§ 4.37 p.m.
§ Order of the Day for the Second Reading read.
§ THE MINISTER OF STATE, BOARD OF TRADE (LORD DRUMALBYN)
My Lords, I beg to move that the Family Allowances and National Insurance Bill be now read a second time. It is a pleasant task to be able to introduce a measure of this type, the principal object of which is to provide further help for widowed mothers. Widowed mothers with families to bring up without the help of father and breadwinner have always attracted, and deserve to 405 attract, special sympathy. If I may, I would recall to your Lordships what the noble Baroness, Lady Summerskill, said in the debate in another place on May 9, 1951, when she said [OFFICIAL REPORT, Commons, Vol. 487, col. 1984]:I am sure honourable Members realise that the widow with children is in a special position. Overnight, she suddenly becomes the wage-earner, the home-maker and the protector of her children. All the responsibilities she used to share with her husband suddenly fall upon her shoulders. I feel sure she is in a special position and I want to put it on record that we must always regard her as such".So it was that the Labour Party, in their 1951 legislation, especially benefited the widowed mother.
This kind of preference has been continued and expanded by the present Government. We have on several occasions made especially favourable provision for widowed mothers—for example, by the introduction of preferential rates of benefit for their children and by further relaxations of the widowed mothers' earnings rule. While the present measure will benefit other beneficiaries under the National Insurance, Industrial Injuries and Family Allowances schemes, it is principally designed to continue this process of help for widowed mothers.
The Bill gives effect to a series of improvements announced by my right honourable friend the Prime Minister on December 10 last. In brief the allowance for each child of widowed mothers is increased to 37s. 6d. a week. The earnings rule for widowed mothers is raised from £6 to £7 a week. The upper age limit for children's allowance and family allowance is raised from 18 to 19. This last change benefits not only widowed mothers but also the unemployed, the sick and the retired, who have children still at school or in low-paid apprenticeships. Finally, the earnings rule for widows and for the retired is raised from £4 5s. to £5.
Yord Lordships will expect me to explain the consideration which led the Government to propose these changes. The Government have been studying for some time the ways in which more help could be given to widowed mothers. I would remind your Lordships that in the 1963 Act a new way of helping them was devised. A provision was included 406 which enabled all widowed mothers, whatever their earnings, to retain at least 26s. of their allowance. This was the difference between the ordinary benefit for a single person and that for a married dependant. We thought it reasonable that that amount should be retained as a contribution to the home which the widowed mother keeps for her children. Of course, the allowance for her children is never affected by her earnings in any way. The most she can lose under the earnings rule is 41s. 6d. out of 67s. 6d.
But the Government have always recognised that the best way of helping widowed mothers within the framework of the National Insurance scheme is to increase their children's allowances. At present, the allowances are 30s. a week for each of the first two children, and 32s. for the others, taking family allowance into account-10s. more than for other children. It is proposed in the Bill to increase them to 37s. 6d.—17s. 6d. more than for the first two children in other families and 15s. 6d. for the rest. Already 37s. 6d. is the amount which is payable as guardian's allowance for an orphan. The increase will mean that the widowed mother who has three children will be receiving a total payment of £9 a week, which in real terms is about 125 per cent. more than the benefit of £2 15s. paid to her when we took office in 1951. And even if the maximum reduction in respect of her earnings is made, this widow with three children will still get £6 18s. 6d.
I come to the raising of the upper limit of age for children's and family allowances. At present, not only do these allowances come to an end when the child reaches 18, but so also does the widowed mother's allowance when her only or her last child reaches 18. There are many widows struggling to keep their children at school before going on to higher education who find their National Insurance and family allowance benefits stopped although their commitments go on just the same—at least, until the son or daughter goes on to the next stage of their higher education or training, when they will get the appropriate allowances for further education.
The proposal to raise the upper age limit to 19 will benefit widows in three 407 ways. First, as well as their own allowance, they will get the appropriate child and family allowance for the son or daughter so long as they continue their schooling or apprenticeship up to 19, instead of 18 as at present. Secondly, where the child has left school and is living at home, they will still get widowed mother's personal allowance until the child is 19; that is, instead of 18. In consequence, each year over 20,000 widows will receive widowed mother's allowance for a further year. Some of these will get an extra year's benefit. The rest, who would otherwise get widow's pension, will have the advantage for another year of the mere favourable earnings rule applying to widowed mother's allowance. Thirdly, it will increase the number who will pass from widowed mother's allowance to widow's pension. At present, a widowed mother gets widow's pension if she is over 50 when her youngest child reaches 18. But most widowed mothers transfer to widow's pension when they cease to receive the allowance; and their numbers will be increased.
The change in the upper limit, as I have said, will benefit not only widowed mothers, but also the sick, the unemployed, retirement pensioners and those receiving family allowances who have children over 18 years of age, so long as they are under 19 and continuing with their education. A new upper limit is desirable because since 1956, when 18 was adopted for this purpose, there has been a considerable increase in the number of children remaining at school beyond 18. In 1956 (I think your Lordships will be interested in these figures) some 19,500 children stayed at school after 18, but by 1963 this figure had reached 31,500. Roughly 9 out of 10 of these children will have left school by age 19, and where they have gone on to university will be getting university grants. Age 19, therefore, will correspond more closely with the educational realities.
I come now to the third main change—namely, the raising of the earnings limit. I feel that it would be worth while for me to say something at this point about the earnings rules. Perhaps I may remind your Lordships of the reasons why they have formed part of the National Insurance scheme since it was 408 first introduced in the Act of 1946, and why the Government still feel that they are necessary, even though they are irksome and widely misunderstood. To start with, may I correct two false impressions? First, the earnings rules do not prevent anyone from earning and secondly, they do not deprive people of benefits already paid for by contributions. Like any general statutory scheme, the National Insurance scheme is based on a principle, and principles are not always easy to apply in practice. The principle is that National Insurance benefits are payable to people who, for one reason or another, cannot work and support themselves by their earnings. That is the basic principle, and it is on that basis that contributions are assessed. And that it why instead of an old age pension we now have a retirement pension. It is also why, instead of unconditional widows' pensions such as existed under the pre-1946 contributory scheme, we have widows' benefits paid only to those widows who, because of age or family circumstances at the time when they become widows, or when their youngest child ceases to be dependent on them, cannot generally be expected to provide for themselves by their earnings—and I am speaking here in general terms.
The effect of the earnings rule is that if a pensioner earns more than so much a week, his pension is adjusted. The levels at which deductions begin to be made for widows and retirement pensioners are at present £4 5s. a week, and for widowed mothers the preferential amount of £6 a week. These amounts will go up under the clause to £5 and £7 respectively. This represents not merely an adjustment to match increases in average earnings since the last move in the earnings rules, but a real improvement for those concerned. If we were to abolish all the earnings rules we should have to abandon the whole retirement principle, thereby putting the clock back twenty years to the old conception of unconditional old age pensions. The immediate annual cost of doing so would be well over £100 million a year. Most of the money would go to pay full pensions to people who go on working or earning as before during the five years after reaching pensionable age. There are nearly 400,000 who are doing so at present.
409 In the same way, in the case of widows' pensions, the earnings rule supports the important principle that the pension is designed for those who cannot work and earn. The dividing line is taken as age 50 when a woman loses her husband, or in the case of a widowed mother when her children have all reached 18. But some widows over 50 can and do take up full-time work—some of them may have been working all the time. So it is necessary to have an earnings rule to make sure that benefits are paid to those widows for whom they are intended, in accordance with the basic principles of the National Insurance scheme.
Widowed mothers are already treated as a special group, because their problems and responsibilities are greater than those of widows who have only themselves to support, and we are proposing to maintain the special preference given to them so that they will receive most of the benefit payable regardless of their earnings. Under the Bill a widowed mother with two children will be entitled, with family allowance, to £7 2s. 6d. a week. Of this she can retain £5 1s. a week, however much she earns. If she is not at work, or is earning not more than £7 a week net, she will be able to receive her £7 2s. 6d. in full, and this will not be reduced to the minimum benefit of £5 1s.—the amount that all widowed mothers with two children receive—until her earnings reach £9 12s.; that is, when her total net income is £14 13s. Thus, while we have not abandoned the main principle, the conditions are relaxed to the greatest possible extent in recognition of the widowed mother's particular needs.
My Lords, having explained what the Bill does, I do not think I need spend much time on the clauses, because they are pretty fully explained in the Explanatory Memorandum. Clause 1 deals with the increase from 18 to 19 in the age limit for the definition of a child for family allowances and for dependency increases of benefits under the National Insurance and Industrial Injuries schemes, including the allowances for children which are paid to widowed mothers. The insurance schemes have always applied the family allowances definition for the purpose of 410 widows' and dependency benefit, and it is obviously sound both in principle and as a matter of administration, that a child should be defined in the same way for allowances under all the three schemes. The change to age 19 can therefore be made by the simple amendment of the Family Allowances Act contained in subsection (1). Subsection (2) provides a similar extension for the widowed mother who has residing with her a son or daughter who has left school and will usually be working.
Clause 2, with Schedules 1 and 2, provides for the increases in the allowances for the children of widows and in the rate of child's special allowance. It secures that in future a total payment of 37s. 6d. a week will be made for each child, including family allowances. This represents a substantial increase in the benefit. Subsection (2) of the clause makes a technical change and tidies up the provisions which apply where the child is not living with his mother.
Clause 3 safeguards the position of a relatively small number of widowed mothers who are at present receiving from the National Assistance Board a supplement to their insurance benefit. It will enable the Board to disregard the increases in children's benefits, provided that the total weekly income disregarded does not exceed 30s. Normally, as the law now stands, the Board do not disregard National Insurance benefits, but this special provision has been included on this occasion in order to ensure that every widowed mother, including those receiving supplementary assistance allowances, will benefit from the Bill. Subsection (2) of this clause makes a consequential amendment to the Acts relating to legal aid, so as to ensure that the increases will be disregarded for the purposes of determining the disposable income of widowed mothers who apply for legal aid.
Clause 4 deals with the earnings rules. Clause 5 provides for payments out of the Exchequer, and Clause 6 is formal. The extra expenditure from the National Insurance Fund resulting from the Bill will be about £6½ million in the first year, and there will be an additional £1 million from the Exchequer for family allowances. Widowed mothers will benefit to the extent of some £5 million 411 a year. The Schedules to the Bill contain provisions which are consequential or transitional. I have already explained that Schedules 1 and 2 go with Clause 2 to make 37s. 6d. payable for each child. Schedule 3 deals with transitional matters and also contains the usual provisions for appointed days—to be fixed by order. My right honourable friend proposes that all the changes in the Bill shall come into operation simultaneously from March 30. Schedule 4 is formal.
My Lords, I hope that I have said enough to explain what the Bill is intended to do, and why the Government are doing it. I hope that the measure will be generally welcomed by the House as a useful advance in this sphere of social provision. I beg to move.
§ Moved, That the Bill be now read 2a.—(Lord Drumalbyn.)
§ 4.56 p.m.
§ BARONESS SUMMERSKILL
My Lords, may I thank the noble Lord for his lucid explanation, coupled with his usual courtesy? It was interesting to learn what I said thirteen years ago. There are not many politicians who can have a quotation made from a speech which they made thirteen years earlier and still wholeheartedly endorse it. It concerns, of course, that aspect of the Bill which I wish to elaborate to-day. Everybody, on both sides of the House, will approve these increases in the allowances for the children, and so on. But I want to challenge the noble Lord on what he called important principles—certain principles which are embodied in this Bill.
Noble Lords will remember that it was necessary, when the comprehensive National Insurance scheme was introduced in 1946, to proceed on certain basic assumptions. Indeed, those basic assumptions were familiar to everybody in the country, because it will be recalled that a great deal of propaganda was done. There were many talks on the radio, and everybody was told that this all-embracing National Insurance Bill was going to be introduced. But after the implementation of the Act—and of course I, as Minister, was very close to it, and recognised this at the time—many anomalies were revealed, and it was clear that amending legislation would have to be introduced. 412 Undoubtedly the experience of operating such a vast organisation was necessary before anyone, however knowledgeable, could foresee the omissions and possible contradictions of the original measure. I would remind your Lordships that there were many knowledgeable people involved in the creation of this scheme, but it is not surprising that a highly technical and detailed piece of legislation should prove fallible.
With that as a background, my criticism of this little Bill is that it is another example of the piecemeal legislation with which we have become only too familiar. I think the indictment of the Government in the field of National Insurance over the last twelve years is that they have been content repeatedly to introduce small Bills of this nature, instead of questioning some of the basic assumptions of the National Insurance scheme. They need not apologise. I suppose it might be said that it is easy to say this after the event. But, of course, if we had stayed in, I am quite sure that we should have challenged those basic assumptions, because one cannot continue to introduce amending legislation, always having to explain just how it stems from some action that was taken in another piece of legislation a few years ago.
It was these initial assumptions that led to the introduction of the earnings rule—and the noble Lord has described some of them. Fears were expressed (this is how it arose) that unemployment might rise after the war, and it was considered necessary to ensure that pensions were not used to subsidise wages. Those fears have, fortunately, proved unfounded, and consequently I say that the earnings rule should be abolished. Yet this Bill seeks to preserve it while amending the amount of the earnings, and I think the noble Lord's explanation itself shows that the position is becoming a little ridiculous because these women, except for a pound or two, can now earn to their maximum.
How does it operate to-day? The noble Lord went so far as to say (and may I just preface my remarks by reminding your Lordships that the average wage for men in industry to-day is £16) that a widow with two children, if she does not work, will receive a pension and allowance of £7 2s. 6d. I think that 413 it would be a matter for strong comment if the average wage for a man with two children was that amount. Yet if this woman, with all the worry and anxiety involved in being solely responsible for her children, decides to go out to work, an earnings rule of £7 is imposed—at least she can earn only that amount—and the noble Lord quite rightly said that benefit would not be withdrawn until her earnings reached £9 12s. 0d., when her total net income would be £14 13s.
He finished there, and I admire him for not going on to say what his Minister said in another place. The Minister said precisely the same: that she can earn £14 13s. Then he went on to add that many married men bring up families on this amount. But the noble Lord to-day was wise enough to know that this is a completely fallacious argument. You cannot equate the conditions of a widow with a family man. When she is working she has to pay somebody to look after her children. When she is working, even if the children have meals at school, if the woman is out the whole time, a neighbour has to be paid to look after the children. In the holidays she has to pay something to her neighbour to look after the children the whole time; and in these days it is a not inconsiderable amount. As noble Lords know, to get people to do ordinary domestic work is expensive, but to get them to look after and feed children all day long is an expensive outlay. So I say that it is absolutely fallacious to equate what a married man is earning with what a widow earns; and I am astonished that the Minister in another place did not realise the expenses of a widow.
It is significant, I think, that for the third time in four years a Private Member's Bill designed to abolish the earnings rule will come up for Second Reading on February 14. I believe that both sides of the House in another place feel strongly about this, and I hope that noble Lords on both sides of the House here feel equally strongly. The earnings rule applies to one category only of widowed mothers. Widows whose husbands died while in the Armed Forces or as a result of industrial accident are exempt, as the noble Lord will agree. This is a ridiculous anomaly. Why 414 should they be exempt?—though I am all for their being exempt. Moreover, widows who have private means may also keep their full benefits. These anomalies cannot be answered, and the noble Lord, quite rightly, did not try to answer them.
I repeat even more strongly what I said thirteen years ago. The widow carries the burden of the wage earner and the home-maker. She is a prey to anxiety; she is emotionally torn; she is striving to hide her fears and loneliness from her children, and, having paid for the care of her children out of the amount she earns after her work outside, she must, unless she can pay someone else to do it, do her washing, cleaning, cooking and mending—all the things that were done by the wife of the male earner. This, my Lords, is the woman to whom the Government have chosen to apply an earnings rule! The widow without children, or the retirement pensioner, will be permitted under this new Bill to earn £5 without the earnings rule coming into operation.
Apart from the injustice of this proposal, how short-sighted it is! All over the country—and this was raised during a medical debate only two weeks ago—in institutions, hospitals, and private homes women are desperately needed for a variety of jobs, yet the earnings rule is imposed which prevents many of them from taking up a job. The matter was dealt with in the 1956 Report of the National Insurance Advisory Committee, in the Minority Report of Professor Titmuss and Mrs. Spelman. This is what they said:Elderly women refuse urgently needed work so as to be on the safe side. Their attitude is that if 'we do not earn anything, they cannot get us'.The Report also said:There is evidence to suggest that the present system of rules is accompanied by wide-spread deceit and evasion.Women feel justified in doing this because they feel that it is grossly unfair, and while I cannot stand at this Box and justify deceit and evasion, I can well understand how tempted these women are, if they are offered a good, fair wage, which is offered to-day, to take it without informing the authorities.
Your Lordships will remember that I introduced a little Bill called the 415 Married Women's Property Bill in order to ensure that the wife who was married to a feckless man might, over the years, save a little nest egg in her own right in case she became a widow. The position is that when a woman becomes a widow she has had no right during her married life to save, however thrifty she may have been. She is the one worker in the country, and a hard worker, too, who has no legal right to save while she is married. Therefore, most widows have no capital at all. Yet when her husband dies she is again discriminated against. I am sure a widow would be the first to say that the real cruelty falls on the fatherless child, who suffers not only the loss of a parent but from a much inferior standard of living.
I would ask noble Lords to read Margaret Wynn's little book Fatherless Families. She tells us that in this country there are 785,000 children brought up by their mothers alone. These are the children made fatherless by divorce, separation, illegitimacy or death. Why do we single out those made fatherless by death for discrimination? Why should these children be called upon to carry a load of poverty. Fifty per cent. of the children receiving National Assistance are fatherless. These figures are an indication of the injustice of this measure of continuing the earnings rule.
I say that we cannot diagnose the various stresses to which these families are subject, but at least we can diagnose poverty. If the widow collapses under the struggle we are prepared to take the child into care in a children's home at a cost of £10 a week to the tax-payer. Perhaps the little extra which legislation of this kind keeps her from earning would have enabled her to carry on with that child on her own. And most of our homes, as we know, are very full.
There is another anomaly. While we are treating the widow as meanly as this, if a child is looked after by a foster mother then 10s. more is paid to her for his support. Who can justify that anomaly? The scheme is getting so complicated now that there are nine different categories of widows, each of whom draws a different kind of benefit on a different basis. As I said in my opening remarks, surely the time has come when instead of bringing these small Bills to us we must examine the basic assumptions 416 of the scheme, and I must say that this small Bill to-day points the Government's failure over the last twelve years to re-design the whole scheme in keeping with contemporary needs.
§ 5.10 p.m.
My Lords, I must first of all declare an interest, because I believe that if this Bill goes through it will be worth several pounds in my pocket, less income tax and surtax. I welcome the Bill, particularly this relaxation of the earnings rule, which is regarded generally in the population as a pinprick though I do not think they realise quite how expensive it would be to remove the whole thing. This relaxation and the various figures it brings with it will, I believe, tend to encourage the half-time employment of widowed mothers, and I, for one, should be very reluctant to see all the widowed mothers in the country employed full time. I think it is very bad for their families if mothers go to work full time, whereas half time can often be conveniently fitted in after children have been packed off to school, and the mother can get back in time to receive them and give them their tea in the afternoon. When the noble Baroness opposite was talking of the heavy expenses of widowed mothers she was, of course, thinking of the full-timer who might be compelled to have her children cared for, or the widowed mother whose children have not yet reached school age.
I admit that; but then, of course, the expense for looking after children for school holidays is only for a portion of the year. I do not think the most ardent feminists are on very sound ground when they compare a widow's overheads with those of a family with a man attached, because it is well known that the vast majority of man-containing households in the country have heavy overheads in the guise of the expensive hobbies of betting, drinking, smoking and various other forms of sport to which women are not quite so addicted.
Any system, of course, is bound to have great anomalies. If you want to remove all the anomalies in the system 417 there is only one thing to fall back on, and that is to go back to the actuaries; in other words, let everybody draw out of the pool what they have actuarially paid in. Of course, nobody would like that at all. The anomalies are the result of grafting a State assistance scheme on to Lord Beveridge's insurance scheme, and so long as we do that we are bound to have these anomalies. The noble Baroness said there were nine classes of widows. I thought there were many more myself, but no doubt she is talking about insurance classes. If we have a State support system grafted on to an insurance system we shall always get new classes being created, whenever Parliament is stimulated to compassion or whenever the Government of the day want to buy some votes. There will be the tendency to create new classes and new anomalies; it is inevitable with the type of system we have. I wish the whole earnings rule could go, because it is a nasty thing that the population does not understand; but it would be so expensive that I do not see it going in the near future, whatever form of Government is likely to be the next one in this country. Nevertheless, I support this step.
§ 5.15 p.m.
§ LORD SILKIN
My Lords, one of the advantages of speaking in this House is that one can be completely out of order and there is no one to correct it. One can speak about something that the Bill under discussion does not purport to deal with; and that is what I propose to do for one moment. The compensation I offer the House is that the statement I want to make will be a very short one. My noble friend Lady Summerskill called for a comprehensive measure to deal with all forms of assistance given to widows and other persons, and I should like to fasten my few remarks on to that. In particular, I want to refer to one class of widow who is receiving a pension which has not increased at all since the end of the 1914–1918 war; that is, the widow of a person who was killed in that war, 1914–18, and whose pension remains exactly as it was then.
Recently a number of cases have come to my notice of extreme hardship. They are obviously very elderly widows today and they are finding it very difficult. 418 Of course they can go to the Assistance Board and get help, but it is understandable that many of these elderly ladies are reluctant to go to the Assistance Board; they still have a feeling of going for public assistance. I think that these ladies are entitled as of right to have their pensions increased in accordance with the increase of cost of living since 1918. I know that this is not relevant to the purposes of this Bill, but I thought I ought to give voice to it so that the Government may know that there is a case here and something ought to be done about it. This Bill is not, of course, designed to deal with it; nor have the Government taken this into account.
Of course, if the Government were prepared to do it, they could extend the Long Title and could provide some means by which these pensions could be increased. I hope that this will be regarded as something very urgent. It would not be expensive—it cannot be; there can be relatively few, although, as I have said, it so happens that in the past month or two a number of these cases have come to my notice. I hope the noble Lord who is to reply will be able to give some encouragement to these ladies, who are very badly in need of help.
§ 5.20 p.m.
§ LORD STONHAM
My Lords, as is the case with my noble friend Lady Summerskill, this particular Bill brings back memories of years ago. My particular memory is of more than seventeen years ago when, in Committee Room 14 upstairs, in a crowded meeting, there was an announcement that the Government of the day were going to increase the pension, which was then 10s., to 26s. In those days and in the circumstances of the time, that seemed a most remarkable and welcome achievement; indeed, in the economic circumstances it was an act of faith and courage. But I confess that over these last few days when I have again been looking at this subject after a lapse of years, I am appalled at the mass of anomalies, inequalities and, indeed, injustices which have arisen from the original structure. It has been patched, added to and amended, so that now I feel that only experts like the noble Lord who moved the Second Reading can find their way through the 70 different rates of pension which are payable: not merely 419 as my noble friend mentioned, are nine different rates of pension payable to widows, but 70 different rates are now covered.
Naturally, like all noble Lords, I welcome the provision in the Bill of £6½ million of extra benefits, most of it going to widowed mothers, with some small improvement for some retired pensioners. But like my noble friend, I regret that the opportunity has not been taken, as it could have been, to remove some of these anomalies. The noble Lord was at considerable pains to explain why the earnings rule for widows had not been removed altogether. If I understood him aright, he argued that to do so would mean scrapping the insurance principle, the basis on which all this rests. This measure, to which I hope we are going to give a Second Reading to-day, is a further step away from the insurance principle in respect to widows. You are really only hanging on to it by a narrow thread. Indeed, this measure is an admission by the Government that this is a special case.
Imagine, a widow with three children will now get £9 a week in pension and allowances, and she is allowed to earn £7 without deduction. That is an income of £16 a week for her without deduction. The national average earned by women in full-time employment, as I understand it, is somewhat less than £8 10s. a week; and I think even the noble Lord, Lord Hawke, will agree that it could involve no large cost to scrap the earnings rule altogether. Indeed, if one counts the considerable administrative cost which must continue if you keep the earnings rule, I should have thought the net cost would have been small.
As my noble friend has mentioned, widows do not understand this earnings rule. They consider it unfair and unjust. In particular, they consider it unjust that it applies not to incomes but to earnings. You can have two widows living next door to each other. One widow may, for instance, have an income of £12 a week from investments left by her husband. He may have won a football pool before he died. She would suffer no deduction from that income. But if her neighbour goes out to work as a typist or a secretary and earns £12 a week, she will suffer the 420 maximum possible deduction and have only 26s. left of her pension. There cannot possibly be any moral justification for this.
Obviously, as my noble friend pointed out, there is no point of principle involved, because if a woman's husband was killed in an industrial accident she would not suffer from the earnings rule. The loss and deprivation is the same in each case. I do not think that anyone can argue that a different set of rules should apply if a man dies in his bed, from those which apply if he is killed at work. In both cases the widow loses the breadwinner; if she can earn she should be allowed to, and the earnings rule should be scrapped for all widows.
I should also like to deal with a point which my noble friend did not touch on—in fact, she may not even agree with me. I regard the total allowance of 37s. 6d. a week as completely inadequate if it is regarded, as indeed it must be, as keeping a child of any age up to nineteen. In some cases, widowhood comes suddenly. In others, it comes after the husband has endured a long illness; the couple's savings have gone and the widow has nothing left except the allowances. In many cases the husband is a working man who has earned £20 a week and the family has commitments—perhaps a house that they are still paying for, a refrigerator and things of that kind. In any case, there are commitments and nothing to meet them with, except the pension and the allowances for the children. The widow is expected to keep a fully grown boy or girl on 37s. 6d. a week. Of course we all know that they eat as much as a man. So far as clothes are concerned, those are frequently more costly.
Foster parents are paid 50s. a week for keeping a child, and even that is considered inadequate. There is some reason for believing it is, because out of every five children put to foster parents two cases are unsuccessful, the children have to be re-circulated and perhaps go to local authority homes wher they cost an average of £9 10s. a week, or eventually finish up, as 4,000 of them do, in penal institutions where they cost £13 10s. a week.
I submit that all these special regulations that we have had, like this Bill, should acknowledge the strain and 421 struggle of the widowed mother: she worries about the home getting shabbier because she cannot replace things when they become worn out; she worries because she feels that the children cannot invite their school friends home; she worries because she cannot give them the little extras that they need for school and recreation. Indeed, as is mentioned in the book by Margaret Wynn which my noble friend referred to, the fatherless family is, generally speaking, poorer, lonelier, less secure and worse housed than other families. The exceptions to this are where the great efforts of the mother have overcome this big handicap. In my view, it would be economically wise and socially just to increase this 37s. 6d. on a sliding scale according to the ages of the children; otherwise, we are just trading on the mother's instinctive determination to keep her children at home not to let them go into the care of the local authority, and we are risking the breakdown of the mother.
Then I would mention the great majority of widows who will get nothing under this Bill. My noble friend Lord Silkin has spoken of one class, perhaps small numerically, who have suffered injustice for a very long time. There are about 2½ million widows, who are looking after, in all, nearly one million children. That means that perhaps 500,000 widows are looking after children, yet fewer than 150,000 of them are drawing widowed mothers' allowances. That means that at least 350,000 widows with children get little or no help under this Bill. There are others among the eight varieties of widow whom we are not going to help this afternoon.
One numerous, and in my view ill-treated, class are widows under 50 whose children have ceased to be dependent and who receive no pension at all. I gained some insight only a few months ago into what this can mean to a widow when one of my own employees died. The family had children of 15, 17 and 21 years of age, but fortunately a latecomer aged 3. So there is no difficulty about pension in that case, nor any real financial difficulty, because they own their house and are otherwise provided for. But the point is that the widow—a woman I know well, a devoted wife 422 and mother—had no skills, had married young and had never done any job other than the very important one of running a home with a fair-sized family. Like so many more widows, particularly widows in her shattered state—a condition which in her case still continues—she is not really employable; yet, but for an accident of birth, she would at 48 have had no pension.
In many parts of the country, in the North-East and in Scotland, it is extremely difficult for women of over 40 or 45 or 48 to get employment. Indeed, as the noble Lord, Lord Drumalbyn, will recall, when Labour was in power we pensioned widows at 40, as indeed they should be now—particularly as an increasing number have children who are no longer dependent by the time the mother reaches the age of 40. In my view, it is just not good enough to expect a woman to do her utmost for her children until they are a certain age, then, as it were, roughly tell her, "Off you go and start a new life, which you know nothing about", and let her scramble along somehow until she qualifies for a pension at 60.
Then there is the unfortunate band referred to as the "ten shilling widows", of whom there are 84,000 under 60 and 27,000 over 60—over 100,000 in all. The great majority of this class of pensions have come into existence since 1948, 35,000 in the last five years. I do not want to delve into the reasons for this curious anomaly. It is an unhappy hangover of pre-war legislation and of the 1948 Act, but it is undeniable that the 10s. dole which was considered appropriate in 1939 is impossibly inappropriate in the comparatively depreciated currency of 1964. It is useless to talk about which fund or pocket—and the total cost would be about £4 million—the money is coming from. I submit that the least we can do, and must do, is to raise the 10s. to 30s. so that it will buy what it bought before the war. Again, that is certainly what we will do if and when Labour is returned to power.
My noble friend commented on the extension in this Bill of the definition of "child" from 18 to 19 years. I congratulate the Government on having broken through in a field where they had assumed this was impossible, and I am 423 glad to hear that some 20,000 widows will benefit substantially. However, I feel quite strongly that the only fair criterion here should be, not the age of the child at school, but dependancy; and that the allowances should be paid so long as the child is receiving full-time education. Again, we should be removing an anomaly, because in the parallel case of income tax the allowances depend on whether the child is receiving full-time education, not on the age of 18 or 19.
There are two smaller points that I should like to submit to the noble Lord, first, in regard to the "disregards" to which he referred with a maximum of 30s. in cases when mothers apply for National Assistance. This Bill, I am thankful to say, will take many widowed mothers out of the orbit of National Assistance, but those whom it will not free from the need to apply for National Assistance are those with the larger families—in fact those with the greatest need. It will be precisely those with the larger families of children who will be hit by this maximum of 30s. imposed on the "disregards". I do not know whether the noble Lord takes my point. If a family has only one child, the 30s. does not matter; but if there are five or six children, it will begin to matter; and it is precisely those families who are in the greater need. I feel that it is only a very small matter financially and that this limit should be abolished. This is one matter which my noble friends and I might consider raising on Committee.
Another point is the suggestion which has been made, as the noble Lord is aware, that it might help retirement pensioners if their earnings could be averaged throughout the year. The answer which has been given by the Government on that point is quite convincing; namely, that their earnings would be calculated in retrospect; that averaging might operate against the pensioner; and that if the earnings were averaged it would possibly create a break of a week or two when the pensioner would get no pension at all. I am wondering if the Department have ever considered whether it would be possible to devise a rebate scheme operating in exactly the same way as rebate operates under P.A.Y.E. If that were possible, the pensioner would get a rebate in 424 weeks when he was not earning or when the earnings were below £5—which would be quite a help to the considerable number of pensioners who do part-time and seasonal employment.
My Lords, has the noble Lord thought this one out? The pensioner is paid on a warrant every week. How is the noble Lord going to work a rebate scheme there?
§ LORD STONHAM
My Lords, I should have thought that it would be worked through the Post Office quite simply by means of a supplementary pension. That is done easily, and it is varied. It seems to me that if it can be done with P.A.Y.E., it can be done in exactly the same way with these other earnings. Why not? The pensioner has to pay income tax. When his earnings fall and he is paying income tax, he will get a rebate. In exactly the same way, he should be able to get a rebate on any deduction made from his pension. In any case, this is not a matter for a violent battle. I merely make the suggestion.
My Lords, I would support what was said by my noble friend Lady Summer-skill about the woes of the children who are fatherless. She gave very convincing and, indeed, distressing figures, and there is no need for me to repeat them. I understand, however, that the Government's view in this matter is that it is impossible to deal with these children—the children of fathers who are divorced or who desert their children, or who are separated from their mothers and who then die—because it is not possible to insure the father against acts which he can avoid doing, or acts which he wilfully commits. But I do not think that that is other than a sophistry which is quite unworthy of discussion; because it is the child who matters, and it is the child who must be provided for like any other child. Otherwise, we have the situation where, because the child had a bad or neglectful father, or perhaps because the child is illegitimate, a lower rate of allowance is payable than in the case of other children. Indeed, as the noble Lord will be aware, there are cases where in the same family you have some children in receipt of allowance, and other children who are not; where you have some children in receipt of a full allowance and others in receipt of 425 only a partial allowance. That situation arises simply because we are visiting on the children the sins or omissions of the parents; and it is a labyrinth of rules which we should abolish.
My Lords, it is no consolation that some of the gaps and holes are partially filled by National Assistance. It is surely an intolerable situation, and one which, in effect, translates social condemnation of the parents into cash penalties for the child. And I think that this is something that must be altered as quickly as possible. It would seem that a fatherless child allowance is the right answer, and that it should be paid equally to all children irrespective of the circumstances of a father's death, his contribution record, or the manner in which he discharged his parental obligations. As my noble friend has said, it is time that we ended patching and cobbling, and laid a new foundation and built a new structure. I am confident that it can be done. Like all noble Lords I welcome this Bill, but I believe that the next National Insurance Bill will be introduced by a Labour Government, and that it will remove the anomalies of which we complain and produce the social justice in which we believe.
§ 5.45 p.m.
§ LORD DRUMALBYN
My Lords, a great many extremely interesting points have been raised in this debate, though I am afraid that if I were to attempt to answer all of them I should detain your Lordships a very long time. However, I will do my best to deal with as many as I can. In particular, I should like to thank the noble Baroness, Lady Summerskill, for the way in which she welcomed the Bill, but with the reservation, first of all, that she said that this was "patching", and that what was needed was a thorough and fundamental examination of the whole National Insurance principle.
I am bound to say that I find her comment that we are getting further and further away from insurance principles a little difficult to reconcile with the closing remarks of the noble Lord, Lord Stonham, who was urging us to get right away from insurance principles altogether. I would doubt whether we have, in fact, got as far away from insurance 426 principles as the noble Lady suggested. The mere fact that we give preferences in certain circumstances does not mean that we are getting away from an insurance principle. This is one of the risks against which the insurance is given, and the mere fact that the payments are greater when that risk materialises—when the actual occurrence for which the cover is obtained happens—than they are otherwise, does not in any way mean that the insurance principle has been violated. Of course we all know that, in a National Insurance scheme of this kind, we cannot be exactly on all fours with ordinary insurance outside. Nevertheless, I think it is important to realise—(I think this was brought out, too, by one of the earlier remarks of the noble Lady) that this is a National Insurance scheme, and that there are contributions which are tied to certain definite benefits.
I was very interested in the way the noble Lady attacked the general conduct of the Government. I myself have thought that we have been doing our best to remove anomalies, and to improve the provisions of the National Insurance scheme as we went along. She seemed to think that, if anything, we had been increasing them, and that it was time we abolished the whole scheme and got away from the "basic assumptions", as she called them. Now assumptions are different from principles. It may well be that one of the reasons why, let us say, the Treasury thought that it was a good idea to have one single scheme, with one single conception of benefits, was that they did not want pensions, as the noble Lady put it, to subsidise unemployment. But this was not at all, of course, the basic conception of the Beveridge scheme which, by and large, came to be the 1946 Act. There we were substituting one single benefit for a number of separate benefits with different levels—unemployment, sickness, old age—and to justify that we had to have one single conception; and the conception, of course, is that the benefits are paid when earnings are not possible for one reason or another—"in the absence of earnings" is the classic phrase.
So I wondered, really, whether the noble Lady wanted us to be quite so fundamental as she indicated. She seemed to me to be arguing at one time 427 that it was time we did away with the earnings rule for widows and widowed mothers, but at other times she did not seem to be so emphatic that it was necessary, also, to get rid of the earnings rule for retirement pensioners. One of the great fundamental difficulties of all this is that one benefit merges into another. We have already seen, in the course of the debate to-day, how the benefit for widowed mothers merges into or is substituted by, or, if you like, is taken over by, a widow's pension when the youngest child is off the hands of the widowed mother.
Perhaps at this stage I might just deal with the point which the noble Lord, Lord Stonham, raised. I think that what he was thinking of was the fact that the present Government have altered the basis of the transition from the widowed mother's benefit to the widow's benefit. It used to take place at forty, and it was subsequently raised to fifty, although the widow's benefit has always started at fifty. I think that, in his remarks, he rather gave the impression that the widow's benefit was payable originally at forty. That was not so, of course.
Just as we have that transition from widowed mothers to widows, so also we have the transition from the widow's pension to the retirement pension. A widow who is in employment may well go on working after the age of sixty. What are you going to do in that case? If you keep the earnings rule for retirement pensions, are you going to say that suddenly when she becomes sixty she becomes liable to the earnings rule? Even if you say, "No, she can go on having her widow's pension until she does retire," then suppose she retires at sixty-three and draws her retirement pension? She would then become subject, of course, to the earnings rule in respect of anything that she might earn over the earnings limit. Whatever you do in this field, you run into difficulties; and we feel it is much better to keep the principle clear and unblurred, that the earnings rule does remain for all.
§ BARONESS SUMMERSKILL
My Lords, may I just interrupt the noble Lord? I am so sorry if the noble Lord was under any misapprehension. Of course, I am opposed to the earnings 428 rule for all. I was really emphasising the case of the widow, because I did in a speech when I was a Minister, which the noble Lord mentioned. I thought I mentioned retirement pensioners in one sentence.
§ LORD DRUMALBYN
I agree entirely with the noble Lady; she did. I think that perhaps I was doing her an injustice. Perhaps she made her view entirely clear, but I think it is equally true to say that that is not the official view of the Party opposite, in so far as one can discern an official view in this matter.
§ LORD STONHAM
My Lords, the Labour Party is on record as being determined to abolish the earnings rule in respect of widows completely.
§ LORD DRUMALBYN
Yes, quite so; but, as I understand it, the noble Lady also wants to abolish the earnings rule in regard to retirement pensions, whereas the Labour Party has not, so to speak, caught up with her on that yet.
§ LORD DRUMALBYN
I do not know all the latest editions, but I think I have the last edition of the pamphlet which has been issued giving their policy.
If I may now turn to another question which the noble Lady raised, she stressed very much the effect that the earnings rule has on the widowed mother's family. I think I should make one thing clear, because I was not quite certain that she gave due weight to this. Everything that a widowed mother who goes out to work has to pay for looking after her family whilst she is working can, of course, be deducted, provided that it is for a reasonable amount, from the earnings when considering what the deductions for earnings should be. So I do not think that the particular point she had in mind is all that important. The noble Lady said, if I understood her argument aright, that if a widowed mother goes out to work then she has to pay so much for someone to look after her children. What I am saying is that that amount is eligible to be taken into account when considering what the deductions 429 should be under the earnings rule. The truth of the matter is, of course, that in this Bill we are providing improvements in the benefits for widowed mothers and their children which will add something like £5 million to the amount that they receive; whereas, if you were to abolish the earnings rule for widowed mothers, the total cost would be only £1½ million—and, of course, by far the greatest benefit would go to those widows who, although obviously they would be very glad to have the addition, do not need it to anything like the extent of those who will benefit under these particular provisions, those who are much worse off than they are.
The noble Lady said she thought that, because the earnings rules do not apply to industrial injuries and war widows' pensions, they should not apply, either, under the National Insurance Scheme. Again, I would say that the conditions there are quite different.
§ LORD DRUMALBYN
She is still a widow, but they are quite different schemes, and it is not reasonable, I think, to take a particular item from one scheme and say that it should apply to all three schemes alike. She also said, I think, that there were nine categories of widows. I am not exactly sure what she is thinking of, but certainly there are three different categories of widows under each of the three schemes.
§ LORD DRUMALBYN
I was not certain whether she was implying that there were now nine different categories under the National Insurance Scheme. Of course, that is not so.
To deal with the interesting point raised by the noble Lord, Lord Silkin, I think the answer to him is that there was an alternative benefit available in the 1914–18 war, and those who elected to take the alternative benefit go on receiving it. It has not been increased at all; but I am told that it would not be increased so long as it is more than the current rates. But if it became less than the current rates, then I think that the beneficiary would be entitled to the 430 current rates. But here again, as the noble Earl said earlier, I speak subject to correction, and I should like to go into the particular point further and write to him about it.
The noble Lord, Lord Stonham, said that 37s. 6d. was an amount which was, as he described it, "totally inadequate". Of course, these things are all relative. He thought that there should be different amounts at different ages. It is of course true that it is much easier for the widow to get out to work as her children get older, so perhaps to some extent it is a counterpoise to the fact that her children, as they get older, cost more. But, in any case, I think that it is perhaps worth reminding ourselves that the amount of 37s. 6d. for the first child compares with an amount of 10s. for the first child when this Government came into power and 7s. 6d. for the second and third children. So, if it is considered inadequate, we have certainly made great progress (I will put it that way) in the last twelve years.
§ LORD STONHAM
It is certainly better, but the noble Lord will agree that, in giving the figures of 10s. and 7s. 6d., he omitted the family allowances for the second and subsequent children, whereas the 37s. 6d. in every case includes family allowances.
§ LORD DRUMALBYN
I think the comparison I have made there is the correct one. But, again, if I am wrong, I will let the noble Lord know.
The noble Lord then talked about widows under 50 who receive no pension and went on to speak about the "10s. widows". Perhaps I may remind your Lordships who these "10s. widows" are. When the 1946 Act came into effect on July 5, 1948, those widows who were ill, or who had children to look after, were able at once to get the new benefit of 26s., plus the children's allowances as they then were. At that time also there were many workers who were insured for a 10s. benefit to their widows in the event of their death. It would have been possible at that time—and let us face it: it would have saved a great deal of administrative trouble—for the Government to stop that benefit. I think they were right not to stop it. There was a contractual obligation; and that obligation continues. The widows 431 and those who were widowed after 1948 get the 10s. benefit if they were married before July 5, 1948, and their husbands were insured under previous legislation.
These are the "10s. widows". The suggestion is that the amount they receive should be raised very much. I think it is worthwhile to make the point that in fact most of them are in employment: the proportion of these widows receiving National Assistance is less than half the proportion of all widows receiving National Assistance. In other words, by and large these are the widows who have got into employment fairly early and are able to continue. They are, of course, that much better off than widows whose husbands were not insured before 1948; and, by the same token, they are that much better off than the spinsters with whom they are working side by side and the widows whose husbands were not insured before 1948.
These are the facts that have to be considered. This was a reserve right kept for these widows. It is at least arguable that there is no good reason, now that all other benefits have been increased, why this particular benefit, which is considered to be obsolescent, should be raised. The noble Lord said that it was an inappropriate sum. I think that under modern terms it is to be considered an inappropriate benefit. It is not a benefit that we should introduce to-day. I think there is no reason why on these grounds it should be raised. This is the view the Government have taken. If it were to be raised (if I may say this), the appropriate figure, on the basis of comparison with 1946 and 1948, would be not 30s. but something less than £1.
§ LORD STONHAM
My Lords, I am aware of that. Will the noble Lord say why the Government do not even do that? During the period they have been in charge they have depreciated the currency and therefore depreciated the value of the 10s. Why cannot the Government do that act of justice and increase the amount to restore the value to what it was?
§ LORD DRUMALBYN
My Lords, this seems to me to be "pots and kettles". Certainly the rate of depreciation and devaluation of currency was much higher per annum under the Labour Government 432 than under the present Government. I think that the arguments I have given show why, in the Government's view, it would not be appropriate to keep this particular benefit in line with any particular level, whether it be cost of living or earnings or anything else. I do not wish to detain your Lordships too long.
§ EARL ALEXANDER OF HILLSBOROUGH
My Lords, may I ask a question on the last answer to my noble friend about the depreciation of currency? Does the noble Lord really believe that what he said was true? Look at the Budget for 1951–52, for £4,192 million, and a Budget this year which will, with Supplementary Estimates, run to over £7,000 million! How can that have happened without a grave depreciation of currency?
§ LORD DRUMALBYN
My Lords, there has been some decline in the value of money and also considerable increase in the wealth of the country. I was about to deal with the question of disregards. I think this is a question that has to be seen in perspective. The noble Lord is quite right. Of course, if you have more than four children there will be some deduction in respect of this payment; but it will be only 1s. 6d. in respect of the fifth child; and, to keep this in perspective, it is worth saying that I am told that there are only 500 widows on assistance with more than three children. So this is a comparatively small issue. In the Government's view, it would not be appropriate to alter fundamentally the National Assistance Act in an Act which is dealing with insurance benefits.
I think I have covered almost all the points. I was interested in the noble Lord's suggestions that there should be a rebate scheme in order to average out earnings more easily. I think my noble friend Lord Hawke gave the answer to that. The only way in which this could be done would be from week to week by personal visit to the local office, which would perhaps cost more to get to in some cases than the amount of rebate. I think this is something we should like to look at; but I believe it would rather cut across the general system of issue of pensions by books and supplementary pensions also by books for periods of three or six months, whatever it may be.
433 Finally, I think we shall all agree that, as the noble Lord, Lord Stonham, said, it is the child that matters; and this particular Bill is designed particularly to help widowed mothers in their task of bringing up children who are left as their responsibility. I am glad that the House welcomes this Bill. As in the case of all such Bills, noble Lords feel that it does not go as far as they would like, but nevertheless I would thank them for the welcome they have given it.
§ On Question, Bill read 2a; and committed to a Committee of the Whole House.