HL Deb 07 June 1956 vol 197 cc769-76

3.6 p.m.

Order of the Day for the Second Reading read.

LORD CLITHEROE

My Lords, I rise to move the Second Reading of the National Insurance Bill. This is not an epoch-making Bill, but I hope that it will bring some comfort to a number of elderly people and also be of general advantage to the community. This Bill was introduced in another place by a private Member, the Honourable Member for Somerset, North, and it owed its origin largely to the endeavours of another private Member, the Honourable Member for Reigate. I may tell your Lordships that it received its Third Reading in another place without a Division and was blessed by Her Majesty's Ministers.

I will describe the purposes of the Bill briefly, if I may. At the present time, those who enjoy retirement or widows' pensions suffer a reduction in their pensions if their earnings in any week exceed 40s., and a widowed mother has her allowance reduced if her earnings exceed 60s. These figures were fixed some time ago, and since then there has been a considerable fall in the value of our money, as we all know to our cost, and many people have thought that these limits ought to be raised. Your Lordships are aware that the present arrangements undoubtedly give rise to a good deal of criticism and heartburning, and also, I have been told, to some evasion of the law. There are some who think that these limits should be abolished altogether, but so long as our present system of retirement allowances, rather than old age pensions, persists, it is understandable that there should be a limit of some sort. Therefore, there is no question of making in this Bill any alteration in the principle of having retirement allowances instead of old age pensions.

The proposals which the Bill contains are very modest and I hope your Lordships will think that they are useful. The whole matter was considered by the National Insurance Advisory Committee and I should like to pay tribute here to the careful and speedy attention which they gave to this matter. The proposals in this short Bill are to give effect to the main recommendations of the Committee. The proposals are as follows. In the case of retirement pensioners—whom most of us used to call, and still wrongly call, old age pensioners—no deduction will be made from their pensions, if this Bill is carried, for earnings which do not exceed 50s. a week. The present limit is 40s., and the proposal is that it should be raised to 50s. After that, a deduction of 6d. for every 1s. earned will be made between 50s. and 70s.; and for earnings over 70s. a deduction will be made of 1s. for every 1s. earned. This means, if your Lordships care to make the calculation, that it will still be an advantage for a pensioner to earn up to £5 a week, which is an improvement on the present situation. I think that this fact will be welcomed by many people.

There are one or two other small points. If this Bill is carried, pensions will be adjusted according to earnings in the previous calendar week, instead of in the previous pension week. That will get rid of a good many inconveniences, for the pension week for retirement pensions runs from Wednesday to Wednesday, whereas most people make their calculations for the week running from Monday to Saturday, so far as earnings are concerned. For widowed pensioners, the rule proposed is exactly the same as that which I have outlined for retirement pensioners, but widowed mothers' allowances are to be treated differently. At the present time, the limit there is 60s. It will remain there, but 6d. in the 1s. is to be deducted for every 1s. earned between 60s. and 80s. I think that that is a rather more generous proposal than that made in the Report of the Advisory Committee.

LORD PETHICK-LAWRENCE

My Lords, if the noble Lord will allow me to intervene, would he state what is the deduction per 1s. at the present time for money earned above the limit?

LORD CLITHEROE

There is no concession at present.

LORD PETHICK-LAWRENCE

The whole shilling comes off.

LORD CLITHEROE

But in future, if this Bill is passed, there will be a concession of 6d. in the 1s., after the first 50s. earned.

Under the Bill the Minister is given the usual power to appoint the day for the operation of the Act, and I hope that we may hear from the noble Viscount, the First Lord of the Admiralty, who I understand is to reply, that if your Lordships pass the Bill there will be no delay in implementing it. Another clause gives the Minister power to amend by Regulations the earnings limits for retirement pensions and widows' benefits and the amount of the deductions to be made. At the present time, such a change can be made only by legislation, and that is rather troublesome. If the Minister does make amendments, I am sure your Lordships will be glad to know that they must be laid before Parliament in draft and must be approved by both Houses by Affirmative Resolution, so that we shall still have control over the situation.

Many of your Lordships may wonder why there should be any reduction at all in the pensions of people who seek to earn something by their own efforts, and a great deal could be said on that point. I have often wondered about it myself, and I personally should feel happier if there were no reduction, however much they earned. But we must remember that we are dealing primarily with retirement pensions and not with old age pensions. These retirement pensions have superseded old age pensions, and so long as we have that system, some limitation seems to be inevitable. Otherwise, a man or woman in regular work might make a formal retirement or a temporary retirement, or might even retire in favour of doing part-time work, and there would thus be a considerable loss to the labour resources of the country. Although this Bill may not contain all that I, or your Lordships, might like, none the less it is a considerable advance on the present position, and I commend it to the House. I hope and believe that your Lordships will give it unanimous support, and that we shall soon hear from the noble Viscount the First Lord of the Admiralty that it has the full approval of Her Majesty's Government. I beg to move that the Bill be now read a second time.

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

3.15 p.m.

LORD PETHICK-LAWRENCE

My Lords, I rise to present to your Lordships the view of those sitting on this side of the House, which is similar to that taken in another place by members of my Party. The noble Lord who has introduced the Second Reading said, quite correctly, that there was no great opposition to the Bill in another place and that it was welcomed there by members of all Parties. The larger question, with which the noble Lord also dealt, is a complicated matter. Off-hand, it would appear that it would be much better if there were no limit at all; but, as the noble Lord has said, so long as they are retirement pensions and not old age pensions—I do not think it applies exactly in the case of a widowed mother—it is impossible to avoid some such scheme as this, which is, in effect, a means test.

At the same time, I do not think that any of us can view this position with complete equanimity, for two main reasons. In the first place, it is really against the public interest to stop people from working by reducing the advantage they get from working, in so far as you say to them that they will not get their whole pension if they earn more than a certain amount but they will get the full pension if they do not do any work, or do not do more than £2 worth of work. That, surely, is against the public interest. At this time, when we want every hand to the wheel, it is throwing a spanner into the works if you prevent people from doing their full work and earning a reasonable amount for it. So that I cannot say, if we look at it all round, that this scheme is fully in accord with the public interests of the country, which needs everybody to do all the work he can at the present time. But the difficulties are what they are, and we have to face up to them. We are dealing not with a new situation but with one that is already in being, and in those circumstances I think this Bill goes a long way to help the difficulties which at present exist.

I think that is true not only with regard to the increased amount which a person can earn without deduction—the 10s. in the case of retired workers—but still more so in the case of this partial allowance for every additional 1s. earned. As I understand the position, under the existing system there is no advantage to a worker to earn above a fixed minimum of £2, because for every 1s. above that figure which he receives for his wages 1s. is deducted from his pension. Under the new system for every 1s. that he so earns 6d. will be deducted from his pension, and therefore it is still an advantage for him to work. That, I feel, is a great step forward, and for that reason, quite as much as for the reason of the higher limit, the Bill is to be welcomed.

There is a further matter, which the noble Lord just mentioned, and that is the great difficulty of checking evasion, for where there is a situation in which both the employer and the employee have an interest in concealing the true facts there is a tremendous strain upon the conscience of people to state the facts quite correctly. That must remain as one of the disadvantages of this scheme. But, having said that, I revert to what I said at the beginning. I think that in all the circumstances this is as good a Bill as we could expect. It goes a long way to deal with the evils which exist under the present system, and we on these Benches give it our full measure of support.

3.20 p.m.

THE FIRST LORD OF THE ADMIRALTY (VISCOUNT CILCENNIN

My Lords, your Lordships will expect an intervention from the Government Front Bench in this short debate, and as the noble Lord, Lord Clitheroe, who moved the Bill so clearly, said, it has the blessing of Ministers in another place, and I am delighted to add the blessing of those who sit on this Bench behind me. I welcome it as a happy example of what can be achieved by a combination of Government and private enterprise. I am sure that the mover of the Bill, and the mover in another place, were delighted to have the support of the noble Lord, Lord Pethick-Lawrence, because he is such an export on these matters. It is a great comfort, I am sure, to them that he has given his approval this afternoon to this Bill.

For some time there has been considerable public interest and feeling about the amount which pensioners were permitted to earn without suffering a reduction in their pensions. The decision of the Government to refer this question to the National Insurance Advisory Committee —which is, as your Lordships know, an independent body set up under the National insurance Act to advise Ministers on matter of this kind, and which contains members representing both sides of industry—coincided conveniently with the introduction of the original version of this Bill in another place. I should like to congratulate and thank the Committee for the speed, as the noble Lord, Lord Clitheroe, mentioned, with which they reported. This speed made it possible, after the Government had accepted the recommendations, for the sponsors of this Bill to put down Amendments in Committee to bring it into line with these accepted recommendations.

The retirement pension as we now understand it resulted, of course, from the recommendations of a Member of your Lordships' House, the noble Lord, Lord Beveridge, and was adopted by the Coalition Government. Instead of an inadequate pension payable at a fixed age, the noble Lord suggested that there should be a more adequate pension payable subject to the person not only reaching a certain age but also retiring from regular work. For those who did not retire at the minimum age it was agreed that there should be the opportunity to increase their eventual pension by earning increments.

I am sure, as the noble Lord, Lord Clitheroe, and the noble Lord, Lord Pethick-Lawrence, mentioned in their speeches, that the rule limiting the earnings of pensioners is an essential feature of the retirement condition. Otherwise there would be nothing to prevent people from going through the act of retirement and then going back to work with full pension on top of regular wages. I feel that your Lordships will also think it wise that the earnings limit should not be fixed at too high a level, or those people who have deferred their retirement will be encouraged to give up regular work in favour of part-time work plus pension. This would mean, as the noble Lord, Lord Pethick-Lawrence said, a loss of production and a bad bargain for the country generally. On the other hand, I am sure your Lordships will agree that the earnings limit must be high enough to encourage pensioners to work if they feel fit enough to do so.

Those of your Lordships who have studied the Report of the National Insurance Advisory Committee will, I am sure, agree with the noble Lord, Lord Clitheroe, that it is a very clear and well-reasoned piece of writing, as well as having been produced with great speed. The noble Lord, Lord Clitheroe, has already explained the "middle way" which the Committee proposed, and which has now been incorporated in this Bill. If I may make one personal observation, on reading the Report I was interested to see the numbers of retirement pensioners actually involved. I see that there are about 4½ million retirement pensioners, but the earnings rule does not operate to-day after a man pensioner reaches seventy or a woman pensioner sixty-five; and about 3½ million of the pensioners are, in fact, above those ages and are therefore not affected at all by this rule. The rule operates only among the 1 million pensioners below those ages, and then only if they are working. In fact, only 136,000, if I am right, are working, and out of these the pensions of 100,000 are not affected, since their earnings do not exceed 40s. a week. Therefore, only some 36,000 pensioners to-day have their pensions reduced because their earnings are above the limit. But however small the number may be, they have had a feeling of injustice, and I believe the Bill is all the more honourable because it has been brought in to deal with a comparatively small number of people. I am sure your Lordships welcome this Bill as removing that feeling of injustice although the numbers immediately involved may not be very great.

LORD PETHICK-LAWRENCE

My Lords, before the noble Viscount passes from that matter, may I ask him this question? He says that there are 136,000 people who might be affected by the Bill, but that only some 36,000 will be because they are earning more than 40s. a week. Is it not one of the objects of the Bill to induce some of the remaining 100,000 to earn over 40s.? Therefore, is it correct to say that it is only 36,000 people? I should have thought it was nearer 136,000.

VISCOUNT CILCENNIN

I quite appreciate the noble Lord's point. We all hope that the inducement to earn more will be effective, and this does, indeed, add to the merits of the Bill. I thank the noble Lord for his correction.

The noble Lord, Lord Clitheroe, asked me about the timing from now on. I can assure him that the Minister of Pensions and National Insurance has given an undertaking that he will use the powers in this Bill to bring the change into operation as soon as possible after the Royal Assent. He is also making arrangements, apart from the usual Press and radio publicity, to bring the changed rules to the notice of the individual retirement pensioners and widows who come within the scope of the earnings rules if they choose to work. On behalf of those on this Bench I welcome the Bill, and I should like to express our gratitude to the noble Lord, Lord Clitheroe, for taking on the task of presenting it so ably in your Lordships' House, and to the noble Lord, Lord Pethick-Lawrence, for what he has said in support of the noble Lord, Lord Clitheroe.

LORD CLITHEROE

My Lords, I should like to thank the noble Viscount the First Lord of the Admiralty for the support which he has given to this Bill on behalf of Her Majesty's Government, and I am also grateful to the noble Lord, Lord Pethick-Lawrence, for what he has said. The Bill is a small one. It will do a certain amount of good to a limited number of people, and I believe, with the noble Lord, Lord Pethick-Lawrence, that the number who will benefit will prove rather greater than the statisticians expect.

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