HL Deb 10 February 1954 vol 185 cc798-834

3.25 p.m.

Debate resumed.

LORD MACDONALD OF GWAENYSGOR

My Lords, it is with some pleasure that I follow the noble Lord, Lord Beveridge. Before continuing the debate, however, I should like to mention one matter which causes me a little uneasiness. I have before me a list of speakers for to-day's debate and I am surprised to find that there is only one speaker from the Government Benches, and he is not a Cabinet Minister. I do not know what it indicates: whether it is a vow of silence on the part of the Back Benchers or a sit-down strike.

THE SECRETARY OF STATE FOR COMMONWEALTH RELATIONS (VISCOUNT SWINTON)

My Lords, so far as the Government are concerned, it indicates complete confidence in my noble friend, Lord Selkirk.

LORD MACDONALD OF GWAENYSGOR

I do not question the confidence; I do not suppose the noble Viscount has more confidence in his noble friend than we have. We are pleased that the noble Earl, Lord Selkirk, is to reply. We feel, however, that this debate might have been considered on lines similar to those of last week's debate on officers' pay. I have here the Report of that debate and I see that speaker after speaker from the Government Benches followed one another and a Cabinet Minister wound up the debate. I do not question the importance of officers' pay, but I question whether it is more important than the matter we are considering to-day. We sincerely deplore the absence of any indication that the Government are keenly interested in this question. Of course, it may be that they think the Motion is ill-timed. Some of my own friends have suggested the same thing. That may be the reason: I do not know; but I should like to know what is the reason for this, to me, apparent indifference of the Government and the Government Back Benches on this issue.

LORD MOYNE

My Lords, as the Back Benchers have been mentioned, may I say that, like many other Back Benchers, I came specially to London to hear this debate. It is a matter of great complexity and not one on which I would venture to speak. I do not quite see why the Government should be criticised because the Back Benchers remain silent and listen to this matter, which is of the greatest importance.

LORD MACDONALD OF GWAENYSGOR

My Lords, I should have thought that the Back Benchers who are interested would have wished to make a contribution to the debate, to try to find a solution to this baffling problem. I should have imagined that Back Benchers would have thought that silence was not the best contribution. Like the noble Lord, Lord Moyne, I was anxious to listen to Lord Beveridge, who has lived with this problem for over forty years, and no one can speak on it with better authority than he: but that is hardly a good reason for Back Benchers on the Government side not making some contribution to try and find a solution to this perplexing problem. We will leave it at that.

During the forty years in which my noble friend has been associated with this problem there have been many changes.

LORD BEVERIDGE

It is forty-five years now.

LORD MACDONALD OF GWAENYSGOR

My noble friend mentioned the present Prime Minister. There is another ex-Prime Minister whose name has been associated with insurance schemes—the late Earl Lloyd-George of Dwyfor. Both he and the noble Viscount, Lord Samuel, who now leads the Liberal Benches were very active in those days. But what changes we have seen since then! Old age has always been a problem. It goes back more than forty years; it goes back more than forty centuries. I believe in ancient times they had a way of solving this problem which was drastic, a way no one in your Lordships' House would suggest to-day. Those of us who remember the years before the 1914–18 war remember that in those days the problem of old age was largely left with the individual. He had to find his own solution. He might call on his family to assist him or get help from friends, or in any other way he could. Later, the local authorities were called in and the local rates were used to assist the aged, after the most thorough investigation of the circumstances of the individual who applied for help and of those of any married sons he might have. But those are things long past. It has long been conceded that this is a national problem, a national responsibility. Every section of the people, regardless of age or occupation, has a responsibility for the aged in this country. We all accept that responsibility. I should be very much surprised if during this debate any noble Lord were to deny that responsibility in any way.

I like the terms of this Motion. We get many stereotyped Motions in your Lordships' House, but this is not a stereotyped Motion. It is: To call attention to the problems facing the people and the Government… I like the emphasis placed on "facing the people." We shall need to take our people into our confidence in handling this problem. The outlook and the prospects for trade, as put forward by the noble Lord, are sufficiently grave to cause us all to wonder what we can do. I am not concerned with Party politics, as such, at the moment, but I want to say this: no Party to-day, neither the Party in power nor the Party in opposition, could be expected to put before the country a detailed policy on how to handle this baffling problem. The most we can do, as the noble Lord has said, is to look at it and make our suggestions. I hope that the Government will not let the fact that they have set up a Committee and are expecting a quinquennial report prevent them from taking some action immediately. The need affects thousands of our people, and they require our help immediately. The noble Lord, Lord Beveridge, with characteristic cogency and clarity, has placed the problem before your Lordships in its entirety; I do not think he overlooked anything. He has made a number of suggestions and, as he always does, asked a number of questions, and I have no doubt that we shall have replies to those questions from the noble Earl, the Paymaster General, in winding-up the debate.

I should like to approach this matter from two angles. The first is: how to make it possible for an ever-increasing number of men and women to continue working beyond the age of retirement.

That is most necessary. The second is: how to make adequate provision for those of pensionable age who have not the capacity or the desire to continue at work. The first essentials are capacity and desire. When we have those two, then all we can do is to provide opportunity. Those three things are needed: capacity, desire and opportunity. It would be impossible to solve this problem without the capacity of the old-age worker, or without his desire to continue working. We have given help in some directions. We have tried to provide various incentives. But I was reading an article in a publication published by the Old Age Pensioners' Association, and I should like to read to your Lordships a paragraph which is headed "Does it pay to remain at work after retirement age? That paragraph says: If a man continues to work after retirement age he gets no pension and has to pay the full contribution of 5s. 9d. (his employer has to pay a further 5s.). He will lose in pension £435, and will have paid in contributions £74 15s. 0d.—a loss of £509 15s. 0d. After age 70 he will receive a pension plus increments of £2 7s. 6d., but the man who took his pension will have received £435 by the time he is 70. By the time he is 75 he will have received £870, but the man who worked until he was 70 will, by the time he is 75, have received only £611, for which he paid in contributions £74 15s. 0d., so his net return will be only £536 5s. 0d. He is therefore at a loss of £333 15s. 0d. through working! There are, of course, some obvious replies to that quotation, and one is that in the meantime he has drawn his wages. But from the point of view of the pensioner, that counts; and I am afraid that the so-called inducements we are providing are not effective enough.

I agree that once it comes to a question of finding work for these old people there is great difficulty, especially if the man cannot be found work in the industry where he has always been employed. I have here the first Report of the National Advisory Committee on the Employment of Older Men and Women. I find it an illuminating and informative Report, which ought to be studied by all those interested in this question. On page 18 of the Report reference is made to some of the difficulties, such as traditional attitudes, pension schemes, and recruitment at fixed ages. But let it be said at once that the Committee also make suggestions in the Report as to how to deal with these difficulties. I agree that in some industries it would be criminal to ask the men to continue working after retirement age. I was brought up in the coal industry, and that is a hard industry. It was hard in my time, perhaps harder than it is to-day. There was certainly a greater strain on the physique in those days, but less strain on the nervous system. The miner to-day has a great strain on his nervous system, far greater than it used to be. By the time a man is sixty-five years old he has clone fifty-two or, in some cases, fifty-three years' work. Let me tell your Lordships, in case you do not knew, that a miner is then tired and ready for a rest. It is useless to expect miners to continue as coal getters beyond the age of sixty-five, But that does not mean to say it is impossible to employ these men in the coal industry.

I well remember a certain noble Lord in this House who came to fight an election in the Newton Division as a young Conservative candidate way back in 1910. Like many Conservative candidates who come to mining areas, he decided to spend part of the clay underground to familiarise himself with mining problems, and then to go to a miners' meeting as he were an experienced miner. This noble Lord told us at the meeting that he had noticed while underground that if you hit the coal in the right place it fell in a heap. There was a old miner sitting in the front row, who had been working hard all day in an abnormal place. He looked up, and said in the Lancashire dialect: "If they hit thee in the right place tha' would fall in a ruddy 'eap." He was not prepared to let this man come forward and suggest that he was an authority on the matter merely because he had been underground for a few hours. The miner must have special treatment as regards his retiring age, and no doubt we shall have to ask the Coal Board to try and find ways and means of employing these men on the surface after they have reached sixty-five years of age. There are many jobs which these men could do and they could thereby help immensely in the coal industry.

But there will be difficulties and. as I have said, they are referred to quite adequately in this Report, which also gives some indication of the way to handle the question. I a in going into the difficulties of superannuation, private pensions and so on. What I want to come to now is the question of what we are going to do with the other people. They are sixty-five years old but they have neither the desire nor the capacity to continue at work. We have to consider how to provide for them. I like the emphasis laid by the noble Lord, Lord Beveridge, on "subsistence" After all, this House was a partner with the other House a few years ago in fixing a scale. This House had regard to the cost of living when fixing that scale, and intended that that should be the standard that the old age pensioner should enjoy. Whether it is owing to the national or the international policy, if the amount given then is not as valuable now as it was, what is the suggestion? Is it that the old people should bear the burden themselves? I hope the Government will look at this matter once again and will decide that something should be done immediately in this connection.

Only the other day I had a letter from the Vice-President of the National Federation of Old Age Pensioners' Association, a gentleman of the name of the Reverend T. A. Nuttall, of Oldham, Lanacashire. He gave me the result of a long survey for which he and his colleagues were responsible. I do not think I need trouble your Lordships with the details, but I think that I owe it to him to give the result of his work. He tells me here that one married couple, after they have paid rent out of their 54s. have 38s. 2d. left. Out of that sum they have to meet other items—here are his figures. Repairs to boots and shoes cost them each 2d. a week; renewals of boots and shoes, 6d. a week; clothing, is. 8d.; shoe polish crockery, buckets, socks, stockings, underclothing, bedding, et cetera, 2s. 6d., a total of 4s. 10d., leaving 14s. 3d. each for the husband and the wife for food. Need I say more? Only about 2s. per day per person at present prices. I leave it at that. That is sufficient to indicate that there is grave need, and I hope the Paymaster General will be able to indicate that the Government are not going to wait for Sir Thomas Phillips' Report before they take action regarding these people.

The long-term problem is a real problem, and we have to face up to it as best we can. I agree with the noble Lord that it is difficult to visualise the variation it the cost of living in the weeks, months or years to come. It may fluctuate to the advantage of the old-age pensioner—one does not know; but we have to find some policy. At the moment, the funds appear to be inadequate for the purpose of providing an adequate pension for these people. The noble Lord, Lord Beveridge, has made some suggestions. I will make some more, not because I agree with them but because they have been made to me by those who speak with authority. I have consulted a good number of my friends in the financial world—not that I rely always on their judgment. For instance, this question was put to me: Why not drop the retirement condition for pension? Why not let a man or a woman continue working and receiving his or her pension in addition to wages? I do not know how that idea appeals, but what my friends said to me was this: there are men getting £1,000, or £2,000, to-day from various sources who are receiving this pension. My friends suggest that their idea might help us. I agree that it might prove attractive for men and women to stay at work, provided they could get their wages and their pension. I am not advocating that suggestion: it was just made to me.

Nor do I advocate the next suggestion, which is to raise the age of retirement from sixty-five to sixty-seven for men and from sixty to sixty-two for women. When these ages were fixed, things were different. Men and women of sixty-seven to-day are as good as, and sometimes better than, those of sixty-five when this limit was fixed. Again I refer to the heavy industries. I know that there are certain jobs which can be done at a grand old age. One or two Members of this House do very good jobs indeed, far past pension age, and one has been referred to in another place as doing a good job as Prime Minister of this country—I understand that he is over sixty-five. There are things which can be done up to sixty-seven. I am told that this would save something like £40 million a year, but whether that is true or not I do not know.

Another suggestion made to me—I almost hesitate to make it to your Lordships—concerned the insured section of our womenfolk. For some reason or other they get their pension at sixty. I wonder whether anyone could give us the real reason for that? Can the Paymaster General help us? How have we decided that women, whose average life is longer than ours, should have this preferential treatment and get a pension at sixty, while we old fogies have to creep on as best we can to sixty-five before we qualify? It may be because of the chivalry of the Houses of Parliament, which are composed mainly of men. II is not for me to advocate this change, but I wonder how the women's associations look at it. They rightly clamour for equal pay for equal work. All right, equal age for pension. I am told that this proposal would save us £27 million a year. Let me make it perfectly clear, so that I shall not get my postal bag too full, that I do not myself advocate this change, but I think it should be looked at. I am confining my remarks solely to the insured women—women insured in their own right—and refer to nobody else. Along those lines we may find ways and means of saving. But where do we come to next? The funds are provided at the moment by contributions from workers, employers and the Government. Somebody has to find more money. Do remember that under our present insurance scheme we are all in it from fifteen to sixty-five; we have all been caught up by this legislation. We are in as taxpayers. I think that a little more could come from the Exchequer so that a less burden was imposed on the worker and the employer. I would say to the Government: If you put, say, Is. on contributions, do remember that the lower-paid worker has to pay the same as the higher-paid worker, therefore you may be imposing burdens unfairly. However, the money has to come from somewhere, and it is no use asking for increased pensions without trying to find the wherewithal to pay them.

There is one other section to which I wish to refer briefly, and I do this by request. I live in Prestatyn, in North Wales. As your Lordships may know, Prestatyn is a health and holiday resort, and many of the business people of Manchester, Liverpool and Birmingham decided some years ago that Prestatyn was a good place to live in. It may be that the most attractive country in the United Kingdom is Wales; and some in Wales think that the most attractive county is Flintshire, and that the most attractive town is Prestatyn. I am told that at the moment we in Prestatyn have the highest proportion of men and women dependent upon fixed incomes of any town in North Wales. They have been there a number of years, and they are feeling the draught. When they heard that this debate was to take place they asked if f would put in a plea for them. I said would. What do they ask for? They realise that when they went to Prestatyn they took a chance. They thought they could manage and make good on the provision they had made for the remainder of their lives. Now, however, they find that they cannot.

These people may be told, "There is the National Assistance Board, go to them." Let us be reasonable, my Lords. They have lived on a certain standard right through their lives, and the National Assistance Board does not appeal to them. They say that the fixed figure of £89 5s. is crippling. I do not know whether the Paymaster General could persuade his right honourable friend the Chancellor of the Exchequer to look at this matter in his next Budget. The number of these people is dwindling—the present legislation has provided for that—and by 1958 or soon after they will have vanished almost entirely. But in the meantime they are suffering. They are not suffering to the same extent that others have experienced poverty. Nobody suggests that they are, but I do think that there is a danger of their being forgotten. They are not very attractive as regards votes, I agree; they cannot make their voices heard very much. But I promised that I would put forward a plea for them in this House, and I certainly think they are entitled to earnest consideration.

I was pleased that the words "facing the people" appeared in this Motion. I do not think that either House of Parliament takes the people sufficiently into its confidence. A vote-catching speech on this issue is seldom a wise speech, from whatever side it be delivered. It does not get anyone very far. There are in this country hundreds of thousands, or perhaps millions, of people who have seen this country through nutty a crisis; and that body of people is how finding life very hard. I think it should be brought home to the youth of the country, and to workers, to employers and industry generally, that they have a responsibility. It is true that the twentieth century will be nearing its close before these young people have to experience this problem in their individual lives. Their parents, however, will experience it before long; their grandparents are facing it now. Increased production is essential if we are going to deal with these problems. Holding down the cost of living is also essential to us if we are to solve the problems. I hope that, if this debate does nothing else, it will at least spur the Government on to take immediate action regarding the cases which have been referred to this afternoon and to ask for these reports as soon as possible. I hope that it will do something to convince workers and employers alike that production and pensions are closely related. We do not always appreciate that fact. I hope that between now and the fateful year 1978, which has been mentioned, we are going to face this colossal demand and that some of us will have done something to bring home to our people the relationship between production and pensions.

3.53 p.m.

LORD KERSHAW

My Lords, I, as an old worker in this field of social service, should like first of all to pay a tribute to the noble Lord, Lord Beveridge, for reintroducing this subject in your Lordships' House. No one can speak with greater authority than the noble Lord, and I have no doubt that any Government would pay great attention to anything which he had to say on this subject. At the same time I think the noble Lord 'himself would, if he were asked, be the first to pay a tribute to some of those who in years much earlier than the date of his Report pointed the way to this kind of social service. I am thinking for the moment of those who were responsible for the Washington Convention and the first Conference of the International Labour Office, in 1919. There, as anyone would find if he looked it up, the principle underlying the provision of benefits for women at childbirth and thereabouts was laid down; and the repeated attempts of British Governments in later days to justify their non-ratification of that Convention were both ingenuous and ingenious but not very convincing.

Then, I have no doubt the noble Lord will remember the Royal Commission on National Health Insurance which sat about 1924. Again, not only the Minority Report (which was the product of the four Labour members of that Commission) but also the Majority Report, pointed the way to the kind of things that have since come about. I remember well that a man who is held in the highest respect by everyone interested in this subject declared that what was advocated at that time was undoubtedly the basis for a scheme of social insurance but that, like many other people, we were dreamers and unrealistic. Nevertheless, we have lived to see this great and tremendous scheme of social security not only adopted but developed by all Parties in this country. There are no Party politics in this subject to-day—at least I hope not—and I believe that everyone, whatever his political colour may be, is desirous of improving, so far as improvement is possible, the benefits and services that are given under this particular Scheme. It required the golden pen and the silver voice of the noble Lord, Lord Beveridge, to get the country to accept the principle that he laid down in his Report.

This, however, is not a time to roam the wide sphere of social security and the Welfare State. The noble Lord has called our attention to a problem, or perhaps to two phases of the same problem: one associated, as he indicates, with the people, and the other with the State. I personally find it rather difficult to divide the problem into those two parts, but I think I understand what he means. When he speaks of "the people," he is referring to those who are suffering by reason of low rates of benefit. The State is the great machine behind the whole which somehow or other has to foot the bill. No one, I am sure, wants to go back: we all want to go forward. I have often felt—leaving out for a moment the ethical and spiritual values—that if I were asked by what yardstick I would judge the degree of civilisation to which a nation had progressed I should say, "By the care it takes of its children, its sick people, its unemployed, its mothers and, lastly, of its aged." That is the standard which I would apply to indicate the degree of civilisation of any nation. I believe that if you look round the world at various countries you will find that the whole life of the nation concerned is to be judged by the extent to which it has looked after its defenceless people.

Now, my Lords, there is a considerable difference between my approach to this problem and the approach of the noble Lord. I think the main difference is twat I believe it has always been accepted that benefits provided for sickness and unemployment are rather different in principle from benefits that should be provided for elderly people. Your Lordships may remember that under the original scheme of National Health Insurance the benefits were to be 5s. a week, the idea being that that would encourage people to provide for further benefits through existing organisations, such as friendly societies and the like. Before the Bill went through the House, however, that amount was increased to 10s. with the same idea behind it: that what the State could do was to give the people a basis, at any rate, upon which to build their own private thrift. All that has changed. I do not know that it is a bad thing. To-day, while nobody would advocate paying a rate of benefit equivalent to the earning capacity of individuals—it is impracticable to suggest it—nevertheless the idea now is that the State health and unemployment schemes should cover all that is necessary to tide a family over a temporary period where the family income is interrupted. But that does not apply in the case of pensions. Once a man is a pensioner, he is so long as he lives a pensioner; not just unemployed or sick for three or four weeks. Continually, throughout the rest of his life, he must have that subsistence allowance.

The State has felt, and I think rightly felt—this is my own private opinion—that, in addition to these schemes of sickness and unemployment insurance, there is a dignified way whereby people may receive further help if they need it. That is a principle which I support. We have it in the National Assistance Scheme. I know there are great numbers of people who object to what they call the "means test," which, of course, is associated with the National Assistance Scheme, but we have to be realists in this matter. No Government, whatever their colour may be, can guarantee complete subsistence for everybody when their wages are interrupted. Therefore, the right thing, to do is to make the rates of benefit that are given for sickness and unemployment reasonably sufficient to carry a family over a period of temporary interruption of their family income. But, when we have said that, it is all the more clear that we must be sure that the amount of money going to the old age pensioner is sufficient to enable him to maintain his home very much in the way to which he has been accustomed. There, there is no rule about leaving out the boots and shoes, the blankets and the clothing, for a few weeks until the man is getting his full wage again—all that has gone. For the rest of his life he will be receiving whatever rate of benefit it is decided he shall have. Out of that he will have to pay for his clothing and all the rest of it, as if he were a working man.

I know there is great objection to the National Assistance Scheme on the part of a large number of people, and if the Government, or all of us for that matter, do no more than educate the people on their rights to National Assistance, we shall be doing some good. Repeatedly, in my work as chairman of committees before which people have to come in respect of these benefits, I have heard people say—and they have meant it—that they would rather starve than go to the National Assistance Board. Whether or not that is a legacy of the old Poor Law I do not know, but it is a fact. It is a fact to-day, though not to the same degree that it was a few years ago. Therefore we have to try to evolve a scheme that will at least not compel too many people to undergo what they think, but what we do not think, is some sort of indignity. I think that is all that need be said, at least by me, in respect of the individual's claim to a higher rate of pension benefit.

Let us turn for a moment to the rather longer view which I know must worry us considerably—and here I must say that the more one studies this problem, the more one is impressed in these days with the complexity of national finance. It is frequently said that the people are paying a contribution for this benefit, but that the value of the contribution is not sufficient to pay the actuarial value of the benefit to which they are entitled. As a matter of fact, in terms of cash, in the year 1951–52 the contributions under the scheme were £91 million in excess of the payments from the scheme. I will refer to that point again in a moment. In my judgment, it is wrong to assume that the people who are receiving these benefits pay nothing more than their contributions for them. I should imagine—and figures can probably be produced to prove it—that the people who are, or are likely to be, the beneficiaries under this scheme are the people who contribute the most in tobacco tax and purchase tax. So it is wrong to say that the State pays so much; that the State is something other than ourselves, and that we pay so much. It is wrong to approach the subject in that way.

I have already said that the cash surplus in the last year for which figures are available was £91 million. In that connection it has to be remembered that pensions, on the one hand, and sickness, on the other, and probably one or two of the other, minor benefits, are benefits which can be actuarially assessed and valued. Unemployment, however, cannot be; it never has been and, I suppose, never will be. The Government Actuary has made a guess, and he will make another guess and another guess. Unemployment depends far more on the policy of the Government and far more, too, on the policy of other Governments than it does upon the actual experience of employment and unemployment in our own country. But, so far as those other benefits, which are capable of actuarial valuation, are concerned there is no doubt whatever that on sickness and on unemployment there has been, and is still, a considerable surplus in the Fund every year. One is inclined to ask where we are getting to in that respect. Are the Government using the surplus on sickness and unemployment to pay for the current cost of pensions? I think the answer must be "They are," because if the income of the General Fund had not been sufficient to pay the outgoings, obviously the Government would have had to make some payment.

There is only one really satisfactory solution of the long-term problem in connection with pensions—the Actuary can, and perhaps will, do it—and that is, to evaluate the actuarial value of the future benefits that are to be paid from that Fund. That is the normal system that we in this country have adopted in regard to State insurance. Your Lordships may remember that the benefits of the 1911 scheme were worth ninepence. The contributors and the employers paid sevenpence: the other twopence was required to pay for the cost of bringing into the scheme people over the age of sixteen at entry. The same principle remains to-day, subject to the increase in benefits that was given in 1952 and to the suspension of the State grant at that time. The contributions payable were regarded as sufficient in the case of a boy who entered at sixteen and remained until pension age, and the Government ought (as I think they originally did) to undertake the responsibility of bringing in the older people giving them the same rate of benefit.

In connection with that, it is interesting to observe (I believe I get this from the Actuary's third report) that the present contributors or pensioners have not paid 5 per cent. of the cost of their pensions. I think it is remarkable, too, to note that in the case of a single man who retired on January 1 last year, the capital value of the pension to which he then became entitled was just short of £1,000: in the case of a man with a wife the capital value of the pension was £1,500, and in the case of a single woman the capital value of the pension was just over £1,000. None of them could possibly have paid more than £100 towards the cost of his or her pension. I think those things ought to be remembered. They need to be talked about in the country, because the more people are impressed by such facts, the more they will realise that it is not a very much bigger step to ask for further assistance from the National Assistance Fund.

My Lords, I came into what I thought would be an arena in the hope that noble Lords on the other Benches would have contributed something to this debate. The fact that they have not done so has robbed me of some opportunity which I thought I might have to touch on other parts of this problem. However, I must just refer to this, although I will cut it as short as possible. The accumulated funds at the moment, according to the Report that I have referred to, are: in the National Insurance Fund, £577 million, and in the Reserve Fund, £783 million. The total Reserve is therefore £1,360 million—a lot of money. I am not asking the noble Earl to give a reply to this question to-day—it is a matter that we can talk over when the subject comes up again—but what I should like to know is, what part of those Reserves was transferred from the approved societies which were abolished in 1948? The rate of interest credited to the Fund seems to be about 2½ per cent. I should be very surprised indeed if the funds transferred from the approved societies did not earn very much more than 2½ per cent. I only mention that. I say once again what a complex problem it is to try to segregate one national Fund from another. The Government can at once retaliate by saying, "Well, that is true, but we are spending about £400 million on medical services, and therefore why talk about an odd £1 million, or so?" But if that Fund of £1,360 million were in the hands of the kind of people who manage insurance or superannuation funds and the like, no doubt it would be earning something like 4 per cent. But assuming that it was earning only 3½ per cent., then, if my figures are right, by the critical year that has been quoted—1977, I think it was—the fund would be £500 million better off than it will be at the rate of 2½ per cent. I mention that merely as one factor in this intricate problem that needs to be examined from time to time.

Now perhaps I ought to tell your Lordships my remedy for some of these problems. I am entirely opposed to an increase in the pensionable age of sixtyfive—and I will tell your Lordships why. It has been my lot, in one capacity or another, to meet thousands of people who have been drawing benefits of this or a similar kind, and I have always been struck by the difficulty of assessing the working capacity of men aged sixty-five. I have had men come before me who have been capable of continuing at work for many years; who were quite healthy and capable, both mentally and physically. But I have had other men, whose job has been a hard, grinding job all their lives, who ought not to be asked to stay a moment longer than sixty-five, doing the kind of work that they have been doing. I saw a coal heaver one day hump five tons of coal, I do not know how many yards, during the time I was having my lunch; and he was doing that time after time during the day, and day after day, week after week. That man looked, as I expected to find him looking, thoroughly worn out long before he was sixty years of age. To say to these men, "We have got a nice job here at the Bank of England for you," is just silly, is it not? It has been said, "We will find lighter work for these men," but it does not happen like that. So I say there must be no increase in the pensionable age of sixty-five for men or sixty for women. With all respect to my noble friend, there must be no increase.

But I would have an incentive. I think there is at present an incentive of eighteenpence for an extra twenty-six weeks of contribution: if a person remains in insurance for twenty-six weeks after sixty-five years of age, he qualifies for an extra eighteenpence a week benefit. I would raise that incentive very considerably. I do not know—but we can be told—whether the eighteenpence in six months worked or eighteenpence of deferred benefit is the value of the deferment. If I were framing a scheme of this sort I should disregard all actuarial values, and I should ask: What is the earning capacity, in the nation's interest, of a man who continues at work? The answer, I imagine, would be a figure very much higher than the present figure. I would do that—and more. The easiest way of all of meeting the increased call on the Fund would be to increase contributions. I well remember, however, the early days, when we had considerable hesitation in suggesting that the contribution should be increased from sevenpence to nine-pence because of the effect it might have upon our ability to compete in foreign trade. The cost of production would go up. Now the figure is 10s. Can we go on for ever adding to the cost of production, by automatically increasing contributions at this time? Of course we cannot. We must have regard to what other countries are doing in the same field. If all countries were giving the same benefits it would not matter. And it does not matter so far as our domestic trade is concerned. But so far as our foreign trade is concerned it matters very much indeed that we should not load it with these "on-cost" items.

I would make this suggestion: it is probably quite new—indeed I hope it is. It has been said for many years past that the savings of our people are very much less than they used to be, and that therefore there is not the same money for capital development. I think that when people talk like that they are omitting to have regard to the enormous savings that are taking place through this very scheme of National Insurance. There must be millions upon millions a year being put away for superannuation schemes, either in the nationalised industries, in other industries or through insurance companies. If that money is being put away to pay for some future benefit for elderly people, why on earth does not the nation, in some way that could be devised, see that that money, or at least a proportion of it, is directly devoted to capital development? I remember that a short time ago the noble Earl gave a figure showing the difference between the power behind the elbow of one of our workers and the power behind the elbow of his counterpart in America. I believe it is right to say that the power behind the elbow of the worker in America is several times more than the power behind the elbow of the worker in this country. If that is so, and if increased production is the only solution, finally, to this problem, why do we not apply these moneys, which are contributed for future maintenance, specifically and directly to the capital development needed to give this extra production? I believe that it can be done. But this is neither the place nor the time to develop that theme—I only mention it in passing.

Finally (I have said this before, but I feel that it is worth saying again), although we have said a good deal about the money side of this scheme, about the finances of it, the scheme itself, which, as your Lordships know, is the child of the noble Lord, Lord Beveridge, cannot be valued in pounds, shillings and pence; and we should be quite wrong in attempting to assess it in that way. There is nothing very much to be put on the income side except actual pounds, shillings and pence. We might be able to put a little on that side for the satisfaction which people have in knowing that they will be provided for in their old age and in respect of their contingencies of life. The security which they feel within themselves is an imponderable which I would put on that side of the balance sheet. On the other side would be the benefits, but far more important than the benefits themselves are these factors. Infant mortality is now one-sixth of what it was when I first began to be interested in the subject. Maternal mortality, also, is about one-sixth of what it was when these ideas began to permeate the nation. The amount of sickness benefit paid is down, in the Report of which I am speaking, by £5 million. I do not know whether that is permanent or not; but what is a fact is that the health of the people as a whole is better; and that the health of our children, and the general care that is taken of our children, is better than ever it was before in history—and probably the best in the whole world. These are the imponderables which I would put on the other side of the balance sheet. I venture to suggest to your Lordships that if you were able to strike a balance of the two sides of that sheet you would be perfectly content agree that, whatever we do, we must do nothing to detract from this great scheme of which the noble Lord, Lord Beveridge, was the architect.

4.26 p.m.

VISCOUNT ALEXANDER OF HILLS-BOROUGH

My Lords, we have had a debate upon a Motion of very great importance. It has been well served by the Mover and also, I think, by the two colleagues of mine who have spoken. I am very grateful to both of them for what they have contributed to the debate. The point of winding up the expressions of the views held on this side of the House, on this vastly important subject, has been reached, but, so far, we have not had the benefit of a single expression of view from the Conservative side of the House.

LORD DERWENT

My Lords, I am sorry to interrupt the noble Viscount, but that is the third time the Back Benchers on this side of the House have been taunted for not joining in this debate. It is because we have come here to listen to certain acknowledged experts on this subject that we are not speaking. On this side of the House, we are not very fond of talking for the sake of talking. May I point out to the noble Viscount that every speech which has been made from his side of the House has been made from the Front Bench?

VISCOUNT ALEXANDER OF HILLS-BOROUGH

It is true that the noble Lord who has just sat down spoke from the Front Bench, and he did so in order that he might have, the benefit of the light, as he has defective eyesight. As a rule, we in this House do not worry too much about where a speech comes from, so long as it shows proper range and variety of thought and experience. We have not yet had a speech from the other side. If the noble Lord pursues that line, let me say that there are people in another place, and among the public generally, who feel very strongly that this House is highly privileged in having in its membership five members of the Cabinet. Yet to-day, apparently, we are not to have the advantage of a speech from a single one of them with regard to what should be done in the exploration of a matter of such importance as that with which the Motion deals. I hasten to assure the noble Earl, Lord Selkirk, that in saying that I am not in any way decrying—nor, I am sure, would anyone on this side wish to decry—the great popularity which he enjoys in this House, generally, by reason of the care and skill that he devotes to his work. Nor am I for a moment impugning the competence which he shows in his preparation of replies for the Government in this House. What we say is that, when such a large proportion of the Cabinet is seated in this House, we think we might have had some speakers from the other side to give us the Government 'view upon this great and vexed question.

I should now like to thank the noble Lord, Lord Beveridge, warmly for bringing this matter once again to the notice of the House. In length of service in this House I am a much younger member than many of your Lordships, but I have heard it claimed on many occasions since I have been here that in these days one of the great reasons for the continued existence of this House is the way in which we debate matters of this kind, on a higher level, for the general education of the public, and give a real lead in these matters. It is said that it is only because of that fact that we can continue to justify our existence. To put down a Motion like this, at this time, was an act of wisdom on the part of Lord Beveridge, who has had such a distinguished career in the development of remedies for social ills and solutions for social problems.

I am very glad that the noble Lord who spoke last paid some attention to what has been achieved by social insurance. Do your Lordships know that a revolution has been going on in this country in the last thirty or forty years? We are very glad to think that now we see in all Parties in the State an adherence to the policy of social insurance. But it was not always so. There had to be pioneers in this matter, and we never forget that, speaking historically, it was as recently as 1898 that Keir Hardie first laid before the nation his scheme for work or maintenance as a right. It took ten years before the Asquith Government of 1908 produced the first old age pension scheme, a scheme which gave relief in amounts varying from ls. to 5s. a week. At the time that was described in this House as revolutionary, as likely to demoralise and undermine the social structure and it was opposed. What a change there is now! How happy it is to be a Member of your Lordships' House and see all Parties subscribe to the principle of social insurance and Govern merit responsibility for the relief of social Ills! That is great progress in a matter of fifty-six years.

In the most modern application of the principle, I hope that we shall bear in mind what my noble friend Lord Kershaw said about the considerations that always must be set against expenditure on social services, and form a compensatory balance. The vast increase in the amount poured out on social services during the last few years has to be balanced against the vast benefits which the people have received. From 1919 to 1926, our great industrial areas were "down and out" because of the operation of the Poor Law and the charges upon it for unemployment in a system of free enterprise. Local authorities had to borrow huge sums from the Government, in order to relieve the poor, and it took years of taxing the ratepayers to repay these loans to the Government. If it had not been for the complete abolition of the Poor Law system, I do not know how high the rates would be to-day, on present costs, to meet the situation. We see the great advantage of the present system to local authorities. On such an occasion as this, I pay tribute to those of my own way of thinking who pioneered in this matter, from Keir Hardie onwards. I pay my tribute to Mr. Arthur Green- wood for the first steps he took, as Minister of Health, towards a general insurance scheme, and for the part he took in the appointment of the Beveridge Committee in 1941.

Let me turn now to the effect on old age pensioners. It is true that we hear a great deal of complaint from them, and the illustrations given by my noble friend Lord Macdonald of Gwaenysgor indicated these complaints; but during my lifetime I have seen a widespread growth of fraternity amongst old age pensioners. I find all over the country a standard and outlook and care for the general welfare of old age pensioners which is without precedent. All these are things to the good. From here, what we have to say in a debate like this must necessarily be exploratory. I feel in my bones that the noble Earl, Lord Selkirk, who is to reply this afternoon, will make no committal statement, in view of the expected arrival, sometime and somewhere, of the Report of the Phillips Committee (and I think the Government are to be praised for setting up that Committee), and also of the arrival of the quinquennial report of the Government Actuary. There is no doubt that when we come to that point we shall have to look for urgent action on the part of the Government. On the other hand, if these Reports are delayed, then the present plight of many old age pensioners, which has been revealed by this recent inquiry, will be grave. The figures mentioned by my noble friend Lord Macdonald of Gwaenysgor were based upon the investigation carried out by the National Federation of Old Age Pensioners' Associations. They examined 2,700 individual cases, with the results which my noble friend gave to this House this afternoon. If the position is as they state, the Government must know it. In fact, their accounts will show them, from the extra charge upon the Exchequer for supplementary allowances. Certainly, the needs of old age pensioners must be taken as an urgent matter.

I think there is no doubt about the actuarial forecast which my noble friend Lord Beveridge put before the House. When, in 1946, the Government brought in legislation to put this scheme into operation (I will give chapter and verse; your Lordships will find this in the OFFICIAL REPORT of another place for February, 1946), the Minister of the day, the right honourable Mr. James Griffiths, on the Second Reading of the Bill, stated that there would be a deficit on the scheme every year up to 1978 (I think that was the year he gave), and the figure of the estimated deficit which he gave was not much different from the £417 million quoted by my noble friend Lord Beveridge this afternoon. That is the situation we have to face, and face realistically. The late Mr. George Bernard Shaw said that democracy would be a failure unless Governments and leaders could persuade and educate the members of democracy in time. That is why I think it is important that debates like this should be used to obtain the different views upon possible remedies which could be adopted to deal with this enormous problem.

I agree with those noble Lords who have said that one of the important factors would be the possibility of getting more production from those who are regarded as being already over the age of retirement, but the value which is to be attached to this remedy all depends upon from which quarter it is being canvassed. We can pick up a bankers' magazine, where the matter is canvassed. We find it has been suggested that there should be compulsory retirement at the age of 67 or 68. If that proposal were in the minds of the Government, or were included in the recommendations of the Phillips Committee, that would create a split throughout the population which it would be very difficult to close. First of all, if we were to make it effective at all, there would be great difficulty in regard to the contractual obligations which already exist under the Fund. We should have great resistance from many of the trade unions who have important interests to conserve, particularly with regard to opportunities for promotion for workers in different grades. I think most experienced trade union leaders would agree that this question of the age at which workers retire, and its effect on promotion and remuneration, has been woven into the wage structure of many of the industries in which this large issue is likely to arise. I think now is the time to make sure that it is being examined from that point of view, and that it is brought to the notice of the general public, who at different times and in different places advocate one remedy or the other.

I feel that ultimately it will be absolutely essential to have a minimum subsistence rate for old age pensioners as the objective. I listened carefully to the master on the subject this afternoon, but I am still not sure how and when he would like this to be tackled. I am never quite sure whether the noble Lord, Lord Beveridge, wants to bring the insurance rate up to the subsistence level now, and leave it to be supplemented afterwards if there is a variation in price standards, or whether he wants a separate arrangement altogether in order to reach the subsistence level. He recommended previously that there should be a period of gradual approach towards the initiation of better standards for old age pensioners; and I believe his idea then would have meant spreading that approach over a period of years.

LORD BEVERIDGE

My Lords, perhaps the noble Viscount will permit me to answer the two distinct questions that he has asked. The first is with regard to adjusting rates of benefit and pension, when fixed in money, to changes in the value of money. Personally, I do not want anything better than what the Labour Government put into Section 40 of their Act of 1946. I think that was an admirable piece of machinery which can, and will, deal with changes in the value of money. But I do not think dealing with changes in the value of money for pensions really makes it unnecessary to stabilise money, because that does not help the private savers. It is a complete solution to that particular point. I believe the method is as good as any other, and I do not want to improve on it. The other question is as to when I think full subsistence rates should apply to pensions. Historically, I thought that we could not, and should not, try to give full subsistence pensions from the beginning to people who had not contributed at all or had not contributed for any lengthy period, but both the Coalition Government, who first received my Report, and the Labour Government:, who acted on it, rejected that; and I do not know how far it is possible to go back on that rejection. If there were a proposal to put up pensions now, that might be one of the things to be considered by this Government. But, clearly, you cannot go back now to my whole original proposal, although I defended that proposal (and I still do) as a perfectly just proposal when it was made.

VISCOUNT ALEXANDER OF HILLS-BOROUGH

I am obliged to the noble Lord. The first answer of the noble Lord means that we were perfectly justified in adopting Section 40, and in having reviews under Section 39, and that it was not disastrous action on our part to make the initial pension rates 26s. in 1948. I think that helps me a good deal, and I hope to receive from time to time the support of the noble Lord in seeking to make things of this sort effective, in spite of the changes that we have to deal with. It is also true to say on this point—and I think the noble Lord referred to it—that the present Government felt forced by circumstances in 1952 to make adjustments in the pension rates. All this, how ever, only adds to the size of the trouble as the years go on, because the rates of' contribution and the Government contribution have not been put into the Fund to enable it to remain actuarially sound and secure. But the fact still remains that 20 per cent. of all old-age pensioners to-day receiving benefit—something over 4 million—must have recourse to public assistance committees to supplement their pensions. That hardly seems to be a satisfactory way of continuing, and I hope that something will be done to improve the basic Fund. That can only be done either by increased contributions or by putting a larger measure of the burden on the general taxpayer, so as to keep the Fund sound.

On this matter there arise a number of thoughts—and I put them as thoughts, because they are by no means commitments. The first is that, judging by experience, old-age pensioners and other beneficiaries of various insurance allowances in the last few years have been constantly affected by a wide variation in the cost of living. The noble Lord, Lord Beveridge, pleaded, in his eloquent speech, for stability of money. But I feel that a good many of my friends in the country would like greater stability in the cost of living, because it is not so much the amount of money they have that matters, but what they can get with that money. The effect of changes in the cost of living index—not confining oneself to the index as a whole, but to the cost of the food that goes into the households of these pensioners—in the ultimate charge on your insurance funds is very great indeed. I do not want to talk politically in any way this afternoon, but I regret that the policy of the Government, so far, in aiming at stability of money, has increased in many respects the actual charge to the people for the food that they need. There is no doubt of that at all. Therefore, an effort ought to be made, by whatever Government is in power, to provide some overall means of restricting, so far as they can, increases in the cost of living. This is vital in connection with the maintenance of these funds and the keeping of them in a sound position.

When we come to the actual capacity of the country to deal with the matter, I wonder whether we should be altogether right—and I should be the last to differ strongly from either of my colleagues who have spoken this afternoon—in, as it were, reading a strict homily to all the workers in the country that they must produce more in order to improve and stabilise the funds. I am a great believer in getting the highest possible production, on a sound basis; but, of course, everything depends upon the system in which we are living and the extent to which the workers actually share—whether they share fairly in the results of increased production. That is something we must always keep in mind.

I must say that I am disappointed that we have not had more contributions from the other side to-day. We often have from bankers in your Lordships' House speeches upon economic and financial questions. We have not been favoured with one to-day, although those noble Lords do—and I am glad they do—canvass these matters outside the House. I saw the noble Lord, Lord Balfour of Burleigh, the Chairman of Lloyds Bank, come in for a few minutes to-day, but he probably had to go away on business. I hold in my hand Lloyds Bank Review for January, 1953, which contains a finely written article by a Mr. Hopkin. I am anxious that this should not be buried for ever in the narrow confines of the Lloyds Bank Review, and I should like to put it on the records of the House. Mr. Hopkin says: To sum up, it does not seem unreasonable to conclude that changes in age-distribution over the next thirty years will reduce living standards by no more than 3 or 4 per cent. compared with what they would otherwise have been. Over such a period this may seem a surprisingly small and rather unimportant figure. It is—or used to be—very commonly assumed that, owing to technical change, capital accumulation, etc., there was a progress in productivity tending to raise average real income per head by about I½ per cent. perannum. Although in fact there is very little to justify selecting a particular figure, past experience certainly suggests that it would be unrealistic, when forecasting over a long period, not to make a substantial allowance for such progress. The more recent experience, for which there is also much the best statistical information, has shown growth at anything but a steady rate, but is not inconsistent with a normal rate as high as 1½ per cent. annually or even higher. If we accept this figure, we must suppose that over thirty years rising productivity will tend to raise income per head by more than 50 per cent. In this context a loss of some 3–4 per cent. through changing age-distribution, though not entirely insignificant, cannot be called catastrophic. That is an important statement, and obviously had been carefully studied. It was not out of harmony with the way some of us were thinking when we decided to adopt the Beveridge Report on Social Insurance in its entirety, and even to bring it up to the position established in the Act of 1946, which meant budgeting for what at that time meant annual deficits.

If one takes in mind a period of thirty years, looks at the way in which industrial development is progressing, and considers what may be the increased output per head from any one of these three factors—the development of atomic energy, the greater harnessing to industrial production of the various ancillary types of jet power, or the extraordinary extent to which we may be enabled to employ horse power units from electricity, giving our workers something like the power which is backing the American worker at the present time—then one realises that this particular figure of 11 per cent. is a low estimate of what the increase may be. Therefore, we ought not to approach this question with recrimination—I do not think we have to-day—and certainly not with a pessimistic view as to the future. I believe that from an examination of the matters which will arise out of the Phillips Report and of the quinquennial valuation, we ought to find a solution.

When, however, we talk about these production estimates, I think it is vital that all sections of the community should be educated along the lines to which my noble friend referred this afternoon. It is not merely a matter of saving to the workers, as many of us have done at meetings, "If you put more in you get more out." It is a matter also, when they have produced more, of whether they live under such a system that will enable them to get their fair share of what they have put in. In these increased endeavours there must be an equal sense of responsibility on the part of all those who are in the ownership, the executive or the managerial positions in industry as a whole. As I go about the country I am glad to see what great development there has been in many quarters as a result of associated effort by employers and workers. That is so in many cases, and nobody welcomes it more than those who lead labour. But there is still a need for greater development, and both sides of industry require education in that matter. We must be prepared, in debates suck. as this, to face up to these problems—they are problems which are not easy for anybody to solve—and to say what we really think should be done to deal with the situation in the future.

We must use the whole power and strength of the nation in a resolve to see that the aged, the sick, the poor and the needy are not left in the condition so ably described by none other than the noble Viscount, Lord Woolton, in a speech he made when he was Minister of Reconstruction in 1944. If I remember rightly, at that time the noble Viscount was not attached to any political Party. Looking at the social services, at the housing problem and at other things in the past, he said, "Then we had he means and not the will." As I said earlier, I am glad see that there is a will amongst all Parties to maintain social insurance, and I believe that, with co-operation between all partners in industry in the same way, we can confidently expect to provide those insurance arrangements for the security of cur peoples' lives without which, in the long run, life is not worth living.

4.59 p.m.

THE EARL OF SELKIRK

My Lords, I do not think for one moment that anyone who looks at this scheme can be under the slightest misapprehension in regard to its importance—that something of the order of 23.500,000 members are paying contributions, amounting to an annual sum of £400 million a year, in probably one of the largest, and certainly the most comprehensive, systems in the world. I think no one can misconceive its importance. For that reason, I warmly welcome all the speeches that have been made this afternoon. They have been very helpful, and I am grateful to noble Lords who have taken part in the debate. There has been one slight "edge" on the discussion, in the suggestion that there have not been enough speakers from this side of the House. Well, my Lords, one can take an interest in a subject either by speaking or by listening—and I must remind the noble Viscount opposite that for a time he had no Back Benchers at all, whereas on this side we have had quite a number throughout.

This is an important occasion, and I feel that it is also an historic one. Lord Beveridge has said that it is something like fifty years since he started writing for the Morning Post on the subject of national insurance He was the first Director of Labour Exchanges, and was for ten years Chairman of the Unemployment Insurance Statutory Committee. It was accordingly with a mature mind and a fund of ideas that he came to prepare the Report now so well known. He had, moreover, the advantage of Departmental information, and experience of the system which had grown up with departmental knowledge over a long period. It is twelve years since the Report was made, five years since it was put into operation; and today we have the benefit of hearing the noble Lord's own views. That is why I say that this is an historic occasion. It was not, moreover, just security at which the noble Lord aimed, or for which his Report was famous; the noble Lord recognised that in some circumstances security, if excessive, may subordinate freedom; and it is probably that which has earned him honorary degrees in, I believe, nine different countries. I do not want to elaborate on that particular point, except to say that I think the noble Lord will agree that liberty without security is not only valueless but is little more than chaos; and that, on the other hand, security without liberty is valueless and is, in fact, not a great deal more than a prison sentence. It is the combination of liberty and security which is a characteristic feature of the noble Lord's Report which we are now discussing.

I think it is important to view this insurance scheme in its framework. Lord Beveridge emphasised clearly in his Report the five giant evils: fear, ignorance, squalor, idleness and want. If we accept that our educational system is making progress in the sphere of ignorance, and our housing programmes in the sphere of squalor and that they will penetrate further still where squalor still exists, we may say that this scheme is designed to provide against want. It is based on three assumptions. The first of these is the children's allowances; the second is a comprehensive Health Service, and the third is full employment. We have those to-day. It is true that the first costs rather more than was expected—still, we have it. Even then, we have still not got the whole picture, because there are two other things which the noble Lord emphasised in his Report. The first of these is private provision for old age, and the second is National Assistance. Lord Beveridge is making it abundantly clear that those must be combined with any sort of National Insurance system.

I should like to say one word on these two subjects. The first concerns private insurance, and superannuation schemes in particular. We do not know a great deal about them. It is estimated that the number of persons covered by them is growing by something of the order of 500,000 a year, and that there may be at the present time up to 5 million, and possibly even 7 million, covered by these private schemes. Over and above that, there are people covered by public service pensions—civil servants, police, teachers and so on. I do not know the exact numbers, but they are very large. This is an important factor which has to be considered. I have said that we have National Assistance. The reason for that is that there always will be people who will fall through the meshes of a National Insurance scheme, so that it is important to have it. At the same time, I agree entirely with the contention made by the noble Lord, Lord Beveridge, that it should not be the main scheme. The main scheme should be an insurance one and not assistance.

Lord Beveridge has expressed a certain anxiety about what lies ahead. He has already written two impressive articles in The Times and I believe that further articles from him are to come shortly. I think it is a good thing, as both Lord Macdonald and Lord Alexander have said, that these problems should be understood. This is a national system, affecting virtually everyone in this country, and it cannot be too clearly stated to the people exactly what is involved. The essence of this insurance scheme is a flat rate of benefit and a flat rate of contributions, calculated on an actuarial basis. That means, of course, that whenever the benefits are raised, the the contribution must also be raised, if the scheme is to remain an insurance scheme at all.

It has been made quite clear in the Annual Reports of the Ministry of National Insurance that it is probable that in the next year or so the revenue of the National Insurance Fund will fall short of expenditure. It may be next year or the year after. It is also clear that in the course of time, perhaps twenty-five years hence, the deficit will be at about £400 million a year. I agree with Lord Alexander of Hillsborough that this is not something which was unforeseen. Indeed, it was inherent in, and a recognised feature of, the financial method adopted. In the Actuary's report on the Act of 1946, he said that in 1968 the Exchequer would have to find £239 million and by 1978, £338 million. That was before certain rises in benefit which have since taken place. In his third report, in 1952, the Actuary made it clear that this was not an unexpected failure of resources, or, indeed, a deficiency or loss in the accepted sense of the word. It was due to a number of factors. First of these was the taking into the scheme of people who had not contributed the proper amount, and who in some cases had paid contributions for a relatively short period. Secondly, there were the increases of benefits since the original scheme, which increased the uncovered liability—indeed, taken as a whole, retirement pensioners have not paid more than 5 per cent. of the amount of the benefits they get, a fact which should be properly appreciated. Thirdly, the scheme required that contributions should be set aside in a fund and accumulated at compound interest until required to pay the pension benefits. It has never been Government policy to do this, and accordingly that fund is not there, in the sense that it should have been actuarially.

The noble Lord, Lord Macdonald of Gwaenysgor, will appreciate that for all persons of whom he spoke there is available National Assistance. Those people should know that that is there. To-day it stands higher in real money than it has ever stood before. The noble Lord, Lord Beveridge, complained that there were too many people on National Assistance. I will say merely that, as I explained just now, in the first place, the National Assistance scales were raised in June, 1952, to a higher value than they ever were before. They were fixed to take account of a rise in the cost of living which had occurred in the past, with some allowance for future increases. With great respect to the noble Viscount, Lord Alexander of Hillsborough, if he looks at the food figures for the last eighteen months, figures prepared as for his own Government in 1947, he will find a 1 per cent. change in the cost of food—that is, in the eighteen months since increased insurance benefits and National Assistance were provided in June, 1952.

The second reason why I think more people are on National Assistance is the reason mentioned by the noble Lord. Lord Kershaw—namely, that the stigma which was said to attach to the old Poor Law has largely disappeared. The real lesson is that if the scales get higher, it is because there is a fall in the purchasing power of money any fall in the value of money inevitably hits the poorest section of the community. There is not the slightest doubt that between 1945 and 1951, when prices rose over 40 per cent., the people who suffered most were the poorest citizens of the community. That is the reason why we attach so much importance to maintaining a stable value of money.

I should like to pit it this way. As stated by the noble Lord, Lord Beveridge, we have a problem in front of us. I have no criticism to make—indeed, it is unlikely that anyone would have any criticism to make—of the forecast made by the noble Lord. But the line we take is that, before coming to a decision on these many varied and intricate subjects, the Government must be fully informed. Accordingly, there are three Reports for which we have asked. First of all, there is the Report of the National Advisory Committee on the Employment of Older Men and Women, which was set up in February, 1952. This Committee, under the Chairmanship of Mr. H. Watkinson, Parliamentary Secretary to the Ministry of Labour and National Service, made an Interim Report in October of last year. Last July, a Committee was set up under the Chairmanship of Sir Thomas Phillips to review the economic and financial problems in providing for old age, having regard to the prospective increase in the number of aged persons, and to make recommendations. The purpose of that Committee is different from the purpose of the Watkinson Committee. Finally, as Lord Beveridge has emphasised, the Government Actuary is due to make his quinquennial review for the period up to March 31 of this year. On receipt of that, the Minister of National Insurance will have to make his statutory review.

The noble Lord, Lord Beveridge, has said that these Reports should be pressed on. I can assure him that we are doing all we can to press them on as much as possible, but I mist say that the Phillips Committee have a considerable unexplored field. I may mention some points which the noble Lord, Lord Macdonald, brought out: raising the retirement age, abolishing the retirement condition and raising the retirement age for women. These are nice, horny problems, though the noble Lord was wise enough to say that he was not advocating these points, but he was wanting merely to discuss them. These matters the Phillips Committee have to examine, and they are most difficult questions. As regards the report of the Government Actuary, may I say this: the final figures on which he will work cannot be begun to be assembled until after March 31 of this year. I am told that they will not be available in a full form probably for a matter of weeks—possibly months. I have here the Third Interim Report of the Government Actuary on one year's working of National Insurance. It is up to March 31, 1952, and it is dated June 9, 1953. I very much hope that the new report will not take as long as that, but these are matters which cannot be unduly hurried. I am afraid that there is no likelihood of these Reports being available this year. I may mention that the Phillips Committee have been sitting regularly since October—I believe twice a month or so, if not more often.

The problem of old age, if I may express it this way, is perhaps, in a sense, the central problem. Medical science and improved sanitation have increased the expectation of life. In fifty years it has increased about 50 per cent.—rather more in the case of women. That means that more people are reaching the age of sixty-five, and one of the curious characteristics of the twentieth century is that families are generally smaller. These two factors together make it inevitable that the working population should be proportionately less. It is, of course, the different aspects of this problem which will be the particular concern of both the Phillips Committee and the Watkinson Committee.

I should like to say one word about the Watkinson Committee. I very much hope that their Interim Report will receive as wide a circulation as possible. It is clear from what noble Lords have said that they agree that we have to take an entirely new view of age and employment. The lengthening of life is not simply extending the period of senility; it is extending the period of useful life. That is the object which we have in mind and which is shown by the Committee to be both feasible and desirable. It is in the interests of most older men that they should continue to work, and I think they are happier to do so. For instance, the expectation of life for a man of sixty is now fifteen years, and for a man of sixty-five, twelve years. I am sure that men are happier working. There is just a grain of truth in what Professor Titmuss rather cynically says: For more and more people work and death are increasingly separated by a functionless interregnum. It is satisfactory to note that already, according to the Watkinson Report, there are a large number of men between sixty-five and seventy years of age who are working. The figure given is about 400,000, which is about one-half of the total population in that age group. That is encouraging, and one hopes that the numbers will be extended. As the noble Lord, Lord Kershaw, emphasised, it is not intended to press people to go on working until they drop, but rather to give them encouragement and opportunity and to remove any slight prejudice that might exist at employing people above a certain age. I would add that it is encouraging to see that there are already signs of changes in the policy of employers about older men.

I will mention only two other points. One, which has been referred to by several noble Lords, including the noble Lord, Lord Macdonald, and the noble Viscount, Lord Alexander, is closely connected with production. If national production were to fall we should undoubtedly not be able to maintain the real value of our insurance scheme, even on the basis at which it at present exists. Then I would add that it is not possible to have social security in any real sense without peace. To-day, our defence expenditure is considerably higher than our expenditure on social services. I have not checked this, but a document by P.E.P., a well known broadsheet, says that our social service expenditure in 1938–39 was higher than that for defence. That gives a measure of the very heavy burden which we are carrying.

My Lords, I should like to say how cordially I endorse what the noble Lord, Lord Beveridge, said about inflation. Without a stable value of money it is quite useless to talk about an insurance system at all, because it cuts away not only at the contributions but also at the value of the benefits. It is one of the proudest achievements of Her Majesty's Government that, since June, 1952, when provision was made for increased insurance benefits, they have kept prices steady, with a rise of, I think, only 1½ per cent. Moreover, prices have been kept absolutely steady since last March. It is the resolute determination of Her Majesty's Government to continue in that way, and in that aim I think we have the support of the noble Viscount, Lord Alexander of Hillsborough. I have tried to outline some of the problems, which are of a deep, human character. One must look at this matter within its framework. The Minister will make his review as soon as possible. But in a scheme so vast and far-reaching as this, the Minister must be fortified by the fullest information, and his judgment unhampered by any sense of undue haste. Indeed, with such a varied and comprehensive system as this the most mature consideration is demanded. Some people have said that this scheme of National Insurance in some way displaces self-reliance, without which I am sure no self-reliance, without which I am sure no people can ever hope to live prosperously together. I am certain that that was not the idea put forward by the noble Lord, Lord Beveridge. I should suggest to him that his idea, and ours, must be that the scheme should lay a sure foundation on which we can build a fuller sense of individual responsioility, enterprise and freedom.

THE MARQUESS OF SALISBURY

My Lords, before the noble Lord, Lord Beveridge rises, I should like to consult the House. We have a Royal Commission at half past five and it is now twenty-two minutes past. If the noble Lord speaks now he will have only about five minutes before he has to resume his seat. I do not know whether he would prefer to start his speech and then return to the matter after the Royal Commission. I think perhaps it might be better if we adjourned during pleasure now, so as to enable the noble Lord to speak immediately after the Royal Commission. However, we will do whatever he prefers.

5.22 p.m.

LORD BEVERIDGE

My Lords, I prefer to talk for no more than five minutes, at the maximum, and then finish before the Royal Commission. May I, first of all, thank the Back Benchers who came to listen to me? I hope they feel that they were rewarded, and that next time they will not be listeners only. It is not that I feel any offence that they have not spoken but that I should like to hear them. Secondly, I am a little sorry that the noble Earl who replied for the Government is so extreme in his view that it is impossible to do anything this year. I suggest to him that that is not so. The Government do not have to wait for the review of benefit rates in relation to the cost of living. They made that review in 1952, thank goodness! so they can do it without waiting for the Government Actuary to do his sums. I think it will be exceedingly depressing to all the pensioners and other people on benefit, who are finding themselves in real need because these rates are not adequate, to be told that they must go on in that need until the Government Actuary has done his mathematics.

THE EARL OF SELKIRK

May I just point out that the position is that such people are entitled to National Assistance, and that in real money the figure is higher than it has ever been before. There is no need to talk about need in that sense.

LORD BEVERIDGE

I am afraid I should need more time to answer that point. Without criticising National Assistance or the people who administer it, I am sure that to the mass of the people of this country the use of National Assistance, subject to a means test which means that in order to get help you must not have helped yourself, is not an admissible or tolerable form of treatment. I feel I ought to say that as briefly as possible; I will not develop the point. I agree that it would be unwise to consider raising pension rates without seeing whether it is possible to do anything about reducing total pension costs. In other words, I would wait for the Report of the Phillips Committee; but only if that Committee shows some of the speed, as well as the knowledge, that was displayed by the Royal Commission under the Chairmanship of my noble friend Lord Samuel, who sits beside me on these Benches. We did as big and as difficult a job in six months, and I do not know why the Phillips Committee should not be able to do a smaller job in six months. I gather that they are now asking for more than fifteen months. I am very disappointed at that, and I hope that the noble Earl, Lord Selkirk, will ask his colleagues to take action to deal with this matter quickly, and not defend themselves on the ground that they must wait for the sums of the Government Actuary. With those few words, I ask permission to withdraw the Motion, at the same time expressing my gratitude to all those who have not spoken and to all those who have spoken.

Motion for Papers, by leave, withdrawn.

House adjourned during pleasure.

House resumed.