§ 3.7 p.m.
§ LORD PETHICK-LAWRENCE rose to call attention to the White Paper Provision for Old Age (Cmnd. 538); and to move for Papers. The noble Lord said: My Lords, when I spoke on this matter on October 30, during the debate on the Address in reply to the gracious Speech from the Throne, I expressed the hope that this House might have an opportunity of a further discussion on this matter—provision for old age—before it became embodied. in a Bill and was discussed in another place. I am grateful to your Lordships that that proposal which was supported by the noble and learned Viscount on the Woolsack, has been brought into effect to-day; and I am further gratified that noble Lords in all parts of the House are, I understand, proposing to take part in this debate. I notice that there are to be two maiden speeches, and we are all greatly looking forward to hearing them. If I may add just one personal note, this question of pensions for the old is one that I have had close at heart for practically the whole of my political life, running into something like sixty years, and I was first acquainted with it in connection with my old friend, Keir Hardie, who was the pioneer of the Labour movement in the other place. 1074 In my speech on October 30 I covered a fairly wide range. I do not propose to do that to-day. I propose to confine myself to two or three subjects, leaving other aspects of the question to be dealt with by speakers on both sides who follow me. The points with which I propose to deal are principally these. First, I want to discuss what were the objects of introducing this new proposal and how far the White Paper of Her Majesty's Government indicates that those objects will be fulfilled. In the second place, I want to discuss what limits there should be on the universality of the scheme and how far that is provided for in the proposals of Her Majesty's Government. In the third place, I want to deal with the question of contracting-out; and, in the fourth place, with the question of how far such payments as are made shall be expressed in terms of pounds, shillings and pence, or whether they should provide for any variability by comparison with some index or other.
§ Coming to the first of those questions, I think the objects of the scheme are three in number. In the first place, it is quite clear to all of us, on whichever side of this House we sit, that the finances of the old age pension scheme are to some extent breaking down. We are all aware of the reason why that is happening. It is due to the change in costs and in the standard of living, and the consequent fact that a number of amending Bills have been introduced and carried through both Houses of Parliament in order to bring the pensions up to date. That has destroyed the actuarial accuracy of the pension scheme, and that is one of the reasons why a new scheme is required and is being introduced by the Government in the form of their White Paper.
§ In the second place, there is no doubt that the pensions provided for a very large number of those who receive them are not up to what is required. Therefore, a large number of pensioners think it right to make supplementary provision for their old age in various ways, from the lowest, who receive supplement by means of the National Assistance Board, to the highest, who make schemes of their own or provide through their employers' superannuation funds. In the third place, it is now generally recognised that a pension, to be of any real 1075 value to the recipient, should bear some relation to the income which he has been in the habit of receiving during the years of his active life.
§ With regard to the first of those three points, the financial breakdown of the existing scheme, I do not think we are yet in a position fully to judge, because we have not, I believe, had a full actuarial report; but that is promised us later on, and when we have it we shall be able to judge how far the Government's scheme fully meets that question. As for the two other reasons for the introduction of this scheme, I would claim that the Government's proposals do not fully meet the situation. They do not meet it with regard to the people at the lower end, because a great proportion of them have to seek relief from the National Assistance Board; and they do not meet it higher up, because I do not think that the pensions, even as projected to be provided in the Government's scheme, will be fully adequate to enable the recipients to live on them.
§ In particular, in that connection, I suggest that the upper limit fixed by the Government is quite inadequate for the purpose of satisfying them. I know what the Government's answer is. Their answer is that they are not supposed to be adequate; they are supposed to be a help, and the rest should be done by the private resources of the individual. I know that argument and I shall deal with it more or less later on. At any rate, by themselves, these proposals, from my point of view, fail in both those respects.
§ With regard to the question of the upper limit, I would say just this: that this is, to some extent, a new idea. The original old age pension scheme was merely to provide bread and butter and shelter and a few absolute necessaries for every person. The scheme is supposed to go further than that, and it goes on the principle which I mentioned just now: that where a man has been having a certain income during his life, his pension ought to bear some relation to it. That, of course, is a now idea. It is recognised both in the Government scheme and in the scheme which was prepared by the Labour Party, but it is a new idea. It conflicts with the old ideological conception of equality, but in the case of both Parties it is accepted now that that must 1076 be done and that what may be wealth, or at any rate a sufficiency, for one man, is quite inadequate for another man, because when he has reached a certain stage in his life he has commitments of various kinds which make a small amount quite inadequate for his requirements. The point I am making is this: that if it be true that the £15-a-week man needs in his retirement a higher pension than the £8-a-week man, it is equally true that the £24-a-week man needs a higher rate of income or pension than the £15-a-week man. That is where I think the Government's figures stop short. They do not carry the graduation further up the scale as I think they should.
§ I want to turn from that matter to the question of universality. One of the great deficiencies of the Government's scheme that I pointed out on October 30 is that the self-employed are left out of the scheme. The noble and learned Viscount on the Woolsack said that it was because it was administratively difficult to bring them in. That may be true; it may be difficult, but I do not think it is impossible. I have been told in the course of my political life of a great many things that were administratively quite impossible, and to my surprise at first, but now to my expectation, before very long they have been found perfectly workable and are in effect to-day. I cannot give a better illustration of that than P.A.Y.E., the method of collecting income tax week by week from the wage-earning part of society. That, we were told at the beginning, was utterly out of the question, yet now it is an accomplished fact which is practised every week of the year.
§ Then it is said by the Government that the self-employed could not be brought in except by their having to pay a very large premium. That may be the case but that is no reason whatever why the self-employed man should not have the option. He could assess his own income for the purpose of the scheme at any figure within reason, and if he were outrageously wrong it could be checked, because the authorities have knowledge of his income from his income-tax returns. He could put his figure at anything within reason; and if the figure he was asked to pay as premium was too high, at any rate he should have the opportunity of saying he would pay it or he would not pay it.1077
§ But personally I should go a great deal further than that, because I do not understand why the scheme should stop short at people below a certain income or because they are self-employed; I think that a really satisfactory scheme should extend to the whole community. There were days gone by when some people had a great deal of money or held high positions bringing in large salaries, people who perhaps were important professional people and were fairly sure that in their old age they would be able to meet the position that came along. But, from our point of view in your Lordships' House, I venture to ask: who could be quite certain that either he or his grandchildren in fifty years' time, when they come to the old, will not need some form of pension? I am not casting any aspersion upon anybody, but the fact is that conditions of modern life are now so different that I think it really is the duty of everyone to make quite sure that he has a pension in his old age.
§ The Government say: "Yes, that is all right, but that is a private matter for the individual. He should take steps in his own way. through an insurance company, to provide a pension for himself." That may he true: to some extent it is a personal question. I venture to say, however, that it is not entirely a personal question but is also a community question. I say that for this reason. Take the case of a person who does not make any provision for his old age—and I know lots of people who do not. When they come to be old, we cannot say to them: "You should have provided for your old age. You can just go to the dogs now." We know perfectly well that that is quite contrary to the modern community idea in this country. When people get old, whether they have made provision for themselves or not, we know perfectly well that the community will make provision for them. It may be that they have been very unfortunate. They may have taken every good step to make provision for themselves but it has proved impossible; or they may have lost the opportunity that they thought they had secured. It may be that circumstances came along which demanded capital from them for some very important reason and that they had spent the money which they had provided for their old age. I do not think that such an answer is good enough. The whole community must make sure that 1078 those people are paying their share—and anyone who does not pay his share is shirking his liability.
§ Therefore I would go a great deal further. I would bring everybody—even rentiers—into a scheme of this kind. It may be said that that is flying too high at the present moment. It may be said that that will be a thing for the future but that it is not suitable in this particular proposal. If that be so, then I say that although that may be right, I feel convinced that before many years have passed we shall have a scheme which will include everyone. I should like to remind your Lordships that, whereas an individual can put money into a money-box or into an insurance company and can save in his own way, the community as a whole cannot pay for the pensions at any particular time except out of the income which it is at that time receiving. It is like a war. Some people think that you can pay for a war in advance or that you can pay for it in arrear. You cannot do anything of the kind. It is the work and service of the people at the time the war is being conducted which must pay for the war.
§ It is precisely the same in the case of the old. One absolute essential is that the active members of the community must pay for the pensions that are being paid to the old; and all that we can do is to make sure that the active members to-day pay for the old of to-day. By virtue of that they have, as I have said before, a kind of contract with posterity, that, if they bear the burden in their active days, then the young people of the future will bear the burden of supporting them when their time comes. Of course, that does not mean that in the purely monetary sense the contributions will go into some fund on paper and will be used by the Government, first of all for paying the pensioners of to-day, and then if there is anything over, for investment. The community has no money-box into which it can pay contributions and to which it can go in order to find the pensions for the old.
§ I come now to the point of contracting out. Your Lordships may remember that in the course of the remarks I made when we were dealing with this question of contracting out on October 30 I said that although it might be necessary to provide for contracting out at the present 1079 time, in the first place I was not altogether satisfied that the choice should rest with the employer. In the second place I thought—and this is something which is much more important—that as time went on the part played by contracting out would gradually fade away, just as the friendly societies had done with the introduction of the earlier schemes of insurance. Having made that remark, I was very much interested to find that, in the middle of last month, a gentleman named Mr. Jackson, who is the pensions officer of Unilever Limited and who has great experience both in this country and in other countries of the world where their business runs, made a statement on this matter, part of which was reported in The Times (I think it was The Times of November 15) in which, to a very large extent, he supported the view that I had taken. He did not, of course, support me, because he probably did not know that I had spoken about it, but from his own point of view he took almost precisely the same line as that which I had taken and which I take to-day.
§ He said that there were certain advantages in the possibility of contracting out but that he thought that there were far more serious disadvantages in contracting out than had been envisaged by anyone up to that time. I will briefly state the three principal disadvantages which he saw. In the first place, he recognised that an employer, in deciding whether or not to contract out, would naturally consult his workpeople; but he foresaw that it would be to the interests of certain of the workpeople not to contract out and of others to contract out, largely depending on the amount of their wages. He thought that any good employer would have to explain to his workpeople what were the advantages and disadvantages—the pros and cons—of contracting out, and that there would therefore be a conflict of interest between one part of his staff and the other part. He thought that whichever course the employer took it would in the end be contrary not only to the wishes but to the interests of one half of his employees who were adversely affected by his decision, and that he would have no desire to be placed in that very uncomfortable position of to some extent injuring part of his workers, even though he would be benefiting others.1080
§ That is a very strong reason, but I think the other reasons are even stronger. He pointed out that when the employer contracts out it covers the whole of his staff and his workers. At that time the whole of his staff is contracted out; but after a while Mr. Brown, Mr. Jones and Mr. Smith decide to leave the firm and work for another employer, an employer who has not contracted out. At the same time, the first firm is taking on new workers who, for a certain number of years, have been with employers who have not contracted out. I think that the noble and learned Viscount the Lord Chancellor, who saw great difficulties of administration in regard to individual men, is bound to agree with me that many of those difficulties which he saw in giving the option to the workers will arise in a different form owing to the migration out of a firm which has contracted out and into firms which have not contracted out; and in these large firms, with hundreds of thousands of workers, it will be going on all the time. According to Mr. Jackson—and it seems to me that it is a very sound point—that is going to make for great difficulties, and I venture to think that it is a very important matter.
§ However, there is a third matter which I think is, in some ways, even more important than either of the other two. We have had the experience over the last fifteen years, since the scheme was in operation (and still longer if one goes back to the earlier schemes) of all sorts of changes being made. They have been brought about by the rise in the cost of living and in wages and by all sorts of things. It seems to me exceedingly likely that this scheme, even if it is a great deal better than it appears to be at the present time, is not likely to survive unchanged for countless years into the future. It is much more likely that within ten years, and certainly within twenty, it will be altered; it will be improved, and in all probability larger pensions will be paid in future days than are paid when the scheme is first inaugurated.
What is going to be the position? Noble Lords should just think this out. An employer may say that his scheme is every bit as good as the Government's scheme and that he is going to contract out. Then at the end of five years he may find that the Government scheme has been improved. What is the employer
going to do then? He has two alternatives. He may say to his workers that he has contracted out up until then but that his scheme is not so good as the improved. Government scheme and that he will guarantee to improve it so that it keeps pace with the Government scheme. That is all very well, if he can afford it and the company and shareholders like it, because it may involve a considerable sum of money. On the other hand, he may say that he is not going to do all this and that contracting out is going to stop. And if he does that he will have to find some money in order that his workpeople may come into the Government scheme in the same way as the people who have been in it all the time. Mr. Jackson points out, with a great deal of force, that that argument is a very difficult one; and the conclusion he reaches, which I shall read to your Lordships, is this:
My last word on this matter is that whilst being superficially attractive at first sight, an exhaustive examination of the proposals shows that any form of contracting out is likely to be both unreasonable and unworkable. It should he withdrawn from the proposals.
§ I pass from that to my last point—the question of whether the future payment should be rigidly expressed in terms of pounds. shillings and pence, or whether it should be variable on the basis of some index. The Government believe in fixing a "pounds, shillings and pence" basis, firm, consistent and lasting. Of course, the Government must do that, because in their scheme they want an actuarial basis for the proposal. If they are going to base it on pure, actuarial terms any deviation from that position will obviously upset the scheme. On the other hand, the Labour Party proposes a sliding scale, variable, owing to the fact that there may be changes in the wealth of the country, in earnings, in the standard of living and in the index of the cost of production.
§ I am not going to say now—it is much too detailed a question—how far either of these proposals is satisfactory. What I am going to point out is that Mr. Jackson has something to say on that question, too. He said it with some reserve, and some provisos; but he does say that in certain circumstances, if there is a State scheme, he sees no objection to the amount of pension being fixed on what he calls "an earnings index." In 1082 his opinion, that is perfectly workable and would achieve its purpose. If we recognise that, in the last resort, the pension is paid out of the active work of those members of the community who are in work during part of their working lives, the fact that there is so much more money about will enable them to pay these pensions in precisely the same way as they would if the cost of living and standard of life had remained entirely stationary.
§ I may say here that when I was not here one day the noble Earl, Lord Selkirk, twitted me with having looked forward to inflation. I do not think that this is a question of inflation. There is no question of the kind of thing we have had during the last fifteen years, which is admitted on all sides to have been inflation. I cannot think that the noble Earl himself would he willing to prophesy that for the next fifteen years the prices of articles and the indices of consumption and earnings are likely to remain entirely identical with what they are at the present time. I do not think that any Member of your Lordships' House would be so foolish as to make any such promise. Assuming that there will be a change, I think it is desirable that we should have some idea of how it is going to be met, and this proposal which emanates from a man of the practical knowledge of Mr. Jackson is certainly worthy of consideration by the Government. I do not say that it is workable or sound: I say merely that it is put forward by a very reliable man, and that I think it deserves the highest consideration of all concerned.
§ I hope that I have not taken up too long but I am coming to the end of my remarks. I think that this scheme has merits and that the Labour Party scheme has merits. The Government scheme has defects and I have endeavoured to show what, in my opinion, are some of those defects, and to show how, on some issues, I would go further in my mind than either scheme and look forward to an almost entirely different view with regard to pensions. I may have looked too far. As politicians we are dealing with the actual proposals, but we must nevertheless, I think, examine what has been said by Mr. Jackson. I believe that it has pointers which those introducing the present scheme should bear in mind.1083
§ I am certainly satisfied with one thing —and I believe that most of your Lordships will agree with me: that this scheme, any scheme, however well composed, is not the end of the road. I am sure that in the course of the years there will be modifications and amendments, and that these will continue for a long time. Therefore I should like my final words to your Lordships to be this. Do not imagine that in this matter there is any finality. We shall not reach finality; we must be prepared for continued alteration of the scheme. All I hope is that on every occasion we amend the scheme we may get a better scheme, because in this country of ours, as we live on from generation to generation, and our civilisation goes marching forward to a fairer conception of life, we must be prepared to hold our heads high, to hold up our flag and press forward year by year to the goal. I beg to move for Papers.
§ 3.41 p.m.
§ LORD BEVERIDGE
My Lords. I must begin, as I think you will all want me to begin, by expressing my gratitude, and the gratitude of all of us, to the noble Lord. Lord Pethick-Lawrence, for bringing before the House this question of provision for old age. It is, I suggest, beyond question the most important, and in some ways the most difficult, of all social problems facing Britain at the present time and in the near future. To show what I mean by that, it is sufficient to mention three essential figures. When National Insurance began in 1911, roughly one in fifteen, or 2 to 3 million, of all the people in this country were of what I will call old age. I speak as one nearing eighty, and when I speak of "old age," I mean sixty-five or over, in the case of a man, and sixty or more, in the case of a woman. To-day there are 5 million old people in that definition, representing one in seven of our whole population. In 1980, about twenty years from now, there will be 9½ million, or one in five of our whole population, in that definition. That is the problem which faces us, of making provision for those people in their old age.
There are, broadly, three quite different plans for dealing with that problem. There is the plan which is at present in force, of the social insurance Report of 1942, for which I was personally respon 1084 sible, as applied, with one most important difference, by the Labour Government of 1946. By that plan the State, by social insurance, guarantees an equal subsistence income to the old, as to all others whose earnings have failed, as of right, without any means lest, treating all alike and not doing more for the rich than for the poor. The State was to guarantee the individual against want and to leave him free and responsible for managing his own life above the subsistence level; for deciding whether he would spend more when young, or save more for old age. That Report of 1942, as carried out in 1946, was a great development of the State's responsibility for welfare, but it did not make the State alone responsible for all welfare: it was for welfare by responsible co-operation between the State and the free individual.
The way in which that plan has been carried out is subject to-day to two criticisms, one of them relatively unimportant, but the other much more serious. One criticism is this. If any of your Lordships has read those interesting and important articles that appeared yesterday and to-day in The Times on these social insurance and allied problems, you may have noticed that the first article said that the plan of 1942 overestimated the speed of Britain's recovery from war and, therefore, was responsible, to some extent, for landing us in the financial morass in which we are. I can only say that the plan of 1942 did nothing of the sort.
It so happened that when I was engaged in preparing that plan, their Lordships of the Treasury expressed great interest in its possible effect upon the finances of the country after the war; and I made a deal with the man who was then the leading spirit in the Treasury, John Maynard Keynes, that I would keep down the expenses for a certain time if he would support the scheme otherwise. The method of keeping down the expenses was to adopt for Britain in regard to pensions the same kind of plan that had been adopted by New Zealand of not giving pensions as of right at once to everybody already of pensionable age, even though they had not made any contribution at all. I said that pensions should rise, over a period of twenty years (New Zealand had said twenty-eight years), to full subsistence, and that in the 1085 meantime there would have to be a certain amount of assistance under a means test. The Government in 1946, rejected that deal between the author of the Report and the Treasury, and gave full pensions at once; and that is one of the reasons why the scheme has been in financial difficulties.
But a much more serious criticism of the plan of 1942 is that it has failed to accomplish its main object of ultimately abolishing the need for assistance and public charity subject to a means test. That aim is expressly and repeatedly put in the Report. It has failed to do that, not because of any fault in the plan itself, but because the State have failed in the very difficult duty of stopping inflation and keeping prices stable. Even with pensions as we have them to-day, one in four of all persons of pensionable age finds the pension not enough to live on and has to ask for assistance, which he gets on proof of poverty. That is due to inflation. Those are the two criticisms of the way the 1942 plan has been carried out: that it has not put an end to public charity, subject to a means test, and that it has not solved the problem of the financial burden on the State.
How can we guarantee the old against want and need of public charity? How can we meet the growing burden of this increasing number of old people without taxing everybody else out of existence? There are before us two other schemes: the Government scheme in the White Paper, which is the main subject of our debate to-day, and the Labour Party scheme, which was published, I think, at the end of 1957. Both of those schemes depart from the principle of both the Report of 1942 and the Act of 1946—that of treating all men equally in social insurance, irrespective of their rates of wages or other earnings. I am not going to describe either of those schemes in detail (my time is limited, and I must confine myself to certain points; I hope that many noble Lords will want to join in this important discussion), but I will begin what I have to say with a few criticisms of the Government scheme. I say at once in regard to the Government scheme, prepared, if I may say so, with much care and after much technical argument, that I may occasionally have misunderstood exactly what they were after; and if so, I 1086 apologise for any wrong criticism that I may make.
My first criticism is that the Government scheme fails to secure the essential priority of guaranteeing a subsistence pension as of right for all. No existing pensioner gets anything more than the £2 10s. a week for himself and £1 10s. a week added for his wife; nobody earning £9 a week, or less, in future will get more than that same sum—and that is the pension that has to be supplemented by public assistance to-day in one case out of four. I do beg the Government, whatever else they do about pensions, to recognise that first priority, that was promised to the people of this country years ago, of having pensions as of right, having enough to live on, and not subject to a means test, so that, if people do save for themselves as well, they will have the benefit of their savings.
That is my first criticism of the Government scheme. That is on the basis of present prices. I must go on to say that that is a scheme which, so far as I can see, contains not even a mention of the problem of inflation—and I am bound to come back to that in a moment—and no provision against it. I must add that it fails to tackle the difficult problem of transferability in occupational schemes. That, your Lordships may remember, was the subject of a long debate in this House initiated by myself last January, in which I and many others urged—the Phillips Committee also urged, although they did not see their way to give effect to their desire—that to make people lose pensions if they changed their occupation was an obstacle to the free movement of labour and, therefore, to the best use of labour. I will say at once that transferability is a very difficult question. Because the Government rightly attach such importance to occupational schemes they ought to give further consideration to that problem.
Finally, if I am not mistaken—and I think I am not—the Government, in proposing graded contributions and pensions, require people above certain earnings to pay larger contributions for pensions. That does not mean that anyone who pays that larger contribution will get the whole benefit of his extra contribution. Some of the money that will come from taxing 1087 people of incomes over a certain level will be used to maintain the finances of the scheme as a whole. That is clearly so, and I think that if one went to an ordinary life society one would often find that they were prepared, on the terms that are proposed for these higher earnings, to give equal benefits more cheaply. Those are my criticisms of the scheme.
I must add that I do not myself accept at all the argument set out in paragraphs 23 and 26 of the White Paper against the flat rate system of treating all citizens equally according to their essential needs. I would rather treat all citizens equally, and if anybody wants to have more in old age because he has had more in youth, it is easy for him to arrange to get that, or not to get it if he would rather "blue" it in youth or give it to his children. I believe in freedom and responsibility, and not in the State organising everybody's life for him from the beginning on. If I am right in the suggestion that this grading in the Government's scheme of higher contributions for people above certain incomes is also a financial device for getting more money to support the scheme, then it begins to look as if one aspect of the scheme (which I admire for the trouble with which it has been prepared) was the purpose of keeping the Exchequer contributions down to a steady £170 million. In other words, it is a financial scheme even more than a pension scheme. That is a point I ask the Government to consider carefully.
Let me turn from that to say that I have made a few criticisms of the Government scheme but, to my regret, I dislike the Labour Party's scheme, if possible, even more. I am not going into that in detail because it is not formally before the House, but it is only fair to say why. My first reason is that it throws a tremendous burden of contributions upon the earners in relation to their earnings—5s. 4—d. for everybody, plus 3 per cent. of his earnings. That is not all he is going to pay. He is going to pay a share of taxation, and he is going to pay in higher prices. If you put up the cost to the employer, the employer will put up his prices. That heavy burden —some people have described it as insupportable, and although I am not going into details I think it probably would prove insupportable—it would certainly I 1088 not be accepted by most of the workers in this country without their demanding higher money earnings as compensation. In other words, it looks to me a direct incentive to more inflation. That would be stimulated by the fact that the Labour Party's scheme includes the proposal that if inflation occurs, then the pensions will go up. That is as good as saying. "Do not mind inflation; you will be all right." That is a further incentive to inflation.
I should like to give your Lordships two or three simple figures to show what inflation means to pensions and how it happens. For that I refer to some exceedingly interesting figures given on November 20 in another place by the Chancellor of the Exchequer showing how two things have moved from 1946 to 1957. One was the average earnings per man, and the other the average industrial output per man. The Chancellor of the Exchequer, for some reason of his own, gave those figures only from year to year. I wanted to sum it up, and I did, by a simple calculation, sum up what that has meant between 1946 and 1957. Let me add that the calculation which I made with my own hand has been checked and found correct by a machine—we always trust a machine.
These are the figures. Earnings per man, from being 100 in 1946 are in 1957, eleven years after, 210. They have rather more than doubled. Output per man in those same years has risen from 100 to 129. That has gone up by slightly more than a quarter. What that means is that of this doubling and more of earnings, one-quarter has been earned by extra output. Where has the other three-quarters of those extra earnings come from? They have come out of the pockets of someone else. Let me say that I am sure they have not come out of the pockets or the profits of the employer. The employer puts prices up. They come out of the pockets of people like myself living on savings, or people like the Civil Service pensioners living on fixed pensions. They have come either from taxation or from the effects of inflation. They have come from defenceless people. Three-quarters of the money profit made by workers in the last eleven years has come from the pockets of defenceless people, not as a result of work done.
Let me just cite for one moment the case of a body for whom I have pleaded 1089 in the past because I belonged to them. That is the First Division Civil Service pensioners. Any number of them are living on pensions which were fixed when the salary of a head of a Department was £1,500 or £2,000; it is now £6,000. The pension is related to the £1,500 or £2,000. Of course, it is worth in money terms perhaps one-fifth or one-third or one-quarter of what it was when they got it. The Government have been approached, and hope they will be again. They have done a little but nothing like enough. I cite that as one example.
I suggest that, difficult as it is, the stabilising of money is the duty of the Government; it is secondary only to the duty of securing peace (if they can) abroad, and order at home; it is the next most important thing, because money is the instrument by which each of us manages his own life. If you want to have the freedom and responsibility of the individual in managing his own life, in deciding when to spend and when to save, you must make money stable; and because the Labour Party scheme goes absolutely contrary to that and disregards it altogether, I beg them, from the bottom of my heart, to reconsider it completely.
Provision for old age (I return to my beginning) is the greatest social problem of our nation for a generation and more ahead. It is a double problem; it is that of providing for the old and that of not ruining everybody else either by taxation or by inflation. Here I am equally unhappy, or almost equally unhappy, both about the Government scheme because it does not really give subsistence, and the Labour Party scheme because it is an incitement to inflation. Neither really solves certain other minor problems, but I will not dwell upon those. My final hesitation about them is that each is the product of a Party which, quite rightly and necessarily, is considering a coming General Election. Is not the problem of old age, the greatest of our social problems, a thing so important that it ought to be taken out of politics altogether and treated as something national? I believe that an all-Party round-table conference might find a way to guarantee the welfare of old people without crushing all those of working and taxable age and without ruining us all by inflation; but no Party can agree that if it is always looking 1090 over its shoulder to ask what this or that group of voters might think about it.
§ 4.5 p.m.
§ LORD FERRIER
My Lords, one of the first tasks I set myself, when I had taken my seat amongst your Lordships, was to study the debates which had taken place on the Life Peerages Bill. I did so because when the debates took place I had not the faintest idea that I should find myself in the situation in which I find myself this afternoon. I studied the debates, and now I rather wish that I had not done so, not because they impressed upon me more than ever the importance of the responsibilities which fall to people in my situation, but because they seemed to add to the anxieties which, as your Lordships will know, go with the makng of a speech such as this. I would say that it had another effect, which was that this question of anxieties over a maiden speech is in some measure a two-way traffic and in so far as to that extent some anxieties are yours, my Lords, you have my sympathy. I am also emboldened in the course I am taking by the fact that it was a course which my noble friend Lady Elliot of Harwood did not fear to tread.
I find it difficult to lead up to my notes after hearing the speeches which we have just heard from the noble Lords opposite. In one case it is difficult to comment without being controversial; in the other, I feel that much of what was said flows into what I am about to say. But the way my mind is working is this. As I see it, this question of pensions for the aged—and goodness knows ! I agree most fully, as we all do, I think, that pensions for the aged are one of the biggest problems of the moment—depends essentially upon the ability to pay these pensions. Provision cannot be made for the aged except from a sound national economy. It is in that light that I feel it fair to say that the proposals of the White Paper which are now under consideration seem to indicate a sound basis.
At the same time, I cannot help feeling strongly that the problem raised by the noble Lord, Lord Beveridge, has a momentous bearing on the matter; namely, how much easier would be the task of the designer of a pension scheme if he were not looking over his shoulder, and how comparatively easy it would be to satisfy the people 1091 as a whole that any scheme adopted is a sound one if its soundness was accepted right through industry from top to bottom—and not only in industry, but in the professions and everywhere else; not only on the shop floor but in the board room: in the field and in the market: in the fo'c'sle, as on the bridge.
With those general comments, I should like to move on to three minor points which strike me as being worth mentioning in connection with the White Paper. First of all, I was interested, at a meeting in Edinburgh only last week, to find that there were very real doubts in the minds of a number of men and a number of women about the fairness of the provisions for women in the White Paper. I am not suggesting that the proposals as outlined are unfair; indeed it seems that there are very good and sound reasons for the suggested contributions and benefits. I do know, however, that not everyone is satisfied, and, though this is a healthy sign, my suggestion is that the remedy is to enlarge, if possible, upon the details given showing the considerations that have led up to the proposals made in the White Paper. I will not go further in connection with the figures lest I became over-technical—and I am no expert; or, further, I might become controversial.
My next point concerns contracting out, but contracting out in the reverse direction. Would it be possible to embody in any legislation which takes shape a provision that a man or a woman, while retaining United Kingdom citizenship and domicile, but working overseas for a number of years, could return to this country and enter or re-enter the scheme by a down payment of adequate and proper proportion and could re-enter employment in this country on a level with the person who has not gone abroad? As so many of us know, taxation abroad is very onerous. I think it is fair to say that the days are past when a job overseas meant the prospect of wealth, and, perhaps, early retirement to ease at an age a good deal of advance of the expectation of life to-day. Those days are over. Indeed, it is difficult enough to get men to go overseas and adventure in the way that they did twenty, thirty, or forty years ago. Is it possible to consider providing that a man—let us say, a free lance technician, or a self-employed person—who proposes, on returning to this country, to 1092 become an employed person should be able to establish himself again in this country in no worse position than the man at the next machine who had not adventured abroad.
The other point that I feel worth mentioning is a very oblique one. The words National Assistance are not mentioned in the White Paper, but noble Lords who have spoken before me have mentioned National Assistance, and I think it can be generally accepted that National Assistance forms an integral part of the whole set-up of the pension arrangements of the country to-day. As we all know there are people at both ends of the social scale (if I may use that phrase), and in the middle, who are too proud or too stubborn, or both, to seek National Assistance, let alone accept it. It occurs to me that something could be done in this respect. Successful attempts are being made to break down this resistance, certainly in my neighbourhood, in Scotland, where I know that people would rather starve than apply for National Assistance they call it "going on the parish." That is surely an out-of-date idea; yet the fact remains that it exists. I think I am right in saying that figures go to show that the number of such people is declining; but that does not mean (that the number is not still very great. Something might be done to ensure that more use is made by such people of National Assistance and of the discretionary allowances which are available under that scheme.
I am a trustee of a benevolent fund in Edinburgh. We come across the same sort of thing. We have the utmost difficulty, on account of their pride, in getting information out of needy people. If I may put forward one small suggestion, it is that every encouragement should be given to National Assistance boards to extend the house visitation method of getting in touch with these people. Only today I was talking with a lady who is concerned with benevolent work. She says that she has found that house visitation is the only real way of getting to the bottom of some people's troubles. One of her visitors had got in touch with an elderly, middle-class lady who had no coal in the house at all. That fact would never have been found out had there not been this visit.
It has been suggested that the name "National Assistance" could be changed 1093 to something like "uncovenanted allocation". I imagine that that would be impossible. Nevertheless, I do put forward for serious consideration the idea of linking up the development of a pension scheme such as this with an assurance that the fullest possible assistance will be given to the people who can properly claim National Assistance. After all, a pension scheme such as we have before us at the moment is one from which all who have contributed are entitled to draw their pension. Surely that fact is one which should weigh in dealing with those people who are not making use of National Assistance. Many of those who are drawing pensions are well above the subsistence level. My Lords, I feel that my contribution has been of light calibre compared to those which came from the other side of the House, and I have done. I trust that I have not wearied your Lordships. More than that, I trust that I have said nothing which might give offence. Speaking for myself, I like to think that there is none more jealous than I that the dignity and the traditions of your Lordships' ancient House should be upheld.
§ 4.18 p.m.
§ LORD STONHAM
My Lords, I count myself extremely fortunate that it falls to me to congratulate the noble Lord. Lord Ferrier, on the speech to which we have just listened. I hope that he will not mind that the first congratulations he receives come from one who only so recently as two weeks ago himself made a maiden essay. It gives me this advantage, that I am in a nearer position to detect the signs in maiden speakers. I can assure the noble Lord that he showed none of the signs of nervousness of which I am quite sure I was myself guilty. It was a speech by no means of a light character, but one which indicated the close and serious study of the subject, and which brought forth a number of points which I had not thought of, and which I am quite sure are well worthy of consideration. I feel certain that your Lordships will look forward eagerly, as I do, to the further contributions which will come from the noble Lord. He had one advantage over me, in that he read the debate on the Life Peerages Bill before he had any idea that he himself would receive a visitation. I read the debate only after I had received the 1094 visitation, but it is probable that we found it equally unenlightening in reaching the same conclusion.
I, too, am in a position of some difficulty to-day in that, in following first my noble friend Lord Pethick-Lawrence and the noble Lord, Lord Beveridge, I am following two noble Lords who between them have an absolutely unequalled experience of social service and effort on behalf of old people and the subject we are discussing to-day. Between them, they have covered not only the White Paper but parts of the Labour Party scheme and, indeed, certain aspects of the case which I do not recognise as having appeared in either. That means that there is little left of a new character for me or perhaps any noble Lord who follows in the debate to bring up afresh. All we can do is to put our own individual viewpoint on some of the matters that have been already discussed.
I feel that we owe a debt of gratitude to my noble friend for giving us this opportunity to debate this subject which, as he said, was so close to his heart, and I am sure is very close to everyone's heart. The only questions that arise are questions of method and degree—although of course they are extremely important. I thought my noble friend covered the matter extremely well in his four points. I was particularly interested in his idea of the provision for old age as a contribution to a kind of national "money-box." That is an idea to which we might well adhere. I was interested, too, in the views he expressed on the very important point of contracting out, views which I thought were supported in large degree by the noble Lord, Lord Beveridge. But I feel that the point of greatest importance made by my noble friend was the fact that we have not reached finality. Whatever is decided or discussed in this debate, whatever the eventual outcome, by way of legislation, of the White Paper, it is important to realise that we have not, by any means, reached finality.
We all remember during the days of the war when the news was first published of the Beveridge Scheme, and what a thrill it brought to the minds of so many people. It is quite remarkable to-day, fifteen years or so later, to have the privilege once more of listening to the author of that scheme and to realise that, fifteen years later, there is no radical change 1095 proposed. In those fifteen years there have, of course, been alterations in money, in contributions and in regulations; but no radical change is proposed to-day except the new principle that the rate shall no longer be a flat rate and that extra contributions and superannuation can be added.
I was particularly pleased to hear the noble Lord, Lord Beveridge, say that the plan of Her Majesty's Government fails to do what we all originally hoped would be done by the State pension scheme: that is, to abolish public charity based on the means test. Unquestionably we have moved no further forward at all in that field, and unfortunately the proposals of the White Paper do not suggest ending it. The noble Lord asked: how can we meet the burden without taxing people out of existence? He begged, as I do, for pensions as of right—enough to live on.
The noble Lord, Lord Beveridge, also made criticisms of the Labour Party scheme, the most important of which was that he thought it was inflationary. I am extremely diffident of disagreeing with the noble Lord on this subject, because many years ago I sat at his feet (though a long way off) in a seat of learning in London; and one is always a little anxious when disagreeing with a former headmaster. None of the many causes of inflation could possibly be related to the proposal of the Labour Party unless the increase in the contribution produced a demand for increased wages; and I believe it does a disservice to the workers who would be involved to suggest that this would be the case. That has not happened in the case of the nationalised industries where they have been called upon to make increased contributions to the nationalised industries' additional pensions scheme. I am not arguing that there have not been increased wages paid to workers in nationalised industries, just as they have been paid to workers in other industries, but I am arguing that it is wrong to suppose that other workers would immediately show less balance and less judgment than either workers in nationalised industries or middle-class people who have made contributions to a contributory pension scheme. I cannot see for a moment, therefore, why it should be expected that the proposal of the 1096 Labour Party should of itself be inflationary.
One would be tempted to ask the noble Lord, if we are going to provide pensions which in his words "would provide enough to live on": at what level? Is not that precisely what the Labour Party is hoping to do? And in what other way can we do that unless somebody pays? We can only pay by means of contributions, wherever they come from, and by means of higher taxes. It is just not good enough to pose the problem without saying what one expects to do about it.
I want to say a few things about the White Paper in its general aspects and where I believe it fails. I suggest that basically the proposals in the White Paper fail completely to make proper provision for the aged because Her Majesty's Government have not even begun to understand what old age is. Like previous Governments, including Labour Governments, they have based their plans on the totally wrong belief that an old man is a different man, whereas we all know, or should know, that, despite physical changes, he is the same man—the same brain made wiser by experience, the same personality strengthened by the additional courage required, perhaps, to bear infirmity, the same eyes looking out upon the world, perhaps a bit more bravely.
I wonder whether your Lordships remember Ernest Hemingway's description of the old fisherman in his famous story the Old Man and the Sea'? Of that old man he said:Everything about him was old, except the eyes, and they were cheerful and undefeated.Hemingway is one of the few people who can see through the ageing mask of flesh to the man within. I once had the experience of being in charge of some 1,700 hospital beds, many for old people, and I would say that that description applies to most old people not overtaken by senility. Their tastes, their qualities, their attributes, their desires and sometimes even their ambitions are unchanged, except that most of them have attained humility without loss of proper pride. And it is because of that fact and because they have attained humility that they accept without complaint the ingratitude of Governments and the impatience and patronage of even the best-intentioned of 1097 their juniors; because in my view it is base ingratitude to impose on the generation which bred us and suffered for us the burden which is least supportable when one is old—the burden of extreme poverty.
I will not deny, and I have no doubt that the noble Earl will make the point in any case. that a pension of 50s. per week in terms of purchasing power is equal to or perhaps 1s. a week better than the pension of 26s. per week granted by the Labour Government in 1946; but this, as the White Paper admits—and I quote the White Paper:was based on a projection of the State of the nation as it was before the war.It looked back, back to the days of mass unemployment; and, in my view, when we were in a near-bankrupt post-war condition the 26s. was an act of faith and courage. But now, to quote the White Paper again:The whole economic climate is altered…. The general standard of living is higher.But not the living standards of the old age pensioners. They are just where they were in 1946. One million, as my noble friend has mentioned, are on National Assistance, and one million more, according to surveys made in Bethnal Green and Salford, are entitled because of poverty to claim National Assistance but are too proud to do so. In other words, half of the four million pensioners in the country are living at starvation level—and I do not consider those words are an exaggeration, because I have been among them, particularly in the East. End of London.
The White Paper seeks to perpetuate that situation. It lifts the pension to 50s. and says, "If that is not enough, then go for National Assistance." It does not offer a crumb. I would say that it goes further than that (and the noble Lord, Lord Beveridge, made this point) and condemns 7 million wage earners—people like farm workers of whom there are none more worthy, and most women workers—to the same prospect when they eventually retire, because for those earning; below the figure of £9 per week it is said, "There is nothing for you. No hope."
I think it is deplorable that the Government are not looking forward. Mr. R. A. Butler, the Lord Privy Seal, has said again quite recently that he is still
1098 confident that we can double living standards in twenty-five years. I entirely agree with that. Indeed, in my view we should do it in a much shorter period of years, having regard to the fact that in the first six years after the war we increased production by something like 50 per cent. But surely—and this is the point—if we have this hope, a very good hope, of increasing national wealth to such an extent, it is utterly wrong to perpetuate a system which deprives the workers of to-day, the creators of that hope, of a share in it when they retire. And since the old person is the same person, we surely cannot approve a pension scheme which plunges a man overnight from reasonable living to poverty, because that is exactly what happens. It means changing his home. his life, his habits, his pleasures, and in effect it converts retirement from a pleasant prospect to a terror.
I would submit that in a nation like ours, with an expanding, forward-looking economy there should be three essential elements in a State pension scheme. The first is that pensions must be on a scale which avoids the need for a radical reduction in living standards—that was one of the points made by the noble Lord. Lord Beveridge. Secondly, there must be built into the pension scheme provision to protect the pension against inflation and also to ensure that the pensioner participates in the improvements in national living standards as they come about. In my submission, the pensioners of to-day, being the workers of yesterday, earned those improvements, or at least laid the basis for them, when they provided the capital goods which eventually made the increased production. The third essential is to have contributions so scaled that they ensure a proportionately heavier burden being borne by the well-to-do. I would submit that if those three principles of a sound State pension scheme are accepted, the White Paper proposals fail completely on those three counts.
I would say that the millions of people with wages under £9 a week, who have the least chance of having private savings, are the very ones excluded from superannuation and will be condemned to eventual poverty. 'The White Paper is most anxious—and here I quote:not to undermine their personal responsibility to make such provision as they can.1099 But what provision can be made out of such wages, particularly when their crumbs of savings have been almost destroyed by inflation? And the £9 to £15-a-week wage group are not much better off. An 18-year-old man—and I should like the noble Earl to deal with this point—entering insurance in 1960, and earning £15 a week from the time he starts until the time he finishes fifty years later, would in the year 2010 get an extra pension of 41s. a week; and for that he and his employer will have to pay more than £1.000 extra. If he is married, his total pension in the year 2010 would he £6 1 s. That must entail a cruel reduction in living standards. Is it possible that we can contemplate a scheme that in fifty years, three generations hence, will give £6 a week as the maximum pension?
Surely we cannot accept the White Paper's contention that this is "reasonable provision for old age" or—and here I quote:For the State to go further would seriously undermine the individual's sense of responsibility for his own affairs.That seems to me to be nonsense, particularly when the State is arbitrarily compelling him to pay more in contributions than would he necessary for similar benefits under private insurance. It is utterly wrong that those earning between £9 and £15 a week—broadly speaking, the industrial workers—should pay the whole cost, as indeed they will, for putting the scheme on what the Government call "a sound financial basis", thus making it possible to limit the taxpayers' contribution to £170 million.
I think it is right to put an upper limit on the amount of pension, but the maximum must be higher than £6 per week and in no case should the pensions accruing to modest earnings be less than half the worker's income at the date of retirement. It is also right to say that the contributions of the well-to-do people should continue beyond the point at which they will get benefit through a maximum pension. If, up to a certain point, they continue to pay contributions without some benefit, they will have, in addition to a comfortable pension, the satisfaction of augmenting the pensions of people with low incomes. I would submit that these things are surely funda 1100 mental. If they are, then they render the Government scheme indefensible. I believe that it is immoral—I repeat, immoral—partially to excuse the rich and totally to exclude the poor; and I would submit, in the light of the White Paper we are discussing, that no-one in your Lordships' House believes that the pension can be limited to 50s. We do not believe it.
But if that is so, why condemn old people to the kind of thing that has been happening in recent years—to the humiliating twelve months' struggle every year for an extra few shillings? Why cannot we show more confidence in Britain's future? Let each of us, as contributors and taxpayers, pay a little more, just as if we were farmers we should not consume the whole of our harvest but save some and plant trees for our children. But I say that we should ourselves raise existing pensioners above the poverty line and we should give contributors a prospect worth working for.
It may well be that the slogan which we in the Labour Party have used for some years—" Security in old age "—is no longer the ideal to aim at, but bare security had to be our target because of the backlog of bad relationships between employer and employed and even, at times, between Government and citizen. However, it was a negative approach. I think we should be more positive and that we should substitute the word certainty" for the word "security ". It would help to preserve the idea which I think most of us would like to see—the idea of trying for something extra. in the knowledge that if the something extra did not come up, then there would still be the certainty of reasonable comfort in retirement. But the point is that everyone must have that certainty.
My Lords, it is unfortunately true that millions of old people in this country —millions of the generation which saved and made this country—are suffering hardships, particularly during the winter, and they are being given nothing in the White Paper. There are millions more of the generation which bore the brunt of the hungry 'thirties who face the prospect of retirement within the next few years, and they are given nothing to hope for. I submit that we owe it to 1101 them, to ourselves, and to our country, that this shame should not be put upon them and upon us.
§ 4.43 p.m.
§ LORD JESSEL
As a Back-Bencher who speaks rarely, I should like to congratulate the noble Lord, Lord Ferrier, on his maiden speech, and I would tell him that. to me, every speech feels like a maiden speech. I am sure the House is grateful to Lord Pethick-Lawrence for initiating this debate on the Government White Paper. Provision for Old Age.. As the Minister of Pensions said in another place, the object of issuing the White Paper in advance of legislation was to elicit views and opinions from all sections of the community.
The noble Lord, Lord PethickLawrence, spoke with his usual clarity, but it seemed to me that his criticisms of the Government White Paper and his approval of the policy of his own Party were a little lukewarm. I think the reason for that is that fundamentally the Labour Party plan is in its very nature inflationary, as the noble Lord, Lord Beveridge, so eloquently pointed out. We talk glibly about employers' contributions, employees' contributions, and Exchequer contributions. But in the end it is the consumer who usually pays, for it is quite obvious that the manufacturer will try to get his contributions back by putting something on the price of the articles which he sells, and, equally, that the employee will try to get his contributions back by asking for higher wages. The Exchequer contribution, of course, comes out of general taxation. That is why I am glad that the Government scheme provides for a contribution of £170 million a year which is going to be used to keep down the size of the contributions of the lower-paid workers —men earning up to £11 a week and women earning up to £10 a week. They are the people who need whatever help can be given from general taxation. In fact, under the proposed Government scheme, most of these people will pay less than they are paying now.
I also like the conception of the graduated scheme under which pensions will be paid in relation to higher contributions from increased earnings, and this is to apply to people who go into the scheme late in life. I have in my time been associated with the introduction of several occupational schemes, and it has always 1102 been a headache to try to include the older people: what we used to call, if I remember aright, "paying for back pensions"—and very expensive it was! Under this new scheme newcomers get the standard pension straightaway and also additional benefits according to their graduated contributions. There is one point in connection with the graduated contributions which I think should be noted. They are based, as I see it, on actual earnings, and therefore each week the amount of the employer's stamp and the amount of the employee's stamp may change, at least for a large proportion of the workers. At the end of the year, the cards will show many varieties of stamps, and the extra clerical work will be tremendous. I doubt whether this fact is fully appreciated.
I feel sure that most people will agree that the part of the Government scheme which is going to cause the greatest difficulty is that which deals with the relationship between the State scheme and occupational schemes. Some firms will want to contract out, as they are entitled to do under certain conditions, but some will certainly have to modify their schemes if they wish to do this. It could happen that there would be a division of opinion among the employees of a firm operating an occupational scheme, and that the employer would be in some difficulty in knowing what to decide. Then there is the problem of the employee changing his job, going say, from a contracted-out occupational scheme to a State scheme. I agree that the White Paper tries to deal with every foreseeable eventuality, but I am sure that a great deal more consultation with industry is essential before legislation is introduced. Broadly speaking, however, I support the Government's proposals. They seem to me to be realistic, and I believe they can be made to work.
The Labour Party scheme claims to guarantee its pensions against inflation. wonder whether the electors will buy "that one—or the very stiff compulsory contributions demanded from all those earning more than a modest income. My Lords, it is possible that the Labour Party will try to persuade the voters that existing rates of pension will be raised immediately if they are returned to power. Their record on pensions, however, is not very good. As the noble Lord, Lord Stonham, mentioned, the real purchasing 1103 power of the pension in October, 1951, even after the rise given just before the General Election, was still lower than the 1946 rate. By contrast, existing pension rates to-day—50s. for a single man and 80s. for a married couple—give substantially better value for money than at any previous time. I will not worry your Lordships with details of the figures, which were given by the Minister of Health during the debate in another place. But surely it is the value for money that matters—and those who will be paying more under the graduated scheme will want to be sure that this is what they are getting. Under the graduated scheme, a man earning £15 a week or more, entering at eighteen (and Lord Stonham has given this figure) will get a pension of 91s. on retirement. That is perfectly true. But it is to be supposed that during the man's working life he will increase the amount of his earnings, and he can make his own arrangements at any time for a larger pension. But he may not want to do so; and as the noble Lord, Lord Beveridge, has pointed out, he has the right to do what he likes with his own money.
I agree that we must look after the aged, but do we want to pile up unnecessary contributions from those who are working? I think that it would be better to increase the rates of National Assistance, if they are insufficient. At least then we shall be sure that the money is going where it is most needed. In his famous dictionary, Dr. Johnson's definition of a pension was:An allowance made to anyone without an equivalent. In England it is generally understood to mean pay given to a State hireling for treason to his country.However, my Lords, that definition did not prevent the doctor from accepting a pension later when he got the opportunity. As the noble Lord, Lord Ferrier, has pointed out, there should be no stigma attached to the acceptance of National Assistance by those who need it; and, like him, when I have come across this attitude I have tried to persuade those concerned to apply for National Assistance, as is their right. When we come to consider pensions automatically paid, I think it is a different story. The White Paper shows what is going to happen to the Fund during the next ten years. From now onwards it will get more and more 1104 into the red. The Government scheme aims to put the Fund on a permanently sound footing and at the same time to give employed persons some measure of pension related to their earnings. I suppose that these objectives may not sound exciting or new, but in fact they are completely new and revolutionary and they have my support.
§ 4.52 p.m.
§ LORD GEDDES OF EPSOM
My Lords, this is the first occasion on which I have addressed your Lordships' House, and I ask for your indulgence. It is very difficult to make a speech of this kind after so many learned speeches have been made, particularly when one is bound by the wise tradition of your Lordships' House regarding maiden speeches. I am bound to say that, as one who has been surrounded by controversy for the last forty years, I am going to find it extremely difficult to keep within that tradition; but I assure your Lordships that I shall certainly not intentionally break with it.
Necessarily, I must confine myself to the general aspects of the White Paper. I want particularly to draw your Lordships' attention to what I believe to be an attitude of mind growing un within a large section of the community—and this would appear to be borne out in the White Paper: the attitude to provision for old age which, as it were, says "Well, there are old people amongst us. It is a pity. I suppose we must do something about it." It seems to me, with great respect. that one can quote from the White Paper in support of this view. May I draw your Lordships' attention to the first paragraph of Part I? I agree that I quote out of context, but it uses the words "within the resources available." But why "within the resources available"? Is it not of paramount importance that the State should make the resources available? Then the White Paper goes on to say, "if opportunity permits." But why "if opportunity permits"? Why not, "if the necessity arises "?
Furthermore, when we come to paragraph 12, we find reference, to which the noble Lord, Lord Beveridge, drew attention, to the greater number of people who will reach old age by 1979. Is this a matter to be regretted? Are we looking back on 1911, as it were, with a certain nostalgia, which does not make it necessary for us to face up to the benefits 1105 that medical science and the advance in all social life have brought us, making it possible for people to live to a greater age? Should not we accept that as a challenge, rather than look upon it as a burden which must be borne? It is my submission that unless we approach this matter with the right attitude, we are very unlikely to reach the right conclusion.
There is a reference in paragraph 26 which I find extremely difficult to comprehend, but which nevertheless seems to have the same implication. It says:To leave the scheme dependent on rapidly growing subsidies from general taxation would amount to drawing a blank cheque on the future.But does the future owe nothing to the past? Do the present and the future owe nothing, to the past? Surely it is clear that we cannot commit the future to unlimited and unknown liabilities. Is not the obligation imposed upon us at least to meet reasonable liabilities and not to throw on posterity the need to meet future liabilities in respect of the past?
My noble friend Lord Stonham has already referred to the aged of to-day. The aged, the weak, the dependent of to-day—these were the strong and virile, the independent of yesterday. They were the men and women who at the turn of the century were still making the name of this nation greater throughout the world, making it one of the greatest nations, if not: the greatest, in the world. They were the parents of the present generation. From 1914 to 1918, they were the men who fought to keep this nation great, who made the sacrifices, who slogged across the mud of Flanders and lived in the trenches. They were the men and women who, from 1939 to 1945, after working round the clock in many cases, donned the blue tunic of the Civil Defence and went out and damned Hitler to do his worst. Do we owe nothing to this generation but a mathematical calculation of how much we can pay? Ought we not to look at this matter from the point of view of what we owe? It is not a matter of how much we can spare from the petty cash that is left after all our wants have been satisfied. Is it not desirable and necessary that we should look on this not as an arithmetical provision for old age but rather as a study of the humanities?
My Lords. I apologise if I have outraged the sense of your Lordships' House by my feeling in this matter. Let me 1106 tell your Lordships of an experience, because I think it amply illustrates the point I am trying to get across. Some five months ago I was an in-patient in one of the big London hospitals. In the same ward was an old man in his seventies, who was still working and had suffered an industrial injury. The one thing this old chap feared, above all others, was the time when he would have to leave hospital. And why? Because in hospital he got meat at least once a day; he got warmth; service willingly given, and comradeship which he could not get elsewhere. Some three monthes later I had a telephone call asking whether I could do something for "Bert". because he had had to go into hosiptal again and on his discharge would be unable to go back to the relatives with whom he had stayed. I was asked what I could do. What can anyone do in this year of Grace, 1958, for an unwanted old man. with 50s. a week income? My Lords, I am almost moved to ask whether anyone in this House knows of a decent "doss-house "—because that is the only place to which this old chap could hope to go; and that without comfort and without hope.
My plea, therefore, is this: that when the Government finally consider their full provisions for old age, they will, as I say, not look upon it as an arithmetical calculation but rather as one of paying a debt to those who have given so much to us. I agree that not everyone who is old is poor; and there are many in honourable positions. But is it not time that old age was in itself a badge of honour, and did not, as it does for so many to-day, carry the stigma of reproach?
§ 5.1 p.m.
My Lords, it is both an honour and a pleasure to follow so distinguished a figure as a past President of the General Council of the Trades Union Congress. It is men of that calibre that I, for one, hope to find created Life Peers and speaking in this House to give us the benefit of their long and wise experience in industry. Particularly, perhaps, does this apply to the noble Lord, Lord Geddes of Epsom, who for so much of his career has seen that our Posts arrived in time and the postmen never went on strike. I had great pleasure in listening to what the noble Lord said, and I feel sure that your Lordships' House will always listen to anybody who 1107 expounds practical humanity with such deep sincerity as he obviously does. I hope that we shall hear him again often.Honour thy father and thy mother …is one of the Commandments of God. Once that was done by sons and daughters in looking after their parents. To-day it has fallen, by stages, to the lot of the State, and the State, having that duty, has the natural obligation to see that people make the maximum possible provision for themselves during their working lifetime, though, of course, as has been said to-day, there are many old people now whose opportunities for doing that have been poor. But, at any rate, we have a contributory national insurance scheme. The trouble is that it never was an insurance scheme, from the very fact, as the noble Lord, Lord Beveridge, pointed out, that people were let in to benefit long before they had paid sufficient contributions: and, in fact, it is a scheme for extracting sufficient from the working age to look after the retirement age.
it fails for two reasons. First of all, the contributions are not enough to prevent the Government's subvention from becoming intolerable in the future; and secondly, the flat-rate contributions from the lower income group in the country are already very burdensome and, if increased, would become quite intolerable. I must say that I admire the ingenuity of the new scheme: it lessens the burden on the lower paid people without decreasing their benefits, and it provides a method by which the higher paid people can supplement their pensions on a strictly actuarial basis. It carries one very curious by-product of which your Lordships may not have thought: namely, that the greater the degree of inflation in the economy, the nearer this scheme becomes to actuarial propriety.
One is entitled to ask questions about the scheme. First of all, is the pension as at present, and that visualised in the future, sufficient to keep the bulk of the aged off National Assistance? One must admit straight away that it is a most meagre living; but at the same time the vast majority of the retirement pensioners are not dependent merely on their retirement pension. Undoubtedly a case could be made out for an increase of the basic 1108 pension. There are 5¼ million drawing national retirement pensions at the moment, and approximately 1 million of those have recourse to the National Assistance Board. There are obviously others who are too diffident to do so, and if we call that another 250,000, that is out of 5¼ million in total 1¼ million find the pension too low to live on. These people have no contribution grounds to draw their existing pension. let alone any increase, and therefore morally there is no difference whatsoever between the amount they would draw as increased pension and what they are drawing as National Assistance; it is precisely the same pocket or, if I may so call it, precisely the same spring of charity. It is, I think, arguable that to increase the pensions of .5¼ million people in order to reach 1¼ million is rather silly finance.
Suppose that £1 a week were the necessary amount—and I would not put it lower than that—that would cost about £270 million a year. The present 1 million who are going for National Assistance are drawing about £42 million a year. I assume that if the pensions went up, the National Assistance charge would drop proportionately. But £270 million, even if there is some saving on National Assistance. is a very large sum. Where is it to come from? if you take it from the National Insurance cards, it is an average of about 4s. 6d. per card, and that means more for a man and less for a woman and a child. if you take it from taxation, it is approximately 1s. on the income tax, or getting on for doubling the petrol duty. One is entitled to ask this question. which the noble Lord, Lord Beveridge, has more or less answered for me. If you add it to the stamp, would it increase the cost of living? I think it definitely would, because the manufacturer's costs would go up by his contribution and the workers would almost certainly expect a higher rate of pay to pay for their contribution.
If you take it out of further taxation. I at any rate believe that further taxation would be inflationary. All this would mean paying extra pensions to 5¼ million people in order to reach 1¼ million. I believe that much the better course, as the noble Lord, Lord Ferrier, suggested, is to see that people lose their 1109 diffidence of going to the National Assistance Board and, if necessary, see that the National Assistance scales are more adequate. Moreover, in that way you would direct more money at the unfortunate old non-contributory pensioners. seven-eighths of whom are now over seventy-five years of age. There are fewer than 250,000 of them left, and 140,000 of those are partially supported by the National Assistance Board.
When one is arguing these things, one must try to get away from the emotional field. We all want to see the aged properly supported, but what is the optimum amount we can transfer from the working population without inflation? I do not believe that it is a much bigger amount, if at all, than we are transferring at the moment, particularly having regard to the fact that the aged proportion of the population is going up. The noble Lord, Lord Beveridge, was dissatisfied with the present pension. He thought that if the principles of his scheme had been stuck to, the whole thing would have been all right. But, quite frankly, I do not follow that, because pensions have gone up more than the cost of living, and yet there are still 1 million of these people having recourse to the National Assistance Board. I should have said that if there was anything wrong with it, it was the noble Lord's starting point of 26s.
Under the new scheme, I greatly welcome the decreased contribution for the lower paid people, but one must have some slight doubts about the increased contributions. It runs up to about 7s. 2d. a card—that is 4s. 6d. for a man's own share—and I am doubtful whether Her Majesty's Government are going to extract 4s. 6d. a week from even the more highly paid workers of this country without their asking for a rise in pay of considerably more to pay the amount. Of course, the risk could be avoided by bringing in this scheme to coincide with a reduction in the Pay-As-You-Earn deductions. But that is complicated, of course, by the fact that the taxation of a man earning £15 a week, or nearly £800 a year, varies enormously according to his family position. If he is a single man he pays quite substantial tax, whereas if he has a sufficient number of children he does not pay any tax. So 1110 it is rather difficult to relieve anybody by P.A.Y.E. nowadays.
The trouble is that if you embark on the field of what are, in effect, compulsory savings, you are bound to get these difficulties. The ideal situation is where the citizens save according to their inclination, and according to the ability they have to abstain for the present in order to provide for the future. That, I believe, is the reverse of inflation. Therefore, I believe that in all schemes one should aim at keeping the compulsory element to the minimum and the voluntary element to the maximum. In my opinion. this scheme does this. It does not touch the private schemes. I am not going into this contracting-in and contracting-out. because it is much too complicated and I do not understand it. But I have no doubt that it can be made to work if the Minister says it can.
Of course, these arguments of mine could be advanced against having any State scheme at all, but I think that so long as the State has assumed the residual obligation to support in old age, the State is entitled to say that people must make a provision during their working, lives and, moreover, make a provision on a basis which is actuarially sound in the case of new entrants. The new scheme, as it carries such a large volume of non-actuarial beneficiaries, is bound to be rather rough on the young and much too favourable to the old. In fact, it is not really insurance at all. But inasmuch as the cash inflow and cash outflow, with the State subsidy at a constant rate, about balance, I believe it is rough justice, and in the result you get the working population providing support for the aged. At the same time, the aged are encouraged to do better for themselves. This, I believe, carries out the letter of the Fifth Commandment, at any rate, and I believe that, working within the limits of practical politics, the Minister has produced an ingenious scheme.
§ LORD SHEPHERD
My Lords, before the noble Lord sits down, may I ask him a question? In the course of his speech he used the phrase, "with the spring of charity." I think he used it in the same context as his remarks on National Assistance and pensions to which a certain group have not contributed. I hope he does not mean that National Assistance is a form of charity.
It is a matter of definition. If the noble Lord can think of a better word to mean getting money for which you have not contributed, I will accept that better word. It is a word chosen on the spur of the moment, and perhaps it was not the happiest one. But it is benefit for which no contribution in the past has been made.
§ LORD SHEPHERD
The noble Lord would agree that though it has not been a contribution in cash it has been, as my noble friend Lord Geddes said, a contribution of service. Surely, that is of equal value as the contribution of money.
At the moment we are dealing with money in a White Paper, and naturally there could not be any contribution at all unless there had been a contribution of service.
§ 5.13 p.m.
§ LORD GRANTCHESTER
My Lords, it is customary and right that, when speaking on a subject with which we have to deal outside this House, we should mention the fact. Sometimes our words may carry less weight on this account, but I think usually the interests that are declared in this House are sufficiently remote to be a comparatively unimportant factor. I hope that in my case this will be accepted, and that experience gained outside this House may make it possible to make some useful contribution on this rather difficult subject.
I should like to refer specifically to some paragraphs of this White Paper, and then to challenge some of the assumptions it makes. The White Paper starts its story in 1926 with the establishment of a State pension as of right. The idea of a State pension as of right was given fresh impetus in 1946, when a bold attempt was made to put a genuine face upon this matter of earned right—a right that was earned because contributions were paid for it. But this face was never really more than a facade, as more than one speaker has pointed out, because there was an element of substantial subsidy, and subsequent increases in the rate of pension have made havoc of the scheme as it was planned, as shown in paragraph 11 of the White Paper before us. I think the wording of paragraph 11 is a little unfortunate. To the ordinary reader it gives an impression of almost wizardry. It implies that the State is producing a 1112 capital value of £2,650 out of contributions of only £200. Perhaps this is relevant to the question raised by the noble Lord, Lord Shepherd. If the tax paid in the purchase of every packet of cigarettes or the tax paid when a bottle of beer is purchased were clearly marked on the packet or on the bottle, as the purchase tax is marked when one buys a car, the ordinary citizen might realise better than he does that in some way or other what the State provides has to be paid for, plus the usual service overheads. just as surely as when a purchase is made in the market. We should not encourage the idea that the State can give something for nothing; it cannot. I think it is quite clear to most of us to-day that 9d. for 4d. has become 9d. for 10d
Looking back, even to a date as recent as 1946, and commenting on the changed conditions, the White Paper, in paragraph 4, declares thatto-day the general standard of living is higher than any cautious person considering the state of affairs during or immediately after the war could have dared to hope.That is one of the new and cheerful factors to which greater significance should, I submit, be attached. The implications are that as a society we are growing up to individual independence; like children who have become self supporting, we can begin to act for ourselves instead of having things arranged for us, and this is a cause, or should be, for rejoicing.
I should like to refer next to paragraph 12, which has already been referred to by the noble Lord, Lord Geddes of Epsom. How gloomy I, too, think this sounds. Instead of having to look after one old person for every fifteen of the population we now have double that number to care for, and soon it is going to be even worse. That is what the paragraph tells us. I should like the story told very differently; something like this: owing to what our doctors have been able to do we are living longer, we are feeling better and we are able to work longer. That is fine, and surely an indication that some need not begin to think of drawing a pension quite so soon as they had thought it would be necessary.
Paragraph 13 plunges us again into gloom when it speaks of the deficit, which is running up to £400 million a year which will have to be found if we are to meet 1113 the liabilities under the existing scheme. The remarks made in reply to me by the noble and learned Viscount, Lord Hailsham, when referring briefly to this matter in the debate following the gracious Speech, made it clear that graduated contributions were introduced not on their merits or because Her Majesty's Government particularly liked the idea of graduated contributions, but to deal with this bugbear of a mounting deficit. It is true that £54 million is to be put in as an extra payment from general taxation to help towards that deficit, but the rest of it is to come out of the graduated contributions. Once more I would ask Her Majesty's Government to look at this matter again. There are other ways of bringing this mounting deficit within manageable proportions, and having regard to the record of improved health and longer living to which I have already referred, surely the first adjustment should be to extend the retirement age by, say, two years in the case of men. and perhaps four years to age 64 in the case of women. That would be a means of handling at any rate part of the deficit. Perhaps Her Majesty's Government could tell us at some time w tat the effect of that would be. It follows very largely one of the recommendations of the Phillips Committee.
I now come to paragraphs 15 and 16. These detail a remarkable record of achievement, not by any Government; a remarkable record of what directors and staff have done already for some 9 million workers now covered by occupational schemes. Surely here we can find the key to what is needed. What is needed is a rapid expansion of the number of people who are covered by occupational schemes, to include, for instance, the more casual workers. I should have thought this was a matter which might well receive the attention of our great trade unions, and I would ask the noble Lord, Lord Geddes of Epsom, whether he would not think it worth while for the trade unions to make a study of this matter of workers who are not yet covered by occupational schemes and help with employers' associations to work out suitable schemes. I know from my personal experience of at least one scheme which might have helped a group of men who change their jobs frequently but which was held up because it was anticipated that the Government would 1114 come out with a scheme. That shows how people stop acting for themselves as soon as Government announces an intention to intervene.
Then there is the question of transferability which has been mentioned by several noble Lords. We had a debate, I remember, in this House some year or two ago, in which a Government speaker said that there was too much changing of jobs in some industries; and that he was very doubtful whether transferability of pension rights would be a good thing or not. But if it is desired—and I personally think it would be a good thing under present conditions —it is perfectly simple to achieve transferability within existing occupational schemes. They all are approved. A request that transferability should be introduced would make it more costly, of course, but it could he managed fairly easily within a short period.
§ LORD PETHICK-LAWRENCE
My Lords, would the noble Lord allow me to interrupt him? It is quite simple when all the schemes are approved schemes from which one can contract out. The difficulty I put forward, which was the one put forward to me by Mr. Jackson, was that of a man going from an employment where he had contracted in and then contracted out, to an employment where he could not contract out and would come under the Government scheme; and finally, later in his life, going back into the original scheme. That is the problem which the noble Lord has not properly examined.
§ LORD GRANTCHESTER
My Lords, I think the noble Lord has misunderstood what I was referring to. I was referring to existing occupational schemes, few of which have provision for transferability. They could be modified, and I am sure that those who run these occupational schemes would be pleased to carry out the necessary modifications, if that is the wish of Her Majesty's Government. So remarkable, indeed, is the development which has taken place with occupational schemes covering 9 million workers that Her Majesty's Government have, I think. had pangs of conscience, and I am sure it is this which has prompted them to introduce the contracting out provisions in paragraph 67 of the White Paper. 1115 My own view is that these contracting out provisions, except for certain rather privileged groups of workers in a high wage bracket, will prove to be administratively tedious and excessively expensive and complicated both to employers and to the Administration, not to mention the insurance offices who handle many group schemes. That there is much work which would have to be done if there is to be contracting out is recognised in paragraph 74 of the White Paper. which suggests that there should be a delay of two years before the scheme could come into operation. That, I think, is already recognised as quite insufficient time to go into this matter. But is it not time that a halt is called to the passing of more and more administrative work from Government Departments to industry'? First, there was the burden of Pay-As-You-Earn accountancy which has already been referred to to-day, a system made possible only by throwing upon industry the extra work of collection on behalf of a Government Department. Then a great deal of work has been thrown on to industry as a result of the provisions of the Finance Act, 1956, under which many pension schemes originally taken out under Section 388 have had to be converted into schemes under Section 379. I think that was a Quite unnecessary burden. Now Her Majesty's Government are suggesting the remodelling and sorting out of pension schemes which affect some 9 million workers, without Thinking of the complications or the work that will have to he done.
So complicated is this matter of contracting out that I, personally, think there will be little of it. What is much more likely to happen is that, in view of the extra cost to employers of the proposed State scheme, occupational schemes will be modified to take into account the benefits of the new State scheme, if it is ever brought in. If what I anticipate is correct, that the extra cost is deducted from the contributions which are put into occupational schemes, and the benefits correspondingly reduced, no very clever result will have been achieved by these proposals. What sort of a build-up have we got now'? Faced with the complication of a growing deficit, graduated contributions are suggested, which are really a new social security tax; and 1116 because it is known that occupational schemes are really the best method of providing a pension, contracting-out provisions are introduced into the proposals. This brings new complications, the choice of going through the costly procedures of contracting out or of paying the extra tax and of reducing the benefits of an existing scheme if the costs of production are not to rise.
My Lords, what is the overriding reason why Her Majesty's Government have come forward with these proposals? I fear it is the fact that the Labour Party produced a new State pension scheme. That was not surprising. The Labour Party believe that they can do things for people much better than the people can do them for themselves. That is their philosophy—the Directing, Planned State, of which they are to be the bankers. levying the tolls and paying out, if not strictly according to need. then as the controllers think best. If the Labour Party are campaigning in favour of a new pension scheme, I suppose the candidates of the Conservative Party must be put in a position to stand up on the platform and say, "We also have a pension scheme—a less damaging pension scheme."
My Lords, is it not time to ask if democracy has so degenerated that there are no votes to be got for a Party which says, "If you are doing well you can put aside something to help sustain you in your old age. You will get the benefit of any contributions paid by your employer, and both you and your employer can charge" (I should like to see this made possible in the simplest way) your contributions against gross income "—and when I say "gross income", I mean any gross income derived from any source—and finally, to say "If by any chance you cannot do this: if you cannot make this provision, we, the State, will stand behind you and see that you do not want."? I do not mind going even further than that, and saying "Even if you could have done this and did not do it. if you neglected to make provision when you very well could have done, we will still stand behind you and see that you are not in need. for we hate want." I would go a little further on the road to freedom than my noble friend Lord Beveridge. Such a policy would, I submit, enable us to pay without strain 1117 more than £2 10s. to a man who was really in need.
Surely, in these days of modern and sympathetic administration, too much is made of the bugbear of a means test. Are we not all subjected to a means test when we are asked to fill up an income tax return? Perhaps those income tax returns which everyone has to make might come to be the dividing line between those who need and those who do not need. If education is worth anything, and if technological advances are bringing in their train higher material standards. we can expect more and more people to grow up and be able to act for themselves. It is no good harking back to 1926, or even to 1946. A new world is before us and we must speak the language of to-day, the language of responsibility and freedom. The White Paper still speaks the language of yesterday, the language of dependence. I know that it is easy to criticise—please forgive me: but this White Paper should be forgotten, Her Majesty's Government should think again.
§ 5.41 p.m.
§ LORD SINCLAIR OF CLEEVE
My Lords, though I am myself a very junior Member of your Lordships' House, it is my very pleasant duty and privilege to oiler my mead of congratulations to the noble Lords, Lord Ferrier and Lord Geddes of Epsom, on their maiden speeches which delighted your Lordships this afternoon. If I may introduce a brief personal note. I should like to record that an experience some years ago in sitting on a court of inquiry with the noble Lord, Lord Geddes of Epsom, led me to expect just that forthrightness of expression, clarity and sincerity that we heard to-day.
At this; late hour it is unnecessary, and probably undesirable, to attempt to elaborate on the complications and complexities of the White Paper now under discussion, for those complications and complexities are considerable. Efforts are being made at the present time to obtain clarification on a number of important points, and in support of what was said by the noble Lord. Lord Grantchester, in one part of his speech, I should like to reserve judgment before making any final appraisal of many of those detailed points. I feel that if we could somehow or other, for a space, 1118 close our ears to the more clamant calls of Party politics, as the noble Lord, Lord Beveridge, suggested, and look at this question as the great national issue that it is, we should find in all sections of this House a great measure of agreement on the kind of plan, or certainly the objective, which would help to increase the standard and widen the range of provision for old age.
In doing so I would feel, as the noble Lord, Lord Beveridge, so eloquently expressed, that the first condition must be that the plan should be economically sound. For, as he said, if I remember his words, "Any Government to-day has an obligation to preserve the stability of money which is second only to its obligation to preserve peace with honour." I believe that the stability of money is the foundation of savings, and that without it we cannot expect to get real savings. I believe, also, that without real savings we shall never have a pension plan that offers scope for individuality—which, I believe. is one of the foundations of this country's greatness.
A second point emphasised by the noble Lord, Lord Beveridge. also struck a note of sympathy in my mind—namely, that a Government should look very care. fully before they go beyond the provision of a flat-rate pension. I am not presuming to state what the level of that flat-rate pension should be, or the extent of the inadequacy of the present level; but I believe that the principle of a flat-rate pension, supplemented by what individuals can themselves find from their own earnings, is the right principle on which we should look at this question. That is a principle from which there is a departure in the Government White Paper; and that departure I regret. Like the noble Lord, Lord Beveridge, I myself should dissent from the views expressed in paragraphs 23 to 26 in the White Paper.
Lastly, on a point which is very close to my own experience, namely occupational schemes, I would say that I entirely agree that provisions for contracting out are most complicated and that it is difficult at this stage fully to appreciate how they are going to work. In the early part of the White Paper there is an acknowledgement by Her Majesty's Government of the contribution which these occupational schemes make to the 1119 solution of this problem. They are described as a great national asset I cannot help feeling, however, on coming to the second part of the White Paper and looking at the provisions therein described, that there is a good deal of what appears, at any rate at first sight, to be active discouragement of occupational schemes. I very much hope Her Majesty's Government will look at that point again.
I cannot for the life of me see the logic of the argument that, to qualify for contracting out, a scheme must provide pensions at least equal to the maximum graduated pensions, while on the other hand it has to pay the full flat-rate contribution and not the reduced rate applicable to earnings between £9 and £11 in the Government scheme. This can mean, of course, that a man in an occupational scheme which has contracted out whose average earnings are £10 a week has to get a graduated pension equivalent to that of a man earning £15 a week. Yet, on the other hand—because there is an element of contribution to the national fund in the graduated contribution—it is only fair (I believe that is the sense of the wording used in paragraph 42) that the contracting-out firm should pay the full flat-rate contribution. Those two things seem very inconsistent, and at first sight they are a definite deterrent to the extension of occupational schemes which I firmly believe are bound to be one of the most effective measures for improving provision for old age, at any rate for a large section of the population in this day and age.
In conclusion, therefore—and I apologise for having spoken so long—may I, with great respect, urge Her Majesty's Government, in framing their proposals for inclusion in a Bill, first to examine with the utmost care, and to re-examine, anything which appears to have in it the least seeds of danger of inflation, because I believe that that is the major hazard we have to face; and secondly, to look again at the provisions in relation to occupational schemes so that, in effect, whatever the final form of the proposals, those schemes may receive encouragement, not discouragement.
§ 5.50 p.m.
§ LORD LATHAM
My Lords, we are moving to the conclusion of a lengthy debate, which has been comprehensive and dealing with what I think we shall all agree is one of the outstanding and important social questions of the day. The problem is the provision for old age, which really becomes the problem of banishing want in old age. Old age has become, for a large section of the people of this country, a nightmare. The eventide of life is dreaded. Where there should be serenity and a sense of security, there is for a large section of the elderly people of this country denial, distress and destitution.
We have been told this afternoon that over one million pensioners and their spouses are in receipt of National Assistance; and social inquiries and surveys which have been made—though limited in extent, I agree—indicate that there is a very large number of old people who are so poor that they would be entitled, if they sought it, to have help from the National Assistance Board. I think we shall all agree, without concern for Party, that the present state of affairs as regards the aged of our country is one which constitutes a challenge to the social conscience of the nation.
§ LORD AMWELL
My Lords, I am sorry to intervene, but the last official figure of people actually in receipt of National Assistance is 1,640,000. That is approaching 2 million.
§ LORD LATHAM
I am obliged to the noble Lord for giving me that information, but I was relying on information that has been quoted officially in the other place. If the noble Lord is correct, then the problem is worse and its extent is much wider.
I confess, if I may say so, that I was a little surprised, indeed, a little shocked, at what was said by the noble Lord, Lord Hawke, who I regret is not in his place at the moment. I understood him to say that he thought the State should limit its provision to the very minimum, and that anyone in need beyond that minimum should have an extended right of applying for National Assistance. That seems to me to be an attitude of mind which is reminiscent of the early days of this century, when there was considerable opposition to the modest pension of 1121 5s a week, dependent upon a means test, for a person at age seventy.
We can, I submit, abolish poverty in old age. With the growth of national output, and therefore of national income, we could bear the cost without, as the noble Lord, Lord Beveridge, suggested, our being sunk in excessive taxation. After all, it was Mr. Butler who said that we can double the standard of living in twenty-five years. If that he so, the aged are entitled to a proper share of it, and the way in which we treat the aged is an element in the standard of living. The Times recently said this in discussing the White Paper:The increasing numbers of the old present no serious economic difficulty.I think that is true. It went on to say:… as for the prospective increase over the next two decades in the Exchequer charge, a mere 6 per cent. increase in national output could dispose of it without raising the level of taxation.If that be the case—and my submission is that all the facts point to that—then we can banish poverty in old age.
The Government's proposals, in our view, are not designed for that purpose. Their purpose is a limited one. The principal purpose is, of course, to place the National Insurance Scheme on a sound financial basis. That is the primary purpose. in my submission, of this scheme. It is the dominating purpose; and all other proposals, whether they refer to the flat-rate scheme or to the graded-pension scheme, are subservient and subsidiary to that declared aim: the aim of putting the present National Insurance Scheme on a sound financial basis. And these words, of course, mean simply: to transfer most. of the accumulating deficit of the flat-rate pension scheme from the Exchequer to one class of new contributor, who will be getting a limited graduated pension; in short, to transfer to the middle-grade worker, the man earning £11-plus. the burden of most of the deficit which will arise on the flat-rate scheme and which at present must be borne by the Exchequer. That heavy burden is to be borne by 13 million contributors alone, under the provisions of this scheme.
As the Economist of October 18 of this year said—and the Economist is not a Socialist paper, and it is not embarrassingly favourable to us in most of its comments: 1122The main feature of the scheme, indeed, in some ways its whole essence, is that it is expected to save the Exchequer £99 million in the first year of its operation and £428 million in 1981–82.And this White Paper, forsooth! is entitled, Provision for Old Age. As I have said, it is no provision for old age; it: is, I think, a shoddy and a shabby pretence. It is a graduated scheme for a limited number as a device to secure this transfer of liability for accruing deficits. As The Times of October 20 said, it was a crude form of income tax related to benefits which were not themselves related to contributions. And it went on to say:What is surprising is the way in which the White Paper obscures the essential financial mechanism of the plan. It contains no actuarial data.Then, a little further down, the article went on:The Labour Party, though lacking the Government's command of experts, was not afraid to publish the arithmetic of its pension plan for all to criticise.Therefore we think that these proposals must be seen not as primarily a scheme for pensions but as a scheme to transfer accruing liabilities.
We take the view, therefore, that the scheme as set out in the White Paper is unsatisfactory on general grounds. The problem has been approached from the wrong angle and in the wrong way. There are also a number of particular features in the scheme as set out in the White Paper which are unsatisfactory. There is, for instance, no provision for the existing pensioners, and there is no provision for the non-contributory pensioners, of whom I believe there are still some 250,000. They are left to go to the Assistance Board in order to avoid destitution.
Moreover, the scheme is not a comprehensive or a national scheme. As my noble friend Lord Pethick-Lawrence pointed out with clarity and force, the scheme is not universal; and he went on to say, as I gathered, that schemes of this kind sooner or later must become universal. In this scheme 7¾ million workers (of whom 70 per cent. are women) get nothing except a temporary reduction in contribution of ls. 7d. for the man and 1s. 2d. for the woman—and there is a notice in the White Paper that in 1965 there will be an increase in contribution and that. following that, there will be a further three increases with an interval 1123 of five years between each. In short, as has been said in another place, these 7¾ million workers, getting £9 a week or less, will become second-class citizens with no rights to be included in a superannuation scheme where the benefits are related to contributions and where both are related to wages. They must rest upon the existing fixed pension scheme, which is not even guaranteed against inflation.
When we look at the graduated pension proposals, we find that these really are almost derisory. Only 13 million of the 24 million insured workers will come within the scheme. That equals something like 54 per cent., whereas in Germany 77.5 per cent. of the insured workers are within a wage-related pension scheme; and I am informed that in the U.S.A. the comparable percentage is 84–4. The scheme for pensions. but not for contributions, stops at £15. As my noble friend Lord Pethick-Lawrence said in his earlier speech on this subject during the debate on the Address in reply to the gracious Speech. it is difficult to understand why the scheme stops at £15. Very few private schemes, if any, would stop at this relatively low figure. Most of these schemes embrace membership carrying salaries very much higher than £15, and it means, as I have said. that the burden of the relief to the Exchequer from the deficit arising from the flat-rate pension scheme will be principally borne by no more than 13 million contributors.
The only thing which is definite about this scheme—perhaps not the only definite, thing, but one of the things which are quite clear and definite in this scheme—is that the Treasury's liability is to be limited to £170 million a year as regards the whole comprehensive scheme. The Minister quite frankly said in another place on October 29 [OFFiCIAL. REPORT (Commons), Vol. 594 (No. 2). col. 166]:the subsidy payable universally up to £9 is gradually withdrawn on the steps up to £15 ",and at £15 a week the Exchequer contribution is completely withdrawn. As I have already indicated, The Times said that this proposal is "a somewhat crude form of income tax, charging variable contributions towards fixed benefits." I submit, my Lords, that the whole framework of this scheme and all its elements have been determined by the overriding 1124 consideration of relieving the Exchequer of its liability for deficits.
Then a question has been raised as towhether it is right that the machinery of the State should he used to compel people to make provision for their old age beyond a fairly modest and reasonable provision.Those were the words used by the noble and learned Viscount on the Woolsack in his speech on this matter on October 30 last [OFFICIAL REPORT, Vol. 212 (No. 3), col. 122]. I should have thought that that was a rather curious philosophy in these days. Nearly 1½ million persons who are in public service, either central or local, are compelled by the State (and, as regards local government, by Act of Parliament) to make provision, whether they like it or whether they do not. If they are to be employed in the Civil Service or in local government, they must become members of a pension scheme. The 1½ million figure does not include the large number of industrial workers who are employed by the central Government and local government and who are compulsorily within pension schemes. nor does it include 250,000 teachers. It is a little ironic to reflect that recently these teachers, against whom the machinery of the State must not be used to compel them to make provision for their old age, were compelled to agree to increase from 5 per cent. to 6 per cent. their contribution towards a pension. It seems to me that there is no case on those grounds why the scheme should be limited to earnings which do not go beyond £15 a week.
There is another difficulty, to which my noble friend Lord Pethick-Lawrence referred with searching results—that is. the exclusion of the self-employed from the scheme. I understand that there are something in the region of 1½million self-employed persons within the National Insurance Scheme who are paying contributions of the employers and the employed within that flat-rate pension scheme. It is true that the self-employed person until 1956 did not have the benefit of tax concessions in respect of premiums paid for pensions and that he now has that concession; but there are many of the 1½ million who will be unable to make provision, even with those tax concessions, because normally the procedure is the formulation of schemes. I admit that it will be difficult to 1125 apply the scheme to the self-employed. One can readily imagine the difficulties which would be involved. But I submit that that is no reason why they should be left with the flat-rate pension scheme only or why the Government should not face up to the difficulties and resolve them rather than run away from them.
There is also the rather miserly treatment of widows. If a woman is over sixty she can draw half of the accrued pension when her husband dies, but if a widow is under sixty, she gets only a widow's pension. I gather that the cost of remedying this and having no distinction between over or under sixty years of age would be trifling. It seems to me that the Government ought to do something to remedy this disadvantage, because the position of widows is really tragic, as many of your Lordships must know. Then there is the scale of pension which has no comparison with contributions. My noble friend Lord Stonham has referred to young men who earn £15 a week at eighteen years of age, pay their contributions and in 2010 will have their flat-rate pension increased under the scheme by 41s. That is not exactly wringing the poverty out of old age. The Times has pointed out in a leader how poor is the scale of benefits. This is due to the fact that a substantial proportion of the contributions under the graded scheme is to go in relief of Exchequer subsidies. That is the real reason, in my submission, why the scale of benefits is so low and is less satisfactory than could be obtained from an insurance company.
To sum up, we take the view that the scheme is unsatisfactory, for, among other reasons, it excludes nearly 8 million persons from superannuation; it limits the scheme to 54 per cent. of insured persons; it transfers the liability for the deficit on the flat-rate pensions scheme from the Exchequer to the contributors under the graduated scheme; it makes no provision for the self-employed; the arrangements for contracting out are unsatisfactory and may well prove to be unworkable; the pensions are too low for the contributions which have to be paid; the scheme does nothing at all to relieve the present and gathering distress of existing pensioners, and it 1126 does nothing to protect the meagre pensions from inflation. The scheme will not work. It is not a scheme which will operate in the years to come to banish the spectre of poverty and destitution in old age. In our view, it is more likely to perpetuate it. In these circumstances, we cannot regard the scheme as being in any sense a proper and adequate provision for old age.
§ LORD FERRIER
My Lords, may I ask a question of the noble Lord opposite in order to get some:figures right? He gave the figure of 1,640,000 in receipt of National Assistance. Am I not correct in saying that only 50 per cent. of these are aged people?
§ LORD AMWELL
My Lords, I merely stated the official figure of those receiving National Assistance. I am not familiar with the breakdown of the figure.
§ LORD FERRIER
I thank the noble Lord for making that clear. I obtained some figures this morning which showed that of those, 70 per cent. are receiving National Insurance and of those 72 per cent. are old people, making my figure about .84 million aged people actually in receipt of National Assistance.
§ 6.20 p.m.
§ THE EARL OF DUNDEE
My Lords, the White Paper which we are discussing to-day begins by stating in the introduction that the Government would like everybody concerned to have an opportunity of expressing his views before the details of the scheme are fixed, and I am sure my right honourable friend the Minister of Pensions will give particular attention to what your Lordships have said in this debate. The noble Lord who introduced the Motion, Lord PethickLawrence, has been a high authority on public finance for the whole of my life—I have had the privilege of hearing him on many occasions since I came into the House—and the noble Lord, Lord Beveridge, is the author of the Report which has done more than anything else to determine the shape of our modern social insurance system. Although the noble Lord seems to be rather doubtful about the advisability of having any kind of graduated scheme, I do not think that affects the objective of trying to overcome want. I doubt if we ever shall achieve freedom from want., because as 1127 soon as you conquer the wants of one generation the next generation always wants a great many other things which the previous one did not; but it is a good thing always to keep trying.
In this debate we have had two excellent maiden speeches: from the noble Lord, Lord Ferrier, who made some valuable suggestions in regard to the finance of the women's position under this scheme, and also about persons who resided abroad and who wanted to be brought into it on coming back again; and from the noble Lord, Lord Geddes of Epsom, whose deep sincerity and sympathy for the old people was, I am sure, greatly appreciated by your Lordships. We hope often to have the opportunity of hearing them both again.
Most people want social security, particularly in old age, or at least some kind of security. Most people also want personal freedom; and it is not easy for a Government at the same time to guarantee social security and to protect personal freedom. Mr. Hilaire Belloc, who was at one time for a few years a Liberal Member of Parliament, but who got tired of being one before Mr. Lloyd George introduced his first insurance scheme, wrote a book a little later on in which he foretold the development of our modern Welfare State. But he did not call it the Welfare State. He called it "The Servile State", which was the title of his book, because he argued that if all the worker had to do was to earn his wage, and if the Government decided for him how much of his wages, and in what manner, should be used to provide for his own future and that of his family, then the wage-earner had become a slave.
A year or two before Sir Winston Churchill extended National Insurance to include old age and widows' pensions, in the early 'twenties, I remember another Liberal politician, of a very different type from Mr. Hilaire Belloc, Sir Alfred Mond, coming down to Oxford and making a tremendously powerful speech against the whole principle of compulsion in our National Insurance system. "Why", he asked, should you take away a man's money for an old age that he will never reach and for a widow that he has not got?" I think we are all agreed now, except perhaps for a few superannuated Liberals, that it is 1128 desirable that we should take away some of a man's earnings in order to make some provision for other people's old age and for other people's widows, including, of course, his own, if he should ever acquire either of these things.
§ THE EARL OF DUNDEE
Including his own, if he should ever acquire either of them. But how much of his wages we ought to take, without unreasonably limiting his personal freedom, cannot be defined by a figure or by a percentage. It is a question that must be decided by the common sense of the Legislature, which desires to protect freedom as well as to promote security.
In my own view, if we were to take away in compulsory contributions so much of a man's earnings as to restrict unreasonably his ability to make such other provision as he might prefer for the future of himself and his family, then we should be building in this country not a Welfare State, but "a Servile State". As the Beveridge Report states (I think it is paragraph 21):Management of one's own income is an essential element of a citizen's freedom.I was glad to hear the noble Lord, Lord Beveridge, repeat that principle with great emphasis in his speech this afternoon. I am also glad to see that this White Paper affirms the same principle, in paragraph 32, where it says:The Government believe that it would not be right to force everyone to contribute more through a State scheme than would be needed for a reasonable provision for old age. For the State to go further would be to arrogate to itself the individual's right to dispose of his income in what he thinks the right way, and would seriously undermine the individual's sense of responsibility for his own affairs.The purpose of the Government is that the State insurance scheme should not supersede but should supplement other methods of individual provision for old age, whether they be ordinary saving, private insurance polices taken out in the ordinary way, or occupational schemes. All of these things may be better fitted to the personal needs of the individual than a uniform State scheme, and we want to give the individual as much freedom of choice as we can. In the State insurance scheme, the Exchequer subvention, which is to be £170 million a 1129 year, is used mainly to weight the payments in favour of the lower-paid workers, who would not be able to afford such adequate provision for themselves as the higher paid ones; and the graduated scheme, which affects only, on the present basis of wages, those earning between £9 and £15 a week, is not intended to abolish other schemes, but to give those workers who have not at present got a chance of insuring themselves under an occupational scheme the alternative opportunity of doing so under this new State proposal.
§ THE EARL OF DUNDEE
I am sorry. I am referring to the workers who have no chance of having any occupational scheme at all. It is mainly intended to give them an opportunity to do something which will relate their future pensions to their present wages.
I ought perhaps to say one word here on the question of contracting out. I am afraid that it is a vast subject which one would not have time to go into in great detail. As the noble Lord, Lord Pethick-Lawrence—who was the first to raise it—is aware, there are no fewer that, 38,000 occupational schemes of every imaginable variety, from the Civil Service scheme, which is a condition of employment, the teachers' scheme or the miners' insurance scheme, with large numbers of State employees and hundreds of thousands of people in one scheme, down to vast numbers of small schemes with perhaps not more than a dozen in each. The conditions in these schemes vary a great deal. In some cases the employer pays the whole of the contribution; in some cases the worker contributes part. In some cases, the scheme, like the teachers' scheme, is a condition of employment, while in other cases it is not. The usual criticism so far against the White Paper proposals on this point has been that the initiative in contracting out is left to the employer, whereas I understand that the Labour Party's national superannuation scheme would allow an individual choice to the worker, which we believe to be impracticable, for many reasons. It is the employer who has to make all the returns and carry out the management of the scheme, and we do not think it would 1130 be practicable to have individual people contracting out.
It seems to the Government that, since most of these schemes of private industry have been set up in order to preserve good industrial relations, it is extraordinarily unlikely that the employer would act without consulting the employees and first ascertaining their wishes. I understand that the noble Lord, Lord PethickLawrence, takes a different view. He thinks that it would be impracticable even to have collective contracting out. That is to say, he presumably does not think that the more complicated and difficult proposal to have individual contracting out could be really considered at all. He also thinks that the proposals in the White Paper for collective contracting out which, I agree, have not as yet been worked out in detail, would not be practicable.
§ LORD PETHICK-LAWRENCE
My Lords, as the noble Earl has referred to me. may I make my position perfectly clear? I can see a great deal to be said for the Labour scheme which allows individual workmen to contract out. It may not be practicable. The Government say it is not. I have not addressed myself this afternoon to the Labour scheme, because the Government say that it is impracticable, and it is not the scheme they are proposing. I have addressed myself solely to the Government scheme. I pointed out in my speech that a leading member, in charge of one of these schemes in Unilever's, gave certain definite reasons why he regarded the scheme as unacceptable; and he. for one, will not have anything to do with it. That is all I said. I have not said that the Labour scheme is impracticable; I say the Government have said that. I was discussing the White Paper, and I have not discussed the merits of the other scheme.
§ THE EARL OF DUNDEE
My Lords, I am extremely grateful to the noble Lord for his intervention. I think it may be that in some cases—we cannot tell yet—occupational schemes may be extremely difficult to contract out of. As the noble Lord. Lord Grantchester, suggested, it may be that in some cases occupational schemes may be revised in order not to take too much away in contributions from the worker, and there may not be contracting out in these cases. In other 1131 cases, if the scheme is a small one, it may be that both the occupational scheme and the State graduated scheme will run together.
The noble Lord mentioned that it might be in the interests of certain groups of workers in one industry to remain in the occupational scheme and contract out of the State scheme, and to the interest of other groups in that industry not to contract out but to get the benefit of both schemes at the same time. I think that would apply often to workers getting between £9 and £11 a week, because the contributions of people with a wage of over £9 who are in occupational schemes remains at 18s. 4d.—they are not reduced —and the graduated contributions do not reach the height of 18s. 4d. until a man gets to £ 11 a week. Therefore, if you take the group between £9 and £11, if the employer will still go on paying his contributions, plainly it will be in the interest of the worker to remain in both schemes; and it may well be that in some firms the employer might arrange one scheme for one group of workers who want to stay in, and another for another group who want to stay out. What would be hopelessly complicated would be if a few individual workers in each group took a line different from all the others. I think that would make the thing impracticable.
The noble Lord. Lord Sinclair of Cleeve, in a helpful speech, in which he recognised the great value of these occupational schemes, was inclined to think that in paragraph 68 of the White Paper, which lays down the conditions for transferability, some injustice was done and it was made too difficult. I am sure that if there is any injustice to any contributor or any employer, the Minister of Pensions will be willing to look at it again. But we must provide that any worker who does contract out of the State graduated scheme, and who then changes his employment, shall not be put in a worse position by having done so. That is the first consideration which we must enforce. Subject to that, I am sure that everything will be done to encourage the growth of these occupational schemes which the Government wish to see increase.
During the war, all political Parties agreed on the Beveridge Report, and. although since that time the economic 1132 position of the majority of wage-earners in this country has changed a great deal, I think there is still a great deal of common ground between the Parties about our policy of making provision for old age. There are also, as the debate to-day and debates in another place have shown, a great many differences. I am not quite sure whether these differences ought really to be described as differences of principle or differences of emphasis but I am afraid that at the moment they do not seem likely to diminish while the possibility of an Election draws nearer. The noble Lord, Lord Beveridge, proposed that we should have an all-Party conference to put provision for old age outside Party politics. I think that is an excellent plan. It is rather like the Summit Conference, and the chances of its being achieved are perhaps even less. But, in principle, I cannot argue against such a proposal, because I personally think it a most admirable plan.
The main differences against the White Paper—whether you call them differences of principle or of emphasis—which 'have been brought out in:this debate, and which were discussed by noble Lords opposite and by the noble Lord, Lord Beveridge, were, first, that the present pension does not provide adequate subsistence and, next, that the scheme does not make any provision against inflation.
Now, my Lords, the evidence for the assertion that the present pension does not provide adequate subsistence is the fact that a large number 'of pensioners are receiving benefits from National Assistance. and as there appears to have been a little uncertainty about the figures, I have tried to get the right figures on that subject while this debate was going on. As I think the noble Lord, Lord Amwell, said in his last intervention, the figure of 1,600,000-odd is the whole figure—all the applicants whose case is entertained by the National Assistance Board.
§ THE EARL OF DUNDEE
This is the total number of successful applicants, those whose claims are admitted; the figure is 1,640,000; that is all those who are receiving assistance from the National Assistance Board, including those who are below pensionable age, unemployed, young persons and sick persons.
§ THE EARL OF DUNDEE
I think there was some uncertainty about the figures, which were rightly given by the noble Lord, Lord Ferrier. With regard to old age pensions, I think about 21 per cent. of families with an old age pensioner in them are in receipt of National Assistance. That would presumably give one a figure of about 1 million old age pensioners. The noble Lord has the correct figure, but I thought I would just be quite clear about the distinction between the old age pensioners and those on National Assistance.
§ THE EARL OF DUNDEE
No, I think it is quite plain now. The Beveridge Report contains the phrase "adequate subsistence" again and again all the way through, and I have always greatly admired the care and perseverance with which Lord Beveridge and his collaborators who drew up the Beveridge Report examined the household budgets of so many families, drew up so many scales of subsistence having regard to prevailing price indexes and so on: I think their researches and their publications are of great value to social science. But our conceptions of what constitutes adequate subsistence are continually changing. If you know all the circumstances of two families you may be able to say, "According to my present ideas this family has adequate subsistence and that family has not". That, indeed, is what the National Assistance Board are expected to do, and I think that the officers of the Board carry out their duties with humanity and understanding.
But when you come to apply the concept of adequate subsistence to a statutory pension which is received as of right and is paid for by contributions, it always seems to me that you meet very great difficulties indeed. I feel it is rather like the question which so often used to be asked at political meetings, although it is not so often asked now: "What figure do you consider is a living wage?", a question I always think no one but a fool would ask and no one but a worse fool would try to answer. My doubts about the applicability of this phrase are certainly not diminished by reading the booklet of 1134 the Party opposite, National Superannuation, giving the Labour Party's policy on old age. They have undertaken to raise the present old age pension immediately from 50s. to 60s. in the case of a single person and from 80s. to 90s. in the case of a married couple, and they commit themselves in this booklet, on page 19, to the statement that these increases will provide adequate subsistence, not, of course, in about twenty years' time but at this moment. They say that in the immediate future this substantial increase, raising the basic rate of pension to £3 a week—that is for a single person—will provide adequate subsistence. That is perhaps rather an incautious statement. I think there might be people who would argue that it was not adequate subsistence.
But may I compare that with the other statement, on page 5. in which this booklet says:In Great Britain to-day grinding poverty is still the rule and not the exception among retired workers with no superannuation or private insurance."—that is to say, those who are getting 50s. if they are single and 80s. if they are married. I think we certainly all appreciate that for an elderly couple whose income is about £4 a week 10s. is a very substantial sum. But it seems to me a little rash to commit oneself to the statement, as this Labour Party booklet does, that the difference between 80s. and 90s. is the difference between grinding poverty on the one hand and adequate subsistence on the other. I cannot help feeling that these terms are being used here in a polemical rather than a scientific sense. The obvious answer is that the present pension of 80s. for a man and wife is worth in terms of purchasing power 15s. 6d. more than the pension at the time when the Labour Government went out of office in 1951. It had then just been raised from 26s. and 42s. to 30s. and 50s. If the present rate of 80s. represents grinding poverty, then the poverty which the Labour Government imposed on the old age pensioner must have been harsh indeed; it was 20 or:30 per cent. worse than the present position.
The next criticism of the White Paper proposals is that we do not provide a sliding scale of pension, or rather a scale of pension linked to a cost of living index, as the Labour Party's National Superannuation proposes to do, in order 1135 to protect the pensioner against inflation. I am sorry the noble Lord, Lord Beveridge, is not here; he would be able to correct me if I am wrong. I think that in his speech to your Lordships last January he said that in his view this would make hay of the finances of any superannuation scheme, and I believe it would be very difficult to take away the authority of Parliament to review the scheme every few years—to make an automatic rise and fall, or at least, rise with the cost of living. The noble Lord will remember that when Mr. Griffiths, who has presumably changed his mind now, was Minister of Pensions in 1946, he pointed out that it would be quite impracticable to have a pension linked to the cost of living, and he reminded Parliament of the unhappy precedent of trying to do that in the case of Service pensions which broke down and led to such melancholy results.
§ Loan LATHAM
It is the case, is it not, that the Minister of Defence is proposing to do it for Service people now?
§ THE EARL OF DUNDEE
The Service pensions do not go up and down any more with the cost of living. The reasons given by the Labour Party on page 27 for wishing to link the superannuation pension with the cost of living are perhaps instructive. They say:"The best safeguard is to attack the problem at source and stop inflation "—I think we should all agree with that. Then they go on to say:A Labour Government would take such steps as are necessary to do this "7—that is, to stop inflation—but we cannot guarantee that Labour will always be in control.Therefore, in order to protect the pensioner against inflation under Tory Governments they must have the pension linked to a cost of living figure. I do not think that either Party is entirely unblemished in regard to the matter of fighting inflation, but when the pot calls the kettle black in this way it is legitimate for the kettle to retort perhaps a little sharply that its own blackness is not quite so sombre as that of its accuser. Not only was inflation more rapid from 1945 to 1951 than it has been since, but the old age pension during that period of inflation did not go up at all until just 1136 before the election of October, 1951, when it was put up from 26s. to 30s., with a married couple's pension going up from 32s. to 40s. That did not in any way compensate the pensioner for the very heavy rate of increase in the cost of living.
But since 1951 the pension has been raised, first, in 1955, from 50s. to 65s. for a married couple, and then in 1958 from 65s. to 80s. for a married couple, and it is now higher in relation to the cost of living than it has ever been. The fact is that the only time the pensioner would have needed protection against a rise in the cost of living was under the Labour Government before 1951. Since 1951 he would actually have suffered in that his pension would not have gone up so much if it had been linked to a price index, because the present pension is worth more in terms of purchasing power than it has ever been at any time since it was introduced in 1946. It is now worth 15s. 6d. more than it was in 1951, and the rises between 1951 and 1958, the last of which was in January of this year, have outstripped the rise in the cost of living which has taken place in the intervening years.
The noble Lord, Lord Beveridge, argued, and I think most of us on this side of the House would agree with him, that the Labour Party proposals for national superannuation would put what he called "an unsupportable burden" on the workers and would be likely to cause inflation; and he added that it would also be a further incentive to inflation. That is a statement with which I am inclined to agree—I do not think that the noble Lord overstated it. But when he himself attacked the Government's White Paper scheme for not giving adequate subsistence, I wondered what other proposals he would have put forward to do it if he thinks that the proposals which the Labour Party have put forward are likely to cause so much inflation that the value of the pension would actually become less instead of more. I will not pursue that, because the noble Lord has been unable to stay here and he might have been able to make some further observations about it.
But while this debate has furnished us not only with a great many interesting and useful speeches but also with some 1137 useful suggestions, it has not done anything to convince me that the main principles of the Government's scheme in this White Paper ought fundamentally to be changed; nor has it convinced me that the alternative plan put forward by the Labour Party ought to be supported in preference to ours. It seems to me that if you try to do too much, and impose too heavy a strain upon your economic resources and possibly set in motion new inflationary forces, you may then destroy your own ability to do what you want later on. Some noble Lords have suggested that under the White Paper plan the pension will be tied for ever to the figure of £2 10s. That is not so. In paragraph 34 of the White Paper it is clearly stated that the pension can be reviewed from time to time. It seems to me that your Lordships ought to give approval to the general principles of the plan contained in the White Paper. It may be a modest plan, but it is a plan which we know can be carried out on the existing basis of our economy and one which is capable of expansion if the general prosperity of our country should rise to a much higher level.
§ 6.56 p.m.
§ LORD PETHICK -LAWRENCE
My Lords, it is not my practice, and it is certainly not my intention to-day, to make a long statement before asking your Lordships' permission to withdraw my Motion. There are, however, just two or three points that I propose to deal with very shortly before I make that request. First of all, I must join with what has been said on both sides of the House in my appreciation of the two maiden speeches that have been made to-day. There have been some suggestions by those speakers that they hoped they were not going to infringe the "noncontroversial" rule. I think there is some misunderstanding about that. I think that all that is expected of maiden speakers is that they shall not be aggressively controversial or make personal attacks. I think it is perfectly right that in a debate they should take a Party side or whatever they feel is their accurate position. I should like to congratulate both noble Lords in conforming in full detail to any tradition or understanding that there is in this House.
We had a most interesting speech from the noble Lord, Lord Ferrier. I did not 1138 agree with a great deal of it, but that is purely a Party question and has nothing whatever to do with the merits of the speech. I congratulate him, and I hope that we shall hear from him again. Turning to my noble friend behind me, Lord Geddes of Epsom, I was delighted with his speech. I thought he made some excellent points, and I am quite sure that his vigour and sincerity appealed to the whole House.
Now I come to the two questions of fact dealing with the situation. I should I like to make perfectly clear my position with regard to this business of contracting out. I have no ideological objection at all to private schemes of superannuation. The people who have founded them, the people who have supported them and the people who have worked with them, are deserving of the highest praise. They have initiated this method of superannuation having some relation to wages, and it is a great tribute to them that the Government are now introducing a national scheme embodying the principle which these pioneering employers and employed have initiated in their own industries. I have no ideological objection, and I think it is exceedingly likely that some employers may decide to contract out. For the reasons which I have already given, it is perfectly clear that there is a strong case for employers to say "We will not contract out ". Mr. Jackson, speaking for Unilever, takes that view strongly, and I must say that his speech convinces me that it will be a very doubtful thing for any employer to stay out. I am not complaining that Her Majesty's Government have decided in their minds that the decision must be made by the employers. So far as I can see, there would be considerable administrative difficulties if it were left to the individual workman, and other, slightly different, administrative difficulties if it were left to the employer.
The reason why I dealt only with the one scheme was that it is the only scheme under discussion. I am not complaining that others should have brought in the Labour Party scheme, but we are not here to-day to defend that scheme: we are here to discuss the scheme of Her Majesty's Government, and that is why I addressed myself to that question. I take no exception at all to what has been said on that point. The noble Earl who 1139 wound up the debate said some very sensible things, particularly in dealing with the question of compulsion. It is no good attempting to shed any wish to compel people, for that is part of our modern system. In certain respects it is countenanced by Her Majesty's Government, as well as by ourselves. As my friend Lord Latham has pointed out, Her Majesty's Government only recently insisted on a compulsory scheme of superannuation for the teachers. I am not saying that they were right or wrong; but the point is that they made that decision and stick to it. It is not a Party issue, therefore, but a general principle that is coming.
Noble Lords not sitting at the present time on the Liberal Benches probably would disagree; but, putting them out of account. I believe that noble Lords on both sides of the House consider compulsion desirable in certain circumstances. I have no desire to compel every employer not to contract out. I believe that in practice it will be found that a great number will not contract out if the scheme is put into effect; and in course of time we shall find that those who do will fade away, as the friendly societies faded out of the other scheme.
There is one thing about which I do complain a little. Whenever anything is proposed from these Benches some people in different parts of the House (I am going to be rude) get up and say "Yah, inflation!" A great many of those who make that remark do not really know what inflation is, but they think it is a nasty poke at noble Lords on this side of the House. I am not saying that the noble Lord, Lord Beveridge, does not know what inflation is, for he does; and he made the charge. I do not think there is any noble Lord in this House who has taken a stronger line against inflation than I have—I have opposed inflation, ever since I began to understand economics; and I have taken as strong a view as anyone else that we should avoid it. But whatever we propose, a great many noble Lords opposite say that it will mean inflation. One noble Lord has said to-day that the Labour Government propose to put on new taxes, and that, in his opinion, that is inflationary; that wages may go up and that 1140 that is inflationary. Those noble Lords are not really working to the mark.
This scheme of the Labour Party, which I have not introduced hitherto because I feel it is not the issue at stake to-day, claims at any rate that it will produce a large surplus of money at the present time which will be available for the Government; and that, far from increasing inflation, it will produce the opposite effect. That is the claim and there is a great deal to be said for it. However, this is not the occasion to argue it out: it is much too elaborate a question, and there must be a proper consideration of what causes inflation and what does not. I do not want to make a Party issue of this matter, but since many noble Lords have done so I will say that I thought the noble Earl was fair in saying there has been inflation during both Governments, and that it was a mistake for the pot to call the kettle black. It was also a mistake for the kettle to call the pot black, as has been done from the other side.
There was a considerable rise of prices, some of which was inflationary, under the Labour Government, and there has been a considerable rise of prices under the present Government. One can call that inflationary if one likes. The fact is that the Labour Government had to face the extraordinarily difficult circumstances of the end of the war and the reemployment of all the people, which was something very difficult to tackle. In the second place, they had to tackle the Korean war, Indo-China and so on. They were faced with those difficulties and with a rise in prices all over the world.
The Conservative Government have had the benefit of two enormous drops in world prices, yet prices in this country have gone up. I will not argue that matter further, butt since that accusation has been thrown at noble Lords on this side I wanted to make that Party rejoinder to them. I will admit that it is a Party point, but I feel that I am entitled to make it. We say that our proposal is not inflationary, and I do not think it helps the matter at all to throw that accusation across the Floor at this side of the House, and I hope it will not be done. I attribute to the noble Earl a careful expression of opinion which avoided a charge of that kind, but I wanted to say that, because in my speech I aimed to look at the issue, so far as 1141 posssible, from a non-partisan point of view.
My Lords, I thank all who have taken pact in this debate. If we have performed any service in putting forward our view for the use of those who will take part in discussing the Bill when it comes on, and of Her Majesty's Government if 1142 they deign to take notice of our point of view, I shall feel glad that we have had this debate. Now, with great pleasure, I ask permission to withdraw my Motion.
§ Motion for Papers, by leave, withdrawn.
§ House adjourned at six minutes past seven o'clock.