HL Deb 26 February 1963 vol 247 cc26-37

House again in Committee.

Clauses 5 to 7 agreed to.

Schedules 1 to 3 agreed to.

Schedule 4 [Commencement, transitional provisions and construction]:

THE EARL OF DUNDEE

This Amendment is consequential on Amendment No. 2, which has been accepted. I beg to move.

Amendment moved—

Page 17, line 9, at end insert— ("section (Allowances in respect of incapacities arising from pre-1948 employment)").— [The Earl of Dundee.)

On Question, Amendment agreed to.

3.40 p.m.

BARONESS SUMMERSKILL moved, in paragraph 1 (1), after "appoint" to insert: (not being later than 1st February, 1963, in the case of subsections (3) and (4) of section 1, Schedule 2 and Part II of Schedule 3)".

The noble Baroness said: I beg to move the Amendment standing in my name: its object is to alter the dates when this Bill will come into operation. It is intended at present (subject to the Bill passing this House, of course) that the benefits for unemployment and sickness shall be increased as from March 7 and the rest of the benefits, which consist mostly of retirement pensions, as from May 27. My purpose is to appeal to the Minister to date these benefits from February 1, in order to ensure that these very small increases, for widows, and for the unemployed or sick, should be given immediately, and that these people should not be kept waiting for weeks or months.

I am afraid that my plea can be based only on compassion: it cannot be based on consistency. I cannot advance a logical argument as to why these people should be given these extra increases. There is no precedent. I admit that at times when circumstances were different I have argued that it is difficult to make a benefit retrospective. But there has been no precedent in recent years for the extremely cold weather that we have had. I believe this has been the coldest winter for 80 years. What are these people going to do when they receive this little extra money? The most important items in the budget of retirement pensioners are food and fuel. As the Bill stands, we are asking these people to wait till the end of May, before they receive this extra benefit in order to improve their standard of living. Thirteen years ago, in 1950 (again I think it was mentioned in another place), it was suggested that certain benefits should be made retrospective in entirely different circumstances. But on this occasion I can only ask noble Lords here to exercise compassion in this matter and say that extraordinary methods will be used in order that old-age pensioners should have this extra money before the end of May.

We often read of, and indeed discuss, wage and salary adjustments; and these are invariably made retrospective. Generally, if there is a strong demand from people who will benefit from an increase in wage and salary, it is decided that increases shall be made retrospective. I am pleading here for retirement pensioners who have no powerful pressure group. We are all politicians here, and it would be quite dishonest for any of us to say that Parliament has never in its legislation been moved by a plea from a powerful pressure group; indeed, one dares not imagine, perhaps, what sometimes goes on behind the scenes when these pressure groups are brought to bear upon some poor unsuspecting Minister. But these retirement pensioners must accept quietly. In fact, they are incapable of making much protest. They would certainly be incapable in this bad weather of descending on the Palace of Westminster and demanding at various doors to see Members of Parliament, of either House. Therefore, all one can do in this case is to consider the situation and ask: are they worthy? The amount of money they are going to be given is very small, and I am asking your Lordships to say this afternoon these people are worthy to have it before May 27.

What are the arguments? I know all the arguments: they are administrative. It is argued that it cannot be done. But we have a first-class machine responsible for administering insurance benefits, and it is guided and directed by the agile minds of first-class civil servants. Maybe thirteen years ago this might not have been possible, but surely I feel quite certain that if your Lordships directed that it should be done the retirement pensioners would receive this little extra benefit before May 27. I beg to move.

Amendment moved—

Page 17 line 13, after ("appoint") insert the said words.—(Baroness Summerskill.)

3.47 p.m.

THE EARL OF DUNDEE

This again is a verbatim reproduction of an Amendment moved in another place which was negatived. The noble Baroness has moved it in a speech of great and charming moderation. She has also been very short and she has above all been very frank, I thought. She said candidly that she was moving this Amendment on grounds of compassion and not on those of logic, and naturally one always sympathises with a case which is put like that; and I shall therefore refrain from quoting the long passage from the noble Baroness's explanation in 1951, to which she has herself referred, giving the reasons why the benefits could not be paid more quickly after the then increase was announced. At that time the interval was four or five months. I shall not read the quotation but I have, I must confess to her, quoted it before in dealing with previous Bills, because it does put the case so clearly and convincingly that I always felt nobody could refute it once it had been heard and it is expressed very much more convincingly than I can do.

All I would say is this. At that time, when the noble Baroness gave this explanation of the very complicated work to be done by the Ministry of Pensions officials, there were only a little over 4 million people receiving these benefits, half the number now; there are now 8 million. It has not become less complicated in the interval. The noble Baroness paid a tribute, I am sure, well deserved, to the capacity and efficiency of officials of the Ministry of Pensions. Their task is twice as difficult now as it was then. They have got to do it on top of their ordinary work, and I am advised by my right honourable friend that if they were to attempt to work out all the retrospective claims between February 1 and May 27 it would have the effect of postponing the date when anything could be paid for a still longer period.

I think my right honourable friend has done his best to accelerate payment in this case. The short-term benefits, which do not require so much calculation, are being begun on March 7, and as for May 27, which is the date of the long-term benefits, I think this is the shortest period but one that has ever been achieved for any major or substantial change in the rates of retirement and other benefits.

The noble Baroness mentioned the hardships of the winter. I would remind your Lordships that the National Assistance scales were raised in September before the winter had begun, not that anybody had anticipated the weather we would have. But I would also add that of the considerable number of recipients of retirement pensions who are receiving National Assistance, a large number—I think about two-thirds—are receiving special allowances for such things as fuel or special diets, averaging something like 8s. a week; and the National Assistance Board also, of course, almost invariably pay the full rent.

These new increases—I will not argue with the noble Baroness who described them as "trivial"—are increases of between 17 and 18 per cent. in the amount of the benefits, and they represent a much greater rise than the rise in the cost of living. Since the last rise of April, 1961, there has been a movement of about 6 per cent. in the cost of living, and the increases in pensions under this Bill amount to about three times that figure. I think it is not only one of the quickest payments after announcement of any increase but it is also, apart from the small adjustment in 1952, the shortest interval that we have ever had between two major changes in pensions rates: only about two years, from April, 1961 until the present date. The anomalies which would be created by trying to make a retrospective payment are not only extremely difficult to resolve, but they would result in a great deal of inequality, unfairness and no doubt discontent even if it were possible to do this. I am afraid that in those circumstances there could not be any hope of my right honourable friend agreeing to amend the Bill in this manner.

On Question, Amendment negatived.

THE EARL OF DUNDEE

This Amendment is also consequential on Amendment No. 2. I beg to move.

Amendment moved— Page 18, line 40, at end insert—

("Allowances in respect of incapacities arising from pre-1948 employment

6.—(1) Where an allowance under the Workmen's Compensation and Benefit (Supplementation) Act 1956, or under the Industrial Diseases (Benefit) Acts 1951 and 1954, is or has been awarded before the increase date, the allowance shall, without any claim being made, become payable (except as respects any period falling before the increase date) at the higher weekly rate provided for by section (Allowances in respect of incapacities arising from pre-1948 employment) of this Act, and the award shall have effect accordingly.

(2) Where any such award is made before the increase date, but after that date has been appointed, the award may provide for the allowance to be paid as from that date at the higher weekly rate.

(3) In the foregoing provisions of this paragraph "the increase date" means the date appointed for the higher weekly rate to become effective under subsection (1) of subsection (3), as the case may be, of section (Allowances in respect of incapacities arising from pre-1948 employment of this Act).

(4) Section 1 (4) of the Workmen's Compensation (Supplementation) Act 1951, so far as it prohibits the making of a scheme under that Act unless a draft of the scheme has been laid before Parliament and approved by a resolution of each House, shall not apply to any such scheme made before the expiration of the period of six months beginning with the date of the passing of this Act if the statutory instrument containing the scheme states that the scheme is made in consequence of this Act; but any statutory instrument containing a scheme which, by virtue of the foregoing provision, is not required to be laid and approved in draft as aforesaid before being made shall be subject to annulment in pursuance of a resolution of either House of Parliament.").—(The Earl of Dundee.)

On Question, Amendment agreed to.

Fourth Schedule, as amended, agreed to.

Fifth Schedule [Repeals]:

THE EARL OF DUNDEE

This, and the next Amendment are consequential. I beg to move.

Amendment moved— Page 20, line 44, column 3, at beginning insert ("Section 1 (1), (3).").—(The Earl of Dundee.)

On Question, Amendment agreed to.

THE EARL OF DUNDEE

I beg to move.

Amendment moved— Page 20, line 45, column 3, at end insert ("and paragraph 2").—(The Earl of Dundee.)

On Question, Amendment agreed to.

Remaining Schedule, as amended, agreed to.

The Title:

THE EARL OF DUNDEE

I beg to move the Amendments to the Title.

Amendment moved— Line 14 leave out ("and").—(The Earl of Dundee.)

On Question Amendment agreed to.

THE EARL OF DUNDEE

I beg to move.

Amendment moved— Line 16, after ("employments") insert ("and to improve the allowances payable out of the Industrial Injuries Fund in respect of incapacities arising from pre-1948 employment;).—(The Earl of Dundee.)

On Question, Amendment agreed to.

Title, as amended, agreed to.

House resumed: Bill reported with Amendments.

Then Standing Order No. 41 having been dispensed with (pursuant to Resolution):

THE EARL OF DUNDEE

My Lords, I beg to move that this Report be now received.

Moved, That the Report be now received.—(The Earl of Dundee.)

On Question, Motion agreed to.

THE EARL OF DUNDEE

My Lords, I beg to move that this Bill be now read a third time.

Moved, That the Bill be now read 3ª.—(The Earl of Dundee.)

3.55 p.m.

LORD MOLSON

My Lords, I had intended to make a speech on the principles of this Bill on Second Reading. I understood, however, that it had been agreed through the usual channels that there should be no debate on the Second Reading. Therefore I find myself in the somewhat anomalous position of being obliged to refer to the general principles after the Committee stage has been concluded. In another place that would be regarded as a quite unforeseen development, but I believe this is part of the flexibility of the procedure in your Lordships' House which is, I think, to the convenience of everybody, and perhaps especially the Opposition.

I cannot think that this measure is well designed for the purpose that it has in mind. The origin and principle of retirement pensions derives from 1926 when Sir Winston Churchill introduced the idea of contributory pensions to be drawn as a matter of right. It then applied only to wage-earners. Legislation following the Beveridge Report made it universal. Under the Act of 1946 everyone was obliged to contribute, and everyone who had contributed became eligible after the lapse of ten years, to draw a pension. The result of that is, first, that everyone is able to draw a pension without proof of need; secondly, in ever-increasing proportion those in receipt of retirement pensions are not in need. Thirdly, it therefore follows that under this Bill, as I calculate it, increases are being given to three persons who are not in need for every one person who is in need. Fourthly, those in need will obtain an extra 6s., while those not in need will obtain an extra 10s.

I think this is a matter of sufficient importance for me to put the same argument again in a different way. Everyone who is in need is able to apply to the National Assistance Board. Let me here pay a tribute to the flexibility and sympathy of the administration of the National Assistance Board. It takes account of the special requirements of every applicant in such matters as fuel and special diet, and in more than 90 per cent. of the cases the rent of the applicant is paid in full. That is an example of flexibility, because there is a great variation in the rents paid by persons who otherwise are in similar circumstances. So greatly do circumstances vary, that even if the pension were increased by £1 instead of by the 10s. by which it is being increased under this Bill, there would still be half a million people who would continue to have to go to the Assistance Board.

National Assistance scales are higher than pensions and therefore pensions which are received are deducted from the scale to determine the amount of assistance given. Those who have no income in addition to their pensions can in almost all cases—perhaps in all cases—draw assistance in supplementation. So the level of pension is of great importance only to those who cannot draw assistance benefit. It therefore follows that those who are, as defined by the scales of the Assistance Board, in need, will benefit under the new arrangements by 6s. a week, while those who have other sources of income and therefore are not in need will benefit by 10s. a week.

The pension has never been tied to the cost of living. It has never been claimed that pensions are sufficient for a person to live upon. It is the Assistance Board who, with great skill, have calculated what is required for subsistence. Under this Bill, so far as I can ascertain, only some 30,000 or 40,000 are likely to be taken off assistance by the increase in pensions. When pensions were originally introduced they were confined to wage-earners most of whom at that time had nothing else on retirement except their retirement pension. It is now being paid to those who have private sources of income—to those who are wealthy, or to those who have just some additional income. It is paid to those who are in receipt of pensions which they have earned by Government service, whether in the Armed Forces or in the Civil Service. It is paid also to those who receive occupational pensions.

There has been an immense increase in the last few years in the number of occupational pensions. They apply now, I think, throughout all the nationalised industries and through a very great many of the larger concerns in private industry. They amount in all to some £1½ million. Therefore, the situation with which the Churchill contributory pensions of 1926 and the Beveridge scheme of 1942 was intended to deal has completely changed. That pension system now is becoming inappropriate to existing circumstances. That was a system of flat-rate benefits paid in return for flat-rate contributions. These contributions are now becoming increasingly burdensome to those who receive low wages, and at the same time the pensions are of little interest to those who are highly paid.

It is only some three years since this Government persuaded your Lordships to approve a measure to introduce graduated retirement pensions, but nothing comparable has been done in the case of unemployed benefit or of sickness benefit. What is happening in this measure is merely another piece of patchwork, and I suggest that in the near future it will be necessary for the whole of this pension scheme to be looked at again in the light of the entirely different circumstances which apply now as compared with 1948.

The arguments I am venturing to put forward are derived from an extremely reputable source—the speech of the Chief Secretary to the Treasury and Paymaster General when, with the Minister of Pensions and National Insurance, he resisted a Motion in the Commons dealing with this matter on November 26 last. It would appear from this recent change in the Government's policy that this is a panic measure intended to alleviate the unemployment which at present exists. But I cannot believe it is wise to make permanent and very important changes in the pensions scheme in order to deal with what we all hope and believe will be a temporary unemployment problem.

The money is being so widely distributed that it is going to be of comparatively small benefit to those who are in greatest need. These additional contributions add a heavy burden to industry and are thereby likely to raise the cost of living at home and to make more difficult the increase of our exports abroad. The expenditure, I venture to say, is entirely disproportionate to the benefit that is going to be obtained. We must be careful in looking at the payment of pensions. Of the whole population in 1911 those who would now be classed as pensioners were 6.7 per cent. of the population, by 1951 it was 13.5, and by 1961 it was 14.8 and still rising.

I hope that this will be the last case of an increase in the flat rate of pension. I regard it as an indiscriminate and undiscriminating distribution of largesse, chiefly at the expense of the contributors. I cannot do better than conclude in the words of the Paymaster-General, speaking in the debate to which I have referred, when he said—and it applies to this Bill [OFFICIAL REPORT, Commons, Vol. 668 (No. 20), col. 146]: … while … it would give advantage and help to many people who could well do with it, it would also give, at a heavy cost to the working generation, advantage to those who are not in particular need.

LORD AIREDALE

My Lords, this Bill was amended in Committee this afternoon by the insertion of a new clause after Clause 4. The new clause has a marginal note which makes use of the expression "Pre-1948 employment". Marginal notes, of course, are not strictly part of a Bill, but I submit to your Lordships that even a marginal note ought to be in good English. I venture to submit that the expression "Pre-1948 employment" is bad English. I very much hope that when the Bill is being printed we shall have the pleasure of seeing this marginal note amended so as to read, instead of "Pre-1948 employment", "Employment before 1948".

4.8 p.m.

THE EARL OF DUNDEE

My Lords, I do not know whether it would be possible to improve the style and language of the Bill before Thursday, when we hope it will receive the Royal Assent, but I will certainly represent to my right honourable friend what the noble Lord, Lord Airedale, has said and see what can be done.

I am grateful for the remarks of my noble friend Lord Molson. He may quite possibly be right in saying, as he did to begin with, that this is an ill-conceived or badly-designed Bill which will not fulfil what is in mind, but I am afraid there is nothing I can do about that this afternoon. I would, therefore only acknowledge the very interesting remarks of my noble friend and just say this. I was glad he began by directing his argument to the National Assistance Board and suggesting that its scope should be expanded, because I am sure your Lordships will agree that all parties have been trying for a long time to remove the idea that there is something derogatory about applying to the National Assistance Board. We, of course, understand very well the sentiments of pride and independence which make many people reluctant to do so. But it is, in present circumstances, really not possible to carry on a humane and proper system of social services in a Welfare State without an institution such as the National Assistance Board. My noble friend's argument was that we ought to do more through the National Assistance Board and not so much through these contributory pensions.

Although personally I should have no theoretical objection if some day we could reach a state of society in which everybody had such a good income that a National Assistance Board was un- necessary—I would certainly think that was a good thing—in present circumstances I cannot envisage any state of society in which there would not be at least a few people who ought to be encouraged, I would say, to apply to the National Assistance Board. I think my noble friend and all of your Lordships would perhaps agree that it is a difficult thing, trying to reach the right balance between benefits which are given as of right, in return for a contribution, and assistance which is not given as of right and which depends upon need. Very often our policy is criticised from the opposite angle to that from which it has just been criticised by my noble friend.

We are often told, for example, that we ought to have a much bigger contributory pensions scheme, like they have in Germany, in which a worker may be assured as of right of a payment in his old age which will be sufficient for his needs. But that, of course, would mean a much higher contribution. I believe that the contributions in Germany amount to 12½ per cent. of a man's weekly wage, with the result that they can earn very high pensions as of right. One would not, I think, necessarily argue that in itself 12½ per cent. is too much of anybody's income to save for the purpose of providing for old age. The question is rather: how much we should interfere with a man's liberty to do what he likes with his own money. That, indeed, was the reason—I thought of it when the noble Lord, Lord Molson, went back to the origin of this insurance scheme more than 50 years ago—which prompted Hilaire Belloc to write a book called The Servile State: because he thought that the result of this insurance legislation would be gradually to make the working population into slaves, and the State would take away all their money for their own good and would judge what was best for them. We have to make the best compromise we can, and I am far from saying that we have the best one, but I think we should not rely entirely on National Assistance. I think we should try to improve and extend our contributory pensions system.

It is a good thing, within certain limits, that we should have compulsory contributions supplemented by aid from the Exchequer in order to provide payments as of right. I think it encourages thrift, too, because if everybody were always to get all he required from the National Assistance Board, that would not be an encouragement to anybody to save. The fact that a man gets this pension as of right means that it is his own and, except for the earnings rule for a temporary period between 65 and 70, it is not something which can reduce his other income. I would not quite agree with what my noble friend said at the end—certainly not about this being a panic measure. I do not think it will add to our export difficulties. In fact, I think that to keep unemployment benefit in step proportionately with wages is a good thing for the economy of the country, because it means that we do not have a considerable section of the public with a much lower purchasing power. And I do not think it is a bad thing for our economy and export trade as a whole, to increase purchasing power in that direction.

I think that these contributory benefits, retirement pensions and unemployment benefit, have moved rather faster since 1948 than wage rates. But I do not think it is wrong that we should go on from time to time improving our social service system in this way, so as to keep these contributory benefits in line with the general increases in wages and in national prosperity. That is what we are trying to do in this Bill. It is not a panic measure. It is a step forward, I would submit to your Lordships, in keeping with the steps which we have taken before, and after a rather shorter interval than we have had until now. I therefore commend this Bill to the approval of your Lordships.

On Question, Bill read 3ªwith the Amendments, and passed, and returned to the Commons.