HL Deb 24 March 1971 vol 316 cc915-24

3.13 p.m.

BARONESS PHILLIPS rose to call attention to the rapidly increasing effects of inflation on the living standards of the elderly and to the urgent need for the Government to increase retirement pensions before the autumn; and to move for Papers. The noble Baroness said: My Lords, I beg leave to move the Motion standing in my name on the Order Paper. I am grateful for the opportunity to de- bate this Motion to-day, as the timing I hope will be opportune, bearing in mind that the Budget Statement will be given to us next week. It seems to me that I have the responsibility of establishing two important facts; one, that inflation does exist, and, two, that it does have an effect on the lives of the elderly.

May we look a little more closely at the group we are discussing in this Motion? It is a very important group in the community; it is a large group—7 million people, or one in seven of the population. Indeed, were they to organise collectively they could be quite a formidable force. This, my Lords, is a generation that is at once proud, hard-working, reticent and shy. The man who is 70 years old to-day has had a working life in which he has had little opportunity of either earning high wages or of saving money. He has passed through two world wars and a period of depression in the 'thirties. He has seen the operation of the Poor Law and the means test, and their abolition, and he has seen, too, that it is possible for his life span to be extended far beyond the years that were given to his father or his grandfather. If he is to enjoy these bonus years, we all know that certain factors must be present: good health, the need to be wanted and loved, a personal philosophy and a reasonable financial security. The physical needs of the human being do change at different stages of life, but the elderly have basic needs: they must have warmth, they must have food, and they must have a good home.

Let us just look at these facts. The cost of living is now going up at a rate of 8 per cent. each year, but I seem to recall that the Index on which these figures are based includes certain items which elderly people are hardly likely to buy, such as cars and refrigerators, so I shall confine myself to mentioning the increase in the prices of the goods they do purchase. Not too long ago I helped with a survey in one of the numerous consumer groups of which I am an active member, and there we found out the kind of things that the elderly, particularly the elderly living alone, have to buy. In the last few months all those items have increased in price: bread—an old lady said to me last week, "Two brown loaves cost 3s. 6d.": tea, margarine, baked beans, corn flakes, eggs, cheese, flour, soups, and cleaning materials of all kinds. Meat and butter are regarded as luxuries and can be bought only occasionally. There are, on an average, 200 items that increase in price every week. On January 1 it was announced that the Gas Boards would be increasing their prices by between 5 and 10 per cent., and in the past few months different Electricity Boards have announced increases of between 10 and 15 per cent. These increases are already in operation or on the way shortly. Coal is between 23s. and 30s. a hundredweight. The cheapest kind of fuel used by pensioners is paraffin. Many elderly people have to use this. Its cost is going up no less than 13 per cent.—twopence on the gallon.

Many of your Lordships will recall last December reading about the poor old people who are removed to hospital suffering from hypothermia. Dr. Geoffrey Taylor, replying to an article on this subject in the Guardian in January this year, drew attention to the hundreds of people at risk, depending on the severity of the winter. There is currently a serial running on Independent Television called "Coronation Street". I happened to see an incident where an old lady, having refused to go out with her contemporaries, looked at the empty fireplace and said, "I had better go to bed". I should like to think that this was only fiction, but it is not. I have here a letter from a Welsh welfare officer in which he describes the old, particularly the old ladies, left alone, undernourished, isolated and lonely. He says, "They stay in bed until midday to save the coal, and they go to bed early at night". Those of your Lordships who are in Central London will have seen the numbers of these people who haunt the public libraries and the cheap cafés in an attempt to keep warm.

New clothing, is, of course, a rarity, but if they have to have shoes repaired it can cost 25s., a fifth of their pension for the week. Another burden is the increasing cost of public transport, and while local authorities are rehousing pensioners in lovely new homes on the outskirts of the town the old people are becoming virtually prisoners in their homes because they cannot afford to travel to town to visit the shops or their old friends, in many cases not even to collect their pensions. Some local authorities provide travel concessions, but there is still great neglect in this respect. The television licence is due for an increase. The cost of postage and newspapers has already been increased, so their forms and enjoyment of communication will be decreasing. The telephone, which should be a lifeline which every elderly person should have installed, can rarely be afforded.

For the vast majority of the elderly, the retirement pension is their staple means. The last increase in pensions, which I had the privilege of bringing before your Lordships' House in 1969, brought the pension up to £5 for a single person and £8.10 for a married couple. May I recall a phrase from the speech which I used then? I said, on behalf of the Government, that that pension increase restored the value of the benefits to the October, 1967, levels. The figures published by the Department of Employment and Productivity this week show that the average earnings of the British bread-winner are now £30 a week. Even if we discount the method of calculation and get away from the fact that that is an average, we cannot gainsay that the gap between the earnings of the ordinary worker and the pensioner grows each day. Yet the pensioner living on £5 a week has to buy in the same market as the highest paid worker—or the man who is able to buy the property, which I noticed advertised this morning for £23,000 in Central London, for a mews house. All these people must buy in the same market.

To cope with the effects of inflation on the purchasing power of pensions, it is clear that two steps are necessary and urgent: first, the pension must be reviewed annually rather than biennially, and it must be pegged to the cost of living; secondly, the increase in pensions must be given now, and these people not asked to wait until the autumn. Indeed, I am hopeful that this is actually going to happen. I feel that perhaps I am knocking on an open door, because I read in the Daily Telegraph only on Monday: Opinion is growing among Conservative M.Ps. that the Budget statement to-morrow week will be a timely opportunity to announce an accelerated increase in the retirement pensions. With all the sincerity of which I am capable, I pray that that may be so.

In November, 1969, a quarter of the pensioners were receiving supplementary benefits. That suggests to me that the pension is far too low, if it needs to be supplemented in so many cases. The National Old People's Welfare Council have suggested to me, and quite rightly, that we need much more up to date information. The last Government survey, which was called Finance and Other Circumstances of the Retirement Pensioners, was actually completed in 1966. I know that the noble Lord the Minister will be able to tell me all about supplementary benefits and the various social services available, and he will probably refer to the rent rebate scheme and the rate schemes, to the meals on wheels and to the other services. None of these would I deny or would I diminish, but they really do not affect the hardship which is being suffered by the pensioner owing to this rising inflation.

I have deliberately avoided making a Party political speech because I feel that there is no one in any part of the House who could speak against this Motion. The cost of another £1 a week on the pension would be £250 million, after tax review; the cost of £1 10s. would be £370 million. Is this not the way to spend our taxes, rather than giving back 6d. to the direct taxpayer, which can only benefit those who are in the much higher tax brackets? I will not attempt to make any comparison between the rest of Western Europe and ourselves, other than to say that we are nearly, but not quite, at the bottom of the league and that every country in the Common Market has an earnings-related scheme. How shall we judge a country's greatness? By the number of cars that people own? By the splendid public buildings that are erected in our cities? By the armaments that are amassed? Or by the way in which the elderly and the young children are treated? Bernard Shaw once said: The worst thing towards our fellow creatures is not to hate them but to be indifferent to them. This is the essence of inhumanity. My Lords, my appeal to Her Majesty's Government is for understanding, humanity, and action. I beg to move for Papers.

3.24 p.m.


My Lords, I am extremely grateful to the noble Baroness for making a deeply moving speech, if I may say so with respect, and also, as she said towards the end of her speech, for not introducing any Party political overtones into it. I hope that I may say the same about my speech.

The noble Baroness started by posing for herself two propositions that she had to prove. The first was that inflation exists, and the second that it affects the lives of the elderly. May I say that I accept those two propositions without any hesitation at all, and if she moved an amendment to that effect I should be happy to accept it. There is a silent nightmare going on among the elderly, the hard pressed, many of the sick and disabled and the very poor in this country. We would fool ourselves if we thought that by an exercise in goodwill, even by an exercise in Government goodwill, we could automatically protect the poorest in the land from inflation. Those are not my own words, my Lords—I wish they were. They are the words of my right honourable friend the Secretary of State for Social Services, speaking in a debate on pensions in another place on February 4 last and they appear in the Commons OFFICIAL REPORT at col. 1957. I quote them, because they seem to me to express more eloquently than I could, the feelings which I imagine are shared by all your Lordships. It is indeed the horror of inflation that it hurts those least able to defend themselves—those who after a lifetime of devoted service have retired on a pension that once was adequate but is no more; those who have worked hard throughout their lives and put aside a nest egg which once would have assured them of a comfortable old age but now is quite inadequate; all those in fact on fixed incomes, whether they be their own savings, their firms' pensions, or State retirement pensions.

Surely, my Lords, this must be common ground among us all, and our common object must be to halt the present inflation. We may differ on the means. Only three weeks ago we had a thorough debate in this House on the subject of prices and incomes policy, and it would be quite wrong for me to repeat in detail what was said then. May I simply repeat, in broad terms, that we consider the present inflation to be a cost inflation, caused mainly by excessive wage increases. We do not believe that a statutory prices and incomes policy is the right way to combat it, but we will use all our influence to reduce the level of wage settlements until they come more nearly into line with the underlying rate of increase in productivity; and we hope thereby to check the present inflation. But if we are really to help our old-age pensioners and those in need, it is not enough simply to check inflation; we have also to increase our gross national product. Only a sound and growing economy can produce the resources we need for the old, for the sick and for all those in need.

In the meantime, the Government are firmly committed to raising retirement pensions this year, but any increase costs a lot of money (as the noble Baroness has reminded us, although I think she underestimated the figures), and has widespread effects. For this reason, the precise timing must rest with the Government alone. To increase the standard pension by only 50p would now cost about £175 million a year, and taking into account proportionate increases in other national insurance and industrial injury benefits, the figure rises to £250 million a year.

Our national insurance benefits have always been financed on the contributory principle—a principle which all Governments have upheld—and these costs must be met largely by higher contributions from both insured persons and employers. A significant increase in the employers' contribution inevitably results in higher prices, and this is one of the important factors which the Government have to bear in mind when deciding on an increase. We are, however, I repeat, committed to raising retirement pensions this year—two years after the last increase. It has come to be generally accepted that retirement pensions should be reviewed every two years, while of recent years supplementary benefit has been reviewed annually. This was certainly the view of the last Government, and in the National Superannuation and Social Insurance Bill, which fell at the Election, it was specifi- cally provided that the rates should be reviewed at not less than, and not more than, two-yearly intervals. Clearly, the previous Government had no intention of uprating pensions at less than two-year intervals.

Quite apart from our commitment we have shown our deep concern for the elderly in many ways, and we have introduced measures to help them. First, as the noble Baroness mentioned, about a third of all retirement pensioners draw supplementary benefit, and the levels of supplementary pension were raised last November—as indeed the previous Government had proposed. The level of requirements for supplementary benefit (including the long-term addition of 50p) is now £5.70 for a single pensioner household and £9 for a married couple—plus (and this is important) provision for rent and rates, or the household outgoings of owner-occupiers. The noble Baroness mentioned those who had insufficient heating. We have improved the rates of the special fuel addition to supplementary benefit, payable to those claimants who, because of poor health or bad accommodation, need extra heating. The old rates, which were based upon the local price of coal, used to average out at 20p and 40p a week; the new rates which now apply nationally are 25p, 50p, and 75p a week, according to need.

In the second place, one of the first Acts to pass through this House after the election was the National Insurance (Old Persons' and Widows' Pensions and Attendance Allowance) Act 1970. Under this Act a pension of £3 a week for a single person, or £1.17 a week for a married woman, was provided as of right to those people who had no State pension because they were over pensionable age when the National Insurance scheme started in 1948 and were not insured under earlier schemes. This pension was payable from November 2, 1970, and by March 9, 1971, over 127,000 awards had been made. Your Lordships will recall that at the Second Reading of the Bill we estimated that there were some 100,000 eligible claimants, so that the figure of 127,000 awards suggests a very near 100 per cent. take-up, which I am sure your Lordships will agree is a most satisfactory outcome. Since then we have promised to pay pensions to all those who are over 80 years old at the time of the general increase of pensions this year, and this will apply, too, to those who subsequently attain that age. We estimate that some 50,000 more people will become eligible for these pensions when they are brought in.

Under the same Act we introduced the attendance allowance, payable at a weekly rate of £4 to severely disabled people, most of them elderly, who require a great deal of looking after both by day and by night. The Attendance Allowance Board is now in being, under the able chairmanship of the noble Lord, Lord Amulree, and it is to no small extent thanks to him and his Board that we have been able to advance the starting date for this allowance from our original target date of April, 1972, to December, 1971. I am sure your Lordships will agree that this is a satisfactory improvement of four months over what any of us had earlier thought to be possible.

For the sake of completeness of the Record, I think I should also mention the additional provision made for the old, in both the health and social services. Your Lordships will recall that as a result of our review of Government expenditure considerable sums were made available in the hospital service, particularly for the benefit of the elderly, the mentally ill and the mentally handicapped. We have also made available to local authorities additional capital for these services, and the rate-support grant has been increased by £5 million in 1971–72 and £6 million in 1972–73, very largely to enable them to make better provision for the elderly.

It has been alleged—though the noble Baroness did not make this point—that action taken by the Government in pursuance of our policy of selectivity in social benefits will result in hardship for the elderly. This is not so, as the whole basis of selectivity is that assistance should be given where it is most required. In every case where we have increased health charges, we have also increased exemption limits. This is a normal process—exemption limits are normally raised when charges are increased—but we have gone further and raised them to £1.50 above the supplementary benefit level. No one over 65 pays prescription charges—or need not. No one on supplementary benefit will pay optical or dental charges, and help will be available to others who need it to meet those charges.

So far as rents are concerned, we have already announced that we shall introduce a system of rent rebates and allowances, covering public and private unfurnished accommodation. This scheme will cover the great majority of rent payers, and will be of particular help to those people just outside the supplementary benefits scheme. The Secretary of State for the Environment will be making a statement in due course, when discussions in progress with the local authority associations have been completed. On the matter of rates, there are about 800,000 householders who have successfully claimed rate rebates, and 80 per cent. of these are retired persons. So far as food prices are concerned the interim scheme, due to come into effect on July 1 this year, will have very little effect on food prices.

The noble Baroness made a point about the different make-up of the budget of retired people compared to the cost of living index. If I have a chance to speak, by leave, at the end of this debate perhaps I can take up that point in rather more detail. She also raised a point about comparisons between this country and the Six. Again, if she will bear with me I should like to answer that point at a later stage. May I repeat that underpinning the whole fabric of our social services there remains supplementary benefit, the importance of which in years of inflation has been recognised by successive Governments by taking action to review rates annually.

My Lords, we have every sympathy with the plight of many of the old, caused by inflation, and we shall continue to fight against it. Meantime, we have taken various measures to bring swift assistance to those in need. We have promised to increase pensions this year and at the same time to pay a pension to all those over 80. We are now carrying out a review of pensions, to ensure that the increase will at least maintain their purchasing power and that pensioners' living standards will be protected. We shall be making a detailed announcement to Parliament, as soon as this review is completed and our proposals are ready.