NATIONAL INSURANCE AND SUPPLEMENTARY BENEFIT BILL (Hansard, 5 July 1973)

§ LORD ABERDARE
My Lords, I beg to move that this Bill be now read a second time. This is the second annual review of pensions and benefits since this annual review was instituted by this Government. We have spent a good deal of time lately on matters concerning National Insurance and I doubt whether your Lordships would wish me to go into too much detail on this Bill, but I should like to run through just some of its main provisions. Clause 1, with Schedule I, provides for increases in National Insurance pensions and benefits. The main increase is £1 a week for a single person and £1.60 for a married couple in standard rate of retirement and invalidity pensions, widows' pensions and widowed mother's allowance. Thus, weekly rates will go up by nearly 15 per cent. from £6.75 to £7.75 for a single person, and from £10.90 to £12.50 for a married couple. This compares with a rise in the Retail Price Index since the last up-rating in October 1972, up till May last (the last figures we have), of 5.5 per cent. Since June 1970, 465 we shall have increased long-term benefits by 55 per cent. and short-term benefits by 47 per cent., compared with a total rise in the Retail Price Index to date of 27.2 per cent.
Naturally, we still wish to do more for pensioners but we have more than kept our word to maintain the purchasing power of the pension. We have a record, of which I have spoken in our debates on the Social Security Bill, of which we are proud in helping the disabled, and in this Bill we are making one selective improvement which will benefit invalidity pensioners. Whereas, as I have said, the general percentage increase in cash terms for long-term benefits is just under 15 per cent., invalidity allowance will go up by about 40 per cent., so that some 60,000 persons whose age at the onset of incapacity was below 35 will get an increase of 45p in invalidity allowance apart from the increase of £1 in invalidity pension. Similarly, another 70,000 people whose age at the onset of incapacity was between 35 and 45 will get an overall increase of £1.30, and about 200,000 others will get £1.15 a week more. In addition, many of these invalidity pensioners will get extra increases for their wives and children.
We are also increasing attendance allowance. The Bill provides for the present higher day and night rate of £5.40 to be increased to £6.20. Similarly, the lower day or night rate will go up from £3.60 to £4.15. Payment of the lower rate was planned to be extended to children from December this year but this is, happily, being brought forward to October 1. If it proves possible we will bring forward other dates when the lower rate will be extended to the elderly. Short-term benefits for the sick and unemployed are being increased by 60p for a single person and £1 for a married couple, bringing the rates from £6.75 to £7.35 for a single person, and from £10.90 to £11.90 for a married couple. Maternity allowance will be increased correspondingly.
Clause 3, with Schedule 3, provides for increases in the Industrial Injuries scheme to correspond with increases under the National Insurance scheme. Industrial Injury benefit goes up by 60p from £9.50 to £10.10; the long-term dis- 466 ablement benefit for 100 per cent. assessment goes up from £11.20 to £12.80, and widows' pension from £7.30 to £8.30. Changes in contributions are provided for in Clause 2 with Schedule 2. The increased costs of pensions and benefits will be met mainly by increasing graduated contributions paid on earnings of over £9 a week and by increasing the flat-rate contributions paid by employers. Thus, we continue our deliberate policy of shielding the low-paid while placing a higher percentage of total contributions on to employers in preparation for changes contained in the Social Security Bill.
The weekly earnings limit up to which graduated contributions are payable will be raised from £48 to £54 from the beginning of October. The rate of graduated contributions for both employers and employees will be increased by ¼ per cent. —the rate will become 5 per cent. instead of 4.75 per cent.—on earnings between £9 and £54. Persons who have contracted out of the graduated pension scheme will continue to pay at a lower rate on earnings between £9 and £18, but this rate will also be increased by ¼ per cent., from ½ per cent. to ¾ per cent. Adult employees will pay 4p less a week in flat-rate contributions, but the employers' share will go up by 14p a week for men and 12p for women.
Self-employed and non-employed persons pay only flat-rate contributions and these will be increased. Self-employed men and women will pay an extra 25p and 21p respectively; non-employed men will pay an extra 19p, and non-employed women an extra 15p. The earnings level at which self-employed persons' contributions normally become payable will be raised from £5 to £6 a week. At present, self-employed and non-employed persons with an income of £468 a year or less can obtain exemption from the liability to pay contributions. This limit will be raised to £520 a year. Clause 6 and Schedule 4 deal with supplementary benefits. On this occasion the Ministry of Social Security Act, 1966, is being amended and new scale rates which will become operative from the week beginning October 1 are set out in the Bill instead of appearing, as is usual, in regulations. Supplementary benefit scale rates are increased by amounts corresponding to those in National Insurance benefits—£l.60 for a 467 married couple receiving benefit on a long-term basis, £1 for short-term married couple beneficiaries with £1 or 60p for single householder beneficiaries depending upon whether the benefit is long or short-term.
In the supplementary benefits scheme a change is being made which will be of particular benefit to the elderly and to the long-term disabled. In effect, from next October heating allowances will be paid in full in addition to the new long-term supplementary benefit scale rates. The change will be to the advantage of those persons whose heating allowance is at present offset, wholly or partly, against their long-term addition. It is estimated that about 400,000 people will benefit from this change, the majority of them getting an extra 30p a week on top of the increase of £1 in both National Insurance and supplementary benefit long-term rates.
The Bill incorporates the long-term addition into the long-term scale rates. This ensures improvements in supplementary benefits parallel to those in National Insurance pensions and benefits and will help to make supplementary benefits easier for people to understand. A supplementary pensioner living alone will, from October, be entitled to £8. a week plus rent and rates or £8.40 a week plus rent and rates if he or she is over 80. A supplementary pensioner couple will be entitled to £12.85 a week plus rent and rates or £13.10 plus rent and rates if one (or both) of them is over 80.
I should like to refer briefly to Clauses 4 and 5. Clause 4 ensures that civil servants who undertake not to claim certain benefits in consideration of receiving full pay when sick or on maternity leave can become entitled at the normal time to invalidity benefit. It also provides for public funds to be reimbursed by the insurance funds to the extent that the funds would otherwise have had to pay out benefits. Clause 5 sets out formally the traditional interpretation of incapacity for work for the insurance Acts. Following a High Court case it is considered necessary to define this clearly. Clause 5 also modifies and extends to marriages, where one of the parties has more than one spouse but which may be technically monogamous, 468 the existing regulation-making power under Section 12(1) of the National Insurance Act 1971 which deals with the treatment of polygamous marriages for National Insurance and family allowance purposes.
Clause 8 secures that while the Bill will extend to Northern Ireland, the power of a Northern Ireland legislature to amend it as it applies to Northern Ireland will remain unimpaired.
The Bill will increase pensions and benefits for about 11½ million people. The increased cost involved will be £570 million in a full year, of which £370 million will be for retirement pensions. We have deliberately placed the emphasis on the needs of the long-term beneficiaries: the elderly, the widows and the invalids—surely among the most vulnerable members of our society.
My Lords, I beg to move that the Bill be now read a second time.

§ BARONESS PHILLIPS
My Lords, I should like to thank the Minister for introducing the Bill. After the major Bills and the events of the afternoon it seems rather in the nature of an anticlimax. I have done some homework and have carefully studied the supplementary benefits handbook. I was delighted to hear the Minister say that it was going to be simplified, because it seems to me that anybody who can simplify these very complicated regulations certainly deserves some kind of honour.
Of course we applaud the increase in the level of benefits. I think if my sum is correct the actual contributions go a substantial way towards this; but the people who will be affected by this Bill are the kind of people who will always be below the average level of income. I noted in the figures shown to-day that the last figure given for family expenditure income is £35 a week, so that any one of these levels is, I am afraid, still well below the national average; but each increase is to be applauded.
I had intended to go rather deeply into the question of supplementary benefits and the long-term addition, but your Lordships will be relieved to know that 469 I do not intend to do this. I will merely say that I have been approached by that wonderful body, Help The Aged, who are very concerned about one aspect of the situation, namely, the heating allowance. I will return to that at the Committee stage. In the meantime, I wish the Bill a fair passage through your Lordships' House.

§ LORD PLATT
My Lords, I put my name down to speak merely because I wanted to ask a question for clarification on the point raised by the noble Baroness about allowances in exceptional circumstances; additional allowances not only for heating but in many cases also for things like laundry, diet and so on for elderly or handicapped people.
I find the Bill extremely difficult to read, but that, I know, is partly because I did not do enough homework with all the other Acts to which it refers. However, I am given to understand—and the noble Lord will know that there was a letter in The Times about this—that if a person or an old couple get these allowances for exceptional circumstances in addition to their long-term supplementary benefit, then a deduction is made from them and they do not get the full allowance to which they would appear to be entitled. I know this is really a Committee point, but I wondered whether the noble Lord would tell me whether I am right about this, otherwise there will be no point in raising it during the Committee stage.

§ LORD ABERDARE
My Lords, I am grateful both to the noble Baroness and to the noble Lord, Lord Platt, for their modified welcome to the Bill. I shall certainly be ready to go into the matter of heating allowances and allowances for exceptional circumstances, such as laundry and diet, when we come to the Committee stage. It is true that hitherto all these exceptional allowances have been treated in one and the same way, but part of the supplementary benefit has been to meet some of these needs and also part of the long-term addition has been to meet some of these needs. So when an exceptional allowance was claimed the custom has been—and it still is for other than heating allowances—to offset some part of them if they are also covered by the long-term addition. However, we thought that in the case of heating this 470 was such a priority matter that it was no longer right for there to be any offset against the long-term addition, and therefore in future any extra heating grant will not be in any way offset. Of course we can go into this in greater detail during the Committee stage if either the noble Baroness or the noble Lord wish to do so. Finally, may I congratulate the noble Lord on having now spoken three times to-day and express the hope that he will speak for a fourth time.