HL Deb 30 April 1974 vol 351 cc82-99

6.34 p.m.


My Lords, I beg to move that this Bill be now read a second time. The main purpose of the Bill is, I hope, perfectly clear. It fulfils a pledge given before the Election that the standard rates of pension would be increased to levels of £10 for single persons and £16 for married couples. Thereafter they will be increased annually in proportion to increases in national average earnings. The Government consider that a substantial improvement in the living standards of pensioners is an essential condition to securing greater social justice. Despite the difficult economic situation I feel sure we would all agree that pensioners have an overwhelming claim for priority treatment.

As your Lordships will know, the Bill provides for an increase of 29 per cent. in the single person's standard rate of pension. This is the biggest increase since the national insurance scheme started over 25 years ago. The increase will be payable from the week beginning July 22, less than 10 months after the present level was introduced. Despite our measures to control prices it is inevitable that some will continue to rise, but not to an extent that could prevent pensioners getting a substantial boost in their spending power. Some measure of the real improvement provided for pensioners can be taken from the fact that prices increased by just over 6 per cent. between last October, when pensions were last increased, and March of this year.

I have spoken of pensions but I can assure your Lordships that these include not only retirement pensions but also invalidity and widows' pensions. All long term beneficiaries, including the old, the chronic sick, the disabled and widows will get corresponding increases in benefits. Short term benefits, sickness benefit, unemployment benefit and the maternity allowance are also to be increased. The rate of increase here is 17 per cent. which after 10 months should be more than sufficient to maintain their purchasing power.

It will perhaps help noble Lords if I run briefly through some of the main provisions of the Bill. Clause 1 with Schedule 1 provides for increases in national insurance pensions and benefits. The standard weekly rate of fiat rate retirement, invalidity and widows' pensions will be increased by £2.25, from £7.75 to £10.00, for a single person and by £3.50, from £12.50 to £16.00, for a married couple. The weekly rate for the children of these long term beneficiaries will go up by £1.10 from £3.80, apart from family allowances where these are payable, to £4.90. Thus a widowed mother with two dependent children will have her benefit increased from £14.45 to £18.90, apart from family allowances.

An invalidity pensioner whose incapacity began before the age of 35 and who therefore gets invalidity allowance at the top rate will have his income increased by £2.70, from £9.35 to £12.05 per week. If he has a dependent wife and three children his benefit will go up from £23.60 to £30.85. Attendance allowance will be increased by £1.80, from £6.20 to £8.00, where attendance is required both by day and by night, and by £1.20, from £4.15 to £5.35, where attendance is required by day or by night. The standard weekly rates of flat-rate unemployment benefit and sickness benefit will be increased by £1.25, from £7.35 to £8.60, for a single person and by £2 from £11.90 to £13.90, for a married couple. Dependancy increases for children payable with the short-term benefits will also be increased, so that a man entitled to unemployment benefit with increases in respect of a dependant wife and three children will have his flat-rate benefit increased by £3.20; that is, from £16.90 to £20.10. Such a man might be entitles to additional earnings related supplement. With your Lordships' permission, I should like to leave for a moment Clause 2 and Schedule 2.

Clause 3, with Schedule 3, provides for increases in benefits under the Industrial Injuries Scheme which correspond to the increases in benefits under the National Insurance Scheme. Injury benefit will go up from £10.10 to £11.35 for a single person, and from £14.65 to £16.65 for a married couple, with additional increases for children. Disablement pension for a 100 per cent. assessment will be increased from £12.80 to £16.40.

Before I leave the subject of benefits, I should mention that there will be parallel increases in supplementary benefit rates. Your Lordships will know that these will be dealt with by Resolution, subject to the Affirmative Resolution procedure, and so they are not included in this Bill. These increases will ensure that those most in need of help will get the full benefit of the proposed increases dealt with in this Bill. My right honourable friend the Secretary of State for the Environment is taking steps to ensure that existing rent and rate rebates are not affected by the increase in pensions and other benefits. My right honourable friend the Chancellor of the Exchequer, is increasing age exemption relief so that persons to whom that relief is available will not have their pension increase clawed back through taxation. We have already discussed in this House the increases in war pensions which will be provided for by means of Instruments under the Royal Prerogative. The whole package of improvements proposed by the Government in the various pensions and benefits will cost about £1,250 million in 1975–76. Of this, about £1,120 million will fall on the National Insurance and Industrial Injuries Funds.

My Lords, Clause 2 and Schedule 2, together with Clause 3(3), deal with contributions towards this substantial cost, The weekly limit up to which graduated contributions are paid by both employers and employees will be raised from £54 to £62, and the rate of contribution will be increased by one-half of one per cent. Adult employees will pay 9p less a week in flat-rate contributions, but the employer's share will go up by 44p per week in respect of a man, 38p in respect of a woman, 29p in respect of a boy and 25p in respect of a girl. The aim of the Government is to protect the lower-paid wage earners from any additional contribution burden, and the cost of the improvements will be concentrated on employers and on higher-paid employees.

The combined effect of the changes in flat-rate and graduated contributions will mean on the one hand that male employees earning less than £27 a week will not have their contributions increased, and that those earning less than £20 a week will have their contributions reduced by at least 3p a week. On the other hand, employees earning £62 a week or more will have to pay an extra 57p per week. Self-employed and non-employed persons pay only fiat-rate contributions, and these will be increased. Self-employed men will pay an extra 42p per week, and self-employed women an extra 34p a week. The changes in contribution rates will come into force on August 5 this year.

Clause 4 provides a relaxation of the earnings rule for retirement pensioners. I know that noble Lords will welcome this move. The earnings rule applies to men aged from 65 to 69, and to women from the age of 60 to 64. The clause provides that it will not operate until earnings reach £13, instead of the £9.50 at present. This change will cost, in round figures, something like £8 million. The effect will be that the £10 rate of pension for a single person will not be extinguished until earnings reach £25 a week, instead of £19.25 as at present. The clause also makes the corresponding change in the earnings rule for wives of pensioners.

The rule which applies to the personal earnings of retirement pensioners reduces benefit by 5p for each 10p earned in the £4 band above the level at which the rule starts to operate. The noble Lord, Lord Reigate, has played an important part in the past in establishing this band (I think I am right in saying this), and I hope he feels that, while perhaps the Government have not been able to go far enough, by bringing in the wives, as I shall say in a moment or two they are helping the position still further besides raising the earnings limit. The clause extends the corresponding band in the rule which applies to the earnings of dependent wives resident with retirement pensioners, invalidity pensioners, and industrial injury disablement pensioners with unemployability supplement, and it is increased from £2 to £4. This in itself will cost about £1 million a year, but it brings the two rules into line. The cost of the changes proposed in Clause 4 will be, as I have already said, about £9 million.

My Lords, Clause 5 amends Section 39 of the Social Security Act 1973, so that the annual review of long-term benefits—that is, those paid to the elderly, the chronic sick, the disabled and widows—will have regard to the general level of earnings rather than the general level of prices, unless at a particular review the latter would be to the advantage of the beneficiaries. The clause also provides that the next review of benefits shall come into force not later than the end of July, 1975. There is a requirement for my right honourable friend the Secretary of State at the time of her review to consider the desirability of introducing legislation requiring reviews more frequently than annually and for her to lay before each House of Parliament a report of her conclusions in this respect. I think at this stage it is only fair to say that this requirement arose from an Amendment put down by the Opposition in another place which was accepted by the Government.

Clause 6 provides some minor and technical Amendments to social security legislation. I hope it will be your Lordships' wish that I do not deal with this clause at any great length, except to say that subsection (1) enables statutory backing to be given for various adjudicating bodies to correct accidental errors and to set aside their decisions in certain circumstances. Subsection (2) relates to the regulation-making powers of the joint authorities for Great Britain and Northern Ireland, where there has in the past been sonic occasional confusion as to the proper body for making particular regulations. Subsection (4) removes a doubt about the statutory authority for conferring certain discretionary powers on the Occupational Pensions Board by Statutory Instrument, and subsection (5), together with Schedule 4 to the Bill, provides for certain amendments of a minor nature to existing legislation to facilitate the ultimate highly desirable consolidation of all the legislation dealing with the basic scheme of social security.

I want to bring my opening remarks to a close, and in doing so say that this is a Bill from which 11½ million people will benefit. It provides pensioners and other long-term beneficiaries with a substantial boost in their incomes, and gives them the assurance of a statutory undertaking that in future their standards will be linked with those of the rest of the community. As regards further developments, my right honourable friend the Secretary of State has promised in another place to make an early statement on the interim position after April, 1975. My right honourable friend has also undertaken that a White Paper on the Government's longer term pensions proposals will be published as soon as possible. I beg to move that the Bill be now read a second time.

Moved, That the Bill be now read 2a.—(Lord Wells-Pesiell)

6.53 p.m.


My Lords, I am sure the whole House will be grateful to the noble Lord, Lord Wells-Pestell, for having introduced the Bill at its Second Reading very clearly and concisely and also, in view of its complicated nature, very quickly, although he did not have the advantage of the usual machinery for informing him how long he had been speaking.

I can assure him that from these Benches certainly we would not wish to oppose a Bill that raises National Insurance benefits, and in particular increases benefits for the pensioner and for the chronically sick. In the previous Government, I had the privilege on more than one occasion of introducing similar up-rating Bills. They were always warmly welcomed in general by the then Opposition, and I am happy to warmly welcome this Bill from my seat on this side. We certainly take particular pride in our accomplishments in the social services during the period of our last Government, and especially for the fact that despite the rate of inflation we kept faith with the pensioners; we saw to it, by the annual reviews which we introduced for the first time, that pensioners did not suffer. In fact, as the figures show, the increases in pensions during the period 1970 to 1974 more than kept pace with increases in prices, and indeed exceeded increases in average earnings during that same period.

Of course, these increases, welcome as they are, have to be paid for, and this inevitably means increased contributions. We cannot escape that inevitable consequence. But I think we have to recognise that increased contributions have a further inflationary effect. Where they fall on the worker, this leads to demands for increases in wages to make good his loss. Where they fall on the employer, this leads to increases in prices, the only way in which industry can recoup its costs. The Government's first priority must surely be to contain inflation. I am sure that all pensioners would very much rather see a stabilisation in prices than constantly rising prices and constantly increased pensions to keep pace with those increased prices.

This Bill must be seen in the context of long-term plans for National Insurance. Our plans were based on the Social Security Act 1973 and gave a large part to play to private occupational schemes. Since that Act was passed, a great deal of activity has been going on to stimulate industry and commerce to establish their own schemes specially devised to meet their own particular needs. No one has been more active and more helpful in this campaign than the noble Lord, Lord Byers. He has taken a leading part and has organised meetings all over the country to stimulate interest in occupational schemes, and we are very grateful to him.

But now we face the fact that the present Government are committed, as I understand it, to replacing that Act of 1973, and no one knows where they stand. This is surely to get the worst of all worlds. Progress is impeded in developing the present proposals, yet no new proposals have been announced. The noble Lord said that the Government were going to make an announcement soon as to where they stand and what they propose to do. I can only urge on the noble Lord the need for speed in this matter. The present uncertainty is bad for everybody. If the noble Lord can give any idea of how soon we may expect an announcement of the Government's intentions this would be of enormous help.

Like the noble Lord, I am sure that my noble friend Lord Reigate will be happy to see Clause 4. He has certainly played a very leading part in the move to get rid of, or at least loosen, the earnings rule. There is, as I learned very vividly, deep antipathy on all sides of the House to the earnings rule, and any relaxation is certainly to be welcomed. I do not think anybody likes having an earnings rule at all. But Governments of all sorts, when they are faced with the cost of abolishing the rule altogether, have to ask themselves what are their priorities. It is a tantalising choice, and a difficult decision that no Government have yet seen fit to take.

We have no quarrel with this Bill. Where we are critical of the Government's actions in the social field is in their undiscriminating use of scarce resources. It is all very well being against means testing in principle. Who is not, in fact? But in practice, how else is it possible to help those who most need help without paying out huge sums to those who do not? But subsidies on food, freezing all rents, removing prescription charges, making contraceptives free, add up to a large sum of money indeed. If that money is available—and it has been made available only by swingeing tax increases in the Budget—then we say that it could have been put to much more effective use in a more selective way. I only hope that when the time comes there will be something left for the one-parent families, for example, which the Finer Report is considering, and for the disabled when we come to the October review that the Government are committed to making. Those are our general criticisms so far as this Bill is concerned, but we support its Second Reading.

7.1 p.m.


My Lords, I too should like to thank the noble Lord, Lord Wells-Pestell, for the way he made this extremely complicated Bill understandable to people like myself who know very little about figures, and therefore need to be brought along very gently. This is a Bill which nobody would deny is a step in the right direction from the pension point of view. One has to look at the long-term future, and to what was really going back to 1942, the Beveridge principle about pensions: that they should provide a universal coverage for basic requirements without any supplementary grant. I think that that is not a practical policy to-day, because it would be too expensive and too inflationary with the money required from extra contributions, as the noble Lord, Lord Aberdare, said.

This is where the work of my noble friend Lord Byers, to which the noble Lord, Lord Aberdare, referred, will be an enormous help. If we could get more occupational pensions going on a big scale, and if they could be transferable, that would go a long way to provide the pensioners with something that would relieve them of the need to apply for supplementary benefit, for which I believe about a third of our pensioners need to apply now because, even with the present increases the pensions are only about 19 or 20 per cent. of the average earnings in the country. I think I am right in saying that, compared with other countries, the pensions in this country are on the low side. I am not quite sure about this, but I think they are the lowest of the countries in the European Economic Community.

When we come to the earnings rule, nobody will be anything but delighted to find that there has been some relaxation of that. Your Lordships were in favour of this when we talked about it some time ago, and I am pleased to see that this has now been brought about. If the earnings rule were to be abolished entirely it would be extremely expensive—something in the neighbourhood of £8 million. Supposing the earnings rule were to be kept to the present figures, or supposing it were to be increased, does the noble Lord know what amount of money would be recovered from it for the Treasury by means of income tax? It has always seemed to me that we have to balance this earnings rule with what may be recovered from it in due course in taxation.


My Lords, if the noble Lord will allow me to intervene at this stage, may I say that I think I am right when I say that if we abolished the earnings rule so far as husbands are concerned, it would cost us something like £160 million a year. If I am wrong, I will write to the noble Lord and put it right.


My Lords, I thank the noble Lord for what he has said, If he is going to reply to me, would he give me some idea of what proportion of that total might be recovered from income tax paid by people who are earning more than they are at the present time? In the long run one would like to see pensions linked quite firmly with the average earnings of the country. I know that some people on my side of the House have talked about something like 50 per cent. of the earnings for the married, and 33 per cent. for the single. That is something to which we can look forward one day, but I would not dream of suggesting it at the present time.

One of the things I should like to see one day is an end to the need for concessions to pensioners. I know that it is nice for pensioners to be able to ride free on buses and pay less to go into exhibitions, and that sort of thing, but in my young days that was called "pauperisation" and was not looked upon as being a good thing and I do not think it really is very good at the present time. I was pleased to learn from the noble Lord that the increase in pensions, and so on, will not be followed by taking away any of the privileges, such as rent rebates, that the pensioners have now. I am very pleased that there is to be no question of that.

There are two further points that I should like to mention before I sit down. In what I am about to say, I may be wrong, in which case the noble Lord will forgive me. He will remember that some time ago there were a certain number of elderly folk who did not come into the insurance scheme when it was first brought in in 1945: I think that they were too old at the time. About three or four years ago they were given a pension of their own. I wonder whether these people (there cannot be many of them left now) could not come into the full pension scheme at the present time. I am sorry that I did not give the noble Lord notice of this second question, but supposing a girl, say an unmarried daughter, is looking after her parents because they cannot be left alone, could she be regarded as being an employed person from the point of view of the insurance stamp rather than a self-employed person? I think that it would make a certain amount of financial difference to her. Apart from those two points, I am pleased to support this Bill. We shall do the best we can to see that it gets on to the Statute Book.

7.9 p.m.


My Lords, this is certainly an important Bill, and I must apologise to your Lordships if, in speaking on this occasion, I repeat some remarks that I have made on other occasions before. Alas! I can only say that, on the whole, my repetitions are usually vain repetitions. Like other noble Lords, I welcome the contents of the Bill, although when it comes to the question of footing the bill for it I think one can have the beginnings of doubts, particularly as regards the swingeing increase in the employer's contribution. There is something to be said for an employment tax but, as I am going on to say, there are one or two places where the shoe is going to pinch in a very hard way.

Of course, I also realise that this increase in the employer's contribution is going to bring the social security system of this country more into line with the other countries in the European Economic Community. I have no doubt that this may indeed have prompted the Government in this particular action. None the less, I think that we have to accept that it is bound to represent a heavy burden on industry. The places where I think the shoe is going to pinch most severely, and to which I think we must give consideration, are first the very small employers, mostly small craft industries, who need every encouragement that this country can give to them. It is going to be a heavy burden for them. Secondly, I would single out charities, who in many cases are already hard hit by V.A.T. The third category is the majority of self-employed, and I will revert to them later. Many self-employed are in the high salary bracket, but the majority of self-employed are still towards the lower end of earnings, and it is going to be very hard on them.

Apart from that I wish, to the surprise of your Lordships, to say a few words about the earnings rule. I am grateful for the generous compliments paid by my noble friend Lord Aberdare and by the noble Lord, Lord Wells-Pestell, to the almost too many speeches I have made on this subject during the last 19 years. Of course I note with pleasure the further relaxation that has been made. Traditionally, the wholly exempted band is fixed at about 30 per cent. of the average male earnings and I believe—my figures are not necessarily accurate—that at the moment it will be at about 32 per cent, of average earnings. I shall be grateful if between now and Committee stage the noble Lord, Lord Wells-Pestell, will confirm or correct my figures. But the fact is that when the earnings limit band is fixed it is not automatically raised whenever benefits are raised. The question which I should like to ask the noble Lord is: Will the exemption band of the earnings rule be automatically reviewed under Clause 5? If he could answer me "Yes", it might save my moving an Amendment when we get to the Committee stage, because it is important that we should not allow the exemption band to fall behind any increases that there may be.

I should like to draw attention to another anomaly in the present earnings rule. The exemption limit fixed on the average of men's earnings is a higher proportion than that of women's average earnings because women usually earn less than men, and they get more exemption from the earnings rule. This is a curious case of discrimination in favour of women. I realise the difficulties in dealing with this anomaly, but it is a matter which might be worthwhile referring to the National Insurance Advisory Committee for its consideration and report before the next review, if that review also includes, as I think it should, the question of the earnings rule limit.

On the general subject of the earnings rule, it is quite amusing to read the report of the Committee stage proceedings in another place and see the roles reversed. The Secretary of State and her Ministers are using arguments identical to those of her predecessor in resisting total abolition of the earnings rule. It is, they always say, a question of priorities. I think that they are right and I support the Government in not totally abolishing it to-day, as I supported my own Government when they did the same. I have always seen the difficulty, if not the impossibility, of the total abolition of the earnings rule in one go. It would be to confuse totally one's sense of priorities in these matters. That is as far as the National Insurance scheme goes, but we should take note of the fact that the reserve pension scheme does not include any earnings rule.

The right policy is obviously to continue to relax the earnings rule, but at the same time the Government—this applies equally to both Parties—ought to evolve a policy towards the ultimate elimination of the earnings rule. Therefore, I think that one should continue to relax the earnings rule but, at the same time, make a substantial increase each time there is a review of the exemptions limit. I should like to ask the Government to commit themselves to saying that at the next review they will consider raising the exemption band to whatever is the equivalent of 40 per cent. of average earnings at that time. I have quoted these figures on the presumption that they are correct, but I invite the noble Lord to correct me if I am wrong. I presume that this could be done under the existing legislation.

My last point is linked with the earnings rule. The corollary to the earnings rule has always been the increments to the retirement pension which can be earned by those remaining in employment. Why is there no increase in the increments on this occasion to match the progress in pensions? When was the last increase? So far as my memory goes, it was in 1971 and this is the second increase in pensions since then. I think that increments should be doubled at once and it would not be a very expensive step forward. Certainly that should be done for the self-employed who are hard hit. I should like to point out to the noble Lord that a self-employed man who stays on at work from 65 to 70 will now be paying substantially more in contributions during the five years that he remains on at work than he will draw in increments during the five years after he receives his pension as of right at the age of 70. It is fairly obvious that he has a dwindling expectation of life.

I know that the Departmental answer when one raises the question of increments is always the same. Of course, they say that increments are not actuarially calculated. That may be so but, in my view, they ought to be. At least, there ought to be some semblance of equity for a small number of pensioners who need to be treated as justly as any other class in the community. I quote the Secretary of State who said in the Standing Committee on the Social Security Bill in another place on February 27, 1973: The increments for the deferment of the time of retirement are a very bad deal for the pensioner, and I rest my case on that, We all appreciate the urgency of the Bill and the reasons why it has to proceed through Parliament so quickly. However, I hope that that will not preclude very full and adequate discussion on Committee stage. With those words I wish the Bill well.

7.18 p.m.


My Lords, with great sincerity I should like to thank those who have taken part for the value of their contributions. I thought it was particularly generous of the noble Lord, Lord Aberdare, if he does not mind my saying so, for giving such a welcome to the Bill. Perhaps few people in your Lordships' House know more about this subject than he, and I am in a position to say how much he is admired in the Department of which he was once Minister of State. I should have thought that this is always a difficult problem because if, from a responsibility point of view, one wants to do what is considered to be reasonably right for people who are elderly, disabled or in some way are in need of financial help, one wants to do it at the highest possible level, and this can only be done if we impose what may well be regarded by some people as a serious burden on those who are able to work. I quite see the noble Lord's point of view and argument and can only repeat what I said the other day, that on this question of means testing, there is a basic difference in the philosophy of his side and the side that I represent. Although I think that perhaps there are occasions when this could be done, at the present moment, with things as they are, the only thing we can do is to impose what are perhaps burdens (burdens which some people may consider to be unreasonable) on those members of the community who, rightly or wrongly, we think can afford to meet those demands and at the same time try to lessen the anxiety for others at the lower end in the community by providing so far as one is able a stabilisation of prices and food subsidies.

The noble Lord raised the question of the 1973 Act which is to be replaced and asked whether I knew when my right honourable friend would be likely to make a statement on this matter. I can say that I expect a statement to be made within the next few days. The difficulties are far greater than many of your Lordships' I think realise. As you know, the Social Security Act comes into operation on April 6 next year and, as the noble Lord rightly said, preparations for its introduction are already far advanced—particularly for the collection of earnings related contributions from employers and employees which is part of the Government's long-term plans.

But the fact remains that the Act has a number of defects. In particular, it leaves millions of pensioners dependent on means-tested supplementary benefits. This is a situation which is likely to continue for a good many years, and in addition I think the noble Lord will agree that there is a certain amount of inferior treatment for women. The Act will ultimately be replaced. We are working towards this in our long-term plans for a just and comprehensive system of social security. This will take time and we have run into certain difficulties. I am hoping that by next week a Statement will be made, because I think we are all agreed that it is important, in view of the time, that one should be made without further delay. I will draw the attention of my right honourable friend to what the noble Lord said, because I think it is important that the feeling should be known.


My Lords, will the Statement, when it is made—and I am not asking that the noble Lord should anticipate it—make clear to those responsible for occupational pension schemes whether it would be wise and prudent to go ahead with plans for the expansion of those schemes or whether it would be advisable to freeze all activities until a further statement is made?


My Lords, although I am not in any way associated with the discussions going on now, my understanding of the situation is that this will be taken into account and that something may be said on this matter.

My Lords, the noble Lord, Lord Amulree, asked about the amount of taxation to be recouped if the earnings rule were to be abolished. I do not think that he will expect me at this stage to give an accurate answer "off the cuff", but I believe the amount would be in the region of £40 million a year. If I am able to get a little nearer to the actual amount, I shall be only too pleased to let him know. The noble Lord also asked about the classification for National Insurance purposes of an unmarried daughter who looks after her disabled parents. This matter will be one of several which are to be looked at in connection with our review of provisions for the disabled on which, as he knows, a Report is to be made at the end of October this year.


My Lords, I was not so much referring to people who are disabled "within the meaning of the Act", as it were. I merely meant the elderly who could not be left alone and who wanted someone about the place to take care of them.


My Lords, I think what the noble Lord is saying is that it is a situation in which there is obviously a need for somebody to look after them. This aspect would probably be covered in any review that will take place on this matter. In reply to what the noble Lord said in relation to the E.E.C., I think that while some of our benefits do not approximate to the level in some E.E.C. countries, we have, perhaps, a much more comprehensive system of pensions, invalidity pensions and disabled pensions, than in many, if any, of the European countries. I agree that the level of payment may not be as great as in some of those countries.

My Lords, the noble Lord, Lord Reigate, raised a number of matters. If he does not mind, I should like to read Hansard tomorrow to note the actual points he has raised. Obviously, in each of our reviews, we shall be looking at the earnings question and the level of the earnings rule will be considered in the context of the annual review although, obviously, movements must be at the discretion of my right honourable friend. I think it is one of the things which will be looked at almost automatically when there is a review. We must face the fact that it is going to be very costly to do away with the earnings rule. Its cost is such that it is bound to have a bearing on the amount of money available for pensions in other directions. It is something we may have to keep—


My Lords, I was trying to be helpful to the Government. I said that I supported them in thinking it could not be abolished straightaway and that there will always be this difficulty of priorities. In the Bill we are now considering, regardless of priorities they have chosen to increase exemption limits at the cost to other things.


My Lords, this is perfectly true; but, on the other hand, one must bear in mind that any Government would want to encourage people on reaching retirement age to take advantage of the retirement period as far as possible. If, as some people want, the earnings rule is relaxed very considerably, I think this would be a cost we could not bear at this particular time.

The noble Lord asked about the relationship between the earnings limit at the present moment—that is, between £9.50 and the proposed £13 a week—and the average earnings. It is true to say the new limit will represent slightly more than 30 per cent. of average earnings. The noble Lord suggested 32 per cent. I think I would accept that. This is a problem as to what is the best thing to do. What we have tried to do in the National Insurance Bill, and we have to a large extent succeeded, is to exercise discretion in spending the available money—if "available" is the right word, for it is a very large sum.

I agree that there are many things that we should like to do, not least among them, perhaps, being improvements in the field of death benefits, and so on. But I think that what we must do is to provide the best possible system for people who are in need at the present moment in the hope that in the future we shall be able to overtake some of the things we are not doing now.

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