HL Deb 19 March 1941 vol 118 cc850-9

Order of the Day for the Second Reading read.

THE LORD CHANCELLOR (VISCOUNT SIMON)

My Lords, I move the Second Reading of this Bill. I do not think your Lordships will desire a lengthy or detailed account of the Bill, but I will state, in as few words as I can and as clearly as I can, what are its chief provisions. The Bill really deals with two matters, and I will take the second one, the one that is dealt with in Clause 3 of the Bill, first. When I was Chancellor of the Exchequer, in a Budget Speech which I made in April last year, I referred to the tendency reported to me of some who might otherwise have taken up one of the forms of War Loan intended for the small investor to feel a reluctance to do so because they thought that if they provided themselves with Savings Certificates or with Defence Bonds this might be counted against them in future years, supposing that they ever had to apply for a supplement to their old age pensions under the recent Act or had to apply for unemployment assistance because their unemployment benefit was exhausted. As your Lordships know, in determining whether or not that assistance should be given, the law requires an investigation of the capital assets of the applicant.

I therefore made a statement to the House of Commons in which I said that we would take steps to put that matter quite right, and, if I may quote my own words, I said that we were going to see the existing rules governing the application of the means test modified so as to remove this objection altogether. I went on to say: It will be necessary in the legislation to make provision to secure that the investment really is of new money and is not a transfer of money from previous funds since the object of the arrangement is to help to gather in the largest possible amount of additional savings for the war. A Bill was introduced by my successor, Sir Kingsley Wood, in the month of August, but objection was taken to it because it was said that my previous declaration had been misunderstood in some quarters. I may say that I do not think there was any ground for misunderstanding, but you have to deal with things as they are and it was said that some people had thought that they would get an advantage which I had not promised—namely, that their war investments would not count against them if they had realised securities which they held before the war and then just switched the investment into a war investment. Of course that really would defeat the whole object of the plan, because the plan was to encourage people to put fresh savings into war investments, and not to encourage them to sell out previous savings in order to buy War Loans.

None the less, the Government felt that as some individuals had been under this misapprehension—and I am not suggesting that it was not a genuine misapprehension—something more must be done. If you look at the Second Schedule of the Bill you will see that the kernel of the matter is really in the definition of "war savings." War savings are there defined and the matter is, in an administrative sense, more complicated than might be supposed because, as I have already indicated, the individual who wants to take advantage of this provision may not want to take advantage of it for twenty or thirty or even forty years. He must therefore receive after the war a certificate which will, once and for all, settle what is the amount of war savings which he was able to effect. That results, of course, in subtracting from his total savings those savings that were made before the war and then what is left will be his war savings. If noble Lords will look at page 6 of the Bill, they will see in the second paragraph of the Second Schedule that there is a provision inserted which will subtract war investments made out of the proceeds of the realisation after the fourteenth day of August, 1940, of any previous investment of a person. The date August 14 is the date on which, as I have explained, the original Bill was expounded and it was made plain to everybody that the concession had nothing to do with switching of investments from old to new.

We have now, I think beyond all question, got this particular matter perfectly right and it is accepted on all hands. There is no reason at all why anybody should hesitate to invest in Savings Certificates or Defence Bonds up to the limit named because of a fear that this will be used against him should he fall on evil days and some time in the future want to ask for a supplement to his old age pension or unemployment assistance. I am glad to think that largely with the help of the promise which I made on behalf of the Government and its fulfilment now, the National Savings Movement, so vigorously conducted by my noble friends Lord Kindersley and Lord Mottistone, is appealing more and more to the small investor who is receiving perhaps overtime or better wages, and indeed to people much poorer who are making most strenuous efforts to increase war savings.

The other matter is dealt with in Clauses 1 and 2. Broadly speaking, up to the present it has been required in the determination of need or in assessing the needs of the applicant for unemployment assistance, or for a supplementary pension, that regard should be had to the resources of all the members of the household of which the applicant is a member, in order that various calculations and adjustments might be made. That has been a matter of considerable controversy and it is in any case an extremely complicated matter. Now it has been decided, and it is provided by the first clause of the Bill, that that requirement shall be abolished. In its place there is substituted a scheme which is embodied in the first instance in rules which will be found in the First Schedule.

The details of the scheme are not given in the Bill for reasons which your Lordships will appreciate. The Assistance Board is a body which is an independent body and it will make exact regulations which will lay down how much assistance will be given in different kinds of cases. When those regulations have been made they will go to the Ministers responsible to decide whether they will accept them or not. If the Ministers accept them, these regulations will be placed on the Table of both Houses of Parliament and will have to be approved by affirmative Resolution. Consequently you could not get in this Bill all the details, but both to save time and also in order that the public should be fully informed and Parliament be able to judge, the general principles which are to be followed are stated in the First Schedule in five different paragraphs. Those interested will have no difficulty in following what they mean. They are an immense improvement because they are very much more liberal.

There has been no change whatever in the text of the Bill since it was introduced in another place. The Bill was passed in the Commons with no dissent, and it has been, I believe, very warmly welcomed in all quarters. I would, however, remind your Lordships that before the Bill left another place the Chancellor of the Exchequer did indicate one or two further advantages which on reflection he found the Assistance Board would be prepared to give. There is available in the Printed Paper Office a White Paper entitled "Determination of Needs Bill— Memorandum by the Assistance Board." This is a document for information. It is to show everybody how the Assistance Board are proposing to apply these general rules in the First Schedule. Two matters which are mentioned in the White Paper have since been announced in the House of Commons. The first has reference to Rule 2 of the First Schedule. Under that rule it had been intended that with regard to adults living in the household and receiving normal wages, it should be taken that they were contributing 7s. a week to the householder who applies for relief. The question arose as to what would be treated as normal wages and the original answer given was 50s. a week. Representations were made, and it is now agreed that this provision will not apply until you have the case of someone in the household earning 55s. If that person is earning 55s. he will be assumed to be in a position to pay 7s. towards the maintenance of the household. The other change is in Rule 3. There the question was what should be treated as the income of a father and mother or a son and daughter and at what point should that income exceed "the prescribed amount"—a very familiar phrase in many Acts of Parliament. The Assistance Board put the amount at £5 per week, but representations were made, and it has now been decided that that amount should be raised from £5 to £6 a week. I mention these matters—detailed as they are—because they are not found in the White Paper. With these additions the White Paper, to anyone who is interested to study it, will be found a very clear publication. I can hardly imagine that the Bill will not be accepted in your Lordships' House because there was complete agreement in another place, and I beg to move that it be now read a second time.

Moved, That the Bill be now read 2a.— (The Lord Chancellor.)

LORD ADDISON

My Lords, I would add only a sentence or two in appreciation of the exposition which the noble and learned Lord Chancellor has given. I am glad, particularly, that he described in such definite terms the arrangement relating to the exemption of war savings. This has been a subject of much contention for a very long time, and the settlement arrived at, I am perfectly certain, has provided an enormous incentive to increasing the assistance given to the savings groups up and down the country. With regard to the arrangement that has been come to so that the test, whereby the means of all those in the household were previously taken into account, has been limited, as is set out in the First Schedule and as has been described so clearly by the Lord Chancellor, that represents a compromise which has been accepted and is undoubtedly an enormous improvement on what has gone before.

I am rather sorry that we have not my noble friend Lord Rushcliffe here with us to-day for he knows from first-hand knowledge, and, I should say, bitter experience, all the controversies and difficulties which arose out of the old household means test. Perhaps it is because of those experiences that he is not here. If he were here we might have drawn him into making some confessions. But however that may be, I am sure that our thanks are due to the noble and learned Viscount and to those who have assisted in the promotion of this settlement of a matter which has been a subject of long-standing and very bitter controversy. I am glad that the noble Viscount mentioned two matters, the £5 a week and the 5s., which were subject to agreement in the other place quite at a late stage and were not embodied in the White Paper. I have nothing to add, on behalf of my noble friends, except to say that we welcome the Bill and to express the hope that it will lead to the disappearance of many long and bitter controversies.

VISCOUNT SAMUEL

My Lords, I beg leave to make a few observations on this Bill and also to join in welcoming it. The operation of the household means test is a matter which has been the subject of ten years of controversy, during most of which period I, myself, was deeply immersed in it. The Government of 1931 passed legislation, at a moment of extreme economic depression and great financial urgency, which was the beginning of this trouble. It was, it must be admitted, hurried legislation and there were not then foreseen the kind of grievance to which this particular provision would give rise. When it was put in operation it soon became plain that the grievance was deep and that the provision was gravely resented by the working classes. I was at that time a member of another place for the Darwen Division of Lancashire where the depression was exceedingly grave, where there were, for years at a time, from 20 to 25 per cent. of the working population unemployed and where this particular provision pressed very hardly.

As your Lordships are aware, any unemployed workman who is insured has rights under his insurance, when he becomes unemployed, irrespective of his means. It is what he has already raid for and what he is entitled to. When, however, his insurance rights have been exhausted by lapse of time he has to come to the State for further assistance, and it was not unreasonable to say that that assistance need not be given from the taxpayer's pocket if the man is already sufficiently provided for from other sources. Whether he was so provided for was the fact that had to be ascertained, and under the law as it has stood recently the whole of the particular household had to have its income aggregated and then, on taking it as a whole, it was considered whether the unemployed workman was entitled to any assistance. More recently supplementary old age pensions were given beyond the normal old age pensions, and it had to be considered in respect of granting these supplementary pensions whether there was a need and the same calculation of the household means was effected. Well, it was thought that this was based on the principle of family solidarity, the principle that relations ought to help one another, that just as parents help their children so when parents need it their children should help them. But it was found that so far from supporting the principle of family solidarity it had the opposite effect. It created family disunion and grievances. Indeed in some cases it actually broke up homes. If you translate this matter from statistics or the terms of an Act of Parliament into actual terms of human life, it is easy to see how in a poor workman's home this provision worked to its disadvantage.

Suppose, for example, an elderly workman out of work has a married daughter and a son-in-law, with whom he lives. He has to be maintained, and when his insurance payments have run out his son-in-law's wages are regarded as part of the income of the house and the workman, in effect, may be refused any allowance, or his allowance may be reduced, because his son-in-law is in work and is bringing wages into the home. That creates a great difficulty in the family and the poor father is left, perhaps, without anything for his small daily expenditure, his newspaper, his smokes and so on, or he has to depend on his son-in-law or other relations for their provision. That has happened in tens of thousands of workmen's homes and naturally it has caused humiliation. Every day this fact makes itself felt and is a source of friction and difficulty. Not only that, but it has been the cause of breaking up the family, because, if the son is in work bringing in wages, the father may be refused unemployment allowance or may be given a very small one; whereas, if the son leaves the house and becomes a lodger in another street, or in another town, immediately the State provides for the father, so that, taking the family as a whole, the income of the family is increased.

Furthermore, the Act had the effect of causing inquiries to be made into the private affairs of people who were making no claim at all. The members of the household who were in work had to return what money they were receiving, and inquiries were made from their employers, in order that some other member of the family should receive a larger sum from the State. Nor was that all, because if one of the members of the family who was in work was working extra time, or was promoted on account of his efficiency and obtained a higher rate of wages, immediately that was taken into account, and the allowance to his relative might be reduced. For all these reasons, as the noble Lord, Lord Rushcliffe, had he been here, would have been able to testify, this was a cause, as I have said, of the most bitter resentment in hundreds of thousands of families throughout the country, and I heard of it constantly in the constituency which I represented.

Some of the worst of those evils were in course of time partially removed, but not the main one, which was the principle of the aggregation of incomes. The Election of 1935, which was the election of the present House of Commons, seems so remote, owing to the events which have intervened, that we have almost forgotten it; but at that Election this was one of the main issues, and on it the three Parties took different lines. The Conservative Party had little to say on the subject. The Labour Party advocated the abolition of all means tests. They said that there should be no inquiries at all, but that the payment should be given indiscriminately. The Liberal Party took neither of those courses, but urged the abolition of the household means test. That was the policy which we presented to the country, and it is the policy which we are now glad to see, after far too long an interval, is being adopted by the State, and which was endorsed by the House of Commons without dissent.

Some say that in effect this Bill does not abolish the household means test, and there was at one stage a controversy in the House of Commons on that account. That, however, is erroneous. Sons and daughters in work still have to contribute, but not as relatives; they contribute as lodgers in exactly the same way as if they were strangers living in the house and contributing out of their wages towards the necessary cost of lodging. The sum suggested is 7s. per adult man, which is the minimum sum suggested by the British Medical Association inquiry as necessary, taking account of the cost of living. If a person's wages are less than 20s. he may be regarded as contributing nothing; and, as the noble and learned Viscount on the Woolsack has said, if his wages are less than 55s., then that 7s. may be reduced on a sliding scale. That appears to me to be a very fair arrangement; and, while regretting that this measure was not introduced and carried years ago, we welcome it now, and I have no doubt that your Lordships will give it very ready approval.

THE LORD CHANCELLOR

My Lords, by leave of the House I should perhaps add one sentence, for I omitted to state, what is plain on the face of the Bill but which perhaps ought to be stated, that the exemption of war investments from being taken into account later on, if there were an assessment for purposes of supplement to a pension or unemployment assistance, cannot exceed the sum of £375. That sum was chosen because it is the purchase price of the maximum number of Savings Certificates which anyone can buy—namely 500, which can be purchased for £375.

On Question, Bill read 2a, and committed to a Committee of the Whole House.