§ 3.51 p.m.
§ Mr. Kenneth Clarke (Rushcliffe)
I beg to move Amendment No. 1, in page 2, line 4, leave out '2' and insert '1'.
This is the first of two amendments which we shall urge the Government to accept. Both amendments are an attempt to prevent the Government from distorting the system of graduated national insurance contributions upon which both sides of the House were agreed when they were introduced in 1973. The Government are being most unfair in the distribution of the burden which is involved in increased pensions, which we are glad to see that the Government intend to pay. We believe that, not doubt unintentionally, the Government are discriminating against most married women in employment in calling upon them to pay greatly increased contributions.
In inflationary times, everyone welcomes the raising of pensions and benefits so as to keep them in line with ever-increasing inflation. We are glad to support the Government in that, but we hope that the Government will do so by distributing the burden of paying for increased pensions and benefits on the basis of the value of benefit received by individual categories of contributors and on the ability of individual contributors to pay. That was the purpose of the 1973 structure which we are proud to have introduced.
That structure moved away from the restraints of the former flat-rate contribution system, under which the level of pension and benefit paid to various people dependent on the national insurance system was greatly inhibited because the national insurance contribution stamp had to be pegged at a rate which the lowest-paid worker could afford to pay. We moved away from that system by introducing graduated contributions based on 254 a percentage of earnings for each category of contributor.
We accept that there might have been some difficulty in introducing that system because it involves the better-off and the higher-paid having to pay more in April 1975. Unfortunately, the Government have made those difficulties very much worse. The Bill will raise before April 1975 the percentage rates which we fixed in our 1973 Act but will distort those rates between the different categories of contributor. The Bill distorts the rates approved by Parliament on the basis of what we believe to be the Government's prejudice against two particular categories.
First, there is a prejudice against the self-employed, and that is dealt with in Amendment No. 2. Secondly, there is a prejudice against the option exercised by the vast majority of married women in work, which is the subject matter of Amendment No. 1. Prejudice against the option rather than against the people leads the Government, unintentionally no doubt, positively to discriminate against married women in work in the way in which they are distributing the burden of payment under the Bill.
The Secretary of State, who is responsible, likes to see herself and often describes herself as the champion of women in all spheres of life, particularly in work. Despite the way in which she protests her intentions repeatedly when she is here, she does not understand the practicalities of the problem and often gives the impression of not understanding clearly the structure of the national insurance system for which she is responsible. By having a prejudice against the married women's option she has misled herself into the unfair treatment of three out of every four married women at work. Consistently for some years three out of four of all married women in employment have opted to pay the lower rate of national insurance contribution and in return have received only industrial injury benefits and National Health Service benefits.
The Government object to married women exercising that option. Their reason for doing so appears to be based on the belief that a move towards abolishing the option is a step towards producing equality for women in work. That view often appeals to have support from 255 feminist groups who support the Government in their intention to remove the right to make reduced contributions by women in work. The House should be clear what lies behind the belief of many people that the married women's option is an undesirable feature of the national insurance scheme.
Those who wish to abolish the option have in mind that women in employment should pay equal contributions for equal benefits alongside men in an improved national insurance system. The view of most feminist lobbies outside in urging the abolition of the option is that they want the Government to move towards raising contributions and benefits so that women are placed in a genuine position of parity with men, paying equal contributions for equal benefits. The Government in their White Paper said that that was the direction in which they intended to move some time in the future, but that is not what is proposed in the Bill. What is proposed bears no relation to that.
The question of benefits for married women being made equal to those available for men is not yet before the House. The Bill does nothing to increase the benefits available to married women who exercise the option. Those who exercise the option will receive only industrial injuries benefit and health service benefits. But although the Bill does nothing to give women equality in benefits, it takes a large step towards making equality of payments between men and women nearer to reality.
There is to be a great increase in what women pay, with no increase in what they will get out of the system. Although some hon. Members may believe that the Bill is a step towards equality for women, it is not. It is simply a way of getting more money out of a group of women who are believed to be more able to pay, who, significantly, are not a prominent group——
§ Mr. George Cunningham (Islington, South and Finsbury)
Is it not true that, in addition to the benefits which the hon. Gentleman mentioned as payable to the opting-out married woman in the light of her contribution, she receives much more valuable benefit in the light of her husband's contribution? Is it not sensible 256 that she should be asked to contribute something to pay for that valuable benefit, along with the single woman and the single man?
§ 4.0 p.m.
§ Mr. Clarke
All married women get the benefit of the £6 pension, which is in return for the husband's contribution. A married woman who does not go out to work gets that benefit and pays no contribution at all. In the Bill we are dealing with married women who go out to work. They pay an additional contribution, and it never has been related to the benefit which widows receive as a result of their husband's contributions. The contribution with which we are dealing in this discussion has always been regarded as a payment for industrial injury benefit and the National Health Service. That situation remains. Those benefits are not being increased nor are the benefits which a woman receives as a result of her husband's contributions. However, the present Bill dramatically increases the payments.
The women who are affected are those who choose to exercise the option of receiving reduced benefits. This is an important point because the Minister always appears reluctant to admit, in straightforward language, that married women who exercise the option at present do so for sound financial reasons. Most married women in employment would be foolish, looking at the situation on a financial basis, not to exercise the option to pay a reduced contribution and to choose instead to pay full contribution in their own right. I shall not repeat the arguments, but they are still not widely appreciated by some hon. Members who believe that married women in exercising their option are cutting themselves off from a benefit which they would otherwise receive.
A woman who does not pay the full contribution is entitled to the £6 retirement pension as a result of her husband's contributions. If she chooses not to rely on her husband's contributions and decides to pay the full national insurance contribution, when she retires she will receive the full £10 retirement pension which a single person would get but will not receive that in addition to her entitlement under her husband's contribution. The effect of a married woman choosing 257 to pay full national insurance contributions throughout her working life is that she raises the combined income of the couple to only £20 per week by way of retirement pension. In other words, her contribution obtains for her only an additional £4 per week above what she would have obtained had she chosen to exercise the option to pay the lower rate and relied on her husband's contribution in respect of retirement pension. Those women who are older than their husbands will receive benefit, but three out of four married women who exercise the option are probably wise to do so.
§ The Under-Secretary of State for Health and Social Security (Mr. Alec Jones)
Does the hon. Gentleman agree that, apart from pension, the married woman who chooses to pay her contributions will receive sickness and unemployment benefit? That factor should not be ignored.
§ Mr. Clarke
I agree with the Minister that such a woman is entitled to those things in her own right if she pays the contribution, but the hon. Gentleman, knowing the huge proportion of national insurance which pensions comprise, as opposed to other benefits, will not seek to deny that, on balance, a married woman who chooses to pay full contributions gets nothing like the bargain for her money that other contributors will obtain. Hence most married women who exercise the option at present would get a bad bargain if they opted to pay the full contribution.
The Government for the first time in legislation are seeking in the Bill to ensure that those women who opt to pay the lower contribution will get a bad bargain in return for their money. Whichever way a woman chooses to opt, on either basis, she will be paying considerably more by way of contribution than the market price or the actuarial price would justify her paying. Under the Bill a married woman will be bound to pay more than her fair share for whatever range of benefits she chooses to obtain.
In Committee the Minister of State revealed for the first time the part played in the market and in terms of the actuarial rate by the 2 per cent. figure in the Bill. The hon. Gentleman conceded that 0.6 per cent., the percentage on a given range of earnings under the Conservative legislation in 1973, represents a 258 fair market or actuarial price for the benefits received by a married woman under the legislation. That percentage is being more than trebled—in other words, to a figure of 2 per cent. of the given range of earnings. The Minister in Committee brazenly confessed that he is raising the cost of contributions for married women to more than three times the proper market price for the reduced range of benefits they choose to receive. The result has been that the Government are coolly seeking to raise married women's contributions to more than three times the market price, and in this way a substantial sum of money will be raised by the national insurance fund to subsidise other beneficiaries of the fund.
We have only to look at the sum of money which the Government are trying to raise under this legislation and at how the figure will be shared among the various contributors to see how much they are relying on getting—which represents far more than the market price— from married women to pay the Bill for increased pensions.
In this way the Government are seeking to raise £150 million. The Opposition cannot be accused of not being cost conscious because in Committee we directed all our arguments to the need to raise that £150 million. At present by the Government's proposals the extra contributions will be raised as to £59 million from employers; almost nothing extra above what was expected from employees; £23 million from the Exchequer; £21 million from the self-employed; and £47 million from married women exercising the option. Therefore, a comparatively small group of contributors will be providing almost a third of the total extra revenue which the Bill seeks to raise.
The Government, in seeking to justify their decision to increase married women's contributions to more than three times the figure that is actuarially justified, argue that married women will still be paying less than they would otherwise have paid. The Government argue that married women will find that their contributions will be reduced in April next year and will not notice that the reduced figure represents more than a fair price for the benefits which they are purchasing. The way in which the Government seek to advance these arguments appears 259 to be somewhat topsy-turvy, but this is the argument that is often heavily relied upon by the Labour Minister who is dealing with these matters.
The Government argue that they have done two things which will come into effect from 1st April next. They argue, first, that they have ended the old system, the Boyd-Carpenter system, of graduated contributions for earnings-related benefits. The old Boyd-Carpenter bricks are going and all contributors will find that graduated contributions are no longer being paid and that the Boyd-Carpenter benefits are being abolished.
The Conservatives' second pension proposals would have come into effect next April. All employed persons would have been paying additional contributions to a funded occupational pension. This would have represented a great step forward for employed married women because for the first time all employed married women would have had the protection of an occupational pension comprising definite rights in terms of their own retirement and an investment based on their own contributions, and employers' contributions, too. However, the present Government have suspended that scheme and obviously intend to put nothing in its place for two or three years until the new so-called Castle scheme begins to take effect—if the Government can get that scheme into credible shape. It is an act of incredible political folly to do away with the Boyd-Carpenter scheme and not to go ahead with the second pension scheme so that for three years there will be a gap in the system.
The Government are taking advantage of that folly. Given the fact that they find themselves in a situation next year where employed persons will not be paying any additional national insurance contributions, they are claiming that it is a virtue that so many will pay less for their pension entitlement. As that applies to married women, the Government take advantage of it by coolly putting up the market price for national insurance benefits to married women opting to pay the lower rate, still taking credit for the fact that they will pay less than they were paying before April last year.
We feel that, because of the Government's own unfortunate approach to pensions policy, they have produced a posi- 260 tion in which many people will pay slightly less because there is no second pension plan ready for April next year. But it is quite wrong to rely on that to disguise a swingeing increase in the contribution expected from married women and to rely on them to subsidise other contributors to the extent proposed in the Bill. Given that the Government take advantage of the fact that married women would otherwise pay less to put on them increasing contributions which cannot be justified in any other way, they refuse to do the same for any other category of employed person.
One other consequence of the Government's decision about April next year is that the great majority of employees will find their national insurance contributions actually going down next year. This would have been the consequence of our legislation if we had contemplated it without any second scheme as well. But the Government have taken over this feature of our scheme and appear to take some pride in pointing out that most employed persons will pay less next year. Even at the top end of the earnings scale, employees will find that their rate of national insurance contribution is going down slightly. In looking for ways to relieve the problems of the self-employed and of married women, the Government refuse to minimise the reduction in national insurance contributions from which employed persons as a whole will find themselves benefiting in April next year.
In Committee, the Government rejected an amendment moved by the Opposition which would have raised the employee's contribution by one quarter of 1 per cent. and would still have left most employees in the position where they had a reduction in national insurance contributions from April next year onwards. That amendment, which would have made that trivial difference to most employees, would have raised an additional £83 million for the National Insurance Fund. The amendment, which the Government would not contemplate, would have raised nearly twice the amount necessary to allow working married women to continue to pay the fair market rate, which is the rate that we proposed in our 1973 legislation.
The Government's proposal, in our opinion, throws an interesting light on the social contract. The Government are happy to increase the burden on married 261 women and the self-employed, yet they reject any suggestion that the burden on employees of paying for the new pension benefits should be raised. A term of the social contract is supposed to be that increases in pensions and benefits are provided for those relying on the National Insurance Scheme. Another Bill shows us that the Government are not likely to keep up with the rate of inflation generated by selfish wage claims. But the social contract is supposed to increase the level of pensions and benefits.
It is interesting to see from the Bill that although the trade unions insist on the raising of benefits as one of the terms of the social contract, trade unionists are not to pay any increased contribution themselves for this supposed feature of their social contract. Instead, when it comes to paying for it, other sections of the community, such as married women, are expected to foot the bill out of all proportion to their actuarial liability to do so.
In seeing that married women are singled out to raise money in this way at a time when the Government refuse to contemplate minor increases in the employee's rate, in order not to offend the trade union movement, we see confirmation of our fears about the Government's approach to national insurance.
We are saddened by the fact that still, apparently, employed women have a comparatively weak position in the trade union movement. If the Government are not prepared to amend the Bill—and so far they have refused obdurately to contemplate any amendment of it—we shall have to regard it and the distribution of burdens under it as a cynical demonstration of the weak position of employed women inside the trade union and Labour movements. No other group of contributors are singled out to pay more than three times the actuarial or market rate for the benefits that they will receive under the national insurance system. To choose to do that at present is not a step towards equality of treatment for women in employment. It is a highly discriminatory step away from it. They are being singled out to pay more than their fair burden for other contributors.
The Opposition seek to redress what we believe to be a legitimate grievance. We trust that, even at this late stage, the 262 Government will for this category of employees accept our amendment and reduce the burden on married women who go out to work to an acceptable, proper market level.
§ 4.15 p.m.
§ Mr. George Cunningham
I am sure that the hon. Member for Rushcliffe (Mr. Clarke) does not believe that his case is fair to the arguments existing on the other side and those which were advanced in Committee. The nub of the argument on this amendment—and it will be the same on the next one—is this: if there has existed for some time an arrangement which seems to give to some group of people benefits in excess of their contributions, should that arrangement be regarded as sacrosanct, never to be corrected for all time?
I am prepared to argue that the contribution paid by the opting-out married woman in the past has been too low in relation to the benefits she has received. It is for that reason that I welcome the Government's proposal greatly to increase the contribution demanded of her.
Let me also ask the hon. Member for Rushcliffe whether he does not think that he fell into what I called "the Zachariah fallacy" in saying that a small increase in the contributions of employed men would raise as much money as a large increase in the contributions of opting out married women. I call it "the Zachariah fallacy" because it can be argued that, because there are very few people whose names begin with the letter "Z", they can be relieved of all taxation and of all contributions to any scheme by making an insignificant addition to the contributions of all those whose names begin with all the other letters.
Fairness requires us to operate on a different basis. We have to try to allocate obligations in accordance with a rational and respectable actuarial calculation. To be fair, the hon. Member for Rushcliffe used the word "actuarial" many times. The question, surely, is whether it is fair to ask of the opting-out married woman a contribution which reflects not only those benefits which she receives in respect of her own contributions—because I presume that that would call for about 0.6 per cent.—but also one which reflects the £6 pension which she 263 will get like every other wife when she comes to retirement age, if her husband is retired.
There is an argument to be mounted on both sides. I ask hon. Gentlemen opposite to recognise that there is a respectable argument on that point on this side. Whether it is the argument that the Government choose to put forward in defence of this arrangement is their concern, not mine. My reason for voting against the amendment is based on the thought that the £6 pension that an opting-out married women, with other married women, receives is far and away the most valuable benefit that she gets.
I invite the House to consider that of all the payments out of the National Insurance Fund, retirement pensions, in the latest year for which I have figures, represented 71 per cent. of the outgoings. That relates to all retirement pensioners, not just the £6 women pensioners. Of that amount I should think that the £6 women's pension must constitute about a third. The cost of that pension is far in excess of all the other benefits added together to which the opting-out married woman is entitled.
It is said that the opting-out married woman has no extra entitlement to that benefit compared with any other woman. Nor has the single woman. The single woman in her contribution has to pay towards those £6 pensions and the single man has to pay a higher contribution than would otherwise be necessary to pay for the £6 pension of all the married women. Is it not fair that the opting-out married woman should be invited to pay a contribution to it as well? I suggest that an honest, well-intentioned, fair person could very well conclude that it was right that she should pay a contribution in addition to the 0.6 per cent. to represent the most valuable of the benefits that she is to receive, because they are not fully paid for by her husband's contributions.
If we accept that in principle, the question is, what contribution it is appropriate for her to pay? Given that the retirement pension costs so much compared with all the other benefits added together, prima facie it does not seem that there is reason to believe that a contribution of 2 per cent. is excessive.
264 It is for that reason that I shall oppose the amendment. I suggest that, in the light of that argument, it is not fair to say that we are trying to clobber the opting-out married woman and to make her subsidise other contributors. I think that if a reasonable actuarial calculation were made we would find that the opting-out married woman was still being subsidised considerably by other contributors—notably the male and single woman employed.
§ Mrs. Elaine Kellett-Bowman (Lancaster)
I have never head such a topsyturvy so-called actuarial argument as that advanced by the hon. Member for Islington, South and Finsbury (Mr. Cunningham).
I rise to support very strongly the amendment to reduce the contribution paid by married women who choose to opt out of paying full contributions. The amendment seeks to reduce those contributions from 2 per cent. to 1 per cent., which is still above what they are paying now but which would be a welcome reduction.
The Minister is well aware of the value which we on this side of the House attach to the married woman's option. It is a value that is plainly shared by three out of four married women who take the positive step of going to the trouble of opting out. And well they may, because, if they do not opt out, they get a very bad bargain indeed—quite contrary to what the hon. Gentleman said—except in the very small number of cases, of whom I am one, where the woman is considerably older—at least five years—than her husband. It would be a very good bargain for me, because I am seven years older than my husband. Therefore, I would get a pension at 60 instead of at 72. However, few women are in that position. For others it is a very bad bargain indeed.
Except where that is the case, a married woman, unless she opts out, would be paying the same contribution as a single woman for much smaller benefits. For example, she gets a reduced rate of unemployment and sickness benefit, except in the rare case where she is the breadwinner. But, most important of all, she could pay a lifetime of full contributions 265 and get only an extra £4 pension over and above the £6 to which she would be entitled as a wife who had paid no contributions. It seems ludicrous to offer the argument advanced by the hon. Gentleman that she should be levied for this pension when a woman who does not go out to work gets it entirely on her husband's contributions. It is small wonder that women are very keen on opting out.
There is a further very important reason why women opt out. The Minister of State, in Committee on 23rd January 1973, admitted: "Her"—that is, a married woman's—income is not just a bit of pleasant extra money coming into the house. It is an essential part of the household budget."—[OFFICIAL REPORT, Standing Committee E, 23rd January 1973: c. 190.]How much more so is that the case to-day, particularly in my constituency where the tragedy of unemployment has hit us again, as it always does under Labour. It did in 1968 when we were penalised as against the development areas, and it is doing so again because we are being penalised vis-à-vis the development areas. This makes it all the more vital that a married women should be able to keep as much as possible of her wage packet for essential family purposes.
It is monstrous that the Bill should seek to increase by more than treble the amount that an opted-out married woman will have to pay, from 0.6 per cent. to 2 per cent. It is a gigantic rise for no extra benefit. She and the self-employed—two very worthy categories, but disliked by hon. Gentlemen opposite—are the tragic victims of the Bill. In total, opted-out married women will have to pay a gigantic £47 million extra under the Bill. That is a wholly unjustified burden on women who are already finding inflation a nightmare burden for their families.
Women, are of course, both practical and realistic. They know that benefits must be paid for. What they bitterly resent is paying for the benefits that they do not get or get at a lower rate.
The Minister mentioned in a previous debate the Government's intention of removing the half-test which deprives many women of a pension even when they have contributed at the full rate for most of their lives. I would welcome 266 this abolition, but there is no mention of it in the Bill.
Women are also very fair-minded. I think that my hon. Friend the Member for Rushcliffe (Mr. Clarke) made that very plain. They would resent the added burden less if they thought that everybody else was being asked to shoulder a similar additional burden, but that is not the case. Out of the additional £150 million that the Chanceller seeks to raise, nearly one-third, a wholly disproportionate burden, will come from these unfortunate opted-out married women.
It is for this reason that my hon. Friends have put down the amendment seeking to halve the burden, and I strongly support them in their attempts to get a fair deal for women.
But the argument goes even further than that. The Minister has repeatedly said that it is the Government's intention to abolish the married woman's option altogether. I fear that this increase is part of a gradual process aimed at making the option less attractive so that when the Government finally withdraw the option the uproar will be less. But I warn them that there will be an uproar, not least in my native Lancashire, with which the Minister is not unacquainted, because women will not lightly give up an option they find of great value. I strongly support the amendment.
§ 4.30 p.m.
§ Mr. R. A. McCrindle (Brentwood and Ongar)
I wonder whether I am the only hon. Member who, listening to yet another social security debate, and particularly to the to-ing and fro-ing of the party argument, is inclined to ask whether the sometimes sterile debate that we have has not gone far enough on social security. The recent history of social security shows one Act succeeding another as one Government succeed another. One asks whether there could not be some mutual ground on which the parties could come closer together for the benefit of those whom they represent. It is in that spirit that I wish to speak on this important amendment.
Hon. Members on both sides who are interested in this vital matter affecting millions of the people we represent might do worse in this period between the suspension of the previous Conservative Act and the enactment of this Government's 267 proposals than see whether the present Government could not legislate in a way which a future Government of a different complexion would be unlikely to reverse. We are addressing ourselves here to an area of social security which for a considerable period has been the subject of acrimony between succeeding Governments, acrimony which has done little good to the people we represent, least of all to these women.
Having tried to take that neutral and non-partisan attitude, I must say how greatly I regret the Government's folly in casting almost completely aside the provisions of the 1973 Social Security Act. I have said before in the House, and I repeat it now, that there seems to me to be no reason why that Act could not, and should not, have been taken as the basis of social security provision, albeit with sustantial amendments. I greatly regret the Government's action in throwing the whole Act out, thus ensuring that we could not return to its basic purpose for at least a considerable time.
Now we are turning our spotlight again on married women, a subject which was explored at great length in Committee on the 1973 Act. This time, however, an enormous additional burden is being put on them. The implied lack of interest on the other side of the House and, frankly, the not much greater interest on this side in a matter of such vital concern to roughly half the people we represent is unfortunate.
The Government, and perhaps we too, are running the risk of drawing a veil over the fundamental points. Talk of percentages obscures the fact that the women are being subjected, justifiably according to the hon. Member for Islington, South and Finsbury (Mr. Cunningham), to a sizeable redistribution of the requirements for achieving these benefits.
The present Government's clear intention is to phase out the married woman's option. They hinted at this during the passage of the 1973 Act, and, to their credit, they have made this aim clear. Yet the average married woman at work would almost certainly say that she found the option a good bargain and wanted it to continue. I am not saying that that should be the only basis on which to approach the matter, but it is a starting 268 point. The women have had a good bargain, they like the freedom to opt for the lower contributions and they clearly want the system to continue. So, no matter what the justification for change, it is no bad thing to concede, as I am sure the Minister would, that the Government are flying in the face of the preference of the majority of married women.
There is not much attraction to a woman to opt in, and the Bill does not change that situation materially. I am particularly concerned about possibly increasing the discouragement to women contemplating going out to work if the option is withdrawn. Many will moralise that far too many married women already go out to work and that their place is truly in the home looking after children. Leaving aside the question of whether I agree or disagree with that argument, the House must accept that if male unemployment increases it would be unfortunate to discourage women who might become temporary breadwinners.
The hon. Member for Islington, South and Finsbury asked a fair question— whether we were suggesting that the system should never be changed, that because married women have benefited in this regard, they should continue doing so indefinitely. I am not taking that line. I am saying that when we are moving into a period of massive social security changes, when, because of the Government's premises, the treatment of married women cannot be overlooked, when at some time the position of women's entitlement and their expectation of equality must be brought up to date, to fiddle with the situation in this irritating way is to bring unpopularity on the Government's head for no good reason.
Raising the married woman's contribution is just a very good way of raising money, and I am sorry to say that I believe that this has been at the heart of the Government's thinking. But they cannot deny that the disproportionate requirement for women which their proposals entail would lead to discrimination against women at the very time when in other spheres of policy the Government are anxious to show how opposed they are to that discrimination.
Listening to the Home Secretary, one can be forgiven for thinking that the Government are the champions of women and 269 their rights, whereas listening to one of the, ironically, only two women in the Cabinet—the Secretary of State for Social Services—one can be forgiven for feeling that she is almost entirely paying lipservice to the cause of women. If this were truly a step towards equal benefits, one could begin to understand the reason for the Government's proposal. But I repeat that it is no more that an interim step on the way to the full-scale proposals which the Government are to introduce in 1975. Quite apart, therefore, from any objections that I may have to the distortion created and to the discrimination introduced, I believe that the Government would have been well advised to defer this change until they were able to bring forward their proposals.
I conclude by repeating that if there is a way in the future for the Government to avoid confrontation with the Opposition—and, to be fair, vice versa— there should be a full exploration of that possibility before we move into the fullscale Bill to be presented next year. In the meantime, and because that Bill, hopefully with all-party agreement, is the basis for the radical change which the Government have in mind, it is a major shame that they should be bringing forward a proposal which does no more than tinker with the question of women's contributions and women's benefits.
For that reason and, as I hope I have proved, in the Government's interests as well as in the interests of the mass of married women who will be affected by this proposal, I hope that even at this late stage I can persuade the Minister to accept the amendment.
§ Sir William Elliott(Newcastle-upon-Tyne, North)
I support the amendment for one basic reason. I believe that at this period in our industrial history we must give the maximum encouragement to women workers, particularly in areas such as mine in the north east of England, where modes of production have changed rapidly and substantially in recent years.
It is not so very long ago that two officials of the English Industrial Estates Corporation told me that they would seriously consider, if necessary—they thought that it might be necessary—proposals for the staggering of the working hours of particular factories on trading estates in 270 order to encourage an increase in the availability of female labour.
The north east of England has known problems of unemployment and continues to know them. They are problems which worry us constantly. But we are short of female labour at present. Therefore, I hope very much that the Minister will take full note of the fact that I support the amendment because I wish to encourage women to go out to work and not to discourage them. I can see nothing other than discouragement in the proposal as it stands. I therefore add my full support to the amendment.
§ 4.45 p.m.
§ Mr. Alec Jones
I should like to reply to the points that have been made, but before doing that I want to make some general remarks.
As many hon. Members know, we have rehearsed this ground on so many occasions that my words will be known to Opposition Members as well as their words were known to me. We can almost start from the premise that very little new or unexpected has been said. I shall be taking up some of the points in the order in which they were raised and I shall deal with some others later.
The hon. Member for Rushcliffe (Mr. Clarke) again talked of increased contributions, as did several of his hon. Friends. It is an exaggeration, to put it mildly, to talk of the proposals in the Bill increasing the contributions for opted-out married women. I invite the hon. Gentleman to come to my constituency and to talk to an opted-out married woman whose earnings are £46 a week—if he can find one with earnings of £46. I take the figure of £46 as the middle of the range. I invite him to say to that lady, "Next April your national insurance contributions will be reduced by £1.18 per week." I suggest to the hon. Gentleman that with that sort of reduction in mind he would have some difficulty in persuading such a constituent of mine, or many of his constituents, that this was a greatly increased contribution. We can develop the argument later. Does the hon. Gentleman wish to challenge the figure?
§ Mr. Clarke
I was wondering whether the Minister would like to explain to that married lady what she would have been paying had the Bill not been amended 271 and what she will be paying under the present Government's proposals to amend the 1973 legislation. The Minister knows that the proposal in the Bill will more than treble her contribution. As I suggested, he is hiding behind the fact that the married woman will not have to pay for the Boyd-Carpenter benefits, because they have been abolished, and the fact that there will not be a second pension scheme because the Government chose to scrap it.
§ Mr. Jones
I shall come to the Boyd-Carpenter scheme and other matters later. I was merely giving the present facts. There will be these reductions.
The hon. Member for Newcastle-upon-Tyne, North (Sir W. Elliott) supported the amendment. I understand the situation in areas in which unemployment is high. No one who has represented Rhondda in the House could be completely unaware of the problems associated with unemployment and of the need to encourage married women to go out to work. The reductions I have described are in themselves an element of encouragement in that respect.
I am sorry to note that the hon. Member for Lancaster (Mrs. Kellett-Bowman) has left the Chamber.
§ Mr. Jones
I have practically got her notes in front of me. Although the hon. Lady is not present, I realise that she may be absent for a perfectly good reason. As hon. Members know, things get complicated in this House.
The hon. Lady quoted what I have said on several occasions. She quoted a speech that I made in Committee on a previous Bill, when I argued that the earnings of married women who go out to work were an essential part of the family budget. The hon. Lady suggested that I ought, therefore, to be supporting the married woman's option. But if she had quoted that previous speech in full, she would have found that I was at that time arguing the case for absolutely equal treatment, indicating that as the income for a married woman is part of the family budget, so would or so should unemployment or sickness benefit be an equally important part of that budget, and that 272 that lady should draw those benefits when necessary. The case I was making on that occasion was for absolute equality of treatment.
§ Mr. McCrindle
Would the Minister care to comment on the point that I made, that of all the times to seek to withdraw or even to water down the married woman's option, a time when we may be moving towards a situation in which women could conceivably become principal breadwinners is just about the last time to contemplate doing that?
§ Mr. Jones
That argument is based on the mistaken belief that each individual contributor to the National Insurance Fund pays for his or her own benefits and that there is no cross-fertilisation, as it were. It is on that one premise that that argument is advanced.
There was some talk by a number of hon. Members, including the hon. Member for Rushcliffe, the hon. Member for Brentwood and Ongar (Mr. McCrindle) and the hon. Member for Lancaster about the Government's position regarding the future of the married woman's option. No one has a shadow of a doubt where we stand on that matter. We made our position quite clear when we were in Opposition. We said that as a general principle we thought it desirable in the interests of married women that they should contribute to and receive from the National Insurance Fund in exactly the same way as male contributors.
Our White Paper "Better Pensions" spelt out in some detail our attitude towards the married woman's option. On Second Reading I did the same thing. I repeated and emphasised the points that we made in the White Paper. We are certainly not attempting to do anything without letting the country, the married women and married women's organisations know exactly where we stand. The discussions now taking place go towards that end.
The burden of the Opposition's case is that the increase in the class 1 contribution rate for opted-out married women and widows from 0.6 per cent. to 2 per cent. is substantial. We have not sought to conceal that from the House. It is self-evident. My son could have worked that out when he was at primary school.
But to say that the increase is substantial misses the point. Further, it is a 273 mathematical nicety to say that 2 per cent. is just over three times 06 per cent. This is not the reality. The questions which married women will ask are— "What are those of us married women who have chosen to opt out paying now? What shall we be paying in April 1975?" The true answer is that almost all opted-out married women will pay less than they are paying now and that opted-out married women at the higher end of the earnings scale will pay very much less than they are paying now.
I gave to the House earlier the figures for the £46-a-week opted-out married woman. These figures show how those with the highest weekly earnings gain the most. At £46 a week, the opted-out married women will pay in April £1.18 less than she pays now. At £62 a week she will pay £1.72 less. At £69 a week she will pay £1.57 less. No one can use the words "excessive burdens" to describe such reductions.
The division between the two sides of the House is not about increases. It is not how much more married women will pay in April 1975. The question is, how much less will they pay, and how can we justify the extent of the various reductions?
The hon. Gentleman said today, as he has said previously, that it was not right for us to take the graduated contributions into account. He reminded the House of the importance of the Boyd-Carpenter scheme. He said that we should not take the graduated contributions into account because they were intended to provide a graduated benefit.
One of the major purposes of the Boyd-Carpenter scheme was not only the graduated pension which would accrue; it was to provide an income to pay the current flat-rate benefits. This has been a tendency which has grown over the years and has been the accepted practice of successive Governments. At present, half the contributory income comes from that source.
Our national insurance scheme in itself is a redistributive scheme, with all better-off employees contributing on an earningsrelated basis towards current flat-rate benefits. That is why we do not think it right that from April 1975 the opted-out married woman should be singled out to pay no contribution to the general 274 cost of benefits as such. It is easy to use the words "unfair burdens" and to suggest, as the hon. Member for Brentford and Ongar did, that married women have enjoyed the right to opt out, and that because they have exercised it this is an absolute reason for continuing the option at this level.
If a similar option were to be offered to single men, three out of four would take it. If it were to be offered to single women, they likewise would take it. If we were to put the whole of our system of national insurance forward on an option basis, large numbers might well opt out. The fact that large numbers opt out now is no justification for saying that we should accept the proposal in the amendment.
My hon. Friend the Member for Islington, South and Finsbury (Mr. Cunningham) said that single men and women, by contributing without the right to opt out, make valuable contributions towards benefits which they never receive and, in some cases, benefits which they hope they never will receive. These are the reasons why we do not believe it reasonable to allow a reduction of the size proposed by the amendment.
In these debates the word "actuarial" is much used. There is nothing actuarial about the amount of earnings-related contributions people pay for flat-rate benefits in any pay-as-you-go scheme. The rates of contribution are based on the total cost of the benefits of the scheme.
The distribution between particular groups is a matter of political judgment and sometimes of political differences. It certainly is not a matter of strict actuarial calculations. Higher earners are paying more than is actuarially needed for their benefits. Lower earners pay less.
We ask why should not married women make some contribution to the general costs? By their amendment the Opposition say that that contribution should be 1 per cent. Our opinion is that it should be 2 per cent. It is a matter of judgment.
§ Mr. Kenneth Clarke
Will the Undersecretary confirm that his approach is totally abandoning actuarial considerations and, as he says, is in no way an 275 actuarial attempt to assess different contributions from different categories but is in fact a political judgment of what any category will bear? Will the hon. Gentleman confirm that clearly and then mention it to his hon. Friend the Minister of State before he rises to speak on the next amendment, because, as the hon. Gentleman says, we each know our words on this subject rather well by now? Is the hon. Gentleman aware that the Government's sole case on the self-employed seems to be based on an actuarial argument that the amount that they pay should be much more in order to get up to an actuarial contribution to the national insurance fund?
§ 5.0 p.m.
§ Mr. Jones
The importance was when I used absolute actuarial basis, but the hon. Gentleman should not become tied up with the exactitude of all this. It was the general principle we were talking about.
Many figures have been mentioned today. We have heard about what has been described as an extra burden of £47 million which a wicked Socialist Government are said to be taking out of the pockets of married women who have opted out. To describe it in that way is unrealistic and in many cases misleading——
§ Mrs. Kellett-Bowman rose——
§ Mr. Jones
I shall explain the position, if the hon. Lady will contain herself. We are talking of substantial reductions on a weekly basis which I spelt out before the hon. Lady came into the Chamber, but I did not object to the global sum being used. The figure of £47 million is the difference between the annual product of a 06 per cent. rate and of a 2 per cent. rate. But that is not the issue. We are proposing a reduction in the total contribution of opted-out women of more than £40 million. When one talks of a burden of £47 million, it is difficult to marry that with the reality of reducing the total contribution for opted-out women of £40 million——
§ Mrs. Kellett-Bowman
Would the hon. Gentleman make it clear that the reduction applies equally to some benefit which is being taken away?
§ Mr. Jones
The difficulty here is to rehearse the same argument which has already been gone over and to explain to the hon. Lady the contribution to the Boyd-Carpenter scheme, a large proportion of which has always been used to finance flat-rate benefits. That has been a principle accepted by Governments of both political parties and it has extended throughout the years. The hon. Lady may shake her head until her heart is content but that is the position.
The amendment would seek to reduce the rate for opted-out women from 2 per cent., as proposed in the Bill, to 1 per cent. It is interesting that the Opposition are not suggesting that we revert to the 0.6 per cent. figure of the 1973 Act. The Opposition, by choosing the 1 per cent. figure, seem to accept that a reduction of 0.6 per cent. would be too great a reduction in the contribution of the opted-out married woman. We come back to the question, to what level should the reduction be made——
§ Mr. Kenneth Clarke
The hon. Gentleman has referred again to our amendment and I cannot resist putting a point to him. As he has just noticed that our amendment refers to a figure of 1 per cent., would he accept that this makes it a little less necessary for him to do what he has just done, in charming and pedantic fashion, namely to lecture us about the cross-subsidy element in the scheme, because our amendment contains some cross-subsidy element? If he wants to justify his cross-subsidy at 2 per cent., can he say which other category of contributors is cross-subsidising other categories to the extent of paying over 300 per cent. more than the actual actuarial contribution? How far from the true actuarial contribution is the hon. Gentleman prepared to go?
§ Mr. Jones
We are entitled on this side of the House to say that, in our view, to create a fair degree of subsidisation, using the figure of 2 per cent. is fairer than using the figure which the hon. Gentleman suggests.
We are saying that we believe that the reduction proposed by the Opposition is indefensible at a time when many other contributors are being called upon to pay more. No doubt in the second amendment, which we shall soon be discussing, hon. Members of the Opposition 277 will call for massive reductions for other contributors and will argue that we have put up contributions too high. Both sides of the House agree that there must be a reduction. We believe that our reductions are reasonable and fair to all concerned, and I ask the House to oppose the amendment.
§ Mrs. Lynda Chalker (Wallasey)
I continue my support of the sensible amendment which we put forward in Committee, and again for consideration today, for a reduction in the married woman's payment from 2 per cent. as in the Bill, to 1 per cent.
I do so because I have always believed that if people pay for something they should get value for money. If married women decide that they wish to opt out, thus agreeing to benefit mainly through their husband's contribution to the National Insurance Scheme, it is right that they should be allowed to retain some extra income, no matter how small it is.
We can hardly take this amendment in isolation, although I shall attempt to do so, because we have throughout Second Reading and in Standing Committee needed to consider the raising of income to support better benefits. We are all in favour of better benefits, but the question is how the method of raising the money should be spread out. I wonder repeatedly what it is in the Government's mind which makes them so anti-married women who opt out and anti the self-employed.
We must accept that when the Government need to raise money, each category of contributor has to do its bit. That is why we are prepared to say that the reduction should be from 2 per cent. to 1 per cent. and not from 2 per cent. to 0.6 per cent., thereby getting married women who opt out to make a further contribution to raising the additional revenue to give better benefits to those people who need them. But I do not know why we have to burden these women to an extent that has been cloaked in mystery by the Minister.
He refers repeatedly to putting the burden on all better-off employees. It seems to me that the better-off employees are not those women we are talking about. I know that the Minister will say that we are to give them great reductions as from next April. That is how it will seem for a few months. For how many months 278 will they continue to be in that advantageous position of not paying as much as they might have paid previously? Undoubtedly, doing away with the Boyd-Carpenter system, means a reduction in contributions if only for the time being, and not making a second pension contribution either, will mean that opted-out married women will be in a nice lulled situation, but for how long we do not know.
It is not very much for members of the Government or Members of the House to have to pay an additional £28 a year, but for the woman who decides to opt out it is. The woman who is trying to contribute every penny possible to her home and household sees that the situation is different, and the difference will be noticed even in these times of inflation. These women provide an essential part of the family budget, and they provide things which otherwise so many families would have to do without.
All our social security legislation is bedevilled in debate by the word "actuarial", as well as by theories on various arguments for and against such proposals. But all this does not make any difference to the ordinary woman who has opted out, no matter how much eloquence or lack of eloquence there may be in our debates. She is looking at her income not only for the week ahead but for much longer, although some women cannot budget for longer than a week. In deciding whether to go back to work a woman is looking at her income over a much longer period of time.
I cannot understand why the Government are not prepared to consider the whole range of reasonable amendments which were put forward in Standing Committee, and only two of which are now being put forward, which could ease the situation more than somewhat for those groups who are having this burden unfairly placed upon them.
The hon. Gentleman says that it will not be unfair on 5th April next year. He is quite right. For a few weeks or months it may not be unfair. But I am concerned not with what is obvious today but with what is implied for the future. So long as three-quarters of all women employees wish to continue opting out, they should have the right, because it is an essential freedom for them, unless by paying more 279 money they contribute to get improved benefits.
We have not heard from the Government at any stage of this Bill, or in any White Paper, that this more-than-tripling of their payment will give them an improved benefit. I have made some attempt since the Committee stage to look into the statistics behind the contributions, to see who benefits, and by how much, for each of the national insurance and national health payment going to the various groups. Without the assistance of the Civil Service it is almost impossible to unravel what percentage is given to which group for which benefit, but no doubt in time I shall get to the end of that investigation.
What I am convinced of, having looked at the groups who make demands on our social services and at their contributions, is that the married women who opt out are not making any greater demand than before which would require them to carry at one and the same time so steep an increase as in this situation.
§ Mrs. Chalker
I am taking into account the £6 pension. I have said that it is not necessarily the situation which we shall be in as from 5th April next year, but the situation over a much longer period, with which I am concerned.
In Committee the Under-Secretary said, in answer to questions from my hon. Friends, that there was nothing devious in this Bill about the married women's option, that the Government were not thinking of tinkering about with it. "Tinkering" was the word that the hon. Gentleman used. I am sure that he was absolutely sincere, but I am convinced that this is only the thin end of the wedge for the many women who wish to go back to work, but who would opt out of the full contribution in order to put money by for various reasons. When we need specialists, they may consider that for tax reasons it is not in their own interests to go back to work. But if they wish nevertheless to go back to work so that they can contribute something to society, I feel that no disincentives should be put in their way.
The Under-Secretary told us in Committee and again today that he is having 280 and will continue to have discussions with the TUC, the CBI, the Department of Employment Advisory Commission on Women's Employment, and the Women's National Commission. Perhaps he started those discussions too late. Whatever advice he is likely to get, I cannot believe that it will not be influenced by the sort of representations which have been made to myself and to many of my colleagues about the very steep increase in the opted-out married women's contribution.
I never thought that we were in Parliament to do away with personal freedoms, options and those personal decisions which every person should have a right to make. Therefore, I hope that we shall not eventually move towards doing away with the married women's option. Nevertheless, I suspect that in a situation of decreased payments from next April for a while, the Minister is seeking to arrive at a situation in which nobody notices that we shall do away with another freedom when married women wish to go back to work in order to contribute to society and to the income of their families.
I shall support the amendment without out hesitation.
§ 5.15 p.m.
§ Mr. Kenneth Clarke
I begin answering what the Minister said by taking up the theme of my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle), who said that in social security debates of this kind we ought to avoid sterile political argument when essentially we are discussing important technical problems connected with a scheme within the terms of which we should find some broad scope of agreement between the parties.
It is particularly appropriate to take up that theme because, as my hon. Friend the Member for Newcastle-upon-Tyne, North (Sir W. Elliott) reminded us, we are dealing with an extremely important aspect of life and work at the moment, which is the rôle of married women in contributing to household budgets, which in many hard-pressed families is an important feature in managing to keep the family's head above water. In proposing these amendments we are moved more by sadness than by anger. In producing the Bill the Government have departed— for reasons which we still believe are 281 partly, perhaps unconsciously, based on prejudice—from an agreed structure which I thought we had in Part I of the 1973 Act.
We are dealing with Part I of the Act about which there was agreement between the parties that the principle of graduated contributions based on earnings ought to be introduced to pay for flat-rate benefits. Both sides were agreed that that basis would have to be pursued until some kind of second pension arrangement could come into operation. Parliament legislated in 1973 on a basis which sought to apportion a proper share of the burden of the national insurance scheme on a dynamised basis between the various contributors. We always accepted that had we still been in government in 1975 we would have had some protests from amongst the higher paid who would have felt that they were being called upon to pay more by way of contribution whereas the lower paid would have had their contributions reduced. We would have explained to the public why these changes were being made and that it was accepted on all sides that this basis of graduated contributions ought to be pursued.
Unfortunately, the Government, in bringing forward this Bill, have not chosen to follow the pattern of the 1973 Act and have not chosen to spread the increased burdens which they feel are necessary across the whole range of contributors. They have singled out certain contributors for special treatment over and above that which we proposed in 1973. It is that which leads us to argue on behalf of this category of married women and to say that we cannot believe that the Government intended to open up this controversy. We do not feel that they can have realised when they brought forward this legislation in July of this year how much they were singling out married women in employment for specially severe treatment. We hope that we can get back to a lack of party political acrimony and to general agreement on a structure which will not single out those women for this sort of treatment but will deal with them on a fairer basis.
§ Mrs. Kellett-Bowman
Married women are already in considerable difficulty with their pension in that they are the only section that has to fulfil three require- 282 ments before getting the pension. Unlike employed or single people they must fulfil the half-test as well as the other two contributory tests and this is a very difficult provision.
§ Mr. Clarke
I entirely agree with my hon. Friend, Mr. Thomas. Of course, the Government can say that they intend to abolish the half test, which we would all very much welcome. When they do so—and I accept that they are committed to it in the White Paper on pensions proposals which will presumably reach legislative form some time early in the new year—we shall happily support them. We all know the difficulties that the half test has always caused and we look forward to a Government being able to produce credible legislative proposals to remove this burden from married women. If the Government remove the half test and begin moving women towards equality of benefits and taking away such anomalies as the half test, they can with justice introduce equality in contributions. But all that married women in employment can look forward to are the good intentions of the Government to improve their position on benefits. They have no actual changes to rely upon. There are hard legislative provisions to increase their burden of national insurance contributions.
§ Mr. McCrindle
Before we get down too much to the fine detail of the situation, will my hon. Friend go back to what he said at the beginning of his speech when he referred to my suggestion about trying to move very gradually away from sterile debate, whether we are talking in generalities or in detail? Was he agreeing with my suggestion that there is a strong argument for both sides getting together on this vital matter to find the lowest common denominator of agreement—in other words, apart from the detailed points about married women, to see whether discussion between both sides of the House would be advantageous? Does he agree that in our general approach as a Parliament to social security provisions there is a strong argument for such discussions?
§ Mr. Clarke
I entirely accept that, Mr. Thomas, and it is something we have been trying to move towards on the White Paper proposals.
§ The Minister of State, Department of Health and Social Security (Mr. Brian O'Malley)
The hon. Member for Brentwood and Ongar (Mr. McCrindle) should be aware that I have already responded to comments and demands of that kind on a public platform last week on which both I and the right hon. and learned Member for Surrey East (Sir G. Howe) were sitting.
§ Mr. Deputy Speaker (Mr. George Thomas)
Order. That is the third time that the hon. Member has done me the favour of calling me Mr. Thomas. I correct him only in case he calls Mr. Speaker "Mr. Lloyd."
§ Mr. Clarke
Before I make any more mistakes, Mr. Deputy Speaker, may I apologise for not addressing you in your proper style and dignity which I am sure we are all glad to see you wearing.
We were delighted to hear the Minister of State's response to the Opposition's approach at the British Institute of Management conference, which I was not able to attend, last week. We hope that he will respond in good faith to approaches of this kind which have been suggested by my hon. Friend the Member for Brentwood and Ongar. We have made a specific proposal and we await a specific response from the Government about the idea of a Select Committee to consider the important social security and pension scheme changes which are to be made in the coming year.
It would seem that the process of a Select Committee as opposed to Standing Committee, hearing witnesses and considering their evidence on an all-party basis, is wholly preferable on a subject of this nature where everyone would like to see all-party agreement. On both sides of the House we criticise ourselves to some extent because our political battles of the last ten years have produced so much uncertainty and caused such damage to the proper development of pensions policy.
It is reassuring to see that we can still reach some understanding, some common denominator, on the 1973 Act. There seems to be no difficulty in our agreeing on the basis of graduated contributions.
284 My hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman) and I welcome the idea of abolishing the half-test and of moving towards equal benefits for women. Why, oh why, therefore, if there is and should be this underlying basis of agreement, do we find ourselves in this quite unnecessary squabble? It arises because the Government have decided that in the interval before we can start improving benefits for women, and taking other steps towards equality of treatment, married women are a suitable means of raising substantial extra money to subsidise other contributors to carry them through the difficult two or three years before the Castle scheme gets anywhere near a practical reality.
I am sorry that the Minister has departed from any attempt to meet us on this subject or to reach any kind of agreement. I listened to what he said and I heard his predecessor last July say something very similar. I heard him put the arguments eloquently at all stages of the Bill. When he said that we had been over this ground before, he should have said that throughout the entire proceedings of the Bill, during five months of steady deliberation, the Government have not budged their position one iota, to try to get this all-party agreement. The Bill remains in every essential feature precisely as it was on 1st July his year. Not only is the Bill unamended but we have heard exactly the same arguments from the Minister using the same item-by-item approach to stonewall arguments from the Conservative benches to defend the position of married women.
I detected one slight change when the Minister said that he accepted that there was an increase and that even his child at a primary school could tell that 06 per cent to 2 per cent. constituted an increase. There were times in his speech today when he was dealing with what will happen next year when I felt that the fact was being fairly effectively cloaked. But at other times, the Minister was stating flatly that what is proposed in the Bill is a large increase. At times he almost as clearly said that even at 0.6 per cent. the system represented a bargain for women and that it would be a bad bargain if they did not take it. He said there was nothing wrong in exercising the option, and that it makes 285 perfectly good sense for three out of four working women to do so. But as soon as he had said that he was making this increase above what we had proposed and above the fair market rate of 0.6 per cent., he began to explain the cross-subsidy that is always involved in the national insurance scheme and that was even involved in the Boyd-Carpenter arrangements which have prevailed so far.
I do not want to be unkind to the Minister because he gave a clear description of the cross-subsidy element involved in the system, but he had no need to lecture us in this way about it. As he discovered when he returned to our amendment, we have attempted to meet the Government half way. The Government have not shifted from their position in July, so we have moved from ours. We say that if, for the sort of reasons indicated by the hon. Member for Islington, South and Finsbury (Mr. Cunningham), they feel that some element of cross-subsidy from married women to others is justified, then that figure should be 1 per cent. instead of 0.6 per cent. He cannot therefore accuse us of trying to relieve the better-off married woman from subsidising other contributors. We have chosen in our amendment to accept the figure of 1 per cent., which represents half as much again as the fair market rate should be if the contributors were simply paying for the benefits they themselves receive.
§ 5.30 p.m.
§ Having moved that far towards the Government, still we find that there is no attempt to settle, no attempt to enter into any kind of market haggling. We are told that it is a question of political judgment that divides us. A figure chosen in July is still the Government's figure, and it is clear that there is not a chance of the Minister's moving from it. In trying to justify it, he is reduced to saying that it is simply a matter of political judgment. For all the other matters that he went through, and the discussions with hon. Members about the word "actuarial" and how it entered into our arguments, I am sure that he will agree when he gets down to it that his figure of 2 per cent. is simply plucked out of the air as a judgment by the Government of what they can get away with in asking women to pay more next year.286
§ We heard a marvellous phrase when the Minister spoke about how far the figure was from actuarial calculations. We heard that the Government would not apply absolute actuarial calculations. I am not sure what the precise opposite of "absolute" is, but how far away can one get when the Government's figure, plucked out of the air, is so much without reference to an actuarial considerations that it is more than 300 per cent. of the market rate for those women who pay for the benefits they will receive, if they continue to exercise the option?
§ Apparently, I have yet again provoked the hon. Member for Islington, South and Finsbury. I was going to deal with his defence of the Government's figure. It was an interesting and original contribution, as we expect of the hon. Gentleman, who shares with my hon. Friend the Member for Kensington (Sir B. Rhys Williams) a great knowledge of the intricacies of the national insurance system and an ability to put arguments that are completely different from those of his Front Bench. Both the hon. Gentleman and my hon. Friend provide valuable insights for both Front Benches. But on this occasion the hon. Gentleman has found, as I suspect he will on the next amendment, reasons for supporting the Government's changes which bear no relation to the reasons put forward by his Ministers.
§ The hon. Gentleman came up with the extremely ingenious argument that we should go well beyond a strict actuarial calculation, based only on the benefits received by exercising the option, and regard the contribution as in some way paying for the £6 benefit that every married woman receives from her husband's contribution. It is an interesting and ingenious argument, but the hon. Gentleman knows that it marks a complete departure from the way in which the matter has been approached in the past. If a married woman who goes out to work is suddenly to be expected to make a contribution towards the pension her husband earns for her as a married woman's benefit, it makes for an extraordinary anomaly between the married woman who goes to work and the married woman who does not and who contributes nothing to the £6 benefit she receives as a result of her husband's contribution.287
§ Mr. George Cunningham
Is that anomaly any greater than that where the same difference exists between the married woman who opts out and receives the £6 pension and the single woman or the single man who pays for it but never receives any benefit in respect of it?
§ Mr. Clarke
The single man receives his £10 pension for himself, although part of his contribution is also going to the benefit of married women. It could be said that throughout the system single people tend to subsidise married people, and that all tend to subsidise married women to some extent. It seems to me and the Opposition that a fresh complication is being introduced, suddenly, to try to scoop some of that money back from married women who go out to work, leaving married women who do not go out to work totally subsidised. The best approach in these rough actuarial calculations, which Governments have always tried to follow in the past, is to regard the £6 and associated benefits of married women as dependent on the husband's contribution, and to accept that there is a cross-subsidy from other contributors.
The hon. Gentleman's argument is in no way the Government's. They seem to accept our arguments on the actuarial calculations, and then coolly depart from the market rate which they can agree with us on the basis of those actuarial calculations. The Under-Secretary did not try to dodge this in Committee. He began his contribution on the subject by saying:In trying to deal with the issues raised on this amendment, which seeks to reduce the class 1 primary contribution from 2 per cent. to 1 per cent., commonly referred to as the married woman's option, may I take straight away the point raised by the hon. Member for Rushcliffe, who asked about the actuarial basis? I am advised that the industrial injury and health service contribution that would be attributed to this category of women would be the 0.6 per cent. that was written into the 1973 Act. But, as both Government and Opposition have proposed an increase from 0.6 per cent. to different levels, it may be presupposed that both of us admit that 0.6 per cent. is inadequate to meet the present pension level, and that the argument between us is not sticking strictly to an actuarial basis, but the extent to which one should depart from it."— [OFFICIAL REPORT, Standing Committee A; 14th November 1974, c. 67–68.]I told the hon. Gentleman then, and I remind him now, of the trap he opens 288 up for the Minister of State when he raises his actuarial arguments on the selfemployed. The Under-Secretary agrees with us that the actuarial rate, the market rate, is 0.6 per cent. The hon. Gentleman examined our 1973 structure and has chosen to more than treble the 0.6 per cent. Why does he take such a breathtaking risk, which his right hon. Friend the Secretary of State for Prices and Consumer Protection would not allow to be taken with the price of any other commodity for which married women have to pay in these inflationary times? The hon. Gentleman does so for the reasons that my hon. Friend the Member for Lancaster pointed out forcefully. Married women are being treated by the Government as a convenient way of raising money, sheer cash, millions of pounds' worth of it that otherwise they would have to raise from other categories of contributors—in particular, employees, whom they regard as simply untouchable beyond what they have already done.
The Minister cannot get away from the fact that he has plucked the figure out of the air in order to raise from married women almost a third of the new burden imposed by the Bill. Of the £150 million that he needs, £47 million will come from married women exercising the option. It is a dramatic increase compared with what they would otherwise have to pay. The woman earning £2,000 a year—the £40-a-week woman to whom the Minister referred—who might have been paying £12 a year under the 1973 proposal of 0.6 per cent., finds her contribution raised to £40 a year under the Minister's proposals, simply because she is seen as the most convenient, handy source of revenue to subsidise the rest of the scheme. The cross-subsidy from that married woman is out of all proportion to any of the other cross-subsidies about which we have argued between categories of contributors in all the rest of the national insurance structure.
How should we judge what the effect will be on married women next year? The Minister emphasised that the approach must be that they will not mind, that they will not even notice that the market rate has been more than trebled for them, because many of them will find next April that in cash deducted from their earnings they will be paying less. The Minister is clearly prepared to deal 289 with these graduated contributions on the basis that they are just a form of personal taxation, and that the married woman paying them will not go into the intricacies but will simply find next April that in many cases the deduction from their pay is slightly less. Therefore, they will not realise how they have been singled out for this additional percentage.
If the Government are to adopt this approach, why will they not adopt it for any other category of employed persons covered by the Bill? Why do not they adopt the same approach to the ordinary employee? The majority of employees will find that they are paying somewhat less in April next year as a deduction from their pay packets. Why do the Government not accept the offer which the Opposition made, by amendment, of £87 million just by putting up these contributions by one quarter of 1 per cent.? For the most part that would not be noticed in April of next year because the burden of employees will be reduced. Our amendment would make only a tiny difference. Why will the Government not adopt that approach?
I shall not trespass on the second amendment, but we have never had the pleasure of hearing the Under-Secretary of State telling us how he would address the arguments that we have heard to the self-employed man who finds that his contribution will go up by £3 a week in April. When we turn to the self-employed no doubt we shall find that the Minister of State will use different arguments and will make no reference to what has been said by the Under-Secretary of State.
Why will the Government not adopt the approach that we suggest? We suspect it is because any suggestion of any minor increase beyond what is now being asked for from employees would enrage the great block of those in the trade union movement on whom they are so dependent. We suggest that the Government are so prejudiced about the married woman's option and are so anxious to eliminate it before they have made any step towards equal benefits for women that they are prepared to accept that it is the most convenient way of imposing an increased burden of contribution towards the national insurance system.
We cannot accept that. We regret that the Government have failed to move 290 since we started arguing this matter. We shall press this amendment in the hope that even at this stage the Government will recognise and accept our views.
§ Mr. Robert Boscawen (Wells)
I have not had the advantage of some of my hon. Friends who took part in the proceedings in Committee of learning all the niceties of the actuarial disadvantages of married women exercising the option under this Bill. I look at this matter from a simpler approach. I have tried to understand why the Government have started to introduce this blatant discrimination against the women who exercise the married woman's option.
It is clear to me that the answer was given by the Under-Secretary of State in Committee on 20th November. He said:Hon. Members will know that Labour Members steadfastly opposed the continuance of the married woman's option during the passage of the Social Security Bill.That is the 1973 Bill. He continued:It is still our conviction that it is wrong to encourage married women to sign away their rights to contribute to pensions of their own. Under our scheme for better pensions, for which a Bill has been promised this Session, married women who go out to work and pay full contributions will receive the same pensions as men and single women with the same earnings record. The married woman's option will be abolished…."—[OFFICIAL REPORT, Second Standing Committee on Statutory Instruments, 20th November 1974; c. 4.]The married woman's option will be abolished. That is the purpose of trying to squeeze out the married woman inch by inch—this time it happened to be a big inch—and to make it not worth while their continuing to opt out.
§ 5.45 p.m.
§ I believe that that is entirely the wrong approach. Three out of four women now exercise their free choice in this matter. It is vitally important that we should continue to allow them to do so. The Bill is just one more attempt by the Government to reduce the amount of free choice open to our citizens. The majority of women who exercise the married woman's option do so because they believe that they get a better deal out of it.
§ The philosophy of our basic national insurance scheme has always been that it should provide family cover. The married man was able at a reduced rate to provide good and worthwhile cover for 291 his wife and any children he might have. There is nothing subservient about that. I do not believe that that makes married women second-class citizens. I do not believe that there is anything that we should be ashamed of by allowing them their option.
§ Women should be able to exercise a free choice. It is important that married women who do not go out to work should be able to do so. They should not be made to pay a greatly increased contribution if they cannot go out to work or do not wish to do so. For example, if they have special problems in their homes. Their lot will be a great deal more difficult because of this Bill.
§ It is especially important that married women who remain at home to look after their families, particularly when they have children with special problems, should not be penalised. What the married woman's option was designed to do from the beginning was to help women with problems at home. It was not just designed to help the majority of women. It was not designed primarily to help the mass of wives who are able to go out to work and earn good wages. It was designed to help in particular the married woman who has to stay at home to look after her family in special conditions. Not only that, it was designed to help the family in which the husband has a lot of sickness and is not able to bring so much money into the home as would otherwise be the case.
§ There is thus a need for a reduced contribution for the wife. I do not think that that is a disadvantage. In fact it is a great advantage. It seems that the Government are trying to change what has been the philosophy of the scheme ever since its inception. I deplore that. They are trying to do so in the rather underhanded way of squeezing the married woman's option rather than coming out openly and saying that the purpose of the Bill is to make the married woman's option not worth while so that when it comes to the point of abolishing it altogether there will be no objection. That is the reason behind it. I have not heard any suggestion that there are any other genuine reasons for raising the level of contributions in this way.292
§ The wife who goes out to work and who receives a large pay packet is in a position to pay the full rate of contribution if she wishes to do so. I cannot understand why the Government wish to penalise the married women who cannot go out to work. That is the basis of the Bill. The Government are taking away one of the major advantages of the present system. From the beginning it was designed to provide family cover and to give help and better security to those who far various reasons have difficulties at home.
§ I shall oppose any measure which will make it more difficult for women to exercise a free-choice. The Bill is a means of removing that choice, and it is doing so in almost a sleight of hand manner. That is why I shall oppose it.
§ Miss Harvie Anderson (Renfrewshire, East)
I must admit that it had not been my intention to take part in this debate—on the good ground that I recalled an occasion some Parliaments ago when I took part in a precisely similar debate at great length. I think that it was the sight of the Minister of State that made me realise that once more I must express my resentment at the proposal now before us. I am sorry that the Minister of State is not present, but I am delighted to see that the Under-Secretary of State is in the Chamber. I know that he will listen carefully to the persuasions that I shall add to those so effectively made already.
This is a repeat performance of a lengthy and drawn-out debate which continued not just for weeks but for many months. I am glad to say that on that occasion the outcome was highly satisfactory, because a General Election took place before the Bill was passed. I would not be quite so optimistic as to suggest that the same will happen again on this occaison, but I repeat my complete opposition to the proposal before us now.
§ Mrs. Jill Knight (Birmingham, Edgbaston)
Does not my right hon. Friend think it noteworthy that the Government withdrew a similar Bill just before the General Election? Does not she agree that the women of the country have yet to become aware of what is to hit them very shortly?
§ Miss Harvie Anderson
I entirely support that point. I do not think that the 293 majority of married women recognised, when it was first introduced, that this proposal would be put into law, and I think that the most serious aspect is that it seems to be the thin end of a wedge which is going to be pushed further.
I am glad to see the Under-Secretary of State looking so anxious, because if it is not the thin end of a wedge we shall be glad to hear it, but may I remind him that this is a convenient method of raising some £47 million additional by advancing a contribution from married women by a rise in contribution greater than one would expect. If that is as far as the Government are going to go ever, good and well. Incidentally I was not consoled earlier in the debate to hear mentioned earnings of £2,000 a year in terms which did not remind the House that when women earn they also pay tax.
We are not dealing with additional payment of an exclusive form of tax falling on married women. Many married women who work, or, indeed, who do not work, also contribute. Where there is an option which gives certain benefit, as this does, to a married woman who contracts out, that benefit is but a small reward for the household contribution she makes. I am sure that not all hon. Members realise that most women; even Members of Parliament, frequently cook the breakfast at home. We do not get paid for it directly, but we are happy to have some indirect benefit as in the advantage of a married women's contribution.
I want to register a protest now, lest this proposal by the Government be the thin end of a wedge which will go ever forward so that married women will have to pay a greater proportion of tax raised than they do at present, and the intention here is, I suspect, to decrease the built-in benefits which we have enjoyed for so many years.
Millions of women accept and take this benefit for granted. They do not yet realise that it is likely to be removed. Even if it is not likely to be removed from them wholly this clause will make a very considerable additional payment necessary in the very near future.
§ Mrs. Knight
In Committee we argued the case strongly for the situation of women who go out to work. I never felt that I received a proper answer to the point I made about the vast differences 294 there are in the conditions of women who go out to work. I do not feel that the Government, in what they intend to do by the Bill, have ever come face to face properly with the fact that some women work for a very short time, that some women work for years after their children grow up, and that some are physically incapable of going out to work. The Bill supposes and demands that women should pay a great deal more money than at present, and for no more in return.
§ Mr. Alec Jones
How can the hon. Lady continue to mislead the House by suggesting that there is to be an increased contribution? There are other arguments, but no one can suggest that a reduction of £1.57 a week in contribution is anything but a reduction.
§ Mrs. Knight
The hon. Gentleman cannot get away with that. He tries, and we must give him 10 out of 10 for trying, but he knows as well as anyone else that the basis of the Bill, as of the Conservative Government's measure earlier, is that contributions and benefits have to be put on a different basis from their present basis. There is no doubt about it.
I thought that we had progressed beyond that to the argument in which we were comparing this Bill with the Conservative measure, which was designed to introduce a firm actuarial basis for benefits, including the increased benefits which we all welcome. The Bill greatly upgrades the amount of money women were going to have to pay under the Conservative legislation. That is what we are arguing about. We are not suggesting that the system ought not to be put on a firm actuarial basis. The argument is that we should do it as fairly as we can. Our argument in Committee was that to expect women to bear an unfair share—£47 million—of the increase demanded was unjust.
The Government must recognise that it is very difficult to set women's circumstances into a neat pattern when asking for payments on their behalf, because they are not able to have such a record of contributions men can very easily have. Males are very fortunate to be males in this respect, because for women it has always been very difficult to keep up comparable contribution records. Unless a woman is single, and remains single and 295 healthy, she has not a hope of matching the contribution record of a man. The Government must recognise that they are demanding from women a very unfair proportion of the extra money needed. They are telling them not only that they must pay this unfair proportion, but do so for no extra benefit whatever.
This is what will be so annoying and infuriating to many women outside the House when they realise what the Government are doing to them. Women who have been out to work for a long time
§ will pay a lot of money under this Bill. Women who have been at work for a short time will not pay nearly as much. It is because of the difficulty in getting a clearly equal contribution that former Governments have recognised that for women the option system is fair and good because they have to be covered by their husband's contributions.
§ Question put, That the amendment be made:—
§ The House divided: Ayes 249, Noes 301.299
|Division No. 15.1||AYES||[6.0 p.m.|
|Adley, Robert||Farr, John||Kershaw, Anthony|
|Aitken, J. W. P.||Fell, Anthony||Kimball, Marcus|
|Alison Michael||Finsberg, Geoffrey||King, Evelyn (South Dorset)|
|Arnold, Tom||Fisher, Sir Nigel||Kirk, Peter|
|Atkins, Rt Hn H. (Spelthorne)||Fletcher, Alex (Edinburgh N)||Kitson, Sir Timothy|
|Awdry, Daniel||Fletcher-Cooke, Charles||Knight, Mrs Jill|
|Bain, Mrs Margaret||Fookes, Miss Janet||Knox David|
|Banks, Robert||Fowler, Norman (Sutton C)||Lamont, Norman|
|Bell, Ronald||Fox, Marcus||Lane, David|
|Bennett, Sir Frederic (Torbay)||Fraser, Rt Hon H. (Stafford & St)||Langford-Holt, Sir John|
|Bennett, Dr Reginald (Fareham)||Fry, Peter||Latham, Michael (Melton)|
|Benyon, W. R.||Galbraith, Hon T. G. D.||Lawson, Nigel|
|Berry, Hon Anthony||Gardiner, George (Reigate)||Le Merchant, Spencer|
|Biffen, John||Gardner, Edward (S Fylde)||Lester, Jim (Beeston)|
|Biggs-Davison, John||Gilmour, Rt Hon Ian (Chesham)||Lloyd, Ian (Havant)|
|Blaker, Peter||Gilmour, Sir John (East Fife)||Loveridge, John|
|Body, Richard||Glyn, Dr Alan||Luce, Richard|
|Boscawen, Hon Robert||Godber, Rt Hon Joseph||McAdden, Sir Stephen|
|Bowden, Andrew (Brighton)||Goodhart, Philip||MacCormick, lain|
|Boyson, Dr Rhodes (Brent)||Goodhew, Victor||McCrindle, Robert|
|Braine, Sir Bernard||Goodlad, A.||Macfarlane, Nell|
|Brittan, Leon||Gow, I. (Eastbourne)||MacGregor, John|
|Brotherton, M.||Gower, Sir Raymond (Barry)||Macmillan, Rt Hn M. (Farnham)|
|Brown, Sir Edward (Bath)||Griffiths, Eldon||McNair-Wilson, p. (New Forest)|
|Bryan, Sir Paul||Grist, Ian||Madel, David|
|Buchanan-Smith, Alick||Grylls, Michael||Marshall, Michael (Arundel)|
|Buck, Antony||Hall, Sir John||Mates, Michael|
|Budgen, Nick||Hall-Davis, A. G. F.||Mather, Carol|
|Bulmer, Esmond||Hamilton, Michael (Salisbury)||Maude, Angus|
|Butler, Adam (Bosworttt)||Hampson, Dr Keith||Maudling, Rt Hon Reginald|
|Carlisle, Mark||Hannam, John||Mawby, Ray|
|Carr, Rt Hon Robert||Harrison, Sir Harwood (Eye)||Maxwell-Hyslop, Robin|
|Chalker, Mrs Lynaa||Harvle Anderson, Rt Hn Miss||Mayhew, Patrick|
|Channon, Paul||Hastings, Stephen||Meyer, Sir Anthony|
|Churchill, W. S.||Havers, Sir Michael||Miller, Hal (Bromsgrove)|
|Clark, Alan (Plymouth, S)||Hawkins, Paul||Mills, Peter|
|Clark, William (Croydon S)||Hayhoe, Barney||Miscampbell, Norman|
|Clarke, Kenneth (Rushcliffe)||Heath, Rt Hon Edward||Mitchell, David (Basingstoke)|
|Cockcroft, John||Henderson, Douglas||Moate, Roger|
|Cooke, Robert (Bristol W)||Heseltine, Michael||Molyneaux, James|
|Cope, John||Hicks, Robert||Monro, Hector|
|Cormack, Patrick||Higgins, Terence L.||Montgomery, Fergus|
|Corrie, John||Holland, Philip||Moore, John (Croydon C)|
|Costain, A. P.||Hordern, Peter||More, Jasper (Ludlow)|
|Crawford, Douglas||Howe, Rt Hon Sir Geoffrey||Morgan, Geraint|
|Critchley, Julian||Howell, David (Guildford)||Morgan-Giles, Rear-Admiral|
|Crouch, David||Howell, Ralph (North Norfolk)||Morris, Michael (Northerns)|
|Davies, Rt Hon J. (Knutsford)||Hunt, John||Morrison, Charles (Devizes)|
|Dodsworth, Geoffrey||Hurd, Douglas||Morrison, Peter (Chester)|
|Douglas-Hamilton, Lord James||Hutchison, Michael Clark||Mudd, David|
|du Cann, Rt Hon Edward||Irvine, Bryant Godman (Rye)||Neave, Alrey|
|Durant, Tony||Irving, Charles (Cheltenham)||Nelson, Anthony|
|Eden, Rt Hon Sir John||James, David||Neubert, Michael|
|Edwards, Nicholas (Pembroke)||Jenkin, Rt Hon Patrick (Redbr)||Newton, Tony|
|Elliott, Sir William||Jessel, Toby||Nott, John|
|Emery, Peter||Johnson Smith, G. (E Grinstead)||Onslow, Cranley|
|Ewing, Mrs Winifred (Moray)||Jones, Arthur (Daventry)||Oppenheim, Mrs Sally|
|Eyre, Reginald||Joseph, Rt Hon Sir Keith||Page, John (Harrow West)|
|Fairbairn, Nicholas||Kaberry, Sir Donald||Parkinson, Cecil|
|Fairgrieve, Russell||Kellett-Bowman, Mrs Elaine||Pattle, Geoffrey|
|Percival, Ian||Scott-Hopkins, James||Trotter, Neville|
|Peyton, Rt Hon John||Shaw, Giles (Pudsey)||Tugendhat, Christopher|
|Pink, R. Bonner||Shelton, William (Lambeth, St)||Vaughan, Dr Gerard|
|Powell, Rt Hon J. Enoch||Shepherd, Colin||Viggers, P. J.|
|Price, David (Eastleigh)||Silvester, Fred||Wakeham, John|
|Prior, Rt Hon James||Sims, Roger||Walker Rt Hon P. (Worcester)|
|Pym, Rt Hon Francis||Sinclair, Sir George||Walker-Smith, Rt Hon Sir Derek|
|Raison, Timothy||Skeet, T. H. H.||Walters, Dennis|
|Rathbone, Tim||Smith, Dudley (Warwick)||Warren, Kenneth|
|Rawlinson, Rt Hon Sir Peter||Spence, John||Weatherill, Bernard|
|Rees, Peter (Dover & Deal)||Spicer, James (W Dorset)||Wells, John|
|Reid, George||Spicer, Michael (S Worcester)||Welsh, Andrew|
|Renton, Rt Hn Sir D. (Hunts)||Sproat, lain||Whitelaw, Rt Hon William|
|Renton, Tim (Mid-Sussex)||Stainton Keith||Wiggin, Jerry (Weston-s-Mare)|
|Rhys Williams, Sir Brandon||Stanbrook, Ivor||Wilson, Gordon (Dundee E)|
|Ridley, Hon Nicholas||Stanley, John||Winterton, Nicholas|
|Ridsdale, Julian||Stewart, Donald (Western Isles)||Wood, Rt Hon Richard|
|Rifkind, Malcolm||Stewart, Ian (Hitchin)||Young, Sir George (Ealing)|
|Roberts, Michael (Cardiff NW)||Stokes, John||Younger, Hon George|
|Roberts, Wyn (Conway)||Tapsell, Peter|
|Ross, William (Londonderry)||Taylor, Teddy (Glasgow, C)||TELLERS FOR THE AYES:|
|Rossi Hugh (Hornsey)||Temple-Morris, P.||Mr. John Stradling Thomas and|
|Rost, Peter (SE Derbyshire)||Thatcher, Rt Hon M.||Mr. Hamish Gray.|
|Royle, Sir Anthony||Thompson, George|
|Sainsbury, Tim||Townsend, Cyril D.|
|Abse, Leo||Dalyell, Tarn||Grocott, Bruce|
|Allaun, Frank||Davidson, Arthur||Hamilton, W. W. (Central Fife)|
|Anderson, Donald||Davies, Bryan (Enfield N)||Hamling, William|
|Archer, Peter||Davies, Denzil (Llaneill)||Hardy, Peter|
|Armstrong, Ernest||Davies, Ifor (Gower)||Harper, Joseph|
|Ashley, Jack||Davis, S. Clinton (Hackney C)||Harrison, Walter (Wakefield)|
|Ashton, Joe||Deakins, Eric||Hart, Rt Hon Judith|
|Atkins, Ronald (Preston N)||Dean, Joseph (Leeds West)||Hatton, Frank|
|Atkinson, Norman||de Freitas, Rt Hon Sir Geoffrey||Hayman, Mrs H.|
|Bagier, Gordon A. T.||Delargy, Hugh||Healey, Rt Hon Denis|
|Barnett, Guy (Greenwich)||Dell, Rt Hon Edmund||Heffer, Eric S.|
|Barnett, Joel (Heywood)||Dempsey, James||Hooley, Frank|
|Bates, Alf||Doig, Peter||Hooson, Emlyn|
|Bean, Robert E.||Dormand, Jack||Horam, John|
|Beith, A. J.||Douglas-Mann, Bruce||Howells, Geraint (Cardigan)|
|Benn, Rt Hn Anthony Wedgwood||Duffy, A. E. P.||Huckfield, Leslie|
|Bennett, Andrew (Stockport N)||Dunlop, J.||Hughes, Rt Hon C. (Anglesey)|
|Bidwell, Sydney||Dunn, James A.||Hughes, Robert (Aberdeen N)|
|Bishop, Edward||Dunnett, Jack||Hunter, Adam|
|Blenkinsop, Arthur||Dunwoody, Mrs. Gwyneth||Irvine, Rt Hon Sir A. (L'pool)|
|Boardman, H.||Eadie, Alex||Irving, Rt Hon S. (Dartford)|
|Booth, Albert||Edelman, Maurice||Jackson, Colin (Brighouse)|
|Boothroyd, Miss Betty||Edge, Geoffrey||Jackson, Miss Margaret (Lincoln)|
|Bottomley, Rt Hon Arthur||Edwards, Robert (Wolv SE)||Janner, Greville|
|Boyden, James (Bish Auck)||Ellis, John (Brigg & Scun)||Jay, Rt Hon Douglas|
|Bradley, Tom||Ellis, Tom (Wrexham)||Jeger, Mrs Lena|
|Bray, Dr Jeremy||English, Michael||Jenkins, Hugh (Wandsworth)|
|Broughton, Sir Alfred||Ennals, David||John, Brynmor|
|Brown, Hugh D. (Glasgow, Pr)||Evans, Fred (Caerphilly)||Johnson, James (Kingston W)|
|Brown, Robert C. (Newcastle)||Evans, Gwynfor (Carmarthen)||Johnson, (Derby S) Walter|
|Brown, Ronald (Hackney S)||Evans, loan L. (Aberdare)||Jones, Barry (East Flint)|
|Buchan, Norman||Evans, John (Newton)||Jones, Dan (Burnley)|
|Buchanan, Richard||Ewing, Harry (Stirling)||Jones, Alec (Rhondda)|
|Butler, Mrs Joyce (Haringey)||Faulds, Andrew||Judd, Frank|
|Callaghan, Jim (Middleton & P)||Fernyhough, Rt Hon E.||Kaufman, Gerald|
|Campbell, Ian||Fitch, Alan (Wigan)||Kelley, Richard|
|Canavan, Dennis||Fitt, Gerard (Belfast)||Kerr, Russell|
|Cant, R. B.||Flannery, Martin||Kilroy-Silk, Robert|
|Carmichael, Nell||Fletcher, Ted (Darlington)||Kinnock, Nell|
|Carter, Ray||Foot, Rt Hon Michael||Lambie, David|
|Carter-Jones, Lewis||Ford, Ben T.||Lamborn, Harry|
|Cartwright, J.||Forrester, John||Lamond, James|
|Castle, Rt Hon Barbara||Fowler, Gerald (The Wrexin)||Leadbitter, Ted|
|Clemitson, I. M.||Fraser, John (Lambeth, N)||Lee, John|
|Cocks, Michael (Bristol S)||Freeson, Reginald||Lestor, Miss Joan (Eton & Slough)|
|Cohen, Stanley||Freud, Clement||Lever, Rt Hn Harold|
|Coleman, Donald||Garrett, John (Norwich S)||Lewis, Ron (Carlisle)|
|Colquhoun, Mrs Maureen||Garrett, W. E. (Wallsend)||Lipton, Marcus|
|Conlan, Bernard||George, Bruce||Litterick, Tom|
|Cook, Robin F. (Edin C)||Gilbert, Dr John||Lomas, Kenneth|
|Corbett, Robin||Ginsburg, David||Loyden, Eddie|
|Craigen, J. M. (Glasgow, M)||Golding, John||Luard, Evan|
|Crawshaw, Richard||Gould, Bryan||Lyon, Alexander (York)|
|Cryer, Bob||Gouriay, Harry||Lyons, Edward (Bradford W)|
|Cunningham, G. (Islington S)||Graham, Ted||McCartney, Hugh|
|Cunningham, Dr J. (Whiten)||Grant, George (Morpeth)||McCusker, Harold|
|McElhone, Frank||Perry, Ernest||Thomas, Dafydd (Merioneth)|
|MacFarquhar, R.||Phipps, Dr Colin||Thomas, Jeffrey (Abertillery)|
|Mackenzie, Gregor||Prentice, Rt Hon Reg||Thomas, Mike (Newcastle)|
|Mackintosh, John P.||Prescott, John||Thomas, Ron (Bristol NW)|
|Maclennan, Robert||Price, William (Rugby)||Thorne, Stan (Preston)|
|McMillan, Tom (Glasgow C.)||Radice, Giles||Thorpe, Rt Hon Jeremy (Devon)|
|McNamara, Kevin||Richardson, Miss Jo||Tierney, Sydney|
|Madden, Max||Roberts, Albert (Normanton)||Tinn, James|
|Magee, Bryan||Roberts, Gwilym (Cannock)||Tomlinson, John|
|Mahon, Simon||Roderick, Caerwyn||Tuck, Raphael|
|Mallalieu, J. P. W.||Rodgers, George (Chorley)||Urwin, T. W.|
|Marks, Ken||Rodgers, William (Teesside)||Varley, Rt Hon Eric G.|
|Marquand, David||Rooker, J. W.||Wainwright, Edwin (Dearne V)|
|Marshall, Dr Edmund (Goole)||Roper, John||Wainwright, Richard (Colne V)|
|Marshall, Jim (Leicester)||Ross, Stephen (Isle of Wight)||Walden, Brian (B'ham, L'dyw'd)|
|Mason, Rt Hon Roy||Ross, Rt Hon W. (Kilm'nock)||Walker, Harold (Doncaster)|
|Maynard, Miss Joan||Rowlands, Ted||Walker, Terry (Kingswood)|
|Meacher, Michael||Ryman, John||Ward, Michael|
|Mellish, Rt Hon Robert||Sandelson, Neville||Watkins, David|
|Mendelson, John||Sedgemore, B.||Watkinson, John|
|Mikardo, Ian||Selby, Harry||Weetch, Ken|
|Millan, Bruce||Shaw, Arnold (Redbridge, Ilf)||Weitzman, David|
|Miller, Mrs Millie (Redbridge)||Sheldon, Robert (Ashton-u-Lyne)||Wellbeloved, James|
|Molloy, William||Shore, Rt Hon Peter||White, Frank R. (Bury)|
|Moonman, Eric||Short, Rt Hon Edward (Newcastle C)||White, James (Glasgow, P)|
|Morris, Alfred (Wythenshawe)||Short, Mrs Renée (Wolv NE)||Whitehead, Phillip|
|Morris, Charles R. (Openshaw)||Silkin, Rt Hn John (Lewish)||Whitlock, William|
|Morris, Rt Hon John (Aberavon)||Silkin, Rt Hn S. C. (Southwk)||Wigley, Dafydd (Caernarvon)|
|Mulley, Rt Hon Frederick||Sillars, James||Willey, Rt Hon Frederick|
|Newens, Stanley||Silverman, Julius||Williams, Alan (Swansea)|
|Noble, Mike||Skinner, Dennis||Williams, Alan, Lee (Haver'g)|
|Oakes Gordon||Small, William||Williams, Rt Hn Mrs S (Hertford)|
|Ogden, Eric||Smith, Cyril (Rochdale)||Williams, W. T. (Warrington)|
|O'Halloran, Michael||Smith, John (N Lanarkshire)||Wilson, Alexander (Hamilton)|
|O'Malley, Brian||Snape, Peter||Wilson, Rt Hon H. (Huyton)|
|Orbach, Maurice||Spearing, Nigel||Wilson, William (Coventry SE)|
|Orme, Rt Hn Stanley||Spriggs, Leslie||Wise, Mrs Audrey|
|Ovenden, John||Stallard, A. W.||Woodall, Alec|
|Palmer Arthur||Steel, David (Roxburgh)||Woof, Robert|
|Park, George||Stewart, Rt Hn Michael (H'smith, F)||Wrigglesworth, Ian|
|Parker, John||Stoddart, David||Young, David (Bolton E)|
|Parry, Robert||Stott, Roger|
|Pavitt, Laurie||Strang, Gavin||TELLERS FOR THE NOES:|
|Peart, Rt Hon Fred||Strauss, Rt Hon G. R.||Mr. Thomas Cox and|
|Pendry, Tom||Summerskill, Hon Dr Shirley||Mr. James Hamilton.|
|Penhaligon, David||Swain, Thomas|
§ Question accordingly negatived.
§ Sir Geoffrey Howe (Surrey, East)
I beg to move Amendment No. 2, in page 2. line 20, leave out from '£2,500)' to end of line 21.
There is intense feeling throughout the country about this subject. The proposals put forward by the Government to increase the contributions payable by the self-employed have given rise to feelings of deep and still mounting anger in many places and amongst many groups of people. That anger, which is well justified, will continue to grow if the Government remain as intransigent and as entrenched as they are on this part of the Bill. The Government's proposals to place a larger burden upon the self-employed are unjust, discriminatory, insensitive and unnecessary. Outside the House they can be seen only as evidence of the Government's total lack of sympathy and understanding of the 2 million people who work in their own busi- 300 nesses and professions and make up the self-employed.
May I make clear at the outset what the Opposition are not arguing on the amendment? We are not challenging or seeking to obstruct the payment and financing of the higher benefits, which we welcome. We are not, as the Minister somewhat tawdrily tried to argue in an earlier debate, jeopardising the National Insurance Fund. Having sat through the Committee proceedings of this Bill, the Minister knows that we put forward alternative methods of raising the money which we say should not be raised by this impost on the self-employed. We suggested, on the one hand, an increase of ¼ per cent. on the contribution payable by the employed and, on the other hand, a modest increase in the flat-rate payment due from the self-employed. Either one of those methods or a combination of the two would have been acceptable and a fairer way of raising the additional money.
§ 6.15 p.m.
§ We are not seeking to go back on the principle of earnings-related contributions towards the financing of the basic State pension. I accept that the introduction of that principle in relation to the self-employed was bound to give rise to some misunderstanding and anxiety because it represented a change. It may be that the step which the Conservative Government took towards the introduction of that principle went too far too fast. There will be scope for argument about that. If that is so, it surely emphasises the total folly of the Government's decision, at the time of the introduction of a new system that is bound to cause misunderstanding and anxiety, to go for an even larger increase in the contributions due from the self-employed. It is folly of the most extreme kind to have moved in that direction.
§ I remind the House of the facts. The Social Security Act 1973 proposed that the self-employed should pay a contribution of 5 per cent. on the band of earnings between £1,150 and £2,500 a year. The Bill proposes to raise and widen that band of earnings by substituting a band of from £1,600 to £3,600 and, in addition, to raise the level of contribution from 5 per cent. to 8 per cent. It may be that the higher band is justified, at least in part, by the movement since then in prices and earnings. Even so, it means an increase in the sum that will be due. To raise the 5 per cent. to 8 per cent. as well means an even larger amount of money to be extracted from the self-employed.
§ At the top of that band of earnings, someone who earns £69 a week in self-employment will have to find £160 as a lump sum for one year's contributions. That lump sum is not tax-deductable, so he will have to pay it out of his taxed income. To raise that £160 a year he will need to earn £238 a year more simply to maintain the cash value of his income, leaving inflation on one side. That burden of £160 net, £238 gross, falling on the self-employed is seen to be in reality an additional tax. That is the reason why it is so deeply resented. If the bands had to go up and the figure had to rise to a higher limit of £3,600, there would be a case for, if anything, a lower percentage rate as a first step towards the introduction of a system of earnings-related payments from the self-employed. But the 302 Government will have nothing to do with that suggestion. Instead, astonishingly and unnecessarily, they have gone for a higher percentage burden of 8 per cent. This represents a huge new impost, which is quite unbelievable.
There is an astonishing contrast between the Government's attitude on this point and their approach to the abolition of the married women's option, which was the subject of the debate on the previous amendment. The Government recognised that the abolition of that option should be brought about carefully. The point was made explicitly by the Minister in Committee, when he said, on the married women's option
We recognise, of course, that for many married women who have already opted not to pay the full contributions the abrupt withdrawal of this option 'would cause a sharp reduction in their take-home pay'. That is why the Government undertook and are now carrying out discussions with organisations representing employers and employees to see how best to phase out the existing system."— [OFFICIAL REPORT, Standing Committee A, 14th November 1974 c. 72.]
§ The Government then saw the need for gradualism. They adopted a phrase which seems to come so readily to their lips and began to talk of "phasing out" the option. They recognised the case against this being carried out too swiftly. But in the present case we see no comparable consideration for the self-employed. There is no question of phasing in the increases against which we are protesting. On the contrary there is a determination to slam on a higher rate which will have the effect, not of phasing people in or out, but of grinding down the self-employed who already face considerable burdens.
§ The House may like to consider a comparison between what is being done in regard to the self-employed and what is being done in respect of other contributors to the fund. The most important thing to remember is that while the self-employed face this large increased burden, the employed people, those who are paying class 1 contributions, will have to bear no increased burdens under the present legislation. The total sum of £150 million must be found to put the insurance fund back into proper balance.
§ That sum is being found first by extracting from employers a sum of £59 million, from the married woman there 303 will be a sum of £47 million, the Exchequer is chipping in £23 million, the self-employed are coming in with £21 million—and employees will pay nothing at all.
§ Mr. O'Malley
In Committee I referred to the figure of £150 million. The more accurate figure is not £150 million, but £610 million extra that is being raised. I have already given the breakdown of the £610 million. Therefore, the right hon. and learned Gentleman should be discussing that figure rather than the £150 million, which I tried to correct in Committee.
§ Sir G. Howe
That takes a number of other factors into account. The breakdown which my hon. Friend the Member for Rushcliffe (Mr. Clarke) advanced in Committee was accepted throughout the debates I have read, and indeed was accepted in the debate on the previous amendment.
§ Sir G. Howe
Not at the moment. The fact remains that there is no increase in contributions being required from the employee, whereas this burden is being required of the self-employed on a discriminatory basis.
§ Mr. O'Malley
I am not trying to be awkward, but it is essential that the House should debate the figures accurately because that is the basis of the discussion. I gave the figure of £610 million.
§ Mr. O'Malley
I shall break down the figure for the hon. Lady. It is reported in the Committee proceedings.
§ Mr. O'Malley>
There is a sum of £47 million arising from opted-out married women's contributions, £83 million from other class 1 employees, £366 million from employers, £21 million from the self-employed through class 4 and nothing through class 2. In total that amounts to £517 million, to which should be added the Treasury supplement of £93 million, which gives a total of £610 million.
§ Sir Derek Walker-Smith (Hertfordshire, East)
On a point of order, Mr. Speaker. The Minister tells us that he has corrected certain figures which he read out at a rapid rate and says that he referred to them in Standing Committee. Some of us did not have the privilege of serving on that Committee. Would it not facilitate our comprehension of these matters if the Minister could identify the reference? Those of us who are less rapid at arithmetic than he would be able to understand the figures more easily.
§ Mr. Speaker
I do not think that the right hon. and learned Gentleman is strictly raising a point of order.
§ Mr. O'Malley
For the convenience of the House, may I point out that the figures are to be found in the Government Actuary's report? I cannot give the page on which the figures are to be found.
§ Sir G. Howe
The Minister has succeeded in creating a huge cloud of confusion. He said that he was reminding me—incidentally with his customary courtesy—of figures which he had given in Committee. My hon. Friend the Member for Rushcliffe has no recollection of those figures having been given. Will the Minister be kind enough to give the House the reference as to where those figures are to be found in the Committee proceedings?
§ Mr. O'Malley
They are in the Government Actuary's report. [Interruption.] I am not trying to hide anything from the House. I used those figures in Committee. If I did not do so, I apologise to the House. They are set out in the Government Actuary's report.
§ Sir G. Howe
May I ask the Minister to say where in the Government Actuary's report the figures are set out, and with what he is comparing the figures? I thought that the figures which I was quoting were common ground between us.
§ Mr. O'Malley
May I seek the help of the House? I was right in believing that I had given these figures in Committee. Hon. Members will see them set 305 out in the Fourth Sitting, on Tuesday, 19th November in the afternoon in columns 155 and 156.
§ Sir G. Howe
Perhaps we may now have an opportunity of studying them together. If right hon. and hon. Members will talk amongst themselves for a few moments, I will look at the comparison which the Minister is making.
§ 6.30 p.m.
§ Mr. David Mitchell (Basingstoke)
While my right hon. and learned Friend is examining the figures, perhaps the Minister will clarify the situation on one other matter. He said just now that it was wrong to suggest that the employee did not have to pay any increase in his contribution. I am not sure whether the Minister intended to say that, because what my hon. Friend the Member for Rushcliffe (Mr. Clarke) said was almost a verbatim quotation from the hon. Gentleman's Second Reading speech. Perhaps the hon. Gentleman will be prepared to reconsider his remarks while my right hon. and learned Friend is giving way to me.
§ Sir G. Howe
That interruption was rather more confused than I expected. My hon. Friend the Member for Basingstoke (Mr. Mitchell) raises a perfectly valid point, but it is not one for me. No doubt the Minister will apply his mind to answering the question in due course.
The figures to which the Minister has now referred take account of the changes in earnings and in earning rates—all the changes made together. But ours are the figures making a constant comparison, and they do not conceal the fact that the self-employed are being required to pay a sharp increase in contributions when employees are finding that almost throughout the whole range their contributions are being reduced. Only about 2 million self-employed face this large increase, whereas 18 million employees face a totally different picture.
I refer to what the Minister said on Second Reading. At that time he was taking credit for the reductions in contributions payable by employed people and singing the praises of that proposal, although the reductions are taking place because of the abolition of the second pension scheme, in substance.
306 On 6th November, the Minister said:All male employees up to well above £60 a week who are not contracted out will pay reduced contributions. I will take it at the top of the range, because there are reductions all the way lower down. Even a man on £62 a week not contracted out will pay 24p less a week than under the existing arrangements. Even at the ceiling of the scheme—that is, roughly one and a half times national average earnings at the appropriate date—the employee not contracted out will be faced with an increase of only 13p a week. So throughout the whole of the range with the exception of those at the very top there will be reductions for those who are not contracted out."—[OFFICIAL REPORT, 6th November 1974; Vol. 880, c. 1115–16.]That is the picture that the self-employed person sees. He sees the impact of what the Minister is taking credit for— a reduction right across the board in the burden on the employed person. We must not forget that many employed persons will be people to whom he is paying wages and in respect of whom he will pay higher employer's contributions. At the same time, alongside that reduction, he sees for himself this large and sharply increased additional burden.
This is a fantastic insight into the Government's lack of sensitivity. It adds enormously to the sense of injustice felt by the self-employed who will face a new world from next April. They are more aware than ever before that they do not get many benefits which are available to employed people. They do not get unemployment pay, redundancy pay, industrial injury benefit and earnings-related supplement. It may be that the Minister, applying his actuarial mathematical mind, can explain that this is rational and justifiable and that self-employed people should not feel a sense of injustice about this when their contributions are going up. But they do, and it is compounding folly to increase that sense of injustice by adding to their burden.
There are other burdens on the self-employed, some of which they share with employees, such as higher taxes under this Government. But many smaller self-employed people smart from the fact that they have received no help from the recent Budget. They face much higher rates on their business premises. To find this additional contribution not deductible from tax is the last straw which will break the backs of many self-employed camels. They regard it as a tax. It is beside the 307 point to make comparisons between the total size of the class 1 contribution, employee and employer, and the total self-employed contribution——
§ Sir G. Howe
The employer's share of the class 1 contribution has gone up, and the employer's share can be set against tax, unlike the employee's part of it.
It may be that the hon. Member for Islington, South and Finsbury (Mr. Cunningham) interrupted at an ill-judged time. In Committee, he himself made a point which he conceded was helpful to our case. On Tuesday 19th November he pointed out—and it was a telling point—that the Treasury made a very substantial contribution to the total being deducted from the employer. The hon. Gentleman estimated that about 61 per cent. of the input into the National Insurance Fund by the employer was contributed by the Treasury. But of the share paid by the self-employed to the fund only 15 per cent. was contributed by the Treasury. The self-employed have to find most of it out of taxed income, whereas the employer may offset it against tax and collect a great deal of it from the Treasury. The self-employed know that, and it adds to their sense of injustice.
The effect of what is being done is to threaten with extinction—certainly with great hardship—many small individual, independent enterprises which provide in most communities services which are irreplaceable. They are convenient to the community, to the family and to the housewife. I have in mind small shops and service establishments which employ between them about 6 million people and which produce between one-fifth and a quarter of the nation's wealth. These are the people who feel themselves discriminated against in this way.
One effect is to drive out of these sectors people who previously have been rendering good service to the community. I quote from a letter I received which makes the point:… last week my wife required the services of a plumber. Of the two that she phoned, the first one stated that because of the proposed changes in the Self Employed Stamp he had given up his work and had now got a job as a supervisor with some firm. The 308 second plumber who had been a plumber for 25 years accepted the job but stated he was giving up his job for favour of working in some other trade as an employee and he may continue his plumbing as a part time job at weekends. This again was because of the increased stamp which he would have to pay.It should be obvious to Government that not only are they driving thousands of such tradesmen who are such an important part of the community out of business, but they will also lose a great deal of revenue from taxes. It is a well known fact that despite reports to the contrary, the average self employed person pays more tax than he should, but when people are driven to do jobs of work on a part time basis (such as the plumber of 25 years standing) they are not going to declare these earnings to internal revenue.This amounts to compulsory moonlighting and certainly a reduction in services available to the rest of the community. These measures are regarded as singling out a group of people who work probably harder than any other group or class in the community. Many have said to me that if all the rest of the community worked as consistently and energetically as the self-employed—motivated, of course, by their concern for their own enterprises—probably we should not be facing an economic crisis at all.
The self-employed regard these proposals as a cynical illustration of the way in which the social contract works. It is all very well Mr. Jack Jones—I have no doubt with sincerity—calling for one term in the social contract to be an improvement in pension provision. That is understandable. He is a party to the contract. But his members will pay less and not more. It is only those who are not organised—the self-employed, who are not able to resort to industrial action—who appear in this Bill to have been singled out in this vindictive way. They feel strongly and bitterly about it.
There are many groups which could be quoted as examples. I mentioned the position of the farming community in some respects because this is important not only as it was in our last debate to hon. Members from Scotland, Wales and the rest of the United Kingdom, but also to those Welsh Nationalist Members who for some reason which I cannot understand voted with the Government at the end of our last debate. I hope that they will give us their support this evening.
The three farmers' unions of the United Kingdom are urging changes in this tax. They point out that it is a 309 substantial burden on the 280,000 self-employed persons in the agriculture industry. In particular, they say that by basing contributions for the self-employed on Schedule D income, the self-employed is compelled to contribute not only on the return for his labour and management, but on the return on his capital investment. The inequity is particularly serious in agriculture. It seems that this is as serious on the other side of Offa's Dyke and the other side of Hadrian's Wall as in constituencies held by the Liberal Party.
§ Sir G. Howe
I follow the hon. Gentleman's point. I think that he is on the right side of this argument, whichever side of Hadrian's Wall he straddles.
That is not the only example. Another example which has cased wide concern outside the House is the effect of this tax on the creative professions. I have received many letters from writers, authors and musicians. The Society of Authors has made express representations about this proposal. It states:The Society's Committee of Management holds the view that while authors, like other self-employed people, should not be exempted from supporting a scheme that will increase pensions and other benefits and so bring aid to those most at the mercy of inflation, none the less the new scheme will operate most unjustly in the way that it is to be applied … Much of the justice that the Government will achieve through the introduction of Public Lending Right … will be cancelled out by this new tax and by the deprivation of benefits which others are to be allowed to enjoy.The Incorporated Society of Musicians makes similar points. It points out that at least half of our professional musicians are self-employed, whether performers or teachers of music. It also makes the point:It is significant that the group chosen to be subjected to this financial penalty is the one group in the country that cannot strike … We would only add that we have 310 the impression that we are being regarded as part of the 'lump'—a so-called band of buccaneering tax dodgers. The truth is that, like most artists, musicians have been individually subsidising the arts in this country by accepting poor rewards and conditions of employment for which a term like 'unsocial hours' is pitifully inadequate.Where has the Minister with responsibility for the arts been throughout the Government's consideration of this subject?
Surely, for all these reasons, the Government's task is to move with understanding and sensitivity when making changes of this kind. But they are moving in the opposite way in this instance. They have singled out and are seen to have singled out for this discriminatory burden a group of people whose loyalty and service to the community are outstanding and whose contribution to the fabric of the nation's life—the life of each community in the nation as well as the country as a whole—is unique and indispensable.
The Government have presented these people with a provocative, harsh and unnecessary shock. The introduction of earnings-related contributions was, at the very least, bound to come as a surprise. To have compounded that prospect in this way is wholly without justification. No wonder we are finding to our regret, but not to our surprise, calls up and down the country by people suggesting that the self-employed should not pay these contributions when the time comes. The House knows that that kind of response is uncharacteristic of the self-employed— a group of people who are being obliged by the Government's approach to this matter to invoke the name of Poujade and to contemplate forms of protest which are unnecessary, or ought to be unnecessary, at a time of stress in our society.
A Government of sensibility concerning themselves with this subject would recognise even now that they had made a serious mistake in pressing ahead with these proposals unrepentant and without making a single change from last summer until this debate. I call upon the Minister to recognise that he has made a mistake, to recognise the extent to which public opinion is against him, and to make himself into a figure demanding, for the moment at least, public acclaim by indicating that he will accept the amendment.
§ 6.45 p.m.
§ Sir John Eden (Bournemouth, West)
It is easy to talk in terms of bands, categories, and other impersonal groups without realising that decisions that affect individuals are changing the livelihoods of countless homes and family businesses.
I hope that the Minister will be able to respond to the invitation from my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe). I am sure that what my right hon. and learned Friend said will have struck a chord not only with my hon. Friends and others who sit on this side of the House but with many who habitually fill the benches behind the Minister. I cannot believe that the action the Government are proposing relating to the self-employed would command support throughout the Labour Party. I am sure that large numbers of hon. Gentlemen who normally sit on the benches opposite will have had representations, just as we have, from constituents, people who run small businesses, people who work for themselves, whether professionally or otherwise, who will be adversely affected and damagingly hit by these proposals. I wonder, as I look at the empty rows of benches opposite, where hon. Gentlemen who would normally be in the forefront of speaking up for their constituents' interests in a matter of this kind can be. I know that they must feel just as strongly as we do about these matters.
The people to whom I have referred will be hit by a very sharp increase in contributions. It is, as I said, easy to overlook the individual situation when talking in broad terminology about categories, bands or groups.
§ Mr. George Cunningham rose——
§ Sir J. Eden
I hope that the Minister will now apply his mind to the individual situation which must exist in his constituency, will draw in his mind's eye the image of the people who live down the road from him, and will ask himself how these people will be affected and whether he is justified in inflicting this degree of damage on them. I will give way to the hon. Gentleman now.
§ Mr. George Cunningham
Does the right hon. Gentleman accept that the increased rate of contribution being asked 312 from the self-employed is no more than is required to pay for the benefits they will receive and have in the past been receiving? Does he accept that that is arithmetically correct?
§ Sir J. Eden
The hon. Gentleman must completely misunderstand the point that we are trying to make and has been strongly represented from all over the country as a result of these proposals. The hon. Gentleman does not understand the human reaction. He can bring out his slide rules and work out all the arithmetical formulae that he likes, but the damage is being done to individual citizens—people of enterprise who participate in the life of the communities in which they live and contribute substantially to the well-being of this country. It is their spirit as well as their pockets which is being damaged by proposals of this kind.
§ Mr. George Cunningham
Of course, I accept that, but if the contribution being asked from the self-employed is less than is arithmetically required to pay for the benefits that they receive, that can only happen if other groups—principally the employed—pay more than is arithmetically required. The same human considerations as the right hon. Gentleman has just invoked for the self-employed apply to other categories. Will he address himself to that argument?
§ Sir J. Eden
The hon. Member should concern himself more with the substantial increase in contribution which this category is being called upon to pay. It is a selective attack on the self-employed and appears to be deliberate. There is obviously every defence which can be mounted and justification which can and, no doubt, will be made by the Government, but is it the Minister's intention deliberately to damage these people? If so, they stand condemned. If it is not the case, they still have the chance to correct this error.
This additional imposte should not be seen, as my right hon. and learned Friend said, in isolation from the other tax changes which this Government have made and which will have so adverse an effect on the self-employed, and especially the small businesses, about whom we are talking in the main. The tax changes have already caused sufficient concern 313 among them, and have already done damage enough by undermining the confidence of many of these people. If one takes into account things like the capital transfer tax, which will have a wicked effect on small businesses, and the other tax proposals in the Chancellor's last Budget, one can see that these people are being cumulatively singled out for a substantial tax increase. They see this as an act of vindictiveness by the Government.
Is it the deliberate policy of the Government to try to damage the interests and enterprise of the self-employed? Does the Minister realise that this proposal will inflict grotesque damage not on groups, bands or categories but on millions of individual citizens, the great majority of whom contribute substantially to the well-being and the life blood of this country? If it is not a deliberate action, then let him withdraw the original proposals and bring forward fresh ones.
§ Mr. Raphael Tuck (Watford)
I am sure that the view of the right hon. Member for Bournemouth, West (Sir J. Eden) that this proposal is vindictiveness is misplaced. I am sure, knowing the Minister, that he is not vindictive. Unfortunately, however, I find myself very much in agreement with much of what has been said by the right hon. and learned Member for Surrey, East (Sir G. Howe). I am very unhappy about the Bill and have come to the House to say so. I will probably incur the wrath of many of my right hon. and hon. Friends, but one has to live with oneself, and I must voice my opinion.
However, this criticism comes a little ill from the right hon. and learned Gentleman. I agree with much of what he said, but the Conservative Government laid the groundwork for this Bill and he is now coming here with a halo around his head, instead of in the guise of Mephistopheles, accusing us of doing what he and his party would have done.
§ Mrs. Kellett-Bowman
Would the hon. Gentleman accept that it is a vastly different kettle of fish now that the Government are seeking to raise the proportion from 5 per cent. to 8 per cent.? That alters the whole picture.
§ Mr. Tuck
But the whole point that the hon. Lady misses is that, unless the 314 Conservative Government had refused to increase pensions, they would have had to increase the flat-rate contribution by the self-employed from £2.41 to £2.70 or they would have had to push up the rate to 8 per cent. What else would they have done? I disagree with this method of doing it, but the Conservative Government have laid the groundwork and left my right hon. Friend to sort the problem out.
The right hon. and learned Gentleman reminds me of the maid in domestic service who told her mistress that she would have to leave because she was going to have a baby. The mistress said "I will keep both you and the baby because I like your work so much." This happened four times, until the mistress was keeping the maid and four babies. Finally the maid said that she would definitely have to leave, because she could not stand a place with so many children. That is exactly how the right hon. and learned Gentleman is behaving. He would have done the same himself—[HON. MEMBERS: "No."] He has not said what he would have done.
§ Sir Geoffrey Howe
I do not want to avoid this point; indeed, I said so in my speech. In Standing Committee we moved amendments embodying two other methods—either an increase of ¼ per cent. in the contribution from the employed person, which would have raised much more, I think £83 million; or, as the hon. Gentleman himself suggested, an increase in the flat-rate contribution from £2.41 to £2.70 for the self-employed. Either of those or a combination would help to raise this sum in a better way than that to which the hon. Member objects—namely, bouncing up the rate from 5 per cent. to 8 per cent.
§ Mr. Tuck
If the Conservatives had raised the rate from £2.41 to £2.70, that would have been an increased burden also for the self-employed and the situation would not have been ameliorated.
However, I agree with much of what the right hon. and learned Gentleman has said. In this case, more by accident than by design, we are penalising the self-employed. I know that the Minister will say that probably one-third to two-thirds of the self-employed are excluded altogether, and that those in the higher 315 bracket can afford to pay, but on earnings exceeding £1,600 per annum an amount representing 8 per cent. up to a maximum of £3,600 must be paid as nothing more nor less than a tax, with no tax relief.
In other words, to generate this 8 per cent. the self-employed person will have to earn these amounts plus the tax that he or she normally pays under Schedule D. To take an example, if a self-employed man were paying 8 per cent. of the difference between £1,600 and £3,600, the amount that he would have to pay is £160 and to make that amount before tax he would have to earn an extra £238. This compulsory payment is illogical and unjust. An extra contribution will be paid on an earnings-related benefit without eligibility for the earnings-related pension fund which most employed people enjoy. The Minister has, I think, admitted that the self-employed are excluded from unemployment benefit, from industrial injury benefit, from earnings-related supplements to sickness benefit, and from widow's benefit. This is a tax on people who already find acute difficutly in making ends meet.
I am not concerned about the one-third to two-thirds who are excluded altogether, nor about those earning more than £3,600. What I cannot understand, however, assuming that the 8 per cent. is essential, is why it has to be put on those receiving £1,600 to £3,600. Let us put it on those receiving between £4,000 and £6,000 by all means. If we did that we would save those who are in difficutly in making ends meet.
§ 7.0 p.m.
§ The EEC regulations on social security apply to nationals of the United Kingdom and other Community countries, and to Stateless persons and refugees who are permanently resident in the United Kingdom and who work for an employer in the United Kingdom. They also apply to national insurance retirement pensioners or widow beneficiaries and their dependants. The regulations do not apply to those who are self-employed or who are not employed. This is very unjust. Again, these people are not getting what employed people normally receive.
§ Mr. George Cunningham
What proportion of all the benefits paid out by 316 the National Insurance Fund do the self-employed not get, in terms of percentage of expenditure?
§ Mr. Patrick Cormack (Staffordshire, South-West)
Carry on. The hon. Member is trying to trip up the hon. Member for Watford (Mr. Tuck).
§ Mr. Tuck
The self-employed doing business in another EEC country will be compelled to pay for private medical and hospital treatment or to take out a private insurance policy before going abroad. This sets the self-employed below the employed or the Stateless person or refugee whose residence in Britain may have been very short and whose contribution to the National Health Service and the life of the United Kingdom may have been relatively microscopic.
It works injustice even between self-employed people. One person may have just reached the £1,600 level. He does not pay any percentage except the £2.41 a week. He pays that at 8 per cent. Another person may have reached the £3,600 level. He will be paying out more in contributions than the person on the £1,600 level, but when they are eligible for benefit they will get exactly the same benefit.
Why can we not have earnings-related contributions and earnings-related benefits? That would be an entirely just system.
§ Mr. O'Malley
At this stage of my hon. Friend's speech, he is speaking sensibly. Successive Governments would have preferred to have been able to introduce a fully earnings-related system of contributions in respect of the self-employed. It is because of the differences between Schedule D and Schedule E that that has never been found possible. The reasons were set out in detail in the 1969 White Paper which the late Richard Crossman put forward. During discussions in Committee on the Bill that became the Social Security Act 1973, the 317 right hon. Member for Leeds, North-East (Sir K. Joseph) made it clear that he would have preferred such a system. The problems so far have proved insurmountable. That is why we have the unsatisfactory hybrid that has been left behind by the Social Security Act 1973.
§ Mr. Tuck
I am glad that my hon. Friend has called it an "unsatisfactory hybrid". He will correct me if I am wrong, but I think he will agree that it still means that the poorest of the self-employed will pay a higher proportion of their net earnings in contributions than that paid by the better off. A self-employed man with earnings of £25 a week will pay 9½ per cent. of his earnings in contributions compared with the payment of 8 per cent. on earnings of £50 a week or more.
§ Mr. O'Malley
As a man or woman who is self-employed and earning below £1,600 a year—a very low income—could be paying a contribution rate of 15 per cent. or more, does not my hon. Friend think that it would be better to show consideration for those people, as I have shown it in jigging the formula, rather than concern for people earning £3,600 and paying not 15 per cent. but 8 per cent.?
§ Mr. Tuck
I appreciate that, but it is the people earning £1,600 and £2,500 about whom I am concerned—for example, the authors and writers who are just getting by. They will have this extra burden placed upon them.
I appreciate the fact that my hon. Friend has not done this through any malice whatever and that this is being forced upon him, but I ask him to review this matter in the coming year and to see whether we can evolve a system whereby we have earnings-related contributions and earnings-related benefits.
The level of earnings below which a person liable for class 2 contributions may seek exemption from liability is set at £675 a year. On earnings of below £675 a man or woman does not pay the £2.41 a week, which is about £125 a year. This seems to be absolutely mad. If one is earning £674 one does not pay that £125, but if one is earning £675, £1 more, one has to pay the £125. Therefore, this means that when earning between £675 and £800 one's net earnings are less than one would receive if one earned only £674. 318 For example, let us suppose that a man is earning £750. He is earning £76 more than the £674 but he has to pay £125. In reality, therefore, he is receiving £49 less than he would be receiving if he kept his earnings at £674.
I do not know whether I have made myself clear. I think that that is correct. It is absolutely mad. If I were not in Parliament, I would say that it was bloody mad, but as I am in Parliament I cannot say that.
§ Mr. Tuck
I have said, Mr. Deputy Speaker, what I would say if I were not in Parliament.
This is a perfectly mad part of the Bill. My hon. Friend the Minister of State will have to do some answering for it. The worst of it is that I do not want my Government to fall, and, therefore, I have got to go into the Lobby to vote for what I consider——
§ Mr. McCrindle
May I give the hon. Gentleman a little advice? When I found myself in a distinctly similar position on a matter involving social security, when the Conservative Government were in power, having made against my Government a speech not dissimilar from that which the hon. Gentleman has been making against his Government, I carried the matter through and voted with the then Opposition.
§ Sir Geoffrey Howe
I should like to reassure the hon. Gentleman and to tell him that although this is a matter of great importance and a matter on which we wish to see the Government change 319 their minds—and we are grateful for his help in persuading them in that direction—it does not immediately occur to one that this is a matter on which the Prime Minister, even with his sense of bravado, is likely to demand a Dissolution. I think that the hon. Gentleman may rest fairly sure of that and join us on the merits of the argument in order to secure a sensible majority.
§ Mr. Tuck
That is a matter of opinion for the hon. Lady, but I cannot state categorically whether the Prime Minister would resign if the Government were defeated. I am concerned to see that the Government are not defeated. Therefore, I must vote for what I consider to be a mad Bill. This again illustrates our mad system. Perhaps we ought to shut up shop or give the government of this country over to its women. They would make a far better job of it than we have done. At least, they could not make a worse job of it.
§ Mr. Charles Morrison (Devizes)
I cannot claim that the hon. Member for Watford (Mr. Tuck) has damned the Government's proposal with faint praise. He has just damned it. His closing remarks gave one cause for shock. It is because of the attitude he proposes to adopt that the public has increased its cynicism about Parliament. Unless people are prepared to make their vote follow their voices, it is not in the least surprising that the general public should steadily lose confidence in Parliament.
I agree wholeheartedly with the description of my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) about the anger which is felt about this proposal. I have had a stream of letters on this subject. Only this morning I received a letter from a constituent who states:I should be grateful if you would do everything in your power by both constitutional and unconstitutional means to prevent this happening, as it is bound to cause considerable hardship.Needless to say, I shall encourage my constituent not to do anything by un- 320 constitutional means, but that letter is typical of many that I have received and it demonstrates how strongly people feel about this extremely harsh and unjust proposal.
It is clear that the Labour Government do not consider that the self-employed are useful people. It is clear that in the view of this Government the self-employed will not be useful until they are employed. It is likely that this Government will consider that the self-employed are not really useful until they are employed by the State. It seems that this Government will not be happy until they have destroyed the smaller farmers and the small shopkeepers.
§ Mr. Morrison
That is what could happen if the Government continued to impose retribution on self-employed people in this way. How would the hon. Gentleman like to be a small farmer in Wales or somewhere on the west coast of England or of Scotland this year, with very limited feeding stuff for his cattle, knowing that he must live on an extremely limited income and that he will now have this sword of Damocles brought to hang over his head? This is the type of proposal which will ultimately bring people who are self-employed into a state of revolt.
It is clear that this Government think that the self-employed are unacceptable. Because of that, these people will react very strongly. I greatly regret that the Government have seen fit yet again to extinguish what my right hon and learned Friend called "independent enterprise". The only good thing which can be said about this proposal is that it is one of the earlier nails in this Government's coffin.
§ 7.15 p.m.
§ Mr. George Cunningham
Service in the House of Commons is something of an education. One of the first lessons that I recall receiving here was a remark by one of my hon. Friends soon after I arrived here when he said words to the effect, "Anyone who thinks that in this place one can convince another Member of a point by rational argument has another think coming." That has been my experience ever since.
321 However, we must endeavour to put rational cases and to identify the greatest possible agreement upon points of fact involved in any decision which we are taking. I say with respect to my hon. Friend the Member for Watford (Mr. Tuck) that he has not, apparently, discovered some of the essential facts which one must have in one's head if one is to reach any conclusion—right or wrong— on this matter.
We should consider this very seriously, because of the very strong feeling which large sections of the general public have about it. We have all received irate letters from various groups of self-employed people about what they regard as the clobbering, the crucifixion, the imposition that is being put upon them.
The fact that those people regard it as such, though important and worthy of mention, is not the basic point. The question is whether it is justified. If the anger is not justified, we cannot just sweep it aside and ignore it. Our first job, however, is to find out whether these people are right in their appreciation of the facts. Therefore, one should endeavour to address oneself objectively to the arguments that are put on the other side from oneself.
Some arguments which were adduced on Second Reading and in Standing Committee do not wash. I illustrate this with the point which was just made by the hon. Member for Devizes (Mr. Morrison) in relation to farmers. I think that there is a very valid point involved in the objection from one group of farmers who wrote to us saying that the profits of a small farmer in particular represent not only the return on his labour but also profit on investment and that, therefore, though he certainly should be taxed on that, because we are all taxed on that sort of thing, it was questionable whether it was right that he should be made to pay a national insurance contribution on that because others did not have to.
That is a rational point, which we can consider calmly without hysteria. Then it might be found that there was a chance of changing propositions, now or on another occasion, because one would have isolated an area upon which one could get dispassionate agreement. One thing that is certain is that British far- 322 mers cannot be saved from all the difficulties with which they are confronted merely by our reducing their national insurance contributions. Their difficulties are far too great to be affected much one way or the other by either an increase or a decrease in contributions.
§ Mr. Cunningham
I must bow to the hon. Member for Rochdale (Mr. Smith) for his calm approach to matters. However, I believe that if one were trying to save the farming community one would be trying to inject into farmers' finance something rather greater than the sum proposed to be saved by the amendment.
§ Mr. Cormack
The hon. Gentleman spoke about logic. He has just uttered the greatest perversion of logic there ever was. The amendment would at least help the farmers somewhat.
§ Mr. Cunningham
I am coming to the question of how much self-employed people in general should pay. I suggest that one is not assisted to reach a sensible decision on the point by suggestions which have been made, not only in this debate, but also in Standing Committee, that somehow the whole problem of the little man in a plumbing business, for example, or of the small farmer, can be solved by anything which is done on the national insurance side. What such a man should contribute in national insurance contributions stands in its own right.
§ Mr. Charles Morrison
It is not just the national insurance contribution. It is also the fact that increasing charges for this, that and the other—for rates, for taxation and for various commodities—have come one on top of the other. These are the things which are getting the self-employed man down.
§ Mr. Cunningham
I understand that. But I hope that the hon. Gentleman will take the point that on Second Reading a number of us said that although an employed person was being invited or compelled by the Bill to pay considerably more than he paid in the past, he enjoyed—I think this is undeniable—in the sphere of taxes, certain opportunities for reducing 323 his tax burden which employed people, on the whole, do not possess. Some hon. Members of the Opposition rightly came back at us and said that if there was something wrong with the tax system it should be changed, but that it could not be expected to balance an error in the tax system which was in favour of the self-employed by an error in the national insurance contribution which was detrimental to the self-employed. We cannot have that argument both ways.
We should look at the national insurance contributions in their own right as a separate matter and see what each category should contribute to the fund. I address my remarks particularly to my hon. Friend the Member for Watford, who obviously has an open mind on this matter. The basic fact from which we all must start is, as the Minister has said on many occasions, that the benefits to which self-employed people are entitled— principally the retirement pension—constitute approximately 90 per cent. of the outgoings of the National Insurance Fund. If my hon. Friend is not willing to take the Minister's word on this he has only to look at the well-publicised figures.
We all know that the pension to which a self-employed person is entitled, which is the same as that to which an employed person is entitled, constitutes far and away the biggest expenditure from the National Insurance Fund. During 1974, for example, expenditure on the retirement pension is expected to constitute 71½ per cent. of the outgoings from the fund. There are other smaller benefits, some, or perhaps most, of which I believe the self-employed person is entitled to——
§ Mr. Cunningham
I could read down the whole list. But if the hon. Lady would look at the proceedings of the Standing Committee she would find the matter all set out there. I am not prepared to interrupt what I am trying to put forward as a reasonable argument in order to refer the hon. Lady to proceedings which she ought to have read——
§ Sir Raymond Gower (Barry)
Even accepting what the hon. Gentleman says, may I ask him whether he acknowledges 324 that some valuable and useful benefits which other contributors enjoy are not payable to the self-employed? Is it not reasonable that under such conditions the self-employed resent the fact that they should be clobbered in this way?
§ Mr. Cunningham
The self-employed are not entitled to some contributions, but we will not go into the reasons for this now. The question is, what percentage does the cost of the contributions bear to the total of benefits from the fund? There is no disagreement between the two Front Benches on this. Both accept the actuarial calculations, which anyone can check prima facie from the published figures, that the benefits to which self-employed people are not entitled amount to about 10 per cent. of the outgoings from the fund. It is no part of the Opposition case to question that figure. I think I see the hon. Member for Rush-cliffe (Mr. Clarke) nodding his head. He accepts the figure.
Let us start from the point that the self-employed person, although not entitled to some benefits, is entitled to benefits which in value constitute 90 per cent. of the outgoings of the National Insurance Fund. If that is not true hon. Members must argue that it is not true, or at least assert their questioning of it. But on the face of it it is extremely likely to be true, even if one merely glances at the figures——
§ Mr. Raphael Tuck
It seems to me that it is not possible to run the world by mathematics. The point we are debating here is not really concerned with mathematics. If we ran the world by mathematics no one who did not pay for medical aid would be entitled to the benefits of the National Health Service. The question we must ask is whether a particular measure is unduly harsh on a certain section of the community. It is my view that it is harsh and unjust on a small section of the community, and that is why it should be reviewed.
§ Mr. Cunningham
I hope that my hon. Friend will follow me through my argument, which I shall make in my own way, and at the end he can see whether he is still of the same opinion, as I think he will be.
If it is true that the benefits to which the self-employed are entitled constitute 325 90 per cent. of the outgoings of the fund, the starting position would be that a self-employed person would pay, either by himself or through someone else, contributions amounting to 90 per cent. of those contributed by other people. But as has been pointed out, the self-employed have never been asked to do that. That has always been regarded as too harsh.
The Minister has said that from the beginning of the scheme the most that a self-employed person was asked to pay was a contribution equal to 70 per cent. of the total paid by employers and employees. I am prepared to say that that was wrong and that the correct method would have been to make a self-employed person pay 90 per cent., which reflects the benefits he receives. If this is not done a self-employed person is being subsidised not by the Government, by way of general taxation revenue, but by other categories of contributors to the National Insurance Fund. If some hon. Members are inclined to disagree with that proposition I am prepared to say that I do not think that either Front Bench would disagree with it. If a self-employed person contributes less than the actuarial equivalent of the benefit he receives he must therefore be in a position of being subsidised by the other categories of contributors to the fund.
§ Mr. Kenneth Clarke
The hon. Gentleman sounds as if he is going to make 90 per cent. the valid comparison. I know that he accepts that as the self-employed do not get tax relief on their contributions in the way that an employer does under the present arrangement, 90 per cent. is in no way a valid starting point. Does he accept, however, that a valid starting point is that successive Governments have allowed the self-employed contribution to fall to 40 per cent. or thereabouts in the total class 1 contribution? That is another valid starting point. The hon. Gentleman cannot be suggesting a dramatic change from 40 per cent. to 70 per cent. or to 90 per cent., which he keeps using in his argument.
§ Mr. Cunningham
The hon. Gentleman knows perfectly well that I accept both those points. I have the impression that I have been labouring hard to get the Opposition to elaborate on these points instead of creating the fiction that we are clobbering the self-employed in mak- 326 ing them pay something which will be drawn off for the benefit of other people.
The normal contribution of a self-employed person, if we are starting from scratch—which we never are—is that he would have to pay approximately 90 per cent. of the value of employee and employer contributions added together. That would be wholly unjustified. I agree that there is a gross differential between the manner in which the employer pays his contribution and the manner in which the self-employed persons pays his. One is subject to tax relief and the other is not. I admit that this was done by a Labour Government in 1965. I do not think that at the time it had the same consequences, from a money point of view, that it has today and at the time the Labour Government gave a quid pro quo involving the withdrawal of tax relief, which is now woefully inadequate.
I have said previously that I regret the change that was made in 1965. I think that, given the much higher contributions which all contributors will now be asked to pay, it is time to reconsider giving tax relief on all those contributions—at least on that part of the self-employed person's contribution which exceeds the contribution of an employee, because the employee does not get tax relief. Therefore, the self-employed person should not get tax relief on the notional equivalent of the employee's contribution but should get tax relief on the notional equivalent of the employer's contribution.
§ 7.30 p.m.
§ I shall not go over the arguments which I mounted at excessive length in Committee, but I will state the conclusions. I conclude that the net amount which the Government are asking the self-employed person to pay is about right but that net amount should be applied to the self-employed person by getting from him the gross amount—12½ per cent. of his earnings—and then he should get the tax relief. In that way the input into the National Insurance Fund would be much higher than it is now and the Treasury would lose some of its tax revenue. Because the National Insurance Fund would go into actuarial surplus, all the contributions could be brought down by a fraction.327
§ At the moment the self-employed person is being subsidised, but subsidised by employees. He ought to be subsidised, as the employee is, by the Exchequer. I stand by the percentage quoted by the right hon. and learned Member for Surrey, East (Sir G. Howe), which he quoted from my speech on Second Reading, and this has to be looked at now in the Finance Bill context in order to give tax relief for part of the contribution of the self-employed person.
§ Mr. Kenneth Clarke
Is the hon. Gentleman not aware that he sounds rather like his hon. Friend the Member for Watford (Mr. Tuck) except that he concedes, for his own reasons, part of the validity of our case? He particularly states the case of tax relief. He says that rather than support our amendment, which would give relief to the self-employed, he looks for help to the Finance Bill when he knows very well that no such help will be forthcoming in this year's Finance Bill. Therefore, does he not accept that however imperfect he thinks the vehicle we have chosen, as he accepts so much of our case it would not be valid to do what the hon. Member for Watford would do?
§ Mr. Cunningham
It is not the case that, because the Government do not want it, it should not happen. The Government get what we give them. The difference between my hon. Friend the Member for Watford and myself is that I am saying that the self-employed person is bearing a burden which is right in net terms. What is wrong is that he is being subsidised from the wrong quarter—from employed people instead of from the Exchequer. Because I argue that he is bearing the correct net burden, I think it is right for the Bill to proceed. If, as a result of all these matters taken together, he was bearing an excessive net burden I would either vote for the Opposition or, more likely, table an amendment of my own.
The Opposition can rightly argue that the reversal of engines has been sharp. Over the years we have allowed the contribution of the self-employed person to fall further and further below the value of the actuarial benefits which he receives. People are entitled to say, "You ought not to reverse engines too suddenly in order to impose a sudden harder burden, 328 even though it is perfectly justified." As I have said before, I am prepared to accept that for reasons which I have already stated. It is a respectable argument to mount against the Government's proposals.
I take my hon. Friend's point that because the self-employed person contributes a fixed element and a percentage element, the self-employed person at the lower end of the income range is paying a large percentage amount. We know the reasons. We have to get some money out of him before the Schedule D obligation is assessed. The weekly contribution should be seen as a payment on account so that the payment of the £2.41, or whatever it was, would then be taken as an advance payment, and that which the self-employed person would be due to pay in the end would be 8 per cent. of his assessed earnings less whatever advance payment he had made by means of his fixed amount. That would be an improvement which the Opposition do not suggest in their system and, therefore, they are not entitled to invoke it tonight, though it would be an improvement in the system if it were ever introduced.
§ Sir Derek Walker-Smith
I propose to be brief, first because my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe), in opening with his customary clarity and cogency made an overwhelming case—what the lawyers call an open-and-shut case—in favour of this amendment. At one stage I thought he was achieving the almost impossible task of carrying conviction in a matter of reason to the breast of the hon. Member for Watford (Mr. Tuck). He carried conviction perhaps to his head but not to his feet.
The hon. Gentleman is now, I suppose, having made his admirable speech, in the position of earning the same sorrowful comment as the Morning Standard made on Sir Robert Peel in the matter of the Corn Laws: "He has convinced others. How comes it that he has failed to convince himself?" I would say to the hon. Member that there is yet time to take a more logical view of his voting intentions tonight.Betwixt the stirrup and the groundMercy I asked, and mercy I found.Within the next hour he can decide to do the constitutionally appropriate thing and join us in the Lobby, thereby not 329 only vindicating the political probity and judgment of this House but also assisting to put into operation that relief for which he so logically and eloquently argued on behalf of this very deserving section of the population.
§ Mr. Raphael Tuck
The view which I have taken so far as voting is concerned is not at all logical. If it were logical I would do what the right hon. and learned Gentleman would like me to do. But it is dictated by necessity.
§ Sir D. Walker-Smith
The hon. Gentleman said earlier that he was not the keeper of the Prime Minister's political conscience. Certainly nobody would wish so hard and unrewarding a task on him, but I think he must be a more vigilant and effective custodian of his own conscience. Otherwise, it may have escaped and may not be found again, at any rate for the purposes of this evening.
I am always a little diffident about these actuarial calculations. I would prefer that we approached these matters forensically. If one has to cross-examine an expert accountant, one at least has an expert by one's side to keep one straight. One thing that I find in these actuarial matters is that no sooner has one produced a set of figures which one thinks are comprehensible than someone else produces an entirely different set of figures which bear no relation to them. That happened again this afternoon. My right hon. and learned Friend produced his figures on the £150 million which he said had been taken as the basis throughout these proceedings and then the Minister produced figures totalling £600 million or so.
§ Mr. George Cunningham
We have the expert witness, which the right hon. and learned Gentleman's court experience would lead him to have, in the Government Actuary's report relating to this Bill. He will find in Appendix 2 the certified figures which are the basis of the assertions which I was making.
§ Sir D. Walker-Smith
I appreciate that. The force of my earlier remark was that the expert witness should be present at one's side to carry one along with these matters. But the relevance of that is this: my right hon. and learned Friend the Member for Surrey, East advanced figures to prove his case that there is a 330 lack of equity in the pattern of these contributions, and that it operates to the disadvantage of the self-employed. The figures which were later quoted and which come, as the hon. Member for Islington, South and Finsbury (Mr. Cunningham) reminds us, from the Government Actuary, do not seem to disprove that assertion in that the figure of £83 million for the employed compares with £21 million for the self-employed. That is only four times as much, whereas the overall ratio of employed to self-employed is nine to one. The figures are about 18 million to 2 million.
The first and fundamental criticism therefore is of the lack of equity, and that is aggravated by the tax treatment. Here the hon. Member for Islington, South and Finsbury is a highly expert witness because of his analysis in Standing Committee of the effect of the absence of tax relief on this matter when he produced these contrasting figures of the Treasury contribution in relation to the employed and the self-employed respectively. The hon. Member argues that we cannot be concerned with the tax position. He does that on the technical ground that this is a matter for Finance Act legislation and that here we are dealing with national insurance legislation. It is very cold comfort to the self-employed person. We have to take this matter rebus sic stanti-bus. We have to take it with the tax law as it is. If that is so, it is operating to the disadvantage of the self-employed person. He has no guarantee and, one would think that with the present administration, no expectation that his position in that regard will be improved.
§ Mr. Cunningham rose——
§ Sir D. Walker-Smith
I have not, because it is here in HANSARD and I have to the best of my ability quoted what the hon. Member said. I am genuinely sorry not to give way, but we prolong the proceedings if we give way several times to the same hon. Member.
I want to stress, therefore, that although there are these important actuarial 331 considerations, basic principles are involved—and here I agree with the hon. Member for Watford—and mathematics are important mainly in so far as they affect these principles. Here the principle of the lack of equity is operating to the disadvantage of the self-employed person. There is also the principle that what is being done here is in effect a method of taxation upon the self-employed under the guise of an insurance arrangement.
Presumably this is done in the sacred name of the redistribution of wealth, though why these small self-employed people should be picked upon to have this particular doctrine applied to them I am not quite sure. If the Government wish to redistribute wealth—and it will soon be an academic question because if they remain in office there will be no wealth to redistribute or even leave as it is—let them do it honestly and openly in the Finance Bill legislation by genuine taxation. Let them not impose penalties of this inequitable sort upon a deserving and important section of the community by a side wind and device such as this.
In the course of the Standing Committee, I see, the Minister said that he resented suggestions that the Government were animated by lack of good feeling towards the self-employed. If they have any such good feeling they are very good at dissembling their love for the self-employed. The self-employed are not deceived. They resent very keenly the treatment which is being meted out and we on these benches share their resentment and will seek to give expression to it.
§ 7.45 p.m.
§ Mr. David Penhaligon (Truro)
I rise as someone who has long thought that the whole idea of a national insurance contribution should be scrapped, but within the context of this amendment we must discuss matters as they stand.
I rise to defend the self-employed primarily for the reason that if we introduce this arrangement it will be another form of income tax, whatever hon. Members might or might not say. It will mean that the self-employed person who makes just £1,6000 a year—that is a mere £30 a week—and who succeeds in increasing 332 his income by £1 will be taxed 41p out of that £1. That is a totally unacceptable rate of tax on such a low level of income.
I was horrified to hear the comment from the Opposition Front Bench that to improve the situation the Opposition wish to increase the value of the stamp to reduce the current rate. On an income of £1,600 a year—and it is the low-paid self-employed who are unfairly hit on this—it will make the situation even worse than it is. The tax rate of 41 per cent. at £1,600 a year remains unchanged up to £3,600 a year. At that rate, in the eyes of the public, we then reduce the level of income tax to 33 per cent. until around £5,000 a year when the marginal rate gets up to 41 per cent. again.
In defence of the self-employed, it must be said that much of their profits are imaginary or illusory. It is all very well to be promised that next year an allowance will be made to help the problem of the small businessman over the ever-increasing value of his stock. Every year he must fill the same number of shelves but it costs more and more to do so. It is all very well to promise to do something next year, but the small businessman desperately needs some help this year. In effect the small businessman will be charged a national insurance contribution on a capital investment. It has certainly not been suggested that it should be done in the case of the employed.
The Liberals will support the amendment because at least it reduces the marginal tax rate to 39 per cent. Why is it that the figure at which these contributions are levied stops at £3,600? It means that someone earning £3,600 a year pays 8 per cent. national insurance contributions, someone earning £7,200 pays 4 per cent., and someone earning £14,400 pays just 2 per cent. in national insurance contributions.
§ Mr. Alec Jones
Will the hon. Member indicate whether he is suggesting that we should lift that band from £3,600 upwards?
§ Mr. Penhaligon
It is perfectly clear. That is what we are proposing.
If the amendment is not passed, we shall be increasing the tax liability of the self-employed person earning just £2,000 333 a year by £32 a year, and that of the self-employed person earning £3,000 a year, much of it illusory, by £112 a year. That is not a satisfactory distribution of the burden of raising the money that we all agree must be raised.
§ Sir Raymond Gower
The hon. Member for Islington, South and Finsbury (Mr. Cunningham) argued with some skill, and I do not complain about that. But he was less than fair to his hon. Friend the Member for Watford (Mr. Tuck) in suggesting that these matters be considered solely on the basis of a mathematical calculation. That is a soulless approach. If the hon. Gentleman persists in it he is in danger of being described, even by his own colleagues, as a dessi-cated calculating machine.
The hon. Member for Watford has his heart in the right place on these matters.
§ Sir R. Gower
Whatever course the hon. Gentleman takes, what he said tonight was valuable. It illustrates that these matters cannot be considered in isolation.
The self-employed, an amorphous, ill-defined group of about 2 million of our fellow citizens, feel that they are in a precarious position. They have no great organisations to represent them. They are not the organised labour who a distinguished parliamentarian said 25 years ago were the people who mattered. He said that the others did not matter a tinker's cuss. I do not think that that was Labour policy then, and I hope that it is not now, but anxieties are renewed.
The hon. Gentleman complained that we suggested that the self-employed were being hammered. In fact, it is hammering to do in one fell swoop all that is proposed in the Bill, even if it is justified over a period. Those concerned would have to earn £3 a week net, and possibly nearly £5 a week gross, just to sustain the increased impost. That is a hammer blow that cannot be justified.
The self-employed are not necessarily all people of equal virtue, but they constitute an important part of our community. The country would suffer greatly if it no longer had this valuable 334 basis from which larger enterprise can grow. The self-employed do not fit easily into any system which those who love State organisations, State direction, would prefer. They do not fit easily into any system of social direction. To that extent, perhaps, some people are not particularly enamoured of anything that may sustain them.
The basis of the ascendancy of certain countries in Europe and elsewhere—certainly countries such as West Germany and Switzerland—has been the efforts of the smaller people and the self-employed. It would be a bad thing for this country if we introduced policies that hammered such people to the extent that we reduced their contribution to our economy.
I hope that even at this late hour the Government will have second thoughts. I have seldom discovered so much quiet anxiety and subdued anger——
§ Sir R. Gower
The anger and anxiety that I have discovered are real. The people concerned have no social contract with anyone. Nobody asks them to enter into a social contract. It is easy to put new burdens upon them, as they cannot strike back. The previous amendment concerned married women. The Government, in apportioning the new burdens, are choosing those least able to help themselves.
Whatever the short-term rights and wrongs of the calculations, Ministers should take a long-term view of the problems. They should institute a reassessment of the contributions, which are excessive in view of the other difficulties of the self-employed.
We must not merely take the negative approach of not hurting the self-employed but must take steps to assist them to increase their contribution to the economy.
§ Mr. Anthony Steen (Liverpool, Wavertree)
The complexity of modern life, the speed of change, the growth of urban conurbations, the size of populations, have led us to an over-concentration of centralised powers and an erroneous belief that bigger is better. Therefore, we have bigger Government 335 Departments, local authorities and comprehensive schools, sprawling housing estates and larger industrial units.
If all this led to greater efficiency, contentment and cost-effectiveness, large units would prove something: but they do not. Man rebels, and the unit breaks down when he is no longer treated as an individual but as a digit. When the size of organisation militates against his free expression as an individual and starts the process of de-personalisation, he rebels and turns on to society rather than into society.
This is part of the problem in Britain today. What we are witnessing is the breakdown of the large unit. Government must reverse the process, by encouraging the individual to be independent of the State and not more dependent on it. Government must encourage the smaller size of our social units.
The Bill represents a greater reliance on State beneficence and it is not good for us. I believe also that it is a disincentive to those who want to be self-reliant. Self-reliance is at the root of the smallest and oldest of all units, the family units—the right of the husband and wife to make a home and to provide for the family by their own initiative and hard work.
The amendment aims at limiting the potential damage, that of the erosion of the sacred and basic principles which I believe are the cornerstone of British society. It aims at preventing the man who wants to make a go of it on his own from being priced out of business.
§ 8.0 p.m.
§ Mr. Ivan Lawrence (Burton)
Whether one's concern is the breakdown of small units or the breakdown of statistical units, the cold, hard fact about the debate is that the effect of the Bill is to benefit all employees at the expense of the self-employed. That would not be bad if the self-employed were enjoying some advantages over and above those of employees. It would not be so bad if they were enjoying some of the advantages of employees. But they are not. They receive no dole, no graduated pensions, no earnings-related benefits, no widow's allowances, no redundancy payments.
336 It would not be so bad if the Bill promised the self-employed additional benefits, but it does not. It would not be so bad if the penalty being inflicted upon the self-employed were minimal, but it is not. The ordinary self-employed person will have to earn £5 a week more, for no benefit.
The gross injustice to the self-employed under this Government does not stop there because, as has been said by many hon. Members, these matters are cumulative— in other words, they are additional to rate increases for business premises, rate increases for domestic premises, increased income tax, increased corporation tax, higher interest rates, gift tax and the wealth tax that is about to be introduced. Even the proposals in the Budget for reducing stock valuation cannot help somebody who is self-employed in a business where the stock is less than £25,000.
On that basis, it is no wonder that the self-employed feel themselves being destroyed. I have seen Labour Members feeling sympathetic to the self-employed, whatever their conclusions may have been. I know that when the vote comes the mass of Labour Members will go into the Lobby to support their Government. I ask myself why the self-employed are being made to pay £5 a week more for no benefit when nearly everyone in the country, and particularly anyone who represents the self-employed, feels so strongly about the injustice of their position. Why are they being singled out for this affliction? Is it because they have no trade union to represent them? Is it because they cannot hit back at this Government? Is it because they are not able to blackmail the Government by stopping production and putting us back on a three-day week? Is it because by exploiting the self-employed the Government realise that the trade unions, which provide so much money for the Labour Party and sponsorship for so many Members, will not be angry?
Does not that underline the fact that the social contract is nothing but an unenforceable and useless agreement between the Government and their party supporters and paymasters? Does not that prove that the Government have lost all claim to being a party of social equality and social justice? I implore Labour Members to think again about this measure.
§ Mr. John Cope (Gloucestershire, South)
It can be seen already that this measure is an integral part of the campaign which the Government have been waging against the smaller business and the self-employed. In different contexts those similar groups overlap. They were summed up by the Prime Minister in the phrase, "the useless people". At least, they were left out of the description of useful people in my understanding of the right hon. Gentlemen's words. That is part of the same campaign.
I am not sure whether the Government appreciate who these people are that they are hitting, but presumably they do. Some of them are the involuntary self-employed of my profession, namely, chartered accountants. We are obliged to be self-employed by law. There are also those who have a certain amount of choice whether they trade as individuals or as companies. A few years ago it was those who chose to trade as companies who were always thought to be trying to get out of paying tax. Earlier we heard from the hon. Member for Islington, South and Finsbury (Mr. Cunningham) that those who are self-employed, by comparison with those who are employed, enjoy advantages or are able to take advantage of opportunities. I think that that was the phrase that the hon. Gentleman used when referring to the tax system and the self-employed. I deprecate very much that implicit encouragement to those who are self-employed to take advantage of any loophole that they can find in the tax system.
The self-employed sector includes not only farmers but small shopkeepers and many clergymen. It is true that some clergymen do not come into the category of self-employed. It includes creative artists and others of artistic ability. The hon. Member for Islington, South and Finsbury said that the profits on which the basis of the calculation is made, the 8 per cent., includes returns on the investment of capital. We are grateful to the hon. Gentleman for conceding that part of our case. That is an important element, and particularly important to farmers who enjoy a low return on capital and who are in a special position.
The hon. Gentleman also conceded that part of the trouble is that we have not hastened slowly and that the blow is all coming at once. Whatever my right hon. 338 and hon. Friends may think of his other points, I believe that that is a powerful argument. It has been suggested—I believe the figures to be correct—that if a self-employed person and his employee both have an income of £62 a week the self-employed business man will find that his employee has to pay £13 less, whereas he has to pay £120 more. That is an indication of the harshness of the blow, of the fact that we are not hastening slowly and that the Government are proposing to hit the self-employed hard and quickly.
The self-employed are also the self-reliant. They are the least inclined, almost by definition, to rely on the State or to rely on others.
§ Mr. George Cunningham rose——
§ Mrs. Kellett-Bowman
Oh no, not again. Do not let the hon. Member for Islington, South and Finsbury (Mr. Cunningham) intervene.
§ Mr. Cunningham
Does not the hon. Member for Gloucestershire, South (Mr. Cope) think that there is a degree of irony in referring to the self-employed as self-reliant—which is in general manifestly true—and then to suggest that they should receive benefits in excess of those for which they pay by cross-subsidy by another category? Is that self-reliance?
§ Mr. Cope
I shall not take up the argument on the figures that the hon. Gentleman has introduced. He shot them down himself when he talked about tax relief, which he then tried to leave out on the ground that that was for the Finance Bill. The self-employed are the self-reliant, and we should not clobber them in the way that is proposed.
§ Mr. William Hamilton (Fife, Central)
Perhaps it is about time that someone from the Government benches said a word or two. Mention has been made about the attendance in the Chamber for this debate. There are now present 13 Conservative Members against five Labour Members. The attendance is not all that great on either side, so let us not make too much of that point.
We start with the proposition that no one likes to pay more for anything, whether it be rates or rents, income tax or national insurance contributions. The Conservative Opposition do not do their 339 cause any good by an exercise in overkill. To pretend, as they have sought to pretend, that the self-employed are the salt of the earth and therefore, by inference, that the others are the useless people, is nonsense. Of course the self-employed have grievances—have not we all? Those grievances stem basically from inflation. Whether or not we had these increased contributions, the self-employed—the small business men— would be faced with growing and increasingly difficult problems. They are being steadily overtaken and put out of business not by increased taxation or increased rates, or whatever, but by the growth of multi-national companies.
In the figures over the years, one sees a steady decline in the one-man or family business and the growth of the supermarket and big store. It has nothing to do with what we are debating today. But, of course, the Conservatives are trying their best to make bricks with whatever straw they can find, and here they have found some straw. One can understand their difficulties, because they are going through a traumatic experience.
One hon. Member has said that he and his colleagues are moderate, that they are seething quietly with anger about this proposal. But one has only to read the intemperate speech by the initiator of this movement for the self-employed to realise where his political loyalties lie. Let the Conservative Opposition not pretend that they are merely looking after the most deserving section of the community. My hon. Friend the Minister of State referred the right hon. and learned Member for Surrey, East (Sir G. Howe) to the figures he quoted in Committee on 19th November. My hon. Friend said then:The great divide between us for a Schedule D profit or gain at £2,400 a year is 17p a week more under our proposals than under theirs … and at £3,600 a year, it would be 63p more a week.What we are talking about is whether those with the lowest income amongst the self-employed should be required to pay 14p a week more. We say, 'No, they should not. Let us hold it down for them' … in order to help those lower paid self-employed people—half a million of them, perhaps more—the man with £2,400 Schedule D profits or gains pays 17p a week more, and at the ceiling of £3,600 63D a week more. That is the situation which divides US."—[OFFICIAL REPORT, Stand- 340 ing Committee A, 19th November 1974; c. 153.]The Conservative Opposition indicate that they would put this burden on the employees in class 1—the ordinary employees. It is a difference of opinion.
On the Government side of the House there are loyalties to outside groups, just as there are loyalties opposite to outside groups. We are subject to perfectly legitimate pressures and representations by outside groups, and we are more amenable to them than the Opposition are. Similarly, they are under pressures from outside groups to which we would not listen. That is how our political system works. All of us in this House, including the Liberal Party, are subject to the pressures of outside groups—perfectly legitimate pressures. I hope that we shall get this question into proportion. I hope that we shall not cry, "Stinking fish" too much, and that the Opposition will not overstate their cause as they have been doing.
§ 8.15 p.m.
§ Mr. McCrindle
I wonder whether I am the only Member concerned about the situation of Members of Parliament in regard to this matter of being self-employed. I wonder how many hon. Members have seen the letter in The Times today, in which the writer reminds us that up to next April hon. Members are considered to be self-employed, but that just at that time when the burden of being self-employed is about to increase, they are to be given the choice of remaining self-employed or becoming employed.
When this matter came up before, I was told that these things were raised through the usual channels during the passage of the Social Security Act 1973. I played a modest part in the proceedings of that Act and it was a surprise to me.
§ Mr. McCrindle
I am interested to hear that comment about those exchanges. At the time when there is some cynicism in the public mind whether we look after their interests or are more prepared to feather our own nests, our public relations in this matter have been abysmally poor. Even at this late stage, so as not to be seen to be advancing our own case unduly, perhaps the Undersecretary of State would be prepared 341 to take the opportunity of presenting to the public the position of hon. Members on this matter.
§ Mr. Alec Jones
Perhaps it would be convenient if I made an explanation at this point, since the matter is of considerable importance and interest. The position is that the transfer of hon. Members is part of a general transfer of all groups of office holders with emoluments assessable to income tax under Schedule E, into class 1, where they belong. It is not happening only to hon. Members. It was part of the Social Security Act 1973. The decision was made after consultation with right hon. and hon. Members on both sides of the House. It was supported by the then Labour Opposition, and there was no question, either then or now, that hon. Members or any other group of office holders, including judges, company directors and a whole host, were seeking to minimise their contribution liability. This was not sneaked in. It was part of the general transfer applicable to all groups of office holders.
§ Mr. McCrindle
I am grateful for that clear statement. I hope it will be given suitable publicity so that any suspicion which, understandably, exists in the public mind will be dispelled.
§ Sir G. Howe
As I understand it, at the time when hon. Members were transformed from being self-employed into employed, the rates of contribution then proposed to be payable in the 1973 Act were lower for the self-employed, at 5 per cent., than they were for the employed, at 5¼ per cent. At the time Parliament made the change and transferred us from self-employed to employees, Parliament was working to the disadvantage of hon. Members. It is only because of the eccentricity of this Government in seeking to raise the contributions by the self-employed from 5 per cent. to 8 per cent. that, by chance, this ill-judged measure turns out to be to the advantage of hon. Members.
§ Mr. McCrindle
I accept the point of my right hon. and learned Friend. It makes it all the more important—because, by accident rather than design we may be seen to be benefiting in this way—that the Minister should have made his statement.
342 The two amendments we have been discussing are linked in that both will produce a degree of anger among those sections of the community which hitherto have been unable to hit back—married women and the self-employed. The difference is that the anger of the married women is almost bound to be delayed until some time in future when they realise what is about to hit them, whereas with the self-employed that anger has already become manifest and has led to the creation of at least one organisation among people who by the nature of their occupations have been totally disorganised in the past.
The Government's proposals are a direct attempt to impose an additional burden on a particular section of the community. Even if they were acceptable, the difficulty is that the attempt is being made to introduce this additional burden virtually at one go. Not for the self-employed the progressive movement to a situation that may or may not be desirable. In many ways they are not just being imposed upon, they are being imposed upon to an insufferable degree. This has been seen as unjust and discriminating.
It is right to ask why it is that the Government should be taking this action. I believe that it is because of a lack of identity with the self-employed, a lack of sympathy with them. I have taken part in many Standing Committees with the Under-Secretary and the Minister of State. I accept absolutely their close identity and understanding with, for example, the mining community. I would listen with great interest to what the miners were supposed to be thinking if it came from the lips of either hon. Gentleman. I am bound to say that I do not think that they understand or sympathise with the motivations of the self-employed. The initiative required before a man gives up security of employment and seeks to become self-employed is simply not appreciated any more than the independence that is part of becoming self-employed is valued on the Labour benches.
I listened with great interest to what the hon. Member for Fife, Central (Mr. Hamilton) had to say. He almost bemoaned the passing of the self-employed business man and put it down to the arrival of the multi-national company. On 343 the contrary, there is now, and I sincerely hope there always will be, room for the small self-employed man to give that acute personal local service in competition with the multi-national company. It is the Government's proposed action which is leading to the snuffing out of this initiative and independence.
Is it prejudice? The answer is that it must be. I ask, is it ignorance on the part of Labour Members? Again I am forced to the conclusion that to a large extent this must be so. There is a failure to identify. I want to express my pleasure on one point and that is that by the very nature of the action proposed by the Government, attention has been forced upon the difficulties which the self-employed have been suffering for some years and which in the past they have suffered in relative silence, overlooked by the rest of the community. By the nature of the imposition the Government seek to direct to the self-employed, they have brought about the banding together of the self-employed. They have forced them to recognise who are their friends and, by the same token, who are their enemies.
Even at this late stage the Government would be well-advised to recognise that whatever they may believe about the socialising of the economy, there is no Government of any political complexion that can continue to run a successful economy without the self-employed.
§ Mr. Alec Jones
Can the hon. Gentleman explain one point? He is suggesting that the Conservatives are the friends of the self-employed, when the amendment moved by his party in Committee would have increased the contribution of the lowest-paid among the self-employed.
§ Mr. McCrindle
It is easy to single that out, and I do not seek to deny it. The point I have been making is that the whole animus behind what has been said from the Labour benches on the question of the self-employed indicates that, not just on this occasion but on every conceivable occasion that presents itself, the Government will take it out of the self-employed. I can only deduce that that is because of the lack of sympathy to which I have referred and an ignorance of what animates the self-employed man. If, 344 in replying to the debate, the Undersecretary can dissipate my feelings in that regard, no one will be more pleased than I.
§ Mr. John Page (Harrow, West)
Most of the juice has been squeezed out of the lemon of this amendment by my hon. Friends, and a pretty bitter drink it has made for the Minister. The hon. Member for Fife, West——
§ Mr. Page
Very well, the hon. Member who one day may become a self-employed pauper said that he hoped that people in the debate would not cry stinking fish. Then he cried just that with his strong lungs. He said that there were outside groups to whom he would not listen and to whom he did not think other hon. Members would listen. I am surprised at this. I would welcome sensible and thoughtful discussion with any group of my constituents. Sadly, the trades council in Harrow seldom asks me to pay it a visit, or responds to my invitations. I fear that is because it does not wish to have its case destroyed by my ineluctable eloquence.
The Bill is a swingeing attack on the self-employed. I beg the Minister, even at this late stage, to ask his right hon. Friend whether this amendment is not acceptable. If the Government do not accept it they will be showing a cynical and vindictive attitude towards private enterprise and the small business.
The Government seem to hate people who try to fend for themselves. In the Bill the Government attack the professional person, the small businessman and the small shopkeeper——
§ Mr. Page
There are few farmers in Harrow. The late A. P. Herbert once said "I will never discuss agriculture", and I follow him.
I am speaking of the small shopkeeper—the pharmacist and the shop on the corner. My hon. Friend the Member for Gloucestershire, South (Mr. Cope) referred to a shopkeeper employing a person who earns the same wages as he earns. That can easily happen in a chemist's shop. This differentiation between the employed and the self-employed is ridiculous.
§ 8.30 p.m.
Many hon. Members on both sides of the House have had letters from constituents appealing for action against this part of the Bill and in support of the amendment. I picked up two such letters as I came into the Chamber early this afternoon. The first is from a lady whose husband is engaged in transport in a small way. The letter reads:
My husband tries hard to earn an honest living, but petrol is going sky-high in price, and so are repairs, tyres, etc. He does his own servicing on the car to try to cut his costs. Once again we shall be hit by this 8 per cent. increase upon income tax".
It is interesting that that should be appreciated by the lady—
If we put our prices up we are increasing inflation, which we are all striving not to do, and also pricing ourselves out of business. As my husband is now 55 he would have a terrible job to get alternative employment. I think you will agree.
The new impost will attack the small person trying to look after himself.
The other letter comes from a member of the Institute of Linguists. It is dated 23rd November, and under the heading "8 per cent. Tax on Self-Employed" states:
In respect of the above tax the meeting was in favour of some collective action against it.
He described it as "legalised extortion". Is it not pathetic that what has become known as industrial action is being forced upon the Institute of Linguists? I accept that the collective action that the institute could take would not hurt the Government very much, but it could hurt a number of outside organisations, and most of all it would hurt the institute.
§ I was hoping that the Minister of State would be on the Government Front Bench. I recollect that he was once a self-employed musician—a saxophonist, I believe. I have recently taken up the saxophone. I was hoping to beg him, instead of "facing the music", to start to play in tune with the House of Commons and the country and to accept the amendment and the applause of many worthy and responsible people.
§ Mr. Beith
I share the feeling of my hon. Friend the Member for Truro (Mr. Penhaligon) and many other hon. Members about the serious effect of the proposals on the self-employed if the amend- 346 ment is not carried. I do not share all the imputations of bad faith which have been made against the Government. A series of Ministers, each in a different sphere, is doing things which will harm the self-employed but none is prepared to stand firm and to say that the total effect of all the measures is such that his Department will look more carefully at the problems of the self-employed. Several instances have been mentioned. The Ministers in the Department of Health and Social Security should have stood firm and said, "This on top of everything else is too much".
I wish not to rehearse general arguments but to deal with a specific point, and I shall detain the House only for a few moments. I am delighted that the Minister of State has returned, because I know that he has taken a personal interest in the group about whom I am concerned, and I gave him notice that I wished to raise this problem.
I am thinking of ministers of religion, of whom there are a goodly number in my constituency. I am pleased to have so many of them as constituents. By a curious anomaly they are treated as self-employed people. Many of them are in the earnings bracket below the £1,600, which is the cut-off point. Some who are just above it are in perhaps the most damaging position of all under the proposals.
I received a letter from a minister in the United Reformed Church. His gross monthly pay is £120.84 and after deduction of tax, superannuation and car loan repayment he is left with net pay of £87.45 a month. He was frightened by the proposals, but I think that the Minister will be able to reassure him that he will not be directly affected by them. He says that most truly self-employed people must earn many times the salary of the clergy and many will be able to recover the increased costs through the increased goods and services they supply, yet their rates of contribution will be the same as those of many clergymen. He says:Ministers are only deemed to be self-employed for the purpose of National Insurance possibly, because we are never at risk of becoming unemployed.I hope he is correct in that assumption.There would be no purpose in insuring against unemployment the fact that we are in receipt of a fixed income, and there is no way 347 in which we can increase our earnings, no matter how hard we work.I am sure that the House would wish to pay tribute to the hard work which so many ministers undertake. Therefore, I hope that the anomalous position of ministers of religion will not end in such a way that they are dealt a serious blow when the Bill passes into law. I hope that the Minister can give them some crumb of comfort.
§ Mr. O'Malley
Perhaps it will be helpful if briefly I were to seek to clarify the situation of the clergy. When I came into this office I found that discussions had already taken place between the departmental Minister of the day and the Churches Main Committee representing a large number of Churches. I continued those discussions and was able, with the agreement of the Churches Main Committee, to come to an arrangement, at the Committee's request, that as from April 1975 for an interim period of one year they will remain class 2 contributors. They will have the opportunity to consider the White Paper "Better Pensions" and to consider in detail at their synods and meetings next year whether they wish to approach me asking for class 1 or class 2 status. Therefore, the interim position is satisfactory to the Churches Main Committee.
§ Mr. Beith
I am grateful for the Minister's intervention. What he said tonight may not yet be known to members of the clergy. They will be anxious about the situation next April, but they can now have the assurance that a choice will be open to them. I am grateful for the Minister's observations. The House can now return to the broader issues raised by the debate.
§ Mr. James Kilfedder (Down, North)
I made my plea on behalf of the self-employed during the Second Reading of the Bill and therefore my remarks will be brief. They are addressed to the Government in the hope that, even at this late stage, they will act fairly towards the self-employed.
The new class 4 amounts to unfair, even harsh, treatment in respect of one section of the community. That group has contributed a great deal to the country; it has contributed to the character and wealth of the nation through its industry 348 and enterprise. Many self-employed people work hours which would be unacceptable to trade unions. Self-employed people work hard and long hours in order to earn a decent income. Yet at the end of the day they face the imposition by the Government of this additional tax.
Some hon. Members have tried to quantify the amount of benefit which the self-employed will receive, but irrespective of that amount, the tax may be the final straw that will break the camel's back. The self-employed person represents a wide spectrum of the community. It is made up of farmers, shopkeepers, small business men and others—all of whom have suffered grievously in recent years. In Northern Ireland there are 38,000 small farmers. They have faced virtual disaster, especially the beef producers, and yet they will have this extra burden to bear.
§ Mr. O'Malley
I accept the hon. Gentleman's proposition that a number of individual farmers in his constituency and elsewhere have suffered as a result of the state of the beef market or other factors, and the profits or gains accruing from Schedule D will be substantially lower than they would otherwise bear. Will he accept the proposition that there should be no increase in the basic class 2 contributions and that this will help rather than hinder the farmers or other small business men whose profits or gains are eroded as a result of current economic circumstances?
§ Mr. Kilfedder
Although I was not invited to serve on the Standing Committee, I listened carefully to what the Minister said on Second Reading. It may be that when this measure becomes law we shall see whether people such as farmers do better than I expect. I fear that they will not, and it is possible that I shall be able to point out to the Minister in due course the real difficulties that they are facing.
If I may take just one problem, farmers, at least those in Northern Ireland, find it very difficult to prove that they have retired. The average farmer likes to retain his farm in his own name, and he likes to live in the farmhouse. His son takes over the running of the farm, but, because there is this difficulty in proving that he has retired, there is often 349 considerable delay in paying retirement benefit. I hope that the Minister will look at that in due course.
That problem apart, there is no doubt that the consequences in Northern Ireland of the Government's proposal to increase the financial burden on the self-employed could be disastrous, bearing in mind that probably there are more self-employed people there than there are in England as a proportion of the population. That is especially true in the present situation, where terrorism is rife, and even more so for people in receipt of net incomes of £1,600 a year, just on the border line. Already they have difficulty in paying the class 2 stamp. That is why I feel that what in effect is a new tax on the self-employed in receipt of incomes between £1,600 and £3,600 a year, without any new benefit, although other contributors to the National Insurance Fund will receive the additional benefits, is a shocking imposition, is inequitable, and should be rejected.
For those brief reasons, I intend to vote in favour of the amendment.
§ Mr. John Horam (Gateshead, West)
The hon. Member for Berwick-upon-Tweed (Mr. Beith) referred to clergymen in relation to the Bill and perhaps also in relation to the amendment. I wish to refer to another special case which is rather outside the general stream in this debate. It is that group of self-employed people, often organised by the Transport and General Workers' Union, of which I too am a member, namely, taxi drivers.
Hon. Members will know that taxi driving is a complicated world, with many complicated legal provisions. The simple distinction is between the owner-driver, who is self-employed and adjudged self-employed in every respect, and what is known in the trade as the bailee—who is self-employed for tax purposes but whose employer has for at least the past 25 years or more made a contribution to his national insurance provision. In that respect, therefore, he is not self-employed.
Under the 1973 Act, that position will be changed. For all purposes the bailee taxi driver will be considered self-employed and therefore will transfer from a situation in which his employer was making some contribution to his national insurance provision to one where he makes no contribution. The bailee him- 350 self will have to make all his national insurance payments and therefore will be doubly disadvantaged.
§ 8.45 p.m.
§ I must make it plain that this is not in consequence of the present measure. It is a consequence of the 1973 Act. I agree that the situation that pertained until the 1973 Act was anomalous, in that it had elements of both the self-employed and the employed in the treatment of this category of taxi driver. None the less, anomalous though it may be, that type of self-employed driver will be at a considerable disadvantage and heavily penalised financially as a result of the operation of the 1973 Act.
§ It also happens that the taxi trade— the union as well as the employers— has been working on the drawing up of a pension scheme. At the moment taxi drivers do not have any pension provisions, but the trade was working on a pension scheme. This will be entirely killed by the 1973 Act, because no contributions will be legally possible from the employers' side. Also taxi drivers, by the very nature of their trade, find it difficult, because of the expense, to get any kind of proper sickness or accident provision. Such a scheme was also being worked out, but that may be affected by the 1973 Act.
§ Mr. O'Malley
I have some knowledge of the complex and unusual matters to which my hon. Friend is referring. I am grateful to him for recognising that the difficulties that he has described arise not from this legislation but from the Social Security Act 1973. It is clearly not possible to discuss the details of an unusual set of circumstances in this debate, but I am willing to discuss the situation in detail with him because I recognise his union interest in the matter.
§ Mr. Horam
I am grateful to my hon. Friend for those sentiments and I will take up his offer. Perhaps he will see some of the taxi drivers involved, some of the union negotiators who represent them, and myself. This is not a matter which can be dealt with in this debate. On a strict interpretation of the Bill and the complicated subsidiary regulations which may emerge, the burden could be extremely heavy. I ask my hon. Friend to consider this situation sympathetically and to try to find some way of softening 351 the blow which will fall on taxi drivers in April. I hope to take up my hon. Friend's offer in the interests of the taxi trade.
§ Mr. Cormack
The debate has just taken on a nice conciliatory tone with the Minister's interjection in the speech by his hon. Friend the Member for Gateshead, West (Mr. Horam). The hon. Gentleman said that he would be delighted to discuss these issues with him because he was a union spokesman. The self-employed do not have union spokesmen, but they have had many spokesmen in this debate. I sincerely hope that the Minister, whom I know to be a man of compassion and concern for people, will have listened to and taken note of what has been said but will do something to alleviate the burden on the self-employed.
§ Mr. O'Malley
The hon. Gentleman suggests that the self-employed have no body to represent them. Large groups of the self-employed have bodies to represent them. For example, general practitioners have the British Medical Association. The hon. Gentleman will be aware of the newly-formed National Federation of Self Employed. I met a delegation from that body last night for more than two hours. Of course I am prepared to meet representatives of organisations, whether they represent employed persons, self-employed persons, employers or any other group of individuals who are affected or are members of the National Insurance Scheme.
§ Mr. Cormack
I am glad to hear it. I would expect no less from the Minister. I hope that he will listen when they come, as I hope he has listened tonight. We are not talking about the more affluent of the self-employed. The thread of our argument has been particularly concerned not with them but with those people who have really made a social contract with society——
§ Mr. Tuck indicated dissent.
§ Mr. Cormack
I am glad to see the hon. Member for Watford (Mr. Tuck) nodding. He made a powerful speech. I hope that even at this late stage he will put his vote where his voice was, but I will not embarrass him too much, because 352 we hope to welcome him with open arms into our Lobby.
The self-employed have made a social contract. They have often put service above self and have given to the community far more than they have taken. If one wants to find people who work all the hours God sends, for whom thrift and enterprise and initiative are watchwords, one looks at the self-employed. If one wants to find people who have served their community, one can do no better than see some of the small shopkeepers in both rural and urban constituencies. They keep their shops open to serve the community, often receiving a mere pittance in return. Their salaries and earnings do not compare favourably with the national average earnings. They are often old people, people who believe that they are giving the community a service.
There are many farmers in my constituency, and, like my hon. Friends, I am acutely concerned about the tremendous problems facing British farming. No one works harder than the farmer, especially the small farmer. These are the people who are being imposed upon by this threatened legislation and who will suffer extra burdens without the amendment.
§ Mr. Tuck
I remind the hon. Gentleman that even the leaders of the Labour Party, like George Bernard Shaw, H. G. Wells and William Morris, were self-employed. This kind of thing will also militate against the intellectual self-employed—for example, sculptors, authors, artists and musicians. They cannot, as the plumber around the corner can, suddenly become employed persons.
§ Mr. Cormack
I am grateful for that intervention. I was not aware that Wells, Morris and Shaw had been leaders of the Labour Party. Would that they had been. It would probably have been a more sensitive party if they had led it in this House. They would have appreciated the needs of the self-employed. They were creative people, with sensitivity and sensibility—the things for which my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) appealed. They would not have connived at this imposition—[Interruption.] As my hon. Friend has just whispered, they would probably have crossed the Floor in horror at what the Labour Party is doing.
§ Mr. Deputy Speaker (Mr. Oscar Murton)
Order. I think that the hon. Gentleman is straying slightly from the amendment under discussion. I should be grateful if he would address his mind to the amendment.
§ Mr. Cormack
I was indeed addressing my mind to the subject under discussion, Mr. Murton. Fascinating byways were indicated by the stimulating intervention of the hon. Member for Watford. If he wished to intervene again, I am sure that we should all be delighted.
This is a serious subject, and the people who will suffer are serious, hardworking people, who put a great deal into society and take very little out. I do not have the comparative statistics—I do not suppose that anyone does——
§ Mr. Cormack
If the hon. Member, who has already been called a calculating machine, would just listen before pressing the button, he would understand the point that I am making.
I was about to say that we do not have the comparative statistics about illness, but I should think that the self-employed would be more inclined than other people to remain at work, because they have no one to whom they can pass on the burden. These people deserve our consideration and everything that we can possibly give to encourage them to foster their talents. They are very much the backbone of the country. I hope that even at this late stage the Minister will allow his heart to melt a little. These are very often the forgotten people—the people who have no one to speak up for them properly. I am glad that they have formed a federation. I wish it well. But even if their federation is truly launched on the national scene, and even if they are able to hold meetings, they are not able to go on strike or to hold a pistol to our heads. They have still to serve and to give. It is about time that we realised just how much they are giving. It is about time that we encouraged and helped them.
To place this fearful imposition on them—this tax on thrift, enterprise and initiative—is something of which the House of Commons should be heartily ashamed and should never even have contemplated. This debate should never 354 have been necessary. But the debate has taken place, and I hope that the message has got home to the Minister. I hope that at the end of the day he will have the magnanimity, the bigness of heart, to stand at the Dispatch Box, without his saxophone, and to play the right tune.
§ Mr. William Molloy (Ealing, North)
I have listened to the debate for about three hours. It is about time that someone came to the defence of the self-employed, because one would think from listening to Conservative hon. Members and some Liberals that there is a bunch of useless, hopeless people who are all on the bread line, all hanging on the last strings of poverty, called the self-employed.
I do not believe that. I do not believe that the self-employed are degenerate, beggarly and poverty-stricken in mind and pocket, as has been said by right hon. and hon. Members of the Opposition. It is about time that someone said something in defence of the self-employed. It has been said that there is no one to represent them. Are the Opposition saying that only the rich farmers can join the National Farmers' Union? Is anyone saying that? The massive cry of opposition to my suggestion is deafening.
What we have heard tonight is the most overstated case that has ever been made in the House of Commons. I concede immediately that there is something to be said for some of the more sane and balanced submissions that we have heard. But if ever there were a case ruined, it was that for the self-employed. If ever any part of the British community has had almost its honour as well as its intelligence massively insulted, it has been the self-employed tonight.
The little baker, the butcher and the candlestick maker exist to give a service. They give an excellent service. The only time that they have been denied the opportunity of giving that service was when there was a Conservative Government who had a policy of creating 5 million unemployed.
If my words reach the self-employed, they will not be too desperately disappointed. They will not have their morale completely obliterated, as it would 355 be if they read some of the comments made this evening by the Opposition. They will understand, however, that while they may feel irritated or annoyed about some aspects of the Bill, the surest safeguard for their prosperity will be the united policies of all sides of the House of Commons.
I admit that in ourselves we are an amalgam of people who have a general principle but different ways of approaching it. But there is a fundamental point which unites the Labour benches but does not unite the Tory benches. Whatever differences we on the Government side of the House have, we are united in desperately trying to maintain the principle of full employment. That is essential to the self-employed and the employed. The Conservative Party is split whether there shall be so many millions of unemployed. This is what hurts Tory Members. The anguish on their faces is plain to be seen. They know that if some elements of the Tory Party had their way there would be massive unemployment. If that were to happen, it would not be merely the person who was at one time employed who would be hurt. The results of such a policy would be more damaging and dangerous to the self-employed than will the small provision that my hon. Friend is introducing tonight.
§ 9.0 p.m.
§ Mr. Nicholas Winterton (Macclesfield)
I will not follow the hon. Member for Ealing, North (Mr. Molloy) in the argument he has addressed to the House. I merely express the hope that in approximately 12 months' time, when the unfortunate effects of the Government's policy come home to roost, he will come here again and harangue us about more than 1 million people being unfortunately unemployed owing to the policies of his Government.
I support the amendment. It is a very important one. I shall not go over many of the arguments which have been advanced by hon. Members on both sides, particularly by my right hon. and hon. Friends. The self-employed are the entrepreneurs in society, whatever their income, whether it be large or small. The fact that they are entrepreneurs does not 356 mean that they are not vulnerable. As was so rightly said by my hon. Friend the Member for Staffordshire, South-West (Mr. Cormack), when self-employed fall ill they are not able to have somebody to look after their business for them. Unlike many people who are employed, they are thus particularly vulnerable. I do not believe that the self-employed are entitled to draw sickness benefit, but this may have been overlooked by some hon. Members who have spoken. While the self-employed are ill and absent from work, their business, which may have taken a very long time to build up, can almost disappear.
I hope that the Minister will appreciate that we are not trying in this debate to overplay the position of the self-employed. Much criticism has been poured upon the Government in this debate. If the Minister can be criticised, it is because he has chosen this time to load the self-employed with such a heavy extra burden. These people have been faced with dramatic inflationary costs. Many self-employed, particularly retailers, have not had the benefit of the rates relief which has been available to domestic ratepayers. These people have had to meet vast additional costs. This could easily be the straw that breaks the camel's back.
Many categories of self-employed, such as pharmacists, farmers and retailers, come into this discussion. We know that the Minister is not an unsympathetic person. The case for taxi drivers received what I would describe as a moderate and reasonable airing just now from one of his hon. Friends. I hope that many other people who next year will be faced with heavy additional costs will be treated moderately and understandingly by the Minister.
Is it so terribly difficult for the Government to accept this reasonable amendment? We have had to fire some pretty heavy salvoes to make any impression upon the Government, but surely that is the duty of an Opposition. I have no vested interest in the self-employed, except that I admire what they are doing. They are an essential part of our economy. I hope that in the Division some hon. Members opposite will show that they appreciate just what service the self-employed render to the British people.
§ Mr. Giles Shaw (Pudsey)
As we come towards the end of this debate, it is right that we reflect that many hon. Members have spoken because of their constituency problems. I know of no matter in recent weeks which has aroused more anger among certain of my constituents than this proposal. Many people have by correspondence and in delegations sought to plead that some of us take some action to draw the Government's attention to the difficulties faced by the self-employed. No matter how irritating it is to see the length of the debate being stretched, it is vital that an opportunity is given to plead their case. A number of points have been well made by previous speakers and I shall dwell merely on one or two matters.
The people who will be affected by these proposals are not merely those in the larger groups, such as the farmers, the pharmacists and the retailers we have heard about, vital though their services are, but frequently they are individuals, running small businesses, in some cases in their own homes.
I have met a delegation from an association representing the retail trades which has advised its members, in view of the increases that will be facing them from next April, to consider encashing individual insurance policies to cover the cost of the increases. That sort of advice indicates that the problem with which we are concerned will bear most heavily on those individuals who often do not have the chance to get together to state their case.
Almost all hon. Members have been approached by retailers. Although the hon. Member for Fife, Central (Mr. Hamilton) made play with the competition from major international stores, it is not true that the retailer has been driven out of the High Street by the large businesses. The survival of the small shopkeeper is demonstrated by the fact that many thousands of them are still in business, but year by year increased costs are borne upon them, whether in the form of rates, or in nationalised industries' prices, or, as in a previous era, from SET, or now from VAT which is still, I am glad to say, virtually at a single rate. If it ever moves to a multiple rate it will put retailers out of business.
358 All these costs have been gradually imposed on shopkeepers and others with small businesses, and have gradually impinged on their operating margins. Now the insurance stamp is to become yet another burden to add to others that have been imposed in the past four or five years. Regardless of which Government is in power, the fact remains that for small businesses and shopkeepers, and many others who serve our society in a similar way, costs have increased.
We have here another indication of those who take risks being clobbered. It does not matter what form of risk they take—whether as an investor or as a house-owner or in setting up in business or in being self-employed; they have been clobbered by this Government's legislation. When thought is given to a reduction in risk taking, it seems to matter only if people are in a large body which is able to discuss productivity at national level. The individual contributor who takes risks for himself and for the community he serves could find that a penalty will be applied to him. I am ashamed that risk-taking has been treated by the Government in this way.
If we are to encourage every man and woman in the country to take risks in order to get the country out of its problems, we must first of all encourage the individual. We should not have legislation which suggests that those who take risks in serving others should be penalised.
I plead on behalf of many organisations which will be affected and on behalf of many individuals in my constituency who will be affected, that the Government should have second thoughts and withdraw their proposal.
§ Mr. John Nott (St. Ives)
I wish to intervene only briefly. I do so because in my constituency the self-employed play a major part in both the economy and of course in the employment of the area. I am not particularly concerned with all the actuarial calculations that were debated earlier. What is obnoxious in the measure is the size of the increase and the way in which the relative contributions of the self-employed and the employed person are being changed. The contributions are being changed in a one-step jump, and this is wrong.
Much of the character of the towns and villages of this country is being changed 359 because many self-employed people are going out of business, for a variety of reasons. These latest proposals will mean an additional burden for the self-employed.
If actuarially it is right that the self-employed should pay more, it would be only proper that the increase should be phased over a number of years rather than as is proposed in the Bill. I come to the conclusion that either the amendment should be accepted or—and I think this would satisfy me—that the Minister should give an undertaking that self-employed contributions should be allowable to tax to the extent that an employer's contribution is now so allowable. A self-employed person depends upon income which he generates to plough back into his business for investment. In that respect he is in the same position as the employer. It is relevant to say that in many parts of the country employment—in my constituency the majority of employment—is very much dependent upon the self-employed continuing to run their businesses.
I am particularly concerned about this measure because I believe it will place an additional burden on the self-employed and will probably add to the serious unemployment situation which we shall clearly face in 1975. It is important in current conditions that no section of the community should feel that it is being discriminated against. There is no doubt that the self-employed feel that they are being so discriminated against, and this will not make the Government's problems any easier.
§ I fully support the amendment.
§ 9.15 p.m.
§ Mr. O'Malley
Many, although not all, of the contributions which have been made in this debate from the Opposition benches have been extravagant in tone and have been markedly lacking in fact. There has been abuse and a degree of emotion which, if I chose to answer in the same way, having been a Member of this House for a number of years, I think I could at least match. Political invective—and all politicians can follow and match political invective—has been evident in some, though not all, of the speeches which have been made in this debate.
360 I think that since we are dealing with a subject which affects the interests of up to 2 million people in the years ahead, it is proper that, as the Minister responsible for the proposals which we are discussing tonight, I should not reply to the debate in the tone of many of the speeches which we have heard. I believe that the most useful thing I can do is to set out the background facts and circumstances which led the Government, and myself as a Minister responsible, to the conclusions which are embodied and enshrined within this Bill, including that part which would be affected by the amendment.
I will give the background circumstances, and I put them in cold, unemo-tive, unvarnished language because I have a respect for the judgment of the House of Commons which, when faced with facts and with sound argument, can shed and cast aside some of the fripperies and extravagant language which is sometimes used in debate in this place.
I will outline the background facts and arguments which led the Government to the conclusions contained in the Bill. At the outset of the National Insurance Scheme in 1948, for the benefits which the self-employed were to receive their contributions should have been set at about 90 per cent. of the contributions which were payable on behalf of employed persons. As an act of political judgment the then Government—a Labour administration under the Prime Ministership of Clement Attlee—set the level of self-employed contributions at about 70 per cent. of the total contributions payable in respect of Class 1 contributors. It was presumably done because it was felt that to set the level at 90 per cent. would have placed what was clearly regarded at that time as an impossible burden upon the self-employed.
Between 1948, the outset of the scheme, until 1961, the year in which the Boyd-Carpenter graduated pension scheme came into operation, the contributions paid and payable by the self-employed Class 2 contributors were set at about 70 per cent. of the contributions paid on behalf of Class 1 contributors. For those 13 years successive Governments felt that although there was a degree of subsidy to the self-employed, the 70 per cent. figure was about right. It varied from year to year, but the average was about 70 per cent.
361 There was therefore established during that period a national insurance system dependent entirely on flat-rate contributions by both the self-employed and the employed persons. There was established that which is now desired by the Opposition Front Bench—a consensus on the subject. It was thought that 70 per cent. or thereabouts, on the whole, taking account of all circumstances, including the circumstances of the self-employed and the nature of their occupations, was about right.
In 1961 the Boyd-Carpenter graduated pension scheme came into operation and the contributions were payable through the Schedule E machinery by which the employed person pays his tax liabilities and upon which an assessment of his reckonable earnings is made. But it was not possible so to assess the self-employed because of the significant differences which existed at the time and which still exist between Schedule E and Schedule D tax provisions.
Therefore in the period after 1961 until the right hon. Member for Leeds, North-East (Sir K. Joseph) began to formulate the proposals later enshrined in the Social Security Act 1973, increasing and very large sums were paid by employees and their employers in graduated contributions. That money was used in bulk to pay for the flat-rate pensions of the retirement pensioners of that decade, whether those pensioners had previously been employed persons, employers or self-employed persons. The ratio was established during the 13 years between 1948 and 1961 for sound administrative reasons. The Conservative Government from 1961 until 1964, and the Labour Government who succeeded them, found themselves unable to bring the self-employed into any type of graduated or earnings-related payment.
When the right hon. Member for Leeds, North-East made his appraisal of the operation of the social security system in the early 1970s, he moved first to a fully earnings-related system of contributions for class 1 employees and their employers, and he moved as far as he could towards a system of graduated contributions for the self-employed. As the spokesman for the Labour Opposition, in the proceedings on the Social Security Act, 1973, I backed 362 the formula of the structure postulated by the Conservative Government. Because the Government were unable to go to completely graduated, completely earnings-related contributions, there was to be a class 2 contribution for the self-employed—that is, a flat-rate contribution. In addition, there was to be a class 4 contribution.
I stress that that structure was not one that I created. The Government have been accused tonight of being vindictive, malicious and evil to the self-employed. I inherited the structure that will come into operation from April 1975.
The right hon. Member for Leeds, North-East decided that there would be a flat-rate contribution and a class 4 contribution at the rate of 5 per cent. between £1,150 and £2,500 a year of profits or gains assessed under Schedule D.
When the right hon. and learned Member for Surrey, East (Sir G. Howe) addressed the conference of the National Federation of Self Employed in London on Sunday, the Daily Telegraph of 25th November reported him as having said:Our proposals were fair and sensible. The self-employed would have paid at a rate of 5 per cent. on any earnings in excess of £1,150 a year up to a maximum of £2,500. On this basis the maximum payable would have been £67.50 a year. But Barbara Castle proposes swingeing increases in these contributions with nothing in return.The right hon. and learned Gentleman did himself and his integrity less than credit when he said that, because it was always made perfectly clear in the Committee considering the 1973 Act that the figures were purely illustrative and were set at 1971–72 levels. The then Under-Secretary said:The figures in the Clause, namely £1,150 and £2,500, are also on a ratchet. They are illustrative figures in the same way as the other figures in the Bill are, and, therefore, as the other figures move, so we would expect these figures to move as well."— [OFFICIAL REPORT, Standing Committee E, 25th January 1973, c. 272.]The situation is that we have moved the figure from £1,150—it is no good the hon. Member for Rushcliffe (Mr. Clarke) shaking his head at me. The hon. Gentleman knows the situation as well as I do. The figures of £1,150 and £2,500——
§ Mrs. Kellett-Bowman rose——363
§ Mr. O'Malley
With respect to the hon. Member for Lancaster (Mrs. Kellett-Bowman), I shall give way to sensible interruptions, but with the kind of strident ignorance that we have experienced from the hon. Lady this afternoon I do not intend to give way to her. It is time that she learned to behave in the House of Commons. If she will listen to sensible argument and to a sensible proposition I shall be prepared to give way. The Conservative Front Bench knows as well as I do that in moving the figure from £1,150——
§ Mr. O'Malley
No, I will not. I will take sensible interruptions, but I will not give way to the hon. Lady now. I have had some experience of her interruptions. I wish that she would take the trouble to do her homework before she comes into the House.
§ Mr. O'Malley
The hon. Member for Rushcliffe says that I am on weak ground. If he wishes to challenge me on this matter, he can do so and do so now.
§ Mr. Clarke
The Minister knows that the passage on which he is dwelling at such fond length has no relationship to the change in the percentage. The quotation he gave from the comments of my hon. Friend the Member for Somerset, North (Mr. Dean) relate to the band of earnings. Our amendment is about the increase from 5 per cent. to 8 per cent. At no stage did the Conservative Government give any indication that they were going to achieve 5 per cent. in the way that the Minister has suggested.
§ Mr. O'Malley
If the hon. Member for Rushcliffe had not been chattering to his right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) he would have known the stage of the argument that I had reached. I was setting out the background circumstances by which we arrived at the proposition that is in the Bill. I am saying that whether the rate is 5 per cent. or 8 per cent., one matter that is manifest and accepted by the Opposition Front Bench is that the band on which the percentage contribution is to be raised was moved in line with the movement of other parts of 364 the Bill. The right hon. and learned Gentleman was talking at a mass meeting on Sunday of a band of £1,150 to £2,500. The position of the Conservative Party is that the band in current terms, and on the basis of the proposition put forward by the then Undersecretary of State, of £1,600 to £3,600 a year——
§ Mr. O'Malley
Yes, at 5 per cent. I was coming to that. I wish that the hon. Lady would try to be a bit intelligent about these matters.
We have the proposition in the Bill that the rate of contributions in the band of £1,600 to £3,600 is to be 8 per cent. The right hon. and learned Member for Surrey, East and the Opposition generally say that it should be set instead at a contribution levy of 5 per cent. Before I pass from this matter, I must say that I wish that when right hon. and hon. Members speak to organisations and to individuals outside the House they would make it clear that the structure is their structure and that the difference between us is not class 4 at 8 per cent. but the difference between class 4 at 5 per cent. and class 4 at 8 per cent.
§ Sir G. Howe
The Minister is entitled to express his wish in that way. I hope that he will take account of the fact that at every gathering inside and outside this House at which I have discussed this matter—this applies to my hon. Friends as well—we have always made it clear that the introduction of earnings-related contributions for the self-employed was in our legislation. I have sought to remedy misunderstandings about that on many occasions so that there shall be no false premise about the argument. I return to the point that the changes proposed by the Government by raising the percentage tilt the scales further, at a time of difficulty, against the interests of the self-employed. That is unjustified.
§ 9.30 p.m.
§ Mr. O'Malley
They do not. The right hon. and learned Gentleman is wrong, and he is misleading his party. I will show in detail why he is wrong and why the facts he has stated are manifestly untrue.
The difference between us is whether it should be 5 per cent. between £1.600 and 365 £3,600 or 8 per cent. I want to explain why the Government decided that it should be 8 per cent. rather than 5 per cent. We could have kept it at 5 per cent., but in order to maintain the ratio as between the class 1 contribution and the class 2 and class 4 contributions at somewhere between 60 per cent. and 65 per cent.—a ratio established by the Social Security Act 1973—we decided on this course.
What we could have done under the conventional formula of the Act was to put up the class 2 contribution from the current £2.41 to £2.70. As recently as August, the contribution had already risen from £1.99 to £2.41. The Government decided there should be no further increase from £2.41 to £2.70 for the self-employed for whom no Conservative Member has spoken today.
The reason was that between one-third and perhaps up to as many as a half of the people who are self-employed and who would have been due to pay increased contributions had, under Schedule D, on the latest available information, profits or gains under the £1,600 figure. We did not want to load on to the lowest-paid self-employed any further increase.
The loss of income and the change in formula by maintaining the figure at £2.41 instead of £2.70 meant a loss to the National Insurance Fund of £21 million, and a loss of balance to that extent. Therefore, in moving the figure from 5 per cent. to 8 per cent., there will be returned £21 million which will come from those of the self-employed who have incomes above £1,600 a year. It will only be those at the top who will have to pay the £160 a year mentioned by the Opposition.
On that basis, I believe that there is an overwhelming case which answers all the charges of inequity which the Opposition have made. But there is one last point with which I want to deal. It was raised in some technical detail in Committee and has been raised in rather less technical detail today. This refers to the question of tax relief on stocks, announced by my right hon. Friend the Chancellor of the Exchequer in his Budget Statement.
There was some concern in Committee that, since the Inland Revenue physically 366 could not cope with the totality of companies and individual businesses, and was therefore dealing only with stocks above £25,000, there would be a period during which self-employed persons with such stocks would be seriously inconvenienced because of the inability of the Inland Revenue to deal with their problems immediately.
I assure the House that it was only because of the practical difficulties in the Inland Revenue of operating the scheme for stock relief at such short notice, that my right hon. Friend had regretfully to exclude from the relief both small companies and unincorporated businesses. The choice, effectively, was between that sort of limited scheme and no scheme at all. He made it clear, however, that there will be continuing relief next year, and that those, such as the self-employed, who have not benefited this year, will next year get relief covering two years, the relief taking account of the fact that they have had to wait a year for it.
My right hon. Friend also said that he will do everything in his power to ensure that this promise of relief will be taken into account by all concerned, including the bankers of these businesses. The Government are determined to do all they can to help small businesses as well as large companies which have liquidity difficulties arising from the increased cost of replacing stocks.
I should also say something about the timing of the payment of the class 4 contributions because there may be some misunderstanding about these. Liability to class 4 contributions will begin with tax assessments for the tax year 1975–76, that is the 12 months from 6th April 1975 to 31st March 1976. The contributions will be payable with the tax for the year which is normally payable in two instalments, on 1st January 1976 and 1st July 1976. By that time the self-employed will be getting the benefit of whatever relief the Chancellor should decide on next year for stock, since that relief will affect exactly the same tax bills. There is no question of class 4 contributions becoming payable before the stock relief is available. I hope that that will be of some assurance to those hon. Members who have raised this point and also to individual self-employed people outside the House.
367 I have demonstrated that the ratio and structure contained in this Bill is precisely the ratio and structure put into legislative form by the Opposition. It is interesting to see that the right hon. and learned Member for Surrey, East is once again putting his knife into his right hon. Friend the Member for Leeds, North-East whom he refused to defend in the House two Fridays ago. He is now saying that perhaps they went too fast. He is not even prepared to defend in detail the legislation of the previous Government, namely the Social Security Act 1973.
Many hon. Members have spoken of the fact that there are some benefits which are paid and payable to class 1 contributors which are not paid or payable to the self-employed. That is the case but the self-employed do not contribute towards such benefits. Even after this Bill becomes law, if it is approved, the situation will be that for the same benefits for which contributions totalling 12.4 per cent. are paid and payable in respect of employed people—class 1 contributors— the self-employed at the ceiling will be paying only 8 per cent.
Therefore I completely reject the propositions which have been put forward by the Opposition. It is a pitiful sight to see a party in opposition so unsure of itself that it is willing to do anything for political popularity—to attack not only the Government of the day but even the idea of legislative proposals which it proposed when in Government. This is not an amendment to be taken seriously and it should be rejected.
§ Sir G. Howe
It is a tragic thing that in closing this important debate the Minister of State should have been driven into such blank and bland denunciations of such total irrelevance to the subject. It is a measure of the insensitivity of the Government, of their failure to measure up to the strength of the case made against them. My hon. Friend the Member for Harrow, West (Mr. Page) excelled himself in describing his own speech as one of ineluctable eloquence. The House have been treated to a great deal of ineluctable eloquence from the Conservative benches and from the hon. Member for Watford (Mr. Tuck), criticising what the Government are doing.
The Minister sought to say that this passion which fired some of my hon. 368 Friend's speeches rendered them less meaningful and sought to pour scorn on them for that reason. That is a measure of the extent to which the Government have failed to appreciate the strength of feeling about this, of the extent to which they have shown basically faulty political judgment in calculating their reaction to the proposal. Deep feelings are engendered outside the House on this subject and they are entitled to be reflected, as they have been in the debate. The Government have failed to respond to them. Neither on the ground of justice nor necessity has the Minister put forward a convincing case.
The Minister has not demonstrated a capacity to produce good government. One of the functions of good government is to respond to feelings outside the House, strongly expressed as they have been expressed today, asking the Government to find a more equitable way of doing what they want to do. The Government have been conspicuous for the total insensitivity of their response to those pressures during the last four or five months.
I ask the House to consider whether any other group of people organised as trade unions and as employees could be expected to face the Government's intransigence with such tranquillity and so little passion as has been shown by the self-employed. No other group could have been dealt with by the Government in that way and shown so little fury.
For that reason we think that the Government, consciously or not, are demonstrating their insensitivity to and prejudice against the group of people who work on their own account, run their own enterprises and secure their rewards by their own hard work and initiative—the self-employed people. The first charge against the Government is that they do not respond to the plea from that quarter.
Let me examine the facts as the Minister stated them. There is—I have never attempted to challenge it—some force in the argument that a movement in the band of earnings is necessary to take account of price movements and inflation. But it is not sufficient for the Minister to compare the percentage of the self-employed person's contribution with the total of the employer's and employee's contribution and to reiterate, as if it were 369 the only answer, that the proportion has been kept about the same. Circumstances have changed.
When we introduced our proposals in 1973 income tax was at the standard rate of 30p in the pound. Since then it has gone up by 10 per cent. That is a substantial shift in the burden imposed on the self-employed. Rates have been rising hugely, and inflation has gone ahead hugely. Many other Government policies have been changed to the disadvantage of the self-employed. That is why the Government should have been careful not to make further changes to their disadvantage.
For the self-employed the contribution is not tax deductible. For the employer it is tax deductible. That position has been working more and more to the advantage of the employer as the years have gone by. It is true that in 1946 the percentage of the self-employed contribution to the combined employer-employee contribution was about 70 per cent. and that it has fallen in recent years to a much lower figure. But that is not the relevant comparison to make. The fair comparison to make in terms of its impact on the person paying the percentage is the comparison between the amount that comes out of the pay packet at various times. Under these proposals the self-employed person's share is 95 per cent. of the employee's share, against 125 per cent in 1946. Even before these changes are made the self-employed person is paying almost as much as the employed person and there can be no possible case for shifting the burden harshly against him.
The Minister dealt inadequately with the argument of the hon. Member for Truro (Mr. Penhaligon) about the added burden on the self-employed of the nonavailability of the stock profit provisions announced by the Chancellor of the Exchequer in his Budget. It is not sufficient to say that the administration cannot deal with that. I think the Minister referred to the inability of the Inland Revenue to deal with its problems. It is the inability of the Government to deal with the self-employed and the problems that they have created for them, and the Government's failure to respond, that make it more difficult for the self-employed. It will be of some help that payment will be deferred, but that is noth- 370 ing like sufficient to meet the overall problem.
§ 9.45 p.m.
§ It is no use for the Minister to say that he inherited this structure and to seek to load the responsibility on to the Conservative Government. The Minister and his colleagues have made significant changes. They have raised the percentage from 5 per cent. to 8 per cent. Even if the Minister is right to say that the band of earnings should be enlarged and raised to a higher level, the self-employed are being given a distinctly identifiable extra burden to bear. For that they are entitled to blame the Labour Government.
§ Mr. O'Malley
Does not the right hon. and learned Gentleman think that there is a more serious situation inherent in the inability to get rid of flat-rate class 2 contributions, and that many people on incomes below £1,600—up to one-half of the total number of self-employed—because of the existence of that flat rate could be paying contributions, in total, not of 8 per cent. but of 15 per cent. and even higher? Does he not think that their claims come first and that it was right not to put the £2.41 up to £2.70?
§ Sir G. Howe
The argument cannot be put in that way. In Committee we advanced a compromise solution. What happened in the April Budget had the effect of increasing the burden put by the Government on the self-employed. To raise the figure from 5 per cent. to 8 per cent. involves not merely raising the figure from £100 to £160 but taking account of the fact that it cannot be set against tax. Until 1965 the amount was able to be set against tax by a self-employed person, but a Labour Government took away that right. That was the first move, which was to the disadvantage of the self-employed. Therefore, it is idle to talk about figures from 1946 because those sums were tax deductible. The rise from £100 to £160 in terms of liability is payable out of taxed income. In the April Budget the Labour Government raised income tax from 30 per cent. to 33 per cent. Therefore, in three different ways the burden of the self-employed person is much larger under the Government's present proposals than anything put forward by my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph). There is no 371 escaping that conclusion. This is why the self-employed person feels so deeply about the present imposition.
My hon. Friend the Member for St. Ives (Mr. Nott) cited the extent to which employment in his constituency is largely dependent on the self-employed. There are many other examples one could quote. I have had a number of letters from hoteliers who are affected by the Bill's provisions. They are people who from next April will face a large increase in the sums they will have to find out of an income which has already declined in real value, and an income which is much more heavily taxed. It is no good the Minister seeking to brush aside these arguments. The burden on the self-employed will be greater because of Government action. For the Government deliberately to take the figure from 5 per cent. to 8 per cent., and to take such action in a single jump, will be a tremendous disadvantage to the self-employed. My right hon. Friend the Member for Bournemouth, West (Sir J. Eden) said that we cannot look at these matters in purely arithmetical, statistical or actuarial terms. We are dealing with human beings who from next April, because of the changed system, will have to find an additional sum. In the light of all these considerations we urge the Government to make some concessions to this group of people and to relax the burden.
I come back to the point at which I began. The Minister said that when the structure was first set up in 1946 the decision to put 70 per cent. of the burden on the self-employed was a matter of political judgment. There is no magical formula or mystery about this. It is beside the point to say that it is true that taxes may be going up and that the Treasury may have to do something next year to help the self-employed in the Finance Bill against the burden being put on them by this legislation this year. People outside do not see it that way. They see the burden as what it is—an additional tax. And, on this basis, the tax total will go up next April by about 20 per cent.
What other group could have been expected to face a 20 per cent. increase 372 in taxes of that kind and in this way? What other group would have put up with it? It is foolish to respond to that sense of grievance by an error of political judgment on the part of the Government. They have under-estimated the impact of it, and it is one which has caused immensely deep feelings outside this House.
We shall be dividing the House on this amendment, which we shall press with all our vigour. We shall continue to press the case from here on until the Bill reaches the statute book. To do otherwise would be to do less than our duty to a group which should be represented by hon. Members on both sides of the House, because their case is a human one.
The hon. Member for Watford (Mr. Tuck) had the courage to criticise the Government for what they are doing. I hope that the hon. Gentleman may yet take his vote where his voice has gone, because we need the support of people of his character and integrity on an issue like this on which this House of Commons is capable of representing the feelings of people outside.
It is a tragedy that, for example, the Minister responsible for the arts has failed to make any impact on the Minister of State in this matter. Has the hon. Gentleman had no consultations? Is there no concern among Government supporters, who seek so often to stand as champions for the arts, about the impact of this change on that group?
Where has the Secretary of State been throughout these proceedings? Not once in any debate on this legislation have we been privileged to hear her voice. Hers is the responsibility for the change. It is the responsibility of the Government and of the Secretary of State. They are proceeding with insensitivity with a measure which is deplorable because it is destructive and discriminatory against one class of the community.
I withdraw not one word of my charge against the Government in my opening remarks. This is more a matter of human feelings than one of simple figures, and the Government have failed to respond to the strength of that case. I call upon my right hon. and hon. Friends to carry that conviction into the Division Lobby.
§ Question put, That the Amendment be made:—374
§ The House divided: Ayes 264, Noes 284.377
|Division No. 16.]||AYES||[9.53 p.m.|
|Adley, Robert||Gardner, Edward (S Fylde)||Maudling, Rt Hon Reginald|
|Aitken, J. W. P.||Gilmour, Rt Hon Ian (Chesham)||Mawby, Ray|
|Alison, Michael||Gilmour, Sir John (East Fife)||Maxwell-Hyslop, Robin|
|Arnold, Tom||Giyn, Dr Alan||Mayhew, Patrick|
|Atkins, Rt Hn H. (Spelthorne)||Godber, Rt Hon Joseph||Meyer, Sir Anthony|
|Awdry, Daniel||Goodhart, Philip||Miller, Hal (Bromsgrove)|
|Bain, Mrs Margaret||Goodhew, Victor||Mills, Peter|
|Banks, Robert||Goodlad, A.||Miscampbell, Norman|
|Beith, A. J.||Gow, I. (Eastbourne)||Mitchell, David (Basingstoke)|
|Bell Ronald||Gower, Sir Raymond (Barry)||Moate, Roger|
|Bennett, Sir Frederic (Torbay)||Gray, Hamish||Monro, Hector|
|Bennett, Dr Reginald (Fareham)||Griffiths, Eldon||Montgomery, Fergus|
|Benyon, W. R.||Grist, Ian||Moore, John (Croydon C)|
|Berry, Hon Anthony||Hall, Sir John||More, Jasper (Ludlow)|
|Biffen, John||Hall-Davis, A. G. F.||Morgan, Geraint|
|Biggs-Davison, John||Hamilton, Michael (Salisbury)||Morgan-Giles, Rear-Admiral|
|Blaker, Peter||Hampson, Dr Keith||Morris, Michael (Northants)|
|Body, Richard||Hannam, John||Morrison, Charles (Devizes)|
|Boscawen, Hon Robert||Harrison, Sir Harwood (Eye)||Morrison, Peter (Chester)|
|Bowden, Andrew (Brighton)||Harvie Anderson, Rt Hn Miss||Mudd, David|
|Boyson, Dr Rhodes (Brent)||Hastings, Stephen||Neave, Airey|
|Bradford, Rev Robert||Havers, Sir Michael||Nelson, Anthony|
|Braine, Sir Bernard||Hawkins, Paul||Neubert, Michael|
|Brittan, Leon||Hayhoe, Barney||Newton, Tony|
|Brotherton, Michael||Heath, Rt Hon Edward||Normanton, Tom|
|Brown, Sir Edward (Bath)||Heseltine, Michael||Nott, John|
|Bryan, Sir Paul||Hicks, Robert||Onslow, Cranley|
|Buchanan-Smith, Alick||Higgins, Terence L.||Oppenheim, Mrs Sally|
|Buck, Antony||Holland, Philip||Page John (Harrow West)|
|Budgen, Nick||Hooson, Emlyn||Parkinson, Cecil|
|Bulmer, Esmond||Hordern, Peter||Pattie Geoffrey|
|Carlisle, Mark||Howe, Rt Hon Sir Geoffrey||Penhaligon David|
|Carr, Rt Hon Robert||Howell, David (Guildford)||Percival Ian|
|Chalker, Mrs Lynda||Howell, Ralph (North Norfolk)||Peyton Rt Hon John|
|Channon, Paul||Howells, Geraint (Cardigan)||Pink R. Bonner|
|Churchill, W. S.||Hunt, John||Powell, Rt Hon J. Enoch|
|Clark, Alan (Plymouth, S)||Hurd, Douglas||price David (Eastleigh)|
|Clark, William (Croydon S)||Hutchison, Michael Clark||Prior, Rt Hon James|
|Clarke, Kenneth (Rushcliffe)||Irvine, Bryant Godman (Rye)||Pym, Rt Hon Francis|
|Cockcroft, John||Irving, Charles (Cheltenham)||Raison Timothy|
|Cooke, Robert (Bristol W)||James, David||Rathbone Tim|
|Cope, John||Jenkin, Rt Hon Patrick (Redbr)||Rawlinson, Rt Hon Sir Peter|
|Cormack, Patrick||Jessel, Toby||Rees Peter (Dover & Deal)|
|Corrie, John||Johnson Smith, G. (E Grinstead)||Rees-Davies W. R.|
|Costain, A. P.||Jones, Arthur (Daventry)||Reid, George|
|Craig, Rt Hon W. (Belfast)||Joseph, Rt Hon Sir Keith||Renton, Rt Hn Sir D. (Hunts)|
|Crawford, Douglas||Kaberry, Sir Donald||Renton, Tim (Mid-Sussex)|
|Critchley, Julian||Kellett-Bowman, Mrs Elaine||Ridley, Hon Nicholas|
|Crouch, David||Kilfedder, James||Ridsdale Julian|
|Crowder, F. P.||Kimball, Marcus||Rifkind, Malcolm|
|Davies, Rt Hon J. (Knutsford)||King, Evelyn (South Dorset)||Roberts, Michael (Cardiff NW)|
|Dodsworth, Geoffrey||King, Tom (Bridgwater)||Roberts, Wyn (Conway)|
|Douglas-Hamilton, Lord James||Kirk, Peter||Ross, Stephen (Isle of Wight)|
|du Cann, Rt Hon Edward||Kitson, Sir Timothy||Ross, William (Londonderry)|
|Dunlop, J.||Knight, Mrs Jill||Rossi Hugh (Hornsey)|
|Durant, Tony||Knox, David||Rost, peter (SE Derbyshire)|
|Eden, Rt Hon Sir John||Lamont, Norman||Sainsbury, Tim|
|Edwards, Nicholas (Pembroke)||Lane, David||Scott-Hopkins, James|
|Elliott, Sir William||Langford-Holt, Sir John||Shaw, Giles (Pudsey)|
|Emery, Peter||Latham, Michael (Melton)||Shelton, William (Lambeth, St)|
|Ewing, Mrs Winifred (Mora[...])||Lawson, Nigel||Shepherd, Colin|
|Eyre, Reginald||Le Marchant, Spencer||Silvester, Fred|
|Fairbairn, Nicholas||Lester, Jim (Beeston)||Sims, Roger|
|Fairgrieve, Russell||Lloyd, Ian (Havant)||Sinclair, Sir George|
|Farr, John||Loveridge, John||Skeet, T. H. H.|
|Fell, Anthony||Luce, Richard||Smith, Cyril (Rochdale)|
|Finsberg, Geoffrey||McAdden, Sir Stephen||Smith, Dudley (Warwick)|
|Fisher, Sir Nigel||MacCormick, lain||Spence, John|
|Fletcher, Alex (Edinburgh N)||McCrindle, Robert||Spicer, James (W Dorset)|
|Fletcher-Cooke, Charles||McCusker, Harold||Spicer, Michael (S Worcester)|
|Fookes, Miss Janet||Macfarlane, Nell||Sproat, lain|
|Fowler, Norman (Sutton C)||MacGregor, John||Stainton Keith|
|Fox, Marcus||Macmillan, Rt Hn M. (Farnham)||Stanbrook, Ivor|
|Fraser, Rt Hon H. (Stafford & St)||McNair-Wilson, P. (New Forest)||Stanley, John|
|Freud, Clement||Madel, David||Steel, David (Roxburgh)|
|Fry, Peter||Marshall, Michael (Arundel)||Steen, Anthony (Liverpool)|
|Galbraith, Hon T. G. D.||Mates, Michael||Stewart, Donald (Western Isles)|
|Gardiner, George (Reigate)||Maude, Angus||Stewart, Ian (Hitchin)|
|Stokes, John||Vaughan, Dr Gerard||Whitelaw, Rt Hon William|
|Tapsell, Peter||Viggers, P. J.||Wiggin, Jerry (Weston-s-Mare)|
|Taylor, R. (Croydon NW)||Wainwright, Richard (Colne V)||Wilson, Gordon (Dundee E)|
|Taylor, Teddy (Glasgow, C)||Wakeham, John||Winterton, Nicholas|
|Temple-Morris, P.||Walker Rt Hon P. (Worcester)||Wood, Rt Hon Richard|
|Thatcher, Rt Hon M.||Walker-Smith, Rt Hon Sir Derek||Young, Sir George (Ealing)|
|Thompson, George||Walters, Dennis||Younger, Hon George|
|Townsend, Cyril D.||Warren, Kenneth|
|Trotter, Neville||Weatherill, Bernard||TELLERS FOR THE AYES:|
|Tugendhat, Christopher||Wells, John||Mr. Adam Butler and|
|van Straubenzee, W. R.||Welsh, Andrew||Mr. John Stradling Thomas,|
|Abse, Leo||Dormand, Jack||Judd, Frank|
|Allaun, Frank||Douglas-Mann, Bruce||Kaufman, Gerald|
|Anderson, Donald||Duffy, A. E. P.||Kelley, Richard|
|Archer, Peter||Dunn, James A.||Kerr, Russell|
|Armstrong, Ernest||Dunnett, Jack||Kilroy-Silk, Robert|
|Ashley, Jack||Dunwoody, Mrs. Gwyneth||Kinnock, Neil|
|Ashton, Joe||Eadie, Alex||Lambie, David|
|Atkins, Ronald (Preston N)||Edelman, Maurice||Lamborn, Harry|
|Atkinson, Norman||Edge, Geoffrey||Lamond, James|
|Bagier, Gordon A. T.||Edwards, Robert (Wolv SE)||Latham, Arthur (Paddington)|
|Barnett, Guy (Greenwich)||Ellis, John (Brigg & Scun)||Leadbitter, Ted|
|Barnett, Joel (Heywood)||Ellis, Tom (Wrexham)||Lee, John|
|Bates, Alt||English, Michael||Lestor, Miss Joan (Eton & Slough)|
|Bean, Robert E.||Evans, Fred (Caerphilly)||Lever, Rt Hn Harold|
|Benn, Rt Hn Anthony Wedgwood||Evans, loan L. (Aberdare)||Lewis, Ron (Carlisle)|
|Bennett, Andrew (Stockport N)||Evans, John (Newton)||Lipton, Marcus|
|Bidwell, Sydney||Ewing, Harry (Stirling)||Litterick, Tom|
|Bishop, Edward||Faulds, Andrew||Lomas, Kenneth|
|Blenkinsop, Arthur||Fernyhough, Rt Hon E.||Loyden, Eddie|
|Boardman, H.||Fitch, Alan (Wigan)||Luard, Evan|
|Booth, Albert||Fitt, Gerard (Belfast)||Lyon, Alexander (York)|
|Boothroyd, Miss Betty||Flannery, Martin||Lyons, Edward (Bradford W)|
|Bottomley, Rt Hon Arthur||Fletcher, Ted (Darlington)||McCartney, Hugh|
|Boyden, James (Bish Auck)||Foot, Rt Hon Michael||McElhone, Frank|
|Bradley, Tom||Ford, Ben T.||MacFarquhar, R.|
|Bray, Dr Jeremy||Forrester, John||Mackenzie, Gregor|
|Broughton, Sir Alfred||Fowler, Gerald (The Wrekin)||Mackintosh, John P.|
|Brown, Hugh D. (Glasgow, Pr)||Fraser, John (Lambeth, N)||Maclennan, Robert|
|Brown, Robert C. (Newcastle)||Freeson, Reginald||McMillan, Tom (Glasgow C.)|
|Brown, Ronald (Hackney S)||Garrett, John (Norwich S)||McNamara, Kevin|
|Buchan, Norman||Garrett, W. E. (Wallsend)||Madden, Max|
|Buchanan, Richard||George, Bruce||Magee, Bryan|
|Butler, Mrs Joyce (Haringey)||Gilbert, Dr John||Mahon, Simon|
|Callaghan, Jim (Middleton & P)||Ginsburg, David||Mallalieu, J. P. W.|
|Campbell, Ian||Golding, John||Marks, Ken|
|Canavan, Dennis||Gould, Bryan||Marquand, David|
|Cant, R. B.||Gourlay, Harry||Marshall, Dr Edmund (Goole)|
|Carmichael, Nell||Graham, Ted||Marshall, Jim (Leicester)|
|Carter, Ray||Grant, George (Morpeth)||Mason, Rt Hon Roy|
|Carter-Jones, Lewis||Grocott, Bruce||Maynard, Miss Joan|
|Cartwright, John||Hamilton, James (Bothwell)||Meacher, Michael|
|Castle, Rt Hon Barbara||Hamilton, W. W. (Central Fife)||Mellish, Rt Hon Robert|
|Clemitson, I. M.||Hamling, William||Mendelson, John|
|Cocks, Michael (Bristol S)||Hardy, Peter||Mikardo, Ian|
|Cohen, Stanley||Harper, Joseph||Millan, Bruce|
|Coleman, Donald||Harrison, Walter (Wakefleld)||Miller, Mrs Millie (Redbridge)|
|Colquhoun, Mrs Maureen||Hart, Rt Hon Judith||Molloy, William|
|Conlan, Bernard||Hatton, Frank||Moonman, Eric|
|Cook, Robin F. (Edln C)||Hayman, Mrs H.||Morris, Alfred (Wythenshawe)|
|Corbett, Robin||Healey, Rt Hon Denis||Morris, Charles R. (Openshaw)|
|Cox, Thomas (Wands, Toot)||Heffer, Eric S.||Morris, Rt Hon John (Aberavon)|
|Craigen, J. M. (Glasgow, M)||Hooley, Frank||Mulley, Rt Hon Frederick|
|Crawshaw, Richard||Horam, John||Newens, Stanley|
|Crosland, Rt Hon Anthony||Huckfield, Leslie||Noble, Mike|
|Cryer, Bob||Hughes, Rt Hon C. (Anglesey)||Ogden, Eric|
|Cunningham, G. (Islington S)||Hughes, Robert (Aberdeen N)||O'Halloran, Michael|
|Cunningham, Dr J. (Whiteh)||Hunter, Adam||O'Malley, Brian|
|Dalyell, Tarn||Irvine, Rt Hon Sir A. (L'pool)||Orbach, Maurice|
|Davidson, Arthur||Irving, Rt Hon S. (Dartford)||Orme, Rt Hn Stanley|
|Davies, Bryan (Enfield N)||Jackson, Colin (Brighouse)||Ovenden, John|
|Davies, Denzil (Llanelli)||Jackson, Miss Margaret (Lincoln)||Owen, Dr David|
|Davies, Ifor (Gower)||Janner, Greville||Palmer, Arthur|
|Davis, S. Clinton (Hackney C)||Jay, Rt Hon Douglas||Park, George|
|Deakins, Eric||Jeger, Mrs Lena||Parry, Robert|
|Dean, Joseph (Leeds West)||Jenkins, Hugh (Wandsworth)||Peart, Rt Hon Fred|
|de Freitas, Rt Hon Sir Geoffrey||John, Brynmor||Pendry, Tom|
|Delargy, Hugh||Johnson, James (Kingston W)||Perry, Ernest|
|Dell, Rt Hon Edmund||Jones, Barry (East Flint)||Phipps, Dr Colin|
|Dempsey, James||Jones, Dan (Burnley)||Prentice, Rt Hon Reg|
|Doig, Peter||Jones, Alec (Rhondda)||Prescott, John|
|Price, William (Rugby)||Snape, Peter||Watkins, David|
|Radice, Giles||Spearing, Nigel||Watkinson, John|
|Richardson, Miss Jo||Spriggs, Leslie||Weetch, Ken|
|Roberts, Albert (Normanton)||Stewart, Rt Hn Michael (H'smith, F)||Weitzman, David|
|Roberts, Gwilym (Cannock)||Stoddart, David||Wellbeloved, James|
|Roderick, Caerwyn||Stott, Roger||White, Frank R. (Bury)|
|Rodgers, George (Chorley)||Strang, Gavin||White, James (Glasgow, P)|
|Rooker, J. W.||Strauss, Rt Hon G. R.||Whitehead, Phillip|
|Roper, John||Summerskill, Hon Dr Shirley.||Whitlock, William|
|Ross, Rt Hon W. (Kilm'nock)||Swain, Thomas||Willey, Rt Hon Frederick|
|Rowlands, Ted||Thomas, Dafydd (Merioneth)||Williams, Alan (Swansea)|
|Ryman, John||Thomas, Jeffrey (Abertillery)||Williams, Alan, Lee (Haver'g)|
|Sandelson, Neville||Thomas, Mike (Newcastle)||Williams, Rt Hn Shirley (Hertford)|
|Sedgemore, B.||Thomas, Ron (Bristol NW)||Williams, W. T. (Warrington)|
|Shaw, Arnold (Redbridge, llf)||Thorne, Stan (Preston)||Wilson, Alexander (Hamilton)|
|Sheldon, Robert (Ashton-u-Lyne)||Tierney, Sydney||Wilson, Rt Hon H. (Huyton)|
|Shore, Rt Hon Peter||Tinn, James||Wilson, William (Coventry SE)|
|Short, Rt Hon Edward (Newcastle C)||Tomlinson, John||Wise, Mrs Audrey|
|Short, Mrs Renee (Wolv NE)||Tuck, Raphael||Woodall, Alec|
|Silkin, Rt Hn John (Lewish)||Urwln, T. W.||Woof, Robert|
|Silkin, Rt Hn S. C. (Southwk)||Varley, Rt Hon Eric G.||Wrigglesworth, Ian|
|Sillars, James||Wainwright, Edwin (Dearne V)||Young, David (Bolton E)|
|Silverman, Julius||Walden, Brian (B'ham, L'dyw'd)|
|Skinner, Dennis||Walker, Harold (Doncaster)||TELLERS FOR THE NOES|
|Small, William||Walker, Terry (Kingswood)||Mr. Walter Johnson and|
|Smith, John (N Lanarkshire)||Ward, Michael||Mr. Laurie Pavitt.|
§ Question accordingly negatived.