HL Deb 07 March 1968 vol 289 cc1432-54

3.50 p.m.


My Lords, the main provisions of this Bill, the Second Reading of which I now move, are part of the effort to put Britain's economy on to a genuinely sound basis. If we are to pay our way and wipe out our indebtedness we need to export more. If we are to sell more abroad we need to cut back consumption at home. All this is common ground. We are all agreed about it. Disagreement sets in when we get down to hard cases and decide how the home consumption cuts are to be made.

The Prime Minister described our general strategy as meaning: a progressive and massive shift of resources from home consumption, public and private, to requirements of exports, import replacement, and productive investment". This Bill will help to implement that strategy in respect of economies in home consumption. As I have said we all agree about the objective in general, but I have no doubt that this afternoon we shall have disagreement about its implementation in particular. It is reported that yesterday in another place the Opposition spokesman claimed that the proposed cuts in defence expenditure could not be justified on economic grounds. Some of my friends have said precisely the same sort of thing about the proposed cuts in home expenditure. The truth is that no cutback in consumption can be pleasant, and in our hearts we must all agree that, if we are honest about our support for the general objective, we should all of us have to accept the necessity for particular economies which we would rather avoid.

Having said that I must go on to add that Clause 1 of this Bill and Schedule 1 would in fact have been necessary quite apart from the considerations behind our other economies. I will explain why. When the higher rates of National Insurance benefit were introduced at the end of October last year they were accompanied by increases in the flat rate contributions. At the time when the legislation of last June authorising those increases was introduced, it was estimated that the proposed increased contributions would be sufficient to support the increased benefits until the early part of 1970. In fact there has been a continuing worsening in the financial position of the National Insurance Fund. It is now expected that in 1967–68 the Fund will show a deficit of £75 million; and if there were no increases in contributions, further deficits would follow in 1968–69 and 1969–70, and the balance available in the Fund might be insufficient to finance the demands upon it.

The reasons why the estimates made only eight or nine months ago have now been falsified are set out in the Report of the Government Actuary (Cmnd. 3532). Very briefly, they are:

  1. (a) A continuing rise in the level of sickness claims, not allowed for in last year's calculations.
  2. (b) An increase in the proportion of men retiring as soon as they reach the age of 65.
  3. (c) People are on average living longer so that the mortality rate among pensioners has been lower than expected.
  4. (d) Apart from the loss of contributions due directly to unemployment, there has been a fall in the total working population since 1966, and this has led to a shortfall in contribution income.
For these reasons an increase in the contribution rates becomes necessary. The Prime Minister announced on January 16 that there would be an increase of 6d. a week for employees and 6d. a week for employers. To increase both the contributions by about the same amount is in accordance with normal practice. The 6d. relates to an employed adult male over the age of 18, but, as Schedule 1 to the Bill indicates, there is a wide range of contribution rates. Again in accordance with normal practice it is proposed that the increase should be roughly proportional to the contributions paid by or for each class of contributor. There are certain adjustments to this, involving the rounding-off of halfpennies, to which I need not refer.

Subsection (2) of the same clause is designed to secure that the powers of the inspectors of the Ministry of Social Security for the purpose of enforcing contribution liability shall extend to premises or places where the inspector has reason to believe that an agency, or a business for the supply of labour, is being carried on; and it also imposes upon people operating an organisation for the supply of labour the obligations regarding the furnishing of information and production of documents to inspectors imposed on employers generally by the 1965 National Insurance Act. This provision will enable the Ministry to stop up what it is feared may be a growing loophole for the evasion of payment of contribution.

Subsection (3) of the clause deals with the case of the person who commits an offence by refusing to give information required under the 1965 Act. At present the penalty for such refusal is a fine of £10 on first conviction, and £50 on a second or subsequent conviction. Unhappily, the extent to which some people, by refusing to give the information required under the 1965 Act, might evade contribution payments is maybe so great that it would pay them to continue their offence even at the cost of paying the periodic fines. The purpose of this subsection is to increase the fine on second conviction to £10 a day for each day on which the offence is continued. It is believed that this deterrent will end evasion of proper contribution payments

Clause 2 and Schedule 2 provide for an increase in the National Health contribution of the employee of 6d. a week. In the debate of January 24 on the economic situation I ventured to confess that the reimposition of prescription charges seemed the least justifiable of all the cuts. I preferred a straightforward insurance policy and that would mean an increase in the Health Service charge sufficient to meet the cost of prescriptions. The Government decided that the necessary increase, of 1s. a week, on top of the increase in the National Insurance contribution, called for in Clause 1, would bear unreasonably hard of the poorer sections of the community. On the other hand, if all prescriptions were to be paid for when taken then again those least able to pay would be hit hardest. The proposals in Clause 2, and Schedule 2 are the result of a compromise.

Patients over 65, children up to the age of 15, expectant and nursing mothers and the chronic sick, will be exempt from prescription charges, and the cost of these exemptions, approximately £25 million in a full year, will be met by this 6d. increase in the National Health Service contribution of the employee. The increased rate of contribution will be introduced as from May 6 next. No date has been fixed for the reintroduction of prescription charges, but it is anticipated that the one will follow the other as soon as practicable.

Clause 3 of the Bill is concerned with the withdrawal of school milk from secondary schools. Here again I get absolutely no satisfaction in asking for this particular economy. I do claim, however, that the decision to make this change comes after the most careful consideration. We considered the possibility of providing free milk for some secondary school children, but not for all, on grounds of special need, but reluctantly concluded that this selection or segregation of certain secondary school children was not a feasible way out. Apart from obvious difficulties in selecting individual children on medical grounds, or because of nutritional condition, or on grounds of family finance, there was an overriding human difficulty. To have some children selected in this way while others in the class sat by and watched them drink the free milk would create embarrassment. Some sensitive children to my certain knowledge would rather not take it in this sort of situation.

One factor relevant to the decision in this clause is the way local education authorities have been co-operating with the Government to improve the take-up of free school meals. As a result of a survey published last summer, it was revealed that only about 50 per cent. of the children eligible for free school meals were receiving them. A campaign has now been mounted to draw the attention of parents to the availability of free school meals where the parental income falls below a certain level, and although it is too soon to be sure of the effects of this there is reason to believe that something like an additional 100,000 free meals have been served over the figure of last November. Moreover, from April of this year free meals will become automatically available to the fourth and subsequent children in families, irrespective of income. I hope that this will be accepted as evidence that the Government, in spite of the decision they have taken on secondary school milk, are not unmindful of their responsibilities for the health of the nation's children.

The next clause, Clause 4, is related to the economic policy, but only indirectly. It makes provision for the payment of compensation to those people who lose their employment, or otherwise suffer loss or diminution of emoluments, in consequence of the Government's decision to reduce civil defence preparations to a care-and-maintenance basis, and to disband the Civil Defence Corps and the Auxiliary Fire Service. The terms on which compensation will be paid will be set out in regulations, and it is intended to follow the general pattern adopted in other cases of statutory compensation—for example, the reorganisation of local government. The cost of compensation under this clause is particularly difficult to estimate, since it will turn very largely on the ease with which those concerned find alternative employment. Altogether, a total of from 2,000 to 2,500 people may be affected. We hope that the great majority will find other jobs either within the local authority field or elsewhere. But to the extent that they do suffer loss the regulations will provide help.

Clause 5 of the Bill does not derive directly from the announcement of January 16, but its aims are broadly in line with the objectives. Briefly, the position is as follows. Over the years a number of fees and charges for various Government services have been fixed by Statute. Where the original Act contains no power to vary such fees by order it has meant that they could be varied only by a further Act of Parliament. This would obviously be an extremely cumbersome way of proceeding if one wished to do no more than up-date a few minor charges and fees. For this reason a whole range of such charges is now completely out of line with the cost of the services to which they relate. In order to overcome this difficulty, it is proposed through this clause to take power to vary such fees and charges by an Order, which would be subject to the Negative Resolution procedure, made by the appropriate Minister. This clause of itself does not vary any charge at all. It is purely an enabling power. I would draw your Lordships attention to the limitation on that power imposed by subsection (1) of the clause, which provides that the fees may be amended so as to produce a net return corresponding more nearly with the cost of the matters for which they are payable". That is to say, our aim here is not to impose a new tax, but merely to require people to pay a fair price for the services concerned. We are also taking power to abolish any fees where the yield from them is likely to be such that their collection is uneconomic.

Finally I come to Clause 6 of the Bill, which embodies a minor but useful reform of the procedure for considering applications in the Board of Trade for building grants in development areas. Under the Local Employment Act 1960 the Board cannot make building grants unless they have first consulted the Board of Trade Advisory Committee (B.O.T.A.C.). Clause 6 would relax this requirement and allow the Board discretion in this matter to consult the Committee as the Board thought fit. The Board of Trade consider that the present statutory requirement leads to a disproportionate amount of time and administrative resources being spent on a large number of small applications. Few of these have in fact been rejected by B.O.T.A.C., and the intention would be that applications relating to a building cost of £10,000 or less should not normally be referred to the Advisory Committee.

Clause 7 of the Bill is of a formal and technical character and I think there is nothing I need say on that.

My Lords, the provisions of this Bill are very varied, but they all contribute to the Government's overriding economic aim of ensuring that demands upon national resources for the purposes of home consumption are reduced to make way for that export-led growth without which all the opportunities of devaluation would be wasted. If, on the other hand, we accept these unpalatable measures, as part of a wider strategy, then I hope that the day will not be too far distant when we can once again concentrate on positive measures to improve and expand our social services. I beg to move.

Moved, That the Bill be now read 2a.—(Lord Beswick.)

4.7 p.m.


My Lords, the whole House will be grateful to the noble Lord for dealing in detail with a rather curious type of Bill, because it is unusual to have a Bill of seven clauses six of which deal with separate subjects and the seventh dealing with the whole lot. This, of course, puts your Lordships into some difficulty in debating it, because on a Second Reading we are generally dealing only with a matter of principle, and here we really have principles within the main principle. Perhaps the House will forgive me if I follow the noble Lord's example and deal with the clauses one by one, because they are so different in character that it is difficult to dell with them otherwise.

The noble Lord started by saying that this is part of the effort to put Britain's economy on a sound basis, and so far as that goes, of course we welcome it, although one is bound to say when one looks at the second page of the Explanatory Memorandum, that it is a relatively small part. Seventeen million pounds is not a small sum of money, but in relation to the national expenditure as a whole and to the increase in the, Estimates, which is £560 million for the current year, it seems a relatively small amount.


Did the noble Lord say £17 million?


Seventeen million pounds. The noble Lord will see, from the second page of the Memorandum, that if you deduct, as I suppose you have to deduct, the amounts that are being paid out, such as those involved in Clause 1, the total amount involved, according to the Explanatory Memorandum, is £16,780,000.

Turning to Clauses 1 and 2, the effect here, as the noble Lord said, is to increase the cost of the National Insurance stamp to unemployed and non-employed persons by 1s. for men and (perhaps I may go into a little more detail, because I think it is of interest to noble Lords) by 11d. for women, and to the employer by 6d. for men and 5d. for women. That is Clauses 1 and 2 together. This increase comes on top of an increase in contributions of 2s. for an employed man in 1965, and another 2s. last year, and will bring the total increase for an employed man since 1964 to 5s., an increase of 43 per cent. on the contribution which then applied. For women the increase since 1964 is from 9s. 8d. to 14s. Id., an increase of 4s. 5d.; that is, if my mathematics are correct, 45 per cent. The flat rate benefits for single persons have been increased over the same period from 67s. 6d. to 90s., an increase of 22s. 6d., so that the flat rate benefits have increased by 33⅓ per cent. Quite clearly, therefore, the contributions have, relatively, increased more than the benefits. The increase in contributions falls with considerable severity on the lowest paid workers. I am glad that the noble Baroness, Lady Phillips, is to reply, inasmuch as this increase falls particularly hardly on women whose average wage is so much lower than that of men.

When benefits were increased in 1963 by 10s., the contribution for employed men to the National Insurance Fund was raised by 11d. The reason for this—the noble Baroness will correct me if I am wrong—was largely to be found in the fact that the top of the bracket on which graduated contributions were charged was raised in that year, in 1963, from £15 to £18, whereas no similar change was made in 1965 and 1967. At the time when the increases were made in 1965 there was some justification for not raising the top of the bracket, because we were all given to understand that a new graduated scheme would be introduced quite soon. In 1967 it was reasonable to presume that the introduction of that scheme was still nearer. But I cannot help observing that over three years have passed since the 1964 Act, and the result of this dalliance is a much heavier burden on the lowest paid workers than it would have been if the flat rate, the top of the bracket, had been increased. Even if a Bill is introduced next Session—and perhaps the noble Baroness will be able to tell us whether the promised graduated pensions Bill is to be introduced next Session—it is unlikely to be brought into effect, I should have thought, until more than a year from now, possibly a year and half.

I would not dispute, and I do not suppose any noble Lord would dispute, that the National Insurance Fund should not be allowed, as the Government Actuary says, to fall so low as to be insufficient to finance the operations of the National Insurance scheme. I am sure this is right. As the noble Lord said, the increases in Clause 1 are made necessary, and they are not really in the same category as the other clauses of the Bill. We would all agree that a further increase in contributions is now necessary. The deficit is now running at £75 million a year as compared with an estimate last year for a virtual break-even in the current financial year, 1967–68, and a deficit of £17 million in 1968–69. The noble Lord quoted the reasons given by the Government Actuary, and if I may just draw the attention of the House to one common feature in them, it is that in every one of those reasons except the last one this is simply a continuance of a trend which already existed. He drew attention to the continuance of the trend in sickness benefits, which have been increasing in the past five years, and presumably the Government budgeted for the trend to continue; to a continuance of the trend towards earlier retirement; to a continuance towards longer life among pensioners; and lastly, a rise in unemployment, coupled with a fall in the total working population.

When we last had these rises considered by Parliament, Government policy was just about to change. I submit that the change in the Government policy was bound to lead, and was intended to lead, to a higher level of unemployment in the short term at least, and a fall in the total working population was predictable in the circumstances. It was not for the Government Actuary to foresee this; it was for the Government to foresee it. It is for the Government to say what the level of contributions should be. Of course, it may be said that at the time when the 1967 Act was being prepared nobody could have foreseen the complete volte face of the Government last July, least of all the Government themselves. It is clear that Clause 1 is really a monument to the incompetence and the maladministration of the Government. The increase in the contributions has nothing whatever to do with the effect of devaluation. It has to do with its cause, which is nothing more nor less than the inability of the Government to run the economy and to foresee the continuance of existing trends, intensified by their own actions.


My Lords, may I interrupt the noble Lord to ask whether it would not also be fair to say that a lot of this is the result of 13 years of Conservative misrule?


My Lords, not at all. I have been trying to point out that, as the Actuary said, all this has arisen from continuance of trends that were known at the time, apart from the action which was taken—a sudden reversal of policy, when the Prime Minister said on one day that we were turning the corner, and three days later we were faced with the new Prices and Incomes Bill and a complete change of policy.

It is also relevant to say that of course people will retire earlier when unemployment is falling. When redundancies are inevitable, it is almost always the case that those who have reached, or are about to reach retiring age, are the first to suffer. What is remarkable about the Actuary's Report is that it was the Actuary who had to draw the attention of the Government to the precarious condition of the Fund. It was he who had to recommend an increase in contributions. But the responsibility lies squarely on the shoulders of the Government who, in my experience at any rate, fix the contributions and then ask the Actuary to comment on them.

Quite apart from the burden on employees, one should not, and one cannot, disregard the effect of the increase on employers and the self-employed so far as the costs of production are concerned. In my experience Government Departments are a little apt to pooh-pooh comparatively small increases of this kind, but they soon mount up, especially when they are weekly payments; and this is particularly important for the labour intensive industries and, above all, the service industries who are already so hard hit by S.E.T.

So much for the effect on employers and employees. So far as the third man in all this is concerned, the Chancellor of the Exchequer—because there are three parties to the National Insurance Fund; he of course acts on behalf of us all—the effect is an annual increase in expenditure of £13 million representing his share to the contributory National Insurance Fund, or 25 per cent., I think, of the flat rate contributions. So that the upshot of this particular clause is to place a greater burden on employers, on employees, on the self-employed, on the non-employed, on industry and on the Exchequer.

I turn to Clause 2. The purpose of this clause is to enable the Exchequer to obtain the full benefit of the increase in prescription charges. As the noble Lord said, that is £50 million. Without it, the Exchequer would get only £25 million. So those who have to pay the prescription charges for themselves will also have to pay through their higher National Health Service contribution on the National Health stamp the prescription charges of those who are to be exempted from them, or who are exempted for the time being from paying for their stamp.

This is an odd way of doing things. We have come so far from the idea of a mutual health insurance that it is difficult to justify increasing the flat rate contribution to the National Health Service. It is quite true that increases of 6d. have been made from the original 8½d.—which was the original charge in 1946, if I remember aright—on two occasions, and one increase of 10d. On precedent, I cannot find fault with this increase, were it not for the increase in the National Insurance contribution at the same time. I suppose we should be grateful that the Government have tempered the economic wind to the much fleeced working population, by knocking off a halfpenny in order to reach a round contribution of 40 coppers to the National Health Service contribution. This is what it now amounts to, 3s. 4d.

This is not the occasion to debate the exemptions which are to be provided for. I would only say that if it is possible to give exemptions in the case of the chronic sick in this context, which must involve defining what is meant by chronic sick, why was it not possible to define the chronic sick for the purposes of National Insurance benefits, so that they could have been given graduated benefits now available to the short-term sick? This is something which I raised at the time when the graduated sickness and unemployment legislation was going through, and I still think that it could and should have been done on that occasion. If you are going to be able to define chronic sick for this purpose, then you could have done it for that other purpose.

I now turn to Clause 3. The repeal of the duty laid on local education authorities to provide free milk in secondary schools is justified by the Government on the ground that the proportion of pupils taking it is falling. The noble Lord gave a figure of 50 per cent. I think that in another place a figure of 58 per cent. was given for those now taking milk in secondary schools.


My Lords, I think that the 50 per cent. related to the take-up of free school meals.


I beg the noble Lord's pardon. I think it was said in another place that the proportion of secondary school children taking free milk was falling, and had fallen from 60 to 58 per cent. It was also said in another place that it is not possible to justify the retention in secondary schools of free school milk on nutritional grounds alone. There has been some doubt as to official advice on this matter, but it was said that it cannot be justified on nutritional grounds alone. May I ask the noble Baroness whether this means that local education authorities can go on providing milk in secondary schools if they so choose? If so, must the pupils who take it pay the full cost of it, or can the local education authorities still charge part of the cost to their ratepayers if they wish? The noble Lord bound this matter up with free meals, and I am glad to hear that the publicity activities of the Government are succeeding in getting a greater uptake of free meals.

I also should like to ask what is meant by the proportions of pupils taking school milk. There have been allegations of considerable waste in milk, and that is why I ask the question. Does it mean that 58 per cent. of pupils actually drink their milk, or does it mean that the amount of milk delivered to schools is 58 per cent. of what might be delivered if the 100 per cent. all took it? What check has there been on wastage in school milk? I know from contacts with school teachers and others that it is thought that there is a good deal of wastage in this sphere.

Clause 4 deals with civil defence. We shall be having a debate on the Government's decision before long, so I need not say much about that now. It appears that the amount of compensation provided is rather small. The noble Lord said that there was great difficulty in estimating what would be required, and the amount which has been put down is £250,000. Relating that to the figure which he gave of 2,000 to 2,500 people who might be affected, this means an average of £100 to £125 each. I daresay that a fairly high proportion will not require compensation, but will those who receive compensation also be entitled to redundancy payments, and will those Civil Defence workers who are taken on by local authorities receive their redundancy payments in the same way as those who are taken on by a firm which takes over the firm for which they are working?

Clause 5 is the sort of clause which Governments long for the opportunity to introduce, and I readily welcome it. Little by little we shall find out what it means for the public. Most departments and local authorities concerned have been anxious about the fact that charges are so often insufficient to cover costs, and most of them will have made up their minds by now what they are going to ask for when the Bill becomes law. Surely it would have been possible for the Government to produce a White Paper to accompany the Bill, giving fuller information and indicating their intentions. I say this because one hears rumours that charges are likely to be increased very considerably. The noble Lord was good enough to point to the policy in this matter—and I welcome this—namely, that the charges should not be regarded as revenue-producing but should be kept sufficient to meet costs. We would not dissent from that and we are sure that it is the right policy.

They are certainly a mixed bag. I looked up one or two of the Acts, and I noted that the Explosives Act 1875 dealt with the licensing of small firework factories, and the next one dealt with increases in fees. It is remarkable—I suppose it is still the position—that one of the Acts which I looked up indicated that where a commissioner is appointed to hold an inquiry and costs are awarded against one party, it is not possible to charge the party against whom costs are awarded more than 5 guineas a day for the services of the commissioner. That has gone on now since 1923 and might well be changed, so we welcome that.

Lastly, I come to the building grants in development areas. The Government are asking for power to pay building grants without reference to the Board of Trade Advisory Committee. They say that it will save £30,000 a year in administration. The danger, of course, is that the grants would then be paid without the same care in investigation as has been taken by the Board of Trade Advisory Committee and before it decided whether to recommend a grant. I know from my own experience in the Board of Trade how short are the Government of accountants to investigate applications. I appreciate that there have been great extensions of the development areas and that the burden on the B.O.T.A.C. must have been considerably increased, but Parliament is entitled to expect that Government money will not be "dished out" to ventures which are unlikely to prove economic. The consequence of this clause is likely to be, not so much to save money on administration, as to increase the numbers of building grants for dubious ventures. It is at least doubtful whether there will be a saving in the long run.

I should be grateful if the noble Baroness could deal with these points because, although the noble Lord said that most applications for building grants are allowed, it still remains true that they are all fully investigated at present. The House would not like to feel that the investigations were in any way reduced. This is a real rag-bag of a Bill, parts of which are designed to save expenditure to the Exchequer and parts of which will increase Treasury expenditure as the inevitable consequence of Government decisions and indecisions. The net financial effect, as I said, is a saving of under £17 million to the Treasury as against an increase in the Estimates for next year of over £560 million. The best that can be said about this Bill, as the late Sir Winston Churchill once said of a pudding, is that "it has no theme".

4.31 p.m.


My Lords, this Bill is what is known in popular language as a "package deal". As has been pointed out, it consists of a number of miscellaneous financial provisions which are necessary to carry out the Govern- ment's programme of reduced expenditure. If the other aspects of the Government's programme of reduced expenditure had encountered as little opposition as this Bill looks likely to do, I am sure that the Government would have been very well satisfied.

There is one matter concealed in the verbiage of this Bill to which I should like to draw your Lordships' attention. It seems to me to be a matter which is so unjust that at a later stage your Lordships may be ready to amend it. As the noble Lord, Lord Beswick, has pointed out, the Bill contains provisions for the payment of compensation to persons who lose their employment, or who suffer some diminution in their emoluments, as a result of the Government's programme of placing the Civil Defence Service on a care-and-maintenance basis. Compensation will be paid by the local authorities, and the Bill provides that the local authorities shall be reimbursed by the Exchequer in respect of their expenditure in paying compensation to those persons who will be entitled.

The Minister is to make regulations defining, I suppose, the classes of persons to whom compensation will be paid and other matters, but the most important matter that he will have to include in the regulations is the extent to which the cost of the compensation will be borne by the Central Government. The regulations which the Minister will be required to make are to be made subject to the provisions of the Civil Defence Act 1948. That Act provides that regulations may provide for a reimbursement of sums which the local authorities, as civil defence authorities, have disbursed. The Act of 1948 further provides tint the regulations may require the Central Government to reimburse the local authorities to the extent of 100 per cent. of their expenditure, or to not more than three-quarters of their total expenditure.

One does not, of course, know the present intention of the Government whether the intention is to provide for full compensation—that is to say, for a full reimbursement of the sums expended in compensation—or whether the intention is to provide for only three-quarters of it. One gets a fair indication of what is intended in the Explanatory Memorandum to the Bill. If your Lordships will look at the note on Clause 4, at the bottom of the first page, you will see that it says: The payments by local authorities of compensation provided for in this Clause are estimated broadly at up to £¼ million, attracting 75 per cent. Exchequer grant. That must mean that when we see the regulations we shall find that the local authorities are to be reimbursed only to the extent of three-quarters of their expenditure on compensation.

I submit to your Lordships that, if this is what is intended, it is rather difficult to justify a reimbursement of no more than three-quarters of the expenditure which the local authorities have incurred. One-quarter of the cost of securing this economy is going to fall upon the local rates. I think one is entitled to ask the Government whether their economy programme consists, so far as this item is concerned, of shifting on to the local authorities the cost of securing the economy which the Government will enjoy. It seems a strange form of economy that one-quarter of the cost of securing it is to be paid by somebody else.

At the present time the local authorities are themselves engaged in trying to carry out programmes of economy. They are endeavouring to reduce their expenditure in every department where that is possible. I submit that it is not right that the Government should expect the local authorities to pay one-quarter of the costs of securing this item of their economy programme. It is really a poor sort of economy if one is going to do it like that. I hope that the noble Baroness who is going to reply to this debate will be able to assure us that the Government will think again about this matter, and will ask themselves whether it is a fair and just settlement that one-quarter of the cost of securing this economy should fall on somebody else.

4.37 p.m.


My Lords, the National and Local Government Officers' Association has raised with me one or two points in connection with Clause 4. However, I should at the outset declare an interest. I happen to be an honorary member of NALGO, but that is the extent of my interest. I should like an assurance—


My Lords, I am sure the noble Lord will forgive me for a moment if I interrupt him to say that, if a personal explanation is necessary, I ought to have given a personal explanation on the same ground, that I also am an honorary member of NALGO.


My Lords, I should like an assurance that NALGO will be taken into consultation on the draft compensation regulations to be made under the Bill. Secondly, it is pointed out that compensation is to be payable in the case of persons affected by the revocation or amendment of regulations made under Section 2 of the Civil Defence Act 1948. Understandably, there is no indication in the Bill of when this is likely to happen.

In the Home Office letter of February 12 to local authorities, it was pointed out that, in the meantime, dismissal of an officer would prejudice his entitlement to compensation. As may be expected, NALGO members are apprehensive about their position. Can information be given about the proposed timetable, when the regulations are drafted? Alternatively, perhaps the compensation regulations could be made to act retrospectively to meet the case of officers who might be dismissed before the revocation or amendment of the Civil Defence Act regulations.

This brings me to a further point. The regulations will apply only in the case of loss brought about by the revocation or amendment of Civil Defence Act regulations. Last summer, a number of members of NALGO employed in the Civil Defence Service lost their jobs, not because of such revocation or amendment of regulations but in consequence of a letter, CD1 1967, issued by the Home Office which called upon local authorities to economise on their civil defence expenditure. It was a broad hint to them—a very broad hint—to get rid of staff to reduce their expenditure. What was the result?

The overall picture was that urban and rural district councils severely cut down their expenditure on civil defence, leaving the county councils to do most of the work. NALGO members who lost their jobs in consequence of this change will not be covered by the new regulations. How are they to be dealt with? Surely they are entitled to the same treatment as those who will now lose their jobs in consequence of the revocation or amendment of statutory regulations. It is true that some of those who lost their jobs last summer were awarded redundancy payments, but in many cases compensation, if it were available, would exceed the amount of any redundancy payment and the officers would be entitled to the difference between the two sums if the compensation regulations could be made to act retrospectively.

I am sorry that I was not able to give the Minister previous notice of these points, but I myself received intimation in regard to them only this morning. Perhaps I may express the hope with which I began; namely, that NALGO will be consulted at all stages of the discussion in regard to the regulations, when I am sure that some of the points that I have made will be ironed out, I hope to the satisfaction of all concerned.

4.43 p.m.


My Lords, I do not wish to take up the time of the House in repeating what has already been said, but perhaps I may say how entirely I agree with the points made by the noble Lord, Lord Ilford. They covered all that I had intended to say; and, as he put the case to the Government so convincingly and so well, there is no need for anyone to repeat it. I feel the more assured in saying no more than this in that I am not at all sure that I should not be wasting not only the time of the House but also my own time, as I feel confident that the Government will take a sympathetic view of the plea which has been put before them. It represents views which I can assure the Government—they probably already know it—are widely held by a number of people.


My Lords, before the noble Baroness replies, I wonder if I might ask whether the Government would consider making a more just relationship between the payments for National Insurance of the employed and the unemployed. I should perhaps declare an interest, because I happen to belong to the ranks of the unfortunate unemployed myself, at least for National Insurance purposes, though I am very far from unemployed in fact. I find for myself that the payment of 14s. 3d. per week for the privilege of being unemployed is quite as much as I want to pay; but there are many others who are in far worse circumstances than I am. There are those who are old and infirm, who perhaps have nobody to help them, who are living on very small incomes which they have no prospect of ever enlarging.

My Lords, is it fair that such people should have to pay such a sum as this? I do not think anybody would question the justice of support for the nation by those who are earning large salaries and are very well off, but I think that to ask so much from those who are in such an unfortunate position as these old and. as I say, often infirm people seems to me very far removed from justice. I hope that it will be possible for the Government to do something about this.

4.46 p.m.


My Lords, I will endeavour to reply to all the points which have been raised by noble Lords, but, as the noble Lord, Lord Drumalbyn, has so rightly said, this Bill covers a tremendous number of subjects; so if I omit to give a reply during this Second Reading debate to all the questions raised it will not be with the intention of evading them, but simply because it has not been possible to provide a reply in the time. I can assure the noble Lord, Lord Somers, straightaway that, although the point he raised does not come within the context of the Bill we are discussing to-day, it will be taken back and looked at.

In reply to the noble Lord, Lord Word, I should like to give him an immediate reassurance on the question of the cost of compensation to redundant civil defence employees. His first point, I think, was: How much will the Exchequer bear? The reply to this is, 75 per cent. This is fair because, after all, the effect of the rundown in civil defence will be to reduce local authority expenditure by about £5 million, per annum. I should like to assure the noble Lord, Lord Burden, and also the noble Lord, Lord Ilford, that NALGO will be consulted on the question of the retrospective effect of compensation and the loss of employment to NALGO members; and although I cannot give the noble Lord, Lord Burden, a direct reply on every point he raised, I will see that this is done during the Committee stage.

It would probably be helpful to both noble Lords, as well as to the noble Lord. Lord Milverton, if I were to make some reference to the question of compensation regulations. These will be on the lines of those made for previous similar cases, and generally accepted by local authorities and their staff as reasonable. They will be based on what is known as the Crosby code. On the question of retrospection—and I am sure that this will reassure noble Lords—there is provision in subsection (4) of Clause 4 to apply compensation retrospectively where the Civil Defence Act regulations are revoked or amended before the passing of the Act or the making of the compensation regulations. The employee's redundancy must, however be attributable to the revocation or amendment of the Civil Defence regulations, as required under subsection (1). That, I think, was the point which the noble Lord, Lord Burden, raised particularly, and it will be looked at. The question whether any employee who ceases to be employed on civil defence work before the Civil Defence regulations are revoked or amended will have any claim to compensation, will depend on whether the cessation of employment is covered by the word "attributable". Each case would have to be considered in the light of the particular circumstances, but retrospection would ordinarily be acceptable if the redundancy occurred after the Prime Minister's statement of January 16, 1968, and the local authority employing the individual concerned stated that it was a redundancy attributable to the prospective revocation or amendment of Regulations which were subsequently revoked or amended.

On the question of the rate of grant, the local authorities' association have represented that the compensation payments which the authorities will make should be subject to 100 per cent. reimbursement. Most civil defence expenditure has been grant-aided at 75 per cent. and there seems no reason to depart from this level of grant, particularly since the local authorities share the benefits of the saving in expenditure which accompanies the reduction of civil defence activities. I hope, therefore, that both noble Lords will accept that any further discussion—


My Lords, there is one point and it is the basis of the case that I put. Will discussions be entered into with NALGO to see whether the points that I raised can be settled satisfactorily?


My Lords, I understand that all the matters I mentioned will be subject to consultation with NALGO; but I will check on this for the noble Lord and give him a reply later.


My Lords, I am much obliged.


The noble Lord, Lord Drumalbyn, I believe raised points on each clause of the Bill. If I do not deal with them in order, at least I hope that I shall cover them satisfactorily. The noble Lord referred to the saving of £16 million under the Bill as being small; and that is true. But these savings are part of an overall saving of £300 million in 1968–69 and over £400 million in 1969–70. The Bill simply deals with that part of the saving which requires legislation.

On the question of Clause 4, again we are back to the subject of compensation. The noble Lord said that £250,000 is a small sum. But it should be remembered that it is an annual amount and the total may be greater—for example, for employees who qualify for continuing payments. And to Lord Drumalbyn's further question on the same clause, as to whether the redundant employees will receive redundancy payment, the answer is, Yes; they will be entitled to do so. In answer to his question on Clause 5, he may like to know that discussions are in train with the local authorities on increasing fees for the registration of births, marriages and deaths. These and all increases will be subject to the Negative Resolution procedure.

The noble Lord raised a further question concerning the Government Actuary and suggested that the Government fixed the contributions and then asked the Actuary to comment on them. In fact, that is not strictly correct. The Actuary drew the Government's attention to the emerging deficit and advised what contribution would be necessary to meet that deficit. That is the normal and proper function of the Government Actuary in relation to the Government. The noble Lord, Lord Drumalbyn, also suggested that the trend had been there before and that, presumably, the Government should have noticed it and made the increases earlier. It is true that the trends were there; but we are dealing with the degree of increase. It was the sudden steepening of the trend which put the earlier calculations out.

I notice that the noble Lord suggested that people retired because of a shortage of work. May we not take the more hopeful view that people are retiring because they are more satisfied with the rate of retirement pension? At any rate, perhaps one reason is as good as another in the existing circumstances. I think it is heartening—to use the phrase used in another place—that "people are dying less frequently". There is no doubt that this is a very heartening trend.

On the subject of the supply of milk, the noble Lord, Lord Drumalbyn, mentioned the figure of 58 per cent. That is, in fact, the quantity of milk supplied to the pupils, but there is no reason to suppose that there is any great difference between the amount supplied, and the amount consumed. The question of wastage is constantly before the Department. The noble Lord said that he had talked with teachers and children about this problem. So, also, have I. From my own recollection, I would say that there is no wastage; it simply means that some children perhaps have more milk than they actually need. I suppose it may be described, technically, as wastage; but in fact no milk is ever put down the drain or thrown away. As my noble friend Lord Beswick has made the point about the decision to withdraw free school milk from secondary schoolchildren, I will not labour it further, but I think it is important to remind the House that this step was taken in relation to the investigation of the quantity of free meals which were being taken up. It is, of course, rather surprising to learn that a percentage of the free meals available was not taken up. But this is, happily, a situation which is now changing.

I think—perhaps I dare say I hope—that I have dealt with all the points raised by the noble Lord, Lord Drumalbyn. I would again remind your Lordships that it is probably unique to have a Bill presented which covers such a wide and varied number of subjects. I hope noble Lords will accept my assurance that during the Committee and subsequent stages I will let then have any further replies. With this rather inadequate little speech, I hope your Lordships will give the Bill a Second Reading.

On Question, Bill read 2a, and committed to a Committee of the Whole House.