HL Deb 22 November 1977 vol 387 cc762-77

3.9 p.m.

Lord WELLS-PESTELL

My Lords, I beg to move that this Bill be read a second time. This is a short Bill and I shall therefore be brief in describing its provisions. Its purpose is to pay a bonus of £10 to nearly 10 million people, which is a larger number than ever before. Because of this Bill we hope that Christmas will be a pleasanter time for them, and it is, I think, a pleasure to everyone in your Lordships' House to have this Bill before us.

As your Lordships know, the Government did not introduce a bonus in 1975 and 1976 for a whole number of reasons which it is perhaps not necessary for me to go into. The economic circumstances meant that available resources had to be concentrated on improving the general level of benefits, and in 1975, as your Lordships will remember, we did in fact have two upratings in pensions. There are disadvantages to bonus payments; because of administrative difficulties, we acknowledge that many deserving groups have to be excluded. We do not like it, but there are real difficulties.

This year, the Government have decided that there is more room for spending power in the economy. We feel it is only right that the pensioners, the disabled, widows and certain other social security beneficiaries should share in the measures announced by the Chancellor in another place on 26th October last. The bonus will go to about 8½ million retirement pensioners and to over 1 million other people under pension age, including those in Northern Ireland. The Bill is a wholly beneficial one. I am sure that it will receive general support from your Lordships and I trust that it will be afforded a swift passage through your Lordships' House so that the payments can be made promptly.

Clause 1 provides that, to qualify for the bonus, a person must first be living or ordinarily resident in the United Kingdom or a Member State of the EEC at some time in the week beginning 5th December. Secondly, he must be entitled, or treated as entitled, to payment of a qualifying benefit for at least one day in that week. A person who satisfies these conditions can get a further payment of £10—making £20 in all—in respect of his wife, if they are both over pensionable age. Only one payment of £10 can be made in respect of any one person. The bonus will be tax free and will be disregarded when a person's means are assessed for purposes such as supplementary benefit, rent allowance or rent rebate.

Clause 2 provides for payments to be made to people receiving retirement and invalidity pensions; supplementary pensions; all widows benefits under the National Insurance and Industrial Injuries schemes; attendance allowance; unemployability supplement or allowance; war widows' pensions. Payments will also be made to war disablement pensioners provided they have reached pension age and retired or been treated as retired. This year, the payments will also go to those receiving invalid care allowance or a non-contributory invalidity pension—including disabled housewives who became eligible for this particular benefit last week—amounting to about 180,000 persons in all.

Clause 3 deals with administration. The great bulk of payments will be made by post offices. Perhaps your Lordships will allow me to take this opportunity to express the gratitude of your Lordships to the staff of the Post Office and to sub-postmasters who are prepared to perform this task at a time when their period of greatest pressure is approaching. I should also like to thank the members of staff of my own Department—the Department of Health and Social Security—who will arrange for the payments to be made in the other cases. The vast majority of those entitled to it will get the £10 payment during the week beginning 5th December, and nearly all payments should be made by Christmas.

Finally, let me turn to the financial provisions covered by Clause 4 of the Bill. The bonus payments will cost about £100 million and the cost will be met out of monies voted by Parliament or from the Consolidation Fund of Northern Ireland. As I have said, the payments will be tax free and will not affect entitlements to other benefits or allowances.

My Lords, this is a short Bill. I do not think that it is necessary for me to say anything further. I commend the Bill to your Lordships and hope that you will give it a Second Reading. I beg to move.

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

3.12 p.m.

Lord CULLEN of ASHBOURNE

My Lords, the House will be grateful to the noble Lord, Lord Wells-Pestell, for explaining the provisions of the Bill with his usual clarity. We welcome the Bill. It was, after all, the Conservatives who initiated the Christmas bonus in 1972 and repeated it in 1973. That example was followed in 1974 by the present Government, but it was discontinued in 1975 and 1976. Then, on the 29th April this year, the Minister responsible for social security said in reply to a Question in another place that it was not intended to pay the bonus in 1977. Now the Government wish to pay it.

There could be two reasons for the Government's change of mind. First, it could be that they are electioneering. It will not escape notice that 1974 was an election year and that another general election cannot be far distant. A more charitable reason would be that which the noble Lord has suggested: that to have paid it in 1975 and 1976 would hardly have been consistent with the pip-squeezing policies then being pursued and that, now that there is more juice in the national economy, the Government feel able to make this payment. I hope that the noble Lord will convincingly refute any suspicion of electioneering which would be bad not only for the image of the Labour Party—which would not distress me—but for the reputation of Parliament as a whole. Although £10 today is worth less than £5 at 1972 prices, I have no doubt that the recipients will be thankful for small mercies and also for the efforts of the Post Office on their behalf. I repeat that we welcome the Bill.

3.15 p.m.

Lord BANKS

My Lords, I, too, should like to thank the noble Lord, Lord Wells-Pestell, for his explanation of this short but very welcome Bill. We on these Benches are glad that it has been introduced into the House. In fact, we, with our colleagues in another place, pressed the Government to introduce it. We are pleased that a little cheer at Christmas will be distributed to some 10 million people—a larger number than ever before when similar payments have been made—and I am particularly glad that the benefit will be available to all invalidity pensioners.

I join with the noble Lord, Lord Wells-Pestell, in the thanks which he expressed towards the Post Office and also to those involved in his own Department. However, I should just point out that we on these Benches are quite convinced that, although this payment is welcome, it does not in any way solve the problem of providing an adequate pension for those who have already retired: it is no substitute for an adequate weekly income. Moreover, the problem of those who are already retired and who will receive no benefit under the earnings-related scheme that is due to come into force next year is one to which we shall want to return at a suitable opportunity. However, in the meantime, we welcome the Bill and hope that it will have a speedy passage through your Lordships' House.

3.17 p.m.

Lord BOYD-CARPENTER

My Lords, as a former Minister of Pensions and National Insurance, perhaps I may also be allowed to welcome the Bill. These Christmas bonuses have sometimes been objected to because, in our universal system of National Insurance in this country the beneficiaries include a very limited number of comfortably-off people. I have always thought that that objection was misconceived because we can fully—perhaps excessively—rely on our taxation system to prevent such people getting any undue benefit from a bonus of this kind.

I think that it is right that, if the Government feel that some purchasing power can be released at this time—and this is entirely a matter for their judgment and responsibility—some of it should go to giving a little cheer and comfort to the older section of our population. There are, however, two questions that I should like to put to the noble Lord, Lord Wells-Pestell.

First, I hope that I did not understand the noble Lord aright—although I think I did—when I understood him to mean that war pensioners below retirement age were not to share in this payment. If that be so, then, even at this late hour I ask the Government to reconsider the matter. For many years it was an axiom in our social security system that war pensioners received priority. I should have thought that it would be an unfortunate abandonment of that principle if, when there is a small sum of money available to distribute, this most deserving section of our community—those who have been injured in the service of our country—should be excluded. I hope that I am wrong in reading the Bill in that way and in my understanding of what the noble Lord, Lord Wells-Pestell, said. If I am not wrong, then perhaps he can tell us that the Government will think again about this aspect.

The second matter that I wish to raise is procedural. Clause 3 (4) of the Bill gives the Secretary of State power to order a claim to be made in writing. I assume that that provision is put in as an administrative precaution for dealing with an exceptional and difficult case. However, I think that the House would be grateful if the noble Lord could give an assurance that it is not intended to exercise this power to demand a claim in writing save in the most exceptional and difficult circumstances.

I hope that the noble Lord will be able to deal with those points. However, I repeat that it is a very pleasant experience—and in these days an increasingly rare one—to be able to congratulate the Government on doing something really rather good.

3.19 p.m.

Lord HOUGHTON of SOWERBY

My Lords, this is, of course, a very pleasant Bill to pass in your Lordships' House today. I ought to declare an interest because, in common with other noble Lords, I shall be a beneficiary and so will my wife. Perhaps that alone is a stimulant to getting the Bill on the Statute Book as early as possible. Nevertheless, as one who was in at the beginning of this kind of social benefit, I question strongly whether it is any longer satisfactory or sound social policy.

In 1964, when the Labour Government announced their intention to introduce very substantial increases in social benefits, it was a matter of great regret that time was against getting the benefits converted into payments before Christmas of that year. There was a great deal of discontent in the House of Commons about that and every effort was made to re-examine the method of payment to see whether it could be instituted more quickly. Unfortunately, it was not found possible. Then pressure mounted to do something for the social beneficiaries for Christmas, in view of the fact that it was not possible to introduce the substantial increase in benefits before then.

So the Government, of which I was a member, decided on a lump sum of £10 to be given to all those in receipt of supplementary benefit or chronic sickness benefit. The mass of protest that came from all National Insurance pensioners and others who were not on supplementary benefits was most formidable. Indeed, those of us who looked at all these protests decided that it would never happen again. But it has happened again. Subsequently, it was applied to all National Insurance and social beneficiaries, as is the case at present, with possible minor exceptions upon which there may or may not be a grievance.

We must consider whether this kind of benefit is any longer justified on social grounds and whether, indeed, it is justified on economic grounds. In order to overcome the problem which I have described as relating to 1964–65, the annual review of benefits, which now takes place, is timed to enable an announcement to be made of the uprating in the late summer, and the uprating brought into operation in November. Only last week were the higher benefits for this year paid to National Insurance pensioners and others, which is in time for Christmas. This is what it was hoped to be able to do when the difficulties of 1964 arose.

One of the advantages of being in your Lordships' House is that one can examine some matters more dispassionately on their merits without the pressures of politics and prejudice. As one affected, I believe we must bear in mind that all pensioners will have the advantage of the increase in personal reliefs this year. They will have the advantage of the reduced rate of tax. Age exemption allowances have gone up; age allowances have gone up. All that has brought benefit to those on pensions. Moreover, in order to reduce the burden of work in the Inland Revenue, the Chancellor has decided that the increases in the State benefits which have been introduced midterm shall not be taxable in this tax year. That is another concession which has been given especially to those who receive the increases in State benefits.

The increase in State benefits is higher than the increase involved in Phase 2 to wage earners; it is higher than the guidelines now offered by the Government for the next phase in wage negotiations. We must not overlook the fact that the public service pensioners, of whom there are very large numbers today, are all included in this as well. Therefore, without in any way wishing to dampen the spirits of noble Lords in this matter, I wonder whether we are on the right lines. Bear in mind that this benefit is at the whim of Governments. Nobody knows whether or not it may come. As was mentioned a few moments ago by the noble Lord, Lord Cullen of Ashbourne, earlier this year the Government said, No, and have subsequently said, Yes. Is that the way to run our social benefits? A benefit started in the exceptional circumstances of 1964, which is subsequently justified on other grounds, can now be an instrument not so much of social policy but of political policy as well. It seems to me that it is undesirable to have this as a repeated feature of our social service benefits. I think that this Christmas box mentality in relation to those on pensions—and I say this without wishing to give offence—is undesirable. It is either patronage or generosity, and neither is appropriate in the circumstances.

On economic grounds this £100 million to be spent in this way would not be my priority for public expenditure at present. I believe that it should either be included in the statutory benefits or discontinued. I recall tobacco coupons—what a nuisance they became. These concessions are difficult to get rid of once begun and repeated several times.

Lord BOYD-CARPENTER

My Lords, as the Minister who abolished the tobacco coupon, perhaps I could say that there is, of course, the great difference that tobacco is bad for one and £10 is good for one.

Lord HOUGHTON of SOWERBY

My Lords, I accept that. I thought that the noble Lord was about to draw the distinction between a cash benefit to everybody as of right and a concession for the purchase of certain products. There is also that material difference. I mentioned it simply because, as the noble Lord will remember, it was most difficult to get rid of the tobacco concession without giving some financial compensation overall, which, if I remember rightly, was given.

The point I make is that if we start a concession for one reason and continue it later on for other good reasons, it becomes almost an expected feature of the social benefit. I believe that this cautionary note is justified, because if this kind of benefit is to be continued, we must reconsider the amount—whether it has been eroded by inflation, whether it shall be given a firm place in the expectations of retirement pensioners, or what. On the whole it is a pleasant duty to perform, but I doubt whether it is sound social or economic policy.

3.27 p.m.

Lord TAYLOR of MANSFIELD

My Lords, I welcome the Bill and, in doing so, I suppose I must declare an interest. However, I should like to put a question to my noble friend Lord Wells-Pestell. He will be well aware of the reciprocal arrangements that have been in operation since the inception of the National Insurance Scheme. There are British nationals who are pensioners living abroad and there are pensioners of other countries living in Britain. Can my noble friend tell the House whether this £10 will apply to British nationals living abroad and to other nationals living here? Will they both receive the £10 bonus?

Baroness WOOTTON of ABINGER

My Lords, along with so many other Members of your Lordships' House, I should like to express appreciation for this measure. However, I should like a little clarification of the Bill. At the top of page 5, Clause 2(7) it says: Two persons who are not married to each other and are living together as husband and wife shall be treated as spouses for the purposes of section 1"— which presumably means that they will receive the pension as though they were husband and wife—in two cases. First, if the man is entitled to a supplementary pension and, secondly, if: their requirements and resources fall to be aggregated under the provisions mentioned in subsection (2) (c)", which is the unemployability allowance. Can my noble friend explain why these two exceptions—and only these two—are made in the case of people who are living together as husband and wife and who are not married?

3.30 p.m.

Lord SHINWELL

My Lords, before my noble friend replies to this debate may I ask him one question which arises out of an observation by the noble Lord, Lord Boyd-Carpenter. I gathered that he said something like this: there exists a limited number of beneficiaries who are rather better off and therefore do not really need this £10 bonus. Are there any statistics available of the number of old-age pensioners, those above the age of 65, who are rather better off and really do not require it because they make no claim for supplementary allowances, and therefore there is no reason why they should be in receipt of this aspect of Government charity?

Quite frankly, I dislike the whole thing, first of all because, although some years ago £10 may have meant something, it does not mean very much now. Recently there was some controversy and I believe a suggestion was made in the other place that the bonus should be increased from £10 to £15. I should have said that that would have been very much better. I am all in favour—and therefore I naturally would not desire to prevent the passing of the Bill—of providing for those in need. That is why we have the supplementary schemes. I am bound to say that many of the supplementary allowances in consideration of the situation in which many people find themselves, because of unemployment and not receiving adequate unemployment pay, or a variety of reasons, are much too low.

I should like one of two things done, or two things if it were possible. First, not to tax old-age pensions. It seems to me that when a pension derives from National Insurance contributions—in other words, it is a form of insurance and one expects at some time or other to receive some benefit deriving from the payments that one makes, or that are imposed upon one in the ordinary course of the situation—that that is all right. But may I put it this way—like my noble friend Lord Houghton of Sowerby, I ought to declare an interest. Frankly, I would much rather see the £10 going to somebody who needs it. Of course I could, and no doubt will, as no doubt will the noble Lord, Lord Boyd-Carpenter, use the £10 to give somebody £2 or £3, or perhaps the whole lot, in order to benefit the person concerned. One can do that, but I would much rather have a different scheme altogether. Increase old-age pensions, or do not tax the old-age pensions. Or let us discover, on the basis of statistical evidence—which is apparently not available to Members of your Lordships' House—whether there are a large number of beneficiaries (we cannot say how many, but it might be a fairly high percentage) who do not need it, such as Members of your Lordships' House, who, I assume, really do not need it. Perhaps those who need it might put up their hands, then I would know. If they did so it would be the only kind of statistical evidence available.

I dislike the whole concept; I do not like it a bit. It is a form of charity dispensed by a Government—I hesitate to say what I am now forced to say because it is in my head and I must get it out—for electoral purposes. From the very fact that the noble Lord, Lord Boyd-Carpenter, mentioned that this bonus was first initiated by a Conservative Government, when we are almost on the eve of another General Election, it is obvious that it was dispensed for electoral purposes. I dislike that idea. It is a form of bribery; a form of corruption. Although no doubt there are some people very much in need and who will be delighted to get the £10 or, in the case of two persons, £20, I would much rather we had a better scheme—better pensions; less taxation.

3.34 p.m.

Lord DRUMALBYN

My Lords, may I intervene for a moment to make three points. The first is in relation to the speech of my noble friend Lord Boyd-Carpenter. If my noble friend is right and disabled war pensioners are not included under this Bill, is there any reason why they should not be included under a Royal Warrant? This is what invariably happens when war pensions are increased in line with other benefits. I have a good deal of sympathy with what the noble Lord, Lord Houghton, said. He made a courageous speech and a sensitive one, as one would expect from him with the experience that he has had.

Dealing with what the noble Lord, Lord Shinwell, has just said, I thought that in the course of his speech he slightly changed his stance and came round to acknowledge that for some people at any rate, some old-age pensioners, an extra £10 at Christmas would be very welcome. They have a great inelasticity of budget, and to have a little extra not only to spend on their own jollification but perhaps on presents for grandchildren and that sort of thing, is no doubt extremely welcome to them. However, I sympathised very much with his view about the appropriateness of making it a once only payment. If that is true this year, surely it is true every year. Why are we legislating only for this particular year for this kind of benefit?

Lord LEATHERLAND

My Lords, cannot we pass this decent, generous little Bill without any more carping criticism? I am quite sure that 10 million people outside this House will say "Thank you" for this £10 or £20 which is going into those 10 million households this Christmas. We have to bear in mind that it is not merely a £10 gift for the husband and a £10 gift for the wife, but that a married couple, under the increases recently announced by the Government, are to get an extra £3.50 a week from last week, or the week before, onwards; so there is a standing, permanent, shall I use the word, "generosity" as well as this £10 or £20 charitable gift to celebrate the Christmas season.

My noble friend Lord Shinwell rather despised the word "charity". I do not. I remember from my Sunday school days that I was told of faith, hope and charity—and that the greatest of these is charity. I think it is, but I do not look upon this as a charitable gift. I look upon this as a reward to worthy old people who perhaps have seen two World Wars, who perhaps have seen the hungry thirties, who perhaps saw the industrial dislocation of the early twenties. The Government are doing the right thing. Let us say good luck to them, and pass the Bill without any further delay.

Baroness FAITHFULL

My Lords, may I support this Bill, and say that old-age pensioners themselves want to be able to give at Christmas as well as to receive. This £10 buys a chicken, or a small turkey, and a Christmas pudding, and they are therefore able to give where they would not otherwise have been able to do so.

3.39 p.m.

Lord WELLS-PESTELL

My Lords, I have tried to make a note of all the points raised, and I hope I shall be able to deal with them. Before I do so may I be permitted to congratulate the noble Lord, Lord Cullen, on his first speech as a Member of the Opposition Front Bench. It is particularly agreeable to me that I congratulate him because I remember that when he made his maiden speech in your Lordships' House a good many years ago it fell to me, as the next speaker, to offer him my congratulations and those of your Lordships. I do so again with great sincerity. I am sorry the noble Lord has started his political career, as it were, on the Opposition Front Bench with such a suspicious mind. He really must not allow the suspicious minds of his colleagues to descend upon him to the degree that appears to have occurred already.

This is not an electioneering gesture. The Government have two years more to go and if we were going to have an electioneering stunt it is much more likely to be next year than this. Even assuming that it is an electioneering stunt, we are merely taking a leaf out of the behaviour of the Opposition. I can remember a Conservative Chancellor not many years ago presenting an enormous give-away Budget; then the Conservatives went to the country and the following November the Chancellor took back every penny and more. So I urge noble Lords opposite not to suspect motives on an occasion such as this.

I thank the noble Lord, Lord Banks, for his contribution in support. As for the remarks of the noble Lord, Lord Boyd-Carpenter, there is a great deal of doubt in the minds of a good many of us as to whether this is a desirable thing to do. My Party is on record as saying that the ideal way to deal with these situations is to see that the pension given weekly to retired people is adequate—I was going to say more than adequate—for their needs, and that is something which many noble Lords would like to see. However, this is a particularly special time (not just a particularly special period of the year) when the Chancellor finds that he can put back into the community a very substantial sum of money to improve conditions generally. A Chancellor who is going to do that must of necessity take into account not only the needs of a certain section of the community but certainly the needs of a poorer section of the community, and it would seem—whether it is a once for all thing or not—very desirable that the pensioners themselves should get some part of the money which the Chancellor has found able to put back into the community. I am grateful to my noble friend Lord Houghton of Sowerby for his contribution; there is no part of it with which I would disagree. Lord Boyd-Carpenter asked me about war widows.

Lord BOYD-CARPENTER

My Lords, I asked about war disability pensioners.

Lord WELLS-PESTELL

I was coming to that, my Lords. It may well be that inadvertently I misled the House—I shall have to read Hansard tomorrow—but certainly most war disablement pensioners, and war widows of all ages, will receive the bonus. If I did not make that clear in my opening remarks I am glad to have this opportunity of doing so.

Another point made by Lord Boyd-Carpenter was about the question of the application. There is no need for anyone to make an application for payment. If people feel they are entitled to the bonus and have not received the payment by the end of December, they should contact their local social security office. We must face the fact that there is a danger that some payments may be delayed in the post, or for one reason or another, and our officers will not be able to cope with a large number of inquiries. Consequently, if people feel they are entitled to this payment and have not received it, we ask them to make an application.

Lord HAWKE

My Lords, I presume that people who receive their pension by quarterly payment by cheque will get it in due course automatically, and I take it that the Minister is not asking them to ask for this bonus if they have not received it by a certain date.

Lord WELLS-PESTELL

That is right, my Lords. People who are entitled to and receive a pension, whether they get it weekly, monthly or quarterly, will receive it and there is no need for them to make application for it.

I was asked about pensioners abroad. British pensioners normally resident abroad, except in Gibraltar and the EEC, will not receive the bonus unless they are present in the United Kingdom, in the EEC or in Gibraltar in the week in question, which, trusting to memory, is the week beginning 5th December. Foreign nationals will qualify only if they are resident or present in the United Kingdom and are receiving a qualifying benefit.

The noble Baroness, Lady Wootton of Abinger, raised the question of persons living together as husband and wife.

These are relatively unusual cases, where the couple are treated as husband and wife, and in a number of cases payment of supplementary pension is made to the man in respect of the woman with whom he is living. We feel that where a supplementary pension is given to a man in respect of the woman with whom he is living, it would be reasonable to pay the bonus in those particular cases. As the noble Baroness will know, the situation cannot arise with National Insurance benefits, though it arises so far as this matter is concerned.

I was also asked whether pensions should be taxable. To make National Insurance pensions tax free would only benefit the better off pensioners, those with income enough in addition to their pensions to make them liable for tax. The National Insurance retirement pension of itself is not sufficient to bring an individual or married couple into tax liability, since the income tax age allowance is worth more. We feel, therefore, that there is some objection where a situation enables people who are better off to receive it, but this is a matter with which it is very difficult to deal.

Lord SHINWELL

My Lords, I think my noble friend is wrong in saying that for those who are regarded as better off and who receive this sum from the Government—£10 or £20 as the case may be—it is taxable; I understand it is not taxable.

Lord WELLS-PESTELL

No, but that was not the point about which I was asked, my Lords. I was asked whether pensions should be taxable. They are not taxable on their own and I was answering the question whether or not they should be made taxable. That reminds me that my noble friend Lord Shinwell raised the question of whether statistics are available on the better off pensioners who do not need the bonus. I am not aware that there are any reliable statistics to show how many people in receipt of retirement pensions are not in need of it. There is some information which makes it quite clear that there are a number of people who are receiving retirement pensions and whose income is such that they would not need the bonus, and that is why I think there is widespread opinion that we should deal with this matter in the future by seeing that the level of pensions is adequate rather than resorting to bonus payments as a general rule.

On Question, Bill read 2a; Committee negatived.

Then, Standing Order No. 43 having been suspended (pursuant to Resolution), Bill read 3a, and passed.