HL Deb 18 February 1964 vol 255 cc826-37

6.5 p.m.

Order of the Day for the House to be put into Committee read.

Moved, That the House do now resolve itself into Committee. — (Lord Drumalbyn.)

House in Committee accordingly.

[The LORD STRANG in the Chair.]

Clauses 1 to 3 agreed to.

BARONESS SUMMERSKILL moved, after Clause 3, to insert the following new clause:

Repeal of earnings rule for widow's benefit

". Section 17(3) of the National Insurance Act 1946 (earnings rule for widow's benefit) is hereby repealed."

The noble Baroness said: If the Committee will permit me, I will take the three Amendments which stand in my name and the names of my noble friends together, as the second and third are consequential on the first. The purpose of this Amendment is to abolish the earnings rule for widow's benefit. The noble Lord will recall that on the Second Reading of the Bill I devoted myself to this matter, and to-day I will be as brief as possible. I was very critical of the continued application of the earnings rule to certain grades of insured workers. Although I said that, having regard to changed circumstances since the introduction of the National Health scheme, the earnings rule should be omitted altogether, nevertheless, I am prepared to limit my argument on this occasion to the need to abolish the earnings rule in regard to widows.

It seems to me, on reading the Bill again, that the case has been almost conceded. Each time the Government come here I think their conscience compels them to increase the amount of disregards that the widow can earn. Because the Government have been compelled to recognise the injustice of penalising the widow by increasing the amount of her earnings which is disregarded. I hope your Lordships will be sympathetic to this Amendment. Indeed, public opinion is so alive to this injustice that the fourth Private Member's Bill on precisely this point is now on the Order Paper in another place.

I do not want to be guilty of tedious repetition, but I would remind your Lordships of the special case of the widow. She is called upon to carry the burden of the wage earner and the home-maker. Surely, the whole trend of our social legislation has been to help the least well off. Yet the widow, suddenly bereft of a husband, a prey to anxiety and loneliness, fearful of the future and completely insecure, is at that time subject to an earnings rule calculated, in my opinion, to obstruct and harass her. I say that this particular woman, the widow, should have our special sympathy. The Government should say, "We will make every effort to make her path a little easier." But, nevertheless, they produce a Bill of this kind and introduce the earnings rule.

Surely the position of the widowed mother demands our utmost sympathy, and to penalise her by applying the earnings rule is to discriminate against the fatherless child. On Second Reading I described the position of a fatherless child in this country and reminded your Lordships that there are nearly 1 million fatherless children. I will not develop that, because no doubt in your own lives your Lordships know of widows who have children to support. I also emphasised on the Second Reading of the Bill the sheer shortsightedness of this policy when women's labour, and particularly of women of this kind, is needed in a variety of ways. I say "women of this kind" because they have a great deal of free time, their husbands having gone, and indeed they want to fill up that time. The need for these women is so urgent in the social services and in the homes of our country that no obstacle should be put in the way of their offering their services.

The noble Lord may say, "It is no job for the Ministry of National Insurance to do this". But I would remind him that on more than one occasion in the Social Service departments I have heard the case argued by a Minister for taking some step because it would ease the needs of another Ministry, it would help another Ministry. In this case, I say these women are wanted in the institutions, the hospitals and the homes. They are wanted for the aged, and to introduce a provision which will obstruct these widows from taking jobs seems to me utterly short-sighted.

The noble Lord did not reply to a point—and I would repeat it again—that I made on the Second Reading of the Bill. I would recall to noble Lords that the Minority Report of the National insurance Advisory Committee—and that, of course, is the Committee which advises the Minister—said: Elderly women refuse urgently needed work so as to be on the safe side. Their attitude is 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 widespread deceit and evasion". This was said by Professor Titmuss, a professor in London University, who chooses his words carefully. I do not want to elaborate this point, but I would remind noble Lords that there is no doubt that a widow with children, perhaps very hard up, is tempted to evade the law. This is known by the family, and there are children who know that mother is tempted to evade the law in order to make a little more money. I do not regard this situation as very helpful.

To abolish the earnings rule for widows would cost £6 million. But the Minister did not object to it on those grounds. He argued that, if we abolish the earnings rule, it would create anomalies among retirement pensioners. I think it is significant that his objections were not related to the creation of anomalies among widows. After all, if there were objections on that point, he should object to anomalies among widows. Of course, an argument on that basis would have been absolutely absurd, for the scheme is riddled with anomalies, and I think the noble Lord would agree with that. I mentioned this on Second Reading, and said that the basic assumptions must be examined. The scheme is riddled with anomalies, and if this causes another it would make very little difference.

The Minister contended that to abolish the earnings rule now for widows would create ill-feeling between widows and spinsters later on. If ill-feeling does exist between women, ill feeling must certainly exist between widows, because a widow whose husband died at work is treated differently from the widow whose husband died on his way to work. If a widow goes to work to help her children, she is subject to the earnings rule, but if she remains at home and receives the same amount out of investments, she is not subject to any rule. Then there are widows whose husbands died in the Armed Forces, or as a result of an industrial injury. These widows are exempt from the rule. As I have said before, I am only too pleased that they should be. But here are the anomalies. Why single out those widows whose husbands have died from natural causes? Because, surely, the needs of their children are precisely the same as the needs of the children of other widows. Then there is the case of the widow part of whose income comes from her own earnings, and part from unearned income. The part from unearned income is not taken into account.

I have given your Lordships five or six kinds of widows, and shown that anomalies certainly exist. As I said before, there are nine categories of widows. When he wound up, the noble Lord said he thought there were three categories, but with three sub-divisions in each. So I think your Lordships will agree with me that there are nine categories of widow. I can quite understand why the Minister has been compelled to relate his argument, in opposing the Amendment asking for the earnings rule to be abolished, to the hypothetical anomalies which might occur years hence. I would ask your Lordships to consider the justice and humanity of this case. Surely, the earnings rule should no longer be applied to widows. This is not only in their own interests or the interests of their children, but in the interests of the community, which needs these women quite desperately in some place. Therefore, I hope your Lordships will support the Amendment. I beg to move.

Amendment moved— After Clause 3, insert the said new clause.—(Baroness Summerskill.)


I am afraid I shall be considered rather a rebel against my own side this afternoon, but I should like to support this Amendment very strongly. In this country we have pretty well achieved equality between the two sexes, but not absolutely, and this is one of the outstanding examples where we have not done so. One must remember that, although the word "widow" implies an elderly person, it is possible to be a widow at only 25 or some such age. A young widow with, perhaps, three or four young children, who must all be educated, has a very heavy burden upon her shoulders. She may be a professional woman who wants to pursue her career, but she may not, as the Bill stands at present, earn more than a certain amount. Or, of course, she may be an elderly person who is not capable of earning very much, who has not got very much money and, therefore, is in a bad position so far as support of any kind is concerned. I think that in all justice we should consider people who are unable to earn their own living, and consequently unable to be of use to the nation.


I am grateful to the noble Baroness, Lady Summerskill, for the kindly way in which she has moved this Amendment. She showed her very deep interest in the widows, and I think it is an interest which we all share. However, I think we ought to consider exactly what the effect of the Amendment would be. It would exempt women receiving widows' or widowed mothers' pensions from the earnings rule, and about one in seven of these widows have their pensions so adjusted. It does not mean they all lose all their pension, but one in seven have them adjusted. It would not exempt all widows from the earnings rule. The widows exempted would be widows who have children under 19 living with them and, secondly, widows who were over 50 and under 60 at the time when their husbands died or when they ceased to be entitled to widowed mothers' allowance. The widows not exempted would be widows drawing the retirement pension and earning more than the earnings limit. These would include women widowed after reaching 60. Others of these widows not exempted would previously have been drawing widow's pension and would have transferred to retirement pension when they retired from full-time work. They then become retirement pensioners and cease to draw widow's pensions.

So among the effects of the Amendment would be, first of all, that if, when a widow retired from her job, she then continued to do part-time work, she would be subject to the earnings rule. That is, if this Amendment went through, so long as she drew the widow's pension she would be exempt from the earnings rule and if, when she retired from her job, she continued to do part-time work, she would be subject to the earnings rule. Secondly, a widow over 60—and I think this is a point worth considering—still earning £50 a week in her business or profession and receiving a widow's pension would be free from the earnings rule, whereas a widow over 60 when her late husband died would get practically no pension if she went out to work and earned over £10 a week. That would certainly be an anomaly.

Thirdly, a widow whose husband died when she was just over 50 would get full pension no matter how much she earned and would not have to pay National Insurance contributions. This would be the effect. She would not be subject to the earnings rule and she does not have to pay National Insurance contributions, whereas the widow whose husband died when she was just under 50 would get no pension and would have to pay National Insurance contributions until she was 60. In my view, the contrast there would be so harsh that it would be impossible to keep the age 50 qualification. Indeed, wherever you fixed the qualification age, the contrast would obviously be exceedingly harsh and it would seem almost impossible to have an age qualification at all. I am talking at the moment of widows, and not widowed mothers, who obviously get widowed mother's allowance, no matter when they are widowed, if they have children dependent upon them. The contrast, as I say, would be very harsh and, indeed, might make it necessary to revert to the old unconditional widow's pension payable irrespective of age.

At the present levels of benefit, if they were still to remain in force, the cost of allowing a widow's pension to all widows, no matter when their husbands died, would be of the order of £30 million a year. When such a pension, an unconditional pension, available to all widows irrespective of when their husbands died, was paid before 1948, the level was 10s. The present equivalent of that is under 19s. in terms of modern purchasing power. But the Act last year provides that widowed mothers who are subject to the earnings rule shall retain at least 26s.

This Bill is designed primarily and principally to assist widowed mothers. The Amendment shows that noble Lords opposite, and my noble friend, too, believe that it would not be possible to exempt widowed mothers from the earnings rule without also exempting the widows t and there is good reason for their thinking so. For when a widowed mother ceases to be entitled to widowed mother's allowance, most of these widowed mothers being then over 50, and ceasing to be widowed mothers, they at once receive widow's pension. If widowed mother's allowance was exempt from the earnings rule and widow's pension was subject to it, the widows who from one day to the next become subject to the earnings rule would certainly feel perplexed and probably aggrieved. So the noble Lady seeks to exempt both widowed mothers and widows. But much the same thing will still happen, if this Amendment is carried, when the widow passes from widow's pension to retirement pension. She will then become subject to the earnings rule, and the result will certainly be a demand for the abolition of the earnings rule in time.

The noble Lady, when she spoke earlier, wanted to see the abolition of the earnings rule entirely. But this Amendment concentrates on the abolition of the earnings rule for widowed mothers and widows. While to abolish the earnings rule for widows only would cost £6 million a year, to abolish it altogether would cost over £100 million a year.


That is for retirement pensioners. I am not asking for that, I am asking only for widows. So I hope the noble Lord will not feel that the £100 million has any relevance to this debate.


I am afraid that I must insist that it has, because what I am arguing is that it is not possible to retain this concession only for widows and widowed mothers; it is bound to be extended also to the wider field. In that event the cost would be very substantially increased. It would be over £100 million. The reason for that is because the earnings rule is the essential support of the retirement condition. If people could earn as much as they liked without its having any effect on their retirement pension, it would be impossible to avoid paying the pension in full as soon as a person reached pensionable age—that is, 65 for men and 60 for women. In other words, the pension which is paid as of right to men at 70 and to women at 65 would become payable as of right five years sooner, no matter what they earn.

I think that one is bound to observe that that is obviously not particularly selective. Moreover, it would be very costly. For these 400,000 people who go on working after reaching pensionable age and have postponed their retirement would then become eligible for the pension at what is called the "minimum pensionable age". What is more, these people earned increments to their pensions, and there would be no point in paying increments to people who postponed their retirement if they were already receiving full pension. So increments could no longer be earned, and 1½ million people are receiving increments at the present time. I am not saying that it would not be possible to make adjustments of one kind or another. I am arguing the consequences of this Amendment The cost of the Amendment in itself, as the noble Lady said, would be in the order of £6 million a year, which is as much as the cost of the Bill as it is, and so it would practically double the cost of the provisions in the Bill. The Amendment is indiscriminate. The noble Lady said (I took down her words): "The trend of our social legislation is to help the least well-off". But this Amendment is indiscriminate. It does not select those widows who are most in need, and we believe that in general it is the widow with dependent children who is most in need. We believe that the best way of helping them is through the child allowances, as has been maintained by the Advisory Committee.

I would again remind your Lordships—because this is a point about which there is a good deal of misconception—that the child allowances are not subject to the earnings rule. That is why we have in the Bill raised the child allowance to 37s. 6d., so that a widowed mother who has three children and works part-time earning £4 a week will have £9 benefit, or £13 in all. This is a fairly typical wage, I should think, for a woman who is working part-time; and there are many, of course, who believe that in many circumstances a woman with a family should not work more than part-time. If she does work full-time and has to employ somebody else to look after the children (I pointed this out on Second Reading), then the amount paid to the person for looking after the children is deductible from her earnings before her allowance is subjected to the earnings rule. If this same woman with three children works full-time and earns £8 a week she will have £16 10s. in all. If she earns £11 or more, she will still get £6 18s. 6d. benefit if she has three children and £5 1s. in addition to what she earns if she has two. Those are very great advances, of course, on what has ever been available before.

The noble Baroness suggested that the earnings rule was an obstacle to women offering their services. It is, of course, undeniable that many women, if they are within a particular bracket of earnings which is just going to make them subject to the earnings rule, will obviously think twice about whether they want to earn more and so become subject to the earnings rule. A widowed mother would be left with 26s. That is to say, she may lose a maximum of 41s. 6d. out of her allowance. As for the widow herself, apart from the widowed mother, I should have thought that this possibility would not act as an obstacle, except within a comparatively small bracket; and I should think there is some deterrent effect. This was all looked into by the Advisory Committee, when they made their Report in 1956; nevertheless, the majority maintained the view that widows should not be exempted from the earnings rule so long as this was a general condition of the scheme.

The noble Baroness says that there is widespread deceit and evasion, and that women are tempted to evade the earnings rule. I have no great experience in these matters, but to judge by the number of inspectors one has whenever one has any kind of insurance, I would say that in any matter of insurance there is always danger of evasion and deceit. It seems to be almost inherent in the idea of claims; it is, I am afraid, part of human nature. And that is why one has inspectors and the like. I do not think this is an argument that can in any way be convincing.

The noble Baroness talked about anomalies, and referred to the fact that there are two entirely separate schemes, apart from the National Insurance Scheme—that is the War Pension Scheme and the Industrial Injuries Scheme. Both of these schemes, of course, have an entirely different history and an entirely different background. The noble Baroness says that it seems strange to separate out one kind of widow whose husband has died from natural causes. But the War Pension Scheme is not a contributory scheme; it is a totally different kind of scheme. It is one where we all recognise that very special conditions apply—the men themselves under discipline, particular kinds of service and a particular background. This is quite different from the kind of conditions which exist in the National Insurance Scheme. Then again, the Industrial Injuries Scheme has its own entirely separate background. That represents compensation for injury suffered, or for death, in the course of and arising out of employment. There are many parts of the schemes that are totally different from the National Insurance Scheme, and what I said on Second Reading still applies: that there is no logic in picking out simply one item from those Schemes and saying that in that item—namely, the absence of the application of an earnings rule the third scheme, the National Insurance Scheme, which is totally different, should be brought into line. Why on that item alone? The Schemes are different; the background is different; and the Schemes are not all contributory. In the Industrial Injuries Scheme no contribution record such as is required under the National Insurance Scheme is needed before a person is entitled to the benefits.

The noble Baroness accused the Government of "tinkering with" the National Insurance Act. What we are doing is to increase the benefits for a particular section of the community which is universally recognised as among the most deserving. This is the principal purpose of the Bill. That is a straightforward action. We are taking it in ways for which there are highly respectable precedents. But it is she, I submit to your Lordships, who is seeking by this Amendment to tinker with the Act, for not only would the Amendment make a change which is at variance with the principle on which the Act is based, but it would create further anomalies and, in practice, would not work out fairly between one widow and another.

I believe that in the Bill as it is drafted we have gone a very long way to help those who we believe most need help. I believe that we have done it in a balanced way, and one that is well in keeping with the terms of the Scheme. The day may come when we shall revise fundamentally the whole National Insurance Scheme. But here I would make a word of caution: that we are dealing with pensions, and we have always to remember that we are dealing with something which is essentially of long-term. People have been paying out this money and they expect in the long run to get certain benefits for themselves. But in this Scheme nobody is being denied a benefit to which he is entitled. The earnings rule does not deny anybody a benefit for which he has paid, because the terms of the policy—and this should by now be well understood—are that the benefits are payable in the absence of earnings. This is the fundamental point of it. It is for these reasons that we have provided in this Bill something that we believe to be much better than the abolition of the earnings rule; and because this proposal is at variance with the principles and would, as I say, create further anomalies, and would not work out fairly between one widow and another, I ask your Lordships to reject this Amendment.

Remaining clauses and Schedules agreed to.

House resumed: Bill reported without amendment; Report received.