§ 2.52 p.m.
§ Lord WYNNE-JONES rose to call attention to the energy problems facing this country; and to move for Papers. The noble Lord said: My Lords, in introducing this subject to your Lordships' House, I think I should explain at the start that I speak on behalf of nobody except myself. I am not speaking on behalf of a particular Party or a Government, and although I am fortunate enough to be a Member of the Committee of your Lordships' House which deals with the subject of energy in relation to the European Communities, I think that the noble Earl, Lord Lauderdale, will deal with that part 1286 of the subject, and so I propose to roam rather widely over the whole range of this subject.
§ We have had several debates on the question of energy, which over the last few years has become one of the most dominant subjects governing the whole economies not only of this country and of Western Europe but of America and of the developing countries, and indeed the Soviet Union, also, is involved in this problem. It is a worldwide problem, and a problem of very considerable importance. We in this country are probably faced with rather narrower choices than many countries, yet with a somewhat wider range of options than others. We are fortunate in that we have over the past few years gained access to the oil and the gas of the North Sea, and this is of very great importance. Also, we were one of the first countries to develop nuclear energy. We have very considerable coal reserves as well. So we are in many ways more fortunate than other countries.
§ But despite all that, the constraints upon us are considerable, and these constraints arise in a number of ways. First, if one has resources—as we have observed with the North Sea—the winning of those resources is an immensely complicated and expensive business. It is not something which we get for nothing, and when we get the oil from the North Sea it effectively costs us about five times as much as the cost of producing oil in the Middle East. So it is not a cheap source of energy; it is an expensive source. Nevertheless, it may at the time be extremely valuable to us.
§ There is a similar situation regarding our coal reserves. We know that these reserves are very considerable, but the cost of exploiting them is enormous. I believe that the latest estimate of the Coal Board for developing new fields (the Selby field and others) over the next 10 years is about £3,500 million. This is merely the capital cost of developing those coalfields. In other words, it is not cheap. The coal is there, but it is not just a matter of going out and picking it. We have to win it at immense cost.
§ The same is true when we come to consider nuclear energy. We know that to build a nuclear power station—one of 1287 the massive ones—will probably cost us up to £1,000 million; certainly over £600 million. There again we have to pay for the energy we get. It is interesting to note that when one tries to do these things quickly they become far too expensive to be worth while. People sometimes talk about crash programmes. They say, "Oh, don't worry. If things go wrong we can push through a crash programme" My Lords, a crash programme is a disaster programme. It is one of the worst things in which one can possibly indulge, because more energy is used up in building the stations than is got out of them for many years. Let us suppose that we wanted to build in this country 100 nuclear stations. Thank heavens! we do not have to consider this, but let us suppose that we had to do so, and within a period of 10 years. It would ruin the country. It would be quite impossible. All the energy of the country would be used up in producing the energy stations. In other words, there is a certain rate, an economical rate, at which one can proceed, and one cannot go faster than that.
§ So when we look at the whole problem carefully we find that we are in reality faced with a relatively few choices, because all the estimates are that by the late 1980s—certainly in the 1990s—the world supply of oil will begin to fail to keep up with the world demand for oil. There will be a net shortage of oil all over the world. It may be patchy; here there may be a little more, here there may be a little less. But even the Soviet Union, it is estimated, will by then have become a net importer of oil.
§ So we cannot dissociate ourselves from what goes on elsewhere in the world. The level of our own resources in the North Sea will have reached a plateau by then, unless a miracle occurs and all of a sudden we find enormous reserves there which have not yet been anticipated. But the probability is that by the 1990s in this country, in Europe, and throughout the world, the demand for oil will be greater than the amount of oil that can be produced in a year.
§ With regard to other sources, we can talk about coal. We are fortunate in having considerable reserves of coal; but, unlike America, those reserves are very difficult to win. In America they are 1288 fortunate because, especially in the West of America, they have vast reserves of coal which are within a few hundred feet of the surface and which can be won by strip-mining. These reserves, they reckon, amount to probably 200 or 300 years' reserves of coal; and, because they are occurring in enormous seams up to 60 ft. deep, they are extremely cheap to get. Therefore, they can get the coal easily: we can get it, but at a cost. In Europe, except in Germany, they have reached a point where they cannot get much coal, and therefore they are in a worse position.
§ My Lords, if we invest considerably in coal, which I think we ought to do, we must realise that at the moment we shall do very little more than keep up our present production because the old pits are running down. We shall have to put more money in to get the new pits working, and this is going to cost a lot of money. It is anticipated by the Coal Board that by the end of the century we may be up to 135 to 150 million tons production of coal, but at a very considerable expense; and that, may I remind your Lordships, is not much more than half the amount of coal that was being won years ago. That is because in those days it was much easier to get the coal. There were more miners; they were poorly paid; they were exploited; and we lived on that exploitation and got the coal. We can do that no longer, and therefore we are bound now to realise that we can get the coal but we have to pay for it.
§ What, then, my Lords, are really the options which lie before us? Primarily, I believe that there are three options. First, there is conservation. Without any doubt at all, the most important thing to do is to conserve energy, because every time you waste energy you are in effect trying to develop a new means of getting energy to correspond to what you have wasted. Therefore, we must conserve; and the possibilities of conservation are considerable, although there again one has to remember that they are not always cheap. For example, the insulation of houses ought to be carried out on an extensive scale. It is much more expensive to insulate old houses than new ones. When you are talking about building a new house, you can include the whole plan of insulation in it, but when you are talking about the millions of old houses in the country it is a much more 1289 difficult and expensive matter. Nevertheless, it should be done; and the waste from factories is probably even worse. One has, therefore, a very considerable scope for conservation. If one thinks of what it is now fashionable to call a scenario for the future, I would say that up to the year 2000 or so we ought to think that any additional energy that we need will come, to the extent of about a quarter, from conservation, I hope. I do not mean that we can save by one quarter over our whole field, but one quarter of the additional amount that we would require in that period.
§
Then, again with regard to coal, I believe that we must place high emphasis on coal and get a large amount of our extra energy from coal. But when we have done all that we are left with a gap, and oil will not fill it. Therefore, in my opinion, there is no other resource open to us than nuclear energy. It is of course true that there are other possible forms of energy, but one wants to remember, when one is talking about forms of energy which have not yet been developed to a point where they can be very effective, that the lead times are considerable. It is important to bear this in mind. It was known a long time ago, of course. In fact, if one looks at Jonathan Swift, writing nearly 300 years ago about Gulliver's visit to the Grand Academy of Lagado, one finds that Gulliver said:
I was received very kindly by the warden and went for many days to the academy. Every room has in it one or more projectors;"—
that means somebody carrying out a project, of course, not a cinematograph projector—
and, I believe, I could not be in fewer than 500 rooms.
The first man I saw was of meagre aspect, with sooty hands and face, his hair and beard were long, ragged and singed in several places. His clothes, shirt and skin were of the same colour. He had been eight years upon a project of extracting sunbeams out of cucumbers, which were to be put in phials hermetically sealed and let out to warm the air in raw inclement summers. He told me that he did not doubt that in eight years more he should be able to supply the governor's gardens with sunshine at a reasonable rate"—
that is a 16-year lead period, my Lords—
but he complained that his stock was low and entreated me to give him something as an encouragement to ingenuity, especially since this had been a very dear season for cucumbers.
In other words, my Lords, inflation had set in.
§ One finds there every problem which faces technological development today, every one of them carefully described by Jonathan Swift. I think it is as well to remember that we have not overcome those problems, even today. We are still faced with them; and, therefore, when we talk about solar energy, when we talk about this form of energy and that form of energy, I would beg your Lordships to remember that it took eight years to get as far as getting some sunbeams out of cucumbers.
§ My Lords, the problem of this country is at least something which I think can he defined, and can be probably contained, over the period of this century. What I am not happy about is whether the world problems can be contained in the same way. I believe that in the short-term, not in the long-term, the world problems are much graver than the problems of this country. This is because, if we look at Europe, we find, as I have said, that there is no country in Europe which has all the resources that we have in the energy field; and if we look across at America we find that, although it has immense resources, it is the most profligate of all countries in its use of energy, and it will take a tremendous effort in America to ensure that the conservation and proper use of energy proceeds in a way which makes it possible for them to have an energy policy at all. This in fact they perfectly well realise.
§
Many of your Lordships will have heard of the book which has just come out, published by one of these bodies which always operates under a series of initials. It is called the Workshop on Alternative Energy Strategies, which is at MIT, and the book is called The Global Prospects of Energy. There it states that there are four essentials for an American energy policy. First of all, it says:
Remember that the supply of oil will cease to meet existing demands before the year 2000; second, that the demand for energy will continue to increase despite Governmental conservation policies; thirdly, that energy reserves must be developed with the utmost vigour.
Then we come to the final point:
The interdependence of nations in the energy field requires an unprecedented degree of international collaboration in the future. In addition, it requires the will to mobilise finance, labour, research and ingenuity with a common purpose never before attained in times of peace. And it requires it now.
We are getting there a real call for urgency; and I would submit that it is playing with
1291
this issue if we do not face these real problems and if we airily dismiss them by saying, "Oh, something will turn up". What will turn up will be a very chilly, frigid future. We can be sure that it is only by international effort in which we all play our part that we have a hope of meeting this world problem of energy. My Lords, I beg to move for Papers.
§ 3.11 p.m.
§ The Earl of LAUDERDALEMy Lords, it is a particular pleasure to follow the noble Lord, Lord Wynne-Jones, who has started this debate with such a splendidly clear, well-informed and, at points, witty survey and has focused our minds immediately on the urgency of the matter. I am happy that the noble Lord works with myself and other noble Lords on a sub-committee of the European Scrutiny Committee watching energy policy. We have learned in that committee to trust and respect his observations. In the 28th Report of that Committee, which is available to the House today, we have not only recommended that our own report should be debated, but that it should be debated in the wider context of energy as a whole just because of its urgency.
It would be churlish for me to enter upon a debate of this sort at this time without regretting the absence due to illness of the noble Lord, Lord Hinton of Bankside. He has been of particular support to our committee and his counsel is well known and appreciated by the House as a whole. We wish him an early and full recovery. The noble Lord, Lord Wynne-Jones, suggested that we face a chilly, frigid future unless we take this matter seriously. I had already intended to say that this is a debate about thin gruel at the top table. It is a debate on the faltering stewardship of a critical resource of civilised living.
Some of us particularly urged that there should be such a debate at this time because on 14th June the Energy Ministers of the European Community will be meeting in Brussels to discuss the alarming situation and to examine it in the light of three documents recently published by the European Commission. Two are on energy use to date; and those two include one with a Jeremiah-type warning that 1292 performance in reducing the West's dependence on imported energy has been nothing like satisfactory. The second is a further Jeremiad on the state of the coal industry, to which the noble Lord, Lord Wynne-Jones, referred with such emphasis. The Commission most solemnly warn:
There is a progressive deterioration in the coal industry and in many cases receipts no longer cover costs despite subsidy".That warning is borne out by figures made available by the Department of Energy here showing that Britain's coal output actually fell nearly 7 per cent. over the period 1973 to 1976.If the message from the European Commission is sad, sadder still it is that our committee found some serious shortcomings in the Commission's documents which can only undermine their credibility: cunning is the dark sanctuary of incapacity. The Commission admitted that their figures were highly tentative. In addition, we found that their assumptions were not always justified, that objectives and forecasts were not clearly distinguished; in perhaps less polite language, one might say that the wish was being father to the thought. We found that the Commission were more interested in policy than in analysis, and we felt that the Commission would do well to concentrate on the successes and failures of national policies and on the reasons for them which so badly need to be brought into the open.
The very short point about the Energy Council meeting on 14th June is the stark fact, to which the noble Lord has already referred, that the industrial West threatens to run short of oil and gas energy well before the end of the century, that nuclear energy development has proved to be a disappointment and is going slowly, that the possibilities of hydro are limited and that coal output is at best stagnant. Other sources must therefore be found in the next 15 to 20 years and, even supposing that they are found, the transition from a civilisation dependent on coal, oil and gas to these other sources will require political management of a far higher order than the world has seen since the OPEC countries took up their position.
No doubt new resources will be found or will be invented and, as the noble Lord, Lord Wynne-Jones, pointed out, of course, at a price. No doubt economic levels everywhere will, as they say, 1293 "adjust". But what does "adjust" mean? Since no political entity will plan for permanent dependence on uncontrollable outside supplies, we must expect the consolidation of some political blocs and the break-up of others. History is not empty of severe examples of primitive peoples overwhelming sophisticated civilisations and, within a century, reducing the vanquished population by half. One thinks of the Slav invasions of the Roman Empire and the Mongol invasions of China.
My Lords, consider who, for us in Britain, are our energy neighbours. There is the European Community aiming at something like a half dependence on imported energy and, therefore, with their eyes sharply fixed on our own offshore. Across the Atlantic there is a gigantic American import demand. As for the Soviet Union, to which the noble Lord, Lord Wynne-Jones, has just drawn our attention, it appears that that country is heading to be an importer of energy, quite soon, by about 1985. Then, what about the teeming Third World of developing countries whose access to energy holds the key to their industrialisation, and therefore to the conquest of the explosive population pressures now pushing so urgently on their subsistence economy? I believe that only in Eurasia; that is to say, South-East Asia and the Middle East, is there abundance, and the question arises: On what terms is that abundance to be available to others? Energy may make more fortunes than prudence; but with energy at the base of an industrial society, and therefore with energy the touchstone of sovereignty and independence, we are forced to ask ourselves: Can an independent West, an independent European Community, survive even if it achieves independence of foreign supplies up to 50 per cent. by 1985?
My Lords, could the European Community have an energy policy? I believe that so long as the main members of it pull apart, so long as their attitude to the Community is what they call in Brussels a menu à la carte—you work together when you are in trouble, and only then—so long as it fails to command the loyalty of the common citizen there will be no common industrial objective; there will be no common industrial policy and therefore there will be no hope of a common 1294 energy policy which could prove to be the touchstone of its survival as a political entity.
Surely, this is where the United Kingdom conies in and has a great role to play. Again, as the noble Lord, Lord Wynne-Jones, has pointed out, it is known; and in earlier reports that our Committee submitted to your Lordships' House we have made it clear that relative to the immediate present—that is to say, the next 20 years or 30 years at the outside—thanks to the offshore, they in the EEC want energy, we in the United Kingdom have it. Thanks to coal, in the near future Britain has a far better prospect than any of her neighbours of indigenous energy resources with an enormous surplus for export.
Surely, here is our negotiating muscle. I hope that the noble Lord, Lord Peart, when he replies, will be able to touch on this. I am sure that all Members of my Committee, indeed the whole House, are grateful that the noble Lord, Lord Peart, is available today to reply to this very important debate. I hope he will be able to reply to these questions: First of all, how far are we British using in the Community what I would call our energy muscle to secure intelligent and realistic policies? One wonders whether we are using that same muscle in regard to our negotiations with Argentina over the Falkland Islands, where again the prospect of offshore energy lies to our hand and to our advantage.
What could be the essentials of a community policy in this field? First, we must recognise that we need a calendar of decades, not years and certainly not months. All the propositions for alternative sources take a long time. Any power station takes six years or more to produce; an offshore oilfield from discovery to production takes at least six years; and when we come to fusion, which, if I may use simple language, is an attempt to bottle a sunspot, that looks like 45 or 50 years away, even if there was agreement now as to where the next step should be sited. Surely a right energy policy will determine what are the likely sources, and will determine the right balance of research and development between exploration and invention as the first option; exploitation as the second; and conservation as the third.
1295 With regard to conservation, may I remind your Lordships that it is not only a question of switching off lights at home, double-glazing the windows or stopping draughts. In industry and the actual conversion of coal to electricity, there is an enormous wastage, up to something like 60 per cent. That is an area that clamours for research. A right policy will secure a suitable but, I take it, flexible balance between the claims of these three research areas. Finally, a right policy will provide the means of encouraging investment, not only public sector investment but private sector investment also, and will protect it—may I add this in parenthesis—without any kind of retrospective change of the ground rules where private enterprise investment is concerned.
When one speaks of policies and chooses between areas of research, all the pet panaceas emerge, whether it is wind, solar power, tides or my own personal pet, wave energy—perhaps I should declare an interest in that I am a director of a small company engaged in promoting that—whether it is breeder reactor developments, whether it is the establishment of processing and enrichment alongside as one way of avoiding hazards, whether it be the consumption of spent fuel.
All these are possibilities; but surely these exciting possibilities have blinded us to a major policy decision which is staring us in the face. I come back to coal. Not only has coal been described as a portable climate, but there is any amount of it. As I daresay we may hear later and more authoritatively from my noble friend Lord Bessborough, as rapporteur of the Committee of Technology in the European Parliament, they there and others here have discerned that there are now resources of coal available, albeit at a price, to a far greater extent than was imagined 10 years ago. Thanks to the new developments in seismic surveying, which has been largely prompted by the oil industry, it is now possible to survey this country; and the National Coal Board have a rolling programme of exploration looking for new sources. Think how that contrasts with the day of the unfortunate noble Lord, Lord Robens, who was appointed to chair the NCB to close collieries down! Then the idea was: we do not want more: we want less. 1296 Now there is a programme for discovering more, and they have found any amount. We believe there is still much more to be found.
Not only is there now a knowledge of greater coal resources, but there are new possibilities of sophisticated use ranging from the power station at the pithead, to gasification, fluidisation and colloidal use. I believe the noble Lord, Lord Energlyn, is likely to refer to this. What holds this up? In an earlier report to this House, our Committee observed that when the European Commission forecast coal production could be maintained at about the present level, we said that that depended on two assumptions: one was adequate investment, the other was the backing and support of the labour force.
My Lords, there is no problem so great that it cannot be ignored by those countries, those Governments, those Parliaments, those citizens, who choose to bury their heads in the sand. In the coal industry there is a grave conflict which has to be faced. May I venture to say that when I was a Member of another place I sat for a mining constituency. I knew all the collieries in my constituency. Although we might have had our differences politically, I never heard a harsh word from my constituents working in those dark, cavernous recesses of the earth. I am not anti-mining; I am pro-mining. I am not anti-miner; I am pro-miner.
We must face the fact that no matter what the investment, the mining community fears that enough output to give a surplus for export would threaten their own wage bargaining power. Here is the heart of the immediate British and Community energy policy crisis. It is one from which we avert our eyes as if it were something indecent. As I have said, there is no problem so great that it cannot be ignored by those who are determined to do so.
I want to ask the Government whether they are satisfied that the National Coal Board's Plan for Coal is anything like enough. It is grandiose indeed, but is it anything like grand enough? I want to ask whether the Coal Board are shouting at the pitheads that new methods to enable one man to do the work of 40 do not mean 39 redundancies but 40 times the 1297 output. That is the message which surely has to be megaphoned up and down the country. Forty times the output would give Britain a new voice in the EEC and the EEC a new voice in the world. By the same token, in the Community, are we pressing for a target of coal production merely to maintain things as they are or to go further and achieve many times better?
§ Lord DAVIES of LEEKMy Lords, I am grateful to the noble Earl for his most interesting speech, but would he not agree that it is impossible to compare coal mining with a factory, and that no matter what capital we have got, if we have not the manpower to cut the coal we cannot get anywhere? Also, unless we look at the kind of machinery that is being used, we are producing more coal dust than real coal, and wasting energy that way.
§ The Earl of LAUDERDALEI am much obliged to the noble Lord for his intervention. In fact it leads on to what I was about to say. While I would not attempt to enter into a dispute as to whether coal dust is a waste or a "plus" resource, because others more competent than I will tackle that later on, I would say this: somebody has said of appeals to Government:
We do not ask them to be brave, but we ask them to be sensible, which is more difficult.So I should like to put this question, in the nicest possible way: in the Community, and with regard to the forthcoming meeting of Energy Ministers, what is the situation on protecting investment in energy? The noble Lord, Lord Strabolgi, has more than once been courteous enough to answer questions I have put about the Minimum Safeguard Price for oil—otherwise known as the MSP when my noble and learned friend Lord Hailsham is not on the Front Bench, because he does not like acronyms. But whether it is MSP or whether it is protecting the Community from cheap coal imports, which are a threat to investment, I hope we shall have some word from the noble Lord as to the Government's approach and purpose.Secondly, to come back to United Kingdom policy, why should there be 1298 any serious resistance to miners retiring at 60? Why resist miners retiring at 50, or 40, or 35? Why not be quite frank and set out to buy them out, in the way the dockers have been bought out, and exclude from the coal-face anyone who has not got a B.Sc. and is probably under the age of 35? It is not that we need a great many more miners. What we do need is the application of the mining force we have got to the best available equipment which, however, I shall not detain your Lordships now by trying to describe.
In the context of world energy generally, a new balance of power must result from two already visible conflicts. First, the Western and industrial nations are competing with the developing Third World for still finite resources, and that competition is beginning to be apparent. Secondly, bitter European and Japanese competition with the United States is surely at hand for access to Middle East oil, and no doubt later to that of South-East Asia. Those two conflicts are only beginning to he seen, but they are going to be serious.
To avert them there are two long-term possibilities. One is to find the philosopher's stone which, instead of turning all to gold, will uncover and harness infinitely renewable energy sources. The alternative is more drastic still and perhaps just as difficult. It is to recognise that our troubles do stem from an industrial machine that we have been brought up with and have ourselves taken steps to advance; to recognise that its idolatory of material wealth, of endless consumption, needing still more consumption to keep it ticking, has moulded our so-called growth philosophy to the point of absurdity, until we actually believe in infinite growth inside of a finite environment.
So, my Lords, I suggest that an energy policy demands an energy philosophy; an energy philosophy demands a social philosophy; a social philosophy demands a moral philosophy, and a moral philosophy demands a choice of values. No society, certainly no Parliament and quite certainly no political Party, which fails to address itself to the enormity of this folly deserves to survive unpunished. As Pascal said:
We run carelessly to the precipice after we have put something before us to prevent us from seeing it".
§ 3.35 p.m.
§ Lord WELLS-PESTELLMy Lords, perhaps this is a convenient moment for me to repeat a Statement which has been made by my right honourable friend David Ennals in another place. With the leave of the House, I will now repeat the Statement made in another place which is as follows:
"In accordance with Section 125 of the Social Security Act 1975 I reviewed the present level of benefits before the end of the 1976–77 financial year, and formally determined that they needed to he increased. Increases will be paid from the week beginning 14th November, which is one year after the last uprating.
"Under the Act pensions and other long-term benefits must go up in line with the rise in earnings or prices, whichever is greater, and short-term benefits must rise in line with prices. During the 12 months to November 1977 prices are expected to rise faster than earnings, so the increase in prices will be the benchmark both for long and for short-term benefits.
"In the Financial Statement published at the time of my right honourable friend the Chancellor's Budget, prices were forecast to rise by 13 per cent. between the last quarter of 1976 and the last quarter of this year. Having given full consideration to all relevant matters, I am satisfied that this forecast represents the most reliable guide available to me of the likely movement of prices between last November and this November. I expect the rate of inflation to fall during the next six months well below the year-on-year rate represented by the April monthly figure which was published last week. The factors that gave rise to that rate were foreseen and fully taken into account in the forecast I have mentioned.
"When this Government came to Office in February 1974 pensions stood at £7.75 and £12.50. I have decided that from this November the single pension will go up to £17.50 and the married couples pension to £28, cash increases of £2.20 and £3.50 over the present rates. This is an increase of nearly fourteen-and-a-half per cent.; and for married couples it equals the 1300 biggest cash rise ever—the one we made shortly after returning to power in 1974. The increases will also apply to the standard rate of widows' pensions and to invalidity pensions.
By November we will have far more than doubled pensions compared with the rates paid by the previous Government. Even after allowing for inflation, by last November this Government had increased the real value of pensions and other benefits by 15 per cent. This November's increase should cover inflation since the last uprating and provide a further increase in real purchasing power.
"Many pensioners will also be glad to know that this year, for the first time, the uprating order will change the earnings rule limit, in accordance with the recent Social Security (Miscellaneous Provisions) Act. The limit will go up from £35 to £40.
"Short-term benefits for sickness and unemployment will go up by £1.80, from £12.90 to £14.70, for single persons; and for a married couple they will rise by £2.90, from £20.90 to £23.80 per week. Maternity allowance and injury benefit will go up by the same amounts. Injury benefit will become £17.45 a week for the single person and £26.55 for the married man with a dependent wife. War and industrial injuries disablement and widow's pensions will go up in line with long-term benefits. For example, the 100 per cent. rate of pension for war disablement or for work injury will go up from £25 to £28.60. There will be comparable increases in the additional allowances which can be paid with these pensions.
"I now turn to the civilian disabled. The therapeutic earnings limit, which is applicable to all the incapacity benefits, will go up from £9 to £10 a week. I am glad to confirm that, from the week beginning 14th November, disabled married women unable to go out to work and unable to do their housework will be eligible for the noncontributory invalidity pension. There will be a more detailed announcement on this later.
"The House will also recall that I have already announced an increase of £2 in the mobility allowance with effect 1301 from November. For supplementary benefit, the cash increases in the main scale rates will be the same as those in the related National Insurance benefits, and they will come into force at the same time. For the present at least, there will continue to be five separate children's supplementary benefit rates, related to age; the proposal we have had under consideration to reduce the number of these rates will be studied further as part of the review of the supplementary benefits scheme.
"Also in November, the Supplementary Benefits Commission will increase the discretionary additions for extra heating from 70p to 80p from £1.40 to £1.60, and from £2.10 to £2.40. The discretionary addition for special dietary needs will go up from 75p to 90p, and from £1.75 to £2.10.
"My right honourable friend the Secretary of State for the Environment has it in mind to make appropriate adjustments in the needs allowances for the rent and rate rebate and rent allowance schemes. He will be consulting his Advisory Committee on Rent Rebates and Rent Allowances.
§ Following are the details referred to above:—
§ DETAILS OF NEW RATES OF BENEFIT
§ The following are the new rates:
| MAIN INCREASED CONTRIBUTORY AND NON-CONTRIBUTORY BENEFIT RATES | ||
| Existing Weekly Rate £ | Proposed Weekly Rate £ | |
| Standard rate of invalidity, widow's and Category A retirement* pensions | 15.30 | 17.50 |
| Category B retirement pension at the higher rate* and widowed mother's allowance: | ||
| Increase of invalidity pension and Category A retirement pension for wife or other adult dependant | 9.20 | 10.50 |
| Category B retirement pension at the lower rate* | ||
| Earnings limit for retirement pensioners and wives of retirement and invalidity pensioners | 35.00 | 40.00 |
| Standard rate of unemployment and sickness benefits: | ||
| Higher rate | 12.90 | 14.70 |
| Increase for wife or other adult dependant | 8.00 | 9.10 |
| Lower rate | 9.20 | 10.50 |
| Widow's allowance (first 26 weeks of widowhood) | 21.40 | 24.50 |
| Maternity allowance | 12.90 | 14.70 |
| *An age addition of 25p is payable to retirement pensioners who are aged 80 or over |
§ "The full-year cost of the whole of this uprating, including the increase in supplementary benefits and in heating and dietary additions, is just under £1,500 million. Nearly £1,250 million of this will fall on the National Insurance Fund and will be taken into account in the annual review of contributions in the autumn. Any changes in contribution rates for 1978–79 resulting from that review will of course require the approval of Parliament.
§ "For the convenience of the House, full details of all the new rates of benefit are available in the Vote Office and will be circulated in the Official Report. I shall he laying the necessary draft up-rating order, under Section 124 of the Social Security Act, after the Recess. The order will be accompanied by a Government Actuary's report in the normal way.
§ "I am sure the whole House will welcome these further measures to protect the position of pensioners and other beneficiaries in these difficult times".
§ My Lords, that ends the Statement.
1303| Existing Weekly Rate £ | Proposed Weekly Rate £ | |
| Invalidity allowance payable with invalidity pension, when incapacity began before age: | ||
| 35 | 3.20 | 3.70 |
| 45 | 2.00 | 2.30 |
| 60 for men or 55 for women | 1.00 | 1.15 |
| Attendance allowance: | ||
| Higher rate | 12.20 | 14.00 |
| Lower rate | 8.15 | 9.30 |
| Retirement pension for persons over pensionable age on 5 July 1948 and for persons over 80*: | ||
| Higher rate | 9.20 | 10.50 |
| Lower rate | 5.60 | 6.30 |
| Non-contributory invalidity pension | 9.20 | 10.50 |
| Invalid care allowance | 9.20 | 10.50 |
| Increase of con-contributory invalidity pension and invalid care allowance for wife or other adult dependant | 5.60 | 6.30 |
| Mobility allowance | 5.00 | 7.00 |
| Guardian's allowance | 6.45 | 7.40 |
| Child's special allowance; increases for children of widows, invalidity, non-contributory invalidity and retirement pensioners, and invalid care allowance beneficiaries: | ||
| First child | 6.45 | 7.40 |
| Any other child | 5.95 | 6.90 |
| Increases for children of all other beneficiaries: | ||
| First child | 3.05 | 3.50 |
| Any other child | 2.55 | 3.00 |
| *Excluding the 25p age addition. |
| MAIN INCREASED INDUSTRIAL INJURIES BENEFIT RATES | ||
| Existing Weekly £ | Proposed Weekly Rate £ | |
| Injury Benefit*† | 15.65 | 17.45 |
| Disablement benefit (100 per cent, assessment)* | 25.00 | 28.60 |
| Unemployability supplement‡ | 15.30 | 17.50 |
| Special hardship allowance (maximum) | 10.00 | 11.44 |
| Constant attendance allowance (normal maximum) | 10.00 | 11.40 |
| Exceptionally severe disablement allowance | 10.00 | 11.40 |
| Industrial death benefit: | ||
| Widow's pension during first 26 weeks of widowhood | 21.40 | 24.50 |
| Widow's pension now payable at £15.85 rate | 15.85 | 18.05 |
| Widow's pension now payable at £4.59 rate | 4.59 | 5.25 |
| *The Rates for beneficiaries not over the age of 18 will also be increased. | ||
| †Increases for adult dependants and children will be the same as those payable with unemployment and sickness benefits. | ||
| ‡Invalidity allowances and increases for adult dependants and children will be the same as those payable with invalidity pensions. |
§ MAIN INCREASED WAR PENSION RATES
§ All ranks receive the same increases, officers' rates being expressed in pounds per annum.
| PART I: DISABLEMENT BENEFITS | ||
| Existing Weekly Rate £ | Proposed Weekly Rate £ | |
| Disablement pension for private at 100 per cent, rate | 25.00 | 28.60 |
| Unemployability allowances*: | ||
| Personal allowance | 16.30 | 18.60 |
| Increase for wife or other adult dependant | 9.20 | 10.50 |
| Comforts allowance: | ||
| Higher rate | 4.30 | 4.90 |
| Lower rate | 2.15 | 2.45 |
| Allowance for lower standard of occupation (maximum) | 10.00 | 11.44 |
| Constant attendance allowance: | ||
| Special maximum | 20.00 | 22.80 |
| Special intermediate | 15.00 | 17.10 |
| Normal maximum | 10.00 | 11.40 |
| Half and quarter day | 5.00 | 5.70 |
| Age allowance with assessments of: | ||
| 40 and 50 per cent. | 1.80 | 2.00 |
| Over 50 and not exceeding 70 per cent. | 2.75 | 3.10 |
| Over 70 and not exceeding 90 per cent. | 3.90 | 4.40 |
| Over 90 per cent. | 5.50 | 6.20 |
| Exceptionally severe disablement allowance | 10.00 | 11.40 |
| Severe disablement occupational allowance | 5.00 | 5.70 |
| Existing Annual Rate £ | Proposed Annual Rate £ | |
| Clothing allowance: | ||
| Higher rate | 36.00 | 40 |
| Lower rate | 23.00 | 25 |
| *Invalidity allowances and increases for children will be the same as those payable with invalidity pensions. |
| Part II: DEATH BENEFITS | ||
| Existing Weekly Rate £ | Proposed Weekly Rate £ | |
| Widow's pension—private's widow: | ||
| Standard rate | 19.80 | 22.70 |
| Childless widow under 40 | 4.59 | 5.25 |
| Rent allowance | 7.50 | 8.60 |
| Age allowance for elderly widows: | ||
| Between age 65 and 70 | 1.95 | 2.20 |
| Over age 70 | 3.90 | 4.40 |
| Widower's pension | 19.80 | 22.70 |
| Adult orphans | 15.30 | 17.50 |
| MAIN INCREASED SUPPLEMENTARY BENEFIT RATES | ||||
| Existing Ordinary Rate £ | Existing Long-Term Rate* £ | Proposed Ordinary Weekly Rate £ | Proposed Long-Term Weekly Rate* £ | |
| Ordinary scale: | ||||
| Husband and wife | 20.65 | 24.85 | 23.55 | 28.35 |
| Person living alone | 12.70 | 15.70 | 14.50 | 17.90 |
| Any other person aged: | ||||
| Not less than 18 | 10.15 | 12.60 | 11.60 | 14.35 |
| Less than 18 but not less than 16 | 7.80 | — | 8.90 | — |
| Less than 16 but not less than 13 | 6.50 | — | 7.40 | — |
| Less than 13 but not less than 11 | 5.35 | — | 6.10 | — |
| Less than 11 but not less than 5 | 4.35 | — | 4.95 | — |
| Less than 5 | 3.60 | — | 4.10 | — |
| Blind Scale: | ||||
| Husband and wife: | ||||
| If one of them is blind | 21.90 | 26.10 | 24.80 | 29.60 |
| If both of them are blind | 22.70 | 26.90 | 25.60 | 30.40 |
| Any other blind person aged: | ||||
| Not less than 18 | 13.95 | 16.95 | 15.75 | 19.15 |
| Less than 18 but not less than 16 | 8.70 | — | 9.80 | — |
| Less than 16 but not less than 13 | 6.50 | — | 7.40 | — |
| Less than 13 but not less than 11 | 5.35 | — | 6.10 | — |
| Less than 11 but not less than 5 | 4.35 | — | 4.95 | — |
| Less than 5 | 3.60 | — | 4.10 | — |
| Existing Weekly Rate £ | Proposed Weekly Rate £ | |
| Non-householder rent allowance | 1.20 | 1.45 |
| Attendance requirements: | ||
| Higher rate | 12.20 | 14.00 |
| Lower rate | 8.15 | 9.30 |
| Discretionary additions to supplementary benefit: | ||
| Heating additions | .70 | .80 |
| 1.40 | 1.60 | |
| 2.10 | 2.40 | |
| Central Heating additions | .35 | .40 |
| .70 | .80 | |
| 1.40 | 1.60 | |
| Dietary additions | .75 | .90 |
| 1.75 | 2.10 | |
| *Where the claimant or a dependant is aged 80 or over a further 25p is added to these long-term rates. |
§ 3.46 p.m.
§ Lord SANDYSMy Lords, I must first thank the noble Lord, Lord Wells-Pestell, for repeating the Statement. But I must say that at the heart of the Statement lies a contradiction, because Section 125 of the Social Security Act 1975, the section to which the Statement refers, charges the Secretary of State with the task of ensuring that pensions and other benefits retain their value. I shall not read out Section 125, but it is quite specific on this point, and so is the Statement, because the noble Lord, Lord Wells-Pestell, said—and I quote the Statement—
… so the increase in prices will be the benchmark both for long and for short-term benefits".This is an essential point here. But we have a contradiction, because the noble Lord's right honourable friend the Secretary of State assured another place that he expected the rate of inflation to fall during the next six months.Welcome as this undoubtedly is, we have to ask ourselves whether or not he is right. Has the Secretary of State for Social Services consulted his right honourable friend the Chancellor of the Exchequer—I have no doubt that he has—because the very latest statement on inflation gives us a current rate of no less than 17½ per cent.? We are assured in this Statement that prices are expected to rise by 13 per cent., and the Government consider that this is about right. Our conclusion—and we have only the evidence of our eyes, the shops and the statements before another place and your Lordships' House—is that the Government may well be wrong. Inflation may be higher than 13 per cent., in which case the Government will have failed in their statutory obligation to keep pensions and other benefits in line.
Two courses are open. Either the Government should raise the rates of benefit or they must change the law, because, clearly, the statutory obligation is to keep pensions and other benefits in line with inflation. It is a difficult task—we acknowledge that—for the Secretary of State to ensure six months ahead that his forecasts are right, but there is here a contradiction of the greatest importance.
I turn to certain matters which we welcome. We welcome the fact that the Statement assures us that the disabled married woman who is unable to go out 1310 to work and to do housework will be eligible for the non-contributory invalidity pension. We are assured that a more detailed announcement will be made about this later on, and I am not in a position to comment further at the present moment.
However, the Statement tells us that five separate children's supplementary benefit rates are to be retained. In the past these have been somewhat confusing. If the Government intend to study it, as they say they will, and bring out a review, it will aid those who handle the benefits and those who hope to benefit from them. The Statement does not refer in very specific terms to whether or not the child benefit will be raised. However, we assume that it will be, in line with other benefits. I hope that the noble Lord, Lord Wells-Pestell, will be able to clarify that point. I believe the Secretary of State has made a bet and that he is hoping that prices will rise by no more than 14 per cent. We believe that he may well prove, unfortunately, to be wrong. Therefore we should like to know what the Government intend to do about it, because something must be done.
§ Lord BANKSMy Lords, I, too, should like to thank the noble Lord, Lord Wells-Pestell, for repeating the Statement made in another place. The Statement says that this uprating should cover inflation since the last uprating and provide a further increase in real purchasing power. This is assuming that the increase in prices from last November to next November is 13 per cent., in which case an increase of 14½ per cent. would allow 1½ per cent. for an increase in real value. However, it seems to me that this is an optimistic assumption to make, in view of the fact, as the noble Lord, Lord Sandys, has already said, that the most recent figure we have is of an inflation rate of 17½ per cent. I very much doubt whether the increase will cover inflation, let alone provide for an increase in real value. That is the crux of the matter.
There is no point in applauding particular figures for particular benefits unless one knows the answer to that question, and it depends upon one's opinion of that answer. However, the uprating should not be regarded as a distribution of Government largesse. Increases due to inflation 1311 should be covered, or nearly covered, by earnings-related contributions without any increase in the percentage contribution rate. We know that earnings-related contributions have been producing surpluses. The Statement says that this uprating will cost the National Insurance Fund £1,250 million extra this year; but that is as against a figure of £1,158 million extra for the uprating last year. Therefore, allowing for the decline in the value of money, this year's extra cost would appear to be less, in real terms.
I welcome the confirmation that from November disabled married women who are unable to go out to work and to do housework will be eligible for the noncontributory invalidity pension. The increase in the mobility allowance from £5 a week to £7 a week, to which the Statement refers, is welcome, but I am afraid that it leaves the mobility allowance totally inadequate for its purpose. We shall watch very carefully to see whether the Government's forecast of the rate of inflation is proved correct. Should the rate prove to be higher, we shall press for an interim review.
§ Lord WELLS-PESTELLMy Lords, it is customary to thank noble Lords on the other side who reply to Statements, but at times I am a little troubled when whatever praise can be given to the Government is given so grudgingly. I look forward to the time when at least somebody from the other side, on either Bench, will get up to congratulate the Government on doing a reasonably good job—without carping.
§ A noble Lord: My Lords, we have!
§ Lord WELLS-PESTELLThen, my Lords, I should like somebody to turn it up in Hansard for me.
To turn to the matter of inflation, I tried to point out that the uprating benefit is related to inflation from last November to this November and not from last April to this April. Secondly, the April-on-April figure is no guide to the inflation we can expect in the second half of the year. It included the price rises due to the Budget; namely, cigarettes, petrol, vehicle excise duty and increases in rates. These are the main items responsible for the increase in prices and, 1312 therefore, in inflation. Thirdly, the April year-on-year figure is not out of line with our expectations.
All I can say is that it is the considereo view of the Government, rightly or wrongly—time will tell, and I am sure noble Lords opposite will not hesitate to remind us if we are wrong—that the amount by which we uprate pensions, starting from next November, will materially increase the real value of pensions. This is because the Government believe that inflation will fall; but, as I say, time will tell. The only other point that was raised was child benefit. However, as the noble Lord, Lord Sandys, knows, this is a matter not for the present but for the future and one which my right honourable friend and his Ministers are considering.
§ 3.55 p.m.
§ Viscount ECCLESMy Lords, as I understand it, the National Insurance Fund is to pay out £1,250 million, a sum of money which will fall on those in work. Therefore I should like to ask the Government whether they think it is in the best interests of the public understanding of what is happening to give all the details of the benefits and then to make us wait six months before we know what the additional contributions will be. We are in great difficulty about rises in incomes. However, to hold out this handful of splendid benefits, as they sound, and then not to tell us how we are going to pay for them is not right.
§ Lord WELLS-PESTELLMy Lords, I think that it is right, in the sense that there is an obligation, which each Government, since time immemorial, have accepted, to do something for those in the community who are less fortunately placed. In different ways, this has been part of the philosophy of both sides of your Lordships' House. The uprating is to take place in November, and the contributions start in April of each year. The Government are going to review the question of contributions this coming autumn, but they are working to a very tight schedule. The review will take a considerable time, because we have to think out new contributions in relation both to those who will be contributing towards a wholly earnings-related policy and to those who will be in a contracted-out scheme. Certainly I cannot today 1313 give your Lordships any indication of what the increase is likely to be in April next.
§ Lord DRUMALBYNMy Lords, could not the Government at least have given an indication of what is the meaning, in terms of contribution, of the increases that have been given? I am sure that the noble Lord is aware that nobody wants to crab him in any way for announcing increases in benefits. Having had to announce them in the past, I know how very satisfying it is. However, the fact is that then the increases in contributions were announced at the same time. May I suggest to the Government that it is only right that they should announce what is the cost to the working community—and to industry, of course—of the increases? It is only right that we should see what these increases are costing the nation. There is no question of one side crabbing the other. It is just a matter of proper accountancy.
§ Lord WELLS-PESTELLMy Lords, in some respects I take the noble Lord's point and accept what he says. I am trying to say that next April we are embarking on an entirely new system, because of those who are going to contract out and because we are introducing a wholly earnings-related policy. This has made it very difficult. There is nothing sinister in not telling your Lordships; at this present stage we just do not know.
§ Lord DAVIES of LEEKMy Lords, those of us who have listened to this Statement from this side of the House welcome it. I hate to introduce any acerbity into this debate or to carp about it politically, but I must point out the illogicality of all that we have heard. In the first place, we are told that this is not enough and then, secondly, we are asked who is to pay for it. We have already been told that the contributions will be £1,250,000, so I ask the categorical question: would the Opposition, had they the power at the present moment, do nothing? Or, would they give more than we have given and, if they gave more, would they not have to increase the contribution for National Insurance? Why not greet this welcome help to the underprivileged in our society and face the realities of the economic position? We 1314 know it is difficult; it would be difficult for the Opposition were they in power and it is difficult for us. For heaven's sake stop carping and help Britain to get out of its difficulties!
§ Lord ALPORTMy Lords, would the noble Lord perhaps realise that suspicious minds might think that giving this agreeable news, which we all welcome, at this time and postponing until November the announcement of the cost of it so far as the working population is concerned, might place the Government at some advantage from an electoral point of view if a General Election took place in October?
§ Lord DAVIES of LEEKMy Lords, there will be no Election in November.
§ Lord WELLS-PESTELLMy Lords, I can assure the noble Lord and your Lordships that there is nothing sinister in this. In any case your Lordships should know the Government well enough to know that there is no reason to be suspicious of them.
§ Lord SANDYSMy Lords, I can only reinforce what my noble friends have said from this side of the House. We believe that we should have a statement of account. To announce these very agreeable increases is one thing, but we must know the other side of the hook. The noble Lord, Lord Davies of Leek, made certain inquiries and, so far as this side of the House is concerned, our priorities are different. We believe that this is a profoundly disturbing policy for the whole balance of the economy. Nothing has done more harm and, indeed, if a Conservative Government were to be returned this autumn, as we think they could be if there were a General Election, we would change the priorities.
§ Lord WELLS-PESTELLMy Lords, I should like to suggest to the noble Lord that he is starting his election campaign about 18 months too soon.
§ Viscount ECCLESMy Lords, I should like to ask one supplementary question. Am I to understand from what the noble Lord has said that the whole cost of the increase between November and April, when higher contributions may take effect. will fall on the taxpayer?
§ Lord WELLS-PESTELLMy Lords, if your Lordships want me to take up the time of the House I can say that in December 1976 the Government actuaries estimated, on certain assumptions about unemployment levels and earnings movements, that the Fund would show an operating surplus of something like £888 million in 1977–78. The effect of the uprating alone will be to reduce the expected surplus to about £680 million. But a further report of the Government actuary will be available when the uprating order is laid, and I am afraid I cannot be of any greater help than that to the noble Viscount.
§ Viscount AMORYMy Lords, I should like to follow one point which was raised by my noble friend Lord Eccles. The information given to us by the noble Lord, that the Government intend to carry out the decision of Parliament as to the rates of pension which should be payable, is very agreeable. On these occasions there is always a danger that many people will not realise how the money is to be raised. I understand the point mentioned by the noble Lord about the change in the system and therefore the difficulty about saying exactly what the increases will be. I should have thought that this was so important that it was well worth considering giving an estimate of what the increases would be, on the basis of present contributions as an indication, and then saying that possibly the system will be changed between now and then. I believe there is always the danger that we see one side of the picture and not the other.