§ 4.15 p.m.
§ Debate resumed.
§ LORD PETHICK-LAWRENCEMy Lords, I rise to resume the debate on this Bill, the Second Reading of which was moved by the noble Earl, Lord Dundee. May I say, in the first place, how interested I was to hear the earlier part of his speech, raising a new aspect of the question to which I hope to refer later in the course of my speech? With regard to the second half of the noble Earl's speech, I was struck once again with the marvellous facility which he has for quoting masses of figures, all from memory. I always thought I had a fairly good head for retaining figures, but I certainly do not think I could reach anything like the heights of the noble Earl, who gave us figure after figure entirely from his recollection. I hope that some day or other, when I get a little older, I shall be able to do the same.
I approached the whole subject of this Bill by thinking of the questions which 37 the ordinary person would put with regard to any Bill with provisions to reform or improve the National Insurance schemes at present in vogue in this country. I would pose these six questions. First of all, is the Bill an improvement in the present law? Secondly, are there any defects in the Bill which make it unworthy of our support? Thirdly, is the Bill sound both financially and actuarially? In the fourth place, I would ask: are the new proposals in the Bill such as really provide an adequate pension for the poorest section of the community? In the fifth case, are there any defects in the timetable which might be remedied by a change in the actual text of the Bill? Finally, is there a prospective advance to which we may look forward, and does it involve, not only at some early date but in a succession, fresh Bills from year to year, or from two years to two years, as the case may be?
Taking these questions seriatim, I refer to the first two—namely, is there an improvement in the law, and are there any defects in the Bill? I can answer those quite simply. In the first place, this is undoubtedly an improvement in the law, from the point of view of the persons concerned; and in the second place, there are no such major defects or injustices in the Bill as would make anyone wish to refuse the Bill a Second Reading. So I can satisfy the noble Earl completely on those two questions.
When it comes to the matter of the financial situation, the solvency of the Fund and the actuarial question of the future solvency of the Fund, the answer is not quite so simple. Of course, there is no doubt that, from a short-term point of view, the figures in the Bill are perfectly sound and correct. But when it comes to an actuarial point of view, then I should like to make the same answer as I made when I was dealing with the last Bill to which the noble Earl referred, the 1959 Act, dealing with superannuation. The fact is (I stated it at the time) that we are departing altogether from the actuarial basis of National Insurance. I stated that then because I had read the statement by the societies of actuaries; and I was interested to see that in the course of the debate on the present Bill in another place that position was recognised by persons on both sides of the House.
38 As I said when the earlier Bill—now, of course, an Act—was under discussion, we are now standing for an entirely new principle. It is this: that we workers in the present generation are willing to provide benefits for our old people to-day on the understanding that, when we become the older generation, the workers of that day will provide our benefits from their running resources. That is really the new position. It is not an actuarial position at all, an the old sense of that term. It does not mean that a person paying certain sums has earned a certain pension. It is simply an implied promise that the next generation will provide us, in our old age, with the benefits that we are providing for the generation older than us to-day. That deals with the third question about the actuarial basis of this Bill.
Now I come to what is, after all, the most important question: whether the benefits are adequate. I want to begin by considering who are the poor to-day. When I was a boy, the terms "poor" and "the unskilled manual labouring class" were practically synonymous, even when the unskilled worker was earning his full pay and was not unemployed, sick or subject to an accident. He and his family were thoroughly poor, and those of your Lordships who have read Charles Booth's famous Report of 50 or 60 years ago will know that I am not exaggerating the facts. The family of the unskilled manual worker, even when he was in work, were permanently poor; they were half-starved, badly clothed and everything else.
In the course of all the years of this century that situation has clearly changed for the better. Broadly speaking, any person in regular employment to-day cannot really be called poor. Some may be getting a smaller amount than others and may be comparatively worse off, but they are not poor in the sense that the unskilled manual worker in employment was poor in the days of which I am speaking, 60 years ago. But that does not mean that we have no poor to-day; because we have. We have poor people, principally of two classes. The first is the widowed mother. All down these years the widowed mother has been expected to carry on an impossible task—to earn money by her work outside the home and to keep the home and children at the same time. Throughout that period, 39 but particularly in the old days of which I am speaking, she was faced with a totally impossible task. The widowed mothers, therefore, are one aspect of the very poor.
The other class of the poor are those who, having been industrial workers previously, have now had to give up their employment and to depend on such pension or charity of some kind as comes to them. The question to-day is whether those aged people, who have not been poor in their working life, are now poor; and to a very large extent they are. In the old days there used to be a class called "decayed gentlewomen". It was not a very happy phrase, but it was used, and I believe still is used in certain cases to-day. There are people who have been comparatively well off in their former life and who in old age become really poor and call for assistance from all sources.
I was most interested in the speech which the noble Earl made, because he practically admitted that if a man in this country had to rely upon his pension under the National Insurance Act and had no other resources, he would be very poor. Not only would he be very poor compared with what he might want, but he would be very poor in terms of the German system which, I understood the noble Earl to say, provides in many cases something like two-thirds of the previous earnings. Of course it is no good our pretending that anybody with much less than two-thirds of his previous earnings would be anything but poor. In the higher income ranges—the Civil Service and so on—the retired worker gets a pension according to the number of years he has served, which generally works at between one-half and two-thirds of the salary he has been receiving during his working life. Even he may be subject to inconvenience and hardship, but most men who have lived fairly well on their salary can, by saving and cutting things out, manage on an income cut to two-thirds, or even down to one half. But the moment the proportion drops below one-half, it is difficult for anybody so to contract his expenditure and to continue to live in a reasonable position.
The fact is, my Lords, that the people who are least able to cut down their 40 expenditure to one-third of what they had before are the lowest-paid manual workers, men who have been getting, perhaps £8 or £9 per week. For them to have to come down to one-third of that amount, which is something like £3 a week, means that they must inevitably be in great hardship. The noble Earl argued in this way. He said one of the great advantages of not taking too much money from the man in contributions was that it would leave him more money from Which to make provision for himself in other ways. That may be perfectly true in a certain number of cases, but I venture to suggest that it is very unlikely to be effective in the great majority of cases. I believe that there are very few people earning £8 or £9 a week, and having to pay whatever is their National Insurance contribution, who will put aside any substantial amount in order to make provision for their old age. People with large sums may be able to do that; and they do, particularly if there are two or three breadwinners in the same family. But I think it is exceedingly unlikely that the ordinary man with only one income, of about £8 or £9 a week, coming into the house, is going to save in other ways, in addition to the saving provided through the Government. Therefore, although I was exceedingly interested in the point made by the noble Earl (and I will came back to that later), I personally would not put upon it the importance he himself suggested.
If a man is not going to be able to live on his resources without being in extreme poverty, he has to get more money in another way. There is, of course, the National Assistance scheme, and quite a large number of men and women, quite properly, ask for and obtain National Assistance. That is quite a good thing, for it is very different from the workhouse brutality which existed when I was young. But it does involve what some people, rightly or wrongly, look upon as humiliation, in having to give an account of their income to some officer who comes to see them. I am quite prepared to admit that the people who visit such persons behave very well and decently to the people they go to see and do not put humiliating and degrading questions to them. Nevertheless, there are quite a large number of 41 people who are very short of money. They look upon the old-age pension as something they have earned by their work, but they look upon National Assistance as charity, which they do not like to receive: in the view of some of them, it is a humiliating thing, particularly when it involves a means test.
So we have the fact that for a great many people this old-age pension is what they intend to rely upon. And is it enough? My contention is that, looking at it from the point of view that I have, it is not adequate to meet the case of those people who have not got other means. For that point of view, therefore, the provision in this Bill—advanced as it is; considerable as it is—does not come up to the point of being adequate to be the only resource to which a person who has lived a perfectly honest, straightforward, painstaking working life should be entitled in the course of his old age. The noble Earl says that it is up to the workers themselves. He asks: would they like to have the German system, in which they are asked to pay a very much higher premium in order to obtain a higher benefit? He came to the conclusion that, on the whole, they would not. But that is a very interesting suggestion, and if that is the position the Government take up, would it not be right that they should make a few inquiries to find out what would be the attitude of the vast number of wage-earners as to that payment?
I remember that when I was dealing with the 1959 Bill I got, not out of my own head but from the pensions officer of Lever's (I think it was), a statement in which he said it was quite a mistake to think that, on the whole, workers would not be prepared to pay an increased premium for a higher pension and superannuation. I do not know. I do not know that the noble Earl, with all due respects to him, has any ground for being able to say that the figure which the Government are now producing is the last word on what workers would be prepared to pay. I am not prepared to say whether it is or whether it is not. But if the view of the Government is that they have brought in this inadequate pension scheme only because of that attitude on the part of the modern worker, then I suggest to them that it 42 might be quite a good thing for them to go to the sources from which information can be obtained and find out whether that is so or not. But it is perfectly clear to me that, from the point of view of complete relief of poverty through the old-age pension alone, the amount provided in this Bill, good as it is and as far as it goes, is not fully adequate. I do net want to hammer that point home any more.
I want to turn to the two last points that I raise. The first point is this. Is the Bill faulty with regard to its timetable? I do not want to make political points here, and I do not think it will get us very much furthur if I do. But there are people who say that the Government could have brought in this Bill a little earlier, so that it could have come into operation over this winter; and some who say that the additional benefits could have been provided so that the winter did not pass with these people still on the figures they have had up till now. I know the Government's answers to those points; they were stated at considerable length in the other place, and I do not think it is much good our pursuing them at the present time. I state my point merely as a fact. It is unfortunate—I will not put it higher—that the people who are going to get this benefit will have to face their old terms all through the hardest part of the winter. It would have been a happier thing had the Government been able to give them increasing benefits from now, instead of from this long time in advance.
That brings me to the last question (and this was one to which the noble Earl himself referred at some length), whether there should be progressive increases in benefits as the years go by. I understood the noble Earl—I do not think I am misrepresenting him—to say quite definitely that it is the intention of the Government from time to time to introduce further ameliorations. I am very glad if that is so, because if, as time goes by, the prosperity of this country goes on increasing, or if we do not entirely stop inflation, or if there are other causes, then I am sure that it would be the intention of those of us on this side of the House—and I gather from the noble Earl that it would be the Government's intention—steadily to improve the 43 scheme of pensions which is provided in this Bill.
The noble Earl, of course, will not fail to notice that in the other place one of the principal Amendments, which was moved by those of my Party on the Opposition side of the House, was one which would have provided automatically for increases in benefits and reexamination of the scheme at certain intervals, particularly when statistical changes had become evident. The Government rejected that proposal. That would have operated, I think, by Order in Council and not by a new Bill. The scheme which the noble Earl advocates, I think, will in every case require a new Bill after each fresh examination; and that, of course, will mean delay and some inconvenience. If the Government intend to implement what I understand to be the intention of the noble Earl, it means that we shall have a succession of Bills in the future from time to time improving the position of the old-age pensioner. If that is so, it would certainly meet with my approval.
My Lords, I want to say this, in conclusion. There is nothing in this Bill which would prompt my noble friends on this side of the House to divide against it on Second Reading. Whether we shall think fit to put down Amendments for the Committee stage, which I gather will be in about a week's time, we shall have to consider; and I hope that what remarks we make will be received with the interest and the attention which I am quite sure the noble Earl will pay to them. But whether that be so or not, this Bill certainly is an advance; and certainly one which should not be opposed on the grounds of defects in principle. But we remain of the opinion that the scheme is inadequate to bring pensions up to a proper figure on which a person for whom his pension is the only means of support has to base his life and conduct and the upbringing of his family.
§ 4.39 p.m.
§ THE EARL OF DUNDEEMy Lords, I do not think there is anything in the most interesting speech of the noble Lord with which I absolutely disagree, and I think that with most of what he said I found myself in agreement. And I am grateful for the manner in which he has presented his comments on this Bill. His final 44 point, No. 6 in the table, was on the future ameliorations, as the noble Lord described them, of the pensions scheme. I ought to make this quite clear: that there is no definite pledge that pensions will be increased from time to time. What we have said is that we will review the scheme from time to time. It is possible to imagine circumstances (for instance, under what has been called the new social fashions of the wage-earners in an affluent State) in which there might be some great new developments by way of other schemes of insurance which might affect the nature of our review. I do not know; we cannot foresee these things. But, so far, I have never heard of any review of the retirement pensions scheme which was other than in an upward direction; and I think that this is now the fifth or sixth in the last ten or twelve years.
Then the noble Lord mentioned only briefly the point about the timetable: that he thought this might have been brought in before the end of the winter. My Lords, I do not think it could be made to take effect quite so early as that. I think the best general answer to questions about the timetable is to be found in what Dr. Summerskill said when she was Minister for National Insurance in 1951. She said [OFFICIAL REPORT (Commons), Vol. 487, col. 592]:
Most people know that pensions are paid by means of books of 52 weekly orders, which are security documents, similar to a cheque or money order. These books are held by pensioners and exchanged as they run out at the rate of about 80,000 a week. Pensioners affected by these proposals are therefore at any moment holding something like 75 million of these security documents; and a steady stream of additional books of orders is going out week by week to them. All these orders must be replaced either by orders for the new rates, or by amended orders, properly authenticated, before the Post Office officials can pay the new pensions. I would ask honourable Members to remember that.At that time, my Lords, I think, there were only four million retirement pensioners. There are now nearly six million, so there is even more administrative work to be done. But my right honourable friend in another place was very frank about this. He said that he thought that, if it had been treated as a matter of urgency, we could have started making these new payments towards the end of February—that is, about six weeks before the date on which they will actually come into effect—but he gave 45 reasons for thinking that this gain of six weeks was not a great enough gain to outweigh the advantages of synchronising this new scheme with the date upon which the 1959 Act was in any case going to begin.The main burden of the noble Lord's remarks was on the theme of: are the benefits adequate?—and here again I do not find myself able to disagree very strongly with anything that he said. He submitted that if a pensioner had nothing at all except his retirement pension, he would be very poor. I think that is obvious and true. One reason why it must be true is that the rate of retirement pension is less than a pensioner with no other means could get by going to the National Assistance Board. I have already given your Lordships some figures on that in my original speech. For instance, under this Bill a married couple will now receive a 92s. 6d. retirement pension, whereas, as I tried to work out a hope my mathematics were correct), if they were (paying a rent of 18s. 6d., which the T.U.C. took as the average rent, and if they were receiving discretionary allowances, taking the average figure, by the National Assistance Board, they would in fact be getting something like 115s. a week, as compared with that 92s. 6d. pension. If you wanted to base your retirement pensions strictly on prevailing ideas of subsistence, it would mean that you would have to raise them substantially, as the noble Lord wants to do.
I am not going to elaborate this at great length, but, as the noble Lord knows, although there are over one million pensioners who are receiving, as they ought to receive, supplementation from the National Assistance Board, there are more than four million others who are not. I will mention the point he made about being too proud to apply in a second or two, but there are a large number of old age pensioners who have very substantial means of their own—some well known ones who are Members of your Lordships' House—and it is at least open to argument whether we should impose a much larger tax upon the earnings of insured contributors in order to pay larger pensions to people who are much better off than they themselves are. It may well be that, as wages go on rising, even the majority of 46 old age pensioners may become related to an income group quite different from that in which most of them find themselves at the present time.
The noble Lord mentioned the fact that some people still feel there is some humiliation about National Assistance. In some cases, I am afraid that may still be true, although I think we have all done our best to remove it entirely from our social habits and conscience in this country. We all feel that inhibitions against National Assistance are utterly wrong, that the modern administration of National Assistance is completely different from the old Poor Law, and that people who need supplementation ought to go and get their incomes supplemented. I hope and believe that the majority of those who need it are doing so, and that there are very few who are deterred by feelings of pride.
Of course, if you are trying to give everybody a subsistence allowance, it is obviously much more scientific to do it through the National Assistance Board and is much less scientific to do it by means of a statutory retirement pension which has to be related to a certain standard of weekly contributions: although, of course, if we had a state of affairs in which people were willing to pay these large contributions, and if the result of the contributions was to make available a sum which was higher than the amount payable by the National Assistance Board, no one could possibly object to that or could consider that it was a bad state of affairs. I think the noble Lord made a very interesting suggestion when he said that we might take more trouble to ascertain by inquiries from cross-sections of insured people how much more they would be prepared to pay by way of contributions in return for so much more in benefits.
My Lords, I do not wish to take up any more of your Lordships' time. I do not think the noble Lord would wish me to enter into a long political argument, which he certainly did not attempt to do himself. I would conclude by thanking him for his very interesting remarks and for his kind reference to myself, and by saying that, if I am spared to reach the number of years which the noble Lord has reached, I only hope that my memory will be half as good as his is now.
§ 4.50 p.m.
§ LORD SALTERMy Lords, may I ask just one question before the noble Earl sits down? I ask it purely for information and not to make any point. I was struck with one point which I thought extremely interesting in the speech of the noble Lord, Lord Pethick-Lawrence, and that is that, as I understand it, there is a profound difference between the basic conception of the present provision and, let us say, the essentially actuarial basis of the Lloyd George Bill of 1911 or 1912, in that we are now making our provisions with a view to securing the benefits, and arranging the necessary finance, for the immediate future, but, so to speak, acting in the faith that our successors in later generations will carry a different burden in relation to what prove to be the obligations of that time. There is a profound difference between that and the essentially actuarial basis of the earlier Acts, and I understood that to be the point made by the noble Lord. I should like to know whether the noble Earl would confirm that.
§ THE EARL OF DUNDEEMy Lords, I think that is a very good question. If my noble friend would like to read the speech of my right honourable friend the Minister when moving the Second Reading of this Bill in another place, he will find the explanation why this present system of pensions is not on an actuarial basis, as it used to be. My right honourable friend also pointed out that people who had contributed £200 or £300 in the course of their lives to the pension scheme under the old basis—not so far back, perhaps, as Lloyd George, but from as far back as 1925—are now receiving benefits with a capitalised value of £2,000 or £3,000 more than they had contributed.
§ LORD PETHICK-LAWRENCEMy Lords, to supplement that point of the noble Earl, may I say that in the course of my speech in the debate we had in June last year I quoted certain phrases from the Society of Actuaries in which they make that point very specifically.
§ On Question, Bill read 2a; and committed to a Committee of the Whole House