§ Order for Second Reading read.
§ 4.23 p.m.
§ The Secretary of State for Social Services (Sir Keith Joseph)
I beg to move, Chat the Bill be now read a Second time.
The Bill represents a landmark in national insurance because it embodies the first annual up-rating within the new policy adopted by the Government and announced just before Christmas last. There used to be up-ratings at irregular intervals, generally of about two-years. There was pressure from both sides of this House to replace the two-year interval by an annual interval, and the pensioners themselves, through their organisations, have for many years campaigned to achieve just what the Government have now established—that is, an annual up-rating.
The annual up-rating will be a blessing to all the beneficiaries in the national insurance and supplementary benefit, war pensions and industrial injury schemes. It will give them reassurance. It will protect them sooner against price increases, and it will enable more regular attempts by Governments to increase the real buying power of benefits.
There is another advantage of which I must remind the House and for which I think the Government deserve the heartfelt thanks of hon. Members on both sides. There is a bonus arising from the move towards annual up-rating of both national insurance and supplementary benefits in that we shall end the wretched and widespread misunderstanding in the country that used to exist with the two-year review of national insurance and the annual review of supplementary benefits. It was a misunderstanding that defeated the explanations of successive Governments. Minister after Minister tried to explain, that what was being carried out was in the best interest of those concerned and was an attempt to give the supplementary benefit recipients an annual increase on account of the biennial review of pensions. But, no matter how often the Government of the day and hon. Members explained it, it never seemed to get through to the public, and 714 the newspapers regularly gave prominence to the complaints that used to arise. I hope that from now on that problem will be ended.
To illustrate the point I want to read extracts from two letters sent to me last September. The first is from Bristol, from a man writing on behalf of himself and his wife. It says:We were promised by the Government£1 for single people and£1.60 for married couples. Naturally this is the Government's everlasting broken promise. My wife and I get 95p between us. We are being shamefully bamboozled.The second letter comes from a single man in the North. It says:I am very disappointed in it as they only allowed me 40p out of the£1. What a lousy do! With the increases in prices of things it won't even buy 20 Woodbines. Who gets the 60p that's left?I hope that there will be no more such letters. [HON. MEMBERS: "What was the reply?"] I tried to explain, as my predecessors did, what had happened. From now on, however, all supplementary benefit increases and all national insurance increases will coincide on the same day each year.
Clause 1 coupled with Schedule 1 provides for increases in flat-rate benefits under the national insurance scheme. Corresponding increases in war pensions will be made by amendments to the Royal Warrant and the appropriate Orders in Council. Those in the supplementary benefits will be by regulations made under the Ministry of Social Security Act, 1966, and these will be subject to Affirmative Resolution of both Houses.
The main standard rate of benefit for a single person will be increased by 12½ per cent. from £6.00 to £6.75. The increases of benefit paid for a wife or an adult dependant and the standard pension for a married woman on her husband's insurance will increase from£3.70 to£4.15; thus, the benefit for a married couple increases from£9.70 to£10.90 a week. Pensioners who are over 80 will continue to receive the 25p age addition on top of these new pension rates.
The increases of benefit for dependent children are also being raised. These increases vary according to the type of benefit and the amount of any family allowances in payment. The present£1.85 paid with unemployment and sickness benefit for' the eldest child will go 715 up to £2.10 and the lower rates for other children will be increased so as to bring the total for each child, including family allowances, up to that amount. The children of widows and of invalidity and retirement pensioners attract a specially high rate, at present£2.95 including family allowances where these are payable—and this will go up to£3.30. The guardian's allowance and child's special allowance will also be increased from£2.95 to£3.30 a week.
The old persons' pension payable to those who were too old to enter the national insurance scheme in 1948, or to people who have reached age 80 and for some reason or other do not qualify for retirement pension, will also be increased by 12½ per cent. from £3.60 to £4.05 a week. For married women the present£2.20 will be increased to£2.50.
The lower rates of pension paid to women who are widowed and cease to be entitled to widow's allowance between the ages of 40 and 50 and other modified rates of pension for example, because of low contribution average—will also be proportionately increased. The widow's basic pension and contributory old-age pension payable to certain widows under the former contributory pension Acts will go up from£1.80 to£2.03 a week.
The war and industrial disablement pension for 100 per cent. assessment goes up from£10 to£11.20. The rates of attendance allowance and the exceptionally severe disablement allowance are also going up in proportion to the main increases. The standard war widow's pension will be increased from£7.80 to£8.80 and the industrial injuries widow's pension from£6.55 to£7.30. Injury benefit goes up from£8.75 to£9.50.
I have nearly finished the list of the benefits of which I am telling the House in detail. The rest are in the White Paper.
The supplementary benefits levels of requirements for the two main categories, the single householder and the married couple, will be increased by the same amounts and at the same time as the proposed standard rates of national insurance benefits. Other rates will be increased proportionately, though we shall be bringing forward the supplementary benefit changes separately. The House 716 should bear in mind that the long-term addition, at present 50p, or 75p where the claimant or a dependant is aged 80 or over, will be increased by 10p to 60p or 85p. The 10p increase in the longterm addition will not be taken into account in deciding the amount of the addition for special needs. The Supplementary Benefits Commission has decided to increase the additions for extra heating and special diets.
The effect of all this, in short, is that the poorest pensioners will be receiving not 75p for a single person and£1.20 for a married couple but, because of the increase in the long-term addition, at least 85p or£1.30.
§ Mrs. Barbara Castle (Blackburn)
Before the right hon. Gentleman leaves the important point of heating allowances, will he elaborate on them a little more than he did when he first made his announcement? He then said that heating allowances would be increased by 20 per cent. I ask: 20 per cent. of what? How many more heating allowances does he estimate will be paid as a result of the Supplementary Benefits Commission ignoring the 10p increase in the long-term addition?
§ Sir K. Joseph
I should dearly like to enter into this matter, but it is more suitable for the regulations which will shortly be laid before the House. It is not part of the Bill. I gave the House a brief summary of the supplementary benefit changes, but it would be wrong to go into the subject raised by the right hon. Lady, not because I wish to avoid it, but because we shall shortly be having the opportunity to debate it.
§ Mr. Gerald Kaufman (Manchester, Ardwick) rose——
§ Mr. Kaufman
The right hon. Gentleman has explained the difficulty in previous years of explaining to pensioners who also receive supplementary benefit why they appear to be getting less than the full increase that has been allocated. He rightly takes some satisfaction in that that problem will no longer arise. How will he explain to pensioners that in the six months' waiting period between the Chancellor's announcement and its implementation about half of their increase will have gone in inflation? Will 717 he, before next year's up-rating, take urgent steps to find a way of paying the increase more quickly after it is announced?
§ Sir K. Joseph
I do not think the hon. Gentleman has recognised that with 11 million benefits in payment, nearly 3 million of which involve supplementary benefit, the time taken to make the necessary changes in those 3 million cases, each one being personally changed on its merits, coupled with the time needed for legislation, must involve several months. The passage of time between the decision and the up-rating date is always taken into account by successive Governments—certainly by this Government—in arriving at the decision of the amount of the up-rating. The real benefit of these increases to those who receive them cannot, because of the point the hon. Gentleman made, be defined precisely at this moment.
In the six months since the last increase in September, prices have gone up, according to the general retail price index, by 2.8 per cent. and, according to the special index for pensioners, by 3.8 per cent. We still have seven months to go, because this is a 13-month period. I cannot tell what will happen between now and October, but I believe I am right in thinking, though one can only tell how right after next October, that the increase of 12½ per cent. will contain enough excess over the rise in prices between last September and this October to leave a significant real improvement in the buying power of pensioners and beneficiaries.
In saying "a significant real improvement" I am trying to choose my words carefully. Last September I called the real improvement in the benefit marginal. I think that this year we shall manage something a little better than marginal, although not yet a substantial real improvement. However, I believe it will be a significant improvement.
In September, for the first time, there is the comfort for all recipients that there will be another annual review in November, 1973, and successive Novembers thereafter. The right hon. Member for Blackburn (Mrs. Castle), at the time the announcement was made, legitimately commented upon the proportion that the 718 single person's pension bears to the average industrial adult worker's wage. I acknowledge that after the Labour Government up-rating of 1965 that proportion peaked at just over 21 per cent. It fell during the two other up-ratings of the Labour Government, and after our first up-rating last year it was at 19.4 per cent. The up-rating in the Bill will, I hope, carry the percentage up again. However, I must point out quite objectively that the real comparison, bearing in mind that two-thirds of pensioners do not pay tax, is between the net buying power of the single pension and the net buying power of average industrial adult earnings. Though it is true that the comparison between pensions and average earnings peaked in 1965, the increases in taxation and national insurance contributions reduced the value of the real buying power of average earnings in later years. It is net buying power comparisons that really matter.
I make no party political point. I am acknowledging that there is a legitimate criterion raised by the right hon. Lady in comparing pensions and earnings. However, if we are to do this meaningfully we should try—I acknowledge that a third of all pensioners pay tax—to compare the net buying power of the two groups.
The question that the Government must answer is: why is the benefit increase not more than 75p for a single person and£1.20 for a married couple, and 85p and£1.30 respectively in the case of supplementary benefit?
Much emphasis has been put on the fact that my right hon. Friend the Chancellor of the Exchequer reduced taxation across the board on all taxpayers by£1 a week in the Budget this year. There is a distinction between reducing taxation and allowing people to keep more of what they have earned or received, and increasing benefits which are only partly paid for by the contributions. I remind the House that, taking a 13-month period, the recipients of national insurance benefits and corresponding benefits received a£1 increase last September and next October will receive an increase of 75p, making a total increase of£1.75 for a single person over about the same period as the taxpayer has received a£1 weekly benefit.
719 I also remind the House that the Government have set their hand to three substantial forms of help for pensioners and all beneficiaries. The first is the annual up-rating, to which I have already referred. That change was pressed for and welcomed by both sides of the House.
The second is the benefit to a substantial number of pensioners which will come from the rent rebate system in the Housing Finance Bill. The third is the hope held out by the Chancellor in his Budget this year when he promised a Green Paper on the tax credit proposals.
These three forms of help add up to an accumulating promise of real benefit for pensioners which I hope the House will take into account.
The date when the benefits will be paid and the contributions will increase will be the week beginning 2nd October, which will be fixed in one of the commencement orders authorised in Schedule 1 of the Bill. The cost of the increase proposed in the Bill is£412 million in the first year, and the total cost of the improvements in the Bill and the related improvements outside the Bill is£479 million.
We are proposing to pay for the increased costs by methods which accord completely with the proposals in the White Paper "Strategy for Pensions". That strategy depends on two bases. The first is that a larger share of the cost will be borne by employers than by employees, and for that purpose there is proposed in the Bill an increase of lop a week in the flat-rate contribution paid by employers. The second main strand of the strategy concerning contributions is that the cost will be borne on an earnings-related basis.
In order to conform with that strategy, we are raising the bulk of the money to meet the cost of the improvements by two changes in graduated contributions. First, we are raising the ceiling of earnings for graduated contributions from£42 a week to£48. Secondly, we are raising the proportion of graduated contribution from 4.35 per cent. to 4.75 per cent. We are not changing the flat rate for the employee.
The result of this combination of changes is that persons earning£19 a 720 week or less as employed people will pay no increase in contribution. For an employed person earning£20 a week there will be an increase in contribution of 1p a week. At£30 the increase will be 5p, at£40 it will be 9p and at£48, where both the increases bite because of the increase in the ceiling and the increase in the percentage, it will be 39p a week.
We have avoided, for the first time as far as I know, in both up-ratings any increase in the contribution of the very low-paid employed person. We have not been able to establish the same desirable objective in connection with non-employed and self-employed people because they are subject to the flat rate, it not being possible at the moment to impose earnings-related contributions on them. For self-employed people there will be an 18p a week increase in flat-rate contribution, and for non-employed people the increase will be 13o. The Exchequer supplement rises in order to keep the taxpayers' contribution at about 18 per cent.
I turn to Clause 4 and Schedule 3, which provide for the increases in industrial injury benefits. I draw particular attention to Clause 4(3), which frees the Government to review the level of therapeutic and subsidiary earnings. These are, in effect, the earnings disregarded respectively for sickness and invalidity and industrial injury benefit, on the one hand, and for unemployment benefit, on the other. By Clause 4(3) and the related Schedule we propose, by regulations and a commencement order, to increase the present level of therapeutic and subsidiary earnings from 33p a day to 75p a day. We have been pressed by hon. Members on both sides of the House to do this, and I have also had an approach from the TUC about it. It is some years since the level was raised, and we are proposing to more than double it.
Clause 5 relates to the finality of decisions by the independent statutory authorities which decide claims and questions under the National Insurance and Industrial Injuries Acts and arises out of recent House of Lords judgments. The judgments dealt with the effect of the provisions in the legislation that the decisions of adjudicating authorities "shall be final" subject to specified rights of appeal and review, and the effect is that medical boards and tribunals dealing with 721 questions arising on a disablement benefit claim must accept the specific medical conditions which can be inferred as the basis of an insurance officer's decision in connection with the preceding industrial benefit claim.
It would be most unsatisfactory to bind the medical practitioners and consultants who compose the boards and tribunals to accept findings contrary to their medical judgment and which could lead to longterm awards, sometimes for life, based on original diagnoses which subsequently proved to be wrong.
I am also advised that the judgments may have implications for the main national insurance scheme and the family allowance scheme.
Clause 5 does no more than restore the position to what it was originally believed to be, and their Lordships foresaw that amending legislation might well be necessary following their judgments.
Clause 6 deals with minor amendments. Clause 7 is the Northern Ireland Clause. The Northern Ireland national insurance scheme is virtually identical with the Great Britain scheme, and up-ratings there usually follow closely what is done in this country. As the Northern Ireland Parliament is at present prorogued, the Secretary of State for Northern Ireland has asked us to include parallel provisions for that country in this Bill.
I turn to Clause 2—the attendance allowance Clause. We began payment of attendance allowance at the full rate—under the Bill it will be called the higher rate—last December. There are now 74,000 awards in payment. The first stage of the attendance allowance was limited to those who are so severely disabled that they need constant attendance and/or supervision by day and by night. The House at an early stage expressed its discontent with the limitation of the benefit.
The benefit is being up-rated from£4.80 a week tax free to£a week tax free and almost totally disregarded for supplementary benefit purposes. The Government said from the moment that they introduced the attendance allowance that they would, as soon as practical, extend it to those who had much 722 the same justification for help but not to quite the same extent as those involved in the original benefit. In Clause 2 and Schedule 4 is the promised extension, and I think I can claim that we could not possibly, in practical terms, have moved quicker than we have.
The basis of the extension is that a benefit at the two-thirds' rate—namely,£3.60—called the lower rate in the Bill, will go to those who need constant attention and/or supervision by day or night instead of by day and night.
I should like to pay a warm tribute to the devoted members of the Attendance Allowance Board—social workers, general practitioners, consultants and the noble Lord who is the Chairman—who, in spite of their very busy lives, have not spared themselves to bring into practical effect the first stage of the attendance allowance and are deeply committed to bringing in the extension at the earliest possible moment. I hope the House will allow me also to pay tribute to the civil servants in my Department and throughout the country who have put their hearts into bringing the new allowance into payment, both the original and the extension, as soon as possible.
§ Mr. John Mendelson (Penistone)
What will happen in those cases when, on the first application, the decision has been negative but one cannot say with absolute certainly that the only reason for rejection was that there was no need for attendance day and night in the judgment of the man making the decision? A number of hard cases have been submitted to the Secretary of State which do not fall into that category. Will there be the possibility of review of those cases?
§ Sir K. Joseph
I have obviously been into that point; it occurred to the Ministers and the advisers. However, I much regret to say that here we have a choice. We can either go back over the past, in which case the staff will be overloaded and we shall not be able to bring the extension into payment as early as we otherwise would, or we can go ahead as early as possible with the extension and invite people who feel that they are entitled to benefit from the extension to submit their applications again at the appropriate date. I have chosen the latter course.
§ Mr. Arthur Probert (Aberdare)
The constant attendance allowance has caused much anxiety and bitter disappointment. Will the right hon. Gentleman ensure that far more attention is paid to the diagnosis of the local practitioner? Practitioners in my constituency are despairing of putting in applications. Far more weight should be given to the opinion of the local practitioner.
§ Sir K. Joseph
I hope that, in fairness, the hon. Gentleman will acknowledge that the allowance has also given great satisfaction to scores of thousands of people. The best thing I can do is to ask the hon. Gentleman to write to me stating the view of his general practitioner friends, and, if necessary. I will ask someone in my local office to go and talk to them so that I may know what is in their minds.
The extension will attract a very large number of claims. We believe that it may be as many as 500,000. We believe that as many as 250,000 awards may be made. We cannot take all those on board at once, and so we have had to face the invidious choice of organising a sequence of applications. I have had the benefit of the advice of the Attendance Allowance Board, and we have chosen to take working age first, then children, and then. in two phases, the elderly.
We are now thinking about putting in hand the preparations for the first stage of the claims. We shall invite claims from the first group—that is, the working age group—to be submitted at any time from 1st December, with attendant publicity well in advance. We intend to start payment to that first group at£3.60 tax free on 4th June, 1973. The three successive groups will be invited to claim at six-monthly intervals from 1st December this year. The date when claims are first taken on board for any group will be the date on which payment starts to be made for the previous group. We shall therefore be working in six-monthly bands, and at that rate of progress we shall be payiing for the second group of elderly people from 1st December, 1974. The timetable will be set out in the commencement orders.
§ Mrs. Castle
So it starts from June and then operates at six-monthly intervals. Do I take it that the phasing will be completed by 1st December, 1974, and that at that stage the cost will be running at the£45 million which is referred to in the Bill?
§ Sir K. Joseph
That is very nearly right, but the cost at that stage will be running at £70 million, including the higher rate, which will continue. At the lower rate the figure is £45 million in a full year.
§ Mrs. Castle
We are told on the front page of the Bill that the extension of the attendance allowance will cost £11 million in 1973–74. The figure jumps to £45 million in 1974–75. Is that right?
§ Sir K. Joseph
To be precise, it will be 1975–76 when it reaches the full £45 million, because the benefits will not all be paid on 1st December, 1974. So it is better to take the full extended cost in 1975–76 of £45 million, to which must be added the cost of the higher rate, bringing the total to £70 million a year.
The Bill will complete an important stage, through the extension of the attendance allowance, in securing reasonable recognition of the needs of the severely disabled. The Bill provides for increases which should secure a real improvement in the buying power for all those who are on benefits. It ends the ups and downs and misunderstandings of supplementary benefits——
§ Mr. Michael Meacher (Oldham, West)
Before the Secretary of State reaches the end of what has been an unduly complacent speech, may I ask him to reconsider what he has said about the value of the pension increase in relation to the £1 tax cut to working households? He tried to make out that the two were comparable. Will he not acknowledge that the pension increase is purely counter-inflationary, representing a restoration of purchasing power, and is not comparable to the £1 to working households? By comparison the pensioners have received virtually nothing.
§ Sir K. Joseph
Those remarks are more appropriate to a speech than to an intervention. The hon. Gentleman is presuming that between last September and next October prices will rise 12½ per 725 cent. I do not believe that to be true. In their six years of office the Labour Government achieved a rate of growth in the buying power of the pension of only 2½ per cent. in real terms. I think it will be found that the 12½ per cent. which we are providing in October will produce a substantially greater improvement in real buying power than the annual average achievement of Labour.
I am not complacent. I am on record in many speeches in the House and outside as saying that we have much more to do, but I reckon that if party politics are brought in I have a reason to claim that our actions are relatively creditable.
Finally, this is a significant and widely welcomed innovation. Despite pressure which for many years pensioner interests have brought to bear on both Governments, this is the first of the annual up-ratings to which the Government as a policy have committed themselves.
§ 4.57 p.m.
§ Mrs. Barbara Castle (Blackburn)
In introducing the Bill the Secretary of State made great play of the annual review. I do not blame him; it was, after all, his bull point; and he was anxious to hurry over the details of some of the other benefit increases. But the Bill does not make legislative provision for the annual review; that, I understand from what the right hon. Gentleman said recently in the House, will be part of the legislation which he will introduce next year. However, I am not surprised at his diversionary tactics. Like my hon. Friend the Member for Oldham, West (Mr. Meacher), I cannot share the right hon. Gentleman's complacency, and we on this side of the House do not accept this Bill on his estimate of it.
What we are dealing with this afternoon is a mini-Finance Bill. It is the poor man's Budget. The rich man's Budget was introduced by the Chancellor of the Exchequer on 21st March, and was presented with such panache——
§ Sir K. Joseph
The right hon. Lady is starting her speech on a most distorting note. My right hon. Friend's Budget brought a tax reduction of£1 a week to every taxpayer in the land—equal for all.
§ Mrs. Castle
That remark might appropriately have been part of the right hon. Gentleman's speech, if he had 726 thought of it. I assure him that we shall not evade this point.
The rich man's Budget was introduced by the Chancellor of the Exchequer on 21st March and was presented with such panache that one might have thought that the old-age pensioners, the disabled, the sick and the unemployed were about to have the bonanza of their lives under the most egalitarian Chancellor since the Levellers. But the slickness of the right hon. Gentleman's tongue deceived the ear. This afternoon we have a chance, of which we intend to take full advantage, of examining the poor man's Budget.
The right hon. Gentleman's explanation did not help us. He likes to rattle through statistics and throw percentages about, but any analysis of what they mean in human terms for these categories of people is put off until another day. The Secretary of State's manner is different from that of his right hon. Friend; it is more that of a mournfully affectionate beagle than of a terrier. It is all good will and gentle devotion to the cause of the poor. But the right hon. Gentleman's technique is the same as that of the Chancellor of the Exchequer. It is a very good technique, and I have been sitting here trying to learn from it for use on future occasions which may not be very far away. The technique is absolutely brilliant—announcing an amalgamation of measures some of which might take place today, although most of them do not, some tomorrow and the rest in two or three years' time. These future projections are presented as though they were today's actualities. The reference to the extension of the qualifying provisions for the attendance allowance is a perfect example.
It is curious to find in the Explanatory and Financial Memorandum on the front of a Bill, after the cost of the extension of the attendance allowance provisions of£11 million in 1973–74, a little hieroglyphic which refers to a note which says:Rising eventually to about£45 million per annum.Even the financial experts of the Government have to enter this Walter Mitty world. In fact, expenditure on the new night and day attendance allowance during the next 12 months will be nil. Even the expenditure on the increase in the attendance allowance this year 727 will be only£1 million. We have now extracted from the right hon. Gentleman the information that this£45 million might be paid in 1975–76; so the Government cannot call it in aid as being in the relief of current poverty.
What we should be dealing with this afternoon is hardship and poverty here and now in Britain under our noses. Distant prospects do not butter today's bread. They do not even give it the thinnest smear of margarine. Let us look at today's actualities, starting with the most penny-pinched section of the community, the old-age pensioners.
The right hon. Gentleman has made great play of the introduction of the annual review. Of course we welcome it, but he must not call it into aid too much without stopping to consider the reasons for it. It is the product not of his Government's virtues but of their failures. The Government have made it a necessity. The inescapable fact is that, despite last year's record increase, as the right hon. Gentleman claimed, of 20 per cent. in the old-age pension, pensioners today are actually worse off in real terms than they were at the time of the Labour Government's increase in November, 1969. That is our starting point today, and it is indisputable.
Percentages do not feed people, clothe people or keep people warm. By the time the right hon. Gentleman had introduced his record 20 per cent. increase in September last year, the cost of living, as a result of his Government's policies, had risen by 16.5 per cent. So last year's increase in terms of food, fuel and clothing was not 20 per cent. but a mere 3½ per cent. to insulate old-age pensioners against the further price increases that were occurring every day.
What has happened since then? The cost of living had risen by another 3½ per cent. by March this year. So that record 20 per cent. had then already been totally eaten up. Only the other day the Under-Secretary of State, replying to a Question from my hon. Friend the Member for Fife, West (Mr. William Hamilton), who asked what was the value now of the single pension increased to£6 in September last year, had to reply that it was worth only£5.87p. That was in April. What is it worth now?
§ Sir K. Joseph
Would not the right hon. Lady agree that precisely the same erosion of the pension increase occurred after all three of the Labour up-ratings, and that we have diminished the damage by introducing the annual instead of the biennial up-rating?
§ Mrs. Castle
Of course there is some erosion. The point is: what is the size of the pension increase at any point compared with the cost of living increase which the pension increase is designed to overtake? I have here statistics which I have obtained from the House of Commons Library, and I assure the right hon. Gentleman that the increase given by the Labour Government in the first two up-ratings was far superior in real terms.
Let me return to the present situation. Every month that passes old-age pensioners are sinking deeper into poverty. The Government know it; they have had to admit it again and again at Question Time in the House. In such a situation, how could the Government do less than promise an annual review? Is it conceivable that the right hon. Gentleman could have stood at the Dispatch Box and told old-age pensioners who are getting steadily worse off than they were in November, 1969, that they had to wait until November, 1973, for an up-rating? There would have been a public uproar if he had. The Government with their annual review are merely making a virtue of a political necessity.
It is against this background that we have to evaluate the Government's generosity to the old-age pensioners. First, it is intolerable that the Government took no action to give emergency help to old age pensioners last winter, as my hon. Friend the Member for Hitchin (Mrs. Shirley Williams) urged on him in a debate last November at the beginning of the winter when already the value of the last increase was being whittled away.
Secondly, it is intolerable that the Government refused to provide the kind of emergency winter payments which we provided when we came to office in October, 1964.
§ Mrs. Castle
For the hardest hit of the old-age pensioners, and those are the people about whom we are talking when 729 we debate heating allowances or longterm additions.
It was feasible for the right hon. Gentleman to have done something for these people at the beginning of the winter months. He refused to increase the longterm addition, a device for helping the very poor between up-ratings, a provision which we introduced in 1966, and increased a second time. The right hon. Gentleman refused to introduce an automatic heating allowance, which goes to only 196,000 pensioners out of 2 million on supplementary benefit. The Government did nothing to increase the sum from the ludicrously inadequate figure at which it stands, and heaven knows how many deaths there were from hypothermia last winter as a result of that inhumanity. The other day I appeared on a television programme with the hon. Member for Aylesbury (Mr. Raison), and with a geriatric consultant who said he believed that many old people die of hypothermia, but the cause of death is described differently on the death certificate.
Instead of the old people being helped during the winter, we have had to wait for this Bill, under which the right hon. Gentleman claims credit for the fact that pensioners will now get a 12½ per cent. increase. I said "now", but, of course, they will not receive the increase until October, 1972. What does it amount to? It means an extra 75p for a single pensioner; yet by October of this year he will already be 20p worse off than he was in November, 1969. By the time winter arrives a single pensioner will have 55p a week extra in hand to see him through the 13 months until his next rise in November, 1973—the year of our entry into the EEC if the Government's proposals go through, and the year by which the Government promised they would effectively insulate those on fixed incomes against the cost of living increases that would be inevitable.
The right hon. Gentleman will no doubt say that I am exaggerating, and that he has increased the long-term addition. He has—by lop, barely enough to buy an old-age pensioner a large white loaf. What about the heating allowance, which the right hon. Gentleman refused to increase last winter? Here we know that he has been recklessly generous. The Supplementary Benefits Commission. he says, intends to increase special addi- 730 tions for extra heating by 20 per cent. where they are payable. I asked the right hon. Gentleman; 20 per cent. of what? It is not 20 per cent. of 75p. The right hon. Gentleman replied that it would be more appropriate to discuss the point at another time. I now ask the right hon. Gentleman to tell us what it is 20 per cent. of, and to how many people it will be payable.
The right hon. Gentleman says that he has instructed the Commission to ignore the increase in the long-term addition in calculating entitlement to heating allowance. I should hope so; otherwise even fewer pensioners will qualify for it and their 10p will have to go on fuel, which will mean that they will not even be able to get that extra loaf of bread.
Only the other day my hon. Friend the Member for Southampton, lichen (Mr. R. C. Mitchell) asked the Under-Secretary of State whether he would introduce a special heating allowance of at least 50p for all pensioners on supplementary benefit. His reply was "No", on the ground thatThe ordinary level of supplementary pension… provides for all normal heating expenses."—[OFFICIAL REPORT, 9th May, 1972; Vol. 836, c. 1106.]Does it, indeed? Tell that to the old-age pensioners, thousands of whom have to go to bed in the afternoon because they cannot afford a fire.
What would my hon. Friend's proposal for an automatic heating allowance of 50p for every supplementary benefit pensioner cost? The answer is£1 million; yet the Government say that they cannot afford that sum. This is in a Budget of£2,000 million give-aways deliberately intended to be reflationary. But whose budgets are the Government trying to reflate—the budgets of old-age pensioners with their 75p, or 85p if they are on supplementary benefit? The right hon. Gentleman said that every wage earner in the land would get an extra£1 a week through tax relief.
§ Sir K. Joseph
If the right hon. Lady regards this as of such absolute priority and so imperative and capable of introduction at such low cost, why was it that in six years of office her Government did not introduce it?
§ Mrs. Castle
Because we were making greater provision than the right hon. Gentleman is making relative to the cost of living today.
§ Mr. Robert Boscawen (Wells) rose——
§ Mrs. Castle
I am sorry, but I do not want to speak for too long.
I am saying that we are today operating in the context of a reflationary Budget of a kind that we never had during our period of office. The Government take credit for that, but they cannot at the same time take credit for refusing to provide£1 million in order to give an automatic heating allowance to old-age pensioners. We are in an exceptional situation. An exceptional Budget is going through the House, and we say that the share which the poor are to receive of that Budget is totally inadequate.
The right hon. Gentleman has made a lot of the tax reliefs being provided by the Budget. Those with incomes of more than£10,000 a year will benefit to the tune of£3 million; yet the Government cannot find an extra£1 million for heating allowances for old-age pensioners. People living on investment incomes will benefit to the tune of not£3 million but£300 million, and in that situation we say that 75p is an insult to pensioners.
Only the other day I received a letter from a woman who said that two or three years ago she became disabled with a spinal injury and she was now living on the same amount of money as she would have when she retired. She wrote to ask how it was that children in welfare homes had had their pocket money raised to 60p a week. She said that she did not begrudge them that sum, but she addedsurely the sense of value is all wrong, expecting the elderly to live on a mere pittance of an extra 75p.Time and again I have been challenged about what we would have done. My reply to the right hon. Gentleman is that, faced with such a Budget opportunity as this, we should have had a different order of priorities. First and foremost, we should have had different priorities in timing. We should not have waited until October to bring substantial help to pensioners.
732 Let me for a moment consider the Government's order of priorities in benefits. Budget day was 21st March. To applause and laughter from his side of the House the Chancellor said that estate duty relief costing£64 million this year and£125 million next year would take effect in relation to deaths occurring "after this day". The pensioner has to stay alive until October to get an increase in his pension. Free depreciation on plant and machinery will take effect "as from tomorrow", said the Chancellor on that day. For tax relief on interest—naturally, of course, the interest paid by wealthy surtax payers—the operative date would be 6th April. The date of the share option scheme would, he said, be 6th April, and the cut in income tax through increased personal allowances would be 3rd May, coinciding, remarkably, with certain electoral activities.
§ Mrs. Castle
Yes, because in that catalogue of timing the date for the pensioners was, and still remains, October, 1972, and the extension of the attendance allowance will not come into force until June, 1973.
Had we been in office we would have had very different priorities of expenditure. Hon. Gentlemen opposite need not be complacent, and my hon. Friends need not be too defensive, over what we did for pensioners because in 1965 we introduced the biggest real increase in the old-age pension, and the right hon. Gentleman is compelled to admit it because he knows that the facts make his admission inescapable.
In 1965 we gave an increase after 22 months in office of 18½ per cent., when the cost of living had increased during those 22 months by 5.8 per cent. Last year the Conservatives gave an increase of 20 per cent. after 22 months in which the cost of living had gone up by 16.5 per cent. That is the answer to the right hon. Gentleman's claim that every Government find the value of the pension beginning to decline from the moment an increase is granted to the time of the next up-rating.
It is important to reflect on what happened during that interval, between up-ratings, when we were in power. We made an emergency grant in payment in 733 the winter of 1964 and an improvement in the long-term addition between up-ratings. We introduced a national superannuation scheme which by the end of this century—if we had won the election and carried forward that Measure on to the Statute Book—would have lifted 87 per cent. of the retired out of poverty. Compare that with the present Government's miserable proposed State reserve scheme under which by the year 2020, when the whole population will have been integrated into the scheme, at least 3 million people will be supplementing their pensions by public assistance.
I remind hon. Members that we introduced the attendance allowance and invalidity benefit, not by way of an election manifesto but in our national superannuation legislation. We lifted the pension to a better ratio with average earnings; to 21 per cent. in 1967 or the highest ratio since 1948.
I accept what the right hon. Gentleman said about the ratio declining after 1969, but it declined for the simple reason that we were struggling with acute balance of payments difficulties. It is because of that struggle that hon. Gentlemen opposite no longer face such difficulties. Indeed, the Prime Minister boasted at a CBI annual dinner the other evening:This means that we are better able than for many years to withstand any temporary strain on the balance of payments which the expansion of the economy may involve.
§ Sir K. Joseph
I trust that the right hon. Lady will complete her picture by saying what happened in 1967 and 1969. The Labour Government in one of those years did not increase the pension even enough to pay for rising prices since the previous increase, and in the other year they managed to do only about as well as, and certainly no better than, we did last year, but much less well than we are doing this year.
§ Mrs. Castle
I accept that from 1969 the ratio declined, but the same cannot be said of the 1967 up-rating. It was from the time of our struggles and difficulties with the balance of payments, devaluation and the post-devaluation period that our record became less good than any of us would have liked. But the real comparison is what we did when we had the sort of opportunity that the 734 Government now have, and the answer lies in our success in 1965.
It is because, as the Prime Minister said, of the strong balance of payments position today that this year's expansionary Budget has been introduced. But it is expansionary for everyone except those who are expected to live on another 75p or maybe 85p a week. One cannot do much expanding on that. This is the year above all years when we could have afforded a crash programme to alleviate the misery of the old and lonely poor.
On the face of it, the figure of expenditure in the Bill looks generous,£412 million in 1972–73, but of this sum about£395 million falls on the National Insurance Fund. This means that not the Government but the contributors, including the employees, are financing the increase. They are paying for this extension of the right hon. Gentleman's modern version of social security tax, or increased graduated pensions in return for flat-rate benefits.
The Government's contribution through the Exchequer is a mere£68 million, and I say advisedly to the right hon. Gentleman that as the Government had so much money to give away they should have used some of it to expand the Exchequer contribution and so enable us to do better than only 75p. If the Government had expanded the Exchequer contribution to the National Insurance Fund from 18 per cent. to, say, 25 per cent., that would have cost£160 million, and perhaps£220 million in 1973–74. On that basis we could have given the pensioner another£1 a week above the 75p, at the price of only a minute increase in contributions.
The aim of our policy must be to lift the pension into a fairer ratio to wage increases. This was the aim of the Private Member's Bill introduced the other day by my hon. Friend the Member for Southall (Mr. Bidwell), in connection with which he said that we should commit ourselves to phase in a statutory obligation to lift pensions over the years to 33 per cent. of average earnings by 1976.
I make no judgment of the figures in that Bill, but there is no doubt that my hon. Friend was right in principle. One way to achieve that principle would be 735 the plan, which we are now studying, of grafting existing pensioners, or those retiring in, say, the next 20 years, on to our radical, dynamised, inflation-proof national superannuation scheme by giving them credits and entitlements within that scheme and by giving them the protection and enjoyments which the scheme gives to the average wage earner. We shall get no such plan from the present Government, who are dedicated to keeping millions of pensioners indefinitely pauperised.
That is the difference between hon. Gentlemen opposite and my hon. Friends. But we shall not vote against this Measure. We are grateful for any improvement from this Government, and we want to encourage them to do better still.
I give notice to hon. Gentlemen opposite and the nation that we believe that the Conservatives' strategy for dealing with poverty and unemployment does not measure up to the needs of a modern society and that when we are returned to power at the next General Election we shall produce a very different one.
§ 5.30 p.m.
§ Mr. R. A. McCrindle (Billericay)
It will do the right hon. Lady the Member for Blackburn (Mrs. Castle) no good to receive a compliment from me. Nevertheless, as one who has admired her as the woman who has probably reached the greatest political power in British history, I thought it was unfortunate that she should carry forward into the debate on this subject today what I might call the combative style which I thought was rather more suited to some of her earlier appointments. However, I listened with great interest as she compared my right hon. Friend the Secretary of State to a beagle and my right hon. Friend the Chancellor of the Exchequer to a terrier. Reminding myself that I am addressing a right hon. Lady. I shall not take the canine simile any further.
The right hon. Lady is quite wrong when she accuses my right hon. and hon. Friends of complacency in presenting the Bill. I make it clear to my right hon. Friend at the outset that, while I very much welcome the contents of the Bill, it Seems still to fall short of the aspira- 736 tions which I have and, I am sure, he has for retired people and other beneficiaries. So, whilst there is no complacency, it is a little churlish not to welcome the Bill, particularly as a first fruit of the Government's decision to review pensions and other benefits annually.
It is a sobering thought that had the Government merely paid lip service to the idea of an annual review—that is what their predecessors have done—we should not be debating today a Bill which will bring at least some comfort to many of those on whose behalf the Opposition are so loud in their espousal. It was absolutely right to decide to go over to an annual review, not only because inflation has been rampant in recent years—and let us concede that under both Governments this has been so; I have never felt——
§ Mr. McCrindle
I concede that under the present Government inflation has been increasing far too fast for my liking and that of my hon. Friends. But, having conceded that, it is expecting too much from me to fail to remind the Opposition that inflation was hardly totally absent during the six years they were in government. Therefore, it was right to change to an annual review. It was right because the weak in our midst—the people we are speaking about—are particularly vulnerable when inflation is as rampant as it has been over the past few years. Elderly people and those receiving social security benefits have looked at the development of the annual increase for wage earners and wondered why they alone were being left for two years before any redress was made to their situation. We, too whom I may loosely refer as the younger generation, sometimes overlook the fact that two years in the life of an elderly person is a very long time. Therefore, I welcome very much the annual review evidenced in the Bill. For the first time in 20 years, two increases have been only a year apart. Surely everyone in the House will welcome that.
I regret having to follow the right hon. Lady in the tone of my following remarks,' but the fact is that in cash terms the 737 benefit will be one-third up, by October this year, since the present Government came to office.
The annual review goes further to reassure beneficiaries than anything any Government have done in the past. I believe we shall indeed attempt in the future not just to increase the pension by such an amount as would keep pace with inflation but that, progressively, we shall move to a position in which we can actively increase the standard of living of elderly people.
§ Mr. Kaufman
Is the hon. Gentleman aware that this could have been done now and that the extra£1 which my right hon. Friend the Member for Blackburn (Mrs. Castle) spoke about in her speech could have been made available if the Government had seen fit to give the£200 million-odd net from the Exchequer to pensioners rather than giving£300 million gratis to the few thousand best-off taxpayers, who get it in accordance with what the Chancellor said in his Budget Statement, at col. 1387 of the OFFICIAL REPORT.
§ Mr. McCrindle
I want to come to what the hon. Gentleman has said, not in that intervention but in an earlier one during my right hon. Friend's speech, because it will surprise the hon. Gentleman to know that I have some sympathy with some of the things he said then. Perhaps he will allow me to develop my argument as I wish.
As from 1972, pensions and supplementary benefits are to be increased at the same time. It is very difficult to overlook the tremendous effect that this will have. All of us in our constituencies must have had the complaint that, pensions ostensibly having risen by so much. people on supplementary benefits were receiving only half of them at the time the increases were announced. So those on supplementary benefit will now get the full amount of the pension increase and that should be welcomed in all corners of the House.
There is room for debate on the amount of increase proposed in the Bill. All I can say about that is that 'twas ever thus. But I remind the House that this is the second increase since June, 1970. Of course prices have risen. The latest figures which I have—noted before my 738 right hon. Friend the Minister of Agriculture announced figures up to April—are from June, 1970, to February of this year. Prices rose during that period by 14 per cent., both on the ordinary index and on the special index for pensioners. If we enact this legislation, by October, 1972, pensions will have risen by almost 33 per cent. in cash terms. No matter what increases in prices take place between now and then, the standard of living of those in receipt of pensions and other benefits will have been improved, no matter how marginally, during the period of the present Government.
It is significant to note that, as a Conservative Government, in two and a quarter years we shall have put up pensions by£1.75 per week, compared with an increase of£1.62½ during the six years of the Labour Government. In addition, we have started on the process—which the Bill takes further forward—of giving extra help to those in particularly urgent need. In particular, I welcome very much the extension to the attendance allowance, moving it over to a situation of paying the benefit where attendance is required by night or by day. All of us must have had many anomalies and hard cases thrown up by the previous operation of the attendance allowance and there have been many borderline cases. It is estimated that as a result of this change about a quarter of a million more people will qualify for it. No matter on which side we sit in the House, that is something which we surely must welcome.
On the subject of paying for these improvements, I contend that the method chosen by the Government is a very fair distribution of the burden. A man receiving£18 a week or less will pay nothing extra. This is the same as the last time pensions were increased. We cannot be said to be neglecting the interests of the least well off section of the earning community. The man on the new£48 maximum will have an increase of 39p per week. But I remind the House that he is the man who has received—by implication this has been criticised by the Opposition—an extra£1 a week as a result of the extra tax reliefs of my right hon. Friend's Budget. After paying the additional 39p he is still left with a substantial part of that£1.
739 That is in conformity with the policy of the Conservative Government to give some incentive to the wage earner. I believe that we are paying for the substantially increased benefits while at the same time not giving a disincentive to the man in active employment. These steps are a move towards a fully earnings-related basis which is part of the programme of the Government outlined in the White Paper "Strategy for Pensions" Therefore, I warmly welcome the Bill.
I want to deal with the point raised by the hon. Member for Manchester, Ardwick (Mr. Kaufman) about whether it is right to announce these increases in the Budget and then pay them about six months later. Although I accept that an annual review of pensions and benefits cannot, and should not, be separated from the budgeting of overall national resources, I would prefer that a decision as to the amount by which pensions and benefits can rise be taken in the summer and that payment should begin in the autumn.
If that were to be done, after the Chancellor of the Exchequer of the day had decided whether his Budget should give away or take back in April, it might be that circumstances would change, that demand had to be reflated, or the reverse. I believe that seeing all those things in perspective, as the Chancellor would, rather better in the summer, it would be preferable in future that increases in pensions and benefits should be decided then and paid in the autumn.
Here is the rub. My right hon. Friend has said, not for the first time, that we under-estimate the administrative difficulty of implementing pension increases quickly. I have said to my right hon. Friend before, and repeat it today, that I just cannot accept that what can apparently he done in other European countries cannot be done in Britain.
I ask my right hon. Friend earnestly to look into the operation of the administration again to see whether we cannot speed up the process. For the first time this year my right hon. Friend the Chancellor of the Exchequner has found it possible to pay the tax reductions on the first weekend in May as against the first weekend in July. I do not believe that what has proved possible administratively for that Government Department should be impossible in this Department.
740 Lastly, I wonder whether my hon. Friend in replying to the debate will answer what may seem to older Members a very elementary question. Why is it necessary to have a Bill to implement these increased benefits? I wonder whether there is not a simpler way in which, although we would not stifle debate, we would achieve our objectives rather more quickly. Will my hon. Friend look into that possibility?
So I want a summer decision and an autumn implementation. I want, if possible, no legislation and faster administration. With those two fairly mild qualifications, I welcome the Bill and wish it a speedy passage.
§ 5.43 p.m.
§ Mr. William Hamilton (Fife, West)
It would be churlish for us on this side not to welcome the Bill so far as it goes. I agree with some of the points that the hon. Member for Billericay (Mr. McCrindle) made, in particular as to the delay in implementation of the Bill's main proposals. We had this same problem in 1965. The then Minister came under very great pressure in Parliamentary Labour Party meetings about the delay in implementing the increase which was announced in the spring but was not brought into effect until the October.
There were then, and there are now, administrative difficulties. We tend to assume that there is just one standard rate of pension. The then Minister said that at that point more than 200 different rates of pension were being paid for one reason or another, and that all the books had to be brought in and sent out again and all the rates individually assessed. It is not an easy exercise.
There should be some retrospective payment. If there is this delay, it would be more tolerable to old-age pensioners if they knew that when the autumn came, when the six months were up, they would get a lump sum in the form of a back payment. That is particularly apt at this time when the Government, because of the highest May unemployment figures since the 1930s, are urging a massive reflation of the economy, not as a virtue but as a political necessity.
The unemployment figures have reached such a state that the Government are pouring thousands of millions of pounds back into the economy and the 741 very Chancellor who introduced his White Paper in October or November, 1970, saying "We shall cut public expenditure" is now encouraging everybody to spend as much as possible immediately.
The very people who would be guaranteed to spend every penny they got would be the old-age pensioners. If we want to encourage expenditure, if we want to initiate a consumer boom, the very best place to channel the resources is into the pockets of the more poverty-stricken section of the community. There is not an hon. Member who in the last few weeks and months—indeed, throughout the year—has not received in his post letters from old-age pensioners detailing their problem and their poverty and asking why they must wait until October or November for the miserable 75p they will get then, because they know their own problems better than anybody here. We all see the evidence before us when we go to our constituencies but we cannot visualise what it is like to live on£7 or£8 or£9 a week, which is the very most that many of these people are getting. Some of them get less.
I agree with my right hon. Friend the Member for Blackburn (Mrs. Castle) that the Secretary of State is a very slick operator. He is the Government's public relations officer No. 1. He can sell us anything, or at least he has a damned good try at selling us anything. Anyone listening to the Secretary of State today would think that it was a harvest festival, that everybody would get something. The right hon. Gentleman challenged my right hon. Friend with the statement that everybody would get£1 back in tax, but that will be taken back in rent in the next few months from most of them. Therefore, they are not gaining.
The debates on the Budget, show that my right hon. Friend's assessment was correct. The Budget was designed mainly to help those on high incomes and investment, unearned incomes. The Bill is virtually distributing the crumbs from the rich man's table. Of course people are grateful for crumbs when they have not had a meal for a month or two, but that is no good reason why we should not criticise the Bill.
I am as much of a partisan politician as any hon. Member. Nevertheless in many ways I find it a distasteful exercise 742 to make a party political football of the plight of our old people. We all tend in these debates to play the numbers game and to produce statistics to show that one side did better than the other at a certain period. This is a futile exercise unless it is related to the context in which a Government were acting. The context in which the Labour Government were acting was a very different context from that in which the present Government are acting. Our top priority was to solve the problem of the balance of payments. Perhaps with hindsight this might be regarded as wrong. We were faced with an£800 million deficit and successive Chancellors bent all their endeavours to solving the problem.
The great tragedy for our old people and for the community as a whole was that when we got the balance of payments right we were kicked out of office because of the sacrifices we asked our people to make in solving it. The Government are now reaping the rewards. We could not have had these Bills and this generosity if it had not been for the Labour Government turning the£800 million deficit into about a£600 million surplus, although the Conservatives tried to convince the people in the course of the 1970 General Election that the turnabout in the balance of payments was phoney.
I shall deal with one or two of the Government's claims. Each political party tends to be more extravagant with its promises in opposition than with its performance when in government. This is the fault of the party politicians and it is probably one of the reasons why they are in such disrepute. The Government claim three things in their list of achievements. They say that the last increase in the basic pension was the biggest in money terms since the war. The second is that they have given pensions to the over-80s, again for the first time since the introduction of the National Insurance Scheme. Their third claim is that for the first time there is to be an annual review of pensions.
Those are legitimate claims which any Government would be proud to make, but I hope the Government do not exaggerate the effects of them. Their first claim that this is the biggest increase in money terms is a grossly misleading boast. In real terms and in percentage 743 terms it is untrue. In 1946 the basic pension was increased by the Labour Government from 10s. to 26s., a rise of 160 per cent. Since then no government have ever remotely approached that kind of increase. The Tory Opposition criticised it—I think it was Sir John Anderson who said we had acted too hastily and ought not to have done it. He had some justification for saying that from his point of view because his then leader, Winston Churchill, had said that we were a bankrupt nation after the war. We did it contrary to the advice of Beveridge. It is true that the increase was eroded by inflation in succeeding years. But the£1 a week that the Government boast about was a 20 per cent. increase on the basic pension as against the 160 per cent. increase of the Labour Government.
There is no denying the brutal fact that since the war the rate of increase in the standard of living of the old people has fallen steadily and remorselessly behind that of the rest of the community. It is easy to blame the "blackmailing" trade unions, if I may use the Chancellor's phrase. It seems to be the Government's favourite ploy these days to blame the position of the old and those on fixed incomes upon the militancy and treachery of the trade unions. But the fault of that militancy lies in the Chancellor's attitude and the two or three grossly unfair and socially unjust Budgets introduced by him in the last two years.
The Government's second claim that they have introduced pensions for the over-80s for the first time is a minimal achievement. Will the Under-Secretary tell us the total net cost of the proposal? Certainly whatever it is, in the nature of things it is a sum which must be reducing. The number of pensioners concerned must be insignificant. Most of the over-80s were already receiving supplementary benefit or, presumably, they should have been if they were entitled to it. It is a measure of the fragility of the Government's case that they continue to claim this as a major contribution to the solution of the problems of old age.
The Government's third claim that they have introduced the idea of annual reviews is sound in principle. Again, with the advantage of hindsight one can say 744 that it should have been done by the previous Government. It does not automatically follow that this innovation, welcome though it might be, will of itself lead to a lightening of the burdens of poverty and deprivation which large numbers of pensioners still undoubtedly endure. If the annual increase is to be no more than 75p, the amount they will get this autumn, they will fall further and further behind the rest of the community who will receive more than 75p a year increase in earnings. The gulf between retirement and other pensioners and the working community will widen.
The future is no less foreboding in the light of the Government's White Paper "Strategy for Pensions". This is not the subject of debate today but it is very relevant to discuss the problem in the context in the Government's long-term policy for pensions. Earnings-related contributions are based on a sound principle. The idea was adopted by the last Government in their ambitious, inspiring and expensive scheme. No good pension scheme can be other than expensive and this is one of the great mistakes made by some of our manual workers. The miners in particular are suffering from it at the moment. They were very badly advised when it was said that they could get a good pension but did not have to pay a good contribution. It cannot be done. If people want good pensions they must be prepared to pay adequate contributions.
The Government's scheme leans far too heavily on occupational pension schemes. Of course they are highly desirable, but there are millions of workers, particularly manual workers, who have occupational pension schemes which are grossly inadequate. The top executives can look after themselves but there are millions of working. people who will still have to depend in large measure on the basic State pension. This is my main criticism of the Government's White Paper "Strategy for Pensions".
I want the Government to commit themselves to a guaranteed increase of not less than 10 per cent. a year on the basic pension in their annual review, plus any additional rise dependent upon the annual rate of increase of industrial productivity, so that the pensioner at the very least keeps pace with the increasing wealth of the rest of the community. 745 There has been reference to the Exchequer contribution. There is nothing sacrosanct about an 18 per cent. Exchequer contribution. No Government should be tied to that figure. On the contrary, it would be more equitable if the Exchequer assumed a much greater proportion, because there is no doubt that financing the old will be a bigger and bigger financial burden for a variety of reasons. How the burden is shared is a matter of debate but I hope it is our view on this side that a bigger proportion must be borne by the Exchequer, with a more progressive taxation system than we have now.
In so far as occupational schemes play a bigger part in financing old age, I think the trade unions would be very well advised to concentrate at least as much of their negotiating strength on that aspect of their conditions as on their claims for immediate wage increases. There might be scope here for the Government, the CBI and the TUC to get together to see whether the unions can be persuaded to limit their demands for immediate wage increases on condition that the pensions at the end of the day will be materially better than they are now. That would serve all purposes. The unions would be assuring their older members of a lessening of the gulf between earnings on retirement and retirement pensions. It would lessen the fear we all have of continuing inflation. It would serve the Government's purpose and the CBI's purpose, and I think it would serve the workers' purpose and help to make a major contribution to dealing with the whole question of inflation.
I should like to say something about the heating allowance, which is a very important point. Some people might think it is a minor point, but the Minister will have seen the recent report of Age Concern on this matter which revealed that one out of every three old people who were interviewed suffered from lack of adequate heating, which is one of their prime concerns. I think that the maximum heating allowance now is 75p a week. That will not buy a bag of coal. The need is much greater the further north the old person lives. I speak as a Member for a Scottish constituency. There might be a case for examining 746 whether it is more desirable to increase the allowance for those living further north. Living in the Highlands is very different from living in the south-east of England. This is an extremely important problem which I hope the Minister will take note of.
We are discussing today, as we discuss every day in the House, a question of priorities and choices. Resources are always limited and we must choose how much we spend on this, that and the other. This occurred last Friday when we discussed nursery education, and today it is pensions. It happens every day. Very painful political decisions must be taken by Governments. All too often the House is completely ignorant of the basic facts on which any Government decide their priorities. But in this case many of the basic facts are on our own doorstep. We can see them and we hear about them. People write to us about them, and we know that the most poverty-stricken section of our community, the most underprivileged section, consists of our old people.
I end on this note, against ourselves as Members of Parliament. In the past day or two there has been published the Parliamentary and Other Pensions Bill. When I compare how we are looking after ourselves with the way in which we are treating the people we are talking about in this debate, I find it intolerable. The Prime Minister's pension, noncontributory, is to be increased from£4,000 a year to£7,500 a year. Mr. Speaker's pension—I make no personal reference to you, Mr. Speaker, but to the office—is to be£6,500 a year, and that, too, is non-contributory. We backbenchers must contribute 5 per cent. to our pensions, but the Prime Minister and the Speaker do not contribute. I do not know why. Leaving that matter aside, why should we treat ourselves more generously than we treat 7½ million or 8 million old people? Simply to say that there are only 630 Members of Parliament but7½million to 8 million old folk, and therefore the problem is that much bigger, is not good enough. I do not believe that if the will were there to give the pensioners an adequate pension the means could not be found. It is because the will is not there that we do not find the means.
§ 6.7 p.m.
§ Mr. Tom King (Bridgwater)
The whole House will accept the spirit in which the hon. Member for Fife, West (Mr. William Hamilton) dealt seriously in the main part of his speech with the Bill and the matters that it raises. He struck an echoing chord in my mind when he spoke about the rôle union negotiators could play and the importance for the future of recognising the value of improved pension benefits to union members, which could give many advantages in many ways.
It is distressing that the so-called fringe benefits, the ones that do not represent immediate cash, tend to be overlooked and to be discarded in negotiations through a lack of understanding of the benefits they could bring. Part of the object of those engaged in negotiations is to achieve better wages, better earnings, so that people have the opportunity to save some of their income for the future, but they often fail to realise that by saving through improved pension provisions they can obtain the help of the Chancellor of the Exchequer and benefit in so doing. We must wish that these considerations could occupy a higher place in the future in union negotiations, and I welcome the hon. Gentleman's plea.
I also agree very much with the hon. Gentleman's refusal to play the numbers game. I thought it was something of an attack on his right hon. Friend the Member for Blackburn (Mrs. Castle), who spent most of her speech playing the numbers game. There have been a few canine comparisons. The right hon. Lady, whom I encountered in her previous capacity, always reminds me, if I may say so in the politest way, of an energetic Jack Russell. Perhaps we should avoid the feminine of that, which I suppose might be a "Jane Russell", which, of course, has other associations.
§ Mr. King
The right hon. Lady is nothing if not energetic, and she deployed her arguments with her usual skill, but strictly in the context of the numbers game. That is not the message the pensioners are waiting to hear.
I very much welcome the improvements that have been made. It is significant, 748 and obviously advantageous, that the members of the Opposition Front Bench team has been changed. Therefore, they avoid the problem of explaining why they failed to make the improvements themselves. They can always claim that they are about to bring to the matter a completely fresh approach of their own. The annual review is undoubtedly welcome.
§ Mrs. Castle
I am sure the hon. Gentleman would like to accept a little correction of what he has just said. I am afraid my hon. Friend the Member for Rotherham (Mr. O'Malley), who is usually with me on these matters, is ill. That is why he is not here.
§ Mr. King
I entirely accept what the right hon. Lady says. I was referring to the role she is playing, and the fact that there are certain advantages in her occupying the position instead of certain of her predecessors, who might have had to accept some responsibility for the inactivity and lack of effective improvements by the previous Government.
There cannot be a Member who has not had pensioners coming to him at his surgery over the problem that used to occur on an increase in pension with the consequent adjustment of supplementary benefit. The annual review, which will remove that anomaly, is to be welcomed.
I would like to raise two particular points on the proposals regarding the attendance allowance. My right hon. Friend the Secretary of State said that after discussion and the benefit of the advice of the Attendance Allowance Board it had been decided to proceed with certain categories in order. I am a little concerned about why the order has been decided as it has. I notice that the oldest shall be last. Those born before 1898 will be the last to receive the benefit so they will presumably be more than 74 before they are reviewed. They will be perhaps 75 or 76. Those over 76 will be the last to receive the benefit.
Why has the order been chosen in that way, particularly as it is based on the advice of the board? Equal periods have been chosen for evaluating the claims of the different categories. Are the categories equally divided? My right hon. Friend gave 500,000 as his estimate of the possible total that could be reached 749 of the numbers eligible under the modified attendance allowance. What percentage is represented in the estimates of his Department by these various categories? How many does he estimate are children, how many are of working age and how many are retired? I note that my right hon. Friend has divided equally the periods into six-month periods for determining each category. Are these groups of equal size? May we be given a breakdown?
I should like us to raise our sights for pensions. This is not a party political point. We in this country still have far too low an idea of what is an adequate pension. West Germany is working on a proposal that retirement pensions will reach 75 per cent. of the average working wage. The average working wage in this country is now£32 a week, which means on the German proposal, a retirement pension of£24 a week. A much closer relationship of the retirement pension to the average working wage will, I believe, become increasingly desired and required in the coming years.
The possibility of earlier retirement is also much under consideration. The commonly accepted philosophy that people in retirement have automatically consideraby lower expenses and must increasingly accept a lower level of income is also a concept that will be increasingly challenged. We shall be expected to ensure a far higher retirement pension—certainly one out of proportion to the football kicked around the Chamber today.
The right hon. Lady mentioned entry into the European Economic Community. One of the factors which all hon. Members will agree about is that there will tend to be a levelling-up process, an equalisation, a harmonisation in a whole range of different activities whereby all countries in the EEC will seek to achieve the level of the best—whether it be in number of holidays, average working wage or pension provision. We shall certainly see that other member countries make a far more generous national pension provision, and as a result we shall be under great pressure to follow suit. We shall be asked why our provision is not so generous.
It is against this background that I agree with the point made by the hon. 750 Member for Fife, West that one does not get pensions which are adequate without being prepared to pay for them. That concept is right and we must accept it. All proposals raise problems. All Governments are understandably anxious to avoid loading exceptional burdens on present and coming generations. But we must recognise that in future a higher standard than what is accepted at present will be expected, and we must prepare for it now.
§ 6.17 p.m.
§ Mr. Alec Jones (Rhondda, West)
I would not wish to follow the hon. Member for Bridgwater (Mr. Tom King) into the attractions he sees lying in Europe and into the accusation he made of the inactivity of the last Government were it not for the fact that I was one of the hon. Members who served on the Committee, with the hon. Lady the Member for Melton (Miss Pike), considering the National Superannuation and Social Insurance Bill of the last Government. Many of the major provisions and increases proposed in this Bill stem from the original concepts in the National Superannuation and Social Insurance Bill, particularly the attendance allowance and invalidity allowance concepts.
I start from the premise that in so far as all social security benefits are designed for those in need, any increase is to be welcomed. On that basis, I welcome in the main the contents of this Bill. But I do not think that is the question we should be arguing. The true question is not whether the Bill contains welcome and much-needed increases but whether the increases are adequate. Do they meet the needs of the old people, the sick, the unemployed and the disabled? Do they meet those needs not only at the date at which the increases are first paid but throughout the period of time in which they operate?
We should examine those questions against the background of the Chancellor of the Exchequer's Budget Statement. The Chancellor boasted:In total, the reductions in taxation which I have announced today amount to some£1,200 million in 1972–73. Together with the other reductions which have been made since this Government came to office, the burden of taxation in this coming year will have been reduced by over£3,000 million."—[OFFICIAL REPORT, 21st March, 1972; Vol. 833, c. 1390]751 Against the background of that large amount of money to spare, and bearing in mind that 82 per cent. of the increases in the Bill are borne by increased contributions which are nothing at all to do with the Chancellor of the Exchequer, I do not believe that the increases in the Bill can be described as over generous or even adequate to meet the needs which exist today.
I want to look first at the plight of our old-age pensioner comrades. If we take it as an essential aim that we should seek above all to insulate the pensioner against poverty—a great deal of lip service is paid to that idea—I do not think we are going far enough in the right direction. The National Federation of Old-Age Pensions Associations—few will contest that it knows more about old-age pensioners and their problems than anyone else—has made a demand for a single old-age pension of£10 and a married couple's pension of£16. That is a long way from where we are going now, but I do not think such a target is unreasonable if we mean what we say—that old-age pensioners should have an income adequate to live on not only with some dignity but with a modicum of comfort.
If we compare that ideal with the proposals in the Bill—increases of 75p for the single old-age pensioner and£1.20 for the married couple, effective not today but from October—it is fair to say that both in amount and in timing we are behaving in a miserly fashion. The Minister of Agriculture this week announced that food prices had risen by 17.2 per cent. since the General Election. The Daily Mirror last Saturday published its "Shopping Clock" which I know is well read in Government circles. It said:A real shocker—that's this week's food bill. It sent the hands of the Mirror Shopping Clock swinging forward by 12.p. The increase is the biggest registered by the clock in five months.That is the sort of problem the pensioners have to meet. These are the people who have to meet the ever-rising prices. It is adding insult to injury to tell them that they even have to wait for their small increases in pension until October while at the same time we make income tax concessions effective from May and other concessions even earlier. After all, we must all surely accept that old-age 752 pensioners, by virtue of their age and their poverty, are the people least able to wait.
I turn now to the question of the annual review. I welcome it as desirable in itself but it could be said to have been forced on the Government by virtue of inflation. It is right that it should have been done, and essential. I do not think that the Secretary of State will think me churlish, however, when I say that I do not believe it to be a victory for any Government. The fact that the present Government have accepted the annual review is a tribute to the pressure put both upon them and the previous Government by back benchers on both sides of the House. I know that I am somewhat suspicious of this Government in particular and Governments in general in connection with old-age pensioners, but I ask the right hon. Gentleman to tell us why it was decided not to write a guarantee of the annual review into the Bill.
§ Mr. Jones
I accept that it has been decided to write the guarantee into another Bill, but I ask because old-age pensioners have said to me "Are we to have it reviewed every year?" I have replied "Yes. The Government firmly intend that it will be." I have then been asked "Will it be in the Bill?" I have replied "Yes" because I was sure that it would be in this Bill and I think it desirable, in the first National Insurance Bill following the Government's decision to accept an annual review that the guarantee should be written in.
I welcome today's reduction in the unemployment figures, but we must remember that the present Leader of the House, when he was Secretary of State for Employment, indicated that we were likely to have 500,000 unemployed for the next two years. That means that we are likely to have over that period high and long-lasting unemployment. I ask the Secretary of State for Social Services particularly to look at the problem of the long-term unemployed. The present law dealing with long-term unemployment means that after 312 days unemployment benefit ceases and the unemployed person becomes dependent either upon means-tested supplementary benefit or, if it is a 753 man, for the first time in his life, after 20 or 30 or 40 years of work, upon his wife's earnings. That was not the case under the 1948 Act, Section 62 of which extended the period of entitlement to unemployment benefit as long as the need—the unemployment—lasted, as long as the man was willing to work. The willingness to work was tested by a local tribunal. I think we should revert to that position, bearing in mind that we are likely to have long-lasting unemployment for a considerable period of time.
I welcome the extension of the attendance allowance to those requiring a great deal of attention by day or night. This will make it much easier for many of my constituents, whose applications have been rejected and who have found the greatest difficulty in understanding the reason for such rejection.
I come back to the point made by the hon. Member for Bridgwater on the implementation of this extension in stages—the working age, the children and the old people. I understand the point that the right hon. Gentleman took the advice of the Attendance Allowance Board on this but I think we should consult further about it. It seems to me that whatever the views of the board may be, the arrangement that the oldest people should be kept waiting to the last to receive the benefit is harsh and cruel. I can think of some of the oldest people in my constituency who need the attendance allowance and who qualify for it by virtue of their age and illness but are likely not to be with us long enough to reap the benefit of the extension. I urge the right hon. Gentleman to look again at this and see whether we cannot devise some means, perhaps by a change in the order proposed, to ensure that the elderly disabled are particularly helped by the extension of the attendance allowance.
I want to say something about the disregard in the assessment of supplementary benefit claims. In 1966 it was decided that the disregard should be 20s. of other income, which was to be ignored in calculating entitlement to supplementary benefit. In 1969 I asked a parliamentary Question about the amount that would be necessary to increase the disregard to give it the same value that it had in 1966. It was clear in 1969 that the disregard had begun to lose its value, and I am sure that as a result of inflation, certainly in the last two years. the 1966 disregard 754 of 20s. needs overhaul today. I ask the Government again whether they consider that the disregard is necessary in 1972. Why is it not updated regularly as are the other benefits provided in the Bill?
I have sought to raise certain issues to which I hope to return if I am fortunate enough to serve on the Committee stage of the Bill. I believe that these issues can make our social security provisions more compassionate. I hope that the Government will enter the Committee stage of the Bill prepared to listen to the arguments and, if necessary, to accept certain Amendments for the sake of our fellow countrymen who often are worse off than ourselves.
§ 6.31 p.m.
§ Mr. Robert Boscawen (Wells)
I am glad to follow the hon. Member for Rhondda, West (Mr. Alec Jones). I know how sincerely he feels about these matters. I am also particularly glad that he is not prepared to play the game of pension shuttlecock. I have always been convinced that pensioners do not like to be treated as a shuttlecock between the parties in these matters. It is an undignified rôle. It does not help them in the least if the parties score party points on what they did when they were in office. How easy it is when one is not in office to make promises for putting pensions up without talking about the contributions that have to be made.
First, though I welcome the extension of the attendance allowance to the day or night principle. It is disappointing that it will take so long to be fully implemented. Before I have to explain this to my constituents, including the people who will not get the extended attendance allowance for two years or so, I would like to hear the detailed administrative reasons why it takes so long. Is it the shortage of doctors on the Attendance Allowance Board, the shortage of medical opinion or the shortage of administrative people involved? I hope that the Minister will give as much detail as possible on this matter.
Secondly, the Attendance Allowance Board must be building up a mass of information and knowledge about the people who are applying to it for allowances. We have not had a full review from the board, and I wonder whether we shall get one. It would be of immense 755 use to all of us if we could hear something of the information it is gaining not only about the people who get the allowance but about those who have to be turned away at the door.
My third point is that many people are turned away because they do not qualify. They are the sad cases one frequently hears about in one's mail. I hope that their position is drawn to the attention of, for instance, the Directors of Social Services. A great deal of the disability in this country can be helped but it is not being helped through lack of communication. It may be possible to pick up a few more cases through the Attendance Allowance Board in this way even if they cannot be given an allowance. At least the director of social service will have had notice of them and will be able to see whether through community home-held or any other ways they can be helped.
The Bill will be followed by increases in war service disability pensions. I never understood why we could not raise those pensions in the same way as we can raise old-age pensions through the Bill. It is done automatically, as I understand it, and it never seems to be debated in this House.
On each occasion that we have debated a National Insurance Bill I have brought up the same case, and I intend to bring it up again. Again we have missed an opportunity to put right the great injustice to the widows of Servicemen who married their husbands after retirement and who still get no pension.
I can quote the case of a widow of a lieutenant-colonel of the First World War. After that war he left the Service and retired. He joined up again in the Second World War, not under the same regular commission but under an emergency commission. He served through the Second World War and subsequently died. Although she was married to him during service in a world war, she still cannot draw any pension. That is a matter about which we should all be deeply ashamed. There are not many such cases, but we should do something about the remaining ones. There is a tremendous amount of moth-eaten red tape wrapped around those cases which I would like to see my hon. Friends cutting through quickly.
756 It was represented that my right hon. Friend was complacent about the gap between average earnings and pensions, particularly the pension for a single person. I do not believe that my right hon. Friend is the least bit complacent. It is completely out of character. I agree with my hon. Friend the Member for Bridgwater (Mr. Tom King) that we have to think much harder about closing this gap. If we are to harmonise with the countries in Europe we shall have to do it. Let us bring it about steadily. We may not be able to do it all at once, but let us start bringing it up steadily towards a better proportion of the average earnings of the day.
Finally, I add my welcome to the Bill, which primarily is the result of bringing in the annual increase, which is a very great advance. My right hon. Friend deserves all the credit for introducing the Bill at this early stage in this Parliament.
§ 6.38 p.m.
§ Mr. Eric Deakins (Walthamstow, West)
I find myself in complete agreement with everything that the hon. Member for Wells (Mr. Boscawen) said, particularly on the plight of certain widows of Servicemen who are still denied a pension, and the need to speed up administrative arrangements for processing applications and planning allowances. I shall have a little more to say on that subject later in my remarks.
I begin by referring to what all hon. Members have mentioned, the issue of pensions and inflation. One of the reasons why the Bill is probably more widely welcomed than any previous National Insurance Bill is that everybody recognises that for the time being we shall have to live with inflation which is well in excess of 5 per cent. a year. Those of us who are at work can perhaps use our bargaining power to ensure that we keep pace with inflation, or even improve our living standards in an inflationary time by investing money in things like property, which are supposed to be inflation-proof. These advantages are denied to old-age pensioners.
We have to address our minds in this debate to the subject of whether it will be sufficient in future merely to regard the annual review of pensions as a means of compensating pensioners for inflation in the previous 12 months. If pensions 757 are constantly to be brought up to a certain level in relation to average earnings, allowed to deteriorate over the next 12 months and then jacked up at the next annual review, we shall be playing fast and loose with the old people. They will have nothing to be happy about if all that we are assured of in this Bill is that the annual review will be on that basis. I hope that it will be agreed that priority should be given in the annual review to giving a rise in pensions sufficient to compensate for the effects of the fall in value of the pension since the last increase.
I suggest—indeed, this may have been considered by the Government—that in the PESC exercise—the public expenditure five-year survey—consideration ought to be given to putting in a target each year for an increase in the value of old-age pensions in addition to any increases which may be necessary to compensate for the fall in the value of pensions since the previous increase. Governments do not like targets because if, for any reason beyond their control, they cannot reach them they are open to perhaps ill-informed criticism. But surely all hon. Members agree that we should try to give a constantly rising standard of living to old people.
This is not a matter which ought to be left to budgetary policy each year. The hon. Member for Billericay (Mr. McCrindle) put forward a useful suggestion for considering an increase in the summer and paying it in the autumn. However, I take issue with him on one point. He implied that an assessment of the pension increase which ought to be arrived at in the summer of each year would depend on the Government's view of the demand management of the economy. In a mixed economy it is obviously essential to have demand management. However, pensions are too important a subject to be considered as just another part of total Government spending. Obviously, they must be considered in that way, but I suggest they should also be considered in other ways. If we are to have demand management policies which work, they should affect those who are working or those who, if not working, are of working age and perhaps living on accumulated capital. There is no question that we need a wealth tax to iron out many of the inequities in 758 the tax system, but it is wrong that a demand management policy should apply to the consideration of old-age pensioners year by year.
Surely no Government could in future say: "It is necessary for us to damp down demand in the domestic economy. Therefore, at the annual pension review we will not give the increase that pensioners ought to be getting to give them a real increase in their standard of living and we shall not give them an increase which will make up for the fall in the value of the pension since the last increase." Whatever the state of demand in the national economy, surely the minimum that any Government of any political complexion should aim to do in the annual pension increase is to compensate for the fall in the value of the pension since the last increase and the last review. If we can assure old people that in future, come what may, whatever the state of the national economy, pensions will at least keep pace with inflation, even though there cannot always be that real increase which all hon. Members would wish to see. we shall be doing them a great service.
The need for an annual review which is inflation-proof is shown by the large numbers of pensioners who have to go to the Supplementary Benefits Commission to achieve a minimal standard of living. Surely our first aim should be a pension for old-age pensioners which ensures that they do not need to go to the Supplementary Benefits Commission, except in very exceptional circumstances. This would not necessarily mean the Government paying out any more money, because what is paid out in supplementary benefits now could be paid out in future as pension increases. There would therefore be a saving on supplementary benefits. However, there is no doubt that, despite what both this and the last Government are doing and have done, the plight of old-age pensioners grows steadily worse, not only because of inflation but because of some human factors which we cannot quantify in money terms.
We live in a mobile society. Therefore, more old-age pensioners are living alone away from their relatives and friends—certainly away from their closest relatives who have a duty to look after them—and are increasingly unable to cope 759 with the demand and pace of modern living. One would think that every old-age pensioner needed a television set not as a luxury but as an absolute necessity, and, furthermore, a telephone as many of them find it difficult to get out, particularly in inclement weather. It may be that eventually we shall have to consider some form of subsidy to provide old people with telephones so that they may keep in touch with relatives who have moved away beyond walking distance, which is all that most old people are capable of doing.
Old-age pensioners are totally dependent on the State. That means that basically they are totally dependent on both parties in this House. Action to give a real improvement in old-age pensions is a right which pensioners have. But, more important, those of us of working age have a duty to those people who have given their lives in service to and work for the community, usually in working conditions very much worse than appertain to the working population today, to do our best for them.
There is another reason for welcoming the annual review. I, like many hon. Members who have fought by-elections in the last few years, particularly in the time of the Labour Government, have found a good deal of misunderstanding among old-age pensioners about the cut which took place in their supplementary benefits every time there was an increase in pensions. Although one could give the explanation, one always felt that it was unsatisfactory from the old people's point of view, and that really one was making excuses although giving the proper reason. Therefore, we should welcome the annual review because it will get rid of what seems, on the face of it, to be an anomaly. In future, if pensions and supplementary benefits are considered together we shall get over this difficulty and old people will understand that pensions and supplementary benefits go up, not that one goes up and the other is cut because the first has gone up.
Finally, I wish to refer to the attendance allowance. Obviously all hon. Members will welcome the extension of the scheme partly because so many people who thought they would be eligible were excluded from the original scheme as a result of the rigorously defined condition 760 which then applied. This is not a matter of criticism. When we start what is, in effect, a new social service we must have rigorous conditions, but gradually there should be a process of relaxing those conditions to bring in more people, particularly as the administrative machinery becomes capable of coping with a larger number of claims. Nevertheless, as has been pointed out, there were a lot of hard cases for constant attendance allowances in the original scheme. The hard cases with which I am particularly concerned will now, fortunately, be met by the generous extension of the scheme to those who need constant attendance by day or by night, not both by clay and by night.
However, we are tackling only the tip of the iceberg regarding the attendance allowance. The needs of the disabled are known, but only vaguely. We do not know the total numbers. There are no central administrative records. Many people who might be eligible for the attendance allowance, disability benefit, and so on, may not have put in for it or may have been put off by the bureaucratic process through which it is necessary to go. Therefore, I hope that, as local authorities begin their surveys for the purposes of the Chronically Sick and Disabled Persons Act by knocking on doors and finding out the needs and requirements of the disabled, the Government—whether this Government or the next Labour Government—will do more to increase the amount of money paid out and to extend the general principle of inclusion in the scheme for the attendance allowance. We have disability benefits, but they are not always open to every section of the population.
The way in which it treats its old people and its disabled, those who can no longer help themselves and are dependent on the State. is a mark of a civilised community. Although no hon. Member will regard the Bill as going far enough, it is a welcome step forward. On both sides, we hope that it will be a beacon to future Governments, Labour or Conservative, to build on the firm foundations now being laid.
§ 6.50 p.m.
§ Mr. Cecil Parkinson (Enfield, West)
I listened with interest to the speech of the hon. Member for Walthamstow, West 761 (Mr. Deakins), but I hope he will forgive me if I do not pursue his line of thought. I hope that the House will forgive me if I introduce a somewhat more partisan note than has been noticeable in the more recent speeches, though not nearly as partisan as the opening remarks of the right hon. Lady the Member for Blackburn (Mrs. Castle) who, I am sorry to see, is not now in her place.
I listened with a growing lack of conviction to the right hon. Lady's speech and then, at the end, I realised that she did not intend to be taken seriously, promising as she did—I tried to note it down—a guaranteed, dynamised, inflation-proof benefit, or something to that effect. It was no doubt what the Labour Party, so we were told, would produce as the outcome of the Crossman plan—a guaranteed, dynamised, inflation-proof benefit. My mind went back to the good old days of the white heat of the technological revolution, and I could not help but wonder whether that pension was to be paid out of the product of that revolution, about which we heard a lot at one time but about which we hear very little now, since that sort of talk is thoroughly unrealistic, just as the right hon. Lady's was about the benefits which her party promises for the future.
I recalled the scheme which, we were told, would produce those benefits. It was largely unintelligible. The present White Paper, on the other hand, offers a much better hope for the people of this country.
I do not like the idea that we in this House by our decisions set the standard of living of 7 million to 8 million people. I prefer that sort of decision to be taken out of the Government's hands. People's pensions should be related to their job. Properly funded occupational pension schemes, diversified and professionally managed, offer a much better guarantee and a much greater likelihood of something approaching the right hon. Lady's dream than the sort of scheme which she and her hon. Friends produced when they were in power.
I am tired of the rather proprietorial air which the Opposition adopt towards pensions and their smug approach to their own record, the implication always being that we on this side do not care while they are the ones 762 who care and do things. [HoN. MEMBERS: "Hear, hear.] I heard the hon. Member for Liverpool, Walton (Mr. Heller) say: "What do you know about pensions?" It is the same old theme—"What do you know about trade unions? What do you know about work?". I am sick of their proprietorial air, so I thought that it would not waste the time of the House if we spent a few moments comparing the records of the two parties.
It is interesting to note that during the 13 years of Conservative Government from 1951 to 1964, pensions rose in real terms by 4 per cent. per year, and in the six years of Labour rule they rose by an average of 2½per cent. I noted that the right hon. Lady boasted about 1965 but slid gently over 1967 and 1969, because she knew that the two later reviews did nothing to improve the pensioner's lot She knew that by the time her party went out of office pensioners were worse off than they were in 1965, in spite of the 1965 splurge, which is the only part of their record that the Opposition really like to talk about.
I take pride in the fact that a Conservative Government gave the largest ever cash increase in pensions last year, and the largest percentage increase in 1958. [HON. MEMBERS: "No."] I have checked that. I was surprised to hear the hon. Member for Fife, West (Mr. William Hamilton) make his claim. In fact the largest percentage increase came in 1958.
In our previous period of government we proved that we care about the pensioner and we share the anxiety which the Opposition express about promoting the well-being of pensioners. We can point to greater success than they ever showed. Whatever the right hon. Lady may say about cost of living increases, the present Government can point to the simple fact, as my hon. Friend the Member for Billericay (Mr. McCrindle) said, that in less than two and a quarter years there will have been an addition of£1.75 to the single person's pension, whereas in Labour's six years the increase was£1.62. We have three and three-quarter years to go and already, in cash terms, we are ahead of them. I am proud that we are, and I hope that the Government will continue in their good work.
§ Mr. Meacher rose——763
§ Mr. Parkinson
I would rather not give way; as there is little time. The hon. Gentleman has many opportunities, and he frequently uses them to give misleading statistics. I do not intend to present him with another opportunity now.
The Government have shown already in the increases which they have given that they intend to look after pensioners. In doing that we are not doing anything new; we are merely maintaining a record of which I am proud.
I end on a slightly more cavilling note. I share the concern expressed by my hon. Friend the Member for Bridgwater (Mr. Tom King) about the attendance allowance provisions, and I am especially unhappy to note that the oldest section of potential beneficiaries will be the last to have their position reviewed. To emphasise the point I shall cite an extreme example which came to my notice at my advice bureau a fortnight ago.
The parents of a 93-year-old lady who has lived with them for 20 years came to see me—[Laughter.] People live long in Enfield; it is a very healthy place. I meant to say "the children", of course. They pointed out that their mother was 93 now and would be in the last category to be reviewed. If she is found to be a deserving case—and I have no doubt that under the extended provisions she will be—the earliest possible date for benefit in her case will be December, 1974. Not to put too fine a point on it, the review in her case will probably be an academic exercise, because it is highly unlikely that she will be here to qualify for the allowance by the time the review is completed.
There is a case for making an exception for the very elderly, the over-80s or over-85s. There is a strong case for bringing forward the review of their position. We should not defer it till the very last. I hope, therefore, that my right hon. Friend will consider this matter. The number of people involved is not enormous. We ought to make a special exception for the over-85s, and I hope that when the Bill goes into Committee an Amendment will be made to bring that about.
This is a good Bill and greatly to be welcomed. No one will be satisfied with what it does for pensions but it is a step in the right direction and, coupled 764 with the annual review, it is further testimony of the Conservative Party's concern for the plight of the elderly.
§ 6.58 p.m.
§ Mr. Sydney Bidwell (Southall)
I apologise for not being present to hear the two opening speeches from the Front Benches, which I very much wanted to hear, but as a member of a Select Committee I was tied up from 4 o'clock till 6 o'clock.
I wish to put a word in the ear of the Secretary of State himself because, on the occasion of my presentation of a Ten-Minute Bill designed to gear the State retirement pension to national average earnings—it is still on the Order Paper—the right hon. Gentleman left the Chamber as I began to speak. Several of my hon. Friends thought he was acting with discourtesy, but I noted that his hon. Friend the Under-Secretary of State did me the honour of listening to my speech.
I quite understand that a Minister of the right hon. Gentleman's standing in the Government is a busy man and, having answered Questions that day, he may well not have been aware, at least at that juncture, that my Ten-Minute Bill had anything to do with him. However, I hope that the right hon. Gentleman will look very seriously at the philosophy expounded in that Bill. It is commonly understood that there are two different philosophies. There is the Labour Party's philosophy towards the State retirement pension which is mirrored in the TUC's economic review. There is also the philosophy and attitude of the Secretary of State and his colleagues towards the promotion of occupational pension schemes in preference to any organic promotion of State retirement pensions.
I ask the Secretary of State to study the proposals in the Bill which I put forward and to consider the possibility of going some way towards what I have in mind. The retirement pension has been set out in graph form in relation to national average earnings, and this, in working-class terms at any rate, is a much better yardstick than a cost of living index. One was produced about two years ago which was supposed to be used as a tool in arriving at the pattern of spending of old people in 765 general, because it is not possible to apply a weighted system in the more general cost of living index, but I understand that it is falling into disuse as it has been found well nigh impossible to measure household costs in terms of rents, mortgages in some instances, and so on. If we want to measure the State retirement pension in real terms, the only tool we have is the document relating to national average earnings, currently about £31 or£32 a week, which ranges over a wide section of industry. If we thought in terms of an entitlement of old people to half this figure in a graduated way annually, we would go some way towards solving the problem.
The hon. Member for Enfield, West (Mr. Parkinson) talked about a "splurge" under the Labour Government in 1965. I do not wish to engage in an auction on this matter. I do not think that the average old-age pensioner was impressed with the previous Labour Government, which I kept on nagging on this question, or is impressed with the present Government. I understand the philosophy and approach to this matter. The Secretary of State said he wanted to give benefits to people who needed them; he did not want to give blanket benefits to people who might not need them. I wish him joy in his endeavour. But that does not apply to old-age pensioners, since a considerable number of them—and I think that a figure has been put on it—because of pride or ignorance or for other reasons will not apply for supplementary benefits to which they would be entitled if they disclosed their circumstances.
A pension of£6 a week for a single person is not satisfactory, especially if people have no other means or very few other means. I was a railway worker several years ago. Railway workers receive a small railway pension. They may have a gratuity and a pension for which they have paid in. When inflation overtakes them, their pride will not allow them to seek the means to help them to catch up with it. There is a generation of people who were denied the opportunity of contributing towards handsome occupational pension schemes.
That may not happen in future because, partly as a result of what happened concerning national superannuation under the Labour Government and partly as a 766 result of what has happened under the Conservative Government, the nation generally is much more conscious about the question of national provision for old-age. It is conscious that it owes a debt to many people of previous generations who did not have the opportunity of contributing to pension schemes. The House brought people over the age of 80 into entitlement on the ground that they could not insure during their working lives. Similarly many people could not take up satisfactory occupational pension schemes. They will be assisted in future because when the Labour Party is in power again it will be possible to implement our national superannuation ideas instead of having to grapple with economic difficulties.
My great criticism of the Labour Government was that they did not give this matter priority after putting the balance of payments right. Had we done so, we would have won the General Election because it would have made Labour Party supporters vote. Our defeat was attributable to Labour supporters not voting rather than to a substantial swing to the Conservative Party.
There is no point in boasting about an annual review system unless substantial improvements are made along the lines I have suggested. We cannot leave the matter to the National Federation of Old-age Pensions Associations for discussion at its annual conference. I notice that in the struggle to keep up with the cost of living and inflation the association has put another£2 on its original demands. Therefore, the TUC's economic review has been made out of date in rapid time.
The Government cannot run away from this matter. The hon. Member for Enfield, West referred to the "white heat of the technological revolution". With a dynamic national economic annual growth rate or the TUC's proposed annual growth rate which its economic advisers said was possible if we pulled together, we could build up the resources necessary to deal with this question. I ask the Secretary of State to look at this matter carefully because if we get the economy moving—and we all want to see that happen—the first beneficiary must be the previous generation of old people.
§ 7.10 p.m.
§ Mr. J. R. Kinsey (Birmingham, Perry Barr)
My right hon. Friend the Secretary of State has a wonderful record over less than two years. This Bill adds to it. I invite the Opposition to look at his record occasionally, to write all the things the Conservative Government have done on a piece of paper and to keep it in front of them. If they had the Government's record they would be trumpeting round the country saying how wonderful what they were doing for the people in need was. I am very pleased that my right hon. Friend, with his humane attitude to these matters, holds his present office.
An hon. Member opposite referred to a Standing Committee during the time of the last Government which had possibly set the scene for today's action. Right hon. and hon. Members opposite talked in government but we had precious little action from them. They took out their plans and gave them a dusting prior to presenting them to the people at the election for the third time in order to get Labour supporters to the poll. It is amazing how much more generous right hon. and hon. Gentlemen opposite are now that they are in opposition. They have lost all semblance of constructive thinking and now seem to be adopting a carping attitude. The right hon. Lady the Member for Blackburn (Mrs. Castle) made a carping speech. The hon. Member for Oldham, West (Mr. Meacher) referred to tax comparisons. It is wrong to take the pensioner in isolation from the rest of the economy. It has never been done in the past. It was not done under the last Labour Government. During their period of office escalating taxes hit hardest the elderly and most needy sections of the population.
However, tax cuts can be extremely helpful if they are used to ease wage claims. This is one of the de-escalating measures which the Government are taking to help all sections of the community. They will be very helpful to the one-third of pensioners who nay tax. I welcome the fact that no tax is to be paid on the 75p pension increase and other tax concessions. I hope it is not only for this one year. I like the system whereby pensions are eased on a taxation 768 basis. Supplementary pensioners will gain in full this year.
The aim of all pensioners is independence. This is the concern not just of the Department of Health and Social Security but of the Chancellor of the Exchequer. I should like to see us pressing the Chancellor more for taxation concessions on pensions. I should also like us to press local authorities to allow elderly people to continue working if they wish to do so. If old people want their independence and if they are useful to the community they should be allowed to do this. Widows need to be helped more than anybody else.
I welcome the proposals concerning the attendance allowance. I wonder whether we should reach 1975 or 1976 before we assist elderly people. It is a little worrying (to think that their benefits may be paid 18 months later than other benefits, although they have an equal and comparable need for assistance.
I wished to mention the question of young people of the age of 15 or 16 whose claims for benefit must also be considered, particularly in view of the extra year which they will spend at school in future. However, that is a matter for other legislation rather than for this Bill. We all want to see improvements for pensioners and other deserving people. If we want an adequate pension for all, the whole House will welcome the tax credit system suggested by my right hon. Friend the Chancellor. It will help to overcome the problem which the hon. Member for Southall (Mr. Bidwell) mentioned about people being independent and not wishing to apply for supplementary benefits. Here is a system that will do it, and both sides of the House recognise this. The fact that the Government are suggesting it proves that they are aware of the need for progress. The further suggestions contained in "Strategy for Pensions" which are still to come will satisfy the needs of the pensioners and show that the Government are concerned about pensions and determined to do something for them.
§ 7.15 p.m.
§ Mr. J. D. Concannon (Mansfield)
The hon. Member for Birmingham, Perry Barr (Mr. Kinsey) chided us about what 769 the Labour Government did for pensioners, but I do not wish to follow that part of his speech. He also referred to the need to be constructive. There is a vast difference between the situation now and the situation when the Labour Government took office. The troubles we inherited meant that we never had an opportunity of doing what we wanted to do within a "hand-away" Budget such as we had this year. If we had had such an opportunity, I should have demanded different priorities from those of this year's Budget.
The hon. Member for Perry Barr said that we should list all the things that the Government have done to help old-age pensioners and keep on reading that list. But we are dealing with the reality today, and there is no justification for self-congratulation by hon. Members on the Government benches. One only has to go round to old peoples' clubs and talk to the old people to learn whether or not they are better off than they have ever been. As my hon. Friend the Member for Southall (Mr. Bidwell) said, it is a plague on both our houses.
Statistics and percentages are bandied about, but what do percentages mean to old-age pensioners? We are in enough trouble with the railwaymen, the miners and others through talking about percentages. What we have to consider is the reality, and I see that reality in my constituency every day of the week. Out of 7 million old-age pensioners, 2 million are on supplementary benefit. The proportion on supplementary benefit must be much bigger in my industrialised constituency. There are no millionaire old-age pensioners there. Most of them cannot struggle along on their present pensions.
Recently I heard of a miner—a very level-headed man not given to excesses—who had worked in the mines for 52 years. All he left his widow was£2 in the Co-operative Bank and£5 in premium bonds. That is not an isolated case. I have never been so mad and bitter as I was when I found out that there are still people so badly off in our community. It is a stigma on our society.
§ Mr. Concannon
He was a pensioner, yes. That is an illustration of the position of our old-age pensioners.
If there ever was an opportunity to do something lasting for the old-age pensioners the Budget was that opportunity, and the opportunity was lost. I am sure that if it had been put to the people who were given concessions in the Budget they would gladly have said that the priorities should have been elsewhere.
My right hon. Friend the Member for Blackburn (Mrs. Castle) spoke about the priorities of the Labour Government. We had a bitter six years, and had we been able to get together the money we should not have handed it out in this fashion. We should have had quite different priorities. But that is the luck of the election. One can only say what a wonderful opportunity has been lost.
We must look closely at the future for our old-age pensioners. Governments are judged on what they do for their old-age pensioners. I was very much in favour of the "Crossman" Bill. The National Insurance system is creaking at the joints and another Bill is needed to deal with it. Our object should be to see that old-age pensioners do not have to apply for supplementary benefits. We must devise a way of ensuring that when people have worked hard in industry for 50 years they have something at the end to enable them to enjoy the few years of retirement which they have earned. The country has an obligation to do that.
§ 7.22 p.m.
§ Mr. Michael Meacher (Oldham, West)
There have been three main themes running through the debate which have been evoked by the need to answer three central questions. The first and most important of these is: what is regarded as being the appropriate level of pension for the retired in today's modern, so-called affluent society? Secondly: in a year of unprecedented Budget opportunity, have the pensioners and others who are wholly or largely dependent on welfare benefits received their fair share of the handout? Thirdly: since with the support of the whole House the Secretary of State has embarked on a campaign for the proper compensation of physical and mental handicap, is that strategy proceeding far enough and fast enough 771 in the direction of the most urgent priority?
The fundamental question is the simple one of what in today's terms we as a society regard as the appropriate minimum living standard for the retired population. The right hon. Gentleman's answer, of course, forms the centrepiece of the Bill. By no civilised standards can that answer be regarded as remotely adequate. Pensioners today are not even keeping up with prices, let alone with earnings.
Some months ago the right hon. Gentleman gave the pensioners a 20 per cent. rise. Since 1969, when the previous Government made their last up-rating, prices have risen by 21½per cent. It will get worse. Every month pensioners will become poorer and poorer in real terms than they were at the time of the last Labour Government up-rating. That is the meaning of the Bill. Never has there been a period of such total eclipse of the real increase in pension value as in these last few months. It is for that reason that the Government's resistance to the annual review has finally been overcome with, I am glad to say, pressure from back-benchers on both sides of the House.
It is also for exactly the same reason that the hon. Member for Billericay (Mr. McCrindle) and the hon. Member for Enfield, West (Mr. Parkinson)—who is supposed to be an accountant—by disgracefully misleading statistics explained the differences between the parties in the increases in the pension in cash terms. Any accountant knows perfectly well that such comparisons are utterly meaningless unless they are given in real terms. Given in real terms, the impression would be entirely different. The Secretary of State has said that the up-rating under the Bill will restore the traditional relationship with earnings, and so by and large it will, but people will certainly have to wait for it, and they will have to wait a long time for it.
One cannot help noticing the progression of the Government's priorities. The Budget Statement was on 21st March. On 3rd May, only six weeks later, the£1 bonus arrived in the pay packet of the local electorate. Unfortunately, the pensioners were not valued quite so highly in terms of the local elections. On 2nd 772 October, six and a half months later and 20p worse off than in November, 1969, the pensioners will get their rise; but not until 4th June, 1973, nearly one and a quarter years after, will the severely disabled get their extension of the attendance allowance. If they are the oldest members of our society—and I strongly support the point made by the hon. Member for Bridgwater (Mr. Tom King)—those aged 77 or over will not see it until December, 1974, two and a half years on, which means that they have a fair chance of not seeing it at all.
It is curious to withhold from benefit till the last those who are nearest to death, and it is in marked contrast to the eager enthusiasm of the Chancellor of the Exchequer for the substantial estate duty remissions for the wealthy. That is not, however, the crucial point.
The crucial point is what is a proper standard of living for pensioners in our society with its present wealth. It is easy in examining the financial statistics to lose sight of the human beings we are talking about. I make no apology for quoting from a pamphlet which I recently received, put out by Help the Aged, entitled "Granny Come Home". The quotation I shall give is in no way exceptional, but entirely typical:I am 78 and my wife is 74. Our total income is now£10:30 national assistance after paying a rent of£5:25 for a damp basement double bedsitting room. The balance has to keep us in food, clothing, heating and lighting. In really cold spells it costs us 15p a day for gas; even then, we use the gas as sparingly as possible by burning only five of our gas fire's nine burners. We have to huddle close to the fire or go to bed with a hot water bottle to survive sometimes.We cook on a single gas ring. We do all our washing and airing in this one room. And we keep our expenses down by halving everything, like cutting a cake of soap in half and sparingly using the same for washing and bathing. We divide such things as oranges and apples by halving them; I do not remember the last time I ate a whole apple or orange at one meal.Since boot repairers do not usually give receipts, we have to suffer the admittedly unavoidable humiliation of asking for one, thereby implying we live on national assistance. I am not merely imagining things when I say tradesmen as well as others do treat one with less respect once they realise one is receiving assistance. I have had this bitterly brought home to me.It is years since we have been to a theatre or cinema. Clothing is a nightmare. I have two suits of 1938 vintage and a military overcoat made a year later.773We would like to attend a church service on Sunday, but we simply cannot afford to contribute to the offertory, so we usually stay at home. There is only one small consolation in all this. By our economies we have no debts, but this is not Life, with a capital L. in the midst of an affluent society.We are the forgotten and unwanted generation.Whatever else the Secretary of State may say,£6.75 per week for a single person is not a living wage. It is a disgrace to the conscience of this nation.
What is unforgivable is that it need not be so. In Britain the single-person pension has been maintained rigidly at 20 per cent. of national average earnings since 1948. In Germany the retirement pension is 60 per cent. of insurable earnings after 40 years' insurance. In Italy it varies between a minimum of£4 and a maximum of 74 per cent, of average earnings in the three years before retirement. In Belgium it is 60 per cent. of average gross earnings subject to insurance. In France it is 40 per cent. of average earnings of the last ten years, varying between£2½and£10. In the Netherlands it is almost£10, less one-fiftieth for every year short of insurance below 50. In Luxembourg it is a minimum of£6½ and a maximum of just over 80 per cent. of insured earnings. Why in Britain are we stuck at 20 per cent.?
If there is one outstanding difference between the parties on social policy, it is over this fundamental question of what constitutes a decent pension level for the elderly. The Crossman scheme remains the symbol of Labour's belief expressed in practical terms, that the basic pension in old age should be more than doubled in its relationship to national average earnings. Equally the "Strategy for Pensions" scheme is a monument to the Conservative belief that income inequalities in working life should be fully reflected in old age, even if this means that the submerged tenth are left for ever below the subsistence level.
The Crossman scheme would have removed from poverty in old age all but 13 per cent. of those who would otherwise have fallen below the supplementary benefits line. The Joseph scheme, if implemented, is unlikely to reduce the present spread of pension poverty even by the year 2019. A starker difference of philosophy in the attitude of the two parties over the critical question of what 774 the pension objective is can, I think, hardly be imagined. I make no apology to the hon. Member for Enfield; West for our being proprietorial about the elderly; we are, just as the Conservative Party is proprietorial about the rich.
On this occasion I shall forbear to anticipate further the coming legislation, except to say that we appreciate the difficulties in which it has placed the Secretary of State today. If we had accepted that the single-person pension of 20 per cent. of national average earnings was a shame to our self-respect as a nation, and if he had decided to raise it by stages to a new higher level of, say, initially 30 per cent. he would have placed at risk his whole "Strategy for Pensions" package, because these latter proposals would then have confronted a sizeable number of people with the prospect of an actual reduction in pension provision.
It is for that reason, quite apart from the well-known ideological preference of the Conservative Party for retrenchment in favour of the rich, that we are being invited today to regard a pension of one-fifth of national average earnings as adequate. As has been said, the Bill is an opportunity tragically missed and that, I believe, is the key to it. In this year of unique reflationary potential such as we have not had since the war and will not have for many years again, a clear, ringing commitment could have been made to a programme for phasing out means-testing in old age and for raising the pension to a new and more decent level in relation to national average earnings.
The cost of taking all pensions up to the supplementary benefit level and thus eliminating the need for all means-testing can be calculated at about£675 million, and I believe that that is roughly in line with the "Strategy for Pensions" calculation. But net of the consequent savings on supplementary pensions the cost comes down to£470 million, and net of tax clawback also it comes down to about£400 million. Given the right priorities, that is a charge which is surely within our national capacity to absorb if spread over a period of, say, five years.
Nor need the effect have been regressive if the chance had been taken to restore the Exchequer contribution, which is now at the extremely low level of 775 about 15 per cent., back to its 1950 level of 24 per cent. I am glad that my hon. Friend the Member for Fife, West (Mr. William Hamilton) made that point. This would make the provision of pensions once again far more the responsibility of the whole community, and far less merely a transfer of resources to the aged mainly from the skilled working class. It would also have been possible to avoid regressive repercussions for the lower paid by making a further extension, as should be the case, to the graduated contribution band.
But no; the opportunity for a better deal for the elderly has been tragically missed. The champagne corks are popping in the City as the share index climbs to an all-time high, while pensioners are still obliged to halve their oranges and their apples because they cannot afford whole ones for a meal.
The second main question which has ranged through the debate is: how much have the pensioners received in handouts in this unprecedented Budget year? Although the Secretary of State failed to make this clear, I hope he will support the point which I made when I intervened in his speech, because it is important. Since the up-rating is merely a counter-inflationary restoration of purchasing power, the simple answer to this question is that, parallel to the£1 tax cut in the pay packet, the pensioners have received hardly anything at all. If they had received their share of the Budget proceeds proportionate to their numbers in the population, they would have gained about£400 million—roughly the cost of the proposals I have outlined. But, even if the demands of the investing class were too voracious for an equitable share-out of this kind to be allowed, several other policies could have been adopted by the Secretary of State if he was really determined to ease the hardship of so many of our elderly today. If the Secretary of State refuses to give a pension rise over and above that need merely to keep up with earnings—this has been the aim of both parties with a certain margin of error it has been achieved in various years and it will be achieved again in October, 1972—he could have provided automatically a reasonable heating allowance for all pensioners in receipt of supplementary 776 benefit. At present only 2 per cent. of pensioners receive an exceptional needs payment for this purpose, which is pathetic, and even of this tiny group only one in 100 gets the top rate of 75p a week, which is only about one-third of the annual average weekly heating charges of the elderly in wintertime.
The seriousness of this situation has recently been revealed by the Task Force report, which showed that more than one-quarter of the elderly people in its sample did not get enough warmth by day, and almost one-quarter by night. That has to be compared with the statistics of those receiving heating allowances. Of 550 in receipt of supplementary benefit questioned on this matter, only 11 per cent. were even aware of their entitlement to a heating allowance.
If the Secretary of State were really determined to take the sting of cold out of pensioners' lives, he could have awarded, at a cost of only£50 million, a£2 per week payment for the three winter months for all old people in receipt of supplementary benefit.
Alternatively, another way by which—if he could not or would not give a special boost to pensioners—he could still have concentrated help where the need is greatest, would have been by the introduction of a disability supplement to the retirement pension of, say,£1.50 a week, a figure I have chosen because it would again have represented a cost of about£50 million.
This would have had the advantage of not being dependent on the supplementary benefit—since it is recognised that take-up of this benefit is always incomplete—but could have been a valuable interim measure until the extended attendance allowance is applied to the elderly as the last of the three relevant categories.
It is clear that several policy options were available to the Government if they were determined to secure for pensioners a place in the concessionary stakes this year, but the Government have not shown willing.
The Secretary of State was asked to end the scandal whereby old people may be "awarded" a 50p heating allowance but are then told that they are already receiving it because it is included in the 777 long-term addition, and that they are actually therefore entitled to nothing extra. On that the right hon. Gentleman said "No". He was then asked to raise the£2 disregard for supplementary benefit purposes, and, although since its inception it has declined and is now worth about£1.50 a week, the right hon. Gentleman again said "No".
The right hon. Gentleman's colleague at the Treasury was asked to give special extra marginal age exemption reliefs for the elderly, but he said "No". Similarly, on behalf of the unemployed, now that 6 per cent. of them have exhausted their right to unemployment benefit and are not in receipt of supplementary benefit either, he was asked to extend entitlement beyond the present one-year period, but to that he also said "No."
In view of the current£350 million surplus on the Industrial Injuries Fund, the Government were asked if they would extend benefit to persons injured by industrial process. I assure the Secretary of State that this figure is correct. Nevertheless, the Government said "No".
These negatives are not in line with the impression that we are given by Government spokesmen, and particularly by the Under-Secretary when he recites the long list of the Government's finely tuned measures of selectivity.
Two important facets of this list are not immediately clear. To begin with, the vast majority of the aggregate sum involved—no doubt the hon. Gentleman will repeat the figure of£1,000 million tonight—is comprised purely of up-rating and in no sense is an extension of existing benefits.
Where new benefits have been introduced, such as the invalidity allowance and the pension age additions, their scope in coverage and value has been relatively peripheral and their total cost in scarcely exceeding£100 million is marginal in terms of a give-away Budget.
The second point which is not normally clear from the Under-Secretary's list is the very large extent to which the benefits are contribution-financed, so that they are not at all directly comparable with the tax concessions made in successive recent Budgets. On this basis the Exchequer contribution to the benefits 778 under the Bill explicitly for the elderly can be calculated, from the information in the Bill, at about£85 million, but to this must, to be fair, be added the£15million non-recurring concession of tax for the pension increase for this year only, making a grand total of about£100 million this year.
This amount means that the average pensioner will get about£13, compared with a Budget gain to the 1. per cent. wealthiest in our society, with incomes of over£5,000 a year, of£145 million through the raising of the personal reliefs and the lifting of the investment surcharge alone, quite apart from other lucrative but essentially unquantifiable gains to this group, involving an average gain to each of them of over£500. In other words, the richest members of society have in this last six weeks been given an extra£500 each while the pensioners have been given an extra£13 each.
It is against the backcloth of redistribution on this scale to other non-needy groups in the population that we protest at the gross injustice of the Bill. In particular, it is in the perspective of these other dealings within the Budget that we believe that the rejection of any major alternative concessionary move is so mean and unfair to the elderly in our population.
The major innovation in the Bill is the extension of the attendance allowance, which we all unreservedly welcome. This, however, at once prompts a question of the Government's whole strategy on behalf of the disabled. An acceptable strategy of the range required would have to take two main forms, and they are not inclusive but complementary.
One is to extend disability payments at least to the 1,250,000 seriously handicapped members of society, and it must be done in a manner which irons out the anomalies which so markedly characterise our pot-holed system of compensating handicap.
The other is to construct an effective network of community services which should partly have the function of substituting income deficiency to a degree but, more important, would channel otherwise wasted skills and capacities into more productive independence. On neither front can any objective person 779 say that the Government shows signs of developing a decisive large-scale strategy.
At present about 75,000 persons are in receipt of the attendance allowance, and it is expected that this number will increase when the extension is made to about 250,000.
§ Mr. Meacher
That is correct. In addition to the 75,000 there will be another 250,000. However, this is still a long way even from the initial target of 1,250,000 seriously handicapped persons in our society.
The Secretary of State will no doubt argue that he cannot administratively go faster. But for us at the grass roots, in the constituencies, it is all too clear that, so far from beginning to assault the citadels of this problem, we are still skirmishing—"floundering" might be a better word—in the foothills, and to give point to the human element I quote a current constituency case which I have no doubt, in its general approach, could be replicated by many hon. Members.
Mrs. H, as I shall call her, wrote to me about her two sons, both aged about 30, one a spastic and the other an epileptic. The latter, whom I will call John. and I quote the letter:suffers from exceptionally severe epilepsy, sometimes involving six or seven fits within 24 hours and regularly at least that number each week. He receives no warning of the fits and therefore often receives facial or head injuries as he falls. For example, during the last fortnight he has been in hospital three times for injuries caused during fits, and even hospital care is no answer because his cuts and bruises require attention. This means that he cannot be left alone. Without doubt, therefore, he needs continual supervision to avoid substantial danger to himself"—which is one of the criteria—Furthermore, his fits cause him to urinate so that at night his bedding and night clothes have to be changed, up to two or three times during one night, and during the day his clothing requires changing.Mr. H also happens to be off work because he has a coronary condition, and, as I have already said, the other son is also appreciably handicapped because he is a spastic.
The application for attendance allowance was made for both sons, supported by their doctor, and it was turned down. 780 Therefore, I tabled a Question to the Secretary of State asking whether he would require that in handling such applications account should be taken not only of the physical needs and capabilities of the applicant himself but of the capabilities of the family or of the caring persons to meet those needs. The Secretary of State said, "No", on the distinctly delphic ground that:The essence of the attendance allowance concept is to help any household containing a severely disabled person".—[OFFICIAL REPORT, 17th April, 1972; Vol. 835, c. 20.]That is exactly what I thought it was and is precisely why I tabled the Question in the first place.
But the point I am making is not merely a plea for Mrs. H in my constituency but far more for all those unknown Mrs. Ifs throughout the country. The point I am making is that, whilst we proceed so slowly in implementing these new proposals and continue to draw the regulations so tightly, inevitably inequities and anomalies of this kind will be increased, as is shown by the fact that by any reasonable standards Mrs. H and her family clearly need at least one disability payment. We have already heard today from the Secretary of State that the extension at a lowered rate does not necessarily mean that they will now get the benefit, having been turned down at the higher rate. But when we are having to wait two and a half years for the full phasing in of what is still a very moderate extension of the attendance allowance, these are serious consequences of the failure to proceed with all due urgency.
Quite apart from the question of the speed of the development of policy, there is also the apparent lack of any attempt by the Government to use this advance to rectify the absurd haphazardness of the present system of disability payments. At present, some awards are made according to the place or circumstances in which the disability first occurred, others according to the individual's circumstances and others according to the contribution record, and sometimes by a test of means. One asks why there should be these variations. What attempt is being made to iron them out? A war disability pension for a major-general at the 100 per cent. rate is almost double that for a private with the same degree 781 of impairment. Is that really justified? Some of the war disabled also get additional unemployability supplements, constant attendance allowances, exceptionally severe disablement allowances, comforts allowances, allowances for lowered standard of occupation, and clothing allowances. Why do they go only to the war disabled? Why do they not go to others who are equally or, perhaps, even more seriously handicapped?
Nothing is being done under the Bill to rectify the anomalies whereby at present a man can draw a full disablement benefit whilst in full-time work and can also obtain sickness benefit in addition to the pension? Yet if a man who became disabled at work does not meet the conditions of eligibility for a pension he may get only sickness benefit even though he is more severely incapacitated. A man disabled outside his workplace gets no pension at all but only the basic sickness benefits, while a disabled housewife may not even qualify for sickness benefit and may be forced back on to a test of means for supplementary benefit. If her husband is in full-time work she may get not even that but no benefit whatsover.
This is not a Bill with a thought-out strategy. It does nothing to remedy the extraordinarly irrational patchwork of anomalies under the present system or to establish the idea of a pension for the pre-retirement disabled through the development of earnings-related invalidity benefits—a serious omission that occurs again in the "Strategy for Pensions" proposals. Britain thus retains the dubious distinction of being the only one of seven western countries recently surveyed by the Disablement Income Group in which there is no pension for any category of disabled apart from war and industrially disabled.
The Bill does nothing to provide any of the desperately needed concessions for the elderly which, even if not given with the largesse which has been magnaminously reserved for the wealthy by the Chancellor, would still make a difference between the raw hardship of many millions of elderly people in our society today and the prospect of a slightly more civilised standard of life in old age.
Above all, the Bill does nothing to lift the value of the pension from its present 782 degradingly low level to a more civilised standard more in keeping with the wealth of Britain in the 1970s. It is the product of a schizophrenic party philosophy that believes in huge prosperity handouts for the few rich but only small, selective, mere cost-of-living increases for the many poor. It is an unexciting and very modest Measure, and, whilst we shall seek to improve it in Committee, it remains a monument to major missed opportunity.
§ 7.56 p.m.
§ The Under-Secretary of State for Health and Social Security (Mr. Paul Dean)
I am sure that the whole House would wish to send good wishes to the hon. Member for Rotherham (Mr. O'Malley), who normally takes part in our debates, and hopes that he will soon be back among us.
I congratulate the hon. Member for Oldham, West (Mr. Meacher). He has just made his first speech from the Opposition Front Bench and I congratulate him on that.
§ Mr, Dean
We shall come to the content of it shortly, but I am starting with the compliments.
The Bill has been welcomed from all sides of the House with, admittedly, varying degrees of enthusiasm. My right hon. Friend said that it was a landmark. In saying that, he meant that it was a step forward. But, equally, he acknowledged that there is a great deal more to be done and that we intend to build on this progress.
Some of the comments which have come from the Opposition Front Bench, from the right hon. Lady the Member for Blackburn (Mrs. Castle) in particular, and some of the promises that she has made, some of the tossing about of figures here, there and everywhere—£50 million more there,£200 million more somewhere else—would have been more convincing if the Labour Party's record had been better. It would have been more convincing if we had heard a little more about whose contributions would rise and by how much, whose tax reliefs would be cancelled and by how much, in order to pay for the things that the right hon. Lady put forward. They were unconvincing for those two reasons.
§ Mrs. Castle
Was the hon. Gentleman listening? Was he not given indications about what would be the yield of increasing the Exchequer contribution from 18 per cent. to 25 per cent.? Also, was he not informed that we would much prefer to have the money spent in that way than in the £300 million reliefs for investment income?
§ Mr. Dean
Yes, but what the right hon. Lady did not attempt to do—and this is what matters—was to convey what the effect would be on each individual family in the land. That is what matters when one is making rash promises of that kind, with very little indication to the country outside about how much it will cost each family.
I refer briefly to three main aspects of the Bill before dealing with the points on which I have been asked to reply. The first is that the Bill is a further expression of the policy, which we started in the 1970 Act, to give additional help to those groups in our community who particularly need that help and who have not been receiving it hitherto.
The 1970 Act introduced pensions for the over-80s and for the young widow, and the attendance allowance for the severely disabled. This Bill continues and extends those arrangements. For the over-80s, for example, there was no pension before it was introduced in the 1970 Act. As from October, 1972, under the Bill, it will be £4.05. The pension for the widow aged between 40 and 50, who previously got nothing, will be in October this year, for the woman widowed at 41 or when her children ceased to be dependent, £2.50 and for the woman aged 49 it will be £6.28. All these figures relate to situations where previously no allowance was available.
The new higher rate for the attendance allowance will be £5.40 as from October, 1972, and the extension which is being introduced will bring in additional groups.
That is the first aspect, building on the improvement of the new allowances and pensions which we introduced for those sections of the community who were hitherto neglected and left out.
The second aspect is the annual review for all. I am glad that this has been welcomed in all parts of the House, because there is no doubt that the Bill, 784 which provides for an annual review for the first time, gives an assurance that from now on, at the onset of each winter, pensions will be increased at least to compensate for prices, and we hope if possible to do more than that, as indeed we were able to do last year and as we shall do this year. It is far better to make modest promises and to do more to beat the target than to make big promises and to disappoint expectations.
Under the Bill, then, which improves benefits for all, 11 million people will benefit and the additional cost will be just under £500 million a year. On top of that, many pensioners will benefit from the Budget—from the tax relief measures and the increase in the age relief and exemption limits.
The third aspect of the Bill which is important is the fair distribution of the cost. My hon. Friend the Member for Billericay (Mr. McCrindle) in particular referred to this aspect. He said that he thought we had got that about right. It is important to recognise that this is not a funded scheme. This is a pay-as-you-go scheme. All the money for the existing level of benefits and for the improved level of benefits must come from the contributor and the taxpayer. The taxpayer's contribution through the Exchequer supplement is being maintained at broadly the same level at which it was stabilised by the previous Government, namely 18 per cent. This means that the Exchequer's—the taxpayer's—contribution to the scheme under the new arrangements will amount to £580 million a year.
We are moving over to contributions based on earnings, which means that the higher paid will pay relatively more and the lower paid will pay relatively less. As a result, those who are earning under £19 a week will pay no increase in contributions to finance this increase in benefit; those earning £30 a week will pay an increase of Sp; those at the top end of the scale—the new ceiling of £48 or more—will pay an extra 39p.
About half the money now raised for the scheme comes from graduated contributions. In other words, we are fairly well on the way towards moving from the existing hybrid system to the fully graduated system which we plan to introduce as from 1975.
785 These are the three most important aspects of our "Strategy for Pensions" which are distinct and which represent a major advance: namely, special help for the priority groups through the selective improvements in the Bill, improvements for all through the annual review and a sounder and fairer financial base through graduated pensions.
There is also coming along in the future the tax credit scheme which will very substantially alter the picture and will deal with many of the weaknesses which the present arrangements are subject to in the basic scheme and in the supplementary scheme, one weakness being the dependence of a fairly large number of people on supplementary benefit to supplement the benefit they get from the basic scheme themselves.
The right hon. Lady raised some points about a comparison of the records. I shall deal briefly with this point because most people are bored staff with comparisons of the records. It is clear that the right hon. Lady cannot stand at the Dispatch Box in a white sheet in this regard. Although the improvement in the pension which took place in March, 1965—the first Labour up-rating—gave a fairly substantial increase in the real value, each one after that got worse and worse. The longer they got away from those Tory years the more difficult the Labour Government found it even to maintain the purchasing power of the pension. The last increase in November, 1969, did not even preserve the purchasing power as it was on the previous occasion.
The right hon. Lady went on to say that the national superannuation scheme which was introduced by the Labour Government would have solved all this. It would have solved all this if one believed the assumptions on which it was based, if one was prepared to trust the blank cheque on tomorrow on which the entire scheme was based. That is why it was fundamentally unsound and that is why it was so unpopular in the country as a whole, plus the fact that it would have meant the nationalisation of pension provision in old age and the cutting back of occupational pension schemes.
I much preferred the more modern approach of the hon. Member for Fife, West (Mr. William Hamilton), who said that what mattered now was for the trade 786 unions to take a bigger part in bargaining for improved pension arrangements. I hope that the trade unions will listen to the advice which the hon. Gentleman offered them. What the hon. Gentleman said—I do not think I am in any way misinterpreting him—was: is it not far better to go a little easy on wage claims for today and to go a bit harder on improved pension arrangements for tomorrow?
I entirely agree with that approach, and it is very nice to know that in our "Strategy for Pensions", which puts the emphasis on occupational schemes and on trade unions playing their part, we have an ally in the hon. Gentleman.
§ Mr. Bidwell
Is not the serious deficiency of occupational pension schemes that most of them do not carry transferability rights? Has not the Confederation of British Industry resisted transferability because it does not believe in the flexibility that would arise there-from and the fact that with transferability workers would not be glued to employers so much as they are today?
§ Mr. Dean
The hon. Gentleman is being a little unfair on employers. However that may be, the fact is that under our proposed Bill which is outlined in "Strategy for Pensions" the pension rights of individuals will be preserved for them or transferred with them. This will be a big advance.
I accept the proposition that in these days a man is as much entitled to his pension rights as he is to his weekly or monthly earnings; and therefore, when he moves his job, those rights should be preserved for him in the most appropriate form, or he should be able to take them with him to his next job. It is one of the main aspects of our "Strategy for Pensions" White Paper that this will become compulsory.
Equally, it will mean an improvement in some occupational pension schemes. They will provide a minimum level of benefit and they will have to provide cover for widows, which is one of the gaps at the present time. They will have to provide special arrangements to ensure that the pension is improved after it is awarded to take account of inflation. These will mean major advances in occupational pension scheme provision and I am sure that as a result the trade 787 unions will become more interested in bargaining about these matters and encouraging employers to fill the gaps which exist in occupational pensions now. I entirely agree with the hon. Member for Fife, West and with my hon. Friend the Member for Enfield, West (Mr. Parkinson) about these matters.
The right hon. Member for Blackburn and a number of other hon. Members raised points about the heating allowance. My right hon. Friend the Secretary of State did not say very much about this in his introductory remarks because if he had he would probably have been ruled out of order as heating allowances are not dealt with in the Bill. They will come later under the normal procedure, which has been adopted by all parties and which is the law of the land, under which improvements in the supplementary benefit arrangements are made by regulation and not by a Bill. Perhaps I might say, however, that heating allowances present a very old problem and we have to start from scratch in grappling with it when we came into office.
The regulations which will come in due course will provide for an improvement in the basic scale of supplementary benefit which will take into account rises in heating costs. They will also provide for an increase in the long-term addition to which every pensioner on supplementary benefit is entitled. Also there will be an increase of 20 per cent. in the existing level of the heating allowances. The right hon. Lady asked why we did not give all pensioners who are on supplementary benefit a 50p heating allowance. I think she believed that it would cost about £1 million to do so, but the figure would be £50 million, which would add very substantially to the cost.
In addition to the improvements which are to be introduced in October we are also examining with the local authorities and with the various voluntary bodies which are interested in this matter other ways of dealing with the problem of heating and heat loss from houses. It may well be that as well as improving the allowances it is equally important to improve insulation so that the additional allowances do not heat the street but heat the pensioners. This is one of the things we are looking at.
§ Mrs. Castle
As the Under-Secretary has dealt with this, can we now have an answer to the detailed points I put to the Secretary of State? He has spoken of a figure of 20 per cent., but 20 per cent. of what? Since 20 per cent. on the top rate is 5p, does that mean that some people on the bottom rate will get ½p? How many people will get the 20 per cent.? How many more heating allowances will be paid as a result of the decision to ignore the lop increase in the long-term addition?
§ Mr. Dean
The 20 per cent. is 20 per cent. on existing allowances. We estimate very roughly—it cannot be more than a rough estimate—that the additional cost will be about £1 million a year. But we do not know how many more people will come on to the allowances until all the existing books are looked at individually as they come up for renewal. For some months books coming in for renewal have been examined to see whether people not now receiving a heating allowance should be getting it. Until this process is complete it will not be possible to say how many more people might be eligible for the allowance.
The hon. Member for Rhondda, West (Mr. Alec Jones) apologised for not being able to be present when I replied to his point about disregards. There are no proposals to change the disregards this year but we are committed to a review of the matter. We recognise that it is some time since they were last improved.
There have been a number of questions about timing. The right hon. Member for Blackburn asked why we had waited until October and the hon. Member for Fife, West suggested that if it took time to get the administrative machinery into operation, back payments could be made. My hon. Friend the Member for Billericay said it was right to pay the increases in the autumn but suggested that they could be announced later towards the summer. The point is that now that there is an annual review all pensioners know that at a regular date each year their pensions will be improved.
We have to decide therefore the best time of year to do this. In our judgment it is at the onset of winter, in October or November. Therefore the timing of the announcement, the time when the 789 Bill is put before the House and when the administrative procedures are carried out, are all in a sense of secondary importance. I accept that it is arguable when the announcement should be made but surely it is right that if there is to be an annual increase it should be made at the beginning of the winter.
My hon. Friend the Member for Billericay asked why we have to carry out the annual up-rating by means of a Bill and whether it would not be simpler to do it in some other way. In the White Paper "Strategy for Pensions" we propose that the increases should be brought into force by regulation instead of by means of a Bill.
I am very glad of the welcome that has been given to the attendance allowance provisions and the other improvements for the disabled which are contained in the Bill. The latest figures show that the number of allowances now in payment is 74,000. That represents a success rate of 62 per cent. With adults it is slightly lower and with children slightly higher. It is a very creditable achievement to have got the new allowances off the ground so quickly. Nevertheless it has underlined the need to extend it as fast as possible. Probably every hon. Member has had to deal with a heart-rending case which has fallen just on the wrong side of the line. When there is no allowance there are no hard cases, but the moment an allowance begins to be given the hard cases begin to arise.
I agreed with the hon. Member for Walthamstow, West (Mr. Deakins) when he said that we have only touched the tip of the iceberg. This is why my right hon. Friend the Secretary of State is extremely anxious to extend the allowances as fast as possible. Every ingenuity of man will be used to do this but we have to take into account that procedures must be undergone. Each individual case must be very carefully assessed and it is largely for this reason that it will take time to bring within the arrangements probably another quarter of a million people. It may well be more. We under-estimated the figure when we thought that 50,000 would be eligible. Already 74,000 allowances are in payment, and they are still coming in, and reviews of those who are dissatisfied are still being carried out. This is one of the 790 reasons why it is not possible to start taking on the first lot of phase 2 until almost December. The workload of phase 1 is still very considerable.
In addition, all the preparatory work for phase 2 must be done. The claim forms and publicity material must be prepared. The BMA must be consulted. The local doctors, the general practitioners who assist in this process, must be informed. Even when we start, each claim must be looked at individually. Many processes are involved. The individual must claim. The local general practitioner must send in his report, which must then go to one of the doctors nominated by the Attendance Allowance Board. He must give his judgment as to whether the person concerned comes within the category. The board must keep a careful check on the claims to see that uniformity is established in different parts of the country. The cases being reviewed must go through a second procedure, with a second medical report. The person concerned must have the opportunity to comment on the report. All this inevitably takes a great deal of time. Much of the central processing is done at the unit at Norcross, where we have some highly experienced and devoted doctors. Inevitably the limitations of medical manpower are one of the factors which mean that it will take time before phase 2 can be put into operation. As my right hon. Friend said, it will probably be towards the end of 1974 before the next phase is completed, but I can assure the House that if it is possible to improve on that date it will be done.
Several of my hon. Friends asked me on what criteria the very difficult decision has been made as to who should come first and who should come last in phase 2. Perhaps I may give the likely figures first. These can be no more than estimates, but we reckon that there will probably be about 50,000 awards to those of working age. In the children's group we expect another 50,000 or so. Among the 65–74-year-olds we expect about 40,000, and among the over-75s about 90,000. The over-75s will easily be the biggest group.
Why have we, on the advice of the Attendance Allowance Board, decided on the order that we have? It was an extremely difficult decision, because one 791 could make a strong argument for putting it the other way round. But those of working age are likely to have had less opportunity than others to build up savings, and the psychological shock for them of becoming disabled is considerable. It was a combination of those two factors. Many children must be cared for in any event, particularly when they are young. Some of the elderly have had an opportunity of building up savings. Most of them are on a pension, and on a supplementary pension if they require additional resources. Some of them are being helped by their local authorities through the local authority social service departments. Perhaps as important is the psychological factor that the human frame is more conditioned to disability in old age than in youth. Those were the sort of factors we considered in making the very difficult decision as to who should come first and who should wait a little longer.
That is one aspect of the extension, but there are two other features of the Bill which are part of the package for the disabled that I should like briefly to mention. The first is the amount that can be earned while people are receiving sickness or similar benefits. The present figure is only £2 a week, which has not been altered since 1958. It is a very low figure, which tends to discourage rehabilitation. It is to be increased to £4.50, an increase of 125 per cent.
The other feature concerns the wives of invalidity and retirement pensioners. At present they receive the married women's rate of sickness benefit but under the proposals they will receive the full rate, which is £2 more. The intention is to recognise that they are breadwinners and should be treated as such when they become sick.
This package for the disabled has four features: the attendance allowance up-rated; the extension of the allowance to other groups of people: more encouragement to people who are recovering to earn without losing support; and the wife breadwinner of a retired or disabled husband receiving the full rate of benefit rather than the married women's rate when she is sick. These improvements are a modest start along the road to greater help to those who are disabled. fn the first full year after the extension 792 comes into operation we shall be spending on the attendance allowance about £70 million a year, whereas when we came to office we were spending nothing. This is a substantial improvement.
I commend the Bill to the House. We feel that it is a modest improvement in our arrangements. It brings additional help to needy groups of people. It more than restores the value of the pension to all who are receiving it. We in no sense regard this with complacency. We regard it merely as a step in the progress which we have already made with social security and which we are determined to continue.
§ Question put and agreed to.
§ Bill accordingly read a Second time.
§ Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).