.

It is good to see that at least one Conservative Member has seen through what the Government are seeking to do. Speaking in the debate on the Budget, the hon. Member for Macclesfield (Mr. Winterton) said: does not it appear to ordinary men and women in the street that it could be a way of obtaining the clawback that the Treasury sought to achieve, and that it is a devious way of doing so?"—[Official Report, 17 March 1983; Vol. 39, c. 358.] The hon. Gentleman is quite right. The Government's trick will be seen through by the British people in the months to come.

During the same debate, my hon. Friend the Member for Truro (Mr. Penhaligon) pointed out that the fiddle being perpetrated today is matched only by the fiddle perpetrated by the Labour Government in 1976. They then changed the system to rob pensioners and others of £500 million. That was "dishonourable", as the then Secretary of State remarked in her diary entry for 14 December 1975. I suspect that after today's debate even more copies of those diaries will be sold. They have been mentioned often enough. Today's fiddle is no less dishonourable for saving only one third of that amount.

Mr. Frank Field (Birkenhead)

Although the hon. Gentleman is right to draw attention to the action of the last Labour Government—I hope that no Labour Member will try to excuse it—

Mr. Peter Bottomley (Woolwich, West)

No one else is present.

Mr. Field

Once again, the hon. Gentleman's sight is failing him. While no Labour Member should try to excuse that action, should it not be set in its proper context? In 1974, pensioners received the largest ever real increase in pensions since 1948. That does not excuse what the Labour Government did, but their record is slightly different from the record that we are debating today.

Mr. Alton

The hon. Member's own record on these matters is above criticism. However, as hon. Members on both sides have already said, the same Government were responsible for the stingy act of stopping the pensioners' Christmas bonus as well. That being so, no one in the House has anything to be proud of. It is pointless for us to snipe at one another about these things. Instead, we should consider where we could go from here.

I do not think that we should follow the plan outlined in Labour's emergency programme of action. In a report in The Times of 6 April 1983, Anthony Bevins examined the Labour party's 12-point plan. He said: When Mr. Michael Foot revealed Labour's 12-point plan for pensioners last month, a pledge that nine million voters would be given their rightful share in the country's future prosperity, the package was described by some jubilant campaigners as the jewel in Labour's crown. Since then, however, it would appear that Mr. Peter Shore and his shadow Treasury team have devoted a good deal of energy to the tortuous task of replacing the jewel with a costume gem of some inferior paste. Mr. Bevins said that the proposals receive hardly a mention in the latest document. The suggested costings range between £5 billion and £30 billion. If Labour are not to be accused again of pork barrel politics, some clarification will be required before the next general election.

Pensioners will not particularly benefit from falling mortgage rates or inflation. Only 2 per cent.—one in 50—have mortgages. There are also pensioners who will suffer from the local differences that some local authorities are encouraging. For instance, Sheffield is considering concessionary TV licences for pensioners. I approve of that, but if it is not done on a blanket basis throughout the country it will increase differentials between pensioners still further.

This week I received a letter from the Rev. Roger Roberts of Conway. Describing the problems in Gwynedd, he said that four out of five of the district councils in that area have a half-fare pass scheme, but that his district council does not. On Merseyside, Sefton district council, which had been refusing to introduce a concessionary fares scheme only recently joined a county-wide scheme.

There has been too much reliance on grace and favour, and too much of a patchwork quilt approach. Another example is the way in which we deal with pensioners living in hostels for the aged. I raised this matter in a debate on elderly people, which I initiated in February during the Consolidated Fund debate. I asked the Minister whether he would investigate the fact that some local authorities do not provide incontinence pads for those in hostels run by voluntary organisations, thus costing those organisations hundreds of pounds a months. After the debate I wrote to the Minister and received a most unsatisfactory reply. I sent the reply to the new director of social services in Liverpool, and he refuted many of the points made in it. I hope, therefore, that when I write further to the Minister he will give my letter proper consideration and will realise that the memorandum of guidance which is circulated is contradictory and applies differently in different parts of the country. The same is true of the local housing programmes. Some local authorities provide adequate sheltered accommodation, and others do not. All those matters should receive the attention of any Government. They are important factors in the general treatment of pensioners. If pensioners are to be treated fairly it must be done on the basis of a national plan. The present piecemeal approach is highly unsatisfactory.

Mrs. Knight

I have followed the hon. Gentleman's argument with great interest. Does he not recognise that some people over pensionable age are, happily, in a better financial position than others? If blanket provision is made for everyone over pensionable age, a considerable amount of taxpayers' money will go to those who do not need help. It may be better to give the limited amount of taxpayers' money that is available to those who really need it rather than to some who can quite well manage without it.

Mr. Alton

My point is that at present these problems are tackled in an arbitrary way, with a patchwork quilt effect. Some of those who are better off receive more than others. There is a much higher concentration of elderly people in some areas than in others, but that is not reflected adequately in the rate support grant settlement or the housing investment programme, or indeed in the Bill. During the Budget debate my hon. Friend the Member for Colne Valley (Mr. Wainwright) and my right hon. Friend the Member for Glasgow, Hillhead (Mr. Jenkins) made it clear that an alliance Government would introduce full index-linking of pensions and other benefits. They would work towards integrating the tax and benefit systems to ensure that the millions who are now in, or close to, poverty would be given adequate incomes. The Bill fails to do that, and we shall therefore oppose it tonight.

6.25 pm

Mr. Geoffrey Dickens (Huddersfield, West)

I am always amused by debates such as this because the very Opposition Members who sit around the table with me in the all-party pensioners group always give the impression that they are the pensioners' friends and that we are the big bad wolf who does not care. They fail to mention their own dismal record, but they recognise that the population of the United Kingdom is an aging one and that pensioners represent a lot of votes.

Old-age pensioners do not suffer from senile dementia. They have brains of their own. I would like to tell the House a secret. When a funeral goes past, we think to ourselves "There goes another paid-up member of the Conservative party". Elderly people have the wisdom of years, and they realise that the principles of the Conservative party made this country great. I say that with no disrespect. It is also said that elderly ladies form the backbone of the Conservative party. Long may it be so.

If I had my way, I would force an inquiry into the provision of benefits. I would dispense with rent rebates, rate rebates, free teeth, eye treatment, glasses, prescriptions, bus passes and television concessions. I would pay the pensioners a very good pension and let them decide how to spend the money. I would dispense with the thousands of people sitting in plush offices all over the country, with inflation-proof pensions and secretarial aids, who pay back to the pensioners the money they could have had in the first place but which they have to tell somebody all their business in order to get. In the long term, we should seriously consider the welfare state system and do some studies, because there might be a much better way of doing the job than any party has yet suggested.

We have heard earlier about the forecasting system under the Labour Government. I refer to page 595 of Barbara Castle's diary—a page that has not yet been mentioned. Barbara Castle freely confessed that by changing to the forecasting system she gained £500 million. We also know that, in five years out of seven, the forecasts were wrong. In 1978 the forecast was low by 1.9 per cent.; in 1980 it was high by 1 per cent.; in 1981 it was low by 2 per cent.; and in 1982 it was high by 2.7 per cent. When Mrs. Castle made the change, pensioners were worse off by about 6 per cent. Allowing for correction of the overshoot of 2.7 per cent. would have produced an increase of 3.3 per cent., but we are going further. We believe that the increase will be about 4.5 per cent. The new system will take account of figures from May to May and is different from what we had in the past.

We must deny the wicked nonsense that we have heard this afternoon. There will be no clawback of money. Pensioners need not be afraid because nobody will take money back from them. Indeed, we will give them much more. We must spell that out. The pensioners to whom I speak realise that they are not too badly off. Many of them think that those who are worst off are young couples with very young children. Some Government had to get to grips with inflation. If the Tory Government had not, where would we have ended up? As inflation stands now, people's savings are worth much more. People who had made provision for their old age did not know where they stood under the Labour Government when there was raging inflation. People who retired, thinking they had enough put by, found that their savings did not last. Some who felt they had made enough provision for their old age are depending on the social security system. This would never have happened if inflation had been properly controlled, as we have done since we took office.

Let us hope that inflation will soon come down to zero. We must achieve zero inflation. Then when people save money it will keep its value. How many people who have taken out insurance policies for their old age have found that when the policies matured they were hardly worth the paper they were written on because of inflation? Very many. We must make people's savings worth what they thought they would be when they took out the policies.

Let us deal with the truth. We have heard many misleading statements. As a Government we have protected and increased pensions. That was a pledge we made in our manifesto and which we maintained. Pensions have risen faster than the retail price and pensioners' price indices in the four years to November 1982. These are facts. Pensioners' top-up supplementary benefits have been raised ahead of prices. The Christmas bonus that we introduced was removed by the grasping Labour Government in 1975 and 1976. We still pay the bonus and I think we always will. It is very important to a married couple to get that £20 at Christmas. I hope in the fullness of time we shall be able to raise the amount.

The earnings rule limit has been raised from £51 to £57 per week. That was not unimportant to pensioners. The Conservative Government pay the basic heating addition automatically if people are on supplementary benefit, are over 70 or have a child under 5. Heating additions have been increased. In 1979 when we came to office the basic addition was a mere 95p. In November 1982 it was £1.90. The higher rates of £ 1.90 and £2.85 in 1979 were increased to £4.65 in November 1982. That is not bad.

As a Government we are spending £325 million on supplementary benefit heating additions. That is more than any other Government have spent. I can see glee on the faces of hon. Members of the Liberal party and the SDP, but I remind them that if Lloyd George were alive today he would be sitting next to me. In passing, it is worth telling the House why. Hon. Members should remember the words of Lloyd George. I recall, too, the Lib-Lab pact and remind hon. Members that the Liberals have associated themselves with the Socialist rejects in the SDP. David Lloyd George said: Socialism is like the sands of the desert; it gets into your eyes, nose, hair and the very air you breathe … It is all gritty with rules, regulations, orders and decrees. That is Socialism. Liberal Members should forget their cosy arrangement with the Socialist party and should stop attacking us. They should try to help pensioners.

Let us move back to the subject of the debate. The gas and electricity industries have agreed that standing charges should be limited to not more than 50 per cent. of anyone's bill. It may surprise the House to learn that 1 million gas users and 2 million electricity users benefit from that. It may also surprise the House to learn that 50 per cent. of those 3 million are pensioners. So Opposition Members should not underestimate what we are doing.

Mr. Thomas Cox (Tooting)

The hon. Gentleman should go and meet them.

Mr. Dickens

I meet the pensioners. The hon. Gentleman should come to my surgery on a Friday evening. It is packed with pensioners and they get help.

Mr. Cox

The hon. Gentleman is always interesting to listen to. He has outlined the great benefits that he says retired people have received under the Conservative Government, and I know he attends the meetings of the all-party pensioners' group. Why is it that pensioners come here when they can to put forward the need for substantial increases in all the benefits that he is saying they are doing so well on?

Mr. Dickens

I do not profess that we are doing everything possible for pensioners—no party ever has—but we have been very fair to pensioners. We have looked after them by ensuring that pensions keep ahead of prices and inflation, as we promised. We cannot do more than that. There are many other demands.

I have been asked why pensioners come to Westminster to lobby us. Thousands of different organisations come to Westminster to lobby Members of Parliament. They make their claim, particularly near Budget time, and they are right to do so, but we are the custodians of taxpayers' money. If we pay more for any benefit or anything in the welfare state than the nation can afford, someone has to pick up the bill. We must always remember that. It is a responsible Government who keep their hand tightly on the purse strings.

Benefits for the disabled have increased more than prices. Expenditure on the disabled is 9 per cent. higher in real terms under this Government than under the Labour Government.

I have spent most of my time tonight defending the Government. Having listened to the attacks and to the myths put forward by the Opposition, I thought it deplorable that pensioners should be used in this way. People such as Airey Neave, whose memorial plaque is above the Chamber door, introduced pensions for the over 80-year-olds. We have been challenged about what happened in the 1970s, but we introduced six-month reviews whereas the Labour Government reviewed pensions only every year. We can be proud of our pensions record.

I have enjoyed the debate, but I cannot tolerate the Opposition's myths. We care about pensioners, we are fair to them and, what is more, the pensioners know it.

6.40 pm

Mr. Joseph Dean (Leeds, West)

The Bill's provisions are narrow, but some speeches today have ranged wide. The hon. Member for Huddersfield, West (Mr. Dickens) confused me because I thought that he suggested that family planning and birth control were being provided for old-age pensioners. The Bill is not about general benefits or about free or concessionary bus fares. It was not a Conservative Government who first allowed local authorities to introduce concessionary fares. A Labour Government did that.

I regret that the hon. Member for Lincoln (Mr. Carlisle) compared the conditions in France, run by a Socialist Government, with the conditions here under a Tory Government. The Socialist Government in France are grappling with adverse economic conditions, but the industrial performance in France is far better than it is here. The hon. Member for Lincoln spoke about realistic manifestos and keeping faith with the electorate. I do not remember the Prime Minister promising the electorate, when she was Leader of the Opposition, that 3½ million people would be out of work under her Government. She promised to reduce unemployment and she has created an adverse "benefit" that nobody wants and nobody expected.

The Bill alters parts of previous legislation. Some of us predicted that the previous measure would be almost unworkable and poor because of the effect that it would have on the people whom it was supposed to benefit.

The hon. Member for Liverpool, Edge Hill (Mr. Alton) mentioned a problem that has reared its head recently and that I am sure other hon. Members will have encountered. On Saturday I received a telephone call from a local councillor who wanted advice about an eviction case involving a private landlord. The tenant had not received his financial entitlement under legislation and as a result the landlord took action. That is one aspect that the Minister must keep under observation. The Bill deals with council house tenants, but I have yet to meet a tenant who knows how unified benefit applies to them. The scheme is confusing. Under present legislation people do not receive the benefits to which they are entitled and this Bill is even more debilitating. Some people are losing out.

Leeds is the second biggest city outside London with about 100,000 properties under local authority control. I hope that the Minister can give a copper-bottomed guarantee that any increase in inflation will be catered for as soon as possible.

I calculate that over 40 per cent. of families in council property receive some kind of assistance. I predict that that percentage will increase. It has already increased because rents have gone up in the past three years by 120 per cent. As a result, more people need help. Many unemployed people are council house tenants who have to fall back on rent rebates or social security payments. For many people social security payments are better.

The Chancellor of the Exchequer has said that he expects inflation to increase by the autumn. In the run-up to a general election a Chancellor would not say in the House that he expects inflation to rise unless he was convinced of it. He would not overstate an adverse case when preparing for a general election. Perhaps the Chancellor's prediction is conservative. If he is wrong, it will be because his assessment is too low. Factors are emerging, internationally and nationally, that will prevent inflation being kept as low as it is and which may escalate it dramatically.

Let us remember the behaviour of petrol companies in the past few weeks. They cannot put 14 per cent. on a gallon of petrol without that showing in the cost of living index in the next few weeks. Whenever the price of oil by the barrel is reduced it is the signal for the petrol companies here to increase the price. As was said in the House on Monday, the whole issue is a contradiction. I always believed that a reduction in the price of a raw material should lead to a reduction in the cost of the finished product. The opposite seems to be true of oil.

The prices of petrol and other commodities affect the cost of living index and have a dramatic effect because they go across the board, covering delivery of merchandise and even travel to work. Most people do not have a car for luxury these days but because it is necessary. People often have to travel too far to find a job or to go to work to use a bike, as suggested by the Secretary of State for Employment.

Mr. Alton

Does the hon. Gentleman agree that the people who will suffer most from any increase in inflation will inevitably be the poorest—the elderly people who will have massive heating bills because they have to stay at home? That is why many of the figures bandied about earlier by the Secretary of State are wrong.

Mr. Dean

The hon. Gentleman is correct. The priority should be to help the elderly. People are living longer because of the advances in medical science, and that process will increase. In five or 10 years' time we shall be faced with a big increase in the numbers of elderly and retired people who will need care from society. This type of measure will act against them.

Unless the Minister can give an undertaking that if there is a substantial increase in the cost of living while the Bill is on the statute book benefits will be raised, 50,000 families in Leeds will lose substantial amounts of money, that they can ill afford to lose, within the next few months. People who pay the full rent to local authorities are not affected by these proposals. Private sector tenants and owner-occupiers are also involved. A short while ago, the Government said that one of their successes was the reduction in mortgage rates. We are hearing noises now from those who run the building societies—a type of early warning—that they cannot hold the rate at the present level and there will be an increase shortly. Unemployed owner-occupiers will lose unless the Minister can give the undertaking.

In Leeds, 50,000 families will be adversely affected financially unless the undertaking is given, and the same could probably be said for Liverpool, Sheffield and wherever people live in council houses. Private sector tenants and owner-occupiers at present receiving housing benefit will also be affected adversely unless the undertaking is given.

The hon. Member for Lincoln said that the Government kept their promises. In 1980 the Government cut unemployment benefit and, under pressure from the Opposition and, to their credit, from many of their Back Benchers, they were forced to restore those cuts. Undertaking after undertaking was given but it has taken three years for them to be honoured. Has that anything to do with it being election year? The Labour party is being accused of making promises that it will not carry out. The 5 per cent. cut in unemployment benefit is being restored but for three years many people suffered and had money taken from them which they should have received.

The hon. Member for Huddersfield, West talked about the hearse going along the road. Unless one deals justly with the problem of the elderly without delay some will go along the road in a hearse. People die, and they will die knowing that they have not had a fair deal from the Government. I hope that the House will support the amendment.

Mr. Deputy Speaker (Mr. Paul Dean)

Mr. McCrindle.

Mr. Mike Thomas

On a point of order, Mr. Deputy Speaker. It may be an oversight, but it is surely not normal practice within the House that those who have listened to the debate from the outset should find themselves disadvantaged subsequently by those who have arrived suddenly and who have not heard any of the opening speeches and have played no serious part in the debate until presumably a Whip has fetched them from some other part of the House.

Mr. Deputy Speaker

The hon. Member has been in the House long enough to know that the Chair has a difficult job calling speakers. We do our best and we have, perhaps, a more careful eye on the movements of hon. Members than those who come and go.

Mr. Thomas

Further to that point of order, Mr. Deputy Speaker. You misunderstand my point. I have not come and gone. I have been present throughout the debate. Others have come and gone and some have simply come very late indeed.

Mr. Deputy Speaker

I realise that the hon. Member has been here. I know that he is hoping to catch my eye. It would be better if he did not push his luck.

6.55 pm

Mr. R. A. McCrindle (Brentwood and Ongar)

I am not sure whether the hon. Member for Newcastle upon Tyne, East (Mr. Thomas) was seeking to refer to me because I had just been called. Although I have been in and out of the Chamber to attend to matters outside, I yield to no one in the number of occasions on which I have contributed to debates on this subject, nor am I prepared to apologise to any other hon. Member for my continuing interest in the subject and dedication to pensioners.

The hon. Member for Leeds, West (Mr. Dean) said that this was a comparatively simple Bill. We have listened to wide-ranging contributions. Although the hon. Gentleman said that his speech would not range widely, he moved into the, no doubt interesting, subject of petrol prices. I shall try to do better and make a rather less rumbustious speech than that of my hon. Friend the Member for Huddersfield, West (Mr. Dickens), possibly a less erudite speech than that of the Secretary of State, a less wide-ranging speech than that of my hon. Friend the Member for Birmingham, Edgbaston (Mrs. Knight), but conceivably a speech which directs its attention to the relatively simple matter to which we are asked to address ourselves.

The purpose of the Bill is no more and no less than to revert to the historic method of uprating pensions and national insurance benefits. We are not introducing some Machiavellian device. We are simply reverting to a system that prevailed for a considerable time until it was changed in 1976. I do not underestimate the importance of the Bill or its controversial nature. In election year it is probably inevitable that a great deal of party controversy, which in an ideal world we could do without, will revolve around the detail of the Bill.

Conceding that it is an important and controversial Bill, I do not see why it should be thought to be so much more controversial now to change back to a system which has been hallowed by time than it was to change the system in 1976. I want to acquit Mrs. Barbara Castle of all the motives which have been suggested as the reasons for the action that was taken when it was taken by the previous Labour Government and to look at the background of what has happened since the introduction of the present forecasting method.

In 1976, the Labour Government changed from the historic basis, under which increases are based on actual price increases, to the forecasting method whereby benefits are based on the estimated rise in prices or earnings. We have now been using the second system sufficiently long to be able to form a judgment upon it. Try as I may to be charitable, it is an undeniable fact that since 1976 there has been a succession of inaccurate forecasts. As a result there has been among pensioners and other beneficiaries some bewilderment and confusion about what they could expect on the next uprating, which I cannot believe was intended to be or should have been part of the change of system.

As I mentioned earlier in an intervention, the fact is that out of the seven years during which the system has applied we have got it right on only two occasions. I do not know what high marks are in the opinion of other hon. Members, but a system that has got it wrong in five out of seven years does not merit high marks from me.

Therefore, I am prepared to agree with the proposal enshrined in the Bill. When we talk about paying the pensioners too much or an increase that turns out to be too high, we run the risk of being misunderstood outside the House. In all conscience, most of us would like to give the pensioners a better deal than successive Governments have given them over the years. However, on the basis of the system introduced in 1976 there has been, to use a more neutral word—although one that I equally dislike—an overshoot here and an undershoot there. Therefore, it is surely right to examine whether we have been as successful with the new system as those who introduced it hoped we would.

I have reached the conclusion that it has become increasingly difficult to defend the system. What is more, I am struck by the fact that since the Government stated in the Budget that they intended to move back to the former system there has been comparatively little criticism outside the House. I am on the mailing list, as I suspect many other hon. Members are, of a sizeable number of charities, many of which look after the aged. I am not suggesting that they have welcomed the system with open arms, but I am struck by the number that appear to be prepared to welcome the return of the former system in principle, although, not surprisingly, they go on to express some regret about the timing of the introduction. It is the easiest thing in the world to say that it is the right system to introduce, but the wrong time to introduce it. It is when we ask people who make those observations what would be the right time to introduce it that we are frequently greeted by a deafening silence.

Not just hon. Members have criticised the present method of calculating upratings. Many people feel that we are not sufficiently concerned about pensioners who do not know where they stand in relation to a forecasting system. In short, the present system has few admirers. As the House has been reminded, even the Select Committee on Social Services was moved to say that the system was far from perfect.

We now have a massive opportunity to move to a system that is more comprehensible to the recipients and not necessarily less fair in the long term than the system of forecasting and which, leaving aside the fair point about the right time to introduce the system, is likely to be a far better way of doing things than the way in which we have been doing them since 1976.

Mr. Field

I agree with the hon. Gentleman's argument. Does he accept that, if we want to agree about the change, that is a greater reason why there should be no clawback in the changeover?

Mr. McCrindle

This is not the usual excuse. Shortly I shall come to what is emotively called the clawback. I promise the hon. Gentleman that I shall not forget his point. We have to face up to that matter if we are recommending the change back to the historic system.

First, I should like to outline a few thoughts about the link with average earnings, which was the basis of the system that applied hitherto. The House will remember that the National Insurance Act 1974 linked national insurance pensions and other long-term benefits to the movements of prices or earnings, whichever was more favourable. The arguments have been rehearsed too frequently for me to wish to weary hon. Members by repeating them. I think that most hon. Members will concede that the earnings link was proved to be too expensive in the economic circumstances that confronted both the Labour Government and the present Conservative Government. Therefore, there was a movement towards relating the increases in pensions to prices only.

The abolition of the earnings link, although there was much emotion and controversy when it was put through the House as the Social Security (No. 2) Act 1980, is now seen as a method of simplifying the structure of our system. There will be years when the pensioners would have done better if the increases had been related to earnings rather than to prices. One has to concede that. But I wonder whether hon. Members will agree with me that, thanks to the simplicity that a system such as as the one that we are discussing should bring to pensions and the relief of anxiety that may result among elderly people, it will be seen in retrospect to have been a better move than some people conceded when we introduced the change in the Social Security (No. 2) Act 1980.

Mr. Mike Thomas

I am having a little difficulty in following the hon. Gentleman's argument. I understand that the Labour Government did not suggest that they would remove the earnings link after the 1979 election nor did the Conservative party in its manifesto pledge itself to removing the earnings link. The only certainly that the removal of the earnings link has given to the pensioner is that pensioners' standards of living will not rise in line with those of everyone else in the community.

Mr. McCrindle

I shall come to the relationship between the standard of living of the pensioner and that of the rest of us. I shall deal with the hon. Gentleman's specific points because, unlike other hon. Members, I prefer to answer interventions.

I am not suggesting that the Labour Government said that they would take such a line. The hon. Gentleman was correct to assume that. Nor am I saying that one would find it written in bold letters in the 1979 Conservative manifesto. Uncharacteristically, the hon. Gentleman is perhaps missing what I felt was a basic argument. In return for what many people saw as the sacrifice of the earnings link, we now have in the Bill simplicity and ability to understand what will happen, on the part of the pensioners, which may be a gain rather than the loss that many of us were told would be the result of implementing the Social Security (No. 2) Act 1980.

Mr. Mike Thomas

rose—

Mr. McCrindle

I know that the hon. Gentleman wishes to catch your eye, Mr. Deputy Speaker. Perhaps it would be better if I were to finish my speech in a reasonable time rather than let the hon. Gentleman make his point now. I contend that the abolition of the earnings link, which is not part of the Bill but which it is not possible entirely to escape from, has in retrospect proved to be a perfectly sensible and overdue measure.

I deal now with the point about relating the increase in retirement pensions to the increase in earnings. I shall be making a prediction shortly, but between November 1978 and November 1982 retirement pensions rose by 68.5 per cent. I apologise if I am boring the House by repetition, but that is important. That figure was not only significantly higher than the rise in prices in the same period of 61 per cent. but slightly higher than the rise in average earnings of 68.3 per cent. I do not claim that a 0.2 per cent. increase in pensions above that of average earnings is a major achievement. However, I do contend that when the undertaking was given, in the Conservative election manifesto to which the hon. Member for Newcastle upon Tyne, East (Mr. Thomas) referred, that the Government would at least maintain the position of pensioners vis-a-vis others who were earning, they have done that without the automatic tie to either earnings or prices to which I have referred.

Mr. Mike Thomas

That is only because—the hon. Gentleman now confesses the fact which his Front Bench colleagues perhaps wisely did not dare to do—the economic performance of this Government has been so abysmal that wages have risen only minimally. If there was any real expansion in the country, the pensioners would immediately fall behind.

Mr. McCrindle

It is tempting to follow the hon. Member down a line which may have something to do with the Bill but which really is a red herring. I prefer instead to revert to the proposals in the Bill. The uprating statement will be issued in June and it will be based on a review of the general level of prices for the 12 months ending 31 May. The Bill guarantees that benefits will rise by an amount equivalent to the rise in prices during that period.

I wish to compare the two systems which, rightly, have been at the heart of this debate, and about which there has been some confusion and some deliberate misunderstanding. Pensioners will be paid more this November than would have been the case if the Government had stuck to the forecasting method with adjustment. The words "with adjustment" have not, surprisingly, been challenged. I have no hesitation in repeating what I have just said. Pensioners will be paid more this November than would have been the case if the Government had stuck to the forecasting method with adjustment.

It is thought probable that in November the 12-month inflation rate will be about 6 per cent. Under the existing forecasting method, there was an overshoot of 2.7 per cent. last year. If that overshoot had been taken into account, pensioners would have been entitled to receive an increase of only 3.3 per cent. On the new basis, however, pensioners stand to gain a rise of about 4.5 per cent.

I appreciate that it is possible to do almost anything with statistics, but these are factual statements and, provided that the two words to which I have made reference are included, they are not challengeable. I notice they have not been challenged by the Opposition. Pensioners will thus still be better off under the proposed change, whereas the change made during Mrs. Castle's period of office in 1976 left them about 6 per cent. worse off.

I find the Labour party's approach to this problem difficult to understand. If the Opposition's amendment were to be carried, the forecasting basis introduced in 1976 would remain. If that is correct, the amendment has been moved on the supposition that the pensioners would therefore be better off. That is the case only if hon. Members presuppose that there will be no clawback. If the forecasting system remains the clawback system is entitled to be used. That is a matter for the Government. If the proposition put forward by the Opposition and the amendment they moved were carried, the result would not necessarily be that which they have suggested to the House.

I turn to the Government's treatment of pensioners. I listened to the extravagant remarks of my hon. Friend the Member for Huddersfield, West. I endorse them to the extent that the Opposition's assumption that all compassion for the pensioners and concern for their welfare reposes solely on the Opposition Benches is not only untrue but positively offensive to those hon. Members who have spent a long time pressing the Government, frequently against their wishes, to do the best they can in the economic circumstances that prevailed. My considered judgment is that, looking back on the past four years, the Government have discharged their undertaking well. I am convinced that they will continue to do so. Accordingly, I recommend the Bill to the House.

7.17 pm

Mr. Frank Field (Birkenhead)

I am pleased to speak after the hon. Member for Brentwood and Ongar (Mr. McCrindle). If I say that his speech would have been a fitting contribution from the Secretary of State, I trust that that will in no way damage his prospects. I am sorry that the Secretary of State was not present in the Chamber to learn from the hon. Gentleman.

I wish to comment on one issue raised by the hon. Member for Huddersfield, West (Mr. Dickens) in the grand tour upon which he took hon. Members.

Mr. Barry Sheerman (Huddersfield, East)

Where is he?

Mr. Field

My hon. Friend asks where he is. I dare say he has gone to talk to Lloyd George and have a bevy with him. The hon. Member for Huddersfield, West said that the Government had to choose, and he listed his priorities. He listed the group in the greatest need as being families with children. One rarely hears in the Chamber or outside when hon. Members are debating the needs of pensioners anybody brave enough to put families with children before pensioners. I was pleased that he did so.

The Secretary of State for Social Services, in a poor speech, reviewed some of the good things that the Government have done. As this is the first opportunity I have had in the House to comment on some of those measures, I shall comment in the way that he did. I believe that the change that the Government are making which will spring people from the invalidity trap is a welcome move. The Government have every right to try to claim whatever credit they can for that.

Hon. Members will know that about 100,000 of our constituents who draw invalidity benefits can never qualify for the long-term supplementary benefit rate because the invalidity payments disqualify them from claiming the ordinary or short-term supplementary benefit rate and thereby qualify for the long-term rate. The measure the Government are bringing forward on this point is to allow beneficiaries to qualify for the long-term rate, and this will make a substantial difference to their income. I welcome that.

The Secretary of State commented on the Government's record on child benefits. The Government have every right to claim that child benefit will be increased in real terms. When examining some of the other policies the Government have pursued, my fear was that not only would child benefit be frozen in money terms but the scheme might have been dismantled. Credit is due to those on the Government Benches and those elsewhere in the Conservative party who fought for its maintenance and the real increase.

However, before they get carried away like the Secretary of State and claim too much, they should put the matter into a longer term perspective. It is true that child benefit will be increased in real terms at the next uprating. However, it is important to realise that when child benefit was introduced, the previous Labour Government injected £1.5 billion into the scheme. The Government are therefore, making a real increase on that substantial base. Historically, the level of child support has been based on the value of child tax allowances in the old family allowance system. Child benefit needs to be increased to £9 or £10 per week per child to return to the real value of family support in the 1950s. The Government can claim some credit on child benefit, but there is a long way to go before they can claim that the system is generous and adequate.

The Secretary of State claimed two other successes for the Government. One was that the Government were to stop beating the unemployed and would repay them the 5 per cent. reduction in their benefit which should never have been made in the first place. If that is thought to be to their credit, the Government are welcome to it. The Government also claim that tax thresholds have been increased in real terms. This is a particularly important issue for the low-paid. I accept that they have been increased in real terms provided that one does not begin the calculation at the commencement of this Parliament. Every one of our constituents earning less than five times average earnings pays more in tax under this Government than they did under the previous Government. When there are a few things that the Government can claim as real achievements, it is a pity that they should soil their record by raising issues for which they can claim no credit.

Like the hon. Member for Brentwood and Ongar, I wish to direct my remarks to the Bill. I welcome the return to the historic basis for increasing benefits. I do not, however, do so for the reason put forward by the hon. Gentleman, that somehow pensioners and other beneficiaries will understand what we are doing only if we use the historic basis. Hon. Members should not underestimate the intelligence of their constituents. That argument was used against one of the Budgets of the previous Labour Government. The then Chancellor of the Exchequer offered wage earners more substantial increases in tax thresholds if they would accept lower wage increases. Many hon. Members on both sides of the House said that their constituents would never understand what the hell was being offered them. The Gallup poll showed that the Chancellor of the Exchequer had to make only two broadcasts before most of our constituents understood what a good deal he was offering. We should not advocate this change therefore on the basis that we represent large numbers of zombies. Our constituents are well able to understand the situation.

My reason for supporting such a change in principle is that, providing one uses the right period for the calculation, one can get it right. I say "right" slightly hesitantly because some of my right hon. Friends who are not in the Chamber now said that it was impossible to get it right. Yet if one has all the information from the retail price index, I cannot see that it is impossible for someone to add up the index each month and to come to the correct conclusion. The change can offer certainty in calculating correctly the increase in benefit rates.

The hon. Member for Brentwood and Ongar said that the change is so important that we should try to gain all-party support for it. I agree with that. However, we shall only win all-party support for this move if everybody believes that the change is above board and that there is no hidden or not so hidden clawbacks. The charge made by the Opposition concerns the fact that there was an overshoot in last year's calculation. Inflation fell more sharply than the Government had anticipated. As a result of the way in which the Government are calculating for the first time on an historic basis, there will be a clawback of almost 2 per cent. When the Government are making a move that should command the full support of the House, it is a pity that they should wish to mar their case for something less than £200 million.

So I support the return to the historic method provided that two conditions are fulfilled. First, that nobody this year should be made any worse off than they thought they would be. Clearly many pensioners will feel that they have been cheated, as, indeed, they will be unless the Government agree to the proposal of my hon. Friend the Member for Pontypridd (Mr. John). The second proviso is that we move from a 12-month period of reviewing benefits if inflation begins to rise appreciably.

I return to the point made by my hon. Friend the Member for Pontypridd. A very good time to make this change would have been when the whole benefit system had been computerised so that benefits could be reviewed quickly if the Government's policy on containing inflation had become less successful than they had anticipated.

To sum up, the change to the historic method is a good move, yet if we make this change we should not make anyone worse off. At present that condition is not being fulfilled. In addition, if we move into a period of rising prices once again, hon. Members on both sides should push hard to obtain a six-monthly increase in pensions instead of the present 12-monthly review.

Let us examine the Government's priorities. Earlier, I said that the Government would save less than £200 million from the clawback. Some people will say that this is a large sum. I wish to remind the House and the country of one other aspect of the Government's record. In their first Budget in 1979 tax cuts were given to the higher rate taxpayers, or to what most of us would call the surtax payers, amounting to £1,590 million. That involved 4 per cent. of the population. Over £1.5 billion was shovelled into the pockets of the very rich. Those tax cuts will continue each year until the Government reverse that policy. The very rich in our society have therefore received £6 billion in tax cuts. The Government have introduced a measure to save £200 million from pensioners. However, hon. Members should consider how this shows up the Government's priorities. During the life of this Parliament £6 billion can be found for the very fat cats in our society while £200 million is to be clawed back from the pensioners. Roll on July.

7.27 pm

Mr. Michael Brown (Brigg and Scunthorpe)

It is a great privilege to follow the hon. Member for Birkenhead (Mr. Field). In a measured speech he criticised constructively the Government. I take his point that the change to the historic analysis for the purpose of estimating pension increases depends on an inflation rate that is continually moderate. However, I am sure that the Government and all Conservative Members recognise that the battle against inflation does not stop just because we have reached the magic figure of 5 or 6 per cent.; it goes on. Nevertheless, there would be cause for concern if there were any prospect of a rise in the rate of inflation in the longer term after November.

I hope that the hon. Gentleman, and indeed the House, will accept that inflation has been the Government's greatest concern and that its control is necessary if we are to improve the lot of pensioners and the unemployed. For us, inflation is public enemy number one. Nevertheless, what the hon. Gentleman says is valid if one considers the change to the system that is proposed in the Bill. Surely, in the light of the excellent speech that he made, the hon. Gentleman has a duty at least to abstain this evening. No doubt he will reach his own decision when the Division bell rings later.

Mr. Field

I shall certainly not abstain. It is in the Government's hand not to force a vote tonight, because they can give an undertaking that pensioners will not be made worse off. What is important is that some Government Members, whichever party is in power, vote against their own Government when that Government are wrong. Tonight we hope that some Conservative Members will vote against the Government if, for example, we move to the new method, inflation takes off, and we are still saddled with a 12-month review.

Mr. Brown

I note what the hon. Gentleman says.

My right hon. and learned Friend the Chancellor of the Exchequer has publicly acknowledged that the rate of inflation in November will probably not follow the trend of the past three or four months. Nevertheless, the Government are entitled to be judged according to their record on inflation. If there were any sign that the Government intended to move away from their central theme of dealing with the problem of inflation, I would accept what the hon. Gentleman says. I note what he says about getting the timing right. It is a matter on which he took issue with one or two of his right hon. and hon. Friends this evening.

We can spend time in comparing the record of the forecasting way of analysing future rises for pensions and the historic way of making a change. A number of hon. Gentlemen have done so. I agree with the statistics that have been produced by my hon. Friends. However, I shall not go down that road.

This debate affords us the opportunity—hon. Members of all parties have taken it, and I shall, too—of considering the plight of pensioners generally and how well off they are after four years of this Government, compared with their position when previous Administrations left office, and the prospect for pensioners in the event of a change of Administration. It is perfectly right to consider the lot of pensioners generally on this occasion.

I agree with my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle), who felt that the Government were entitled to say that, taking the election manifesto commitment of the Conservative party in 1979 as it affects pensioners today, they could be acquitted of the charge made by Opposition Members, and in particular by Labour Members, that we have let pensioners down. The hon. Member for Newcastle upon Tyne, East (Mr. Thomas) wanted to challenge my hon. Friend who said that not only had pensions been maintained, and indeed increased, when set against the general level of prices, but that—to some extent by coincidence, and perhaps to some extent by luck—the pension increases had kept roughly in line with the rise in earnings. The hon. Gentleman challenged that statement. Perhaps he would care to clarify that.

Mr. Mike Thomas

As the hon. Gentleman asks me to clarify the matter, I shall do so. I did not challenge the figures, although I cannot speak for their accuracy. They sound about right. I said that that had taken place only because of the appalling economic performance of the Government, who have allowed wages to rise so little during the period. If we came out of the recession with a reasonable recovery in wages, the standard of living of pensioners would rapidly fall behind.

Mr. Brown

I did not misunderstand the hon. Gentleman. The Chancellor of the Exchequer and all the independent forecasts that have been made by the CBI and industrial bodies say that people in work are much better off today compared with 1979, that the increase in wages has far outstripped the rise in prices, even with the economic difficulties of the past three or four years, and that there has been a real increase in the standard of living of people in work.

Mr. Mike Thomas

Not a big one.

Mr. Brown

The point has been made consistently by my right hon. and learned Friend the Chancellor of the Exchequer in his battles against inflation that there has not been sufficient productivity to match the increase in earnings and standard of living during the past three or four years. If the rate of increase of pensions has managed to keep pace with the increase of earnings, against that background, that is surely a credit to the Government.

Mr. Mike Thomas

I am saying that one of the disadvantages of the present system is that if wages move ahead of prices substantially, because the Government have severed the earnings link, pensioners' standard of living will not rise in line with everyone else's.

Mr. Brown

We are doing this point to death. What I say stands. The fact is that, over the past three or four years, people in work have had a rising standard of living, set against the general world economic recession and the problems of this country's economy. If pensions have matched that, it is a credit to the Government.

Mr. Rooker

Before this dies—incidentally, I apologise for missing the speech of the hon. Member for Brentwood and Ongar (Mr. McCrindle)—perhaps I might blow a breath of life into it. If what the hon. Member for Brigg and Scunthorpe (Mr. Brown) says about the rise in earnings is correct, how is it that the Under-Secretary of State for Health and Social Security admitted to the House on 18 November last year that, because the Government broke away from earnings in linking pensions, in the last financial year, 1982–83, they saved £500 million of pensions and long-term benefits? That is a cut for pensioners, and it does not square with the hon. Gentleman's assertion that there has been no difference in the change of earnings and prices.

Mr. Brown

I confess that I am not an expert on detailed matters of social security, and I am sure that my hon. Friend and his colleagues can answer matters of detail. As a Back-Bench Member, I can only judge on the general view as I perceive it. I judge from the lack of hue and cry in the country, which the hon. Gentleman and his colleagues predicted after the Budget this year, that, on the whole, pensioners feel that the Government have kept faith with them. That is how I, as a Back Bencher and as one who is not as experienced as either the hon. Member for Birmingham, Perry Barr (Mr. Rooker) or my hon. Friends the Ministers on the details of social security matters and pensions, judge the situation.

May I, as a Back-Bench Member without detailed expertise, say how I shall judge Labour's 12-point pension plan, and how I believe pensioners will judge it. We have been told today that pensioners are not stupid and that they, being perhaps the oldest and wisest in the country, have been round the circuit of deals for pensioners and blueprints for pensioners that emerge from Opposition parties just before elections. Pensioners are not stupid, and they will ask the simple question, "How will it be paid for?" They will not be bought off by the reply, "Oh well, you as a pensioner will not pay the price. You will derive the benefit. Those who are more able to bear the cost will pay." Pensioners will pay, as a result of inflation.

Pensioners will not be protected from the burdens that the Opposition will foist on the British economy. The record of the Labour party when in government was one of raging inflation created because too heavy a burden was being placed on the nation in the mid-1970s when it could ill afford such financial burdens. Pensioners were not protected by the Labour party then, and I see no reason why they are any more likely to be protected in the future.

The Labour party's 12-point programme for pensioners is a blueprint for buying 9 million valuable and important votes. Those votes are crucial in the marginal constituencies. They are crucial when a party is devoid of other policies and when it has to get down to the nitty-gritty, pork barrel politics that sometimes, in the 1950s and 1960s, bought Governments victories. That is not the way nowadays, and I am sure that pensioners who were working 10 or 20 years ago and experienced the problems of the economy then will be wise when they consider the Labour party's document.

Pensioners are entitled to examine the record of the Labour Government between 1974 and 1979 and that of the Conservative Government between 1979 and 1983, to judge on the basis of what was the rate of inflation at the start of each Administration compared with the rate at the end of each Administration and to ask by how much over those four or five years prices had risen and whether the value of their pensions had been protected.

I am privileged to be young enough to have two hale and hearty grandparents on my mother's side. My grandfather retired about 20 years ago and he and my grandmother are aged 85 and 81 respectively. They retired on average earnings in the early 1960s. They are typical pensioners. They retired when my grandfather was 65, with a little money put aside. They retired to a small bungalow in the south of England, having moved from London, and, like many other pensioners from the 1960s, they made a small profit on the sale of their house which they wanted to invest. They hoped that investment, coupled with what they hoped would be a reasonable deal for the pensioners from whatever Government were in power, would see them through the rest of their days. They are still hale and hearty and are able to go about their daily business with nothing other than a weather eye for my mother and father and myself. Between 1970 and 1980, they saw the value of their pensions eroded because of the enemy of inflation. More importantly, that small amount of money on which they thought they would be able to live when they invested it was not able to give them the supplement to their old-age pension because inflation, public enemy number one, had eroded their savings.

On the occasional Sunday when I am not in my constituency and I have the opportunity to have a cup of tea with my grandparents, they tell me that they judge the success of the Conservative Government not simply on having kept faith on pensions but on the fact that at last their savings are worth something and at last, when they have a little spare change to invest, they are able to live on some of the earnings because the value of their savings is protected. It is the saver, the old-age pensioner, brought up in the true traditions of the earlier part of this century, who puts a small amount of money by for his pension and sells a bigger house so that he can retire to the coast, or wherever it may be, who nowadays looks to those savings to see him through. From 1975 to 1979 when my grandparents were in their seventies, they were worrying about how they would survive if the good Lord gave them the years that he has done. Now, in the early 1980s, they can look forward, as long as their health is good, to the prospect of living for many more years.

Mr. J. F. Pawsey (Rugby)

Does my hon. Friend agree that one of the reasons why his grandparents are enjoying excellent health is that the Government have put more resources into the National Health Service? Does he agree that a 6 per cent. increase in real terms in spending on the National Health Service is much appreciated by people of the age of my hon. Friend's grandparents? I am sure that my hon. Friend's grandparents are taking advantage of the National Health Service facilities. We should all give thanks for them. We have a caring and compassionate Government who, quite properly, are safeguarding pensioners. Before my hon. Friend sits down, will he say a few words about how the National Health Service has been protected by the Government to the advantage of pensioners?

Mr. Brown

My family and my grandparents would agree with my hon. Friend. While his point may not quite have been in order, it is well taken. Any Member of Parliament, whether he is a grandson in Parliament or a son in Parliament, away from the pressures of his constituents and away from the electoral pressures of pensioners, who visits his family is likely to have his ear bent if they are anything like the traditional family. He will be given a piece of their mind if they believe that they have the ear of someone with influence in Parliament.

My grandparents tell me that their financial resources are reasonably stable. They rely heavily on the value of their pension being protected. I assure my hon. Friend that I would soon get it in the neck from my grandparents if they felt that I or the Conservative Government were letting them down. My conversations with my family are typical of any conversation that I might have with electors in my constituency.

The hon. Member for Liverpool, Edge Hill (Mr. Alton) referred to the great care that we all have to exercise before one side of the House enters into a slanging match about what the other side of the House has done. Those words come well from the hon. Member for Edge Hill because his party has blood on its hands with regard to any criticisms that it might make of the Labour Administration in the mid and late 1970s. If the Liberal party truly wants to show its concern for pensioners, its record must be judged against the backcloth that it participated in sustaining a Government who did much to harm the value of the pension and pensioners' savings. If we take the Liberal party support for the Labour Government in the late 1970s as an indication of what the Liberal party thinks on pensions, woe betide pensioners if ever the Liberal party is in partnership with any other Government party.

For the excellent reasons advanced by the hon. Member for Birkenhead, I believe that it was right to introduce this Bill. It will solve the difficulties, inaccuracies and problems of the forecast analysis. I take the hon. Gentleman's point that the success of the legislation will depend upon the ability of the Government to support it by a continuing attack on inflation. I am assured that that point is well seized by all hon. Members, particularly Ministers, on the Conservative Benches. As many of my hon. Friends have said, the evidence for reverting to a precise system where people know where they stand is overwhelming. As my hon. Friends have said, with the forecast method, we have managed to get the sums right in only two years out of seven. On five occasions we got it wrong. As my hon. Friend the Member for Brentwood and Ongar said, on that basis alone the Government are entitled to bring forward the machinery of the Bill.

The Government are committed to dealing with inflation in this Parliament and in future. That in turn has clear implications for the value of pensions and the value of pensioners' savings. Against that background, my right hon. and hon. Friends are entitled to invite the House to give the Bill a Second Reading.

7.50 pm

Mr. Mike Thomas (Newcastle upon Tyne, East)

I hope that the hon. Member for Brigg and Scunthorpe (Mr. Brown) will forgive me if I do not seek to take up his remarks in precise detail. On balance, I agree with the hon. Member for Birkenhead (Mr. Field).

I believe that it is probably right to return to the historic system of uprating pensions and other benefits. The Government's motives are at least as suspect as those of the previous Labour Government when they changed the forecast system in 1975. The hon. Member for Pontypridd (Mr. John) was commendably retiring about that and perhaps Conservative Members will feel that I should be, too. However, when the Secretary of State started to refer to the literary works of my former colleagues my suspicions were aroused about his motives. Before he embarked on that section of his speech, I thought, given the present state of the Conservative and Labour parties, that the only thing that he was likely to have in common with the right hon. Member for Heywood and Royton (Mr. Barnett) was the likelihood of difficulty in being reselected for his parliamentary seat. I now discern that they both have a similar financial turn of mind.

The change that the Government are proposing is designed to save money. Its purpose is to advantage the Government and to disadvantage benefit recipients. Whatever we say about clawback, for example, the fundamental reason why the Bill is before the House is to save the Secretary of State from the embarrassment of trying, shortly before an election, to claw back money from pensioners which they feel entitled to receive. That is the Government's real motive and that somewhat diminishes my enthusiasm on this occasion for a return to the historic system.

If I had any doubt about the Government's motive, the choice of May as the month in which the review will take place, and as the basis on which the uprating will be made—May 1983 when inflation will probably be at its lowest rate for more than a decade and when, on the Government's admission, it is soon after likely to rise again—it is confirmed by the transparent nature of the Government's approach.

This is a mean and niggardly Bill. It will advance demands in the short term for a twice-yearly uprating. If inflation starts to take off again, it will necessitate a twice-yearly uprating. It will accelerate demand for a wholesale reform of the pension and benefit system.

I agree again with the hon. Member for Birkenhead that it might have been preferable to have delayed change until the computer system had been able to make it possible to implement change more rapidly than we are told is possible now. I have some doubts about the "administrative complications" that are always thrown in our faces. However, the minimum that the Government could have done this year would be to add their estimate in May of the May-November inflation rate to the uprating increase. It seems that the Minister for Social Security was absolutely right when he said on 7 February: The difficulty with a historic method is that one is basing the increase on past rises in prices. If there is rapidly accelerating inflation, there is an appreciable time lag for the pensioners before the pension is put right to take account of the rise in prices which has taken place."—[Official Report, 7 February 1983; Vol. 36, c. 827.] That seems to be the most legitimate criticism of the historic system. If a rapidly accelerating inflation rate is not one that will rise in two or three months by 50 per cent. from 4 per cent. to 6 per cent., or possibly by more to about 7 per cent., I do not know what a rapidly accelerating inflation rate is. That is not my forecast but that of the Chancellor of the Exchequer.

There is no chance of the Government making such a concession. We have already seen the Secretary of State contemptuously shaking his head at the suggestion. I suppose that we should not be surprised because we know the Government's record. They cut the earnings link for pensions and they now propose the measures that are contained in the Bill. Their record on unemployment benefit reflects an interesting parallel, which is the time-lag problem. They cheated the unemployed out of 5 per cent. of their benefits for 16 months and have still failed to do the most obviously helpful thing for the long-term unemployed, which is to put the 1 million—a figure that is to the Government's eternal shame—who have been unemployed for more than one year on to the long-term supplementary benefit rate. I suppose that by their deeds we shall know them.

The truth is that there is no one in the Government who really understands what it is like to live on the old-age pension or supplementary benefit. The Bill reflects the absence of any generosity on the Government's part. It reflects the Government's essential meanness of spirit. We shall vote against it. We regret that the Government have not introduced the minimal improvements that would have enabled us to vote for them.

7.56 pm

Mr. Peter Bottomley (Woolwich, West)

The alliance and the Labour party are concerned about the consequences that would follow from reintroducing the historic method of calculation if there were runaway inflation, and that is because members of both parties have read their proposed manifestos. The greatest danger facing pensioners and the entire economy is a dramatic reacceleration of inflation. To that extent they are right, on their terms, to be concerned about the reintroduction of the historic method of calculating pension increases. Until the hon. Member for Birmingham, Perry Barr (Mr. Rooker) is able to convince himself that there will not be a massive increase in inflation, he will be right to vote against the Government tonight.

Pensioners will benefit from the implementation of the historic method if inflation falls but they will he harmed quite considerably if inflation increases by not merely two percentage points over two or three months but if it rises from an average of 4 per cent. to 6 per cent. to 14 to 16 per cent., or even 24 to 26 per cent. That is the real danger that pensioners face on my estimate—it is not only mine—from the likely consequence of the Labour party's economic programme—a penalty of massive inflation.

Pensioners suffer heavily from inflation as do those who are earning their pensions. It is in the interests of virtually everyone in Britain to make his or her individual decisions so as to bring about a reduction in inflation and to consider more carefully the promises of political parties at election time, be it a general election or local election.

Many pensioners and others in London have to pay rates to the GLC. My constituents have to pay rates to the Greenwich council. They learn the consequences of the voting in the area when they receive rate demands and when more and more Left-wing politicians have control of spending and taxing decisions. I have received a number of letters from pensioners in my constituency. The authors claim that the increase in pensions and the benefit of increased tax allowances have been completely wiped out by the 30 per cent. rate increase in the London borough of Greenwich. Constituents have sent me their rate bills for this year and have compared them with rate demands three years ago, before Ken Livingstone took control of county hall and the GLC.

Labour party supporters and others realise that the consequence of the Labour party's plans is a dramatic rise in the cost of living. They understand that the party's policies will lead to greater impositions being placed upon them by local government. In national terms, they are equally aware of the consequences of the Labour party's proposed economic programme. Many pensioners will be well advised to consider carefully whether the historic or the prospective estimate of inflation will be better for them. They will be well advised to vote Conservative purely in self-interest. I am aware that most pensioners' votes are based on issues other than their direct interests. However, it must be made plain that we are likely to have a Division because alliance and Labour Members are formulating economic programmes that will penalise pensioners even if we retain the forecast method for calculating pension increases.

The issue goes beyond the State retirement pension. Most people who retire now, and many more people who will retire in future, will have the benefit of a second pension scheme. Moreover a growing number of people will receive the benefit of investments and savings that they have put by outside formal pension schemes. That prospective income, which they hope to enjoy when they retire, is also severely damaged by inflation. Some such people might be looking to a total income after retirement of, say, £4,000 a year and they will not be desperately impressed by a political party that says that it will ensure that one third of that income increases by two percentage points if the consequence is that the other £2,500 loses half of its value within five years.

I caution all pensioners against the promises of any political party. They are likely to get a better deal from a Government who are willing to talk openly about their programme and the consequences of their actions. There is much talk of a hidden clawback in these proposals. Nothing is hidden. It is perfectly clear to hon. Members and people outside that the consequences of moving towards the historical method and the choice about making the decision about increases in June will mean a pension increase over a two-year period that is higher than the rate of inflation in that time. It is true that, if the pension increase is taken over one year, it will be less than the rate of inflation. Most pensioners are prepared to consider the consequences of a two-year period and to judge a Government by what has happened during the lifetime of a Parliament.

As many of my hon. Friends have said—there might yet be some Opposition Members who still acknowledge it—pensioners have benefited from the guarantee that the state retirement pension will be kept in line with prices. In fact, they are slightly ahead of prices. If we start to discuss the loss that has arisen from the cancellation of the link with earnings or prices, whichever is the higher, we get into all sorts of complications. A case can be made for a return to that system but it is not nearly as strong as the loss that was calculated when the Labour party changed from the historic to the prospective method.

We should put the debate into a wider context than that of the increase year 1983–84. People want to see what is likely to happen in 1984–85 and beyond. I hope that we shall eventually be able to eliminate inflation. That is one of the ways in which to regain economic prosperity. That would make it possible to generate an increase in real wealth. We should put the arrangements that we are making into the context of what I call the family perspective or the family life cycle. We know that, as the second pension scheme system matures, many more pensioners will have a higher standard of living than is now the case. Moreover, because about 70 per cent. of people in their thirties own their own homes, many of the costs that pensioners now face will not be faced by succeeding generations of pensioners in 20 or 30 years' time.

When 80 per cent. of retired people have paid off their major housing costs voluntarily during their working life by buying their home, we must ask ourselves how fast we want the value of pensions to increase in real terms in competition with other demands during working life. I am talking not about demands on Government but about shifting resources upwards and downwards in the family life cycle.

It is possible to borrow £30,000 and get tax relief at marginal rates of tax. It is possible, for example, for two young people with reasonably good jobs to borrow £30,000 and pay that loan off over 25 years. That is very nice. I am on record as opposing the increase in mortgage interest relief, although my opportunities for voting against that type of thing are limited. The Government are crazy to do that. There is no sensible justification for the increase in logic, or in terms of monetary policy, or in terms of sensible Tory philosophy. I hope that we shall eliminate the mortgage interest relief system as it stands. I remind the House, and especially senior civil servants and Treasury officials who get more benefit from it than most others, and certainly get more benefit from it than they do from child benefit, that a system that encourages people to have mortgages for as long as possible and to extend and increase them when they get a salary increase is perverse. There is no justification for it. The justification is to concentrate resources when people need them for housing help during family formation. The idea is to transfer resources through pensions and child benefit at two important times to ensure that people have resources which they cannot earn, both when they have passed retirement age and stopped work and before they reach working age. That means pensions and child benefit.

During the past 30 years, successive Governments have doubled the value of the old-age pension in real terms and yet the level of child benefit and child income support is still lower than it was in 1955. We should examine the consequences of that type of crazy tax and benefit system in the context of this Bill, analyse tax benefits and the family life cycle and try to work towards a better system.

I had hoped that the alliance would help in that regard. Unfortunately, it seems to have swallowed the suggestions of Dick Taverne and the Institute of Fiscal Studies, which proposed almost everything except an increase in child benefit. I thought that that was not too bad because, a week later, when the alliance had a chance to vote for an increase in child benefit it leapt aboard.

There is a slight problem with the alliance. It is not quite sure in which direction it is facing on any issue. Perhaps that is why it is so often absent from the House, as is the case now. There are not many alliance hon. Members. I shall say no more about that because I did not want to make a provocative speech. Because of that, I should like to say that I look forward with keen anticipation to hearing what the hon. Member for Stockport, North (Mr. Bennett) has to say. He is one of those Labour Members who puts in the homework on these issues, although I may not agree with everything that he says. Not only is he the best Labour Back Bencher in the House at the moment,, he is the only Labour Back Bencher in the House at the moment.

We face the problem of whether it is right to offer to pensioners the type of promises that the economy cannot support in the short term. There has been a brief advertisement for Anthony Bevins' recent article in The Times, which examined the various draft election promises on pensions made by Labour party Front Bench spokesmen, such as the hon. Member for Perry Barr.

If pensioners take that short-term promise of prosperity, they will end up with the type of economy that will be disastrous not only for them but for the whole country. I wholly agree with the Government's decision to return to the historic method. I do not think that I should fall out too dramatically with the amounts of adjustment that the changeover has openly included. I would probably have left pensioners with half of the overshoot from last year's overestimate of inflation. We are dealing with 1 per cent. of the state retirement pension. It is not critical. The critical thing is to develop the type of economy in which we can generate an extra 3 per cent. in national wealth each year and ensure that pensioners get a share of that wealth. The way in which to ensure that pensioners get a share is to ensure that hon. Members are always concerned with the real interests of pensioners, which includes the value—the increased value where possible—of the state retirement pension. Merely keeping the link with prices or earnings, whichever is the higher, is not the way in which to do it. That provides an automatic ratchet that winds up the apparent value of state retirement pension in such a way that even a Labour Government were forced to break the link. I do not know whether the cancellation of the Christmas bonus for two years was part of that process, but it is better to ensure that we keep the link with prices and that we take an annual opportunity to persuade the Government, where we believe that it is right—the Government often do not need to be persuaded—that there should be a real increase in the state retirement pension. But it should be a conscious decision.

Had the Government said "We shall make no adjustment", they would have been accused of electioneering, and the pensioners' view would have been "If the Government are promising that now, we shall have a general election and they are likely to make the same promises and take the same action as, sadly, the Labour Government did in their last year of office before they were rejected by the electorate." It is much better for the Government to try to ensure that, during a Parliament, a share in the increased national wealth should go to pensioners. However, that is likely to happen as a consequence of having economic policies that drive inflation back towards zero, not of making extravagant promises that build up people's hopes but then dash them again.

8.10 pm

Mr. Andrew F. Bennett (Stockport, North)

The hon. Member for Woolwich, West (Mr. Bottomley) seemed to believe that in the not-too-distant future earnings-related pensions would play a greater part in our system and that pensioners would be much better off. I give him the firm warning that the sad fact is that many people will not qualify for the new earnings-related pensions because they are unemployed. That is only one worry about the new scheme.

The hon. Gentleman was enthusiastic about the idea of examining incomes throughout the life cycle. There are some attractions in that approach, but the hon. Gentleman must be careful about comparing today's children with today's pensioners. I do not object to his comparing one child with another and following them throughout their lives. However, if he wishes to compare today's children with today's pensioners he must look back at the struggle that most of today's pensioners had—

Mr. Peter Bottomley

I follow the hon. Gentleman's point, and I am sorry that I did not put across my point more clearly. I take a great deal of stick in my constituency for battling for pensioners and am often asked, "Why are you trying to protect them so much?" I recognise that pensioners have put up with worse conditions than others, but it is important to follow people through their life cycle and to make changes in advance. With mortgages one needs 20 years' warning, and with pensions one needs 40 years.

Mr. Bennett

I accept that, but today's pensioners have had much difficulty in their lives and they deserve some recognition of that. The hon. Gentleman seems to be part of the cut and run school of the Conservative party who are increasingly vocal in saying, "We are almost certain that the lowest inflation rate will be in May. It will be announced in June, so that is the time to have an election because we have built an entire edifice around reducing the inflation rate, whatever the cost." They say that, ignoring the fact that everyone knows that inflation will then begin to rise.

I apologise to the House for not being present to hear the opening speeches, but I had to attend a meeting of the Select Committee on Social Services. Members of a Select Committee have a problem when both the Committee and the House are debating similar topics on the same day. Earlier today we heard a proposal to televise Select Committee hearings, and the House must consider that carefully. There is already considerable pressure on hon. Members to attend Select Committee meetings rather than to listen to an entire debate on the Floor of the House, and if Select Committees were televised, but the House was not, the problem would become even worse.

I was especially disappointed that during the two hours for which the Select Committee sat today we spent all our time debating the health aspects of the Government's public expenditure and did not debate social security, because I wished to ask a key question about social security public expenditure. The Government announced in their supplementary Budget expenditure statement last autumn that they would save an estimated £180 million—the so-called clawback. Perhaps the Minister can tell me now how much he expects to save as a result of this measure.

Will it still be £180 million, although it will be achieved not by clawback but by this mean and squalid measure? The reaction of the press and some Conservative Back-Bench members to the original proposal was such that the Government recognised that it was unacceptable, so they have had to dress it up and give it a new name. However, the real test is whether, in their public expenditure estimates, they still expect to save £180 million. The figures would appear to show that that is the case.

If that is the saving that the Government expect, we can spell out clearly what it will mean. The single retirement pensioner will be 65p worse off and a retired couple will be £1.05 worse off. The single person who receives the long-term supplementary benefit will be 65p worse off and a couple will be £1.05 worse off. Child benefit for children aged 16 and 17 will be 30p less, for those aged between 11 and 15 it will be 25p less, for those aged under 11 it will be 20p less, and there will be a corresponding reduction in unemployment benefit.

That is a depressing picture. The Government try to justify it by saying that the Labour Government did exactly the same. It is likely that that argument will be developed, but it is not helpful in politics to say, "Yah-boo, you did the same thing." The question is whether it was right in the first place. I do not believe that the change was right when the Labour Government introduced it, but it must be measured against what the Labour Government did for pensions and for most other benefits. Under the Labour Goverment pensions increased in real terms by 20 per cent. The Government must tell us, especially if they are heading for a June election, by how much pensions will have increased in real terms during their period in office. They will say that conditions have been very difficult, but we must measure those difficulties against what they have done for others. If conditions are difficult, how could they find £1.5 billion in tax cuts for the well off? As my hon. Friend the Member for Birkenhead (Mr. Field) said, it has been estimated that the Government have given away £6 billion to the well off, but very little to pensioners.

The hon. Member for Huddersfield, West (Mr. Dickens) went to great lengths to say that he was fully in touch with pensioners, but I wonder how many pensioner households he has visited. There is a disturbing difference between meeting pensioners on the street and looking carefully at some of their households, especially those who have been hard up for most of their lives. They live in considerable poverty. The present pension is just about enough to enable a pensioner to get by if the majority of capital items were purchased while the pensioner was working. But if one enters old age in poverty, one is stuck in poverty, with this pension, for the rest of one's life. There is no reserve in the pension to buy major items of household equipment, major items of clothing and furnishings or to carry out major repairs. That is the reality. We should be talking about how we can increase the basic pension so that those people can enjoy a decent standard of living in old age.

In an area such as Stockport many people do not enjoy an adequate standard of living in their old age. There is also much bitterness about the way in which the different measures that the Government have proposed have weighed heavily on pensioners. When I went out canvassing last night a lady from Haughton Green said that her first grouse was that her husband, who had worked hard and contributed to a work's pension, was taxed. She pointed out that not only had their pensions not risen as much as they had hoped but that they had to apply for housing benefit and then receive back in housing benefit the money that they were paying in tax. They thought that that was somewhat ridiculous. Over the past three years not only have they not seen their pension increase as much as they would have liked but they have seen their council rent increase much more than they wanted. Even taking housing benefit into account, they worked out that they were losers by 70p, and because they might also lose other benefits they could be up to £1 or £2 worse off.

Mr. Pawsey

Does the hon. Gentleman agree that the majority of pensioners enjoy rent and rate rebates from local authorities so that the increases in the rents to which he has referred probably do not bear so heavily because of the safeguards that are built into the system?

Mr. Bennett

I am sure that the hon. Gentleman will have followed the progress through Parliament of the housing benefit legislation which is now being implemented. He will know that those people who are receiving a pension and superannuation are often caught by the Government's savings in the introduction of the housing benefits scheme. Of course, the Government gave the guarantee that they would not penalise anybody by more than 70p a week. There are many people who are caught in that trap. Their rents go up and then they find that they lose 70p as a result of the introduction of the housing benefit scheme.

Another group of people who previously received heating benefit when they had a heating charge combined with their rents have lost about £1.65. There are a quite distinct group of people who have lost out as a result of the Government's introduction of the housing benefit provisions. The other argument that I must put forward relates to fuel bills but I shall say more about that later.

Another point that pensioners regularly make to me is why they have to wait so long. They have a legitimate argument. If the Germans, Belgians and other Europeans can have rapid upratings, why cannot we in Britain? The reason that is always given is that there is not the money. If there was the will to give rapid upratings, it would be perfectly possible to design such a scheme. The Government say that they cannot make the calculations sufficiently quickly, but they could make the Christmas bonus the variable factor. They could easily do the uprating five months in advance and, if they found that their calculation was wrong, if they had not got the inflation figure right, they could make the Christmas bonus that variable factor which restores to people the money that is available. If the Government have the will, upratings can be made much more quickly. How will the Government do the uprating this time? Will it involve the issue of second books to individuals? That often causes a great deal of confusion. Perhaps the Minister will say a little more about that when he replies.

As I understand it, pensions will increase as a result of the May retail price index but supplementary benefit will go up as a result of the May retail price index without the housing element in it. It has now been estimated that that probably means that supplementary benefit will go up slightly more than pensions. If that is correct, it means that an increasing number of pensioners will qualify for supplementary benefit this autumn, but that they will qualify for a small amount. I welcome the fact that they will have some more money, but I am worried that because that amount will be small and that many will only just qualify to receive supplementary benefit they will not realise that they are entitled to it and therefore will not apply. They will have applied for supplementary benefit some time during this part of the year and will have been told that they are not entitled to it when, come November, they will qualify. I hope that the Government will give an undertaking that any pensioners who ask about supplementary benefit before November will be reminded after November that they might qualify because of the changing relationship between pensions and supplementary benefit.

I fear that there will be another take-up problem which the Government should be considering carefully. They should not be giving people marginal increases in supplementary benefit which they do not claim. They should ensure that people get the money. A simple way would be to ensure that pensions rose by the same amount as supplementary benefit and that they both rose by the higher amount. The Government will accept that there is a major problem with take-up in Britain. I deplore the fact that the Government have not carried out a survey into take-up since 1979. Although they have reluctantly paid lip service in the end to various take-up campaigns by local authorities, the Government do not really hammer home and encourage take-up.

I had intended to berate the Minister for not replying to a letter that I sent to him on 21 February in which I drew attention to a study on pensioners' heating costs that was carried out by Age Concern in Stockport. On my way into the Chamber I called at the message board and was able to pick up his reply. I thank him for that fairly comprehensive reply, though I am a little disappointed that it has taken him since 21 February to make it. I am sure that Age Concern in Stockport will be pleased to hear the Minister's detailed comments on its study. It will also be rather disappointed by the letter's content. I am particularly anxious about the last paragraph, in which he points out that the Department has now done a great deal to pay those people in Stockport who have under-floor electric heating the new estate rate. I admit that the Department has done that, but I wrote to the Department in September last year asking it to check how many pensioners and others in receipt of benefit in Stockport were entitled to that estate rate. I wrote about five letters which were always courteously replied to, sometimes saying that the local office was dealing with it and sometimes that the regional office in Manchester was dealing with it. We were told that the local authority had been asked to identify all those who had under-floor heating and that the electricity board had been asked for estimates of the bill.

Eventually it was announced in February that it accepted that over 1,000 dwellings would qualify. When I asked when they qualified I was told that the Secretary of State had signed the certificate that they qualified from February. Why should they not have qualified from September when I first raised the matter? That was when the Department first became aware of it and it would have been much more help to pensioners in Stockport with these high heating costs if that had happened. The local authority dwellings having been identified, the Department is now busily trying to identify those of the housing associations. I do not blame the Department for taking a long time over the administration but I am a little worried when the Minister claims credit for it in his letter, particularly when he was not generous enough to backdate it to September when the issue was first raised rather than February when his officials after a long time finally came to their conclusions.

The Under-Secretary of State for Health and Social Security (Mr. Tony Newton)

The regulation was virtually unworkable until we sorted it out last year. It took a lot of time to sort out and it certainly took more time than we would have wished to identify all the estates. But unless we had acted—this I think we can legitimately claim credit for—we would have been stuck with a virtually unworkable regulation, with nobody in Stockport getting help.

Mr. Bennett

I am not sure why the Government did not deal with this when they revised the supplementary benefit regulations in 1980. Having created the difficulty, it now seems that they are claiming credit for solving it. Having accepted that there was a difficulty, why did the Government not give the people of Stockport the benefit six months earlier when the issue was first raised? Equally, why are the Government not doing more to encourage insulation? It is some consolation to get extra money to pay the bills, but most people would like to consume less electricity, and proper insulation would make a great difference.

This is a mean and disappointing measure. Most pensioners in Stockport will feel that they have not had a fair deal. They remember when the Government gave tax handouts to the well-off. In fact, the Government are bringing comfort to the rich but oppression to the poor. It is time that we got rid of them.

8.30 pm

Mr. Harry Greenway (Ealing, North)

The concluding remarks of the hon. Member for Stockport, North (Mr. Bennett) do not stand up to close scrutiny. It was totally unworthy of the hon. Gentleman to suggest that the Government have attacked the poor and supported the rich.

Like every other hon. Member, I have my share of pensioners in my constituency, including six centenarians, one of whom is a lady of 105. She keeps me well briefed on her lifelong problems and achievements, and particuarly on her current problems. She is always cheerful. When I ask why she has achieved such longevity, she always replies "I have never had anything to worry about. I have always worked hard and successfully and have had an adequate living, as I do now, but most particuarly I have lived a long time because I have never had anything to do with men." My relationship with her has been gentle, but suitably close, and I hope that I have been of support. I certainly seek to be.

She has a friend called Jenny, who is 103. She lives in sheltered accommodation and is particularly pleased with the 5p television licence that she has only recently been able to obtain as a result of Government action—[Interruption.] As the hon. Member for Birmingham, Perry Barr (Mr. Rooker), who is interrupting me from a sedentary position, will know, that concession has recently been extended to other categories. I am sure that by his nodding the hon. Gentleman is welcoming that fact.

Mr. Rooker

Of course I am.

Mr. Greenway

I am not making any false claim.

Mr. Rooker

I apologise for intervening, but the hon. Gentleman was giving the impression that Jenny had just benefited from this 5p concession, whereas she had always benefited from that concession, which has existed for a long time. It has now been extended to other categories. The hon. Gentleman seemed to link the two, thus giving a false impression, which I know he would not want to do.

Mr. Greenway

Indeed not. Lady Bracknell took exception to dentists who gave a false impression, and I agree with what she said.

Jenny has only recently obtained a concessionary licence because she has only recently moved into sheltered accommodation. I was in no way seeking to mislead the House.

All my centenarians and pensioners have been particularly damaged by the high rate rises forced on them by the Labour-controlled GLC—150 per cent. over two years. Some people are protected by rate rebates against these vicious rises, but many pensioners are suffering greatly because they do not gain from the lower cost of travel, which it is said those rate rises have partly achieved. That is because they already have travel passes. They are especially damaged because the high rate rises contribute to a higher rate of inflation, higher prices and more expensive services. I lay that squarely at the door of the Left-wing GLC.

The hon. Member for Stockport, North said that the old-age pension does not allow pensioners to buy clothing or other capital items. However, I have been able to achieve for a number of pensioners—and ethers on supplementary benefit—allowances to buy clothing, bedding and all sorts of important capital items. What the hon. Gentleman says, therefore, is in no sense true.

The hon. Member for Stockport, North referred to the work of Select Committees. I and the other members of the Select Committee on Education, Science and Arts recently visited France. We looked mainly at education and training, but I was able to take some interest in the Socialist millenium. I was shocked to find that no family allowance is paid in France to parents of persistent truants. If children repeatedly truant from school and their parents do not respond to a stiff letter from the authorities or to various other sanctions, the family benefit is withheld.

Mr. Pawsey

That is an interesting point. It is a powerful argument for retaining the present system of discipline within our schools and allowing each school to decide whether or not to use corporal punishment.

Mr. Greenway

I appreciate my hon. Friend's point.

Mr. Deputy Speaker (Mr. Bernard Weatherill)

Order. The hon. Gentleman would go a little wide if he were to follow that argument.

Mr. Greenway

I take your point, Mr. Deputy Speaker.

Mr. Peter Bottomley

I am sure that my hon. Friend will recognise that there is a difference between the way in which the French pay the retirement pension and the way in which they pay child benefit. Child benefit is paid through local organisations, which can keep some of the funds back and use them to promote bodies such as Family Forum. I hope that the Minister will copy the French in one respect—by making more funds available to family organisations, which may help to bring in a better deal for pensioners and may help parents to look after their children as well as control them.

I am sure that my hon. Friend will have noticed another distinction between France and this country. Certainly those of his constituents who are over 100 years old will be aware of it. In France, most benefits are paid by credit transfer. The Labour party would get rid of payment by weekly order books, but many hon. Members wish to protect both pensioners and sub-post offices. We should therefore be wary of adopting some apparently constructive arguments if we want to retain the weekly payments while bringing in a more administratively efficient system for those who could be paid at longer intervals.

Mr. John

That was a better speech than the hon. Member's earlier speech.

Mr. Greenway

I am grateful for my hon. Friend's intervention and I agree with his point. I echo the tribute paid from the Opposition Front Bench.

My Select Committee looked at the formation professionelle, where we saw teenagers being trained. It is the equivalent of our own youth opportunities scheme. The results of that scheme affect French men and women throughout their lives and into old age because in Socialist France, if a person fails to gain any qualification either at school or through the formation professionelle, he will not receive unemployment benefit—or rather, he will not receive supplementary benefit if he is out of work. Unemployment benefit as such does not exist in France. That came as a great shock to me. I am sure that our Government will not follow the French Socialists' example, and if we ever have another Labour Government I hope that they will not do so either.

I read in a newspaper recently that the cost of the Labour party's promises to the electorate so far has been estimated at £40 billion.

Mr. John

Will the hon. Gentleman give way?

Mr. Greenway

No, I will not give way.

Mr. John

Was not the figure £14 billion?

Mr. Deputy Speaker

Order. The hon. Gentleman is not giving way.

Mr. Greenway

The figure that I saw was £40 billion. If it were £14 billion, that would be high enough. I have seen various costings ranging between those figures. It is certainly not less than £14 billion.

Mr. John

It must be.

Mr. Greenway

It is suggested that that would mean a 12p increase in the standard rate of income tax.

Mr. John

Will the hon. Gentleman give way?

Mr. Greenway

No, I must press on.

We should move towards a principle of non-subsidy, whereby old-age pensioners are financially independent. The pension should be adequate in its own terms so that pensioners do not have to look for subsidised holidays and the like, which is demeaning, unfair and unpleasant.

If the hon. Member for Pontypridd (Mr. John) will be brief, I will give way to him now.

Mr. John

I am grateful to the hon. Gentleman. I was beginning to think that he was a total abstainer so far as I was concerned. Is he aware that my costing of our pensions programme was one third of the lowest estimate given by the Secretary of State? The Secretary of State referred to a figure between £10 billion and £20 billion. The figure that the hon. Member for Ealing, North (Mr. Greenway) saw was even more fanciful. The Chief Secretary to the Treasury suggested a figure between £15 billion and £25 billion. In other words, the geniuses of the Government Front Bench have costed our programme at anything from £10 billion to £25 billion, so they are scarcely in a position to boast about their arithmetic.

Mr. Greenway

rose—

Mr. Deputy Speaker

Order. It may help the hon. Gentleman if I tell him that the Front Bench speeches will begin at 9 o'clock and two other hon. Members wish to take part in the debate before then.

Mr. Greenway

I am grateful for that information, Mr. Deputy Speaker. It had not been made clear to me earlier. In that case I will leave the figure suggested by the hon. Member for Pontypridd to stand or fall, but I have certainly seen some very high costings for the broad Labour party programme. The Labour party will have to face that and not try to dodge it.

The value of the pension has been more than maintained by the Conservative Government. That has been said repeatedly in the debate and it must not be forgotten. The value to pensioners of low inflation is beyond price. Pensioners who are dependent upon both pensions and savings are helped by low inflation. On inflation, the Government have a record that is appreciably better than that of their predecessor.

Early in my teaching career, 25 or more years ago, I met very elderly former teachers who were living on fixed pensions and savings. Because of inflation they were in penury, although it was a slow process in those days. The message to society is that if we were to return to the high inflation which Labour policies would bring, people's savings would lose their purchasing power very quickly and the value of their pensions would be depressed to zero. They could not return to the standard of living that they have enjoyed under this Government. Opposition Members who are muttering as I speak and who do not like this point must face up to what inflation does to pensions. The programme that the Labour party recently launched would certainly fuel inflation.

8.47 pm

Mr. Allen McKay (Penistone)

Inflation and the cost of living mean different things to different people; it depends upon the base from which one starts and how one determines the cost of living. Pensioners in my constituency determine their cost of living on what they can buy when they go to the shop—the cost of milk, bread, eggs and bacon. They consider what they need to keep their heads above water.

This is a narrow Bill, although we may discuss many things. It is dear to the hearts of hon. Members on this side of the House because nothing smarts our consciences more than the attacks on social welfare benefits during the past four years. The attacks have been small, but they have been sustained over a long period. If they had all come at the same time, there would probably have been a revolution when people realised what had happened to the working class, to pensioners and to those in receipt of welfare benefits. The Minister said that he wanted to protect the standard of living, but many things which have happened over the past four years must be looked at. The earnings-related supplement has gone. It was a traumatic experience when many people suffered the first shock of unemployment which has been caused mainly by the Government's policies.

The Government are trying to put through their policies deceitfully with this Bill. It would have been more becoming for them to be more open. Everyone knew that they wanted to claw back the 2 per cent., 2.3 per cent., 2.7 per cent. or whatever it was. It would have been better if they had been honest and above board about it.

We are approaching an election and the Government are trying to cover up. That is unpalatable and will not go down well with the electorate. The hon. Member for Macclesfield (Mr. Winterton) was right to suggest that we should continue with the present system and give notice that we shall move to a new system next year. That would be honest and above board. Everyone knows that the Government sought to claw back 2.7 per cent. and that at the last moment they decided to operate a new method of calculation involving a historical calculation rather than forecasting. That gave them the 2.7 per cent. and 9 million pensioners are being deceived by the Government.

The Government claim that they want to protect living standards. If that is so, why do they insist on a £3,500 cut-off level when they know that many people who are made redundant because of their policies receive well above that and cannot qualify for supplementary benefit until they have spent that part of their savings? That is what happens under a Government who profess to encourage saving. The Government are compelling people to spend savings put aside for retirement and redundancy money. Anyone with an occupational pension over a certain sum is taxed pound for pound. That is the action not of a Government who protect standards of living, but of a Government who protect their own interests.

Budgets in the last four years have given to those who earn most and taken from those who earn least. Close examination shows why. The country earns £14.4 billion a year from North sea oil. We spend £17 billion a year on welfare benefits. We know that North sea oil will run out some time and that the Government must ask how the money can be replaced. If the Government decide to spend £10 billion on Trident and to give back money to people earning the most in the hope that they will invest—although money is pouring out faster than ever—in Britain, the only solution is to cut spending on public education and social services, squeeze the councils. The Government are taking from the recipients of welfare benefits.

If the Government were more honest and forthcoming people would believe them. The Government are calling on local authorities to protect the people who the Government promised to protect. My local authority has provided old people's dwellings round a centre so that residents can take advantage of concessionary fuel, free television licences and the council's cheap bus fares. Pensioners in London are treated differently from pensioners in the north.

The hon. Member for Birmingham, Edgbaston (Mrs. Knight) talked about shovelling gin. She owes an apology to the country's 10 million pensioners because she debased the people who gave her the standard of living that she now enjoys. She owes an apology if for no other reason than that pensioners drink whisky, if they drink anything, I am glad to say.

Some hon. Members say that pensioners do not want cheap television licences. They should look at their postbags to understand what is happening. A scheme recently accepted in Sheffield brings 8,000 pensioners into a cheap television licence scheme.

I introduced a ten-minute Bill on 26 October which attracted 187 votes. The House will have a chance to vote on the Bill again on Tuesday because I shall continue to bring it back until the anomalies have been corrected.

The Government should look at their policies. They are not protecting the welfare beneficiaries; they take from them continually. I believe that at the next election the Government will find that their policies have caught up with them.

8.55 pm

Mr. J. F. Pawsey (Rugby)

It is always a pleasure to follow the hon. Member for Penistone (Mr. McKay) who spoke with his usual sincerity and developed some interesting arguments. I shall not follow them all. He mentioned education, but he should remember that the only real cut is that which has been made voluntarily by families having fewer children. School rolls are falling but the pupil-teacher ratio has never been better. The per capita spending in schools is at its highest.

It has been a thoughful debate with many helpful contributions. I have listened to the last eight speeches. It is significant that six of them favoured a return to the historic method of uprating. The hon. Member for Birkenhead (Mr. Field) referred, as I think did the hon. Member for Stockport, North (Mr. Bennett), to tax cuts for those on higher incomes. Surely both hon. Members understand that those taxes have been cut so that entrepreneurs can develop the nation's wealth, create work and develop jobs so that the number of unemployed people will fall. That is why the Government have taken such courageous decisions.

The hon. Member for Birkenhead referred to a six-month review, but that only becomes important if we live in an age of rising inflation. One of the benefits that the Government have bestowed is the realistic control of inflation, which is now running at about 5 per cent.

I listened with some interest to my hon. Friend the Member for Brigg and Scunthorpe (Mr. Brown) and the tale that he told about his grandparents. I was careless enough to lose all of mine, and my six sons have but one grandparent—a gentleman of 82 who enjoys somewhat poor health. That is why I mentioned the importance of the National Health Service during my intervention in my hon. Friend's speech.

Unfortunately, my hon. Friend the Member for Woolwich, West (Mr. Bottomley) is not in his place. We shall soon enjoy having two for the price of one. I look forward to contributions from his alter ego when she eventually arrives in this place.

The hon. Member for Stockport, North said that he was busy canvassing in his constituency last night like the assiduous Member that I know him to be. I was doing the same, but I suspect that we came to rather different conclusions as the result of our work. I have been assured by one of my hon. Friends that there is no saving to the Government from the Bill, which might perhaps reassure the hon. Member for Stockport, North.

Mr. Andrew F. Bennett

I did not suggest that there was any saving to the Government. I said that there was a loss to many pensioners.

Mr. Pawsey

The housing benefit part of the Bill was brought before the House not to save money but rather to achieve fairer shares. I am sure that the hon. Gentleman will agree that it is important to have fair shares for all. I believe that that is a slogan that should unite both sides of the House.

My hon. Friend the Member for Ealing, North (Mr. Greenway) mentioned some of the elderly ladies in his constituency. We have three centenarians only in Rugby. I do not want any comparison to be made between Ealing, North and Rugby because I am sure that Rugby is just as healthy as my hon. Friend's constituency. I hope that we shall have five centenarians in time. I was extremely impressed by his knowledge of French and his French pronunciation. We may perhaps one day see him on the Council of Europe where I am sure that his knowledge will prove invaluable.

My hon. Friend the Member for Woolwich, West referred in an interesting intervention to post offices. By coincidence, I was at my new post office in Rugby today. I discovered from the postmaster that he anticipated a 12 per cent. drop in counter turnover as a result of changes in legislation. I say in all seriousness that that matter should cause us all a great deal of concern.

I welcome the return to the historic method of uprating pensions and social security benefits, because the present system is grossly inaccurate. It is so much in error that it has nothing to commend it. It has only twice been right in seven years. I should like to quote some words of my right hon. Friend the Secretary of State, which make good reading. I am delighted to see him in his place, so that he can be reminded of what he said, which was: it has been wrong in five out of the seven years that it has been used. In 1978 the forecast was 1.9 per cent. too little. In the spring of 1980 the forecast was 1 per cent. too high. In 1981 it turned out to be 2 per cent. too low. In 1982 it was 2.7 per cent. too much."—[Official Report, 17 March 1983; Vol. 39, c. 356.]

What sort of system can it be to have such gross inaccuracies? Is it any way in which to run a country or a pension system? It is not so much a rule of thumb as a rule of error. It is not so much an estimate as a look at the entrails. We are in the age of the computer, but I suspect that even the Saxons could get two guesses right out of seven. Were I a betting man, I think that I could get even two bets right out of seven.

To get the debate into perspective, we should look at the background to pensions. My right hon. Friend the Prime Minister said that we should inflation proof pensions. That promise has been kept. My right hon. Friend usually says what she means and means what she says. Pensions have been kept ahead of prices. The pension is now worth more in real terms than it was in 1979. From May 1979 to November 1982 earnings increased by 59.4 per cent., but pensions went up by 68.5 per cent.

It is also fair to say that my right hon. and hon. Friends have done more for pensioners than any Government. Among other things, the earnings rule limit has been raised from £51 to £57. Perhaps that is not good enough. More could be done and I am sure that more will be done.

All in all, I believe that my right hon. and hon. Friends have done much of which they can be proud. I have no doubt that we shall hear many references to what has been done during the wind-up speech. I have every confidence that the Minister of State will reassure hon. Members, who will join him in the Lobby when we vote.

9.3 pm

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

I feel sorry for the hon. Member for Rugby (Mr. Pawsey) because his speech has been curtailed, but in the brief time that was available to him he managed to make a mini windup speech. I am not sure how the Minister of State will take that.

Before I come to the main thrust of my remarks, I should like to make a couple of preliminary points, first, to assist the Minister, and, secondly, because they are important, although they are about the city that I help to represent. In his speech the Secretary of State of his own volition referred to housing benefit. He referred to the debate on the regulations late one night three weeks ago, when matters concerning Birmingham were raised by my hon. Friend the Member for Birmingham, Stechford (Mr. Davis), who was supported by me. The Secretary of State said, almost as a throw-away, that he had solved the problem. We should be grateful to know about that by letter or through a statement. Neither of us has received any information. We should like to know whether Birmingham council has received any new money. It needs about £750,000. Has the council received new money to get over the problem of a double week's rent collection? My constituents, including 80-year-old women, are being harassed to pay an extra week's rent by non-existent rent collectors. We disbanded rent collectors years ago. The departments have been sending officials round the houses. The Opposition would like clarification on that point as soon as possible.

I repeat the offer made by my hon. Friend the Member for Pontypridd (Mr. John). At 10 o'clock there need be no vote on this Bill. The Opposition say that in all sincerity because the argument as to what the calculation will be could be academic. However, it is not academic to those on the losing side. Will the Government ensure—it can easily be done—that no one will lose this year because of the technicalities of the changeover? They can ensure that by saying that they will pay a 6 per cent. increase in benefits in November if that is the inflation rate. By June, when the Government possess the May figure, they will have a better idea of what the November figure will be. If they do not wish to do that, they could pay an extra week's benefit, because that is roughly what a 2 per cent. difference in benefits means. It is the loss of one week's benefit during the course of a year. The Government could pay an extra week's benefit on top of the Christmas bonus. If the Government do not like that, a procedure that is not so fast but nevertheless acceptable would be to bring forward another uprating in the early months of next year to make up for that shortfall. There are three ways round the problem. If the Minister accepts one of those options, or comes forward with another formula that his Department has concocted during the day, he has the assurance that the Labour party will not divide the House.

The Rossi price index was mentioned early in the debate. The Minister whose name is attached to the index, which was invented last year, did not seem fully to understand what my hon. Friend the Member for Pontypridd said. The Minister will remember that during the passage of the Social Security and Housing Benefits Bill, which legislated for the housing benefit system, it was estimated that the retail price index minus housing would increase by 0.5 per cent. less than the retail price index in general in November 1982. However, it actually rose by 0.2 per cent. more than the annual RPI. There is a gap of 0.7 per cent.

Supplementary benefit, instead of being increased by 0.5 per cent. less than other benefits, should have been increased by 0.2 per cent. more than other benefits. The Labour party believes that at the very least the 0.5 per cent. should be added back this year. Bearing in mind the logical way that the Rossi price index operates, it is arguable that the full adjustment of 0.7 per cent. should be made. I am quite happy to give the Minister that in writing as it is something which is not easy to explain across the Dispatch Box.

Most hon. Members have referred almost exclusively—except when they were learning about the French system of child benefit payments or lack of them because of truancy — to pensioners. It is true that the majority of people in this country who depend for their total income on the social security system are pensioners. Hon. Members must not forget the 3 million people who are on the dole. I am talking about a person who loses his or her job and will receive £25 a week income in unemployment benefit. A married couple receives £41 a week unemployment pay. The House has been told that average earnings are £160 a week. I am talking not just about the pensioners but the unemployed and the disabled. The whole spectrum, counting dependants, amounts to the best part of half the population of the country. Were the time available, or the scope of the Bill such, the Labour party would wish to raise many matters about the income support levels to the various groups of people affected.

The Government are the only one in modern times—my limited experience in the House is nine years—who have to introduce primary legislation to stop social security benefits rising, as they would have done without such legislation. I cannot recall a time since the last war when a Government have had to introduce a Bill to prevent an increase that would otherwise have occurred. There was so-called "over-provision"—the Chancellor of the Exchequer's phrase—in November 1976 and 1977 tinder the forecasting system. That system did not work in the majority of years, but that is not to say that people suffered. In 1976 and 1977 the forecast was higher than the rate of inflation at the end of the day. There was no clawback Bill in 1977 or 1978 to get back the so-called over-provision in 1976 and 1977.

However, when in November 1980 social security benefits, pensions and the whole lot were seen to rise by 1p in the pound more than the rate in inflation at the outturn, the Government introduced in 1981 a special Bill which had one purpose and one alone—to take that 1p in the pound off the November 1981 increase. They introduced primary legislation then and they are doing so again. We have another special Bill which will affect benefit levels in November this year in a detrimental way. However much the hon. Member for Birmingham, Edgbaston (Mrs. Knight) may try to argue against that, it cannot be refuted. Indeed, the hon. Member for Woolwich, West (Mr. Bottomley) said that 1 per cent. did not really matter. However, when the Government cut 1 per cent. off benefits in 1981 he voted when there was a three-line Whip. That 1 per cent. was important enough then for a three-line Whip and for us to oppose it.

The issue would not be so contentious if people did not lose as a result in the year of the changeover. In addition, if the gap between the increased rate of benefit and the payment was not so long, the argument between the two sides of the House would diminish. Hon. Members, like me, only quote the bits they want to quote. However, paragraph 35 of the report of the Social Services Committee—House of Commons Paper 123—states: We recommend that in developing its operational strategy the Department bear in mind the considerable advantages that would accrue from the possibility of swifter and more frequent uprating. We want to know what the Government intend to do about that. In some ways the hon. Member for Macclesfield (Mr. Winterton) has been like a shadow over the debate. Several hon. Members have quoted him because of his great walk-out during the Secretary of State's speech. Indeed, I bumped into the hon. Gentleman twice today in the photocopying room. On both occasions I was photocopying his words, so he knows that I intended to refer to him. On 15 December 1982 the hon. Gentleman told the Minister in the Select Committee that the Conservative party's manifesto had twice included pledges to have more frequent upratings of social security benefits. However, nothing has ever come of that. The arguments against more frequent upratings have diminished considerably.

Ministers in both Labour and Conservative Governments have repeatedly told the House and the country why they need a minimum of six to seven months to carry out the uprating. The facts are given in considerable and helpful detail in the Library briefing prepared for the Bill. Nevertheless, it appears at this late date that we do not need six to seven months after all. In the four upratings under this Government the average delay between announcement and uprating has been seven and a half months. The six upratings in the four and a half years of the Labour Government saw an average delay of 5.7 months. That is almost two months less in terms of average delay between announcement and payment. So, despite the use of computers in the national insurance part of the system, the delay has increased in recent years.

As late as December of last year, Ministers were saying that much time was still needed. However, as a result of the policy of mass unemployment that has been followed by this Government and the increased numbers of people being means-tested, there is an increased work load compared with previous years. Nevertheless, the Government suddenly say "We do not need to do anything until 17 June, and we can make all the payments by the date in November." We need some assurances on that matter, if only because between May 1979 and the end of last year there has been a 22 per cent. increase in the ratio of means-tested supplementary benefit claimants, compared with the local staff in DHSS offices who have to make the calculations. There has been a massive increase in their work load, and they have to do the work in the shorter time between June and November this year. We need assurances—we need them now and in Committee next week—about what the Government have done to get agreements with their staff, notwithstanding the problems in local offices in recent months. We need to know whether arrangements have been made for overtime work in offices. We need to know what procedures are being adopted. Is it correct, as my hon. Friend the Member for Stockport, North (Mr. Bennett) asked, that second order books will need to be issued in order to make the dates?

I come back to the matter that I raised in an intervention. What happens if the House is prorogued in June? What assurances will be given, and what procedures will be set in motion if this House is not sitting on 17 June, the day on which the May retail price index comes out, and the starting date for changing the books of millions of beneficiaries before November? If the Prime Minister cuts and runs in June—the sooner the better, as far as I am concerned—the Government must make sure that the administrative machinery is set in motion so that those who are dependent on social security payments do not suffer as a result of that action.

The Government have tied the mechanism to one date, 17 June. That is when everyone will know what the increase in pensions will be in November, because I understand that that is the date of publication of the May retail price index. That date is already known. If the House is not sitting, there will be difficulties for the people who will be operating the system without parliamentary approval. That is not a scare. I am simply pointing out the consequence of what the Government may do.

Various views have been expressed about whether the Government have taken the correct course. I mentioned the hon. Member for Macclesfield. I shall not quote what he said in full, but he said on 17 March that he would accept what the Government were doing, but that he would have preferred them to announce it the year before so that it did not appear that the Government were operating in "a devious way". He went on: Would not it have been more honest to have introduced the new method—which I fully support—next year? In those circumstances, Conservative Members could say 'We could have done a good thing'."—[0fficial Report, 17 March 1983; Vol. 39, c. 358.]

The Secretary of State said that he was grateful for his hon. Friend's remarks. The hon. Gentleman then walked from the Chamber.

However, the matter goes beyond that, because back in June 1976, a year that has dominated part of our debate because of what happened in terms of the change, the then Opposition social security spokesman, the present Minister for Health, the hon. and learned Member for Rushcliffe (Mr. Clarke), said on 24 June: Would the Minster not accept that it would be possible to have respect for a Government who said that, because of economic strictures, they would have to cut £500 million off the anticipated uprating and that they could not abide by the commitment which my hon. Friend the Member for Wells (Mr. Boscawen) spelled out and which had been made by former Ministers? What is not acceptable is what the Minister tried to do in his opening speech—that is, to pretend that there was no real change".—[0fficial Report, 24 June 1976; Vol. 913, c. 2012.] I accept that he was attacking my hon. Friends in Government. There is no argument about that. Nevertheless, this Bill is brought before the House only to save the Government money, some this year and a lot next year. If that were not the case, the logic of the Government's argument would mean that the Bill should have been before the House last year, not this. They are introducing it because of the arguments about the clawback. In answering questions to the Select Committee on Social Services, the Minister for Social Security said: In other words, even if one went on a historical basis there was a risk of overshoot or undershoot, and in fact that did happen. If it happened in the past, it will happen in the future. In a more recent Consolidated Fund debate, the Minister for Social Security said: The difficulty with a historic method is that one is basing the increases on past rises in prices. If there is rapidly accelerating inflation … "— inflation will rise this year from 4 per cent. to 6 per cent., which is a 50 per cent. increase between May and November. The Secretary of State winces, but that is a difference of 2 per cent. and a difference of a week's benefit. The Minister for Social Security continued: That is the difficulty with that method."—[Official Report, 7 February 1983; Vol. 36, c. 827.]

The Prime Minister sought to remind the House that I said that I was in favour of a change—I think that I am on record as referring to this only once but I stand to be corrected if I am on record somewhere else—because of what I said in Committe on the Social Security and Housing Benefits Bill on 22 December 1981 at c. 186. We were debating the new sick pay scheme covering eight weeks' maximum income, which has just been introduced, not long-term income support such as retirement pensions.

There is a world of difference between a maximum of eight weeks' support in respect of sick pay and the total lifetime support of the pension system. Following the Minister's announcement about how the Government would operate statutory sick pay on the historic system, what I said was sensible in view of the problems that they had had. The other difference is that the sick pay increases will not now come in November when all the other social security changes take place. Because of the tax system, they must come about in April.

It will always be necessary for the Government to announce the sick pay increases—so that employers know and so that codes can be changed—in November, December or January before they come into force in the April when the national insurance rates are changed. There is a difference between the debate in Committee in December 1981 and the debate taking place today. I do not retract the remarks I made then about the point of principle. As I have already said, if any of our offers are accepted, we will not divide the House.

In a press release on the day after the Budget the Secretary of State said: I shall be introducing a Bill immediately to restore the historic basis of uprating social security benefits. The historic basis was never actually legislated for. No Act of Parliament laid down the historic or forecast methods. As the courts judged, under the Social Security Act 1975, it is almost within the whim of Ministers to decide which basis is used. For the Secretary of State to imply that he is returning to a legalistic form that existed under the Labour Government is not strictly accurate. The Labour Government used the forecast method before they used the historic method, and then they went back to the forecast method. There were two changes during that period.

During the debate many hon. Members have rightly reminded the House that the greatest cut in what the pension would have been under the Government if they had left matters alone when then came into power was the removal of the earnings link. The 1975 Act, which linked pensions with prices or earnings, whichever was the higher, was changed by the Government. On their own admission pensioners have lost over £500 million a year as a consequence.

The issue goes beyond that because the Government Actuary has warned that if the Government continue with their policy of increasing pensions only in line with prices and keeping the national insurance upper and lower earnings limits fixed to the pension, they will in future be increasing the upper and lower earnings limits only in line with prices. The Government Actuary has warned the House and the Government that if they do not stop that policy and introduce amending legislation they will, in effect, change the Social Security Act 1975 "beyond all recognition". That is the statement that the Actuary makes in paragraph 613 of his first quinquennial report in July.

Those in their thirties and forties who are paying into a state pension scheme for an earnings-related additional pension will suffer catastrophically if the Government do not stop what they are doing. The Government stand charged with setting in motion changes in social security benefits which have had a knock-on effect into long-term pension policy for those who are now at work and whose pensions are still a generation away.

The system left under the 1975 pensions Act—it is sometimes referred to as the Brian O'Malley Act—would have created a pension package of a basic pension plus the additional earnings-related pension of about one third average earnings of a single person and about one half for a couple at the time of retirement. That would have applied to those who had worked for 20 years from 1978, when the scheme started, to 1998, when it will come to fruition. Those who retired after that date would have been entitled to use the best 20 years. The Labour party and the House can be justly proud of that system. It would have given automatically a decent non-means-tested income earned throughout a working life through the pay-as-you-go system. That would have been the provision for millions of our people.

The then Conservative Opposition did not oppose the 1975 legislation, which was designed to provide the framework for a decent pension programme and policy after the problems of the Joseph years, the plans of Richard Crossman and all the other to-ing and fro-ing that caused havoc to pension policy. The Government have not attempted to change the 1975 legislation but other changes that they have introduced have undermined the earrings-related pension programme. The Government are shortchanging millions of people to the extent that the Government Actuary states in his report. In paragraph 1.4 of his conclusions he states: If flat-rate benefits too were operated over a long period at a lower rate than earnings, for example in line with prices or at some intermediate rate between earnings and prices, the increase in the standard contribution rate would be less steep and might even not increase at all depending on how big was the difference between earnings and benefit increases. In that event, the basic benefit rates would in due course"— we are talking about basic pensions for today's working people— become very much lower than at present compared with the level of earnings, even if the purchasing power … had been maintained".

In 1981, the basic pension for a single person was about 21 per cent. of average earnings. That will drop to about 14 per cent. of average earnings as a result of what the Government have already done. Although pensions being tied to prices might look good for electioneering slogans, it is catastrophic for people who are now aged between 30 and 50 who believe that they are paying into a scheme that will provide them with a decent pension. That will produce major problems in the future.

I have taken a couple of minutes longer than intended because the hon. Member for Rugby (Mr. Pawsey) stole a little of my time. I should like to deal with the Prime Minister's recent arithmetical juggling. On 17 March, in a long reply to my right hon. Friend the Leader of the Opposition, she said: If pensioners' demands were to be accepted it would mean an increase in the weekly national insurance contribution of £20 a week for the man with average earnings."—[Official Report, 17 March 1983; Vol. 39, c. 346.] That was repeated throughout the country. The Prime Minister seemed to think that the National Pensioners Convention plan was exactly the same as my right hon. Friend the Leader of the Opposition's 12-point plan when, in fact, it is substantially different. It was suggested that Labour's plan would cost a man on average earnings £20 a week. I wrote to the Prime Minister because that figure is incorrect. I asked her how she arrived at it and whether she had assumed that the employee would pay all of the national insurance increases from now on. I also asked how she had split it. She wrote to me a couple of days ago and said: For a man on average earnings, (presently £165 a week) this would mean an increase of £20 per week in the total contribution; exactly the figure I gave in the House. I did not split the figure between employers and employees. However the split is made, the cost ultimately falls on the working population". If that is the case, we might as well abolish national insurance contribuions now and stick it all on employees. It is a smear for the Prime Minister to try to claim—

Mr. Fowler

No, it is not.

Mr. Rooker

Oh, yes it is. The Prime Minister said that the pensioners' demands would mean an increase of £20 a week in national insurance contributions by a man on average earnings. It would not. First, it would not be £20 a week and, secondly, the employer would pay by far the greater share. That is not the same as saying that the employee would pay.

The Opposition do not accept the £20 figure anyway. I do not want to be unfairly critical of the Secretary of State but the estimate—it may not be his own—of the cost of the plan was £10 billion to £20 billion. The Chief Secretary to the Treasury then ran it from £15 billion to £25 billion. Today, the hon. Member for Ealing, North (Mr. Greenway) mentioned £40 billion. That might be a misprint. Conservative Members have estimates ranging from £10 billion to £40 billion when my hon. Friend the Member for Pontypridd, who is in charge of these matters, has said in a statement for public consumption that the Leader of the Opposition's 12-point plan, read as it is published rather than as the Secretary of State and the Prime Minister wish to interpret it, will cost one third of the Secretary of State's lowest estimate. His lowest estimate was £10 billion. If he does not know what one third of £10 billion is, he is in real trouble in his job.

Mr. Fowler

The hon. Gentleman must concede that there is much public interest in the Labour party's proposals. Does he now agree with my suggestion that he should place in the House of Commons Library the costs of the plan and the details of how it has been worked out in the same way as he invited me to publish my costings of his proposals?

Mr. Rooker

Yes, at the appropriate time. The Government are rattled because of the firm commitment in Labour party documents to restore the link with earnings and prices.

Mr. Fowler

There appears to be some confusion on the Opposition Front Bench about how far that pledge goes. Does it apply only to pensioners?

Mr. Rooker

A plan for pensioners is a plan for pensioners—

Mr. Mike Thomas

He does not know.

Mr. Rooker

It is no good the Secretary of State trying to suggest that there will be a knock-on effect throughout the social security system.

Mr. Thomas

Is it only pensioners?

Mr. Rooker

That document is in the Library. We intend to have the same formula for the entire social security system so that there is no differentiation between long-term and short-term benefits as there used to be. That is the point about which the hon. Member for Newcastle upon Tyne, East (Mr. Thomas) is getting so up tight. We shall restore what pensioners have lost as a result of the break with earnings. That is a published figure—£1.45 a week for a single person and £2.25 a week for a couple. As soon as it is practicable to put through an order, that is what a Labour Government will do.

9.37 pm

The Minister for Social Security (Mr. Hugh Rossi)

First, may I dispose of the point about Birmingham. My right hon. Friend the Secretary of State will write to the hon. Member for Birmingham, Perry Barr (Mr. Rooker) in a few days' time about that matter, so I need not take up the House's time now.

This has been an interesting debate because of the display of contradiction, disarray and ambivalence on the Opposition Benches, especially on the Front Bench. My right hon. Friend has already drawn attention to the contradictions between the Labour party's 12-point pension plan and the document "New Hope for Britain". We have just noted the embarrassment of the hon. Member for Perry Barr about the costing of the 12-point plan. That was brought out by my hon. Friend the Member for Ealing, North (Mr. Greenway). However, it may help the House if I draw its attention to the letter of 29 March written by my right hon. Friend to the hon. Member for Perry Barr which gives the Government's costings of the 12-point plan. The letter should be studied carefully because it gives a formal costing for each pledge. I shall not detain the House by reciting the entire letter, but the relevant paragraph states: As you will see then I have been rather generous to you in costing the plan at between £10 and £20 billion—the minimum cost would appear to be £13 to £15 billion—and that leaves out any cost for pledges 7 and 8. My right hon. Friend goes on to talk about the additional five pledges that the hon. Member for Pontypridd (Mr. John) found it necessary to give during the Darlington by-election. About that my right hon. Friend the Secretary of State said: That adds to the social security budget by over £1½ billion per annum". That is the magnitude of the bill.

Mr. John

We say in pledge 7: We shall introduce a pension schemes Act which will more adequately protect occupational pensioners from the effects of inflation". The right hon. Gentleman says that that would cost the Government hundreds of millions of pounds. He knows that protection for private occupational pension schemes will come from the pension payers themselves.

Mr. Rossi

That is interesting: the Government are getting someone else to inflation-proof the pensions. The hon. Gentleman has made a false point, because, even assuming that he intends to impose the cost of pledge 7 upon the private sector, it still does not detract from the fact that the cost of the other pledges comes to between £13 billion and £15 billion. In his letter my right hon. Friend says that it comes to £13 billion to £15 billion, leaving out any cost for pledges 7 and 8. On top of that we have the £1.5 billion for the additional five Darlington pledges. We have not been told where that money will come from.

The hon. Member for Perry Barr has taken my right hon. Friend the Prime Minister to task for suggesting that payments of between £13 billion and £15 billion have to be found from national insurance contributions. In her letter to the hon. Gentleman my right hon. Friend said that, even allowing for the 13 per cent. Treasury subvention to the national insurance fund in respect of this additional liability, £20 per week national insurance contributions would still have to be charged upon the average national wage. That is precisely what my right hon. Friend meant when she answered that question in the House.

Of course, the hon. Gentleman is trying to split hairs and play with words. What my right hon. Friend meant is clear and she has made it perfectly clear in her letter to the hon. Gentleman in saying that the cost will have to be borne presumably in part by the employer and in part by the employee. Even if it is paid half and half, £10 per week is still a lot of money to the employee and to add £10 per week in overheads to each job would have a serious effect upon Britain's industry and commerce.

Mr. Mike Thomas

rose—

Mr. Rossi

I have little time left.

An interesting contradiction arose among Labour Members out of a question that was asked about the restoration of the earnings link and whether that applied only to pensions or to other benefits as well. I noted the reply of the hon. Member for Perry Barr a few moments ago, but, because I found it a curious occurrence, I made a note that at the time the question was asked the hon. Member for Crewe (Mrs. Dunwoody), who is no longer in her place, said "No, it does not", while the hon. Member for Perry Barr said "Yes, it does". If that is not a matter of disarray on the Labour Benches, I should like to know what is. Such contradiction and ambivalence extend to whether we have a forecast or historic method of uprating. That is the subject matter of the Bill.

During the Budget debate the hon. Member for Pontypridd did not say that he opposed the historic method. In the Committee that considered statutory sick pay, to which the hon. Member for Perry Barr has already referred, I formed the impression that both were inclined to the idea of a historic method. The hon. Member for Perry Barr went so far as to say that he thought it was sensible. It was true that it related to a different benefit over a different period, but at that time I argued the advantages of the historic method to remove from us all the difficulties that Governments have faced over the years in trying to forecast the uprating. It was in that context—on the principle of forecast or historic—that the hon. Member for Perry Barr said that it was sensible. For the purposes of this debate, he has found it necessary to adopt a slightly different attitude and to justify the remark that he made in Committee that encouraged me to believe that we should pursue the historic method of uprating for benefit.

The hon. Member for Pontypridd said that he was hoping for an academic debate. But today, on balance, he said that he preferred the forecasting method. Is he really serious about that, or is he merely a devil's advocate in the academic debate on the methodology that he would like to have? So far as I could gather, no Opposition Back Bencher really supports the forecast method. From what my hon. Friend for Brentwood and Ongar (Mr. McCrindle) said, it seems that no one outside supports the principle of the forecasting method which, as has been said time and again, has been wrong five times out of seven. How can one really place reliance on a method which, in the light of experience, has shown itself to be wrong so consistently? Use of such a method causes great uncertainty and worry. Every year there must be consideration of an adjustment one way or the other, and difficult forecasts must be made.

If hon. Members are guided by the light of experience and adopt a flexible and open-minded attitude, they must admit that the forecasting method, introduced in 1976 for questionable reasons, has not succeeded. It has failed the country, including pensioners and everyone in receipt of social security benefits.

As for the historic method, the hon. Member for Pontypridd quoted comments that I made in evidence to the Select Committee on Social Services as well as in a subsequent debate. I was asked which was the preferred method, and at that time no decision had been taken, nor could it have been.

In my evidence to the Select Committee I referred to the advantages and disadvantages of both methods. The historic method has some disadvantages, although it does not have the grave disadvantages of the forecasting method. If there happens to be a gap in time between the announcement of the uprating and its implementation, the historic method based upon past actual figures may well not serve the purpose for which it is intended if there is inflation in the meanwhile. That was the real difficulty, and it was to that point that I directed my evidence to the Select Committee.

The real difficulty that the Labour Government ran into was that they were dealing with the hysterical method—I meant to say the historical method, but it became hysterical for them in many ways—at a time when they were presiding over the most rampant inflation that this country has ever had, rising to 30 per cent. In times of hyper-inflation the historic method will not serve, for any Government, the purpose for which it is intended. That is why the Labour Government had to change the method. The present Government, by their will and by their record, have shown that they intend to, and will, bring down inflation. That is a totally different context in which to use the historical method. There are bound to be hiccups from time to time, but with the historic method those hiccups will inevitably be caught up in the next round of uprating.

Mr. John

I am interested in the debate about the historic and the forecasting method. I prefer the forecasting method, but I would not go to the stake for it. Will the hon. Gentleman pledge that no one will lose this year as a result of the change to the historic method? If he will do so, he can avoid a Division on Second Reading.

Mr. Rossi

The hon. Gentleman knows better than to ask such a question. These matters are dealt with in a way that precludes my making such an undertaking. I can assure the House, however, that if there is a gap between the rate of inflation and the payment that is made, it will be closed as a matter of course at the next uprating in the following year.

I have been asked how much will be saved. The Budget statement shows that we have improved on the public expenditure White Paper, published as recently as February, by £220 million. We are not saving money. We are adding to our public expenditure.

Mr. Field

Who is it going to?

Mr. Rossi

It is going in improved benefit and also in pensions. We have more than kept our pledge to maintain pensions in line with prices. Assumptions about 6 per cent. and 4 per cent. have been bandied about the Chamber. By next November, pensions will have increased by approximately 75 per cent. as against inflation of 70 per cent. over the same period.

By this measure, the Government have sought to achieve stability in the uprating of benefits. As well as that, we have made improvements as a result of our Budget changes. We have not done any of this by subterfuge. We made our intention perfectly clear from the outset. We made statements about the 6 per cent. and the 4.5 per cent. That is clear for all to see. That is quite different from the underhand way in which the Labour Chancellor of the Exchequer saved £500 million in 1976.

Reference has been made to possible administrative difficulties in terms of the gap between the announcement and the uprating and to what has happened in the past. The right hon. Member for Norwich, North (Mr. Ennals) said that in 1974 it was possible to uprate in four months, but, although I challenged him, he did not mention the resulting difficulties in late payment of pensions and problems within the Department. The same difficulties were encountered after the 1974 election when a five-month period was achieved. The experience of those two attempts was such that the Labour Government never tried again and moved to a seven-month period. That has been compared with the eight-month periods in the past two years, but they were entirely due to the date of the Budget and the need to make an uprating statement immediately after an early Budget.

We have been asked what difficulties stand in the way of a further improvement. They are that the majority of beneficiaries, including 8 million retirement pensioners, are paid weekly by means of an order book which covers their weekly entitlement for up to 20 weeks, or 26 weeks for supplementary benefit. Order books covering the uprating week therefore go out several months before the uprating. It would be possible, of course, to change to another system. Rayner suggested direct payments through bank accounts on a monthly basis. A much shorter timescale for uprating would then be possible.

But our pensioners do not wish to be paid in any way other than through order books with weekly payment slips. So long as that is their wish, they will be paid in that way, and so long as they are paid in that way it is logistically impossible to foreshorten the period needed to deal with these matters administratively. This year, some beneficiaries will have to receive two order books because it was too late to include the increase with the routine issue of the main order book. That will inevitably mean extra work in local offices, but I am sure that the staff will rally to the problem as they always do and work the necessary overtime to ensure that the books are delivered on time.

The hon. Member for Pontypridd asked about housing benefit. It is true that at the time of the November 1982 uprating the RPI less housing costs was marginally lower than the RPI including housing costs. To the extent that supplementary benefit depended on the former, beneficiaries received 0.5 per cent. less than they would have received if the housing costs had been included, but that is in the context of their receiving 2 per cent. above the rate of inflation in any case. I can assure the hon. Gentleman that a change has taken place inasmuch as housing costs have been moving much more slowly than the rest of the figures in the retail price index. Therefore, the figure is now the reverse of what it was in November 1982. Supplementary pensioners will be better off under the new system.

As I have not time to answer the remaining questions, I commend the Bill to the House.

Question put, That the amendment be made:—

The House divided: Ayes 207, Noes 270.

Division No. 112]	[10 pm
AYES
Abse, Leo	Harman, Harriet (Peckham)
Adams, Allen	Harrison, Rt Hon Walter
Allaun, Frank	Hattersley, Rt Hon Roy
Alton, David	Haynes, Frank
Anderson, Donald	Healey, Rt Hon Denis
Archer, Rt Hon Peter	Heffer, Eric S.
Ashley, Rt Hon Jack	Hogg, N. (E Dunb't'nshire)
Ashton, Joe	Holland, S. (L'b'th, Vauxh'll)
Atkinson, N.(H'gey,)	Home Robertson, John
Bagier, Gordon A.T.	Homewood, William
Barnett, Guy (Greenwich)	Hooley, Frank
Benn, Rt Hon Tony	Horam, John
Bennett, Andrew (St'kp't N)	Howell, Rt Hon D.
Bidwell, Sydney	Howells, Geraint
Boothroyd, Miss Betty	Hoyle, Douglas
Bottomley, Rt Hon A.(M'b'ro)	Hudson Davies, Gwilym E.
Bray, Dr Jeremy	Hughes, Mark (Durham)
Brown, Hugh D. (Provan)	Hughes, Robert (Aberdeen N)
Brown, R. C. (N'castle W)	Hughes, Roy (Newport)
Brown, Ronald W. (H'ckn'y S)	Hughes, Simon (Bermondsey)
Brown, Ron (E'burgh, Leith)	Janner, Hon Greville
Buchan, Norman	Jay, Rt Hon Douglas
Callaghan, Rt Hon J.	John, Brynmor
Callaghan, Jim (Midd't'n & P)	Johnson, James (Hull West)
Campbell, Ian	Johnston, Russell (Inverness)
Canavan, Dennis	Jones, Barry (East Flint)
Cant, R. B.	Kaufman, Rt Hon Gerald
Carmichael, Neil	Kerr, Russell
Clarke, Thomas (C'b'dge, A'rie)	Kilroy-Silk, Robert
Cocks, Rt Hon M. (B'stol S)	Lambie, David
Coleman, Donald	Leadbitter, Ted
Concannon, Rt Hon J. D.	Leighton, Ronald
Conlan, Bernard	Lestor, Miss Joan
Cowans, Harry	Litherland, Robert
Cox, T. (W'dsw'th, Toot'g)	Lofthouse, Geoffrey
Craigen, J. M. (G'gow, M'hill)	Lyon, Alexander (York)
Crowther, Stan	Lyons, Edward (Bradf'd W)
Cunliffe, Lawrence	Mabon, Rt Hon Dr J. Dickson
Cunningham, G. (Islington S)	McElhone, Mrs Helen
Cunningham, Dr J. (W'h'n)	McKay, Allen (Penistone)
Dalyell, Tam	McKelvey, William
Davies, Rt Hon Denzil (L'lli)	MacKenzie, Rt Hon Gregor
Davis, Clinton (Hackney C)	McNally, Thomas
Davis, Terry (B'ham, Stechf'd)	McNamara, Kevin
Deakins, Eric	McTaggart, Robert
Dean, Joseph (Leeds West)	McWilliam, John
Dewar, Donald	Magee, Bryan
Dixon, Donald	Marshall, Dr Edmund (Goole)
Dobson, Frank	Marshall, Jim (Leicester S)
Dormand, Jack	Martin, M(G'gow S'burn)
Dubs, Alfred	Mason, Rt Hon Roy
Dunnett, Jack	Mikardo, Ian
Dunwoody, Hon Mrs G.	Millan, Rt Hon Bruce
Eadie, Alex	Miller, DrM. S. (E Kilbride)
Eastham, Ken	Mitchell, Austin (Grimsby)
Edwards, R. (W'hampt'n S E)	Mitchell, R. C. (Soton Itchen)
Ellis, R. (NE D'bysh're)	Morris, Rt Hon C. (O'shaw)
Ellis, Tom (Wrexham)	Oakes, Rt Hon Gordon
Ennals, Rt Hon David	O'Brien, Oswald (Darlington)
Evans, Ioan (Aberdare)	Ogden, Eric
Evans, John (Newton)	O'Halloran, Michael
Field, Frank	O'Neill, Martin
Flannery, Martin	Orme, Rt Hon Stanley
Fletcher, L. R. (Ilkeston)	Palmer, Arthur
Foot, Rt Hon Michael	Parry, Robert
Ford, Ben	Penhaligon, David
Foster, Derek	Powell, Raymond (Ogmore)
Foulkes, George	Race, Reg
Fraser, J. (Lamb'th, N'w'd)	Radice, Giles
Freud, Clement	Rees, Rt Hon M (Leeds S)
Garrett, John (Norwich S)	Richardson, Jo
George, Bruce	Roberts, Albert (Normanton)
Gilbert, Rt Hon Dr John	Roberts, Allan (Bootle)
Ginsburg, David	Roberts, Ernest (Hackney N)
Golding, John	Roberts, Gwilym (Cannock)
Graham, Ted	Robertson, George
Hamilton, James (Bothwell)	Robinson, G. (Coventry NW)
Hardy, Peter	Rooker, J. W.

Roper, John	Varley, Rt Hon Eric G.
Ross, Ernest (Dundee West)	Wainwright, E.(Dearne V)
Ross, Stephen (Isle of Wight)	Wainwright, R.(Colne V)
Rowlands, Ted	Walker, Rt Hon H.(D'caster)
Ryman, John	Wardell, Gareth
Sandelson, Neville	Watkins, David
Sever, John	Weetch, Ken
Sheldon, Rt Hon R.	Wellbeloved, James
Shore, Rt Hon Peter	Welsh, Michael
Short, Mrs Renee	White, Frank R.
Silkin, Rt Hon S. C. (Dulwich)	White, J. (G'gow Pollok)
Silverman, Julius	Whitehead, Phillip
Skinner, Dennis	Whitlock, William
Smith, Cyril (Rochdale)	Wigley, Dafydd
Smith, Rt Hon J. (N Lanark)	Willey, Rt Hon Frederick
Soley, Clive	Williams, Rt Hon Mrs(Crosby)
Spellar, John Francis (B'ham)	Wilson, Gordon (Dundee E)
Spriggs, Leslie	Wilson, William (C'try SE)
Stallard, A. W.	Winnick, David
Stoddart, David	Woolmer, Kenneth
Strang, Gavin	Wrigglesworth, Ian
Straw, Jack	Wright, Sheila
Summerskill, Hon Dr Shirley	Young, David (Bolton E)
Taylor, Mrs Ann (Bolton W)
Thomas, Jeffrey (Abertillery)	Tellers for the Ayes:
Thomas, Mike (Newcastle E)	Mr. Hugh McCartney and
Thomas, Dr R.(Carmarthen)	Mr. George Morton.
Thorne, Stan (Preston South)
NOES
Adley, Robert	Dorrell, Stephen
Aitken, Jonathan	Douglas-Hamilton, Lord J.
Alison, Rt Hon Michael	Dover, Denshore
Ancram, Michael	du Cann, Rt Hon Edward
Arnold, Tom	Dunn, Robert (Dartford)
Aspinwall, Jack	Durant, Tony
Atkins, Rt Hon H.(S'thorne)	Dykes, Hugh
Atkins, Robert(Preston N)	Eden, Rt Hon Sir John
Atkinson, David (B'm'th,E)	Edwards, Rt Hon N. (P'broke)
Baker, Kenneth (St.M'bone)	Eggar, Tim
Baker, Nicholas (N Dorset)	Emery, Sir Peter
Bendall, Vivian	Eyre, Reginald
Benyon, Thomas (A'don)	Fairbairn, Nicholas
Berry, Hon Anthony	Fairgrieve, Sir Russell
Best, Keith	Faith, Mrs Sheila
Bevan, David Gilroy	Farr, John
Blaker, Peter	Fell, Sir Anthony
Bonsor, Sir Nicholas	Fenner, Mrs Peggy
Bottomley, Peter (W'wich W)	Finsberg, Geoffrey
Bowden, Andrew	Fisher, Sir Nigel
Boyson, Dr Rhodes	Fletcher, A. (Ed'nb'gh N)
Braine, Sir Bernard	Fookes, Miss Janet
Bright, Graham	Forman, Nigel
Brinton, Tim	Fowler, Rt Hon Norman
Brittan, Rt. Hon. Leon	Fox, Marcus
Brooke, Hon Peter	Fraser, Rt Hon Sir Hugh
Brotherton, Michael	Fraser, Peter (South Angus)
Brown, Michael(Brigg & Sc'n)	Gardiner, George (Reigate)
Browne, John (Winchester)	Gardner, Sir Edward
Bruce-Gardyne, John	Garel-Jones, Tristan
Bryan, Sir Paul	Gilmour, Rt Hon Sir Ian
Buchanan-Smith, Rt. Hon. A.	Glyn, Dr Alan
Buck, Antony	Goodhart, Sir Philip
Budgen, Nick	Goodlad, Alastair
Bulmer, Esmond	Gorst, John
Butler, Hon Adam	Gow, Ian
Carlisle, John (Luton West)	Gower, Sir Raymond
Carlisle, Kenneth (Lincoln)	Grant, Sir Anthony
Carlisle, Rt Hon M. (R'c'n)	Gray, Rt Hon Hamish
Chalker, Mrs. Lynda	Greenway, Harry
Chapman, Sydney	Grieve, Percy
Churchill, W. S.	Griffiths, E.(B'y'St. Edm'ds)
Clark, Sir W. (Croydon S)	Griffiths, Peter (Portsm'th N)
Clarke, Kenneth (Rushcliffe)	Grist, Ian
Clegg, Sir Walter	Grylls, Michael
Colvin, Michael	Gummer, John Selwyn
Cope, John	Hamilton, Hon A.
Cranborne, Viscount	Hamilton, Michael (Salisbury)
Crouch, David	Hampson, Dr Keith
Dickens, Geoffrey	Hannam, John

Haselhurst, Alan	Neubert, Michael
Hastings, Stephen	Newton, Tony
Havers, Rt Hon Sir Michael	Nott, Rt Hon Sir John
Hawkins, Sir Paul	Onslow, Cranley
Hawksley, Warren	Oppenheim, Rt Hon Mrs S.
Hayhoe, Barney	Osborn, John
Heddle, John	Page, Richard (SW Herts)
Henderson, Barry	Parkinson, Rt Hon Cecil
Heseltine, Rt Hon Michael	Parris, Matthew
Hicks, Robert	Patten, Christopher (Bath)
Higgins, Rt Hon Terence L.	Pattie, Geoffrey
Hogg, Hon Douglas (Gr'th'm)	Pawsey, James
Holland, Philip (Carlton)	Percival, Sir Ian
Hooson, Tom	Peyton, Rt Hon John
Howe, Rt Hon Sir Geoffrey	Pink, R. Bonner
Howell, Rt Hon D. (G'ldf'd)	Pollock, Alexander
Howell, Ralph (N Norfolk)	Prentice, Rt Hon Reg
Hunt, David (Wirral)	Price, C. (Lewisham W)
Hunt, John (Ravensbourne)	Price, Sir David (Eastleigh)
Hurd, Rt Hon Douglas	Prior, Rt Hon James
Irvine, RtHon Bryant Godman	Proctor, K. Harvey
Irving, Charles (Cheltenham)	Raison, Rt Hon Timothy
Jessel, Toby	Rathbone, Tim
Johnson Smith, Sir Geoffrey	Rees, Peter (Dover and Deal)
Jopling, Rt Hon Michael	Rees-Davies, W. R.
Joseph, Rt Hon Sir Keith	Renton, Tim
Kaberry, Sir Donald	Rhodes James, Robert
Kershaw, Sir Anthony	Ridley, Hon Nicholas
Kimball, Sir Marcus	Ridsdale, Sir Julian
Kitson, Sir Timothy	Rifkind, Malcolm
Knight, Mrs Jill	Rossi, Hugh
Knox, David	Rost, Peter
Lamont, Norman	Royle, Sir Anthony
Lang, Ian	Sainsbury, Hon Timothy
Langford-Holt, Sir John	St. John-Stevas, Rt Hon N.
Latham, Michael	Scott, Nicholas
Lawrence, Ivan	Shaw, Giles (Pudsey)
Lawson, Rt Hon Nigel	Shelton, William (Streatham)
Lee, John	Shepherd, Colin (Hereford)
Le Marchant, Spencer	Shepherd, Richard
Lennox-Boyd, Hon Mark	Shersby, Michael
Lester, Jim (Beeston)	Silvester, Fred
Lewis, Sir Kenneth (Rutland)	Sims, Roger
Lloyd, Peter (Fareham)	Skeet, T. H. H.
Loveridge, John	Smith, Tim (Beaconsfield)
Luce, Richard	Speller, Tony
Lyell, Nicholas	Spicer, Jim (West Dorset)
McCrindle, Robert	Spicer, Michael (S Worcs)
Macfarlane, Neil	Sproat, Iain
MacGregor, John	Stanbrook, Ivor
Mac Kay, John (Argyll)	Stanley, John
Macmillan, Rt Hon M.	Steen, Anthony
McNair-Wilson, M. (N'bury)	Stevens, Martin
McNair-Wilson, P. (New Fst)	Stewart, A.(E Renfrewshire)
Madel, David	Stewart, Ian (Hitchin)
Major, John	Stradling Thomas, J.
Marland, Paul	Tapsell, Peter
Marlow, Antony	Taylor, Teddy (S'end E)
Marshall, Michael (Arundel)	Tebbit, Rt Hon Norman
Marten, Rt Hon Neil	Temple-Morris, Peter
Mates, Michael	Thatcher, Rt Hon Mrs M.
Maude, Rt Hon Sir Angus	Thomas, Rt Hon Peter
Mawby, Ray	Thompson, Donald
Mawhinney, Dr Brian	Thorne, Neil (Ilford South)
Maxwell-Hyslop, Robin	Thornton, Malcolm
Mayhew, Patrick	Townend, John (Bridlington)
Mellor, David	Townsend, Cyril D, (B'heath)
Meyer, Sir Anthony	Trippier, David
Miller, Hal (B'grove)	van Straubenzee, Sir W.
Mills, Iain (Meriden)	Vaughan, Dr Gerard
Mills, Sir Peter (West Devon)	Waddington, David
Mitchell, David (Basingstoke)	Waldegrave, Hon William
Moate, Roger	Walker, Rt Hon P.(W'cester)
Monro, Sir Hector	Walker, B. (Perth)
Moore, John	Walker-Smith, Rt Hon Sir D.
Morgan, Geraint	Wall, Sir Patrick
Morrison, Hon C. (Devizes)	Walters, Dennis
Morrison, Hon P. (Chester)	Ward, John
Neale, Gerrard	Warren, Kenneth
Nelson, Anthony	Watson, John

Wells, Bowen	Winterton, Nicholas
Wells, John (Maidstone)	Wolfson, Mark
Wheeler, John	Young, Sir George (Acton)
Whitney, Raymond	Younger, Rt Hon George
Wickenden, Keith
Wiggin, Jerry	Tellers for the Noes:
Wilkinson, John	Mr. Carol Mather and
Williams, D.(Montgomery)	Mr. Robert Boscawen.

Question accordingly negatived.

Main Question put forthwith pursuant to Standing Order No. 41 (Amendment on Second or Third Reading), and agreed to.

Bill accordingly read a Second time.

Bill committed to a Committee of the Whole House.—[Mr. Major.]

Committee tomorrow.