HL Deb 17 June 1980 vol 410 cc1007-57

4.43 p.m.

House again in Committee.

[Amendment No. 26 not moved.]

Lord WELLS-PESTELL moved Amendment No. 27:

Page 4, line 33, leave out from ("allowance") to ("shall") in line 34.

The noble Lord said: This can be taken fairly quickly. I hope, having regard to the substance of it, that the noble Baroness the Minister will be able to accept it. This amendment would prevent the abolition of the earnings-related addition to a widow's allowance. The case for preserving this allowance I think is particularly strong for a number of reasons. First, of all the groups of people who might be asked to share in the sacrifices resulting from the Government's policies, women who have recently suffered the tragedy of the death of their husband are surely among the least appropriate victims.

In addition to the emotional stress resulting from widowhood, it has always been recognised that this is a time when they particularly need financial support to help them to adjust to the new situation. Secondly, the argument about incentives and the relationship between benefit and earnings which underlie the Government's hostility to the earnings-related supplements to unemployed and sickness benefit, has no relevance whatsoever to the situation of widows. Thirdly, the earnings-related addition to the widow's allowance must be seen in the context of the long-term provision for widows in the national insurance scheme. Widow's allowance is payable for the first six months of widowhood after which it is replaced by a widowed mother's allowance if there are dependent children, or by a widow's pension if there are no children but the widow is aged 40 or over.

Under the Social Security Pensions Act 1975 those benefits are increased by the earnings-related pension which the husband had earned by his contributions from 1978. But the additional earnings-related pension is not paid for the first six months of widowhood precisely because during that period the widow is entitled to a short-term earnings-related addition. If the earnings-related addition payable under the earnings-related scheme is to be abolished, the earnings-related pension payable under the 1975 Act clearly ought to commence immediately on the husband's death. Since the Government do not propose to extend, as I understand the situation, the 1975 Act pension in that way, it would be wrong to abolish the existing earnings-related addition for the first six months of widowhood.

I would say to the noble Baroness that it is really a special case. I am not unmindful that there is a lot to be said against special pleading. If one does it for one, why does one not to it for another? I accept all that; but there is a strong case to be made out here. I hope that the noble Baroness, unless she is quite adamant that this cannot be done or the Government will not do it, will take this amendment back and have a look at it. I beg to move.


I am grateful to the noble Lord for what he has said about widows being a special case. When widows are mentioned, having been twice widowed, I am apt to plead their case. Widows are frequently in financial trouble, sometimes because of the overlapping benefit rule, which is very strict. At the same time it would not be fair—as I said in Second Reading—to exclude them from the Government's reductions. However, I feel that there is a special case for them. The new widows have been greatly helped by the Chancellor, who agreed that they can keep the tax allowance for the first year, which is £770. But if the ERS is taken away, it would in most cases mean giving with one hand and taking away with the other.

The ERS has been paid for, after all, by paying Class 1 National Insurance contributions, and the abolition of the ERS on widow's allowance will of course affect only women. But if the ERS is abolished, those paying Class 1 National Insurance contributions will once again be paying and receiving no benefit. I know the Committee has heard reference to this today. Perhaps one should not expect to get out what one has put in. Some people seem to think that one should; and some people seem to think that one should not.

As understand it, the ERS was created in 1966 in order to cushion those in difficulties and lift those people up above the poverty line for this crucial short period of six months. It affects the widows over 60 if their husbands were under 65 and working at the time of death. It will be obvious to your Lordships that I am trying to find my way through this maze of difficulties. I have been given a few particulars by my widows, and perhaps I may ask my noble friend whether he can make an exception in these particularly difficult circumstances.


I fully recognise the concern that has been expressed about this problem by both the noble Lord, Lord Wells-Pestell, and by my noble friend Lady Macleod. I think there is a considerable case for special pleading in this regard, but I am unhappy to say that it will be difficult for me to add very much to what has already been said in another place.

I fully understand why this amendment seeks to exempt widows from the provisions of Clause 4(2), but I am unable to accept the amendment. Subsection 4(2) abolishes, with effect from January 1982, the earnings-related supplement payable with short-term incapacity and unemployment benefits, and the earnings-related addition payable with widows' allowance during the first 26 weeks of widowhood. Under this amendment, widow's earnings-related addition would be exempt from this abolition, and would continue to be paid, though at the reduced rate introduced under Clause 4(1).

We have had to make difficult decisions on this Bill. We have had to find savings in the social security programme and it has not been an easy task. This subsection achieves substantial savings in 1982/83 and makes a major contribution to the total package. Earnings-related supplement was introduced in 1966, primarily in respect of unemployment benefit; but because of the close relationship between unemployment benefit and the other short-term benefits it was paid with these from the outset. It would be illogical to exempt any of these benefits from the effect of Clause 4(2) and it would also be costly. We would lose savings of around £12 million in a full year if this amendment were accepted, and we cannot accept reductions in the total package of this order.

However, I would refer to what the noble Baroness said in regard to the Chancellor's arrangements under his tax concession. I think she will be reassured to hear that from 5th April 1980 a widow has been able to qualify for a widow's bereavement allowance of £770 in the year of her husband's death, irrespective of when in that year her husband died. The concession will still be of benefit to a great many widows, whether or not the earnings-related addition is abolished, as it will reduce their tax liability during the year in which their husband dies or take them out of tax altogether. It is true that some widows will lose the benefit of the earnings-related addition when it is abolished from 1982, but only some 60 per cent. of widows are at present entitled to this addition and in many cases the amount of the addition they would have received during the tax year would be less than the amount gained owing to the tax concession. There are advantages and disadvantages but, on balance, I think the noble Baroness will agree that it is an advantage.

I have said that I understand the difficulties faced by widows. But I think we must recognise that the basic widows' allowance is paid at a much higher rate than the other short-term benefits (post November 1980 the proposed rate for widows' allowance is £38.00, compared with £20.65 for the single person's unemployment or sickness benefit) and the allowance is paid to younger widows, who may in fact be working before and after their bereavement. Widows have the unique advantage among short-term beneficiaries of receiving full benefit on top of full earnings. This and their high basic rate of benefit explain why comparatively very few widows are expected to have to claim supplementary benefit when the earnings-related addition stops. In making savings, we have, in Clauses 2, 4 and 5, concentrated on those areas where payments are received in addition to the basic benefits. Finding comparable savings elsewhere would involve still more difficult choices. In conclusion, I should perhaps remind your Lordships that the benefits of most value to most widows are the widows' pension and the retirement pension. These are not affected in any way by the Bill and are fully price protected.


If I understood him aright, my noble friend said that supplement would be abolished as from January 1982. Is that actually in the Bill or is it just the intention of the Government that that should be so? I cannot find it in the Bill.


I think I said on the amendment we dealt with just before the Statements that the cut-off point is June 1982. I think the cut-off final date for ERS is June 1982.


But is it in the Bill? It seems to me that it is governed by Clause 8(2) and it is not yet actually in the Bill: it is an intention. Is that so?

Baroness YOUNG

As I understand it, it will be governed by regulations.


The noble Lord staggers me somewhat. He said, "Only 60 per cent." of widows will benefit. I should have thought that that was an enormous number. It is nearly two-thirds, and to argue that they would not derive much more benefit than they have already derived as a result of the changed tax structure means that if they had this earnings related supplement, however small, they would be that much better off. This is the 27th amendment. Are the Government saying that no matter what the merit of the case is and no matter how important the amendment is, in no circumstances are they going to consider the merit, even if the sum is small? I suggest that the amount of money which will be saved here is £12 million. It is an infinitesimal sum, and I really feel that if the attitude of the Government is: "All right: we are not going to give an inch; we are not going to budge; we are not going to consider the merits of the case put to us", why not say so? We could shorten these proceedings very considerably.

Baroness YOUNG

We on this side, of course, have a great deal of sympathy with what the noble Lord, Lord Wells-Pestell, and my noble friend have been saying, particularly because my noble friend speaks with a wealth of experience and represents an organisation of widows, and, therefore, has a great deal of knowledge of these matters. The fact is that we are not in a position to be able to accept this amendment, but I will, of course, draw the attention of my right honourable friend the Secretary of State to the remarks that have been made in the course of this discussion. But it would be quite wrong of me to pretend to your Lordships that we are in a position to take this back and look at it again, when I know in fact what the answer to that particular question is.

My noble friend Lord Sandys has explained very clearly that the Government's overall policies have, in some respects, meant an improvement for widows. Although we accept that by the abolition of earnings-related supplement some will be worse off, the fact is that we have introduced a great many other benefits which will be of benefit to widows. So I hope that my noble friend and her colleagues in her organisation will recognise those benefits, when they consider this matter which is before the Committee today.

5 p.m.

On Question, Whether the said amendment (No. 27) shall be agreed to?

Their Lordships divided: Contents, 92; Not-Contents, 108.

Alport, L. Gaitskell, B. Plant, L.
Amherst, E. Gladwyn, L. Ponsonby of Shulbrede, L. [Teller.]
Amulree, L. Gordon-Walker, L.
Ardwick, L. Goronwy-Roberts, L. Robson of Kiddington, B.
Bacon, B. Gosford, E. Rochester, L.
Balogh, L. Grey, E. Ross of Marnock, L.
Banks, L. Hale, L. Sainsbury, L.
Barrington, V. Hall, V. Seear, B.
Beaumont of Whitley, L. Hatch of Lusby, L. Segal, L.
Beswick, L. Henderson, L. Simon, V.
Birk, B. Hood, V. Stewart of Alvechurch, B.
Blease, L. Irving of Dartford, L. Stewart of Fulham, L.
Blyton, L. Jacques, L. Stone, L.
Boston of Faversham, L. Janner, L. Strabolgi, L.
Bowden, L. Kilbracken, L. Strauss, L.
Brimelow, L. Leatherland, L. Tanlaw, L.
Brockway, L. Lee of Newton, L. Taylor of Blackburn, L.
Bruce of Donington, L. Leonard, L. Taylor of Mansfield, L.
Burton of Coventry, B. Listowel, E. Underhill, L.
Byers, L. Llewelyn-Davies of Hastoe, B. Wall, L.
Chitnis, L. McNair, L. Wallace of Coslany, L. [Teller.]
Crook, L. Maelor, L. Wells-Pestell, L.
Cudlipp, L. Maybray-King, L. Whaddon, L.
Darling of Hillsborough, L. Milverton, L. Wigoder, L.
David, B. Mishcon, L. Wilson of Radcliffe, L.
Davies of Leek, L. Ogmore, L. Winterbottom, L.
Donaldson of Kingsbridge, L. Pargiter, L. Wootton of Abinger, B.
Elwyn-Jones, L. Peart, L. Wynne-Jones, L.
Fisher of Rednal, B, Phillips, B.
Airey of Abingdon, B. Bolton, L. Cottesloe, L.
Alexander of Tunis, E. Brooke of Cumnor, L. Craigavon, V.
Allerton, L. Brooke of Ystradfellte, B. Crathorne, L.
Amory, V. Campbell of Croy, L. Cromartie, E.
Ampthill, L. Clancarty, E. Cullen of Ashbourne, L.
Bellwin, L. Clitheroe, L. Davidson, V.
Belstead, L. Clwyd, L. de Clifford, L.
Berkeley, B. Cockfield, L.I De La Warr, E.
Denham, L. [Teller.] Hillingdon, L. Rawlinson of Ewell, L.
Derwent, L. Hives, L. Redmayne, L.
Drumalbyn, L. Holderness, L. Reigate, L.
Dundee, E. Home of the Hirsel, L. Renton, L.
Eccles, V. Hylton-Foster, B. Roberthall, L.
Effingham, E. Ilchester, E. Rochdale, V.
Ellenborough, L. Inglewood, L. Rugby, L.
Elliot of Harwood, B. Kinloss, Ly. Saltoun, Ly.
Elton, L. Kinnaird, L. Sandford, L.
Emmet of Amberley, B. Lauderdale, E. Sandys, L. [Teller.]
Exeter, M. Long, V. Selborne, E.
Falkland, V. Lovat, L. Soames, L. (L. President.)
Ferrers, E. Luke, L. Somers, L.
Fraser of Kilmorack, L. Lyell, L. Spens, L.
Gage, V. McFarlane of Llandaff, B. Strathclyde, L.
Geddes, L. Mackay of Clashfern, L. Strathcona and Mount Royal, L.
Geoffrey-Lloyd, L. Macleod of Borve, B. Strathspey, L.
Gibson-Watt, L. Mancroft, L. Tranmire, L.
Glenkinglas, L. Mansfield, E. Trefgarne, L.
Godber of Willington, L. Marley, L. Trenchard, V.
Gowrie, E. Martonmere, L. Ullswater, V.
Gridley, L. Mowbray and Stourton, L. Vickers, B.
Hailsham of Saint Marylebone, L. (L. Chancellor.) Netherthorpe, L. Vivian, L.
Newall, L. Wakefield, of Kendal, L.
Hatherton, L. Northchurch, B. Ward of Witley, V.
Hawke, L. Nugent of Guildford, L. Young, B.
Hill of Luton, L. Nunburnholme, L.
Hill-Norton, L. O'Neill of the Maine, L.

Moved accordingly, and, on Question, Motion agreed to.

Amulree, L. Grey, E. Pitt of Hampstead, L.
Ardwick, L. Hale, L. Plant, L.
Avebury, L. Hatch of Lusby, L. Ponsonby of Shulbrede, L. [Teller.]
Aylestone, L. Henderson, L.
Bacon, B. Hood, V. Ritchie-Calder, L.
Balogh, L. Houghton of Sowerby, L. Robson of Kiddington, B.
Banks, L. Howie of Troon, L. Rochester, L.
Beaumont of Whitley, L. Hutchinson of Lullington, L. Ross of Marnock, L.
Beswiek, L. Irving of Dartford, L. Sainsbury, L.
Birk, B. Jacques, L. Seear, B.
Blease, L. Janner, L. Segal, L.
Blyton, L. Kilbracken, L. Simon, V.
Boston of Faversham, L. Leatherland, L. Stewart of Alvechurch, B.
Bowden, L. Lee of Newton, L. Stewart of Fulham, L.
Brimelow, L. Leonard, L. Stone, L.
Brockway, L. Listowel, E. Strabolgi, L.
Bruce of Donington, L. Llewelyn-Davies, L. Strauss, L.
Burton of Coventry, B. Llewelyn-Davies of Hastoe, B. [Teller.] Tanlaw, L.
Byers, L. Taylor of Gryfe, L.
Crook, L. Longford, E. Taylor of Mansfield, L.
David, B. Lovell-Davis, L. Underhill, L.
Davies of Leek, L. McNair, L. Wall, L.
Donaldson of Kingsbridge, L. Maelor, L. Wallace of Coslany, L.
Elwyn-Jones, L. Melchett, L. Wedderburn of Charlton, L.
Evans of Claughton, L. Meston, L. Wells-Pestell, L.
Fisher of Rednal, B. Milverton, L. Whaddon, L.
Gaitskell, B. Mishcon, L. Wigoder, L.
Gifford, L. Noel-Baker, L. Wilson of Radcliffe, L.
Glenamara, L. Ogmore, L. Winterbottom, L.
Gordon-Walker, L. Pargiter, L. Wootton of Abinger, B.
Goronwy-Roberts, L. Peart, L.
Gosford, E. Phillips, B.
Airey of Abingdon, B. Falkland, V. Newall, L.
Alexander of Tunis, E. Ferrers, E. Norfolk, D.
Allerton, L. Fraser of Kilmorack, L. Northchurch, B.
Amory, V. Gage, V. Nugent of Guildford, L.
Ampthill, L. Gainford, L. Nunburnholme, L.
Balerno, L. Geddes, L. O'Neill of the Maine, L.
Bellwin, L. Geoffrey-Lloyd, L. Orkney, E.
Belstead, L. Glenkinglas, L. Porritt, L.
Berkeley, B. Godber of Willington, L. Rawlinson of Ewell, L.
Bessborough, E. Gowrie, E. Redmayne, L.
Bolton, L. Grantchester, L. Reigate, L.
Brooke of Cumnor, L. Gridley, L. Renton, L.
Brooke of Ystradfellte, B. Hailsham of Saint Marylebone, L. (L. Chancellor.) Rochdale, V.
Cairns, E. Rugby, L.
Camoys, L. Halsbury, E. Saint Oswald, L.
Campbell of Croy, L. Hanworth, V. Saltoun, Ly.
Clifford of Chudleigh, L. Hatherton, L. Sandford, L.
Clitheroe, L. Hawke, L. Sandys, L. [Teller.]
Clwyd, L. Hertford, M. Selkirk, E.
Craigavon, V. Hill of Luton, L. Soames, L. (L. President.)
Crathorne, L. Hillingdon, L. Somers, L.
Croft, L. Hives, L. Spens, L.
Cullen of Ashbourne, L. Holderness, L. Stamp, L.
Davidson, V. Home of the Hirsel, L. Strathclyde, L.
de Clifford, L. Hood, V. Strathcona and Mount Royal, L.
De La Warr, E. Hylton-Foster, B. Strathspey, L.
Denham, L. [Teller.] Lauderdale, E. Tranmire, L.
Drumalbyn, L. Long, V. Trefgarne, L.
Dundee, E. Lucas of Chilworth, L. Trenchard, V.
Eccles, V. Lyell, L. Ullswater, V.
Ellenborough, L. Mackay of Clashfern, L. Vaizey, L.
Elliot of Harwood, B. Mais, L. Vickers, B.
Elton, L. Mansfield, E. Vivian, L.
Emmet of Amberley, B. Marley, L. Wakefield of Kendal, L.
Energlyn, L. Merrivale, L. Ward of Witley, V.
Evans of Hungershall, L. Mowbray and Stourton, L. Young, B.
Exeter, M. Murton of Lindisfarne, L.

Resolved in the negative, and amendment disagreed to accordingly.

5.8 p.m.

Lord WELLS-PESTELL moved Amendment No. 28:

Page 4, line 36, at end insert ("unless it is a period in respect of which the weekly rate of earnings-related supplement or earnings-related addition is to be ascertained by reference to the claimant's reckonable earnings for a tax year not later than 1980–1981.")

The noble Lord said: This amendment would ensure that the earnings-related supplement continues to be payable for spells commencing up to January 1983, instead of only up to 1982 as the Government propose. The contribution rates for 1980–81 were fixed last November, as your Lordships know, long before there was any question of the earnings-related supplement being abolished. It is true that national insurance operates on a "pay as you go" basis, but from the point of view of the individual contributor there is a clear connection between what he pays in this year and what he draws out in future years.

The connection is particularly clear where, as with the earnings-related supplement, the amount of benefit is directly related to the amount of the contributions paid in a particular year. To fix the contribution rate and then announce that one of the principal benefits based on the contributions paid in that year is to be abolished may be defensible—I say that it may be defensible—in terms of "pay as you go" financing, but most contributors will look upon it with very grave suspicion. I shall not put a word to it, but I do not think "robbery" would be out of place.

The whole contributory basis of the national insurance scheme rests—and I think this is where the Government slip up very badly, indeed—on the confidence of the working population that the benefits for which they are contributing will be paid. If they only knew the working population a little better, and realised how important some things are to them, the Government would not get themselves into this difficulty. What I am trying to do is to be very generous and get them out of it, but over the months the Government have made it abundantly clear that they do not need my help and that they will not touch it with, if I may say so, the proverbial barge-pole.

Let me end by saying that the whole of the Bill, especially Clause 4, threatens to undermine the confidence of ordinary working people. There are millions of them and they ought not to have a view about any Government that will lead them to believe that they are being taken for a ride. It is on that basis that I move the amendment.

5.11 p.m.


I have listened with interest to the arguments of the noble Lord, Lord Wells-Pestell. I think I can say that we on this side of the Committee always listen to his arguments with the closest care and, indeed, read them afterwards. But the problem is that it is impossible for the Government—indeed, for any Government—to say that the situation as regards national insurance is frozen in time. In the past, much has had to be superseded by changes in benefit, and this Bill makes further changes.

Clause 4 aroused a very great deal of criticism, both during the Second Reading and again in Committee. Clause 4(2) provides for the abolition of the earnings-related supplement and the earnings-related addition. It is intended to abolish the benefit from 3rd January 1982, the start of the 1982 benefit year. Claimants whose period of interruption of employment through unemployment or incapacity begins before 3rd January 1982, or whose husband dies before that date, will retain their entitlement to the supplement, or addition, until the entitlement is exhausted or the period of interruption of employment ends, subject to a final cut-off at the end of June 1982. These will be people whose entitlement to benefit depends on reckonable earnings in the 1979–80 tax year or, in the case of linking claims, an even earlier year.

The abolition of the earnings-related supplement and the earnings-related addition from January 1982 is a crucial part of our overall strategy to achieve savings in public expenditure. If abolition were delayed, we should have to find savings elsewhere in the social security programme which would be extremely difficult to achieve without causing a great deal of hardship.

It has been suggested that the abolition of the earnings-related supplement and the earnings-related addition is a breach of contract. The noble Lord has referred to this many times, both on Second Reading and on earlier amendments. The argument put forward is that the supplement paid out during 1982 will be paid for by contributions which people are paying at the moment and that they will therefore lose a benefit which they have already paid for. My noble friend Lady Young gave a detailed explanation of this point during Second Reading and I quoted her this afternoon, but it may be helpful if I go through the important points once again.

It is true that the entitlement to the supplement during the benefit year 1982 will be based on earnings upon which contributions have been paid in the current tax year 1980–81. Entitlement during 1982 is based on earnings in 1980–81, for the practical reason that we have to obtain information about earnings for 1980–81 from employers and it has to reach the Newcastle computer before the benefit rates can be calculated. But the 1980–81 earnings do not pay for the 1982 benefits.

The national insurance scheme is not a funded scheme, which I referred to earlier, but is run on a pay-as-you-go basis. Contributions are set each year taking account of likely expenditure on the benefit in that year. Earnings-related supplement will not be abolished until the latter part of the 1981–82 tax year, and the abolition will he one of the factors taken into account when the contribution rates for the year are fixed.

This is a complex issue and I hope that I have been able to explain what the real position is. We could not accept an amendment which would reduce total savings by some £275 million in 1982–83, and I must therefore ask your Lordships to resist this amendment.


Before we finally leave this subject of the earnings-related supplement, I should like to return to the argument which the noble Lord, Lord Sandys, has pursued in the course of his remarks about entitlement to benefit. We all know that it was originally envisaged, as the noble Lord explained to us on an earlier amendment, that national insurance should be fully funded. Also, we all know that in the event it was not fully funded and that eventually, because of that, it was transferred entirely on to a pay-as-you-go basis. But that does not alter the fact that people have an entitlement to national insurance benefits in relation to the contributions which they have paid. The fact that it is pay-as-you-go instead of on an insurance basis does not make any difference to that. When it comes to the question of benefit that people are going to get, this will depend upon the contributions which they have made. That will be the source of their entitlement.

We know that the Government have the right to alter the level of benefits, and we know that the Government have the right to alter the nature of benefits. But surely any Government ought to hesitate about abolishing benefits to which contributors believe they are entitled, especially when this is done to accumulate money in a national insurance fund at a time when contributions are proving to be quite adequate. It is not done because the fund is in difficulties; it is done for quite other reasons—for economic reasons, for reasons to do with the Government's handling of the economy. As the noble Lord, Lord Wells-Pestell, said, if this were done on any scale, confidence in the national insurance scheme would surely vanish completely.

5.19 p.m.


Before the noble Lord the Minister replies, may I draw attention to the fact that the Government are yet again perpetuating the rather curious idea that some benefits will be either better or worse according to the year in which a particular Act comes into force. To take, for example, the widow's allowance, it appears from what the Minister has said that a woman who becomes a widow in one year will be better off than a woman who becomes a widow in another year. That is something you do not determine, nor indeed desire.

We had an earlier discourse from the Minister on the original Beveridge plan, which of course was based on a totally different concept from the one described by the Minister. It was based on the concept that, while one was young and fit and working, one paid into a fund from which one drew if one was unfortunate enough to be handicapped, widowed, elderly, unemployed or in any other such circumstance. But since we have moved away from that principle, I would still suggest that it is very curious to say that certain benefits will come to you if the situation arises before a certain date whereas those who are unlucky enough to have the same circumstance occurring after that date will not have the earnings-related benefit. There is something curiously unjust and curiously difficult in that, and if we once institute this into Acts of Parliament we shall have ladies arranging to make sure that their husbands die at the right moment so that they get the earnings-related benefit.

I have seen this so many times in Acts of Parliament over the years, when advising people on the question of pensions and benefits, and I know that it involves something which is quite fallacious. We already have enough of these anomalies on the statute book and I should have thought that the Government would hesitate to add some more, even to save money, although of course a national insurance fund is basically not designed to subsidise the state; it is put there for those who have to draw from it if it is necessary.


I should like to raise a small point about the cut-off date. If I understood my noble friend aright, he said that the earnings-related supplement would end on 3rd January 1982 but that those who already had an entitlement still running would be allowed to continue until a cut-off date, which I think he said was towards the end of June. It looks as though that is all right for the sickness benefit because that is 168 days and that would be just about running out by that time. In other words, the benefit and the earnings-related supplement would end at about the same time. But when we come to unemployment benefit, that runs for 312 days and the cut-off date would cut off the supplement in the middle of the period of benefit. I wonder whether he could give consideration to that.

5.23 p.m.


I wonder whether the noble Lord would now proceed to answer the question which I asked him. When earnings-related benefits were introduced, am I right in thinking that earnings-related contributions also were introduced, and those contributions were related to what supposed benefits were going to come from these six-month benefits? It is wrong to say that actuarial calculations do not enter into it. It means this. There are millions of people who have paid these contributions but who, because of the Government's decision to end this particular benefit, are not going to draw a penny out of it and they will have a feeling that they have been "done". There is no saying what is going to happen after 1982, as to whether some of these people will be sick or rendered unemployed, and what they have paid for will not be available to them.

Are the Government going to make any change in the earnings contribution? Are they going to reduce it? I fancy not, otherwise the whole purpose of the Government would be spoiled. All they want to do is to save money, but they are doing it by cutting off the rights of people while at the same time they are continuing to charge the same. This is a very important point. It has nothing to do with insurance at all; it has nothing to do with unemployment benefit, sickness benefit and the rest of it. It is purely to do with the Treasury and the decisions which the Government have taken in respect of public sector spending. The department which the noble Baroness represents has been told, "You must save so much: go ahead and do it". They have been driven to these quite unethical procedures of ending benefits but not ending the contributions to which those additional benefits were related.

What we are asking for here is only an additional one year and they should at least give us that and show that they are tender in their thoughts about what they are doing. It is all very well for the noble Lord to stand up and say, "What we are doing is legal; there is nothing unethical about it". But I wonder when last we did anything like this. I wonder when last we ended a benefit without making a similar balancing reduction in contributions. I cannot remember it and I was concerned with national insurance matters for many years. This is not something which any Government would enter into lightly, and it does not stem from the Department of Health and Social Security but comes really from the Treasury.

The noble Lord has a distasteful task. It is not one which any Minister would enjoy but he does not help it by embroidering it with all sorts of fanciful talk about notional funds which have long since gone. When a new benefit is introduced contributions are assessed in relation to actuarial considerations. The actual fact is that in the early years there is a very considerable profit from a Government point of view; it is only in the latter years that it falls off and here we are, having taken the profit, cutting off the benefit but continuing to take the earnings-related contributions.


Millions of people will be affected by this. I am sure that in the Conservative manifesto the public were not told that earnings-related supplements and unemployment benefits, sickness benefit, maternity allowances, and so on, would be cut down. I am sure that millions of people did not realise that. The sick and those who really are suffering thought that this Government which was coming in would give justice and it would be a brand new world. I find this a piece of unnecessary legislation to save a fiddling amount compared with the health and wealth of those who are sick and who need help.


I think much of the last two speeches of the noble Lord, Lord Davies of Leek, and the noble Lord, Lord Ross of Marnock, was replied to very well by the noble Baroness, Lady Wootton of Abinger. T expect the noble Lord, Lord Ross, will remember what the noble Baroness said. She referred to the extreme complication of the whole of the social security budget. There comes a time when a great complication and great rigidity is built into a succession of statutes. I need not recite them all, but starting with the 1973 Act in current legislation—I will not go back further—one statute has built upon another, and the noble Lord will remember that in the last Social Security Bill we built into it a thing called a Keeling Schedule, which is a device to make the legislation a little easier to understand. This is in the nature of an experiment: I hope that it will work, I hope that it will prove to be a means of understanding legislation more satisfactorily.

In referring to what the noble Lord, Lord Drumalbyn, said in regard to the cut-off date, I would remind him that the second six months of unemployment benefit are at a flat rate; earnings-related is the same as for sickness benefit, and I think that answers his particular point.

I am sure that the Committee will have agreed with much of what the noble Baroness, Lady Phillips, said in regard to the unpredictability of the situation of widowhood. I am sure the very great sympathy of the whole Committee was attached to what she said. So many statutes promote a very difficult situation. There must always be marginal cases which fall one side of the line rather than the other. It is one of the tasks of Government to draw that particular line and to make rules and regulations—of which there are all too many—to attempt to alleviate their particular problem. The noble Baroness may feel that the Government have fallen on the wrong side of the line here, but she will recollect that my noble friend Lady Young has agreed to bring the matter of all the discussions on widows' benefit this afternoon to the attention of her right honourable friend the Secretary of State.


Let us get this quite clear. The Government cannot hide behind what really is not true. You cannot say—no one can say—that this is due to the rigidity of the statutes. We are not simple-minded people on this side of the Committee.


I never said that the noble Lord was in any way simple-minded. I think it requires very great flexibility of mind to understand the statutes.


We really must not be treated as if we are simpleminded. To hide behind a phrase, that the real trouble is the rigidity of the statutes, has nothing to do with what we are talking about, and what we have talked about since 3 o'clock yesterday afternoon. The trouble is that it is the rigidity of the Government, who are going to save money by fair means or foul, whether legal or illegal, whether it means appropriating money which should go to one source—


I think the noble Lord has agreed that there is nothing illegal in what the Government are seeking to do.


Well, my limited understanding of the situation may well be that it is not illegal. I hope that some group of people in the not too distant future will test this in the courts.


In a company we would call that a "bucket shop".


It is the rigidity of the Government. They are going to save money by fair means or foul. They have made that abundantly clear. Do not let us hide behind the statutes and say that it is the rigidity of the statutes. We know the statutes are numerous; there are too many of them. They need to be looked at, but it would not help us here. From beginning to end this is a Bill which has been designed, from the first clause to the sixth clause, to save money on a whole variety of things, whether the amounts are small or whether the amounts are large. I would have more sympathy with the Government if they were honest enough to say, "The purpose of this Bill is to save money; we have looked at every possible field where we can save money and this is what we are doing"—it has nothing to do with statutes.


There are two points here. One is that it has been said by my right honourable friend the Secretary of State in another place in Standing Committee B that this is a Budget Bill. Because it is a Budget Bill your Lordships' House has a certain difficulty in handling it. Nevertheless, I think the second point is closely associated with it; that is, that it is a matter of much concern to your Lordships that so many detailed provisions concern the funding of particular parts of the Budget in respect of those cuts. We believe that the Government have been very honest in your Lordships' House in making constant declarations that it is our aim to save money. It is a matter of complaint by the noble Lord, Lord Wallace of Coslany, who said he would start screaming if we said so again Now his noble friend says we have not said it enough.


I am on the point of doing so.


At the appropriate time, I think the Committee has to consider amending the Long Title to make it Social Security (No. 2) (Confidence Trick) Bill.

On Question, Amendment negatived.

Clause 4 agreed to.

Clause 5 [Abatement of unemployment benefit on account of payments of occupational pension]:

5.36 p.m.

Lord BYERS moved Amendment No. 29:

Page 4, line 43, leave out ("£35") and insert ("£50").

The noble Lord said: Now that the minuet between the noble Lord, Lord Sandys, and the noble Lord, Lord Wells-Pestell, has finished, perhaps I might have leave to move the amendment which stands in my name on the Marshalled List, which is at page 4, line 43, leave out "£35" and insert "£50". Even if one reluctantly accepts the principle underlying Clause 5—and I am rather doubtful that I do—that unemployment benefit should be withheld from men between 60 and 65 who are drawing substantial occupational pensions, there is clearly no one obvious answer to the question of what constitutes a substantial pension. I believe the Government have admitted in another place that there is no particular magic in this figure of £35, and I in turn am not particularly wedded to the figure of £50 rather than, say, £49 or £51, or some other figure close to that.

I do not think that in the middle of 1980 £35 a week constitutes a substantial income. I say this for several reasons. First, it is less than half the national average earnings. Secondly, it is clearly essential that our system of social security benefits should be a coherent one, and any figure used in this clause should be—and I am not saying it should be identical—at least consistent with the qualifying figure for, say, family income supplement. At the moment, a married couple, even with only one child, is entitled to support from this part of the social security system if their income falls below £56, a figure much higher than the £35 in Clause 5 as it stands at the moment. Even if one deducts the amount attributable to the child under family income supplement, the figure must be much higher than £35. How, therefore, can such a gap between these two figures be justified? If a married man earning £56 a week is entitled to additional support from the social security system, we cannot sensibly say that if his income takes the form of an occupational pension and falls to £35 that that is adequate or substantial.

Thirdly, the figure of £35 contained in the Bill is even less than the basic state pension for a married couple, which is £37.30. In the majority of cases, a married couple, for whom that constituted their only source of income, would be entitled to a supplementary pension in addition. How, therefore, can a figure £2 lower than this, and paid by a former employer instead of the state, be labelled substantial? Fourthly, whether or not we care for the principle, I think we have to admit that the aim of this clause is to apply some sort of earnings rule to those claiming unemployment benefit, albeit that the income measured is in the form of an occupational pension rather than true earnings.

In the context of state pensions, of course we already have an earnings rule, and it bites on those with earnings above £52. There is a prima facie case for using the same figure here. However, while there could well be arguments about whether to use a figure approaching £56, to be consistent with the family income supplement figure, or a figure of £52 to be consistent with the earnings rule figure, it would, to my mind, be quite inconsistent and would create an unnecessary anomaly to set the figure in Clause 5 as it is, at only £35.

I am aware that the £35 is merely the starting point at which the means test begins to operate to reduce the unemployment benefit and that total income will be higher than that. Nevertheless, I believe that the starting point is too low against the background of modern living. My suggested alternative of £50 is, I think, a modest one and I hope that it will command your Lordships' support in all quarters of the Committee. I beg to move.


I rise to support the amendment moved by the noble Lord, Lord Byers. The point to which the noble Lord, Lord Byers, has referred and which he has embodied in his amendment was raised by my noble friend Lord Underhill on Second Reading, and I consider that the Minister did not make a very satisfactory reply. The noble Baroness more or less implied that £35 was picked out of the air as an alleged substantial sum. I entirely agree with the noble Lord, Lord Byers, when he asks how £35 a week can be regarded as a substantial income. When one comes to think about the matter—and we have a certain interest here—if one is a London-based or a suburban-based Member of this House that amount is equal to two days' attendance allowance here; and that is not taking into account having to keep one's wife and family because, of course, one does not keep one's wife and family on the attendance allowance: one is supposed to have another income or another job, which may not be the case.

In her reply to my noble friend Lord Underhill the noble Baroness said that she was grateful to the noble Lord, Lord Boyd-Carpenter, for putting right what could be regarded as an abuse. However, we have had no substantial confirmation that abuses are taking place. Of course, in social security—whatever area one looks at—there is a small element of abuse. That is bound to arise.

The noble Baroness also alleged that employers are wary of employing people who are over 60. I am not so sure about that. Some employers I know do, if possible, take on people who are 60 or just over 60, rather than a younger person, because they regard them as more reliable and not so unreliable as the younger generation.

Another point that we must bear in mind is that there is an increasing appeal to people to retire early. Many unions have agreed to that—for example, the National Union of Mineworkers—and I was somewhat surprised when my daughter, who is a teacher, told me last night that her education authority has issued a circular urging women teachers to retire at 50. I thought that there was a teacher shortage. That is the type of background that we must think about, and I believe that the Government should reconsider the matter—not necessarily accepting the amendment now—and give an undertaking to have another look at it and to sum up the situation in a better way than was done on Second Reading and will possibly be done in reply to the amendment tonight.

5.44 p.m.


I am interested to note from the two speeches that have been made that there is no substantial opposition to the principle of this particular clause. Perhaps it is worth recalling that quite a long time ago—about 17 years ago—our colleague Lord Evans of Hunger-shall made a report on this matter. I remember it very well because at the time I happened to be at the Department of National Insurance. That report has been in cold storage for quite a long time, but at last it has come out. I cannot say that I remember the details. Indeed, I doubt whether I would find a copy of it in the Printed Paper Office, but no doubt it is in the Library. I do not know whether the figure of £35 was in some way related to the figure of "disregard", so to speak, that the noble Lord recommended at that time. Personally, I have always felt inclined to accept the recommendation of that committee, difficult as it was to get a majority for it, particularly in the House of Commons.

As regards the actual amount suggested, if my arithmetic is right the benefit would disappear when the occupational pension was £69.90. Is that right? I think that after that there would be no further disregard. It is quite a substantial sum of money if one works it out in terms of annual occupational pension. It seems to me that it is a sum which is by no means derisory, given the terms in which the present position rests—that is, that in order to qualify for unemployment benefit at present one must be genuinely seeking employment. I remember that it was said in the report that a considerable amount of evidence had been accumulated to the effect that a number of people were claiming who, on retirement from their work, went to live in a place where it was almost certain that they would not be able to find work in the range of employment they were in previously. It was deemed at the start that they were not genuinely seeking employment if they did so, but gradually there was a relaxation and it was found increasingly difficult to interpret and apply that rule. So, in saying now that unemployment benefit should cease in part to be paid if the occupational pension is £35 a week, and should disappear altogether when it conies to £70 a week, does not seem to me unreasonable in the present circumstances.


I find that there is more in this than meets the eye. I do not want to make a party point because it is a fact all over the world that, with technology, micro-technology and so on, we shall face an issue of unemployment. We are asking people—sometimes people who genuinely feel that they have done enough—at the age of 60 in certain occupations to retire. I think that this will have a deadening effect. It will affect younger people and young married people, at the beginning of their lives, slipping into a job at a very difficult time. Frankly, that is what I foresee. I am not sure whether these figures are the law of the Medes and the Persians. I agree with the noble Lord, Lord Byers: I think that our social system at present is not by any means one of the best in Europe. I think that that of Albania is almost as good.

We are undermining the entire purpose of the society that we hoped to build-up after we had fought the Second World War for democracy and decent living. That is what hurts me. That is what is undermining the situation. It will not encourage the retirement of people who are still healthy enough to enjoy life, because if their occupational pension—which may be very meagre—reaches such a point there will be nothing for them. Consequently, I sincerely believe that we are making a mistake.

Finally, is there any hope—when I was in the Ministry of Social Security we used the phrase—of dynamising these figures? Are they static or will they be changed because of the terrific inflation that we may have to meet, whichever Government are in office? Inflation is one of those things that no one as yet has found a perfect formula for. That is why I see greater depth in this matter and a greater effect than can be seen superficially from just reading the paragraph for the first time. I hope that we shall go into the Lobby with the noble Lord, Lord Byers, because to me this is a matter of great principle.


I listened to the noble Lord, Lord Byers, with close attention because I think that there is much to be explained as regards this particular situation. My noble friend Lady Young explained the position at Second Reading and I think that very often it helps to have an example, which I shall now quote. As the noble Lord, Lord Davies of Leek said, there is more to this than meets the eye. How right he was, because in the basic situation we start off with an occupational pension of £35 for an unemployed man.

Let us take the case of a married man with an occupational pension paid at the weekly rate of £35. At the age of 60 he would have, in the first year—but for no longer than that—a flat rate of £20.65 unemployment benefit for himself and an addition for his wife of £12.75. That totals £68.40. I agree that once his occupational pension exceeded that amount he would no longer be entitled to receive any benefit; but if his pension was less than £68.40, he could receive the amount of benefit that would bring his income up to that level.

I believe, first, that in arguing his case most cogently the noble Lord, Lord Byers, may have overlooked what my noble friend Lord Boyd-Carpenter said on Second Reading at column 1159 of Hansard, on Monday, 2nd June. Of course, my noble friend is very experienced in this particular field and he turned part of his remarks especially to this particular situation. He said: I return quickly to the other parts of the Bill to which I should like to refer. I am delighted to see the provision in respect of the limitation of unemployment benefit for the occupational pensioner. There is no doubt that in certain parts of the country this had the elements of scandal about it. To register for unemployment benefit for a type of work which one knows is non-existent in the area where one has decided to settle was certainly perfectly legal. But I do not think that those concerned are entitled to any very great sympathy if their unemployment benefit is moderately restricted, as is proposed by the Bill. Here again, applying if you like the hard test of priority, is payment of unemployment benefit to such people necessarily of the highest priority? Personally, I do not think that it is". There my noble friend was speaking at a time when he did not have the benefit of seeing the amendment of the noble Lord, Lord Byers, as set down. Nevertheless, that was what was in his mind at that time.

I turn to the amendment as it stands. At a time of savings in the social security expenditure, I repeat once again that, the Government's aim is to reduce expenditure in areas in which it will cause least hardship. In the circumstances, the Government consider that it is reasonable to abate the amount of unemployment benefit payable to people aged 60 or over who have retired on a substantial occupational pension. Those below the age of 60 are not affected.

The figure chosen to define a substantial pension is, of course, to some extent arbitrary. A case can be made out for a higher figure based on precedents or on "feel". But £35 is certainly not wholly arbitrary. The results of a recent survey have shown that about half the unemployed claimants aged 60 to 64 who have retired on an occupational pension receive a weekly amount of less than £35 from that pension. Under this clause a person over 60 who receives an occupational pension of no more than £35 a week will not be affected by the new rules and will receive his or her unemployment benefit in full, to which I have referred in that example. Thus, half those who might be involved are, in fact, exempted.

By deciding that abatement of unemployment benefit shall not begin until a person is receiving an occupational pension of more than £35, the Government will also ensure that full abatement will not apply unless a reasonably high level of occupational pension is being paid. For example, standard flat rate unemployment benefit for a single person in 1981 will not be fully abated unless his or her pension amounts to at least £55.70 a week, while the equivalent amount for a married couple is £68.40 a week. That, of course, was the example which I quoted.

It will be noted that Clause 5 is so constructed that the Bill itself sets only a lower limit to the pension figure from which the new rules begin. The actual sum is to be prescribed by regulations, and it is, therefore, not necessary to amend the Bill in order to prescribe a higher figure.

I hope that I have not wearied the Committee with the examples and details, but, as I have already explained, the main purpose of the first five clauses of this Bill is to reduce public expenditure. This clause will produce savings of about £25 million in a full year, while protecting those on lower occupational pensions. The effect of this amendment would be to reduce those savings by about £9 million. Alternative savings would have to be looked for elsewhere in the social security field. I do not think that it would be easy to justify transferring this burden to others simply to ensure that the money could continue to be paid to some of the better off occupational pensioners, including many who, having retired from work, neither need nor wish to take further employment. I hope that the Committee will reject the amendment.

5.56 p.m.


I shall not pursue my point about the general principle until we come to the clause stand part debate. But the noble Lord, Lord Drumalbyn, will not be surprised because I have pursued several Governments on this point, including Labour Governments.

The Minister has just given some figures which are extraordinarily interesting. There seems to be the underlying principle that there is something very wicked in a person of 60 years of age who actually wants to work. It is a good job that that was not applied to this gentleman, Mr. MacGregor, who is 67 years old. I was delighted to hear that he was going to take part in the activities of the Steel Corporation because it was striking a blow for the over-60s.

But at the moment men have to retire at 65 years of age. If they are wicked enough and foolish enough to wish to work and they receive a retirement pension, immediately the earnings rule comes into operation. As the noble Lord, Lord Sandys, knows, if they earn enough they will lose their pension—and who knows what is enough, because they have to shop in the same market as everybody else; their loaf of bread costs exactly the same as that of a man who is earning; they receive no special privileges there. So now we are back to the same principle. If a man retires at 60 or is declared unemployed at 60 under our system he cannot collect a retirement pension. He may have an occupational pension towards which, in most cases, I would remind the Minister, he has made a contribution, and he then may seek work. I think that it is quite unjust of the noble Lord, who is not in his place, to suggest that people deliberately collect money without seeking work. Most pensioners of 60 who I know, who, after all, are not senile—because if we assumed that everyone over the age of 60 was senile, that would rule out quite a number of the Members of this House—are quite capable of earning money, of working, and want to do so. We are talking about a generation which liked to work. Therefore, it is quite slanderous to suggest that they go somewhere to live in order to go to the employment exchange to collect this magnificent sum because they do not wish to work. I do not think that that is true.

But let us suppose that they go along with the intention of finding a job. They then collect this vast sum and then, because they have an occupational pension, they are to lose a certain proportion. There is something totally unjust about this. No section of the population pay back £1 for every £1 they earn. They are always allowed to retain something out of it—even people who enter the class of the late Charlie Clore; they still retain some of their money.

This provision is quite unjust and unfair. If the amendment of the noble Lord, Lord Byers, were approved at least it would be lifted a little, but it is wrong to say that a pension of £35 a week is substantial. I suppose we are now to assume that the retirement pension is substantial. Most people who know people of that age would admit that they find it very difficult actually to live on the retirement pension. If they wish to work, I cannot see why we should be the ones who, by any Act of Parliament, deprive them of this privilege. At least let us raise this amount; it is in any case paltry enough.


I do not conceal the fact that I do not like the principle which has been introduced of penalising the occupational pensioner, but nothing which has been said from the Front Bench opposite has persuaded me that this figure of £35 is adequate. It is a bad starting figure. What I dislike is the suggestion that this is really brought in because there is an abuse. It is going to hit the unemployed person who is genuinely wanting work, is living in the right place, but is not able to get work.

In those circumstances—I take the point made by the noble Baroness, Lady Phillips—these pensions on the whole have been paid for. A contribution has been put there by the employer and by the employee in order to make the sort of provision that people want, and a lot of them, as I shall say on the next amendment that I propose to move, have planned their retirement taking into account the fact that, if they could not find a job, they would at least get unemployment benefit when they had come to early retirement. I feel very strongly about

this. We have got the wrong figure. It is an arbitrary figure. There is no guarantee that regulations will dynamise this and I can see it being a trap for those over 60 who genuinely want to get work but cannot find it. I beg to move.

6.2 p.m.

On Question, Whether the said amendment (No. 29) shall be agreed to?

Their Lordships divided: Contents, 90; Not-Contents, 99.

Ardwick, L. Goronwy-Roberts, L. Phillips, B.
Avebury, L. Gosford, E. Pitt of Hampstead, L.
Bacon, B. Grey, E. Plant, L.
Balogh, L. Hale, L, Ponsonby of Shulbrede, L.
Banks, L. Hampton, L. [Teller.] Ritchie-Calder, L.
Barrington, V. Harris of Greenwich, L. Robson of Kiddington, B.
Beaumont of Whitley, L. Hatch of Lusby, L. Rochester, L.
Beswick, L. Hood, V. Ross of Marnock, L.
Birk, B. Houghton of Sowerby, L. Sainsbury, L.
Blease, L. Howie of Troon, L. Seear, B.
Blyton, L. Irving of Dartford, L. Segal, L.
Boston of Faversham, L. Jacques, L. Simon, V.
Bowden, L. Janner, L. Stamp, L.
Brockway, L. Kilbracken, L. Stewart of Alvechurch, B.
Brooks of Tremorfa, L. Kilmarnock, L. Stewart of Fulham, L.
Bruce of Donington, L. Kings Norton, L. Stone, L.
Burton of Coventry, B. Leatherland, L. Strabolgi, L.
Byers, L. Lee of Newton, L. Strauss, L.
Chitnis, L. Leonard, L. Tanlaw, L.
Crook, L. Llewelyn-Davies, L. Taylor of Mansfield, L.
Crowther-Hunt, L. Llewelyn-Davies of Hastoe, B. Underhill, L.
Cudlipp, L. Lovell-Davis, L. Wallace of Coslany, L. [Teller.]
Darling of Hillsborough, L. McNair, L.
David, B. Maelor, L. Wedderburn of Charlton, L.
Davies of Leek, L. Melchett, L. Wells-Pestell, L.
Elwyn-Jones, L. Milner of Leeds, L. Whaddon, L.
Evans of Claughton, L. Noel-Baker, L. Wilson of Radcliffe, L.
Fisher of Rednal, B. Northfield, L. Wootton of Abinger, B.
Gaitskell, B. Ogmore, L. Wynne-Jones, L.
Gifford, L. Pargiter, L.
Glenamara, L. Peart, L.
Adeane, L. Crathorne, L. Fortescue, E.
Airey of Abingdon, B. Croft, L. Gainford, L.
Allerton, L. Cromartie, E. Glenarthur, L.
Amory, V. Cullen of Ashbourne, L. Glenkinglas, L.
Ampthill, L. Davidson, V. Godber of Willington, L.
Balerno, L. de Clifford, L. Gowrie, E.
Bellwin, L. De Freyne, L. Gridley, L.
Belstead, L. De La Warr, E. Hailsham of Saint Marylcbone, L. (L. Chancellor.)
Bessborough, E. Denham. L. [Teller.]
Bolton, L. Drumalbyn, L. Hanworth, V.
Brooke of Cumnor, L. Dundee, E. Hatherton, L.
Brooke of Ystradfellte, B. Eccles, V. Hawke, L.
Brougham and Vaux, L. Ellenborough, L. Henley, L.
Cairns, E. Elliot of Harwood, B. Hertford, M.
Campbell of Croy, L. Elton, L. Hill of Luton, L.
Clifford of Chudleigh, L. Emmet of Amberley, B. Hives, L.
Clitheroe, L. Exeter, M. Hornsby-Smith, B.
Colwyn, L. Faithfull, B. Hylton-Foster, B.
Craigavon, V. Falkland, V. Kimberley, E.
Kinnoull, E. Murton of Lindisfarne, L. Spens, L.
Lauderdale, E. Newall, L Strathclyde, L.
Long, V. Norfolk, D. Strathcona and Mount Royal, L.
Lyell, L. Northchurch, B. Strathspey, L.
Mackay of Clashfern, L. Nugent of Guildford, L. Tranmire, L.
Macleod of Borve, B. Orkney, E. Trefgarne, L.
Mansfield, E. Redmayne, L. Trenchard, V.
Marley, L. Renton, L. Ullswater, V.
Massereene and Ferrard, V. Rochdale, V. Vaizey, L.
Merrivale, L. Saint Oswald, L. Vickers, B.
Milverton, L. Sandford, L. Vivian, L.
Monson, L. Sandys, L. [Teller.] Wakefield of Kendal, L.
Morris, L. Selkirk, E. Ward of Witley, V.
Mottistone, L. Soames, L. (L. President.) Young, B.
Mowbray and Stourton, L.

Resolved in the negative, and amendment disagreed to accordingly.

6.10 p.m.

Lord BYERS moved Amendment No. 30:

Page 4, line 44, at end insert—

("This section shall not apply in respect of payments by way of occupational pension which commenced before 26th March 1980").

The noble Lord said: I am concerned over the timing of this measure. It is desirable, even essential, that people should plan their financial provision for retirement in advance. Indeed, it is a sad fact of life that all too many people grossly underestimate the length of time they are likely to spend in retirement and hence the amount of income they are likely to need. Fortunately, there are some people who make proper provision in advance; but whether or not they have made proper provision, if they have already made a decision and entered upon retirement, or indeed if retirement has already been forced upon them by way of redundancy, they are surely entitled to be protected from legislation which cuts out part of the income they are currently receiving.

It is that protection that my amendment seeks to provide. Without it, the Bill, as it stands, is in danger of undermining the basis of the calculations which many people now retired have already made. Such calculations will have led many people to decide that they can afford to retire, or others to decide that they can afford a certain lifestyle in retirement. Having made such decisions, they surely are entitled to protection from a measure that would now withdraw part of the income which they had planned upon having.

There is a strong case for making this provision effective from a date in the future so that this measure can be taken into account by anyone who is considering whether or not he can afford to retire, or, if the retirement is an enforced one, whether a certain standard of living can be maintained. On the other hand, the Government could argue—and indeed I expect them to argue—that the choice of an effective date in the future would give people the opportunity to frustrate the intention behind this clause by retiring immediately, or at least before the critical date arrives. With some reluctance, therefore, I have incorporated in my amendment an effective date based on the timing of the announcement of this measure in the Budget proceedings in another place.

The effect of this amendment, therefore, would be to exempt from the provisions of Clause 5 only those whose occupational pension had commenced before the day of the Budget. That means that there can be no possibility of anyone timing his retirement in order to frustrate the intentions of the Government, whatever we may feel about those intentions.

All in all, this amendment is a modest one, but one that in my opinion we owe in all fairness to those whose occupational pensions have already begun. Of course, if we were designing a social security system from the drawing board where none already existed, we would probably not make provision for unemployment benefit to be payable to certain occupational pensioners. But we are not faced with a blank sheet of paper; we are faced with a system already working and, whatever its defects, those who have taken the working of that system into account in making fundamental personal decisions were fully entitled to do so. It would be thoroughly objectionable if, at this late stage, we were to penalise them for doing so, and that is the principal at the heart of my amendment. I hope that it commends itself to your Lordships. I beg to move.


I rise briefly to support the noble Lord, Lord Byers. He has outlined and made a cast iron-case. The amendment would avoid an obvious injustice. I think that this is a situation where the Government can come forward and meet this side of the Committee in an attempt at last to reach a stage where an amendment will he accepted, which would of course be revolutionary. But please do not mention anything more about financial savings.

6.15 p.m.


I think the noble Lord will agree that in discussing Clause 5 it has been argued that many of those who have retired on an occupational pension have done so in the expectation that they will be able to claim unemployment benefit if they are unable to find work. In this context, it is interesting to note that the recent Cohort Study of a sample of unemployed men—which no doubt the noble Lord, Lord Wells-Pestell, has read or has had the opportunity of looking at—which was run for the Department of Health and Social Services, reported that 56 per cent. of those on occupational pensions, the subject with which we are concerned in this amendment, had applied for unemployment benefit but were not available for work.

It has been emphasised both in this House and in another place that in many cases they have paid national insurance contributions all their working lives in the expectation of drawing unemployment benefit when they retire. The facts are, first, that many people who retire from work with a substantial pension are, quite understandably, not really keen to obtain further work. This is, I think, disputed by the noble Baroness, Lady Phillips.


Will the Minister forgive me for intervening before he leaves this point? He said something that I have not heard before; that is, that the survey showed that these people were receiving unemployment benefit but were not available for work. How could you determine that? Surely, the mere fact that you go to the manpower services, I believe it is called now, or the manpower centre, means that you are seeking work.


At this stage, without the survey in front of me, I can only say that this was embodied in the survey carried out by the DHSS. I shall be happy to answer the question, but I have not had the opportunity of looking at chapter and verse in the few moments since the noble Baroness has spoken.


Perhaps the Minister will let me know, because I do not see how he can reach that figure.


I think the Minister said that the numbers were of those who had applied for unemployment benefit. Perhaps he could verify whether they had actually received unemployment benefit.


Once again, I would hesitate for several long minutes before replying to my noble friend Lord Drumalbyn on this point. As I have now been given a note on this, perhaps I could reply at short length. The recent survey known as the Cohort Study found that over half, that is to say, 56 per cent., of the unemployed men with occupational pensions of a size to be affected by this proposal admitted—and that is the crucial word—that they were not looking for work. I do not know whether that satisfies either the noble Lord, Lord Drumalbyn, or the noble Baroness.


No, it does not satisfy me.


May I now resume my argument on this amendment. The facts are that this was borne out by the results of the survey referred to earlier—over half of the unemployed men over 60 with a pension large enough to be affected by this proposal admitted that they were not looking for work. Secondly, quite apart from the issue of whether or not a pensioner is looking for work, it must be remembered that unemployment benefit is extended as a short-term earnings-replacement benefit for people experiencing unforeseen periods of unemployment until they can find fresh work. Retirement from work can hardly be regarded as unforeseen. Moreover, if on retirement a person is awarded a substantial occupational pension, he will be receiving a form of earnings-replacement, and payment of unemployment benefit in addition is double provision for the same contingency. In the present economic circumstances it is difficult to justify spending £25 million to provide duplicate earnings replacement of this kind.

I readily accept that this amendment would not cost as much as some which have been proposed. Many people who retired before 26th March 1980 and who had then claimed unemployment benefit would have exhausted their entitlement before the start of the new provisions in April 1981, and to that extent the cost of the amendment would be reduced. But if those concerned obtained further work for at least 13 weeks or if, having worked for a time after retiring from their normal occupations, they then became unemployed, they could claim unemployment benefit at any time until they retired after reaching the state pension age of 65. Distinguishing the entitlement of these occupational pensioners from those who had retired after March 1980 would involve administrative complications, and would most certainly lead to a sense of unfairness as between those pensioners who received full unemployment benefit and others with similar occupational pensions who had had their benefit reduced or extinguished altogether. For those reasons the Government cannot accept the amendment.


When I retired from the Navy at the age of 47 I was unemployed for six weeks and drew unemployment benefit, primarily to find out what it was like to do so, and I discovered that they paid it from a different office from social security benefits, and that of course was a valuable thing to have learned. Do I understand that under the Bill I would not now be able to do that and gain the valuable experience that I did on that occasion?


I do not think the provisions of this clause would apply. I am not fully conversant with my noble friend's situation and I would hesitate to confirm or otherwise the situation in such a particular case.


I was very disappointed indeed at the attitude of the noble Lord, Lord Sandys, and I was worried by a statement he made, and I am not sure whether he realises exactly what he said. As I understood him, he said retirement from work could not be entirely unforeseen. That is what is happening today; people are not able to get jobs and are forced to retire. That is not something they have foreseen. I am worried that we are being bedevilled by this 56 per cent. of people who say they do not really want work. It means that 44 per cent. of people are genuinely seeking work. If there are people taking unemployment benefit who do not wish to work, that should be treated as the abuse which it is and should not affect those who are genuinely seeking work and whom this will catch in a very bad way. As the noble Lord, Lord Wallace of Coslany, said, here was an opportunity for the Government at least to be sympathetic towards this idea and perhaps to have said they would have another look at it. I regard this as a potential injustice to a large number of people, and if the Government are not prepared to have another look at it, the Committee should press it to a Division.


I do not think we can leave the matter of the 56 per cent. there. I do not suggest we pursue it tonight, but my understanding of the regulations of the Department of Employment is that a person has to register or sign on once a week to get his money. If that is what he does, then he signs on once a week to get work and, if there is no work, he gets his money. The implication of what the noble Lord said—and I realise he was relying on a report—suggests that money is paid out without that requirement being exacted because, as I understand the situation, they must register for work once a week. The very fact that they sign on means that they sign on saying they want work. Perhaps the noble Lord could at an early stage pursue the matter. Many of us would like to know how this percentage of people interviewed admitted what the noble Lord described. We should like to know, of course, what conditions they had to fulfil.


I will certainly look into this matter, and perhaps the noble Lord, Lord Wells-Pestell, would either like me to write to him about it or—if he thinks a larger number of people would benefit from such a course—if he would set down a Question for Written or Oral Answer in your Lordships' House, I should be only too happy to make what arrangements we can on behalf of the Government.


I do not think that would be satisfactory either to the noble Lord, Lord Wells-Pestell, or to those on these Benches. If the noble Lord will say he will have another look at this and come back with something positive on Report, I should be willing to withdraw the amendment. If not, I should like to press it to a Division.

6.26 p.m.


As the one who originally raised this point, I should like to pursue it because the reply given by the noble Lord, Lord Sandys, appeared to refer to a report. Was that report prepared by the department? From what he said, it seemed to be an outside report. We all know about market research; you can get any answer you like if you ask the right question. The report in question seems to have originated in this way, that people leaving the manpower services centres were stopped and asked, "Did you want work, or were you just coming here for a walk"? and they gave an answer.

It seems dreadful that we should he dealing with a prospective Act of Parliament on the basis of a piece of market research about which we have had no information. It is a slur on people I know, through Age Concern, who genuinely want work. The idea that more than half of them go along gaily to collect this vast sum of money in order to live, presumably in a nice place like Devon or Cornwall, is a total nonsense. In view of the sort of report this appears to be, we need the source, the kind of questions that were asked and all the facts that went with it; that is, if it is to be quoted as a reason for a provision in a Bill.

Baroness YOUNG

Perhaps we could take ourselves away from that point. It would be a great mistake if the Committee believed that Clause 5 had been inserted to cater for something that might be regarded as an abuse. On Second Reading, a few noble Lords raised the whole question whether the Bill was aimed at dealing with abuse, and I made it clear in my winding-up speech that it was not. It has nothing to do with that at all. In fact, that is a quite subsidiary point, which arose over the clause when it was said it was possible for somebody to draw unemployment benefit although he had an occupational pension and was not available for work. On the point that has been raised about the survey, to satisfy the Committee my noble friends and I would be very happy to write to anybody giving the full details of the survey to indicate where the information can be found, so that any of your Lordships who care to look at it can do so; but I would not want the Committee to think that the case rests on that.


The noble Baroness, Lady Young, said this was not a Bill designed to deal with abuse. Why, then, did she say on Second Reading: I was very pleased to have the support of my noble friend Lord Boyd-Carpenter for putting right what could be regarded as an abuse"?

Baroness YOUNG

The way in which I couched my remarks on that occasion indicates that I do not regard that as a principal reason for the Bill. The noble Lord, Lord Wallace of Coslany, has said often enough that he is bored hearing us say it is a Bill to save money, but I indicated in my opening remarks that that was indeed the purpose of the Bill. In fact, the principal purpose of this clause—and we have not pretended about this fact—is another way of saving money. We have said that this is a group of people who have retired and who have an occupational pension, and we have chosen the figure of £35 as a cut-off point for those who would not be eligible for this unemployment benefit.


That was in regard to the previous amendment. What is the cost of this amendment? Will it really be very much?

Baroness YOUNG

I beg the Committee's pardon. I accept that the cost of this amendment is not as great as the cost of other amendments. The point that my noble friend Lord Sandys made was that it would distinguish between those who retired before the date in March 1980 when my right honourable friend the Chancellor of the Exchequer made his statement about the matter and those who have retired subsequently. To distinguish between the two would be a very complicated matter and would, I believe, create a sense of unfairness between two groups of occupational pensioners.


Will the noble Baroness agree that the figure would probably be about £25 million per annum?

Baroness YOUNG

I can certainly give the noble Lord the precise figure.


The figure I mentioned actually appeared in an early day Motion in another place.


I wish to make a quick observation. With regard to the 44 per cent. who want work—

Several noble Lords

It is 56 per cent.


No, it is 44 per cent., not 56 per cent. Some of these people are very choosey about the kind of work that they want.

Several noble Lords



I just wanted to make that point because I have had experience of this matter.


We cannot let it go on the record that we started this business, because it was the Minister, the noble Lord, Lord Sandys, who said that his noble friend the noble Lord, Lord Boyd-Carpenter, had made the remark that we we have been discussing. That is why we followed up the point; we on this side of the Committee did not raise it. We have simply tried to answer the accusation and to point out that these people are not layabouts. May I say to the noble Viscount that, if he went to a labour exchange or a manpower centre, he would not think it unreasonable to expect the type of job to which he was accustomed, rather than one to which he was not accustomed.


I was not accusing people of being choosey about work; I was just making the point.

6.32 p.m.

On Question, Whether the said amendment (No. 30) shall be agreed to?

Their Lordships divided: Contents, 83; Not-Contents, 97.

Ampthill, L. Gosford, E. Ogmore, L.
Ardwick, L. Greenwood of Rossendale, L. Pargiter, L.
Bacon, B. Grey, E. Peart, L.
Balogh, L. Hale, L. Phillips, B.
Banks, L. [Teller.] Halsbury, E. Pitt of Hampstead, L.
Barrington, V. Hampton, L. [Teller.] Plant, L.
Beaumont of Whitley, L. Hanworth, V. Ponsonby of Shulbrede, L.
Beswick, L. Hatch of Lusby, L. Ritchie-Calder, L.
Blease, L. Hood, V. Robson of Kiddington, B.
Blyton, L. Houghton of Sowerby, L. Rochester, L.
Boston of Faversham, L. Howie of Troon, L. Ross of Marnock, L.
Bowden, L. Irving of Dartford, L. Sainsbury, L.
Brockway, L. Jacques, L. Seear, B.
Brooks of Tremorfa, L. Janner, L. Shannon, E.
Bruce of Donington, L. Kilbracken, L. Simon, V.
Burton of Coventry, B. Kilmarnock, L. Stamp, L.
Byers, L. Leatherland, L. Stone, L.
Collison, L. Lee of Newton, L. Strauss, L.
Crowther-Hunt, L. Leonard, L. Taylor of Mansfield, L.
Cudlipp, L. Llewelyn-Davies, L. Underhill, L.
David, B. Llewelyn-Davies of Hastoe, B. Wallace of Coslany, L.
Davies of Leek, L. Lovell-Davis, L. Wedderburn of Charlton, L.
Elwyn-Jones, L. McNair, L. Wells-Pestell, L.
Evans of Claughton, L. Maelor, L. Whaddon, L.
Fisher of Rednal, B. Melchett, L. Wilson of Radcliffe, L.
Gaitskell, B. Milner of Leeds, L. Wootton of Abinger, B.
Glenamara, L. Milverton, L. Wynne-Jones, L.
Goronwy-Roberts, L. Northfield, L.
Adeane, L. Emmet of Amberley, B. Morris, L.
Airey of Abingdon, B. Exeter, M. Mottistone, L.
Allerton, L. Faithfull, B. Mowbray and Stourton, L.
Amory, V. Falkland, V. Murton of Lindisfarne, L.
Balerno, L. Fortescue, E. Newall, L.
Bellwin, L. Gainford, L. Norfolk, D.
Belstead, L. Glenarthur, L. Northchurch, B.
Bessborough, E. Glenkinglas, L. Nugent of Guildford, L.
Bolton, L. Godber of Willington, L. Orkney, E.
Brooke of Cumnor, L. Gowrie, E. Redmayne, L.
Brooke of Ystradfellte, B. Grantchester, L. Renton, L.
Brougham and Vaux, L. Gridley, L. Rochdale, V.
Cairns, E. Hailsham of Saint Marylebone, L. (L. Chancellor.) Saint Oswald, L.
Campbell of Croy, L. Sandford, L.
Clifford of Chudleigh, L. Hatherton, L. Sandys, L. [Teller.]
Clitheroe, L. Hawke, L. Selkirk, E.
Cockfield, L. Henley, L. Soames, L. (L. President.)
Colwyn, L. Hives, L. Spens, L.
Cranbrooke, E. Hornsby-Smith, B. Strathclyde, L.
Crathorne, L. Hylton-Foster, B. Strathcona and Mount Royal, L.
Croft, L. Kimberley, E. Strathspey, L.
Cromartie, E. Kinnoull, E. Tranmire, L.
Cullen of Ashbourne, L. Lauderdale, E. Trefgarne L.
Davidson, V. Long, V. Trenchard, V.
de Clifford, L. Lyell, L. Tweeddale, M.
De La Warr, E. Mackay of Clashfern, L. Ullswater, V.
Denham, L. [Teller.] Macleod of Borve, B. Vickers, B.
Drumalbyn, L. Mansfield, E. Vivian, L.
Dundee, E. Marley, L. Wakefield of Kendal, L.
Eccles, V. Massereene and Ferrard, V. Ward of Witley, V.
Ellenborough, L. Merrivale, L. Westbury, L.
Elliot of Harwood, B. Mills, V. Young, B.
Elton, L. Monson, L.

Resolved in the negative, and amendment disagreed to accordingly.

6.40 p.m.

Lord WELLS-PESTELL moved Amendment No. 31:

Page 6, line 28, leave out from ("subsection") to ("as") in line 30.

The noble Lord said: This is a very brief amendment. It is one which the Government will have no difficulty in accepting, and I know will be pleased to accept. It certainly has no money implications at all, and therefore they cannot offer that as a reason for not accepting it. The amendment relates to subsection (5) of Clause 5, which deals with the function of the Social Security Advisory Committee, which will have the responsibility of making proposals and examining regulations once they have come into being. But subsection (5) says in line 28: such regulations as are mentioned in the preceding subsection, other than regulations which are made during the period of 6 months beginning with the date of the passing of this Act …".

I think it is understood that once the Act comes into being it will take a little time to set up the Social Security Advisory Committee. This I accept. It is not something which ought to be done in a hurry; it has to be done with very great care. That means that in the early stages regulations will have to be drawn up, they will come before Parliament and Parliament will make a decision on them; and there may well be other proposals put forward by the Secretary of State. We are not objecting to that. What we are saying is that, although this is a necessary procedure, once the Social Security Advisory Committee is in being, then no matter how many regulations have been passed and proposals adopted during the first six months, they should nevertheless go to the Social Security Advisory Committee so that they can look at them. It may well be that they will approve of all of them; but I think those of your Lordships who have followed the function of the National Insurance Advisory Committee (known as NIAC) will realise and will know that there have been times when they have seen things in regulations and proposals which have escaped the notice of everybody else, and that they have been able to make some valid and well worthwhile criticism and comment.

This is a very simple thing, and I do not honestly think there can be any rooted objection to it. I hope nobody will say that, of course, they will have so much work on their hands, because we do not know how much work they will have on their hands. At this stage, we do not know how often they will meet—whether it will be once, twice or three times a week, though it will be probably not as much as that. I see no reason for resisting this request because the regulations made in the first six months are really going to be of supreme importance. I know the answer is that they must come before Parliament, but Parliament has not a complete monopoly of wisdom, as we know from time to time. If they had, we should not have to amend so many Acts. Therefore, I ask the noble Baroness, or whoever is replying from the Government Front Bench, to say that this is a reasonable request, and that they will accept it. I beg to move.


The noble Lord, Lord Wells-Pestell, will recollect that we had discussions on the first Social Security Bill a matter of a month ago on the subject of the Social Security Advisory Committee and its administration. Under this clause, proposals to make regulations under subsection (2), which would allow the introduction of certain detailed operating rules or the making of regulations to extend the definition of payments by way of occupational pension, must be submitted to the Social Security Advisory Committee unless they are made within six months of the Royal Assent to this Bill. This amendment would remove the proviso, so that any regulatory proposals made within six months of Royal Assent would also have to be submitted first to the Social Security Advisory Committee.

I hope that the noble Lord has a copy of the Notes on Clauses, because if he has looked at page 7 he will have seen that Ministers are minded not to use the regulation-making powers to counter arrangements which deal with lump sum payments and other payment practices, which could be used to avoid abatement of unemployment benefit, until experience of the new provisions has established the need and pointed to the best approach. This would mean that these particular proposals would not be made within six months of Royal Assent, and therefore would be submitted to the Social Security Advisory Committee before being made.

As regards the regulations which are to be made within six months of Royal Assent the majority of these will be of a procedural or non-contentious nature; for example, for the conversion of monthly payments of occupational pension to weekly payments for calculation purposes and for ensuring that no adjustment of unemployment benefit is made for days before the occupational pension becomes payable. Opportunities for discussion of the general principles on which these regulations will be based have been provided during the passage of the Bill through Parliament, and the regulations will of course be subject to annulment in the usual way.

This apart, it is important that these regulations should be made some months before the proposed commencement of the new arrangements in April 1981, to allow time for the necessary local office instructions to be prepared and for staff to be properly trained. In this context, of course, the noble Lord, Lord Wells-Pestell, will recollect that we had certain discussions on the No. 1 Bill in regard to this highly important matter. It is unlikely that the new committee, which will be set up only in November of this year, would have adequate time to consider the regulations. On these grounds, I ask the Committee not to support this amendment.


I feel that that reply is a very unsatisfactory one. No case has been made out at all as to why the matters affecting the working of the Act should not be referred to them. The noble Lord says that there are a number of matters which will be non-controversial. They may well be non-controversial from the Government's point of view, no doubt, but I am not sure they are going to be non-controversial to people outside the Government or to Members on this side of the Committee. Furthermore, though the regulations will be dealt with by going through the Affirmative Resolution process, it does not necessarily follow that we shall not miss something.

I feel that it would be a simple matter to refer these things. Even if they come into being or have to be considered before the Social Security Advisory Committee comes into existence, there is no reason why, after that committee has been set up, it should not be asked to examine the regulations and the other things which have been decided upon. I should have thought it was a very good longstop and a very good safeguard.

On Question, amendment negatived.

Clause 5 agreed to.

Clause 6 [Supplementary benefit in cases affected by trade disputes]:

6.50 p.m.

Lord WELLS-PESTELL moved Amendment No. 32: Page 6, line 42, leave out paragraph (a).

The noble Lord said: I beg to move this amendment standing in my name. As noble Lords will realise, we are now moving into a very difficult and controversial area. The first amendment, on page 6, line 42, is to leave out paragraph (a). Paragraph (a) of Clause 6(1) provides that PAYE refunds to a person involved in a trade dispute and other relevant payments which, for practical purposes, I shall call "strike pay", are to be taken into account in full for supplementary benefits purposes, except to the extent that regulations provide otherwise. The intention is that PAYE refunds should be taken into account without any disregard while up to £12 of strike pay will be disregarded. The £12 disregard of strike pay could be provided for by regulations modifying Clause 6(1)(b). The effect of deleting Clause 6(1)(a), as the amendment I am moving proposes, would be to retain the existing £4 disregard of PAYE refunds.

The normal way of treating PAYE refunds for supplementary benefit purposes is to regard them as capital. Since a claimant can have as much as £1,200 of capital without any reduction of benefit, the result in most cases is that the tax refund is disregarded. Until 1971, the same rule applied to tax refunds received by strikers. In that year, as one of a number of measures to tighten up the supplementary benefits rules for strikers, it was decided that their PAYE refund should be treated as income, subject to the normal disregards. That remained unchanged under the Labour Government. Athough it constitutes a form of discrimination against strikers, most people would probably regard it as a reasonable compromise. To abolish the £4 disre- gard, as Clause 6(1)(a) proposes, is simply—and I do not think that I am using too strong a word here—vindictive; and I believe it will cause justifiable resentment.

After all, a tax refund is a man's own money which he has earned in an earlier part of the tax year. That is what we are dealing with. Whether he gets a refund at all depends upon whether the strike takes place early or late in the tax year. It hardly seems equitable that a man who strikes in April should receive substantially more supplementary benefit than a man who strikes in February or March. A £4 disregard to some extent mitigates this in equity. There may be a case for increasing it to take account of inflation; but I submit that there is no case for abolishing it. I move this amendment rather briefly, because what is in our minds is I think quite clear, and I do not think that any useful purpose will be served by prolonging it at this stage.

The LORD ADVOCATE (Lord Mackay of Clashfern)

As the noble Lord, Lord Wells-Pestell, has said, this amendment would leave out Clause 6(1)(a) which is in two parts. Part (i) proposes, in effect, the removal of the £4 disregard on strike pay and it is the Government's intention to substitute a disregard of £12 a week on strike pay which will be brought in by regulations. This Government were elected on a promise to ensure that trade unions paid a fair share of the cost of supporting their members and families when they were on strike, and the proposed £12 a week disregard of strike pay would give unions every incentive to be responsible in this particular way. This amendment would provide for only a £4 disregard on strike pay, so there would be no incentive to unions to pay more than £4 a week in dispute pay to their members.

Part (ii) of Clause 6(1)(a) abolishes the present £4 disregard on income tax refunds. The striker gets a refund of tax only because he is on strike and has no earnings, and in most strikes it is part of his regular weekly income. We do not think it is right to continue with this £4 disregard which, in effect, provides an unwarranted bonus by increasing the entitlement to supplementary benefit for the striker who receives a tax refund.

The noble Lord in moving his amendment pointed out that whether or not a person received a repayment of tax would depend upon the situation at the time. He suggested that it was unfair that a person who had a refund should have it brought into account; whereas if he did not have a refund, it would not be. This ignores the fact that supplementary benefit is supposed to deal with need. We see the income tax refund that he receives as something which ought to be taken into account in assessing his need. I invite your Lordships not to agree to this amendment.


I tried to point out that the refund of PAYE is money which a man has earned and which he has paid by way of taxation and, therefore, if he finds himself in the position of being locked out or on strike and gets that money back, it is iniquitous that anybody should seek to take into account part of that money. I do not know whether there is any point in raising the general principle behind this. The Government originally intended to deem that a man on strike would be receiving £12 a week from his union. But they discovered, of course, that union funds, generally speaking, would not permit payments of that kind; so that, at least, the word "deem" seemed to have died a natural death and we have not heard about it. But in its place we have legislation which is going to recover that amount of money, as I understand the situation, by reducing the supplementary benefit by that amount.

I know that noble Lords opposite have strong feelings about people being on strike. I do not know how many noble Lords opposite have ever in their lives accepted the fact that men sometimes have a justifiable reason for coming out on strike; but, as far as I can see in the Bill, there is no yardstick by which that is going to be measured. It is going to be a matter of whether people are out on strike. It also means, as a result of some people being out on strike, that others can be laid off or locked out.

It is difficult for noble Lords opposite because many of them are in the capacity of employers. If the employers of this country understood a little more about their employees, there would not be nearly so much trouble. I do not think that anybody on the Government side would deny that a good deal of the trouble that we have experienced in the industrial field has been due to bad management. I am not going to say that it is all due to bad management.

A noble Lord

Thank God!


We need not thank God for it. I am a fairly reasonable person. I do not think that right is always on one side, but I think that right can be on both sides. I invite noble Lords opposite to recognise that there is often right on the side of the workers.

What the Government are saying is that whether they have a good reason or not the married man, his family, will suffer to the extent of a £12 a week reduction in Social Security. For the very first time that I can remember we are now going by law to penalise the family. Just think of it—£12 a week! Not much to some noble Lords opposite, but £12 a week to a family is very considerable.

I am saying that we are enunciating a new principle; that it is going to be a kind of crime to strike. One of the great bastions of democracy which we have had longer than anybody else is the fact we have recognised the right of a man to withdraw his labour or, if it is more acceptable, to go on strike whether he was right or wrong in doing it, because he always thinks that he is right. The employer invariably thinks that he is wrong. But this is the way the things goes.

I have always been proud when I have been abroad and people talk about our democracy that we have permitted men to do this, but we have not permitted their families to suffer. I want to raise this as a general principle because I want to ask noble Lords opposite to have this at the back of their minds. I believe the Minister has received a letter from the Assistant Masters and Mistresses Association. They have sent me a copy of it and perhaps it is appropriate for me to read it, if the noble Baroness does not mind. It says: My Association is most concerned about Clause 6 of the Social Security (No. 2) Bill which is now under consideration by the House of Lords. The advice that the Association has received is that as Clause 6 of the Bill is at present drafted, and in the light of the comments that Mr. Jenkin made in the debate in the House of Commons, the Department of Health and Social Security will have no discretion to pay supplementary benefit if our members were prevented from working as a result of industrial action by some other group of employees in the education service. In these circumstances, we take the view that the Social Security (No. 2) Bill should be amended to ensure that the employees who are locked out by their employers, as a result of industrial action being taken by some other group of employees, will not have the deduction of £12 a week made from the supplementary benefit which is paid in respect of dependents". I hope that somebody on the Government Front Bench is in a position to reply to that. If that is true, there is a very serious omission in the Bill.

I will not take up more time. I hope that nobody will go back on a long established principle which has been a pillar of our democracy: that we have permitted men to do this but we have not imposed some kind of sanction or penalty on their families. In the 1980s it is a retrograde step to take.


Before the noble Lord sits down, could he tell us why, in view of the letter he read out at the end of his speech, he did not put an amendment down to give effect to that letter instead of the amendment he has put down?


I have several amendments down—as many as I thought were necessary in the Committee stage proceedings. There is a limit imposed as to how many days we can have in Committee. We have two Committee days and we shall take them up because we shall not finish, so far as I can see, much before half past nine or ten o'clock tonight. Therefore it is always necessary to consider the period between the Committee stage and the Report stage for putting down other amendments.


That is not a very good explanation. It would have been better to concentrate on an amendment for which the noble Lord had a definite statement rather than making a general one and taking a particular issue. To take the noble Lord very quickly up on this point about the right to strike, of course it is entirely agreed from this side of the Committee that there must be a right to strike. Of course at the time the strike occurs the people who are striking believe in their cause; but it seems surely reasonable that there should be some means of making sure that trade unions that call strikes make a proper contribution from their funds towards the cost of supporting the strike.

As I see this particular clause in the Bill, it is attempting in a rather small way to bring an encouragement to the trade unions that are supporting strikes to do their share, as they used to in days gone by, in assisting strikes which they think are worth supporting. Is it not also reasonable that there should be some discouragement for the type of unofficial strikes of which we used to have a rash at one stage—particularly during the period of office of noble Lords opposite—and that those strikes need to be discouraged? This clause will serve to assist in that purpose. To try and draw a shadow across the whole debate to imply that noble Lords on this side do not know the facts of life is not only unreasonable but unworthy of the noble Lord who has just spoken.


I am grateful to the noble Lord for giving me an opportunity of adding to what I have said. One has to bear in mind that if one is going to impose a regulation of this kind upon the unions, one has to be satisfied that every union will be able to comply with it. Probably the noble Lord would be prepared to take it from me when I say that the funds in a large number of unions are such that they would not be able to do it. We have the "Big Four" or the "Big Five", like the high street banks, but there is an enormous number of unions that could not do it. Also, it would necessitate a very careful inquiry into their means. While that would not be difficult, in the last analysis, it would not be possible for the majority of them to do it. When it comes to imposing some stricture, some penalty, it is the wrong way of going about industrial relations. This is the mistake.

I do not pretend to be more informed on this—I am perhaps less informed—than some noble Lords opposite. I have not had the experience. I know that Mr. Heath came a "cropper". Mr. Prior, with his reasonableness—and I am no being sarcastic; he has more reasonableness than many people—is running into very serious difficulties. One cannot legislate for relations and relationships. All one does is to aggravate the situation. One has to start from a different angle. Therefore any imposition of penalty is going to exacerbate rather than help the situation.


May I just say that a great deal of what has been said recently has nothing at all to do with the amendment. So far as this amendment is concerned, I cannot accept for a moment that there is anything iniquitous about taking account of an income tax refund as a resource when it is a question of need that is being assessed. So far as the £12 point is concerned, in this clause all that has been said is that if a union pays

strike money up to £12 it will be disregarded from the point of view of supplementary benefit and therefore, from that point of view, this clause is of considerable advantage to the striker. This particular part of the clause, of course, is not alone, but that is the way this part of its stands.


Yes. May I say that if I have gone into other fields it is because I allowed noble Lords opposite to seduce me!

7.11 p.m.

On Question, Whether the said amendment (No. 32) shall be agreed to?

Their Lordships divided: Contents, 57; Not-Contents, 89.

Ardwick, L. Hampton, L. Ponsonby of Shulbrede, L. [Teller.]
Banks, L. Hatch of Lusby, L.
Beswick, L. Houghton of Sowerby, L. Ritchie-Calder, L.
Blease, L. Jacques, L. Rochester, L.
Blyton, L. Janner, L. Ross of Marnock, L.
Boston of Faversham, L. Kilmarnock, L. Seear, B.
Bowden, L. Leonard, L. Simon, V.
Brockway, L. Llewelyn-Davies, L. Stewart of Alvechurch, B.
Burton of Coventry, B. Llewelyn-Davies of Hastoe, B. [Teller.) Stewart of Fulham, L.
Collison, L. Stone, L.
Crowther-Hunt, L. Lovell-Davis, L. Strauss, L.
Cudlipp, L. McNair, L. Taylor of Mansfield, L.
David, B. Maelor, L. Underhill, L.
Davies of Leek, L. Milner of Leeds, L. Wallace of Coslany, L.
Evans of Claughton, L. Mishcon, L. Wells-Pestell, L.
Gaitskell, B. Northfield, L. Whaddon, L.
George-Brown, L. Pargiter, L. White, B.
Gosford, E. Phillips, B. Wilson of Radcliffe, L.
Gregson, L. Pitt of Hampstead, L. Wootton of Abinger, B.
Hale, L. Wynne-Jones, L.
Airey of Abingdon, B. Ellenborough, L. Lyell, L.
Allerton, L. Elliot of Harwood, B. Mackay of Clashfern, L.
Amory, V. Elton, L. Macleod of Borve, B.
Ampthill, L. Falkland, V. Mansfield, E.
Balerno, L. Forester, L. Marley, L.
Bellwin, L. Fortescue, E. Massereene and Ferrard, V.
Belstead, L. Gainford, L. Merrivale, L.
Bessborough, E. Glenarthur, L. Mills, V.
Bolton, L. Glenkinglas, L. Milverton, L.
Brooke of Cumnor, L. Godber of Willington, L. Monson, L.
Brooke of Ystradfellte, B. Gowrie, E. Morris, L.
Brougham and Vaux, L. Gridley, L. Mottistone, L.
Cairns, E. Hailsham of Saint Marylebone, L. (L. Chancellor.) Mowbray and Stourton, L.
Campbell of Croy, L. Murton of Lindisfarne, L.
Clifford of Chudleigh, L. Halsbury, E. Norfolk, D.
Colwyn, L. Hanworth, V. Northchurch, B.
Crathorne, L. Hatherton, L. Nugent of Guildford, L.
Cromartie, E. Hives, L. Redmayne, L.
Cullen of Ashbourne, L. Hylton-Foster, B. Renton, L.
Davidson, V. Killearn, L. Rochdale, V.
de Clifford, L. Kimberley, E. Saint Oswald, L.
De La Warr, E. Kinnoull, E. Sandys, L. [Teller.]
Denham, L. [Teller.] Lauderdale, E. Shannon, E.
Drumalbyn, L. Long, V. Soames, L. (L. President.)
Eccles, V. Lucas of Chilworth, L. Spens, L.
Stamp, L. Trefgarne, L. Vivian, L.
Strathclyde, L. Trenchard, V. Wakefield of Kendal, L.
Strathcona and Mount Royal, L. Tweeddale, M. Ward of Witley, V.
Strathspey, L. Ullswater, V. Westbury, L.
Tranmire, L. Vickers, B. Young, B.

On Question, Motion agreed to.


I beg to move that the House be now resumed.

House resumed.