§ 3.10 p.m.
TILE MINISTER OF STATE, DEPARTMENT OF HEALTH AND SOCIAL SECURITY (LORD ABERDARE)My Lords, I beg to move that this Report be now received.
§ Moved, That the Report be now received.—(Lord Aberdare.)
§ On Question, Motion agreed to.
§ Clause 1 [Outline of basic scheme contributory system]:
§
THE EARL OF GOWRIE moved Amendment No. 1:
Page 2, line 36, leave out ("5(9)") and insert ("5(10)").
§ The noble Earl said: My Lords. Amendment No. 1 being consequential on Amendments Nos. 3 and 4, perhaps it would be for the convenience of the House if in moving Amendment No. 1 I spoke also to Amendments Nos. 3, 4. 27 and 41. The object of these Amendments is to secure that any special Class 4 contribution collected under Clause 5(9) is separately calculated and collected from any "normal" Class 4 contribution under Clause 5, subsections (1) to (8). For example, if the same person had £2,000 of earnings from "deemed" self-employment, and also £2,000 of profits and gains from genuine self-employment, the Amendment would secure that two separate contributions of, in Bill terms. 5 per cent. of the difference between £2,000 and £1,150 were collected—not a single contribution on aggregate earnings of £4,000. Although the latter course would be right in strict logic, the legal and administrative problems in making provision for the association of two entirely different kinds of earnings, and two entirely different systems of collection, would be quite out of scale given that such cases will in practice never, or very seldom, arise. In short, these are precautionary Amendments. I beg to move Amendment No. 1.
§ LORD SHEPHERDMy Lords, could the noble Earl say what benefit the contributor would receive as a consequence of this Amendment?
THE EARL OF GOWRIEMy Lords, the instance I gave was an example; it was not a description of a particular benefit.
§ LORD SHEPHERDMy Lords, the first intervention was by way of asking a question before the noble Earl sat down. Is it not a fact that the Government are introducing Amendments to give a benefit to a contributor who will be in the higher salary or income profit bracket, and yet at a later part of the Bill the Government are not prepared to grant tax concessions to those who make contributions by Statute to the Reserve Pension Fund? Is this a basis of equity?
§ LORD ABERDAREMy Lords, the noble Lord is not right. The whole purpose of this provision under Clause 5 is to see that certain people who are deemed to be self-employed, although they are in fact receiving a normal form of salary, do not pay less than they otherwise would.
§ On Question, Amendment agreed to.
§ Clause 3 [Class 2 contributions]:
§ THE EARL OF GOWRIE moved Amendment No. 2:
§ Page 6, line 20, leave out from ("and") to end of line 27 and insert—
- ("(i) those earnings are such that (disregarding their amount) he would be liable for Class 1 contributions in respect of them if he were not so treated in respect of the employment, and
- (ii) no Class 4 contribution is payable in respect of the earnings by virtue of regulations under section 5(9) of this Act.")
§ The noble Earl said: My Lords, this is a technical and drafting Amendment. A drafting Amendment to Clause 3(4)(b) is in any event necessary because of the Amendment to Clause 5 to which I have already spoken, to tie up with the fact that the new Clause 5(9) no longer refers to deemed "profits or gains". I beg to move.
§ On Question, Amendment agreed to.
§ Clause 5 [Class 4contributions]:
§ Amendments moved—
§ Page 7, line 43, leave out ("and (9)") and insert ("to (10)")
§
Page 9, line 26, leave out subsection (9) and insert—
("(9) Provision may be made by regulations so that where—
he is to be liable, in respect of those earnings, to pay a Class 4 contribution of an amount equal to 5 per cent, of so much of the total as exceeds £1,150 and does not exceed £2,500.(10) It shall be for the Secretary of State and not the Inland Revenue to recover Class 4 contributions payable by virtue of regulations under subsection (9) above and generally to be responsible for the relevant administration; and regulations may in relation to contributions so payable—
§ On Question, Amendments agreed to.
§ Clause 6 [General power to limit, and otherwise regulate, liability for contributions]:
§ THE EARL OF GOWRIE moved Amendments Nos. 5 and 6:
§ Page 10, line 3, leave out from ("that") to ("liability") in line 5 and insert ("their")
§
Page 10, line 7, leave out from ("prescribed") to. ("contributions") in line 8 and insert—
("(1A) Regulations made for the purposes of subsection (1) above may provide—
§
The noble Earl said: My Lords, I beg to move Amendments Nos. 5 and 6 together, if that is your Lordships' wish. These are both largely technical Amendments which will give more flexibility in the operation of Clause 6(1). This is the provision which enables annual contribution maxima to be prescribed to cater for circumstances in which persons have more than one employment, or are both employed and self-employed at the same time. As now drafted, the provision
251
would enable excess contributions to be refunded, but would not enable liability to be excused in advance—since the provision is
without prejudice to.… liability in the first instance for the full amounts payable … ".
§ On Question, Amendments agreed to.
§ Clause 7 [Annual review of contributions]:
§ Clause 8 [Additional power to alter figures in Sections 2 to 5]:
THE EARL OF GOWRIEMy Lords, with the leave of the House I should like to move Amendments Nos. 7 and 8 together, if that is your Lordships' wish. These Amendments are consequential on Amendment No. 4, to which I have already spoken.
§
Amendments moved—
Clause 7, page 11, leave out lines 19 and 20 and insert—
("(5A) An order under this section, if it contains an amendment altering either of the figures specified in section 5(2), shall make the same alteration of the corresponding figure specified in section 5(9)").
Clause 8, page 12, line 20, at end insert—
("(1A) An order under subsection (1) above shall, if it contains an amendment altering the percentage rate for Class 4 contributions specified in section 5(2), make the same alteration of the percentage rate specified in section 5(9)").—(The Earl of Gowrie.)
§ On Question, Amendments agreed to.
§ Clause 9 [Description of benefits; the earnings factor; crediting of contributions]:
§
THE EARL OF GOWRIE moved Amendment No. 9:
Page 16, line 44, leave out ("longer or shorter than") and insert ("or not a period of").
§ The noble Earl said: My Lords, this Amendment will enable a benefit year to be prescribed of exactly twelve months beginning on a day other than the first Sunday in January, in addition to the power to prescribe a benefit year of longer or shorter than twelve months. The additional power will be needed for the future, in case it becomes possible to provide for an earlier start to the benefit year. It was always the intention to have this power.
252§ BARONESS PHILLIPSMy Lords, I should like to ask the Minister a direct question: will this make it better for the person who is drawing out, or more difficult?
THE EARL OF GOWRIEMy Lords, I am a great believer in straight answers, but that is not a question pertaining to this particular Amendment. This Amendment is a protective provision in case it becomes possible to provide for an earlier start to the benefit year.
§ BARONESS PHILLIPSMy Lords, with your Lordships' permission, may I point out that if it is changing the point of time at which one collects one's benefit, it must affect certain individuals who will be drawing those benefits.
§ LORD ABERDAREMy Lords, this provision is to make it more flexible. I think the noble Baroness at one time was saying that the benefit year should be closer to the contribution period, and this Amendment will allow that to happen.
§ On Question, Amendment agreed to.
§ Clause 11 [Invalidity benefit]:
§ 3.18 p.m.
§ BARONESS DARCY (DE KNAYTH) moved Amendment No. 10:
§
Page 20, line 39, at end insert—
("(8) Where the earnings of a person entitled to invalidity pension, being a person who has not reached pensionable age, have exceeded £9.50 for the week ending last before any week for which he is entitled to the invalidity pension, the weekly rate of pension for the last-mentioned week shall be reduced—
Provided that this subsection shall not affect the rate of the invalidity pension and invalidity allowance for the first week after the date of the beneficiary's entitlement to the pension.")
§ The noble Baroness said: My Lords, I beg leave to move this Amendment in the absence of my noble friend, Lord Crawshaw. It aims to put the invalidity pensioner on a par with the wife of such a pensioner and with normal retirement pensioners. The retirement pensioner may earn up to £9.50 a week before the sliding earnings rule is applied, 253 whereas the invalidity pensioner can earn only £4.50 a week before forfeiting his entire pension at one fell blow. The retirement pensioners' earnings rule may be a disincentive to work, but it is not quite the effective deterrent facing the invalidity pensioner who will lose his entire pension as soon as he earns more than £4.50 a week.
§ Let us look first at the objections to this Amendment put up by the noble Lord, Lord Aberdare, at Committee stage. First, the noble Lord said that he felt we should wait for the results of the review of all the benefits for the disabled; but, as many noble Lords pointed out, reviews tend to be long drawn out, and research is, by its very nature, unending. The second objection was that the Amendment would introduce an entirely new concept of invalidity benefit. The noble Lord admitted that it would proably not cost very much, but explained that invalidity benefit was paid only to an insured person whose physical or mental condition rendered him incapable of working. The existing concept that the invalidity pensioner is incapable of work, that he is permanently retired, is entirely out of line with to-day's idea of rehabilitation. Indeed, in another place, supporters of the Government argued that one of D.I.G.'s Amendments was unacceptable, precisely because it necessitated categorising a disabled person as incapable of ever working again. Another point is that the concept is apparently that the invalidity pensioner must be incapable of working if he is to draw his pension, but the retirement pensioner can be recognised as retired and yet still working and benefiting from the earnings rule. There is an anomaly here.
§ The noble Lord's third point was that if a change of the earnings rule were considered the position of all disabled people in full-time open or sheltered employment must be taken into account. If there were a sliding earnings rule a pensioner doing a fairly limited amount of work might earn more than a disabled person who was a low wage earner, and who had never received invalidity benefit, could get working full-time. As to those in open employment, there can be no argument for tying their earnings down to the lowest wage earner, and this argument did not arise when considering the earnings rule for the wife of an invalidity 254 pensioner. There is no limit to the income that the wife can earn—the invalidity pensioner will forfeit only the dependant's allowance. This is, of course, as it should be. As for the comparison with those in sheltered employment, the wages in some sheltered workshops are ludicrously low and cannot be a reason for maintaining other disabled people at a similarly low level of income. In fact, I would hope that the employees of some sheltered workshops would benefit from this particular Amendment.
§ Let me now turn from the objections to the argument put up by the disabled themselves. The first argument is that the earnings stop is a severe deterrent to full rehabilitation. Nothing can faster undermine the spirit of a disabled person than having to accept complete inactivity—mental deterioration sets in and physical deterioration follows. On the Committee stage the noble Lord, Lord Raglan, when speaking on his Amendment to abolish the earnings rule for retirement pensioners, said that a wise geriatrician told him that illness tends to fill the gap formerly occupied by the job. He argued that it might well cost the Health Service a good deal more to look after the old who had been discouraged from working than it would cost the Exchequer to abolish the earnings rule. My Lords, the same is true of the disabled. I have it on good authority that disabled people in employment keep fitter than those who do not work. There are also fewer wives with nervous breakdowns and fewer disturbed children when the husband is interested and satisfied in a worthwhile job, and is supporting the family and pulling his weight, instead of moping about the house, deteriorating mentally and physically, and in a state of enforced premature retirement.
§ The second argument is that the earnings stop in many cases makes it financially impossible for the disabled person to return to work. I know of a man with bronchial asthma who can work only intermittently. When he is able to work his earnings would be more than £4.50 a week, and therefore he just cannot afford to work. Do the Government want these people back in employment? It cannot be done this way. The earnings stop condemns a man to remain idle for the rest of his life. There is another point against the earnings stop. If there is a 255 ceiling of £4.50 a week some employers may be influenced into offering £4.50 a week for whatever a disabled person is doing and may take this figure as the maximum wage for disabled people.
§ Surely, my Lords, the right to work is a basic human right; that is all we are asking for. This Amendment seeks to remove the serious disincentive to full rehabilitation which condemns a man to a life of total inactivity when he could be supporting his family, paying his taxes and contributing usefully to the community. Many of your Lordships on all sides of the House spoke on this Amendment during Committee with interest, sympathy and understanding, and I hope that to-day you will give it your full support.
§ LORD SHEPHERDMy Lords, I have a great deal of sympathy for the noble Baroness in moving this Amendment—sympathy for the Amendment itself and for the circumstances under which she moved it. The noble Lord, Lord Aberdare, will remember that on Committee there was a full debate and noble Lords from all quarters of the House spoke in support and were generally sympathetic. There is no doubt at all as to what would have been the consequences of the vote on that occasion if there had been a Division.
The noble Lord, Lord Grenfell, then rose to support the noble Lord, Lord Aberdare, by pointing out that the Committee was relatively thin in numbers and it would be quite wrong in those circumstances to have a vote on an Amendment of principle. My Lords, when the noble Baroness spoke the House on the other side was a good deal thinner than was the Committee. I would hazard a guess that since the noble Baroness spoke in support of this Amendment, deploying it, at least fifty noble Lords opposite have come from some other quarter of the building, and I doubt whether they are in any position to make a judgment upon the quality of, and the case for, the Amendment. My Lords, I think it would be difficult to ask the noble Baroness to repeat the very full case that she made, but I would hope that the noble Lord, Lord Aberdare, recognising the difficulties of the noble Baroness, and also those of the Committee in response to the noble Lord, Lord Grenfell, in not proceeding 256 with a Division on that occasion, will be more forthcoming than he was on Committee; that the period of reflection which the Committee decided to give him has been amply rewarded, and that we shall have a very sympathetic and satisfactory answer to an Amendment which I believe ought to commend itself to your Lordships' House.
§ VISCOUNT INGLEBYMy Lords, in supporting this Amendment I should like to give one example. It is of a married man, aged 39, with a wife and six children. He has bronchial asthma and at the moment receives an invalidity pension of £23.85 per week. He would like to work at home and is learning to type and to do leather work, at which he is extremely good. But it will obviously take him some time before he can build up his earnings to replace the £23.85 invalidity pension. As things stand at the moment when he gets to the point of earning beyond £4.50 he loses the whole of his £23.85.
§ LORD CRAWSHAWMy Lords, this is an identical Amendment to one that I moved at the Committee stage, and therefore I naturally wish to give it my full support. As the noble Lord, Lord Shepherd, has said, I think we gained first innings points on that occasion, and I think that was widely recognised. I also felt that my noble friend Lord Aberdare was receptive and I hope that with more time he might come to terms with the Government and be talking the same language. As the matter was left in limbo, I think it is right that it should have another airing this afternoon. I hope I will not bore your Lordships, many of whom may be feeling that you have only to add the prefix "social" to find yourselves agreeing with the witch in Macbeth who maintained that, "security is mortals' chiefest enemy". I shall not need to restate all the arguments that were advanced on the previous occasion, but I think a brief outline of the case can again be made for those who were not here before.
The object of the Amendment is to encourage the long-term sick or impaired to get back into worthwhile though probably partial employment as soon as possible. To their credit, the Government have created the concept of an invalidity pension as an extended form of sickness 257 benefit to look after the needs of those incapable of any work at all, and this can easily amount to £19 or £20 per week. So far, so good; but the trouble starts when the pensioner wants to get back into some sort of work. As soon as he earns more than £4.50 he loses all entitlement to pension and usually cannot afford to take this risk. My noble friends have quoted examples of this and I quoted one at the Committee stage. The evil of unemployment is something of which we hear a good deal and is usually created unintentionally and in spite of strenuous efforts by the Government to prevent it. Here the evil is allied to other numerous psychological and physical problems of disablement, and I do not think I exaggerate when I say it is positively fertilised and encouraged by Statute. An additional effect of this policy is that between 32 per cent. and 37 per cent. of invalidity pensioners have to resort to supplementary benefit, which is an avoidable charge on the taxpayer. What we seek with this modest Amendment is to put the invalidity pensioners in the same position as the wife of an invalidity pensioner and as the retirement pensioner who can earn up to £9.50 a week without pension rights being affected. I know that our present Foreign Secretary is an exceptional man, but in theory at any rate, he can draw full pension as well as earning as much as he can. So why remove the invalidity pensioner's rights as soon as he earns a modest £4.50? Can we not give him some purpose and more incentive? My Lords, I wish to support my noble friends.
§ LORD ABERDAREMy Lords, I have a great deal of sympathy with this Amendment, which has been so lucidly and eloquently moved. I have no sympathy at all with the noble Lord, Lord Shepherd, who always groans and moans about the number of people in the House when he knows perfectly well that that is completely outside anybody's control. I am sure that he would be the first person to acknowledge that there are lots of occasions on which many of us, including the noble Lord, have not been present yet have taken a view on certain matters.
§ LORD SHEPHERDMy Lords, the noble Lord is always fair. I was repeating an appeal which the noble Lord, Lord Grenfell, made during the Committee stage, that we should not vote on 258 this important issue because of the small number of Members present. I was only drawing attention to the difficulties of the noble Baroness in moving an Amendment in what was then a relatively thin House.
§ LORD ABERDAREMy Lords, I do not really think that the noble Lord needed to bring this matter to our attention. But still I hope very much indeed that there will be no vote, because I trust I am sufficiently sympathetic to the mover of the Amendment to make it unnecessary to divide. At the Committee stage, I expressed my sympathy and said that I would have further conversations with those who are interested in this point, and this I have been able to do. I was pleased to meet yesterday some of those noble Lords who are interested in this subject and we had a very useful discussion. The problem with this Amendment is that it substitutes, for a benefit which is paid to those who are incapable of work, a benefit payable to those who are disabled. Because it does that by an approach through a relatively minor provision affecting the existing benefit, it inevitably changes the character of invalidity pension in a way which we find difficult to accept and which might indeed be unworkable. I say that it might be unworkable, because it would create a situation in which a doctor was being requested to issue a medical certificate on the basis of incapacity for employment to someone working full-time and earning perhaps £20 a week.
With retirement pension, which the noble Baroness, Lady Darcy (de Knayth), mentioned, we are dealing with a benefit which at 70 becomes an old age pension and escapes completely from the earnings rule. With invalidity benefit we are dealing with a benefit which throughout, hitherto, has been based on incapacity for work. Clearly, at some point the fact of working becomes inconsistent with receipt of a benefit on account of being unable to work. Another factor to be considered is that if the main concern is rehabilitation—which was also mentioned by the noble Baroness and which we also have very great interest in and sympathy with—and if cash benefits are thought to have a bearing on incentives, then we must also look very closely at the level of provision for the invalidity pensioner, 259 for the trainee in an industrial rehabilitation unit, for the Remploy worker and for others, and it is not easy to get the balance right.
I should like to emphasise, as I did earlier, that the present £4.50 disqualification, which was raised only last year from £2, is not in fact an earnings rule in the accepted sense. It was always seen as a therapeutic allowance because, traditionally, it is related to "earnings" from work done, usually in hospital, under medical supervision. Once a job comes into the employment category, it may be inconsistent with incapacity for work whatever the earnings it produces. I would add that few of those who are undergoing therapy and earning a little money in the process are likely to be earning as much as £4.50 a week. Even so, the £4.50 is not sacrosanct and we are taking it into account in our review of benefits. We also have very much in mind the question of some form of provision for the working disabled. But what I must stress is that we should not confuse the two issues. I take the point that the Amendment makes, but to carry it into the Bill would make nonsense of an important benefit with a number of new features which I think we are all anxious to develop sensibly.
On many occasions during the Committee stage I spoke of the review of social security benefit for the disabled which the Government are undertaking. In fact, an Amendment was carried against us at the Committee stage in the name of the noble Baroness, Lady Seear, which was designed specifically to ensure that that review is completed by a certain date. We have given very careful consideration to this point, and we have accepted the principle which the noble Baroness argued on that occasion. As throughout the Committee stage, where the disabled are concerned. I depended on this review taking place, it is right that there should be a time limit on it. The noble Baroness has kindly put down to-day a slightly modified Amendment, Amendment No. 15B on the Marshalled List, which I shall advise your Lordships in due course to accept. This will mean that the Government will be obliged to
… review social security provision for chronically sick and disabled persons, and shall 260 lay a report on his review before Parliament by 31st October 1974.This will be a wide-ranging review, concerned essentially with looking at what we are doing already, at how far that measures up to the need which can be identified, and at what further provisions ought to be, and could be, made.We are interested in all the points that were raised during the Committee stage on the question of disablement. We are interested in the employed disabled, to which this Amendment refers; we are interested in the disabled housewives, who were the subject of another Amendment moved by noble Baronesses opposite; we are interested in the children and in the elderly, who constitute the great majority of the disabled; and of course, we are also concerned about those who care for the disabled or who have to care for them—their families. In looking at these needs, we are looking, too, at the many suggestions made about the ways in which they might be met. This Amendment is designed to meet one need of one particular type of disabled person, and it is one need with which I confess again I have great sympathy. But I would beg the noble Baroness who moved this Amendment, and her noble friends, not to press it to-day, because by doing so they would pre-empt the review that I have said we are undertaking, on which I am firmly putting a final date. If we pre-empt that review by writing into the Bill one particular type of help, we shall make it very difficult to make a thorough review and to get our priorities right in the long run. I hope that the noble Baroness will accept from me that this Government are indeed extremely interested in the needs of the disabled and that we have shown it by our actions. In the uprating Bill, which is reaching your Lordships' House to-morrow, we have put extra emphasis on the invalidity allowance; we have shown throughout our deep interest in the disabled; we are conducting this review, and we have put a date on its completion. I very much hope that, with those assurances, the noble Baroness will not press her Amendment.
§ LORD RHODESMy Lords, does the Minister say that he wishes to shelve this question until after the review has been made, some time late in 1974, with all that that implies? Surely legislation will 261 have to be brought in to give effect to a new sot of recommendations. What this small but very powerful little lobby in front of us here is trying to do is to remedy something that needs to be remedied now. I am perfectly certain that there is hardly anybody in this House, if this Amendment goes to a Division now—and I hope that there will be one on it failing a more forthcoming statement from the Minister—who would not support it. In a home where there has been slow progress back to a sort of normality, this would give a man or a woman—and I have two cases in mind now—some standard of living that they have really worked hard to achieve, the whole family working with them on it. The cost to the Government to do it now would be chicken-feed. I hope that this Amendment will be pressed.
§ LORD ROBBINSMy Lords, I wonder whether the noble Lord could enlighten me a little further. I am always convinced of the deep sincerity with which he speaks, but I confess that I totally fail to understand what harm would be done by the acceptance of this particular Amendment. What did the noble Lord mean by saying that it would pre-empt what was going on? Did he mean that the people who were considering disablement benefits in the larger sense would be precluded from giving a thought to this problem in future? That seems to me so difficult to understand.
§ BARONESS PHILLIPSMy Lords, before the Minister replies I should like to follow up this point. The Minister appeared to advance two arguments, the first of which was the question of preempting the review. This I found rather difficult to follow. But I found the other argument equally difficult to follow; namely, that by giving a little more we should change the character of the invalidity pension. This particular subsection is within a Bill—and I should like to emphasise this point once again —which does not take effect until the year 1975. The Minister made reference to the fact that the £4.50 allowed now largely covers work done within the hospitals. Surely in 1975, which is when this Act will be first effective, £4.50 will be worth even less than it is now—and it is not worth very much now. So I cannot follow the line of argument that 262 to increase the exemption would be to do something which changed the character of the invalidity benefit. This is within a Bill which deals with other kinds of benefits, so the only thing that can be changed is the figure—and the Minister has told us that the figure is not sacrosanct. If it is not sacrosanct, then it can easily be changed now, because I would remind your Lordships again that we are legislating for the future. The noble Lord who has just sat down referred to this provision taking effect now. We are not asking for it now. It may be asked for in another way, but in this particular Bill we are thinking about the future.
My Lords, work is a great therapy. Anybody who has gone through any period of stress or strain knows the great virtue of work; and anybody who is suffering from an incapacity and who has the courage to go out and earn a little should be encouraged to do so. Indirectly, it would assist the State as the noble Baroness has pointed out. If you do not support in one way those who cannot work, then you will certainly have to support them through the supplementary benefits. So I would ask the Minister not to accept the rather limited argument which he advanced on two fronts, and to show that he can accept something which will be merely flexible.
§ LORD ABERDAREMy Lords, I am afraid we are getting very near a Committee stage. I have no right of reply, but if the House is willing to give me leave because of the speeches which have been made and because this is a very important point, may I briefly answer those who have spoken? My answer to the noble Lord, Lord Rhodes, is this. I do not know whether he was here at the Committee stage, but there is an enormous number of people who want special help given in special areas relating to the disabled. Now resources are not limitless. We must strike a balance; we must get our priorities right; and we must look at all the claims before we can decide how best to help which one. That is the first point I would put to the noble Lord.
To the noble Lord, Lord Robbins, I would say that the other point I was trying to make is that, historically, invalidity benefit has always been paid to 263 people who cannot work, and the little bit over and above (it was only £1 at one time; then it became £2; then it became £4.50, and there is nothing to stop it from going higher if need be) is purely to give them some little incentive for the small amount of work that some of them may be able to do despite the fact that they are medically certified as being unable to work. If you give them the benefit of the full earnings rule, which this Amendment wishes to do, what about those other people who are very severely disabled but are not drawing invalidity pension because they are not certified as unable to work and who are getting only what they can earn and no sort of benefit? If this Amendment is passed, you create an anomaly between those who are medically certified as unable to work but who are working and getting the benefit, and those who may be almost completely disabled but are not certified as unable to work, and who do not get the benefit. There are many categories of people concerned among the disabled working people, and this is one large category of people whose position we want to look at and review completely. We want to take into account all the suggestions which have been made before we say, "Yes, this is the right one to go for".
BARONESS DARCY (DE KNAYTH)My Lords, I was rather alarmed to hear the phrase "therapeutic allowance" used once again in defence of the invalidity pension. I must emphasise that I believe that that concept is entirely out of line with present-day thinking on rehabilitation. However, I feel it is most important to have a more comprehensive policy dealing with all the types of disabled, including those who do not pay, and have not been in a position to pay, National Insurance. As the noble Baroness, Lady Phillips, has pointed out, the Act will not come into force until 1975, and a truly comprehensive review and statement of policy in 1974 would be extremely valuable. If your Lordships have been impressed by the arguments of my noble friends and myself—and I should like to thank all those noble Lords who have given us tremendous support for this Amendment—I hope you will assist to make sure that the review is well-informed and comprehensive, and that it 264 is acted upon by whatever Government are in office. I therefore beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Clause 14 [Disqualifications and special conditions]:
§ 3.49 p.m.
§ THE EARL OF GOWRIE moved Amendments No. 11 to No. 14:
§ Page 23, leave out lines 32 and 33 and insert ("properly notified to him ").
§ Page 23, leave out line 40, leave out from ("any") to ("with") in line 41 and insert ("official recommendations given to him"). Page 25, leave out lines 7 and 8.
§
Page 23, leave out line 26, after ("not") insert—
(ca)"properly notified", in subsection (2)(b), means notified by an employment exchange, the Employment Service Agency, a local education authority or some other recognised agency, or by or on behalf of an employer.;
(cb) "official recommendations", in subsection (2)(d), means recommendations in writing made by an officer of an employment exchange, the Employment Service Agency or a local education authority;
(cc) "employment exchange" has the same meaning as in the Employment and Training Act 1948").
§ The noble Earl said: My Lords, with the leave of the House I should like to move Amendments Nos. 11, 12, 13 and 14 together. As your Lordships will be aware, the current Employment and Training Bill is at present under consideration by your Lordships' House. These technical Amendments are needed to cover the situation which will arise when the term "employment exchanges" is replaced under new provisions in the current Employment and Training Bill. I beg to move.
§ On Question, Amendments agreed to.
§ Clause 19 [Widow's allowance]:
§ 3.50 p.m.
§
BARONESS PHILLIPS moved Amendment No. 14A:
Page 31, line 5, leave out from ("death") to end of line 6.
§ The noble Baroness said: My Lords, we return to a point that I raised in Committee, and because I feel so strongly about it I should like to move this Amendment. The same point occurs in the next Amendment which I propose to move formally. Your Lordships will be aware that at present certain benefits cease from 265 the time of a widow's remarriage or if she cohabits with a man as his wife. This applies also to the widow's allowance, to the widowed mother's allowance, to the widow's pension under the basic scheme and to the widow's pension under the reserve scheme. If we take the case of a widow who remarries, it may be reasonable to assume that the second husband has a duty to provide for her; but if we consider the widowed mother we have a different case. Here the second husband will have to be responsible for the children of the first marriage. When we come to the question of cohabitation I would submit, as I did on Second Reading, that this is a curiously humiliating clause for anybody to read in a pensions book. It is interesting to note that it does not appear in the retirement pensions book. As I have said before, presumably one has a licence to cohabit provided one waits until one reaches a reasonable age to do so. I would emphasise that the social security officers are very small in number and it seems to me appalling that these people should be used to carry out a role of this kind. They can find out if a woman is living with a man as his wife only by making inquiries.
§ There has never been any evidence that there have been other than a very small number of cases. I have learned over the years that Governments of all kinds do not, in the main, respond to appeals to their heart but will sometimes accept appeals to the head. I would suggest that the amount of money, time and energy spent in finding out whether people are living together is a matter which, in this day and age, should not be concerned with and should not be written into an Act of Parliament. I would seriously say that if we are moving into the next period when this will be a very revolutionary Act, bringing in many changes and many benefits, this is the moment when we could leave out this totally unnecessary clause. To many of the widows who feel very strongly about it, it is a kind of humiliation. I cited previously the case of the widow who dared to look at television with the man who lived next door. This may be putting the matter at its most ridiculous, but once there is this kind of clause it will flourish on gossip. How else do you discover this kind of thing? I would say seriously that the time has come to leave out of an Act of Par 266 liament this kind of squalid and totally uneconomic matter. I beg to move.
§ LORD ABERDAREMy Lords, the noble Baroness has returned to a point that she raised at the Committee stage and she has been perfectly frank about her wishes. The effect of her Amendments would be to remove the remarriage and cohabitation disqualification for widow's allowance, widowed mother's allowance and widows' pensions. Social Security widows' benefits have always been subject to a remarriage and cohabitation disqualification—even before 1948. The benefits are designed to provide a cash benefit to a woman who has lost her husband who is normally the main provider for her and the children of their marriage. To continue payment of a widow's benefit after remarriage or after cohabitation, which is what the noble Baroness is after, would give a remarried or a cohabiting widow financial help at a time when in fact she has resumed the position she was in before she was widowed; that is to say, she again has someone to whom she can look for support.
When a widow who is in receipt of widow's benefit remarries, one would expect her new husband to assume the financial responsibility for her and for her dependants. Accordingly, widows' benefits cease on remarriage. In our view, if a widow cohabits with a man as his wife she ought not to be placed in a better position financially than if she were to marry him. Therefore, a cohabiting widow is similarly disqualified from receiving widows' benefits. Despite the difficulty of establishing cohabitation, it seems to me to be wrong to encourage people to think that they are in a different position, so far as a widow's benefit is concerned, if they cohabit from what they are if they marry.
These Amendments would also open the gates to widows' benefits to those widows who do not at present claim the benefits because at the time of the husband's death they were already separated and living with another man. It would not be generally right that a woman who was already cohabiting at the time of the husband's death, and whose financial circumstances would be little changed by his death, should benefit by such a change in the law as the noble Baroness is suggesting.
§ BARONESS PHILLIPSMy Lords, is the Minister saying that it is retrospective? That is very unusual in this kind of legislation.
§ LORD ABERDARENo, my Lords, it is not retrospective. What happens now is that when a man dies and his wife has been separated for some time and living with another man, she does not claim widow's benefit. Under the noble Baroness's Amendment she probably could and would. Moreover, when one looks at the priorities, thinking in terms of financial cost, the acceptance of these Amendments would cost a lot of money, amounting ultimately to between £40 million and £50 million a year. Even if there were no retrospection, the costs would build up rapidly, to about £25 million a year after ten years and to £40 million a year by the end of the century. In these circumstances, although I know that the noble Baroness is deeply sincere in her feeling about this, I am afraid that I cannot advise the House to accept her Amendments.
§ LORD SOMERSMy Lords, there is one slight point. I rather agree with what the noble Lord has said about cohabitation but, so far as remarriage is concerned, it does not follow that the second husband is necessarily in any position to take over the financial responsibility. He may not be very well off himself. A woman is going to be put into a very difficult position if she is in receipt of widow's benefit and has to make a choice between accepting the proposal of a would-be husband and losing her widow's benefit, or refusing him and keeping it.
§ BARONESS SEEARMy Lords, is it really not possible for the noble Lord to reconsider this matter between now and Third Reading? I very much support what the noble Baroness has said about the sordid prying which must inevitably go on to establish whether cohabitation is taking place. Anybody who has ever seen the kind of things which went on to establish a case under the divorce laws previously, knows what a totally unsatisfactory and repugnant business this is. For the Social Security people to be spending time stirring up gossip to find out whether Mrs. X is living with Mr. Y, when it gets down to local level and regarding it in human terms, seems to 268 me quite repugnant. I do not think that the noble Lord, Lord Aberdare, can be very familiar with this kind of situation if he thinks that when a woman cohabits with a man she is going to get the man to pay the bills. I strongly suspect that it does not work out that way—I speak on hearsay. To assume that a woman living with a man gets the same kind of financial support as a wife has good reason to expect, is normally very wide of the mark, I am certain.
I see the difficulty about the Amendment. If you do not include cohabitation but take away the pension when a woman remarries, there is a strong inducement to continue cohabitation and draw the pension rather than to marry and lose it. The way out of this would be if a remarried wife were permitted to draw the pension for a five-year period. That would be long enough not to be a disincentive to marriage and it would deal with the problem of children of a previous marriage who would be substantially off their parents' hands at the end of the five-year period. Would it be possible for the noble Lord to take this back and look at it again and remove from this very important Bill what I think in ten years' time will be regarded as something extraordinarily outdated and unacceptable?
§ BARONESS PHILLIPSMy Lords, I thank the noble Baroness, Lady Seear, for her support. I was interested in the figures which the Minister produced. I assume that the figures are based on the number of people who remarry, because the Minister could not assess how many people cohabit. It would be a problem similar to that of the number of illegal immigrants: how can you count heads when you do not know where they are? It is an interesting thought that there are that number of people who would be affected. I left the two situations in the Amendment quite deliberately because of the argument which has been advanced by the noble Baroness that no one who remarried would gain anything. I would emphasise that in respect of benefit drawn from the State as seemed to emerge from the discussion on the last Amendment, the moment that you have other moneys the taxation position acts as a regulator. It is unlikely that anyone, whether sick, handicapped, widowed or retired, will collect so much money from the State, 269 because the tax system will see to it that they do not.
I plead again with the Minister to look at this matter once more. We are legislating for the future and I cannot believe that this affects so many people. It is interesting that such figures can be produced, but they must be very inaccurate projections because we have no way of assessing what this would cost in the future. I beg the Minister to give me at least a crumb of comfort by saying that he will look at this again before the next stage.
§ LORD ABERDAREMy Lords, again we are getting into a Committee stage and this is Report stage, and noble Lords must not ask me continually to answer questions. I cannot give the assurance for which the noble Baroness has asked. We do not feel that it would be right to preempt a lot of money for remarrying widows or the cohabiting widows.
§ On Question, Amendment negatived.
§ Clause 20 [Widowed mother's allowance]:
§ BARONESS PHILLIPSI beg to move Amendment No. 14B:
§
Amendment moved—
Page 32, line 5, leave out from beginning to end of line 7.—(Baroness Phillips.)
§ On Question, Amendment negatived.
§ Clause 21 [Widow's pension]:
§
BARONESS PHILLIPS moved Amendment No. 14C:
Page 32, line 30 leave out from beginning to end of line 32.
§ The noble Baroness said: My Lords, this Amendment deals with the same point, but I should like to mention one other matter because the Minister cannot make more than one comment and perhaps he will make it at this time. If the noble Lord makes a statement it is a little difficult because I do not know any way in which one can elicit more information except by resorting to the old technique of saying, "Before the noble Lord sits down …." or interrupting the Minister, which I do not like to do. Here we are back to the same clause referring to remarriage and cohabitation. I should like to point out what appears to me to be a mistake. A young widow may 270 receive a reduced pension because she comes into the pension bracket at an earlier age. In previous debates I asked the Minister whether this widow would receive the lower pension until she was aged 50, 60 or 65. Now we see that she will receive it until the age of 65. Yet in Clause 23, which we shall discuss later, we see that pensionable age in the case of a man means 65 and in the case of a woman 60. If the pensionable age is 60, why is this young widow receiving a reduced benefit until the age of 65?
§ LORD ABERDAREMy Lords, the noble Baroness is right in saying that the normal retiring age for a woman is 60, but Clause 21(3) limits the payment of widow's pension to women below the age of 65. It is to benefit the widow that it extends to 65 rather than to the normal retiring age of 60, because at 65 the woman is deemed to be retired even if she is still working, so a retirement pension will be payable at either the same or a higher rate. During the period between age 60 and her 65th birthday some widows will need to continue to rely on a widow's pension because they cannot satisfy the retirement conditions.
§ BARONESS PHILLIPSMy Lords, that is exactly what I mean. I have to ask the Minister this question. I know that the widow will get the pension at 65, but I can give a practical case of a young widow who at the age of 42 receives the princely sum of £3.60 a week. Why should she receive only £3.60 a week until she is 65?
§ LORD ABERDAREMy Lords, the age is 60.
§ BARONESS PHILLIPSIt says 65.
§ LORD ABERDAREMy Lords, may I take up this point with the noble Baroness outside the Chamber because I think that would be more convenient. Normally a widow or any woman can draw her pension at age 60, the full retirement pension, but in the case of a widow such as the noble Baroness is talking about with the reduced widow's benefit, if she goes on working and has not retired after 60, she can still go on receiving her extra reduced allowance between 60 and 65. She has not retired.
§ On Question, Amendment negatived.
271§ Clause 23 [Matters affecting entitlement to pension]:
§ 4.10 p.m.
§
BARONESS PHILLIPS moved Amendment No. 14D:
Page 34, line 3, leave out from beginning to end of line 4 and insert ("no less than the age of 60 and no more than 65").
§ The noble Baroness said: My Lords, we now come to a slightly different point. As your Lordships will know, in the Bill now before us we read that the pensionable age for a man is 65 and for a woman 60. We have discussed before, on Second Reading and in Committee, that the work pattern of women in future will undoubtedly be different. It will be possible for the average woman, having brought up her children to a certain age, still to work for another 25 years. She is still asked to retire at 60, though there is no evidence that she is less capable of going on until she is 65. Equally, many men who have been in heavy physical employment have forced themselves to go on to the age of 65, when obviously they should have retired at 60.
§ What I am saying is that this new piece of legislation presents us with the opportunity to move away from the old-fashioned idea that a woman retired at one age and a man at another. When I gave this matter some thought I could see that I was in a dilemma. If I suggested that everyone should retire at 60, no doubt the Minister would tell me that it would be too expensive, and he would probably have the figures all worked out in his brief—another interesting projection. If, on the other hand, I suggested that women should retire at 65, this would leave many women longer in the labour market than they would like to be. I well recall presenting this case at a large meeting and saying that the retirement age should be the same for men and women. A nurse came up to me after-wards and said: "I do not want to go on working for another five years at my job. I shall have had enough at 60". This seems to emphasise the point that we are moving to the stage where there should be a flexible retiring age. A coal miner, it seems to me, should retire possibly at 50, whereas somebody in a sedentary occupation may well go on until he is 70 or 75. In other words, retirement age is a purely artificially constructed age, decided upon in a period when there 272 was a shortage of work and a surplus of people. This is no longer true. Yesterday I visited a large food factory in the centre of London, and I was informed that it is to close down because of a shortage of labour. This is an interesting point. It might be peculiar to London, but undoubtedly there is more work about. So the age of retirement is a purely artificially constructed thing. Here we have all the old concepts embodied in new legislation.
§ The age at which people leave off work should no longer be tied to their sex, but to the fact that they are in a certain occupation. I beg the Government to move into the future—to be "with it"—and to give us an opportunity to have a flexible retiring age, one which is devoid of the old-fashioned idea that a woman, because she lives longer, must have a lower pensionable age and is forced to retire at an age which she herself has not chosen. I beg to move.
§ LORD ABERDAREMy Lords, the noble Baroness has told us of her dilemma and her search for a more flexible system, but I am afraid she has not suggested any way out of the dilemma. The difficulty is that if one takes the standard rate of pension at the moment, it must either apply to the minimum or to the maximum age of retirement for everybody if you want to put men and women into the same scheme. If you apply the standard rate of pension to the maximum age of retirement, then any woman who at present retires between 60 and 65 would be at a disadvantage, as she would have to wait up to five more years before qualifying for the standard rate of pension. If, on the other hand, you put it at the minimum, then the additional cost would be substantial, as it would in effect be granting the option of the present standard rate pension to men at the age of 60. So we are in the same dilemma as the noble Baroness when she talks about the fixed rate. Either you have a flexibility under which people get less than they do at the moment if they retire at the bottom of the scale, which is undesirable because they may not have enough to live on later, or if you fix the bottom of the scale at the present rate of pension, then you get involved in those large figures which the noble Baroness suggested I might have in my brief, and 273 which in fact I have in my brief. The figures are that if one reduced the pension age for men from 65 to 64 it would cost £145 million, and to reduce it to 60 would cost £825 million. This is the difficulty, and one comes back to the question of priorities as to whether this is the right use for the money. We have therefore decided that, at least for the purposes of this Bill, we must stick to the present retirement age, although I admit to the noble Baroness that when we were putting the Bill together we gave consideration to reducing the pensionable age for men. It was simply a matter in that case of the enormous cost, and we did not think that women would wish to have their retirement age of 60 raised. We were in the same dilemma as the noble Baroness.
§ BARONESS PHILLIPSMy Lords, there is only one thing further I would say, and that is on the point of flexibility and the lower age. A widow already has the option of going on to a lower retirement pension at 60, or of remaining on her widow's pension if she is working because she can add increments to her final retirement pension. So there already exists some flexibility. Also, there are already a number of occupational pension schemes, for example, in the Civil Service, where men have the option to retire at 60. I do not think this is impossible to operate; in fact, I do not think anything that you really want to do is impossible to operate. That is one of the things that I learned in my short time in Government: that if you really want to do something you find a way round your difficulties; and, of course, if you do not want to do it, you call in aid a Royal Commission or something else. I do not think this is impossible. I would say that we have reached the position where we must look at this question much more earnestly and not merely write it into an Act. For the people we are talking about, I believe the operative year will be the year 2014 or something like it, and I imagine that things will have changed quite a bit by then. Perhaps people will then age more rapidly and the retirement age may be about 35. But I can see that I am not going to get very far, and I cannot ask the Minister to answer again. 274 I will just sit down and think what I am going to do about it.
§ LORD HOYMy Lords, before we pass from this matter may I say that it is foolish to think that you cannot get below the age of 65. I am sure we all know that there are thousands of men who at the present time retire at 60. One thinks of the Civil Service, the banks, the police and so on. I do not want the Minister to think this is an impossible business, because we have demands for it at the present time from the large unions. After all, to take the mining industry, where people have to go down into the bowels of the earth to dig out coal, surely at the age of 60 they are entitled to say that they have earned a retirement pension. These people are denied the right to a retirement pension at that age. It may well be a great struggle for them to exist between 60 and 65, and they may leave this earth altogether, never having enjoyed a pension.
I will not ask the Minister to answer, but when he says that this will cost £800 million, what he is inferring is that this £800 million will be paid by the Government. He knows that that is not so. Insurance policies are not paid for by the Government, but by those who are insured and their employers. The Government's share of the cost is very small. It does not fall on the Government as a form of national expenditure; so the noble Lord should not frighten us with the story of £800 million. That may be the total cost but it is not borne by the Government: certainly not the full cost. I think of how much insurance contributions have increased over the years and I remember that people in industry have quite willingly paid increased contributions in order to get the pensions they would like to receive. It ought to be possible to do it for men at 60 years of age, if it is possible to do it for men in industry. So I should not like the House to think that it is not done at the present time, because it is done for many thousands of people—and the cost is not borne by the Government but by the contributor and his or her employer. The Government's share, of course, is very small in comparison.
§ On Question, Amendment negatived.
275§ Clause 26 [Supplementary provisions as to Category A and B retirement pensions]
§ 4.21 p.m.
§
LORD RAGLAN moved Amendment No. 15:
Leave out Clause 26.
§ The noble Lord said: My Lords, I beg to move this Amendment. We had a short debate on the earnings rule late at night during the Committee stage and my noble friends and I have put down the same Amendment again for several reasons, one of which of course is to give those noble Lords who were not present in the Chamber at that time an opportunity to voice their opinions. My own reason is the conviction that the Government's defence of the earnings rule was entirely unconvincing. Indeed, I think the noble Lord, Lord Aberdare, was himself rather unhappy at the arguments he was putting forward, and he probably did something towards retrieving the situation, which proved to be a close vote, by claiming that no part of this clause had to do with the earnings rule, whereas the whole clause is related to it.
§ Most of us probably do not realise how closely all our lives are bound up with jobs and with work generally. From almost the moment that a child is born —certainly if the child is a boy—his parents will be talking about his future and will be discussing it in terms of his occupation: what will little Johnny do when he grows up? And so Johnny will be taught to think in the same terms. It might have been that once upon a time he would have wanted to be an engine driver: now he may want to be a truck driver or an air pilot—it does not matter what. But what his parents are recognising by talking in these terms is that the whole of our civilisation and the whole of our existence is dependent on the work of individuals. If we do not work, we die of starvation. I do not say that that is what necessarily should be the case, but that is certainly a fact. Therefore, the child's upbringing by his parents, his education at school, his early training in jobs or at university—throughout this time he is taught how to occupy himself with some kind of work which will be of gain to the community as well as to himself. If he does not work, somebody else will have to keep him.
276§ Apart from the importance of work in our lives, we may also be unconscious of how much people's social lives are bound up with work. Friendships are made and maintained, and work is frequently a topic of conversation. Nowadays, more and more effort is put into trying to make jobs more interesting. Tracts are written about it, the implication being that those with jobs they find interesting get a great deal more out of life than those without such jobs. The age of 65 comes along and suddenly the whole purpose for which a person has been educated is taken away. He is removed from the friends he has made, from the interests of the job and also from the income he receives from that job. Large numbers of people thereby feel cast out, and indeed they have been referred to as "displaced persons". They no longer belong to the society into which they were born and educated.
§ It is all very well for those who have reached important positions by the end of their working lives. They can be appointed to boards of companies or schools—or they may even perhaps be elevated to the House of Lords. In any case, they have good connections and probably good pensions as well. Even those who are less exalted may, if they wish, be able to continue with other jobs which are interesting and which may bring in enough to allow them to afford to ignore the earnings rule. But the least exalted of all—the ordinary wage-earner —is the most damaged even if, at best and as sometimes happens, he manages to dodge round it in some way. He is actively and positively discouraged from working long enough at odd jobs to add more than a few pounds per week to his already meagre pension. I will not go again into the psychological effects which this discouragement has, because I and other noble Lords emphasised this point in Committee. I would only say that it can be devastating both to the personality and health of the people involved.
§ The noble Lord, Lord Aberdare, made two points at Committee stage which I must dispute. He said that the pension is for retirement and not for old age. Nevertheless, the earnings rule is relaxed for a man who is over 70, even though he may then take up a fulltime occupation again. As to the cost of removing the rule, I think the Government really must 277 look at the problem in the depth it deserves. First, there is the extra taxation which increased earnings will bring in: then there is the, I admit incalculable, saving to the Health Service which will derive from the improved health of those who can stay in employment instead of being committed to enforced idleness. I said on Committee that the earnings rule has an evil effect upon retired people. That is true, and I beg the Government to take notice of that fact. The earnings rule is wrong and unjust. It bears most heavily on the people who are least able to afford to ignore it. The noble Lord, quite rightly, said that nobody likes it, and I believe I am voicing the opinion of the vast majority of people in saying that it must go. I beg to move.
§ LORD ABERDAREMy Lords, we come back to the retirement pensions earnings rule, which we have discussed on many previous occasions and most recently at the Committee stage. Perhaps therefore I might repeat the old argument with which the noble Lord is already so familiar: that despite the fact that we are not very enthusiastic about this rule, at the same time we believe that present priorities preclude us from incurring the expense involved in relaxing it at a time when there are so many other demands for help—and not least those we have heard about to-day from the noble Baroness, Lady Darcy (de Knayth), and her friends.
The reason for the existence of the earnings rule is that the scheme provides for a retirement pension and not for an old age pension. The pension is not therefore payable unconditionally to people who have reached the minimum pension age of 65 for man or 60 for a woman. It can be awarded to a person during the five years after that age if he or she can be accepted as retired from regular work. One of the tests used in deciding whether a person can be regarded as retired is that any earnings are not expected to exceed, or only occasionally to exceed, the level at which the earnings rule starts to operate, which is at the moment £9.50 a week. The earnings rule is necessary to support this retirement principle, since without it there would be nothing to prevent token retirements, followed by a return to full-time work with wages paid together with 278 full pension. But at the age of 70 and 65 respectively, a man or woman is automatically treated as retired and at that age the earnings rule no longer applies, as the noble Lord knows.
These two things—the earnings rule and the retirement condition—stand or fall together, and the difficulty is that the cost of abolishing the rule would be about £115 million a year at current rates. Moreover, most of this benefit would go to some quarter of a million people, and their dependants, who have chosen to defer their retirement. The extra money that would be required to pay pensions to these people would have to be found, as the noble Lord, Lord Hoy, has reminded us, by raising contributions. I do not believe that contributors in general would feel that it was right that they should have to pay more in order to pay pensions to other people who were in full-time employment when there were many others who needed help much more: those unable to work, the very old, the chronic sick or disabled or other categories of need.
§ LORD GARNSWORTHYMy Lords, would the noble Lord allow me to ask whether he could state what would be the cost of meeting this Amendment? We have had the figure mentioned in the other place, but it would be useful if the noble Lord could remind the House and we shall then understand better the burden that people would be asked to carry.
§ LORD ABERDAREMy Lords, the total amount that it would cost to abolish the earnings rule would be £115 million a year at current rates.
§ LORD ARCHIBALDMy Lords, may I ask the Minister whether that takes account of the revenue from income tax in this connection?
§ LORD ABERDAREMy Lords, the noble Lord has a subtle point there. It was raised by the noble Lord, Lord Garnsworthy, at the Committee stage. The answer is: No, it does not. But I can give the noble Lord the figure for income tax. The extra income tax which would be received would be likely to be of the order of £30 million a year. The net figure would be £115 million less £30 million, which is £85 million per annum. 279 This is basically why I resist the Amendment of the noble Lord, as I did last time. The figure is one of £85 million a year, and if we had that sum we should use it for many other needs which we think deserve higher priority, although I sympathise with the noble Lord's campaigning on behalf of people retiring, for I know how hard he works for them.
§ LORD REIGATEMy Lords, as an old campaigner for the abolition of the earnings rule I feel that I ought to be allowed to support my noble friend, even if nobody else does. First of all, while listening with great sympathy to what the noble Lord, Lord Raglan, said, I do not think this is the right Bill in which to abolish the earnings rule. I can give him a crumb of comfort: the figure of £115 million is not far off the figure of £100 million which I was given in 1955. Times have changed since then, and the total amount of expenditure on pensions has vastly increased; so one can say that in one sense the cost of the earnings rule as a proportion of the total costs secured is gradually dwindling. But we have to face the fact that the earnings rule was a millstone which was mistakenly hung round the neck of this scheme in 1946. As the noble Lord rightly said, it was in some sense made a nonsense by allowing exemption at the age of 70. If the noble Lord reads the debates he will see the mistaken reasons why that was done. I do not think this is the right occasion to abolish the rule. First of all—and this has some reference to earlier debates—the community has to make up its mind whether the pension should ultimately be given for old age or for retirement or, as I am beginning to think, for incapacity—for the inability to earn. But this means a large recasting of our pension scheme yet again, and we could not do it partially on this Bill.
I hope that the noble Lord, Lord Raglan, will accept that I am in sympathy with the principle that he has adumbrated. My record on this matter is fairly consistent. I think that when I die "earnings rule" will be written on my heart. It will take its place there with a number of other graffiti, but I am sure it will be the largest. I hope therefore the Amendment will be resisted for the reasons my noble friend gave.
§ BARONESS PHILLIPSMy Lords, I should like to support the noble Lord who moved the Amendment. While acknowledging that the noble Lord, Lord Reigate, is a campaigner—and I have supported him when he has spoken in this House on the subject—I cannot understand why he says that this is not the Bill by which to exclude it. Surely it is the easiest thing of all to take out a clause. I cannot repeat too often that this is legislation for the future; it is not for what is happening now. If you are doing anything when looking ahead you are surely not always looking back at what you had in the past. This is something which is admittedly expensive to operate.
I have in my hand one of the numerous little books issued by the Department. I have about 40 splendid explanatory leaflets now in my office. None of these can be cheap to print. This booklet contains 42 paragraphs. It starts off with the magic words:
What is meant by retirement? Giving up paid work altogether is the most obvious example of retirement. But if you intend to carry on work of some kind you may be deemed to be retired.That is exactly what we are saying—everybody does not want to give up work completely. I also brought up the question of tax because I do not think it has been taken enough into account. If people earn then the tax is a regulator. It would be interesting to do a mathematical calculation (which I will try to do before the next stage of the Bill) to show that somebody collecting £12 a week on their pension may be paying back a substantial part of that pension to the State.On the question of cost, I have a figure which has been supplied by a reputable organisation which shows that there was a surplus in the National Insurance Fund in the past two years. That would have to be taken into account when talking about spending money. So far everything that we have asked for the Government have said would cost too much. We are not going to have any presents at all. We are going to end up with the Government saying, "This costs too much, and that costs too much". When you say to a child looking into a shop window, "You cannot have that, and you cannot have that", 281 at least you might say, "but you can have this".
I seriously suggest that this rule is costly to operate. You have these different calculations, one on the invalidity benefit, a different one on this clause, a different one regarding the widowed mothers' allowance, and so on; and you have to employ an army of people to sit down and work this out. I read in this book that earnings include wages, overtime, salaries, fees, commissions and regular tips. What is regular? Is that every month, every week, or every six months? That is a very subjective matter. Earnings also include bonuses, other than Christmas bonuses, up to £10. My Lords, they can never make anything straightforward there are always all sorts of exemptions and qualifications.
Another meanness about this—and I work with these people, and that is why I know these cases so well—is that if a retirement pensioner has a wife younger than he is and she earns, the earnings rule operates in relation to the pension he would draw for her. We have passed the point where people are supposed to be living on the pension because they have finally stopped work. They cannot live on it; it is too low. It is a dreadful commentary that the pension is, pro rata to the total earnings, less now than it was when it was instituted in 1914. When wages were 30s. we gave pensioners lOs; when wages now are on average about £32 a week we give pensioners £6.75. So to suggest that people can live on the pension is to belie the facts.
The noble Lord who moved this Amendment pointed out something I saw for myself last week when speaking at a retirement course at a big works. The people on the shop floor were going to retire on £6.75. Some of the people in different positions had already safeguarded their situation and were going to collect something which I suspect does not come under any of these headings, and therefore they would not be subject to any earnings rule; they would be subject to tax. So there is already an inequality. I beg the Government in this new Bill to cut out this provision. I feel certain that what we propose is not as costly as the Minister suggested, because we have not been able to offset the cost of operating; nor indeed the tax, which is the regulator.
§ 4.42 p.m.
§ BARONESS SEEARMy Lords, I know that we must not turn this debate into a Committee stage, but if the noble Lord is determined to keep the earnings rule, whereas I, along with the noble Lord, Lord Raglan, and other noble Lords who have spoken this afternoon, wish we could get rid of it, is it really not possible to look once again at whether the earnings rule has to be operated on a weekly basis? I know that when I raised this point in the House over a year ago now I had a long, but to me completely unconvincing, letter from the Department as to why the earnings rule must be calculated weekly. We are moving into a period when there will be longer holidays, when regular staff will be away from work. Surely, there is everything to be said for having a situation in which the people who have retired in the previous five years can return to work for two, three or four months in the summer during the holiday season or during emergency times, and be allowed to earn in total up to £460, or whatever the figure is which £9.50 a week aggregates during the year, before they lose their pension.
If they could do this, I am sure you would save a great deal on social security and you would gain something on tax. It would help very much in the labour situation where during the holiday period there is a shortage of labour and there are bottlenecks and difficulties in getting work done. It would supply what is perhaps from the human point of view the most important advantage of all for the retired person: a period of two or three months back with his old workmates, in many cases doing a job which needs to be done. He would feel that he was needed, and he would indeed be filling a need and supplementing his pension to the tune of over £400. It would he of enormous help to the old-age pensioner. I cannot accept that the system of aggregation of an annual amount which one may earn, rather than a weekly amount, is something we ought not to consider again at the present time.
§ LORD GARNSWORTHYMy Lords, the noble Lord has had some pretty powerful support from the noble Lord. Lord Reigate. Over the years I have watched with the greatest interest and indeed admiration the way in which Lord 283 Reigate has stuck to his championship of this question. He suggested that perhaps this was not the Bill in which to make the change. I cannot help feeling that throughout the years of his advocacy with regard to the earnings rule he will have used any and every occasion on which to advance the cause.
§ LORD REIGATEMy Lords, would the noble Lord allow me to intervene, because I should like to make clear my reasons for saying that. First of all, while I am grateful for what the noble Lord says about my campaigning, may I say that I have always sought to mitigate the rule rather than actually to abolish it. With regard to this Bill, the point is that if we omit Clause 26, what we shall be doing is abolishing the retirement pension and restoring the old-age pension. I am not in favour of that at this juncture without further consideration of the reasons for people's ceasing work.
§ LORD GARNSWORTHYMy Lords, I am sure that the House will be grateful to the noble Lord for what he has said. Let us get this clear. A great many people die very soon after they retire Many do not live the five-year period from 65 to 70. In my view, if ever there was a time when people ought to be able to enjoy luxuries that have been denied to them throughout most of their working life, it is when they reach their closing years. I think that Lord Reigate indicated that the numbers are falling, and falling fairly rapidly, and the difference between £100 million in 1955 and £115 million to-day indicates that it is a problem of progressively decreasing size.
May I come to the question of incapacity. None of us knows how much it costs local authorities to run schemes to keep people healthy in retirement. Local authorities are just beginning to wake up to the fact that there is a tremendous field for activity here, but we do not know the cost. Neither do we know what the cost is to the National Health Service. I am quite sure that the longer a man remains in full-time employment, the greater the likelihood of his remaining healthy. It is because of this that we must do everything we can to ensure that the case for this Amendment continues to be pressed until it is accepted. I have no doubt at 284 all that nobody would be happier than the noble Lord, Lord Aberdare, if he could stand at that Box and say: "I am very pleased to accept the principle". even if the Amendment is defective. He indicates that he would not be happy to do that: then I do him too much credit —I am sorry. We have another stage of this Bill. I hope we shall get to know the view of the House at this stage. That is not for me to decide as it is not my Amendment, but I am very hopeful indeed that, even if we do not make a right decision to-day, we shall come back to the question again before the Bill leaves this House.
THE MARQUESS OF ABERDEEN AND TEMAIRMy Lords, I should like to add my support to the noble Baroness. Lady Seear, when she says, "Why do we have to have a weekly earnings rule?" I have discussed this point with Americans on a number of occasions. I think I am right in saying that they have an annual rule: one either earns so much for so many days or earns so much in a year. I have always felt that this weekly earnings rule is not at all a good point, and I would suggest to my noble friend that at some day and time this matter should be looked into very deeply indeed.
§ LORD ABERDAREMy Lords, may I answer just the points made by the noble Baroness, Lady Seear, and my noble friend Lord Aberdeen? We went into this matter carefully, and I am sure that the noble Baroness, who had a letter from the Department, will be very familiar with the facts.
§ BARONESS SEEARI am quite unconvinced, my Lords.
§ LORD ABERDARENot convinced, my Lords, but at least familiar. The matter was examined by the National Insurance Advisory Committee, who published a Report in January, 1967. A paragraph in the Report states:
In our judgment, extension of averaging"—this is what we are speaking about—would benefit few pensioners while adding substantially to the complications of the earnings rule both for pensioners and the Ministry.It was on the advice of the National Insurance Advisory Committee that we have not been able to go ahead on this matter. Perhaps the noble Marquess would like a copy of the Report.
§ LORD LEATHERLANDMy Lords, does the noble Lord, Lord Aberdare, really want us to believe that there would be far more administrative burden in making a calculation once a year of what a person had earned in a year, than in making a calculation once a week?
§ LORD ABERDAREYes, my Lords.
§ LORD LEATHERLANDMy Lords, one would have thought that there would have been exactly 1/52nd of the administrative work and burden involved. However, I stand before your Lordships to-day as one of the victims of the earnings rule. After a lifelong term in journalism I retired at 65. I had been writing millions of words during my forty years on newspapers and I decided that I wanted to make a completely fresh start and forget all about writing. But then I wondered what I was going to do with my time, and I found that there was a certain therapeutic value in writing which made me feel that I was still somebody.
By a coincidence, I was approached by an organisation who said, "You know something about local government. Will you write us a monthly article about local government which we can then circulate to provincial newspapers?" I agreed to do this, and in fact I did it for about three years. But every month I had to go up to the Ministry of Labour and explain to them that I had been earning so much in this particular month, and they said, "Oh no; you earned it in a particular week—the week in which you received the money". Had it been calculated over a monthly period it would have been all right from my point of view, but as it was calculated on the basis of the week in which I received the money for the article it was entirely different.
I think there is much in what the noble Baroness, Lady Seear, has said. This, like every other item in a person's income, should be calculated on a yearly basis. We do not calculate our income tax on a weekly basis—a figure is taken for the whole year and adjustments are then made for the weekly deductions, or even deductions in respect of dividends. I think that many people feel a sense of 286 grievance when they find that, having worked all their lives and become entitled to a pension for the eventide of their years, some of this money is snatched back from them, not because of any sin on their part but because of the virtue that they have decided that they would like to do some work in order to earn a few pounds to supplement what is really an inadequate pension. I plead with the noble Lord, if he cannot go all the way in abolishing the earnings rule entirely, at least to go along with the noble Baroness, Lady Seear, and to calculate it on a yearly basis.
§ LORD RAGLANMy Lords, the noble Baroness, Lady Seear, the noble Marquess, Lord Aberdeen, and my noble friend Lord Leatherland are on a different point from the one to which I was adverting in my original Amendment. But this weekly calculation of the earnings rule underlines the fact that it is the weekly wage-earner against whom it is directed: it is not directed against the monthly salary earner or the yearly income earner, or one receiving yearly income of any kind. It is the weekly wage-earner against whom it is directed, and this is why I so dislike it. It operates against those who are least able to afford it. I am in the hands of the House as to whether or not I press this Amendment. I suggest to the noble Lord, Lord Aberdare, that one of the Government's original slogans was that they wanted to help people to help themselves, and abolishing the earnings rule is one of the things that does just that. I should like to ask the noble Lord. Lord Aberdare, if he will promise that the Government will study this. I have had no help from him in that respect at all. Would the noble Lord like to say something on it now?
§ LORD ABERDAREMy Lords, this is the third time that I have spoken. All I can say to the noble Lord is that we have already relaxed the earnings rule and we shall continue to review it at our annual review of social security benefits in general. If that will help the noble Lord I will certainly give that undertaking.
§ LORD RAGLANMy Lords, that is somewhere along the road, but I think I had better press the Amendment.
§ THE DEPUTY SPEAKER (LORD DOUGLAS OF BARLOCH)My Lords, the Question is that Amendment No. 15 be agreed to.
§ BARONESS PHILLIPSMy Lords, I think there is some misunderstanding. I do not think anybody is calling a Division, unless possibly it is the Deputy Speaker.
§ THE DEPUTY SPEAKERMy Lords, I will put the Question again, as perhaps noble Lords are not clear. The Question is, That Amendment No. 15 be agreed to.
§ 4.53 p.m.
§ On Question, Whether the said Amendment (No. 15) shall be agreed to?
§ Their Lordships divided: Contents, 56; Not-Contents, 93.
287| CONTENTS | ||
| Archibald, L. | Henderson, L. | St. Davids, V. |
| Arwyn, L. | Henley, L. | Samuel, V. |
| Bernstein, L. | Hoy, L. | Seear, B. [Teller] |
| Beswick, L. | Jacques, L. | Serota, B. |
| Blackett, L. | Janner, L. | Shackleton, L. |
| Blyton, L. | Leatherland, L. | Shinwell, L. |
| Bowden, L. | Llewelyn-Davies of Hastoe, B. | Slater, L. |
| Brock, L. | Lloyd of Kilgerran, L. | Snow, L. |
| Brockway, L. | Longford, E. | Stocks, B. |
| Caradon, L. | McLeavy, L. | Stow Hill, L. |
| Chorley, L. | Meston, L. | Summerskill, B. |
| Clancarty, E. | Peddie, L. | Tanlaw, L. |
| Diamond, L. | Phillips, B. | Taylor of Mansfield, L. |
| Donaldson of Kingsbridge, L. | Platt, L. | Thurso, V. |
| Fiske, L. | Raglan, L. [Teller] | Wade, L. |
| Gardiner, L. | Rhodes, L. | Wigg, L. |
| Garnsworthy, L. | Ritchie-Calder, L. | Winterbottom, L. |
| George-Brown, L. | Royle, L. | Wynne-Jones, L. |
| Hale, L. | Sainsbury, L. |
| NOT-CONTENTS | ||
| Aberdare, L. | Ferrers, E. | Merthyr, L. |
| Aberdeen and Temair, M. | Fortescue, E. | Milverton, L. |
| Ailwyn, L. | Geddes, L. | Monck, V. |
| Alexander of Tunis, E. | Goschen, V. | Monk Bretton, L. |
| Amherst of Hackney, L. | Gowrie, E. | Mowbray and Stourton, L. |
| Atholl, D. | Greenwav, L. | Moyne, L. |
| Auckland, L. | Grenfell, L. | Napier and Ettrick, L. |
| Balerno, L. | Gridley, L. | Oakshott, L. |
| Balfour, E. | Grimston of Westbury, L. | Rankeillour, L. |
| Berkeley, B. | Hailes, L. | Reigate, L. |
| Blackett, L. | Hailsham of Saint Marylebone, L. (L. Chancellor) | Rhyl, L. |
| Bourne, L. | Rochdale, V. | |
| Brooke of Cumnor, L. | Harvey of Prestbury, L. | Ruthven of Freeland, Ly. |
| Brooke of Ystradfellte, B. | Hawke, L. | St. Aldwyn, E. [Teller] |
| Caccia, L. | Headfort, M. | St. Helens, L. |
| Coleraine, L. | Hylton-Foster, B. | St. Just, L. |
| Colville of Culross, V. | Ironside, L. | Sandford, L, |
| Conesford, L. | Jessel, L. | Sandys, L. |
| Courtown, E. | Killearn, L. | Sharples, B. |
| Craigavon, V. | Kindersley, L. | Stamp, L. |
| Crathorne, L. | Kinloss, Ly. | Stonehaven, V. |
| Crawshaw, L. | Lauderdale, E. | Strathcona and Mount Royal, L. |
| Croft, L. | Limerick, E. | |
| Cromartie, E. | Long, V. | Stratheden and Campbell, L. |
| Daventry, V. | Lothian, M. | Sudeley, L. |
| Denham, L. [Teller] | Loudoun, C. | Tenby, V. |
| Drumalbyn, L. | Lyell, L. | Tweedsmuir of Belhelvie, B. |
| Dundee, E. | Mancroft, L. | Vernon, L. |
| Dundonald, E. | Margadale, L. | Vivian, L. |
| Ebbisham, L. | Massereene and Ferrard, V. | Waldegrave, E. |
| Eccles, V. | Maybray-King, L. | Wise, L. |
| Emmet of Amberley, B. | Merrivale, L. |
Resolved in the negative, and Amendment disagreed to accordingly.
§ Clause 30 [Death grant]:
§ 5.4 p.m.
§
BARONESS PHILLIPS moved Amendment No. 15A:
Page 42, line 34, leave out subsection (3).
§
The noble Baroness said: My Lords, I shall not detain your Lordships long on this Amendment, nor indeed do I intend to take it to a Division, so those of your Lordships who are enjoying the tennis may return to it. As far as I can work it out Clause 30(3) refers in the main to people who are over 80, because we find in this paragraph which I wish to delete the words:
a death grant shall not be payable in respect of the death of a person who attained pensionable age before 5th July 1948 nor, except in prescribed cases, in respect of a death occurring outside Great Britain.
I feel that there is an injustice here. The longer one lives the less money one has to live on, and therefore it seems that the death grant becomes more necessary if someone dies over the age of 80 rather than under the age of 80. When we look at the cost of a funeral we see it is rising substantially all the time. I feel that when we come to the point of the Bill again, there will be an even smaller number of people affected, and it seems a rather mean thing that these older people should not receive a death grant in order to provide for their funerals.
§ My Lords, if we look at the pattern of insurance we see that those who are now in the age group of the thirties, forties or fifties do not go in for commercial insurance in the way that the same group would have done fifty years ago. This group were people who were concerned very much about the cost of a funeral and often they continued to pay small sums of money in order to be sure that the last rites were performed with a sense of dignity. I feel that with the small cost involved here, it will be unfortunate if we declare rather categorically that this older group cannot receive a death grant. I beg to move.
§ LORD ABERDAREMy Lords, so far as our Amendment is concerned, as the noble Baroness says, the effect would be to remove the present restrictions which prevent the payment of a death grant in two circumstances: first, in the case of a person who reached pensionable age before the July 5, 1948, and the second 290 except in prescribed cases in respect of a death occurring outside Great Britain. The noble Baroness has concentrated on the first point, and so will I.
The removal of the first of these restrictions would make a half rate death grant payable on the deaths of men reaching the age of 65 and women reaching the age of 60 before July 5, 1948, where at present no death grant is payable. Death grant is a contributory benefit and was introduced for the first time in July, 1948, under the 1946 National Insurance Act, and consequently no part of any contribution paid before July, 1948, went towards death grant, and people of the generation which reached pensionable age before that date, as the noble Baroness so rightly said, had no expectation of such a benefit, and knew they had to make provision by themselves for funeral expenses in the way of insurance, savings, trade union funds and so on. The expense of a funeral is not a burden which always falls entirely on the surviving spouse or children. It is a first charge on the estate and in the majority of cases there are other resources available which meet at least part of the cost. It has always been held that a death grant for someone who had never contributed under the present scheme would be a breach of the contributory principle and might lead to pressure for other benefits to be paid on a non-contributory basis.
The provisions have been looked at on a number of occasions. Once again this is a provision which has been examined by the National Insurance Advisory Committee, and it has always been concluded that the present arrangements should stand. Those are the reasons why I would ask the noble Baroness to withdraw the Amendment: that it is not and never has been intended for these particular people; they have never contributed towards this benefit and it would be setting a precedent if we were to make a payment under the National Insurance scheme to people who have not contributed.
§ LORD MAYBRAY-KINGMy Lords, may I point out to the noble Lord that his own Government extended benefits to the 80-year-olds on the very ground that they needed the money although they were not entitled to it because they were not covered by the national scheme. The 291 noble Lord is now dealing with a group of 85-year-old women and 90-year-old men. Does he not think that this little concession might be granted to them?
§ LORD REIGATEMy Lords, before my noble friend replies, I think I raised this point in my speech on Second Reading. I had hoped to move an Amendment on Committee stage, but was not able to be here. I do think it is rather a small matter, and unless the cost, which I have not heard my noble friend give, is very extensive I think the Government might look at it again.
With regard to the point raised by the noble Lord, Lord Maybray-King, I think it is only fair to say that payments to the over-80s are paid out of the Consolidated Fund, and therefore that does not affect the contributory principle to which my noble friend referred. All I can suggest is that the Government, while perhaps not accepting this Amendment to-day, should look at this rather tiny little economy to see whether in due course they could fit it in in some other measure. There cannot be many people whom it affects, and it would not cost very much.
§ BARONESS SUMMERSKILLMy Lords, may I add my plea? It seems to me quite remarkable. Every now and then the Ministry exercise a certain compassion on behalf of certain groups who have never been covered by insurance. I am thinking of the over-80s who were given a special allowance, and the other people already mentioned to-day. Here we are dealing with men and women who may have worked for the country all their lives and yet die uninsured. They can comprise only a small group, yet on this question the Government show a hardness of heart which is difficult to believe. Long before the noble Lord was born people felt that to die, as they described it, "on the parish" was a great disgrace for the family. In the past there were little clubs which enabled very poor people to contribute so much a week in order that they should be able to pay for their funeral. In the minds of the very poor there is still a desire to feel that when their end comes their funeral will be an affair that has been paid for by themselves or by their family and that they do not have to rely upon any external source which derives from the Government. The noble Lord 292 must know about this; he must surely have read about it or learned about it. I learned about it as a young doctor. I learned that the thing that had to be paid on Monday morning was so much to a club which would ensure that if death came unexpectedly the funeral would be of the kind which would not disgrace the family.
I hope the noble Lord will recognise that he cannot stand by the hard-and-fast rule of an insurance scheme. We have departed from it on so many occasions. Here we are pleading for the dead: and they, poor creatures! cannot plead for themselves. There is one thing the noble Lord must know, that there can be no pressure group for these people for whom we are pleading now. The disabled, quite rightly, have a powerful pressure group in the country—D.I.G., a marvellous organisation which is pressuring for them. We know perfectly well, particularly those of us who have served in the Commons, that when there is a matter which calls for pressure then the Central Lobby is full; when any powerful organisation have a demand at heart they generally find that it is met. because of the pressure they can exercise. Here for the first time we are talking about a comparatively small group which cannot possibly call up to their aid a pressure group, and therefore I ask the noble Lord to act on their behalf.
§ BARONESS PHILLIPSMy Lords, I know that the Minister cannot reply, and perhaps I am taking an unfair advantage. I think we must emphasise the point that this is not a precedent. I was going to raise this very point about the over-80s who were given this money. It was a marvellous thing; everybody was delighted. I was only unhappy that my own Government had not done it—I see that the noble Lord nods his head. If the money cannot come from one fund, it can come from another. Ultimately where does Government money come from? It comes from the people. Either they pay it in taxes or it is raised in some other way. The difference between the fund which is funded directly and the Government money which comes from taxes seems to me to be very fine. If the Government were going to pay this very small sum I am sure they could find it somewhere.
293 The noble Lord, I thought, introduced a slight note of unreality when he spoke about the funeral being a first charge on the estate. The elderly couple I have in mind certainly would not have any problems about that; they have not got an estate. The average person does not even own his own house. It is rather pathetic to think of the kind of people we are talking about—an elderly man and woman; one dies, and the other
§ one does not get any help for the funeral. And with the cost of funerals going up all the time, they are getting so expensive that it is almost impossible to die.
§ 5.16 p.m.
§ On Question Whether the said Amendment (No. 15A) shall be agreed to?
§ Their Lordships divided: Contents, 59; Not-Contents, 85.
293| CONTENTS | ||
| Arwyn, L. | Hoy, L. | St. Davids, V. |
| Bernstein, L. | Ingleby, V. | Samuel, V. |
| Beswick, L. | Jacques, L. [Teller.] | Seear, B. |
| Brock, L. | Janner, L. | Segal, L. |
| Brockway, L. | Leatherland, L. | Serota, B. |
| Caradon, L. | Llewelyn-Davies of Hastoe, B. | Shackleton, L. |
| Clancarty, E. | Lloyd of Kilgearn, L. | Shinwell, L. |
| Darcy (de Knayth), B. | Longford, E. | Slater, L. |
| Diamond, L. | McLeavy, L. | Snow, L. |
| Donaldson of Kingsbridge, L. | Masham of Ilton, B. | Somers, L. |
| Fiske, L. | Maybray-King, L. | Stamp, L. |
| Gardiner, L. | Meston, L. | Stocks, B. |
| Garnsworthy, L. | Peddie, L. | Strabolgi, L. [Teller.] |
| George-Brown, L. | Phillips, B. | Summerskill, B. |
| George Brown, L. | Platt, L. | Tanlaw, L. |
| Greenwood of Rossendale, L. | Raglan, L. | Taylor of Mansfield, L. |
| Hale, L. | Rhodes, L. | Thurso, V. |
| Hanworth, V. | Ritchie-Calder, L. | Wade, L. |
| Henderson, L. | Royle, L. | Winterbottom, L. |
| Henley, L. | Sainsbury, L. | Wynne-Jones, L. |
| NOT-CONTENTS | ||
| Ebbisham, L. | Merrivale, L. | |
| Aberdare, L. | Eccles, V. | Milverton, L. |
| Aberdeen and Temair, M. | Emmet of Amberley, B. | Monck, V. |
| Ailwyn, L. | Falkland, V. | Monk Bretton, L. |
| Alexander of Tunis, E. | Ferrers, E. | Mowbray and Stourton, L. |
| Amherst of Hackney, L. | Gainford, L. | Napier and Ettrick, L. |
| Atholl, D. | Goschen, V. | Oakshott, L. |
| Balerno, L. | Gowrie, E. | Rankeillour, L. |
| Balfour, E. | Grenfell, L. | Reigate, L. |
| Balfour of Inchrye, L. | Grimston of Westbury, L. | Rhyl, L. |
| Barnby, L. | Hailes, L. | Rochdale, V. |
| Berkeley, B. | Hailsham of Saint Marylebone, L. (L. Chancellor.) | Ruthven of Freeland, Ly. |
| Bourne, L. | St. Aldwyn, E. [Teller.] | |
| Brooke of Cumnor, L. | Harvey of Prestbury, L. | St. Just, L. |
| Brooke of Ystradfellte, B. | Hawke, L. | Sandford, L. |
| Colville of Culross, V. | Hylton-Foster, B. | Sandys, L. |
| Conesford, L. | Inglewood, L. | Selkirk, E. |
| Courtown, E. | Ironside, L. | Sharples, B. |
| Cowley, E. | Killearn, L. | Stonehaven, V. |
| Craigavon, V. | Kindersley, L. | Strathclyde, L. |
| Crathorne, L. | Kinloss, Ly. | Strathcona and Mount Royal, L. |
| Crawshaw, L. | Lauderdale, E. | |
| Croft, L. | Limerick, E. | Stratheden and Campbell, L. |
| Cromartie, E. | Long, V. | Sudeley, L. |
| Daventry, V. | Lothian, M. | Templemore, L. |
| Denham, L. [Teller.] | Loudoun, C. | Tweedsmuir of Belhelvie, B. |
| Drumalbyn, L. | Lyell, L. | Vernon, L. |
| Dundee, E. | Mancroft, L. | Vivian, L. |
| Dundonald, E. | Margadale, L. | Waldegrave, E. |
| Massereene and Ferrard, V. |
Resolved in the negative, and Amendment disagreed to accordingly.
§ Clause 36 [Reports on needs of chronically sick]:
§ 5.25 p.m.
§
BARONESS SEEAR moved Amendment No. 15B:
Leave out Clause 36 and insert the following new clause:
§ Review of provision for chronically sick and disabled persons
§ "36. The Secretary of State shall review social security provision for chronically sick and disabled persons, and shall lay a report on his review before Parliament by 31st October 1974".
§
The noble Baroness said: My Lords, I think that on this occasion we can be brief. Your Lordships will appreciate that Clause 36, as it stands, is in fact the clause that was achieved (if that is the right word) at Committee stage. The Government have considered this clause, and the noble Lord, Lord Aberdare, has put the point that the Government are willing to accept it and not to oppose it, provided that we make a firm date for October 31 rather than April 30. You will notice that, as the clause stands, it says:
… 30th April 1974 or such later date as may be approved.…
I have consulted with most, though I fear not all, of my co-sponsors of the Amendment at Committee stage, and it seems to us that the firm acceptance by the Government that a comprehensive report will be presented to the House not later than October 31 is something so greatly to be welcomed that we should he very glad to accept the proposed change. Therefore I have pleasure in moving the Amendment.
§ BARONESS MASHAM OF ILTONMy Lords, my name was down with that of the noble Baroness, Lady Seear, on the Amendment at Committee stage, but it got left off this time. I would support her in what she said. I think that if the Government will lay a report before Parliament, so that everyone can look at the provisions for the disabled, this will be a most sensible move and a very wise course to take. In anticipation, I should like to thank the noble Lord for accepting this Amendment.
BARONESS DARCY (DE KNAYTH)My Lords, I welcome this Amendment in that it requires the Secretary of State to lay a report of his review before Par 296 liament by a definite date. I am however concerned at the exclusion of the lines in Clause 36 as it stands which ensured that the needs of such persons not at present entitled to benefits within the scope of this Bill will also be considered. The disabled housewife comes into this category, and in her own right the disabled housewife at present receives no financial assistance whatsoever, except the attendance allowance if she is exceptionally severely disabled.
There is also the question of the congenitally disabled who have never been enabled to work and so have paid no contributions. Will the noble Lord tell us whether the report will cover these categories of people not at present entitled to benefit because they do not pay contributions, or have not paid sufficient contributions? I sincerely hope that the report will be truly comprehensive. Will the question of the earnings stop be considered, and will there be co-ordination between the Department of Health and the Department of Employment in relation to this matter? Something must be done to remove this serious disincentive to full rehabilitation and the very real impediment to disabled persons returning to work. These are two most important questions on which I should like the Minister to reassure the House, and provided these points are covered, I wholeheartedly support the Amendment.
§ LORD CRAWSHAWMy Lords, I should like to say one or two words about the Amendment, too, because it is the only one which remains on this whole subject after hours of debate in this House and in another place. I think that I and my noble friends have shown a good deal of restraint in not pressing other Amendments. I hope that the Government will give us credit for that. We certainly take the Government on trust on what they have said. I happen to support the Government, so I know that my trust is in good hands. I hope that everybody will feel the same.
There are one or two questions that I should like to ask the Government as to what this review will cover. For instance, will they consider treating the position of prolonged incapacity for work consistently with normal retirement? Will they take into account the earnings rule, which we have debated twice in this House, and 297 try to establish some scheme of a pension for partial incapacity? My noble friend has mentioned the acute position of the disabled housewife and the young disabled; will the Government take into account the special expenses incurred by disabled people in their normal lives? We have had debates in this House on this subject, and I think the Minister knows what I am talking about.
Will the Government also maintain close contact with organisations such as DIG—the Disablement Income Group, who, incidentally, have asked me to express appreciation of the Government's attitude in being willing to accept this Amendment so readily—and the Central Council for the Disabled, on other aspects as well as financial ones? I feel that there should be a permanent two-way exchange of thought on this, because DIG and the Central Council are extremely responsible bodies, with a vast fund of experience on these matters, and the Government would do well to make use of this great experience. They should pay close attention to them because if there is not obvious co-operation between these people and the Government then I think there is a danger that mare strident and militant voices will be heard in the wines and the whole atmosphere may well be soured. We are much more likely to make progress if the atmosphere on both sides is kept sweet. In conclusion, I should like to thank my noble friend for his ready acceptance of this new clause.
§ VISCOUNT INGLEBYMy Lords, I also would express my thanks to the Minister for having another look at this particular Amendment. This was the most important Amendment being put forward on behalf of disabled people, and I hope that he will, as my noble friend Lord Crawshaw said, bear in mind our forbearance earlier this afternoon. Speaking as a Cross-Bencher, I think we can trust both sides of the House equally in this matter, and I hope very much that whichever Government is in power on October 31, 1974, will give a sympathetic reception to the proposals when they are brought forward. I would ask, finally, that in this matter the Government will work closely with DIG who have a great fund of expert knowledge.
§ LORD ABERDAREMy Lords, I am delighted to hear all the honeyed words that noble Lords have spoken on this 298 particular Amendment. I am very pleased to accept it. I am grateful to the noble Baroness for having put it down in this form, and I fully recognise the co-operation which I have received from noble Lords on the Cross-Benches who have taken my word that we are conducting a very serious review into the whole question of social security provision for the disabled. I think the noble Baroness, Lady Darcy (de Knayth), and the other noble Lords will find that I gave most of the reassurances for which they were asking when I replied to Amendment No. 10. This will indeed be a wide-ranging review and will cover all the categories that have been mentioned. It will cover the earnings rule, the attendance, the disabled housewives and all the other problems that arise in connection with disablement. It is, I would stress, a Government review, not a review entirely being conducted by my Department, and therefore the Department of Employment will certainly be fully in on that review. I should like finally to say that we value very much our contact with the Disablement Income Group and the Central Council for the Disabled and other bodies working in this field and shall willingly receive any views that they would like to express to us.
§ On Question, Amendment agreed to.
§ Clause 38 [Claims for, and payment of, benefit and other ancillary provisions]:
§
LORD ABERDARE moved Amendment No. 16:
Page 49, line 44, leave out from ("which") to ("certain") in line 45 and insert ("substantially replace").
§ The noble Lord said: My Lords, this is a drafting Amendment to provide a more accurate description of Schedule 10, which contains provisions largely reproduced from the 1965 Act relating to the claiming and payment of benefits and other matters ancillary to Chapter 2. I beg to move.
§ On Question, Amendment agreed to.
§ Clause 51 [Recognised pensionable employment]:
§ 5.37 p.m.
§
THE EARL OF GOWRIE moved Amendment No. 17:
Page 67, line 1, leave out from ("provision") to ("so") in line 2 and insert ("subject to
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any requirements of regulations, or of the Board, under subsection (4)(d) above").
§ The noble Earl said: My Lords, Clause 51(4)(d) enables the Secretary of State or the Occupational Pensions Board to impose requirements about the form which relevant scheme rules—that is to say, those rules about minimum benefits —should take. Clause 51(6)(b), to which the Amendment relates as presently drafted enables the Secretary of State but not the occupational Pensions Board, to require a scheme to adopt the particular words used in the Bill. The Amendment will enable the Board, too, to make such a requirement. While it is unlikely that it will generally be necessary to insist on the scheme using the precise words in the Bill, the Board may wish to do so in the interests of the employees concerned. It would be unwise to preclude their doing this, and the Amendment gives them the facility. I beg to move.
§ On Question, Amendment agreed to.
§ Clause 59 [Financing and security of minimum benefits]:
§
THE EARL OF GOWRIE moved Amendment No. 18:
Page 79, line 8, leave out from ("above") to first ("the") in line 9.
§
The noble Earl said: My Lords, this is a technical Amendment deleting from subsection (6) the phrase
or the Board are not satisfied under that subsection …"—
that is to say, subsection (3). The phrase achieves no useful purpose and could give rise to ambiguity. I beg to move.
§ On Question, Amendment agreed to.
§ Clause 73 [The Reserve Pension Board]:
§
THE EARL OF GOWRIE moved Amendment No. 19:
Page 96, line 25, leave out ("enactments in force in Northern Ireland") and insert ("Northern Ireland legislation").
§ The noble Earl said: My Lords, this is a drafting Amendment designed to achieve consistency throughout the Bill. However, there may at Committee stage occasionally have been confusion about the application of the Bill to Northern Ireland and it might be to the convenience of the House if I spoke very briefly 300 about this. I hope therefore that when I come later to apply the Bill to Northern Ireland that will go through fairly formally.
§ My Lords, at present Great Britain and Northern Ireland have separate, but virtually identical, National Insurance schemes governed by the separate legislation of the two countries. Because of the present situation in Northern Ireland, it is necessary to make provisions for their scheme in this Bill; that is to say, the present emergency procedure which of course overrides the normal situation, but we are providing for a permanent and, we must hope, a better situation in Northern Ireland. It became apparent to the draftsmen that the method originally adopted, which briefly was to apply the Bill as a whole to Northern Ireland with the necessary modifications, did not achieve all that was required. The reason was that whereas Part II, the occupational pension scheme, and Part III the reserve pension scheme, had to apply to the whole of the United Kingdom, Part I had to be applied separately to the two countries because it is intended that they should have their own separate basic scheme just as they have separate National Insurance schemes at present. Work on the Bill in the Commons made it necessary to postpone the drafting and moving of the necessary Amendments. It was because of time difficulties that clarification of the provisions affecting Northern Ireland had to be deferred until the Bill reached your Lordships' House. The outstanding Amendments that we are considering to-day are part of the process of tidying up the technical application of the Bill to Northern Ireland. I beg to move.
§ On Question, Amendment agreed to.
§ Clause 74 [The Reserve Pension Fund]:
§
THE EARL OF GOWRIE moved Amendment No. 20:
Page 97, line 36, after ("Board") insert ("and the payment of any interest on money so borrowed").
§ The noble Earl said: My Lords, this is a technical Amendment designed to remove any uncertainty that there might be in the interpretation of the paragraph, I beg to move.
§ On Question, Amendment agreed to.
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§
THE EARL OF GOWRIE moved Amendment No. 21:
Page 97, line 40, leave out ("under") and insert ("for the purposes of").
§ The noble Earl said: My Lords, this is a drafting Amendment to achieve consistency with subsection (6)(b) of Clause 74. I beg to move.
§ On Question Amendment agreed to.
§ Clause 75 [Management of the Fund and its investments]:
§ LORD REIGATE moved Amendment No. 22:
§
Page 100, line 20, at end insert—
("( ) The Board shall not exercise their powers under subsection (2) so that the Fund shall have any interest in shares comprised in the relevant share capital of a company to which the said subsection does not apply without the prior consent of the Secretary of State and of the Treasury; and in each report which the Board is required to make under section 76 of this Act it shall set out details of all investments made in accordance with this subsection.").
§ The noble Lord said: My Lords, I shall be very brief. Despite some of the assurances that were given during the Committee stage, there are still many people who are concerned at the very wide powers and at the discretion of the Board in regard to investments. Under the proposals as they stand at present, investments in publicly-quoted companies are limited to 10 per cent. During the Committee stage, I moved an Amendment to make the limit 30 per cent. in the case of unquoted companies. That Amendment was resisted, and I must say that I entirely accepted my noble friend's reason for not accepting the limit of 30 per cent. I just want to say that I realise that the Board will be composed of responsible people, but my Amendment suggests, in effect, that they should not embark on a scheme of any magnitude without the approval of the Secretary of State or the Treasury, and that the public should be fully informed in the annual report as to exactly what ventures the Board are embarking upon. My Amendment is really designed to try to prevent the Board from extending their activities into too many totally uncharted seas. I may say to my noble friend that I am not asking for acceptance, and I should be more than surprised and pleased if he accepted the Amendment. All I am 302 asking is that the point should be considered by the Board when they are set up, and I express the pious hope that the Board's first duty will be to read all the Hansard reports of the proceedings on this Bill. My Lords, I beg to move.
§ LORD ABERDAREMy Lords, I am very grateful to my noble friend for the way in which he has moved this Amendment, and I appreciate the reasons which underlie it. We see it as fundamental that the Board, in the day-to-day exercise of their functions, should enjoy as much independence as possible, and that there should be no question of Government intervention. This is why I was slightly apprehensive about the Amendment. But I can assure my noble friend that the Board, which will be made up of very highly responsible people, will take careful account in deciding on their investment policy of all the relevant circumstances, including the considerations which he has put forward in this Amendment.
§ LORD REIGATEMy Lords, what my noble friend has said is very helpful, and I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Clause 76 [Annual report to Secretary of State]:
§ LORD REIGATE moved Amendment No. 23:
§
Page 102, line 17, at end insert—
("(5) The Board shall in an annual report not later than that in respect of the third year of the operation of the reserve pension scheme submit proposals to the Secretary of State for the making of arrangements designed to avoid the number of employed earners in respect of whose earnings contributions under this part of this Act continue to be paid into the Reserve Pension Fund exceeding one million, in particular by the establishment under regulations to he made for this purpose of a number of agencies independent of the Board and mutually independent of each other, in each of which would be vested such of the administrative responsibility and other functions conferred on the Board by or under this Act as may be prescribed and as they relate to those employer earners in respect of whose earnings reserve scheme contributions and premiums are payable and who, in accordance with a prescribed procedure, so opt, it being the intention that into a fund administered by each such agency reserve scheme contributions should be payable in respect of the earnings of not more than one million employed earners. The Secretary of State shall prepare and lay before each House of Parliament a report giving his conclusions on these proposals and the reasons for such conclusions, together
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with any drafts of orders and regulations which he considers necessary to give effect to those conclusions.").
§ The noble Lord said: My Lords, I move this Amendment with even more diffidence, because I doubt whether it will be practicable as drafted. This again reinforces the fact that many people are concerned at the sheer magnitude of the task of this Board. We have to remember that on its success depends the standard of living of very many pensioners. It must be an alarming task for the Board to contemplate investing successfully each year three times the amount of the investment income of the Prudential Assurance Company. Our present occupational schemes—of which I believe there are something like 26,000 in being —are operated, in the main, by some 200 companies including the nine giants, of whom the Prudential is the largest. This, in the case of the present occupational schemes, means that there is a fairly reasonable diversity of investment policies. All my Amendment does is to suggest a means whereby this giant fund will be able to diversify its investment by operating through a number of agencies. This would be very roughly on the lines of the old approved societies which operated prior to the National Insurance scheme in 1948, when they did a wonderful job. I am not asking that this Amendment should be accepted. I am asking only for some reassurance that the Board will consider these proposals when they come into being, and will show that they appreciate the magnitude, complexity and implications of their task, and their very great economic power for the good of this country. My Lords, I beg to move.
§ LORD ABERDAREMy Lords, again I am grateful to my noble friend for raising this point. I could not accept this Amendment as it stands, because it would produce agencies which are self-contained and separately responsible, with separate boards of management deciding their own independent actions. This might be very difficult. We should get investment performances that differ from one agency to another and pension values would vary, and in a national scheme with contributions collected at a uniform rate this would be difficult to justify. However, my noble friend has put his 304 point in rather a different way. I have no doubt that the Board would consider very carefully whether they should make some use of agencies to conduct their investments. I should expect that in this sort of matter they would be prepared to learn by experience, and there is no reason why they should not work through different agencies if that proves the best way of handling their investments.
§ LORD REIGATEMy Lords, I am grateful for that reply and I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Clause 77 [Reserve scheme contributions]:
§
THE EARL OF GOWRIE moved Amendment No. 24:
Page 103, line 30, leave out ("neglect") and insert ("negligence").
§ The noble Earl said: My Lords, this is a drafting Amendment designed to achieve consistency with corresponding provisions in Schedule 1. My Lords, I beg to move.
§ LORD HOYMy Lords, it is all right to talk about consistency in drafting, but there is a distinct difference between the meaning of the two words and the Minister ought to have explained what he meant when he asked us to accept this Amendment. There is a great deal of difference between proving whether someone has neglected to do something, and proving whether there has been negligence. The Minister ought, in fairness, to have explained this point a little more to the House.
THE EARL OF GOWRIEMy Lords, I am sorry if I have not satisfied the noble Lord, Lord Hoy. I am not entirely clear why he is dissatisfied. Obviously, for the purposes of clarity, we want to achieve consistency in the provisions in the Bill. I am not quite clear what he finds objectionable in this Amendment.
§ LORD HOYMy Lords, I do not want to continue this discussion, because I shall be told by the Minister that we are at the Report stage and not in Committee. But there is a distinct difference between the word "neglect" and the word "negligence". I could not be more specific, and I am sorry if the Minister who has moved this Amendment cannot understand the difference.
§ LORD ABERDAREMy Lords, this being the Report stage, and as I have not yet spoken on this Amendment, may I come in on it? The word "negligence" is used in the Schedules, and it would seem wrong to use one word in the Bill and a different word in the Schedules. That is the simple answer.
§ On Question, Amendment agreed to.
§ 5.50 p.m.
§ LORD DIAMOND moved Amendment No. 25:
§
Page 104, line 12, at end insert—
("( ) Primary contributions paid by an earner for any year may be deducted from the amount of his emoluments to be assessed to income tax for that year.")
§ The noble Lord said: Frankly, my Lords, this is a matter which we have discussed before, but I have to return to it because I just cannot conceive that your Lordships' House would be content that such a gross injustice should be perpetrated if your Lordships were fully aware of what was involved. I realise that when this issue was last discussed there was a very small Committee—we all understand the reasons for that; noble Lords have many duties which take them elsewhere—and I think it is right that we should give this matter very careful consideration.
§ What is involved, as your Lordships probably know, is the question whether contributions to the Reserve Pension Scheme—what I may call the State scheme, as opposed to private enterprise occupational schemes—should be uniquely penalised at the cost of breaching well-established tax principles. I say "uniquely penalised" because what is at issue is whether an employee who, without any say by himself—it is not a question of his own free will, because it is the employer who decides what kind of pension scheme there shall be; whether there shall be an occupational scheme or, if not, the Reserve Scheme—is, under the Bill, compelled to make a contribution to the Reserve Pension Scheme, shall, alone, not have his contribution allowed for tax purposes. I say "alone" because, of course, the employer will get the tax allowance. In occupational schemes, the employer and the employee get their contributions allowed for tax purposes. Members of Parliament, who are legislating this Bill, have legislated their own pension scheme under which contribu- 306 tions by Members of Parliament are, as is the normal rule, allowed for tax purposes.
§ It is an established tax principle that, where you have a pension scheme, the build-up of the scheme is free of tax but the release of it—that is to say, the receipt of the pension—is taxable. That is going to apply in the occupational schemes; it is going to apply to the employer's contribution in the Reserve Scheme; but so far as the employee is concerned, he is being hit both ways. When he pays his contribution he pays tax on his full wages, not on the wages less the contribution, because, of course, a contribution to pension is merely a deferred wage. He pays tax on his full wages with no allowance for contribution to the pension; and when he receives the pension he pays tax on it again, if he is liable to tax.
§ That is what the Government propose. Quite frankly, I think the Government have gone out of their mind. It is an intolerable injustice, the most extraordinarily stupid political move, as I shall explain, and it is something which will rankle in the minds of employees week after week after week. It is to be compared only with the same abuse of power perpetrated by the Government in connection with the Industrial Relations Act which still rankles, where the same unique tax penalty was imposed, as a result of which nearly all unions have refused to register. That is a separate issue: I am just saying that that is paralleled only by the crass stupidity of the Government in what they now propose.
§
Obviously, a Government would not do a thing like this unless they had some reason. The noble Lord, Lord Aberdare, gave us the reasons on the occasion when we discussed this matter at Committee stage. He said that the Government wanted to have a 50–50 contribution; I shall explain that in a minute. He said—and I am reading from column 224 of the OFFICIAL REPORT of June 18:
These were the reasons why originally we had thought of a 50–50 split. As the noble Lord also said, it is true that we were not willing to penalise the employee by not giving an income tax rebate and, at the same time, not making compensation for it. It was for that reason that we went on to modify the split contribution to make it 1½ per cent. for the employee and 2½ per cent. for the employer.
307
So the stance of the Government is: "We do not want to be unfair by allowing no income tax rebate; we want to be fair by allowing, instead of an income tax rebate, compensation in the form of a favourable split."
§ Now let us examine the favourable split. The Government said that what they had in mind was 50–50, and they have now reduced it to 1½ per cent. and 2½ per cent., which is a total of 4 per cent. The 4 per cent. has never varied, so the 50–50 means that the Government had in mind each side, employer and employee, contributing 2 per cent. each. But now, instead of, or by way of compensation for, no income tax relief, it is to be varied so that the employee pays only 1½ per cent. instead of 2 per cent. and the employer pays 2½ per cent. instead of 2 per cent. I am inviting your Lordships to consider the premise of the argument; namely, that it would be reasonable to have a 50–50 split. It would not. It is not the case that that is the average in occupational schemes. The Government know that it is not. The Government have said so through the mouth of their Minister in the other place.
§ In fact, the reduced figure of 1½ per cent. is slightly more unfavourable to the employee than the average of all occupational schemes. So the reduced figure is already a disadvantage. The original figure would have been such an intolerable disadvantage that the Government would not have had a chance, of getting it through either House. So that is the first answer of the Government: that they have given it by way of compensation. I reject that utterly, and I invite your Lordships to reject it utterly, because out of the mouth of the Minister himself—I am talking about Sir Keith Joseph—it was stated, absolutely plainly, that the average percentage contribution is in fact less than the reduced figure of 1½.
§ Moreover, although one does not want to spend a lot of time on this subject, another reason why I think the Government have gone off their head is this. If you want to put the position right (because they have said that they want to make compensation for this lack of tax relief) as between the taxpayer, the contributor, the employee, and the Inland 308 Revenue, you do not achieve it by putting a burden on the back of the employer. He has done nothing to deserve this burden, even if the Government have gone mad. All that this variation proposes is that, in as much as the Government are deliberately giving a compensation for lack of tax relief—that is their intention—what happens? My Lords, £20 million is put on the backs of the employers and £20 million is relieved from the Inland Revenue. The Inland Revenue collect £20 million more; the employers pay £20 million more; the employee is, broadly, not affected. It is mere nonsense, and an insult to everybody's intelligence, to suggest that the way to deal with the imbalance between the taxpayer and the Inland Revenue is to put it on the backs of a third party; namely, the employer. In fact all that the Government are saying—the noble Lord, Lord Reigate, referred to this in his speech in Committee and he is aware of the circumstances—is that if we treat the occupational schemes and the Government Reserve Scheme equally, the occupational schemes will founder.
§ What the Government say is that the delicate balance will be altered. What they are suggesting is that the private enterprise occupational pension schemes cannot stand up against this State scheme unless the State scheme is penalised to the extent of over 40 per cent. That is the effect of the lack of tax relief: an over 41 per cent. penalty put on the State scheme. I know of no private enterprise insurance representative body who would be so ashamed, so defeatist, as to say, "We need this penalty on State enterprise for us to be enabled to compete." It is only the Government who say this. It is not the pension funds. They do not say this. They say, "We do not want this." It is not the Life Offices Association; they do not ask for this penalty to be put on the competition of State enterprise. It is only the Government which are running down private enterprise in this way by saying that they cannot stand up to a State scheme unless a penalty of over 41 per cent. is put on the backs of those who contribute to the State scheme.
§ I think I am going some way to satisfy, at all events my mind, if my argument is correct, that the Government have gone 309 off their head. The politics of this are stupid to a degree. I ask the noble Lord, Lord Aberdare, to consider what kind of effect this proposal in the Bill would have on a future Government who may be considering whether or not they should nationalise pension schemes generally. Here is a Tory Government saying deliberately that private pension schemes cannot stand up against a State scheme unless a penalty of 41 per cent. is put on the State scheme. What kind of argument is that for those who support private enterprise? And what kind of argument is it for those who believe that private enterprise has no price in pension insurance schemes? It is the Government who are making the argument—not I. I am saying with the Life Offices Association and with the Pensions Fund Association that this is a totally unnecessary penalty and is grossly inequitable. My noble and learned friend Lord Stow Hill referred to it on the last occasion—and he is renowed for his moderation of speech—as a "monstrous injustice". It is totally unnecessary, totally unfair and inequitable—and uniquely so.
§ I am hoping that your Lordships will do what they did in the Committee stage in the other place. They threw out this proposal and put in something which has the same effect as the Amendment that I am putting before your Lordships. That is what happened on Committee stage where the matter was considered in detail. As you know, every Standing Committee is representative of the numbers in the Chamber; that is to say, there would be a majority of Conservative M.P.s in the Standing Committee. Of course a number of them—I do not have the number in mind but it was a sufficient number—voted against the Government in order to remove this inequity. A number of Conservative M.P.s voted against the Government when it came to the Chamber itself—but not quite enough. I think the fact is that the Division was carried by a majority of four as against the basic 25 or 27 which would be the case if everybody voted on purely Party lines in another place.
§ I am appealing to your Lordships. The facts that I have given are not in dispute at all. It is the noble Lord, Lord Aberdare, who says—and I can read it out if your Lordships would wish it—that the real reason for this iniquity is not to 310 disturb the balance between the occupational pension schemes and the Reserve Pension Scheme. I appeal to your Lordships to say: "You must not treat one section of the community grossly unfairly; you must not upset well-established tax principles in seeking to bolster up private enterprise against State enterprise when the private enterprise does not need it and has not asked for it." I beg to move.
§ LORD REIGATEMy Lords, my noble friend knows my views. I should like to pay tribute both to him and to my right honourable friend the Secretary of State for the patience with which they have listened to me and have tried to persuade me that I am wrong in thinking that this is virtually the only blemish on a great Bill, a Bill of which the Conservative Government will be very proud and which will go down in history in the main features of its architecture as a remarkable piece of social progress.
The matter which we are discussing to-day breaches a fundamental principle of taxation. It is quite true that there is a precedent; but the precedent is a bad one. It was from the Finance Bill of 1965, when the Labour Government of the day abolished the tax exemption on contributions to the basic pension. I would ask your Lordships to bear with me very patiently if I quote some words from the Hansard of the other place of May 20, 1965:
This change"—the change I have mentioned—weakens, if it does not altogether undermine, the principle that because pensions are taxable the contributions towards them should not be taxed, so as to avoid double taxation. It also weakens the principle that pension contributions should get tax relief because they represent income which is postponed until retirement.Those words were the words of Mr. Paul Dean, now Under-Secretary of State in the Department which is producing this Bill. He went on to say:I am bound to ask … whether this represents the thin edge of the wedge and the Chancellor will say to us next year … that tax relief on contributions to occupational pension schemes and the like is now an anomaly and should be removed."—[OFFICIAL REPORT, Commons. 20/5/65; col. 1770.]His fears on the latter score were not necessary.In the case of 1965, the Government endeavoured to compensate by increasing 311 personal tax reliefs. And the Conservatives, including Mr. Paul Dean, argued, rightly, that it was a dangerous precedent; and it was dangerous, because it is the precedent which the present Government are now following. The only difference is that Mr. Dean's fears that it might be extended to occupational schemes were proved wrong and the present Government are now extending it to their own Reserve Pension Scheme. My Lords, the Secretary of State is using exactly the same means about which we complained eight years ago, and although the noble Lord, Lord Diamond, said that he thought the Government had gone out of their minds it is only fair to say that they had a precedent in what his Government did eight years ago.
When we discussed this point during the Committee stage I made a tentative suggestion that the alternative possibility was that if the Government were going to penalise the employees on this matter, they should also penalise the employers and make their contribution equally non-tax exempt. I am not quite sure about the morality of it, but I feel that if the Government are going to commit one inequity they might extend it to both parties, which might then make it faintly equitable. What I was really suggesting was that if it is the intention of the Secretary of State, and his wish, to make the Reserve Pension Scheme less eligible and less attractive than occupational schemes —in effect, to outlaw it—he should do so in a rather more equitable manner as between the two contributing parties. However, that suggestion has not found favour in my noble friend's eyes—perhaps he thinks it might create yet another dangerous precedent. But Governments, as I have shown, are not necessarily bound by precedent, or even by their own past words.
I find myself in some difficulty when I see the Opposition Amendment. I think there is something to be said for the theory that at this late stage in the progress of the Bill, when it is almost law, it would mean renegotiation with very many people. But I certainly cannot support the Government in what they are doing in this matter. The view of the Secretary of State, as I understand it, is that the end justifies the means. I do not accept that, when the means are as 312 inequitable as they are in this case. As the noble Lord, Lord Diamond, also pointed out, considered opinion in the insurance world does not think that this is necessary, and that is the position so far as I have been able to ascertain from what has been stated in public and from private contacts that I have made.
I should like to remind the Secretary of State, through my noble friend, that although this scheme will go through, there are many in the Conservative Party who think it wrong. I think it fair to say that those of us on both sides of the House who interest ourselves in matters of social security—apart from what I might call the "normal pensioneering" in which we all indulge from time to times—represent a fairly select minority. It is a very technical subject. But the provision in the Bill was defeated in Committee, with Conservative support; and of those whose main interest in another place is in matters of social security, on the Conservative Benches hardly one supported the Secretary of State, and not one noble Lord in this House has spoken in favour of it. Those who have spoken against include the very weighty opinion of a former Minister of Pensions.
§ BARONESS WHITEMy Lords, in recent days I have been too deeply immersed in water to have had the opportunity of following this Bill closely. But I realised that this Amendment was likely to be taken at about this time and I felt that I should try to be in my place simply to say that this is one of the issues on which I think that the greatest feeling has been roused. It is a matter of justice and equity. The case has been so admirably put by my noble friend Lord Diamond and by the noble Lord, Lord Reigate, that I do not wish to delay your Lordships by rehearsing the arguments again. But I thought it only right that one should express the feeling held by many, including many of the women's organisations with which I am associated, that this is a most unjust provision. It would be very regrettable if it went forward unamended and, having heard the arguments put in your Lordships' House, I hope that even at this late hour your Lordships may feel disposed to emphasise to the Government that this is a most serious error of judgment on their part.
§ 6.17 p.m.
§ LORD ABERDAREMy Lords, I was rather surprised, in a way, that the noble Lord, Lord Diamond, should return to the charge on this matter, because we had a debate during the Committee stage on this; we had a Division, and the Government's view was supported in that Division. We now return to an Amendment which, though differently worded, has precisely the same effect as the last Amendment on the Committee stage. All the arguments have been heard before, and nothing that the noble Lord, Lord Diamond, said to-day was in any way different from what he said in Committee. Nor will my reply be very much different, though I may be able to express myself more clearly. I should also say to your Lordships that in fact this is very much a matter about which this House should tread delicately. It is entirely a matter of taxation policy and one in which the other place has rather a deeper interest and responsibility than we have. But I will try to follow the noble Lord, Lord Diamond, through the sequence of points that he made to-day.
The noble Lord began by referring to tax principles. The Reserve Pension Scheme is an entirely new departure and it does not seem to me surprising that perhaps policies apply to it which are different from those that have applied hitherto. My noble friend Lord Reigate —although I realise that he does not agree with Government policy in this matter—himself referred to the fact that there was a precedent, and that to save administrative costs, tax relief on employees' National Insurance contributions was supplanted by a lump sum addition to personal allowances. In other words, in that case the employee was compensated elsewhere in the tax arrangements for the withdrawal of tax relief on his National Insurance contribution. In the present case the compensation comes from the employer or, if one carries the analysis a little further, from the employer and the Inland Revenue by way of tax relief on the employer's contribution. But again it is the employee who is compensated in this way. I do not accept that our proposals can be faulted by reference to traditional tax principles.
My noble friend Lord Reigate returned to his point that if we were not allowing tax relief on the employee's contribution 314 we should not allow it on the employer's contribution either. But we do not think that it would be fair to lay a further burden on the employer, who is already paying 2½ per cent., as against the employee's 1½ per cent. The noble Lord, Lord Diamond, asked me to justify the fifty-fifty split in the 4 per cent. contribution which it had originally been our idea to put forward. It has been argued that general practice in occupational pension schemes would justify levying the Reserve Scheme contribution as to only three-eighths from the employee, even though the employee received tax relief on his share. This we do not accept. It seems to us that there is a very real difference between, on the one hand, arrangements which have been voluntarily entered into, following negotiations between employers and employees, and, on the other hand, a contribution compulsorily imposed.
Your Lordships will have observed that under the recognition requirements, in the case where occupational schemes are to be tested by reference to their contributions under a money purchase arrangement the employer is to be required to pay no more than half the total contribution—2.5 per cent. of relevant earnings out of the minimum total contribution of 5 per cent. One really cannot argue that because the total contributions of employers and employees to occupational schemes at present bear a certain relationship to each other that same relationship could properly be embodied in a statutory requirement—any more than one could argue that because some employers run non-contributory schemes all employers should be obliged to do so. Under voluntary arrangements there are opportunities to settle these matters to the satisfaction of employers and employees as part of the total remuneration offered. A requirement statutorily imposed does not provide the same opportunities of flexibility and adaptation to the particular wage structure.
Our departure from the 50–50 basis does of course impose an additional burden on the employer, as the noble Lord said, but we regard this as justified, taking into account the fact that it is ultimately the employer who has to decide to take his employees out of the Reserve Scheme and put them into a recognised occupational scheme.
315 The noble Lord went on to speak about a penalty of 40 per cent. being imposed on the Reserve Scheme as against an occupational pension scheme. This is not the full picture, however, because it is essential to our case that the employee's contribution to the Reserve Scheme is topped up not by tax relief but by an extra contribution from his employer. It would be quite wrong to suppose that 40 per cent. is the measure of the tax relief advantage given to the occupational scheme as a whole in comparison with the Reserve Scheme, because this 40 per cent. is applied only to a minority part of the scheme's contribution income. Under the Reserve Scheme, as under occupational schemes, the employer's contribution will attract tax relief. In considering whether tax relief ought to be given on employee's Reserve Scheme contributions we are discussing a tax relief which would amount to something like £25 million a year in relation to total Reserve Scheme contributions of the order of £300 million. So that, on these figures, in relation to the total contribution income of the Reserve Scheme, tax relief on the employee's contributions would represent less than 10 per cent.
Let me summarise what the Government's position is, and how we are very much in control of our own heads and have by no means gone off them. We had first to make a judgment on the scale on which the Reserve Scheme should operate, taking account of the rate of contribution that could reasonably be charged. This enabled us to strike a balance between a scheme that would not provide reasonable benefits and one that would be so attractive that it would discourage the development of occupational schemes. We calculated that the Reserve Scheme could be financed by a total contribution of 4 per cent. We then had to make a further decisison on how that 4 per cent. total should be split between the employer and the employee, and this entailed finding a further nice balance again to avoid the danger of discouraging the development of occupational schemes; and this balance we believe to be struck at a split of 1½ per cent. for the employee and 2½ per cent. for the employer. An employer who may be contemplating an occupational scheme (as we hope that many will) knows that if he relies on the Reserve 316 Scheme all his employees, whether or not they are taxpayers, will have to contribute 1½ per cent. of their relevant earnings. He could therefore calculate that for any occupational scheme he had in mind a contribution of 2 per cent., subject to tax relief, should be acceptable to his employees—or even, indeed, a higher contribution if he could convince them of the extra benefits provided by the occupational scheme. This gives him the flexibility to propose an attractive occupational scheme.
If, however, this Amendment were carried and tax relief were allowed on the employee's contribution, this would reduce that contribution, at least for those who were taxpayers, to something nearer I per cent. How much more difficult it would then be for an employer to propose an occupational scheme in claiming a contribution from the employee of 2 per cent. or higher! To accept this Amendment would upset completely the delicate balance between the Reserve Scheme and occupational schemes. It would result in the discouragement of occupational schemes, and would probably deprive millions of workers of the opportunity of an occupational scheme. We have deliberately taken into account the absence of tax relief on the employee's contribution by putting it at 1½ per cent. compared to the employer's 2½ per cent. We see considerable advantage in the fact that all employees will be on the same basis, and there will be no advantage to those who pay tax over the lower paid who do not.
I cannot repeat more strongly, my Lords, that one of our main purposes in this Bill is to encourage the maximum development of occupational pension schemes which can bring benefits to their members closely related to their needs. The Reserve Scheme is what its name implies—a fall-back scheme for those without an occupational scheme. To alter the balance now between these two types of scheme to the advantage of the Reserve Scheme would be contrary to the whole purpose of the Bill and would be unfair to employees— many millions of them. I ask your Lordships once main not to agree with this Amendment.
§ LORD JACQUESMy Lords, I should like to make just two points. It has been stated that in 1965 the previous Government laid down a precedent. I think 317 there is a great deal of difference between what was done then and what is being done now. First of all, when the contributions to the ordinary pension were disallowed everybody concerned was given as compensation an increase in the personal allowance. Since everybody was affected, it was reasonable compensation. The ordinary scheme is not in competition with the vocational schemes. Therefore, it might have been an error—perhaps a tactical error—but it was not an injustice. But this is an injustice.
The Minister has said that the Government started their thinking on the basis of 50–50. But this is thinking of a number. Surely it would have been more reasonable if the Government had started their thinking on the same basis as the vocational schemes. The Minister in the other place has admitted that the contributions made by employees to the vocational schemes are certainly not more than 37½ per cent. So that the employee in the vocational scheme is paying not more than 37½ per cent. and is getting the tax allowance. But the Government are proposing that in this Reserve Scheme which is in competition with the vocational schemes the employee shall pay again 37½ per cent. but shall not get the tax allowance. This is a grave injustice and, at the very least, it is a grave psychological error.
§ 6.30 p.m.
§ LORD DIAMONDMy Lords, I believe I have the privilege of replying to the debate since I moved the Amendment. I am grateful to my noble friend, who has saved me the task of explaining what I am sure is well known to your Lordships: that in the days before computers, as a matter of administrative convenience and of saving the taxpayers' money on wasteful administration, it was decided to exchange tax for tax. Instead of the separate assessment of each person's contribution, which is a basic figure throughout the National Insurance scheme, there was a lump sum added on to the personal allowance which gave broadly the same result as a tax relief, being equivalent to the tax relief lost in the "long-way-round" method which had been previously used. Administrative costs saved, the tax position unaltered, no third party brought in—those were the reasons why that was done, in order to save the wasteful 318 expenditure of taxpayers' money. That is not a precedent or anything like a precedent for what we are saying, with justification, is a unique injustice against one particular category alone, is a breach of tax principles and is also foolish in the sense that it does not achieve what it set out to achieve because it does not help the individuals in the same way as it helps the Inland Revenue. It saves £20 million for the Inland Revenue which it puts on the backs of employees. I believe the noble Lord, Lord Aberdare, wanted to add something.
§ LORD ABERDAREMy Lords, I just wanted to make the point, of which I am sure the noble Lord is aware, that the compensation in 1969 by means of increased personal allowances did not benefit those who were not taxpayers; so there was an injustice there, too.
§ LORD DIAMONDMy Lords, the noble Lord has come back to that point again, so I must deal with it. The noble Lord is now saying that one of the defects of my Amendment is that a proposal to give tax relief does not help those who in any event pay no tax at all. That is perfectly true and it is true throughout this system. It has nothing to do with this particular case. It is of the quality of all tax systems where you have a threshold below which no tax is paid. If the noble Lord still thinks it is a fair argument to use, let me tell him what it is that he wants—he wants people to enter into the occupational schemes. That is what he is wanting: he wants them to go into occupational schemes instead of entering the Reserve Scheme. In the occupational schemes which the Minister wants and the Government want, those employees who pay will get tax relief. The employees who pay no tax will get no tax relief in the scheme which the Government themselves are propagating.
This is penalising the Reserve Scheme so that the occupational schemes shall flourish. It is really a very odd argument to use, and it hits back at the Minister, because it is a fundamental condition of our taxation system—I dealt with this at Committee stage and I did not want to detain your Lordships by referring to it this evening. And the remedy does not lip with an Amendment 319 to this Bill or with a pension rearrangement. The remedy lies with having a minimum wage so that everybody gets at least an amount of income which is equal to the threshold of taxation and therefore starts to pay a little tax. The minimum wage is not for us to decide: it is not relevant to this Bill. However, this is merely explaining to the Minister that he cannot use the argument about tax structure to affect this particular Amendment. So the Minister is now really falling back on the argument that you cannot compare the 33 per cent.—incidentally, my noble friend was right in saying "less than 37 per cent."; it is in fact 33 per cent.—which is the proportion which the employee is called upon to bear in the average occupational scheme, with the 50–50 which is the sole justification for the whole of this argument. In the Government's mind, you cannot compare those two because one is voluntary and the other is compulsory.
The noble Lord gave two arguments. The first was that there were often arrears of service taken into account in the voluntary schemes. Of course that is so. Of course, when an employer starts a new occupational scheme he frequently makes an extra contribution himself in order to provide for arrears of service worked before the scheme had started. Thus, the employer's extra contribution provides for back service as well as current service so as to give the benefit of pension rights to those employees whom he wishes to benefit. That is a further benefit to the employee. So if you do want to compare these two, then all you are saying is that the contribution should be not 33 per cent. but even less, because the employee in the Reserve Scheme will never—I repeat, "never"—get any benefit in respect of pre-scheme service, or back service. The second argument which the noble Lord used has escaped me for the moment. Perhaps he would be good enough to refresh my memory on that.
§ LORD ABERDAREMy Lords, I was talking about the total contribution of employers and employees to occupational schemes, because at the present time they 320 bear a certain relationship to each other, and that therefore the same relationship should accordingly be a statutory requirement.
§ LORD DIAMONDThe noble Lord was making comparisons between voluntary schemes and the compulsory scheme, which is what the Reserve Scheme is. Unfortunately, I did not have time to make a note of it while he was speaking, so I will not detain the House any longer on that issue.
The noble Lord then brought in, which I much regretted, a most selective argument about the £25 million of the total contributions. This is merely a way of comparing like with unlike. It is a very familiar exercise. I did not think that the noble Lord's case was so weak that he would need to rely on arguments of that kind. The £25 million is what is expected to be saved for all the taxpayers, some of whom will be paying at the full rate and some of whom will not. Some of them will be paying no tax at all. But the comparison that matters is the comparison the employee will make when he says to his union officer who is going to negotiate with the firm and endeavour to persuade the firm to set up either an occupational scheme or enter the State scheme, "If I, the employee, go into an occupational scheme, I get that amount of pension and it costs me my contribution, less tax; and if I go into the State Reserve Scheme I get the same amount of pension, it costs me the same amount of contribution on average and I get no tax relief." That is the comparison that is going to be made by each individual employee, no doubt acting through his or her organisation. So we are still left with the fact that in order to penalise the State Reserve Scheme the Government have put a penalty on it so that the private schemes can compete with it. As my noble friend said, there was no question of competition in 1965; that issue was not involved at all. It is a matter of bolstering up what the noble Lord alleges to be incompetent private enterprise occupational pensions schemes putting a penalty of 40 per cent. on the State Reserve Scheme. I should think your Lordships would want to reject an argument like that out of hand.
§ 6.41 p.m.
§ On Question, Whether the said Amendment (No. 25) shall be agreed to?
§ 6.48 p.m.
§ Clause 81 [Reserve scheme widow's pension]:
THE EARL OF GOWRIEMy Lords, this is a drafting Amendment designed to bring cross references into line with Amendments made earlier. I beg to move Amendment No. 26.
§
Amendment moved—
Page 109, line 45, leave out from ("section") to end of line 46 and insert ("77(5) or under Schedule 1 to this Act as applied by section 77(4)").—(The Earl of Gowrie.)
§ Clause 84 [Questions arising under the basic scheme]:
322§ Their Lordships divided: Contents, 33; Not-Contents, 78.
321| CONTENTS | ||
| Arwyn, L. | Henderson, L. | Shackleton, L. |
| Beaumont of Whitley, L. | Hoy, L. | Shannon, E. |
| Beswick, L. | Hughes, L. | Shinwell, L. |
| Blyton, L. | Jacques, L. [Teller.] | Slater, L. |
| Brockway, L. | Leatherland, L. | Stocks, B. |
| Diamond, L. | Llewelyn-Davies of Hastoe, B. | Stow Hill, L. |
| Garnsworthy, L. | Phillips, B. | Strabolgi, L. [Teller.] |
| George-Brown, L. | Rhodes, L. | Taylor of Mansfield, L. |
| Granville of Eye, L. | Ritchie-Calder, L. | White, B. |
| Greenwood of Rossendale, L. | Royle, L. | Winterbottom, L. |
| Hale, L. | Segal, L. | Wynne-Jones, L. |
| NOT-CONTENTS | ||
| Aberdare, L. | Denham, L. [Tellers.] | Merrivale, L. |
| Aberdeen and Temair, M. | Drumalbyn, L. | Monck, V. |
| Albemarle, E. | Dundee, E. | Monk Bretton, L. |
| Alexander of Tunis, E. | Eccles, V. | Mowbray and Stourton, L. |
| Amherst of Hackney, L. | Emmet of Amebrley, B. | Napier and Ettrick, L. |
| Atholl, D. | Falkland, V. | Newall, L. |
| Auckland, L. | Ferrers, E. | Oakshott, L. |
| Balerno, L. | Ferrier, L. | Rankeillour, L. |
| Balfour, E. | Gainford, L. | St. Aldwyn, E. [Teller.] |
| Barnby, L. | Goschen, V. | St. Just, L. |
| Berkeley, B. | Gowrie, E. | Sandford, L. |
| Bourne, L. | Grenfell, L. | Sandys, L. |
| Brabazon of Tara, L. | Grimston of Westbury, L. | Selkirk, E. |
| Brook of Cumnor, L. | Hailes, L. | Somers, L. |
| Brooke of Ystradfellte, B. | Hailsham of Saint Marylebone, L. (L. Chancellor.) | Strathclyde, L. |
| Coleraine, L. | Strathcona and Mount Royal, L. | |
| Colville of Culross, V. | Hylton-Foster, B. | |
| Conesford, L. | Killearn, L. | Sudeley, L. |
| Courtown, E. | Kindersley, L. | Swansea, L. |
| Cowley, E. | Kinloss, Ly | Templemore, L. |
| Craigavon, V. | Landerdale, E. | Tenby, V. |
| Crathorne, L. | Limerick, E. | Terrington, L. |
| Crawshaw, L. | Long, V. | Tweedsmuir of Belhelvie, B. |
| Croft, L. | Lothian, M. | Vivian, L. |
| Cromartie, E. | Loudoun, C. | Waldegrave, E. |
| Cullen of Ashbourne, L. | Lyell, L. | Windlesham, L. (L. Privy Seal) |
| Daventry, V. | Margadale, L. |
On Question, Amendment agreed to.
§ is a consequential Amendment. I spoke to this on Amendment No. 1.
§
Amendment moved—
Page 113, line 44, leave out ("or (9)") and insert ("(9) or (10)").—(The Earl of Gowrie.)
§ On Question, Amendment agreed to.
THE EARL OF GOWRIEMy Lords, I beg to move Amendment No. 28. I spoke to the substantial point on this on Amendment No. 11, a technical Amendment.
§
Amendment moved—
Page 114, line 25, after ("Act") insert ("and any other Act of the same session in which this Act is passed").—(The Earl of Gowrie.)
§ On Question, Amendment agreed to.
323§ Clause 91 [Information to be given to employees]:
§
THE EARL OF GOWRIE moved Amendment No. 29:
Page 120, leave out line 20.
§ The noble Earl said: My Lords, with the leave of the House I should like to move Amendment No. 29 and to speak to Amendments Nos. 29 and 80 at the same time. Clause 91(3) enables the Secretary of State to make regulations requiring employers to inform their employees whether they are to be members of a recognised occupational pension scheme or the State Reserve Scheme. The intention is that such information should be given before the appointed day from which employers must be in one or other of these types of scheme. The intention is that the day appointed should be April 6, 1975, but the reference in line 20 to "any time before the appointed day" is not only unnecessary but also could cause confusion in the context of the Bill where there will be different appointed days for different purposes. The desired effect will be simply achieved by bringing Clause 91(3) into force by an appointed day Order before Parts II and III of the Bill are made generally operative. I beg to move.
§ On Question, Amendment agreed to.
§ Clause 93 [Priority of certain debts in bankruptcy, etc.]:
THE EARL OF GOWRIEMy Lords, this Amendment again concerns the Northern Ireland application, to which I spoke on Amendment No. 19. I beg to move Amendment No. 30.
§
Amendment moved—
Page 123, line 38, at end insert ("or the Northern Ireland Ministry").—(The Earl of Cowrie.)
§ On Question, Amendment agreed to.
§ 6.52 p.m.
§
Amendment moved—
Page 124, line 32, leave out ("subsection (1) above") and insert ("Schedule 24 to this Act").—(The Earl of Gowrie.)
§ On Question, Amendment agreed to.
324§ Clause 95 [Further provisions as to Northern Ireland]:
THE EARL OF GOWRIEMy Lords, this is a technical Amendment to correct an omission. I beg to move Amendment No. 32.
§
Amendment moved—
Page 127, line 27, after ("(5)") insert ("88").—(The Earl of Gowrie.)
§ On Question, Amendment agreed to.
THE EARL OF GOWRIEMy Lords, with the leave of the House I should like to speak to Amendments Nos. 33 and 35 together. These are technical Amendments to correct wrong cross-references. I beg to move.
§
Amendment moved—
Page 127, line 29, leave out ("13 and 14") and insert ("and 13 to 15").—(The Earl of Gowrie.)
§ On Question, Amendment agreed to.
THE EARL OF GOWRIEMy Lords, with the leave of the House I should like to speak to Amendments Nos. 34 and 36 together. They are drafting Amendments connected with the Northern Ireland application. I beg to move.
§
Amendment moved—
Page 127, leave out lines 38 to 40.—(The Earl of Gowrie.)
§ On Question, Amendment agreed to.
§
Amendment moved—
Page 127, line 41, leave out ("7") and insert ("8").—(The Earl of Gowrie.)
§ On Question, Amendment agreed to.
§ Clause 97 [Parliamentary control of orders and regulations]:
§ Amendment moved—
§
Page 130, line 2, at end insert—
("(d) regulations or orders made by the Northern Ireland Ministry").—(The Earl of Gowrie.)
§ On Question, Amendment agreed to.
§ Clause 98 [Financial provisions]:
THE EARL OF GOWRIEMy Lords, this is a technical Amendment designed 325 to bring the wording to conformity with paragraph 7(b) of Schedule 19. I beg to move Amendment No. 37.
§
Amendment moved—
Page 130, line 35, leave out from ("recovered") to end of line 37 and insert ("by the Secretary of State in pursuance of regulations under paragraph 7(b) of Schedule 19 to this Act").—(The Earl of Gowrie.)
§ On Question, Amendment agreed to.
§ Clause 99 [Interpretation]:
§ Amendment moved—
§
Page 135, line 4, at end insert—
("( ) Any reference in this Act, in relation to any enactment of the Parliament of the United Kingdom, to the corresponding Northern Ireland legislation is a reference to, or to any provision of, an Act of the Parliament of Northern Ireland, or any order made under or having the same effect as such an Act, for the time being in force corresponding to that enactment.").—(The Earl of Gowrie.)
§ On Question, Amendment agreed to.
§ Clause 100 [Transitional provisions; minor and consequential amendments; repeals]:
THE EARL OF GOWRIEMy Lords, I beg to move Amendments Nos. 39 and 40 together. They are concerned with Northern Ireland application. I beg to move.
§ Amendments moved—
§ Page 135, line 38, leave out ("the enactment") and insert ("or an Order made under, or having the same effect as, an enactment of that Parliament, the enactment or Order").
§ Page 135, line 44, leave out ("an order made under, or having the same effect as") and insert ("any provision of an Order made under").—(The Earl of Gowrie.)
§ On Question, Amendments agreed to.
§ Schedule 2 [Levy of Class 4 Contributions by Inland Revenue]:
THE EARL OF GOWRIEMy Lords, I have spoken to this Amendment with Amendment No. 1. It is consequential. I beg to move.
§
Amendment moved—
Page 144, line 17, leave out ("or (9)") and insert ("(9) or (10)").—(The Earl of Gowrie.)
§ On Question. Amendment agreed to.
326§ Schedule 7 [The Attendance Allowance Board; Miscellaneous Provisions as to Attendance Allowance]:
THE EARL OF GOWRIEMy Lords, this Amendment is required to ensure that the existing entry relating to the Attendance Allowance Board in Part II of Schedule 1 to the House of Commons Disqualification Act 1957 (bodies of which all members are disqualified for membership of the House of Commons) continues under the Bill. The existing entry was inserted by the National Insurance Act 1970. I beg to move.
§ Amendment moved—
§
Page 153, line 17, at end insert—
("1A. The House of Commons Disqualification Act 1957 shall continue with the Attendance Allowance Board included in Part II of Schedule 1 to the Act (bodies of which all members are disqualified from membership of the House of Commons) at the place where it was inserted in the Schedule by Schedule 2 to the National Insurance Act 1970.").—(The Earl of Gowrie.)
§ On Question, Amendment agreed to.
§ Schedule 12 [The National Insurance Advisory Committee]:
THE EARL OF GOWRIEMy Lords, this is a technical Amendment. It amends Part III of Schedule 12, regulations not requiring prior submission to the N.I.A.C., by deleting the reference to Section 2(3) of the National Insurance Act 1969. I beg to move.
§
Amendment moved—
Page 166, line 45, leave out from ("Act") to end of line 46.—(The Earl of Gowrie.)
§ On Question, Amendment agreed to.
§ Schedule 13 [Adaptation of Part 1, and Other Provisions for Northern Ireland]:
THE EARL OF GOWRIEMy Lords, with the leave of the House, I beg to move Amendments Nos. 44 and 45 together, and to speak in addition to Amendments Nos. 47, 48, 49, 50, 51 and 52. These are technical Amendments relating to the Northern Ireland application. I beg to move.
§ Amendments moved—
§ Page 167, line 27, after ("49(1)") insert ("other than that section and this Schedule)").
§ Page 167, line 30, at beginning insert ("Subject to the following provisions of this Schedule").—(The Earl of Gowrie.)
§ On Question, Amendments agreed to.
327THE EARL OF GOWRIEMy Lords, with the leave of the House, I should like to sneak to Amendments Nos. 46 and 57 together. They are technical Amendments again relating to the Northern Ireland application. I beg to move.
§
Amendment moved—
Page 167, line 36, in the first column, after ("Board") insert ("(except in paragraph 1A of Schedule 7").—(The Earl of Gowrie.)
§ On Question, Amendment agreed to.
§ 7.0 p.m.
THE EARL OF GOWRIEMy Lords, with the leave of the House I beg to move Amendments Nos. 47 to 52 en bloc. I have already spoken to them.
§ Amendments moved—
§ Page 167, line 44, in the first column, leave out ("and section 49")
§ Page 167, line 46, in the first column, leave out ("(except in section 49)")
§ Page 168, line 17, in the first column, leave out ("(except in section 49)")
§ Page 168, line 26, in the first column, leave out ("section 49")
§ Page 168, line 33, in the first column, leave out ("in section 49")
§ Page 168, line 36, in the first column, leave out ("(except in section 49)").—(The Earl of Gowrie.)
§ On Question, Amendments agreed to.
THE EARL OF GOWRIEMy Lords, I beg to move Amendment No. 53 and at the same time I wish to speak to Amendment No. 55. This is a Northern Ireland application.
§ Amendment moved—
§
Page 168, leave out lines 47 to 49 and insert—
("(3) In section 1(6)—
§ On Question, Amendment agreed to.
THE EARL OF GOWRIEMy Lords, I beg to move Amendment No. 54. I spoke to this Amendment when dealing with Amendment No. 11.
§ Amendment moved—
§
Page 169, leave out lines 4 to 6 and insert—
(" 5. In section 14(6)—
328
§ On Question, Amendment agreed to.
THE EARL OF GOWRIEMy Lords, I spoke to this Amendment with Amendment No. 53. I beg to move Amendment No. 55.
§ Amendment moved—
§
Page 169, leave out lines 37 and 38 and insert—
("13. In section 45—
§ On Question, Amendment agreed to.
THE EARL OF GOWRIEMy Lords, this is a Northern Ireland application. I beg to move Amendment No. 56.
§
Amendment moved—
Page 169, line 42, leave out (""the Old Cases Act"").—(The Earl of Gowrie.)
§ On Question, Amendment agreed to.
§ Amendment moved—
§
Page 170, leave out lines 1 and 2 and insert—
("16. In Schedule 7—
§ On Question, Amendment agreed to.
THE EARL OF GOWRIEMy Lords, this technical Amendment clarifies and 329 simplifies the existing wording. I beg to move Amendment No. 58.
§ Amendment moved—
§
Page 170, line 11, leave out from beginning to ("to") in line 12 and insert—
("(2) The reference in sub-paragraph (1)").—(The Earl of Gowrie.)
§ On Question, Amendment agreed to.
§ Schedule 16 [Requirements as to preservation of benefit under occupational pension schemes]:
THE EARL OF GOWRIEMy Lords, this is a technical Amendment, designed to clarify the meaning of this provision without in any way altering its effect. It puts beyond any doubt the fact that the preservation requirements will apply not only to the long service benefit payable to the member himself on his retirement but also to benefits payable in respect of him after he has attained normal pension age; that is to say, cover for death after retirement. I beg to move Amendment No. 59.
§ Amendment moved—
§
Page 174, line 39, leave out from ("benefits") to ("retirement") in line 45 and insert—
("which will be payable under the scheme, in accordance with legal obligation, to or in respect of a member of the scheme on the assumption that he remains in relevant employment until he attains normal pension age;
and in paragraph (b) above "benefits" means").—(The Earl of Gowrie.)
§ On Question, Amendment agreed to.
§ THE EARL OF GOWRIE moved Amendment No. 60:
§
Page 176, leave out lines 12 to 15 and insert—
("(2) Subject to the following sub-paragraph, short service benefit must be made payable as from normal pension age or, if in the member's case that age is earlier than 60, then from the age of 60.
(2A) Short service benefit payable on or in respect of the member's death after normal pension age must be made payable as from his death or within such time thereafter as long service benefit payable on or in respect of his death would be payable.
(2B) In applying sub-paragrahs (2) and (2A) above, no regard is to be had to the operation of any scheme rule, taking effect at any time after termination of the member's pensionable service, as to what is normal pension age under the scheme.")
§ The noble Earl said: My Lords, this is a technical Amendment designed to clarify the meaning of this provision in 330 three respects. First, it removes an ambiguity in the paragraph as drafted at present as to the age at which short service benefit must be payable where normal pension age is earlier than age 60. In these cases the benefits need not be put into payment until age 60. Secondly, it puts beyond any doubt the fact that only the personal element of a short service benefit may be deferred in this way: if a short service member does between normal pension age and age 60 any death benefit included in the short service benefit must be payable within the same period of death as in the case of a long service benefit. Thirdly, the opportunity has been taken to ensure that even where a scheme rule is changed while an employee is still a member of the scheme it will not affect his normal pension age unless it actually takes effect while he is still a member. I beg to move Amendment No. 60.
§ On Question, Amendment agreed to.
THE EARL OF GOWRIEMy Lords, this is a technical Amendment designed to remove any implication that paragraph 16 might override paragraph 17 and thus prevent schemes even from writing off arrears of benefit after six years or more. I beg to move Amendment No. 61.
§ Amendment moved—
§
Page 180, line 17, leave out from beginning to ("provision") in line 20 and insert—
("16.—(1) Except so far as permitted by this paragraph, and subject to paragraph 17 below, a scheme must not contain any provision for forfeiture of short service benefit.
(2)")—(The Earl of Gowrie.)
§ On Question, Amendment agreed to.
THE EARL OF GOWRIEMy Lords, I beg to move Amendments No. 62 and 63 together. Paragraph 17 restricts the circumstances in which occupational pension schemes may write off arrears of short service benefit (that is to say preserved pensions) because of failure to claim or to comply with a scheme formality. This is to protect the member or his dependant who has lost touch with his scheme. I beg to move.
§ Amendments moved—
§ Page 181, line 13, leave out ("the person's failure") and insert ("failure by him or any other person")
§ Page 181, line 15, leave out ("person's failure") and insert ("failure by him or any other person").—(The Earl of Gowrie.)
§ On Question, Amendments agreed to.
331§ Schedule 21 [Part IV of National Insurance Act 1965]:
THE EARL OF GOWRIEMy Lords, I beg to move Amendments Nos. 64 to 69 en bloc. These are technical Amendments. The definition of "contributions" in Section 64 of the National Insurance Act 1965 (as adapted by the Bill) is transferred to Section 81(3)(a) of the National Insurance Act 1965, which is its only relevant context. I beg to move.
§ Amendments moved—
§ Page 193, leave out lines 17 to 23.
§ Page 193, line 44, leave out from ("Act") to end of line 45.
§
Page 197, line 33, at end insert—
("(c) in subsection (3)(a) after "contributions" insert "under Part I of the Social Security Act or contributions or premiums under Part III of that Act")
§ Page 198, leave out lines 10 to 15.
§ Page 198, line 32, leave out from ("Act") to end of line 33.
§ Page 209, line 35, at end insert—("under Part I of the Social Security Act or contributions or premiums under Part III of that Act").—(The Earl of Gowrie.)
§ On Question, Amendments agreed to.
THE EARL OF GOWRIEMy Lords, I spoke to this Amendment when dealing with Amendment No. 11. I beg to move Amendment No. 70.
§
Amendment moved—
Page 210, leave out lines 18 to 22.—(The Earl of Gowrie.)
§ On Question, Amendment agreed to.
§ Schedule 25 [Adaptation of certain provisions of Part IV for Northern Ireland]:
THE EARL OF GOWRIEMy Lords, I beg to move Amendments No. 71 to 74 en bloc and at the same time to speak to Amendment No. 77. This again is the Northern Ireland application.
§ Amendments moved—
§ Page 220, line 15, at beginning insert ("Subject to the following provisions of this Part of this Schedule")
§ Page 220, line 18, after second ("of insert ("this Part of").
§ Page 220, line 24, leave out ("49") and insert ("44(4)").
§ Page 221, line 19, at end insert ("and in its application to regulations or orders made otherwise than by that Ministry that subsection shall have effect as if the words "(other than paragraph 4 of Schedule 10) or of Part IV of the former principal Act" were omitted.").—(The Earl of Gowrie.)
§ On Question, Amendments agreed to.
332§ 7.10 p.m.
§ LORD ABERDAREMy Lords, this has a Northern Ireland application. I beg to move Amendment No. 75.
§
Amendment moved—
Page 221, line 23 at end insert ("and after 'in subsection (4) insert', in paragraph (b), for fails' substitute 'refuses or neglects' and".").—(Lord Aberdare.)
§ On Question, Amendment agreed to.
§ LORD ABERDARE moved Amendment No. 76:
§
Page 221, line 31, at end insert—
("(bb) in paragraph 5(4)(a) omit "or in Scotland a citation" ").
§ The noble Lord said: My Lords, I think that the noble Lord, Lord Hoy, may be relieved to hear that this is a technical Amendment which corrects a reference to a Scots law which is included in this Schedule. I beg to move.
§ On Question, Amendment agreed to.
§ LORD ABERDAREMy Lords I have spoken to this Amendment with Amendment No. 71. I beg to move.
§ Amendment moved—
§
Page 221, line 41, at end insert—
("(ee) in paragraph 12 for "paragraphs 7 to 10" substitute "paragraphs 7 to 9"").—(Lord Aberdare.)
§ On Question, Amendment agreed to.
§ LORD ABERDAREMy Lords, This has a Northern Ireland application. I beg to move Amendment No. 78.
§ Amendment moved—
§
Page 222, leave out lines 5 to 11 and insert—
("(c) in paragraph 5 for "Schedule 11" substitute "Schedule 9";
(d) in paragraph 6—
(e) in paragraph 7—
§ LORD HOYMy Lords, what we are doing here is removing lines 5 to 11 and replacing them by I cannot remember how many lines, but I think it is something like 22. I do not know why all this explanation is necessary if you take out lines 5 to 11 and have to put in an Amendment to cover this. What is the reason for it?
§ LORD ABERDAREMy Lords, I did speak to this matter a little earlier, when I talked about the application of the Bill to Northern Ireland. These remarks were addressed to Amendment No. 19. I am happy to do this again if the noble Lord wishes. This was the application of the whole of the Bill to Northern Ireland and on Amendment No. 19 I spelt out what we were doing.
§ On Question, Amendment agreed to.
§
LORD ABERDARE moved Amendment No. 79:
Page 223, line 41, leave out ("paragraph 2(1) of Part II") and insert ("paragraph 14(1)").
§ The noble Lord said: My Lords, with the leave of the House, I beg to move Amendment No. 79 and to speak to Amendments Nos. 82, 85, 88 and 90 at the same time. Each of these technical Amendments corrects a wrong cross-reference.
§ On Question, Amendment agreed to.
§ LORD ABERDAREMy Lords, I have spoken to this with Amendment No. 29. I beg to move Amendment No. 80.
§
Amendment moved—
Page 224, line 6, leave out from ("prescribed") to end of line 7.—(Lord Aberdare.)
§ On Question, Amendment agreed to.
§
LORD ABERDARE moved Amendment No. 81:
Page 226, leave out lines 8 to 14.
§ The noble Lord said: My Lords, with the leave of the House I beg to move Amendment No. 81 and speak to Amendments Nos. 83, 86, 87, 89 and 91 at the same time. These have a Northern Ireland application.
§ On Question, Amendment agreed to.
334§ LORD ABERDAREI beg to move Amendment No. 82:
§
Amendment moved—
Page 226, line 27, leave out ("paragraph 2 of Part II") and insert ("paragraph 13")—(Lord Aberdare.)
§ On Question, Amendment agreed to.
§ LORD ABERDAREMy Lords, I beg to move Amendment No. 83.
§
Amendment moved—
Page 226, line 33, leave out from ("Act") to end of line 34.—(Lord Aberdare.)
§ On Question, Amendment agreed to.
§ LORD ABERDAREMy Lords, I beg to move Amendment No. 84.
§
Amendment moved—
Page 227, line 6, leave out ("omit" under this Act" and")—(Lord Aberdare.)
§ On Question, Amendment agreed to.
§ LORD ABERDAREMy Lords, I beg to move Amendment No. 85.
§
Amendment moved—
Page 230, line 20, leave out ("paragraph 2 of Part II") and insert ("paragraph 13")—(Lord Aberdare.)
§ On Question, Amendment agreed to.
§ LORD ABERDAREMy Lords, I beg to move Amendment No. 86.
§ Amendment moved—
§
Page 231, line 8, at end insert—
("(c) in subsection (3)(a) after "contributions" insert "under Part I of the Social Security Act or contributions or premiums under Part III of that Act."")—(Lord Aberdare.)
§ On Question, Amendment agreed to.
§ LORD ABERDAREMy Lords, I beg to move Amendment No. 87.
§
Amendment moved—
Page 231, leave out lines 28 to 33.—(Lord Aberdare.)
§ On Question, Amendment agreed to.
§ LORD ABERDAREMy Lords, I beg to move Amendment No. 88.
§
Amendment moved—
Page 231, line 45, leave out ("paragraph 2 of Part 11") and insert ("paragraph 13").—(Lord Aberdare.)
§ On Question, Amendment agreed to.
§ LORD ABERDAREMy Lords, I beg to move Amendment No. 89.
§
Amendment moved—
Page 232, line 3, leave out from ("Act") to end of line 4.—(Lord Aberdare.)
§ On Question, Amendment agreed to.
§ LORD ABERDAREMy Lords, I beg to move Amendment No. 90.
§
Amendment moved—
Page 239, line 46, leave out ("paragraph 2 of Part II") and insert ("paragraph 13").—(Lord Aberdare.)
§ On Question, Amendment agreed to.
§
Amendment moved—
Page 243, line 19, at end insert ("under Part I of the Social Security Act or contributions or premiums under Part III of that Act").—(Lord Aberdare.)
§ On Question, Amendment agreed to.
§ Schedule 27 [Minor and consequential amendments]:
§ LORD ABERDARE moved Amendment No. 92:
§ Leave out Schedule 27 and insert the following new Schedule—