SOCIAL SECURITY (No. 2) BILL

HL Deb 17 June 1980 vol 410 cc967-87

2.54 p.m.

The MINISTER of STATE, DEPARTMENT of EDUCATION and SCIENCE (Baroness Young)

My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved, that the House do now again resolve itself into Committee.—(Baroness Young.)

On Question, Motion agreed to.

House in Committee accordingly.

[The Earl of LISTOWEL in the Chair.]

Clause 4 [Reduction and abolition of earnings-related supplement and addition]:

Lord WELLS-PESTELL moved Amendment No. 25:

Page 4, line 24, leave out subsection (1).

The noble Lord said: We come to Clause 4 of the Bill, which is responsible for the reduction and abolition of the earnings-related supplement and addition. The amendment which I now beg to move, and the one that follows it, seek to eliminate Clause 4 from the Bill. I have decided to do it in two parts. Nevertheless, with your Lordships' permission, I wish to speak to both parts but to move the amendments separately.

If I may refresh your Lordships' memories as to what the earnings-related supplement and addition are, the present position is that under Sections 14(7), 22(4), and 24(3) of the Social Security Act 1975, and Schedule 6, people receiving unemployment benefit, sickness benefit, maternity allowance and widow's allowance are entitled after two weeks on benefit to an earnings-related benefit which can be paid for a maximum period of six months. The Government are proposing to reduce the amount payable by way of the earnings-related supplement. The amendment now before your Lordships will prevent the Government from reducing the 15 per cent. rate of earnings-related supplement payable on earnings of over £30 a week to 10 per cent. from January 1981.

If I have understood the Government's attitude to the earnings-related scheme it is this: that because the average value of its benefits has diminished it might be just as well to abolish it. During the Commons Committee stage, the Secretary of State conceded that the reason for delaying the abolition of the earnings-related supplement until January 1982 was that people have already paid their national insurance contributions for the tax year 1979–80 in the belief that they would be entitled to an earnings-related supplement based on those contributions, in 1981. But the Secretary of State argued that the proposed reduction of the 15 per cent. rate to 10 per cent. in 1981 was such a modest change that it was not felt there was the same binding nexus between contributions and benefits. He referred to the Cabinet's sense of propriety, convincing them that if the benefits were abolished in 1981 people might have a legitimate criticism.

The Cabinet's sense of propriety, however, clearly has to be kept within bounds. Although precisely the same point of principle applies to the reduction of a benefit based on contributions that had already been paid, they were apparently prepared to swallow that. I do not want to go all over that again because I have already raised the question of the morality of taking contributions for a specific purpose and then reducing them, as has been done in the case of certain benefits that are not going up by 16½ per cent. but only by 11½ per cent.

In fact, this cut is not so modest as the Secretary of State's words might have implied. For somebody getting earnings-related supplement at the maximum rate on weekly earnings of £135 in 1981, it represents a reduction from £19.25 to £14 a week which, over the six-month period for which the earnings-related supplement runs, would mean a loss of £136.50. At a lower level of earnings—say, £80 a week—the loss would be about £2.50 a week, or £65 for the six-month period.

In the Budget speech the Chancellor of the Exchequer said: The earnings-related supplement scheme itself has been diminishing in worth and effectiveness over recent years. Redundancy payments are now more generous, and the development of the employers' sick pay scheme means that earnings-related supplement is much less needed than formerly. Of the unemployed, only about 10 pet cent. to 15 per cent. are in receipt of earnings-related supplement at any one time. All in all, the Government would find it difficult to justify its retention".—[Official Report, Commons; 26/3/80, col. 1461.]

But that is not the point. The point is that these people have paid national insurance contributions which we, on this side of the Committee, say have taken into account benefits to which they are entitled, including the earnings-related supplement. The main reason why earnings-related supplement has diminished in worth is because the £30 dividing point between the two rates on which it is calculated has not been raised, with the result that the one-third rate applies to a diminishing band of earnings.

The position at the present moment is that the percentage payable is one-third of earnings between £17.50 a week, which is the lower earnings limit, and £30 a week, and 15 per cent. of earnings between £30 a week and the upper earnings limit which is, I think, £135. But the lower earnings limit of £17.50 is now very much lower in relation to earnings than the lower limit of £9 when the scheme commenced in 1966. For low paid workers therefore the scheme is more effective than it was originally. For the average earner, too, it is still a very useful addition to his benefit. For instance, a man with earnings of £100 a week in 1981 would get earnings-related supplement in 1982 of about £13 a week. And this is not a gift; it is part of the money that he has paid in for and there are no grounds for saying that the statutory redundancy payments are now more generous. As the reply to a Member in the other place on the 17th April at column 670 showed, the average redundancy payment is worth little more in real terms than it was in 1965–66, and such increase as there has been took place almost entirely between 1965 and 1968. The relative value of redundancy payments compared with flat rate unemployment benefit was hardly changed at all.

The growth of the employers' sick pay schemes does not justify abolishing the earnings-related supplement for the unemployed, expectant mothers and widows. Anyway, many people, especially manual workers, are not covered by employers' sick pay, and the Government's proposals for compulsory sick pay would apply only to the first eight weeks of sickness, during which the amount payable would be only £30 a week. Even that would be subject to tax, reducing its value for most people down to something like £21 a week, because most people would have income for the whole year above the tax threshold.

To say that only 10 to 15 per cent. of the unemployed are getting earnings- related supplement is quite meaningless. The vast majority of unemployed people who remain out of work for more than two weeks (other than school-leavers) do qualify for an earnings-related supplement. Of those not currently receiving it, a large proportion have either been unemployed for less than two weeks or for more than 28 weeks, and if the Government are concerned about the latter group, as I and my noble friends think they ought to be, they should be thinking about extending earnings-related supplement beyond the six months or paying a higher flat rate benefit to those whose entitlement to earnings-related supplement has expired. Instead of which they are proposing to reduce the real value of the flat rate benefit and ultimately to abolish the earnings-related supplement.

The only other thing I want to say is in relation to subsection (2), the deletion of which I shall be moving subsequently. This amendment would prevent the abolition of the earnings-related supplement, and if earnings-related supplement were neither reduced nor abolished the rates payable in 1982 would be one-third of earnings between £23 and £30 a week, which would be £2.35, plus 15 per cent. of earnings for those earnings between £30 a week and £165. For a man who earns £100 a week in 1980–81 (roughly the national average) the earnings-related supplement in 1982 would be about £12.85 per week. If he continued to draw it for 26 weeks its total value would be in the region of £334. That is the amount that the Government are proposing to take—and I use the kindest possible word I can find when I say "take". I could use many others with every justification. But that is what they are proposing to take from the sick, the unemployed and widows in order to leave more money in the pockets of those fortunate enough to be in work. In the last analysis we must look at the position of those who are unemployed through no fault of their own, many of them who, once they become unemployed, stand very little chance of getting another job. I beg to move.

3.7 p.m.

Lord BANKS

I should like to support the two amendments to which the noble Lord, Lord Wells-Pestell, has spoken. I suppose the situation is the same in regard to these amendments as it has been in regard to previous amendments: that the Government are not against the earnings-related supplement, that they would not reduce or abolish the earnings-related supplement in the ordinary course of events and that they are only doing so in order to make a saving—because this Bill is about saving. I think they would argue that the people who are in receipt of earnings-related supplement are the least vulnerable; but it is true, of course, that this clause, although one of the shortest in the Bill, produces the biggest saving. It produces a gross saving of £360 million, but that is reduced to £285 million once one takes into account the extra amount which will have to be spent on supplementary benefit, because this clause will put more people on to supplementary benefit at a time when we should be trying to reduce the very large numbers who are dependent upon that benefit. It means that a total of £285 million is being saved on this clause out of £460 million saved by the Bill as a whole.

I should like to ask: Do the Government envisage the earnings-related supplement being restored when the Conservative millenium arrives and inflation is down to a nil rate of growth as a result of these draconian measures that they are introducing in the meantime? There is no indication that the earnings-related supplement is unbalancing the national insurance fund as a result of having to include earnings-related supplement in the benefits it provides. The fund is meeting its obligations and the one feature that has led to a small increase in the contributions recently is the increase in unemployment. It is anticipated that that will go further, and, if it does, that will be a result of Government policy. But there is no indication that there is going to be a problem in having to find the money for the earnings-related supplement. The fund is paying out some £10,000 million a year and we are talking about a saving of £285 million.

Presumably there will be no reduction in contributions. That would enable the Government, I suppose, to save the 18 per cent. of the total cost which they provide, but I suppose it would be more advantageous for the Government's purposes if the money were accumulated in the National Insurance Fund, because if it is accumulated there it reduces the public sector borrowing requirement. I think that is really the reason why this is being done—not because there is any objection on the part of the Government to the earnings-related supplement, not because they hope to reduce contributions, but because they hope to reduce the public sector borrowing requirement by accumulating money in the National Insurance Fund. The question I would ask is, for how long we are to accumulate money in the National Insurance Fund, at the expense of benefits which it is generally agreed are desirable, in order to hold down the public sector borrowing requirement?

Lord MILVERTON

I would like to support Lord Wells-Pestell, which may surprise some of my noble friends on this side. On reading a different matter on this subject, I can only say that there is a sense in which in spirit I have felt a little disturbed and unhappy. I think my noble friends here and the noble Baroness, Lady Young, know that as far as possible I do my best to support Her Majesty's Government, but on this occasion I have an uneasy conscience and I do not think I really can. I have to be truthful and say that if I had been able to be here yesterday I most probably would have found myself supporting noble Lords opposite on most of the amendments.

Lord SANDYS

I think I should start by advising my noble friend Lord Milverton, if he would be good enough, to follow my remarks. I cannot possibly claim to give him satisfaction in this regard, but the history of this matter is an extremely long one. I begin by saying that the noble Lord, Lord Wells-Pestell, referred to Clause 4 of the Bill in his speech on Second Reading, at column 1124 on 2nd June. I remind your Lordships of his remarks: What the Government are proposing to do may be quite legal, but in my view it is open to serious question". Then he went on to say: I recognise what the Government want to do in this matter, but people have paid national insurance contributions over a long period of time, and I would find it very difficult to believe that in assessing the amount of their weekly national insurance some consideration has not been given to the amount which is likely to be paid out by way of an earnings-related supplement". Before we embark on a detailed study of the very complex formula, I would like to go into the history of this, because I think it will interest your Lordships, and as some noble Lords made very interesting speeches on this subject I think it would give a good opportunity to do so This is an important issue of entitlements under a national insurance scheme. I hope I shall not weary your Lordships in making some excursions into the past in order to help to show how we have arrived at the present position. My noble friend Lady Young explained the provisions of the clause on Second Reading at column 1115. She said: It is significant that under successive Governments the real value of the earnings-related supplement has been allowed to decline since 1971. Maximum earnings-related supplement is now worth half what it was". To reach the nub of the issue it is necessary to look at the national insurance scheme and how it was funded. As my noble friend put it very clearly at column 1116: The original proposals put forward by Beveridge were for a strict insurance scheme. The contributions each individual would pay over his lifetime would be related to the average benefits he could expect to receive over his lifetime. An inevitable consequence of this was that it would be many years before full retirement pensions could be paid out: Beveridge suggested 20 years. The Government of the day in fact introduced full pensions from the outset, and it followed that the scheme as originally designed was not financially viable". The outset of the scheme was a particularly interesting one, and I propose to quote from the debates that took place in 1946 because I believe they are relevant to this, and also to the fact that a very important maiden speech was made on that Bill by the noble Lord, Lord Wallace of Coslany, which I have enjoyed reading this morning. I think I should refer to what the Minister said on 6th February 1946. He was of course, the right honourable Member for Llanelli, Mr. James Griffiths. At column 1738, he said: The next point of general importance to which I would refer is the scope of the scheme. I believe that Clause 1 of the Bill is an epoch-making document, and I hope that Members will read it". I am sure they did, and this is what it said: Every person who on or after the appointed day being over school-leaving age and under pensionable age … shall become insured under this Act and thereafter continue throughout his life to be so insured".

Lord DAVIES of LEEK

May I ask the noble Lord a question? He is not quoting dear old James Griffiths in support of this Bill, in the name of God, is he?—because he would be rolling in his grave if he knew.

Lord SANDYS

I am attempting to explain, and I thought I was embarking on a very useful explanation of how we have reached this point. I hope the noble Lord will listen and will contain himself. I have further to come on to the right honourable Member's next speech on this subject, on review, a matter of eight years later. I hope the noble Lord will allow me to do so and that I may be permitted to continue.

Lord DAVIES of LEEK

I apologise to the noble Lord.

Lord SANDYS

If I am allowed to continue in this vein, we reach a very important debate on 9th December 1954, when the Conservative Party were in Government. A review had been taking place and the Phillips Committee had reported. The same right honourable Member, Mr. James Griffiths, from Llanelli, at column 1216 said this: As one who eight years ago, just before this time of the year, completed several months of very hard work drafting the 1946 National Insurance Bill, and who piloted it through the House and began to bring it into operation … It was a new venture. My job was to translate the Beveridge Report into legislation". Further down he said: It was inevitable that in the light of experience we should find a lot wrong with the Act". The problem was a problem of funding so clearly identified by my noble friend Lady Young. Another former colleague of the noble Lord, Lord Davies of Leek, made a very significant contribution to that same debate on 9th December 1954. I am referring to Mr. Aneurin Bevan who had some very interesting comments to make. Of course, as he was not a Minister the Committee will not permit me to quote him verbatim. However, at columns 1149 and 1150 of the Official Report for that date he said that there was a danger that the House believed that it was dealing with insurance but, in fact, in his view, to talk about it as insurance was bunkum. He then cited the situation as follows. He believed that the contractual relationship which exists in insurance in its normal context was totally different when the state enters as a third partner. He believed that once the state became a third partner to the arrangement, the ordinary concept of insurance was immediately modified. He went on to point out that the state, as a sovereign body, can change the terms of an insurance contract and. therefore, to relate everything concerned with national insurance to the normal concept of insurance as we know it, is, in his submission, nonsense. I believe that the late Mr. Aneurin Bevan, a much revered figure by both the nation and the Labour Party, had hit upon a very important point.

Insurance is an extremely complicated issue and I believe that what he said identifies the problem which has so worried the noble Lord, Lords Wells-Pestell. He and his honourable and right honourable friends in another place believe that a contractual matter has been violated. Do I understand the noble Lord correctly? The noble Lord does not wish to reply, but it was clear from his remarks that he believed that to be so. It is our submission that that is not correct, because national insurance is in a rather different context.

I should like to refer to how the scheme went after the first review. It will be remembered, of course, that the change took place—and it was a very radical change—when funding was altered in 1959, and the system has been run on a "pay-as-you-go" basis ever since. Speaking on this very subject in connection with the earnings-related supplement, my right honourable friend Mr. Patrick Jenkin, the Secretary of State, said, in Standing Committee, at column 833: The essence of the working of a 'pay-as-you-go' scheme is that contributions paid this year finance the benefits paid this year. Benefits for the succeeding years will be financed by the contributions paid in those years". That is an important matter to bear in mind.

I listened with interest to what the noble Lord, Lord Wells-Pestell, quoted from Standing Committee "B" and I must say that I was somewhat mystified because he referred to column 670 and I could see no reference in that column to the matter. I wonder whether, in his subsequent remarks, he might wish to explain which column it was—to correct or confirm it. I believe that the remarks made by my right honourable friend in this context in Standing Committee "B" are the ones which give the best advice. I think that I can advise the noble Lord that it is our belief that the amendment as a whole should be rejected.

The noble Lord, Lord Wells-Pestell, has made it clear that the intention of this amendment is to preserve the existing formula—and it is a very complicated formula—for the rates of earnings-related supplement and earnings-related addition payable with the short-term incapacity, unemployment and widowhood benefits. Subsection (1) of Clause 4 gives effect to the Government's intention to reduce the rate of earnings-related supplement and addition in 1981, prior to abolition in 1982. This, as I have said, is a complex subject and it may be helpful if I explain the effect of the subsection in some detail.

Under the existing provisions, the amount of supplement or addition payable during 1980 is calculated in the majority of cases by reference to earnings in the 1978–79 tax year; the formula is one-third of weekly earnings between the amounts £17.50 and £30, and 15 per cent. of earnings between £30 and £120. The lower and upper earnings limits are raised year by year, as they are linked to the lower and upper earnings limits for contributions in the relevant tax year; the £30 cross-over point between "bands" remains constant, however, so that the one-third rate is gradually paid on a smaller and smaller earnings band. Subsection (1) has the effect of reducing the 15 per cent. rate to 10 per cent. with effect from January 1981. This means that in 1981 beneficiaries will receive one-third of weekly earnings in the tax year 1979–80 between the new lower limit of £19.50 and £30 and 10 per cent. of weekly earnings between £30 and the new upper limit of £135. I apologise that the explanation is lengthy, but I think that it will probably be very much easier to understand when read in Hansard than when spoken.

The automatic change in the earnings range coupled with the effect of the change in the rate under Clause 4, while the cross-over point remains constant, means that a man entitled to the maximum level in 1980 (based on earnings in the 1978–79 tax year) would receive £17.67 per week, while someone entitled to the maximum rate in 1981 (based on earnings in the 1979–80 tax year) would receive £14.00.

Subsection (1) is intended to take effect from 4th January 1981, which is the start of the 1981 benefit year. The new arrangements would, however, apply only to claimants whose period of interruption of employment—through unemployment or incapacity—begins during that benefit year or, in the case of the widow's earnings-related addition, whose husband dies during that year. For these beneficiaries, entitlement to benefit will be governed by reckonable earnings in the 1979–80 tax year. We intend to make transitional arrangements under regulations which will allow a beneficiary whose period of interruption of employment commenced before 4th January 1981, or whose husband died before that date, to be entitled to benefit at the rates now in operation until entitlement is exhausted or the period of interruption of employment ends. This would be subject to a final cut-off date in June 1982. These will be people whose entitlement to benefit depends on reckonable earnings in the 1978–79 tax year or, in the case of linking claims, an even earlier tax year. This is to ensure that rates of benefit are not reduced during the middle of an existing claim and are not reduced where a current spell of incapacity or unemployment links with an earlier spell to form part of the same period of interruption.

I am coming to the end of my speech, as the noble Lord, Lord Wells-Pestell, will be pleased to hear. I have explained the operation of the subsection at some length. The Government decided to make this reduction in the earnings-related supplement to achieve substantial savings in 1981. I apologise to the noble Lord, Lord Wallace of Coslany, remembering his remarks in this regard last night, but I can assure him of the pleasure I had when I read his maiden speech in another place on 7th February 1946.

These savings amount to £65 million, partly offset by supplementary benefit expenditure of £5 million at current benefit rates in the calendar year 1981. We must achieve savings in the social security programme, and this subsection makes an important contribution to overall savings. Earnings-related supplement and addition are paid for a limited period only to a limited number of beneficiaries, and are paid on top of the basic benefit. We could not accept an amendment which would reduce the total savings and force us to find savings elsewhere, which would be more painful. I must, therefore, ask for your Lordships' support in resisting this amendment.

Baroness WOOTTON of ABINGER

The noble Lord, Lord Sandys, has given us a very stimulating intellectual discourse which contained two points on which I should like to comment. The first was his elaborate explanation that there is no real actuarial basis for the benefits that people now receive under the National Insurance Act. Whatever else may be said from this side I should like to say that I am entirely in agreement with the noble Lord, and this has been true for a long time. The argument that what people are paid governs what they receive is, with great respect to my noble friend Lord Wells-Pestell, now out of date because that relationship has long since been destroyed. That is a simple matter which we can appreciate. People now receive what Parliament decides they shall receive.

The other point on which I should like to comment is the incredible complexity of the regulations. I doubt whether many of your Lordships who listened to the admirable explanation of the noble Lord, Lord Sandys, could repeat any part of it correctly. I should like to emphasise that if these are the regulations by which people who have had fewer educational advantages than many of your Lordships will find their incomes governed, then the regulations are completely disastrous. The great point is that we should get something simple. However, at the end of his remarks the noble Lord, Lord Sandys, said something which we can all understand and which I can understand—that those who would have received 15 per cent. of something will now receive 10 per cent. of something, and that is the "guts" of the amendment. For that reason, I hope that my noble friends will sustain the amendment.

Lord WELLS-PESTELL

I find myself in complete agreement with my noble friend Lady Wootton of Abinger. Anyone who knows the noble Lord, Lord Sandys, as I and many people have come to know him over the years, will realise that if he takes on something, he is extremely thorough. I say that because it is absolutely true. I have been against him for something like five years and I know that to be so. With the greatest possible respect, I want to say that this has nothing whatever to do with what is before your Lordships' Committee. We are not concerned with the philosophy of Beveridge; we are not concerned with the opinions of Nye Bevan; we are not concerned with what people thought in 1940. We are concerned with Sections 14(7), 22(4) and 24(3) of the Social Security Act 1975, which laid down what people receiving unemployment benefit, sickness benefit, maternity allowance and widow's allowance are entitled to. That is all we are concerned with.

Our welfare state was based upon concept, and my noble friend Lady Wootton is perfectly right when she said that our insurance scheme and our national insurance has no bearing whatever on the thinking of that time; for the simple reason that Governments have found that, whatever a political philosophy may be, it must be interpreted in political terms and ultimately in an Act of Parliament which goes on the statute book, giving people certain rights. There are noble Lords sitting opposite me who have seen more Acts of Parliament put on the statute book than I shall ever see, and who have participated in their formulation. The Social Security Act 1975 was another Act which laid down people's entitlement. The only way in which to do things in our society today is for Governments to look at something, come to a decision and put it on the statute book.

On this side of the Committee our quarrel concerns the fact that people are entitled to an earnings-related supplement. The noble Lord is quite right when he said, I think, that I said I did not question the legality of it. I do not question the legality of it because a Government can change an Act of Parliament, which is precisely what the present Government are proposing. On behalf of my noble friends, I am saying that it is thoroughy immoral to do so. People have been promised an earnings-related supplement at a certain level, for which they have paid national insurance contributions. I say it is thoroughly disgraceful and immoral that the Government should come along when it suits them and say, "All right. Instead of giving you 15 per cent., we shall give you only 10 per cent." That is the nub or crux of the argument.

Lord SANDYS

It may well be that the noble Lord, Lord Wells-Pestell, feels that the Government are being immoral. But I have attempted to show that that is not the case. I would further point out the remarks of his noble friend Lady Wootton of Abinger, which related to the extreme complication of the situation as it is. What better way to relieve the noble Baroness of her anxieties—and, indeed, the anxieties of a very large number of people—in computing this scheme than to ensure its abolition at the cut-off date of June 1982, the date to which I have referred?

Lord ROSS of MARNOCK

When this scheme was introduced, can the noble Lord tell us what changes were made in respect of payments made by those who were insured? It is all very well for him to give us a long lecture starting in 1945, and jumping to 1954, and then 1959. It is a great pity that the Minister of Pensions and National Insurance at that time is not with us—he was the noble Lord, Lord Boyd-Carpenter.

I can remember all the arguments in respect of the notional fund relating to insurance. I can remember all the arguments about the projections that were made, as to whether this fund would be viable in 10, 15 or 20 years' time. The argument advanced was that pensions should be paid out of finance annually. But in 1959, or just before, another scheme was introduced by the noble Lord, Lord Boyd-Carpenter. It was supposed to be based actuarially, and there are certain aspects of our present national insurance which are still said to be based actuarially. There is no doubt that it is a bit of a mess. But it is not right to say that we should get rid of this by abolishing entitlements. On the basis of his last argument, we shall abolish unemployment benefit altogether. I think that the noble Lord, Lord Hill of Luton, will remember the introduction of a free National Health Service in, I think, 1956. Then 10d. was added to the cost of the insurance stamp, but that had nothing to do with insurance; it was to do with payment for the National Health Service.

I can assure the noble Lord that his arguments have not satisfied me. In the subsection he is actually making a transitional reduction prior to wiping out an entitlement which people presently have and for which they have paid for some considerable time. If he had also said—if the noble Baroness wishes to interrupt me I will gladly sit down. I shall then be able to answer her in this speech rather than later on.

Baroness YOUNG

I was not intending to comment on what the noble Lord, Lord Ross, is saying, but there are two Statements to be made, and when he has completed his remarks I think we ought to resume the House to hear the Statements.

Lord ROSS of MARNOCK

We are in Committee, and it is very easy for me to sit down and resume my remarks later.

Baroness YOUNG

I beg to move that the House do now resume.

Lord WELLS-PESTELL

We have come to the end of this discussion, and we wish to divide the Committee. Surely we can do this before we hear the Statements. Having reached the point where we wish to divide, surely this is the right time to do it.

Baroness YOUNG

When the noble Lord, Lord Wells-Pestell, was speaking before, I thought that we were going to conclude the business and divide the Committee. Then the noble Lord, Lord Ross, started to speak and I thought that noble Lords wished to continue with the debate. We are in Committee, and we could conclude discussion on the amendment at any time. But certainly we will divide the Committee at this stage if that is the wish of the noble Lord.

Lord HAWKE

I was thinking of saying a few words, but I will postpone them until after the Statements.

Baroness YOUNG

As the noble Lord, Lord Ross, also wished to say something further—

Lord ROSS of MARNOCK

May I say that I have quite finished now? I can say anything more that I want to say on the next amendment.

Baroness YOUNG

I think we are in a difficulty. We are in Committee. We can go on with this debate, and of course we can divide the Committee at any stage the noble Lord, Lord Wells-Pestell, or his colleagues wish. But I think we should now resume the House in order to take the Statements.

Several noble Lords

No, divide!

Lord TREFGARNE

I am sorry to intervene once more, but if there are noble Lords who still wish to speak I think we must resume the House.

Lord PEART

Looking around, I think the consensus is that we should divide the Committee. We have two very important Statements to come, and there is a long way to go on this Bill. I think we ought to divide now.

Lord TREFGARNE

I am sorry to intervene once more, but my advice is that it is not proper to deny a noble Lord the right to speak. In that case, I beg to move that the House do now resume.

Moved, That the House do now resume—(Lord Trefgarne.)

Lord DAVIES of LEEK

We are in a proper mess now.

Baroness LLEWELYN-DAVIES of HASTOE

As neither the Chief Whip nor I was here at the beginning of this discussion, may I say that as we understand it nobody on our side of the Committee wished to say anything further on that particular amendment and that therefore it was proper to take the Division. What we did not think was proper was to resume the House.

Baroness YOUNG

May I just explain the position? The noble Lord, Lord Wells-Pestell, made a speech. I thought he was concluding the debate on the amendment. When he sat down, the noble Lord, Lord Ross, rose to speak. At that stage we had the information that we could take the Statements. I then made a move to get up, and I said to the noble Lord, Lord Ross, who gave way, that I did not wish to interrupt his remarks but that when he sat down I should like your Lordships to take the two Statements. At that stage the noble Lord, Lord Wells-Pestell, said that he wished to divide the Committee. I was agreeable to that, but one of my noble friends wished to speak. We are in Committee. It is right that anyone who wishes to speak should be able to do so. We are perfectly willing to divide the Committee at any stage, although of course it is principally for the noble Lord, Lord Wells-Pestell, or for any member of the Committee to say when they wish to divide. It seemed to me correct that at this stage we should resume the House to take the Statements.

Baroness LLEWELYN-DAVIES of HASTOE

If we are still in the middle of a discussion on an amendment, of course we should continue with it. I am sure the noble Lord the Chief Whip will agree with me that we take Statements at a time agreed between the two Front Benches. That time was not agreed.

Lord DENHAM

I understand that my noble friend Lord Hawke wishes to keep the Committee for only one minute on this particular amendment. The difficulty is that, after the noble Lord, Lord Wells-Pestell, had concluded, had the Committee divided, then, of course, it would have been rather difficult for my noble friend to get up and speak. But there has been another speech. Perhaps we could hear what my noble friend Lord Hawke has to say.

Lord BYERS

With all respect to the Chief Whip, we are in the middle of a vote. We are in the middle of a Motion. It has been put once by the Chair, and surely we must dispose of that before we proceed to the next business.

Lord DENHAM

I absolutely agree, and it was this Motion that I was speaking to. May I suggest that it be put to the Committee? After it is put to the Committee, perhaps my noble friend Lord Hawke may say what he wishes to say and then we can conclude this amendment before we have the Statements.

The DEPUTY CHAIRMAN of COMMITTEES (The Earl of Listowel)

Perhaps I should remind the Committee that the Motion is that the House do now resume.

On Question, Motion disagreed to.

Lord HAWKE

I do not think I have ever spoken in such baffling circumstances. I wanted to say one or two words about the background to the detail that has been dealt with so ably by my noble friend Lord Sandys. For a number of years I have viewed with concern and interest the tussle going on in this country between the producers and the non-producers, the producers being those in work, and the non-producers being the people at school, the old age pensioners and so on, whose numbers, if anything, have been increasing.

Successive Governments have handed out to the non-producers increasing amounts of money the whole time, perhaps not in real terms, but in money terms. That money has to come from

somewhere else, and it can come only from the producers. Time and time again the producers have rebelled when asked to pay higher and higher taxes and increased (what we call) national insurance contributions but which are in effect taxes. They have nearly gone on strike for more pay to meet those increases. The result is that an inflationary process has been set in train. In our economy, 1 reckon that the mainspring of inflation is the price of oil and coal; but the element which has kept it going more than anything else is the increasing cost of social security payments. This clause is just one small item in the attempt to keep those things down.

3.47 p.m.

On Question, Whether the said amendment (No. 25) shall be agreed to?

Their Lordships divided: Contents, 85; Not-Contents, 105.

Baroness YOUNG: I beg to move that the House do now resume.

House resumed.