NATIONAL INSURANCE BENEFITS AND CONTRIBUTIONS (Hansard, 10 June 1969)

§ THE MINISTER OF STATE, DEPARTMENT OF HEALTH AND SOCIAL SECURITY (BARONESS SEROTA)
My Lords, with the permission of the House, I should like now to repeat a Statement which is being made in another place by my right honourable friend the Secretary of State for Social Services about improvements in national insurance and industrial injuries benefits, supplementary benefits and war pensions and about increases in the contributions of the insurance schemes. The Statement is as follows:
"I have presented to-day a Bill to increase benefits and contributions under the national insurance and industrial injuries schemes. A Financial Memorandum is attached to the Bill. An explanatory White Paper and a Report by the Government Actuary will be available later this afternoon.
"The House already knows that the Government proposes to increase, the main standard benefit rates of the national insurance scheme by 10s. a week for a single person and 16s. for a married couple. This will restore to the flat-rate benefits the value lost because of the rise in prices in the two years since the last increase, in October, 1967. The cost of the total increase (including industrial injuries) will be about £247 million in the first full year. It is proposed that the new rates of benefit should come into effect at the beginning of November.
"The levels of supplementary benefits will be increased at the same time. For the two main categories—the single householder and the married couple—increases of 5s. and 8s. are proposed. Taking into account the first instalment they have been receiving since October, 1968, they will then have had increases of 10s. and 16s. respectively since October, 1967—the same increases as are now proposed in the standard rates of national insurance benefits, which have remained unchanged since that date.
559 "Supplementary benefit levels of other categories, including children, will also be increased. Draft regulations to provide for all these changes will be laid for approval by the House in due course.
"There will also be increases in war pensions—as usual, by Royal Warrant.
"I will, with permission, circulate a list of the principal proposals for supplementary benefits and changes in war pensions in the OFFICIAL REPORT.
"I now turn to contributions which need to be increased, not only because of higher benefits but owing to two other factors—the greatly increased number of pensioners and the higher cost of short-term benefits. As the House already knows, the total required in a full year is about £430 million. With the Exchequer contribution remaining at 18 per cent, i.e. £70 million, this leaves about £360 million to be found from increased contributions. The traditional way of raising this sum would have been to put the whole burden on the flat-rate contribution. This would have meant an increase of 3s. 4d. each for employer and employee. The Government rejected this as an intolerable imposition on the lower-paid worker. Instead, we thought it right to move towards the new scheme of national superannuation by raising most of the additional contribution on an earnings-related basis. The flat-rate increase therefore for an employed man (including industrial injuries), has been held down to 1s. a week and for an employed woman to 11d., whereas the present ½per cent. graduated contribution on earnings between £18 and £30 will be raised by 2¾ per cent. The biggest increase—for a man earning £30 or more a week—will be 7s. 7d., made up of 1s. flat-rate contribution, and 6s. 7d. graduated contribution. On the other hand, some 6 million employees who earn less than £18 a week will have only the 1s. flat-rate increase to pay.
"I now turn to the benefits which employees will receive in return for these increased contributions. Let me emphasise that the additional 560 graduated contributions, which will apply across the board, both to those in the State scheme and to those contracted out, will earn additional pension rights. But the greatest weakness of the graduated scheme introduced by our predecessors in 1961 was that it included no device for making these graduated pensions inflation proof. Indeed, ever since 1961 their value has been shrinking year by year. The Government has, therefore, decided that from 1972, when the new scheme comes into operation, the biennial review will guarantee the value not only of new-scheme earnings-related pensions and the present flat-rate pensions, as indicated in the White Paper, but also of the small graduated element in the present scheme which is earned by all of those who pay graduated contributions. This will apply not only to pension entitlement in the three years between now and 1972 but also to the pension earned in the last eight years.
"I should warn the House that this decision may cause problems to some employers and contracted-out workers. I should make it clear, however, that contracted-out employers will not be required to revalue the equivalent pension benefits for employees who have left or may leave their employment before retiring age. But it will be for the employer to decide whether any improvement should be made in the light of all the circumstances; and since the decision will not take effect until after 1972 this will leave ample time for further consultations on this complex issue.
"On the other hand, the decision to revalue the graduated element of the present pension scheme will, I am sure, be welcomed by all those whose pension rights were frozen by the previous Government's legislation. Now they will be able, for the first time, to look forward in their retirement to graduated pensions that will be revalued in the light of changes in the value of money and the level of earnings.".

§ LORD DRUMALBYN
My Lords, I should like on behalf of the whole House to thank the noble Baroness for repeating this Statement. May I start by asking her whether it is intended to publish also in the House of Lords OFFICIAL REPORT the detailed proposals for supplementary benefits and changes in war pensions to which she has referred. She did not mention what would be the increase in the full 100 per cent. war disablement pension. Perhaps she would be good enough to let us know this. I believe that the last increase was 17s.
The salient and outstanding point in this Statement is the need to raise £430 million, of which apparently the Treasury are to find £70 million, and the remainder is to be found by increased contributions. Anyone who has had anything to do with the Ministry of Pensions (as it used to be) will know of the problem always created by trying to keep down the contribution for the lowest-paid worker and also of the complications that arise from contracting out. In this case the Government have availed themselves of the graduated pensions contributions. Noble Lords will remember that Labour spokesmen are accustomed to refer to this as a swindle. It is interesting to note that the Government have now decided that they must avail themselves of this "swindle". And not only that: the contributions to the "swindle" are to be increased 6½-fold—I repeat, 6½-fold—presumably on the argument that the bigger the swindle, the more respectable it becomes.
I should like to ask the noble Baroness how much of the higher revenue that is to be raised will come from flat-rate contributions and how much from graduated contributions. I would also ask her whether she can tell us what the total contribution by a person earning £30 a week is now and what the total contribution will be under the new arrangements. Finally, I would ask the noble Baroness to confirm that there is to be no Exchequer contribution matching the increased graduated contributions and that the 25 per cent. Exchequer contribution will be related purely to the flat-rate contributions. If this is so, does it not mean that the proportion of Exchequer contribution will tend to decline in relation to the total contributions? My Lords, 564 if this is so—I am not saying that it is right or wrong that the Exchequer contribution should be reduced—I would point out once again that it is very much at variance with what Labour spokesmen have for long argued, that the Exchequer contribution should be increased.

§ LORD AMULREE
My Lords, I should like to thank the noble Baroness for repeating the Statement. I have not a great deal to say about it because it is rather complicated and needs a good deal of thinking about. The sums involved are certainly rather large and one wonders whether the increased contributions which are to be called for from the better paid workers will not at once lead to a call for an increase in wages, so adding further to the general inflationary spiral which is going on.
There is one question that I should like to ask the noble Baroness. Can she tell me whether those unfortunate people who do not receive pensions at the present time, the older ones who missed out, will be included in this new scheme? I take it that they will not, or we should have heard something about it, but I should just like to inquire. Finally, I should like to say that although we all echo what the noble Baroness said in the last sentence of the Statement, one seems to have heard that kind of thing before, and one wonders whether the effect will be as great and good and lasting and beneficial as the Statement makes out that it will be.

§ BARONESS SEROTA
My Lords, I thank both noble Lords who have spoken for the way they have received this very complex and difficult Statement. In replying, I am sure that the House would not want to be detained too long to-day. The White Paper will be available and I am sure that all noble Lords will read it with the greatest care. I assure the noble Lord, Lord Drumalbyn, that the figures relating to war pensions and supplementary benefit increases will be circulated in the OFFICIAL REPORT of this House just as they will be in the OFFICIAL REPORT Of another place. I have the figures before me if the noble Lord wants them immediately, but I think that all noble Lords will want to read them and the Statement at leisure.
565 I have been asked a number of questions of detail about the particular proposals but I would prefer, if the House would allow me, not to answer them off the cuff. This is a very complex situation and I should like to answer the questions accurately, preferably in writing. In due course, my Lords, when the Bill which my right honourable friend the Secretary of State for Social Services is presenting to-day has passed through its various stages in another place, your Lordships will have full and ample opportunity, I am sure, to debate in detail the proposals which I have outlined to-day. I suggest that we wait until everyone has before them all the factual information which my right honourable friend is presenting.

PROPOSED SUPPLEMENTARY BENEFIT RATES
	Present Weekly Rate	Proposed Weekly Rate
	£	s.	d.	£	s.	d.
Ordinary Scale
(a) Husband and wife	7	9	0	7	17	0
(b) Single householder	4	11	0	4	16	0
(c) Any other person aged:—
(i) not less than 21 years	3	14	0	3	17	0
(ii) less than 21 but not less than 18 years	3	1	0	3	4	0
(iii) less than 18 but not less than 16 years	2	13	0	2	16	0
(iv) less than 16 but not less than 13 years	2	1	0	2	4	0
(v) less than 13 but not less than 11 years	1	19	0	2	1	0
(vi) less than 11 but not less than 5 years	1	12	0	1	13	0
(vii) less than 5 years	1	7	0	1	8	0
Blind Scale
(a) Husband and wife:—
(i) if one blind	8	13	6	9	2	0
(ii) if both blind	9	9	6	9	18	0
(b) Any other blind person aged:—
(i) not less than 21 years	5	15	6	6	1	0
(ii) less than 21 but not less than 18 years	4	1	0	4	4	0
(iii) less than 18 but not less than 16 years	3	9	0	3	12	0
(iv) less than 16 but not less than 13 years	2	1	0	2	4	0
(v) less than 13 but not less than 11 years	1	19	0	2	1	0
(vi) less than 11 but not less than 5 years	1	12	0	1	13	0
(vii) less than 5 years	1	7	0	1	8	0
Notes:
(i) An allowance for rent is added to the above rates.
(ii) Both the existing and the proposed rates given above exclude the 10s. long-term addition which is added to the requirements of persons over pensionable age and to those of persons under pensionable age (other than the unemployed) who have received supplementary benefit for a period of two years.

PRINCIPAL CHANGES IN WAR PENSIONS
	Present weekly rate	Proposed weekly rate
	£	s.	d.	£	s.	d.
Disablement pension:—
100 per cent. rate	7	12	0	8	8	0
with proportionate increases for lesser disablement, e.g. 20 per cent. rate	1	10	6	1	14	0
Special allowances paid with disablement pensions:—
Constant attendance allowance
Normal maximum rate	3	0	0	3	6	0
Exceptional maximum rate	6	0	0	6	12	0
Allowance for lowered standard of occupation
up to	3	1	0	3	7	0
Treatment Allowances (in lieu of current pension)	7	12	0	8	8	0
Unemployability supplement:—
Allowances (sometimes payable with treatment allowance also)	4	17	6	5	9	0
Wife or adult dependant	2	16	0	3	2	0
First child	1	8	0	1	11	0
Second child		10	0		13	0
Other children		8	0		11	0
Way Widows:—
Standard pension	5	17	0	6	10	0
Allowance for first child	2	9	6	2	13	0
Other children who receive family allowances	1	19	6	2	3	0
Other children who do not receive family allowances	2	6	6	2	10	0
Rent allowance up to	2	5	0	2	10	0
Orphans:—
Under 15
First child and any other child who does not receive a family allowance	2	9	6	2	13	0
Other children receiving family allowances	1	19	6	2	3	0
15 years and over
First child and any other child who does not receive family allowances	3	12	6	3	18	0
Other children receiving family allowances	3	2	6	3	8	0
Adult	4	10	0	5	0	0