Sitting of 15 April 1980

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS

  WEST YORKSHIRE BILL [Lords]
  Order for consideration, as amended, read.
  Amendments agreed to.
  To be read the Third time.

  SOUTH YORKSHIRE BILL [Lords]
  Orders for Second Reading read.
  To be read a Second time upon Thursday 17 April.

ORAL ANSWERS TO QUESTIONS
  DEFENCE

    Hong Kong
    Mr. Hooleyasked the Secretary of State for Defence what will be the United Kingdom expenditure on the defence of Hong Kong in 1980–81; and how this compares with the figures for 1979–80.
    The Under-Secretary of State for Defence for the Army (Mr. Barney Hayhoe): The United Kingdom share of expenditure is assessed under the terms of the defence costs agreement as £16 million in 1979–80, including reinforcements. Preliminary estimates for 1980–81 suggest expenditure in the region of £16 million, excluding reinforcements.
    Mr. Hooley: Is it not a waste of the taxpayers' money to pretend that we can defend a Chinese city 10,000 miles away? Against whom are we supposed to be defending it?
    Mr. Hayhoe: Our commitment, as I have explained to the hon. Gentleman before, is to the integrity and security of Hong Kong. I believe that we get good value for the money that is spent.
    Sir Anthony Royle: Is my hon. Friend aware that his decision will be greeted as being in the national interest? Will he give an assurance that the British Government will continue to make certain that the internal security of Hong Kong is maintained and that its frontiers and integrity are maintained, particularly in view of the problems that are faced regarding refugees?
    Mr. Hayhoe: There are particular problems concerning illegal immigration from mainland China. I am glad to report to the House that the number of illegal immigrants has come down to about 25 per cent. of the figure for December of last year, partly as a result, obviously, of the reinforcements that we have sent. That is very good news for the people of Hong Kong.
    Mr. Roper: Would not the hon. Gentleman agree that it is unfortunate that neither in Volumes I or II of the White Paper, nor in the Defence Estimates, is the fact explained that as a result of the agreement reached by my right hon. Friend the Member for Stockton (Mr. Rodgers) with the Hong Kong Government about 80 per cent. of the cost is borne by that Government? Should this not be shown explicitly in the White Paper or in the Estimates?
    Mr. Hayhoe: It is true that the defence costs agreement negotiated in the past means that, under the assessed costs, 75 per cent. are met by the Hong Kong Government. At present, this defence costs agreement is being reviewed.

    Cruise Missiles
    Mr. Cryerasked the Secretary of State for Defence if he can now state the proposed sites for the installation of cruise missiles.
    The Secretary of State for Defence (Mr. Francis Pym): I have nothing to add to the reply I gave the hon. Member on 11 March.
    Mr. Cryer: Will the Defence Secretary confirm that United States and NATO nuclear warheads outnumber those

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    of the Soviets by two to one in Europe, that the cruise missiles represent an escalation, as a potential first strike weapon, and that the people of East Anglia are becoming increasingly aware of the dangers that potential sites in East Anglia represent to them and this country? Is he surprised at the growing opposition there?
    Mr. Pym: The United States has proposed the withdrawal of 1,000 warheads. I cannot, without notice, confirm or deny precisely the figures given by the hon. Gentleman. The United States made an offer. It has received a negative response from the Soviet Union. As the cruise missiles will be replacements, rather than additions, it follows that for every cruise missile that is installed, one other warhead will be withdrawn. That seems to me to be a reduction of the total nuclear capability and should be welcomed.
    Mr. Cyril D. Townsend: Will my right hon. Friend confirm that Britain has been a potential nuclear target since the Soviet Union first acquired nuclear weapons in 1950? Will he explain the current rate of siting of SS 20 missiles by the Soviet Union? Is he convinced that the programme is, by and large, completed?
    Mr. Pym: There is no doubt about the speed of the build-up on the other side of the Iron Curtain of the SS 20s and the warheads that go with them. I can confirm that the United Kingdom has been a prime target for a number of decades—since the Second World War. What is important about the modernisation programme for LRTNF is that instead of all the theatre nuclear forces of that range being located within the United Kingdom, they are to be spread more widely throughout the Alliance. That should give some assurance to our people who, naturally, are anxious about this matter.
    Mr. Donald Stewart: Does the Secretary of State accept that the patriotism, courage, military knowledge and experience of the late Earl Mountbatten is beyond doubt? Is he aware of the speech which the Earl made in May 1979 about the futility and danger of nuclear weapons?
    Mr. Pym: I am aware of it. I am glad to say that I had an opportunity
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    to talk to Earl Mountbatten upon the subject of that speech, which needs to be read in full.
    Mr. Frank Allaun: Has the Secretary of State noted that when Boeing beat General Dynamics for the contract, four out of 10 even of the Boeing missiles went seriously astray? Does he propose to test these missiles on British soil? Will he use the three years before deployment to negotiate Mr. Brezhnev's offer on the SS 20 as against the cruise missile?
    Mr. Pym: Almost any new weapon encounters a certain amount of teething troubles. The weapon chosen is the General Dynamics Tomahawk and not the product of the firm to which the hon. Member referred.
    Mr. Adley: In relation to the siting of the missiles, will my right hon. Friend confirm that 50 miles here or there is irrelevant? Does he agree that people such as the hon. Member for Keighley (Mr. Cryer) who deliberately stir up trouble by traipsing round the countryside miles from their constituencies, make themselves look even more ridiculous than usual, if that is possible? Does my right hon. Friend agreee that, wherever the missiles are sited, we may be sure that the hon. Member for Keighley and his friends will turn up with the relevant Rent-a-Mob?
    Mr. Pym: I am sure that, whatever sites are ultimately selected, it will make no difference to the general vulnerability of the country as a whole. One cannot isolate one region. Obviously there is anxiety and we are considering carefully where the bases should be.
    Mr. Rodgers: When the Secretary of State made his announcement to the House in December about TNF, he made it clear that the agreement between NATO Ministers involved an important arms control package. We understand the extent to which events in Afghanistan have thrown a shadow over that. However, will the Secretary of State accept that we must try to isolate the question of arms control measures in Europe from other issues? What prospect is there for a real initiative from NATO and what is the timetable?
    Mr. Pym: The United States have made their proposals concerning warheads, to which I have referred. Negotiations continue at Vienna. There is no doubt that the events of last December have cast a cloud over the prospects for arms control. That does not alter our efforts and endeavours to proceed. Unfortunately, at the moment the response from the other side does not amount to worthwhile progress.

    Rhodesia (Ceasefire Medal)
    Mr. Goodhewasked the Secretary of State for Defence what representations he has received concerning the striking of a medal to be awarded to members of Her Majesty's Armed Forces who monitored the ceasefire in Rhodesia.
    Mr. Pym: I have received a few inquiries from hon. Members and from members of the public on this subject. The possibility of an award for service in Southern Rhodesia has been in my mind for a long time and is under very serious consideration.
    Mr. Goodhew: Is my right hon. Friend aware that that answer will give some satisfaction to those who admire greatly the conduct of the officers and men who went to Rhodesia on what people who have served in the RAF would regard as a rather "dicey operation" demanding calm, cool courage? Does my right hon. Friend agree that their effectiveness in ensuring a ceasefire in the run-up to the election deserves the acknowledgement and recognition of the House?
    Mr. Pym: I am grateful to my hon. Friend and I fully endorse what he says. There is a procedure for arranging such matters and proper consideration is being given to it.
    Mr. Concannon: Does the Secretary of State accept that a Commonwealth force was involved? Does he agree that it did a unique job in Rhodesia? Is he aware that Prime Minister Mugabe acknowledges the effect of the monitoring force? Does he agree that such a unique service deserves a uniquie response? Would it not be better to contact the prime Minister of Zimbabwe and suggest that Zimbabwe strikes its own medal for the forces?
    Mr. Pym: The right hon. Gentleman is right—a Commonwealth force was involved. The important point that he makes is being borne in mind.
    Mr. Churchill: May I join in the tributes paid to the British participants in the monitoring force? Will my right hon. Friend also take the opportunity to pay tribute to the Rhodesian security forces, both black and white, without whom the monitoring force could not have completed its task?
    Mr. Pym: I am certainly prepared to do that and to add my tributes to the British policemen and to everybody who made a contribution to what turned out to be a great success.
    Mr. Buck: In view of the unique character of the force will my right hon. Friend consider the possibility of publishing an official history of the activities of the monitoring force?
    Mr. Pym: I shall consider that suggestion.

    Cyprus
    Mr. Brothertonasked the Secretary of State for Defence if he has any plans to visit British bases in Cyprus.
    The Under-Secretary of State for Defence for the Royal Air Force (Mr. Geoffrey Pattie): My right hon. Friend has at present no plans to do so, but I plan to visit British bases in Cyprus during the last week in May. My hon. Friend the Under-Secretary of State for the Army visited Cyprus last week.
    Mr. Brotherton: I am delighted to hear of my hon. Friend's proposed visit to the bases. In view of the great value of the bases to this country and to NATO, can he assure the House that there are no plans in the foreseeable future for Britain to relinquish her sovereignty over the bases in Cyprus?
    Mr. Pattie: I can give my hon. Friend that assurance.
    Mr. Christopher Price: Will the Minister tell the House about the discussions between President Kyprianou and the Prime Minister recently about payment for facilities within the Republic used by our forces in the bases? How much was promised to Cyprus, or is that to remain a secret?
    Mr. Pattie: I understand that the matter is still to be discussed by the two Governments. The hon. Gentleman should put further questions to my right hon. Friend the Prime Minister.
    Mr. Biggs-Davison: Did not the bases play a valuable part in staging the Commonwealth monitoring force to which tribute has just been paid? Is there not excellent co-operation between the Government of the Republic of Cyprus and the British authorities? Does not the situation in the eastern Mediterranean demand that the bases should remain British?
    Mr. Pattie: The answer to all those questions is "Yes".
    Mr. Roper: When the hon. Gentleman is in Cyprus will he commend the British forces working with the United Nations forces in Cyprus since they are playing a valuable part in keeping the peace?
    Mr. Pattie: I shall be glad to do that.

    Reservists (Gratuities and Pensions)
    Mr. Neil Thorneasked the Secretary of State for Defence if he has any further information about bringing gratuities and pensions of reservists killed on duty into line with those paid to regular Service men.
    The Under-Secretary of State for Defence for the Royal Navy (Mr. Keith Speed): The review which my hon. Friend announced on 27 November is not yet complete. When it is I shall make an announcement.
    Mr. Thorne: May I thank my hon. Friend for that reply? Does he agree that the Territorial Army and the other reserve forces do so much for the defence of the realm at such little cost that they deserve a better deal? Is he aware that reservists have substantially to contribute out of their own funds towards supplementary insurance? Does he agree that that is wrong?
    Mr. Speed: I was a reserve officer until May last year and I endorse everything that my hon. Friend says. The present situation is far from satisfactory. I hope that we shall be able to make an announcement fairly soon.
    Mr. Wilkinson: Does my hon. Friend agree that the risks of certain aspects of
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    reserve training are almost as great as those experienced by the Regulars? For example, is the Minister aware that a few weeks ago a member of the 21st Special Air Service Regiment (Artists) of the Territorial Army, died in a training exercise on the Brecon Beacons? Will my hon. Friend conduct a review with the greatest urgency and ensure that compensation is in line with that awarded to the Regulars? Does he accept that nothing less is just?
    Mr. Speed: The matter is being considered with the greatest urgency. I hope that an announcement can be made be-force long. I accept the important points made by my hon. Friend. The present scheme has operated since 1974. It has many shortcomings.

    Sensitive Information (Publication)
    Mr. Chapmanasked the Secretary of State for Defence if he is satisfied with arrangements for preventing sensitive information relating to contracts for air defence systems and battlefield communications systems being made public knowledge.
    Mr. Pattie: Yes, but, as my hon. Friend said in his reply to my hon. Friend on 17 March, security matters are kept under constant review.
    Mr. Chapman: While I am partially reassured by that reply may I ask my hon. Friend whether he does not think that the sort of information that appeared in the International Defence Review about our country's radar defences—picked up by other publications and widely disseminated—is conducive to the national interest? If not, will he and his right hon. Friend look into this matter and try to institute new rules and safeguards which will ensure that such sensitive information does not become public property?
    Mr. Pattie: I am satisfied that in the case on which my hon. Friend based his question there was no question of national security being compromised. My hon. Friend will be aware that in many specialised journals—particularly those dealing with defence—a remarkable degree of detailed knowledge is published and distributed widely around the world. The only question that that fact raises in my mind is whether the Ministry of Defence in the recent past has not been

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    guilty of revealing less information than is to be found in many published sources. I hope that hon. Members on both sides of the House will feel that we have now taken steps to reverse that trend with the publication of the White Paper last week.
    Mr. Neil Thorne: Will my hon. Friend confirm that there is no suggestion that any contractor working in this country has been responsible for a leak of this nature, particularly in view of the involvement of the Plessey company which is an important employer in my constituency.
    Mr. Pattie: I can certainly confirm what my hon. Friend has said.

    Political Education
    Mr. Winnickasked the Secretary of State for Defence if he is satisfied with the level of political education given to officers in the Armed Forces.
    Mr. Hayhoe: Senior officers require an understanding of the general political background to defence questions, both nationally and internationally, and I am satisfied that proper account is taken of these matters in their training.
    Mr. Winnick: In view of the reported remarks of the Chief of Defence Staff at the time that some Army officers at Army headquarters were talking about the possibility of military intervention in February 1974—talk condemned by the field marshal—is there not a need for more sophisticated political education at a higher level than that we saw recently in the film on the Staff College at Camberley? Were those officers who were talking about the possibility of a coup in Britain ever disciplined? Were they reminded of their constitutional and public duties?
    Mr. Hayhoe: The hon. Gentleman is trying to make far too much of some off-the-cuff remarks. The Army, of course, is concerned with questions of internal security as anyone who is aware of what the Army has had to undertake in Northern Ireland must know. It is right that officers should have proper training in these matters.
    Mr. Onslow: Will my hon. Friend confirm that it would do nothing but
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    good if officers in the Services had a first-hand opportunity to hear the extraordinary and bizarre political delusions of the hon. Member for Walsall, North (Mr. Winnick) and his hon. Friends the Member for Keighley (Mr. Cryer) and Salford, East (Mr. Allaun) at first hand? Would that not do much to strengthen the resolve of those officers to defend this country?
    Mr. Hayhoe: I see no reason why those officers should have to share our misery.
    Mr. Marks: Why only officers? Is it not significant that during the Second World War the excellent Bureau of Current Affairs helped the forces not only to understand but to discuss the political issues of the time? Will the Secretary of State consider reviving that bureau?
    Mr. Hayhoe: I think that recollections of the activities of the Army Bureau of Current Affairs will vary. It is vitally important, however, that there should be no political bias, no political indoctrination and no party political activity on the part of serving officers.
    Mr. Stokes: Are not officers in Her Majesty's Services taught to fear God and honour the Queen, and should not those precepts be their guilding principles?
    Mr. Hayhoe: Yes, of course they should. Surely, in the week when Zimbabwe comes to independence and when we have testified in this House to the high quality of the contribution made there by Her Majesty's forces, it is absurd to talk of Army officers being politically biased.

    North Atlantic Treaty Organisation (Defence Ministers)
    Mr. Cartwrightasked the Secretary of State for Defence when next he expects to meet North Atlantic Treaty Organisation Defence Ministers.
    Mr. Pym: I expect to meet NATO Defence Ministers at the Eurogroup and NATO Defence Planning Committee meetings in May.
    Mr. Cartwright: When the NATO Defence Ministers meet in May will they discuss the reported warning from the

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    United States that certain key American forces currently committed to NATO may have to be switched elsewhere? Can the right hon. Gentleman say what impact such a change in United States policy will have on the strategy set out in his White Paper?
    Mr. Pym: I have no doubt that we shall discuss that matter. In view of international events the United States has announced plans to reinforce its military capability in South-West Asia. In no sense—as the United States has made absolutely clear—does that diminish its responsibility to its NATO Allies and the part played by the United States in that Alliance. Together with all our Allies we must take stock of the situation created by the invasion of Afghanistan. As a result of the meeting yesterday, further work has been set in hand and we shall be discussing that at the meeting I mentioned.
    Mr. Wilkinson: Does my right hon. Friend agree that in current international circumstances the Council of Ministers might look with profit at a more effective division of responsibilities within the Alliance? For our part can we not try to ensure that British forces are as flexible as possible so that they are capable of intervening if necessary, where required, beyond the NATO theatre of operations?
    Mr. Pym: Yes, Sir. That is always possible and is continuing at present in the light of the new situation.
    Mr. Cook: When the Secretary of State goes to the next NATO meeting will he take with him page 89 of the Defence White Paper and draw the attention of the West German Defence Minister to the statement on that page to the effect that the rising trend in foreign exchange costs to BAOR is disturbing and that it is worsened by the expiry of the offset agreement this year? Will the Secretary of State impress upon the West German Minister that it is absurd that one of the weakest economies in Europe should continue to contribute such a substantial subsidy to one of the strongest economies in Europe without any offset agreement?
    Mr. Pym: There is no doubt that that aspect of our costs in the Federal Republic is a source of great anxiety. As the hon. Gentleman knows, it was the Gov-
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    ernment whom he supported, in the last Parliament, which brought the previous agreement to an end last month. We inherited that arrangement. However, I make no secret of the fact that, though I have no intention at the moment of doing anything about the arrangement that was entered into, it is a source of anxiety to us that the cost should be so high.
    Mr. Robert Atkins: Will my right hon. Friend draw the attention of his NATO colleagues to the increase in the invasion of our airspace—and that of our NATO colleagues—as reported today? Does the Secretary of State intend to give any indication eventually of the results of the exercise affecting air defences in this country today?
    Mr. Pym: I am not sure that that would be appropriate but I believe that it is a good thing that an exercise of this kind is taking place. There are always lessons to be learnt from an experience of this kind.

    Reserve Forces (Recruitment)
    Mr. David Priceasked the Secretary of State for Defence what success he has had since taking office in improving recruitment for the reserve forces and what further plans he has for the expansion of these reserve forces.
    Mr. Hayhoe: Recruitment to the volunteer reserve forces is going very well. Since the announcement of increased bounties last August, for example, the strength of the Territorial Army has risen by well over 3,000 to more than 63,000, its highest level since the 1967 reorganisation. Since taking office we have announced the creation of a new Air Branch for the Royal Naval Reserve and we have launched a scheme involving the recruitment of three regiment squadrons of the Royal Auxiliary Air Force. There are at present no proposals for the further expansion of the volunteer reserves but we shall of course keep this possibility under review.
    Mr. Price: While I thank my hon. Friend for the first part of his answer may I ask him, on the second part, whether he should not press ahead? Does he not agree that the most effective method of increasing this country's defence capability—given the current budgetary

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    restraints—is through an increase in our reserve forces?
    Mr. Hayhoe: Our reserve forces are extremely cost effective, though they are all below establishment at present. I would like to see our current recruiting drives continue successfully so that we achieve establishment levels.
    Mr. Allan Roberts: Does the Minister agree that increased recruitment into our reserve forces—and indeed into all our Armed Forces—has more to do with increasing unemployment than with any patriotism that may exist among our young people? Is it not a crying shame that people are forced to join the Armed Forces because there is no other work for them?
    Mr. Hayhoe: The hon. Gentleman is wrong on both counts. Those joining the Territorial Army are largely in employment. One of the problems we face is that of persuading employers to release their staff so that they can fully undertake their training.
    There is no correlation between levels of recruitment into the Regular forces and levels of unemployment.
    Mr. Biggs-Davison: Will my hon. Friend consider whether, since many men and women in Northern Ireland receive training in the Ulster Defence Regiment and then leave, there should be some volunteer reserve for them?
    Mr. Hayhoe: I should be prepared to consider that suggestion.
    Mr. Duffy: In view of the Minister's reference to the reluctance of employers to allow time off to reservists to fulfil their training obligations, what response has there been to the Prime Minister's appeal last month to employers, especially employers in the nationalised industries?
    Mr. Hayhoe: I must make clear that many employers adopt a very fine attitude towards releasing people. My criticisms were directed at a minority of employers. One understands the problems faced by small employers when the staff involved may be crucial to the operation. The appeal by my right hon. Friend the Prime Minister has been very well received and I am following it up. I hope that all right hon. and hon.
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    Members will do what they can to encourage employers in this respect.

    China
    Mr. Dalyellasked the Secretary of State for Defence if, on his visit to China, he discussed military co-operation in response to events in Afghanistan and Pakistan.
    Mr. Pym: I discussed a wide range of issues with Chinese leaders, in the light of the Soviet invasion of Afghanistan and its implications. Our discussions covered the prospects for co-operation including the sale of British defence equipment to China and exchanges of defence-related visits.
    Mr. Dalyell: Is not Soviet concern—albeit an obsession—about China a partial explanation of events in Afghanistan? Did the Secretary of State discover why the Chinese have put such a high proportion of their scarce resources into constructing the Karakoram highway and pouring defence equipment into a dubious regime in Pakistan?
    Mr. Pym: It is a matter of opinion whether the Chinese attitude to the Soviet Union had any or some responsibility for the Soviet action in Afghanistan. Certainly we and our Allies have without exception, condemned that aggressive act. The use of Chinese resources is a matter for the Chinese and their judgment. I thought that their approach, in so far as they revealed it to me, would certainly have the support of the West.
    Mr. Nicholas Winterton: May I welcome the increased co-operation between the United Kingdom and the People's Republic of China, and urge my right hon. Friend not to overlook the fact that the People's Republic of China, like the Soviet Union, is not unknown for its invasion of independent countries? May I refer my right hon. Friend to the Chinese invasions of Tibet and of the Republic of Vietnam?
    Mr. Pym: Given the threat that the world faces at the moment from the sustained build-up in the Soviet Union, it is as well for the West and for Europe, including this country, that there should be a strong Chinese determination to resist any aggression, should it ever occur.
    Mr. Frank Allaun: Is the right hon. Gentleman aware that this touching love affair of the Conservatives for Communist China convinces no one? In drawing up in future his balance of power—which, by the way, is by no means as impressive as the IISS balance—will he not fail to take note of the vast Chinese forces on Russia's eastern flank which quite alter the balance, even from the Secretary of State's point of view?
    Mr. Pym: If we did not know the hon. Gentleman so well it would not be clear from that intervention which side he was on. I think that it is just as well from the point of view of the West that events in the East attract a substantial part of the Soviet military forces on that eastern border.

    Royal Dockyards
    Mr. Douglasasked the Secretary of State for Defence if he will report progress in the study group's investigation of the Royal dockyards.
    Mr. Speed: I hope to submit the report of the dockyard study to my right hon. Friend, the Secretary of State for Defence, shortly.
    Mr. Douglas: Does the Minister agree that this is such an important document that it ought to be published and discussed with the trade unions involved? Will the Minister give an assurance that the eventual outcome will not endanger the future of any dockyard and that the work-forces in the dockyards are indispensable to securing a United Kingdom defence capability?
    Mr. Speed: On the latter point, I must not prejudge the studies. The hon. Gentleman will be aware, on the former point, that it is our intention, given the views of my right hon. Friend, that there should be a full consultative document which will be discussed with the staff side, the trade unions and, I hope, with hon. Members and other interests.
    Mr. Alan Clark: Will my hon. Friend confirm that one of the principal frames of reference for the study group will be the wastage of certain grades of technician in the dockyards, and that it will he looking very closely at comparability with equivalent skills and trades in civilian job opportunities?
    Mr. Speed: We have been looking at comparability in recent weeks. We have been examining that problem because we have been losing desperately needed skilled workers from our dockyards.
    Mrs. Fenner: Will my hon. Friend accept that the investigation has already caused apprehension, and the three measly paragraphs devoted to Her Majesty's dockyards in the Defence White Paper together with the promise that the investigation will be complete by 1 April has caused additional apprehension? Is my hon. Friend prepared to set the date for the completion of that investigation?
    Mr. Speed: The date is "In the very near future". The results will have to be considered then by my right hon. Friend, but I can assure my hon. Friend the Member for Rochester and Chatham (Mrs. Fenner) that there will be many more than three measly paragraphs in the report, and I think that she will find the report most acceptable.

    Cadet Forces (Equipment and Uniforms)
    Mr. Trippierasked the Secretary of State for Defence if he is satisfied with the standard of equipment and uniform supplied to the cadet forces of the four major services.
    Mr. Hayhoe: One can never be fully satisfied, but I believe the general position is satisfactory.
    Mr. Trippier: Does my hon. Friend agree that the Government should give more support and encouragement to the cadet forces, not only because they provide a source of recruitment for the regular and reserve forces, but because they provide forms of youth training which are not normally available in the community?
    Mr. Hayhoe: I am happy to confirm the important contribution of the cadet forces. There are plans for issuing small quantities of the 7·62 mm target rifle, radio equipment and further items of clothing. Matters of that kind are in hand, but my hon. Friend must bear in mind that we are operating at a time of considerable financial constraint.
    Mr. Cryer: Since considerable sums of taxpayers' money are spent on uniforms will the hon. Gentleman give an assurance

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    that British textile sources will be used to supply them, thus ensuring the preservation of jobs and avoiding the need for the taxpayer having to finance unemployment and supplementary benefits when jobs are lost as a result of garments being imported?
    Mr. Hayhoe: On the information that I have about uniforms being issued to the Army and other cadet forces, that point does not arise.

    Expenditure
    Mr. Ioan Evansasked the Secretary of State for Defence what is the proposed defence expenditure for 1980–81.
    Mr. Barry Jonesasked the Secretary of State for Defence what is the total cost of the defence budget for 1980–81.
    Mr. Pym: The defence budget for 1980–81 is £10,785 million at Estimates prices.
    Mr. Evans: Is it not disturbing that, while the Government are cutting back on housing, education and welfare and local authority services, they are increasing defence expenditure? Will the right hon. Gentleman study the report of the Brandt commission, of which the right hon. Member for Sidcup (Mr. Heath) was a member? Is he aware that it has suggested to leading industrial nations that they should cut their spending on arms and devote their resources to aid to underdeveloped countries and to dealing with the problem of world poverty?
    Mr. Pym: I am sure that the report is most important and that it is being considered by every nation. However, we have to consider the immediate threat. There may or may not be a move of policy in the direction suggested by the report. I cannot say that at this stage. However, in the meantime, all the Allies agree that it is necessary to increase defence expenditure, and even our predecessors in office, to be fair to them, took the same view.
    Mr. Nelson: Will my right hon. Friend accept that there will be a widespread welcome for the fact that the Government have given the defence
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    budget the priority it deserves? However, if it is to rise, as we understand, by some 3 per cent. a year for the next few years, and if one of the major features of defence expenditure is to be a major re-equipping programme for all three forces, is my right hon. Friend satisfied that, if 5 per cent. of the defence budget is to be spent on renewing our nuclear deterrent, even a 3 per cent. increase year on year will be satisfactory by the middle of the decade?
    Mr. Pym: The Alliance-wide target of an increase of 3 per cent. is adequate in all the circumstances. It represents a substantial improvement in our defence capability over a period of years. It is a mistake to confuse with that argument one weapon system. I do not think that the position that we face at present enables anybody to take a complacent view about the position of either this country or of the Alliance. Together—if we make an adequate contribution—we can maintain the peace.
    Mr. Norman Atkinson: Does not the Minister agree that if there is a threat at all, the same threat applies to all members of NATO equally? Why is it necessary for this country to make a larger per capita contribution than any other member of NATO? Is it not a fact that we are now paying more for defence than we spend on health or housing? Why did the Minister, in Cabinet, argue for more money under those circumstances, and threaten resignation? What moral justification is there for that.
    Mr. Pym: The hon. Gentleman has chosen the wrong method to describe our expenditure. On a per capita basis, we are in the bottom half of the table. It is only as a percentage of GDP that we are at the top of the table—excepting the United States. The reason why we have supported that view is that the needs of the position require us to make this additional effort. We are determined to make our contribution. On a per capita basis there are members of the Alliance paying more than those resident in the United Kingdom.
    Mr. Burden: When considering the position of the Royal naval dockyards, will my right hon. Friend realise that

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    they have played an enormous part in the defence capability of Britain in the past, and that they have no less an important task in the future?
    Mr. Pym: I agree with my hon. Friend. As he knows, I am shortly to receive a study on the future of the dockyards. I accept that they have an important role to play for the Navy.

    Recruiting Costs
    Mr. Gwilym Robertsasked the Secretary of State for Defence what are the latest figures available for the cost of recruiting a soldier, sailor, and airmen; what further steps he is taking to reduce these figures; and if he will make a statement.
    Mr. Pattie: The most recent available figures are those for the financial year 1978–79, which I gave to the hon. Gentleman on 12 June. I can assure the hon. Member that the cost effectiveness of the recruiting organisation is closely monitored.
    Mr. Roberts: Does not the Minister accept that the figures in all the cases are still far too high? As I have appealed to him before, may I ask him again to consider the more direct use of job-centres for recruitment? Will he also consider the disincentive effect on recruitment of the wide variation in facilities and conditions at present in the Armed Forces as between officers and other ranks?
    Mr. Pattie: I cannot accept the assertion made by the hon. Gentleman that the costs are too high, bearing in mind that the costs relate to all parts of the recruitment process, including the testing and filtering of recruits. The hon. Gentleman has made the jobcentre point before. As I have told him on other occasions, jobcentres have an important part to play in this process. He will be glad to know that recruiting in the period October to December 1979 was 24 per cent. higher than the same period in the previous year.
    Mr. Michael McNair-Wilson: Will my hon. Friend say to what extent the Armed Services share recruitment centre facilities?
    Mr. Pattie: I can give my hon. Friend some detailed information on that sub-
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    ject. They share facilities to a considerable extent. If I may, I shall write to my hon. Friend on the matter.
    Mr. Robert C. Brown: Does the Minister accept the necessity to close down recruitment centres in prime shopping areas? If he studies the figures he will find that they serve very little purpose in recruitment.
    Will he give an assurance that he is continuing with the trend set out in the Wellbeloved report?
    Mr. Pattie: We are continuing along those lines. There is considerable force in the point made by the hon. Gentleman. There is no point in closing down recruitment offices simply for the sake of doing so. Where they are doing a good job they will be maintained.

    North Atlantic Treaty Organisation
    Mr. Michael Brownasked the Secretary of State for Defence when he intends to meet his North Atlantic Treaty Organisation colleagues.
    Mr. Robert Atkinsasked the Secretary of State for Defence when he expects next to meet his North Atlantic Treaty Organisation counterparts.
    Mr. Pym: At the Eurogroup and NATO defence planning committee meetings in May.
    Mr. Brown: Will my right hon. Friend take to the meeting a copy of his excellent White Paper, and draw the attention of the Allies to the fact that we are more than honouring our obligation—and quite rightly so? Will he seek an assurance from his fellow colleagues that their countries will also seek to make the same contribution as Britain to NATO?
    Mr. Pym: Most of our Allies are fulfilling the aim to increase expenditure by 3 per cent. Some of those who are not doing so have had a good record in recent years, unlike some other members. I take the point made by my hon. Friend.
    Mr. Atkins: Will my right hon. Friend discuss with his NATO colleagues and counterparts the next aeroplane—the so-called AST 403? Can we have a decision on this matter as soon as possible?
    Mr. Pym: I doubt that that subject will come up at the defence planning

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    committee meeting. However, in other forums I am considering the matter with our Allies.

    PRIME MINISTER (ENGAGEMENTS)
    Mr. Sheermanasked the Prime Minister if she will list her official engagements for Tuesday 15 April.
    The Prime Minister (Mrs. Margaret Thatcher): This morning I had meetings with the Vice President of Ghana and with Sir John Mason, our High Commissioner designate at Canberra. In addition to my duties in this House, I shall be having further meetings with ministerial colleagues and others.
    Mr. Sheerman: Will the Prime Minister take time today to reflect on the mounting evidence emerging this week—not only from her Chancellor of the Exchequer—that her economic strategy is destroying Britain's industrial base? [HON MEMBERS: "Reading."] Will she further consider a reversal of those policies which have led to a soaring inflation rate of 20 per cent., rising unemployment and crippling interest rates,—[HON. MEMBERS: "Reading."]—that will soon turn this country into a banana republic, both economically and diplomatically?
    The Prime Minister: I note the hon. Gentleman's studied supplementary. It is ridiculous to say that Britain's industrial base is being destroyed. There are large areas of industry that are flourishing. As my right hon. Friend the Secretary of State for Trade pointed out recently, our export performance, apart from cars, is holding up extremely well. That is a great compliment to many of our industries.
    Mr. Cryer: Textiles?
    The Prime Minister: Quite a number of our textiles also. Some of our textiles are in great demand.
    I agree that the unemployment rate is high. Fortunately, it is not quite as high as the record levels reached under the previous Labour Government. I can only be frank with the hon. Gentleman. I believe that, unfortunately, the unemployment rate will rise. If we were to continue printing more money—which is what the hon. Gentleman wants—we
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    should have not only higher inflation, but also higher unemployment.
    Mr. Montgomery: Will my right hon. Friend take time today to read the reports in the press about the rate—[HON. MEMBERS: "Reading."]—bills that are circulating at present.
    Mr. Cryer: Reading slyly.
    Mr. Montgomery: Will my right hon. Friend note that a house in Conservative-controlled Wandsworth has an annual rate bill of £233, whereas an identical house on the opposite side of the road, in Socialist-controlled Lambeth, has a rate bill of £376? Does she not think that there is a lesson there that people should learn before they vote in the local elections?
    The Prime Minister: I thank my hon. Friend for pointing out that the lowest rate increases are occurring in Tory-controlled authorities, and that the highest rate increases are occurring in Labour-controlled authorities. That is happening all over the country. The position in Wandsworth and Lambeth is just one example, and many people are glad that they live on the Wandsworth side of the boundary.
    Mr. James Callaghan: The Prime Minister said that it is ridiculous to say that British industry is being undermined by her policies. Has she any record of any previous period in British manufacturing history when there has been a decline—and the Government anticipate a decline of 4½ per cent. in manufacturing output this year—further followed by three consecutive years of decline? In what way does she believe that that will strengthen British industry?
    The Prime Minister: My point was that, on the whole, British industry is not going into perpetual decline, nor is the manufacturing base being perpetually eroded. There are certain problem areas, and the car industry is one of them.
    Mr. Cryer: And textiles is another.
    The Prime Minister: There are enormous difficulties in some of the nationalised industries. They will not be sorted out until we have reduced the overmanning and concentrated on raising productivity. The right hon. Gentleman is as familiar with that as I am.
    Mr. Callaghan: I am familiar with the fact that it is a long-standing problem and that it will not be cured by Tory gimmicks. However, why is the right hon. Lady accepting with such complacency the intention, which the Government have published, that British manufacturing industry should decline over four years? Will she answer my question? How can that possibly strengthen the base of British industry? How can it possibly help unemployment? How can it encourage British industry to invest and expand?
    The Prime Minister: British industry will invest and expand by individual decisions by individual companies. As for macro-assessments—yes, we have deliberately been very cautious about the future. The right hon. Gentleman knows what happened when he made extremely optimistic assessments and based his public expenditure forecasts upon them. The assessments did not come about because the increases were not made. Unfortunately, he nevertheless spent the money and very soon had to have the IMF in.
    Mr. Callaghan: Is the right hon. Lady aware that we totally disagree with the policy of cutting public expenditure at present? It is not only socially unjust but economically crippling.
    The Prime Minister: I note that the right hon. Gentleman wishes to have either very much higher taxation, direct and indirect, or wishes us to print more money. I reject those solutions.
    Mr. Onslow: Will my right hon. Friend continue her efforts today, tomorrow and, if need be, the day after to get it into the thick skull of Sir Denis Follows that there is a war going on in Afghanistan? Will she make it clear to him that in the circumstances it would be a national disgrace if a British team were to go to compete in the so-called Olympics in Moscow with the Communists and their stooges?
    The Prime Minister: I understand fully and agree with my hon. Friend's question. I understand that Sir Denis Follows said that only a war would change the decision of the British Olympic Association to go to Moscow. I agree with my hon. Friend that there is just such a war going on in Afghanistan. Russia is using troops to hold down a
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    people. In those circumstances it will be wrong for British athletes to go to Moscow if they value their freedom as much as we do.
    Mr. Donald Stewart: Will the right hon. Lady take time today to consider the anger of the teaching profession in Scotland over the instruction from Professor Clegg that it works out its own comparability study? Will she instruct her right hon. Friend the Secretary of State for Scotland to make an appointment immediately of a committee along the lines of the Lever committee on steel, to produce a result within seven days?
    The Prime Minister: I think that there are mixed feelings on the report of the Clegg Commission. As the right hon. Gentleman is aware, the Clegg Commission was asked to consider pay in relation to terms and condition of service. It is clear from the face of the Clegg Commission's report that it had considerable difficulty in carrying out its task. Its findings must now be referred to the negotiating committees on pay and to different committees on conditions of service. Most people agree that teachers' professional obligations extend outside the classroom. It is extremely difficult to arrange pay unless we know exactly what terms and conditions of service we are paying for.
    Mr. Meacherasked the Prime Minister if she will list her official engagements for 15 April.
    The Prime Minister: I refer the hon. Gentleman to the reply which I gave a few moments ago.
    Mr. Meacher: Will the right hon. Lady take an opportunity amid her duties, to explain why she and other Ministers continue to insist that the only way to reduce inflation is by reducing the money supply, when over the past five years Germany, Switzerland and Belgium have had rates of expansion of the money supply identical to ours and yet, while our rate of inflation has averaged 15 per cent. Switzerland's was 4 per cent. Germany's was 5 per cent. and Belgium's was 9 per cent.? Does not that indicate clearly that the Government's economic policy is based on a gigantic fallacy?
    The Prime Minister: Of course it does not. The hon. Gentleman is well aware

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    that there are time lags between money supply and it coming through. He will find a close correlation, if he looks at the time lag, between money supply and the rate of inflation. Apart from that it stands to commonsense that, if we print more money than is backed by goods and services, that extra money, if it is used, will find its way into increased prices over the course of time.
    Mr. Emery: In an effort to assist the Leader of the Opposition and industry, will my right hon. Friend say anything to trade union leaders at British Leyland, whose dispute and subsequent strike is leading only to economic disruption in the industry? Does she agree that it will do nothing to assist the recovery of British Leyland and nothing for the workers but will merely play into the hands of those who wish to see economic ruin in Britain?
    The Prime Minister: I am grateful to my hon. Friend. We hope that British Leyland will break through to being profitable and successful. We believe that in the past few months it has increased its share of the market and has a chance of doing a great deal better. We hope that that chance will not be thrown away by those who are at present on strike. We hope that they will assist all their fellow workers and the management to make British Leyland successful once again.
    Mr. Michael Morris: Will my right hon. Friend find time to ring Mr. Len Murray to suggest that his time would be better spent in getting together with Mr. Moss Evans and Mr. Duffy to sort out the ridiculous problem at British Leyland instead of spending time organising a day off on 14 May?
    The Prime Minister: I hope that the problem at British Leyland will be sorted out. There is a chance there. I believe that the company has one of the best managers that any industry will ever have. I hope that the work force will back him and that it will go back to work and enable the cars to be sold once again.
    Several Hon. Members rose—
    Mr. Speaker: Order. I shall call two hon. Members from the Opposition Benches to hold the balance.
    Mr. Harry Ewing: The right hon. Lady is on about British industry. Does she accept that the Post Office is an extremely important part of British industry? Will she confirm that at 4 o'clock today the chairman of the Post Office will announce his resignation, to be replaced by a civil servant from the Department of Industry?
    The Prime Minister: I think that the hon. Gentleman had better wait until 4 o'clock, if an announcement is to be made at that time.
    Mr. William Hamiltonasked the Prime Minister what are her official engagements for 15 April.
    The Prime Minister: I refer the hon. Gentleman to the reply which I gave earlier.
    Mr. Hamilton: Will the right hon. Lady take this opportunity of explaining in a little more detail exactly what she meant yesterday when she made the commitment to support United States policy in Iran? Was that support completely unqualified? Does it include, for instance, any move by the United States to employ military means to solve the problem?
    The Prime Minister: With respect to the hon. Gentleman, I think that I spent just about half an hour answering questions in very considerable detail yesterday. I made the point as forcefully as I could that diplomatic activity had not succeeded in releasing the hostages and that the United States was entitled to expect to move on to the next stage—namely, political and economic activity. I made no reference to military activity—
    Mr. Hamilton: We are asking now.
    The Prime Minister:—except to say that that would be an extremely grave step. I believe that the United States was asking us to see what we could do by political and economic activity, and for that we would need the widest possible international support.
    Mr. Grylls: In view of my right hon. Friend's firm statement yesterday on Iran, will she undertake to stop the handing over of the recently completed naval supply vessel to the Government of Iran by Swan Hunter on the Tyne? It

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    would be a rather odd time to hand it over right now.
    The Prime Minister: As my hon. Friend knows, we have not exported any military equipment to Iran. That has been one of the points of agreement that we had with the United States Government. We are able to do that without legislation, because the requirement is either the commissioning of a naval vessel or an export licence. In this case it would require an export licence, so the Government are entitled to take action if an export licence is applied for.
    Mr. Cook: In view of the right hon. Lady's earlier remarks that British industry is bearing up, is she able to assure the House that she is aware that the Chancellor of the Exchequer said only yesterday that industrial production will fall by 6 per cent. under her Government? Is she aware that if that happens she will leave behind industrial output that is even lower than that left behind by the right hon. Member for Sidcup (Mr. Heath) 10 years before, when we had three-day working? Is she content to go down in history as the Prime Minister who left British industry in a worse state than her right hon. Friend the Member for Sidcup?
    The Prime Minister: As the hon. Gentleman knows, what happens in the next year will depend exactly on how hard and how efficiently people work. [Interruption.] Of course it will. If people back strikes, their output will go down, but if they take advantage of increased productivity and of previous investment in British industry and work with greater efficiency, we shall get a higher standard of living. That is the only way in which to get a higher standard of living in this country.
    Mr. Cryer: On a point of order, Mr. Speaker. During Question Time the Prime Minister appeared to mislead the House by suggesting that the textile industry was one of those industries with a balance of payments surplus—
    Mr. Speaker: Order. With every respect to the hon. Gentleman, the content of the Prime Minister's reply cannot be a point of order for me, because the Prime Minister takes responsibility for her own replies.
    Mr. Cryer: What I am concerned with, Mr. Speaker, is the conduct of the House, which is in your hands and is obviously outside the responsibility of the Prime Minister. The Prime Minister's suggestion, by misleading the House, has lowered the standard of conduct, which is in your hands.
    Mr. Speaker: The hon. Gentleman is well experienced. He knows that that is not a real point of order. There has been no breach of our Standing Orders in what has occurred. Whatever the hon. Gentleman's feelings, he should not pursue them with me at this moment, because there is nothing that I can do.
    Mr. Cryer: Further to the point of order, Mr. Speaker. Is there some remedy open to hon. Members if the Prime Minister misleads the House by suggesting that a particular industry is in surplus when it is in massive deficit?
    Mr. Speaker: Order. It is quite common in this House for hon. Members on each side to charge that someone on the other side has misled the House. It usually means that the hon. Member concerned disagrees with the contents of the reply.

RHODESIA
The Lord Privy Seal (Sir Ian Gilmour): With permission Mr. Speaker, I shall make a statement on Rhodesia.
Rhodesia will come to independence as Zimbabwe on Friday 18 April. Her Majesty the Queen will be represented at the independence celebrations by His Royal Highness the Prince of Wales. My right hon. and noble Friend will represent the Government. My right hon. and noble Friend the Governor of Southern Rhodesia will leave Salisbury on Independence Day.
The Government look forward to working closely with the Government of an independent Zimbabwe, headed by Mr. Mugabe. I am pleased to announce that, subject to parliamentary approval, we intend to commit, over three years, aid totalling £75 million to Zimbabwe. The aid to be given within this total commitment includes a £7 million grant for urgent post-war reconstruction; an allocation of £500,000 for joint funding with British voluntary agencies of projects which they undertake in Zimbabwe; contributions to our share of expenditure through any extension of the Lomé convention to Zimbabwe and to the special appeal of the United Nations High Commissioner for Refugees; and further humanitarian assistance.
The bulk of the £75 million will be devoted to a substantial bilateral aid programme which will be allocated in agreement with the Zimbabwe Government. A mission from the Overseas Development Administration will visit Zimbabwe shortly after independence for talks with incoming Ministers to identify projects. At the request of the new Government we are providing assistance with police training, broadcasting, the Civil Service and the Foreign Service. We are also providing, separately from the aid programme, assistance with the training of the future Zimbabwe Army.
Because of the marked extent to which the aid programme is already committed over the next two years, and in order to minimise the impact of this very substantial pledge to Zimbabwe on the level of United Kingdom assistance to other countries, my right hon. and learned Friend the Chancellor of the Exchequer has agreed exceptionally that there should
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be made available from the public expenditure contingency reserve a sum of £8 million in 1980–81—with consequent adjustment of the cash limit—and of £7 million in 1981–82.
We welcome Zimbabwe's accession to the Commonwealth as the forty-third member. This calls for further legal provisions. An order under the Zimbabwe Act will be laid before Parliament in draft in the next two days for approval by resolution. The principal purposes are to continue the application of certain United Kingdom laws in relation to Zimbabwe, notwithstanding its change in status. Similar provision has been made for the application of United Kingdom law in respect of other republics within the Commonwealth.
The Zimbabwe Act 1979 granted an amnesty in United Kingdom law for political offences connected with UDI.
A similar amnesty was granted in Rhodesian law, and has subsequently been extended by the Governor in a general pardon covering all political offences up to the elections.
Now that full amnesty has been granted to all those responsible for the situation which led to the imposition of sanctions, the Government feel that it would no longer be appropriate for any further prosecutions to be initiated for sanctions offences.
The measures applying sanctions in United Kingdom law have, of course, been revoked. I am informed by my right hon. and learned Friend the Attorney-General that only one case, an appeal, is at present before the courts, and that no other prosecutions are pending. The amnesty will not reopen past judgments. An order will be laid before Her Majesty in Council in due course to give effect to this decision.
Britain is thus about to terminate its constitutional responsibility for Rhodesia and to transfer power to a Government freely elected, under British supervision, by the people of Rhodesia. I am sure that the House wishes the new country every success.
Mr. Shore: The proper and legitimate independence of Zimbabwe is an event that has been wished for ardently by hon. Members on each side of the House for many years past. It is right for me to

1017
pay tribute to all those who have over the years, and in spite of great difficulties, refused to accept the fact of UDI, and who have worked for this proper and legitimate solution in Zimbabwe. We are very glad indeed to be approaching this final act in the drama of independence, the actual Independence Day.
With regard to the question of aid to Zimbabwe—which is, of course, very necessary, given the state of the country and the great disruption that it suffered—while we welcome a pledge of £75 million aid over three years we cannot help but have in mind the assessment that was made some years ago, that Zimbabwe would need a sum ranging between £500 million and £750 million.
While it is not justifiable for Britain alone to undertake that burden, I should have hoped that the Government would think fit to send the ODA mission to Rhodesia first, and to report back on the needs of the Rhodesian economy, whereas they have given us the figure first and are now proposing to send the ODA mission to Rhodesia to see how the aid can best be allocated. I should have thought that that was the wrong way of going about it. I hope that the Government will give further thought to the report they receive from the ODA mission after it arrives in Rhodesia.
I hope that the Lord Privy Seal will give the assurance that, along with the new Zimbabwe Government, we shall make a genuine appeal for international funds. We have already had the news of the United States' contribution, but other nations are willing to contribute. I am thinking not just of the Lomé convention but of countries such as Sweden and Canada, which, as well as the United States, have in the past expressed their interest.
There is one matter on which I must take up the cudgels with the Lord Privy Seal. It is in relation to what he said about the wide-ranging amnesty provisions. I believe that it is absolutely right to give a political amnesty to all offences committed within Rhodesia during the period of UDI. That was a necessary part of achieving the spirit of conciliation that is necessary in that country.
However, to extend that to British firms that have broken British sanctions
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is a serious mistake. I regret that. I say it in no spirit of vengeance, but because I believe that we have a duty to uphold our own laws; it is necessary for us to do so if we are to get the respect for our laws in Britain in future and if we are to carry the right impact with countries abroad.
Lastly, I join with the Lord Privy Seal in his good wishes to the new country of Zimbabwe. We all fervently hope for its success and we all believe that its Prime Minister and new Government have given an excellent lead.
Sir I. Gilmour: I am grateful to the right hon. Gentleman for the gracious remarks at the beginning and at the end of his speech, but not so grateful for his less gracious remarks in the middle. He mentioned the large sums of money estimated three years ago. He will, of course, be aware that those estimates produced no money at all. It is absolutely right for us to say what we should produce. Indeed, the right hon. Gentleman threw his argument away by what he subsequently said, because other countries will contribute to Zimbabwe. It was therefore right for us to do what we have done. We should have been open to considerable criticism if we had not given the lead by saying what we were prepared to contribute. The right hon. Gentleman made somewhat of a meal about the amnesty being wide-ranging. It is not wide-ranging. As I indicated, no prosecutions whatever are pending and I am sure that the House as a whole will agree that it would be wrong to bring prosecutions now for offences that are no longer offences.
Mr. David Steel: On behalf of my colleagues and myself I join with the Government in wishing the people and the Government of Zimbabwe well as they approach legal independence. I especially welcome the fact that the truncated aid programme is being augmented by special provisions for Zimbabwe. However, may I press the Lord Privy Seal to be more forthcoming about what is to be done to meet the total needs of Zimbabwe, given the fact that a couple of years ago there was wide agreement about the need for an international aid programme post-independence?
Sir I. Gilmour: I am grateful for what the right hon. Gentleman said. By implication, I have already answered the second part of his question. Of course we believe that many countries will wish to subscribe to the aid programme for Zimbabwe. Some have already done so, and others will follow suit. We are confident that this aid will amount to a substantial sum.
Mr. Grieve: Does not my right hon. Friend agree that a policy of being magnanimous abroad and vindictive at home would be a wholly wrong way to set off Zimbabwe on its new course? Does he not take the view that the only way to give a good start to the great achievement of Her Majesty's Government is by wiping clean the slate of past offences?
Sir I. Gilmour: I entirely agree with my hon. and learned Friend. Of course it is right to wipe the slate clean. But, as I said, as far as we know the slate is fairly clean anyway, because there are no prosecutions pending.
Mr. Whitehead: I welcome the aid proposals and the specific purposes for which they are to be used. Will the Lord Privy Seal say something about the number of former Rhodesian civil servants, people in the broadcasting authority and police, who are expected to remain in post after independence next week?
Sir I. Gilmour: I cannot give any exact figures. As the hon. Gentleman will know, one of the objectives of the agreements at Lancaster House was to ensure a safe, stable and prosperous future for all communities in Zimbabwe. We hope that both the white and black communities will stay in the new Zimbabwe.
Mr. Eldon Griffiths: As the bulk of the £75 million will be for bilateral aid, will my right hon. Friend ensure that in addition to the ODA officials, who are not always expert in these matters, there will be representatives of private enterprise—engineers, bankers and technicians—who can advise on what is required? In view of the magnificent achievement of the Governor, will my right hon. Friend encourage the Prime Minister to discuss with Her Majesty the Queen an appropriate way of honouring him
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on his return and by that act the accomplishment of the many British soldiers and police officers who assisted in bringing Zimbabwe to independence in democracy?
Sir I. Gilmour: I am sure that the whole House agrees with what my hon. Friend said about the achievements of the Governor, the soldiers and everyone else who was instrumental in bringing Zimbabwe to peaceful independence. No doubt my right hon. Friend will also note what my hon. Friend said.
As for aid, I think that my hon. Friend is under a slight misapprehension. Bilateral aid in no way means that the aid will not be given by private enterprise to help the industry of the new country; it merely means that it will be under the aegis of this Government rather than multilateral auspices. The fact that the ODA will be in charge in no way rules out private enterprise. I do not accept what my hon. Friend said about the ODA.
Mr. Alexander W. Lyon: Is the Minister able to tell us how much the United States and the EEC propose to contribute to the funds for Rhodesia? Is he able to say how much of this money will be used for land reform within Zimbabwe?
Sir I. Gilmour: I cannot give the hon. Member figures at present. Moreover, as he will be aware, this must be a matter for discussion between the countries concerned and the new country of Zimbabwe and not the present Government. Therefore, the question of the way in which the aid will be dispersed canot be decided until the new Government is in post.
Mr. Emery: Will my right hon. Friend ensure that the good wishes to be expressed to the new Government of Zimbabwe on Friday go from not only the Front Benches but the Back Benches? I am sorry that we have not had time for a debate before independence, but will my right hon. Friend pay tribute to all those who have assisted in achieving independence, not least the right hon. Member for Stepney and Poplar (Mr. Shore), who, when he was in Zimbabwe, was extremely helpful in assisting the Governor?
Aid amounting to £75 million has been announced. That is only one-third of the

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total estimate of £450 million, which is the pro rata figure of 1,500 million dollars over a five-year period and is quite inadequate. With a number of hon. Members I have urged the British Government to lead the rest of the world to build up a development fund. As we have announced our contribution, do we hope to receive matching amounts from Europe and America? Is it too late to use British money in this way to attract other aid, as three times the figure announced by the British Government will be necessary?
Sir I. Gilmour: I do not think that it is too late. As I said, the fact that we have announced what we are prepared to give to Zimbabwe will encourage others. I hope that a large number of countries will contribute and that they will do so very soon. As to my hon. Friend's earlier remarks, I am sure that the whole House, and not just the Front Benches, will wish the new State every success and will want to thank everyone who has been instrumental in bringing it about.
Several Hon. Members rose—
Mr. Speaker: Order. I propose to call those hon. Members who have been rising throughout and to conclude with the Front Bench.
Mr. Robert Hughes: Will the right hon. Gentleman confirm that his mind is not closed to increasing aid to the new Zimbabwe if funds from international sources do not match requirements? Will he also confirm that the way in which the money will be spent will be generally agreed with the Government of Zimbabwe in the first place? Finally, as we all wish the new State of Zimbabwe well, will the Lord Privy Seal accept that perhaps the Government have learnt a lesson by the events in Rhodesia over the past few years and will now commit themselves to free elections in Namibia as quickly as possible and keep pressure on South Africa for decent reforms there?
Sir. I. Gilmour: That remark was characteristic of the interventions that the hon. Member has made throughout our debates over the past year or so. We are fully committed to free elections in Namibia. I do not think that there are any lessons for us to learn from Zimbabwe, though I dare say that some others learnt from it.
1022
On the question of aid, I have said what we are prepared to make available, and of course this will be disbursed in discussions and agreement with the Government of Zimbabwe. Any other way of doing it would be quite inconceivable.
Mr. Fletcher-Cooke: Has my right hon. Friend any word of comfort or hope for the patient and long-suffering holders of Rhodesian bonds?
Sir I. Gilmour: Not at the moment. However, Mr. Mugabe has said some very encouraging things. I think that my hon. and learned Friend should address his question to the Treasury.
Mr. Hardy: The right hon. Gentleman said that the aid budget was fully stretched. Would it not be more accurate to say that it has been shamefully contracted? Is it not the case that the burden of the cost of the bulk of the aid that he has just announced will be felt by those who are a great deal more impoverished than people in this country?
Sir I. Gilmour: It could be said that the aid budget has been both stretched and contracted. The fact is that we have increased it and the Chancellor has agreed to that. That means that the second part of the hon. Member's question is inaccurate.
Mr. Brocklebank-Fowler: When will my right hon. Friend announce the name of the new high commissioner to Zimbabwe?
Sir L Gilmour: The new high commissioner will be a member of the Diplomatic Service, and his name will be announced very soon.
Mr. Spearing: Does the Lord Privy Seal agree that, since the rural areas of Zimbabwe were those in which Government services, particularly agriculture, broke down many years ago, those areas are now most in need, particularly as most of the Zimbabwe population lives in them? Does he agree that those areas are least likely to receive attention from private capital? Will he tell the House the extent to which the Government have direct knowledge of the needs of rural areas? Has the figure of £75 million which the Lord Privy Seal has announced been drawn up with that in view? If not, will he agree that this figure is an initial

1023
announcement and does not preclude further aid being made available?
Sir I. Gilmour: No, it is not an initial announcement. We are well aware in general, if not in detail, of the conditions in rural areas. This matter was discussed at Lancaster House and forms part of the Lancaster House agreement. We are well aware of the needs of rural areas, but the exact amount must be decided in conjunction with the new Zimbabwe Government.
Mr. Nicholas Winterton: May I join hon. Members on both sides of the House in wishing the people of Rhodesia peace, progress and prosperity in the coming years, and in welcoming the ending of prosecutions under the sanctions order? Will my right hon. Friend indicate whether there are any strings attached to the aid? I believe that £75 million is a substantial amount of aid, bearing in mind that Rhodesia is one of the most prosperous countries in Africa and has managed its affairs rather better than this country for many years. Will my right hon. Friend also indicate whether, as a result of the sums that will be allocated for broadcasting, there will be any pressure or influence brought to bear on the Prime Minister not to assume total control of the media—both press and television—as is apparently the case at present?
Sir I. Gilmour: In my statement I said that we were sending out assistance teams on broadcasting. That does not mean that much of our aid will be devoted to broadcasting. It must be for the new Government, in conjunction with the ODA and other countries, to decide how the aid should be spent.
Mr. Ioan Evans: In view of the fact that the announcement of aid falls far short of what the new emerging country will require, will the Lord Privy Seal suggest an international initiative to bring together the United Nations, the Commonwealth and the EEC in a combined effort to give aid to Zimbabwe?
In view of the fact that, for the first time, Zimbabwe will have a truly democratic Assembly, will he consider making approaches to the effect that the House of Commons should make some symbolic gesture to the new Assembly? Will he use his good offices to bring a parlia-
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mentary delegation from the new Assembly to visit this country?
Sir I. Gilmour: The second part of the question is a matter not for me but for Mr. Speaker.
On the first part, I can only assume that the hon. Member was not listening to the earlier exchanges. I have said that, in addition to the aid that we are giving, other countries will also give aid, and naturally we hope that this will be part of a large international effort.
Mr. Cyril D. Townsend: Does my right hon. Friend agree that the generous financial provision that he has just announced can be easily justified in this country, both on political and moral grounds? Can he confirm that members of the Zimbabwe police and armed forces will be immediately welcome at Britain's excellent military and police training establishments?
Sir I. Gilmour: As my hon. Friend knows, there have been discussions, and teams have gone out to Zimbabwe. However, once again this matter must be one for discussion between the new Government and the British Government after independence.
Mr. Stanbrook: Is my right hon. Friend satisfied that adequate arrangements exist to guarantee the pension rights of those who have already retired and the accrued pension rights of those who are presently serving in the public services in Zimbabwe? Will overseas aid be available for this, if necessary?
Sir I. Gilmour: No, it will not.
The answer to the first part of my hon. Friend's question is "Yes". We spent a good deal of time on this matter at Lancaster House, and careful provision was made for guaranteeing public service pensions in Rhodesia. Mr. Mugabe has agreed to abide by that.
Sir Ronald Bell: Since sanctions operated to the great disadvantage of British industry and to the advantage of French, German, Italian, Japanese and American industry, is there any reason why British aid should not be administered, conceived and shaped is such a way as to help to restore Britain's industrial and commercial connections with Rhodesia?
Sir I. Gilmour: There is no reason at all.
Mr. Shore: The Lord Privy Seal has not satisfied the Opposition in his replies on the blanket nature of the amnesty or on the aid programme. On the aid programme, is it not the case that, in spite of the £15 million additional expenditure which has been earmarked from the contingency fund for Zimbabwe, this aid is being given at the expense of some £60 million of allocations to other countries in that programme? I believe that we should have a proper statement on that.
Secondly, is it not almost an absurdity to present the House with a figure before giving us any indication of the current balance of payments problems in Rhodesia, the actual costs of resettlement—internally and externally with the refugees—or the urgent need for land reform? I urge the right hon. Gentleman to be rather more flexible in his approach. If his officials go out and come back with a picture—as I believe they will—of considerable short-term, urgent financial need in that country, is he prepared to come back, discuss the matter with his colleagues and report to the House of Commons accordingly?
Sir I. Gilmour: I am sorry that the right hon. Gentleman has used this occasion for slightly inappropriate needling. I have already answered his question. We have given a generous allocation of aid to Rhodesia. The right hon. Gentleman says that we cannot know how much will be needed, but equally we cannot know—and neither can he—how much will be subscribed. Surely the right thing is for us to be first to say what we are prepared to give to Rhodesia, and to hope then that other people will contribute too—and we have had undertakings. As we are now about to see the independence of Rhodesia, this is an occasion not for needling but for congratulating the new country and wishing it well in future.

LOCAL GOVERNMENT (METROPOLITAN DISTRICT OF BOOTLE) (AMENDMENT)
3.59 pm
Mr. Allan Roberts: I beg to move,
That leave be given to bring in a Bill to amend the Local Government Act 1972 so as to transfer the former county borough of Southport from the metropolitan district of Sefton in Merseyside to the county of Lancashire and to re-name the remainder of the metropolitan district 'Bootle'.
I give notice that the renaming of the metropolitan district "Bootle" might be open to amendment in Committee. One does not wish to argue about names. The present metropolitan district of Sefton compromises the former authorities of Bootle, Litherland, Formby, Crosby and Southport. By proposing to take Southport out of that metropolitan district, a metropolitan district with an electorate of 216,500 would remain. It would be bigger than that of Knowsley and St. Helens in Merseyside. It would be bigger than the metropolitan district of Bury in Greater Manchester. It would therefore be a viable unit and would be large enough to run services.
The non-metropolitan district of Southport, in the county of Lancashire, that I seek to create would have a population of 84,574. That is a greater population than is found in many of the present districts within the county of Lancashire. It would also be viable. There is no question of seeking to create non-viable local government units.
One of the reasons why I have sought to change the local government boundaries is that I wish to put right a mistake that was made in the Local Government Act 1972. Many of those living in the Sefton area believe that a mistake was made. Some may even suspect that some gerrymandering took place. At the last minute Southport was pushed into the metropolitan district of Sefton. When the councils of Bootle, Litherland, Crosby and Formby voted to join the metropolitan district of Sefton, and when Bootle council—which had a Labour majority—voted to go not into Liverpool but into Sefton, it did so thinking that Southport would not be included.
At that time the proposals were such that Southport would have been in Lancashire. It was only as a result of last-minute efforts by the right hon. Member

1027
for Crosby (Sir G. Page) that Southport was pushed into Sefton, thus creating the present situation. Bootle had a proud tradition of independence and a strong community spirit before local government reorganisation. It feels that it has been robbed of its ability to run and control its affairs because of the way in which the boundaries were drawn for the metropolitan district of Sefton. Since local government reorganisation, it has lost its hospital, fire station and police services to the county. It seems that decisions that affect the people of that area are taken by people in Southport and by councillors who have no idea of the problems or interests of Bootle.
There is also a conflict among Crosby, Formby and Southport. This is not just a parochial issue. It is just one example of how the Local Government Act tried to create local authority areas in which town and country were interdependent. The Maud Commission recommended local authority areas in which town and country would be interdependent. That idea has been proved wrong. Throughout the British Isles a conflict has been created between rural areas and seaside resorts, such as Southport, and areas such as Bootle areas with inner city problems and with communities whose aspirations and problems are completely different.
In addition, in 1972, prior to local government reorganisation, an argument was put forward to the effect that size is important in achieving efficient local government. That has also been proved wrong. Hon. Members from all parties have said time and again that large units of local government have become remote from those whom they seek to represent. Far from being efficient, large local government units have become inefficient. because of remoteness. We should therefore create local authority units that have a community of interest. When looking at local government boundaries, that community interest—not just the size of a local authority—should be uppermost in our minds. There is no community of interest among Southport, Litherland and Bootle.
There is no community of interest among Southport, Crosby and Formby. The people of Southport think that their rates are being spent to subsidise the solution of problems in areas such as
1028
Bootle. The people of Bootle are well aware that rate poundage is being kept down and that money is being spent on frivolous things such as statues of Red Rum, fairy lights and bandstands in Southport. They are well aware that the inner city problems of areas such as Bootle are not being met because of the conflicts. The councillors of Southport control the Sefton local authority. They spend money on non-essential items in Southport. They are reluctant to increase rate poundage to deal with the real problems of bad housing and high levels of unemployment.
If one considers two simple sets of statistics, one can see the great differences that exist among the communities of Bootle, Litherland and Southport. The population of Bootle is about 74,000 and that of Southport about 84,000. There is a difference in the respective populations of only 10,000 people. However the number of persons per hectare in Bootle is 54·71. The number of persons per hectare in Southport is 21·65. Southport is a rural area and seaside resort. It is a Victorian town that has no inner city problems and no problems of bad housing. It does not have the serious unemployment that exists in Bootle, where over 12 per cent. of active males are unemployed. In Southport only 5 per cent. are unemployed. The problems of Bootle that do not exist in Southport are clearly illustrated in those statistics.
The whole authority is penalised by its very nature. When the Government calculate the rate support grant settlement and decide on such things as needs element and resources element, our rate support grant is reduced because Southport has not the acute problems of the other areas and its needs are not as great as those in the rest of the Sefton area. The need for the local authority to raise a greater rate poundage is therefore even stronger.
The anger caused by the conflict between Southport and Bootle has dramatically increased in recent times as a result of decisions of Sefton council in the past few months. It has cut services, amalgamated schools, increased school meal charges, got rid of school milk, and closed down swimming pools in the Bootle and Litherland areas that

1029
had been built by local effort. Parent-teacher associations had raised the money for those pools. The conflict between Southport and Bootle has become much greater. Vicious cuts have been introduced by a council and they have been aimed at areas such as Bootle and Litherland.
I appeal to the House to allow this Bill to be introduced, not just for the benefit of Bootle. The Southport Visitor of 25 March states:
"The debate on The Emancipation of Bootle Bill"—
my nickname for the Bill—
"in the Commons on April 15 should be interesting. Or it could be disappointing.
"Mr. Allan Roberts, Labour M.P. for Bootle, who is introducing the Bill, wants to 'kick Southport out of Sefton'….It will be interesting to see to what extent public opinion in Southport is represented in the debate. The majority opinion here seems to say that Southport WANTS to be kicked out of Sefton.
"Will the Commons be told that three public opinion polls among Southport electors between 1971 and 1976 all showed that more than 90 per cent. voted for a future for Southport in Lancashire instead?"
I have had many letters from people in Southport. I shall quote from one that comes from a Mrs. Fairhurst of Wennington Road, Southport. She wrote a long letter in support of my proposals. She concludes:
"Better that Bootle and Southport part as friends than remain together as enemies."
Mr. Speaker: I understand that the right hon. Member for Crosby (Sir. G. Page) wishes to oppose the motion.
4.9 pm
Sir Graham Page: The hon. Member for Bootle (Mr. Roberts) seeks the leave of the House to introduce a Bill to carve up the Merseyside metropolitan borough of Sefton. The borough was formed from three boroughs, an urban district and a few neighbouring parishes, which provide a uniquely complementary variety of activities and population—docks, old-established and modern, modern buildings, Government and private offices, factories large and workshops small, famous schools both of Elizabethan foundations, sports and culture in abundance, beautiful rural areas, attractive shopping areas and a whole compass of residences.
Sefton has managed its affairs with approximately the same number of employees as its previous constituent authorities, and has kept its rates below the rate of inflation since it was formed. The hon. Gentleman wants to break up this district merely because the local Labour Party is so much part of the Left that it is unable to get sufficient votes in this moderate and sensible community. I ask the House to deny the hon. Gentleman this gerrymandering.
Question put, pursuant to Standing Order No. 13 (Motions for leave to bring in Bills and Nominations of Select Committees at Commencement of Public Business):
The House divided: Ayes 138, Noes 102.

Division No. 253]

AYES

[4.11 pm

Adams, Allen

Cunningham, Dr John (Whitehaven)

Freeson, Rt Hon Reginald

Allaun, Frank

Davies, Ifor (Gower)

Freud, Clement

Alton, David

Davis, Clinton (Hackney Central)

Garrett, John (Norwich S)

Ashley, Rt Hon Jack

Davis, Terry (B'rm'ham, Stechford)

George, Bruce

Atkinson, Norman (H'gey, Tott'ham)

Deakins, Eric

Golding, John

Bagier, Gordon A. T.

Dean, Joseph (Leeds West)

Graham, Ted

Beith, A. J.

Dewar, Donald

Grant, George (Morpeth)

Bennett, Andrew (Stockport N)

Dixon, Donald

Hamilton, James (Bothwell)

Bidwell, Sydney

Dormand, Jack

Hamilton, W. W. (Central Fife)

Booth, Rt Hon Albert

Douglas-Mann, Bruce

Hardy, Peter

Boothroyd, Miss Betty

Duffy, A. E. P.

Harrison, Rt Hon Walter

Bottomley, Rt Hon Arthur (M'brough)

Dunn, James A. (Liverpool, Kirkdale)

Hattersley, Rt Hon Roy

Brown, Hugh D. (Provan)

Dunwoody, Mrs Gwyneth

Healey, Rt Hon Denis

Brown, Ronald W. (Hackney S)

Eastham, Ken

Heffer, Eric S.

Callaghan, Jim (Middleton & P)

Edwards, Robert (Wolv SE)

Home Robertson, John

Campbell-Savours, Dale

Ellis, Raymond (NE Derbyshire)

Homewood, William

Carter-Jones, Lewis

Ennals, Rt Hon David

Hooley, Frank

Clark, Dr David (South Shields)

Evans, Ioan (Aberdare)

Howells, Geraint

Cocks, Rt Hon Michael (Bristol S)

Evans, John (Newton)

Huckfield, Les

Cohen, Stanley

Field, Frank

Hughes, Robert (Aberdeen North)

Concannon, Rt Hon J. D.

Fitt, Gerard

Hughes, Roy (Newport)

Cook, Robin F.

Flannery, Martin

Janner, Hon Greville

Cox, Tom (Wandsworth, Tooting)

Fletcher, Ted (Darlington)

Jay, Rt Hon Douglas

Craigen, J. M. (Glasgow, Maryhill)

Foot, Rt Hon Michael

Johnson, James (Hull West)

Crowther, J. S.

Foster, Derek

Jones, Barry (East Flint)

Cryer, Bob

Fraser, John (Lambeth, Norwood)

Kaufman, Rt Hon Gerald

Kerr, Russell

Morton, George

Silverman, Julius

Kilfedder, James A.

Newens, Stanley

Soley, Clive

Lamborn, Harry

Oakes, Rt Hon Gordon

Spearing, Nigel

Lamond, James

O'Neill, Martin

Spriggs, Leslie

Leighton, Ronald

Orme, Rt Hon Stanley

Steel, Rt Hon David

Lewis, Ron (Carlisle)

Palmer, Arthur

Taylor, Mrs Ann (Bolton West)

Litherland, Robert

Parker, John

Thomas, Dr Roger (Carmarthen)

Lofthouse, Geoffrey

Pendry, Tom

Thorne, Stan (Preston South)

Lyon, Alexander (York)

Powell, Raymond (Ogmore)

Tilley, John

McDonald, Or Oonagh

Race, Reg

Tinn, James

McKay, Allen (Penistone)

Rees, Rt Hon Merlyn (Leeds South)

Wainwright, Edwin (Dearne Valley)

McKelvey, William

Richardson, Jo

White, Frank R. (Bury & Radcliffe)

MacKenzie, Rt Hon Gregor

Roberts, Allan (Bootle)

Whitehead, Phillip

Marshall, David (Gl'sgow, Shettles'n)

Roberts, Gwilym (Cannock)

Wigley, Dafydd

Marshall, Jim (Leicester South)

Robertson, George

Winnick, David

Martin, Michael (Gl'gow, Springb'rn)

Rooker, J. W.

Woodall, Alec

Maxton, John

Roper, John

Woolmer, Kenneth

Mellish, Rt Hon Robert

Ross, Ernest (Dundee West)

Mikardo, Ian

Rowlands, Ted

TELLERS FOR THE AYES:

Miller, Dr M. S. (East Kilbride)

Sheldon, Rt Hon Robert (A'ton-u-L)

Mr. John Sever and

Mitchell, R. C. (Soton, Itchen)

Silkin, Rt Hon John (Deptford)

Mr. Jack Straw.

Morris, Rt Hon Charles (Openshaw)

NOES

Adley, Robert

Grist, Ian

Neubert, Michael

Alexander, Richard

Grylls, Michael

Normanton, Tom

Aspinwall, Jack

Gummer, John Selwyn

Onslow, Cranley

Baker, Kenneth (St. Marylebone)

Hawkins, Paul

Page, John (Harrow, West)

Baker, Nicholas (North Dorset)

Heddle, John

Page, Rt Hon Sir R. Graham

Banks, Robert

Holland, Philip (Carlton)

Price, David (Eastleigh)

Beaumont-Dark, Anthony

Hordern, Peter

Proctor, K. Harvey

Bell, Sir Ronald

Howell, Ralph (North Norfolk)

Rippon, Rt Hon Geoffrey

Bevan, David Gilroy

Hunt, David (Wirral)

Shaw, Michael (Scarborough)

Biggs-Davison, John

Jessel, Toby

Shelton, William (Streatham)

Bottomley, Peter (Woolwich West)

Kershaw, Anthony

Shepherd, Richard (Aldridge-Br-hills)

Bowden, Andrew

Kitson, Sir Timothy

Shersby, Michael

Bradford, Rev R.

Knight, Mrs Jill

Silvester, Fred

Browne, John (Winchester)

Lang, Ian

Skeet, T. H. H.

Buck, Antony

Lawrence, Ivan

Smith, Dudley (War. and Leam'ton)

Budgen, Nick

Lee, John

Speller Tony

Burden, F. A.

Lennox-Boyd, Hon Mark

Stainton, Keith

Cadbury, Jocelyn

Lloyd, Ian (Havant & Waterloo)

Stanbrook, Ivor

Carlisle, John (Luton West)

Lloyd, Peter (Fareham)

Stewart, Ian (Hitchin)

Carlisle, Kenneth (Lincoln)

McCrindle, Robert

Stewart, John (East Renfrewshire)

Clark, Hon Alan (Plymouth, Sutton)

McCusker, H.

Stokes, John

Cockeram, Eric

McNair-Wilson, Michael (Newbury)

Temple-Morris, Peter

Costain, A. P.

McQuarrie, Albert

Thompson, Donald

Crouch, David

Mates, Michael

Thorne, Nell (Ilford South)

Emery, Peter

Mawby, Ray

Townend, John (Bridlington)

Fell, Anthony

Mawhinney, Dr Brian

Townsend, Cyril D. (Bexleyheath)

Fenner, Mrs Peggy

Meyer, Sir Anthony

Trippier, David

Fletcher-Cooke, Charles

Mills, Iain (Meriden)

Waldegrave, Hon William

Fookes, Miss Janet

Mills, Peter (West Devon)

Walker, Bill (Perth & E Perthshire)

Fraser, Rt Hon H. (Stafford & St)

Moate, Roger

Ward, John

Fraser, Peter (South Angus)

Molyneaux, James

Whitney, Raymond

Garel-Jones, Tristan

Montgomery, Fergus

Gow, Ian

Morris, Michael (Northampton, Sth)

TELLERS FOR THE NOES:

Gower, Sir Raymond

Morrison, Hon Charles (Devizes)

Mr. Malcolm Thornton and

Grant, Anthony (Harrow C)

Needham, Richard

Mr. Tony Marlow.

Griffiths, Eldon (Bury St Edmunds)

Question accordingly agreed to.
Bill ordered to be brought in by Mr. Allan Roberts, Mr. Eric S. Heffer, Mr. Robert Kilroy-Silk, Robert Parry, Mr. Jack Straw, Mr. James A. Dunn, Mr. Frank Field and Mr. Ernie Ross.

LOCAL GOVERNMENT (METROPOLITAN DISTRICT OF BOOTLE) (AMENDMENT)
  LOCAL GOVERNMENT (METROPOLITAN DISTRICT OF BOOTLE) (AMENDMENT)
  Mr. Allan Roberts accordingly presented a Bill to amend the Local Government Act 1972 so as to transfer the former county borough of Southport from the metropolitan district of Sefton in Merseyside to the county of Lancashire and re-name the remainder of the metropolitan district 'Bootle': And the same was read the First time; and ordered to be read a Second time upon Friday 4 July and to be printed. [Bill 191.]
ORDERS OF THE DAY

  SOCIAL SECURITY (No. 2) BILL
  Order for Second Reading read.
  Mr. Speaker: I propose to apply the 10-minute rule between 7 o'clock and 9 o'clock. If it proves unnecessary, we can always be flexible. However, we shall start with the rule.
  4.25 pm
  The Secretary of State for Social Services (Mr. Patrick Jenkin): I beg to move, That the Bill be now read a Second time.
  This is a short Bill, but I do not doubt that it will be a controversial one. Its primary purpose is to achieve public expenditure savings amounting to £270 million in the financial year 1981–82, rising to £480 million in 1982–83.
  A second purpose is to implement the pledge which this party gave at the last election to deal with the payment of supplementary benefit to the families of strikers. As this issue stands a little separate from the other clauses of the Bill, I will deal with it separately towards the end of my speech.
  When I spoke in the Budget debate before Easter I explained to the House why it is inescapable that the social security budget must make some contribution to the savings in public expenditure required by the Chancellor. Since 1971 the social security programme has grown three times as fast as national income. Ten years ago it accounted for 17 per cent. of public expenditure. Now it is about 27 per cent. In the difficult years that lie ahead when the gross domestic product is projected to grow at only 1 per cent. per annum, it must be clear to the vast majority of people that social security spending could not possibly continue to grow unchecked. Yet, at the same time, this Government, like their predecessors, have a duty to protect those least able to protect themselves. In particular, we will ensure that retirement pensions are protected against rising prices, that needy families with children are given extra help through family income supplement and the child benefit addition for lone parents, and that the safety net below which none shall fall is maintained intact and fully price protected.
  1034
  Given these commitments and given the fact, which no one on either side of the House will wish to dispute, that the overwhelming majority of social security benefits are paid to people properly entitled to them, the House will see that it has not been easy to identify scope for savings.
  The savings for which this Bill makes provision, therefore, fall under three main heads. First, there are the benefits that ought to be taxed but are not. We propose that pending the introduction of proper taxation it would be right to go for an interim scheme providing for a limited uprating of the benefits next November.
  Secondly, if the highest obligation is to maintain the value of benefits for those most in need, it follows that where benefits are paid to people higher up the income scale these have a lesser priority. Under this head, therefore, we propose, first, the reduction and then the abolition of earnings related supplement, the temporary freezing of the earnings limit for pensioners, and abating the amount of unemployment benefit for those who have retired on occupational pensions.
  Mr. George Cunningham: The right hon. Gentleman should be ashamed of himself.
  Mr. Jenkin: Thirdly, where existing rules have been found over time to lead to abuse and to people becoming eligible for benefits in circumstances that the House never intended, we are taking steps to tighten up the rules. Into this category fall the provisions of clause 3, amending the linking rules as they apply to unemployment, sickness and other short-term benefits.
  Although, of course, objections can be and no doubt will be put forcibly to each of these changes, it really is a travesty to suggest, as the right hon. Member for Salford, West (Mr. Orme) suggested in the Budget debate two weeks ago, that these changes seriously threaten the concept of Beveridge's Welfare State. That is an absurd charge and it reflects a total lack of proportion on the part of those who make it. The social security budget, even after the savings to be achieved by this Bill, will still be growing at an annual rate, in real terms, of 2 per cent. I do not think that Lord Beveridge would complain about that.
  Mr. Andrew F. Bennett rose—
  Mr. Jenkin: I have only just started. Perhaps the House will allow me to continue.
  It is also, if I may say this to the right hon. Member for Salford, West, a very short-sighted argument. We all of us, in whatever part of the House we sit, share a genuine and common desire, in Disraeli's famous phrase:
  "to elevate the condition of the people".
  We all want to see better provision for the elderly, for the disabled, and for the sick. We all want to see a return to full employment, with decently paid productive jobs for those who seek them.
  It is a real achievement—for which both parties can take credit—that the harsh, grinding poverty that disfigured the 1920s and 1930s has gone, but that achievement must not let us forget those in our society who are still in real need. On the other hand, I must make it clear that I certainly do not accept Professor Peter Townsend's theory of relative poverty. He defines poverty in such a way that by his test the poor will always be with us, however well off they become. That, too, is absurd. We really do not need to argue that absurd proposition in order to recognise the continuing need for effective social services.
  The reason why, a moment ago, I criticised the right hon. Gentleman's attack was that he should know better than almost anyone else in the House, as he held a job in Government in this Department. It is just not possible to spend more on the social services without first earning the money to pay for them.
  By far the biggest influence on reducing poverty—I said this over and over again in opposition—is an economy that generates more resources, creates more jobs, yields more taxation at lower rates, and does all these things not just for a few months but for year after year, continuously. Our Common Market partners can afford better health services, higher pensions, and better care for the disabled, not because they have tenderer social consciences but because their economies have produced the resources to pay for them.
  Mr. David Ennals: Is the right hon. Gentleman arguing that in fact the measures that he is proposing in this Bill, particularly those affecting the benefits of the unemployed, invalidity benefits, and so on, will help to strengthen the economy of this country? Is it not true that he is trying to pay for the additional benefits for the rich?
  Mr. Jenkin: The right hon. Gentleman must really begin to understand that there are two main thrusts to the Government's policy here. One is to restore balance to the economy by reducing the public sector borrowing requirement by reducing public expenditure, and the second is to try to get the economy moving through the restoration of incentives. Of course it makes a difficult presentational case when we are having to do both these things at the same time, but they are two sides of the same coin, and it is because the Labour Party has never understood that every time they have been in government they have failed.
  Unless we can restore our economic fortunes we shall not be able to match the achievements of our Common Market partners. Right at the heart of the battle to restore prosperity is the need to reduce the gap between what the Government spend and the revenue that comes in. Unless we get that right, nothing else will come right. Of course, a great deal else has to be done as well, but reducing the public sector borrowing requirement is a condition of the achievement of everything else. There is no secure future for the social services, as I said in the Budget debate, if we go on paying more in interest on borrowing than we pay in retirement pensions.
  Mr. George Cunningham: If the right hon. Gentleman is right that the Government have earnestly tried to strike a balance between different people's interests, why is it necessary to do the things in this Bill, on which, as the right hon. Gentleman well knows, he personally is standing on his head, when at the same time there have been massive tax cuts and there has been, for example, something like a 25 per cent. rise in the threshold for parental contributions to student grants? Why is it possible to have a 25 per cent. rise on that and only 15 per cent., or much under that, on the things dealt with in this Bill?
  Mr. Jenkin: These are immensely difficult judgments for Governments to make when weighing the merits of the different elements of the expenditure programme and of taxation. As I explained a moment ago to the right hon. Member for Norwich, North (Mr. Ennals), it really is not inconsistent for a Government seeking to bring the economy into balance by bringing down the public sector borrowing requirement at the same time to seek to re-establish incentives so that we can get the growth in production on which everything else depends. That is absolutely crucial, and it is because people in the Labour Party like the hon. Member for Fife, Central (Mr. Hamilton), who consistently parade their prejudice against tax cuts, have brought such influence to bear on their Front Bench that the Labour Party have never been able to understand this argument and have never been able to get the economy moving.
  The Government put forward this Bill not as an exercise in masochism or because we are hell-bent to destroy the Welfare State. That is a travesty. We do it because we have a consistent, coherent economic strategy to bring inflation under control and to restore the balance in our economy. It is this that will make it possible for us once again to reach the faster economic growth on which alone depends production of the resources to finance the Welfare State. Therefore, the Bill is an integral part of the Budget strategy and it is on that basis that I put it forward.
  Mr. Peter Bottomley: Would my right hon. Friend confirm that the social security expenditure constraints in this Bill do not cover every field and that whether we take the Donnison argument, the relative poverty argument, or the absolute poverty argument, we are still left with the fact that in November child benefits will be over 9 per cent. lower than they were in April 1979, and that they would need to be increased by 30 per cent. to give the same level of child support as in 1955?
  Mr. Jenkin: My hon. Friend knows that I understand and have a lot of sympathy with the view that he has put over the months; he has been very consistent in the argument about child benefits. But, at the risk of boring the House, I must make two points about the increase in
  1038
  child benefit announced by my right hon. and learned Friend the Chancellor of the Exchequer. The first is that the annual rate of increase from April 1979 to November 1980, of 11 per cent., is exactly in line with the effective annual rate of increase in the personal allowances for taxation. The second point that I make is that if we look at the position as it will be in November 1980 and compare it with what family allowances and the child tax allowances were in the last full year, 1977, revalued in line with the Rooker/Wise formula, we see that there is no doubt that a great many families will be significantly better off than if they had stayed with the old system. [Interruption.] With respect, it is right. I quoted the figures in my Budget speech.
  Clause 1 provides for the limited up-rating of certain benefits. The payments affected are those that by common consent ought to be treated as part of taxable income—just like, for instance, retirement pensions, widows' pensions and other comaparable long-term benefits.
  Mr. Reginald Freeson: This question has been put in the House before and we did not get a clear answer then. Is it the intention of the Government, when we do come to a taxation system in this field—proper taxation, as the very learned Gentleman called it earlier on—that the 5 per cent. shortfall that we are now going to get should be restored?
  Mr. Jenkin: That will be an option that is open to any Government at the time, but no Government can possibly give a categorical assurance on that two years in advance. That matter has to be judged in the light of the economic circumstances, the public sector borrowing requirement, and all the other factors that determine these things.
  The case for taxing these benefits now hardly needs to be argued. It is now widely accepted. As I pointed out during the Budget debate, the previous Government and the right hon. Member for Salford, West committed themselves to this in principle. I also quoted the speech of the former Financial Secretary to the Treasury, the right hon. Member for Ashton-under-Lyne (Mr. Sheldon)—when he said
  "not only do I agree with the taxation of short-term benefits, but I think that everyone

  1039
  who has ever been concerned with these problems has agreed with it."—[Official Report, Standing Committee D, 23 June 1977; c. 1182.]
  As the right hon. Member for Salford, West made clear in his letter to me from which I quoted, the problem has always been the administrative complications and the numbers of staff needed to apply PAYE.
  Mr. Ralph Howell: Having campaigned for many years to have all benefits made taxable, I wonder whether my right hon. Friend will agree with me that there is a very great difference between making benefits taxable and actually taxing benefits. Surely it makes sense to raise the tax threshold well clear of all benefits so that tax is not actually taken from benefits.
  Mr. Jenkin: The point is—as my hon. Friend has been assiduous in pressing on his Front Bench for many years, for which I warmly commend him—that if somebody is out of work for part of the year and his earnings are subject to tax, whatever the tax threshold, and quite apart from the level of benefit, the benefit that is paid when he is out of work should be treated as part of his taxable income. I do not think that there is any argument about that.
  Mr. Stanley Orme: I understand that, but would the right hon. Gentleman not concede that this is not taxation, and that some of the people who are going to lose this 5 per cent. are the poorest and would not be paying tax in any case?
  Mr. Jenkin: The right hon. Gentleman will not be surprised to learn that I shall be dealing with that. It is a point that has been made perfectly clear in a number of communications to the Government since the Budget.
  Still dealing with taxation, the benefits affected by this taxation proposal will be sickness, injury, maternity allowance, unemployment and invalidity benefit. The yield from taxing these benefits will be about £450 million a year. Taxation is essential as one of the steps to deal with the "why work" syndrome. It is the non-taxability particularly of sickness and unemployment benefit, coupled with low tax thresholds, which has been the principal reason for people finding theselves better off if they are out of work for part of the year.
  1040
  Invalidity benefit is a long-term benefit, but it too has not been taxed. This was explained in the last Parliament by the right hon. Member for Ashton-Under-Lyne, the then Financial Secretary to the Treasury. My hon. Friend the Member for Eastleigh (Mr. Price) had asked the Chancellor of the Exchequer
  "why, among contributory benefits, sickness and invalidity benefits are tax-free but the retirement pension is not".
  The right hon. Member for Ashton-Under-Lyne replied:
  "Sickness benefit which should in principle be taxable, is exempted because of the practical difficulties of collecting tax on short-term benefits. Invalidity benefit, which is payable when entitlement to sickness benefit runs out, is exempted because it would give rise to anomolies if it were treated differently from sickness benefit".—[Official Report, 26 May 1978; Vol. 950, c. 742.]
  If sickness benefit were taxed, the logic is that invalidity benefit should be taxed as well. Hon. and right hon. Gentlemen on the Opposition Benches cannot have it both ways. Not taxing invalidity benefit also creates anomalies. When people reach retirement age and exchange the untaxed invalidity benefit for the taxed retirement pension, many find themselves worse off. This has resulted in people opting to continue on invalidity benefit after reaching retirement age simply to avoid tax. That is something that the House surely never envisaged.
  Hitherto I have been talking about proper taxation. But taxation in 1982 is two years away, and the Government have decided that we must start, next November, with an interim scheme in lieu of taxation. The proposal is that these untaxed benefits should be uprated by five percentage points less than the uprating applicable to the taxed long-term benefits. The limited uprating as well as covering the main benefits I have mentioned will cover also the increases for adult dependants paid with these benefits, but not the increases paid for children.
  The effect will be to reduce the uprating by 90p for a single person and £1·50 for a married couple; in the case of invalidity benefit, which of course is at a higher rate, the reduction will be up to £1·40 for a single person with the maximum invalidity allowance, and up to £2·10 for a married couple. The yield from this change will be about £130 million net in a full year.

  1041
  The clause applies directly to the up-rating next November; but power is being taken to repeat the 5 per cent. provision by affirmative resolution in either or both of the 1981 and 1982 upratings. Of course—I make this absolutely clear—no decision on the future years has been made, and any exercise of the power would depend upon the economic circumstances at the time.
  I come to the point which the hon. Member for Birkenhead (Mr. Field) has been shouting about from a sedentary position. I stress that this is an interim measure, and there are two important points to be borne in mind. First, the yield from the interim measure at about £130 million or £140 million in a full year is less than one-third of the yield from proper taxation which is about £450 million so that it will have a markedly less overall effect on beneficiaries than the taxation to which both sides of the House are committed in principle. Second, for most people the effect of the 1982 tax proposals will be to abolish or at least greatly reduce PAYE refunds which they will receive when unemployed. The Bill will have no effect on eligibility for tax refunds.
  Mr. Andrew F. Bennett: If the right hon. Gentleman is concerned about the safety net, he should be concerned about individual problems rather than the overall picture. He is saying that some people will suffer far more under these proposals than they would if he were carrying out genuine taxation.
  Mr. Jenkin: No doubt if the hon. Gentleman catches Mr. Speaker's eye he will be able to make that point. He answered his own question by referring to the safety net. The safety net—the short-term supplementary benefit rate—is being fully maintained and fully price protected. That is the guarantee, that no one shall be allowed to fall below the level of the safety net.
  Mr. George Cunningham: The right hon. Gentleman has made quite a point of saying that this is an interim device that the Government are putting forward. He has said that the net product is only about £150 million. Have the Government considered the alternative interim arrangement which I put forward three years ago, which would have produced
  1042
  as much revenue as would taxation of the benefits but with an expenditure of about £50 million on staff? That would have meant a net benefit of between £350 million and £400 million. It would not have meant reducing the benefit at the time it was needed but would have got rid of the tax refund, which is what we all object to.
  Mr. Jenkin: The hon. Gentleman put forward a scheme which I remember describing at the time as very ingenious and attractive. He has indicated what seems to me to be the major difficulty, which is that it is very staff-intensive.
  What we hope to achieve in 1982 as a result of the work done by my right hon. and noble Friend Lord Cockfield and others is effectively to tax under the PAYE system these short-term benefits, with a tiny fraction of the additional staff which previous Governments had thought necessary, by making use of computers and other machinery of that sort. It is worth waiting until 1982 to do it properly, but I maintain that in the economic circumstances of the time we must have an interim scheme in the meantime.
  I come to clause 2, which I can deal with more briefly. It freezes the earnings limit for retirement pensioners at £52.
  Mr. Orme: Oh dear.
  Mr. Jenkin: The right hon. Gentleman says "Oh dear", but he and his hon. Friends resisted in debate after debate increases in the earnings limit. It is now £52, and it remains the Government's firm commitment to get rid of the earnings rule as soon as resources allow. At a time when other people are having to accept cuts in the social security budget it does not seem right to proceed with the automatic increase of the earnings limit, which, by definition, would be of value to pensioners with significant earnings in addition to their pensions. I gave the commitment to phase out the earnings rule during the period of this Parliament but this would not be justified in view of the present difficulties we face and the size of the public sector borrowing requirement which it was discovered after the election was infinitely greater than the right hon. Member for Leeds, East (Mr. Healey) had ever let on before the election.

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  We are continuing to examine the cost of abolishing the rule. The assumptions on which the previous estimates of cost were based have been reworked in the light of later information, and we are now satisfied that the cost of eventually abolishing the earnings rule would be significantly lower than it would have been on the basis of the assumptions made by our predecessors. Nevertheless, there still will be a cost, as there would be a cost of raising the earnings limit, and at the present time we do not believe this would be justified.
  Clause 3, which is intended to come into effect in September, amends the definition of a period of interruption of employment in section 17 of the Social Security Act 1975 and makes two changes. The first change is that fewer than four consecutive days of incapacity for work will not constitute a period of interruption of employment for the purposes of the Act. The second change is that any two periods of interruption of employment, whether they are periods of unemployment or incapacity, will not link to form one period of interruption of employment if they are separated by a period of more than six weeks.
  The effect of the first change will be to cut out payment for very short spells of incapacity. Most people do not qualify at present because of the normal three waiting days rule. But if a period of sickness or unemployment lasting three days, or less, links with another period of interruption, then benefit is paid for the full period off work. The change we propose is that the periods of three days or less should not link and therefore not qualify for benefit which should become payable only if the period lasts four days or more.
  The truth is that the vast majority of people in this country are perfectly capable of sustaining short periods off work out of their own resources. At present, there are over half a million claims a year for these short spells—half a million claims to pay out £2 million of benefit. There are clearly significant administrative savings here. Moreover, this change goes a long way to meet the medical profession's long-standing objections to signing sick certificates covering just a few days incapacity.
  1044
  The switch from 13 weeks to six weeks as the linking period, as well as saving some £20 million in a full year, will help to stop the anomaly of people becoming eligible for invalidity benefit as a result of a series of short periods off work which, because they can at present be linked, can eventually lead to eligibility for the higher invalidity benefit rate. It is clear that this was never intended by Parliament and the clause will deal with it.
  For the unemployed, on the other hand the clause will help those who suffer frequent spells of unemployment. Under the clause, such a person would need only a gap of six weeks and one day between spells of unemployment in order to start a new period and so begin a new 312 days of unemployment benefit. I should point out, however, that when someone has used up his 312 days the requalification period for unemployment benefit remains at 13 weeks, and the clause does not, of course, affect the 13 week link-up period for the supplementary benefit long-term scale rate.
  Clause 4 of the Bill provides for the reduction and eventual abolition of the earnings-related supplement which, at present, is added to unemployment benefit, sickness benefit, maternity allowance and the widows' allowance. This may seem a drastic step [HON. MEMBERS: "It is".] But the fact is that successive Governments, particularly in the last 10 years, have allowed the real value of ERS to decline. For instance, between 1972 and 1979, the real value of ERS paid with unemployment benefit has declined by 28 per cent. At the same time, because there has been a growth of increasingly generous occupational sick pay schemes, the case for ERS paid with sickness benefit is much less than it used to be. We estimate that over 80 per cent. of all full-time employees are covered by a sick pay scheme of some kind.
  Mr. Ennals rose—
  Mr. Jenkin: I must press on with my speech. I hope that the right hon. Gentleman will forgive me.
  For the unemployed, only about one-third of expenditure on ERS goes to them, and redundancy payments are now

  1045
  a great deal higher in many cases than they were when ERS was first introduced.
  The right hon. Member for Llanelli (Mr. Davies), in the Budget debate, demanded to know the effect of this measure on redundant steel workers in Port Talbot. We remember the fun that the right hon. Gentleman had with my right hon. and learned Friend the Chancellor. In fact, as exploratory talks between management and union teams were adjourned only last week, as reported in The Guardian today, it would be wrong of me to say anything which might affect those negotiations. On a more general basis, however, I can tell him that all British Steel Corporation employees receive a 50 per cent. supplement to the statutory redundancy pay, and the average statutory redundancy payment to workers in all industries in 1979 was £874.
  Moreover, the British Steel Corporation has, in particular cases, negotiated with the steel unions some very large amounts of severance pay over and above the statutory level. At East Moors, payments averaged £3,500 per man; at Glengarnock in Scotland, payments averaged £2,100 per man; and at Bilston, payments averaging £3,900 per man and at Shotton, payments averaging £4,900 per man were negotiated. I have no doubt that those at Port Talbot will be looking at these figures.
  In the Budget debate, the right hon. Member for Salford, West argued that ending ERS was a breach of contract. With great respect, that is just not so. As the right hon. Gentleman knows, the national insurance system is funded on a pay-as-you-go basis. Contributions for the current year, 1980–81, were set by the House last December to cover the benefits payable in 1980–81. That is what is meant by pay-as-you-go. When the contributions come to be set for the year in which ERS is abolished, that will be taken into account in fixing the level of contributions for that year.
  Mr. Orme: Sleight of hand.
  Mr. Jenkin: I have to tell the right hon. Gentleman that if the system as seemed to be implied by his criticism was a proper insurance system, either the contributions would have had to be much higher or the benefits very much lower.
  1046
  On a pay-as-you-go system, it cannot be said that there is any breach of contract.
  Mr. Ennals rose—
  Mr. Jenkin:I must press on.
  Because the safety net is to be fully price protected, we shall naturally expect the combined effect of this clause on ERS and of clause 1 to increase entitlement to supplementary benefit. The reduction of ERS in January 1981 and the effect of clause 1 will be to add some 30,000 supplementary benefit claimants and the abolition of ERS will add a further 80,000, making a total of an additional 110,000 claimants for supplementary benefit. This represents an increase of less than 4 per cent. in the numbers claiming supplementary benefit at present.
  The savings from the reduction of ERS from January 1981 will be about £65 million in the calendar year. Abolition will save some £360 million, offset by supplementary payments of £5 million and £75 million respectively at current benefit rates.
  Clause 5 of the Bill deals with the entitlement of occupational pensioners to unemployment benefit. It provides for the abatement from April 1981 of payments paid to pensioners aged 60 or over who are getting an occupational pension of over £35 a week. For unemployment benefit to be extinguished, a single man on flat rate benefit will have to have an occupational pension next year of £55·70 a week and for a married man this would be £66·40 a week.
  This is the fourth occasion in which Governments have brought forward a proposal to make this change, two by each party. On each previous occasion, the House has rejected it for what seemed at the time to be good and valid reasons.
  Mr. George Cunningham: The right hon. Gentleman voted against then.
  Mr. Jenkin: Indeed; I said so when I made my speech and made my statement the day after the Budget. I have spoken and voted against this proposal. I believe now, in the new circumstances in which we find ourselves, that it is right that the House should be asked to look at this again. Unemployment benefit is intended for unexpected and unforeseeable contingencies. It really cannot be said that retirement at the end of a pensionable

  1047
  career—this clause applies to people over 60 years of age—constitutes "unemployment" in the accepted sense of the word.
  When the right hon. Members for Norwich, North and for Salford, West sought to introduce this in 1977, I argued that further efforts should be made to make the availability-for-work rule more effective. Naturally, before deciding to come forward with clause 5 of the Bill I looked at this very closely indeed. The fact is that the only effective way of testing availability for work is to offer a man a job. As the House will recognise, job opportunities for occupational pensioners have always been scarce, partly because of a shortage of suitable vacancies and partly because many pensioners move to retirement areas where jobs are scarcer anyway.
  When the National Insurance Advisory Committee considered this question back in 1967, it argued that the only way to make the availability condition effective would be to require pensioners to take employment anywhere in the country but this, of course, would not be acceptable or workable. It concluded that there was no satisfactory way of enforcing the availability rule for these pensioners. That remains the position today.
  I can tell the House that a recent survey found that over half of unemployed men with occupational pensions of a size to be affected by this change admitted that they were not actually looking for work. Yet the cost of paying unemployment benefit for people with significant pensions is no less than £25 million a year. In today's conditions, I do not regard that as a sensible use of money. A similar view is taken in West Germany and in France where unemployment benefit cannot be paid to a person in receipt of an occupational pension because such a person is deemed to be outside the labour market. It is sometimes said that pensioners—and I know that a number of my hon. Friends are worried about this—claim unemployment benefit only in order to secure eligibility for the retirement pension payable at 65. However, contribution credits do not depend upon drawing benefit. People can and do claim credits for unemployment, although they receive no benefit. The change in the Bill will leave entitlement to unemployment credits unimpaired.
  Mr. J. W. Rooker: Provided people sign on.
  Mr. Jenkin: That is right; but they do not receive benefit. A pensioner who already has a substantial occupational pension should not, in addition, be entitled to unemployment benefit.
  I hope that this time round the House will recognise that the change we are proposing is indeed fair. I shall quote the right hon. Member for Norwich, North; I hope that it will not embarrass him. He said.
  "The people we are talking about have been in employment and have retired. The vast proportion knew that they would retire at that age, and they have an occupational pension which was designed for retirement at that age."—[Official Report, 2 December 1976; Vol. 921, col. 1189.]
  I agree with that. It really is a misuse of language to describe such people as "unemployed".
  Mr. Ennals: The speech that I made then was absolutely right. I shall support the Secretary of State in this particular part of the Bill. However, he was totally opposed to it. He and his colleagues ensured that the measure which he now says is reasonable was not passed. How far can one take hypocrisy?
  Mr. Jenkin: As the right hon. Gentleman made clear in the debates, he had never sat on the Opposition Benches. He had never been faced with opposing a proposal which he subsequently introduced. That is what he is doing now. He intends to oppose a proposal which he made when in government.
  Clauses 1 to 5 all have the effect of reducing the prospective growth of the social security programme. As one looks around the world, one can see that other countries have faced the difficult decision to reduce benefits as part of their retrenchment measures. In particular, Holland, West Germany, Canada and Australia have introduced cuts in benefit increases as part of their public expenditure savings. Yet, even after these reductions, our social security programme will still be growing at 2 per cent. a year in real terms.
  I come to clause 6, which deals with the supplementary benefit for strikers' families. Although the clause looks complicated, its intention is simple and straightforward. It is to reduce by £12

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  a striker's existing entitlement to supplementary benefit for his family.
  Contrary to much of the comment in the House and in the press, this is not done by a "deeming" provision but by a straightforward reduction in the amount to be paid. It applies to trade unionists and non-unionists alike, and it applies to anyone who is out of work as a result of his involvement in a trade dispute at his place of employment. The reduction will be matched by a corresponding disregard of strike pay received by the man up to the £12 level. That is logical. The clause also removes the disregard of the first £4 of a tax refund, but the disregard of wives' earnings at £4 and of the striker's own earnings from any part-time work—£2 at present, £4 from next November—remain.
  I have always understood that, when the national assistance scheme was established in 1948, there was an understanding between the Government of the day and the TUC that unions would not expect to have resort to national assistance in the event of trade disputes. Certain it is that for many years after 1948 the amount of national assistance paid to the families of strikers was utterly insignificant. However, after the change in the scheme in 1966 which replaced discretion with a legal entitlement to supplementary benefit, the position changed pretty dramatically. Although there was nothing in that Act which in practice affected the position of strikers' families, there is no doubt that from then on it became regarded as acceptable and proper for those on strike to have recourse to supplementary benefits if they were otherwise eligible.
  Of course, in the vast majority of strikes, the issue never arises because the strike lasts less than two weeks and the final wages are taken to cover that period. I recognise that even in strikes that go on longer than that, supplementary benefit is not the principal means of support. Figures have been published both by the Engineering Employers' Federation and by the British Institute of Management showing that other means of support such as wives' earnings, savings, postponing the payment of rent and rates and other debts, these constitute for most strikers the way that they get by during a strike.
  1050
  Yet in a number of strikes which have done great damage to the economy the amounts paid out by way of supplementary benefit have been substantial. In the 1971 Post Office strike, the unions paid no strike pay but over £3 million was paid out in supplementary benefit. In the building strike in 1972 over £1 million was paid out by the taxpayer, yet the Union of Construction, Allied Trades and Technicians had assets of over £2 million and the Transport and General Workers Union over £20 million.
  In the miners' strike in 1972, £5½ million was paid out in supplementary benefit and the union paid no strike pay at all. Nor did the NUM pay strike pay in 1974 when over £4 million was paid by the taxpayer. In the firemen's strike in 1977, £1¼ million was paid out in supplementary benefit. The union paid no strike pay despite having assets of over £1 million. In the Ford strike in 1978 the unions paid strike pay but nevertheless over £1¼ million was paid out in supplementary benefit. Yet the combined assets of the unions involved were worth over £85 million.
  In the road haulage dispute in 1979, the Transport and General Workers Union paid only £6 a week strike pay despite having assets of £37 million. Nevertheless, £500,000 was paid out as supplementary benefit. As the House knows in the recent steel strike, the two main unions involved—ISTC and the blastfurnacemen—paid no strike pay at all despite having assets of over £11 million. In that case, the taxpayers had to find over £9 million for strikers' families.
  Given these figures—and I have only quoted half a dozen of the major instances—it is hardly surprising that there has been a rising tide of criticism of successive Governments for allowing this state of affairs to continue. Many of the strikes have been directed not so much at private employers but at the public itself. In these circumstances, it really is unacceptable that the public should have to find such substantial sums to finance the strikes. One result is that unions which should be regarded as the main source of help for strikers and their families are able to use their funds for other purposes—to finance flying pickets and demonstrations. The time has come

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  to put this right, and clause 6 achieves that.
  Nowhere in the world does the striker and his family qualify for social assistance more readily than in this country. Assistance in most countries is paid only in the most exceptional circumstances or where there is particular hardship. In many countries, such payment would normally be in the form of a loan. In this country supplementary benefit paid after return to work is in the form of a loan, but the House will know that securing the repayment of these loans is sometimes a cause of difficulty and acrimony.
  No, the right source of support for strikers and their families is their unions. The Bill does not seek to impose a direct obligation on the unions, but the implications of the clause are clear. A man who decides to go on strike must be presumed to have made provision to cover most of his family's needs either by membership of a union or by having set aside sums for this purpose.
  The Opposition claim that the Bill treats strikers' families worse than those of murderers and rapists. If I may say so, that is a ridiculous argument. There is a vast difference between someone who is removed from his family by due process of law, often for months or years, and someone who voluntarily decides to cease work for a period that may be only a few weeks.
  Some will argue that we have not gone far enough. Why stop at £12? I understand that argument. Twelve pounds compares with an average benefit payment of £17·40 to strikers with dependants last year. In the steel strike the average payment was around £22 per week. It is estimated that if this clause had been law during the recent steel strike the amount paid out in supplementary benefit would have been about halved. The clause makes provision, in subsection (2), for an automatic increase of the sum of £12 in line with prices.
  The clause also deals with hardship.
  Mr. William Hamilton: Will the right hon. Gentleman give way?
  Mr. Jenkin: No.
  While clause 6(1)(c) precludes the making of urgent need payments to strikers and their families, power is being taken
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  to make regulations to define the circumstances in which special hardship payments may still be payable. Of course, events creating hardship right outside the strike such as fire, flood or similar disaster will still qualify for relief under the normal rules.
  Mr. Hamilton rose—
  Mr. Hugh Dykes: Bearing in mind the particular severity—even if justified—of these measures, can my right hon. Friend say what specific measures would be available to him, under the subsection, if a non-unionist was obliged against his will to go into a strike as a result of a union decision and had, consequently, to suffer the same hardship as trade union members?
  Mr. Hamilton rose—
  Mr. Jenkin: I understand the anxieties of my hon. Friend the Member for Harrow, East (Mr. Dykes), but it would be impossible for clerks at social security office counters to try to draw a distinction between a willing and an unwilling striker. That would impose an impossible burden upon the clerks. The only way—as has been the case for years in relation to entitlement to unemployment benefit—is to ask whether a man is out of work due to an industrial dispute in which he has an interest. If that is the position, the rules must apply. However, I can tell my hon. Friend that the powers in the Bill will enable the Government to make regulations to take account of the anxieties that he has expressed.
  Mr. Dykes: I am grateful to my right hon. Friend, and I regret interrupting him again—
  Mr. Hamilton: What is wrong with Opposition Members?
  Mr. Dykes: I resist the temptation to answer the hon. Member for Fife, Central (Mr. Hamilton) on behalf of my right hon. Friend, but will my right hon. Friend give some further reassurance to the House at this stage, though I appreciate that there are stages of the Bill yet to be discussed? In cases where non-unionists would suffer unjustly as a result of decisions that were beyond their competence, will my right hon. Friend say that their families will not suffer?
  Mr. Jenkin: I cannot give my hon. Friend the precise assurance that he seeks. It would not be possible to exempt from the £12 reduction non-union strikers placed in the circumstances that he has described. The clause applies across the board to those who absent themselves from work as a result of an industrial dispute. However, the Bill provides power for the Government to make regulations which enable the Government to deal with cases of special hardship. As I said at the outset—
  Mr. William Hamilton: What about the lock-out?
  Mr. Jenkin: A lock-out is an industrial dispute, and there have been far fewer lock-outs than there have been strikes. There is no way in which anybody can determine the rights and wrongs in a particular industrial dispute so as to draw a distinction as to where the merits lie.
  The Government were elected, among other things, to restore a fairer bargaining balance between employers—public and private—and trade unions. Clause 6 represents one of the steps taken to that end. The effect is to fix responsibility for the support of strikers' families where it rightly belongs, namely, upon the unions which call the strikes in the first instance. That is what the country has demanded, and that is what we are now doing.
  My right hon. and learned Friend's Budget has been widely commended as realistic and fair. The Budget is realistic in that it spells out in a way never done before the medium term financial strategy, and does so on the basis of realistic assumptions about economic growth. The projections for the money supply and the PSBR are crucial to this strategy and they in turn depend on our reducing public spending as spelt out in the public expenditure White Paper.
  This Bill is an essential instrument to help cut public spending. As such it is an integral part of the Budget strategy approved by Parliament before Easter, and I commend it to the House.
  5.14 pm
  Mr. Stanley Orme: The House is faced with the Social Security (No. 2) Bill before the first Social Security Bill has gone through the
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  House of Lords and returned to this Chamber. As the Secretary of State knows, this Bill amends certain clauses that have been passed by the House on behalf of the Government in the original Bill. We shall deal with that point during our discussions.
  This is an extraordinary Bill. In recent times no Government have introduced a Bill that comes anywhere near the diabolical proposals in this legislation. The Bill takes away people's rights. It reduces and abolishes benefit, and it breaches the national insurance principle. At the very minimum, the Bill will put at least 110,000 people on supplementary benefit and a further 1,000 civil servants will be required to administer its provisions.
  The long title of the Bill emphasises my point. In my time in the House I have never before seen a long title which says bluntly that the purpose of the measure is to
  "Amend the law relating to social security for the purpose of reducing or abolishing certain benefits and of relaxing or abolishing certain duties to increase sums."
  The Bill takes away benefits and from beginning to end wipes out proposals accepted in the past by both parties concerning social security.
  The Bill spells out the price that will have to be paid by a carefully selected group of socially disadvantaged people for the Tory Budget. To describe the Bill as representing a general political philosophy is to accord it an unwarranted dignity. It is certain that St. Francis of Assisi has been left by the roadside. The Bill will create social disillusion and discord that will set the poor against the poor and the employed against the unemployed.
  The Financial Secretary to the Treasury, in the Budget debate, spoke of the economic imperatives that dictated the need for this Bill. He might have addressed himself to the economic imperatives of the tax reliefs given by the Government to the better-off members of our society. There is no economic crisis at the moment, and there is no pressure on the Government to take the action that they have taken other than the fact that they believe in the policy of redistributing wealth in our society. The price to be paid is not only the rejection of principles

  1055
  accepted by previous Conservative Governments, but, more importantly, the abandonment of the contributory principles of the Welfare State.
  Clauses 1 and 4 are similar, since they both express the same contempt for that contributory principle. Those clauses select and attack the same victims for discrimination. They attack the unemployed, the sick, the disabled and those receiving maternity allowance. Both clauses reflect the two principal contributions made by this Government to contemporary political thinking. The first contribution is a fear of public expenditure, and the second is an unsubstantiated and unproved fear that people are better off out of work than in work. The "why work?" syndrome has taken over.
  Under section 125 of the Social Security Act 1975, sickness and unemployment benefit and maternity allowance should rise each year in line with prices, and invalidity benefit should rise in line with prices or earnings, whichever is the greater. Clause 1 of the first Social Security Bill has already broken that principle since it brings invalidity benefit into line with prices only.
  However, before the ink is dry on that Bill, that provision is to be changed. If unemployment and sickness benefit and maternity allowance were to continue to be linked with prices they would go up to £21·50 for a single person and £34·89 for a married couple. As it is, those benefits will increase to only £20·65 and £33·40 respectively, that is, by 11·5 per cent.
  The invalidity benefit, which has previously always been paid at the same rate as the retirement pension, would have gone up to £27·15 for a single person or £43·45 for a married person. Instead, it will go up to only £26 for a single person or £41·60 for a married person. That may not seem a great difference, but it is for someone who has to live on that benefit alone. It is interesting to recall the number of times that we have heard the Secretary of State, when in opposition, lamenting about the poor from this Dispatch Box. Now we see him taking the action contained in the Bill.
  In future the 1981 abatement will be based on the already abated 1980 increase. My right hon. Friend referred to
  1056
  that point earlier. In 1982 the abatement will be based on the doubly abated 1981 increase. That will mean a compound reduction in the real value of the benefits if the powers in the Bill are used in full. Thus, the unemployed, the sick and the disabled can look forward to a declining real income in the inflationary years ahead. Perhaps the Minister will give his estimate of how the gap between long-term and short-term benefits will have widened by 1982.
  One of the most startling aspects is that the basis of the Welfare State, which was aligned with the Beveridge report, is to be drastically altered from 1980. The groups that I have mentioned, who will have paid their contributions in good faith and in the expectation of a minimum return from the State, will be eligible only for a rate of benefit less than the means-tested supplementary benefit. That betrays the mutual trust and sense of responsibility that exist between State and individual and which are a feature of our Welfare State.
  As Beveridge emphasised:
  "A permanent scale of benefit below subsistence, assuming supplementation on a means test as a normal feature, cannot be defended."
  The whole point of Beveridge was to replace the inadequate, arbitrary and offensive nature of means-tested benefits as they existed in the 1930s with a secure guarantee, based on the contributory principle, against want. That guarantee will, under the clause, no longer be honoured.
  Mr. Patrick Jenkin: If the right hon. Gentleman is to advance his argument on that line, will he take account of the fact that his Government published the report entitled "Social Assistance", at the heart of which, both in its setting up and its drawing up, was the proposition that supplementary benefit, which is a means-tested benefit, was not now just a residual safety net for a few but had become a principle source of livelihood for millions? It had a mass role, and it had to be adapted to suit that.
  Mr. Orme: The Secretary of State is seeking to paraphrase the report, but, as he knows, it was prepared by officials and was issued by Ministers without any commitment. However, the Secretary of State is deliberately increasing the number of people on supplementary benefit instead

  1057
  of taking them off it by raising the scales and standards.
  Why are the Government taking these measures? Is it to save money? The £140 million to be saved under this clause hardly compares to the loss through tax evasion each year, a figure that runs into billions. Is it to overcome the "why work?" syndrome? The Chancellor raised this issue in his Budget Statement. If we had fewer slogans from the Chancellor and the Secretary of State, and more statistics on the dimensions of this apparent problem, the right hon. Gentleman and his right hon. and learned Friend might be more convincing.
  The unemployed are to be made the scapegoats for many of the problems that face society. That action is taken by a Government who have deliberately increased unemployment since coming into office. So anxious are the Government to discriminate against this group of people that the Bill contradicts the Government's declared intention set out in the first Social Security Bill, which is now before the Lords. Schedule 2 to that Bill states that national insurance and supplementary benefit rates should be aligned. That was heralded as a welcome rationalisation because it brought supplementary allowance up to the higher rate of unemployment benefit. Now, for the first time, the rates of unemployment, sickness and injury benefits will be less than the rate for supplementary benefit. Do the Government intend to force people into low-paid jobs—where those jobs exist—with bad employers? We are entitled to an answer.
  As the Child Poverty Action Group says in its document "So who's better off on the dole?", a man might be better off if he had been trying to support a family on a gross income of £35 a week or less. I could give many more examples. We need facts from the Government on this issue. Perhaps the Minister will describe the dimensions of the problem in more detail when he replies to the debate.
  By the Government's White Paper, unemployment will be increased by at least 500,000 in the next two years. As Beveridge stated:
  "Unemployment both through increasing expenditure and reducing income to bear these costs, is the worst form of waste."
  1058
  We know the cost. In February 1980 about 500,000 unemployed were not entitled to unemployment benefit. Given de-indexation, another £12 million is expected to be charged to supplementary benefit to cover this latest generation of casualties. How will reducing benefits deal with the "why work?" syndrome? Will it generate more jobs in South Wales or Merseyside? Will it equip the unemployed with new skills? Will it encourage social mobility in the search for jobs? The only answer, which the Department admitted, is not
  "holding down the benefit rate but in raising the income of those in unemployment."
  Mr. Peter Bottomley: Will the right hon. Gentleman allow me to answer a few of the questions that he is asking?
  Mr. Orme: I want some answers from the Minister.
  Mr. Bottomley: Then I am grateful to the right hon. Gentleman for giving way, even if he did it through a misapprehension. When he speaks of intended unemployment, or the intention to put an extra 100,000 people on supplementary benefit, does he accept that the Government's main aim is to avoid the unintended increase in unemployment that has arisen in the last five years? He speaks about 500,000 people being out of work and not getting unemployment benefit because they have exhausted their entitlement to it. Those 500,000 were almost the total of people out of work when Labour came into office in 1974. Does he not accept that, whatever the merits of the issues in the Bill, the Government's general economic approach is designed to avoid the disaster that the unemployed suffered under his Government?
  Mr. Orme: The hon. Gentleman has been honourable on many of these issues, not least on child benefits. However, he should now stand on his own feet and not try to curry favour with his Front Bench.
  Given indexation, another £12 million is expected to be charged to supplementary benefit to cover the latest generation of casualties. We have to ask the Government whether their proposals will assist the areas that I have mentioned, whether they will get people into jobs and whether they will generate jobs. The greatest social evil in society is increasing

  1059
  unemployment, and any Government should be making the maximum effort to reduce it. The Government are not only sitting back and watching it. In some instances they are creating it while reducing unemployment benefit.
  That brings me to the taxing of short-term benefits. The Government are being completely dishonest on this issue. They are reducing benefits on the premise that this is a form of taxation against people, many of whom would be exempted if benefits were taxed. In other words, people living solely on benefits—some of the poorest in our community—will have to accept a reduction in those benefits. That is not just a question of taxing benefits but of reducing arbitrarily the entitlement of people who would not have to pay tax if such a tax regime applied at the moment.
  Mr. Patrick Jenkin: The right hon. Gentleman accused me of using the words "this is a form of taxation". I never said that. I have said that it is an interim scheme in lieu of taxation. Of course, it is not the same as proper taxation and, of course, the impact will fall differently on different people. But, as I pointed out, the yield from this clause will be just one-third of the yield from proper taxation, if that were applied now. There is no way in which we can distinguish between the taxable capacity of individuals without imposing proper taxation, and we cannot do that until 1982.
  Mr. Orme: Perhaps the right hon. Gentleman will recall his press stataement, which said "in lieu of taxation". He was equating it with taxation. Initially, when he made his statement in the House, he went to great lengths to explain that it was the same as taxation. It is not the same.
  I wish to put a number of questions to the Secretary of State, and I hope that he will reply to them. Since the flat rate of the present benefit does not bring them into tax, will the Government give an undertaking that these benefits will be restored to their full value when taxation is introduced? We are entitled to an answer to that question.
  People will be taxed eventually on a false premise—on a reduction that they have taken in their benefits—that if taxation had been started at the present time they would not have to pay the tax. That
  1060
  is important in the context of the fact that the estimated saving from 5 per cent. abatement is £133 million.
  What confidence can we place in the estimate that taxation will be introduced by 1982? The latest estimate was the mid-1980s. However, the Secretary of State has stated firmly that it will be 1982. If it does not apply by 1982, what are the contingency plans. Do the Government intend to continue to abate these short-term benefits in the interval?
  I deal next with those on invalidity pension. This measure comes as a double disaster to them. There are about 650,000 people on invalidity benefit. Most are under pension age. Indeed, many of them are much younger because this group includes the young chronic sick. Invalidity benefit has always generously recognised the long-term implications of chronic illness. It has been treated as a long-term benefit. That link has now been broken. The Government have failed to keep their most basic promise that long-term benefits should maintain pace with prices. By that decision the Government have outraged the lobbies for the disabled. They have aimed a cruel and unexpected blow at those who are most vulnerable and who form one of the most conspicuous groups in poverty within our society. Perhaps we shall hear from some Conservative Members on this issue. Perhaps they will stand up and be counted.
  One disablement group, the Royal Association for Disability and Rehabilitation, raised the point that on Second Reading of the first Social Security Bill the Secretary of State referred to rising prices and the link with benefits. In a letter to me it says—
  "At no time during the discussion of that Bill was there anything other than explicit commitment to maintain the link of invalidity pension with retirement pension."
  In referring to the Second Reading speech by the Secretary of State, RADAR says:
  "Later in his speech he said 'perhaps the most important single change is the proposal to align supplementary benefit scale rates with their insurance counterparts'."
  The Secretary of State's right hon. Friend, who sat in Committee for about 104 hours, never gave any indication that the Government were making a basic reversal of policy. These actions are bringing the charge of dishonesty

  1061
  upon the Secretary of State and upon the Government. The right hon. Gentleman has been less than frank with the House. His right hon. and hon. Friend, if they did not know, should have known. If they did know, they should have informed the Committee about the Government's thinking in this regard.
  The Disability Alliance says:
  "The Government has launched a deplorable assault on the welfare of sick and disabled people. The future living standards of all those who rely on social security benefits are to be cut. But one group has been singled out for a double blow: the 600,000 long-term sick and disabled people who receive Invalidity Benefit."
  Day after day I receive numerous letters from the disabled about invalidity benefits. They are outraged by the proposal. We shall go into detail on this matter in Standing Committee, and I shall read some of the letters so that they may be put on the record.
  Another act of robbery is the proposed reduction from January 1981, and abolition from January 1982, of the earnings-related supplement to unemployment benefit, sickness benefit, maternity grant and widow's allowance. Most people think that this is linked solely to unemployment benefit, but it is linked to the other benefits also. ERS continues to be an important contribution to the family budget in time of great financial and mental anxiety. The impact of sickness and unemployment on a family is shattering. Redundancy pay is available only to those who have worked for two years and more. The average redundancy pay is £957. That may sound generous, until it is realised that for a man out of work for a year or more redundancy pay is hardly a realistic income.
  The maximum ERS pay for six months is £459. The average weekly payment in 1980 is estimated at £8·80. That is not a large sum, but it is crucial to the family budget in times of unemployment and sickness. The major point about this benefit is that since 1966 working people have contributed to it, with the expectation that when they need it they will receive it. The Financial Secretary gave no indication that contributions would be reduced. I reiterate that when benefits are reduced from January 1981 people will have contributed to that benefit during the previous year. To reduce benefit, and ultimately to abolish
  1062
  it, is to rob contributors of their expected benefits. By reducing ERS the Bill contemplates a further 110,000 people on supplementary benefit, at a cost of £75 million, by 1982–83. What a casual admission it is that the ranks of the means tested are to be suddenly swollen by those who, to date, have been treated as legitimate contributors.
  On maternity grant and widow's allowance, it is especially ironic, when the Government will make the maternity grant non-contributory in 1982, and will provide paid leave for women to attend maternity clinics, that the Bill will take money away from them. For many women the loss of ERS will mean a loss of almost one-third of their income. It will affect about 70 per cent. of all women. It is another blow at the family. It will make Britain one of the worst supporters of women's rights in Western Europe. It will undermine the Government's commitment to improve our poor record on infant mortality.
  I now come to clause 2. I find it extraordinary that the Government should prevent a compulsory uprating of the amount that men under the age of 70, and women under the age of 65, who are entitled to a retirement pension may earn without their pensions being abated. It is an issue that we have debated on a number of occasions. Both parties are in favour of ending the earnings rule. In a move to bring that about under the previous Labour Administration—with a vote in the House in which the Secretary of State took part—we agreed to adjust the amount each year. If we assume that the limit of the earnings rule should increase at the same rate as prices, namely, 16½ per cent., the limit should have been increased to £60·58. However, the Bill abolishes the duty to increase the earnings rule limit, so it will remain at £52 for the foreseeable future.
  Mr. Patrick Jenkin: Does not the right hon. Gentleman remember that the effect of an amendment that was passed some time ago was to increase the limit from £35 to £50? At that time the right hon. Gentleman, who was then the responsible Minister, argued that it should remain at £35. As the then Opposition spokesman, I acquiesced, and we agreed to cancel the increase to bring the limit to £50. All that we are doing is what the right hon. Gentleman did while in government.

  1063
  We are faced with the same imperatives and we have taken much the same step. The right hon. Gentleman cannot make too much of this.
  Mr. George Cunningham: What about indexation?
  Mr. Orme: As my hon. Friend has just said, the quid pro quo was indexation, which has made a considerable difference. It has helped especially those in receipt of lower occupational pensions. In a written answer the Minister for Social Security referred to the earnings rule as it applies to retired people. He said:
  "It will be increased again in November 1980 in line with the expected movement of earnings over the 12 months from November 1979. The Government are committed to phasing out the rule in the lifetime of this Parliament."—[Official Report, 22 January 1980; Vol. 977, c. 198.]
  What has happened between the Minister giving that reply and the introduction of the Bill, a matter of two months? What financial contingency has arisen that has made the change necessary?
  Clause 5 seeks to end the right of unemployment benefit for those who have attained the age of 60 years and who have until now been able to claim the benefit for 312 days. The right hon. Gentleman has stood on his head on this issue. I am not prepared to do that. To make such a change in improving economic circumstances is one thing, but to make it in a Bill that cuts and abolishes from start to finish is an entirely different matter. No doubt we could have fun with quotations on this issue, but there is one quotation that is worth putting on the record. I refer to a reply to my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker). The right hon. Gentleman said:
  "Though I have not been long in politics, I have been in politics long enough to know that 'never' is a very dangerous word indeed. However, I will say this: the proposal having been introduced three times and thrown out three times, I think that it would be a very unwise Minister who sought to introduce it again."—[Official Report, 2 December 1976; Vol. 921, c. 1207.]
  The right hon. Gentleman's hon. Friends can, of course, make him an unwise Minister if they so desire. We shall discuss the issue more fully in Committee.
  The Secretary of State for Employment was today present during the right hon. Gentleman's speech, including
  1064
  his remarks on clause 6. It seems that he has had to leave the Chamber. He gave no explanation. There should be a Minister from the Department of Employment on the Government Front Bench.
  Mr. Patrick Jenkin: Where is the Opposition employment spokesman?
  Mr. Orme: We are talking about the Government's proposals. It is the Government's Bill and they will have to answer for it.
  Clause 6 deals with a contentious and emotional issue. This clause above all others reveals the poverty of understanding that characterises Tory attitudes towards industrial relations and the traditional responsibilities of the Welfare State. The clause is different from all others because it is aimed at those who legitimately take industrial action as opposed to proposing real savings in public expenditure.
  Over the past 10 years about £2½ million per year has been paid to the families of strikers. Surely that is a pretty small price to pay for maintaining industrial sanity within our society. The Government play with fire when they move into this area. There are several implicit assumptions in the clause. First, it is assumed that the existence of supplementary benefit sustains and prolongs strike activity. Secondly, it is assumed that supplementary benefit is the critical factor in maintaining a striker's income. Both assumptions are false on the best evidence that can be provided by social research.
  It is necessary to remind the House of the principles that are at stake. The essential feature of national assistance and supplementary benefit is that the unemployed who are in need receive benefit for themselves and their dependants. That was established as long ago as 1898. It was first written into statute in 1948. It was then provided that the wives and dependants of strikers should not suffer from trade disputes on the ground that they have no direct say in the cause of their own impoverishment.
  The right hon. Gentleman's explanation concerning prisoners and strikers was outrageous. We fully support the principle that the families of prisoners should have sustenance. However, to argue that strikers are more criminal than those who

  1065
  have been convicted of criminal offences is completely wrong.
  We are talking about a wise and hon. ourable tradition. It has marked the difference between the old poor law, and its refusal to succour the undeserving poor, and the Welfare State. Society has not been prepared until now to allow the wives and children of strikers to suffer. The Government, with their false assumptions and their attitude towards trade unions, plan to revoke the principle that I have outlined.
  Much play is made of what other countries do nationally. I am aware of a recent reply of the Minister for Social Security. An authority is the document entitled "Financing Strikers" by John Gennard. I put one paragraph on the record as it deals with a central issue. It states:
  "It is widely believed that Britain is alone in providing payments to the families of strikers. It is true that except for two states in the USA and one industry in that country—the railways—the USA, all European Economic Community countries and Sweden exclude strikers from unemployment benefit. However, all these countries have developed systems of State support for the needy and have found it impracticable to exclude the families of strikers from benefits. In some cases such assistance is provided from central Government funds but in others it is available from a lower level of Government."
  Local government is an example. So this is not the only country in the world to give benefit to strikers' families. What are we to do in such circumstances? Are they to be allowed to suffer poverty? That is what the right hon. Gentleman is aiming at.
  Several Hon. Members rose—
  Mr. Orme: I should like to develop the argument before giving way. If hon. Members will listen, perhaps they will find—
  Mr. Alan Clark rose—
  Mr. Orme: I make no apologies for going into close detail.
  Several Hon. Members rose—
  Mr. Orme: The paragraph that I have just read was a complete paragraph and it deals with the particular issue. It explains what happens in Holland and in Belgium.
  Mr. Ralph Howell: Would the right hon. Gentleman, rather than talking generally, mind telling us which countries pay strikers from central funds?
  Mr. Orme: First, nobody pays strikers. Secondly, no other country has a nationally financed system that is the same as the British system. While we pay it through national financing, as Mr. Gennard says in his article, some countries pay—[Interruption.] Never mind which countries. The fact is that he quotes the countries—
  Mr. Howell rose—
  Mr. Orme: The point that I am making is that benefit is paid to strikers' families. What do the Government propose? [Interruption.] I do not know what hon. Gentlemen are getting excited about. The Government propose that £12 shall be deducted from the striker's entitlement to benefit on behalf of his dependants. This means that instead of being able to claim £17·50 for his wife and allowances for his children, a married man with no children will get only £5·05, a married man with a 5-year-old child will get £7·60—child benefit is automatically deducted—and a married man with children aged 12 and 18 will get £13·75.
  Since 1948, strikers in certain circumstances have been able to claim an urgent needs payment when it is essential for the family, but the relevant clause in the Bill appears to deny any urgent needs payment. There are strong rumours emanating from the Department that the regulatory powers are to be used to protect non-unionists only in regard to these payments. Is this true? We want an answer. The reply that the Minister gave to one of his hon. Friends implied that in regulations there may be some discrimination between unionists and non-unionists.
  Linked with this question is that of the lockout. The Secretary of State for Employment ought to be here. We should like to know from him the number of lockouts there have been in recent times. It is very interesting that the employers are setting up a strike fund that will be paid for by the profits earned by the people who work in their companies, yet at the same time the Secretary

  1067
  of State is discriminating against people who take legitimate action.
  Since 1971 the Tory Party has been moving towards this policy of reducing strikers' benefits. But it is worth looking at the Tory manifesto of 1974, which stated that while unions themselves should accept a share of responsibility for the welfare of families,
  "equally it is right that families of strikers should not suffer".
  Where is the compassionate Secretary of State now? Why has the Tory Party changed its policy? That policy has been dropped in favour of a frontal attack on the trade union movement. We know that the Secretary of State for Employment wants nothing to do with this Bill and is trying to keep it at arm's length. How dishonest can the Tories get? The right hon. Gentleman feels that it will affect his relationship with the TUC. That shows the sort of measure it is—that it will affect the Government's relationships with the TUC at a time when they should have been trying to improve them.
  But what are the facts? The Government appear to believe that the relief afforded by supplementary benefit is the key factor in the stimulation and length of strikes. What nonsense this is. One of the most scientific and thorough reviews of the role of the State in financing strikes has refuted that idea, on the evidence of studies that have been made of many industries and many strikes over the past 50 years. As John Gennard puts it:
  "The hypothesis that the existence of benefit increases the frequency of industrial disputes does not appear to be borne out by the evidence of … actual strike behaviour. The dimensions of strike activity appear to be affected by labour and product market factors, for example, the level and duration of unemployment. The underlying theory behind the arguments of those who want to change the system is questionable."
  That is an authoritative statement by someone who has examined the question in great detail. The point has also been underlined in the study undertaken by the Engineering Employers' Federation, which stated in its document:
  "Even where a union encourages its members to apply for State support, it is clear that SB provides only a minority—perhaps seldom more than one-quarter—of the average income of a striker's family".
  1068
  So much for strikers being subsidised by the State. In practice, their income is provided by a variety of sources—savings, loans, the wife's income, strike pay, and income tax rebate.
  The Government's proposal will undoubtedly inflame industrial relations. It will create a bad atmosphere and lead to more bitter strikes. It will be most bitterly opposed by the trade union movement. If that is what the Government want, they will achieve it by clause 6 of the Bill alone.
  Perhaps Conservative Members would like to take note of an important point made by the TUC. It says:
  "Not only is the proposal unlikely to influence strike activity, it may make matters worse. In the longer term it may encourage some unions to build up significant strike funds, the existence of which may in turn encourage resort to strike action more readily. The provisions could build up membership pressure for strikes to be made official more readily and more quickly than at present, so that members can receive some benefit from union strike pay, which they are effectively to be treated as receiving. More official strikes will tend to mean that action is intensified and support sought from other unions so that the general effort is to make action more severe. Alternatively, forms of action short of strikes could be adopted or strikes concentrated on small but vital groups of workers (e.g. safety and maintenance men, computer operators)."
  That is what the TUC says about this issue.
  In an editorial on 5 February, The Scotsman said:
  "If the Government curtail social benefits for strikers' dependants their action will be called mean and despicable by Labour, and industrial bitterness will be intensified. There may be a political dividend for the Tories in risking the reproach of making women and children suffer, but the material savings would be small. The steel strike may cost a few million pounds, which is a tiny proportion of the immense social security bill."
  That is the feeling of people who are conversant with industry.
  The views of the TUC ought to be taken into account. As the TUC put it:
  "The TUC is proud that this country has an extensive social security system. Trade unions have fought long and hard for such a system. We believe it is a mark of a fair and caring society that it makes provision for its people in times when they are unable to support themselves."
  That is what the TUC says about the whole social security system.

  1069
  Clause 6, along with clauses 1 and 4, will poison the atmosphere for millions of people and they will hit back. I believe that this Government, who may get a short-term political benefit from the Bill, will live to regret their action. This is a diabolical Bill, which I ask my right hon. and hon. Friends to vote against.
  6 pm
  Mrs. Peggy Fenner: I am pleased to have caught your eye to-day, Mr. Deputy Speaker, in order to make a brief intervention in support of the Bill.
  It is the tradition of the House to follow the debating points made by the previous speaker. On that assumption I follow the right hon. Member for Salford, West (Mr. Orme) and take up his last point so that I do not forget my duty. Is the TUC speaking for the rank and file membership? If so, I draw the attention of the right hon. Gentleman to the enormous subvention of £1,000 million to British Leyland, which is currently being undermined by Terry Duffy, who is today calling his members to come out on strike. British Leyland face the question of a strike previously presented to it by 247 shop stewards whose decision was overthrown by a referendum of the work force. Therefore the right hon. Gentleman should be careful when talking about the TUC expressing its view and arrogating to it the right to express the view of every person it represents.
  The right hon. Gentleman mentioned the vulnerability of striker's families. I accept that. He also referred to the frequency of strikes. One thing is certain; the larger the number of women employed by a firm the fewer the strikes. Women understand industrial action, especially when they are at the receiving end as members of a striker's family.
  I did not notice much support from the Opposition Benches when wives of the steel workers at Sheerness marched in the streets to support and encourage their men to exercise their right to work and not be persuaded by the argument to go on strike. This is relevant, because the right hon. Gentleman specifically referred to the vulnerability of strikers' families. However, he does not seem to be concerned about them when they want to express their view about that vulner-
  1070
  ability to the extent of persuading their men to remain at work.
  Many of the organisations that have faced large-scale strikes over the past few years—my right hon. Friend referred to some of them—with the possible exception of Ford's, were State industries, supported by the investment of large sums of public money. If the right hon. Gentleman wants to talk about fairness and justice I can tell him that many ordinary people who are not necessarily members of trade unions do not consider it fair or just to support strikes, as it were, through the sum paid to strikers' families when those strikers are already undermining the public moneys invested in their industries.
  In this day and age it is absolutely fair that the vast funds held by major unions should contribute. As has already been said, £8 million was paid out to support the families of strikers during the 13-week strike by workers in the British Steel Corporation. When we were talking about the sum paid out to strikers' families, the hon. Member for Birkenhead (Mr. Field) said on several occasions, from a seated position, that that was but a small sum, but he did not relate that to the fact that the BSC had already had a tranche from public funds of £450 million this year, to which the £8 million in strike pay must be added. The strike did little to justify the expenditure of £450 million to support a basic steel industry in this country.
  Emotive claims will be made—already, predictably living up to his reputation, the right hon. Member for Salford, West has made such claims—about the discrimination against strikers' families compared with the families of a criminal. He seemed unable to grasp the fact that a striker has the ability to work, whereas the criminal has had that ability properly removed because of the requirements of criminal justice both to punish him and to protect society.
  Mr. Frank Field: I am following closely the argument of the hon. Member for Rochester and Chatham (Mrs. Fenner). Reading carefully through the Chancellor of the Exchequer's Budget Statement it seemed that there were two clear lines of policy by which the Government hoped to revive the British economy. One was their virtual addiction to controlling the money supply and the

  1071
  other was the weakening of the bargaining power of trade unions, as the Chancellor called it. Does the hon. Member not agree that one of the dangers of this measure is that in the long run the Government may be creating even more powerful trade unions than we have at present? Ordinary members will have to pay increased subscriptions to build up strike funds to enable strike action to be taken and will therefore be that much more dependent on the whims of trade union leaders.
  Mrs. Fenner: To answer the point put by the hon. Member for Birkenhead, which he no doubt considers fair, I would need to stretch the tolerance of Mr. Deputy Speaker further than I am likely to be allowed. My answer is that greater participation by the rank and file of the trade union movement would be required to decide whether they should take industrial action. I have no doubt that I and others will have the opportunity to speak about that during the Report stage of the Employment Bill.
  In our society today—I believe that many people were aware of this, and it is one reason why they voted for the Conservatives last May—there is far too much talk about rights, whether they be welfare rights or rights to withdraw one's labour, and not nearly enough talk about responsibility. Specifically in the case of strikers' families men should be aware of their responsibilities. The right hon. Member for Salford, West, who has unfortunately left his seat, talked about the family. In my book a man's first responsibility is to his family. I do not believe that his first responsibility is to his trade union.
  I was lucky enough to draw a place in the ballot for Private Members' motions, and I spoke in the House in December specifically on the earnings rule. Hon. Members will therefore appreciate that I was disappointed to hear my right hon. Friend put forward this clause. However, my disappointment was tempered by the exact words that he used. I noted them with great care. He referred to a "temporary freezing" of the earnings limit. As a Back Bencher who has returned to the House after a spell outside, listening to the two Front Benchers and knowing what actually occurred during
  1072
  my absence only by reference to the record, I found it strange. It gives credence to the often reiterated assertion that Ministers propose but the Civil Service disposes. It is significant that both parties when in opposition have proposed similar measures on more than one occasion and yet have found it necessary not to pursue them.
  Mr. George Cunningham rose—
  Mrs. Fenner: I will give way to the hon. Member. I note from the record that he was responsible, with other Back Benchers, for ensuring when his party was in government we at least had a commitment to the gradual relaxation of the earnings rule.
  Mr. Cunningham: The hon. Lady has made my point. The truth is that civil servants and Ministers may propose, but it is this House that decides. She and her hon. Friends must now face the test. Will they allow the Government to get away with the proposals in the Bill? We had a test in the past; it is their turn now.
  Mrs. Fenner: I take the hon. Member's point. I have listened very carefully to my right hon. Friend and no doubt I shall have an opportunity to listen to him carefully again during progress on the Bill. I know that he is concerned about priorities. I had a junior post in the previous Conservative Government and I am only too well aware of the disciplines involved in making the money go around.
  During progress on the Bill I shall seek reassurance from my right hon. Friend that I do not need to be so worried about the report from the other place. I admit that I was worried that after my debate in December, when the Parliamentary Secretary referred to the cost of totally phasing out the earnings rule, my right hon. Friend did not disclose his estimate of the cost. This may be difficult for him but it will be helpful if we are to consider the cost in the light of public expenditure savings.
  Mr. Patrick Jenkin: I respond warmly to my hon. Friend's invitation. It is not possible to put an overall cost on this because it depends on the rise in earnings. As a rough rule of thumb, I can say that for every 1 per cent. increase in the earnings index the cost of raising the earnings

  1073
  limit is about £1 million. Therefore, a 10 per cent. increase in earnings would mean a cost of £10 million.
  Mr. Peter Bottomley: Perhaps my hon. Friend the Member for Rochester and Chatham (Mrs. Fenner) will ask the Secretary of State the total cost of abolition.
  Mr. Jenkin: The cost of abolition depends on the assumptions, and we are looking at these again. We estimate that it will be significantly lower than the cost estimated by the previous Government. The point that I was making previously was that for every 1 per cent. increase in earnings in the review period, the cost of raising the limit would be £1 million.
  Mrs. Fenner: I am obliged to my right hon. Friend. I take the point that when he makes difficult decisions in the area of social benefits he may feel that it is not an area of the highest priority. Those are almost the exact words used in another place by Lord Cullen of Ashbourne, who said:
  "There is no doubt however that in the present state of the economy this does not have the highest priority and we have not yet been able to make a start, and I am afraid I am unable to tell the noble Lord when we are likely to do so."—[Official Report, House of Lords, 6 February 1980; Vol. 404, c. 1340.]
  The reassurance that I shall seek from my right hon. Friend is this: he introduced this Bill today by explaining that there were two reasons why it was necessary. The first was the need for further public expenditure savings, which I accept. The second related to the clause on benefits to strikers' families. He said that this clause was necessary to implement the Conservative manifesto pledge on strikers' benefits. My right hon. Friend does not need me to remind him that it was our party's manifesto pledge to phase out the earnings rule within the lifetime of a Parliament.
  Over the past few months, in answers to questions, my right hon. Friend said that this phasing out will be done "as soon as possible" or "as soon as circumstances allow". I give him the benefit of the doubt, but if he does not make a start, or if he feels unable to do this because of the pressure of other higher priorities, in order to meet our manifesto pledge there will need to be an acceleration in later years. I am concerned about
  1074
  that. Perhaps during the progress on the Bill my right hon. Friend will reassure me on that point.
  Given an assurance that my right hon. Friend has no intention of allowing that matter to go beyond the lifetime of this Parliament, I will support his modest Bill. It is a modest measure of few clauses, but I have no doubt at all that there will be a charade of opposition from the Labour Party and the trade unions. They must realise that much of what is in the Bill supports what people in this country believe to be fair and just, and for which my party was elected last May.
  6.17 pm
  Mr. David Ennals: I believe that there will be massive opposition in this country for many of the proposals in the Bill. The hon. Member for Rochester and Chatham (Mrs. Fenner) began her contribution with a carping criticism of the quotation from the TUC made by my right hon. Friend the Member for Salford, West (Mr. Orme).
  I begin my speech with another quotation, which relates to clause 6 of this Bill. It goes:
  "This Conference would be the first to howl if we really did have pictures on television of children going hungry for lack of benefit—perhaps because their striking fathers were on low pay and had not been able to save, perhaps even because their striking fathers had not made the necessary arrangements for saving for the purpose. But this Conference would object strongly if children were shown going without food."
  That statement was made at the Conservative Party conference in 1973 by the present Secretary of State for Industry, who was then Secretary of State for Social Services. He convinced his party that it should not do what the present Secretary of State is now suggesting.
  This is a unique occasion. For the first time in more than a generation Parliament is debating a measure that is designed to reduce benefit to some of the most needy groups in our society. I shall not take us through the list of legislation that has come forward to improve benefits for needy groups, but this is the first time that we have sought to cut back, except for the first Conservative Social Security Bill. This is the No. 2 Bill and I do not know when No. 3 will emerge. Perhaps when it comes it will abolish unemployment benefits altogether.

  1075
  One never knows where one is with this Government, except that the next measure will be always worse than the last.
  The Government are introducing this Bill less than a year after they denied that they would cut these benefits. This is a disgrace. It is on a par with the assurance given by the present Prime Minister on 26 April, when she said:
  "We have no intention of raising prescription charges."
  Since then they have done so fivefold. On the same day she said that the Conservative Party had no plans for any new NHS charges. Those charges were announced in the Budget.
  Also, on 26 April the present Lord President of the Council said that a Labour Party leaflet had warned of a Tory plan to reduce pensions and social security payments. He claimed that that was a direct lie, yet that is part of the purpose of this squalid Bill, apart from its attack on strikers' wives and children and its decision to take away the statutory right to earnings-related unemployment benefit that has been paid for over the years.
  It is all very well to say that everything is on a "pay-as-you-earn" basis. Those who have contributed on an earnings-related basis believed our Governments assurance—perhaps they did not believe this Government—that they would be entitled to an earnings-related benefit as a result of their earnings-related contributions. I am sure that the right hon. Gentleman himself would have said that if my party had come forward in Government with a squalid proposal like this.
  The Bill is not only an attack upon the living standards of the most vulnerable members of our society; it creates a new low in political deception. It sets out to enshrine in legislation actions that the Conservative Party denied that it would carry out during the election campaign. No hon. Member suggested to the electorate, in a manifesto or in any speech, that the Conservative Party would reduce the entitlement of those on invalidity benefit, of the unemployed and, in certain circumstances, of widows. If any hon. Member did make such a suggestion during the election campaign I hope that
  1076
  he will now rise. I will then give way and say how honest he or she is. If the Secretary of State gave any such hint to the electorate, I give way. He knows that he did not. Mention was made only of benefits to strikers' wives and children.
  This is a deplorably mean Bill. It has been put forward in a deceitful way. When the Labour Party was in Government my right hon. Friend the Member for Salford, West and I fought for funds in order that we could get the long-term unemployed on to the long-term supplementary benefit basis. However, we were faced by constraints on public expenditure. We were also worried about the widening gap between those on long-term benefits who could share in the rising standard of living, and those on short-term benefits who were tied to price protection.
  The widening gap worried us, and we tried to find a way of filling it. Meanwhile, the Secretary of State and his friends were planning to keep the gap open at the expense of both groups, by removing the right of pensioners to share in rising living standards and by cutting back on short-term benefits. As a result, those affected became poorer and poorer and less able to protect themselves from the ravages of inflation.
  To add insult to injury, the Government have introduced these mean and cruel measures when the rate of inflation is out of control. Both the Secretary of State and his colleague, the Chancellor of the Exchequer, have spoken about a rate of inflation of 16½ per cent. at the time of the next uprating in November. The Secretary of State did not mention that figure today. However, within the next few days the 20 per cent. barrier will probably have been broken, or almost broken. The Government's pay bill is now expected to rise by 25 per cent. Yesterday it was made clear to a Select Committee that the cost of gas, coal, electricity, transport, food and prescription charges was escalating.
  This morning I went into my grocer's shop. He told me that during the first four months of this year there had been 5,138 increases in costs. Which hon. Member believes—does the Secretary of State believe—that by November we shall find ourselves with an inflation rate of 16½ per cent.? The Secretary of State said that the entitlement of some of

  1077
  those who are least able to protect themselves will be 5 per cent. less than the inflation rate of 16½ per cent. Does he still believe that the inflation rate will be 16½ per cent.? If the inflation rate is closer to 18 per cent., 19 per cent., or 20 per cent., will he still use the axe that he holds in this Bill? Will he still reduce benefits to a level of 5 per cent. below the inflation rate of 16½ per cent.? The justifications given by the Secretary of State for his mean measures are very hollow and unconvincing.
  The problem of work incentives has been greatly exaggerated. The Minister agreed that the numbers were small. He said that the magnitude of the "Why work?" syndrome should not be exaggerated. However, the situation becomes clearer if we look at other statements. The document "Social Assistance" was produced by the DHSS. It states:
  "Men are now remaining unemployed for longer and having a lower earnings potential than in normal circumstances such as have obtained over the last thirty years. Despite this we found very little evidence that they are declining to return to work and prefer to remain on benefit when jobs are offered to them."
  David Donnison, chairman of the Supplementary Benefits Commission, said:
  "Some realists know perfectly well that cutting benefits will not get people back to work; there are no jobs to go to."
  The Secretary of State knows that that is so. However, the Government's action will create more unemployment. They are cutting back on those projects that created job opportunities. The argument for getting people back to work does not stand examination.
  As the Secretary of State will admit, the squeezing of child benefit has contributed to the "Why work?" syndrome. The Government are pushing people into unemployment and denying them the job creation schemes that were introduced by the previous Labour Government. More and more people have been out of work for a long time. An increasing number of young people, including youngsters from the ethnic minorities, will not be able to find employment. To try to force them into jobs that do not exist is utterly unrealistic.
  Mrs. Fenner rose—
  Mr. Ennals: To punish people when they fail to find a job is sheer crude cynicism.
  Mrs. Fenner: This is a very important point. I have been in recent correspondence with British Rail, Southern Region, complaining about the filthiness of the trains that my constituents are expected to use and for which they are expected to pay increasing fares. I was given a solemn reply, in writing from the manager of British Rail, Southern Region, to the effect that British Railways cannot get cleaners because they can get almost as much money by not working. British Railways are major employers—
  Mr. Rooker: What was the pay?
  Mrs. Fenner: The hon. Member for Birmingham, Perry Barr (Mr. Rooker) implies that we may not pay cleaners enough. I am trying to assure the right hon. Member for Norwich, North (Mr. Ennals) that there are some jobs.
  Mr. Ennals: Given the hon. Lady's keen interest in this subject, I hope that she will try to analyse this question. I hope that she will discover the level of payment given to those working for British Rail. I hope that she will find out how many children they would need in order to approach such a level of benefit. The benefit represents a minute figure. Anyone who has studied this question knows that that is so.
  The action taken in the Bill represents a step backwards on issues on which we have sought, and sometimes achieved agreement across the Floor of the House. The Bill gives a commitment that the poor will become poorer. It cannot be otherwise. Why are the Government doing that? They are trying to pay for the tax benefits of the rich. I can see no other reason why they should squeeze the poor. This legislation punishes people for the tragedy of being unemployed or of being invalids.
  It is almost inconceivable that although hon. Members from all parties care about human dignity and need they will vote for a Bill that is so damaging to human rights. The Bill contains a commitment to push more and more people on to means-tested supplementary benefits. I thought that the House had agreed to consider measures that would

  1079
  reduce the number of those dependent on the State. We have been told that 110,000 extra people will be put on to supplementary benefit, together with an extra 1,000 civil servants.
  In conclusion, I believe that this is a mean and despicable measure. I hope that those on the Government Benches who care about the Welfare State and our responsibility to care for the sick unemployed and those facing hardship will this time have the courage to stand up and say that even though the first Social Security Bill was passed through this House, Social Security (No. 2) Bill should not have the sanction of this Parliament.
  6.30 pm
  Mr. Richard Needham: I wish to deal briefly with clause 4 and the problems of the unemployed, who do not have the pressure groups and support that many other worthy causes have—I am thinking particularly of pensioners and one-parent families.
  Listening to the rhetoric of right hon. and hon. Members on the Labour Benches, one might be led to believe that they are concerned about the matter, but on looking at the empty seats around them one realises that perhaps the rhetoric is more sound and fury than substance. Right hon. and hon. Gentlemen might be better advised to leave the plight of the unemployed to the "wets".
  Unemployment is not the fault of the unemployed. I do not suggest that many believe that it is, but a social stigma still attaches to unemployment. A person who does not have a job is frequently not accepted by society. That feeling, unfortunately, often extends to that person's family. Many people who are made unemployed do not know how to face their family to tell them about the disaster that has befallen them.
  It is right that we should look carefully at the words and works of the nineteenth century economists, but perhaps we should not pay too much attention to the Protestant ethics and industrial psychology of the nineteenth century. It is important to realise the fear and degradation of unemployment. The majority of people like work and responsibility, want to be involved and wish to participate. That was stated not by a Labour Member or by Keir Hardie,
  1080
  but by a former dean of the Harvard Business School.
  Mr. Clement Freud: Does the hon. Gentleman agree that the degradation of the disaster of unemployment is the degradation of the disaster of not having money?
  Mr. Needham: I believe that it goes much further than the degradation of not earning money. A person who becomes unemployed finds that his basis and dignity of life are taken from him. I do not accept that money is the only motivating force in the world. We have been too obsessed by the motivation of money, and have not tried to listen to and take account of people's other problems and ambitions.
  Redundancy pay has helped the unemployed. In his Budget Statement my right hon. and learned Friend the Chancellor said that redundancy payments are now more generous. However, to take the year 1973, which was the last year of the previous Conservative Government, the average payment was £900 at 1979 retail prices. In 1979 it was £874.
  One problem in discussing earnings-related supplement as it affects the unemployed is to discover the true statistics. The right hon. Member for Norwich, North (Mr. Ennals) said that the average payment was £957, but the figure given in an answer on 2 April was £874.
  Redundancy payments are no more generous now than they were seven years ago. We should also remember that not only do large numbers not receive redundancy payments for various reasons, but that the actual figure may be very much less than the average. For example, a married man aged 40, with two children aged 8 and 11, who has been five years in work and finds himself redundant, will get only £500.
  Furthermore, I hope that at least on the Government Benches redundancy payment is regarded as a capital sum, which we hope people will invest for themselves, their childern or for difficult times. It should not be regarded as income. On the other hand, earnings-related supplement is an insurance policy that is taken out through the national insurance fund, designed specifically to help in moving employment and acting as a cushion.

  1081
  To take the same married man in the same circumstances, on an average wage of £95 a week, who becomes unemployed, his entitlement, including earnings-related supplement and child benefit, is £55.84. His flat-rate unemployment benefit which is what he will become entitled to after 1982, will be £39.35, and the supplementary allowance will be £43.65, plus rent. After earnings-related supplement is removed, a person who becomes unemployed and goes straight on to flat-rate unemployment benefit will get £4 and a bit less than he would receive by way of supplementary benefit alone.
  We have to accept that unemployment will increase in the foreseeable future. Those who become unemployed will rely on flat-rate unemployment benefit that will not be sufficient. They will therefore increasingly rely on a top-up from supplementary benefits. My right hon. and learned Friend the Chancellor said that only 10 to 15 per cent. of those unemployed received earnings-related supplement. However, that still amounts to 160,000 to 200,000 people at present, which is 42 per cent. of those entitled to unemployment flat-rate benefit. It is still a significant number.
  As we know, earnings-related supplement is paid for out of the national insurance fund and is 82 per cent. self-financed on a "pay-as-you-go" system. However, the national insurance fund has been in surplus, as the hon. Member for Birkenhead (Mr. Field) found out recently in a parliamentary answer, for several of the past few years by a substantial amount, mainly because the Government Actuary works out the basis of the national insurance fund on what the Government say that wage settlements are likely to be, which is what Government policy is, rather than on what wage claims are settled at. That surplus is therefore reasonably likely to continue if the Government Actuary continues to do the calculations on the present basis.
  My right hon. Friend said that the number of those receiving earnings-related supplement in 1980 was estimated at 190,000. If the earnings-related supplement were removed, the saving would be £96 million. If, in future years, the Government Actuary deducts from the national insurance fund the amount that is paid out in earnings-related supple-
  1082
  ment, and the amount of supplementary benefit increases, I cannot see how there can be a saving to the public sector borrowing requirement. Surely there will be an increase. Therefore, is it not wiser to continue to provide an amount that at least cushions people from the £95 average earnings down to a much lower level?
  In the 1930s—I have the figures for 1934—the average industrial wage for a married man with two children was 52s 6d. The average flat level of benefit was 30s. The fall was from five to three. Now the fall will be from £95 down to £39, plus whatever is applicable on supplementary benefit.
  Mr. Field: I was following the hon. Gentleman's argument closely as he took us through the maze of the national insurance fund. Will he complete his argument? In the financial memorandum to the Bill the Secretary of State lists the savings from abolishing earnings related supplement. The right hon. Gentleman was careful to say that this was a pay-as-you-go scheme, and that therefore adjustments would be made to contributions for benefits that would not be received later. Surely the only reason why the financial memorandum to the Bill can refer to a saving is that the contributions will stay at their present level, but the benefit will be abolished. If there were a quid pro quo we would abolish the contribution and the benefit and there would be no saving whatsoever to present at the beginning of the Bill.
  Mr. Needham: The hon. Gentleman is right. If this is an insurance scheme which is self-financed, to the extent of 82·4 per cent., for the unemployed, surely the Government must, in all reasonableness, reduce the employers' surcharge to make sure that this is fairly handled.
  I want to continue this line and make it clear what will happen. The figures are very difficult to come by. My right hon. Friend said that the gross savings in cash terms would be £360 million in 1982–83. Of that, the unemployment benefit element will be £110 million. However, on page 113 of the Chancellor's Blue Book on the Government's expenditure plans the final sentence of section 15 reads:
  "After allowing for the additional claims for supplementary benefit, and the associated staff cost which will ensue and for the effect

  1083
  of the proposal for employers taking responsibility for payments during short-term sickness, it is expected that the savings from the cessation of earnings-related supplements will amount to some £130 million in 1982–83."
  Taking those two figures together, one says £130 million, while the other says £360 million less £75 million—that is £285 million—and the discrepancies become more and more alarming.
  We are talking about massive amounts in the national insurance fund of billions of pounds. The investment income alone amounts to £370 million a year. Would it not be more advisable for my right hon. Friend at least to accept at the moment that the self-financed element of earnings-related supplement should be allowed to continue, which will do little if no harm? If that happens, there will be continuing support for those who find themselves out of work and who must face the financial difficulties that come from finding their standard of living halved. They cannot suddenly do away with their mortgage or hire-purchase repayments. They will end up with the trauma of the dole, with no spare money and little mobility.
  Mr. Tristan Garel-Jones: Will my hon. Friend confirm that if it were possible to retain what he called the self-financing part of earnings-related supplement, that would represent about 85 per cent. of what is at present drawn by people benefiting from this payment?
  Mr. Needham: My hon. Friend is correct. That is the amount that is currently self-financed. If there must be a saving to the Exchequer, surely that can come out of the 14 or 15 per cent. that is paid from the Consolidated Fund.
  Mr. Ennals: I agree with the hon. Gentleman's approach. I hope that the Secretary of State will take seriously the argument that was put. Would the hon. Gentleman care to add the additional social argument, which seems to me to be important in terms of the strength of the economy? Is not the purpose of an earnings-related supplement not just to cushion someone from this mighty drop from a good salary to a very low one, but to enable him to have a period when he can be more mobile and give him a breathing space to get into another job in another place? Are not the mobility and employment aspects important?
  Mr. Needham: I take the right hon. Gentleman's point. Obviously, mobility is important. People who are unemployed want to get out, find new jobs and get cracking on them as soon as they can. If they do not, they find themselves trapped in the demoralisation caused by unemployment. It becomes more and more difficult to move as their incomes reduce further and further.
  I ask my right hon. Friends to consider this case carefully and judge how it will be financed. If the amount of supplementary benefit is to be increased, it may well increase much more than the Government are currently allowing for. The Government may well take more money out of the public sector borrowing requirement for supplementary benefit, whereas if they go on as they are they will be living with a scheme that is 85 per cent. self-financed.
  6.49 pm
  Mr. Clement Freud: I came to make this, my first speech on social security, with a certain humility. As I listened to the arguments from both sides of the House, I realised that we on the Liberal Party Bench are the only ones who have not been forced by the changing face of Government to under changes of policy and regurgitate the words that we uttered in the last Parliament. Therefore, one has a certain pride in at least having been consistently consistent in opposing cuts in social security—
  Mr. Alan Clark rose—
  Mr. Freud: It is very good to see the hon. Member for Plymouth, Sutton (Mr. Clark) back again on one of his short visits, but I think he might serve a little time, then I will give way.
  Political regurgitation has become part and parcel of party politics.
  Mr. Clark: On a point of order, Mr. Deputy Speaker. The hon. Member has inferred that I have only just come into the Chamber. That is perfectly correct, and during the brief moment that I was absent the hon. Member must himself have made his first appearance, because I was here for all the opening speeches and all the earlier speakers.
  Mr. Deputy Speaker (Mr. Richard Crawshaw): Honour is satisfied.
  Mr. Freud: I should like to say that I have been here all of the time.
  For the uninvolved and the unwhipped, the crucial question about this Bill is whether it is being brought in for financial or for party political reasons. The amount which will be saved, which is really a very unsubstantial amount in comparison with the enormous giveaway to the high rate taxpayers earlier last year, is so small that it makes us believe it is political. If it were money the Government were after, would they not recruit more tax inspectors than social security snoopers? It is quite obvious that political popularity has played a substantial part in this.
  I think that historians will look back at this Government and decide that they got it wrong, that they hit the wrong targets. I believe that in clause 6, which perhaps is the crucial clause in this Bill, it would have been a brave move to hit the unions if they wanted to fight. Their fight was with the unions; I do not believe that it was with the dependants, the wives and the children, of those who are in industrial dispute.
  It has been the same sort of argument as this Government used when recommending the boycott of the Olympic Games. I am totally in favour of that boycott but not as the only boycott. The boycott by the athletes should have come after the trade boycott, after the export guarantee boycott, after the ending of diplomatic relations. Then by all means let us hit the Russians by boycotting the Games. By the same token, to hit the families of the strikers is the milkman's horse syndrome. I am thinking of the story of a man who found his wife was having an affair with the milkman and went and kicked the milkman's horse.
  To go through the clauses very quickly, under clause 1 it is intended ultimately to bring these benefits into taxation. It is argued that the 5 per cent. reduction is an interim measure, but it is purely arbitrary and bears no relation to the kind of tax which a recipient would be likely to pay. It is not altogether clear whether, when these benefits are brought into tax, they will be indexed. I think this point ought to be investigated. The Secretary of State will know that under the tax credit scheme in which my party has always believed none of the
  1086
  credits would be taxable, but under the present arrangement there is a case for taxing short-term benefits. This seems in clause 1 also to mean that a retirement pensioner with no other source of income would receive more than an invalidity pensioner with no other source of income. This is surely wrong and will be enormously difficult to explain to a constituent who raises that point.
  Mr. Patrick Jenkin: The hon. Gentleman would find it almost as difficult to explain to an invalidity pensioner who reaches pension age why he suddenly finds that his pension is taxed whereas his invalidity pension has not been taxed. But that is the situation that will have to be dealt with in 1982 and, as the hon. Gentleman has said, what we are proposing to do now is an interim phase towards that.
  Mr. Freud: I accept that, and I also accept the valid point made by the hon. Member for Norfolk, North (Mr. Howell) about the differences between taxability and actual tax payments.
  Clause 2 seems to be going in the opposite direction from that to which the Government are publicly committed. They have committed themselves to abolishing the earnings rule within the lifetime of the present Government, and they are now backtracking; in this clause they seem to be going in the opposite direction since its effect must be to make the earnings limit progressively more restrictive.
  On clause 3, on 27 March I asked the Prime Minister how she would expect a sub-postmaster with one employee to pay that employee eight weeks' sick pay, as he would have to do, and said that my constituents would also like to know who would become rich as a result of the sub-postmaster's having to pay tax on both the employee's wages and the wages of the person who replaced him. The Prime Minister, in her wisdom, answered:
  "I would be very surprised if a sub-postmaster with one employee had no alternative source of income."—[Official Report, 27 March 1980; Vol. 980, c. 1649.]
  I found that a staggering answer; it was the "let them eat cake" syndrome—people who believe deep down that every dustman owns a yacht in San Tropez.

  1087
  Since 1963 the Liberal Party has argued that benefits should be related to earnings so that for a period at least the drop from earnings to benefit should be cushioned. I listened with care to the speech of the hon. Member for Chippenham (Mr. Needham). It is absolutely right that it is advocated not as a poverty-removing measure but as a hardship-removing measure. People's commitments do not drop when they lose employment or become sick; their commitments remain the same in relation to their previous earnings, their standard of life and so on.
  I agree, and we have always agreed, with the content of clause 5. I have received, as I think many other hon. Members have, an excellent document from the Child Poverty Action Group of which the hon. Member for Birkenhead (Mr. Field) is the author or co-author, and he will doubtless elaborate on this. I think it would be wrong not to welcome the fact that at least a safety net exists and remains. It would have been appalling for this debate to have been held under any other circumstances. The Secretary of State, almost at the beginning of his speech, quoted Disraeli, saying that we all wished
  "to elevate the condition of the people."
  What saddens me, and what the whole House must be unhappy about, is the fact that this Bill, if it becomes an Act, will do nothing to elevate the condition of the people. It is, in the Government's own "newspeak", a "substantial reverse elevation procedure".
  My right hon. and hon. Friends will oppose and vote against the Bill, as we have always opposed measures to make the poor poorer, even if in this instance it will not specifically make the rich richer.
  Several Hon. Members rose—
  Mr. Deputy Speaker: Order. Before I call the next speaker I wish to tell the House that from now until 9 o'clock we shall be operating the 10-minute rule for speeches.
  7 pm
  Mr. R. A. McCrindle: The Bill contains a miscellany of proposals, perhaps more wide-ranging than in any social security measure within the memory of most of us in the House.
  1088
  Parts of the Bill are opposed by groups of people, and many hon. Members would find fault with at least one aspect of the Bill, but the official Opposition would be wrong to underestimate the degree of appeal that the measure in its totality has for people outside the House.
  There are people who say that the measure undermines the Welfare State. I suggest that there is an equal argument, which will not find favour on the Labour Benches, that it is a return to the basis on which the Welfare State was introduced in 1948, in that it strengthens the safety net below which people shall not be allowed to fall and at the same time reintroduces a degree of incentive to people to provide for their own families that has not always been noticeable in the recent past.
  I get to the heart of the Bill by talking straight away about the benefits to strikers' families. I do not believe that the public should be asked to finance in any material way the carrying on of a strike when those members of the public have to suffer deprivation as a result of that strike. Large sums are involved. About £8 million or £9 million has been mentioned. Here we are taking a step to honour a manifesto commitment.
  It may be, as the right hon. Member for Salford, West (Mr. Orme) said, that in all other EEC countries some measure of public support is given from public funds to strikers. It is also true that in all other EEC countries the trade unions accept responsibility for strike pay to members they call out on strike. In this country we have many large unions with massive funds that are not used, because the public are expected to contribute.
  I am uneasy about the earnings rule. I have been round this course more than once during the 10 years that I have been in the House. Provided that what we are being asked to approve is no more than a temporary interruption on the way to achieving the manifesto commitment of the total abolition of the earnings rule, I am prepared to buy it, but only on a relatively short-term basis. I am able to do that because £52 a week is a reasonably high income in addition to the retirement pension. Nevertheless, if I thought that we were reneging on our commitment to phase out the earnings rule I should be very unhappy.

  1089
  I move on to another hardy perennial, the occupational pensioner who retires at 60 and who until now has been able to draw unemployment benefit for a limited period. On several occasions I have spoken on this matter, and I am by no means convinced that on this occasion we shall be any more successful in achieving our objective than we have been in the past. I have to accept that the aim of that part of the Bill is to penalise only occupational pensioners who are in receipt of a reasonable retirement pension.
  I do not think that I am going back on anything that I have said before in saying that I cannot conclude that most of the individuals involved could be classified as genuinely unemployed. At a time when other people, perhaps in greater need, are being asked to make sacrifices as a result of other provisions of the Bill, I am prepared to agree with that part of it which abolishes unemployment benefit for people who retire early on occupational pensions.
  On the question of de-indexation, there is an assumption that the whole basis of the Welfare State is being changed. That is not so. Almost the opposite could be said to be true. We are changing back the emphasis of the Welfare State's benefits to those who are truly needy. One matter that has received scant acknowledgement from the Opposition Benches is that we are uplifting the rate of supplementary benefit by the full percentage requirement to take account of inflation. If by the measures that we are taking on de-indexation we are creating a difficulty for some people—I am honest enough to concede that we shall—we must take into account that available to those people will be those increased supplementary benefits.
  Invalidity pensions are included in the wide ambit of the proposed changes. To those who suggest that it is a mean act to include invalidity pensions I say that anomalies would be created if they were to be treated differently from sickness benefit. Even under the proposals contained in the Bill, the benefits payable will be higher in real terms than they were after the November 1976 uprating.
  I have never felt that we should single out the disabled or point to them as a separate section of the community. So far as possible we should absorb them into
  1090
  the community and treat them as normal members of it. If we are changing the method of payment to the unemployed and the sick it would be wrong not to include invalidity pensions in those changes.
  The earnings-related supplement is another aspect of the Bill that leaves me comparatively uneasy. The existence of the earnings-related supplement has provided an immediate cushion in the aftermath of unemployment, and its removal could conceivably cause some hardship. To that extent I ask my right hon. Friend the Minister of State to explore the helpful suggestions put forward by my hon. Friend the Member for Chippenham (Mr. Needham) and to see whether there is a middle course that will allow the Government to reduce expenditure while at the same time having a less immediate effect on the person earning an above average income who is suddenly rendered unemployed. Even before the Minister replies, I am fortified by the knowledge that out of 1.25 million people who were unemployed in May 1979 the number who were in receipt of earnings-related supplement was 176,000. I do not lightly cast aside the fact that 176,000 people will be disadvantaged, but it is wise for the House to get these figures in perspective.
  The proposal to transfer to employers the responsibility for sickness payment means that earnings-related supplement will have to be removed anyway, so the Bill anticipates that move. The real living standards of the real poor are protected by the Bill through the maintenance of supplementary benefit. On the whole, this is a measure that deserves the support of the House.
  7.10 pm
  Mr. Frank Field: I am always pleased to follow in debate a contribution made by the hon. Member for Brentwood and Ongar (Mr. McCrindle). If I were not also penalised by the so-called 10-minute rule I would like to have taken issue with a number of points that the hon. Gentleman raised. His most important statement was that the Bill could be supported because it returned to the principles of the 1948 Welfare State. In a fundamental way, it does the opposite. The Bill will push more people on to means tests and therefore trap them into poverty. There is growing agreement between the Benches of this House

  1091
  that what is needed is a Welfare State that acts as a floor from which people can build by their own efforts. The Bill contributes nothing in that direction.
  The Secretary of State began his speech in grand style. He addressed himself to the challenge that the British economy, in particular, and the world recession, in general, presents to all three major parties in this country. The world economy has broken up the basis for post-war consensus. That basis was that the economy would grow and that part of the new wealth would be used to pay for social reform.
  Despite the optimistic comments about growth in the next few years, most hon. Members know that there will be very little, if any, growth. The Government have made their decision on how they intend to behave. They are redistributing to the rich at a time when there is no growth. The challenge that the Government have accepted also confronts the Opposition. Are we prepared to continue a dialogue in which one thinks of paying for social reform only from new wealth rather than by redistributing existing wealth? One cannot separate the measures in this Bill from the measures that the Government have taken in two Budgets. I remind the House briefly of those changes. They nail the untruth put around by some Government spokesmen that there is not the money to pay for social reform.
  In the first Budget, taxation was cut by £4·5 billion. The richest 7 per cent. of the population picked up 34 per cent. of those tax cuts. The poorest 10 per cent. got 2 per cent. of the tax handouts of the first Budget. In the second Budget of this Government, though obviously more modest, the richest 2 per cent. picked up 14 per cent. of the net tax reductions. It is, therefore, impossible to maintain any longer the argument that the money is not available. The Government have other choices.
  To help pay for those tax cuts, there has been the Social Security Bill. Now we have the Social Security (No. 2) Bill. I should like to spend the remaining six minutes of my contribution looking at some of those cuts and the people they affect. The Government have singled out the weakest for the cuts. At the front of the firing line are children. The Government have made two vicious cuts in bene-
  1092
  fits for children—those whose parents are unable to work as well as children of parents in work. The Government have fiddled for the first time the method of increasing the benefit rates for children of those on national insurance benefits.
  The normal method of calculating the increase is to take the whole of the child addition, multiply it by the inflation rate and then subtract the increase in child benefit, if there be an increase. Sadly, in many years there was no increase. This year, the method of calculating the children's addition has been to take the benefit to subtract the child benefit as it stands, then multiply by the inflation rate before deducting yet again the child benefit increase that occurred in the Budget. Children of the poor have increases of a little over 5 per cent. in this Budget. That is not price protected. The increase is not even the 11·5 per cent. of the unemployed; it is only 5 per cent.
  On child benefit, the increase is in the region of a little over 9 per cent. The Secretary of State knows, as does his Minister of State, that the child benefit increase announced in the Budget is really an increase to be spread over two years and not over eighteen months, as they maintain. Children are therefore the first group to have their benefits cut more viciously than any group in the population. Because child benefit has not been increased generously enough and because the problem to which the hon. Member for Norfolk, North (Mr. Howell) referred has not been dealt with partly because of the failure to increase child benefit more generously, the Government have had to cut even further the allowance for children of those unable to work.
  The second group for cuts have been the sick and disabled. Not only has there been a de-indexing as it is called, under the name of the need to tax benefits. I stand clearly on the proposition that all income should be taxed. I stress the word "all". In the last Budget, the Chancellor was concerned only with 45 per cent. of personal income. Fifty-five per cent. of personal income is legitimately exempt from tax. Benefits form only one small part of personal income that does not come under the hammer of the Inland Revenue.
  Mr. Ralph Howell: Is the hon. Gentleman suggesting that all incomes should

  1093
  be taxed, or that all incomes should be taxable?
  Mr. Field: I am saying that they should be taxable. If the expenditure of the tax allowance Welfare State were controlled and those benefits abolished, we could be talking in terms of a standard rate of tax of about 13 per cent. or 15 per cent. We should not worry only about the benefits of the unemployed. We should also consider the benefits of those who largely depend on untaxed and untaxable income.
  I turn now to the third group who are suffering cuts. The hon. Member for Chippenham (Mr. Needham) referred to them in an effective speech. He pointed to the untruth at the beginning of the financial statement to the Bill. If the Government were going to adjust contributions for the abolition of earnings-related benefit, there would be no £360 million gross to chalk up as a saving. The Government intend not only to abolish earnings-related benefit; they intend to keep in being the contribution.
  The fourth group suffering cuts under the Bill are strikers—or, to be accurate, the wives and children of strikers. A striker can get no benefit for himself at present and his wife is classified as a non-householder. The hon. Member for Norfolk, North shakes his head but he is wrong on this point. The striker gets no benefit, and the wife is classified as a non-householder. On top of that, £12 is now to be deducted and the £4 disregard scrapped for any tax rebate. As supplementary benefits are not paid for the first two weeks of a strike, the unemployed family with one child, during the first three weeks of a strike under the Bill, will be picking up a fraction over £2·50 a week for the whole family.
  I should like to address briefly five questions to the Minister. He argues that there is, and will continue to be, a real increase in social security expenditure, even if the Bill is passed. How much of that increase will be wiped away because of the increase in the number of claimants? If the inflation rate of 16·5 per cent., on which all the calculations depend, is wrong, will the Minister make good the shortfall for those on shortterm benefits, who will obviously suffer most? When the benefits are brought
  1094
  properly into tax, will he make good the de-indexing in the intervening years? Will he answer the point made by the hon. Member for Chippenham about the earnings-related contributions? Will they also be abolished?
  Lastly, as all the evidence shows that families with children, particularly poor families, have fallen behind other groups over the past 20 years, will the Minister at least reconsider the particularly vicious cuts against children contained in the Bill?
  7.20 pm
  Dr. Brian Mawhinney: The overall strategy of the Budget from which the Bill is derived was in step with the election commitment made last May. The hon. Member for Isle of Ely (Mr. Freud) introduced a novel concept when he said that the Bill was designed to curry political favour. Hon. Members in opposition are free to make such statements. However, many of us are here today because we made commitments on union activity and strike pay which caused many people who have always voted for Labour Members to elect us to seats previously held by the Labour Party. It is strange to suggest that there is something disreputable or questionable about trying to introduce legislation based on commitments made during the election campaign.
  Why should the State subsidise and finance strikes against itself? I have been an active trade union member for the last 10 years. The issue is not about penalising strikers but about trying to find the correct balance between the rights and needs of strikers and the rights and needs of society. We believe that that balance has been tipped too far in one direction. The Bill is an attempt to redress the balance.
  Some Opposition Members have said that the Bill is heartless. If they believe that, they must accept that the majority of people are heartless because the Government are simply seeking to enact what they desire. In the Budget debate the right hon. Member for Salford, West (Mr. Orme) said:
  "On average the first £15 of any benefits claimed by a striker for his family is for him to pay. Then there is a further £12 on top of that, which makes a total of £27 before a striker's family starts receiving benefits."—[Official Report, 31 March 1980; Vol. 982, c. 62.]

  1095
  That is not true. We are saying that the union should pay the £12. We are not saying that a striker should be deprived of that sum but that other arrangements should be made for that £12 to be paid. If the £12 is not paid, let people direct their wrath against the unions, not against society.
  I say to the right hon. Member for Norwich, North (Mr. Ennals) that the Conservative Women's Federation must also understand that. We face not only a "why work?" syndrome but a "why not strike?" syndrome. Strikes have ceased to be a measure of last resort. They have become the measure of first resort.
  The hon. Member for Isle of Ely said that we were indulging in a political fight with wives and children and not with unions. That is untrue. We wish wives and children to receive the £12 a week referred to in clause 6. We wish them to receive it from the unions, not from the Government. It is wrong to prohibit strikes. It is equally wrong for social measures positively to encourage strikes. Clause 6 is in line with our election commitments and the Budget strategy to try to find a proper balance between those competing claims.
  I have referred to the "why work?" syndrome. For many years hon. Members on both sides of the House have said that there is unhappiness among people working for a low wage who see those staying at home receive more in benefits than they receive in earnings.
  I have sympathy with the arguments about clause 1, particularly with those made by the hon. Member for Birkenhead (Mr. Field) in his typically courteous and helpful way. I have reservations about the reductions in the standards of living that will be caused by clause 1. Nevertheless, it is right, within the overall strategy, to make the provisions. We must concern ourselves with the unskilled who are working as well as with those who are not receiving benefit. There must be some encouragement for them. Those who are not working should not have the protection of index linking which is not afforded to those who are working and whose salaries are closely akin to the benefits of non-workers. Clause 1 does not make my heart leap with joy, but it is certainly defensible.
  1096
  I turn to clause 4 and make it three in a row for Government Back Benchers. I am worried about the earnings-related supplement. The Government strategy is to shift the balance of employment from the public to the private sector and, at the same time, to increase incentives to work. During the election campaign we said that that would be a delicate balancing act and that there would probably be some increase in unemployment. That is generally accepted. Unemployment would probably rise anyway.
  The first two measures of which I have spoken are in line with the Government's overall strategy, but clause 4 is not. The Chancellor of the Exchequer said that the ERS scheme had been diminishing in worth and effectiveness. He gave reasons why it is now possible to abolish the scheme. People have been making contributions to the scheme since the mid-1960s. In the Budget debate the right hon. Member for Salford, West, said that the average worker contributed slightly less than £9 per week and the employer £18 a week.
  The question of what is to happen to those contributions has been raised. Most objective people will agree that we are discussing a form of retrospective legislation which some of us find a little difficult happily to accept. People who talk about moral commitments in politics are often regarded with suspicion. I admit that I believe that there should be some cognisance of moral responsibility in the political arena. I am, therefore, slightly uneasy about the ERS scheme.
  Government policy is that people should move from unproductive to productive jobs. The willingness to do that voluntarily will be increased if people believe that they will not suffer unduly during the transfer. The Government want mobility of labour, but that requires time. People must look after their own interests during that time. The reduction of ERS runs counter to the Government's strategy. The abolition of ERS may have the negative effect of causing people to stay in unproductive jobs because they are afraid to move.
  The Chancellor of the Exchequer said that ERS was no longer needed because of increased redundancy payments and sick pay. My hon. Friend the Member

  1097
  for Chippenham (Mr. Needham) has dealt with the economic arguments and shown that they are substantial. The Chancellor said that 10 to 15 per cent. at any one time would be involved. That could be 150,000 people, and with a turnover time of 10 weeks it might mean 750,000 people in a year. The Chancellor also discussed the cost. My hon. Friend the Member for Chippenham said that £285 million, £280 million and £130 million have been mentioned, but we do not know the cost. It is difficult to understand how £130 million can be found from the savings in earnings-related supplement, but in the context of the Budget it is not at all difficult to find £130 million considering that increased duty on alcohol will raise £288 million.
  I support the Government's platform. I support the Budget and I support this Bill, with one reservation: I hope that it will be possible to talk about earnings-related supplement in more detail in Committee.
  7.30 pm
  Mr. Robert J. Bradford: It is always a great pleasure to follow the reasoned arguments of my fellow Ulsterman the hon. Member for Peterborough (Dr. Mawhinney), but, having said that, I find myself in sympathy with a great deal of what was said by the hon. Member for Birkenhead (Mr. Field).
  I do not think that anyone in the House questions the validity of reviewing social security benefits. Benefits need to be updated, and it is true to say that the situations for which benefits were inaugurated can change. That change sometimes renders the need for those benefits obsolete or creates anomalies.
  We must look carefully at the provisions of the Bill and ask ourselves whether it will improve or damage the current situation. The Bill is like the curate's egg—good in parts and very bad in parts. Though there is an apparent balance in terms of the number of acceptable and unacceptable clauses in the Bill, there is no balance of importance between the two groups. We believe that the three unacceptable clauses are so important that we shall oppose the Second Reading of the Bill. It is my view and that of my colleagues that the acceptable provisions of the Bill are outweighed by
  1098
  the serious objections that we entertain about the Bill as a whole.
  I do not wish to waste the time of the House, and I shall therefore spend the time available to me in an endeavour to explain why we intend to vote against the Second Reading.
  I strenuously oppose a reduction in the uprating of benefits. The Social Security Act 1975 stated that sickness benefit, unemployment benefit and maternity benefit should rise in line with prices and the cost of living. As I understand it, a Bill in another place is intended to tie the invalidity benefit to prices alone, thus removing the linking of that benefit to the rise in earnings. It is estimated that price increases will reach 16·5 per cent. by November this year. This Bill will limit increases in sickness, unemployment, and maternity and invalidity benefits to 11·5 per cent. in November this year.
  That is objectionable. I find it objectionable for three reasons. The first is because the level of benefit is to correspond with the 11·5 per cent. increase and not the 16·5 per cent. increase in the level of prices. That, retrospectively, penalises the needy. The second reason for my opposition to clause 1 is that the 1981 abatement of 5 per cent. will be based on the already abated 1980 increase. Similarly, the 1982 abatement will be based upon the doubly abated 1981 increase. We have been told, perhaps for good reasons, that the Secretary of State cannot give us an assurance that this abatement will disappear when these benefits are rendered taxable. That compounds our concern and adds to the sense of unease that we entertain.
  My third reason for opposing clause 1 is that it is intended to yield approximately £133 million to the Exchequer. That may be no bad thing in itself. But, however we amass more resources for the nation, I do not believe that it should be the purpose of the Bill to amass those resources by fleecing the poor. At the end of the day however, that is what will happen. We are told that these benefits will not be taxable until 1982–83, but in the interregnum the Secretary of State is taking this opportunity to amass resources for the Exchequer at the expense of the poor. When we add to that consideration the irrefutable fact

  1099
  that if these benefits were rendered taxable in this financial year many of those whose benefits are being reduced by 5 per cent. would pay no tax at all, that provides a further reason why the needy should not be exploited in the interregnum.
  Though I did not intend to do so, I advance a fourth reason for my opposition to clause 1. As I understand it, the principle of another Social Security Bill is that national insurance and supplementary benefit should be aligned. However, the latter will be uprated to 16·5 per cent. and the national insurance benefit by only 11·5 per cent. I believe, therefore, that we are breaking the principle already enshrined in another Bill.
  We also oppose clause 2, which abolishes an index-linked increase in the earnings rule. No consideration appears to have been given to the rise in the cost of living, not to mention the increase in the level of earnings which is the objective of the Social Security Act 1975. On the basis of the increase in prices—the smaller of the two increases—the earnings rule should have reached £60·58. I believe that that figure is accepted by the Opposition Front Bench spokesman. However, the figure is being held at £52 for the foreseeable future.
  The Government are clearly going back on their election manifesto promise, rather than moving forward on their commitment to the electorate. I appreciate that the Secretary of State is concerned to enhance employment prospects, and perhaps that point is related more to clause 5 than to clause 2. As an Ulster Member, I must make the point that such is the situation in Northern Ireland that many pensioners do not have the luxury of choosing whether or not they work. It is an absolute necessity for many of them to work, yet this clause will render it not worth while for them to seek employment.
  I shall not bore the House by rehearsing some of the reasons why Northern Ireland pensioners need to work. The cost of gas is exorbitant—it is three times higher than in the rest of the United Kingdom. Electricity is much more expensive in the Province, and prices in private and public sector housing have shot up in recent months to the extent that the retirement pension simply will
  1100
  not meet the demands on many pensioners in Northern Ireland. There will be a real disincentive to many of those pensioners if this earnings rule is not abolished.
  I move on now to clause 6 to question whether its objective is a legitimate and valid pursuit of a Social Security Bill. Much as I sympathise with, in some way, inducing the trade unions to make a more realistic assessment of the national situation, I doubt whether such a Bill is the right way to pursue that objective. Clause 6 is unique, in that its primary consequence is not the saving or creation of money. The Government are in no position to say that there will be a certain number of strikes next year or the year after and that they will therefore save a certain amount of money by invoking the £12 provision that is implicit in the clause. Since the incidence of strikes is not within Government control, the objective of the clause is clearly to strike at the rights of unions. Whether or not that is a vital priority, it is not and should not be an issue in this Bill.
  Furthermore, the Government cannot ensure that payments from non-Government sources will enable families to exist, let alone subsist, at the higher theoretical level indicated by the supplementary benefit subsistence level. How can the Government determine whether a striker's family can exist, let alone subsist, in those circumstances?
  The difficulties inherent in these clauses will force us to vote against the Bill tonight, and in doing so we hope that these clauses will be amended later into a form that will enable us to accept them along with the other clauses that are already acceptable to us.
  7.42 pm
  Mr. Peter Bottomley: I wish to concentrate on the effect of the Bill on families with children and to emphasise how regrettable it is that in the last Parliament we were not able to establish the principle that child benefits should be indexed. The Government would then have had to argue in the House against that indexation. If it had been possible in the previous Parliament to get the kind of fractured all-party agreement that existed on the earnings rule and on the Lawson-Rooker-Wise amendment, families with

  1101
  children would have been substantially better off. With such indexation child benefit would have been 30 per cent. more than it will be this November.
  The social case for substantially higher child benefits has not been successfully opposed. On the general economic case, as I argued in an article in The Times on 25 March, it is even more essential to have substantially higher benefits.
  I do not want to discuss the other parts of the Bill on which I fully agree with the Government. Equally I shall not concentrate on the areas of which I disapprove. I am not sure that my disapproval goes anywhere near far enough on the major mistake that the Government are making—a mistake made by all previous Governments in most of the years since the war, apart from the 1951–55 Government which increased the child tax allowance. Successive Governments have allowed income support for families with children to decline—in the case of families with two children under 11 from 5 per cent. of the married couple's pension to the low twenties.
  The whole argument about Peter Townsend's relative or absolute definition of poverty is not relevant when we are considering the proposed levels of child benefit. That benefit is lower than it was 25 years ago, and since that time the general standard of living in this country has virtually doubled. In the last year there has been a 6 per cent. increase in disposable income, but not for families with children.
  After making one or two statements in the House and outside about child benefit, a number of people wrote to me asking how to get more support for a campaign for higher child benefit. My answer to them is to join a political party or to attend their trade union meetings. One of the most disgraceful aspects of the Budget is the way in which the trade unions have not got up in arms in support of the high proportion of their members who have family responsibilities. Unions should represent those members just as much as they represent the members who are likely to retire soon. This is a question of bringing the family life cycle into social and economic policy.
  1102
  People write to me asking why parents should get higher child benefit since that serves only to help increase the population. I tell them that that is neither relevant nor true. All the evidence that I have been able to discover shows that the higher the rate of child income support, the lower the birth rate. Even countries such as France which have deliberately set out to increase their birth rates have discovered that there has been a decline the same as or perhaps at times greater than ours. The only way to make sure that the birth rate increases is to drive people into poverty. I do not advocate that and I do not think that those who are not convinced of the need for higher benefits have that in mind either.
  There is an economic advantage to higher benefits. But if we are to reduce the general level of pay settlements from the 15 to 20 per cent. range which appears to apply at the moment to a more sensible 3 to 5 per cent.—a figure which could be sustained by increased trade and productivity—over the next two or three years, which I assume is behind the Government's general economic and financial policy, how will there be relative equity for those in greatest need?
  A letter that I answered this morning was from a single person who asked why he should pay to have child benefit increased. The simple response is to ask that person how, if he had been supporting a spouse and children on a single income, he would have been able to manage over the last few years. I do not believe that either side of the House can talk about family policy and politics until they are willing to see what has happened to the disposable incomes of those looking after dependants at a certain time. When people say that parents should have only the children that they can afford, I have to point out that parents cannot send their children back to the shop as they can send back a colour television when they can no longer afford the rental payments that they could manage when they were slightly better off.
  It seems to me that it is just as impossible for people to provide for themselves before they go to work as it is to provide for themselves when they retire. The arguments apply equally. Some people would argue that parents should not have children until they can afford to bring them up. That argument could

  1103
  just as well be applied to the same income groups to say that they should not get a State retirement pension because they ought to be able to save up during their working lives for their retirement.
  As the hon. Member for Birkenhead (Mr. Field) reminded me, part of my usual talk on this subject describes how housing costs can be spread over 20 or 30 years with a mortgage or with subsidies in the council sector. There is insurance for sickness, however it is affected by the Bill, for unemployment and for old age. Children are the only group to be left out. This area needs the kind of bipartisan approach which existed in the 1974 election manifestos. It seems that the Labour Party, the trade unions and much of the Conservative Party have lost sight of the primary target, which should be to make sure that when we all have to suffer the burden is spread relatively fairly and that when we prosper the benefit is fairly spread as well. During the past 25 years, that is exactly what we have not done for people with children.
  Those who argue that we cannot afford a larger child benefit should ask "Where have we spent the extra 30 per cent, that we would have spent on child benefit if we still had the combined value of the child tax allowances and the family allowances?" The issue has been forgotten in mainstream politics. There are always convenient arguments for not bringing it forward.
  I say to the Government, in the politest possible way, that I shall dedicate myself to this matter rather more over the next year or so. I hope that people do not expect me to curry favour with my Front Bench, as was suggested by the right hon. Member for Salford, West (Mr. Orme). I still have the same habit—which I have not thrown off as a Government supporter—of treating the Government on their merits on the issues involved.
  I look forward to supporting the Government's general economic and financial policies, which I believe will be effective in raising prosperity, Above all, I look upon myself as almost the parliamentary father of family policy—I come 30 or 40 years after Eleanor Rathbone, who might be regarded as the parliamentary mother.
  Mr. Field: The hon. Gentleman is better looking.
  Mr. Bottomley: I did not know that the hon. Gentleman knew Eleanor Rathbone.
  There is growing support, both inside and outside the House, for a reversal of the public expenditure proposal not to increase child benefit. I hope that the Government will decide that it is politically, economically and socially right to ensure that the level of child benefit continues to increase, and that we do not see the fall in real levels that we have seen in the past 25 years.
  7.52 pm
  Mr. William Hamilton: Had it not been for the time limit I would have been glad to lend my wholehearted support, in great detail, to the remarks of the hon. Member for Woolwich, West (Mr. Bottomley). He must have had many sleepless nights during the past 12 months as he watched his Government behaving in the opposite direction to that in which he would have wished them to behave.
  It is not a coincidence that in the first Session of this Parliament a disproportionate amount of time has been spent on legislation and other measures which attack the living standards of those millions of people who depend in whole, or in part, on help from the social services, such as health, education, housing and national insurance benefits.
  Not only are those services being cut back; if one takes a casual glance at the Government's White Paper on public expenditure for the next five years, one will see also that these services are to be the principal victims of continuous and sustained expenditure cuts. Expenditure on police and defence is not to be cut; it will increase substantially no matter what the economic circumstances. In order to achieve that, nurses, hospitals, children, schools and those unfortunate enough to exist on national insurance benefits will have to be sacrificed.
  For the first time since the end of the war, the Bill makes provision for an actual cut, or cuts, in the value of national insurance benefits. The Minister spoke this afternoon about the need to save public expenditure in that area. However, when one looks at the defence White Paper and other areas where expenditure could be cut, one sees that it boils down to a question of priorities. That is where

  1105
  Conservative Members differ from Labour Members.
  I say quite frankly that I shall vote against the Government's proposals on defence. I refuse to go along that road and support a policy of guns before butter, guns before pensions, and massive increases in police and Army salaries at the expense of old-age pensioners and children of families with low incomes. Those priorities are obscene and indefensible.
  Clause 6 reduces benefits for strikers. When I heard the proposition put forward at the last election I could scarcely believe my ears. A striker is to be treated worse than a rapist. If a rapist goes to prison his wife and children are still entitled to supplementary benefit. That has always been the case, on the principle that they are innocent and that they should not suffer from the criminal act of the breadwinner.
  Clause 6 provides that the wife and children of a striker—who may be perfectly justified in striking—will have £12 per week deducted from their social security entitlement. It will be assumed that the unions are paying that £12, even if they are not doing so. Part of the philosophy of the Government is "We must get tough with the unions because that is electorally popular". That may well be so. But it is also part of the doctrine of seeking scapegoats for the shortcomings of the Government's policy, which we have seen in other areas.
  The local authorities are carrying the can for the reduction of social services provision at local level, increased rents, and so on. All those things come back to the Government's cuts in public expenditure. We have heard the emotive terms "the workshy" and "the scroungers". It is part of the Government's policy to place upon the shoulders of those least able to bear them the burdens of their failure to grapple with the real problems of the country.
  As the Bill stands, it is true to say that £12 per week will be deducted automatically. That means that a family with two children will be left with £l3·5 per week, plus a rent allowance. Many Conservative Members have said that the unions should face their responsibilities. The assumption is that all strikes are inevitably the responsibility—and the fault—of the unions.
  1106
  However, there are wicked, inefficient and greedy managements. Many strikes are the fault of management. Let us consider the recent steel strike. The unions would argue strongly that the strike was due mainly to shockingly bad and inefficient management.
  Mr. Bob Cryer: The Government bear responsibility.
  Mr. Hamilton: Yes, the Government bear responsibility also. It is nonsense to assume that all strikes are automatically and without exception the fault of the trade unions, and that they should foot the bill.
  I tried to intervene in the Minister's speech earlier today to ask about a lockout. In that position, the employer says "We are not having you in. We will shut the doors on you".
  Mr. Ivan Lawrence: When do employers say that?
  Mr. Hamilton: Employers often say that. The hon. Member for Burton (Mr. Lawrence) must learn the facts of life. The Government are saying that if that happens the unions are still to blame and that they will have to foot the bill. The Minister knows—there is no more contemptible Minister than the Minister for Social Security, who is now occupying the Government Front Bench—that some unions are not wealthy. Some workers are badly organised. They are in weak unions, which are not able to provide strike pay. Very often employers take advantage of them because they are weak. They incite workers to strike. Some Tory employers may deliberately incite strikes to break the unions in the knowledge that the Bill is passing through Parliament. I know some employers who would do that.
  Let us suppose that there is a strike and that the £12 is deducted. A wife may be left with three or four kids. She may well find that she is unable to support them without the £12. If she is not receiving strike money, she will go to the local authority to say "I cannot care for these kids. You take them off my hands." The local authority will take them into care. It costs at least £100 a week to keep a kid in care. What sort of nonsense is that?
  I was a teacher before I became a Member of this place. A report on

  1107
  teachers' salaries has been issued recently. If I were a trade union leader in the NUT and said "We are not going to accept the contents of the report, but the Government are to fine us £12 a head", I should add "We shall not strike. We shall merely bring out the maths teachers in every school in the country. Alternatively we shall bring out the caretakers." We learnt last winter that if caretakers are brought out there are widespread school closures. That is the type of action that the Bill will incite.
  Another option is to work to rule. We all know what that can do to the railways, for example. If key workers are brought out, the consequences are enormous—for example, the bringing out of 20 power station workers can black out the whole of London.
  Mr. Garel-Jones: Marvellous; that is just what the hon. Gentleman would like.
  Mr. Hamilton: That is what the Bill will incite. The sooner Conservative Members realise that, the better.
  8.4 pm
  Mr. David Myles: I am pleased to take up the remarks of the hon. Member for Fife, Central (Mr. Hamilton). By so doing I may balance things slightly. I am pleased that both of us will operate under the 10-minute rule. That is due to my inarticulate approach and because I would not want to have to listen to the hon. Gentleman for much longer.
  In a democracy there is a great temptation for Governments to buy popularity with taxpayers' money. Precedents are set and commitments made in the name of compassion by those who seek to measure the amount of good that they do by the amount of other people's money that they spend.
  I represent a constituency with a much above average number of self-employed. I usually talk about farming, fishing and distillery interests. It may be found strange that I should venture forth on social security. I shall explain myself. I am not exaggerating when I say that during the run-up to the general election of May 1979 everyone to whom I spoke at any length about politics brought up the subject that is introduced by the Bill. If there was one overriding political concern among those in the North-East of Scotland, it was the inquities of present
  1108
  legislation, whereby many who work hard and diligently and never come out on strike could find themselves not much better off than if they did not work at all. In fact, there are those who find that when they are sick and off work they are better off than while working. The Bill will go some way to correct the "why work?" syndrome.
  I shall not go into the provisions of the Bill in detail because the proceedings in Committee will give us the opportunity to do that. We may examine the Bill line by line in Committee. The hon. Member for Birkenhead (Mr. Field) has left the Chamber. However, I was able to listen to the hon. Gentleman during the proceedings in Committee on the Social Security Bill 1979. He spoke at great length in Committee. I wondered at some of the arguments that he advanced.
  The hon. Gentleman spoke of the means test. I thought that everyone in Britain had a means test. I thought, for example, that that was the method by which taxation was charged. I stand to be corrected. It has been said that we are penalising the sick, the weak, the elderly and the unemployed. However, as the hard-headed but soft-hearted people in the North-East of Scotland so readily understand, money must be made before it can be spent. That is my main reason for supporting the Bill. It represents a facing of reality.
  We have heard of all the dire deprivations that will stem from the enactment of the Bill. They will be nothing to the deprivations that would follow Britain's bankruptcy. It is nonsense to say that all benefits should be indexed if we ignore whether we have the wherewithal to meet the commitments.
  It is true that no one party has a monopoly of concern for the poor, the sick, the helpless, the elderly, the disabled or the unemployed. However, that has been suggested today. I have great concern about unemployment. It seems so often to be ignored that no person can be employed unless there is another person or business willing to employ him. That is why we must support the encouragement that the Government have given to employers to employ.
  Can anyone say that any of the categories to which I have referred are to be seriously disadvantaged by any proposal in the Bill? I shall not waste the time of

  1109
  the House by going into detail. What is more, I do not have time to do so. I am sure that the arguments will be advanced adequately in Committee, including those on earnings related unemployment benefit and supplementary benefit.
  But the broad question must be asked: is this a Bill for which there is general approval? I can say, without fear of contradiction, on behalf of the people of Banff whom I represent, that the answer is a resounding "Yes".
  8.10 pm
  Mr. Andrew F. Bennett: Perhaps I ought to congratulate the hon. Member for Banff (Mr. Myles) since, apart from the Secretary of State, he seems to be the only Conservative Member to have given a wholehearted welcome to the Bill. I expect that he is already lining himself up for the Committee. I wonder whether the Government will find places on the Committee for most of the Conservative Members who have been critical of the Bill, or whether, as with the earlier Social Security Bill, all the critics will be kept off the Committee so that it is filled with people who can be guaranteed to give the Government an easy ride.
  Along with the Secretary of State, the hon. Member for Banff seemed to have little conception of what it really means to be on the poverty line. What depressed me most about the Secretary of State's speech was his complete unwillingness to show any understanding at all of what it is like to have to live on State benefits year after year. Whatever his argument about whether it is relative poverty or real poverty, he obviously did not understand what it was about. He did not seem to have an inkling of what it is like to have only one set of clothes, bought at a jumble sale with little or no chance of renewing them for a very long time. He did not seem to understand what it is like to know week after week that, because one is out of work or sick, one's children will have to go short.
  Having listened to the right hon. Gentleman, I thought that it would be worth while referring to just one letter from my constituency post bag, in the hope that he will be able to read it in the Official Report. It is one of many that I get frequently from people who are expres-
  1110
  sing their concern, their worry, at the low standard of living that they, their family and their children have to put up with.
  The constituent wrote to me because she was concerned about the damp which has been penetrating one of the bedrooms in the flat that she occupies. There has been a long argument with the council about whose fault it is that the room is damp. She writes:
  "Thank you for your letter of the 13th March '80 with the letter from Mr. Wright of the Works Division. My comments on that letter are…I did what they advised last year and the problem was still there when the bad weather came round again. So when he says put foil on the wall before redecorating this year, this is not on this year as I can't afford to waste another £36 on redecorating of one bedroom again…If the problem is due to the tile floor of the communal stairway, then is it not the landlord's responsibility? I only wish the housing problem was not solved with blocks of flats and they built houses instead with the same size rooms. Then the problem of flying objects over the verandahs would not be there. Heating problems would also be different. A house that I could afford would be marvellous. From the 1st April our finances will be very thin from what I understand of the new Budget (1) prescription charges up and no exemption certificate for those on social security."
  She is on invalidity benefit and that is why there is no exemption for her. She goes to the hospital every week. The letter continues:
  "(2) the concessionary bus pass for the disabled is not being re-issued after the 31st March."
  That is a particular measure from the Tories in Stockport. That will be the position unless she pays out £31 a week, or, as she puts it,
  "£31 each for my husband and myself. I use it to go to hospital every week. We do not like being ill. We have to live with it.
  (3) Rent, heating, up, rates, and higher price electricity, TV licences up.
  (4) Invalidity benefit stays around the same. The new rules of the Budget are very hard to understand. I for one get very worried and depressed when I cannot give my family the things they need—a balanced diet, clothes renewed, shoes and bedding renewed. I have been trying to do this now for 26 years, the length of time my husband has been a sick man. How can we live? I can remember being hungry as a child and no shoes on my feet (clogs) and patched clothes to wear. No bedding, just old coats. Those days I thought had gone forever."
  She adds a PS:
  "I pray that we could get a Chancellor who could understand that we do not ask for more than a decent chance to live."

  1111
  I suggest that we also need a Secretary of State who has some understanding of that sort of problem. From his speech today, it seems that the right hon. Gentleman does not understand what poverty is like. I would challenge him to come to my constituency, or to the constituencies of any of my hon. Friends who are in the Chamber at the moment, and to talk to people who are on the poverty line. They would know what it is like to have any cuts in benefits. They are the ones who will be suffering from the Bill.
  I should like to ask the Minister one or two questions. First, how many people remain on invalidity benefits, sickness benefit or unemployment benefit, or a combination of these, for the whole of the tax year? Will not most of these people be £1 a week worse off as a result of these measures? If he adopted in full the idea of taxing benefits, is it not likely that they would have no tax, or very little, deducted from their income? Is he not robbing these people of £1 a week by this interim measure? However much he may say that the full measure will save more money, those people are much worse off as a result of this interim measure.
  The Minister has repeatedly refused to say what will happen when we get to the full tax imposition. Will he then make up the benefits for the amount taken out this year? He said that he cannot predict the future or commit a future Government, yet there are instances in the Bill where he is committing the Government to a proposal for 1981–82. When we talk about the maternity benefit increasing, he talks about putting it away until the later part of 1982. If he can commit the Government on those sorts of things when deferring expenditure, he ought to be able to give a commitment to the House that if he is doing it as an interim measure he will at least restore the value of these benefits once they are brought within the tax framework.
  The Minister was also challenged about the fundamental principle of insurance. It is no good saying that it is done on an annual basis. That will not convince my constituents who have been paying graduated contributions for the last five or six years and who have never drawn any
  1112
  when they come in the next two or three years to draw those benefits. It is no use telling them that they have either disappeared altogether or been phased out. They will feel that they have been swindled, and that if it is right for the Government to tear up one contract that they have made with them there is nothing to stop the Government tearing up other contracts.
  Many hon. Members have dealt with the way the benefits for children have been cut back, so that I shall not press it further, but that is a particularly despicable measure.
  I turn now to the clause which deals with taking away benefits from strikers' families. I urge the Government to accept that there may be at least one occasion when the blame rests not with the trade unions but with the employers. Will the Government consider some way of penalising the employers? Is not the logic of the measure that employers who cause disputes unnecessarily ought to be penalised in some way? Would it not be logical to demand that they pay tax on the profits that they would have made had they not become involved in the dispute? If the Government have an intention of trying to discourage industrial disputes, they should be even-handed in their approach.
  What is the Government's attitude to clearing-up money? Frequently, when a dispute is finally solved, part of the agreement is that some money is paid out either for clearing up the mess—for example, if it is a refuse dispute—or in terms of a tacit agreement that there will be plenty of overtime so that lost production can be made up. In practice, the £12 will simply be an additional cost in the clearing-up argument. Very likely the unions will say that the employer ought to pay out. Where the unions are strong, they may well try to get the £12 out of the employers. But if the union is weak and is not successful, its members will be the ones who are in difficulty. It is really, in that sense, an attempt to penalise the weak unions.
  What is the logic of the pay-round negotiations? I assume that most trade unionists this year will be asking for extra pay to make up for the loss in benefit contained in the Bill. Presumably, if we follow the Government's logic, unions should also be asking for extra pay so

  1113
  that they can charge higher dues, to make sure that they have built up a powerful strike fund.
  The Government are, in effect, very firmly telling trade unionists "Make sure that you put your wage demands in that much higher this time so as to take into account the Social Security (No. 2) Bill." Do the Government really want to fuel wage demands in this way? Have they really thought out the logic of it?
  The next question I pose to the Government is what happens to the person involved in an industrial dispute who finds that either his family or his house is overcome by disaster? As I read the Bill, he will be ineligible not only for benefit for his family but for emergency needs payments. I hope that the Government do not intend this and that they will give us a clear answer. What will be the approach when there is already a matrimonial dispute within the family and the wife is living apart from her husband? Will her benefit be penalised or will she retain it? Or are the Government encouraging families to split up during disputes?
  What depresses me about the Bill is that the Government have no idea—the Secretary of State certainly does not—of what poverty means. If the Government need to save money, they could do it by going after those who avoid the payment of income tax rather than hitting out at the poorest members of society who will have the most difficulty in retaliating.
  8.21 pm
  Mr. Ivan Lawrence: I do not wish to follow the speech of the hon. Member for Stockport, North (Mr. Bennett) who thinks, with arrogance, that only Opposition Members know anything about poverty. Nor do I want to follow the speech of the hon. Member for Fife, Central (Mr. Hamilton), because that would make me angry.
  Mr. William Hamilton: Good.
  Mr. Lawrence: The reason why this Government have to make any cuts at all is that the hon. Gentleman and his Government supported the policies that threw money at every problem, fuelling the fires of inflation. The result is that
  1114
  a responsible Government now has to do something about it.
  It is satisfying for Back Benchers to see their Government implementing a manifesto promise. Few things can be more satisfying for us than the implementation of a manifesto promise that had the overwhelming support of the people at the time and still enjoys that overwhelming support. In the few short minutes that I have left, I want to refer to one of the promises made in our manifesto—the promise to see that the unions bear their fair share of the cost of supporting those of their members who are on strike.
  Of all the measures in this courageous and necessary Bill, none will be so popular as clause 6. The reason is clear: in these days strikes normally hurt the public. They are specifically aimed at doing so. The public stoically put up with strikes but they can never understand why they should be doubly punished by having to pay strikers out of their earnings, savings and taxes, as well as having to suffer the harmful effects of strikes.
  The people who sent me here have never understood why those who wish to make a sacrifice for their principles—which is perfectly reasonable—should expect those whom they are hurting to make a sacrifice for them. Those who sent me here have never understood why people who marry and have children should be encouraged to surrender responsibility for the care of their families to others who have their own responsibilities and problems but who nevertheless continue to work, earn money and pay taxes. The concept of social security benefits for strikers and their families is completely alien and unacceptable to those who have their own responsibilities, especially when strikers' mortgages are paid, their rent is paid, their television rental is paid, or their hire-purchase payments are paid.
  Mr. Cryer: That is pure ignorance.
  Mr. Lawrence: The hon. Member for Keighley (Mr. Cryer) does not strengthen his argument by calling me ignorant. I am merely stating that which is known to be fact, and any social security office will tell him as much. It is completely alien to every comparable Western society to give social security benefits of this kind to strikers and their families. It may surprise Opposition Members, who

  1115
  seem to think that there is nothing more morally wrong with those in work being forced to make sacrifices for others who too often try to extort an extra benefit—
  Mr. Cryer: The hon. Member does not make any sacrifices.
  Mr. Deputy Speaker: Order. The hon. Member for Keighley (Mr. Cryer) is forgetting that if he wants to intervene he must ask to do so. He should not remain seated and continually shout across the Chamber.
  Mr. Cryer: On a point of Order, Mr. Deputy Speaker. I accept your stricture, but you will appreciate that when a person who is paid as a Member of Parliament, and who is a lawyer earning fat fees in the courts for part of the day, lectures strikers and others about supplementary benefits, it goads one into making remarks.
  Mr. Deputy Speaker: I understand that, but if the hon. Gentleman feels that way he should seek to intervene.
  Mr. Lawrence: The hon. Member for Keighley would not have any success if he did seek to intervene, Mr. Deputy Speaker. So uninspiring are his arguments that he has to resort to making bogus points of order. He seems to have done so for most of the day.
  It may surprise Opposition Members to know that until 1966 there never was any right for trade unionists who were on strike to enjoy the benefit, the taking away or reduction of which they are now bemoaning. I do not remember any great national clamour at the injustices of trade unionists not having the right to social security benefits when they went on strike. Most of the opposition to this measure is hollow and thoroughly unconvincing.
  To begin with, supplementary benefit comes to less than 20 per cent. of the total expenditure of people on strike. It is all very well for hon. Members to weep for the children who will suffer, but they are largely protected because child benefit is automatically paid to mothers regardless of whether the husband is at work or on strike. It is all very well for Opposition Members to weep about the so-called low level of assistance given to the needy, but they did not weep when the families of steel strikers were considered to be
  1116
  more needy than the crippled invalids in our society who might have benefited by an increase of £1 per week in mobility allowance, which could have been paid had we not been paying the £9 million to strikers and their families, especially when the steel union had £l1 million out of which it could have paid benefits to strikers.
  Apart from the economic benefits that would come to our citizens by reducing benefits to strikers' families there may also be a gain for industrial relations. If unions have to pay more for strikes than the 2½ per cent. of their income they now pay, they may be less inclined to strike or less inclined to do so for long periods. If strikers have to rely on their unions paying them rather than automatically receiving State benefits the union may have better control over unofficial strikers.
  It is for those reasons that the people who sent me here overwhelmingly support this measure. It is not only those who sent me here who support this measure; The Sunday Times opinion poll shows that there is a 2 to 1 support for this measure throughout the country. It follows that those who oppose the measure are out of touch with the people, and that is doubtless why they lost the election.
  My only regret is that the Government did not find it possible to do away altogther with the subsidy for strikers. Had they done so they might have instilled even more responsibility into some of the unions and some of those who see no need to be responsible for their own families. There might also have been fewer strikes, more productivity and more wealth created, and therefore more money available, so that some of the criticisms made by hon. Members need not have been made, or been justified. I hope that the time will come when we will look at the matter again. Meanwhile. I congratulate the Government on their courage in bringing forward the Bill and I hope that it is passed without amendment.
  8.29 pm
  Mr. John Maxton: This is a remarkable piece of legislation, in one small respect. It is the first time in parliamentary history that we are repealing part of a Bill that is not yet

  1117
  even on the statute book. If we look at the schedule at the back of the Bill we see that it refers to the Social Security Act 1980. Part of that Act is to be repealed. But that measure is not even an Act yet, and the Government are already repealing part of it. I wonder whether it is valid to produce a Bill repealing part of something that is not even on the statute book.
  Besides being a remarkable piece of legislation, this Bill is a squalid and nasty measure. It is nasty because it hits at the poorest and weakest in our society. It is squalid because it attempts, through a Social Security Bill, to introduce legislation that has nothing to do with social security, but everything to do with hitting the trade union movement. It is squalid also because it is underhand. The Government are using dirty tactics in doing it this way, rather than by more legitimate means within the House.
  Clause 1 deals with de-indexation—a rather ponderous and nasty word. Not maintaining the indexation of benefits to the unemployed, sick and the handicapped in our society is really a nasty action. At present, average earnings are at least keeping pace with inflation. Earlier this week the Chancellor of the Exchequer said that the Government were allowing a 25 per cent. increase in their employees' earnings—that is above the present rate of inflation. The last report of the Department of Employment on the increases in earnings of the highest paid people in this country—those earning more than £20,000—shows that they are receiving at least a 23 per cent. increase in their earnings, on top of the enormous tax benefits that they received from the Government. Therefore, practically everyone else in the society is keeping pace with inflation—I accept that there are some lower-paid people who are not; but most people are—yet the poorest, the unemployed, the sick and the handicapped will not receive that benefit.
  The fact remains that these sections of society are the hardest hit by inflation. If one is earning in excess of £20,000 a year and inflation goes up by 20 per cent. and one's earnings do not keep pace with it, one still has many choices. One can decide whether to replace the wife's car this year or next; one can decide whether to buy a Prestel set for the television this
  1118
  year or next; one can decide whether to have a video tape recorder. Even if one is lower down the income scale, one still has choices. One can give up some of the payments that were planned and put them off until next year. The things that one gives up in these circumstances are not the necessities of life.
  The poorest people find that the large bulk of their income is spent on necessities—housing, clothing, heating and food. They have no choice. If they cannot keep up with inflation they must either buy second-hand clothes for the children in a jumble sale or buy cheaper cuts of meat. Those are the choices faced by the poor.
  Also, in many cases the poor pay more for their basic necessities than do many of those who are better off. They do not have lump sum payments, and they cannot afford to go to big superstores on a monthly basis. They cannot afford to buy necessities in bulk at lower prices. They do not have the deep freezers which enable them to get food at cheaper prices. They have to buy on a daily basis from the corner store. As a result, they buy more expensively. This Bill will mean a dramatic loss for many of the poorest in our society. That is why it is squalid and nasty.
  There is a class point to be made on clause 4. Most of this legislation is class based—it hits at the working class again and again. Let us look at the earnings-related supplement for maternity allowances and who receives it. If one is a woman in a profession, such as teaching—in other words, middle class—one will not lose by this clause. In teaching, and probably in other professions also, a woman who works up to six months of her pregnancy receives three months' full pay after she has left her employment. In other words, she is paid her full money up to the time that her baby is born. Thereafter, she receives three months' half pay. Therefore, earnings-related benefit does not affect her. It does not affect the middle-class professional woman. It hits the working-class girl. She may be employed as a shop assistant or be in a job where she receives no such benefit from her employer. This is a nasty piece of class legislation.
  Most Opposition Members are particularly concerned about clause 6, which relates to strike pay. Perhaps I am

  1119
  ignorant, but I found the Secretary of State's speech very confusing. He used a variety of different terms when describing those who will lose this benefit. He used the phrase "strikers". Then, in response to an intervention from a Conservative Member, he used the phrase "those involved in an industrial dispute". He also used the phrase "those affected by an industrial dispute". I do not know the answer. Will only those whose union has specifically called them out on strike lose their benefit? Does the provision affect anybody in a factory or firm who is locked out by his employer because people in another firm are on strike and consequently his factory cannot operate. If that is the case, the provision is disgraceful. The whole legislation is disgraceful.
  A union might specifically tell its members not to go on strike. I have been in such a position. During the steel strike one or two unions told their members not to strike. However, those members could not go to work because they had no work to do. Will those people find that they cannot get their benefit? If that is so, it is disgraceful. I hope that the Minister will answer those points.
  Even if the provision affects only strikers, it remains part and parcel of a damaging piece of legislation that is directed against the working class. We have heard about the number of strikes that take place and the damage that they do to the economy. However, that proves only that the Government are incapable of reading basic statistics. If so, they should not be in office. Such statistics prove that this country's strike record is considerably better than that of many other countries. If the Government can read statistics, we must find other reasons for a piece of legislation that is directed against the trade union movement.
  Many Conservative Members and many firms, insurance companies and banks which back the Conservative Party are after one thing. They want cheap docile labour. The Secretary of State tried to suggest that the Bill should be taken in two parts, and that clause 6 should be taken on its own. However, those parts come together. The reduction in unemployment benefit makes it less likely that people will take action and put their jobs at risk. People are less likely to stay off work when they are ill. They
  1120
  will stagger in to work. That is cheap docile labour.
  The Government are attempting to castrate those organisations—the only organisations in some ways—that specifically work to protect the interests of the working class. This is not a single piece of legislation, but part of an overall design and strategy that seeks to hit the working class and to take all the power away from the trade union movement. For those reasons, I oppose this piece of legislation.
  8.39 pm
  Mr. Tristan Garel-Jones: My hon. Friend the Member for Chippenham (Mr. Needham) referred extensively to the proposals on earnings-related supplement. My hon. Friend covered that topic adequately, and I do not propose to go over it again. I hope that my right hon. Friend the Secretary of State will do all that he can to ensure that the Treasury takes on board my hon. Friend's powerful arguments, so that at least the self-financing part of ERS, which I understood from an intervention that I made to my hon. Friend's speech is about 85 per cent., will be retained.
  My hon. Friend the Member for Woolwich, West (Mr. Bottomley) dealt with child benefits, which I shall also not go over again. The Government have rightly admitted that the first effects of their counter-inflation policies will be to increase unemployment, and we should therefore reconsider ERS and increasing child benefit to a much greater extent.
  I shall concentrate on clause 6, which proposes to reduce the payment of supplementary benefit to strikers' families. It is an excellent clause. I do not wish to place Labour Members in too uncomfortable a position. I am not a manifesto man. One should not be too detailliste about a manifesto. It is, however, worth saying that the Conservative manifesto at the last election said of this country's strike record:
  "One cause is the financial treatment of strikers and their families. In reviewing the position, therefore, we shall ensure that unions bear their fair share of the cost."
  Few people in this country can be unaware that this Government's intention was to move towards a position where the trade union movement bears a greater share of the cost of financing the living standards of its members during strikes.

  1121
  We have heard much hyperbole from the Opposition Benches. The hon. Member for Fife, Central (Mr. Hamilton) took up the point made by the right hon. Member for Salford, West (Mr. Orme). He suggested that trade union members were being treated worse than criminals—I believe that he said worse than rapists. A criminal has taken an action that has placed him outside the law. It would be quite wrong for his family and young children to be penalised while he is paying the price of his action.
  Following that analogy through, the trade union movement becomes the criminal—and I do not accept for one moment that it is a criminal organisation. It is a responsible organisation—an estate of the realm. It can rightly be held responsible for its actions and those that it induces its members to take. The hon. Gentleman's argument does not stand up to examination.
  Mr. Maxton: The Employment Bill makes it possible for a striker to end up in prison. Is the hon. Gentleman suggesting that before a striker goes to prison he will not receive benefit but if he happens to go to prison his family will receive benefit?
  Mr. Garel-Jones: Like many of his hon. Friends, the hon. Gentleman appears to believe that it is his duty and that of the trade union movement to encourage trade unionists to place themselves outside the law. That is not the traditional role of the movement or the intention of responsible leaders within it.
  The right hon. Member for Salford, West quoted extensively from Mr. John Gerald Gennard. I took the trouble during the debate to leave the Chamber and follow up the somewhat selective quotations that the right hon. Gentleman made. The chapter that he quoted from opens with this sentence:
  "The general principle of national insurance legislation is that those involved in a trade dispute are disqualified from benefit. The definition of a trade dispute contained in the Trades Disputes Act 1906 means that workers locked out are also disqualified, along with those who refuse to cross picket lines and those who are indirectly involved in disputes."
  My right hon. Friend the Secretary of State said that, since the National Assistance Act 1948, increasing numbers of strikers had claimed this benefit on behalf of their families. In the hook by Professor
  1122
  Gennard there is a table which makes the position clear. It gives the figures from 1949 to 1974. In the years 1949, 1950, 1951 and 1952 there were no recipients. The way in which the figures increase over the years until we reach the final date given, 1974, is staggering. My right hon. Friend developed the theme further, giving us the cost to the taxpayers of the recent steel strike.
  Perhaps the most selective thing that the right hon. Member for Salford West did was to imply that the treatment proposed under the clause was different from that given by other countries, by our partners in Europe and indeed by the United States. He quoted one sentence:
  "In some cases such assistance—
  that is the additional assistance which the other countries are alleged to give—
  "is provided from central Government funds but in others it is only available from a lower level of Government."
  I then read on to see what was this kind of assistance. For example, I found that in Holland there is a possibility that any assistance can be recovered by the authorities, and that in Germany assistance is repayable and severe standards are applied to decide what is hardship. In France there is an example which I am sure will appeal to many hon. Gentlemen. The passage continues:
  "However, in practice, in the "left-wing"-controlled municipalities, sympathy with strikers is usually shown by giving assistance in kind, usually free meals and food parcels."
  Earlier the hon. Member for Bootle (Mr. Roberts) introduced a Ten-Minute Bill to provide for a kind of independence for Bootle. I dare say that hon. Members representing the area would approve of this dispensation for food parcels and other kinds of charity. To imply that the assistance listed here is given by other countries but not by this country is to mislead the House.
  In conclusion, I quote from the final paragraph of the chapter quoted by the right hon. Gentleman. It describes the kinds of measure that we should consider. It says:
  "In many countries the issue of public aid to strikers has not become the centre of debate as in the UK and the USA because there are fewer strikers and few very long and big strikes where the need for assistance is likely to arise. In addition"—
  this is the most important point—
  "the trade unions provide a more generous level of strike pay in disputes than those in

  1123
  Britain so that official strikers are often receiving financial support from their trade unions at a level which excludes them from public assistance programmes."
  I regret that the right hon. Gentleman did not see fit to quote that passage, as clause 6 takes an important step towards that position in this country.
  8.50 pm
  Mr. Allen McKay: The hon. Member for Watford (Mr. Garel-Jones) was taking examples from Europe and he should therefore also take examples of wage rates and of the contributions that are made to trade unions. History will show that this Bill is one of the most despicable that this present Government have tried to put on the statute book. A lot has been said about the Bill being welcomed widely by the general public. That, I think, is only because the attitude of employers to what has happened has not really got across.
  A person who becomes unemployed or sick faces a traumatic change because of finding himself not only unable to work but also unable to pay his way. What this Government have done is to deduct 5 per cent. from unemployment and sick pay purely and simply to try to force a person back into work. On top of this, they have stopped the tax rebate due to a person until he returns to work, and this has further implications for the finances of such people.
  The earnings-related supplement was a scheme that was originally welcomed as a means of cushioning the first effects of unemployment. It was intended to provide benefit for a person moving from one job to another, so that he would not have the experience of dropping from a high level of income to a low level of income in the period in which he was making the change. In this connection, I should like to ask the Minister what happens to such schemes as the National Coal Board scheme, the redundancy payments scheme and the sick pay scheme, of which earnings-related supplements are part and parcel. Who is to pay that difference? Is the National Coal Board to pay it, or will the Government pay it, because the earnings related supplement is part and parcel of the income under the national redundancy payments scheme and the sick pay scheme.
  Turning to the £12 deduction from payments to strikers' families—that is
  1124
  what it means, since, whatever the Government may say, the strikers have already had £15 deducted and the £;12 is deducted from the strikers' families—what is the legal position of the striking steel workers to whom an amount is already deemed to have been paid by the uinon but has not been paid? I have written to the Minister about this but have not had a reply as yet. What I want to know is the general policy position of people who have had an amount of money stopped from the social security payment to their families because it has been deemed that that money has been paid by the trade union, when in fact it has not. Will this money now be paid to those people? The Bill is trying to make the position legal, but if it has deemed that it has been paid beforehand I am sure that if is illegal.
  Mr. Cryer: Would my hon. Friend not accept that there is also a difficult legal position in the case of managements who cause lock-outs, because the trade union members will be locked out and therefore will be without work and will presumably come under this legislation? This is what happened when the British Leyland management at Speke created a strike. There is ample evidence of that. Would my hon. Friend care to enlarge on that?
  Mr. McKay: I agree with my hon. Friend that is exactly what will happen. It will make a good employer bad and a bad employer worse. This is legislation against the trade unions and in the case of industrial disputes there will be an alternation in the attitudes and the implications of the disputes. What will happen is that trade unions will bring out selected people, and not the whole lot.
  The question arises whether, if the employer then locks the other people out, the Government will legislate against the people who are locked out in addition to those on strike, because if they do that they will be changing the fundamental approach to all industrial relations.
  I accuse this Government of two things. First, by their policies they cause unemployment and then they bring in legislation against unemployment pay. Thus they bring into industrial relations attitudes which cause strikes. And let us not forget that these are the champions of free collective bargaining. The Inns of

  1125
  Court, a society of conservative lawyers, made the position quite plain when it said:
  "Thus it becomes clear that the right to strike can only be justified in a competitive economy."
  It is that type of economy that the present Government champion.
  "As for a deterrent, it is not feasible to impose normal sanctions of a court of law on those who strike or call a strike that is unreasonable or irresponsible. One cannot send people to prison or enforce an injunction against them or even bring them all before a court of law and fine them. It is elsewhere that sanctions must be found."
  The Conservative Government have sought to define these sanctions by legislation not against the striker but against the striker's family. This will lead to a worsening in industrial relations; the workers' attitude in a dispute will be intensified; strikes will tend to be made official immediately; co-operation between trade unions will be encouraged; the unions will withdraw selected work people, and there will be higher wage claims.
  In spite of what has been said by Government supporters, trade unions do not have strike funds. Most union funds are invested in employees' welfare and sick pay schemes.
  Mr. Peter Bottomley: That is not true.
  Mr. McKay: It is absolutely true. Most trade unions have no strike fund, so the legislation will compel more people to pay more into union funds. That will lead to higher wage rates and more disputes.
  8.56 pm
  Mr. Iain Mills: I noticed that the House was empty, so I thought that there should be some comment on the Bill from the heart of the West Midlands. Throughout the council estates of the West Midlands—I speak for one of the largest—there is a great divide between the incentives to work and the incentives not to work. The choice between whether to strike and to withdraw labour or to continue to work has become too difficult for the ordinary working man. Therefore, the changes proposed in clause 6 are extremely significant.
  Whatever hon. and right hon. Gentlemen on the Labour Benches may say
  1126
  in their sophistry in the House, however they argue in favour of or against trade unionism or against the structural problems of trade unionism, this is the reality I should like to put before the House tonight. It is wrong that the money of the ordinary person living in an ordinary council house on an ordinary council estate should be used to support other people's right to withdraw their labour. Why should they continue to fund the right of other people to withdraw labour when they have no choice, no interest in and often no support for that decision? Should not the ordinary working person in the ordinary council estate have some form of redress or balance in the difference between working and not working.
  We should not assume that the Labour Party has a right to speak for people on council estates. Some of them showed in May last year how popular is the Conservative Party. I assure the Opposition that on the council estates the most popular action the Government could take would be to make it more difficult for people to withdraw their labour.
  I should like to see a little reality brought back to the great industries of this country. I spent 18 years working in one of them, having worked my way up from the shop floor. Many Opposition Members have never seen a shop floor and they speak from theory rather than from practice. What it comes to is that a worker may withdraw his labour but he must not depend on the taxpayer to pay for it. If a little justice is done by the clause, it will be justice well done.
  9 pm
  Mr. J. W. Rooker: The hon. Member for Meriden (Mr. Mills) has a bit of a cheek in claiming to speak on behalf of the West Midlands and making the allegation that my hon. Friends do not know what the shop floor is like. He has clearly not read the Bill. Most hon. Members have said that clause 6 is the major part of the Bill. I take a contrary view. There are equally important parts of the Bill to which I have a fundamental objection, but, at least, those hon. Members who have spoken have shown that they have read the Bill. The hon. Gentleman showed clearly that he had not read it.
  One point made by the hon. Member for Meriden with which I agree was his

  1127
  implied criticism of the thin attendance for the debate. My hon. Friends and I who have been present would not go as far as the present Secretary of State for the Environment in swinging the mace above his head, but the Bill makes us feel close to that situation. We understand the implications of the Bill for people outside the House.
  There have been more of my hon. Friends wishing to speak than Conservative Members. It has to be remembered that two speakers from the Opposition Benches were not members of the Labour Party but members of Opposition parties, entitled to have their views heard. We have shared our time with those parties. My hon. Friends have put up a good case against the Bill.
  The Bill and its ramifications show that the Government have sanctioned a direct attack on the underdog, a declaration of war on the poor and the needy. Not much has been made of the fact—some of my hon. Friends have referred to it—that the Bill is a further attack on women's rights and benefits. I shall return to that aspect.
  As my right hon. Friend the Member for Salford, West (Mr. Orme) said when the Bill was announced in the statement following the Budget, this measure is a fundamental attack on the trade union movement. The Government's hands are not clean on the matter of supplementary benefits for strikers' families. Up to now, many people would have regarded the Tory Party, in and out of Government, as generally sniping at the people of this country on whose backs they have trodden for so long. With the Bill, the Government have shown clearly not just to the Opposition but to people outside the House that they are spoiling for a fight. I reckon that they will get one.
  It may not have become apparent to millions of people what will be the effect of the Bill on their benefits and the benefits of their families and their loved ones. That will come home later in the year. The people of this country, at the general election last May, did not sanction this Government offensive. They did not sanction what has turned out to be a very offensive Government. They did not sanction this Government offensive against the people.
  The methods proposed in the Bill for cutting benefits were not contained in the
  1128
  Tory Party manifesto. The Government cannot claim that the manifesto gives them the right to take these measures. There are six substantive clauses in the Bill dealing with six separate issues. Three of those issues—the interruption of the linking of the weeks for benefit from 13 weeks down to six weeks, the earnings-related supplement and the unemployment benefit to occupational pensioners—were not mentioned in the Tory manifesto.
  On the de-indexation of short-term benefits contained in clause 1, the Tory manifesto said:
  "Raising tax thresholds will let the low-paid out of the tax net altogether, and unemployment and short-term sickness benefit must be brought into the computation of annual income."
  The computation of annual income is not used as the system under the Bill. There was no mandate in the Tory manifesto. On the earnings rule issue, in clause 2, the Tory manifesto said:
  "It is wrong to discourage people who wish to work after retirement age, and we will phase out the 'earnings rule' during the next Parliament."
  The Government have said that there is only a temporary abatement. But it is a freezing of the system. Further legislation will be required to get the matter going again. It is clear that the Tories have reneged on the promise in the manifesto and the commitment made while in opposition.
  The Government have no mandate for the provisions relating to strikers' families. Of strikes the manifesto said:
  "One cause is the financial treatment of strikers and their families. In reviewing the position, therefore, we shall ensure that the unions bear their fair share of the cost of supporting those of their members who are on strike."
  The provisions in the Bill to cut benefits are not based on that proposition. Detailed arguments in Committee will show that the Government have no mandate for their proposals for strikers' families.
  Mr. Garel-Jones: The hon. Member says that the provisions in three clauses were not included in the manifesto. By his logic, the provisions of the other three clauses must have a mandate. However, he argued that there is no mandate for them either.
  Mr. Rooker: I refer the hon. Gentleman to tomorrow's Hansard. I have tried

  1129
  to spell out how the provisions in each of the six clauses were dealt with in the manifesto. I said that the provisions of three of the clauses were not mentioned and, by implication, that those in the other three were mentioned. The methods proposed in the manifesto are not the same as those in the Bill. We are entitled to take exception to them.
  Nobody, not even the Tory Party, claimed during the election campaign that economically all in the garden was rosy. I remember, as do almost too many of my constituents, having the distinct impression that the Tory Party thought that it had all the answers. However, millions of people were not told the detailed proposals of the Tories' plan to cut spending on the Welfare State.
  For instance, the people were not told that the party which bellyached for years about widows planned to cut £15 million from expenditure on widows. I am surprised that we have not received representations from the widows' associations. They were not slow in coming forward to complain that the Labour Government did not do enough for widows. However, the Labour Government never cut widows' benefits as the Bill does. Clause 4 cuts widows' benefits by £15 million. Benefits to mothers are cut by £35 million in the same clause. A total of £50 million is to be taken from women as a result of the earnings-related supplement.
  One must examine the other side of the Budget equation. The Budget gave a £70 million handout in capital gains tax. Is that to be paid for by widows and mothers in the first 26 weeks of widowhood and motherhood? We have not heard complaints from Government Members about that.
  The hon. Member for Watford (Mr. Garel-Jones) devoted his speech to one clause. I had the distinct impression from his previous speeches that he does not agree with the other five clauses but that he could not bring himself to say so tonight. If he wants to claim that I am wrong, I shall be happy to give way to him.
  Mr. Garel-Jones: I am flattered that the hon. Gentleman should pay so much attention to my speech. I opened my speech by referring to the contributions by my hon. Friends the Members for Chippenham (Mr. Needham) and
  1130
  Woolwich, West (Mr. Bottomley) and said that, since I agreed with the content of both, I did not wish to trouble the House by going over the same ground.
  Mr. Rooker: The hon. Member for Watford is against five clauses and in favour of one and he will vote for the Bill. We shall put him to the test on Report if he is not a member of the Committee.
  Mr. Ennals: The Tories did not only say that they would take action on strikers' families but they went out of their way to say that they would not cut benefits. They accused us of lying when we said that we feared that that was what they would do. My hon. Friend is being too kind to Government Members.
  Mr. Rooker: I hope that when I sit down I shall not be accused of being too kind to this reactionary Government.
  It must be made clear that all widows are affected by the Bill, including the widows of men killed at work. That point has not been made in this debate. Industrial injury benefits are cut in the Bill. They are cut under the abatement and they are cut under the earnings-related rule. The widows of men killed at work or who die as a result of contract-a work-related disease will lose the earnings-related supplement.
  Of course, we are speaking of a small number of people. On average, only 25 to 30 people die each week in this country as a result of an accident at work or of industrial disease. Those people are the underdogs whose families we should be looking after, yet they are the very people being attacked by the Government. However, I suspect that once the trade union movement gets wind of some of the effects of these cuts—Bank Holiday has intervened and the Bill is being rushed through so that the Government can effect the cuts by November—the Government will know about it.
  This is not a Bill, as some Conservative Members have said, designed merely to attack strikers and create work incentives. How the hell will we achieve work incentives by cutting the benefits to the families of those killed at work? That is a provision in the Bill and it should be made abundantly clear to people outside this House.

  1131
  The philosophy behind this Bill is nasty, sick and nauseating. What are the Government doing? If they think that the sick and the unemployed will take this lying down without fighting back, they have another think coming.
  It is appalling that we know from press reports—I have no reason to believe that they are innacurate—that many Conservative Members believe that these cuts do not go far enough. In the Financial Times on 4 April, under the headline "Tory fire on Biffen", a story appeared which said that the Chief Secretary to the Treasury
  "came under sustained criticism from Conservative backbenchers last night for the modesty of the public expenditure cuts announced on Budget Day."
  The Chief Secretary is alleged to have replied that the Cabinet had deliberately chosen a gradual strategy so that the country's social cohesion could not be overstrained. It will not be overstrained. It will be overstrained to breaking point and that will produce a whiplash that will throttle Conservative Members. It will be no good then for the Government to look to the Opposition to bail them out of the trouble they have landed themselves in with the trade union movement and the people.
  The Government does not appear to belong to the party which was elected in 1970 when the right hon. Member for Sidcup (Mr. Heath) spoke of one nation. This Bill is splitting the nation apart. As we have seer, during the last 11½ months, the Government are soft on tax dodgers. They parade about the country alleging that the Opposition are soft on social security scroungers and those who abuse the Welfare State. So far I have never heard any of my right hon. Friends say that it is right to rip off the public purse. All we ask is a little sanity and that the Government should not chase the tadpoles while the whales are still in the ocean. Because of cuts in the number of tax inspectors, the Government have made it easier for people to fiddle the tax system.
  At the same time, the Government have the nerve to attack those people who are off work because of sickness. The Government propose to save £185 million by cutting sickness benefits and part of the reason for that policy is alleged to be the search for incentives. The Gov-
  1132
  ernment say that their policy is not merely a matter of public expenditure cuts but also of incentives.
  If the Government really believe that people off work are not ill, what do they say about the doctors who sign the sick notes?
  They do not stop there. They follow it with an attack on unemployment benefit in the first 26 weeks with a saving of £110 million. They then attack injury benefit—the money collected by the work wounded, people who are at home off work, some of them never to work again and suffering from any one of 51 prescribed industrial diseases. That list of 51 is not very long. There are many other diseases that we believe are work related, but somehow we cannot seem to get them listed as prescribed industrial diseases. The sorts of diseases that people get from their work, and the benefit paid in respect of which is being cut by the Government, are cancer of the nose, lead poisoning, mercury poisoning, viral hepatitis and farmer's lung. When I read the definition of farmer's lung I thought that it ought to be called farm worker's lung, because I suspect that not many of the fat-fed farmers get farmer's lung. I suspect that it is the farm workers who suffer from it.
  Mr. Peter Mills: Speaking as a farmer, I can assure the hon. Gentleman that the disease is more prevalent among farmers because it usually occurs on the very small farms which do not employ farm workers.
  Mr. Rooker: The obvious solution is for the hon. Gentleman to vote against the Bill and against the attack on the work injured. [HON. MEMBERS: "Withdraw."] I did not say that no farmers contracted farmer's lung. I said that I suspected that it ought to be called farm worker's lung because farm workers were most affected by it. Therefore, there is no reason for me to retract what I have said.
  Savings from the unemployment, sickness and industrial injury benefits will total £360 million. That figure is exactly the sum handed out in the Budget through the relaxation of stamp duty and capital transfer tax and through the profit-sharing scheme. These benefits will have been paid for. It is no good the Minister's arguing that it is a pay-as-you-go scheme when the benefit received relates to a contribution year which could be two years earlier.

  1133
  The Secretary of State knows full well that the earnings-related supplement due to be paid between January 1981 and January 1982 was paid for by national insurance contributions in 1979–80.
  Mr. Patrick Jenkin: The hon. Member is confusing two things. One concerns the measurement of the entitlement. The benefit in the calendar year is measured by the amount of the earnings-related contributions in the fiscal year. The second is that it is paid for by the contribution paid in the year in which benefit is received. The hon. Gentleman should recognise those facts.
  Mr. Rooker: That is the point that I described as deliberate sleight of hand. For millions of people outside their entitlement to benefit, depending upon the contributions in the previous tax year, is the link between the two. That is what they are concerned about. Of course, the Government have eased their position a little by announcing some of the changes before the end of the last tax year, and that has avoided their being placed in a worse mess than they are in already. I have here a quote that is a few years old, but it describes what will be the feelings of the people of this country over the cheating that is taking place over this benefit.
  "The broad mass of the people face the hardship of life undaunted, but they are liable to get very angry if they feel that they have been gulled or cheated."
  Those words were uttered by Winston Churchill in 1943, but they are appropriate to the cheating that has gone on in respect of the cuts in the Bill.
  Mrs. Fenner: How many times has the hon. Member quoted Winston Churchill?
  Mr. Rooker: Several times before, because Conservative Members do not like it. Occasionally there were words of wisdom from that old man. The words that I have quoted were words of wisdom. They were the truth and they apply to this Bill. The Conservatives will soon find out the truth of those words.
  Clause 1 is a massive attack on the people. For the Government to bring forward this proposal and say that it is in lieu of taxation or that it is not proper taxation belies belief. The Government know that there are people in this
  1134
  country who during the next financial year will have a cut in benefits when their total annual income is less than the tax threshold. How can that be equality before the law when annual increments are treated on a different basis simply because of the massive cut that the Government will make? The cut will affect single people, couples, people on invalidity benefit and others. It can affect people at work. Someone who may have worked for nine months could be better off if his sickness benefit were taxed than he would be under this system. That is what is so crazy about this proposal. The Government claim that it will not hurt many people because the cut will bring in only £130 million, rather than the £450 million that they would have received from taxing benefits. However, it will be a different group of people who will pay for the cut.
  I consider this clause to be a charge upon the people because it is in lieu of taxation. The Government have indulged in sleight of hand. They should have introduced a ways and means resolution on the matter. It is a tax measure, and they are trying to tax people in a grossly unfair manner.
  I fail to understand how the House could sanction such inequality and unfairness to our citizens. I hope that Conservative Members, who talk about the underdog in society, equality and fairness, will follow their mouths with their votes when the time comes. They have not been good at doing that since the Government came to power. I am becoming sick of the speeches by Conservative Members, which are applauded in journals such as the New Statesman, who say "The Tories are talking about the underdog. We should hear something about that from Labour Members". Yes, Conservative Members do talk about the underdog. Yet they will vote at the end of the debate to kick the underdog in the teeth.
  I turn to clause 6, which deals with strikers' benefits. The definition of a trade dispute is contained not in employment legislation but in social security legislation. My hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton) was correct in the example that he gave of workers locked out. Whether or not they are involved in the dispute, they will be caught by the clause. They will be caught

  1135
  whether or not they are members of a trade union. I shall be interested to hear the remarks of the Minister on this matter when he replies to the debate, bearing in mind the answers given by the Secretary of State earlier today. The Government think that they will find a way to differentiate between union and non-union members. Why is it that they have not yet been able to do that and enshrine it in legislation, so that their manifesto promise to put the burden on the unions could be carried out? They will try to use a back-door method. Such proposals will affect both official and unofficial strikes. About 90 per cent. of the disputes are unofficial, although the number of working days lost as a result of those strikes is out of proportion because of the odd massive strikes.
  We have heard the changing tune of the right hon. Member for Leeds, North-East (Sir K. Joseph). I looked at the original quote in the Tory campaign guide for 1974. It was an excellent campaign guide for Labour candidates because most of them returned to the House after the election. It is incredible that the right hon. Gentleman should have used the words that he did at a Tory Party conference. What will happen when pictures of hungry children appear on our television screens? It will be the Prime Minister's equivalent of the Kampuchea experiment—starve them, send them out and tackle them in that way. The photographs that people have seen of the starvation in Asia will not be reflected in this country. But, believe it or not, there will be the odd example that Conservative Members will claim is blown out of all proportion by the press.
  Mr. Peter Bottomley rose—
  Mr. Rooker: No, I shall not give way. I have only six minutes left. If I find that I can give way to the hon. Gentleman later, I will do so.
  The Government's hands are not clean on the issue of supplementary benefit for the families of strikers. I can prove that the Government have been bounced into the measures contained in the Bill since October. We all knew that they were planning to act by way of a loan or by deeming that the unions had paid a certain sum. It was their intention to put that in legislative form. Both those approaches were found to be impractic-
  1136
  able. At one stage it appeared that the idea had been dropped.
  When a striker went to a social security office a year ago to claim supplementary benefit, he was told that he could not claim it. He was given departmental form BO 3TD, which told him that he could not claim benefit. The form did not mention that he might be able to claim benefit for his dependants; no advice of that sort was given.
  The issue was taken up by some of my hon. Friends and myself during the winter of 1978–79. It was agreed in principle that claimants should be made aware of their rights. Nothing was done before the general election. Late in 1979 a reprint of the leaflet was due, as was made clear to me in an answer given by the Under-Secretary of State for Health and Social Security on 25 October 1979. I asked the hon. Lady whether the words that appeared on the leaflet had been changed. She told me that they had not but that a reprint was due. She added that the issue I had raised with my right hon. Friend the Member for Salford, West would be taken into account.
  I asked the Secretary of State only last week whether the words on the form had been changed since October 1979. I received a one word answer—"Yes". I telephoned my local office to ask whether it had a new form. It sent me a copy. At the bottom of the same form attention is now drawn, in bold capital type, to the right of the striker to claim benefit for his dependants. It states:
  "For information about benefit for dependants see leaflet SB11."
  The Government have—
  Mr. Patrick Jenkin rose—
  Mr. Rooker: No; hang on. The Government have adopted a measure that I applaud. They are now telling people of their rights. I am demonstrating that the Government have been bounced. If they knew that they were to make the £12 reduction they would not have gone ahead with the reprint since October 1979.
  Mr. Jenkin: The hon. Gentleman has blown himself right out of the water. Families will still be entitled to the supplementary benefit less the £12.
  Mr. Rooker: There is £15 off for the person on strike and £12 off for the

  1137
  family. That does not leave much change at the end of the day for the small number who will be affected by this measure, or those who will receive the benefit.
  Mr. Peter Bottomley: Will the hon. Gentleman remind the House of the proportion of strikers' families' expenditure that is financed by social security payments? I have a feeling that it is about 14 per cent.
  Mr. Rooker: That is a question that the Secretary of State will be able to answer. I do not have the figure in my head. It is not my job, from the Opposition Dispatch Box, to answer questions. It is the Opposition's job to ask questions. The great tragedy is that usually we are not given answers. If we are given answers, they involve sleight of hand or are downright untruthful.
  There is one person's hand behind the Bill. It is not the hand of the Secretary of State. I give him that credit. It is not even the hand of the renegade who will reply. It is the hand of the Prime Minister. As far as I know, no one has ever heard in the Prime Minister's words, or in her tone, an ounce of compassion for the underdog in our society.
  The right hon. Lady had the nerve on 4 May 1979, on the steps of No. 10 to quote the words of St. Francis of Assissi. After 11½ months in Government those words have been warped so much that they now would read "Where there is harmony they bring discord. Where there is truth they would bring error. Where there was faith they have created doubt and uncertainty. Where there was hope they have created despair." That is despair that will be inflicted on millions of people—for example, the work wounded, widows, mothers, the sick and the disabled.
  We shall oppose the Bill root and branch, and I hope that my right hon. and hon. Friends will be able to vote it down here and now.
  9.30 pm
  The Minister for Social Security (Mr. Reg Prentice): Two fascinating trends have become apparent in the conduct of the Opposition during the course of this Session of Parliament. One is that, as one month succeeds another, the language becomes more extreme and the rhetoric
  1138
  becomes more frantic. The speech to which we have just listened is an example of this. A few months ago we were simply said to be damaging the Welfare State. Now I gather that we have destroyed it altogether.
  The parallel trend is that the attendance of Labour Members in the Chamber to listen to these speeches has gone down and down, practically to vanishing point. When my right hon. Friend moved the Second Reading there were 12 hon. Members on the Labour Benches, heckling as loudly as they could. When the right hon. Member for Salford, West (Mr. Orme) was explaining to the House how the Welfare State was about to be destroyed, the attendance on the Labour Benches—for reasons that are not for me to say—went down from 12 to eight. Right through the debate, until the last half-hour, the exaggerated rhetoric has reverberated around the empty Benches.
  Mr. Ioan Evans: For the record, Mr. Speaker, may I point out that there are at the moment more Opposition Members than Conservative Members present? Would the right hon. Gentleman like to count the number of hon. Members?
  Mr. Prentice: If that is a point to be taken seriously, perhaps I should demand a recount, but certainly during a great deal of the debate there have been more Members present on the Government Benches than on the Opposition Benches.
  There have been two main strands of argument. One has concerned the first five clauses, and the other has concerned clause 6. I should like to split my speech between the two, starting with the first five clauses. They represent a modest but necessary pruning of what would have been the expansion of the social security budget over the next few years. The first point to make is that it will still be an expanding budget. We have provided—and will be providing in regulations to be brought to the House in the next few months—for the uprating of pensions and all the other main benefits in November. Most important of all for the poorest in the community, there will be regulations to protect from price rises those within the supplementary benefit range.
  The exaggerated language about attacking the poor and the sick is totally

  1139
  irrelevant to the content of the Bill. We are talking about a programme amounting to approximately £20 billion that is planned to grow at a rate of 2 per cent. a year in real terms. The issue is whether, within that very large total, there should be a pruning back which will amount to £270 million in the first full year and £480 million in the year after that.
  The Chancellor of the Exchequer in his Budget speech reminded us—my right hon. Friend has since reminded the House of it and I make no apology for repeating it, because it is at the crux of the argument—that in the last 10 years the social security budget, in real terms, has grown by 50 per cent. It has grown more than three times faster than the gross domestic product in those years.
  It is time that we had a serious debate—we could have done so today if the Opposition had been in the mood—on the question why the social security budget has grown to the extent that it has, why it has moved ahead of our ability to pay for it and why we now face, just as other Western countries do, the need to look carefully at this problem and challenge some of the decisions of recent years. My right hon. Friend mentioned similar problems in Germany, Holland, Australia and Canada.
  The budget has grown for demographic reasons but also for other reasons. It has grown because successive Governments added new benefits and have never felt it politically possible to withdraw benefits already in existence. It has grown because the ground rules for benefits have been expanded and new people have become entitled to existing benefits. It has seldom, if ever, been considered possible to narrow the definition under which people are entitled to benefits. The social security budget has also grown because year after year the uprating of benefits has been in line with the cost of living, or, for benefits such as pensions, higher than the cost of living in some years; it has not been found politically possible to uprate pensions by less than the cost of living.
  Mr. Ennals: Does not the right hon. Gentleman agree that there are two categories: first, there has been a great increase in the number of elderly people
  1140
  receiving pensions and in the number of unemployed; secondly, there are new benefits, such as child benefit and benefits for the disabled, both of which were fully supported when his party was in opposition. What is the question all about?
  Mr. Prentice: The question is all about exactly that. All that the right hon. Member for Norwich, North (Mr. Ennals) has done is to repeat, in his words, what I said. The reasons are partly demographic and partly that successive Governments of both parties have taken an expansionary view of the Welfare State and have never challenged the assumptions upon which it is based.
  Mr. Ennals: And rightly so.
  Mr. Prentice: The right hon. Gentleman says "rightly". I put it to him that the irony is that this social security budget, which is now over one-quarter of total public spending, has grown at a rate far beyond the ability of the nation to finance it. Therefore it has been one of the major causes of high taxation, high borrowing and one of the main reasons for our high rate of inflation. The victims hit hardest by that inflation have been the retired, the widowed and the chronic sick. In other words, the irony is that our policy—I deliberately say "our policy" because Conservative and Labour Governments have been involved—has done the greatest damage to those whom we have been trying to help most. We have to face this fact realistically. That is what the first five clauses of the Bill are about.
  The Labour Opposition have totally failed to face the reality of this in today's debate, just as they have totally failed, since May 1979, to face any financial reality. They overspent when in Government. On top of that overspending they handed to the new Government White Papers for the growth of public expenditure—in the year 1979–80 for more than the preceding year, in 1980–81 for more still, and so on in successive years. On top of that, since last May the Opposition have filed one commitment after another on which to spend money that was not even in their public expenditure plans.
  If all Opposition amendments to the first Social Security Bill had been passed in Committee it would have meant extra

  1141
  spending of about £2¾ billion a year, none of which was provided for in their public expenditure White Papers. Unhappily we have failed today to measure up as a House of Commons to a serious debate on the nature of the problem with which we are faced. Against that background I come to the first five clauses.
  My hon. Friend the Member for Peterborough (Dr. Mawhinney) said that his heart was not jumping for joy at some of the proposals. Of course it was not; nor is mine, or anyone else's. But none of us would have wanted to make the proposals in any of these five clauses if we could have considered these matters in isolation from the ecomomic background. We had to make difficult choices, and no one has yet suggested any other parts of the social security budget that should have been cut in place of the reductions proposed here.
  We see clause 1 as a rough and ready substitute for the taxation of these benefits. No one in this debate has argued against the principle of taxing these benefits. The hon. Member for Birkenhead (Mr. Fields) nods in agreement with the principle of taxing benefits. He was right in saying that the provisions in this Bill do not amount to taxation. They are not as finely tuned to individual circumstances as taxation would be—
  Mr. Rooker: Then why do it?
  Mr. Prentice: I have spent the last 10 minutes explaining why we must do it. The Bill will make a substantial contribution to the savings that I have described.
  I understand the particular difficulties that hon. Members feel about invalidity benefits. However, the essential parallel here is the sickness benefit. At present neither benefit is taxed; in future both will be taxed. In the interim period it is reasonable that both should be treated in the same way. Hon. Members have drawn a parallel with retirement pensions, claiming that these are long-term benefits. I remind them that retirement pensions are taxed and are included in the taxable income of every pensioner.
  Mr. Rooker: Will the right hon. Member make clear that the basic old age pension is not taxable because it is below the threshold? The point that we
  1142
  have been making is that people on benefits—particularly the invalidity benefit—will face a cut even though their annual income is below the tax threshold.
  Mr. Prentice: The hon. Member's first point is correct. The retirement pension is taken as part of the total income for tax purposes. The invalidity benefit will be so taken in future. In the meantime, we do not have taxation proposals in front of us; we have a rough and ready substitute to last until 1982, when we hope to bring in proper taxation.
  On clause 2 I repeat that the total abolition of the earnings rule remains our objective. The stages by which we achieve that objective depend upon the financial situation year by year. I was asked specifically by my hon. Friend the Member for Rochester and Chatham (Mrs. Fenner) whether we intend the proposal in clause 2 to be for one year only. We profoundly hope that it will be for only one year, but no one can give a total guarantee about the position 12 months from now. It is certainly our objective that this should be just a temporary postponement of progress along the road towards the phasing out of the earnings rule.
  There has been very little discussion on clause 3, and I take it from that that there is general agreement that there was a case for altering the rules about short spells and about the linking periods.
  Hon. Members on both sides paid a great deal of attention to clause 4 on the earnings-related supplement. I understand the reasons why Labour Members pay a great deal of attention to clause 4 of any document. However, concern was also expressed by a number of my hon. Friends. I understand the reasons for that. I find this the most regrettable of the proposed cuts, but it is an essential part of the total arithmetic. Again I was faced with the question of possible alternatives. No alternatives have been put forward. In the total savings that we propose in the Bill, the abolition of earnings related supplement will provide a gross saving of £360 million in a full year when it is finally phased out.
  There is no clear alternative in sight. My right hon. Friend the Secretary of State pointed out that, over the years successive Governments have not given this high priority. Earnings related supplement has been kept at a relatively low

  1143
  level. It has not been updated annually with the movement of prices. That shows that successive Governments have not given it priority when compared with other demands on resources. Again, that reflects the real situation. Earnings-related supplement was always regarded as a means of helping people to adapt to change and of encouraging them to accept redundancies and a period of unemployment while looking for another job. It provided a means of easing the transition.
  The practical effect of redundancy payments has been much greater than that of earnings-related supplement. One must bear in mind the growth in the statutory redundancy scheme and the extent to which additional agreements have been made in the public and private sectors. Those of my hon. Friends who have expressed doubts should bear in mind that, much as they may regret it, it is a choice that we can live with. We can accept it as a regrettable but necessary part of pruning the social security system.
  My hon. Friends the Members for Chippenham (Mr. Needham) and Peterborough asked about the effects of earnings-related supplement on contributions. It will be taken into account when contributions are next fixed for the year 198182. They did not suggest that it would be right simply to relate earnings-related contributions to earnings-related supplement and to the benefits mentioned in this clause. Earnings-related contributions pay for all types of benefits. They pay for flat-rate benefits on a graduated basis. They also earn the right to the earnings-related part of retirement pensions. That is far more important than anything mentioned in this clause.
  Mr. Peter Bottomley: My right hon. Friend used the argument that because the earnings-related supplement had fallen by about 28 per cent. it was not a high priority and could therefore be phased out. I remind the Government that they should never try to use that argument for child benefit. Child benefit is about 25 per cent. below the amount given 25 years ago.
  Mr. Prentice: No one would use that argument in relation to child benefit. The speech made by my hon. Friend the Member for Woolwich, West (Mr. Bottomley) on child benefit was typical of the sincere and well-informed way in
  1144
  which he has campaigned for a long time. He commands the agreement, in principle, of virtually every hon. Member.
  Mr. Needham: If the Government are to prune back contributions as well as benefits, how can there be a saving in the public sector borrowing requirement?
  Mr. Prentice: If there is an equivalent saving on both, there is no saving in the public sector borrowing requirement. However, there is a reduction in public expenditure. Reductions in public expenditure that lead on the other side of the account to reductions in all types of taxation, including national insurance contributions, are desirable.
  As for clause 5, there has been wide recognition that when someone has retired on a substantial retirement pension—I am not talking about those on small pensions—and that person registers for employment but finds none, he should not—for most purposes—be regarded as unemployed. That has been the view of successive Governments. Four attempts have been made to change the law. Many comments have been made over the years. I believe that the time has come when the House should resolve to do what successive Governments have wanted to do. I hope that the clause will go through.
  Clause 6 is in a totally different category from the remainder of the Bill. It will save public money to a modest extent, but that is not its main concern. I commend the clause to the House irrespective of the economic situation. It is right in principle to make this change, which is well overdue.
  It is not—I repeat not—an attack on the right to strike. It is an attack on the assumption that strikers should be subsidised by the taxpayers to the extent that has been so in recent years. It is an assertion that those who take strike action should accept the consequences. Those with families should provide for them, either through their own savings or from other earnings or, more usually, collectively through their union's strike funds. If it is suggested that in certain circumstances the individual or union cannot afford it, the answer is simple. There is the choice not to strike, to go back to work and earn the living that is available.
  Mr. Maxton: Will the right hon. Gentleman make it clear to the House that he

  1145
  is talking of those who are on strike and not all the others who may be affected by strikes? That is not clear in the Bill. If a person is locked out essentially because others are on strike, will that person or his family receive benefits?
  Mr. Prentice: The hon. Gentleman raises two points. The first is whether there should be a distinction between a strike and a lockout. There will be no distinction. There never has been in the operation of the law. The number of days lost each year through lockouts is very small. Most lock-outs occur as a step in an industrial dispute. An example last autumn was at Rolls-Royce Limited, where the workers were on strike for two days a week and Rolls-Royce locked them out for the other three.
  The categories affected will be the same as at present—those participating in and directly interested in the dispute but not other categories.
  The main accusation against us, which was eloquently made by the hon. Member for Birkenhead, is that in doing this we are hitting at families. It is unrealistic to assume that under present arrangements the striker does not benefit from supplementary benefit payments. He shares in the food and other facilities of the home financed by supplementary benefit payments. There is no practical way of ensuring that he does not. We are not abolishing supplementary benefit for strikers' families; we are reducing it by £12 a week. There will still be a safety net, although a low one.
  In the recent steel strike the average payment to each recipient was £22 a week. The £12 reduction would leave an average of £10 a week for each recipient, with the same number of recipients. However, the number would not be the same, because those at the lower level of entitlement would be taken out of the equation. If the average was £22 a week, those with the greatest need—with large families or high rents—would have received during the steel strike considerably more than £22 a week and would therefore still receive benefits under the new arrangements.
  If a person is involved in a strike who is not in receipt of strike pay or any other income and who is fanatical enough to carry on with the strike, even
  1146
  though it will make his children hungry, or, more likely who is under the thumb of those who are fanatical, we shall provide a safety net for him, although one a great deal lower than that provided at present.
  I have been asked about regulations that may be made for urgent need payments. In general, those payments will not be available, but they will be available in certain circumstances. Clause 6 allows for the making of regulations. There are certain circumstances in which these payments should be available to everyone; for instance, if some extraneous event creates sudden hardship for the family—a robbery, a fire or an event totally unconnected with the strike, causing sudden hardship to the family. It remains a question that we are studying whether there should be a wider definition in relation to the non-unionist. However, we are studying it. There has been no final decision on this.
  There is a case for saying this. Whereas the trade unionist can fall back—and is entitled to fall back—on his union and expect it to provide strike pay, the non-unionist is in a different position. Whatever we do about this, and whatever shape the regulations eventually take, I want to make it clear that we are talking about exceptional circumstances. The circumstances will be limited. They cannot go too wide—otherwise we should defeat the whole purpose of the exercise.
  I am fascinated by the history of this matter. Prior to 1966, when the present arrangements were enshrined in legislation, the National Assistance Board had discretionary powers which it exercised according to ground rules similar to those in the 1966 Act. Before 1966 very little use was made of this by trade unionists. The total cost in 1960 was £75,000. In 1967, the year after the law was put on the statute book, it went up to £377,000. By 1969 the figure was £748,000.
  In the 1970s we experienced a series of major national disputes, to which my right hon. Friend referred, in which the cost was very high indeed: over £3 million for the Post Office strike in 1971; £5½ million for the first major miners' strike in 1972; over £4 million for the

  1147
  miners' strike in 1974; and approximately £9 million for the recent steel strike.
  Of course, we accept that the majority of strikes are over quickly and that the majority of strikers' families therefore never reach the point of entitlement. However, in these major national disputes, the availability of this money and the fact that the unions have not faced up to their financial responsibilities have been factors—certainly not in causing the dispute—in prolonging them and enabling the unions to prolong them beyond the point that would otherwise have been possible.
  I was closely involved with the developments in this matter during the period from 1972 to 1974, when I was Shadow Employment Secretary. I noticed two trends in that period. One was that a symptom of the greater militancy of certain trade unions in that period was a positive decision to lean more heavily on the State for the maintenance of strikers' families rather than provide for them from strike pay. The second trend was that even if there had been no deliberate decision to do that, unions simply were not updating their provisions for strike
  pay in line with inflation. That seems a sad departure from the old trade union ethics of brotherhood and solidarity by which the trade unions looked after their own members in disputes.
  I do not believe that an earlier generation of trade union leaders would have tried to live by the rule that one grabs everything one can from the taxpayers in order to save the union money, even when many of those taxpayers are fellow workers who may be losing earnings because of one's own dispute. It is an intolerable situation. It is totally different from that in other Western countries. It deeply offends public opinion.
  The Sunday Times opinion poll showed not merely that the public generally were 2 to 1 in favour of Conservative policy in this matter but that trade unionists generally were in favour of it, as well.
  This change is long overdue, and I commend it to the House.
  Question put, That the Bill be now read a Second time:—
  The House divided: Ayes 299, Noes 244.

  Division No. 254]

  AYES

  [10.0 pm

  Adley, Robert

  Burden, F. A.

  Fletcher-Cooke, Charles

  Aitken, Jonathan

  Butler, Hon Adam

  Fookes, Miss Janet

  Alexander, Richard

  Cadbury, Jocelyn

  Fowler, Rt Hon Norman

  Alison, Michael

  Carlisle, John (Luton West)

  Fox, Marcus

  Ancram, Michael

  Carlisle, Kenneth (Lincoln)

  Fraser, Rt Hon H. (Stafford & St)

  Arnold, Tom

  Carlisle, Rt Hon Mark (Runcorn)

  Fraser, Peter (South Angus)

  Aspinwall, Jack

  Chalker, Mrs Lynda

  Fry, Peter

  Atkins, Robert (Preston North)

  Channon, Paul

  Gardiner, George (Reigate)

  Atkinson, David (B'mouth, East)

  Chapman, Sydney

  Gardner, Edward (South Fylde)

  Baker, Kenneth (St. Marylebone)

  Churchill, W. S.

  Garel-Jones, Tristan

  Baker, Nicholas (North Dorset)

  Clark, Hon Alan (Plymouth, Sutton)

  Gilmour, Rt Hon Sir Ian

  Banks, Robert

  Clarke, Kenneth (Rushcliffe)

  Glyn, Dr Alan

  Beaumont-Dark, Anthony

  Clegg, Sir Walter

  Goodhew, Victor

  Bell, Sir Ronald

  Cockeram, Eric

  Gorst, John

  Bendall, Vivian

  Colvin, Michael

  Gow, Ian

  Benyon, Thomas (Abingdon)

  Cope, John

  Gower, Sir Raymond

  Benyon, W. (Buckingham)

  Cormack, Patrick

  Grant, Anthony (Harrow C)

  Best, Keith

  Corrie, John

  Gray, Hamish

  Bevan, David Gilroy

  Costain, A. P.

  Greenway, Harry

  Biffen, Rt Hon John

  Cranborne, Viscount

  Grieve, Percy

  Biggs-Davison, John

  Critchley, Julian

  Griffiths, Eldon (Bury St Edmunds)

  Blackburn, John

  Crouch, David

  Griffiths, Peter (Portsmouth N)

  Blaker, Peter

  Dickens, Geoffrey

  Grist, Ian

  Bonsor, Sir Nicholas

  Dorrell, Stephen

  Grylls, Michael

  Boscawen, Hon Robert

  Douglas-Hamilton, Lord James

  Gummer, John Selwyn

  Bottomley, Peter (Woolwich West)

  Dover, Denshore

  Hamilton, Hon Archie (Eps'm&Ew'll)

  Bowden, Andrew

  du Cann, Rt Hon Edward

  Hamilton, Michael (Salisbury)

  Boyson, Dr Rhodes

  Dunn, Robert (Dartford)

  Hampson, Dr Keith

  Braine, Sir Bernard

  Durant, Tony

  Hannam, John

  Bright, Graham

  Eden, Rt Hon Sir John

  Haselhurst, Alan

  Brinton, Tim

  Eggar, Timothy

  Havers, Rt Hon Sir Michael

  Brittan, Leon

  Emery, Peter

  Hawkins, Paul

  Brocklebank-Fowler, Christopher

  Eyre, Reginald

  Hawksley, Warren

  Brooke, Hon Peter

  Fairbairn, Nicholas

  Hayhoe, Barney

  Brotherton, Michael

  Fairgrieve, Russell

  Heddle, John

  Brown, Michael (Brigg & Sc'thorpe)

  Faith, Mrs Sheila

  Henderson, Barry

  Browne, John (Winchester)

  Farr, John

  Heseltine, Rt Hon Michael

  Bruce-Gardyne, John

  Fell, Anthony

  Hicks, Robert

  Bryan, Sir Paul

  Fenner, Mrs Peggy

  Higgins, Rt Hon Terence L.

  Buck, Antony

  Finsberg, Geoffrey

  Hill, James

  Budgen, Nick

  Fisher, Sir Nigel

  Holland, Philip (Carlton)

  Bulmer, Esmond

  Fletcher, Alexander (Edinburgh N)

  Hooson, Tom

  Hordern, Peter

  Moate, Roger

  Shersby, Michael

  Howe, Rt Hon Sir Geoffrey

  Monro, Hector

  Silvester, Fred

  Howell, Rt Hon David (Guildford)

  Montgomery, Fergus

  Sims, Roger

  Howell, Ralph (North Norfolk)

  Moore, John

  Skeet, T. H. H.

  Hunt, David (Wirral)

  Morgan, Geraint

  Smith, Dudley (War. and Leam'ton

  Hunt, John (Ravensbourne)

  Morris, Michael (Northampton, Sth)

  Speed, Keith

  Hurd, Hon Douglas

  Morrison, Hon Charles (Devizes)

  Speller Tony

  Irving, Charles (Cheltenham)

  Morrison, Hon Peter (City of Chester)

  Spicer, Michael (S Worcestershire)

  Jenkin, Rt Hon Patrick

  Mudd, David

  Sproat, Iain

  Jessel, Toby

  Murphy, Christopher

  Squire, Robin

  Johnson Smith, Geoffrey

  Myles, David

  Stainton, Keith

  Jopling, Rt Hon Michael

  Neale, Gerrard

  Stanbrook, Ivor

  Joseph, Rt Hon Sir Keith

  Needham, Richard

  Stanley, John

  Kaberry, Sir Donald

  Nelson, Anthony

  Steen, Anthony

  Kimball, Marcus

  Neubert, Michael

  Stevens, Martin

  King, Rt Hon Tom

  Newton, Tony

  Stewart, Ian (Hitchin)

  Kitson, Sir Timothy

  Normanton, Tom

  Stewart, John (East Renfrewshire)

  Knight, Mrs Jill

  Nott, Rt Hon John

  Stokes, John

  Lang, Ian

  Onslow, Cranley

  Stradling Thomas, J.

  Langford-Holt, Sir John

  Oppenheim, Rt Hon Mrs Sally

  Tapsell, Peter

  Latham, Michael

  Page, John (Harrow, West)

  Taylor, Robert (Croydon NW)

  Lawrence, Ivan

  Page, Rt Hon Sir R. Graham

  Taylor, Teddy (Southend East)

  Lawson, Nigel

  Page, Richard (SW Hertfordshire)

  Tebbit, Norman

  Lee, John

  Parris, Matthew

  Temple-Morris, Peter

  Lennox-Boyd, Hon Mark

  Patten, Christopher (Bath)

  Thatcher, Rt Hon Mrs Margaret

  Lester, Jim (Beeston)

  Patten, John (Oxford)

  Thomas, Rt Hon Peter (Hendon S)

  Lloyd, Ian (Havant & Waterloo)

  Pattie, Geoffrey

  Thompson, Donald

  Lloyd, Peter (Fareham)

  Pawsey, James

  Thorne, Neil (Ilford South)

  Loveridge, John

  Percival, Sir Ian

  Thornton, Malcolm

  Luce, Richard

  Peyton, Rt Hon John

  Townend, John (Bridlington)

  Lyell, Nicholas

  Pink, R. Bonner

  Townsend, Cyril D. (Bexleyheath)

  McCrindle, Robert

  Pollock, Alexander

  Trippier, David

  Macfarlane, Neil

  Porter, George

  Trotter, Neville

  MacGregor, John

  Prentice, Rt Hon Reg

  van Straubenzee, W. R.

  MacKay, John (Argyll)

  Price, David (Eastleigh)

  Vaughan, Dr Gerard

  Macmillan, Rt Hon M. (Farnham)

  Prior, Rt Hon James

  Waddington, David

  McNair-Wilson, Michael (Newbury)

  Proctor, K. Harvey

  Wakeham, John

  McNair-Wilson, Patrick (New Forest)

  Pym, Rt Hon Francis

  Waldegrave, Hon William

  McQuarrie, Albert

  Raison, Timothy

  Walker, Bill (Perth & E Perthshire)

  Madel, David

  Rees, Peter (Dover and Deal)

  Walker-Smith, Rt Hon Sir Derek

  Major, John

  Rees-Davies, W. R.

  Waller, Gary

  Marland, Paul

  Rhodes James, Robert

  Walters, Dennis

  Marlow, Tony

  Rhys Williams Sir Brandon

  Ward, John

  Marshall, Michael (Arundel)

  Ridley, Hon Nicholas

  Warren, Kenneth

  Marten, Neil (Banbury)

  Rifkind, Malcolm

  Watson, John

  Mates, Michael

  Rippon, Rt Hon Geoffrey

  Wells, John (Maidstone)

  Mather, Carol

  Roberts, Michael (Cardiff NW)

  Wells, Bowen (Hert'rd & Stev'nage)

  Maude, Rt Hon Angus

  Roberts, Wyn (Conway)

  Wheeler, John

  Whitney, Raymond

  Mawby, Ray

  Rossi, Hugh

  Wickenden, Keith

  Mawhinney, Dr Brian

  Rost, Peter

  Wilkinson John

  Maxwell-Hyslop, Robin

  Royle, Sir Anthony

  Winterton, Nicholas

  Mayhew, Patrick

  Salisbury, Hon Timothy

  Wolfson, Mark

  Mellor, David

  St. John-Stevas, Rt Hon Norman

  Young, Sir George (Acton)

  Meyer, Sir Anthony

  Scott, Nicholas

  Younger, Rt Hon George

  Miller, Hal (Bromsgrove & Redditch)

  Shaw, Giles (Pudsey)

  Mills, Iain (Meriden)

  Shaw, Michael (Scarborough)

  TELLERS FOR THE AYES:

  Mills, Peter (West Devon)

  Shelton, William (Streatham)

  Miscampbell, Norman

  Shepherd, Colin (Hereford)

  Mr. Spencer Le Marchant dna

  Mitchell, David (Basingstoke)

  Shepherd, Richard (Aldridge-Br-hills)

  Mr. Anthony Berry.

  NOES

  Adams, Allen

  Callaghan, Rt Hon J. (Cardiff SE)

  Davidson, Arthur

  Allaun, Frank

  Callaghan, Jim (Middleton & P)

  Davies, Rt Hon Denzil (Llanelll)

  Archer, Rt Hon Peter

  Campbell, Ian

  Davies, Ifor (Gower)

  Armstrong, Rt Hon Ernest

  Campbell-Savours, Dale

  Davis, Clinton (Hackney Central)

  Ashley, Rt Hon Jack

  Cant, R. B.

  Deakins, Eric

  Ashton, Joe

  Carmichael, Neil

  Dean, Joseph (Leeds West)

  Atkinson, Norman (H'gey, Tott'ham)

  Carter-Jones, Lewis

  Dempsey, James

  Bagier, Gordon A. T.

  Cartwright, John

  Dewar, Donald

  Barnett, Rt Hon Joel (Heywood)

  Clark, Dr David (South Shields)

  Dixon, Donald

  Beith, A. J.

  Cocks, Rt Hon Michael (Bristol S)

  Dobson, Frank

  Benn, Rt Hon Anthony Wedgwood

  Cohen, Stanley

  Dormand, Jack

  Bennett, Andrew (Stockport N)

  Coleman, Donald

  Douglas, Dick

  Bidwell, Sydney

  Concannon, Rt Hon J. D.

  Douglas-Mann, Bruce

  Booth, Rt Hon Albert

  Conlan, Bernard

  Dunn, James A. (Liverpool, Kirkdale)

  Boothroyd, Miss Betty

  Cook, Robin F.

  Dunnett, Jack

  Bottomley, Rt Hon Arthur (M'brough)

  Cowans, Harry

  Dunwoody, Mrs Gwyneth

  Bradford, Rev R.

  Cox, Tom (Wandsworth, Tooting)

  Eastham, Ken

  Bradley, Tom

  Craigen, J. M. (Glasgow, Maryhill)

  Edwards, Robert (Wolv SE)

  Bray, Dr Jeremy

  Crowther, J. S.

  Ellis, Raymond (NE Derbyshire)

  Brown, Hugh D. (Provan)

  Cryer, Bob

  Ellis, Tom (Wrexham)

  Brown, Robert C. (Newcastle W)

  Cunliffe, Lawrence

  English, Michael

  Brown, Ronald W. (Hackney S)

  Cunningham, George (Islington S)

  Ennals, Rt Hon David

  Brown, Ron(Edinburgh, Leith)

  Cunningham, Dr John (Whitehaven)

  Evans, Ioan (Aberdare)

  Buchan, Norman

  Dalyell, Tam

  Evans, John (Newton)

  1150

  1151

  Ewing, Harry

  Lamond, James

  Roberts, Ernest (Hackney North)

  Field, Frank

  Leadbitter, Ted

  Roberts, Gwilym (Cannock)

  Fitt, Gerard

  Leighton, Ronald

  Robertson, George

  Flannery, Martin

  Lestor, Miss Joan (Eton & Slough)

  Robinson, Geoffrey (Coventry NW)

  Fletcher, L. R. (Ilkeston)

  Lewis, Arthur (Newham North West)

  Rooker, J. W.

  Fletcher, Ted (Darlington)

  Lewis, Ron (Carlisle)

  Roper, John

  Foot, Rt Hon Michael

  Litherland, Robert

  Ross, Ernest (Dundee West)

  Ford, Ben

  Lofthouse, Geoffrey

  Ross, Stephen (Isle of Wight)

  Forrester, John

  Lyon, Alexander (York)

  Ross, Wm. (Londonderry)

  Foster, Derek

  Lyons, Edward (Bradford West)

  Rowlands, Ted

  Foulkes, George

  McCartney, Hugh

  Ryman, John

  Fraser, John (Lambeth, Norwood)

  McCusker, H.

  Sandelson, Neville

  Freeson, Rt Hon Reginald

  McDonald, Dr Oonagh

  Sever, John

  Freud, Clement

  McElhone, Frank

  Sheerman, Barry

  Garrett, John (Norwich S)

  McKay, Allen (Penistone)

  Sheldon, Rt Hon Robert (A'ton-u-L)

  Garrett, W. E. (Wallsend)

  McKelvey, William

  Short, Mrs Renée

  George, Bruce

  MacKenzie, Rt Hon Gregor

  Silkin, Rt Hon John (Deptford)

  Gilbert, Rt Hon Dr John

  Maclennan, Robert

  Silkin, Rt Hon S.C. (Dulwich)

  Ginsburg, David

  McMillan, Tom (Glasgow, Central)

  Silverman, Julius

  Golding, John

  McNally, Thomas

  Smith, Rt Hon J. (North Lanarkshire)

  Gourlay, Harry

  McNamara, Kevin

  Snape, Peter

  Graham, Ted

  McWilliam, John

  Soley, Clive

  Grant, George (Morpeth)

  Magee, Bryan

  Spearing, Nigel

  Grant, John (Islington C)

  Marks, Kenneth

  Spriggs, Leslie

  Hamilton, James (Bothwell)

  Marshall, David (Gl'sgow, Shettles'n)

  Stallard, A. W.

  Hamilton, W. W. (Central Fife)

  Marshall, Dr Edmund (Goole)

  Stewart, Rt Hon Donald (W Isles)

  Hardy, Peter

  Marshall, Jim (Leicester South)

  Stoddart, David

  Harrison, Rt Hon Walter

  Martin, Michael (Gl'gow, Springb'rn)

  Strang, Gavin

  Hart, Rt Hon Dame Judith

  Maxton, John

  Straw, Jack

  Hattersley, Rt Hon Roy

  Meacher, Michael

  Summerskill, Hon Dr Shirley

  Haynes, Frank

  Mellish, Rt Hon Robert

  Taylor, Mrs Ann (Bolton West)

  Healey, Rt Hon Denis

  Mikardo, Ian

  Thomas, Jeffrey (Abertillery)

  Heffer, Eric S.

  Millan, Rt Hon Bruce

  Thomas, Dr Roger (Carmarthen)

  Hogg, Norman (E Dunbartonshire)

  Miller, Dr M. S. (East Kilbride)

  Thorne, Stan (Preston South)

  Home Robertson, John

  Mitchell, R. C. (Soton, Itchen)

  Tilley, John

  Homewood, William

  Molyneaux, James

  Varley, Rt Hon Eric G.

  Hooley, Frank

  Morris, Rt Hon Charles (Openshaw)

  Wainwright, Edwin (Dearne Valley)

  Horam, John

  Morris, Rt Hon John (Aberavon)

  Wainwright, Richard (Colne Valley)

  Howell, Rt Hon Denis (B'ham, Sm H)

  Morton, George

  Walker, Rt Hon Harold (Doncaster)

  Howells, Geraint

  Moyle, Rt Hon Roland

  Wellbeloved, James

  Huckfield, Les

  Newens, Stanley

  White, Frank R. (Bury & Radcliffe)

  Hudson Davies, Gwilym Ednyfed

  Oakes, Rt Hon Gordon

  White, James (Glasgow, Pollok)

  Hughes, Robert (Aberdeen North)

  Ogden, Eric

  Whitehead, Phillip

  Hughes, Roy (Newport)

  O'Halloran, Michael

  Whitlock, William

  Janner, Hon Greville

  O'Neill, Martin

  Wigley, Dafydd

  Jay, Rt Hon Douglas

  Orme, Rt Hon Stanley

  Williams, Rt Hon Alan (Swansea W)

  John, Brynmor

  Palmer, Arthur

  Williams, Sir Thomas (Warrington)

  Johnson, James (Hull West)

  Parker, John

  Wilson, Rt Hon Sir Harold (Huyton)

  Johnson, Walter (Derby South)

  Parry, Robert

  Wilson, William (Coventry SE)

  Johnston, Russell (Inverness)

  Pendry, Tom

  Winnick, David

  Jones, Rt Hon Alec (Rhondda)

  Powell, Rt Hon J. Enoch (S Down)

  Woodall, Alec

  Jones, Barry (East Flint)

  Powell, Raymond (Ogmore)

  Woolmer, Kenneth

  Jones, Dan (Burnley)

  Prescott, John

  Wrigglesworth, Ian

  Kaufman, Rt Hon Gerald

  Price, Christopher (Lewisham West)

  Wright, Shella

  Kerr, Russell

  Race, Reg

  Kilfedder, James A.

  Radice, Giles

  TELLERS FOR THE NOES:

  Kilroy-Silk, Robert

  Rees, Rt Hon Merlyn (Leeds South)

  Mr. Terry Davis and

  Lamble, David

  Richardson, Jo

  Mr, James Tinn.

  Lamborn, Harry

  Roberts, Allan (Bootle)

  Question accordingly agreed to.
  Bill read a Second time.
  Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

  BUSINESS OF THE HOUSE
  Ordered,
  That, at this day's sitting, the Insurance Companies Bill [Lords] and the Companies Bill [Lords] may be proceeded with, though opposed, until any hour.—[Mr. Wakeham.]

INSURANCE COMPANIES BILL [Lords]
As amended (in the Standing Committee), considered.
Motion made, and Question proposed, That the Bill be now read the Third time.
10.15 pm
The Under-Secretary of State for Trade (Mr. Reginald Eyre): This is the first time that the Bill has been discussed on the Floor of the House. Hon. Members may welcome a brief indication of its provisions, although at this hour I shall not detain the House for long.
The Bill is a technical measure with a limited objective. It creates a uniform United Kingdom regime for the authorisation and supervision of insurance companies by extending the existing Great Britain legislation to Northern Ireland and repealing the virtually identical Northern Ireland legislation.
The Bill is necessary to fulfil the requirement of the European Community's insurance establishment directive that an authorisation to carry on an insurance business shall be valid throughout the national territory. The Bill is useful because it eliminates the duplication of effort between Belfast and London. All the companies supervised by the Department of Commerce are already supervised by the Department of Trade.
10.16 pm
Mr. J. Enoch Powell: I wish to refer first to the manner in which the Bill reached its present advanced stage and then to say something about its content. As the Minister has observed, this is the first time that the House, as a House, has made its acquaintance. It is one of those measures that went to a Second Reading Committee and thereafter was dealt with by a Standing Committee.
No hon. Member representing a Northern Ireland constituency, the part of the Kingdom which the Bill primarily concerns, was on the Second Reading Committee or the Standing Committee. I appreciate, given the composition of the House, that representation of minorities on the Standing Committees is in the
1154
ordinary way one of difficulty: it is rarely possible for representatives of those minorities to be included. But I suggest that it is intolerable and should not be repeated—I hope that the Committee of Selection will take account of this—that in a measure concerned almost exclusively with Northern Ireland no steps were taken to ensure any representation from Northern Ireland on either of the Committees which considered the Bill.
I can confirm—I have the authorisation of my hon. Friend the Member for Antrim, South (Mr. Molyneaux) to do so—that at no stage was any approach or suggestion made, at any rate to the Ulster Unionists, on whether we wished to participate in the Bill's proceedings and, if so, how that could be arranged. I leave the matter there. It is inconsistent with the general idea of fairness that a measure such as this, the prime purpose of which concerns Northern Ireland, should reach Third Reading without any Northern Ireland Member having had an opportunity to address himself to it. I hope that there will be no repetition of that ugly precedent.
I turn to the contents of the Bill. For the last six or seven years the standing contention of my hon. Friends and myself—indeed, it is a contention with which, not entirely unintentionally, we have from time to time rather wearied the House—that Northern Ireland should be legislated for, as are all other parts of the United Kingdom, by the procedure of Bills and Acts of Parliament and not otherwise. While we appreciate that initially a great deal of, so to speak, tidying up legislation can conveniently be done—and not altogether improperly done—by Order in Council under the 1974 Act, it should be accepted that the proper method of legislation, even during the interim period, for Northern Ireland is that method which alone is applicable to all other parts of the kingdom, even when, as in the case of Welsh or Scottish measures, the Bills are to apply only to part of the kingdom.
When we have put this contention forward—a contention which the House of Commons in justice to itself can hardly reject or question—we have been met with two objections by Northern Ireland Ministers. The first was that, since Northern Ireland legislation has hitherto

1155
been substantially separate from legislation for Great Britain, it would be awkward to include in a United Kingdom Bill the necessary application provisions for Northern Ireland.
We pointed out, it is true, that that does not seem to prevent Scottish application clauses finding their way into Great Britain Bills; but here we have a piece of legislation which has been brought before the House and will be passed in order to apply, through the Bill procedure, Great Britain legislation to Northern Ireland. We observe that it takes exactly one page of the Bill and one schedule to do the trick.
So there must be many cases in which at present Great Britain legislation is applied to Northern Ireland by order where it would be perfectly convenient, and involve no substantial addition to the bulk of the Bill for this House to have a United Kingdom Bill applying in the proper manner to all parts of the Kingdom, in debate on which hon. Members from all parts of the kingdom could take part on a common basis.
That deals with one of the objections with which we have hitherto been confronted—the objection of clumsiness and complexity. The second objection was more portentous. We were told that there is a sacrosanct thing known as the Northern Ireland statute book and that during this interim period—which may well be as durable as most things provisional are—it would be sacrilege not to maintain this Northern Ireland statute book intact.
Admittedly it is a curious collection when one looks at it. It includes Acts of the United Kingdom Parliament before 1922 and after 1800; Acts of the United Kingdom Parliament before 1800, and Acts of the Irish Parliament before 1800. It includes Acts of the Northern Ireland Parliament between 1922 and 1972 and the odd rag bag of measures which managed to get through the ill-fated Assembly of 1973–74. Anyone who imagines that there is a beautiful corpus, self-consistent and of single origin, is grievously mistaken.
However, let us take the argument as it stands. We are told that any additions to the law of Northern Ireland, so far as that takes the form of Northern Ireland law, must during this interim period be made in a specifically Northern Ire-
1156
land form so that they find their place upon the shelves alongside the Northern Ireland statutes. We have even—hon. Members may inspect this phenomenon in the Oriel Room in the Library—got to printing Orders in Council in series as if they were Northern Ireland statutes and treating them as such.
That is not an argument that will stand up from now on. The Government have discovered that in a matter that has hitherto featured exclusively upon the Northern Ireland statute book, hey presto, we can amend the law and replace it by an Act of the United Kingdom Parliament. If that can be done in this case, it can be done in any other. The Government have put their foot through their own argument of the sacrosanctity of the Northern Ireland statute book, and I hope that we shall hear no more of that nonsense.
How did this happy conversion come about? How were a Government who have obdurately argued that it was too clumsy to legislate for Northern Ireland by Bill, and that in any case it was undesirable to do so because that impugned the purity and the totality of the Northern Ireland statute book, suddenly converted? How did the light dawn upon them? What Damascus were they visiting so recently?
The Minister said in the Second Reading Committee—and he repeated it this evening—that the main point of the Bill is
"to fulfil our European Community obligations."—[Official Report, Second Reading Committee, 20 February 1980; c. 6.]
By a whisker of interpretation it is held that the EEC requires there to be a single statute in the matter of insurance company law for Northern Ireland as for the rest of the United Kingdom. The EEC spake the word and the thing was done. Her Majesty's Government, obdurate about the wishes of the citizens of this country, deaf to the arguments and entreaties of hon. Members sent to this House to represent a part of the United Kingdom, collapsed immediately, grovelled and knocked their foreheads upon the floor in front of the EEC. "Of course", said they, "if the EEC wants it done that way, we forget all our scruples; all inconvenience goes out of the window; it shall be done at once." And done it is. What a humiliation that we should have to be told by the EEC how

1157
to legislate uniformly for a unitary United Kingdom!
At the same time, but just as a secondary argument, the Government discovered—and set the point out at some length in the Second Reading Committee—that this change would actually be a convenience for Northern Ireland, that it would be nice for Northern Ireland to have the same statute as that under which insurance companies operated on what we like to call the mainland.
Normally when one makes such a suggestion one is attacked as being an integrationist. It is not many weeks since the Minister of State, Northern Ireland Office threatened in the most menacing tones hon. Members on this Bench who said that we might have uniformity—it was not on an important matter—between Northern Ireland and the rest of the United Kingdom. He told us that the whole process of constitutionmongering that was being carried on by that absurd conference at Stormont would be threatened if there were any question of this House having the temerity to produce uniformity between the administration of the law in Northern Ireland and that in the rest of the Community.
However, when the EEC says that it has to be, the beauties of uniformity are discovered. It turns out that it is convenient and economical. The word "integration", instead of being a curse word, becomes a term of blessing.
This is a great night for Northern Ireland. The Bill should—I am sure that it will—feature in future constitutional text books as the breakthrough point in legislation for Northern Ireland. This was the night when the House and the Government discovered that the proper way to legislate for all parts of the United Kingdom was also the convenient way. So the Bill which came to us—perhaps significantly, in view of its wisdom—from another place, which derives from the hereditary part of the legislature, will be wafted on to the statute book with the blessings and good wishes of those sent to this House from Northern Ireland.
10.30 pm
Mr. Tom Pendry: As the right hon. Member for Down, South (Mr. Powell) said, we are asked to support the Bill basically because it conforms to two EEC directives.
1158
Those directives require that a business should be valid throughout the entire national territory.
My first reaction, when asked to support a measure which is prompted by an EEC directive, is one of hesitation, especially when there is a Northern Ireland connection. The Community is not well placed to judge the special circumstances that sometimes prevail in Northern Ireland.
When the Bill was introduced in another place, Lord Lyell, who spoke for the Government, said that its main object was to fulfil our EEC obligations, and that it was not an initiative that the Government would have taken in the absence of those Community directives. Why not? If the Bill eliminates the duplication of effort by the Department of Trade in London and by the Department of Commerce in Belfast in the supervision of insurance companies, why apologise for its introduction? The Government could have easily complied with the directives by merely extending the authority of both supervisory bodies to the entire United Kingdom. Perhaps the Minister, when he replies, will say why he did not follow that course of action.
Although we have received an assurance that there will be no manpower reductions following the passage of the Bill—and Labour Members totally welcome that—it baffles me that, following a measure designed to verticalise and rationalise the insurance industry's structures with a view to eliminating duplication and effort, no saving in this area is made possible. Perhaps the Minister will enlighten the House on that aspect.
A beneficial effect for Northern Ireland could be the powers contained in paragraph 4 of schedule 3, which allow insurance companies operating in Great Britain to have similar operating powers in Northern Ireland. As the House knows, the converse is already the case. Will the Minister indicate the likely effects of the movements away from Great Britain towards Northern Ireland in this area of business? I do not expect him to answer that question tonight, but perhaps he will tell us of any assessment that he may have made about that movement.
We shall support the Bill because it is proper that by repealing the existing Northern Ireland legislation—the Insurance Companies (Northern Ireland) Order

1159
1976—and extending to Northern Ireland the provisions of the Insurance Companies Act 1974 we shall streamline the legislation in a sensible way.
10.33 pm
Mr. Eyre: With the leave of the House, Mr. Deputy Speaker, I shall endeavour to reply to the issues that have been raised.
First, I refer to the matters raised by the right hon. Member for Down, South (Mr. Powell), especially those concerning the representation of Northern Ireland Members on either of the Committees that have considered the Bill. I know that the right hon. Gentleman will understand that it is not for me to comment upon the mode of operation of the Committee of Selection. Northern Ireland Ministers were present when the right hon. Gentleman spoke. They heard his remarks and I am sure that they will consider them carefully.
The hon. Member for Stalybridge and Hyde (Mr. Pendry) asked about the assessment of the movement of business. Little or no change is expected. If it is possible to answer his question more fully, I shall he glad to contact him. As the hon. Gentleman said, the Bill is necessary to implement two European Community directives. The first is the European non-life directive—that is, non-life assurance business. It sets out common rules for the supervision of general insurance corn-panics in all the member States of the Community. In Great Britain the directives have been implemented largely by a series of regulations under the European Communities Act 1972, notably those on class of business, authorisation and solvency of camponies. The second measure, the European Communities life directive, was adopted in March 1979. It deals on broadly the same lines with life assurance business. We hope to implement the terms of the life directive in a Bill to be introduced early next Session if the legislative programme permits.
Mr. J. Enoch Powell: Will the hon. Gentleman confirm that that Bill will also be a United Kingdom measure?
Mr. Eyre: That will be a United Kingdom Bill.
It is a requirement of both the directives that an authorisation to carry on business should be valid throughout an entire national territory. That is not the present
1160
position in the United Kingdom as insurance companies need separate authorisations to carry on business in Great Britain and Northern Ireland. The main purpose of the Bill is to fulfil our European Community obligations. Primary legislation was necessary to bring about the validity of the authorisation to carry on all such business throughout the United Kingdom. The Bill is necessary to implement the European Community directives.
The Bill is useful because it will eliminate the duplication of effort by the Department of Trade and the Department of Commerce in Belfast in the supervision of insurance companies. In theory it would have been possible to comply with the European Community requirement by extending the jurisdiction of both supervisory authorities to the whole of the United Kingdom. That would have only compounded the unnecessary duplication of effort as all companies authorised and supervised in Belfast already have the separate authorisation that is at present needed to carry on business in Great Britain. For that reason, it has been the Department of Trade that has taken the initiative in supervising all the companies concerned. The Department of Commerce has tended to follow the lead from London. It makes sense for the Department of Trade to be solely responsible for the authorisation and supervision of companies. That is what the Bill will achieve.
The transfer of a quite minor function from a Northern Ireland Department to a Department of State is judged to be the most simple way of meeting the requirement of the Community directive. A complicated system could have been created that would have enabled the Department of Commerce to continue its supervisory activities, but administrative good sense suggested that the course that has been followed would be the best solution of the problem. A minor function has been transferred, and such a transfer does not give the slightest case for either hopes or fears that the Government are prepared at this moment to make a general alteration to the traditional responsibilities of Northern Ireland Departments.
Question put and agreed to.
Bill accordingly read the Third time and passed, with amendments.

COMPANIES BILL [Lords]
Lords Amendment consequential to a Commons Amendment, Lords Amendments to Commons Amendments and Lords Amendments in lieu of Commons Amendments, considered.
COMPANIES BILL [Lords]
  Clause 22

    PAYMENT FOR ALLOTTED SHARES
    The Lords have agreed to the amendment made by the Commons in page 28, line 27, leave out subsection (3) and insert:
    "(3) Subsection (2) above shall not apply in relation to the allotment of a bonus share in contravention of subsection (1) above unless the allottee knew or ought to have known the share was so allotted."
    and have made the following consequential amendment to the Bill:
    No. 1, in page 28, line 13, leave out "subsections (3) and" and insert "subsection".
    10.39 pm
    The Under-Secretary of State for Trade (Mr. Reginald Eyre): I beg to move, That this House doth agree with the Lords in the said amendment.
    The amendment deletes the reference to subsection (3) of clause 22(1). It is simply consequential on the changes made to subsection (3) of the clause by Commons amendment No. 89.
    Question put and agreed to.

  Clause 35

    ACQUISITION OF A COMPANY'S SHARES BY THE COMPANY
    The Lords have agreed to the amendment made by the Commons in page 44, line 3, at end insert:
    "(1A) A company limited by shares may acquire any of its own fully paid shares otherwise than for valuable consideration."
    with the following amendment:
    No. 2, at end insert:
    "and any company may acquire its own shares in a reduction of capital duly made."
    Mr. Eyre: I beg to move, That this House doth agree with the Lords in the said amendment.
    Mr. Deputy Speaker (Mr. Bernard Weatherill): With this it will be convenient to take amendments Nos. 3, 4 and 5.
    Mr. Eyre: Amendment No. 2 is an addition to the new subsection (1A) of clause 35. Without the amendment, there would be room for doubt as to the legitimacy of reductions of capital made by companies. The reason for this doubt is that technically a company can acquire its shares in a reduction of capital. The exceptions in subsection (3) of clause 35 do not cover all reductions of capital, and it could therefore be concluded that subsection (1) of clause 35 would prevent such acquisitions of shares. The amendment removes the problem by stating that any company may acquire its own shares in a reduction of capital duly made.
    With regard to amendment No. 3, it is necessary to exclude from the operation of clause 36 certain cases where shares are acquired by a nominee of the company, where the company is a trustee and has no beneficial interest in the shares, other than by reason of any right as trustee to recover its expenses or be remunerated out of trust property. At present, a company acting as trustee is able to accept in the name of a nominee shares issued by itself on behalf of the trust fund. The effect of clause 36, if unamended, would be to prevent this. We consider that it should be allowed, hence the amendment.
    The effect of amendments Nos. 4 and 5 is to replace Commons amendment No. 149 with an amendment to the same effect with the deletion of the word "otherwise" in line 1 of paragraph (b) and to replace the reference to clause 36 in clause 35(3) of the Bill with a reference to paragraph (b) in amendment No. 149, which requires to be referred to in this context.
    Question put and agreed to.
    Lords amendments Nos. 3, 4 and 5 agreed to.

  Clause 41

    DISTRIBUTIONS OF INVESTMENT COMPANIES
    The Lords have disagreed with the Commons amendment in page 50, line 16, leave out "land or other assets" but have

    1163
    made the following amendment in lieu thereof:
    No. 6, in page 50, line 15, leave out
    "in securities, land or other assets" and insert "mainly in securities".
    Mr. Eyre: I beg to move, That this House doth not insist on its amendment and doth agree with the Lords in their amendment proposed in lieu.
    On Report, the Government introduced a number of amendments to clause 41 providing for a new and simplified administrative scheme giving a greater flexibility of dividend regime to investment trust companies.
    The Association of Investment Trust Companies considered the scheme to be a welcome improvement but was concerned that the deletion of the reference to "land and other assets" in subsection 41(7), thereby restricting an investment company's investments to securities only, could prove unduly onerous. This is because investment companies may have some direct investments in assets other than securities, and, furthermore, at the time of a falling stock market, an investment company may quite reasonably decide to keep a fair proportion of its assets in liquid form.
    The amendment introduced by the Government and agreed in another place meets this concern by adding the word "mainly" to the words "in securities". It is consistent with the requirements of the second directive, the Association of Investment Trusts agrees that it meets its point, and I recommend to the House that it be accepted.
    10.45 pm
    Mr. Clinton Davis: I beg to move, as an amendment to the Lords amendment, at the end to add
    "that is to say, over fifty per cent.".
    This is my sole, massive contribution to this evening's entertainment. The phrase "mainly in securities" is imprecise and there is no reason why it should not be clarified. I do not think that matters were improved by the explanation, so-called, given by the Government spokesman, the noble Viscount Trenchard, in another place. He said:
    "The point is that the usual investment in this area is in securities. However, we did not want it to be exclusive to them. Therefore, we used the term 'mainly' which, though short, is fairly clear."
    1164
    That is a curious way of putting it. After all, one expects some degree of precision in a Companies Bill and it is not enough for it to be "fairly clear". If it is fairly clear, one might also say that it is fairly obscure. There is no reason why this should not be completely clear. I do not see why there should be an invitation to litigation to clarify these matters, and I do not accept the further argument that the noble Lord introduced that he needed flexibility. Indeed, the argument that was advanced by him was absurd. No doubt it will be adopted by the Minister, in which case it will be doubly absurd.
    Our amendment gives a sufficient degree of flexibility but it also clarifies the position. It says what the noble Lord went on to say he meant. He said:
    "I believe that 'mainly' means over 50 per cent. in securities for sure."—[Official Report, House of Lords, 27 March 1980: Vol. 407, c. 1014]
    If that is so, why not say it? That is the question I pose to the Minister. I am offering him the flexibility that he wants and I am also offering a degree of precision which, at the moment, the amendment that was carried in another place lacks.
    Mr. Eyre: The Opposition's amendment is, I am sure, a genuine attempt to clarify the amendment made in another place, the effect of which I have already explained. However, I must ask the House not to accept it on the ground that it is unnecessary. Let me briefly explain why I make that assertion.
    The purpose of the clause as amended is to require investment companies to invest at least half of their funds in securities. I am advised that the expression "mainly in securities" achieves this purpose and that no additional words are necessary. The adverb "mainly" is used elsewhere in the law relating to companies without qualification. For example, in section 18(6) of the 1967 Act there is a reference to a person who works wholly or mainly outside the United Kingdom. Parliament felt no need to expand on the meaning of the word then and there is no need to do so now. Therefore, I cannot recommend the Opposition's amendment to the House.
    As I have said, Lords amendment No. 6 achieves what the Government wish to achieve, namely, to ensure that at

    1165
    least half of the funds of an investment company are invested in securities. It seems clear from the Opposition's amendment that they do not dissent from this policy, which has been welcomed by the companies affected.
    It may help the hon. Gentleman if I remind him that in the case of Fawcett Properties Limited v Buckinghamshire County Council, reported in 1961 Appeal Cases at page 636, Lord Morton expressed the view that "mainly" meant "more than half." Therefore, I hope that the hon. Gentleman and his supporters will agree to withdraw their amendment.
    Mr. Clinton Davis: This amendment has been supported by the national executive committee of the Labour Party, and it is of profound significance. I am very impressed by the judgment of Lord Morton. I must concede that the Minister has made the point better than it was made in another place. If the point had been made with such clarity, we need not have had this debate. I recommend that the Minister goes to the other place as quickly as possible.
    I beg to ask leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Lords amendment No. 6 agreed to.
    The Lords have agreed to the Commons amendment, after clause 45, insert the following new clause:

    DISTRIBUTIONS OF INVESTMENT COMPANIES

      INTERPRETATION
      ".—(1) For the purposes of this Part of this Act, an individual is connected with a company if, but only if,—

      (a) he is a director of that company or a related company; or

      (b) he occupies a position as an officer (other than director) or employee of that company or a related company or a position involving a professional or business relationship between himself (or his employer or a company of which he is a director) and the first company or a related company which in either case may reasonably be expected to give him access to information which, in relation to securities of either company, is unpublished price sensitive information, and which it would be reasonable to expect a person in his position not to disclose except for the proper performance of his functions.

      (2) Any reference in this Part of this Act to unpublished price sensitive information in relation to any securities of any company is a reference to information which—
      1166

      (a) relates to specific matters relating or of concern (directly or indirectly) to that company, that is to say, is not of a general nature relating or of concern to that company; and

      (b) is not generally known to those persons who are accustomed or would be likely to deal in those securities but which would if it were generally known to them be likely materially to affect the price of those securities.

      (3) For the purposes of this Part of this Act a person deals in securities if (whether as principal or agent) he buys or sells or agrees to buy or sell any securities; and references in this Part of this Act to dealing in securities on a recognised stock exchange shall include references to dealing in securities through an investment exchange.
      (4) In this Part of this Act, except where the context otherwise requires—
      "company" means any company, whether a company within the meaning of the 1948 Act or not;
      "Crown servant" means an individual who holds office under, or is employed by, the Crown;
      "debenture" has the same meaning in relation to companies which were not incorporated under the 1948 Act as it has in relation to companies which were so incorporated;
      "investment exchange" means an organisation maintaining a system whereby an offer to deal in securities made by a subscriber to the organisation is communicated, without his identity being revealed, to other subscribers to the organisation, and whereby any acceptance of that offer by any of those other subscribers is recorded and confirmed;
      "listed securities", in relation to a company, means any securities of the company listed on a recognised stock exchange;
      "related company", in relation to any company, means any body corporate which is that company's subsidiary or holding company, or a subsidiary of that company's holding company;
      "securities" means listed securities and, in the case of a company within the meaning of the 1948 Act or a company registered under Part VIII of that Act or an unregistered company, the following securities (even if they are not listed securities), that is to say, any shares, any debentures or any right to subscribe for, call for or make delivery of a share or debenture:
      "share" has the same meaning in relation to companies which were not incorporated under the 1948 Act as it has in relation to companies which were so incorporated;
      "take-over offer for a company" means an offer made to all the holders (or all the holders other than the person making the offer and his nominees) of the shares in the company to acquire those shares or a specified proportion of them, or to all the holders (or all the holders other than the person making the offer and his nominees) of a particular class of those shares to acquire the shares of that class or a specified proportion of them; and

      1167
      "unregistered company" means any body corporate to which the provisions specified in Schedule 14 to the 1948 Act apply by virtue of section 435 of that Act (application of provisions to unregistered companies)."
      with the following amendment:
      No. 7, after subsection (3) insert—
      "(3A) For the purposes of this Part of this Act, an off-market dealer shall be taken to make a market in any securities if in the course of his business as an off-market dealer he holds himself out both to prospective buyers and to prospective sellers of those securities (other than particular buyers or sellers) as willing to deal in them otherwise than on a recognised stock exchange."
      Mr. Eyre: I beg to move, That this House doth agree with the Lords in the said amendment.
      This amendment defines what is meant in Commons amendment No. 217 by an off-market dealer making a market in securities.
      Question put and agreed to.

CORONA PROPERTIES LTD. (THORNE HOUSES)
Motion made and Question proposed, That this House do now adjourn.—[Mr. Wakeham.]
10.50 pm
Dr. Edmund Marshall: I am grateful for the opportunity—a little earlier than expected—to draw the attention of the House to the extraordinary and appalling problems which are related to houses in my constitutency in a road called Corona Drive, Thorne. That road, which has 90 houses altogether, was built some 50 years ago by a firm of property developers called Corona Properties Ltd., of Manchester. The firm still owns 63 of the 90 houses. The other 27 have been purchased over the years by sitting tenants, so that now nearly all are owner-occupied. Of the 63 houses still owned by Corona Properties Ltd., 34 are occupied by tenants of that company, while the other 29 are empty.
The astonishing fact is that many of the empty houses have been vacant for many years. It appears that no new tenancies have been created by Corona Properties since about the end of the Second World War. When any sitting tenant has moved out or passed away during that time, that house has simply been left empty and allowed to grow derelict.
1168
The condition of the vacant houses now presents an appalling eyesore. It is a source of serious nuisances for the other residents of the road. Most of the windows of the houses are boarded up, but still the properties attract vandals, and, on occasions, squatters. Indeed, at a time of continuing housing shortage in the area, it is a matter of wicked negligence that these houses should have been left empty and unused for residency for so long. Furthermore, the gardens are totally overgrown, giving rise to problems of infestation and health hazards for other residents of the road, both tenants and owner-occupiers. The empty houses are scattered throughout the length of the road, interspersed among the occupied houses.
Ten of the empty houses have been subject to closing orders under the Housing Act 1957 made by the relevant local authority, which up to 1974 was the former Thorne rural district council and since then has been Doncaster borough council. I understand that the structure of these houses is still sufficiently sound for them to be capable of being made habitable. However as the years go by, the expense of doing that grows. Until such renovation takes place, the empty houses will continue to give the whole road a general appearance of degradation to the detriment of tenants and owner-occupiers alike.
Meanwhile, the problems of the rented houses are, in a way, equally serious. Whenever items of repair work become necessary—and it is not surprising that there are many such items in houses of that age—the tenants have the utmost difficulty in getting the landlord to do the work. The only address that they have for the landlord is Corona Properties Ltd., Post Office Box 439, Manchester M60 1JB. It appears that any letters sent there receive neither reply nor attention. Indeed, I sent correspondence on behalf of my tenants to that address by recorded delivery and I received no reply.
In 1975 I discovered that the registered address of Corona Properties Ltd., under the company legislation, was 26 Pall Mall, Manchester 2. I discovered that the director of the company was Mr. Michael J. Kingsley, but only once have I received a reply to a letter that I sent there. That was in 1978. Unfortunately, that reply

1169
was unco-operative, and simply contained a refusal by the company to meet tenants and to discuss their problems.
Of course, the usual way for any tenants to report repair items for attention to an absentee landlord is through a regular rent collector. That method did not have much effect in Corona Drive when there was a rent collector. I believe that it is now some time since rents were collected. That is yet another bizarre aspect of this most extraordinary situation. When one of these rented houses becomes vacant through the death or removal of a tenant, there is no one to whom one can hand the keys. It is a chronic situation in which it is difficult to understand the motives of the landlords. They treat the property in Corona Drive as if it did not exist. I can only guess that the company's assets in Corona Drive are somehow used to offset financial gains in its operations elsewhere.
I do not know, but perhaps the company's affairs should be scrutinised closely by the Inland Revenue and the Department of Trade. Meanwhile, those of my constituents who live in houses that are owned by Corona Properties Ltd. are the innocent victims of the company's gross neglect. In such a situation, of course, the local authority has power, under the Housing Act 1957, to require that necessary repairs to rented properties be undertaken by the landlord. If necessary, the local authority can make enforcement orders, in default of which the local authority can undertake the work and subsequently charge the landlord.
Corona Properties Ltd. is well versed in the statutory procedures and delays all action to the latest possible moment by using every possible excuse for doing nothing. The conduct of Corona Properties Ltd. in respect of its houses at Thorne has been as baffling as it has been unscrupulous. Until it changes its policies and attitudes, I shall have no confidence that it is interested in fulfilling its duties as the landlord of my constituents in Corona Drive.
After a few years of fruitless pursuit of these problems on behalf of my constituents, I formed the view, which I still hold, that the only effective method of resolving these problems is that of public ownership of all the houses—whether tenanted or empty—that are still
1170
owned by Corona Properties Ltd. in Corona Drive. In 1974 the Government advocated in an official circular to local authorities that municipalisation of rented houses in circumstances such as those surrounding Corona Drive was desirable. I continued to press the local authority, Doncaster borough council, and the Department of the Environment to enable such a step to be taken as regards those houses at Thorne. However, progress towards that end was partly delayed by some timidity among local authority officials. They were timid about the risk of making compulsory purchase orders. However, in my view, there was and is ample evidence to demonstrate the bad record of Corona Properties Ltd. at any public inquiry. Progress was also partly delayed by the continuing scarcity of cash needed to secure the purchase.
However, by 1978 progress was being made. I was pleased to receive a letter, dated 10 November 1978, from the then Minister for Housing and Construction, my right hon. Friend the Member for Brent, East (Mr. Freeson) in which he wrote, towards the end:
"We"—
meaning the Department—
"have told them"—
the local authority—
"that they need not hold back from acquiring the houses if finance is likely to be the only obstacle."
That statement must be the nearest that any Minister of the Crown has ever come to writing a blank cheque. I was very grateful indeed to my right hon Friend for making such a commitment.
I quickly passed a copy of my right hon. Friend's letter to the chief executive officer of the Doncaster borough council, a Mr. William Jackson, who was recently President of the Society of Local Authority Chief Executives. He acknowledged receipt of the letter on 17 November 1978. But some nine months later, at almost the same time as Mr. Jackson retired, I was astonished to discover that the senior officers in the appropriate department of the Doncaster council had no knowledge of the Minister's letter, which I quoted. It appears that Mr. Jackson, for reasons best known to himself, did not inform his officer colleagues or members of the council that there was no longer any financial obstacle to a programme of purchasing properties in Corona Drive. As I say, Mr.

1171
Jackson has now retired, but through his inaction a vital opportunity to help the residents of Corona Drive was lost.
Since the summer of 1979, the Doncaster borough council has drawn up definite plans for the acquisition of seven of the empty houses in Corona Drive, namely, Nos. 1, 2, 4, 6, 8, 10 and 12, all of them close to the only entrance into the road. The improvement of these houses, which face anybody who comes into the road, and their reoccupation would give a much-needed boost to the morale of the road as a whole. I hope that it would spur on Corona Properties to undertake similar work to other houses owned by it along the road.
Doncaster borough council included the acquisition of these seven houses in its submission last autumn to the Department of the Environment for its housing investment programme for 1980–81. I wrote to the present Minister on 6 December in support of this particular item in the council's submissions. Somewhat regrettably, the reply from the Under-Secretary of State, whom I am pleased to see here tonight, was not very encouraging. When the housing investment allocations for 1980–81 were announced by the Secretary of State, it emerged that Doncaster's allocation fell at least £2 million short of what the council needed to meet the housing commitments that had already been made contractually. Consequently, unless additional finance is made available to the local authority in 1980–81, it cannot embark on any new housing schemes such as acquisition of houses in Corona Drive.
I think that I have said sufficient to indicate that the situation in Corona Drive, Thorne, is extremely unusual, with uniquely serious problems facing my constituents there. Responsible opinion of every political shade must surely recognise the plight of Corona Drive residents which is due almost entirely to neglect by their landlord. I hope that all considerations of party policy and doctrine can be put aside to enable the necessary finance to be made available for steps to acquire the seven houses to go ahead.
I very much hope that the Under-Secretary will be, prepared to give the position of Corona Drive thorough consideration. If it will help him to see the road for himself, I give him an
1172
open invitation, when it can be conveniently arranged, to come and have a look. If everybody concerned co-operates, I am sure that we can find the best method by which the Government and the local authority together can overcome the serious problems that I have described.
11.5 pm
The Under-Secretary of State for the Environment (Mr. Geoffrey Finsberg): I say at once that as soon as some of the more controversial legislation is out of the way, if it is of help, I shall be delighted to come to Doncaster and look at the problem on the ground.
I was most interested to hear the points made by the hon. Member for Goole (Dr. Marshall), and I can understand his concern and that of Doncaster metropolitan district council about both the specific properties in Corona Drive and other problems in connection with housing public expenditure in 1980–81. I should say at the outset that, as the housing authority, these decisions are for Doncaster to take within the broad policy framework laid down by Government.
I know that the hon. Gentleman has taken a deep personal interest in Corona Drive for some years now, and is rightly concerned about the condition of the properties. It is indeed unfortunate—and that may be an understatement—that the landlord has not taken remedial action, and I know that the council has been pressing him to do so. As far as I am aware, to date no application for approval to acquire any of the Corona Drive properties has been made to my Department by the local authority. That is not to say—and I have to make it clear—that we would give borrowing approval to the purchase of such houses if it was the council's intention to add them to its own housing stock.
The council is already heavily committed to a programme of house purchase from the National Coal Board. That will add substantially to its number of council houses. I understand it is contractually committed to a five-year programme of acquiring between 1,000 and 1,700 houses annually at an overall cost in excess of £6 million. The cost to the public purse does not of course end there. Estimates of £8,000 to £9,000 per house are spoken of for improvements and repairs, and, if that applies to any substantial number of

1173
the total of nearly 7,000 houses, we are talking of a very large capital investment indeed.
With Doncaster council's substantial programme of new building projects, that adds up to a level of expenditure on housing that we as a nation cannot afford. It is Government policy to allow local authorities to acquire existing properties in the private sector to add to their own housing stock only in the most exceptional circumstances.
Against that general background, I believe that the suggestion that the answer to the problem may be in permanent acquisition by the local authority is wrong. It seems to me that it is the very large existing programme of municipalisation in Doncaster, with the immense demands that that makes on resources of all kinds, that may be preventing, or at least inhibiting, the local authority in its wider housing responsibilities.
The problem, as the hon. Gentleman pointed out, has been running on for several years, irrespective of the seven or eight months' delay apparently caused by Mr. Jackson. The local authority has had ample opportunity, if it so wished, to acquire some or all of these dwellings. Alternatively it could have pursued—indeed, can still pursue—other courses with a good deal more determination than appears on the face of things to have been shown so far.
Indeed, I do not believe that would be unfair to suggest that on this particular occasion the hon. Gentleman is seeking to use me, as it were, as an amplifier or a loudspeaker to turn up the hi-fi volume of the criticism that he has been making over a considerable period of the action or inaction of the local authority in this case.
Dr. Edmund Marshall: On that very point, may I explain that in a letter that I received from the new chief executive of the authority, dated 29 November, he says specifically that the seven houses that I mentioned in Corona Drive have been included in the programme of purchases under the housing improvements programme for 1980–81?
Mr. Finsberg: That is not quite the same point as I was making. The inclusion in the HIP bid and an actual
1174
application for a compulsory purchase order are two very different things.
As I say, I think that the hon. Gentleman has been trying to make the local authority do something over a long period, and I must emphasise that the responsibility for any necessary action must rest first with the local authority and not primarily with the Department of the Environment.
What are the alternative courses open to the local authority to secure improvement or repair of these houses? Without detailed knowledge of the condition of the individual dwellings, I cannot be precise, but there are two major possibilities.
First, if the dwellings lack essential amenities, the local authority may be able to compel the owner to bring them up to standard using the powers in part VIII of the Housing Act 1974. Broadly speaking, these powers involve the service of a notice on the person having control of the property requiring works to be carried out. If the notice is not observed, the local authority may carry out the works and recover the cost of so doing from the person having control of the property.
The second option applies if the dwellings do not lack amenities but, to quote the statute, if
"substantial repairs are required to bring 'them' up to a reasonable standard, having regard to 'their' age, character and locality."
The procedure in this case is broadly similar and, indeed, I believe that the local authority has served repair notices in respect of four of the dwellings. I do not know why the notices were not, apparently, followed up with enforcement action by the local authority, for example, undertaking the works itself and charging the cost to the person having control of the dwellings. The hon. Gentleman said that Corona Properties Ltd. is sharp. My experience of local government is that over a period of years it gets to learn the tricks if it wants to do anything.
We are trying to help authorities such as Doncaster which I know are already in difficulties enough with the financial consequences of property acquisition without adding further to the problem. We believe that they will be able to obtain some relief through the provision in the Housing Bill giving tenants the right to buy their council houses. This would benefit

1175
Doncaster council both in attracting private investment by passing some of the improvement and repair responsibilities to the new home owners and by allowing the council to augment its available resources for housing provision in 1981–82 and subsequent years by 50 per cent. of its unapplied capital receipts. This, I should have thought, was perhaps a reason why Doncaster might respond to what the hon. Gentleman said and suggest, as we are trying to do, solutions free of political dogma.
The first recourse of the local authority over the specific problem of the properties in Corona Drive must be to persuade the owner of the properties to undertake the necessary works himself. The council has various statutory powers to this end. Also, I hope the landlord may be encouraged by the provisions in the Housing Bill, which will make investment by him more attractive. I am thinking of shorthold tenancies if he wished to grant them for the vacant properties, and the local authorities' discretion to waive the repayment of any improvement grant if the houses were subsequently sold.
It is only as a last resort that the Doncaster council should consider stepping in to acquire any of the properties. I must make it crystal clear that, if it wished to acquire the houses, my Department would approve such a course of action only if the local authority planned to acquire the houses by agreement, improve them and sell them upon completion on the open market. Again, the Housing Bill gives substantial encouragement for such an approach.
I am sure that the hon. Gentleman is as aware as I am of Doncaster council's difficulties in matching its expenditure with the announced housing investment programme levels. Its programme has been an ambitious one involving substantial new building schemes and a five-year programme for the acquisition of NCB houses. I appreciate that the choices the council now has to make are not easy ones for it. But if, as a last resort, it decided that it must embark on a scheme for the acquisition, improvement and sale of the Corona Drive properties, then, although the cost of that scheme would need to be financed from its 1980–81 HIP allocation, its spending power in future years could benefit substantially from the unspent capital receipts.
1176
There is not much that I can offer to do for Doncaster about its HIP allocation because the situation is not altogether easy. The hon. Gentleman said that Doncaster's existing commitments significantly exceed the sums that it would be allowed to spend in 1980–81. This seems to be for two reasons: first, its current estimate of commitments is substantially in excess of the figure it gave my Department in September and, secondly, it has incurred a substantial overspend in 1979–80 which must now become a first charge on the 1980–81 allocation.
I am not sure of the precise reasons for the overspend in the last financial year, but it is a surprisingly large sum of more than £2 million and certainly not in character with other authorities in the Yorkshire and Humberside region. I have already commented on the extent of Doncaster council's commitment to add substantially to its housing stock by purchasing NCB houses, and, although I do not have the council's outturn payment figures for the whole of the last financial year, I notice that its spending up to the end of December last showed an outlay of almost £10 million on new build schemes out of a total programme expenditure of nearly £13 million.
Were it not for this overspend, I believe that the allocation to Doncaster council for 1980–81 would be close to its commitments for this financial year, that is, both just over £14 million. Even so, when the HIP allocations were being worked out, we were basing our calculations on a commitment estimate by the local authority of a little more than £10 million.
In the Yorkshire and Humberside region no council was given an allocation for 1980–81 which was less than the level of commitments forecast by the local authorities themselves in their HIP submissions. Even so, we must not lose sight of the obvious merit of basing allocations with increasing emphasis on housing need and less on historic spending levels, and this the Secretary of State has already told local authorities he proposes to do.
I come back to what I have said to the hon. Gentleman. First, if no acceptable solution seems to be working out in the next two or three months, I will gladly try to come and look at the problem on site. Secondly, if Doncaster is prepared under the terms of the Bill to acquire, im-

1177
prove and sell, there are substantially fewer problems. Thirdly, if Doncaster will commence the sale of its existing stock of council houses, it will have the opportunity of augmenting its capital expenditure by the percentage I have already mentioned.
Much of the problem seems to have been caused by a lack of enthusiasm by Doncaster council and its predecessor to do very much for the unfortunate tenants the hon. Gentleman mentioned so movingly. Certainly its enthusiasm has not matched his. I can only say that I will do what I can to see whether there is anything further I can suggest to him. I will have examined some of the points the hon. Gentleman raised about whether the
1178
accounts of Corona have been properly field and whether there is a possibility that other provisions of the Housing Act 1974 which compel the disclosure of names and addresses of directors of companies may be of any benefit. But in the end much of the decision has to be taken by Doncaster.
I hope that, with the benefit of this debate, the hon. Gentleman will be able to spur Doncaster into taking more action than it has done in keeping with the racing that takes place in Doncaster.
Question put and agreed to.
Adjourned accordingly at eighteen minutes past Eleven o'clock.

HOUSE OF COMMONS
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Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Chelmsford.
The Lord Sinclair—Took the Oath.

ELECTRICITY PRICES: SCOTLAND
The Earl of CROMARTIE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they have considered that the increase in electricity prices by the North of Scotland Hydro-Electric Board is in direct contravention of the original charter of this board and could be disastrous both for the Highlands and in particular for the Western Isles of Scotland.
The MINISTER of STATE, SCOTTISH OFFICE (The Earl of Mansfield): My Lords, the Electricity Consultative Council for the North of Scotland District has submitted formal representations to my right honourable friend under the provisions of Schedule 7 to the Electricity (Scotland) Act 1979, asking that he should give a direction to the board on this matter. My right honourable friend has the representations under consideration.
The Earl of CROMARTIE: My Lords, I thank my noble friend for his Answer, but it is not entirely satisfactory. May I ask whether the Government realise that the original charter of the North of Scotland Hydro-Electric Board was devised largely for the benefit of the Highlands and Islands, and that has not taken place? We have to a large extent been absorbed by the South of Scotland Electricity Board and our headquarters have been moved out of our area. In fact, the savings that could be made in the administration would probably
114
amount to a great deal of money and the cost of electricity, which is very serious in the Highlands and Islands, could be mitigated.
The Earl of MANSFIELD: My Lords, I appreciate my noble friend's concern in the matter, but regret I cannot comment further on this aspect of the question since my right honourable friend is presently considering a formal representation from the Consultative Council which may in due course lead to his issuing a direction to the board. It would not be appropriate for me to express any opinion on the legality, and still less the merits, of the board's decision. I should add that the fixing of tariffs is a matter for the commercial judgment of the board and, apart from the possibility of issuing a direction to the board following a representation from the Consultative Council, the Government have no powers to intervene in the board's decision in such matters.
Lord LOVAT: My Lords, in supporting my noble friend Lord Cromartie, may I ask the Minister whether he is aware that the late Mr. Tom Johnston, who was probably the best Secretary of State we ever had in Scotland, assured us that the Highlands would benefit from the water which was running to waste and that water would provide what he considered would be the equivalent of "pit-head prices" to consumers in the North? Is he also aware that Mr. Johnston assured us we would get rateable values accruing in the county council from the harnessing of our rivers, and that did not happen either? I consider that the Highlands have been very badly treated in both instances.
The Earl of MANSFIELD: My Lords, without necessarily agreeing with my noble friend's estimate of the gentleman's capabilities as Secretary of State, I am aware of the historical aspects of this particular Question.

TAX EVASION: RECOVERY OF REVENUE
2.40 p.m.
Lord UNDERHILL: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether, in view of the proposal to appoint additional inspectors to check social security abuses, which is estimated to save £50 million a year, it is proposed to take steps to deal with tax evasion which it is estimated would save at least 20 times that sum.
The MINISTER of STATE, TREASURY (Lord Cockfield): My Lords, between them the two revenue departments employ a total staff of 105,000. These resources need to be deployed in the most effective manner and due priority is given to tackling tax evasion. Both revenue departments have in fact scored significant successes in this field in recent years. Thus, in the case of the Inland Revenue the amount recovered as a result of specific investigation work has increased nearly four-fold in the last three years; while in the case of the Customs and Excise undeclared VAT recovered as a result of control visits has almost doubled over the same period.
Lord UNDERHILL: My Lords, I thank the noble Lord for that Answer. Could I ask him whether he recalls that on 4th December, in answer to a somewhat similar Question, he intimated that these matters are under constant review? Could he indicate the results of any recent review? Does he not agree that the amount of tax evasion is still so high as to be a matter of great concern that some people are not meeting their responsibilities while the great mass of citizens of this country have only one source of income?
Lord COCKFIELD: My Lords, as I have indicated, the amounts recovered from investigations into tax evasion have shown a steady increase over the years. The number of staff employed on special investigation work in the Inland Revenue has also increased. There are at present five special investigation offices, and that number will be increased to six in the coming year. The number of staff employed in Customs and Excise in specialised investigation units has also shown an increase; and it is the policy of both departments to continue to deploy
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the maximum effort in this field, consistent with the overall level of their staffing.
Viscount MASSEREENE and FERRARD: My Lords, does not my noble friend the Minister agree that comparisons are odious, and that in this Question the comparison is particularly odious? Does the Minister further agree that, however deplorable tax evasion may be, the individual who is indulging in it either has money or is earning money, and may well be employing a lot of people? Therefore, he is no expense on the community, whereas the individual who is living on the Welfare State, though it may not be his fault, is a charge on the community and if he indulges in fiddling the Welfare State it is disgraceful.
Lord COCKFIELD: My Lords, I think, if I may be permitted to say so, that it is also disgraceful to fiddle the Inland Revenue or the Customs and Excise. We all greatly deplore tax evasion, and must do so, and every effort is made by both revenue departments to deal with this matter in the most effective manner. Both revenue boards are to be congratulated on their successes in this field, which are amply demonstrated by the figures that I have quoted.
Baroness GAITSKELL: My Lords, may I ask the Minister what the departments mean, when they look into this social security fiddling or whatever it is, by "speculative figures"? They mentioned £50 million when they talked about benefits of all kinds. I heard it on the radio.
Lord COCKFIELD: My Lords, with respect to the noble Baroness, that is not the subject matter of the Question, which relates to tax evasion.
Lord WIGG: My Lords, is the Minister aware that in 1964 when the Labour Government took office, the total amount of revenue from betting, gaming and lotteries was of the order of £34 million? It reached a figure of £400 million. Is he aware that that sum could be greatly increased if he adopted a cost-effective attitude towards the Customs and Excise staff, and did not decrease it but increased it?
Lord COCKFIELD: My Lords, the question of dealing with tax evasion is essentially a question of the proper deployment of the available staff, rather than one of simply increasing the number of people employed.
Lord WIGG: My Lords, with great respect, before the betting, gaming and lotteries legislation was introduced in the early 'sixties, in every main police station in the country there were at least two officers—as I am sure the Minister must be aware—looking out for evasions of the law. The responsibility was then moved from the police to the Customs and Excise and the number now engaged in this job, right across the board, is quite insufficient for the job in hand.
Lord COCK FIELD: My Lords, the question of preventing evasion in this Feld is a matter which is well within the cognisance of the Board of Customs and Excise, and I am confident that they take whatever steps are necessary in that regard.
Lord WALLACE of COSLANY: My Lords, will the noble Lord tell the House how many tax inspectors of senior rank have left the Inland Revenue to join private companies, in order to advise those companies how to avoid tax?
Lord COCKFIELD: My Lords, this Question relates to tax evasion, and I am quite certain that no inspectors of taxes have left the service of Her Majesty's Government in order to advise people on tax evasion.
Lord MORRIS: My Lords, is my noble friend aware that the Lord President of the Court of Session, Lord Clyde, in a leading case, stated that,
"No man in this country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or to his property as to enable the Inland Revenue to put the largest shovel into his stores"?
Would my noble friend agree that the distinction between evasion and avoidance should be very clearly understood?
Lord COCKFIELD: My Lords, the Question relates entirely to evasion and it was to that that I directed my remarks.
Baroness FISHER of REDNAL: My Lords, would the noble Lord consider publishing figures in exactly the same way as figures are being published of so-called scroungers on social security? The noble Lord talked about a percentage, and if the figures were published the general public would know that there is not one law for the rich and one law for the poor.
Lord COCKFIELD: My Lords, I am grateful to the noble Baroness. Figures of this kind are published in great detail in the annual reports of both revenue departments.
Earl ALEXANDER of TUNIS: My Lords, would the Minister agree that it would be cheaper to tax more on spending and less on people's savings and earnings?
Lord COCKFIELD: My Lords, that, of course, is a legitimate observation, but it does not arise out of the Question.
Lord UNDERHILL: My Lords, would the noble Lord agree that it is very difficult to publish figures as to the number of people who are guilty of evasion, because the only figures that can be published are of those that are found out? Can the noble Lord give us figures as to the amount which the Inland Revenue estimate is lost by evasion?
Lord COCKFIELD: My Lords, I entirely agree with the noble Lord about the difficulty and unreliability of such estimates, which is why I was somewhat surprised to find them in the noble Lord's own Question.

AIRLINE OPERATIONS: FUEL ECONOMIES
2.49 p.m.
The Earl of KINNOULL: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what action is being taken to facilitate fuel economies in airline operations.
Lord TREFGARNE: My Lords, fuel-saving measures in the airline industry lie largely in the hands of the operators themselves by the choice of aircraft and by improvements in aircraft operating procedures. The Government and the Civil Aviation Authority do what they can by trying to improve air traffic control services and shorten air routes.
The Earl of KINNOULL: My Lords, I thank my noble friend for that reply. Can he say whether the Government are holding joint discussions with the operators to find ways of achieving economies? I have particularly in mind the air traffic control, especially over Europe. I wonder whether the Government have evidence that air traffic problems cause wasteful fuel consumption and lead to higher prices for fares?
Lord TREFGARNE: My Lords, the National Air Traffic Service, which is a joint service run by the Civil Aviation Authority and the Ministry of Defence, are very much aware of these matters and do what they can within the constraints of military requirements and other considerations to keep air routes to a minimum. I can also say that the air traffic control authorities in Europe, for whom we have no responsibility, are equally aware of these problems.
Lord PONSONBY of SHULBREDE: My Lords, I am sure that the noble Lord has read the recent report of airlines in America over-economising on the amount of fuel carried. I hope that the noble Lord will say that pressure for economies here will not extend so far as that.
Lord TREFGARNE: My Lords, I have read the report to which I think the noble Lord is referring, but the noble Lord, and your Lordships, should not confuse on the one hand the amount of fuel consumed with, on the other, the amount of fuel carried. The case to which the noble Lord refers was an aircraft which arrived with little or no fuel remaining, and that was because it did not carry enough fuel in the first place.
Lord ORR-EWING: My Lords, would my noble friend bear in mind that the fitting of RB-211 Rolls-Royce engines to the Jumbo 747s saves 10 per cent. in
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fuel? Is not this something to be encouraged—not only using British engines but saving fuel at the same time?
Lord TREFGARNE: Yes, my Lords, it is indeed the case that the RB-211 is a very highly cost-effective engine.

DERELICT LAND
2.52 p.m.
The Earl of KINNOULL: My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government how much derelict land is in public ownership.
The PARLIAMENTARY UNDER-SECRETARY of STATE, DEPARTMENT of the ENVIRONMENT (Lord Bellwin): My Lords, this information is not readily available. The last national survey, made in 1974, showed some 43,000 hectares of derelict land in England, but this was not broken down by ownership. So far as vacant or unused public land is concerned, to the best of my knowledge there are no national statistics although some local authorities do maintain their own records.
The Earl of KINNOULL: My Lords, while I thank my noble friend for that reply, would he agree that these statistics are very important? May I ask my noble friend what action the Government plan to ensure that as much unused and derelict land as possible is developed for public use?
Lord BELLWIN: My Lords, it is always useful to have statistics but the problem of compiling them in the way that they will be most effective is quite difficult, not to say costly. That is why we have not seen further such surveys in the last few years. As to the steps which the Government are taking to see that more unused and underused land is released for development, there are a number of such steps, including the repeal of the Community Land Act, the reduction of the development land tax rate and the raising of the initial threshold

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of exemption, the streamlining and speeding up of the planning system and procedures and the abolition of the "first offer" procedure among Government departments, local authorities, housing corporations and nationalised industries, thus saving months, or even years, in releasing surplus public land. In addition, the Local Government Planning and Land Bill will require registers to be compiled in certain designated areas of unused or underused land in public ownership. The provisions include a proposed power for the Secretary of State to direct the disposal of land demonstrably surplus to the requirements of its present owners.
The Earl of KINNOULL: My Lords, while I thank my noble friend for that list of good things which the Government are doing, may I ask him whether he will review again whether the statistics of unused and derelict land could be updated annually, or biennially, or even triennially?
Lord BELLWIN: My Lords, it so happens that at the present time we are considering when the next derelict land survey should take place, but clearly decisions on such matters have to be taken bearing in mind not least the central and local resources which it would consume.
Lord WINSTANLEY: My Lords, may I ask the noble Lord whether he is aware that under the previous Government the Minister of State in the Department of the Environment wrote to the chairmen of public bodies owning and managing land in designated areas of the countryside with instructions that due consideration should be given to the purposes of designation in the management of that land? May I also ask the noble Lord whether that instruction is endorsed by the present Government?
Lord BELLWIN: My Lords, I was not aware of the letter to which the noble Lord refers, but I should certainly have thought that anything which encouraged the bringing forth of land for beneficial use rather than that it should lie unused, derelict, or whatever, could be only to the good.
The Earl of LAUDERDALE: My Lords, I wonder whether my noble friend
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can enlarge on what he said with regard to the likely enforced disposal of land owned by public authorities under the legislation which the Government have in mind? Would that include land owned by nationalised industries—for example, mudflats that are underdeveloped?
Lord BELLWIN: Yes, my Lords, it would very much include that kind of land. Indeed, it should include any land for which there is no foreseeable use. That can be only to the good, and I am sure that everyone I know endorses the rectitude of that line.
Lord CLEDWYN of PENRHOS: My Lords, is the noble Lord aware that the Derelict Land Unit which I set up in the Welsh Office after the Aberfan disaster of 1967 has done the most remarkably good work? May I ask him what steps the Government are taking to encourage the Derelict Land Unit to extend its operations not only in Wales but in England and Scotland as well?
Lord BELLWIN: Yes, my Lords, I am aware of that. Whereas at present local authorities are required to acquire derelict land in order to reclaim it with the aid of grant, the Local Government Planning and Land Bill contains a provision—Clause 92—which will enable grant to be paid in future direct to the private sector and public bodies other than local authorities. The grant is to cover net loss only.
The Earl of KIMBERLEY: My Lords, is my noble friend aware that many allotment holders are very unhappy about the fact that they will lose their allotments for building land? Will Her Majesty's Government consider issuing a directive to local authorities that if they are taking allotment land for building, where there is derelict land it might be rejuvenated into allotments?
Lord BELLWIN: My Lords, we are talking of two separate issues. The Question relates to derelict land, and I have referred to unused and underused land. The noble Earl's question refers to allotment land, which itself is the subject of proposals contained in the Bill. As noble Lords may have seen in the last few days, there is considerable concern

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about that particular kind of land. We share that concern. I hope that there will be no difficulties and that there will be a continuation of the use of allotment land. I am not sure whether that reply fully answers my noble friend, but it is a subject which is at the present time under discussion both in another place and elsewhere.
Lord HALE: My Lords, can the noble Lord say whether he has the constant co-operation of British Rail in this matter? Can he also say whether or not it is a fact that British Rail have a great deal of unused and extremely valuable land which is lying derelict, with rusty rails upon it or huge banks alongside it, all of which could make a much more substantial contribution to public use?
Lord BELLWIN: My Lords, I agree entirely with the noble Lord. That is precisely why one of the provisions contained in the Bill is along the lines which I described.
The Earl of ONSLOW: My Lords, is the noble Lord aware that there is a second land use survey being carried out by Dr. Alice Coleman of the University of London and that that land use survey shows all derelict land and all underused land? Is the noble Lord also aware that they are short of money for the printing of maps and that this is extremely important and extremely valuable documentation which shows what is happening to land in the whole of the United Kingdom?
Lord BELLWIN: My Lords, I am grateful to my noble friend for reminding us of the survey to which he refers, of which I do know. I shall certainly take away the point he makes about the problems which they seem to be encountering.
Lord DAVIES of LEEK: My Lords, is the noble Lord aware that the point I wanted to make in regard to the "Beechingisation" of the railways is that it may now be wise for the Government to look into the future use of all the manpower which was wasted with the destruction of the railway routes, for the saving of energy in the future by new means of transportation?
Lord BELLWIN: My Lords, with respect, I suggest that that is not really related to the Question.
The MINISTER of STATE, MINISTRY of AGRICULTURE, FISHERIES and FOOD (Earl Ferrers): My Lords, I do not know whether your Lordships may feel that we have probably gone far enough along this road, apart from the fact that the poor noble Lord, Lord Taylor of Gryfe, has risen to his feet about three times. Perhaps the noble Lord will put his question and then we might pass on to the next business.
Lord TAYLOR of GRYFE: Thank you very much, my Lords. Would the noble Lord agree that much of the British Rail land described by my noble friend consists of disused railway tracks which are long and narrow and with no opportunity for development, and would he agree that the £20 million contribution of the British Rail Property Board to lessening the railway deficit last year was substantial and worthwhile?
Lord BELLWIN: My Lords, I am bound to say again that I think that strays a long way from the original Question. I take the point made, but I am not in a position to confirm or otherwise the second part of the noble Lord's observation.

BUSINESS
Lord DENHAM: My Lords, it may be for the convenience of your Lordships to know that dinner will be available tonight at the usual time. It is proposed that the Committee stage of the Social Security Bill should be adjourned at approximately 7.15 for three-quarters of an hour in order to enable those of your Lordships who are particularly involved to avail themselves of this facility.

RHODESIA
3.3 p.m.
The SECRETARY of STATE for FOREIGN and COMMONWEALTH AFFAIRS (Lord Carrington): My Lords, with your Lordships' permission, I shall make a Statement on Rhodesia.

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Rhodesia will come to independence as Zimbabwe on Friday, 18th April. Her Majesty the Queen will be represented at the independence celebrations by His Royal Highness the Prince of Wales. I shall represent the Government. My noble friend the Governor of Southern Rhodesia will leave Salisbury on Independence Day. Britain is thus about to terminate its constitutional responsibility for Rhodesia and to transfer power to a Government freely elected, under British supervision, by the Rhodesian people. I am sure that your Lordships will wish to join me in wishing the new country every success.
We look forward to working closely with the Government of an independent Zimbabwe headed by Mr. Mugabe. I am pleased to announce that, subject to parliamentary approval, the Government intend to commit over three years aid totalling £75 million to Zimbabwe. The aid to be given within this total commitment includes a £7 million grant for urgent post-war reconstruction; an allocation of £500,000 for joint funding with British voluntary agencies of projects which they undertake in Zimbabwe; contributions to our share of expenditure through any extension of the Lome Convention to Zimbabwe and to the special appeal of the UN High Commissioner for Refugees; and further humanitarian assistance.
The bulk of the £75 million will be devoted to a substantial bilateral aid programme which will be allocated in agreement with the Zimbabwe Government. A mission from the Overseas Development Administration will visit Zimbabwe shortly after independence for talks with incoming Ministers to identify projects. At the request of the new Government we are providing assistance with police training, broadcasting, the civil service and the foreign service. We are also providing, separately from the aid programme, assistance with the training of the future Zimbabwe army.
Because of the marked extent to which the aid programme is already committed over the next two years, and in order to minimise the impact of this very substantial pledge to Zimbabwe on the level of United Kingdom assistance to other countries, my right honourable friend the Chancellor of the Exchequer has agreed exceptionally that there should be
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made available from the public expenditure contingency reserve a sum of £8 million in 1980–81 (with consequent adjustment of the cash limit) and of £7 million in 1981–82.
We welcome Zimbabwe's accession to the Commonwealth as the forty-third member. This calls for further legal provisions. An order under the Zimbabwe Act will be laid before Parliament in draft in the next two days for approval by resolution. The principal purposes are to continue the application of certain United Kingdom laws in relation to Zimbabwe notwithstanding its change in status. Similar provision has been made for the application of United Kingdom law in respect of other republics within the Commonwealth.
The Zimbabwe Act 1979 granted an amnesty in United Kingdom law for political offences connected with UDI. A similar amnesty was granted in Rhodesian law, and has subsequently been extended by the Governor in a general pardon covering all political offences up to the elections.
Now that full amnesty has been granted to all those responsible for the situation which led to the imposition of sanctions the Government feel that it would no longer be appropriate for any further prosecutions to be initiated for sanctions offences.
The measures applying sanctions in United Kingdom law have of course been revoked. I am informed by my right honourable and learned friend the Attorney General that only one case, an appeal, is at present before the courts, and that no other prosecutions are pending. The amnesty will not reopen past judgments. An order will be laid before Her Majesty in Council in due course to give effect to this decision.
3.7 p.m.
Lord GORONWY-ROBERTS: My Lords, the whole House will warmly welcome the Statement made by the noble Lord, and we thank him for coming to the House to keep us abreast of the situation. I am also sure that the entire House will feel that the choice of His Royal Highness the Prince of Wales to be one of our principal representatives at the celebrations is most appropriate—an appropriate-

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ness matched only by the choice of the right honourable and noble Lord himself to represent the Government. There is a sense, of course, in which he will represent this House and a much wider area of consensus in the country as represented by one particular party.
I wish to put one or two questions as to the rest of the Statement. May I say how much we welcome what the noble Lord has just said about the intention of the Government to work closely with the new Government of Zimbabwe headed by Mr Mugabe; and in that connection I should like to say how pleased we all were to hear on the radio this morning the warm and generous references made by the Governor of Zimbabwe, the noble Lord, Lord Soames, to the new Prime Minister of Zimbabwe. This is a constructive and friendly way in which to launch the new State forward on the path of prosperity, and indeed of friendship with this country.
As to the financial provisions which the noble Lord has announced, is he aware that we shall wish to examine the details which he has given us? It seems that £75 million spread over three years is a substantial sum, especially perhaps—and I am putting this in the form of a question—when it is linked with certain multilateral advances to the new State, possibly from the Community and other offers of financial aid which have been made public by the President of the United States of America in the last day or two. So perhaps the House will join with me in looking at this sum in connection with other sums that other friends of Zimbabwe will be making available.
May I say how glad we are to see that the bulk of the £75 million over three years will be devoted to bilateral aid programmes in agreement with the Zimbabwe Government. There is of course anxiety here and there that when we do extend this aid we may perhaps be tempted to over-advise the new Government as to how they should spend it. I do not think we should worry too much about this. The whole tone and tenor of the new Government and of the new Prime Minister in particular is to turn to this country as a friend and equal and to consult with us. I am sure that the exchanges as to how best to dispose of this substantial sum over the next three years will be in that spirit.
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May I in this connection ask the noble Lord to note that we welcome very much the fact that the new Government of Zimbabwe have themselves asked this country to help them in cash and kind, in advances and advice, in very important sectors of the new country's life—in police training, broadcasting, the civil service, the foreign service, as well as in the training of the future Zimbabwe army. This is most acceptably significant in regard to the attitude of the new Prime Minister and his Government, and indeed of the Rhodesian peoples, as to which way their country wishes to go in the future. As to drawing on the contingency reserve, I take it that these two sums, £8 million next year and £7 million the year after, are to be drawn from the contingency reserve because the aid programme is already bespoken, as it were. In that sense Zimbabwe has led to a substantial increase in commitments for the aid programme over the next two years.
Finally, may I join with the noble Lord in emphasising the fact that Zimbabwe is the forty-third member of the Commonwealth. As one who has played some little part in constitutional discussions of this kind, though not of this complexity of course, leading to independence, I can testify to the fact that never at any time in these discussions does this country, through its representatives, press upon any dependency when advising on independence the need, or even the advisability, for it to join the Commonwealth. Always they raise the point and say they want to join the Commonwealth. It is most reassuring. It gives one a warm feeling of confidence in the future of the Commonwealth, which, incidentally, has done so much to contribute to the solution of this long-standing and difficult question of Rhodesia. It gives us all great satisfaction that Zimbabwe under Robert Mugabe has itself, on obtaining independence, opted to become a member of the Commonwealth.
3.13 p.m.
Lord BYERS: My Lords, we from these Benches would certainly wish to be associated with the expression of good wishes to Zimbabwe on assuming independence. We certainly welcome the decision made by the Government to grant this amount of aid to a country which will certainly need it. May I ask

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the noble Lord two questions. Will any of these funds be available to pay for teams of teachers and instructors from this country to go out to Zimbabwe to train the people on the spot, so that they can raise standards, academically, industrially, agriculturally; and if aid is to be used partly in that way, can we make quite sure, together with the Zimbabwean Government, that there is a minimum of red tape, which in so many countries has held up the necessary equipment and materials needed urgently by the people who are to receive instruction? Secondly, may I ask the noble Lord the Foreign Secretary whether any specific aid is being granted by the EEC? Would this not be an opportunity for using some of our food surpluses in the Community to combat the malnutrition which I understand is rampant in Zimbabwe?
Lord CARRINGTON: My Lords, I am grateful to both noble Lords for the remarks they have made. Perhaps I should have said in the Statement that, of course, both the other parties in this I-louse will be represented at the independence celebrations. I am not quite sure whether it is Mr. Callaghan or Mr. Shore who will be going from the party opposite, and Mr. Steel will be going for the Liberals. So it will be an all-party delegation to the independence celebrations.
I thought there was perhaps a slight suggestion in the remarks of the noble Lord, Lord Goronwy-Roberts, that £75 million might be rather a lot of aid because there would be aid from other countries which will add up to a considerable figure. I hope that there will be, and certainly there have been some generous pledges by other countries for aid. But I hope your Lordships will remember that the war in Rhodesia caused enormous damage and there really is a very great deal of damage to be made good before any aid can be spent on productivity and production. One thing is quite certain. Provided that Zimbabwe is administered effectively and efficiently, as I am sure it will be, Zimbabwe is certainly one of the African countries which can stand on their own feet. Its economy is perfectly viable. So there is no reason to suppose that the money we are providing will go down the drain; it certainly will not do that.
The noble Lord, Lord Byers, asked about training for teachers. We are, of
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course, doing a certain amount of it already, but there is no reason why, if Mr. Mugabe wants money to be spent in that way, we should not help him in every way we can. Already Mr. Cheysson from the EEC has been in Zimbabwe and has had a talk with Mr. Mugabe about Community aid, so there is no doubt whatsoever about that. In common with both noble Lords, I welcome Zimbabwe as the forty-third member of the Commonwealth. I would only reflect that perhaps the birth was a little more difficult than some.
Lord ALPORT: My Lords, may I ask my noble friend whether he will bear in mind, in the allocation of grants to Zimbabwe, the needs of the University College of what was Rhodesia and Nyasaland and presumably on Friday will be the University of Zimbabwe, which under the very courageous leadership of the Reverend Dr. Craig has played a very important part in preparing the Zimbabwean people for the responsibilities of independence?
Lord CARRINGTON: Yes, my Lords, I will certainly remember that.
Lord ELWYN-JONES: My Lords, do the arrangements relating to the welcome proposal of Zimbabwe to join the Commonwealth include provisions for recourse to the Judicial Committee of the Privy Council?
Lord CARRINGTON: My Lords, the noble and learned Lord has torpedoed me. I am afraid I do not know the answer.
Lord BARNBY: My Lords, may I ask my noble friend whether, from the sums that he reported as being made available or from any other source, adequate provision for pensions has been made on a scale which has been suggested as equitable by the bodies concerned with the civil service and others in Rhodesia?
Lord CARRINGTON: My Lords, it was not intended that this sum of aid should be used for that purpose, because, as my noble friend knows, the pension rights of public servants are fully guaranteed under the Zimbabwe constitution and Mr. Mugabe has made specific commitments to respect its provisions.
Lord GRIDLEY: My Lords, may I ask my noble friend the Foreign Secretary, if he is able to give this confirmation, for what purpose the financial assistance is being given to the civil service in Rhodesia?
Lord CARRINGTON: My Lords, I did not say that it was. I do not quite follow my noble friend's question.
The Earl of ONSLOW: My Lords, when we give aid to Zimbabwe can the noble Lord possibly bear in mind that the aid should be concentrated not on large projects but on small items like water pumps and simple things for a relatively simple high labour content economy? I would suggest that we avoid the trap of building large and expensive projects which suck in high technology from outside and do not provide jobs, and raise the standard of living for a vastly educated urban and rural population.
Lord CARRINGTON: My Lords, I am sure my noble friend is right when he says that money should be spent on productive enterprise which employs the people of Zimbabwe. I think on the whole smaller schemes probably do more than big ones, but I think it would be a mistake to exclude all big schemes from the programme.
Lord BROCKWAY: My Lords, I should like to ask the Secretary of State whether he is aware that we all recognise the momentous event which the independence of Zimbabwe will be and that, despite any criticisms which have been made, we want to congratulate him on the part that he has taken? Britain, the United States of America and the European Community have already indicated that they will give considerable financial contributions towards the development of Zimbabwe. Is it possible, by some means, to make a broader appeal to the world? What has happened in Zimbabwe is of international importance and of enormous importance to Africa, and especially the problems of Southern Africa. The whole world ought to be involved. Would it be possible to ask the Secretary General of the United Nations to make an appeal for assistance as well? There are also the unaligned nations, which include the wealthy oil countries
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of the Middle East; there is the Commonwealth itself which initiated this movement at Lusaka, and even COMECON—the Communist countries and China. Is it not possible now to make a world appeal for assistance so that Zimbabwe can recover from the appalling conditions that now exist?
Lord CARRINGTON: My Lords, Her Majesty's Government have already addressed an appeal to all countries that are likely to give aid. As I said in a previous answer, there has already been an extremely generous response and I do not think that we have heard from everyone yet. So I think that what the noble Lord wants has, to a very large extent, already happened.
I am very grateful to him for his generous remarks. At one time I was rather worried that the absence of Rhodesia as a quarry for Questions would cause the noble Lord, Lord Brockway, some difficulty as regards finding material for Questions in this House. I am glad to say that I have been proved wrong.
Lord PLANT: My Lords, would the noble Lord agree that, in some respects, the whole world has already been asked to give assistance to Rhodesia? I am referring to the International Labour Organisation. Is the noble Lord aware that the Government of Norway have placed a considerable sum of money at the disposal of the International Labour Organisation so that some research can be done in Zimbabwe as to which Acts need to be repealed in order to bring about some measure of equality? Will the noble Lord keep in close contact with the International Labour Organisation which is expecting to provide a great deal of training and material help for Zimbabwe?
Lord CARRINGTON: Yes, my Lords.
Lord SOMERS: My Lords, I do not know whether it is in order for me to add, from these Benches, our congratulations to the noble Lord for the very happy solution which he has brought about. It has not been an easy row to hoe and I think that we all admire, in particular, the way in which he handled the conferences at Lancaster House. The result justifies everything that he has done.
Lord CARRINGTON: My Lords, I am much obliged to the noble Lord and I must only apologise to your Lordships for having deprived your Lordships of your Leader for four months.
The Earl of ONSLOW: My Lords, as no one has congratulated the noble Lord from this side of the House today, perhaps I might just be allowed to do so.

EDUCATION (SCOTLAND) BILL [H.L.]
3.24 p.m.
The Earl of MANSFIELD: My Lords, on behalf of my noble and learned friend the Lord Advocate, I beg to move that this Bill be now read a second time. It is a consolidation measure which incorporates amendments to give effect to recommendations of the Scottish Law Commission. It consolidates certain enactments relating to education in Scotland, and apart from the amendments which are intended to remove certain minor anomalies in existing law the Bill makes no change in the existing law. If your Lordships approve, the Bill will be referred to the Joint Committee on Consolidation Bills which will consider it and make its report to the House in due course. My Lords, I beg to move.
Moved, That the Bill be now read 2a.—(The Earl of Mansfield.)
Lord ROSS of MARNOCK: My Lords, I should like to congratulate the Government on the speed with which they have been able to incorporate in a consolidation measure a Bill which made changes in respect of Scotland and which was before the House just over a week or so ago. I noticed that they wasted no time at all in getting changes made in respect of nursery schools and school meals provisions. On the basis of the assurance that has been given by the Minister of State that there is no substantial amendment—which, of course, would cause the Government very considerable trouble and open up the whole Bill for amendment in another place, if not here—I certainly would support the Second Reading.
The Earl of MANSFIELD: My Lords, I must thank the noble Lord for those
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few kind words. I am bound to say that when the gifts are proffered one looks to the nationality of the giver in case he is Greek, but in this case I need make no further comment.
On Question, Bill read 2a, and referred to the Joint Committee on Consolidation Bills.

SOCIAL SECURITY BILL
3.26 p.m.
The MINISTER of STATE, DEPARTMENT of EDUCATION and SCIENCE (Baroness Young): My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, that the House do now resolve itself into Committee.—(Baroness Young.)
On Question, Motion agreed to.
House in Committee accordingly.
[The Lord Aberdare in the Chair].
Clause 1 [Amendments relating to up-rating]:
The CHAIRMAN of COMMITTEES (Lord Aberdare)The CHAIRMAN of COMMITTEES (Lord Aberdare): Amendment No. 1. I must point out that if Amendment No. 1 is agreed to, I cannot call Amendment No. 2.
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 1:
Page 1, line 6, leave out subsections (1) and (2).
The noble Lord said: I beg to move Amendment No. 1. I should like to crave the indulgence of the Committee at the very beginning and ask the noble Baroness the Minister one simple question. I am grateful to her for suggesting that certain of the amendments can be grouped. I personally suggested that perhaps we could take Amendments Nos. 1, 2, 3 and 4 together, and I understand that that is acceptable to the Government. I see no difficulty about the other groupings. However, I wanted to be clear in my own mind as to whether the noble Baroness the Minister was thinking in terms of speaking to all four amendments in one go rather than taking them separately. I had hoped that in the grouping we would

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still speak to each amendment. We would speak to Amendment No. 1 and then decide what to do on it; then we would deal with Amendment No. 2, then No. 3 and then No. 4 and decide what we are going to do at each stage rather than speaking to all four in one go.
Baroness YOUNG: I am perfectly agreeable to the suggestion that the noble Lord has made and we shall certainly take the amendments in the way that he wishes.
Lord WELLS-PESTELL: I am most grateful to the noble Baroness, because otherwise it would have meant my speaking for an almost interminable time on the first four amendments and that would not be good for me, nor, I am sure, for your Lordships.
Clause 1 is perhaps the most important part of the Bill with the exception of that section of the Bill which deals with the abolition of the Supplementary Benefits Commission. I think that because Clause 1 is so important it is important to ask your Lordships to consider what the Government are in fact asking. Certainly the first two amendments deal with the up-rating formula for pensions and other long-term benefits.
The Government argue that the present formula, introduced by the Labour Government in 1975, produced an illogical ratchet effect. In theory I am bound to admit that that is true. Pensions go up each year in line with prices or average earnings, whichever is rising faster in the particular year. As a result, over a period of years in which prices have risen faster in some years and earnings in others, pensions will have risen faster than either prices or earnings. I accept that that is the situation. Amendment No. 1 would preserve the existing formula if your Lordships decided that it was desirable to do so. If Amendment No. 1 is agreed, the present system of raising pensions, either in keeping with prices or earnings, would be preserved. We think that that has worked well in the past.
In practice, since 1975 the ratchet effect has not resulted in pensioners getting an unfair advantage over wage-earners. But if pensions do rise faster than earnings, is that really a bad thing? I think that it is generally agreed by everybody that the
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basic pension is much too low. If my memory is accurate, the Minister for Social Security, the right honourable friend of the noble Baroness, himself said quite recently that the basic pension is much too low. That is why the previous Government introduced a new earnings-related pension scheme. But that scheme will help future pensioners, not those who retired before 1979.
If the ratchet effect gives some extra help to existing pensioners, I think that most people would regard that as being absolutely desirable. Let us face it, pensioners are not a pampered section of the community. Of about 8·5 million people over pension age, over 2 million were on supplementary benefit in November 1978, and supplementary benefit is not a princely amount. Another 750,000 are entitled to supplementary benefit, but they do not claim it. Many more are near the poverty line, which shows that about 3 million people had incomes of up to 40 per cent. above supplementary benefit level in 1979. That does not mean that they had enough to meet their needs week by week.
Ministers have stressed that the Government still intend that pensioners should continue to share in rising living standards. But good intentions are no substitute for legislation. 1f the Government are obliged by law to increase pensions only in line with prices, anything more will have to come out of the contingency reserve. That means that it will have to be fought for year by year in competition with other spending priorities. There can be no guarantee that the pensioners will always win, and the Government's refusal to make good the shortfall in last year's up-rating is not, if I may say so, an encouraging precedent.
Amendment No. 2 offers a reasonable compromise. It accepts that the ratchet effect could become a problem and offers a way of guaranteeing pensioners their full share of rising living standards without the ratchet effect. In normal times pensions would rise in line with average earnings. In years such as 1980, when prices are rising more than earnings, pensions would rise in line with prices—that is, more than earnings—but pensions would then continue to rise only in line with prices until the original relationship

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between pensions and earnings was restored.
If the Government seriously intend pensioners to share in rising prosperity, when there is any in which to share, they cannot logically oppose this formula; with very great respect, nor can noble Lords opposite reasonably object to it. Indeed, Ministers have quoted with approval articles that have recently been written; one in particular by Mr. Tony Lynes, who is recognised as being quite an authority on this matter, in which this formula was suggested.
The reason for taking November 1980 as the starting date for the new formula in Amendment No. 2 is because we already know that this year prices are expected to rise faster than earnings. So the question of giving pensioners a share in rising standards will not arise until 1981 at the earliest. I ask your Lordships to ponder on this. This House has always shown a very great concern for those less fortunately placed than many of us here. Regardless of party, we have always recognised that pensions for retired people are often not enough for them to have a reasonable standard of living. They are men and women who have worked to the ages of 65 and 60 respectively, and in many cases some have worked to the age of 70. They have helped to produce what wealth this country is in a position to produce, of which some of us, who are not producers, have enjoyed the benefits. Therefore, I ask your Lordships to accept the first amendment which will ensure that in future the present situation continues, of pensions being increased according to earnings or prices, whichever is the greater, because we believe that it is right that the community should do this for the aged. I beg to move.
3.37 p.m.
Lord BANKS: I should like to support this amendment which has just been moved by the noble Lord, Lord Wells-Pestell. I do not think that the case has really been made out for abandoning the present formula. If there is no link with earnings, as is now proposed, and if there is an increase in the standard of living through earnings rising faster than prices, pensioners and others on long-term benefits will be left behind; they will
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become relatively poorer. That must happen unless the present position is maintained, in which case there would be no point in the Government taking the measure which they propose in Clause 1 of the Bill. Of course, the Government say that they want to ensure that pensioners share in such an increase in the standard of living. But we cannot be sure that they will share to the full. If they continually share to the full, there would be no point at all in the new measure. Therefore, I think that it is safe to assume that they will be left behind and become relatively poorer.
The noble Lord, Lord Wells-Pestell, has explained the ratchet effect, and in theory the case appears sound, that in course of time the percentage of average national earnings which the pension represents will increase if the present formula is maintained. But if we look at what has happened over the past five years, during which time this formula has been in operation, we do not find any suggestion that the pension is shooting up in terms of the percentage of average national earnings. There is very little change to be observed at all.
As Mr. Prentice, the Minister for Social Security, has himself said that pensions are too low as a percentage of average earnings, and as the ratchet effect is scarcely detectable at the present time, surely there is no need at this moment to worry about it. The thing to do would be to allow the ratchet effect to have such effect as it has and gradually—and it would be slow—bring pensions to the target level, whatever it is, that Mr. Prentice may have in mind as being a satisfactory level, since he regards the present level as being too low. When that point is reached then I think it would be sensible for the Tony Lynes formula outlined by the noble Lord, Lord WellsPestell, to be applied.
The question I should like to ask is this: Based on the experience of the past five years, what increase in the percentage contribution made by the employer, the employee, and the Revenue do the Government think would be necessary during the next five years to contend with the ratchet effect during that period? I think it would be small, if anything at all. The most recent small increase that we have had was largely to meet the increasing cost of

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unemployment benefit, and the Government Actuary's reports have singled out that particular possibility for further increase and have not to my knowledge laid any stress on the ratchet effect.
3.41 p.m.
Baroness PHILLIPS: I believe that these are the clause and the subsection which, according to the notes issued for guidance, provide,
"for the Secretary of State to continue to have regard to earnings in reviewing the retirement pensioners' earnings rule".
I still regard, and always will regard, the earnings rule as totally iniquitous. This is now the only section of the population who have to pay back in total if they commit the terrible crime of continuing to earn after they have reached pensionable age. I have attacked each Government on this and shall continue to do so.
The question I am concerned with now is if this is now to be linked to prices and not to earnings, it seems to me even as an ex-teacher of mathematics that we have a highly complicated and bureaucratic way of arriving at a simple equation. Are we to assume that the level of what people can earn before their pension is taken away will now be concerned with the kind of prices they will have to pay, assuming you know the kind of things that those people will be buying with their money?
The Bill is already complicated enough, but these clauses are going to make it impossible for pensioners to sit down and work out what they are entitled to. This is serious: we read the other day of the case of the unfortunate old man who was sent to prison simply because he had not declared that he had some savings in a building society and had taken supplementary benefit. It is vital that the pensioners themselves should understand the high complications which this Act is going to impose on them.
3.43 p.m.
Baroness YOUNG: The noble Lord, Lord Wells-Pestell, in speaking to both Amendments Nos. 1 and 2, has made it quite clear that the intention of Amendment No. 1 is to preserve the existing formula on retirement pensions. In effect it would be a wrecking amendment to this
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Bill—to a major provision of this Bill. Subsection (1) gives effect to the Government's declared intention to change the statutory provisions relating to the up-rating of basic retirement pensions and other long-term benefits. At present they have to be increased at least in line with the movement of earnings or prices, whichever is the greater. This subsection provides that, in future, they shall be increased at least in line with the movement of prices alone.
The present requirement means that, when the movement of earnings exceeds that of prices, pensioners have real increases similar to those for earners; but when the movement of prices exceeds that of earnings, pensioners have the value of their benefits protected while earners suffer a decrease in real income. In the long term, the inevitable result of this ratchet effect is that pensions grow faster than both prices and earnings. The expenditure implications are very considerable, and we have made it clear that we cannot allow this to continue without regard to the ability of the economy to bear the cost.
I may say at this point that we should all like to do more for pensioners. Everybody who talks about it would like to do more. When we come to look at this matter to see why we do not accept the noble Lord's amendment and continue with the situation as it has existed since the last Labour Administration put in this provision, we see that during the time of the last Labour Administration they broke the earnings link in two of their last three up-ratings and were in fact set to break it again in 1979.
In 1976 pensions were increased by 15 per cent., which was less than either the increase in earnings or the increase in prices, and this was explained. The noble Lord will be as well aware of the facts as I am, and I shall not go into them all now. In November 1978 pensions were increased by only 11·4 per cent., while average earnings rose by 13·3 per cent. Again, Labour proposed in November 1979 that pensions should he increased by 12·8 per cent., and this was reaffirmed in their manifesto. However, earnings were running at almost 15 per cent. last May, so that the up-rating would almost certainly have failed again to match the increase in earnings.

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This merely indicates the great difficulty of making this kind of calculation. We feel we must give a cast-iron guarantee to pensioners. We have said that we shall keep the pensions in line with prices so that retirement pensioners will not in fact be adversely affected by the effect of inflation and increased prices because their pensions will be protected, and we think that that is a guarantee that we can keep to. Of course we see that there is a very real point that pensioners should share in rising prosperity, but the truth of the matter is that prosperity is unlikely to rise in this corning year. We are going to have a difficult time. Pensioners will therefore be protected so far as prices are concerned.
We hope that as a result of our policies the economy will pick up again and we shall become more prosperous. It is interesting to note that, during our last period in Government from 1970 to 1974, whereas prices rose by 40 per cent., earnings rose by 55 per cent. and pensions rose by 55 per cent., although there was no obligation whatever to keep pensions in line with earnings. So in effect pensioners benefited from the prosperity that accrued during those four years. It is worth recognising what the last Conservative Government did, and that, when my right honourable friend the Secretary of State for Social Services has indicated that we will look after this matter, our record speaks for it.
I hope that this, in a very real sense, answers the point raised by the noble Lord, Lord Banks, about pensions and earnings, because I think he was making a very similar sort of point. He will know, with his vast personal experience, of the complexities of getting the calculations right on either pensions or earnings, and of the difficulty that we ran into before. We therefore believe that it is right to guarantee pensioners against the increase in prices and to leave it at that point.
Amendment No. 2, to which the noble Lord, Lord Wells-Pestell, also spoke is of course a means of solving the ratchet problem. I recognise that the method of solving this problem in the present legislation by providing that pensions maintain a fixed relationship to earnings has been canvassed before in this article to which the noble Lord referred in New
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Society last May by Mr. Tony Lynes, and during the consideration of this Bill in another place.
We believe that the amendment does not achieve this objective since it leaves unchanged the proposed amendment to Section 125(1) of the Social Security Act 1975 as set out in Clause 1(1). However, I cannot accept the intention of the amendment, because I do not think that one should argue on really a technical point alone. I recognise that in the long term this would avoid the ratchet problem, but that is not the only purpose of Clause 1(1). The subsection is also intended to give the Government flexibility to determine when the economy is able to afford real improvements in pensions over and above the minimum that is laid down in this clause.
Lord BANKS: In the light of what the Minister said, I wish to add a comment to what I said earlier. She said the last Government broke the link with earnings, as if that were some argument against having a link in the future. It is just as easy to break a link with prices as it is to break a link with earnings, and we have no guarantee, so far as that is concerned, that the present Government might not find some way to break the link with prices. Governments may not stick to what they are supposed to do, but we are trying to decide this afternoon what they are supposed to do.
What are the difficulties over the link with earnings? It has not been explained to the Committee what the difficulties are. We have had the theoretical point about the ratchet effect, but I have suggested, and it has not been denied, that there is no detectable difference in the percentage of national average earnings which the pension represents now compared with five years ago. So what is this terrible ratchet effect that has made it so necessary to break this link? How much has the ratchet effect added to contributions? I have asked that question three times, or at least I have asked what it will add to contributions in the future. I ask, in addition, what it has added to contributions in the past.
The Minister finally said the Government wanted flexibility so that they need not always increase in line with earnings. If, however, they do not always increase

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in line with earnings, then it is inevitable, as I said at the outset of my remarks earlier, that pensioners and people on long-term benefits will fall behind gradually and will gradually become poorer, and I do not think that point has been answered either.
LORD WELLS-PESTELL: I realise that the noble Baroness, Lady Young, did not use the expression "wrecking amendment" in an emotive way, but this is a sincere attempt on our part to try to persuade the Government to maintain the formula as it has been in recent years. I do not think the Minister will deny that if the last Government had pursued the policy which this Government are bent on pursuing, the pensions of old people, when the present Government took over, would have been something like £5 a week less. It was only because the previous Government decided to increase pensions according to prices or earnings, whichever was the higher, that over the period of office of the last Government pensioners received about £5 a week more than they would have done if it had been confined to prices.
That means they enjoyed a higher standard of living, meaning that millions of them did not have to go cap in hand, as some of them think they have to, to the Supplementary Benefits Commission. As the noble Lord, Lord Banks, asked, how much will it cost? We cannot get an answer to that question. And if it is going to cost a lot of money, I should have thought somebody would have worked it out and we could be told. I accept that the Government would not like to accept Amendment No. 1, but the Minister said some kind and generous things about Amendment No. 2, so why not let your Lordships' House show the way, as it did on the Education Bill and has done in other ways over the years, by accepting that amendment and asking the Government, as a result, to look afresh at the matter?
LORD DRUMALBYN: I find difficulty in following the argument because it seems to be highly theoretical. The essence of the question we have to decide is whether we should be tied, so to speak, to two points, which does not give very great flexibility, or whether the reference point should be only one point. The fact of the
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matter is quite clear and, if I may say so, I do not think noble Lords opposite have taken this point: namely, that the 1975 Act is perfectly clear in that the obligation on the Government—the obligation which my noble friend said had not always been carried out—is, at the time of an up-rating order, to increase the sums:
"at least to such extent as he thinks necessary to restore the balance".
In other words, pensioners will not be any worse off—the sums they receive will be brought in line with prices—but beyond that the Government can increase them to a greater extent or to a much greater extent in accordance with the degree of prosperity and the prospects of the country in the following year to which their increase relates.
I should have thought that argument would commend itself to everybody and I do not think there is any great merit in seeking to retain the earnings test as well, given that the earnings test, I imagine, at a given point in time is very much more difficult to calculate effectively than the prices test. Goodness knows, we had enough trouble in the past in arriving at what the prices test should be, at what average prices were, and what they should and should not include. This is a matter which can always be considered from time to time. The essential point here is that We have a commitment to retain the purchasing power in terms of prices; in other words, the pensioner will not be any worse off, and to go further when circumstances are appropriate, though no more than that.
Lord WELLS-PESTELL: May I ask the noble Lord, Lord Drurnalbyn, if he is saying that if the amount of the retirement pension is decided by either prices or earnings, whichever is the greater, the pensioner is no better off than if the pension is decided according just to prices?
Lord DRUMALBYN: I do not think I said that.
Lord WELLS-PESTELL: I am asking whether he would say so. I understood him to say it does not matter what the yardstick is and that the pension is protected. We are saying it is protected at a lower level than it would be if the present

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formula were maintained. I am sure the noble Lord will not deny that.
Lord DRUMALBYN: I certainly do deny it. There may be years in which prices increase faster than earnings, in which case it would be more advantageous to relate to prices. Where earnings have gone up but at a particular time in the year, and prices are more likely to have a much more even trend throughout the year, I should have thought that that was a point which can best be taken into account by the Government in line with prospects for the following year. That is my argument. I am not saying that we are settling on whatever is the lower of the two when we choose prices alone, and that is certainly not likely to be the case. It may be the case in one year but, as I said, in any case there is latitude to the Government to raise the level of pensions to a higher amount irrespective of the fact that they are committed to raising them only to the level of prices.
Baroness PHILLIPS: Without wishing to press the Minister, I should like a reply, perhaps in writing, as to how this formula of earnings will be worked out. I am left completely confused. If a pensioner has an increased pension, in the past the amount that can be earned has also increased. Is this still to be tied to earnings, or is it to be tied to prices? If it is to he tied to prices, then I do not understand how the formula is to be worked out.
Baroness YOUNG: I did not answer that point, which is an important one, because I thought it was a rather separate one which we shall come to when we debate a later amendment. I thought I would deal with it then because other matters will arise on it.
Baroness PHILLIPS: I am obliged to the noble Baroness.
Baroness FISHER of REDNAL: Surely it would he far easier for the Government to index according to wage levels. We constantly read in the media about average weekly earnings, and those figures obviously are collated monthly. I believe that we require some assurance from the Minister because, if at some stage the Government think of changing the cost of living index, the resulting scheme
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should have some bearing on the spending powers of pensioners. Some pensioners may worry that the system may go against them if the cost of living index is the only part of the ratchet that is considered and there is no fall-back in relation to the earnings provisions.
Baroness WOOTTON of ABINGER: This is clearly a gamble. If the Government succeed in reducing the rate of inflation as they hope, let us suppose that they succeed in reducing it considerably so that prices become almost stable—which older Members of the House will remember as a possibility. If prices become stable, pensions will remain the same in money terms. Pensioners tend to think in terms of money, although they realise that their money is being eroded by the rising cost of living. If pensions are fixed only in relation to prices and the Government succeed in their policies a great deal better than we on the Opposition Benches expect, pensioners will he receiving lower increases. If on the other hand the Government face complete disaster in their anti-inflation policies, prices will roar ahead and pensioners possibly will believe that they have got more real income. They will find more money in their pockets and probably will prefer that than to have a figure of pension that is stabilised because prices themselves are stabilised.
I believe that the earnings factor provides a hedge against this gamble because it gives something which is real. Pensioners will see that their pensions are bound to rise to some extent because we can be quite confident that either earnings or prices will rise in money terms. It is a question of which rises the faster; that is the gamble. One will hedge both ways if one adopts this alternative formula. That is its great merit. However, a great deal depends on whether the Government succeed, as we believe they will not succeed, in keeping inflation down. If they do not keep inflation down, there is something to be said for the prices formula. If they succeed in keeping inflation down, they will not succeed in keeping earnings down and that will give us an alternative road.
Baroness YOUNG: I wish to thank my noble friend Lord Drumalbyn for his most helpful intervention in explaining what

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we are attempting to do in these provisions. At the risk of repetition, and also by way of answering the noble Baroness, Lady Wootton of Abinger, and the noble Baroness, Lady Fisher, perhaps I may indicate how we see these provisions working. It is our intention that the retirement pension should keep up with prices, and that this would be a minimum requirement, as we believe it must be. As my noble friend indicated, it is one fixed point. Nobody is saying that it is a maximum requirement. If, as I would like to believe, and as I confidently hope, contrary to the view of Lady Wootton, our economic policies succeed, and if we reach a stage at which inflation is reduced to, say, 2 per cent. or even nil—I find it difficult to believe that this could happen in the next three or four years but if we may adopt the analogy used by Lady Wootton—let us assume that the economy will improve. If that happens, I am certain that the pensioners will do better because we will all do better as a country.
Our record shows that when we have done better pensioners have done better under a Conservative Government because they have been looked after. It is essential for pensioners to know that when there are great increases in prices their pensions will keep up, so that when they go to the shops week by week they are able to keep up with the prices for the things which they require to buy. That must be right, and that is why we have taken this view. There is considerable evidence to show that it is difficult, having made these promises, to keep up either with earnings or prices, whichever is the greater. One reason is that it is much more difficult to make the calculation on earnings. We believe that it will be better to make the calculation on prices.
In terms of the ratchet effect, if one has one or the other one inevitably commits oneself to an increase in expenditure. The fact is—and we could argue about this for a very long time—that it must be part of the Government's economic policy to try to get the country to live within its means. We believe that we cannot go on as we are, and we are examining every area of Government policy and Government expenditure. The most important thing for retirement pensioners is that their pensions should keep up with prices.
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The noble Lord, Lord Banks, asked about the cost of the ratchet effect. It is difficult to say what the relative movements in earnings and prices will be over the next five years. Therefore, we do not know what the ratchet effect will be. In the Financial Memorandum to the Bill we estimate that the ratchet will cost £130 million a year for each I per cent. by which earnings movement exceeds movement in prices. That is an estimate and is a difficult calculation, but we believe that it is too great a burden for public expenditure, for which we cannot plan ahead. That is why we have said that if our economic policies succeed and if we do better, we shall try to make sure that pensioners get a real increase in the value of their pensions commensurate with the real increase in the standard of living and real wages and the real improvement to be obtained from an improved economy.
Lord BANKS: Does the Minister agree that if the link with pensions is not maintained in practice fully, pensioners must be worse off than under the present formula?
Baroness YOUNG: If the present formula were always to be kept because of the ratchet effect, it is true that pensioners would always be protected against prices and would get an automatic increase when earnings were greater than prices. However, if ultimately we as a country do not get our economy on a sound footing, then in comparable terms with other countries our average standard of living will decline and pensioners will do worse. It is in the interests of retirement pensioners, as of everybody else, that we should get the economy right. It would be very unfair to pretend to one group of people that somehow they can indefinitely receive a rise, as it were (as one can with other people), which is unrelated to the basic increase in productivity in the country as a whole. In a sense it is a short-term delusion, it does not last very long, and we believe that it does not put right the basic difficulties in the country as a whole.
I was reminding myself of the point that the noble Lord, Lord Wells-Pestell, made at Second Reading when he used this argument. He said:
"If the system which the Government are now proposing to adopt had been in operation in

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recent years, it would have resulted in the weekly retirement pension being £5 less than it was when the present Administration came into office."—[Official Report, 1/4/80; col. 1272.]
That assumes that the Government of the day had paid sums of money up to average earnings on each occasion. The amount could have been even more if they had done that, but they did not. We are arguing imponderables as to what people might have done under certain circumstances, but in fact did not do. In the Bill we are trying to give one fixed point, which is a minimum, from which we could make additions as the economy improves.
Lord WELLS-PESTELL: I did not assume anything of the sort. Retirement pensions were in fact £5 more than they would have been had there been only one point at which the calculation was made. However, I do not want to go over all that ground again. I want to congratulate the noble Baroness upon her honesty, because if I understood correctly, what she implied a few minutes ago was that it is not so much the position of the pensioners which is the first consideration, but rather the fact that the Government cannot afford to do what is suggested because they must save money. I might be inclined to accept that.
4.12 p.m.
Baroness YOUNG: I hope that I am honest with the Committee, because I consider this a very serious matter. I take the view that it is the Government's job to look after retirement pensioners as well as all vulnerable groups within the population. As we have made perfectly clear, our first priority as a Government is that somehow we must try to live within our means and get ourselves out of the economic difficulties in which we currently find ourselves. It does not help retirement pensioners or anyone else to pretend that as a country we have unlimited sums of money to spend on all sorts of things. What we must do is look after these groups within the population, and that we are doing in this proposal. They are intelligent people, perfectly capable of knowing what is going on, and we cannot pretend to them that we can do a great many things and improve the standard of living of all kinds of people, when, as we all know, productivity is not rising and we are not
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in a situation in which the country is as rich as we should like it to be. What we must ensure is that these people do not fall behind; that is very important.
When previously in Government we improved the economy, things became better, and we were able to do much more for retirement pensioners, and as earnest of our good faith I gave the figures. I might say that the £10 Christmas bonus was a Conservative policy, as was pensions for the over-80s. Those were two real improvements that we were able to make—and we made them gladly—when we were last in government because we felt that things were better, and we were able to share out that prosperity.
We are being honest with everybody about this situation. We are providing a minimum below which we do not expect people to fall. We are keeping the Christmas bonus. We are of course keeping the pensions for the over-80s, and in the budget proposals we have been able to do a certain amount for war widows and other vulnerable sections. However, I should not wish to mislead the Committee, nor to pretend to people that we can undertake commitments which we do not really feel we can make at this time. When the country is in a better position, pensioners will join in the prosperity.
Baroness MACLEOD of BORVE: Is my noble friend the Minister aware that it is my knowledge—perhaps it is not of very great value—that when our country is not in a state of great prosperity the pensioners would not wish to be cushioned against its problems any more than any other section of the population?
Lord DRUMALBYN: Before my noble friend replies, may I ask whether she agrees that what the noble Lord, Lord Wells-Pestell, has said is not infallible? He has said that pensions would have been £5 less than they actually were under the Labour Government had there been only the one test of prices, but that assumes that the Labour Government would have given only that amount of increase and would not have given more, although they were entitled to do so even without the addition of earnings. This is the whole point. As the Bill now stands, the Government of the day must up-rate

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by at least as much as the figure of price rises, and the same applied previously. So this trotting out (if I may use the expression) of the £5 less that would have been paid to the pensioners over the period of years mentioned is wholly fallacious. It assumes that only the minimum increase would have been given; and that is not the intention. I remember very well that during my period in administration every time there was an increase it was not based only on the increase in prices. The increase looked forward to the prospective increase in prices, and went a little farther than that as well.
Lord WELLS-PESTELL: I very much dislike joining issue with the noble Lord, Lord Drumalbyn, because when I was a junior Minister I was on more than one occasion very grateful to him for coming to my rescue, with his vast knowledge of this field, but let us get the position quite clear. What the noble Lord has said, quite correctly, is that the present Government have decided on a point at which they are going to raise pensions. He then said, again quite rightly, that they are giving an undertaking that if the position is such that they can improve upon that, they will do so; but this must be a judgment, and I do not altogether trust judgments of Governments, whoever those Governments may be.
I want to see more than just a judgment. I want to see something which is laid down, and so far as I am aware, no one in your Lordships' Committee can say that there is a better formula than that of increasing pensions according to either prices or earnings, whichever is the higher. It comes down to that. We have had a good debate. I do not think that we shall get much farther on this matter, and I am prepared to say no more.
Lord BANKS: May I make one quick point before we finish our debate on this particular matter. What I have to say is in reply to something that the noble Baroness said. When answering the point that I raised about the cost of the ratchet effect, she quoted part of the Explanatory and Financial Memorandum to the Bill,
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which states that if the Secretary of State's—
"estimate of the movement of prices were one percentage point below his estimate of the movement of earnings, the cost of that up-rating would be lower than it would have been under the existing statutory provision by £130 million in a full year at current benefit levels".
We know that the new formula is less costly than the old one. Indeed, it is the basis of our objection that less will he spent on pensioners; that the pension that the pensioners receive under the new formula will be less. But the figure of £130 million that is set out in the Explanatory and Financial Memorandum in those circumstances is not the cost of the ratchet effect. The ratchet effect is the cost of increasing the percentage of average national earnings which the pension represents; it is not increasing the pension to keep in line with earnings. So the cost of the ratchet is not £130 million. If over the five years there has not been an increase in the percentage of average national earnings which the pension represents, then in fact the ratchet will not have cost anything.
Baroness YOUNG: Certainly I do not intend to pick an argument with the noble Lord, Lord Banks, on this point; to do so would be most unwise. I shall read very carefully in tomorrow's Hansard what he has said, but I shall accept what he has said as being true. I think we have had a long discussion on this, but I will not accept now that, by saying this, we are committing everybody to lower pensions. We are giving a minimum which we may be able to raise; and I suspect that by altering it, to go back to either prices or earnings, whichever is the greater, although we could write that into the Bill, it would not necessarily give anybody something which was a higher pension in real terms. It would depend on the prosperity of the country.
4.20 p.m.
On Question, Whether the said amendment (No. 1) shall be agreed to?
Their Lordships divided: Contents, 89; Not-Contents, 116.

CONTENTS

Airedale, L.

Goronwy-Roberts, L.

Northfield, L.

Amulree, L.

Gosford, E.

Oram, L.

Aylestone, L.

Hale, L.

Paget of Northampton, L.

Bacon, B.

Hampton, L.

Peart, L.

Balogh, L.

Hatch of Lusby, L.

Phillips, B.

Banks, L.

Henderson, L.

Plant, L.

Beaumont of Whitley, L.

Hooson, L.

Ponsonby of Shulbrede, L. [Teller.]

Birk, B.

Houghton of Sowerby, L.

Blease, L.

Howie of Troon, L.

Rhodes, L.

Blyton, L.

Hutchinson of Lullington, L.

Rochester, L.

Boston of Faversham, L.

Jacques, L.

Ross of Marnock, L.

Brockway, L.

Janner, L.

Sainsbury, L.

Brooks of Tremorfa, L.

Jeger, B.

Segal, L.

Bruce of Donington, L.

Kaldor, L.

Shinwell, L.

Byers, L.

Kilbracken, L.

Stedman, B.

Chitnis, L.

Leatherland, L.

Stewart of Alvechurch, B.

Cledwyn of Penrhos, L.

Lee of Newton, L.

Stewart of Fulham, L.

Clifford of Chudleigh, L.

Listowel, E.

Stone, L.

Collison, L.

Llewelyn-Davies of Hastoe, B.

Strabolgi, L.

Cooper of Stockton Heath, L.

Lloyd of Kilgerran, L.

Taylor of Gryfe, L.

David, B.

Longford, E.

Taylor of Mansfield, L.

Davies of Leek, L.

McCarthy, L.

Wallace of Coslany, L. [Teller.]

Donaldson of Kingsbridge, L.

MacLeod of Fuinary, L.

Elwyn-Jones, L.

McNair, L.

Walston, L.

Evans of Claughton, L.

Maelor, L.

Wedderburn of Charlton, L.

Evans of Hungershall, L.

Maybray-King, L.

Wells-Pestell, L.

Fisher of Rednal, B.

Melchett, L.

Whaddon, L.

Gaitskell, B.

Milford, L.

Winstanley, L.

Galpern, L.

Milverton, L.

Wootton of Abinger, B.

Gardiner, L.

Mishcon, L.

Wynne-Jones, L.

Gladwyn, L.

NOT-CONTENTS

Airey of Abingdon, B.

Ferrers, E.

Mowbray and Stourton, L.

Alexander of Tunis, E.

Fraser of Kilmorack, L.

Murton of Lindisfarne, L.

Allerton, L.

Gage, V.

Northchurch, B.

Alport, L.

Gainford, L.

Nugent of Guildford, L.

Amory, V.

Galloway, E.

O'Neill of the Maine, L.

Auckland, L.

Gibson-Watt, L.

Onslow, E.

Balfour of Inchrye, L.

Gisborough, L.

Orkney, E.

Barnby, L.

Glasgow, E.

Orr-Ewing, L.

Belstead, L.

Greenway, L.

Porritt, L.

Berkeley, B.

Gridley, L.

Redmayne, L.

Birdwood, L.

Grimston of Westhury, L.

Reigate, L.

Boyd of Merton, V.

Halsbury, E.

Renton, L.

Bradford, E.

Hankey, L.

Robbins, L.

Brentford, V.

Henley, L.

Roberthall, L.

Campbell of Croy, L.

Hertford, M.

Rochdale, V.

Cathcart, E.

Hill of Luton, L.

St. Aldwyn, E.

Chesham, L.

Home of the Hirsel, L.

St. Davids, V.

Clancarty, E.

Ilchester, E.

St. Just, L.

Clitheroe, L.

Kimberley, E.

Saint Oswald, L.

Cork and Orrery, E.

Kinross, L.

Sandford, L.

Cottesloe, L.

Kintore, E.

Sandys, L. [Teller.]

Craigavon, V.

Lauderdale, E.

Sempill, Ly.

Cranbrook, E.

Lindsey and Abingdon, E.

Somers, L.

Crawford and Balcarres, E.

Long, V.

Spens, L.

Cromartie, E.

Lonsdale, E.

Stamp, L.

Cullen of Ashbourne, L.

Lothian, M.

Strathcarron, L.

De Freyne, L.

Loudoun, C.

Strathclyde, L.

Denham, L. [Teller.]

Lucas of Chilworth, L.

Strathspey, L.

Drumalbyn, L.

Luke, L.

Tenby, V.

Dulverton, L.

Lyell, L.

Teviot, L.

Ebbisham, L.

McFadzean, L.

Tranmire, L.

Eccles, V.

Macleod of Borve, B.

Trefgarne, L.

Effingham, E.

Malmesbury, E.

Trenchard, V.

Ellenborough, L.

Mancroft, L.

Vaux of Harrowden, L.

Elliot of Harwood, B.

Mansfield, E.

Vickers, B.

Elton, L.

Massereene and Ferrard, V.

Vivian, L.

Emmet of Amberley, B.

Merrivale, L.

Westhury, L.

Faithfull, B.

Mills, V.

Young, B.

Falkland, V.

Morris, L.

Resolved in the negative, and amendment disagreed to accordingly.

4.29 p.m.
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 2:
Page 1, line 13, after ("prices") insert ("and to the increase in the general level of earnings over the whole period commencing on 24th November 1980").
The noble Lord said: I move this amendment formally because I have in fact spoken to it, but I would just remind your Lordships (although there are not many of us to be reminded) that the amendment offers a reasonable compromise. It accepts that the ratchet effect could become a problem and attempts to suggest a formula by which the effect of it will not be the same as it is at the present moment. I do not think there is any need for me to say anything more: I beg to move.
Baroness YOUNG: I will speak only briefly on this point because we discussed it earlier. I recognise that, in the longterm, the proposal which the noble Lord is setting out would avoid the ratchet problem, but that really is not the only purpose of subsection (I) of Clause 1. The subsection is also intended to give the Government flexibility to determine when the economy is able to afford real improvements in pensions over and above the minimum laid down in this clause. Therefore, I am afraid I am unable to accept this amendment.
4.31 p.m.
On Question, Whether the said Amendment (No. 2) shall be agreed to?
Their Lordships divided: Contents 76; Not-Contents, 113.

CONTENTS

Airedale, L.

Goronwy-Roberts, L.

Northfield, L.

Amulree, L.

Gosford, E.

Gram, L.

Aylestone, L.

Hale, L.

Peart, L.

Bacon, B.

Hampton, L.

Phillips, B.

Balogh, L.

Hatch of Lusby, L.

Ponsonby of Shulbrede, L. [Teller.]

Banks, L.

Henderson, L.

Beaumont of Whitley, L.

Hooson, L.

Rhodes, L.

Bernstein, L.

Houghton of Sowerby, L.

Ross of Marnock, L.

Birk, B.

Howie of Troon, L.

Sainsbury, L.

Blease, L.

Hutchinson of Lullington, L.

Segal, L.

Blyton, L.

Jacques, L.

Shinwell, L.

Boston of Faverhsam, L.

Janner, L.

Stedman, B.

Brockway, L.

Jeger, B.

Stewart of Alvechurch, B.

Bruce of Donington, L.

Kaldor, L.

Stewart of Fulham, L.

Byers, L.

Kilbracken, L.

Stone, L.

Chitnis, L.

Leatherland, L.

Strabolgi, L. [Teller.]

Collison, L.

Lee of Newton, L.

Taylor of Gryfe, L.

Cooper of Stockton Heath, L.

Listowel, E.

Taylor of Mansfield, L.

David, B.

Lloyd of Kilgerran, L.

Underhill, L.

Davies of Leek, L.

Longford, E.

Wallace of Coslany, L.

Donaldson of Kingsbridge, L.

MacLeod of Fuinary, L.

Walston, L.

Elwyn-Jones, L.

Maelor, L.

Wells-Pestell, L.

Fisher of Rednal, B.

Maybray-King, L.

Winstanley, L.

Gaitskell, B.

Melchett, L.

Wootton of Abinger, B.

Gardiner, L.

Milverton, L.

Wynne-Jones, L.

Gladwyn, L.

Mishcon, L.

NOT-CONTENTS

Airey of Abingdon, B.

Cathcart, E.

Ebbisham, L.

Alexander of Tunis, E.

Chesham, L.

Eccles, V.

Allerton, L.

Clancarty, E.

Ellenborough, L.

Alport, L.

Clifford of Chudleigh, L.

Elliot of Harwood, B.

Amory, V.

Clitheroe, L.

Elton, L.

Auckland, L.

Cork and Orrery, E.

Emmet of Amberley, B.

Balfour of Inchrye, L.

Cottesloe, L.

Faithfull, B.

Barnby, L.

Craigavon, V.

Falkland, V.

Belstead, L.

Crawford and Balcarres, E.

Ferrers, E.

Berkeley, B.

Cullen of Ashbourne, L.

Fraser of Kilmorack, L.

Boyd of Merton, V.

De Fryene, L.

Gainford, L.

Bradford, E.

Denham, L. [Teller.]

Galloway, E.

Brentford, V.

Digby, L.

Gibson-Watt, L.

Caccia, L.

Drumalbyn, L.

Gisborough, L.

Campbell of Croy, L.

Dulverton, L.

Glasgow, E.

Greenway, L.

Macleod of Borve, B.

St. Aldwyn, E.

Gridley, L.

Malmesbury, E.

St. Davids, V.

Grimston of Westbury, L.

Mancroft, L.

St. Just, L.

Halsbury, E.

Mansfield, E.

Saint Oswald, L.

Hankey, L.

Massereene and Ferrard, V.

Sandford, L.

Henley, L.

Merrivale, L.

Sandys, L. [Teller.]

Hill of Luton, L.

Morris, L.

Sempill, Ly.

Home of the Hirsel, L.

Mowbray and Stourton, L.

Somers, L.

Hornsby-Smith, B.

Murton of Lindisfarne, L.

Stamp, L.

Hylton-Foster, B.

Northchurch, B.

Strathcarron, L.

Ilchester, E.

Nugent of Guildford, L.

Strathclyde, L.

Kimblerley, E.

O'Neill of the Maine, L.

Strathspey, L.

Kinross, L.

Onslow, E.

Tenby, V.

Kintore, E.

Orkney, E.

Teviot, L.

Lauderdale, E.

Orr-Ewing, L.

Tranmire, L.

Lindsey and Abingdon, E.

Pender, L.

Trefgarne, L.

Long, V.

Porritt, L.

Trenchard, V.

Lonsdale, E.

Redmayne, L.

Vaux of Harrowden, L.

Lothian, M.

Reigate, L.

Vickers, B.

Loudoun, C.

Renton, L.

Vivian, L.

Lucas of Chilworth, L.

Robbins, L.

Westbury, L.

Lyell, L.

Roberthall, L.

Young, B.

McFadzean, L.

Rochdale, V.

Resolved in the negative, and amendment disagreed to accordingly.

4.39 p.m.
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 3:
Page 2, line 19, leave out ("last") and insert ("21st").
The noble Lord said: This amendment concerns the date of the up-rating of pensions. As your Lordships know, the present position is that each up-rating must take place within 12 months of the last one. In practice, this means within 52 weeks because the up-rating day has to be a Monday. As a result, the up-rating happens a day earlier each year and this means two days earlier in the Leap Year. Since the annual up-rating rule started in 1975, the up-rating date has crept forward from 17th November in 1975 to 12th November in 1979.
If the Government had done nothing about it, the 1980 up-rating date would have been 10th November—a full week earlier than in 1975—and by 1986 it would have been two weeks earlier. It would be quite reasonable for the Government to seek power to prevent this kind of thing happening and we have no quarrel with that; all that would be needed is to provide that when the up-rating date has crept forward to 10th November it should automatically go to the 17th so that the up-rating would always take place between the 11th and the 17th. Clause 1(3), however, goes farther than this, allowing the up-rating
158
to take place at any time before the end of November.
During the Commons debate on similar amendments, Ministers refused to say whether the Government intended to make use of this power to postpone this year's up-rating to 24th November, thus cheating—and I use the word advisedly—pensioners and other beneficiaries of a week's increase.
The noble Baroness's right honourable friend the Minister, Mr. Prentice, said during the Report stage on 18th March (at col. 373 of Hansard of the other place):
"the Budget announcement will contain the details of this year's up-rating, the amount and the date".
He was wrong. As I understand the situation, the Budget speech gave the amounts but not the date. That was left to the Secretary of State to announce the following day, when the postponement of the up-rating until 24th November was overshadowed by the large number of other cuts which were announced simultaneously. This amendment therefore does not deal with a hypothetical situation, as the Commons amendment did, but with a situation in which the Government have announced that they intend to cheat this November. Only the power of your Lordships' House to amend the Bill can in fact prevent them from doing so.
The reason for specifying 21st November rather than 17th November as the latest date for the up-rating is that different benefits are up-rated on different days of

159
the week. The intention of the amendment is that the up-rating should commence not later than 17th November and should be completed by 21st November. Thus the amount saved by making the up-rating date the 24th rather than 17th November means that something like £60 million is involved. We feel strongly that it should be the 21st and not the 24th. It appears that the only reason for making it the 24th is that it will save something like £60 million at the expense of the pensioners. I beg to move.
Lord BANKS: I support the principle in this amendment. Unless there is some technical objection to it which has not occurred to me as yet, I shall be inclined to support it completely. The noble Lord, Lord Wells-Pestell, has explained that the date gets earlier each year at the present time, and that the Government are proposing to overcome that by allowing the date to go back as far as the end of the 12th month which could mean a very considerable loss to people who had to wait for their increase for something like a fortnight. This amendment, as I understand it, would prevent that and would also overcome the objection to the way things are working at the present time.
4.45 p.m.
Baroness YOUNG: The noble Lord, Lord Wells-Pestell, has explained very clearly the problems about the fact that the date for up-rating has moved forward progressively each year, normally by one day only and two days in a leap year. This gradual creeping forward has both procedural and financial implications. The amendment which he has proposed and which has been supported by the noble Lord, Lord Banks, would mean that the up-rating had to take place by the 21st day of the month in which the first anniversary of the previous up-rating falls instead of the last day of that month as the subsection provides. The choice of the 21st of the month, I assume, was made to take account of the fact that different benefits are uprated from different days of the week in which the up-rating takes place to take account of the spread. The final date referred to in an amendment of this sort has to he later than the Monday of the week in which the up-
160
rating takes place. The aim of the amendment is to keep the up-rating week in the middle of the month.
The subsection that we are debating here does not change the principle of having an annual up-rating. It allows the Government some flexibility in settling the date by providing that the up-rating must take place by the end of the month in which the anniversary of the previous up-rating occurs. We believe that we must have a provision to prevent the up-rating date creeping forward, and that is the principle of the subsection. We need some flexibility in the arrangements. This would be prevented if one had a fixed date—as in this case—which would have to be reviewed annually, otherwise we should be in the difficulties which the noble Lord described because it clearly has financial implications as the date creeps forward each year. The noble Lord, Lord Banks, made this point. There is this difficulty as a matter of principle. Further, as we believe there must be flexibility to fix the date, we have drafted the Bill as it is. There are both financial considerations and a consideration of flexibility. That is why we are doing it. We remain committed to the annual up-rating of the pensions as I have already indicated.
BARONESS PHILLIPS: ft seems strange that one has to have flexibility when paying out pensions to people. There is no flexibility in the tax laws: we have to submit our tax by a certain date, or else! So far as I can recall, there is certainly no flexibility in the payment of wages or earnings. One's contract of employment always relates to certain days in the month. Here we are dealing with people who have very small sums of money to handle, so that if one is receiving something like only £19 a week, the odd pound which would not be noticed by a higher wage-earner becomes very important. I cannot see why the Government needs flexibility when paying out, whereas they certainly give no flexibility when receiving money from the citizen.
LORD WELLS-PESTELL: May I ask the Minister what is there to prevent it being up-rated on 21st of the month other than the fact that it will save something like £60 million? If it can be done and still not upset the normal procedures, why

161
cannot this be done? I know a little about the procedures involved and what it means in the way of pension books and so on. If this can be done on the 24th, why cannot it be done on the 21st? Surely, it gives more time. Let us come down to the issue: is it not really a means of saving money at the expense of the retired?
BARONESS YOUNG: I have been asked two questions: why we cannot fix the date of the 21st, and the point that the noble Baroness, Lady Phillips, made. I am not by any means a tax expert but she said that income tax all had to be paid on a certain date. One pays one's income tax if on PAYE automatically through one's salary or wages. It is an automatic deduction so that it is not in quite the same sense as that. The reason why we are involved is that, as the noble Lord, Lord Wells-Pestell, has explained, quite rightly, the date has crept forward each year and so one would get to the stage, when there were a leap year, when the date would have crept forward about two weeks.
Therefore, the Government would automatically have been committed to a very large increase of expenditure if the same date were fixed and it went on creeping forward in that way. So there needs to be a general rule about it. If we wrote into the Bill that it should be the 21st November, as the amendment suggests, then once again we are on a fixed date and, for the reasons which have been mentioned—these are reasons with whose details I am sure the noble Lord is more familiar than I am—we have the difficulty about not having it on a Monday, which for administrative reasons it has to be, and therefore we would get ourselves into difficulties. That is another reasons for not having it on the 21st. Those are two reasons why we wish to leave the Bill as drafted. I agree that it would be an extra increase in expense if it were to be left at the 10th November, that being the date it would have come to had we gone on without any amendment at all. But that is not the only reason for it and it is not the only reason why the noble Lord's amendment cannot be accepted.
Lord ROSS of MARNOCK: But there is a very considerable sense of grievance among pensioners about what is happening, because effectively it is a loss of two weeks. Had the law not been changed
162
it would have come two weeks earlier, and I would have thought myself that it is just a bit much to expect pensioners to thank the Government for having deceived them in respect of the increase which they would normally have expected at a particular time, under the present law. By the change of law and this pleading (a) for flexibility and (b) the plea that it could not be a Monday and thus resisting this particular amendment, you take away that second week that might have been saved for the pensioners.
I do not think that the Government are on a good thing at all here. I do not think it is justifiable to go so far on the grounds of flexibility as to deny pensioners a fortnight's increase to which they would normally be entitled and to which they are presently entitled until such time as this Bill becomes law. I hope the Government will think again. We have taken a half-way house here in suggesting the date of the 21st.
Baroness PHILLIPS: I do not think that one wants to press the noble Baroness, because obviously, as regards some of the sins that we are accusing this Government of, I must say that other Governments have been equally guilty. I recall that we created a situation where the pension was announced in May, I believe, and increased in November; and when certain people asked why it had to be for such a long period, the answer was that all pension books had to be amended and it was a very complicated administrative job. At that time, I pointed out that when British Rail raise their fares they do not have any of these qualms: they simply overstamp the price of the fare, and they do it the next day. I repeat that it is only when money is paid out that we get "administrative problems". It is not when money is paid in: that will always be smoothed over; things will be done quickly. I feel that once again we are having the administrative argument used as well as the economic one. This concerns a group of people who, as has just been said, feel a sense of grievance because they are already on low static incomes. The noble Baroness the Minister referred earlier to productivity; hut if the poor dears actually go and earn some money the first thing that happens is that their pension is taken away and they are taxed, so they cannot really

163
indulge in much productivity. I feel that we are dealing here with a group with a small sum of money and that they need to get it as early as possible and they need to get the maximum that we can give them
Baroness GAITSKELL: I only want to add one sentence to this. I find it rather hard to follow. I simply do not understand why the Government are fighting this amendment. Therefore, when I read an article headed, "Are the Government blundering around in the dark? I fully agree that the Government are blundering around in the dark.
Lord BANKS: Am I not right in thinking that what the Government are saying in the Bill is that the date must be not later than the last day of the month—and we normally think in terms of November—and that this amendment would make it not later than the 21st? Would that not still leave the necessary flexibility to deal with Mondays?
Baroness YOUNG: There is a great deal I could say on this amendment, but I will restrain myself in the interests of getting on. I am afraid I cannot accept the strictures of the noble Baroness, Lady Gaitskell, that the Government are blundering around. We have had to make a lot of very difficult and painful decisions which I do not like very much. I could, if I so wished, remind her of all the painful decisions which her Government took under the strictures of the IMF and, as I indicated in the course of some of our discussions on the Education Bill, the consequences were very fortunate for the last Labour Administration because we, as an Opposition, did not go round telling everybody at every possible opportunity how terrible everything was and that the whole of society was going to fall apart as a consequence of all those decisions. I could quote to your Lordships all the figures to show in fact that the last Labour Government cut far more under the IMF than we are proposing to do in two or three years.
However, I do not think this will advance our cause very much, nor do I think it is going to help very much in a discussion of very serious problems about pensioners. I have given the reasons and I have made it quite clear that there are
164
two of them. We believe that the drafting now in the Bill is a more flexible arrangement which avoids the "creeping back" of the one day a week for the payment of the retirement pension. Secondly—and I accept this point—it will mean a saving of expenditure by having the Bill as it is. The retirement pension itself, of course, will not fall, but the increase will not start on the date it would have started on without the amendment in the Bill, and therefore there would be a saving of money. We have not pretended at any stage that the decisions we are taking over a number of issues are easy either to make or to contemplate; but, if we are successful, all these measures will have been well worth while.
Lord WELLS-PESTELL: May I just say, in the nicest possible way, that I want to warn the noble Baroness the Minister that if she is really tempted, during the discussions we are going to have for several hours to come, to raise a number of sins of omission or commission on the part of Labour Governments, we might be strongly tempted to remind her that this country would not be in the mess that it is now had it not given £3,500 million by way of reduced taxation to people who did not need it. I only mention that, but I will trot out a few more if I am forced to do so. But let us say that, as regards sins of commission and omission, perhaps we could agree that we are fairly equal now. May I ask the noble Baroness whether she would feel able to take this back and discuss it with her right honourable friends? I realise that it is not her department, but, on the other hand, I feel sure they will listen to her. It may well be that she will come back at Report stage and say, "Nothing doing"; but this is a sticking point with us. It may seem very little—only a matter of three days—but, as my noble friend Lord Ross has said, it means depriving a number of people of a few pounds and they can ill afford to be deprived of that amount. I wonder whether she could meet us in that way; I ask for no commitment.
Baroness YOUNG: The noble Lord, Lord Wells-Pestell, is, of course, always very persuasive on these matters when he raises them in these terms, but I think that I must be quite honest with the Committee. I do not think that this is a matter

165
on which the Government can give way. I therefore think it would be misleading to say that I will take it back and reconsider, if I really cannot offer any hope of reconsideration. If I said that I would reconsider it, I would mean precisely that. As I feel that this is not an issue on which I can give any assurance, I should not like to do it on this occasion.
Lord ROSS of MARNOCK: That being so, could we have a promise from the Government that they will no longer tell us that, in the cuts that are being made, they are going out of their way to make sure that the pensioners do not suffer? Everything that the noble Baroness said from that Box earlier was to the effect that what mattered was money. Every-

CONTENTS

Airedale, L.

Hale, L.

Oram, L.

Amulree, L.

Hampton, L.

Peart, L.

Aylestone, L.

Hatch of Lusby, L.

Phillips, B.

Bacon, B.

Henderson, L.

Ponsonby of Shulbrede, L. [Teller.]

Balogh, L.

Hooson, L.

Banks, L.

Houghton of Sowerby, L.

Rhodes, L.

Beaumont of Whitley, L.

Howie of Troon, L.

Rochester, L.

Bernstein, L.

Hutchinson of Lullington, L.

Ross of Marnock, L.

Birk, B.

Jacques, L.

Sainsbury, L.

Blease, L.

Janner, L.

Segal, L.

Blyton, L.

Jeger, B.

Shinwell, L.

Boston of Faversham, L.

Kaldor, L.

Stedman, B.

Brockway, L.

Kilbracken, L.

Stewart of Alvechurch, B.

Brooks of Tremorfa, L.

Leatherland, L.

Stewart of Fulham, L.

Bruce of Donington, L.

Lee of Newton, L.

Stone, L.

Byers, L.

Listowel, E.

Strabolgi, L.

Cledwyn of Penrhos, L.

Llewelyn-Davies of Hastoe, B.

Taylor of Gryfe, L.

Collison, L.

Lloyd of Kilgerran, L.

Taylor of Mansfield, L.

Cooper of Stockton Heath, L.

Longford, E.

Underhill, L.

David, B. [Teller.]

McCarthy, L.

Wallace of Coslany, L.

Davies of Leek, L.

McNair, L.

Walston, L.

Donaldson of Kingsbridge, L.

Maelor, L.

Wedderburn of Charlton, L.

Elwyn-Jones, L.

Maybray-King, L.

Wells-Pestell, L.

Evans of Claughton, L.

Melchett, L.

Whaddon, L.

Fisher of Rednal, B.

Meston, L.

Winstanley, L.

Gaitskell, B.

Milford, L.

Winterbottom, L.

Gardiner, L.

Milverton, L.

Wootton of Abinger, B.

Goronwy-Roberts, L.

Northfield, L.

Wynne-Jones, L.

Gosford, E.

Northfield, L.

NON-CONTENTS

Ailesbury, M.

Campbell of Croy, L.

Dulverton, L.

Airey of Abingdon, B.

Cathcart, E.

Dundee, E.

Alexander of Tunis, E.

Clifford of Chudleigh, L.

Ebbisham, L.

Allerton, L.

Clitheroe, L.

Eccles, V.

Alport, L.

Cockfield, L.

Ellenborough, L.

Amory, V.

Cork and Orrery, E.

Elliot of Harwood, B.

Auckland, L.

Crawford and Balcarres, E.

Elton, L.

Balfour of Inchrye, L.

Cromartie, E.

Emmet of Amberley, B.

Bellwin, L.

Cullen of Ashbourne, L.

Faithfull, B.

Belstead, L.

Daventry, V.

Falkland, V.

Berkeley, B.

de Clifford, L.

Ferrers, E.

Boyd of Merton, V.

De Freyne, L.

Fraser of Kilmorack, L.

Bradford, E.

Denham, L. [Teller.]

Gainford, L.

Brentford, V.

Digby, L.

Galloway, E.

Caccia, L.

Drumalbyn, L.

Gisborough, L.

one had to make a cut. Time and again we hear the Government saying, "Oh! the pensioners will not suffer." This is deliberately against the pensioners. The Government are prepared to deny the pensioners a week or a fortnight's claim to their additional money. So long as it is made clear that the Government are prepared to ask the pensioners to make their contribution, we will accept it. So be honest.
5.1 p.m.
On Question, Whether the said amendment (No. 3) shall he agreed to?
Their Lordships divided: Contents, 84; Non-Contents, 109.

Glasgow, E.

Lucas of Chilworth, L.

Rochdale, V.

Glendevon, L.

Lyell, L.

St. Aldwyn, E.

Gowrie, E.

McFadzean, L.

St. Davids, V.

Greenway, L.

Macleod of Borve, B.

St. Just, L.

Gridley, L.

Malmesbury, E.

Saint Oswald, L.

Grimston of Westbury, L.

Mancroft, L.

Sandford, L.

Halsbury, E.

Mansfield, E.

Sandys, L. [Teller.]

Hankey, L.

Merrivale, L.

Sempill, Ly.

Henley, L.

Mowbray and Stourton, L.

Somers, L.

Hill of Luton, L.

Murton of Lindisfarne, L.

Stamp, L.

Home of the Hirsel, L.

Northchurch, B.

Strathcarron, L.

Hornsby-Smith, B.

Nugent of Guildford, L.

Strathclyde, L.

Hylton-Foster, B.

Onslow, E.

Strathspey, L.

Ilchester, E.

Orkney, E.

Tenby, V.

Kimberley, E.

Orr-Ewing, L.

Tranmire, L.

Kinross, L.

Pender, L.

Trefgarne, L.

Kintore, E.

Porritt, L.

Trenchard, V.

Lauderdale, E.

Redmayne, L.

Vaux of Harrowden, L.

Long, V.

Reigate, L.

Vickers, B.

Lonsdale, E.

Renton, L.

Vivian, L.

Lothian, M.

Roberthall, L.

Young, B.

Loudoun, C.

5.10 p.m.
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 4:
Page 2, line 20, at end insert—
("(4) If in any year the increase in any of the sums mentioned in section 125(1) of the Social Security Act 1975 or in section 23(1) of the Social Security Pensions Act 1975, excluding any increase resulting from the provisions of this subsection, is less than would have been required to restore their value in relation to the general level of earnings or prices, whichever is appropriate, the next following draft order under section 125(3) of the Social Security Act 1975 shall provide for increases or additional increases of the amounts necessary to make good the shortfall.").
The noble Lord said: Amendment No. 4 would require the Government to make good the shortfall in the up-rating by adding an appropriate amount on to the following year's up-rating. It applies to all benefits which are subject to a statutory up-rating formula—not just pensions but unemployment and sickness benefit. It also applies indirectly to supplementary benefit which goes up each year by the same amount as the National Insurance benefit. Under the No. 2 Bill that link would be broken for the short-term supplementary benefit rates, but it is only fair to say at this stage that we are not dealing with the No. 2 Bill.
The question of making good a shortfall first arose in 1978 when the Labour Government underestimated the increase in both prices and earnings for the year to November 1978. As a result, the new pension rates were 30p a week too low
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for a single pensioner and 50p a week too low for a couple, while the short-term benefit rates were 15p too low for single people and 25p too low for a married couple. The Prime Minister announced on 28th March 1979 that the shortfall would be made good in November 1979, and the then Secretary of State, the right honourable David Ennals, confirmed on 3rd April 1979 that this applied not only to pensions but to short-term benefits—for example, unemployment and sickness as well.
The present Government honoured this pledge so far as pensions are concerned, but failed to make good the shortfall in the up-rating of short-term benefits. However, in November 1979 there was again a shortfall in the up-rating of pensions and other long-term benefits. The up-rating was based on a 17·5 per cent. increase in prices, but earnings unexpectedly rose faster than prices to 19·2 per cent. However, the Government have refused to make good the 1·7 per cent. shortfall, therefore withholding from pensioners, widows and the long-term sick something like £195 million per year to which they are morally entitled.
In the Commons' debate on a similar amendment the Minister, Mr. Prentice, asked:
"What about overshoots, where it turns out that the Government of the day has made an overestimate and introduced a larger pension increase than would have been justified?"
I must ask: does the corollary follow that pensions should somehow be reduced for that reason? The answer to this question is that while it might be reasonable to make

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an adjustment in the next up-rating for an overshoot as well as for a shortfall, in practice shortfalls are much more likely to occur because the Treasury is bound to err on the side of optimism in predicting the rate of inflation and the size of pay settlements.
We feel that this amendment is important because it would require the Government to make good any shortfall. If the Government are accurate in their forecast then they have nothing to fear, but I would be among the first to recognise how extremely difficult it is to make an accurate assessment. Let us face the fact, though, that Governments have behind them a vast army—I do not mean that unkindly, but certainly a very substantial number of experts in the real sense of the word who can assess fairly accurately the market situation, the economic situation, and so on. This has been shown to be the case in the past. Therefore, in my view, it is not going to be a very serious amount, but it would be of sufficient size and importance to enable one to say to the Government that when there are these shortfalls one ought, out of common fairness, apart from having a moral obligation to do so, to make them good.
I hope that the Government will feel able to accept this amendment or to look at it with some care, because again we are talking about a very deprived section of the community. It is for them that I think we speak. I am sure it is for them that noble Lords also feel keenly. I beg to move.
Lord BANKS: This problem arises through having a period of reference which is half in the past and half in the future. This came about during the time of the last Government. Many of us objected to it at the time and felt that it was an unsatisfactory arrangement to have six months of record to go by and another six months to guess at when you are working out what the increase should be. It can obviously mean that the guess can be wrong, and if the guess is wrong then it is only right that it should be made good. Had the old system been maintained, that situation could not have arisen.
As the noble Lord, Lord Wells-Pestell, has pointed out, the present Government
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have not made good the shortfall recently; therefore it is necessary to make it mandatory to do so. If there were an overshoot in one particular year, I could not rule out that that might be set against any increase in the following year. The great thing is not to allow people to fall behind whatever the criteria, so I would support the amendment on those grounds.
Baroness YOUNG: The present statutory provision is quite clear. The courts ruled in 1978 that the Government's duty is to base an up-rating on the best estimates available at the appropriate time of likely movements between upratings—currently, movement of prices or earnings but prices only under the provisions of Clause 1—but there is no legal obligation to make up any shortfall. The fact is that the expenditure implications of making good shortfalls are very considerable. This was the main reason why we decided that we could not make good the shortfall in relation to earnings in last year's up-rating, although noble Lords will be aware that the increase in the retirement pension was more than the rise in prices. That shortfall affected retirement pensions and other long-term benefits, and the estimated cost of making it good would have been a further £195 million in a full year. This amendment would require any shortfall in all benefits to be made good.
Finding such large sums over and above the cost of the up-rating which the Government have already taken into account in their expenditure plans would be very difficult. In fact, in the present economic climate these additional resources simply cannot be found, and even in better times the Government of the day should be left free to consider their priorities in the light of the economic situation then pertaining, and to decide what could best be fitted into existing plans.
As both the noble Lord, Lord WellsPestell, and the noble Lord, Lord Banks, have said, there is an element of swings and roundabouts about this. If we are to have a statutory requirement to make good shortfalls, should we not also take account of overshoots where the estimates prove to be too high? At present, even if the estimates are too high the new rates form the baseline for the subsequent up-ratings and the overshoot is therefore built into future benefit rates.

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It is the Government's view that there should not be a statutory requirement to make good shortfalls—that this should be left to the Government of the day to decide in the light of their expenditure commitments and what the country can afford. Therefore I am unable to accept the amendment.
Lord WELLS-PESTELL: May I ask the noble Baroness whether it would be right for us on this side to assume that the Government have already made up their mind that they are not going to
accept any amendments that are down on the Marshalled List, other than their own?
Baroness YOUNG: I never commit myself by predicting what will happen all through a Committee stage when we are only on the fourth amendment.
5.19 p.m.
On Question, Whether the said amendment (No. 4) shall be agreed to?
Their Lordships divided: Contents, 78; Not-Contents, 106.

Mansfield, E.

Rochdale, V.

Strathclyde, L.

Merrivale, L.

St. Aldwyn, E.

Strathspey, L.

Mowbray and Stourton, L.

St. Davids, V.

Tranmire, L.

Murton of Lindisfarne, L.

St. Just, L.

Trefgarne, L.

Northchurch, B.

Sandford, L.

Trenchard, V.

Nugent of Guildford, L.

Sandys, L. [Teller.]

Tweedstnuir, L.

Onslow, E.

Selkirk, E.

Vaux of Harrowden, L.

Penrhyn, L.

Sempill, Ly.

Vickers, B.

Porritt, L.

Sharpies, B.

Vivian, L.

Redmayne, L.

Stamp, L.

Westbury, L.

Reigate, L.

Strathcarron, L.

Young, B.

Renton, L.

Resolved in the negative, and amendment disagreed to accordingly.
5.28 p.m.
Lord BANKS Lord BANKS moved Amendment No. 5:
Page 2, line 20, at end insert—
("(4) Section 30 of the Social Security Act 1975 shall cease to have effect on 5th April 1984 and all references to that section in that Act or in any other enactment shall then likewise cease to have effect.").
The noble Lord said: This amendment sets a date-5th April 1984—for the final abolition of the earnings rule whereby pensioners between ages 65 and 70 for men and 60 and 65 for women find their pensions docked if they earn more than a specified amount. I move this amendment with a good deal of confidence, for three reasons: first, because all parties are agreed that the earnings rule should go and I do not need to go over the arguments in favour of that tonight. Secondly, the Government are committed to abolishing the earnings rule during the lifetime of this Parliament. Thirdly, the noble Lord, Lord Cullen of Ashbourne, when in Opposition, moved an amendment in exactly the same terms as this one on 6th March 1979, just over a year ago. The noble Lord said that it was Conservative policy to phase it out by 1984 and he added:
"We are convinced that the case put forward by the Conservative Party for many years … is correct".
He also said:
"We have concluded that there is no real cost involved in abolishing the earnings rule".[Official Report, 6/3/79, col. 15.]
I thought he was perhaps pitching it rather high when he said that, but I agreed with the general case that he was presenting at that time and supported him in the Division Lobby.
The noble Baroness, Lady Young, gave powerful support, just a year ago,
174
immediately before the Conservative Party took office. She pointed out the general agreement in principle to which I have referred, and she made it clear that she and the noble Lord, Lord Cullen, were concentrating on the date. She said:
"We believe that we have the support of thousands of people in the country, and certainly it is the wish of my right honourable friend Mr. Jenkin".—[Col. 31.]
The amendment was pressed to a Division and passed by this House by 108 to 71. The Commons moved it out of the Bill, but it has been passed in this House, and of course there has been a change of Government since it was passed here. So I am happy to provide the Government with the opportunity of giving practical expression to the views which the noble Lord, Lord Cullen, and the noble Baroness, Lady Young, so forcefully expressed. I beg to move.
Baroness YOUNG: Would it be convenient to the Committee to take the other amendments on the subject at the same time, Amendments Nos. 9 and 10?
5.32 p.m.
Lord UNDERHILL: I wish to move Amendment No. 9 and also to speak to Amendment No. 10. Both these amendments are concerned with the same principle——
The DEPUTY CHAIRMAN of COMMITTEES (The Earl of Listowel): I hesitate to interrupt the noble Lord; I hope he will forgive me. It is contrary to the rules of the House in Committee to move an amendment while another amendment which has been moved is being discussed.
Lord UNDERHILL: I will speak on Amendments Nos. 9 and 10. Amendment No. 9 provides for the amount of the permitted earnings to be increased from the existing £52 a week to £65 a week,

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commencing in November of this year. The new clause which is proposed in Amendment No. 10 would abolish the earnings rule entirely, not later than 9th April 1984. Your Lordships will note that there is a difference between this wording and the wording of Amendment No. 5; Amendment No. 5 would propose that it takes effect on 5th April 1984, whereas Amendment No. 10 provides that it shall not be later than April 1984. The earnings limit was increased steadily in recent years, and there is provision for this to be reviewed annually and to be up-rated in line with earnings when benefits generally are increased. The present figure is £52 a week, and the proposal in Amendment No. 9 is that it should be increased to £65 a week. This would meet the requirement to raise the limit in line with earnings and also make a small contribution towards its eventual abolition.
The noble Lord, Lord Banks, has referred to the fact that all parties are in agreement with the abolition of the earnings rule. On this I would merely say that in other debates on other subjects we have heard a lot about the necessity for the present Administration to adhere to its manifesto commitments. Here is one that we hope they will adhere to today, because their manifesto for the 1979 election stated:
"It is wrong to discourage people who wish to work after retirement age, and we will phase out the earnings rule during the next Parliament".
That was for the 1979 election and therefore it refers to this Parliament. The manifesto of the Conservative Party is clear on this, and the other two parties are clear also.
Baroness PHILLIPS: I should like to support my noble friend. This is a subject to which I have returned so many times. I only hope I live long enough to see the rule abolished. I was interested to hear my noble friend say that all parties wanted abolition of the earnings rule. Were I not in your Lordships' House I would have said, colloquially "You could have fooled me"! No Government that I can recall for the last 15 years has made any attempt to abolish it; they have simply brought in arguments concerning how costly it would be to abolish it. I merely repeat what I have said so many times before. This is the
176
only group in the community who have actually to pay back their pension simply because they have committed the offence of going out to earn extra money. Since they are dealt with under fiscal laws—you have to pay tax on pensions if you happen to have anything else as well—I cannot see why it is necessary to still preserve this rule. If they were lucky enough to keep this wonderful pension that we always give our citizens and they also had this magnificent wage, they would be at once subject to taxation. It seems to me that Governments have been dragging their heels very reluctantly on this for no good reason.
Underlining what my noble friend said, I was delighted when I saw the advertisement in a national paper during the election campaign, when the Conservative Party—and this is in black and white, which is more than the Labour Party had ever done on this—said they would abolish the earnings rule during the next Parliament. No doubt this Parliament will see several more Queen's Speeches, but it would be very good if this was something that could go down in history in this Bill. It is not going to affect a lot of people.
The noble Baroness referred earlier to productivity. Here is an opportunity to make some productivity, and then let them keep the money that they have over a long period earned. We are dealing with a generation who have suffered two wars, periods of unemployment and deprivation. We are not talking about people who have had it easy. It seems to me that we could certainly look for a speedy abolition of the earnings rule, and the amendment will at least go some way to help towards this end.
5.38 p.m.
Baroness YOUNG: If this was not such an extremely serious subject I should be tempted to say that the debate we are now having would make a fitting final episode for that splendid BBC series "Yes, Minister". My only regret is that the noble Lord, Lord Wells-Pestell, has not joined in the fray. I feel certain I shall be able to bring him to his feet. He could have made my speech in Opposition, I could have made his speech in office, and it would have completed the picture.

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As soon as I saw this amendment in the name of the noble Lord, Lord Banks, it rang a familiar bell, and I thought: "Where have I seen this before? "It was so helpful of him to remind us that of course it stood in the name of my noble friend Lord Cullen; I think I added my name to the amendment as well. Now that the wheel has turned full circle, as I say, if this was not such a serious subject I feel it would be a fitting episode for somebody who wishes to write up parliamentary life. Of course I looked very interestedly to see what the brief said on this subject, and it was rather a relief to find that the first reason for objecting to the amendment was a technical one. That is always a good one to fall back on when all else fails, and I am pleased to be able to tell Lord Banks and Lord Underhill that the amendments are technically defective, so we could not in any case accept them. We all know what we now think personally about this matter. I looked very carefully at the other items in the brief, which I think are quite right.
It is only fair for me to say that a detailed report on the earnings rule was published in October 1978, and that report gave figures of the cost of doing away with the earnings rule. They left us with doubts, and we have been engaged in testing out and reviewing the costs and the assumptions on which they were based. A factor in the calculation of costs, of course, is that we are trying to look ahead to a situation in some years' time; and part of the background to it all is that for some time now there has been a fairly steady trend towards earlier retirement—that is to say there are fewer people who are deferring retirement beyond pension age and therefore fewer people who, with the ending of the earnings rule, become entitled to immediate pension. There is some evidence of recent years of a greater accentuation in that trend, which may continue, and this would suggest that, come the time, costs would be somewhat lower than when they last appeared—a point which I think the noble Lord, Lord Banks, made. However, our review of these costs is not yet complete.
I was extremely touched to learn that the noble Lord, Lord Underhill, had read the Conservative Party manifesto. I should like to feel that more people had
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read it. I am very pleased that he did so, but then he is a real professional in these matters. However, I should like to say that the Government are committed to the phasing-out of the earnings rule, as circumstances allow, but ways of achieving this aim and the costs involved are currently being studied, and the Government will announce the outcome of this consideration in due course.
Baroness GAITSKELL: I think that this subject, which we have debated over the years, is an absolute slur on rich nations like ourselves. We are not a poor nation compared with a great many other nations and countries throughout the world. Whenever I see this type of attitude towards pensioners I think to myself, "My goodness, death before retirement is what I should like!"
Lord UNDERHILL: The noble Baroness, Lady Young, referred to the fact that in her brief there was a technical reason for rejecting the amendment. Would she give the rest of the Committee the advantage of that technical information?
Baroness YOUNG: Yes, my Lords. The reason for having an earnings rule at all is that the pension is a retirement pension. It was in support of the requirement that a person has to be retired in order to get a pension that the earnings rule came into being. It is not enough, therefore, to remove the earnings rule while leaving retirement as a condition to be satisfied before pension can be awarded. To complete the job it is also necessary to reconstruct Section 27 of the Social Security Act 1975, and other related provisions.
Lord BYERS: In the light of what the noble Baroness has just said and the fact that there is, as I understand it, another inquiry taking place into the earnings rule, does it mean that the Government have gone back on their pledge in the manifesto to get rid of this earnings rule during the lifetime of this Parliament? If so, this is a very important statement of policy: it is quite a new development. Does that pledge still stand—a pledge upon which a great many people voted Conservative—or, in the light of what the noble Baroness has said now, has that pledge been abandoned?
Baroness FISHER of REDNAL: It was interesting to listen to the noble Baroness liken the situation to the television farce "Yes, Minister". It might be a matter which makes us smile in this building, but for those people outside who watch that television programme, "Yes, Minister", it is a farce, and when those people in the Public Gallery see it being acted realistically in a legislature I think that it will make them think: what is Government all about?
The Front Bench on this side were in agreement on the matter. We have heard very eloquently from the noble Lord, Lord Banks, that he also was in agreement and supported the noble Baroness when she moved an almost identical resolution. So, the political parties are agreed upon a principle. The political parties being agreed upon that principle then have to put up with technicalities. Surely if we have a farcical situation like that put over on the television, then to me it is rather worrying that people are agreed on a situation, but then find all kinds of what I would call stupid, technical reasons for not putting it into operation.
LORD WELLS-PESTELL: I should like to ask the noble Baroness the Minister a question. If it is the intention of this Government, regardless of the circumstances, to abolish the earnings rule during the lifetime of this Government—which can be, as I understand it, right up to 1984—and if that is a serious pledge on their part, then why cannot the noble Baroness the Minister come back at Report stage with an amendment of this kind, properly worded, which would meet all drafting regulations and include the date as 1984? It will then be on the statute book and the Government would then have fulfilled a promise.
BARONESS PHILLIPS: I think that there is a very interesting technical point which has not been mentioned and I am not sure that I should draw the Government's attention to it if they have not already thought about it. If one is a widow, at 60 one has the option of changing from the widow's pension to the retirement pension, which is the same amount. But, of course, the widows' pension is not subject to the earnings rule. So, any widows who have remained in work—and I have had quite
180
a number work for me—have very carefully not gone on to the retirement pension because they could then continue to earn and receive their full pension. So there is an anomaly.
The other matter is one to which the noble Baroness herself has referred. I deal with a great many of the pre-retirement courses and she is quite right in saying that people are retiring earlier. If they retire at 58, they have no pension. Indeed, if a man retires at 60 he does not have a pension. So we have again a whole area which creates an anomaly. If a man retires at 60 and has to go to the Supplementary Benefits Commission until he is 65, then, when he does go on to the retirement pension and earns, he has it taken away from him, he begins to wonder what it is all about. I think that there are so many curious anomalies. If it is any cold comfort to the noble Baroness, I have said more than once to my own Government that they should abolish this nonsensical earnings rule. I suspect that the administrative costs involved in taking back the money are far greater than the actual money that is collected.
BARONESS YOUNG: The noble Baroness, Lady Phillips, has made a statement about costs and I can only return to the point that I made at the beginning of my remarks and say that we are still looking at this whole question because there is some evidence that because increasing numbers of people are retiring earlier—which may continue—costs would be somewhat lower than had at first been thought. That is a review that is not yet complete and so we do not in fact have the evidence before us.
As regards the noble Lord, Lord Byers, I did not wish to make a joke of this matter. However, I never feel that it is right on an important issue to argue on a technical point. It was for that reason that I did not give the technical argument at the beginning. My answer to the noble Lord is that this is not an amendment which the Government can accept. Therefore, I felt that it would not have been right to pretend to the noble Lord that if the amendment had been correctly drafted it was one that we could accept. If that had been the case, I would have said that we would have redrafted it and brought it back at Report stage, which I think would have been right.
Lord BYERS: That is exactly the point that I am making. Does what the noble Baroness has said tonight mean that the pledge given in the manifesto no longer stands? That is the point. Has it been withdrawn?
Baroness YOUNG: I cannot go beyond saying what I said originally; namely, that the Government are committed to phasing-out the earnings rule as circumstances allow. Ways of achieving this and the costs involved are currently being studied and the Government will announce the outcome of this consideration in due course. I cannot go beyond that at this stage.
Lord BYERS: May I press the noble Baroness and say that the real test here is "the lifetime of this Parliament". That was the manifesto pledge. Does that still stand'?
Lord ROSS of MARNOCK: If the noble Baroness, Lady Young, wants to reply, then she should because it is a very important point. Is the noble Baroness prepared to answer right away?
Baroness YOUNG: I am not prepared to say more than I have already indicated; that is as far as I can go this afternoon.
Lord ROSS of MARNOCK: That means that the noble Baroness is not going as far today as the Tory Party went in its election manifesto. That is a very serious breach indeed. No wonder the noble Baroness refers to some lighthearted television programme. She is turning the whole thing into a farce; she is turning politics into a farce. It was Winston who at one time said that simply because something is stuck into a manifesto, it does not mean to say that it will become law. I thought that the Tory Party had got away from that. They place great faith in manifesto commitments. We have already had two Budgets, so they have had time to think about this.
As I understand the argument of the noble Baroness, she said that there was a review that gave figures in 1978, but her pledge came after that review—it came in 1979. The Conservative Party is now in Government and they are now working it out in the light of that review. It is appal
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ling that a party should claim to be taken seriously when they give a commitment (after a review that gave costs) that they would do it within the lifetime of this Parliament. I do not know how the noble Lord, Lord Banks, feels, but I certainly would not accept this business of technical difficulties as not being really serious on a Committee stage. If the Government accept the principle, they will make the suitable changes, and bring it forward at a particular time. But for the Government at this stage not to be prepared to go so far as they went at election time when they were seeking votes leads to a certain measure of cynicism which can do no good to parliamentary democracy.
Lord WELLS-PESTELL: I think that the noble Baroness is in some difficulty, which I believe we all recognise. I do not want to act as either doctor or nurse, but I wonder whether I could make a suggestion. I put this forward very seriously and I do not know what my noble friend Lord Banks would feel about it. This might be an occasion when the noble Baroness could say that these two amendments—one in the name of my noble friend Lord Banks and one in the name of my colleagues and myself—are technically deficient; she could undertake to look at the matter, and—and I say this with great respect take some advice from her right honourable friend the Prime Minister. After all, if we are to have a "Big Sister" in 1984—we were threatened by Orwell with a Big Brother—it might well be that at the Report stage she could give some sort of definite undertaking which might be of assistance to everybody.
Lord LEATHERLAND: I do not think that I have any interest that I need declare. It is my good fortune that I shall be 82 years old on Friday, so I think that I am outside the boundary of those who are likely to be penalised by the earnings rule. But when I retired from work 17 years ago, the earnings rule certainly penalised me, despite the fact that I had paid my contributions for the whole of my working life. I should have thought that that was one side of a contract which ought to have been honoured by the other side. I feel very deeply that I had a very raw deal on that occasion, and I am quite sure that there

183
are hundreds of thousands of people who are in a similar position.
After I retired from work, news got about in certain Fleet Street quarters that I was a journalist of some moderate ability, and furthermore that I had had a long experience of local government. So I was approached to write a series of 36 articles upon local government, a task which I duly performed to my own satisfaction and to that of the people who had ordered the articles. But the trouble was that I lost two of my weekly pensions for every month during which I was writing those articles. That period extended over about 12 months.
Looking at the matter from the morality point of view, surely it is good to encourage people to work rather than to sit down in their retirement and do nothing at all except contemplate the work that they used to do when they were working. I think that the acceptance of this amendment would be very worth while. It would give satisfaction to an enormous number of people and from the moral point of view it has everything to commend it.
Baroness HORNSBY-SMITH: Before my noble friend replies, may I ask her whether, when they make this review of the cost, the Government will also take into account the number of people who have reached retirement age—and a very substantial proportion of those who do now have an occupational pension as well—who will be depriving those of employment age of jobs. I do not think that this is the time to make it easy for people to continue to work many years after they have reached retirement age. I have been fascinated by some of the comments made by noble Lords opposite, because my memory goes back to when I was in the Ministry of Pensions and National Insurance. Then it was the trade unions who said "In order to help employment you must not allow people to have their pension and work as well". I should be very interested to know how many trade unions, with, unhappily, many of their members unemployed, would welcome the fact that people who not only have one pension but who have two pensions might continue to work, thus depriving others of that employment. I do not think that this is the time to do this.
Baroness PHILLIPS: I am afraid that I cannot let the noble Baroness, Lady Hornsby-Smith, get away with that. We are not talking about people on consultancy fees of £40,000 a year; we are talking about the kind of people who man the catering industries. There are certain industries in this country where no one else wants the jobs. Do not let us fool ourselves. Those industries would actually fall apart if it were not for people of retirement age. I could tell the noble Baroness of a number of people who certainly do not have two pensions; they have their retirement pension and they have to work very hard for the other small amount of money they receive. It would be interesting for the noble Baroness to see some of the people actually working in the Palace of Westminster; they are not working at gay, happy and easy jobs. Therefore, it is unreal to suggest that these people would actually take occupations from others. In the main the older worker does the kind of job that no one of a younger age wants to do.
Baroness YOUNG: I am, of course, familiar with the arguments. I only have to read Hansard to realise how familiar I am with the arguments about all this, and that we have discussed it before. My noble friend Lady Hornsby-Smith has made an important point, and it is one of the matters that needs to be considered in all this. I have listened with great care to all the points that have been made. This debate has shown that if an historian looked at it, he would say that both the parties should have done more and should have done better. Fundamentally, I think we all wish that we could do more and that we should like particularly to help retirement pensioners to stand on their own feet and be able to earn more.
I regret that I cannot accept these amendments. I have stated the reasons. I can only reiterate that we remain committed to phasing-out the earnings rule, but at present the cost is a significant factor. We are reviewing the costs and shall decide the way forward in the light of the review. In the light of everything that has been said, I shall undertake in particular to draw this debate and what has been said this afternoon to the attention of my right honourable friend Mr. Jenkin.

185
It is right that he should know the feelings of your Lordships' Committee, but it would be wrong of me to go further than that. However, that undertaking I shall give.
Lord BANKS: If the noble Baroness had been prepared to say that the pledge stood that the earnings rule would be abolished within the lifetime of this Parliament, then I should have felt inclined to withdraw the amendment. Even if she had responded positively to the suggestion of the noble Lord, Lord Wells-Pestell, I think I

CONTENTS

Airedale, L.

Gardiner, L.

Milford, L.

Aylestone, L.

George-Brown, L.

Ogmore, L.

Bacon, B.

Goronwy-Roberts, L.

Oram, L.

Balogh, L.

Gosford, E.

Peart, L.

Banks, L.

Gregson, L.

Phillips, B.

Beaumont of Whitley, L.

Hale, L.

Pitt of Hampstead, L.

Bernstein, L.

Hampton, L. [Teller.]

Ponsonby of Shulbrede, L.

Birk, B.

Hatch of Lusby, L.

Rhodes, L.

Blease, L.

Henderson, L.

Rochester, L. [Teller.]

Blyton, L.

Hooson, L.

Ross of Marnock, L.

Boston of Faversham, L.

Houghton of Sowerby, L.

Seear, B.

Brockway, L.

Hughes, L.

Shinwell, L.

Bruce of Donington, L.

Irving of Dartford, L.

Stedman, B.

Byers, L.

Jacques, L.

Stewart of Alvechurch, B.

Chelmsford, Bp.

Janner, L.

Stewart of Fulham, L.

Cledwyn of Penrhos, L.

Jeger, B.

Stone, L.

Collison, L.

Kaldor, L.

Taylor of Gryfe, L.

Cooper of Stockton Heath, L.

Kilbracken, L.

Taylor of Mansfield, L.

David, B.

Leatherland, L.

Underhill, L.

Davies of Leek, L.

Lee of Newton, L.

Wallace of Coslany, L.

Donaldson of Kingsbridge, L.

Listowel, E.

Wells-Pestell, L.

Elwyn-Jones, L.

Llewelyn-Davies of Hastoe, B.

Whaddon, L.

Evans of Claughton, L.

Lloyd of Kilgerran, L.

Winstanley, L.

Fisher of Rednal, B.

McCarthy, L.

Wootton of Abinger, B.

Gaitskell, B.

Mackie of Benshie, L.

Wynne-Jones, L.

Galpern, L.

MacLeod of Fuinary, L.

NON-CONTENTS

Ailesbury, M.

Digby, L.

Henley, L.

Alexander of Tunis, E.

Drumalbyn, L.

Hill of Luton, L.

Allerton, L.

Dulverton, L.

Home of the Hirsel, L.

Alport, L.

Dundee, E.

Flornshy-Smith, B.

Amory, V.

Ebbisharn, L.

Keith of Castleacre, L.

Auckland, L.

Eccles, V.

Killearn, L.

Bellwin, L.

Ellenborough, L.

Kimberley, E.

Belstead, L.

Elliot of Harwood, B.

Kinross, L.

Boyd of Merton, V.

Elton, L.

Kintore, E.

Bradford, E.

Faithfull, B.

Lauderdale, E.

Brougham and Vaux, L.

Falkland, V.

Long, V.

Campbell of Croy, L.

Ferrers, E.

Lonsdale, E.

Cathcart, E.

Fortescue, E.

Lothian, M.

Clitheroe, L.

Fraser of Kilmorack, L.

Loudoun, C.

Cork and Orrery, E.

Gainford, L.

Lucas of Chilworth, L.

Cottesloe, L.

Galloway, E.

Lyell, L.

Craigavon, V.

Gisborough, L.

McFadzean, L.

Crawford and Balcarres, F.

Glasgow, E.

Macleod of Borve, B.

Cromartie, E.

Glendevon, L.

Malmesbury, E.

Cullen of Ashbourne, L.

Gowrie, E.

Mancroft, L.

Daventry, V.

Greenway, L.

Mansfield, E.

de Clifford, L.

Gridley, L.

Massereene and Ferrard, V.

De La Warr, E.

Hailsham of Saint Marylebone, L. (L. Chancellor.)

Merrivale, L.

Denham, L.

Mills, V.

Halsbury, E.

Mottistone, L.

should have been inclined to withdraw the amendment. But, while I realise that she has probably gone as far as she feels she can in the circumstances in which she finds herself, nevertheless I cannot say that it is satisfactory to me, and I feel obliged to press this amendment to a Division.
6.1 p.m.
On Question, Whether the said amendment (No. 5) shall be agreed to?
Their Lordships divided:
Contents, 77; Non-Contents, 103.

Mowbray and Stourton, L. [Teller.]

Rochdale, V.

Strathclyde, L.

Murton of Lindisfarne, L.

St. Aldwyn, E.

Strathspey, L.

Northchurch, B.

St. Davids, V.

Swansea, L.

Nugent of Guildford, L.

St. Just, L.

Tranmire, L.

Onslow, E.

Sandys, L. [Teller.]

Trefgarne, L.

Orkney, E.

Selkirk, E.

Trenchard, V.

Penrhyn, L.

Sempill, Ly.

Tweedsmuir, L.

Redmayne, L.

Sharples, B.

Vickers, B.

Reigate, L.

Stamp, L.

Vivian, L.

Renton, L.

Strathcarron, L.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
6.9 p.m.
Lord BANKS Lord BANKS moved Amendment No. 6:
Page 2, line 20, at end insert—
("(4) If the Secretary of State concludes that during any year the sums mentioned in section 13 of the Social Security Act 1979 have not retained their value he shall prepare and lay before Parliament the draft of an Order increasing these sums by at least the amount necessary to restore their value.
If the draft Order is approved by resolution in each House of Parliament the Secretary of State shall make an Order in the form of the draft.").
The noble Lord said: This amendment would ensure that each year when the Secretary of State looks at the National Insurance maternity grant and the National Insurance death grant to see if they have lost value, as he is bound to do under the Social Security Act 1979, he must up-rate these grants to take account of any loss of value, which he is not bound to do at the present time under that legislation. It is well known how both these grants have been eroded over the years. The death grant, for example, has not been raised since 1967 when it was raised to £30, and it would have to be at least £125 to have the same value as when the grant was first established in 1949. The maternity grant has had a similar experience.
It is quite wrong to allow a benefit to be eroded without the specific consent of Parliament in fresh legislation. Amendments Nos. 18 and 20 in the name of the noble Lord, Lord Wells-Pestell, would increase the benefits to £125 for the death grant, and £95 for the maternity grant, and I support those amendments, but this amendment does not raise the present figure. It ensures that whatever the present figure is, whether it is the figure as now of £30 in the case of the death grant or whether it is the figure as proposed in
188
later amendments of £125, it would not lose value in the future. Its value from this point on would be maintained. This amendment is quite compatible with the later amendments, but equally it would operate effectively if the later amendments were not carried. It would make sure that whatever value we decide on for these benefits now, that would be maintained in the future, so I hope at least that this modest amendment will be accepted. I beg to move.
Lord WALLACE of COSLANY: I shall subsequently move Amendments Nos. 18 and 19 but it might be for the convenience of the Committee if I spoke to them now and formally moved them later. The first would increase the death grant to £125 and make it payable at the same rate for a child. At present the grant for an adult is £30, but the grant payable on the death of a child is as follows: under three years of age, £9; age three to five, £15; and age six to 17, £22·50. The grant was last increased in 1967 and £125 is the amount needed to compensate for price increases since then. It is well below the full cost of even a simple funeral. Both Labour and Tory Ministers have argued over the years that while they would like to increase the death grant, they could not justify doing so in terms of spending priorities. But that is not an argument for letting the value of the grant decline indefinitely. At a time when the Government have just announced proposals to save £480 millions a year on the social security budget, they can hardly say that the £50 million needed to restore the value of the death grant cannot be found.
During the Commons Report stage, advance copies of a DHSS survey entitled Families, Funerals and Finance were made available to Members of Parliament. The survey, which is likely to be published in the next week or two, is based on information collected from

189
bereaved people in 1975 and shows that most of them had no difficulty in meeting the cost of the funeral. However, very different results might have been obtained by interviewing a sample of elderly people about funeral costs. Many old people are extremely worried about the heavy cost that will fall on their families. The insurance policies on which they paid premiums during their working lives are in many cases quite inadequate to meet the present cost of a funeral.
Regarding the older generation, for many years firms like the Prudential and many others accepted premiums from the elderly who wanted to make sure they would have a respectable funeral. One of the qualities of the older generation—incidentally, I almost qualify to be in this category—is this attitude of mind; poor but honest and hoping to be decently buried. That is how they feel about it. Moreover, they were led to believe in 1948 that the death grant would relieve them of that anxiety; the grant was originally enough to pay the undertaker's bill for a simple funeral. They contributed to the scheme on that basis and they now feel cheated.
Amendment No. 19, the second new clause, would make the death grant noncontributory by making it payable subject to a residence test. It would also get rid of the disqualification of people who were over pension age in 1948. The first new clause would make the full grant payable for a person who was within 10 years of pension age in 1948, instead of the half-rate grant payable at present. These changes would mainly benefit the relatives of men now over 87 and women over 82, many of whom are themselves pensioners. I am concentrating my remarks on the older generation, but those who have had unfortunate experiences in this sphere in recent months will know of the extraordinary increase in the cost of a funeral, and particularly a cremation. My last word—I mean it in the sense of contributing to the debate is that while we all know that the cost of living has increased, so has the cost of dying.
Lord CULLEN of ASHBOURNE: The new clause, Amendment No. 18, would increase the rate of the death grant to £125 for all recipients including those who at present receive reduced rates. It would increase expenditure on the
190
grant by about £60 million in a full year. The intention of the new clause inserted by Amendment No. 19 is to make the death grant payable to those elderly people who are at present excluded because they were over pension age in 1948. The clause would delete the provision which specifically excludes them and would make the grant payable in respect of them, subject to residence conditions. To pay a grant of £125 in such cases would cost a further £21½ million a year.
The purpose of Amendment No. 6 is to require that the death grant and the maternity grant be up-rated each year, presumably in line with the movement in prices. To up-rate maternity grant and death grant by 16 per cent. would cost an additional £2·7 million each in a full year. There would also be a commitment to continuing increases in subsequent years. New Clause 4 is also relevant; it seeks to increase maternity grant from £25 to £95.
Your Lordships are aware of the Government's determination to reduce the burden of public expenditure. This means that we must consider very carefully the priority of proposals for increased expenditure in the social security field, as elsewhere. The Government are aware of the concern felt in some quarters about the level of the death grant, but we have to decide whether in the present economic climate it is the best way to spend these amounts. We have to conclude that it is not. I know the noble Lord, Lord Banks, has raised this subject on many occasions before and I am sorry to say that I must resist the amendment.
Lord BANKS: The question one must ask is whether it is the intention of the Government that these benefits should continue to decrease in value. Are they saying that we do not need a maternity grant and a death grant? They should come clean with the Committee, if I may use that expression, otherwise it is quite absurd in my view for them to say, "It will cost extra money in a time of inflation to keep benefits at the same real value". That we know. That must happen. But are they saying that these benefits are ones which they no longer regard as being of any importance and that they can be allowed to dwindle right away? Surely

191
this amendment, which, as the Minister said, would cost only £5·4 million, would at least see that the present inadequate level does not fall any lower. Does the noble Lord not think that is the proper way in which to proceed?
Baroness PHILLIPS: On the question of the older person not receiving a death grant—this is something about which I spoke to my Labour Government when we were in office—I recall my mother, who died last year at the age of 97, often saying with great irony, "I am sorry I have lived so long that you cannot collect the death grant", and I think she had gone down to the nothing point, although in her case it did not matter. However, recently I was made aware of an elderly couple, both well into the late 80's, where one died and because they had been on pension for so long, that was the moment when they really did not have very much. The couple had a small insurance, and one appreciates the terrible hardship imposed on the poor woman who was trying to do the right thing. She had no children and nobody to help her. Obviously this problem will solve itself because people of this great age will get fewer and fewer. Surely this is a moment when the Government could do something about the situation. The figure would probably not even amount to £2½ million when it is actually granted. Obviously there will be fewer and fewer old people in this group. It seems a curious anomaly to think that the longer one lives, the less one appears to need money. In fact, I believe that the longer one lives, the more one needs money. I do not follow the logic behind these provisions; indeed, perhaps there is no logic behind them. They cause great hardship to a remarkable group of people in our own generation.
Baroness HORNSBY-SMITH: If my memory serves me correctly, I believe that the amount of the weekly contribution used to be broken down and analysed, certainly during the time when I served in the Ministry. We knew how much went to pensions and how much went elsewhere. I believe that out of the total contribution a minute amount, as small as an old penny, went to death grant. Contributions have been increased in relation to pensions over the years as pensions have risen,
192
but have there been any commensurate increases in the proportion of the insurance stamp to make up the sum forming the death grant? I have great sympathy with those who think that the present amount is dramatically small, but I am not aware that any addition has ever been made to the amount of the old penny which I believe was the proportion of the contribution that ultimately went to death grant.
Baroness PHILLIPS: I am sorry to have to disagree with the noble Baroness—I rarely do—but surely the original concept of paying into a pool was not that one would automatically draw from it what one had paid in. In that event one would almost have had to ensure that one was handicapped, sick or widowed in order to get back the money one had paid in. I paid into the scheme in the hope that I would not have the need to draw upon it, but if somebody else had to draw upon it because he or she was handicapped, elderly, widowed or unemployed, one paid one's contribution to assist such people. I know that in theory there was a breakdown, but all workers assumed that they made their contributions not necessarily for them personally to draw upon. I believe that would be a dreadful argument in relation to social security. We are talking about those who are in need, not necessarily about those who pay for these things.
Baroness HORNSBY-SMITH: With great respect to the noble Baroness, Lady Phillips, I think she has missed the point. Those who made contributions as insured people were paying the contributions for different aspects of social benefit, and a particular proportion of the weekly stamp was allocated to each. It has been common practice for every Government who felt it right and proper to raise pensions, unemployment benefit or other benefits to raise the cost of the stamp. I do not query who will claim these benefits, because none of us will escape dying.
Lord DRUMALBYN: Those of us who have had to deal with these matters in Government have always found this a difficult problem. If I remember correctly, the amount remained at £20 from its inception until 1967, but it was then increased by £10. I have no doubt the view was taken that, whatever the figure

193
was to start with, it was not possible to increase that amount to what was needed to provide a decent funeral. Obviously when we are considering all these benefits, we have to consider them in relation to one another; we must determine priorities. There must be some elasticity in the kinds of benefits and we have to judge, as things evolve, what benefits are still necessary.
The instinctive approach of the noble Lord, Lord Banks, is that we cannot do very much to bring the figure up to what is necessary but at least should not let the position get any worse. In other words, he wishes to keep the figure up to current values. That is a point of view, but surely the better point of view is to consider the real need and how it can be met. The real need arises among those who are on supplementary benefit and who have not the resources. Surely it is possible to make the contribution to a funeral much nearer to the real cost, if not the whole of it, through what is at present the Supplementary Benefits Commission, to be carried on in future by the new body. That must be the right approach.
There cannot be an insurable risk in this case because this happens to us all, but this was the kind of benefit which at the time seemed to be necessary. However, we must realise that times have changed so much. Only on one occasion in up-rating has the position been changed. I do not know why the Government of the day chose to change it, but it was done. Manifestly, the figure is inadequate, but the question is simply one of priorities. One must always be careful to ensure that where need is manifest it can be met. Perhaps my noble friend the Minister will say to what extent it is met under supplementary benefit.
Lord CULLEN of ASHBOURNE: The noble Lord, Lord Banks, asked whether the Government intend to allow the death grant and the maternity grant to continue to decrease in value. The Government are considering all aspects of the death grant, including current levels. An announcement of the Government's intentions will be made in due course, but it will be necessary to have regard to the economic situation and to priorities. The matter is being examined seriously.
194
We are all sympathetic on this question, and I well remember the noble Lord, Lord Wells-Pestell, having to say the same sort of things as I am now saying today when this point was raised in the House in earlier years. The noble Lord, Lord Banks, is always in the happy position of asking these questions from the Liberal Benches. They relate to items of Government expenditure, and those of us who are responsible for these matters find some difficulty when we seek to reply.
The noble Lord, Lord Banks, also asked whether the Government intend to allow the value of the grants to continue to fall. The Government are obliged to examine the level of the grant each year. If, having regard to other priorities, the Government feel that the grants should be increased there is power to do so. But we cannot commit ourselves to what the position will be next year. For this year no increase is possible.
My noble friend Lady Hornsby-Smith asked about the contribution to death grant. I understand that about one fifth of a penny of every £1 contributed goes to death grants. I am sorry that I cannot go further, but I am afraid that I cannot accept the amendment.
Lord WELLS-PESTELL: All I want to say is that in the amendment before us there is a very marked degree of realism; indeed much more realism than there is in the two amendments which we on these Benches have put down in relation to this matter. It is because there is such a marked degree of realism, involving a little more than £5 million, that I would support the noble Lord's amendment in preference to our own amendments. What we are asking for in our two amendments may well be the impossible, so far as matters are concerned today. What the noble Lord is asking for is I believe the possible.
This matter has brought home to many of us who have some connection with social work and with professional social workers the number of times that one hears—I am not saying that it is every day or every week—of a couple or an individual pinching, or scraping up, a few pence each week to put aside because of the fear of being unable to have a decent burial. Such people do not even want the responsibility to fall upon their

195
children, who would be most willing to undertake it.
So far as turning to social security is concerned, unfortunately one must face the fact that this is still abhorrent to a large number of our elderly people. I, and the noble Lord, have both spoken about the amount of benefits that are not taken up. Governments have spent enormous sums of money advertising benefits and in trying to persuade people to take them up. The reason that they do not take up the benefits and there is very good authority for saying this—is not so much that they do not know about them, but because they still feel that the benefits are a form of charity, and you cannot tell them otherwise.
I do not think that I really realise that the amount needed to implement the amendment of the noble Lord, Lord Banks, is only £5 million. If the Government cannot see their way clear to agreeing to this, I hope that we shall take whatever steps are open to us so as to leave them in no doubt that there are some noble Lords in the Committee who really feel that this money ought to be found from one source or another; and I should have thought that it could be found.
Lord BANKS: I am grateful to the noble Lord, Lord Wells-Pestell, for what he said about the amendment. He said that it was a modest amendment, and it is a

CONTENTS

Aylestone, L.

Goronwy-Roberts, L.

Ogmore, L.

Bacon, B.

Gosford, E.

Oram, L.

Banks, L.

Hale, L.

Peart, L.

Beaumont of Whitley, L.

Hampton, L. [Teller.]

Phillips, B.

Bernstein, L.

Hatch of Lusby, L.

Pitt of Hampstead, L.

Blease, L.

Hooson, L.

Ponsonby of Shulbrede, L.

Blyton, L.

Houghton of Sowerby, L.

Rhodes, L.

Brockway, L.

Hughes, L.

Rochester, L.

Bruce of Donington, L.

Irving of Dartford, L.

Ross of Marnock, L.

Byers, L.

Jacques, L.

Seear, B. [Teller.]

Chelmsford, Bp.

Janner, L.

Stamp, L.

Cledwyn of Penrhos, L.

Jeger, B.

Stedman, B.

Collison, L.

Kaldor, L.

Stewart of Alvechurch, B.

Cooper of Stockton Heath, L.

Kilbracken, L.

Stewart of Fulham, L.

David, B.

Lee of Newton, L.

Stone, L.

Davies of Leek, L.

Llewelyn-Davies of Hastoe, B.

Strabolgi, L.

Donaldson of Kingsbridge, L.

Lloyd of Kilgerran, L.

Taylor of Mansfield, L.

Elwyn-Jones, L.

McCarthy, L.

Underhill, L.

Evans of Claughton, L.

Mackie of Benshie, L.

Wallace of Coslany, L.

Gaitskell, B.

MacLeod of Fuinary, L.

Wells-Pestell, L.

Galpern, L.

Milner of Leeds, L.

Winstanley, L.

Gardiner, L.

modest amendment. It is not asking for a great increase in the death grant or the maternity grant, although I think that there ought to be an increase in them. The amendment is saying merely that these grants have been allowed to go down too far; do not let them go down any farther.
I think that the noble Lord, Lord Drumalbyn, missed an important point. He said that it would be possible to get help from supplementary benefit to meet the cost of a funeral, but of course it is not the person who dies who has to pay, and very often old people are extremely worried by the prospect of leaving their relatives with having to face the cost of a funeral amounting to up to £300. Whether or not the relatives will qualify for supplementary benefit is not a factor that is present in the minds of the old people, who are worrying about saving now what they should be using to help them deal with the rising cost of living, but which instead they have to save to meet the rising cost of dying. Therefore, I very much hope that your Lordships will find it possible to support the amendment, which I feel we should press to a Division.
6.34 p.m.
On Question, Whether the said amendment (No. 6) shall be agreed to?
Their Lordships divided: Contents, 64; Not-Contents, 99.

NOT-CONTENTS

Alexander of Tunis, E.

Falkland, V.

Mancroft, L.

Allerton, L.

Ferrers, E.

Mansfield, E.

Alport, L.

Fortescue, E.

Massereene and Ferrard, V.

Amory, V.

Fraser of Kilmorack, L.

Mottistone, L.

Auckland, L.

Gainford, L.

Mowbray and Stourton, L.

Balerno, L.

Galloway, E.

Murton of Lindisfarne, L.

Bellwin, L.

Glasgow, E.

Northchurch, B.

Belstead, L.

Glendevon, L.

Nugent of Guildford, L.

Boyd of Merton, V.

Gowrie, E.

Onslow, E.

Bradford, E.

Greenway, L.

Orkney, E.

Campbell of Croy, L.

Gridley, L.

Penrhyn, L.

Cathcart, E.

Grimston of Westbury, L.

Redmayne, L.

Clifford of Chudleigh, L.

Hailsham of Saint Marylebone, L. (L. Chancellor.)

Reigate, L.

Clitheroe, L.

Renton, L.

Colwyn, L.

Hanworth, V.

Rochdale, V.

Cork and Orrery, E.

Henley, L.

St. Aldwyn, E.

Cottesloe, L.

Hill of Luton, L.

St. Davids, V.

Craigavon, V.

Home of the Hirsel, L.

St. Just, L.

Crawford and Balcarres, E.

Hornsby-Smith, B.

Sandys, L. [Teller.]

Cromartie, E.

Keith of Castleacre, L.

Selkirk, E.

Cullen of Ashbourne, L.

Killearn, L.

Sempill, Ly.

Daventry, V.

Kimberley, E.

Sharpies, B.

de Clifford, L.

Kinnoull, E.

Skelmersdale, L.

De La Warr, E.

Kinross, L.

Strathclyde, L.

Denham, L. [Teller.]

Kintore, E.

Strathspey, L.

Digby, L.

Long, V.

Swansea, L.

Drumalbyn, L.

Lonsdale, E.

Swinfen, L.

Dulverton, L.

Loudoun, C.

Tranmire, L.

Dundee, E.

Lucas of Chilworth, L.

Trenchard, V.

Eccles, V.

Lyell, L.

Tweedsmuir, L.

Ellenborough, L.

McFadzean, L.

Vickers, B.

Elliot of Harwood, B.

Macleod of Borve, B.

Vivian, L.

Elton, L.

Malmesbury, E.

Young, B.

Faithfull, B.

Resolved in the negative, and amendment disagreed to accordingly.
6.42 p.m.
Lord WALLACE of COSLANY Lord WALLACE of COSLANY moved Amendment No. 7:
Page 2, line 20, at end insert—
("(4) The sums specified in section 6(1)(a) of the Social Security Pensions Act 1975 and column (3) of paragraph 6 of Part IV of Schedule 4 to the Social Security Act 1975 shall be increased to £27·55 and £16·55 respectively with effect from 24th November 1980.").
The noble Lord said: I move Amendment No. 7 for discussion. It would put up the basic retirement pension this November to £27·55 single and £44·10 married, instead of £27·15 and £43·45 as proposed by the Government. The 1979 up-rating was based on an expected price increase of 17·5 per cent., but in the event earnings rose by 19·2 per cent. in the year to November 1979. The Government refused to make good the shortfall by an addition to this year's up-rating. Amendment No. 7 would compel them to do so, adding an extra 40p to the pension for a single person and 65p for a married couple. The arguments
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supporting this amendment closely relate to those made already on Amendment No. 4, and I do not wish to repeat them except to say that this amendment puts right an injustice suffered by pensioners. I beg to move.
LORD SANDYS: As the noble Lord has made clear, the purpose of this amendment is apparently to make good the shortfall in relation to earnings in the November 1979 up-rating of retirement pensions and other long-term benefits. Although it refers specifically to the standard rate of retirement pension on a person's own contributions and to an increase for a wife, other benefits, such as a wife's Category B pension and widows' pensions, are linked to those rates. The Government announced in January of this year their reason for not making good that "shortfall", and the reason was this. The November 1979 up-rating fully satisfied the present statutory requirements of the Social Security Act 1975 and fully restored the purchasing power of benefits. There is no statutory requirement to make good any shortfall; and, as we explained, our reason for not making good the 1979 shortfall—a shortfall only when compared

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with earnings movements—was the very high cost of doing so.
This amendment would also appear to have the effect of thwarting our intention in regard to the invalidity pension. Statutory provision for this proposal is now being discussed in another place, and it would be inappropriate to make provision for it in this Bill.
The overall cost of this amendment is therefore considerable—about £280 million in a full year—and I am afraid we cannot possibly accept it.
LORD WALLACE OF COSLANY: I think the best thing I can do is to say that I will read Hansard very carefully tomorrow to see what the noble Lord has said, think matters over very carefully and perhaps bring something up at another stage. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
6.46 p.m.
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 8:
Page 2, line 20, at end insert—
("(4) In section 125(3) of the Social Security Act 1975, at the end there shall be inserted the words" and, in the case of a draft order laid in consequence of a review in the tax year 1979–80, 1980–81 or 1981–82, further to increase the specified sums by 5 per cent.", and at the end of section 125 of that Act there shall he added the following subsection—
(5A) In the preceding subsection, "the specified sums" means—

(a) the sums specified in paragraphs 1 and 4 of Part I, column (3) of paragraphs 1, 2 and 3 of Part IV, and paragraphs 1, 4, 5 and 11 of Part V of Schedule 4 to this Act;

(b) the sums specified in paragraph 3 of Part I of the said Schedule 4 except so far as they are relevant for the purpose of section 28(7) of this Act;

(c) the sum mentioned in section 23(1)(a) of the Social Security Pensions Act 1975 so far as the sum is relevant for the purpose of calculating under section 14(6) of this Act the rate of unemployment or sickness benefit and of calculating under section 14, 15 or 16 of the said Act of 1975 the rate of an invalidity pension.").

The noble Lord said: This amendment would add 5 per cent. to the annual up-rating of the short-term benefits—for example, sickness, unemployment, maternity allowance, industrial injury benefits and various others—and long-term invalid-
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ity pension in November 1980, 1981 and 1982. We put this forward in order that it would compensate for the 5 per cent. annual reduction in the value of these benefits, for which provision is made in Clause 1 of the Social Security (No. 2) Bill. I am aware that the Social Security (No. 2) Bill is not before your Lordships' House, but, if I may say so with great respect, there is nothing to prevent our asking your Lordships to put this in to provide the safeguards which we find are not in the No. 2 Bill.
The Government claim that the reductions would be an interim step pending the introduction of arrangements for taxing the benefits, but, when questioned at his Press conference on the day of the up-rating announcement, which was on 27th March, the Secretary of State for Health and Social Security refused to give any undertaking that the cuts would be restored when the benefits became taxable. In fact, the last of the three cuts, in November 1982, would take place after the date on which the Government hope to start taxing the benefits; namely, in April 1982. If the case for cutting invalidity benefit is thin, the case for cutting the short-term benefits is, if I may respectfully say so, thinner still. Their value has already been allowed to fall substantially in relation to the long-term benefits as a result of the policy pursued by both parties since 1973 of increasing them only in line with prices while long-term benefits rose in line with the better of prices or average earnings; and the differences are now very substantial. Long-term benefits, if you are single, amount to £23.30 a week; the short-term benefit, if you are single, is £18.50; the long-term benefits for a married couple amount to £37.30; and short-term benefits for a married couple amount to £29.95. It really is a very marked difference.
The difference between the long-term and the short-term additions for children is even wider: £11.10 per child and £5.70, respectively, including the £4 child benefit. These differences in both the adults' and the children's rates are more than enough to counteract the effects of not taxing the short-term benefits. Indeed, as the Secretary of State himself said when announcing the 1979 up-rating—and I quote:
"The widening of the gap is a process that has been going on for a number of years. It is something to which attention should be paid in the

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future and I recognise the disquiet about the matter".
That was from Hansard of 13th June 1979, in col. 441. Yet the Government are now proposing to widen the gap further. This amendment is designed to prevent them from doing so. It is our view that there can be no real justification for dealing with the short-term benefits by way of a 5 per cent. reduction. They are short-term benefits; they are less than the long-term benefits and not only less but they are to be reduced by 5 per cent. We think this is an iniquitous thing to do. I beg to move.
Baroness YOUNG: As the noble Lord has made clear, the purpose of this amendment is to prevent the provisions of Clause 1 of the Social Security (No. 2) Bill (which is having its Second Reading in another place today and which will be considered by your Lordships in due course) from having the effect they are designed to have. Clause 1 offsets the proposed limitation in the up-rating of certain short-term benefits, such as sickness and unemployment benefit, and of invalidity benefit, provided in that Bill, by adding on in this Bill increases of 5 per cent. Of course, it is open to your Lordships to debate these provisions, but we shall have the opportunity to do so when the Social Security (No. 2) Bill comes before the House, as it will before too long. Perhaps in the meantime I should explain that the proposals in Clause 1 of the No. 2 Bill are an interim step towards the taxation of those benefits. At present, they are not taxable as are retirement pensions and other long-term benefits, although it has been common ground between the parties that they should be taxable. The Chancellor of the Exchequer has made it clear that it is intended to introduce proposals to treat these benefits as part of taxable income from 1982 or as soon as possible thereafter. We believe that this will restore a fairer balance between incomes in work and incomes out of work. Pending the introduction of these proposals, it is intended that these non-taxed benefits shall go up by 5 per cent. less than is necessary to restore their value.
To deal with the amendment as it stands and on its merits, it would, at the 1980, 1981 and 1982 up-ratings, increase these specified benefits by some 5 per cent. more than was necessary to restore their
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value in relation to the estimated rise in prices. The financial implications of this are considerable. An increase of 5 per cent. on those benefits which are the subject of provisions being discussed in another place would cost £130 million in a full year. We are talking about very considerable sums of money. As I have indicated, this is a matter which should be debated on the Social Security (No. 2) Bill as it is not, in effect, part of this Bill. I hope the noble Lord will withdraw his amendment because we shall have another opportunity to discuss it.
Lord BANKS: The noble Baroness has referred to the proposal in the No. 2 Bill to increase the short-term benefits by 5 per cent. less than would be necessary to restore their value; and she described it as an interim step to bringing them into taxation. But it is purely arbitrary (is it not?) and some people will be penalised who would not be liable to tax at all. I wonder if the noble Baroness can say whether it will be the intention to make up that 5 per cent. once the benefits are brought into taxation; for otherwise some people at the very bottom of the scale will be penalised unfairly.
Baroness YOUNG: I will take note of the point that the noble Lord has made and the other points that have been made. There will be an opportunity to debate this on the No. 2 Bill.
Lord WELLS-PESTELL: I am glad to get the observations from the noble Baroness the Minister with regard to the Government's attitude to this matter. I accept what she has said. I admitted at the beginning of what I said that this is really a matter for the No. 2 Bill; but I think it was important that we should get some idea of the direction of the Government's thinking in this matter. When Hansard is available, I shall read carefully the explanation which the noble Baroness has given. Meanwhile, I shall withdraw this amendment only to return to it, as the noble Baroness pointed out, on what might be a more appropriate occasion.
Amendment, by leave, withdrawn.
Lord UNDERHILL Lord UNDERHILL moved Amendment No. 9:
Page 2, line 20, at end insert—
("(4) Without prejudice to the provisions of section 125 of the Social Security Act 1975, the sum specified in section 30(1) (excluding paragraphs (a) and (b) of that Act shall be increased to a sum not less than £65 with effect from 24th November 1980.").
The noble Lord said: I have already spoken to this amendment and I move it formally.
On Question, amendment negatived.
Clause 1 agreed to.
[Amendment No. 10 not moved.]
Clause 2 agreed to.
Schedule 1 [Amendments of Social Security Act 1975]:
6.55 p.m.
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 11:
Page 27, line 34, at end insert—
("(2A) After subsection (1) of section 47 there shall be inserted the following sub-section—
"(1A) Where a person whose invalidity pension is increased under the preceding subsection becomes entitled to a Category A retirement pension, the weekly rate of the retirement pension shall be increased by the amount by which the invalidity pension would have been increased under the preceding subsection if she had not become so entitled").
The noble Lord said: This amendment would enable a married woman who has been receiving an increase in the invalidity pension for her dependent husband to go on receiving that increase after she retires. At present, a married woman who is sick can claim an increase in her sickness or invalidity benefit for her husband only if he is incapable of self-support. In future, as part of the similar-treatment provisions in Schedule 1, she will be able to claim for him if his earnings do not exceed the amount of the increase, which is £15·60 from next November, in the case of an invalidity pension. In our view, this is far from equal treatment. A male invalidity pensioner can claim an increase for his wife if her earnings do not exceed £45. The increases reduce on a sliding scale above the level of earnings. Nevertheless, it is an improvement on the present situation.
On becoming a retirement pensioner, however, normally at the age of 60 (although she can defer her retirement until she reaches the age of 65) a wife is no longer entitled to an increase of pension for her husband. In the Commons debates on similar amendments, the Minister, the right honourable Mr. Prentice admitted that this was the rough edge of the legislation but refused to put it right. We feel this is rather iniquitous; it is unfair, and I move the amendment accordingly.
Baroness YOUNG: The Bill provides (paragraph 2 of Schedule 1) that a married woman receiving unemployment or sickness benefit, or maternity allowance, will be able to claim an increase of that benefit for her husband provided that he is not earning more than the amount of the increase, which is £11·45. This is precisely the same basis on which a husband can claim art increase of one of these benefits for his wife, and it meets the requirements of the EEC Directive. Although the Directive does not require it, the Bill goes on to allow a woman who is sick for some time, and who then receives invalidity benefit, to carry on claiming for her husband provided his earnings are not more than the amount of increase of that benefit, which is £14. The noble Lord, Lord Wells-Pestell, himself said that this is an improvement on the present position—under which a wife can only claim for her husband if he is incapable of self-support—but I recognise it does not give complete equality since a male invalidity pensioner can claim a full increase of benefit for his wife provided her earnings are less than £45, and a tapered increase if they are not much above that level. When, however, the invalidity pensioner wife retires and receives her retirement pension, she can no longer receive an increase of benefit for her husband.
On this position, as I understand it, we have fulfilled our obligations under the EEC Directive, and it is quite proper that we should do so. We have gone slightly further and what we are unable to do at this stage is to go as far as the noble Lord would like. The Committee will recognise that we have done more than simply meet our requirements. The fact is that the social security legislation does not provide for the payment of a dependency increase

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for the husband of a retirement pensioner; and the EEC Directive does not require equal treatment in this area. This is because a married man is not entitled to claim a retirement pension on his wife's contributions, and while this situation exists it would be inappropriate for a married woman retirement pensioner to claim a dependency increase for her husband instead.
There are various consequences in cost were we to go further than we have at the moment. But I hope that the Committee will recognise that the particular situation we are in arises because we have gone further than the Directive requires and allows increases for the husbands of invalidity pensioners as well as sickness beneficiaries. We feel that it is better to have done this than it would have been to have stuck strictly to the terms of the Directive which would have made an even less satisfactory situation than we have. The numbers likely to be affected adversely are small, particularly since the Bill allows a woman invalidity pensioner who does not retire at 60 to carry on receiving an increase for her dependent husband until the age of 65, if she does not retire earlier. We cannot take steps to remove this small anomaly when the inevitable consequence would be that it would lead to pressure for a major change in the scheme which, for the reasons that I have explained, is not something that we could do at the present time. I hope, however, that I have said enough to indicate that not only have we fulfilled our obligations under the EEC Directive; we have gone on a bit further and at the present time that is as far as we can go in this matter.
Lord WELLS-PESTELL: I am most grateful to the noble Baroness. I should like to consider the implications of what she has said. I should like to look at that very carefully. Meanwhile, I beg leave to withdraw this amendment.
Amendment, by leave, withdrawn.
7.3 p.m.
Lord PONSONBY of SHULBREDE Lord PONSONBY of SHULBREDE moved Amendment No. 11A:
Page 29, line 19, at end insert—
(". After section 52 there shall he inserted the following section—
"52A. An accident happening while an employed earner is travelling to or from his
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place of work shall be deemed to arise out of and in the course of his employment in a case where he was so travelling—

(a) incidentally to, or in fulfilment of, an obligation to his employer; or

(b) in preparation for the fulfilment of such an obligation.".").

The noble Lord said: Schedule 1 to the Bill contains provisions which make various amendments to the Social Security Act 1975 and this would seem to be an appropriate place for inserting a further amendment to that Act concerning industrial injury benefit. At present, for an employee to qualify for industrial injury benefit or disablement benefit, an injury suffered by him must have been caused out of and in the course of his employment. There are many decisions of the Commissioners on the subject of employees who travel direct from their homes to the first appointment of the day or to a site where they must report for work. The Commissioners tend to distinguish between those who are merely travelling to a fixed place of work and those whose duties involve travelling and visiting various places. Thus, for example, benefit has been awarded to an employee who was required to make visits and had a discretion as to how those visits should be arranged, and awards in this respect have been made in favour of employees such as agricultural advisers who were required to visit farms and relief insurance agents. On the other hand, however, a home help travelling to her first house of the day had her claim disallowed.
In the case of Regina v. National Insurance Commissioners, Ex Parte Field-house, the legal issue was defined as
"… whether on the particular journey the claimant was travelling in the performance of a duty or travelling incidentally to the performance of a duty, or whether on the other hand, his journey was merely preparatory to the performance of a duty".
The Royal Commission of Civil Liability and Compensation for Personal Injury (the Pearson Commission), in their report published in 1978, recommended that the industrial injuries scheme should cover injuries sustained by an employee while travelling to or from work. Despite the difficulties which would arise from breaks in a journey and other borderline cases, the Commission took the view that the advantages of such an extension would outweigh the problems and that in due

207
course case-law would arise to determine the borderline issues.
This amendment is intended to implement this foregoing recommendation of the Pearson Commission, and the object of the amendment is to provide for its implementation. I apologise to the noble Lord who is to reply that this amendment was only put down at a fairly late time. No doubt he may well wish to consider its implications. I beg to move.
Lord SANDYS: I have listened with close attention to the amendment so ably moved by the noble Lord, Lord Ponsonby of Shulbrede. It was good of him to mention that it was put down at a late stage. Nevertheless, the Government have taken a great interest in this amendment. He rightly quoted the report of the Commission on Civil Liability and Compensation for Personal Injury. The recommendation that he refers to is of course No. 86 which was passed, I think, by a majority of one regarding injury on the way to or from work.
Following the Commissioner's report, the then Government decided that the industrial injuries scheme should be reviewed. Departmental officials therefore carried out a review of the scheme and their report was submitted to the present administration and published as a discussion document entitled, Industrial Injuries Compensation—a Discussion Document—in February of this year. The document reviews the benefits provided by the scheme and seeks a public discussion of the issues by inviting views and comments from individuals and organisations during the consultation period ending on 31st December 1980.
One of the subjects reviewed in the document is the possible extension of the industrial injuries scheme to include accidents on journeys to and from work which is in Chapter 6, paragraphs 6.32 to 6.45. The arguments for and against this change are spelt out fully in those paragraphs, and copies of the discussion document are available in the Library of your Lordships' House. The Government consider it would be quite wrong to pre-empt the discussion by taking a decision and legislating on it at the present time before the consultative process can be completed. The comments of the
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Members of the Committee on this issue will be taken into account when the Government come to recommend what changes should be made to the industrial injuries scheme following the current review. At the present stage that is all can say on the matter. We will look very closely at what the noble Lord, Lord Ponsonby, has said and any points that other Members of the Committee wish to make.
Lord PONSONBY of SHULBREDE: May I thank the noble Lord for his very full reply to my amendment? I am glad that he will study closely what I have said, and I will study closely what he has said.
Amendment, by leave, withdrawn.
Baroness YOUNG: This might be a convenient moment to break now for dinner. It has been agreed that we should break now for three-quarters of an hour. We will resume therefore at five minutes to eight.
[The Sitting was suspended at 7.10 p.m. and resumed at 7.55 p.m.]
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 12:
Page 31, line 19, at end insert—
("17. For sub-paragraph (a) of paragraph 3(1) of Schedule 6 there shall be substituted the following sub-paragraph—
("(a) 15 per cent. of so much of the reckon-able weekly earnings as does not exceed that year's upper earnings limit; or".").
The noble Lord said: I beg to move Amendment No. 12. This is an amendment we are very concerned about, and I should like to begin by asking the noble Baroness the Minister whether she will give the Committee some indication of the right of the Government to take the proposed action in relation to the earnings-related supplement. This amendment proposes a new formula for the earnings-related supplement to unemployment, sickness, maternity and widow's benefit. At present the earnings-related supplement is paid at 33⅓ per cent. on earnings between the lower earnings limit, now £17·50 for the relevant tax year, which is 1978–79, and £30 a week plus 15 per cent. of earnings between £30 and the upper earnings limit, which I understand is now £120. For 1981 it will be 33⅓ per cent. of earnings between £19·50 and £30 and

209
15 per cent. on earnings between £30 and £135.
The Government, in Clause 4 of the Social Security (No. 2) Bill, propose to reduce the 15 per cent. rate to 10 per cent. from January 1981, and to abolish the earnings-related supplement altogether in January 1982. The purpose of this amendment is to suggest that rather than abolish the earnings-related supplement, the Government ought to consider ways of making it operate more effectively. The Labour Party and the Trades Union Congress have been studying this subject, as no doubt the noble Baroness knows, for some considerable time. They have produced a number of ideas which have been adopted by the General Council as TUC policy, and accepted as a basis for wide discussion by the Labour Party's National Executive Committee.
One of these ideas, incorporated in this amendment, is to replace the present formula with a simpler and slightly more generous one: earnings-related supplement to be calculated at 15 per cent. on the whole of a person's earnings up to the upper earnings limit. The £30 dividing point between the 33⅓ per cent. and the 15 per cent. rates has become meaningless with the passage of time, because practically nobody in full-time work now earns as little as £30 a week. As the £30 figure has not been adjusted in line with the upper and lower earnings limits, it has the effect of steadily diminishing the band of earnings on which the earnings-related supplement is calculated at 33⅓ per cent. In fact, it will not be many years before the lower earnings limit of £23 for the current tax year reaches £30, and the 33⅓ per cent. rate ceases to operate at all.
Under the present formula, the amount of earnings-related supplement payable in 1981 on the first £30 of weekly earnings will be one-third of £10·50—£30 less £19·50—which is equal to £3·50. This amendment would increase that to 15 per cent. of £30; namely, £4·50. Thus most recipients of earnings-related supplement would get an extra £1 per week. More important, the new formula would get rid of the £30 dividing line, since there would be only one percentage—namely, 15 per cent.—at which earnings related supplement would be calculated on earnings up to the upper limit.
Instead of considering ideas of this kind, the Government are proposing to abolish the earnings-related supplement. The arguments that they use to defend this are that only 10 to 15 per cent. of the unemployed are in receipt of earnings-related supplement at any one time; that redundancy payments and employer's sick pay are more generous than when earnings-related supplement was introduced in 1966, and that earnings-related supplement adds to income out of work and, therefore, at the margin, does not encourage a return to work. I take those words from the Secretary of State's statement on 27th March which appeared in the DHSS Press release, but for some reason not in Hansard.
The fact that most of the unemployed at any one time are not getting earnings-related supplement is largely due to the growth of long-term unemployment. Earnings-related supplement is payable from the third to the twenty-eighth week of unemployment or sickness. If the Government were proposing to save money on earnings-related supplement and to spend it on the longer-term unemployed, it might be defensible. But they are not proposing to do that. Redundancy payments normally provide a lump sum, not a weekly income; and, anyway, the sick and many of the unemployed do not qualify for them. At present levels of unemployment, redundant workers need to put such payments aside to meet major expenses during what may be a long period out of work. They should not be expected to use them for living expenses during the first weeks of unemployment.
As for sick pay, many workers still do not get it and for those who do it is often inadequate. The compulsory sick pay which was proposed in the recent Green Paper would be only £30 a week for eight weeks. As for the incentive argument, it is clearly wrong to penalise all the sick and the unemployed in order to preserve work incentives for what many of us believe to be a very tiny minority. Moreover, the earnings-related supplement is subject to a ceiling which prevents it from raising the total benefit payable to more than 85 per cent. of the previous year's weekly earnings.
Earnings-related supplement remains, as it was in 1966, a very valuable addition

211
to the incomes of the unemployed and the sick and, not least important, of widows and expectant mothers, during the period of adjustment to what may be a lengthy spell of living on a low income. It is also an important way of keeping large numbers of people off supplementary benefit. The Government have admitted that their current proposals will add 110,000 to the number of supplementary recipients, and the abolition of the earnings-related supplement is a major factor in producing this total.
What causes so much concern on this side of the House is that the earnings-related supplement was set out to be a very valuable component to people when they were unemployed, when they were sick, when they had need to receive a benefit of some kind or other and, in particular, when they retired. It seems that the policy of the Government at the moment is to withdraw that. I do not know what right they have to do it. I am sure I shall be told that they have every legal right. But it seems to me that this is an action which is open to very grave criticism. I beg to move.
8.5 p.m.
Lord BANKS: It certainly seems that the formula which the noble Lord, Lord Wells-Pestell, has suggested is a neater one than that at present in use, and it might well be considered as a substitute for it, for the reasons which he very clearly put forward. I, too, regret the proposed abolition of the earnings-related supplement. The philosophy of the earnings-related supplement is that National Insurance is not only a means of averting extreme poverty—though it certainly is that—but is a means of cushioning the fall in earnings which people suffer when they suddenly become unemployed or sick, and when their commitments have been entered into on the assumption that their earnings would continue and be able to take care of them. They then find that that is not so, and for a period the earnings-related supplement acts as a cushion.
We on these Benches have been advocating an earnings-related supplement, paid for by earnings-related contributions, since 1963 and we were gratified when, eventually, this was adopted. So we
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regret the proposed abolition now, but perhaps this is not the occasion to go into it in detail. We shall certainly want to discuss it very thoroughly when we come to deal with the relevant parts of the Social Security (No. 2) Bill.
Baroness YOUNG: As the noble Lord, Lord Wells-Pestell, has quite rightly said, earnings-related supplement is payable on top of the short-term flat-rate benefits—unemployment, sickness and injury benefits and maternity allowance. It goes to employed people whose earnings in the relevant income tax year were above a specified level. The rate of supplement paid at present will usually be based on earnings in the 1978–79 tax year, and is one-third of weekly earnings from £17.50 to £30 and 15 per cent. of earnings between £30 and £120. The lower and upper earnings limits are linked to the lower and upper earnings limits for contributions in the relevant tax year. Both these limits are increased each year, but the £30 figure has remained unchanged for a number of years. so that the one-third rate of earnings-related supplement is gradually becoming a smaller and smaller earnings band. As the noble Lord quite rightly said, the numbers are declining.
The effect of the amendment would be to abolish the dual method of calculating earnings-related supplement on earnings between a floor and ceiling, and substitute a 15 per cent. rate over all weekly earnings up to the current earnings ceiling. This would increase the amount of earnings-related supplement payable, because taking away the earnings floor would more than compensate for loss of the one-third rate on a small band of earnings. An earnings-floor has always been a feature of the earnings-related supplement scheme, because the supplement is paid on top of flat-rate benefit which, with increases for dependants, already provides a high proportion of earnings during sickness and unemployment.
As the noble Lord, Lord Banks, has said, we shall have an opportunity to discuss this again when we debate the Social Security (No. 2) Bill. Under that Bill, it is proposed to cut the present 15 per cent. rate to 10 per cent. from January 1981, and to abolish the supplement altogether from January 1982. The reason for this is that, at a time when

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benefit savings have to be made, it is felt that the savings should fall on benefits which are above basic levels. The value of earnings related supplement has been allowed to decline by successive Governments over the years, and with more generous redundancy payments and the development of employer's sick pay schemes there is now less need for the supplement. There is also some evidence that the earnings-related supplement has lengthened duration of unemployment and its reduction and eventual abolition will lead to some improvement in incentives. The savings from the proposed reduction will be £60 million net of supplementary benefits in the calendar year 1981 and £285 million net in 1982–83. Leaving aside the savings, the increased expenditure resulting from the present amendment would be £80 million in the 1982 calendar year.
I think it will be quite apparent to the Committee from what I have said that at a time when the Government are proposing to reduce expenditure on earnings-related supplement it would not be sensible to accept an amendment which was specifically designed to improve that benefit. I should perhaps add that if in fact the amendment were to be accepted and the 15 per cent. rate were subsequently amended to 10 per cent., as we propose in the No. 2 Bill, those concerned would be worse off than they would be under the present proposals, since the reduction from 15 to 10 per cent. would apply to all earnings below the ceiling instead of merely to those earnings between £30 and the ceiling. So it would have a rather unexpected consequence which I do not think any of us would wish to see.
This again is one of these difficult measures that we shall have another opportunity to consider when we look at the Social Security (No. 2) Bill, and I shall certainly take note of the points which have been raised, in particular the one raised by the noble Lord, Lord Banks. It is a matter to which we can return on that Bill. I hope, after what I have said, that the noble Lord will feel able to withdraw his amendment.
Lord WELLS-PESTELL: I am proposing to do so, but I do so with very great reluctance because I feel strongly about this. If there were something I could get
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cross about it is this. I think it is quite disgraceful that this provision should be found in any Bill, even if the excuse is, "Well, we've got to cut down expenditure". I may be quite wrong, but I look upon the earnings-related supplement as a kind of insurance that I took out and that I paid for. The noble Baroness, or somebody else, may say, "Ah, yes, but there was no specific mention of the earnings-related supplement when the National Insurance rates were increased". However, I should want a lot of convincing that when the National Insurance rates were increased the cost of the earnings-related supplement was not taken into account. Therefore, along with millions of other people, I was paying an increased amount, an increased premium, if you like, to get an earnings-related supplement.
If I had taken out insurance with a private company and found subsequently that they "ratted" on it, I should want to take some action. I think the Government are doing precisely that. It may well be that I am wrong, but I do not think I am. When the Government increased National Insurance rates they must have taken into account the cost of an earnings-related supplement when it became payable. For them now to say, "Ah, well, we have got to reduce expenditure"—which is what the noble Baroness said—"and therefore we are not going to pay it", is an action which is open to very grave criticism.
I shall withdraw the amendment so far as tonight is concerned, but we will return to it, with all the strength that we can command, when the No. 2 Bill comes before your Lordships' House.
Amendment, by leave, withdrawn.
8.14 p.m.
Lord WALLACE of COSLANY Lord WALLACE of COSLANY moved Amendment No. 13:
Page 31, line 19, at end insert—
("17. In section 15(3), at the end there shall be inserted the words "which shall at all times be the same as the weekly rate specified in Schedule 4, Part I, paragraph 8".").
The noble Lord said: I beg to move Amendment No. 13, which would tie invalidity pensions to the basic retirement pension rate. Since invalidity benefit was introduced in 1971, it has always

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been payable at the same rate as the retirement pension. This year, however, the Government propose to increase invalidity benefit, along with the short-term benefits—sickness, unemployment, et cetera—by 5 per cent. less than the rate of inflation while retirement pensions will be fully inflation-proofed. As a result, while retirement pensions will rise to £27·15 single and £43·45 for a couple, the new invalidity pension rates will be only £26 and £41·60.
The reason given for this is that invalidity benefit ought to be taxed. Since it will not be possible to tax it until April 1982 at the earliest, the Government are seeking power in the Social Security (No. 2) Bill, at the moment being debated on Second Reading in another place, to reduce the up-rating by 5 per cent. this year and in each of the two following years. This is an extremely unfair measure. Many invalidity pensioners would have incomes below the tax threshold even if the benefit were taxable, yet the 5 per cent. annual reduction will hit them just as much as the better off invalidity pensioners who may be drawing sick pay on a generous scale from their employers.
The Government's enthusiasm for taxing benefits, however, has nothing whatever to do with fairness. They simply take the view that the benefits are too generous and ought to be reduced. In particular, they are worried about the alleged disincentive effect of paying adequate benefits when people are sick or unemployed. The Chancellor of the Exchequer, in his Budget Speech, stated quite openly that this was why he wanted to tax the benefits.
Nobody denies that there are a few cases in which benefits can equal or occasionally even exceed what a person could earn, but these are a very small minority of cases. Can it really be argued that, with average earnings of over £100 a week, the present rates of invalidity benefit—£19·50 for a single person and £31·20 for a married couple, plus an invalidity allowance of up to £4·15, depending on the age at which incapacity began—are adequate, let alone excessive? If so, why did the Conservatives support the introduction of an additional earnings-related benefit which will build up over a 20-year period under the Social Security Pensions Act 1975?
This is a reasonable and fair amendment which should receive support from your Lordships, particularly if many were present to listen to the debate. I beg to move.
Lord BANKS: This opening up of a gap between the invalidity pension and the retirement pension certainly seems to be a matter to which we should give serious thought. The noble Lord, Lord Wallace of Coslany, has explained that the Government are contemplating the application of the 5 per cent. reduction to invalidity pension because it is not taxed, but what they are proposing to do will have the effect that the retirement pensioner not paying tax will get more than the invalidity pensioner not paying tax, whereas until now these rates have been the same. This seems to be a move in the wrong direction, and one would want to know precisely what are the reasons which have caused the Government to propose this course of action.
Baroness YOUNG: The amendment which the noble Lord, Lord Wallace of Coslany, has moved, as it stands, is superfluous, because Section 14 of the Pensions Act already provides that the basic invalidity pension will be at the same rate as the basic Category A retirement pension. That is the position; therefore there is no need, even if the Government were moved to accept this amendment, to write it into the Bill, because Section 14 stands until it is repealed. Once again this is a matter which will come up on the Social Security (No. 2) Bill. We shall then have an opportunity to return to the issue. It does not arise under this Bill because, as I have said, the position remains as it is.
The noble Lord, Lord Banks, has given the reason why the Government are doing what they are doing in the No. 2 Bill; that is, increasing the invalidity pension by 5 per cent. less than the retirement pension. This is because the retirement pension is subject to tax whereas the invalidity pension is not subject to tax. However, I believe that this is a matter to which it would be more sensible to return on the No. 2 Bill, where in fact it applies, and not on this Bill, and I hope very much that the noble Lord, Lord Wallace, will withdraw his amendment.
Lord WALLACE of COSLANY: Will the noble Baroness kindly give the Committee the section of the 1975 Act to which she referred, if it is possible? I should be grateful if she could do so otherwise of course we shall have to wait for another occasion.
Baroness YOUNG: Yes, certainly. It is Section 14 of that Act which provides for the basic invalidity pension to be at the same rate as the basic Category A retirement pension. If I am wrong about that I will write to the noble Lord, but that is my understanding of the position.
Lord WALLACE of COSLANY: I thank the noble Baroness for that information and we will certainly look at it. We are not too happy about this. Of course we appreciate the fact that the Social Security (No. 2) Bill is leisurely coming our way and there is a certain amount of overlap between the two Bills, which is unfortunate. Having registered our displeasure, we will leave our displeasure on the record until a later date. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 1 agreed to.
Clause 3—[Amendments of Social Security Pensions Act 1975]:
8.24 p.m.
Lord BYERS Lord BYERS moved Amendment No. 14:
Page 4, line 9, at end insert—
("( ) Where a contracted-out scheme provides increases in guaranteed minimum pension after service has been terminated before attaining pensionable age by one of the method,; provided for in the Pensions Act the same method of increase shall also apply to any transfer of rights made to that scheme in accordance with this section.").
The noble Lord said: This amendment is, unfortunately, a very technical one, and with your Lordships' permission I should like to begin by explaining some of the general principles involved in it. Between 1961 and 1975 it was possible to contract out of the graduated part of the State pension scheme, and to do that it was necessary to belong to an occupational pension scheme where the unit of pension provided each year did not fall below a
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minimum amount. At one time the amount in question was £3 9s 7d per year of membership. Unfortunately, those "bricks" of £3 9s 7d rapidly started to lose their real value because of the terrible rates of inflation which we have experienced in recent years.
When the last Government were devising their new State pension scheme, which began in 1978, and when they were considering the terms for contracting out, they very reasonably wanted to learn from the mistakes which had been made over the graduated scheme and its contracting out terms. They decided that it would only be possible to contract out of their new State scheme provided the units of pension built up year by year were calculated in one of two ways. The more usual method was to require the pension to be at least a certain fraction of final earnings at, or just before, retirement. The alternative method required the units of pension built up year by year to be revalued in line with national average earnings. Whichever method is employed solves the problem for those members of an occupational pension scheme who continue in active membership of the same scheme right through to retirement. But a problem arises with the members who, whether from their own free choice or through being made redundant or for some other reason, leave their job before retirement. These are the people who are known in the pensions world as "early leavers".
The last Government originally intended that an early leaver should continue to have part of his pension increased from the time he left until the time he retired and the part to be increased was the part that was used for contracting out. That of course was reasonable. What was not reasonable was that the Government stipulated that the rate of increase each year should be the rate of increase in national average earnings. This was clearly unacceptable to an employer, for several reasons. The main reason was that the employer may be able to control what he pays his own employees, but he cannot control national average earnings; and any employer who accepted that responsibility would therefore be taking on a totally open-ended liability in respect of people who were no longer contributing towards his business.
Secondly, the requirement was unreasonable because the very nature of an average requires that the many people whose earnings rise more slowly than the average would balance the many people whose earnings rise more rapidly. Requiring the pensions of early leavers, therefore, to be increased in line with national average earnings could mean that an early leaver did better and absorbed a greater share of the employer's resources than another employee who stayed with that same employer right the way through to retirement.
At the time when the 1975 Social Security Pensions Bill was being considered in this House I brought forward an amendment which would have given employers an additional option in increasing the contracted-out pensions of their early leavers. My amendment would have allowed employers the option of increasing the pension from the time the member left his contracted-out pension scheme to the time of his retirement by the same fixed rate as the Government Actuary had assumed for other purposes in his calculations in connection with the new State pension scheme and contracting out. On that occasion your Lordships were good enough to support my amendment, and although it was later deleted in another place the Government did bring forward changes of their own to achieve the same objective. The fixed rate of increase adopted at the start of the scheme in April 1978 has remained unchanged to this day and is still 8½ per cent.
There is in fact a third option and that represents a sort of compromise between the other two methods. It requires early leavers to have their contracted-out pensions increased at the fixed rate of 5 per cent. and in addition the employer must pay a lump sum known as a "premium" to the State scheme in order to purchase whatever increases are necessary over and above the 5 per cent. If the rate of increase in national average earnings falls below 5 per cent. other considerations arise, but I do not think we need concern ourselves with those for the foreseeable future.
I hope that all I have said so far serves to explain why an increase in the pensions of early leavers is essential to the system, and why it is important that the method
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of providing those increases should not place unreasonable burdens on the employer. There is no quarrel with the requirement in principle that the pensions of early leavers should be increased. A problem does arise over the way in which increases should be provided when a transfer of pension rights takes place from one scheme to another, and that is where I now come, from that background, to the present amendment. It is designed to improve the position where a member moves from one contracted-out occupational pension scheme to another contracted-out occupational pension scheme run by his new employer.
As far as the member is concerned it is often highly desirable that he should be able to transfer his pension when he moves. Transferring it will not necessarily increase the amount of pension but it will achieve two useful objectives. First, it will relieve the old scheme of an administrative burden of looking after what could be quite a small pension for many years and trying to keep track of the future pensioner in order to pay him the pension at the retirement date. Secondly, and probably more important, it will enable the employee to have all his pension payable from the same date and subject to the same terms. By "subject to the same terms I mean that it will be subject to the same provisions regarding retirement age, widows' pensions, increases after retirement, the guarantees applying on death, frequency of payment and so forth. But unfortunately, as the law stands at present, the receiving scheme is permitted to take in a transfer of contracted-out pension only if it agrees to revalue that pension in line with changes in national average earnings.
This is clearly an extraordinarily bad bargain from the point of view of the receiving employer. He is offered a fixed transfer value—fixed, that is, in money terms; and in return he has to provide a pension of which the contracted-out part must be increased in line with national average earnings, a factor over which he has no control at all. The net effect is that the new employer will not normally agree to transfer of the contracted-out pension.
On the other hand, if a transfer does not take place and the pension is left behind as a frozen pension with the old

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scheme, then the old employer can choose between three methods of increasing the contracted-out pension; namely, increases in line with national average earnings, increases at the fixed rate of 8½ per cent., or the hybrid method of increases at 5 per cent., plus payment of the lump-sum premium. Any employer can use one of these three methods of increasing the contracted-out pension for those who leave his scheme. All my amendment seeks to do is to permit the employer who takes in a transfer of contracted-out pension to use the same method in respect of contracted-out pensions transferred into his scheme as he does in respect of those who leave his scheme.
I think it is appropriate to draw attention to the fact that for very good reasons it will in future be less easy for an employee who leaves a pension scheme to take his own contributions out with him. Quite reasonably in recent years, Governments of both complexions have taken the view that the purpose of a pension scheme is to provide pensions and this objective should not be frustrated by allowing a scheme to be used as a sort of piggy-bank which, if not exactly tax-free, then at least is highly tax efficient. The result is that in future an increasing number of people who leave their employer will have to choose between a frozen pension under the old scheme or a transfer of pension rights into the new scheme. If my amendment is adopted a transfer of contracted-out pension will no longer mean that the receiving employer incurs an open-ended liability.
Before concluding, may I deal with two possible objections. The first is that my amendment deals only with the relatively small part of the pension used for contracting out. We are not talking about the total pension. It is, of course, highly desirable that the total pension should be transferred, but the contracting out requirements are concerned only with the part used for contracting out. It is the rate of increase to be applied to that part which is the subject of this amendment.
Secondly, one might be tempted to think that my amendment is unsatisfactory from the employee's point of view because the law at present requires him, if his pension is transferred, to have the contracted-out part increased in line with national average earnings. If national average earnings increase at a rate faster
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than 8½ per cent., he might appear to receive a smaller pension if he benefits only from increases at the rate of 8½ per cent. than if he received increases in line with the full rate of national average earnings. In fact, this will not happen as the State does already make good any shortfall if the rate of increase which is needed exceeds 8½ per cent., and this arises already since the great majority of pensions are left behind in the old scheme and not transferred. Consequently, the State scheme is already prepared to make good any shortfall caused by the rate of increase in national average earnings exceeding 8½ per cent. So I do not think it can be argued that the burden on the State scheme will be increased if this amendment is adopted.
I am sorry to have taken so long in outlining what is in the end a relatively modest amendment, but I hope the principle will appeal to the Committee. It is clearly desirable that those who transfer from one employer to another should be able to take their pension rights with them. All that I am seeking to do is to enable the receiving employer to take on board a transfer of pension rights from the previous employer on terms which do not involve the second employer in taking on open-ended liabilities. I think credit is due to the previous Government for the way in which they accepted that the contracting-out terms should not embody an open-ended liability. If your Lordships remember, a number of amendments made to the 1975 Bill as it passed through both Houses reflected this willingness to be flexible. It is unfortunate that this loophole should have been left, and I hope that the case for closing it will be accepted by the Government. I beg to move.
Lord CULLEN of ASHBOURNE: My Lords, this amendment is intended to allow guaranteed minimum pensions, when transferred from one contracted-out pension scheme to another, to be revalued at a fixed rate instead of by reference to the increase in average earnings. As the noble Lord is aware, an amendment was moved in another place to achieve the same object.
I would point out to the noble Lord at this stage that there is no need for primary legislation to achieve this object. I am advised that it could be implemented by regulations. The Government are not

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unsympathetic to the case put forward by the noble Lord. However, the plain fact is that the Occupational Pensions Board are presently conducting a review on the preservation and transferability of occupational pension rights. They have up till now received 700 pieces of written evidence and in addition have taken oral evidence. The board hopes to be able to report in early 1981. I would say that the speech of the noble Lord, Lord Byers, will be something that they will read with the very greatest interest. Certainly, he put the case exceptionally well and very clearly.
In this complex field, it is the Government's considered view that it would be inadvisable to act on an isolated aspect of the whole question of pension transferability and preservation in advance of the Occupational Pension Board's report. It is claimed that the present requirement for index-linked revaluation of the transferred guaranteed minimum pension is preventing transfers and therefore stopping people from changing jobs. The noble Lord will no doubt have seen the article in the February edition of the Pensions World by the chairman of the Occupational Pensions Board which indicated that the evidence the board had received on the desirability of transfers was not all one way. In any event, at the moment guaranteed minimum pensions are still only of modest amounts, built up over two years since 1978; it would, I think, be wrong to exaggerate the burden the obligation to dynamise these rights would place on receiving schemes. If the board's report recommends a change in the guaranteed minimum pension transfer arrangements this would be considered urgently by the Government, and, as I have said, could be implemented quickly by regulations. I am advised that there are some defects in the amendment which would militate against its intended purpose. Leaving that on one side, I would ask the noble Lord to withdraw his amendment in the light of my remarks.
Lord BYERS: I am grateful to the noble Lord for the sympathetic way in which he has received the principle behind this amendment. Of course, I am aware that the Occupational Pensions Board is studying this matter, and I would not dream of pressing him for a definite
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undertaking tonight, except to say this. It is reassuring to know that this could be done by regulations and that primary legislation is not required. As the Government appear to be fairly sympathetic to the principle, if the Occupational Pensions Board has no objection to it, I wonder whether I could ask the noble Lord if I can take it that the Government will then implement it by way of regulation.
Lord CULLEN of ASHBOURNE: I do not think I am really in a position to say that, but what I should like to do is to take this away and perhaps we could discuss it again at the next stage of the Bill.
Lord BYERS: I would be very happy to do that, and with the leave of the Committee I beg leave to withdraw this amendment.
Amendment, by leave, withdrawn.
8.40 p.m.
Lord PONSONBY of SHULBREDE Lord PONSONBY of SHULBREDE moved Amendment No. 14A:
Page 7, line 41, leave out from (" Act ") to (" after ") in line 43 and insert—
("(a) after the word "are" there shall be inserted the words "or at any time were"; and
(b").
The noble Lord said: Clause 4 of the Bill makes a number of miscellaneous amendments to existing legislation. Subsection (I) of the clause will extend the definition of "public service pension scheme" contained respectively in Section 51(3) of the Social Security Act 1973 and Section 66(1) of the Social Security (Pensions) Act 1975. There is in fact an anomaly. The Port of London Authority Pension Scheme was established by the Port of London Authority Act 1928 and there is some concern that this scheme should clearly be seen to fall within the definition contained in the above-mentioned sections as was intended when the scheme was originally established.
However, I understand that there is some doubt as to whether the scheme falls within those sections and the object of this particular amendment is to make clear that the scheme is a public service pension scheme for the purposes of the

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definition. I hope that the Government will be able to agree to this amendment for the sake of clarity. I beg to move.
Lord SANDYS: We approach a difficult and technical matter of definition and I have been looking with close interest at both the Social Security Act 1973 and the Social Security (Pensions) Act 1975 with their definitions which, of course, are identical. The effect of this amendment would be to provide that, if the particulars of a pension scheme—and here of course the noble Lord referred to the Port of London Pension Scheme established quite a long time ago in 1928 established by or under an enactment or the Royal Prerogative or Royal Charter (not applicable, I imagine, in this case) had at some time been set out in an enactment, Royal Warrant or Charter, or in a legislative instrument made there under but were no longer so set out, then such a scheme would nevertheless come within the definition of a public service pension scheme for the purposes of the two Acts referred to.
I should like to say straight away that we are in some difficulty here, examining the particular scheme referred to by the noble Lord, because I have had no previous discussion with him about it. However, I think that I should continue with the details. It is important that the relaxations which apply to public service pension schemes, as defined in the two Acts referred to, should apply only to schemes whose solvency would not be in any doubt because of their association with the Exchequer. I do not wish to cast any reflection whatsoever upon the pension scheme referred to by the noble Lord, but I think I should mention that matter in passing.
If the definition were to be extended to include schemes whose particulars are now set out in trust deeds and could be changed by members' consent, then it would not be appropriate to exempt them from the stringent solvency requirements applicable to other contracted-out occupational pension schemes.
Should the noble Lord be aware of a difficulty in relation to a particular scheme, I shall do my best to assist him if he will give me the particulars. I am sure that we could arrange a discussion on these matters. Nevertheless, in view
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of the considerable repercussions which could result from the proposed amendment, I hope the noble Lord will agree to withdraw it.
Lord PONSONBY of SHULBREDE: I should like to thank the noble Lord for his reply and for his offer to discuss the particular problems raised by the present wording of the Bill. I should certainly like to take up his offer, and in the circumstances I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn. Clause 3 agreed to.
Clause 4 [Miscellaneous amendments]:
8.45 p.m.
Baroness YOUNG Baroness YOUNG moved Amendment No. 15:
Page 8, leave out lines 31 to 34 and insert ("such modifications as are prescribed by the regulations; but any modifications so made shall not apply in relation to any payment of benefit unless notice of the effect of the modifications was given to the beneficiary in accordance with the regulations before he agreed to the arrangements.
In this subsection "modifications" includes additions, omissions and amendments.").
The noble Baroness said: As I explained during our Second Reading debate, Clause 4(4) in its present form was severely criticised in another place as providing inadequate safeguards, in the arrangements for recovering overpayments, for beneficiaries paid by automated credit transfer. The Government undertook to look at the situation again, and this amendment is designed to meet those criticisms. Perhaps it would be helpful to the Committee to explain the background to the matter and what the amendment does.
A recent study by DHSS officials of the arrangements for paying social security benefits, has confirmed that there is a substantial demand among many members of the public for their benefits to be paid direct into their bank accounts by automated credit transfer. This is particularly true in the case of mothers receiving child benefit. This change in opinion is a reflection of the fact that about 50 per cent. of the adult population now use a current bank account and 75 per cent. use a current bank account or some other

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form of account such as a building society account. The Government are still considering the proposals in this study, which was carried out in consultation with Sir Derek Rayner and which goes much wider than payment by automated credit transfer. However, the Government share the view, expressed by the Opposition when they held office, that it is right in principle to offer the public payment of benefits by automated credit transfer if they want it—and only if they want it—provided that there are no major cost or administrative disadvantages in doing so. The Government are still considering the study, but they mean to announce their intentions on payment by automated credit transfer as soon as possible.
In the meantime, it seems only prudent to take advantage of the opportunity presented by this Bill to deal with a possible consequence of paying benefits in this way. As the Opposition will know from their own experience in Government, this system involves a greater risk of overpayments because there would be less routine contact between beneficiaries and the Department and it might lead to more beneficiaries overlooking the need to report changes in their circumstances that would affect the amount of benefit they receive. The very nature of this payment method, which transfers money by computerised systems, means that beneficiaries cannot prevent an incorrect payment as they can with an order book by simply refraining from cashing it.
None of us can be certain that there will be a significant increase in overpayments if automated credit transfer is introduced, but we believe that it would be irresponsible to put public money at risk by introducing a new payment method that the public wanted, while knowing that it carried the risk of more overpayments. At present, overpayments are not recoverable if the beneficiary shows "due care and diligence". However, if there is a significant increase in inadvertent overpayments as a result of automated credit transfer, the cost and effort required to establish whether a beneficiary has exercised "due care and diligence] would seriously jeopardise the financial viability of this method of payment. It is for this reason that, provided adequate safeguards are made available, we consider it
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reasonable that the "due care and diligence] test should be suspended for a person who chooses payment by automated credit transfer. Let me say here that, in providing any particular payment method for benefits, any Government would have to strike a reasonable balance between the wishes of beneficiaries for particular payment methods and the cost to the taxpayer who pays for those methods.
If automated credit transfer is made very expensive to administer because of the cost of elaborate procedures for recovering overpayments, then this will make it difficult for the Government to give the public a new payment method that they want. It must also be noted that beneficiaries who, in their own interests, choose to have their benefit credited to their account, will have voluntarily chosen a system under which they will not receive the normal reminders to report changes of circumstances or have the normal facilities for preventing further payment. And it is worth hearing in mind that members of the public will have a major safeguard in that they will have a totally free choice as to whether they want their benefits paid by automated credit transfer, and there will he nothing to stop them at any time from choosing to be paid by order books if for any reason they find that they do not like the new system.
The Government recognise that the arrangements for recovering overpayments resulting from automated credit transfer must have reasonable safeguards for beneficiaries. They have sought to amend Clause 4(4) to meet the criticisms made in another place, and the clause as amended carries a number of significant safeguards. First, it ensures the most important safeguard of all, namely, that the special arrangements for suspending the "due care and diligence] test cannot, as a matter of law, operate unless the beneficiary is given due notice of their effect before he agrees to payment by automated credit transfer. It will then be made clear to him that overpayments will be recoverable whether or not he is personally to blame. It might seem superfluous to say that it was always the department's intention that beneficiaries should be so informed, but the new wording places the matter beyond any doubt.
Secondly, the amendment widens the regulation-making powers of Clause 4(4) to enable regulations to provide for other features of the automated credit transfer system and at the same time requires the beneficiary to be given due notice of these, also, before he decides whether to opt for this method of payment. The detailed procedures are still being worked out, but it is proposed at the minimum that he will be told, when an overpayment comes to light, of the circumstances of the overpayment, the amount, and the Department's intention to recover it—if possible by reducing the future sums to be credited to his account. The beneficiary will be advised of the maximum amounts that may be compulsorily recovered by deduction from further payments. He will, in fact, be given all the information that he will need to have to decide whether to opt for payment by automated credit transfer.
Thirdly, the clause leaves intact the beneficiary's right to apply for a decision of an insurance officer, which carries normal rights of appeal to the local tribunal and thence to the Commissioner, if he disputes that there has been an over-payment or challenges the amount of it. And, fourthly, regulations made under Clause 4(4) will have to be referred either to the National Insurance Advisory Committee or the new Social Security Advisory Committee.
I have explained this in considerable detail, but there was a great deal of discussion in another place. I know that it is a matter which has very much concerned a number of Members of another place and in your Lordships' House. I felt that it would be helpful to have this on the record. I beg to move the amendment to meet the criticisms that were made, and I hope that the Committee will feel that we have fulfilled our obligation by this amendment. I beg to move.
Lord WELLS-PESTELL: I am sure that we are all grateful to the noble Baroness for going into this matter in so much detail. I am aware, as are my friends behind me, of the concern which was expressed in another place when this matter came before them. As far as I can tell, although I would want to read very carefully in Hansard what the noble Baroness has said, I feel that she has gone a long way—if not the whole way—
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to meet the criticisms that were made in another place.
There is only one matter which exercised my mind, and I shall not ask the noble Baroness to try to find it for me. I understood her to say that the beneficiaries will benefit if there are no administrative costs in doing so. It may well be that I have something out of context, and I am quite prepared to leave the matter until I have read for myself what the noble Baroness has said.
Baroness YOUNG: The point I was trying to make is that it would not be right to introduce a new system without a safeguard, because of the possible effect of overpayments; things would be automatically paid by a computer and there would not be the regular check that people now have of collecting something from a post office or wherever it may be—clearly it would be a different system. The idea of the new system is to provide a service for which many people have wished. Therefore, if we do have the new system we are taking the opportunity of having the safeguard against overpayments built into it. Clearly, there would he some administrative costs, but we believe that they would certainly be no greater than they are at present. One has to strike a balance between what is right—and that must be made clear to the beneficiaries who choose to do this—and the clear advantage of having something coming through one's bank account, and the dangers of the computer getting it wrong. There are a number of interests to be considered, but we are not preventing this because we think that there would be large administrative costs; on the contrary, we think that it will be administratively better, but we must close this loophole.
Lord WELLS-PESTELL: I am much obliged to the noble Baroness.
On Question, amendment agreed to.
Clause 4, as amended, agreed to.
8.55 p.m.
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 16:
After Clause 4 insert the following new clause:
"Rate of child benefit
. In section 5 of the Child Benefit Act 1975 there shall he inserted the following subsection—
(7) The weekly rate of child benefit prescribed for any child with effect from 24th November 1980 shall be not less than £5·20."
The noble Lord said: I should like to speak to Amendments Nos. 16 and 17, and in due course move Amendment No. 16. Amendment No. 16 concerns the increase of child benefit to £5·20 this November, which would restore its real value to the level it reached when the last up-rating occurred in April 1979. In his Budget speech the Chancellor of the Exchequer sought to justify the proposal to increase child benefit by only 75p, to £4·75 per child, on the grounds that the percentage increase—namely, 18½ per cent. over 19 months—was roughly equivalent to the net value of the increase in personal tax allowances for a married man after deducting the extra tax due to the abolition of the 25 per cent. tax band, which amounted to about 11 per cent.
However, after last year's Budget families with children had a right to expect extra help this year, not just fair shares in what we feel is misery for a good many families. Moreover, if the Chancellor's comparison was valid, the increase in child benefit should have been limited to 11 per cent. for 12 months and not 19 months, and child benefit should have been increased from this month, as will be tax allowances.
This has caused a great deal of concern, not only to Members on this side of the Committee, but to Members on the Government side in another place. If my memory serves me correctly, I believe that some of them even voted against their own Government, and others abstained. It means that there was a great deal of feeling among a number of Conservative Members of Parliament in another place when the Chancellor increased child benefit only by 75p, when I think it is generally recognised by anyone who is concerned with levels due to inflation and so on, having worked it out, that we really need £5·20 to compensate for the child benefit increases in inflation over 19 months.
The Chancellor also argued that the 75p increase would ensure that basic rate taxpayers were better off than they would have been if child tax allowances and family allowances had continued and had been up-rated in line with prices. But the
232
credit for that belongs entirely to the last Government. The most that this Government can claim is that they have not completely undone the good done by the previous Government. When their other attacks on the living standards of families are taken into account—and I have referred to the increased prices in school meals, the abolition of free milk for large families and a number of other matters, which I shall not go into because on more than one occasion in recent months we have made our views quite clear from this Dispatch Box—it cannot possibly be held that the 75p covers the inflation which has occurred over the past 19 months.
The benefit of £5·20 is not the right level for child benefit. To put it up to that level would merely be a holding operation to prevent its value from falling. But it is vitally important that its value should not fall because once it does it is extremely expensive to make up lost ground. The additional cost compared with the proposed £4·75 is, as I am sure we shall be told, something like £250 million in a full year; but that is a reason for doing it, in my submission, and not a reason for not doing it.
There are a large number of children involved; a large number of children are going to suffer as a result. It really is despicable that the Government should raise it by only 75p when on all showing it needed £1·20. We really ought not to be doing that to a vast army of young children whose parents need that extra money in view of the other cuts which are going to fall heavily upon the poorer families.
With your Lordships' permission, may I pass on to Amendment No. 17. This new clause provides for annual increases of child benefit in line with the increase in average earnings. Ideally one would want to see child benefit raised to an adequate level and then indexed. Under the present Government, however, child benefit is losing value in relation to both prices and earnings. Indexation is therefore needed to arrest this trend. It would also have the great advantage that the cost would automatically be provided for in the Government's expenditure plans each year. Only increases in excess of the index figure would have to be fought for in the annual battle with the Treasury.
The appropriate index for this purpose is average earnings rather than prices because child benefit is essentially a supplement to earnings. There would be a case for a price or earnings formula to ensure that if the real value of earnings fell the value of the State support for children was protected. That however might be much more controversial in view of some of the discussion we have had this evening.
The new clause is a moderate proposal which I think reasonable people of all political persuasions might be expected to support. I beg to move Amendment No. 16.
9.3 p.m.
Lord BANKS: I should like to support this Amendment. The proposed up-rating on the part of the Government, as the noble Lord, Lord Wells-Pestell, has made clear, is not really enough to take account of inflation, and the figure of £5·20 is a more accurate attempt to reflect that than the £4·75, and Amendment No. 16 would put it at that figure. Amendment No. 17 would then maintain its value in terms related to earnings thereafter.
The child benefit should have been upgraded last year, and this at the same time as increases in tax allowances because it is part of the same process to do that now that there are no child income tax allowances. As the noble Lord, Lord Wells-Pestell, said it would cost about £250 million to £270 million in order to increase the proposed increase from £4·75 to £5·20. That is a large figure, but when you think of it against the cost of the increase in personal allowances in the 1980 Budget, of £1,200 million (and this is part of the same process) it does not then seem quite so great.
The maintenance of child benefit is important because it brings help for all families, and the comparative position of people with families has been deteriorating over recent years. It helps most, of course, the poorest. It helps single-parent families, who are helped by the special addition which they get for the first child; but child benefit is for all children, so an increase in child benefit is even more helpful to them. It takes people off supplementary benefit, and that is one of the things which in a reform of the supplementary benefit system, which this Bill
234
covers, we ought to be attempting to do. We seem at the moment to be putting more people on to supplementary benefit; but this takes people off supplementary benefit, and the Supplementary Benefit Commission themselves strongly recommended that an increase in child benefit should quickly follow. For all these reasons child benefit should, at the very least, be maintained in value.
Baroness FAITHFULL: I wonder whether it would be of assistance to the Committee and save time if I spoke to the two amendments moved by the noble Lord, Lord Wells-Pestell, and my Amendment No. 69A after Clause 7, which also concerns child benefits. With the leave of the Committee, may I speak to that amendment as well as to the other two in order to save time? In essence and in spirit, so to speak, I fully support the noble Lords, Lord Wells-Pestell and Lord Banks, and indeed we spoke on this matter at Second Reading. In matters of fact concerning the amendments my amendment is slightly different from Lord Wells-Pestell's amendment, in that I have set a date of 1981 to 1982 rather than 1980 to 1981, and I have related upgrading of the child benefit rate to prices rather than to earnings. To that extent what I have done is to agree with, and fully support, child benefits but, in view of the situation with regard to finance and inflation in this country, I have in effect deferred the up-rating of the child benefit scheme.
Having said that, I would say that I feel deeply and strongly about the whole position of child benefits. To start with, child benefits close the poverty trap, and there are about 90,000 families caught in the poverty trap in this country. I believe it is the most constructive benefit that can be given to families with children. Further, I believe it is an incentive to work for low-paid workers, and I ask myself whether trade union policy would not be effected if it were felt that if inflation rose, then with child benefits there would not be such a need for pressure for wage rises, and to that extent it would be good for society, at any rate for the time being. Therefore, I do not support Amendment No. 16 as drafted, I support in spirit Amendment No. 17 and, when the time comes, I shall move Amendment No. 69A.
Lord RENTON: It is with some hesitation that I rise to speak on this subject because I never made the deep study which many of your Lordships have, in spite of many years in another place, of the National Insurance Scheme and the various modifications of it which have been made over the years. I find that having been a Member of your Lordships' House for a relatively short time, I am always learning and being surprised. One of the surprises I have come across this evening is that apparently after a matter has been discussed thoroughly in another place, we are free in your Lordships' House to propose amendments which would lead to an increase of no less than £250 million in the taxpayers' commitment, and for that reason alone I should have thought we would be very chary indeed about accepting Amendment No. 16.
There are, of course, other reasons as well. Since child benefits were first introduced—I think they were called family allowances—many things have changed which would affect the value of them. First, the general wages level and the ability of the working population to support their families have improved enormously. Secondly, the whole pattern of social security benefits, supplementary benefits and so on has changed, so that child benefit is no longer to he relied upon to the extent that family allowances used to be and necessarily were relied upon. We also have the annual changing, for the better, of the personal and married persons' and children's allowances under the tax system. All those things are relevant to the amount of the child benefit, and I have no doubt but that all those factors were borne in mind when the matter was fully considered in another place.
I wish briefly to mention Amendment No. 17 and the amendment, which is somewhat like unto it, spoken to by my noble friend Lady Faithfull, No. 69A. I should have thought that the reasons I advanced—as I said, with some temerity, in regard to Amendment No. 16—apply with much greater force in relation to Amendments Nos. 17 and 69A because, if child benefits are to be raised from time to time, the general level of earnings obtaining in Great Britain should not be considered the only factor or indeed the
236
main factor in deciding what child benefits should be in the years to come. For those reasons and without doubting the good motives and sincerity either of the noble Lord, Lord Wells-Pestell, to whom one always listens with great attention because of his expertise in these matters, or of my noble friend Lady Faithfull, I would he very surprised if my noble friends on the Front Bench felt able to accept either or any of these amendments.
9.14 p.m.
Baroness YOUNG: The whole issue of child benefit is important and I have listened with care to what has been said in this debate. The present position is that from next November child benefit will be increased by 75p—an increase of 18¾ per cent. since the last increase in April 1979. This is equal to an annual rate of increase of 11 per cent. After allowing for the withdrawal of the 25 per cent. tax rate, the personal allowance for a married couple will also go up by 11 per cent. for the year. Therefore, families with children are not falling behind other families.
My noble friend Lord Renton mentioned one important matter. The 1979–80 cost of child benefit is about £2,800 million, and the cost of the 75p increase already announced is about £160 million in 1980–81 and £420 million in a full year. If we were to increase child benefit to a figure of £5.20 as provided in Amendment No. 16, this would cost a further £90 million in 1980–81 and £250 million in a full year. It is easy to see that this would become a most expensive proposition.
The Government have recognised the importance of child benefit by proposing to raise it by 75p next November. The figure will be higher than if the old system of child tax allowances and family allowances had been continued and revalued in line with increases in the RPI from 1976—the last year of the old system—up to 1980. Furthermore, the Government have given extra help, as was recognised by the noble Lord, Lord Banks, to hard-pressed families. The one-parent family addition to child benefit is to be increased by 50p to £3. It will have gone up by 50 per cent. since the Government took office lat year. It is estimated that 300,000 single parents will gain from this increase.

237
We are also trying to help low earners who will benefit from a big improvement in family income supplement. The average payment will go up by one-third from £7.50 to £10 a week and will have doubled from about £5 since May 1979. This will be of particular help to lone parents who constitute about half of the families receiving family income supplement. For families on supplementary benefit there will be automatic entitlement to £1.40 a week fuel allowance where there is a child under five, and there will be more help to children as part of this Bill. Supplementary benefit rates are being fully protected against the increase in prices with a 16½ per cent. increase. Therefore, the Government propose not only an increase in child benefit but particular help to those groups of people, both in work and out of work, who are the most hard-pressed in our community.
I was asked by the noble Lords, Lord Wells-Pestell and Lord Banks, about the date of the up-rating for child benefit. The point is that child benefit is a social security benefit and should be up-rated at the same time as other social security benefits—that is, in November. The last increase was in April 1979 and the Government considered that a further increase in November 1979 was not justified. Therefore, the next appropriate date is November 1980.
Social security has been taking a steadily increasing share of public expenditure in recent years and now stands at 27 per cent. of all public expenditure. With falling output, there is less available to share out and the Government are determined to cut public borrowing. The consequence is that spending on social security cannot he exempted from all our economies. But we believe that our proposals on taxation and social security achieve a fair balance between working families, with and without children, and that we are also able to help the poorest, whether in work or out of work.
Because of the immense extra cost that would be involved in these amendments, including Amendment No. 69A, it is only right that I should tell the Committee that the Government cannot accept these proposals. I hope that with that explanation the Committee will feel that we are doing our best to help those who are most in need.
9.20 p.m.
Lord WELLS-PESTELL: I have listened with considerable interest to what the noble Baroness the Minister has said, and I do not believe that the whole matter can be clouded by a series of statistics about what we are doing here, there and somewhere else, and about it costing this and that. It always has cost a lot of money. What we are concerned with is the problem of the child and child benefit. It is as simple as that. People who work in this field, and who know how vulnerable children are, estimate that to provide the same purchasing power today it is necessary for child benefit to go up not by 75p but by £1·20.
I hope that the noble Baroness, Lady Faithfull, will not feel that I am being unkind—I am merely calling her to my aid—if I refer to what she said at Second Reading of the Bill on 1st April:
"I wish to touch on the subject of child benefits. I appreciate that such benefits have recently been increased from £4 to £4·75, but I believe that to compensate for inflation they should have risen to £5·20".—[".Official Report; col. 1294.]
There are but a few people in your Lordships' Committee who know more about children and their needs than does the noble Baroness, Lady Faithfull. It is true that the noble Baroness the Minister has had much to do with local social services, but the noble Baroness, Lady Faith full, has been part of those services. She has had not one ear to the ground, but both ears, and she knows the situation. Many others among us have had vast experience of social work, and we know that children are more vulnerable than anyone else in the community. It is so often the children who suffer.
I take the point of the noble Lord, Lord Renton, but there are some situations for which society must make provision. Of course half a loaf is better than none, but we use the phrase so often; and what happens? What we do makes very little difference. I did not wish to make a lot of political capital out of this question. I am becoming a little tired, as I am sure are some of your Lordships, of constantly having to refer to the Government's cuts and to what the Government are doing and are not doing, but the noble Baroness the Minister has more than once this evening referred to what the Government have done. We

239
must bear in mind that what the Government have done has increased the expenditure of a family of four—a husband, a wife and two children—by nearly £9 a week in some areas. With school meals going up considerably, with no free milk, and with other cuts that have affected children, in some areas a husband and wife with two children must find another £7, £8, or £9 a week. Yet they receive only 75p a week more in child benefit.
I know that nothing I say here tonight will make the slightest difference, but do not let us go away thinking that what we do is relatively unimportant. Of course whatever we do in the community will cost money, and I am among the first to realise that money must be saved. What I want to say to the noble Baroness—perhaps this is not the right moment to make this remark, because there is not time for me to establish it beyond all reasonable doubt, though in other circumstances I should have no difficulty in so doing—is that the Government have got their priorities wrong in more ways than one. If from the moment that they came into office they had had their priorities right, instead of dispensing thousands of millions of pounds to people who did not need it, then they would have been able to afford £5·20 a week child benefit.
Baroness FAITHFULL: Perhaps I may just say that of course I stand by what I said on Second Reading, that in an ideal world I would want the child benefit to be £5·20, as I said then. At this stage I have modified what I said, partly because of the very reasons given by the noble Lord, Lord Renton—that we are in a state of

CONTENTS

Banks, L.

Howie of Troon, L.

Ponsonby of Shulbrede, L. [Teller.]

Blease, L.

Irving of Dartford, L.

Brockway, L.

Janner, L.

Rochester, L.

Byers, L.

Jeger, B.

Ross of Marnock, L.

Cledwyn of Penrhos, L.

Kaldor, L.

Segal, L.

David, B. [Teller.]

Llewelyn-Davies of Hastoe, B.

Stewart of Alvechurch, B.

Davies of Leek, L.

McCarthy, L.

Stewart of Fulham, L.

Elwyn-Jones, L.

Mackie of Benshie, L.

Stone, L.

Galpern, L.

Maelor, L.

Underhill, L.

Goronwy-Roberts, L.

Northfield, L.

Wallace of Coslany, L.

Hampton, L.

Peart, L.

Wells-Pestell, L.

Hooson, L.

Pitt of Hampstead, L.

Wynne-Jones, L.

difficulty—and partly because, although I believe that children are the future of our nation, nevertheless it would be wrong to ask for something that was completely outside our reach and, unlike the noble Lord, Lord Wells-Pestell, I would rather have half the cake than no cake at all. That is why, in my amendment, I modified what I requested.
Baroness YOUNG: There is, I think, one point that I should like to make on all this. Of course, we should all like to do more for families with children; we should like to do more for the pensioners; we should like to do more for all the good causes that we have been discussing this evening. I have not totalled up what the actual cost would be; but I think it is worth the Committee bearing in mind that at the end of the day one of the effects of the Budget is that social security benefits will actually be increased by more than £3 billion in the next financial year, under improvements and upratings. We may think it ought to be more; but I really think we need to keep the costs of this in proportion, and to recognise the sort of costs that we are talking about. We are making an improvement. We should all, I am sure, like to do more; but as I have said on other occasions, one cannot simply be ruled by one's heart. One has to be ruled by one's head as well as by one's heart; and we are trying to help the poorest of families in the way that I have described.
9.28 p.m.
On Question, Whether the said amendment (No. 16) shall be agreed to?
Their Lordships divided: Contents, 35; Not-Contents, 70.

NOT-CONTENTS

Airey of Abingdon, B.

Fortescue, E.

Mottistone, L.

Alexander of Tunis, E.

Gainford, L.

Mowbray and Stourton, L.

Amherst of Hackney, L.

Galloway, E.

Murton of Lindisfarne, L.

Bellwin, L.

Gibson-Watt, L.

Nugent of Guildford, L.

Belstead, L.

Gisborough, L.

Orkney, E.

Bradford, E.

Glasgow, E.

Reigate, L.

Cathcart, E.

Gowrie, E.

Renton, L.

Clitheroe, L.

Greenway, L.

Rochdale, V.

Cockfield, L.

Gridley, L.

St. Just, L.

Cork and Orrery, E.

Grimston of Westbury, L.

Sandford, L.

Craigavon, V.

Hailsham of Saint Marylebone, L. (L. Chancellor.)

Sandys, L. [Teller.]

Cromartie, E.

Selkirk, E.

Cullen of Ashbourne, L.

Hanworth, V.

Sempill, Ly.

de Clifford, L.

Home of the Hirsel, L.

Sharples, B.

De La Warr, E.

Hornsby-Smith, B.

Skelmersdale, L.

Denham, L. [Teller.]

Killearn, L.

Strathclyde, L.

Drumalbyn, L.

Kimberley, E.

Swansea, L.

Dulverton, L.

Lauderdale, E.

Swinfen, L.

Eccles, V.

Long, V.

Trenchard, V.

Ellenborough, L.

Lonsdale, E.

Vaux of Harrowden, L.

Elliot of Harwood, B.

Lucas of Chilworth, L.

Vickers, B.

Elton, L.

Macleod of Borve, B.

Vivian, L.

Falkland, V.

Mansfield, E.

Young, B.

Ferrers, E.

Montgomery of Alamein, V.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
9.35 p.m.
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 17:
After Clause 4 insert the following new clause:
"Review of rate of child benefit
. In section 5 of the Child Benefit Act 1975, for subsection (5) there shall be substituted the following subsection—
(5) In the tax year 1980–81, and each subsequent tax year the Secretary of State shall review the rates of child benefit for the purpose of determining whether those rates have retained their value in relation to the

CONTENTS

Banks, L.

Hooson, L.

Ponsonby of Shulbrede, L. [Teller.]

Blease, L.

Howie of Troon, L.

Boston of Faversham, L.

Irving of Dartford, L.

Rochester, L.

Brockway, L.

Janner, L.

Ross of Marnock, L.

Byers, L.

Jeger, B.

Segal, L.

Cledwyn of Penrhos, L.

Kaldor, L.

Stewart of Alvechurch, B.

David, B. [Teller.]

Llewelyn-Davies of Hastoe, B.

Stewart of Fulham, L.

Davies of Leek, L.

McCarthy, L.

Stone, L.

Elwyn-Jones, L.

Mackie of Benshie, L.

Underhill, L.

Galpern, L.

Northfield, L.

Wells-Pestell, L.

Goronwy-Roberts, L.

Peart, L.

Wynne-Jones, L.

Hampton, L.

Pitt of Hampstead, L.

Wynne-Jones, L.

NOT-CONTENTS

Airey of Abingdon, B.

Craigavon, V.

Elliot of Harwood, B.

Alexander of Tunis, E.

Cromartie, E.

Elton, L.

Amherst of Hackney, L.

Cullen of Ashbourne, L.

Falkland, V.

Bellwin, L.

de Clifford, L.

Ferrers, E.

Belstead, L.

De La Warr, E.

Fortescue, E.

Bradford, E.

Denham, L. [Teller.]

Gainford, L.

Cathcart, E.

Drumalbyn, L.

Galloway, E.

Clitheroe, L.

Dulverton, L.

Gibson-Watt, L.

Cockfield, L.

Eccles, V.

Gisborough, L.

Cork and Orrery, E.

Ellenborough, L.

Glasgow, E.

general level of earnings obtained in Great Britain and, if on any such review he concludes that any of the rates have not retained their value, he shall make regulations in conjunction with the Treasury providing for such higher rates as he thinks necessary to restore their value.").
The noble Lord said: I have already spoken to this amendment, I therefore move it formally.
On Question, Whether the said Amendment (No. 17) shall be agreed to?
Their Lordships divided: Contents, 34; Not-Contents, 68.

Gowrie, E.

Lonsdale, E.

Sandford, L.

Greenway, L.

Lucas of Chilworth, L.

Sandys, L. [Teller.]

Gridley, L.

Macleod of Borve, B.

Selkirk, E.

Grimston of Westbury, L.

Mansfield, E.

Sempill, Ly.

Hailsham of Saint Marylebone, L. (L. Chancellor.)

Montgomery of Alamein, V.

Sharples, B.

Mottistone, L.

Skelmersdale, L.

Hanworth, V.

Mowbray and Stourton, L.

Strathclyde, L.

Home of the Hirsel, L.

Murton of Lindisfarne, L.

Swansea, L.

Hornsby-Smith, B.

Nugent of Guildford, L.

Trenchard, V.

Killearn, L.

Reigate, L.

Vaux of Harrowden, L.

Kimberley, E.

Renton, L.

Vickers, B.

Lauderdale, E.

Rochdale, V.

Vivian, L.

Long, V.

St. Just, L.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
[Amendments Nos. 18 and 19 not moved.]
9.44 p.m.
Baroness JEGER Baroness JEGER moved Amendment No. 20:
After Clause 4 insert the following new clause:
"Substitution of sum
. For the amount specified in paragraph 1 of Part II of Schedule 4 to the principal Act there shall be substituted the sum of £95 with effect from 24th November 1980".
The noble Baroness said: I beg to move Amendment No. 20. This proposes that a new clause be introduced into the Bill, and there are two purposes in it. The first is that the maternity grant should be raised to £95, which is roughly the sum that would be needed to make the £25 existing maternity grant, which was brought in in 1969, of equivalent value today. I must say that I myself would much have preferred that we should have been able to start some index-linking of maternity benefit so that from time to time we did not have to alter the sums set put in the Bill, because then we would be able to build into the system a protection for families, and particularly for mothers, who are faced with rising prices. The second effect of this new clause would be to have the higher benefits start in November this year.
It would be ungracious for us not to welcome the changes that have been made in this Bill, in that maternity benefit is now to be non-contributory. I am sure that everyone in the Committee welcomes that. I understand this will mean that about 60,000 mothers every year, who were previously not entitled to benefit, will now be able to receive it. I should like to put one question to the Minister concerned, and to ask whether this shift to the noncontributory benefit will be linked at any
244
stage to the question of a mother's age. I ask that question, because I know that we are all very concerned about the growing number of very young mothers, sometimes girls still at school, who find themselves expecting babies. I want to know whether they will be included as beneficiaries of this non-contributory benefit. It will be very useful to know whether it is to be paid totally regardless of age.
On the question of the date of starting the new benefit, I was rather sorry to see that the Bill does not refer at all to a date; it refers only to an appointed day. But from careful reading of the proceedings in another place, I see that November 1982 has been mentioned as a possible starting date. This is a great disappointment. It is a long time off, and to stick until 1982 at the £25, and the exclusion of these 60,000 other mothers who are at present unprotected, seems to me very seriously to devalue the whole process.
This benefit is of particular importance to the poorest and most disadvantaged mothers. We must all know people who do not much mind one way or the other about £25; but to the unsupported mother, to the very young mother, to the mother whose husband has deserted her, the maternity grant is a very important part of the budget. This deferment for another two years will mean that thousands of babies will be born in the poorest homes in this country, receiving only the £25 benefit which was brought in in 1969.
There has been a great deal of evidence—and I do not propose to weary your Lordships by quoting from the reports of a number of committees of inquiry that we have all worked through about the hazards and deprivations of the infant mortality problem in the poorest families. But there is this clear link, which has not been denied by any sociologist, between

245
poverty and infant mortality and child handicap. All these people who are doing the job know that class 5 families, in the sociologists' jargon, have a higher incidence of handicapped children and of infant mortality. I am not saying that maternity benefit provides the answer to this complicated and very difficult situation, but I believe that anything which eases the financial situation in a hard-pressed family, at a time when there are unavoidable expenses, can do nothing but help them. The fact that this is a benefit which is paid to the mother is also of very great importance.
I hope your Lordships will forgive me if I remind the Committee that the first maternity grants in this country were paid in 1911, only to certain insured people. It was then £1·50, and it stayed at £1·50 until 1920, when it went up to £2. It was 28 years before it went up again. Then in 1948 the maternity grant was increased to £4. One of the reasons why I mentioned earlier that I wished this benefit were indexed is that I do not want the mothers of this country to have to wait another 28 years before the next upgrading. In 1953 it went up to £9. Then in 1969I am glad to say under a Labour Government—it went up to £25. But I regret to say that under succeeding Governments ever since 1969 it has stayed at £25.
I am advised that to restore the grant to the 1911 level of payment we should have to make it something slightly over £100. I am sure it would be a matter of regret to many of your Lordships to have to accept the fact that mothers in 1911 were treated more generously than we are treating the mothers of today. This, surely, is a deviation from the road towards social justice and better conditions, for hitherto there has been at least some Beveridge consensus between us. Therefore on behalf of my noble friends I move this new clause, for the reasons I have stated, all too briefly.
If I may anticipate what may be said in partial reply—that previous Governments have not made any increase since 1969—I would say that during the period of the last Government there were increases and developments in many spheres of social welfare. I am sorry that we did not get around to this one; it was in the Labour Party manifesto, and it would
246
certainly have been at the top of my list had the election turned out differently.
The difficulty now is that we are holding down this benefit, which in fact means reducing it, at a time when, across the whole spectrum of our social services and welfare services, there is a contraction. So what is a virtual cut in this benefit is impinging at the same time on the family, particularly where there are other children. They are having to meet all these other expenses—more expensive school meals—and all the other difficulties with which the poorest families in this country are confronted at the moment.
I do not know why there should be such hesitation about making this upgrading. It seems to me that it would put help where help is most needed. It would put it right at the centre of the family. It would put it where it can most benefit the children of this country and the families that are often in the greatest difficulty. Therefore I hope that your Lordships will feel able to support the new clause. I beg to move.
Lord BANKS: In view of the fact that the Committee has turned down the more modest proposal which I put forward earlier, that the present value of the maternity grant should not be allowed to fall further, I am not too hopeful about the prospects for this amendment. Nevertheless, I should like again to express my support for it and for the increase in the maternity grant which it would provide—an increase in a benefit which, as the noble Baroness has explained, has been allowed to decline in value over the years.
9.54 p.m.
Baroness YOUNG: I have listened with great care to what the noble Baroness, Lady Jeger, has said on this amendment. I accept that the maternity grant of £25 is much less valuable today than it was when it was up-rated to that figure in 1969. The reason for this is that, despite continuing inflation, no Government—neither of the noble Baroness's party nor of my own—since 1969 has felt able to accord priority to increasing the amount of the grant.
I listened with great interest to the history of this matter which the noble Baroness gave to the Committee, It was certainly new to me; I had not seen those

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figures. Of course, if I noted correctly what she said, that there was no increase in the maternity grant for those who were eligible for it between 1920 and 1948, the period at any rate between 1920 and 1939 was a period during which there was no inflation at all. In fact, I think I am right in saying that prices dropped very slightly in the 1930s; so these long arguments that we have about indexing amounts to keep up with inflation were not relevant to that period, because prices were steady and they did not start to rise until we were suffering from the effects of the War. We are in fact speaking about a completely different world.
However, I am very glad that the noble Baroness recognised that what in fact we are doing is to make a modest improvement in connection with maternity grants by making them non-contributory from 1982. This will mean, we estimate, that there will be 60,000 more maternity grants paid each year, and I should like to confirm that the non-contributory grant will be payable regardless of age. I think that is extremely important. I take the point made by the noble Baroness: One of the groups of people most at risk are schoolgirls who become pregnant, who have not got husbands and who are therefore not eligible for the maternity grant. They are already vulnerable and by enabling them to claim the maternity grant it will be of some help to them, and I hope it will do something to assist in their general wellbeing, quite apart from that of the baby.
We estimate that the additional expenditure will amount to about fl million, £1·2 million when the reduction in supplementary benefit is taken into account. We only felt able to accept this charge for the additional benefit if it could be offset by other administrative economies of the same order, something which I am sure we all understand and feel to be right. Therefore, we reckon that the change to non-contributory benefit will allow the administration of the grant to be centralised. This in turn will enable economies to be achieved because it will become possible to computerise the main operations. The Government are satisfied that the expected economies will be sufficient to offset the additional benefit costs. The administrative changes involved will be possible in 1982 when
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computer facilities will become available at the child benefit centre in Washington.
Baroness JEGER: If the noble Baroness will allow me, is she saying that payment has to be deferred until 1982 because of administrative reasons or because of financial reasons?
Baroness YOUNG: Both. The introduction of the non-contributory grant will not come in until 1982 and for the reasons that I have given; namely, because it will cost more and because there will be more beneficiaries. Everybody who is currently entitled to it will of course continue to have it. It is those who will benefit when it becomes non-contributory who will start to benefit in 1982, and because we can make the administrative savings by putting this on the computers in the child benefit centre in Washington (and this can only be done by 1982) the savings that we shall make from this will enable us to pay the maternity grant to the estimated extra 60,000 girls and women who will qualify for it.
Turning to the specific Amendment No. 20 now before the Committee, the increase in the non-contributory grant to £95 would cost some £50 million per year extra, and, as the noble Lord, Lord Banks, has made quite clear, as we felt that we could not accept his much more modest amendment, the noble Baroness will not be surprised that we cannot accept her amendment. However, I am glad she feels that we have made a modest improvement in this particular matter of the maternity grant, and it is something which, as the economy improves, we can look at again.
Baroness JEGER: I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 5 [Maternity grant]:
Lord WELLS-PESTELL Lord WELLS-PESTELL had given Notice of his intention to move Amendment No. 21:
Page 9, line 45, after ("date") insert ("not being later than 24th November 1980").
The noble Lord said: This is an amendment which would bring forward the commencement date from November 1982,

249
as the Government propose, to November 1980. Having heard what the noble Baroness has said, I do not propose to
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move the amendment.
Clause 5 agreed to.
Clause 6 [Amendments of Supplementary Benefits Act 1976]:
10.3 p.m.
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 22:
Page 10, line 22, leave out subsection (2).
The noble Lord said: We have reached, If I may say so, another point in the Bill which does cause us a great deal of concern. I refer to our amendment to page 10, line 22, which is to leave out subsection (2). Subsection (2) states:
"The Supplementary Benefits Commission is hereby abolished".
We view this with some very real concern because if the Social Security Bill abolishes the Supplementary Benefits Commission it will merely leave in its place an advisory committee which would cover the whole field of social security except industrial Injuries.
I think it is worthwhile recalling that the Supplementary Benefits Commission was set up in 1966 to replace the old National Assistance Board, and the then Minister said it was to be a powerhouse of ideas. Whatever criticisms we may have of the Supplementary Benefits Commission, it has certainly been that, and particularly so in recent years. Although its statutory responsibilities were virtually limited to deciding individual benefit claims, from the start it adopted a much wider role, taking a keen interest in the quality of the service to the public, the working conditions of staff, the need to publicise both the legal rights and payments, and the way in which the commission's discretionary powers were used. It is the discretionary powers that I shall want to deal with a little later in the Committee stage.
The publication of the Supplementary Benefits Handbook in 1970 was a major step towards removing the veil of secrecy surrounding the use of discretion. In 1975 the commission's role was extended and it was arranged that it should produce annual reports in which it would be free to comment on policy developments and priorities. The four annual reports it has issued have been universally praised
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both as major contributions to the discussion of current policy issues and as sources of factual information. On the policy side, the commission drew attention in its first report to the serious problems facing the Supplementary Benefits Scheme, and this led to the setting up of a review of the scheme by a team of DHSS officials. Many of the review team's suggestions were first put forward by the commission; for example, the automatic six-monthly payments for replacement of clothing and a single fuel benefit for those in and out of work.
On the information side, the commission's reports go far beyond the basic function of reporting on the operation of the Supplementary Benefits Scheme. For example, they have been the main source of information about the low take-up of means-tested benefits for the working poor. The Government's recent decision to discontinue publication of the DHSS annual reports on grounds of economy makes the Supplementary Benefits Commission's report more important than ever before. Equally important is the series of supplementary administration papers which the commission has produced on a whole range of topics—for example, exceptional needs payments; training of staff; the cohabitation rule; taking up benefits; proposals for local social security users; consultative groups and a whole host more.
The Social Security Bill proposes—and this is another matter which rather concerns a number of us—to make local benefit officers responsible for decisions on individual cases. There will still be a right of appeal, but neither the Supplementary Benefits Commission, which will no longer exist, nor Ministers, will be answerable for what goes on at the local office level. That is what will happen.
At present the chairman of the Supplementary Benefits Commission has either to justify the decisions made in the commissioner's name, or be prepared to revise them when challenged by MPs and others. In future the Secretary of State will have to say that he cannot interfere with a decision made by an independent benefit officer. I ask noble Lords opposite whether that is really what they want. I cannot think that it is. There will still

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have to be somebody at the centre to ensure—as the Supplementary Benefits Commission does now—that the law is administered with reasonable consistency. The intention is that a chief benefit officer will do this, but like the chief insurance officer he will work behind closed doors and the guidance he issues to local benefit officers is unlikely to be published, although in our view the Government should be pressed for an assurance that it will be published.
So far as discretionary payments are concerned—and there will still be many of them—each benefit officer will set his own standards. This is quite an important matter as regards social workers. I am thinking not only of local authority social workers, but social workers in a vast number of voluntary organisations—probation officers who deal with people who sometimes have nothing or who are missing out on a number of things. At present—all right—it fits where it touches, but by and large the local DHSS officers, when asked to use their discretion for discretionary payments, are very helpful and very co-operative. I think it is fair to say that social workers, whether voluntary or statutory social workers, would find it extremely difficult to do their job if they did not have that kind of relationship with somebody who can use the discretion—discretion which seems to me to be going. I know that I shall be told that there will still be discretion, but nobody will tell me, I am sure, the extent of that discretion.
I wish to make a few comments about the Social Security Advisory Committee that will replace the Supplementary Benefits Commission. The proposed new advisory committee, however independent, will not have the same influence as the commission for a whole variety of reasons. Being only an advisory body with no responsibility for the decisions made at local level, it will not have the right or the resources to monitor the work of local offices as the Supplementary Benefits Commission does. One of the Supplementary Benefits Commission's biggest assets is a body of high-powered headquarters officials whose job is both to administer the scheme and to advise and inform the commission. The Social
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Security Advisory Committee—the new body—may have access to the same officials, but the officials will owe allegiance to Ministers only, and not to the Social Security Advisory Committee.
The Supplementary Benefits Commission has an inspectorate which carries out a continuous programme of small-scale inquiries into the various aspects of the day-to-day running of the scheme. The Commission decides on the inspectorate's programme of work and increasingly publishes its findings. If the inspectorate remains in existence at all, it will not be under the control of the Social Security Advisory Committee, which will, therefore, lack one of the Supplementary Benefits Commission's main sources of information.
The new Social Security Advisory Committee will cover the whole social security field and will simply not have time to concern itself with detailed aspects of supplementary benefits, as does the Supplementary Benefits Commission. Its individual members will have to cover a wide range of interests, and as a body it will he less expert in the narrower field of supplementary benefit than is the Supplementary Benefits Commission. It will have only a small staff whose previous experience may not include working on the supplementary benefits side of the department.
Perhaps your Lordships have come to the conclusion that we, on this side of the Committee, want the Supplementary Benefits Commission to remain in existence, with its present staff and responsibility for deciding individual claims. It would lose some of its policy-making functions, but as well as reporting on draft regulations it would continue to issue guidance to local offices on the use of discretion. Its advisory role and its annual report should be extended to cover the whole field of central Government. This sort of thing is badly needed because there is a need for co-ordination, and we believe that it could be better done by the Supplementary Benefits Commission. It should be given the task of reporting annually on the relative living standards of those living at or around supplementary benefit level.
I hope that the Government will not take this lightly. We feel strongly about it. We have discussed this at some length. We believe that it is a matter which must be dealt with very fully. Unless the answer is extremely satisfactory—and I do not think for one moment that it can possibly be (I do not think that anyone is going to say that he or she will accept Amendment No. 22)—I shall feel it necessary to take whatever steps are open to me and my friends on this side of the Committee to try to get agreed Amendment No. 22, which says "leave out subsection (2)". I beg to move.
10.12 p.m.
Lord BANKS: I take rather a different view on this matter from that taken by the noble Lord, Lord Wells-Pestell, though I agree with him on some things. I agree very strongly with him about the value of the work that has been done over the years by the Supplementary Benefits Commission and, indeed, I said so on Second Reading. I share some of his apprehensions about how the new arrangement will work.
However, I accept that it is sensible to have National Insurance, family income supplement, child benefit, and supplementary benefit all dealt with by the one body. Therefore, I welcome the amalgamation of the Supplementary Benefits Commission and the National Insurance Advisory Committee. I believe that this new body has been welcomed by the Supplementary Benefits Commission itself. It is because I welcome the joining of these two together and the covering of the whole of the payments field by the one body, that I am not able to support this amendment.
I am never tired of telling your Lordships that we on these Benches would like to see a tax credit scheme; that is, a scheme which brings all the cash benefits into one scheme united with taxation. It seems logical to say that if we are to have that on the one side, we should have a joint body on the other side which reviews, monitors and advises on how all these benefits should inter-react. But the Supplementary Benefits Commission had both an administrative as well as an advisory role, and I regret that the new committee is not to have any administrative role. This may detract from some of its authority. No
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doubt I shall be told that this would be difficult if the Minister is to be responsible; that we should be going back to a divided and perhaps not all too clear authority, and that that must be avoided. Perhaps the Government may find some administrative role for the committee under the general supervision of the Minister. But it has to be an important and powerful body monitoring and reporting on the work of the whole system. In so far as it does that, of course it has to be an independent body.
I am not too happy about the situation that the noble Lord, Lord Wells-Pestell, described so far as the relationship between the Minister and the local benefit officer is concerned. I hope that on that point the noble Baroness, or whoever is to reply, will be able to give us a little more explanation and possibly reassurance.
10.17 p.m.
Lord CULLEN of ASHBOURNE: It would, I suggest, be convenient to discuss with the amendment to Clause 6 the amendments to lines 6 and 9 on page 32; that is, Amendments Nos. 23 and 24. The Supplementary Benefits Commission have three functions. The first of these is the executive one. The commission are responsible for determining individual claims to benefit and for the use of the discretion conferred by the present legal structure. This discretion is in fact exercised by local officers acting in the name of the commission on the basis of guidance issued by them. The major thrust of the reform of the supplementary benefits scheme set out in this Bill is to change that pattern: that is, replace discretionary powers with published rights which will have statutory authority; and replace officers acting as agents with officers who are, subject to clear right of appeal, independent determining authorities. Clearly, the commission will have no place in such a system of adjudication.
I might say here, for the sake of completeness, that the commission also have a number of other minor executive responsibilities, including the provision of temporary board and lodging for people without a settled way of living, and the provision of accommodation for a declining number of Polish people under the 1947 Polish Resettlement Act.

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The Bill provides for the transfer of these minor functions to the Secretary of State.
The commission's second executive function also relates to discretion. I refer to their policy-making role in drawing up rules for the guidance of local officers in the use of their discretionary powers. Both here and in another place tributes have been paid to the way in which the commission have over the years done their work. I fully endorse these tributes. It is no criticism of the way the commission have exercised their policy-making role to ask whether such a body should really have had this role in the first place. The Government believe—and the commission made the point themselves in a statement to the Press in November last year—that issues of policy which affect the welfare of some 5 million people must really be decided by Ministers who are accountable to Parliament.
That leaves the commission's third function, which is to give advice. Again it is no criticism of the way the commission have done this to say we believe there will be a major advantage in having a single advisory body whose remit covers all the major benefits. I was glad that the noble Lord, Lord Banks, took the same view. Once again the commission themselves have endorsed this view. When the Bill was published they said:
"We see advantages also in the Commission's advisory role being taken over by the proposed Social Security Advisory Committee, which we see as an important new body. Unlike the present bodies—ourselves and the National Insurance Advisory Committee—the new committee will be able to consider all the main social security benefits and this will complete the process of integration begun in 1966".
The Government believe there is an overwhelming case for the changes now to be made, and I urge the Committee to reject the amendment.

CONTENTS

Blease, L.

Janner, L.

Ross of Marnock, L.

Boston of Faversham, L.

Jeger, B.

Stewart of Alvechurch, B.

Cledwyn of Penrhos, L.

Kaldor, L.

Stewart of Fulham, L.

David, B. [Teller.]

Llewelyn-Davies of Hastoe, B. [Teller.]

Stone, L.

Davies of Leek, L.

Underhill, L.

Elwyn-Jones, L.

Peart, L.

Wells-Pestell, L.

Howie of Troon, L.

Pitt of Hampstead, L.

Wynne-Jones, L.

Irving of Dartford, L.

Ponsonby of Shulbrede, L.

Lord WELLS-PESTELL: I do not know whether the Minister is in a position to answer a question which is not important now because my mind is quite unchanged in regard to what should be done. I am concerned that nothing has been said so far—this is not a criticism as to what rights people in authority (Members of your Lordships' House, Members of the House of Commons and others) have got if they want to take up a complaint on behalf of, for example, a constituent. With the Supplementary Benefits Commission today, they can do so in no uncertain manner, but as far as I can see this will be a body so protected that one will not be able to question a decision being made in relation to an individual.
Certainly he will be able to appeal-1 accept that—but tribunals are not always right. He can take the matter higher if there is a point of law involved, but judges are not always right either. A good deal of social work is done by Members of the House of Commons, by Members of your Lordships' House and by others, and it seems to me that we will be excluded. I should like to know between now and Report, if the noble Lord will write to me, whether such activities will be prevented altogether or whether people like MPs, who have certain responsibilities to see that their constitutents are dealt with properly, will be able to ensure that.
Lord CULLEN of ASHBOURNE: The noble Lord, Lord Wells-Pestell, has made an extremely important point and I will most certainly write to him. I could give an answer now, but I am sure I will give a very much better one by letter.
10.23 p.m.
On Question, Whether the said amendment (No. 22) shall be agreed to?
Their Lordships divided: Contents, 22; Not-Contents, 67.

NOT-CONTENTS

Airey of Abingdon, B.

Faithfull, B.

Macleod of Borve, B.

Alexander of Tunis, E.

Falkland, V.

Mansfield, E.

Amherst of Hackney, L.

Ferrers, E.

Monson, L.

Banks, L.

Fortescue, E.

Montgomery of Alamein, V.

Bellwin, L.

Gainford, L.

Mottistone, L.

Belstead, L.

Galloway, E.

Mowbray and Stourton, L.

Boyd of Merton, V.

Gibson-Watt, L.

Murton of Lindisfarne, L.

Bradford, E.

Gisborough, L.

Reigate, L.

Cathcart, E.

Glasgow, E.

Renton, L.

Clitheroe, L.

Gowrie, E.

Rochdale, V.

Cockfield, L.

Greenway, L.

Rochester, L.

Cork and Orrery, E.

Grimston of Westbury, L.

St. Just, L.

Craigavon, V.

Hailsham of Saint Marylebone, L. (L. Chancellor.)

Sandys, L. [Teller.]

Cromartie, E.

Selkirk, E.

Cullen of Ashbourne, L.

Hampton, L.

Sharples, B.

de Clifford, L.

Hanworth, V.

Skelmersdale, L.

De La Warr, E.

Home of the Hirsel, L.

Swansea, L.

Denham, L. [Teller.]

Hornsby-Smith, B.

Vaux of Harrowden, L.

Drumalbyn, L.

Killearn, L.

Vickers, B.

Dulverton, L.

Kimberley, E.

Vivian, L.

Eccles, V.

Long, V.

Winstanley, L.

Elliot of Harwood, B.

Lonsdale, E.

Young, B.

Elton, L.

Mackie of Benshie, L.

Resolved in the negative, and amendment disagreed to accordingly.
10.31 p.m.
Baroness YOUNG Baroness YOUNG moved Amendment No. 22A:
Page 10, line 33, at end insert—
("(4) Until the coming into force of subsection (1) of this section and Part I of Schedule 2 to this Act, section 34 of the said Act of 1976 (which provides for the interpretation of that Act) shall have effect as if after subsection (2) of that section there were inserted the following subsection—
"(3) In determining for the purposes of this Act whether a person (in this subsection referred to as "the provider") has to provide for, or for the requirements of, another person to or in respect of whom any payments are made otherwise than by the provider, the other person shall not by reason only of the payments or the amount of them be treated as a person who is, or whose requirements are, provided for otherwise than by the provider.".").
The noble Baroness said: I beg to move the amendment standing in my name. This amendment will secure the same result, from the date of Royal Assent to the Bill, in relation to the present paragraph 3(2) of Schedule 1 to the Supplementary Benefits Act, as the proposed paragraph substituted by the Bill will have from November when the revised scheme will be introduced. It is right to proceed in this way rather than through bringing the substituted paragraph into effect on Royal Assent, as it would not be practicable to bring that provision into force in isolation from other provisions which will come into force in November. The need
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for us to move now on this particular provision arises out of a recent High Court decision.
The amendment and the issues behind it, have a complicated history. As a prelude, perhaps I should remind the Committee that the starting point for the purposes of determining entitlement to supplementary benefit is that the requirements and resources of a family unit are aggregated. The effect of paragraph 3 of the present Schedule 1 to the 1976 Act is to require aggregation of the requirements and resources of the claimant, his wife, and any person under 16 who is a member of the same household and for whom the claimant, or his wife, in the language of the Act, "has to provide".
Before 1976, and a case to which I shall refer shortly, it was the policy of the Supplementary Benefits Commission to disregard any excess of a child's own resources over its requirements in the calculation of benefit payable to the family. The one exception was maintenance payments paid directly to the child, which were taken fully into account as a resource of the family unit.
Following a Court of Appeal decision in 1976 on the treatment of damages, the Supplementary Benefits Commission changed its policy and decided that, where a maintenance payment made to a child exceeded the child's requirements, the child's requirements and resources should not be aggregated with those of the parent. The net result was that the maintenance

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payment was not included as a resource of the family. Relatively few cases were affected to begin with, and there was no evidence of abuse.
However, since 1976 there has been a growing awareness among those advising claimants that the Supplementary Benefits Commission's policy in fact permits the parent to get more benefit—in some cases substantially more—if the court could be persuaded to make the bulk of any maintenance order payable to the child rather than the parent, either for the parent's maintenance, or that of the child. This led the Supplementary Benefits Commission (with the Government's full support) to revert in 1979 to the previous practice of aggregating the child's requirements and resources with those of the rest of the family. Now, however, there has been a High Court judgment to the effect that, under the Supplementary Benefits Act 1976—that is, as it stands at present, unamended by this Bill—where maintenance payments exceed the child's requirements, the parent no longer "has to provide] for the child who will not then be counted as part of the family for the purpose of calculating entitlement to supplementary benefit. There are other cases pending, and the purpose of the amendment is to clarify the issue beyond doubt.
The Government are convinced that the family should be treated as a single unit for the purposes of supplementary benefit, and in particular that maintenance payments to, or for, a child should be taken fully into account when assessing that family's entitlement to supplementary benefit. It is for this reason that we are seeking to validate the commission's practice in the present Bill; and it is because the High Court has cast doubt upon that practice under the present law that we seek to correct the position, by way of this amendment, to cover the period up to November.
The principle is seen as fundamental. Payment of maintenance enables the parent having custody of the child to maintain the child and discharge the duty of custody. If maintenance payments to or for a child, and by logical corollary child benefit payable in respect of that child, were to be regarded as the child's resource and the child then artificially taken out
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of the supplementary benefit assessment unit, the consequence would be the virtual emancipation of the father from any liability to maintain his child for the purposes of the supplementary benefit legislation. In addition, although the recent High Court judgment would make it theoretically possible for the commission, through discretionary powers, to control artificial manipulation of court orders—for example, where a maintenance order was loaded in favour of a child instead of the mother (for example, for the mother's maintenance)—it would in practice be administratively impracticable to oversee court orders in this way.
It is intended that regulations under the new Act should put it beyond doubt that a child, or a young person aged 16 to 18 still at school who will be excluded from entitlement to benefit in his own right under Section 6(2) of the Act as to be amended, will in all cases be subject to aggregation. They will in fact normally fall to be treated as a dependant, not only for the purposes of supplementary benefit but also of child benefit. It is because they are dependants that it is thought right that they should be subject to aggregation—that is, included in the assessment unit—and that maintenance payments to or for them should be taken fully into account.
Finally, there is another important reason why we should make this change sooner rather than later. That is that it makes for sensible administration of the supplementary benefit scheme if the staff operating it are enabled, by this amendment, to continue the commission's practice of taking these maintenance payments into account. If the amendment is not made, the situation would be that the staff, at a time when they were more than fully occupied with preparing for the new scheme, would have to learn a completely new set of rules, and to apply them for an interim period of a few months, only to revert to current practice when the new scheme comes into effect in November. For this and the other reasons I have advanced, I hope your Lordships will agree that the amendment should be made. I beg to move.
On Question, amendment agreed to.
Clause 6, as amended, agreed to.
Schedule 2 [Amendments of Supplementary Benefits Act 1976]:
[Amendments Nos. 23 and 24 not moved]
Lord WELLS-PESTELL: I fear that Amendment No. 25 will be a very long one.
Baroness YOUNG: My understanding is that it is really for the convenience of the Committee that we sit until roughly ten minutes to 11.
10.38 p.m.
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 25:
Page 32, line 31, at end insert—
("(d) after subsection (2) there shall be inserted the following subsection—
"(3) Any instruction or guidance issued to benefit officers regarding the exercise of their powers under this section in a class or classes of cases shall be published in such manner as may be appropriate."").
The noble Lord said: In moving Amendment No. 25 I should also like to speak to Amendment No. 52. The Bill proposes that decisions on entitlement to benefit should be made by benefit officers, normally the same local officers who make such decisions on behalf of the Supplementary Benefits Commission at present. For many years there has been criticism of the fact that these officers operate under the instructions issued by the SBC, the A Code or other codes, which are not published. These instructions cover not only the interpretation of the legal provisions of the Supplementary Benefits Act but also the policies adopted by the Supplementary Benefits Commission under its discretionary powers. Copies of the A Code circulate clandestinely among welfare rights groups, but they are invariably out of date. Publication of the Supplementary Benefits Handbook in 1970 made public for the first time many of the SBC's policies, but the handbook is a very slim volume compared with the massive two-volume A Code.
The White Paper published in November (Cmnd. 7773) said:
"The Bill lays down the basic principles for entitlement to supplementary benefit. It enables the Secretary of State to lay down the detailed rules, for example, on the calculation of requirements and resources in regulations. Thus the
264
rules governing entitlement to supplementary benefit will be published, and published in full".
In future, therefore, most of the policy guidelines issued by the SBC, which do not have the force of law and do not confer legal rights on claimants, will be replaced by published regulations. Those regulations seem likely to be extremely complex but at least they will be open and published. It is becoming increasingly clear that the rules of the scheme will not, after all, be published in full.
In the Second Reading debate on 20th December, the right honourable Mr. Stanley Orme asked:
"… will the new regulations contain a new code similar to the A Code covering administrative matters and the remaining discretion? Will it be published? Will there be a chief benefits officer similar to the chief insurance officer? The chief insurance officer issues guidance to his local officers which is not published. Will there be a similar guide to the local SBC officers and will it be published?"
That comes from Hansard, columns 923 and 924.
These questions were answered in a letter dated 15th January from the Secretary of State to my right honourable friend. The Secretary of State admitted that there would be a chief supplementary benefits officer, although neither the White Paper nor the Bill refers to such a person. He wrote:
"The CSBO's function will be to guide benefits officers. It is virtually certain that he will issue printed guidance. Such guidance would not be published …".
It is far from clear on what authority the Secretary of State can say that the CSBO guidance will not be published. The CSBO, like the local benefits officers, will have independent statutory authority. If he chooses to publish any guidance that he issues to the local officers, surely he has the right to do so. It would be quite improper for the Secretary of State to prevent him. Since the CSBO has not yet been appointed, how can the Secretary of State be so certain that he will keep his guidance secret?
Perhaps Ministers are assuming that because the chief insurance officer's guide is not published there will be no pressure to publish the CSBO guide. But there are major differences. First, even under the new arrangements, there will be far more discretion in the supplementary benefit scheme than on the National Insurance side. The Under-Secretary of

265
State, Mrs. Chalker, has tried to give the impression that the guidance will be purely procedural; but is this so? The Secretary of State's letter of 15th January made it clear that procedural guidance to benefits officers would be given by the department through something like the present A Code. The CSBO's job will be a different one, presumably to explain the regulations to local officers and to ensure that they are exercising their powers, both statutory and discretionary, in a reasonable, considered manner. Guidance of that sort clearly ought to be made public. If it is not, how can Ministers claim that the rules of the scheme will be published in full?
There are three examples from the Secretary of State's letter on 11th February to which I should like to refer. After explaining the factors that local officers will take into account in deciding whether a claimant's rent is "reasonable", he says:
"Guidance from headquarters will provide for consistency of treatment between benefit officers".
Guidance from headquarters can only mean guidance from the CSBO, which, we are told, will not be published. The rules for deciding whether a rent is reasonable or not will be a closely guarded secret. I am bound to ask, why? When explaining how single payments for items of household equipment will be made, the letter says that, in addition to the items listed in the regulations, there will be,
"… a general provision for other items in exceptional cases".
It is quite certain that local benefit officers all over the country are not going to be left to make their own decisions about what can be paid for under this general provision without any guidance from headquarters. But who is going to provide that guidance?—certainly not the Secretary of State, as I understand the position. Not the SBC, because it will no longer be in existence. It can, in my submission, only be the CSBO, and his guidance will not be published. I think that we ought to be told why.
Thirdly, in the annex to Notes on Clauses we read that a boarder's requirements will include the charge actually paid for board and lodging, unless the benefit officer considers it unreasonably high; and
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"… there will be regional and local limits determining what is regarded as reasonable".
When my right honourable friend Stanley Orme asked who would lay down these limits, under what powers and whether they would be published, the answer he received from the Secretary of State was, to say the least, cryptic:
"The details here are the subject of consultation".
Perhaps this time it is not the chief benefit officer but a regional benefit officer who will make the rules. But there will still be a need for consistency between one region and another, and only the CSBO will be in a position to ensure that. Whether the rules are national, regional or local, however, we believe that they should be published.
The extent of discretion is not the only thing that distinguishes supplementary benefit from National Insurance benefits. We are told that, as the new scheme develops, the interpretation of the Act and the regulations will be a matter for the social security commissioners, and that some at least of their decisions will be published, just as the National Insurance commissioners' decisions are published, so that in due course there will be a body of case law for benefit officers to follow. But all this is in the future. When the new supplementary benefit arrangements start next November, the benefit officers will have hardly any case law to guide them. They will have to look elsewhere for guidance. Thus, initially at least, the CSBO will have a far more important role than his counterpart on the National Insurance side. All the more important, then, that his guidance should be open and published. My concern—as is that of many of my friends—is, what is going to happen? Are these documents going to be published, and are they going to be available? I beg to move.
Lord SANDYS: I have listened with interest to what the noble Lord, Lord Wells-Pestell, has said on this amendment. I hope that my remarks will reassure him. I shall be quoting from what my honourable friend the Under-Secretary of State had to say in another place, which I hope will help me in that regard.
The new supplementary benefit scheme represents a significant departure from the current scheme, in terms of the degree

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of openness which will be achieved by publishing all the policies of the reformed scheme in the Act and the regulations made under it. No longer will the rules governing the scheme be shrouded in secrecy. Perhaps even more importantly, because claimants and their advisers will have access to all the rules governing entitlement, much of the confusion of the current arrangements will be eliminated. This confusion occurs at present because many of the rules of the scheme are based on the Supplementary Benefit Commission's discretionary policies, which are often promulgated in the form of secret instructions to staff. Those instructions were referred to by the noble Lord, Lord Wells-Pestell, under current arrangement. To add to the confusion, other parts of the rules are readily available in the form of the Supplementary Benefit Commission's Handbook, leaflets, and so on.
For the future, changes in policy will require amendment of the regulations and hence will not be made without the approval of Parliament. As the Supplementary Benefits Commission themselves have said,
"the proper forum for debate on all the rules affecting supplementary benefit claimants is Parliament".
As the scheme gets under way, interpretation of the provisions of the Act and regulations will be a matter for the commissioners and, as noble Lords know, leading decisions of the commissioners are published. All the provisions which affect entitlement to supplementary benefit and are relevant to the calculation of benefit will thus be published.
Of course we recognise that claimants will seldom want to wade through the Act and regulations, and that is why we are publishing a simplified and expanded version of the Supplementary Benefits Handbook to help them. But the point is that everyone will have access to all the rules about entitlement if they so wish. We have always envisaged that there will still be a need for purely procedural guidance to help social security offices to administer the scheme. It is not the practice in Government departments, or indeed in any large organisation, to publish this sort of guidance and we do not envisage the publication of procedural guidance to local officers. As I have said,
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all the policies on entitlement to benefit will be in the regulations and handbook, and the procedural guidance to staff will not be relevant. This applies also with any guidance issued by the chief supplementary benefits officer. On the grounds that publication of guidance is unnecessary and would also be costly, I ask the Committee to reject the amendments.
In regard to what my honourable friend Mrs. Chalker said in another place, in rather more general terms, about the publication of details about the scheme as a whole, I think it is relevant to quote from the Official Report, Standing Committee E, 14th February 1980, column 627. My honourable friend said this:
"Leaflets will be available to claimants and they will not have to delve into a great tome or a supplementary benefits handbook. We shall publish a supplementary benefits handbook which will give much more detailed guidance, but the leaflet given to claimants might not be read, let alone understood, if it went into some of the detail which the right honourable gentleman suggests".
Then, a little further on, in reply to the honourable Member for Birkenhead, my honourable friend the Under-Secretary of State said this—I think it is relevant here, and I hope I have the attention of the noble Lord, because it is an undertaking by the Government. Her words were these:
"I think the honourable Member knows full well that we shall be as helpful as we can be in those leaflets. One thing I did not want him to assume from my remarks was that every mortal detail could be put into a leaflet and handed out to every claimant. It is a question of balance".
Then she went on:
"I give him my assurance that I shall see the draft of what is to go into those leaflets, and we shall seek to be as helpful as possible to claimants".
I hope those remarks will help to reassure the noble Lord; and I ask him to consider very carefully what we have said.
Lord WELLS-PESTELL: I am grateful to the noble Lord, Lord Sandys, for what he has said. He will understand me, without being misunderstood, if I say that by merely listening to him I have not been able to absorb it in the way I should like to do. I should like to read through what he has said tomorrow.
If I understood him correctly, certain publications are going to be available, but there are to be others available for benefit officers which presumably nobody

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outside the office is going to see. I do not like that. I do not know whether the Secretary of State will have powers to see them. This is going to be a body which is not going to be responsible to Ministers or to the Secretary of State. I still do not know to whom it is going to be responsible. If I am told "to the new Social Security Advisory Committee", as I understand the situation, they are not going to meet very often. So, as far as I can tell—I may be quite wrong about this—they will be a group which is responsible to nobody at all. There could easily be, as there are today, documents printed and going around, giving instructions as to what they can and cannot do and what they must and must not do, which nobody at all seems to know anything about. The A Code was a case in point, until somebody got hold of a copy.
I do not want to be difficult about this, but I want to be absolutely certain that they will be responsible to somebody, and that some very responsible person will also be responsible for the instructions they issue to local benefit officers. But I should like to read the report of what the noble Lord has said, because it was in detail, and, as he knows only too well, I always have a remedy, which is to come back at Report stage. Meanwhile, I am very grateful to him. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness YOUNG: It is five to eleven, and I think it would be the wish of the Committee that the House should now resume.
House resumed.

  SPECIAL CONSTABULARY: STRENGTH
  SPECIAL CONSTABULARY: STRENGTH
  IMMIGRATION: ILLEGAL ENTRANTS
  IMMIGRATION: ILLEGAL ENTRANTS
  CITIZENSHIP APPLICATIONS: THE RAYNER REPORT
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  GIBRALTAR: THE BRITISH NAVAL BASE
  GIBRALTAR: THE BRITISH NAVAL BASE
  SPEECH THERAPISTS
  SPEECH THERAPISTS
  THE INTERNATIONAL SPORTS COMPANY: SPEKE FACTORY
  THE INTERNATIONAL SPORTS COMPANY: SPEKE FACTORY
  MAEDI/VISNA INFECTION IN SHEEP
  MAEDI/VISNA INFECTION IN SHEEP
  BBC SCOTLAND AND SCHOOLS BROADCASTING
  BBC SCOTLAND AND SCHOOLS BROADCASTING