§ Order of the Day for the Second Reading read.
§ THE LORD PRIVY SEAL (THE MARQUESS OF SALISBURY)
My Lords, I regret that it is my duty to bring this very important Bill, the most important of the Session, before your Lordships at this late period of the Session. But any noble Lord who his been a member of the House of Commons will be aware of the reasons why so important a measure has taken a long time to pass through that House and why therefore its appearance is so belated here. But we have still time to discuss it, I think, as thoroughly as is requisite. Your Lordships are, of course, 463 very familiar with the Bill. It has been debated not only in another place, but in the public Press at great length, but I think you will expect me to give some reasons for it and at any rate an outline of its provisions.
The first reason which stands upon the face of matters for the introduction of the Bill is that we held out anticipations and pledges to that effect. The present Prime Minister, speaking in October of last year, said:—A scheme of widows' pensions we shall lave and if it be an acceptable one we shall do our best to carry it out.It is, in fact, an example of what I may call active Conservatism. When Mr. Bonar Law was Prime Minister there was a word which was very familiar in men's mouths. It was said that a Government's primary duty was to restore tranquillity. That is a very important function of the Conservative Party, but it is not its only function. We have active duties to perform and not merely to restore tranquillity. This Bill is the first fruits of our efforts. It is undoubtedly an example of State intervention. It is not State intervention of the kind which I apprehend is advocated by noble Lords who sit, I will not say upon the Back Benches opposite but upon the Front Benches opposite; still, it is an example of State intervention. Laissez faire has never been part of the doctrines of the Conservative Party.
§ THE MARQUESS OF SALISBURY
I am always glad when I command the support of the noble and learned Viscount. No! We believe in State intervention, subject to certain conditions. In the first place, the object of that intervention must be carefully chosen. In the second place, we must take care that the intervention does not do inure harm than good. I think that in this ease the objects of the intervention are certainly such as we may approve from the strictest Conservative point of view. In this Bill we are setting out to help those who are handicapped in life through no fault of their own—widows and orphans and veterans of industry who, having reached the confines of old age, are no longer able to maintain themselves with the vigour of their prime. 464 Those are the objects of this intervention. But there has been no forgetfulness of the other limit—that we should not do more harm than good. On the contrary, our object is not to undermine the self-respect and self-reliance of the people.
It is of the very essence of the scheme which we place before your Lordships and the country that it should be a contributory scheme. Unless it be a contributory scheme I am certain the Conservative Party would have nothing whatever to do with it. That is absolutely essential; and not only is it a contributory scheme but, as a matter of fact, it is not a complete scheme; that is to say, the State intervention will not relieve even these recipients of the necessity of making all other provision or effort. It will only go part of the way towards it. Therefore, both by their contributions in the past or the contributions of those who are responsible for them and by the fact that the benefit conferred upon them is not sufficient by itself to support them, we still leave the necessary motive of self-help and therefore of self-respect, which, as I have said, is in our view essential as a condition of State intervention. There is, of course, an additional reason why we are advocates of this plan. Not only does it help those who are old, not only does it help the widows, but it helps the children, the rising generation, those who have the care of the future of our country, who are necessarily and obviously helpless and for whom provision is made when their father, the bread-winner, is unfortunately taken from them.
With your Lordships' leave I will now describe some of the main features of the Bill. In the first place, it provides insurance for widows of insured men who die after the appointed day; that is, after January 4, 1926. It provides 10s. a week for those widows until they are seventy, when the other procedure takes it over, or until re-marriage. I need not dwell upon the obvious justification for those limitations. There is also a transitory provision dealing with widows of insured men who have children, where the husband has died before the appointed day. In that case there is a pension of 10s. for the widow until six months after the youngest child has reached the age of fourteen, when the 465 widow's pension comes to an end. In both cases, in what I may call the transitory cases and the permanent cases, the children are treated alike. An allowance for them is paid of 5s. for the eldest child and 3s. for each of the others. Where there is neither a mother nor a father then, in the case of the father having been an insured man, there will be a pension of 7s. 6d. till the child reaches the age of 14. There is a further provision both with regard to the children whose mother is alive and to the orphan namely, that if the child is still spending full time at school after the age of 14 and until the age of 16, then the pension continues to be paid, 5s. or 3s. in the case of the child of the widow and 7s. 6d. in the case of the orphan.
The conditions which make a man an insured person are the following. He must, in the first place, have had insurable status—that is to say, he must be insured tinder the Health Insurance Act. In the second place, he must have been whilst insured in insurable employment for 104 weeks, not necessarily continuously but 104 weeks altogether. In the third place, he must have paid 104 contributions; and in the fourth place he must have paid an average of 26 contributions during each of the last three years before his death. Those are rather technical conditions and I shall not delay your Lordships by describing the defence of them. Any limits such as those I have mentioned are in their nature arbitrary, but you must draw the line somewhere. What is necessary is to have some limit which shall make it certain that the man is properly and duly insured and that he has been insured for a sufficient period to make the thing a reality. The difficulty arises of how to deal with cases of sickness and of unemployment. A man may be anxious to fulfil all these conditions, but he may be struck clown by sickness and the opportunity may be denied him. In the same way, through no fault of his own, he may be thrown out of employment and in the same way the opportunity of making the average of twenty-six contributions may be beyond his power, and so we make a very important concession. Weeks of sickness or weeks of genuine unemployment—that is to say, unemployment which is not due to his own 466 fault—are counted as contributions within the meaning of the Bill, so that arty possible hardship under that head is removed. I need not say that if your Lordships desire to have the clauses under which these provisions are made I can give them, but I shall not interrupt my narrative for that purpose unless I am asked. I will do my best to answer any further questions which noble Lords may raise in debate respecting the intricate conditions of this part of the Bill.
I pass to describe the case of the extended contributory old age pension. To any insured person, man or woman, who reaches the age of 65 before January 2, 1928, there will be given a pension of 10s. a week for the remainder or his or her life. Your Lordships will observe that it is a different appointed day. The appointed day for the widows' pensions is January 4, 1926, while the appointed day for the extended old age pension is January 2, 1928. Not only will insured persons obtain this extended old age pension, but the wife of an insured man, where the man has reached the age of 65 and the woman herself also has reached the age of 65, will have a pension of 10s. for life as well as her husband. That is to say, when this old couple both reach the mute of 65—not so very old, my Lords, when I reflect on my own age, still for the purpose of this class it is old—they will have between them £1 a week for life. I think your Lordships will admit that that is a very substantial benefit. I ought to describe what are the conditions of insurance in this case. The insured person must have been continuously insured for five years up to the age of 65—that is, a continuous five years up to the date. He or she must have paid 104 contributions, and must have a certain number of minimum contributions. I do not pause to describe those, because they vary a little, and I apprehend your Lordships would not wish me to go at this moment into such particulars. That is the ordinary extended old age pension.
Then there is a benefit to insured persons of 70. Insured persons who become 70 on July 2, 1926, and who become 70 between that date and January 2, 1928, the appointed day, that is to say, all persons of 70 reaching that age under the conditions I have described, now or hereafter will have this great benefit which corrects what I must describe as a 467 failing in the Old Age Pension Act—namely, there will be no inquiry as to their means. The 10s. will be free. There will be none of that very awkward, very inconvenient and, I think, very unwelcome inquiry into the means of the recipient. I suspect many of your Lordships have come across it when giving, as you often do give, pensions to old servants on your estates. You have been checked by the thought that if you gave the money it would pro tanto diminish the old age pension. All that is cut away. The 10s. now will be given without reference to the means of the recipient. That is another tremendous boon. Lastly, there is a small but valuable provision that all insured persons of 65 will have free medical benefit for life. Here again weeks of sickness and genuine unemployment will be counted as contributions. I am sure the House will agree that these provisions will be a very great boon to the working class. I ought to mention a provision—I will not go into details—for cases where men and women who have been in insurance and have dropped out of employment want to retain their insurance status. They may become what are called voluntary contributors, that is to say, persons having been for two years at any time in insurable employment may become voluntary contributors and may pay their contributions, in this case, of course, both of the employed and the employer, and may enter into or retain the benefits of the Bill.
There are 10s. a week for life for these widows, 5s. and 3s. for the children, 7s. 6d. to the orphans, 10s. to the old men and women of 65 years of age, 10s. to the wives of men of 65 who are in insurance. These are great benefits. There is no inquiry into means and there is free medical benefit. Your Lordships may ask how many people will have advantage of the provisions. Let me take the case of widows first. I am not going to trouble your Lordships with a great number of figures. I can assure you that I recognise the tedious nature of such a process. Let me take the first complete year, 1926–7. There will be 245,000 widows benefited. These, of course, are actuarial estimates. Take the year 1965–6, which is the limit of the tables supplied to me, there will be as many as 1.305,000 widows benefited. Similarly there will be in 1965–6 406,000 children benefited. Turn- 468 ing to old age there will be in that year just over half a million, 529,000 of these old men who will be benefited and 297,000 old women, and the total of beneficiaries in that year will be just over 2,500,000. But that, of course, is not the full way of looking at it. You have to think of all the people who are potential beneficiaries, all the people for whom provision is made under this Bill. That number is 30,000,000 or 70 per cent. of the population, who will receive these very large benefits.
The contribution of the men will be 4d. and of their employers 4d., that of the women 2d., and of their employers 2d. I ask this question: What would be the contributions which on a true actuarial basis would correspond to the benefits I have described? That is the important way of looking at it. There is not so much difference in the case of a man or woman who enters insurance at the earliest age; that is, at sixteen years of age. In order to earn them a woman would have to pay 5d. and a man 10d. But your Lordships will remember that we are going to provide not merely for men and women who enter at the earliest age, but for men and women who are entering now at any age, and up to 60 and 65. I take the age of 60, and I find that in order to earn the benefits we provide a woman would have to contribute 8s. 4d. a week. She is only going to contribute 2d. A man would have to contribute 16s. 8d. at the age of 60. He is only going to contribute 4d. Your Lordships will see that in respect of all the ages, except the earlier ones, the benefit conferred by this Bill is on a most generous scale.
I must deal with one other set of figures, but I will be very brief—the cost of this boon to the country. Although your Lordships do not deal in detail with this part of legislation, yet I know it is of interest to you. In 1925–6 it would have cost £2,700,000 if it had been allowed to go on without the further provisions which I am about to describe. In 1965–6 it would have cost £60,800,000. But there must be taken off that a certain relief on account of health insurance and unemployment insurance, which will be diminished by the provisions of this Bill. In addition to that it is designed in the Bill at the end of ten years to increase the amount of contributions paid by beneficiaries by 2d. in the case of men 469 and 1d. in the case of women and that will reduce the expenditure in 1935–6, which is the end of the decennial period, to £15,300,000; and if the same process is repeated again in 1965–6—it is not provided in the Bill—in 1965–6 it would reduce it to £23,000,000. I say it is not provided in the Bill, but it is contemplated by the Government that there should be successive increments in the contributions. The only increments which are distinctly provided are at the end of each of the first three decennial periods. That would be the cost as I have described it. But by a provision in Clause 11 the cost for the first ten years is to be spread, so that the cost will be £4,000,000 each year. I hope that I have made the financial provisions clear, and I think that your Lordships will agree that these are very great benefits, conferred upon a very large number of people.
Undoubtedly the figure provided by the country is very large, but I think it is justifiable. Let me say one word as to the costs of the work. The 4d. and the 2d. to which I have referred, undoubtedly constitute a burden thrown upon the workers. We should be very loth to throw any extra burden upon the worker, but it must be admitted that this is not excessive. Let me put it to your Lordships in this way. How much work does 4d. really represent? Taking wages at something between £2 and £3 a week, then 4d. corresponds to 20 minutes' or perhaps a quarter of an hour's work each week. That is its equivalent, and that is all that is thrown upon the worker.
I turn to the employers. A great deal has been said as to the extra burden that we throw upon industry, and undoubtedly there is an additional burden. The Government have been most anxious to mitigate that burden so far as they possibly could. I am glad to say that, by means of the Unemployment Insurance Bill, which will come before your Lordships shortly, it will be seen that in one important particular we have been able to mitigate the burden that falls upon employers. A sum of 2d. in respect of the man and of 1d. in respect of the woman is going to be saved by that Bill, so as to reduce still further the burden upon the employer and upon industry. That is not all. The effect of this insurance will be an immense saving to the rates, which are paid by the employing classes. A sum of £3,000,000, rising to £7,000,000, will be saved off the rates. Lastly, there will be 470 a great diminution in the number of the ranks of the unemployed, with a proportionate relief to the taxpayers of the country—that is, again, to the employing classes. Consequently, although undoubtedly these very large benefits conferred upon the persons whom I have described do involve very considerable figures indeed, yet we have been able in the way that I have detailed to your Lordships to mitigate in a great degree the burden which is thrown upon the industries of the country.
I have said as much as I propose to say at this stage about the actual provisions of the Bill. In spite of the large figures, I recommend this Bill to the favourable consideration of the House. I have already mentioned the pledges of the Government, but it is our hope that this Bill will vet not only as a great boon to the people of this country but as an incentive to thrift. If it were a complete support to the beneficiaries it might not have that effect, but the very fact that it falls short of a complete support, while it yet gives them this boon, ought to act as an incentive to the mea and women themselves, by their own savings or their other resources, to supplement the provision made by the Bill, and so it may act as an incentive to thrift. Above all, we hope that by this Bill we shall earn for the Government of this country, apart from Party considerations, the confidence of the people. That is what seems to us to be of such vital importance. We desire that they should be convinced that we have their welfare at heart. That ought to reflect itself in the political complexion of the time.
I have already said to your Lordships, but I may be allowed to repeat it, that it seems to us most important in the interest of industry that there should be a reduction of direct taxation. That has been provided, as the House is aware, in the Budget. I am satisfied that it would have been impossible unless it had been accompanied by a measure such as that which I have described to your Lordships in moving the Second Reading of this Bill, which is for the direct benefit of the wage-earning classes. If we are able to earn their confidence with this Bill, we believe that they will realise that, in lowering direct taxation, we were seeking not merely to benefit the employing classes but to relieve industry as a whole.
471 Finally, we hope that by this act of confidence we may do something to mitigate the industrial unrest which, alas, is so prominent at this moment. In some ways I speak at an unlucky moment when I say this, but you cannot expect that remedies of the kind which I now recommend to the House will have effect immediately. It is, of course, a process of time. We do hope—nay, we confidently anticipate—that when legislation of this kind becomes law, becomes appreciated by the people, and enters into their daily life, it will act in the way I have described, and mitigate the feeling of unrest that prevails. If that be so, this legislation will have earned that which I believe it deserves—the gratitude of the country and the favour of Parliament. I beg to move that the Bill be read a second time.
§ Moved, That the Bill be now read 2a. —(The Marquess of Salisbury.)
§ LORD ARNOLD
My Lords, the noble Marquess in his opening remarks said that this was an important Bill. It is an important Bill. It is a Bill which has naturally excited deep interest in the country and has been subjected to much criticism in another place. I propose briefly—I am not going to make a long speech—to put before your Lordships sonic of the main objections of the Labour Party to this measure. In the first place we are opposed to the contributory basis of the Bill. We contend that this scheme should be non-contributory. Strictly speaking this is not a pensions Bill at all, These pensions will, for the most part, be paid for by insurance contributions. A pensions Bill is a Bill which gives pensions and an insurance Bill is a Bill which gives insurance benefits. This is really an insurance Bill.
The noble Marquess, in the concluding part of his speech, referred to the effect which these contributions would have or which he hoped they would have, in regard to thrift. I will not pursue that point beyond saying this, that at any rate these contributions are not themselves thrift, because thrift is voluntary and these contributions are compulsory. They really are a form of taxation. Now, quite apart from the burden which they place upon the workers—and the workers are already heavily burdened with existing insurance contributions, high taxation and the high 472 cost of living—these contributions impose a heavy new charge upon the industry of the country, about which I notice that the noble Marquess, so far as industry is concerned, with admirable discretion, said very little. As a matter of fact, under the régime of the present Government the trade and industry of the country have become as bad as, and probably worse than, they have ever been since there was any trade and industry. But this Government has a genius for doing the wrong thing in regard to industrial and financial problems, possibly because it scarcely contains a single member with any real business experience, and the Government chooses this moment of all moments to place a heavy new charge upon industrial concerns, many of which are finding it extremely difficult to carry on at all.
I can only conceive of one circumstance which would justify that, and that circumstance is that from the Budget point of view it would be an impossibility to make this scheme non-contributory. But in the current year, with the recollections of the Budget fresh in our minds, any such argument as that is not merely untenable, but ridiculous. It was absurd for the Minister of Health to argue in another place that this Bill could not be made non-contributory when in the Budget which the Government introduced and passed only a few weeks ago there was given away to the Income Tax and Super-Tax payers £42,000,000 a year. What is the finance of the Bill? In the first year the contributions under this Bill will amount to about £22,000,000. As I have said, the Government almost simultaneously is giving away to the Income Tax and Super-Tax payers £42,000,000, and so it is perfectly clear that there is, or perhaps I should say was, plenty of money with which to have made the scheme non-contributory and also to have made the benefits more generous, and they ought to be more generous in various ways, as I will indicate to your Lordships in a moment. Even looking ahead, although the scheme will cost more as time goes on, the necessary finance could have been arranged, and I can easily demonstrate this to your Lordships particularly with the declining cost of old age pensions. However, the Government is quite adamant. Great efforts have been made to get them to change their minds, but without success.
473 Although the Bill bristles with injustices and anomalies, many of which are directly due to the fact that it is based on a contributory principle, I scarcely think that the House would have realised that from the speech of the noble Marquess. I want to put a point which is of great importance in my view. It is this, that owing to the fact that this scheme is contributory all workers who are not working for a definite employer are shut out altogether from the widows' pensions and the old age pensions at 65 and from the other benefits of the Bill. They are outside the scope of the Bid simply because the Bill is contributory and is worked upon the basis that persons have to be employed by definite employers. You therefore shut out persons who need old age pensions and widows' pensions just as much as, or possibly more than, those who are brought within the scope of the Bill. There are persons such as fishermen, costers, crofters, and petty traders, and so on, all of whom are cut out from the Bill, and they number many millions.
Then let me emphasise the burdens which the contributory basis is imposing upon industry. It is quite true that owing to the Unemployment insurance Bill which was introduced a few weeks ago that burden has been somewhat alleviated since this Bill was first brought in, but still it is a very heavy burden. It amounts to about £10,000,000 a year, which will be imposed upon business, trade, and industry at the present time. That is a very serious matter, especially for the export trades, many of which, I would again remind your Lordships, are suffering very great difficulties, and some art those difficulties have been seriously aggravated by the gold standard policy of the Government. These insurance contributions which the employers have to pay operate most inequitably amongst the various classes of persons engaged in trade and industry. For instance, merchants, retailers, and distributors have been on the whole doing well, certainly much better than manufacturing concerns, but these persons, merchants, retailers, and distributors employ comparatively few people, and therefore their contributions under the scheme will be proportionately much less than the contributions of the manufacturers, many of whom 474 are finding it extremely difficult to make a profit at all.
Take the professional classes, barristers, solicitors, stockbrokers, estate agents, and so forth, some of whom make large incomes. These people employ little labour and come off extremely lightly, in spite of the fact that they are well able to pay. Then I ask why should the rentier class escape contribution? It is surely just as much their responsibility to provide for the widow and old age pensioner as it is the responsibility of people carrying on the work of the country. I submit with confidence that the more the matter is examined the more it will become clear that a non-contributory scheme would not only be fairer to the workers and more progressive and more inclusive, but very much better adapted to the needs of industry and of trade.
I leave that and I proceed to criticisms other than the contributory basis of the scheme. I turn to the inadequacy of the benefits. This Bill, as the noble Marquess has said, gives 10s. per week to a widow. Under existing conditions 10s. a week is not nearly sufficient to keep a widow.
§ LORD ARNOLD
I know the noble Marquess said it was not sufficient, and he seemed to think that that was a very satisfactory feature of the scheme. We do not, and I will tell him why in a moment. A widow with two children will get 18s. a week—5s. for the first child and 3s. for the second child. 18s. a week for a widow with two children is even more inadequate than 10s. a week for a widow without children. Many boards of guardians at the present time are paying to a widow with two children up to 28s. a week. Surely the main case for widows' pensions is Oaf the widow should be able to bring up her children properly and should not be driven into the labour market. But if she has only got 10s. a week, or 18s. a week, that will not happen. It is nut sufficient to enable her to keep out of the labour market or to avoid resorting to the guardians. There is a very important principle at stake here which was not made clear to the House. It is this, that it is in the best 475 interests of the State, as we of the Labour Party say, that children should be properly brought up and looked after.
In the United States, where they have widows' pensions, those pensions are sufficient to enable a woman to live and to bring up her children. They say that it is an economic proposition, a good investment, that it pays the State well to see that children are properly brought up. But this Bill will not do that. A woman who has 18s. a week only, and who has herself and two children to keep, is either driven into the labour market and has to get somebody else to look after the children—if she can—or has to resort to the guardians. That is a most unsatisfactory position. Moreover, I am afraid that one result of this Bill will be that guardians—or some of them—will cut down the relief which some of them have been giving. They may well say. "If the central Government considers that 18s. a week is sufficient, why should we pay 28s. a week?" So that one result of this Bill—of this social reform which the noble Marquess told us was the product of active Conservatism—may well be the cutting down of relief given by the guardians to some of the most needy and harassed of our people.
Let me make another comparison, which in my view furnishes an unanswerable case for higher benefits. It is a comparison with what happens in the case of the widows and children of ex-Service men. The widow of an ex-Service man was not given 10s. a week, she was given £1 6s. 8d. a week; she was not given 5s. a week for the first child, she was given 10s. a week for the first child; she was not given 3s. a week for the second child, she was given 7s. 6d. a week for the second child. If you add those together—£1 6s. 8d. for herself, 10s. for the first child and 7s. 6d. for the second child, the total is £2 4s. 2d.; so that the widow of the ex-Service man with two children is getting £2 4s. 2d. per week against 18s. given to the widow with two children under this Bill. I am very glad that widows of ex-Service men are getting that, I rejoice in it, but I entirely fail to understand on what principle the widow of the man who dies in industrial service is to be so much less well treated than the widow of the man who was killed on military service.
476 Take another injustice of the Bill, and it is a very serious injustice. The noble Marquess, naturally enough, did not say anything about it. It concerns the position as regards unemployment benefit of the man who reaches the age of 65. Under this Bill, as the noble Marquess said, when a man reaches 65, if he is an insured person he will get 10s. a week. Yes, but as a result of getting 10s. a week under the Bill he will fall out of unemployment insurance benefit. That is a very serious matter. Under unemployment insurance benefit the man does not get 10s. a week, he gets 18s. a week for himself and 5s. a week for his wife, so he gets 23s. a week. But now under this Bill, and because of this Bill, if his wife is under 65—and it is not uncommon for a wife to be younger than her husband—all they will get is 10s. a week as against 23s. a week unemployment insurance benefit. Look at that position. Here you have a man who may have been paying in for a long term of years heavy unemployment insurance contributions with a view to helping himself when the period of unemployment comes. The noble Marquess said in his speech that at 65 a man is old He is very old from an industrial point of view and that is just when a man is likely to be hit and to want his benefit He has reached the age when he is most likely to be faced with unemployment and then, instead of getting as he should have done 23s. a week, he is only to get 10s. a week.
That is a very mean and shabby provision. All that can be said in its defence is that it is cheap. You can buy cheapness too dear if it is bought at the expense of breaking faith with the workers, and this is a direct breach of contract. The Government in this provision is doing something which, if an ordinary insurance company did it, would lead to legal proceedings, I believe even to criminal proceedings, but at any rate to legal proceedings. And what is the defence? The strongest representations were made in another place to get this injustice put right. The real reason why the Government did not put it right was that there is no money. And the reason why there is no money is that the Government has given £40,000,000 a year to Income Tax payers.
And that is not the last hardship done by the Bill. This Bill actually throws 477 upon certain classes the cost for contributions towards some benefits which they now get for nothing. As time goes on, the young men and women of sixteen who come in under this scheme will be contributing to the cost of the old age pensions which they are to get when they are seventy. But without this Bill they would get those for nothing. What does it come to, therefore? It comes to this: that the non-contributory scheme of old age pensions which has existed in this country since 1908 has been done away with. That is what will happen in due course; yet all Parties in the State support old age pensions on the noncontributory basis for persons over seventy. I will not say that all persons support them because I do not know whether the noble Lord, Lord Banbury, is still opposed to them.
§ LORD ARNOLD
The noble Lord told your Lordships not very long ago that he was one of the very few who had voted against that beneficent measure.
§ LORD ARNOLD
Yes, but Lord Robert Cecil did not seem to take the same pride in it that the noble Lord did. The noble Lord seemed to glory in his shame. He flaunted it before the House and he still seems to be adamant. He is one of a very minute percentage of the population, because, practically speaking, the whole population of the country supports, for people over seventy, non-contributory old age pensions, which are now to be done away with.
Before I sit down I wish to make one thing clear, and I do not think this will be denied by anybody who has been following the proceedings. Certain valuable concessions have been secured in this measure in another place owing to the very vigilant and able work done during the Committee Stage by the Labour Party. The noble Marquess told your Lordships with great satisfaction, as it seemed to me, that if a child remained at school up to the age of 16 the allowance was to be continued until that age. True, but that was not in the Bill when it was introduced. It is the Labour Party which 478 is entitled to the credit of that, not the Government. That was inserted owing to a Labour Amendment.
§ LORD ARNOLD
At any rate, I am not doing wrong in calling attention to the fact that it was the Labour Party who got that put in, and, if it had not been for the Labour Party—
§ LORD ARNOLD
The noble Marquess is always fair-minded, and I am sure he will agree that on this occasion the Labour Party did very good service to the country. I regret to say that many other Amendments of great value were not accepted, but were refused. The only reason why they were refused was that there is no money. Well, I have dealt with that; your Lordships know why there is no money. I will not go into further detailed criticisms of this Bill, because, if I were to put before your Lordships in regard to this measure all the things which ought to have been done, but which have not been done, I am afraid I should make a quite undue draught upon your Lordships' time and patience.
§ EARL BEAUCHAMP
My Lords, the noble Marquess the Leader of the House a short time ago rebuked me, on the discussion of a Party Bill, for imparting too much of a Party character into the discussion which was then taking place. I am quite prepared when a suitable occasion arises to justify what I said on that occasion, but I cannot but contrast his rebuke of me for making a Party speech on that occasion with his own speech this afternoon. Your Lordships will remember how he emphasised the principles of this Bill as being the principles of active Conservatism. This Bill touches two important measures which have been introduced during the last twenty years for the welfare of the working classes of this country and, embodying as it does the principles of active Conservatism, this Bill refers to two measures, one of which was introduced by my noble friend Lord Oxford and the other by my noble friend Lord Buxton. It was my noble friend 479 Lord Oxford who was responsible for the initiation of old age pensions and it was my noble friend Lord Buxton who was first responsible for the introduction of insurance against the ills to which the working classes are subject. I think in those circumstances I may fairly point out to the noble Marquess that his principles of active Conservatism have gained a great deal from the Liberalism of the last generation.
But owing so much as the Bill does to the principles of Liberalism, the noble Marquess will naturally realise that I am not going to adopt the same tone of criticism in regard to the measure as that adopted by the noble Lord who has just sat down. There is a great deal in this Bill which was common to all political Parties at the last General Election and I think also the last but one. There is a great deal in it which is good. Therefore, although I have criticisms to make, they are rather on points of administration and of detail than on any matters of principle. I take, for instance, the point which is involved in the very title of the Bill. I confess that it seems somewhat less necessary to endow childless widows than to endow widows who are mothers. A childless widow, who is quite young and who, perhaps, at the age of 25 is thrown upon her own resources, is not so much in need of money as the widow who has a number of children to look after. I do not know what the actuarial figures would be, but it is evident that the childless widow with a pension which is awarded to her under this Bill will be able to go into the labour market and perhaps depress the conditions under which other women work. If the money available for the childless widow could have been available for the children of the widowed mother I think it would have been a great advantage.
We realise, of course, that His Majesty's Government have not gone so far as they would probably wish to go, and not so far as some of your Lordships would like them to go. But that they went no further was because they had not the money. I confess that I should be very much interested if the noble Marquess has the figures and can tell us what would have been the result if the money which goes to childless widows under the Bill had been made available for the children of widowed mothers. It is evident from what was said by the noble Marquess that 480 the amount of money is not adequate to the demand.
My other criticism is in regard to the administration of this Bill. The Bill in many respects is an extension of the National Health Insurance Act. It involves an amendment of the Act and of the administration under the Act. At the same time I should have hoped that the scheme for administering the Bill would be the same as that in vogue under the National Insurance Act; instead of which a new bureaucracy is set up which will cost something like half a million—a subject on which I shall say something in a few moments. Meanwhile, a large part of the administration will be done by the Post Office, which has already a great deal to do in managing the postal affairs of the country. The reason why I should have preferred the scheme to be administered by the approved societies is that, generally speaking, administration by Government is notoriously less efficient than administration by such bodies as the approved societies.
You give these approved societies an incentive to administer well, and I am sure that, instead of these inquiries being made by bureaucrats, it would have been very much better if the staff of the approved societies, which already have a great deal of experience in these matters, could have been induced to take on the work. They do it already. They do it with sympathy. They have a great deal of experience of these matters, and I feel that they would have been able to do it a great deal better. They have experience of people who malinger and who pretend to be ill when they are not. They have facilities in the matter, and had this work been handed over to them I believe the fact that they would have been enabled to give increased benefit would have led to very careful administration. It is clear that under this scheme, although I am not sure that it is altogether unavoidable, the younger people will be made to pay for the older, because the older will come into the scheme at such a very short date. As the noble Marquess has told us, they come in during next year and immediately get the benefits provided in the Bill. In those circumstances I confess that I think it is wise that His Majesty's Government has provided that every ten years there shall be a review of the charges under the Bill.
481 I turn to the Actuary's Report upon the Bill, and I would point out to your Lordships a somewhat serious figure which appears on page 25. He says that the charges at the end of ten years front now, in 1935–36, will exceed the contributions by an increasing annual sum, the excess amounting in that year to nearly £13,000,000. That is no doubt the reason why there must be a revision under the terms of the Bill itself of the charges and the scale of contributions. It is indeed a very serious thing to contemplate that in ten years the contributions under this Bill will be insufficient to pay for the charges by no less than £13,000,000. I think we may not unfairly compare the scheme under this Bill with that of the Health Insurance Act. Under the Health Insurance Act reserve values were created at the start which were equal to the age of the members, those reserve values were credited to a society and as they were written off the benefits were increased. Under this Bill there is no possibility of increased benefit because, owing to the very large charges it makes upon the contributors, there would be no extra fund and no reserve of capital value, as it is, would be created at the beginning of this measure. The fact that the "dead hand" of a Government Department will be chiefly occupied in administering the Bill is, I regret to think, probably due to the struggle which took place some time ago—two years ago—between Sir William JoynsonHicks and the approved societies over the remuneration to be awarded to the doctors.
There is, of course, the point about contributions which was raised by the noble Lord who has just sat down, and I confess in this matter I occupy a middle position between the noble Marquess and the noble Lord. It is acknowledged that the amount which will fall upon the Treasury during the next ten years will only be £18,000,000, and it might have been well worth the consideration of His Majesty's Government whether they could not have borne all the charges which will fall upon industry for the next three years and will be employed in this matter. For three years they might only have found the same sum of money as would have been necessary to pay for the charges under this Bill.
I return to the question of the cost of administration. That has 482 been estimated by the noble Lord at a sum of £500,000. I wish I could think it was likely to be limited to that sum. We may take as a comparison the amount of money which it costs to administer the old age pensions. The Old Age Pensions Vote is for £28,000,000 Old age pensions cost us £28,000,000 a year and there is a sum of £62,000 set aside for the Committees under the Old Ago Pensions Act. But that is not the amount for which the pensions are administered. The Inland Revenue charge no less than £530,000 a year, and if we deduct the amount per year sent to Ireland that brings it roughly to a round £500,000. The Pest Office pay £250,000 and therefore we find that the administration of the £26,000,000 of the old age pensions costs £750,000 a year. In those circumstances I think that there is very little hope that when the amount administered under this Bill comes to the large sum mentioned in the Actuary's Report, rising as it is said to rise in 1935 to £38,000,000, we shall find that the cost of administration will be kept down to £500,000.
We all know that, generally speaking, this Bill is so largely finance that it would be difficult for your Lordships to amend it. I shall, however, venture to put down one Amendment for your Lordships to consider in Committee, and that is that the provisions of this Bill be extended to those who, having paid their contributions, go to reside in other parts of the British Dominions. When the Committee stage comes I hope to be allowed to move that Amendment.
Before I sit down, I should like to make some reference to the speech of the noble Lord, Lord Arnold, who spoke on behalf of the Labour Party. I wish to refer not so much to what he did say as to what he did not say. I hope he will take an opportunity of completing those remarks that he made upon the Second Reading of the Finance Act. Your Lordships will no doubt remember how, in the course of his remarks on that occasion, he spoke of the £300,000,000 which are paid in interest on National Debt, and said that as they were returned, generally speaking, to the wealthier classes, it really meant that as compared with their conditions before the War broke out they were not so very much worse off now than they were in 1914. I confess that I thought at the time that 483 his arguments on that head were fantastic. I admire his skill in juggling with figures, taking them out of one side of the account and not putting them back on the other, and I had hoped that he would have completed his remarks on this occasion by referring to the advantages which are given to the poorer classes of the community under this Bill and under similar measures which have been introduced during the last two years.
§ LORD ARNOLD
May I be allowed to interrupt the noble Earl? I am sure he wants to have this matter stated aright. I am afraid he has not grasped the point which I made. My point was not that the wealthier classes were slightly worse off or little worse off than they were in 1914. About that I said nothing. What I said was that if you looked at both sides of the national account and took into account what went to the wealthier classes and what was going to the poorer classes, you would find that the wealthier classes were in very much the same position as compared with the poorer classes as they were in 1914.
§ EARL BEAUCHAMP
The noble Lord with his usual anxiety has not allowed me to make my point, therefore he can hardly say that I have, not grasped the point that he made. No one is so intolerant of criticism as the noble Lord, who is constantly interrupting other speakers, yet I remember on an occasion recently, when he refused to give names in reference to some cases upon which he was speaking, that he stated that he declined to be deflected from the course of his argument by giving names. I really think that the noble Lord does not like being criticised, but he must realise that we are allowed to criticise other people in this House and that it is the usual custom for us to do it, as a rule, without interruption. I now pass on to try to complete the point that I was making, which is that the amount of money that is distributed amongst the poorer classes of this country is very great. If we add together the amount of money which they receive under the Unemployment Insurance, under the Poor Law, under National Health and under Old Age Pensions, Workmen's Compensation, Employers' Liability and State grants for relief works, we get a total of something like £200,000,000 a year, to which must be added the money that will be spent under this Bill.
484 It is perfectly true that that money is partly contributory. On the other hand, nobody helps the wealthier classes when they have to make their contributions to Income Tax. We are, therefore, not wholly unfair when we say, if we are to compare the position on the one side and the other, that we ought to take into account this £200,000,000, which will rise in the course of time to some £250,000,000 a year. Although part of it is certainly contributory, it is at this moment being spent for the benefit of the poorer classes in this country. That amount of money, of course, has to be paid partly by the taxpayer, partly by the ratepayer and partly by the employer, but it is an amount of money to which a great many of us have to contribute in all three capacities—and if we make a general survey of the condition of the people in this country it is wholly unfair and fallacious not to admit figures such as those. If we are to consider she £300,000,000 we ought at least to consider also the £250,000,000 on the other side.
May I, in conclusion, say to the noble Marquess that I should be very glad if he could give us some assurance that this is not the end of what His Majesty's Government propose to do in this matter? I hope they will take into consideration the possibility of giving more benefit by, perhaps, a scheme of what is commonly known as all-in insurance. This ought not to be the end of the good work which can be done in benefiting the more unfortunate classes of this country. There are various schemes of all-in insurance which are fairly well known, and if something of that kind could be done I believe it would be a very great advantage. The reason why it is not clone generally is that very many people are afraid that the amount of money which would have to be paid by the employer—it has been estimated as 2s. 6d.—would be too much. On the other hand there is an estimate, which I have seen—I think a reliable estimate—that employers have to pay something like 3s. per head for all men and women they employ if you take into consideration health, unemployment, rates, and liability to compensation. A great deal might be, done in preventing overlapping and the frittering away of money if there could be one big State scheme of insuring against all these various things.
485 I should be glad if the noble Marquess could assure us that that was not altogether outside the purview of His Majesty's Government, and that they would be willing, as time goes on, to consider the possibility of improving the administration of these Acts. The result of that would be a very considerable advantage to those who are insured, or contribute, under this Bill. If that is so, then I think we may fairly congratulate His Majesty's Government upon having introduced a Bill which, in spite of the somewhat small criticising that I have made, will, I think, be very largely to the advantage of a large section of the community.
§ LORD BANBURY OF SOUTHAM
My Lords, the noble Lord, Lord Arnold, told us he objected to this Bill because it was going to put a very heavy burden upon the industries of the country. If he will allow me to say so I agree with him there. I think this Bill is going to put a very heavy burden upon the industries of the country. But the noble Lord went on to say that he would like to add to those burdens by making the scheme non-contributory. I do not know where he is to find the money to make the scheme noncontributory unless he increases the burden on, amongst other people, the industrialists of this country. It is true that he suggested that £42,000,000 had been abandoned by the Government in reduction of the Income Tax and Super-Tax. I do not know whether he has added the increased burdens of the Death Duties. I have not the figures before me at the moment, but I would point out to him that that £42,000,000, if it had not been taken away, would have been paid, or some of it, by the enterprise and business of this country. Therefore, the burdens which he objects to being thrown on the industries of the country would still continue.
I am opposed to the Bill altogether. I should like very much to move the rejection of the Second Reading, and I would do so if I thought there was any possibility of defeating the Bill. But though the majority of noble Lords on this side of the House would, I believe, vote with me if the vote was by ballot, I am not quite certain that they would vote with me in the ordinary way, and, therefore, I do not propose either to make a long speech 486 or to divide your Lordships' House against the Bill. I should like, however, to say why I object to this Bill, and to this class of legislation. After the Napoleonic Wars there was a great increase in outdoor relief, and the result of it was that nobody wanted to work as long as he could gel something from somebody else which was sufficient to keep him from starvation. And human nature—I draw no distinction between classes—in every class is inclined not to work if it can get somebody else to support its existence. The result of all these "doles," a certain number being kept by other people, is to discourage the habits of work, of industry and of thrift. If the majority of people think that they can get some other people to support them it is quite certain that they will not take any steps either to obtain work or to support themselves.
I was a member of another place when a former Insurance Bill was brought in. We are told that people were going to get 9d. for 4d. Now I understand from the noble. Marquess, Lord Salisbury, that widows are going to get 8s. 4d. for 2d., and therefore—
§ THE MARQUESS OF SALISBURY indicated dissent.
§ LORD BANBURY OF SOUTHAM
Well, a good many widows, not all. It was not everybody who got 9d. for 4d. I did not get it, and other people besides myself did not get 9d. for 4d. No doubt there are a certain number of widows who will not get 8s. 4d. for 2d., but there is a considerable number who will. Taking men, women and children, 70 per cent. of the population will obtain these benefits which are contributed, to the greatest extent, by 30 per cent. of the population.
§ LORD BANBURY OF SOUTHAM
And as 70 per cent. is larger than 30 per cent. the unfortunate 30 per cent. will have to find the money. Not only do I object to this on the ground that it is bad for the people but also because it is imposing an enormous burden on posterity which it will be unable to bear. The sum of £750,000,000 is the capitalised value of the charge which will be imposed upon 487 posterity by this Bill. That is the statement made by the Chancellor of the Exchequer in another place, and it is an amount which is larger than the total Debt of this country in 1914. This is an additional burden of £750,000,000 at a time when the expenditure of this country is, in round figures, £800,000,000 a year, and when the total Debt of the country is very nearly £8,000,000,000. Not only do I think that we cannot afford it, I know we cannot afford it; not only is it bad for everybody, but it is had electioneering. If the Government have it in their mind that they are going to obtain gratitude from anybody I would ask them to remember that gratitude is a sense of favours to come. If the Government had, four years hence, brought in a Bill of this sort I should still have opposed it on the grounds I have given, but it would have been good electioneering, because people would have probably voted for the Conservative Party on the understanding that they were going to get something.
But what is going to happen now? We have the Labour Party saying that these pensions must be non-contributory, and as certain as I am standing here we shall at the next Election be faced with this problem. The Labour Party will say: If you return us we will make the pensions non-contributory. Where is the money coming from? And how, when 70 per cent. of the population are going to benefit, can we resist that. Bribe—I can call it nothing else—by the Labour Party? To make matters worse the noble Earl, Lord Beauchamp, to be quite certain that the Liberal Party was not left behind in the race to offer benefits to the electors, appealed to the Government to extend the benefits at a certain time. Therefore two different Parties at the next Election will be recommending an increase in the benefits or a decrease in the contributions, or both. And where will the wretched people be who will have to find the money? Our industries cannot now compete success fully with foreign industries, and where shall we be if we have to pay, I think it is, up to £90,000,000 a year for this particular benefit, and for the increased benefits which the noble Earl, Lord Beauchamp, and the noble Lord, Lord Arnold, are desirous of seeing?
488 One reason given for this Bill was that it was going to put all these various reliefs upon a contributory basis, but the Minister in charge of the Bill in another place gave that away, and Clause 18 gives to widows whose husbands have never paid a single shilling towards pensions the right to a pension. I propose in Committee to move the omission of Clause 18. At any rate we might begin by making the Bill contributory. Then we are told that it will reduce the rates. We were told exactly the same thing when the Old Age Pensions Act was introduced in the year 1908. And what has been the result? The rates have gone up, and they will go up in this case. All that will happen will be that the man or widely who gets 10s. a week will say: "It is not enough for us to live on. We are not going to do any work; we ought to have a great deal more, and we will go to the Poor Law and get something in addition." There will be no diminution in the Poor Law rate, but an increase. I should like very much to divide against this Bill, but I have made my protest. I feel sure that the Bill is a mistake. As an electioneering measure it was had, and as a financial measure it is worse.
§ THE MARQUESS OF SALISBURY
My Lords, as I listened to my noble friend who has just sat down I wondered whether there could be any Bill of which he would not vote against the Second Reading. I think there is one exception—the Dogs Bill. That, I believe, is the only piece of legislation which Parliament could consider to which he would not be opposed. I am afraid I cannot hope that in anything I can say I shall convince him that there is a good case for this Bill, but he himself, towards the close of his speech, seemed to indicate that there was some value in the contributory principle. I am glad of that, and I wish that the weight of that consideration were sufficient to cause him to be in favour of the Bill.
The great distinction, of course, between a good pensions Bill and a bad one—and here, very respectfully, I differ entirely from the noble Lord, Lord Arnold, who spoke just now—is the presence of the contributory principle. To us the contributory principle is essential and it does not at all frighten me to be told that the contributions are upon such a scale that in course of 489 time they may make not merely the pension at sixty-five years old contributory but also the pension at seventy years old. I shall be delighted if that turns out to be the case. I believe that a great mistake was made when the existing Old Age Pensions Act was passed in not placing it upon a contributory basis. I should be sorry to believe that the people of this country are opposed to the contributory basis. Why should it be imagined that they do not value the principle of self-respect as much as your Lordships do? I believe that they do. This Bill differs altogether from outdoor relief, of which the noble Lord spoke. I should be very sorry indeed if these pensions had to be supplemented by outdoor relief.
The noble Lord said that if we do not have outdoor relief the pensions are insufficient and the beneficiaries will have to do a little work. Of course, I do not want the widow to have such a burden of work that she cannot look after the house and the children. But she can do a little. We who live in the countryside and know what passes, know that in the cottages a little washing is done or a little sewing, and a few shillings are earned: Why not? It is an admirable thing. We do not want to do anything to stop that, and we differ entirely from the noble Lord in that respect. To us the contributory principle is essential. That it should be supplemented by work and by other resources is wholesome and beneficial, and this idea would, I am sure, earn the confidence of the Party to which I belong, if not that of the noble Lord, Lord Banbury. I see that the noble Lord has left the House; I hope that he felt that his case could no longer be sustained.
Then the noble Lord said that there were persons outside employment who were badly treated by this Bill. I am sure that we should have been very glad to bring them inside the Bill if it could have been done. Perhaps it may be done in the future. But that which the noble Lord said was not altogether accurate, because people who have been insured persons at any time since 1912 may, under the clause concerning voluntary insurance, come back into the Bill, and so are not altogether excluded. Many persons may avail themselves of that power. Similarly there is a provision in the Bill under which soldiers who served 490 in the War can come into the Bill even if they are not being employed at the present moment, so that the noble Lord's remarks were not altogether accurate. It is a good principle, though the noble Lord did not seem to appreciate it, that industry should insure itself. That is in line with what I have already said. It is all in the direction of helping those who help themselves, and we are anxious that this system should finally be bound up with industry and that, by the contributions of those engaged in industry, both employers and employed, widows' pensions and old age pensions may be provided, of course with the assistance of the contributions which the State is able to afford.
Then the noble Lord found a great grievance in the fact that a man who, at the time when lie becomes sixty-five, is in the enjoyment of unemployment benefit should drop from that figure—I think he gave it as 23s.—to the 10s. provided by the old age pension scheme. But the two things are not comparable. The 23s. is received by the unemployed man only while he is unemployed, but he gets the 10s. for life. I can assure the noble Lord that he is quite wrong in imagining that the man loses. The actuarial calculation is, I believe, that the benefits between the ages of 65 and 70 are three and a half times the value of the present rights of the man under the health and unemployment insurance scheme. Accordingly I am afraid that I cannot accept the charge which the noble Lord made.
I turn now to the speech of the noble Earl. I ought to say that I am very much obliged to the noble Earl for his support of the Bill. His criticisms were very gentle and, on the whole, I think that we may be grateful that he and the Party which he leads at the moment in your Lordships' House are supporters of the Bill. He did, however, make some criticisms, and one of his criticisms was that childless widows were admitted to benefit. That matter has been very carefully considered. I may say that I myself was one of those who questioned the value of that provision, just as the noble Earl has done. But, to use a colloquial phrase, there is no money in it; I mean that the number of widows in question is very small. I think that it would be true to say that on the average only 4 per cent 491 of the individuals becoming widows in one year will be under 35 and childless, and most of those, or a good many of them, will re-marry, so that the case, although I admit that there is something to be said for the noble Earl's view, is a very small one if it is looked at statistically.
It must also be said on the other side that, after all, the husband who has died has paid the contribution in the hope that if he dies his wife will be insured. It is not with him a question whether he has children or not. He is thinking of her, too, and it is a little hard to say to a man: "Although you have paid contributions, if you, unfortunately, die it will make no difference, your widow will not get a sou, for you have no children." I think this has to be remembered. This is in the nature of insurance. A man has paid for insurance and he is surely entitled to benefit in the shape of a pension for his widow. For these reasons, after careful thought, the Government rejected the proposal which the noble Earl has made, and I hope he will realise that we have carefully thought the matter out. Then the noble Earl said that he wished we had acted in the payment of these pensions through the approved societies. That also was very carefully considered. There was a meeting with the representatives of the approved societies, and they were convinced that it was impracticable, and the reason it is impracticable is that insured persons, although they may insure in a particular locality, may move all over the country, and the approved societies in many cases have no machinery by which they can follow the pensioners wherever they may have gone.
Therefore it was abandoned and the Government have used the other channel. They pay the benefits through the Post Offices, which, as your Lordships are aware, exist everywhere. It is for that reason we could not take the approved societies. Then the noble Earl said that he proposed to move an Amendment in Committee to provide for the cases of pensioners who emigrate to different parts of the Empire. That is a matter which has given us a great deal of thought and I am able to inform your Lordships that a Departmental Committee will be appointed to consider what arrangements can be made, with reference to unemployment, health and pensions, to meet the cases of contributors desirous of 492 emigrating within the Empire. The matter is very complicated, but the Government have already resolved to appoint a Committee to look into it.
The noble Earl also said something about the cost of administration. We hope that the cost of administration will be kept within the figure of 2 per cent. of the contributions, and the reason we hope to do it cheaply is that there will be no committees such as exist under the present Old Age Pensions Act, because there will be no means test. These committees exist in order to verify the means of the recipients, and they are costly things, of course, like all machinery. We have abolished the means test. Therefore, these committees are abolished likewise, and great economy will result. Then the noble Earl said that he hoped that this did not mark the end of our good work. I was immensely pleased at that phrase of the noble Earl. It contemplated a long career of excellent social legislation which will be passed by the Conservative Government. I make my bow to the noble Earl and assure him that it is my hope, too.
But I am afraid it will not take the form of all-in insurance. That has been Carefully considered and found to be impracticable. I am afraid that nothing in that direction is possible, although there are many other beneficent directions in which I hope the Conservative Government will justify the confidence of the noble Earl. I think I have answered all the questions which have been put to me and I am glad to think that there is no menace, even from my noble friend, Lord Banbury, of opposition in the Lobby. I hope and believe that this Bill will be the unanimous work of your Lordships' House, even in spite of the criticisms of the noble Lord, and that we shall be able in a very few days to place it upon the Statute Book as the first fruits of our active Conservative policy.
§ On Question, Bill read 2a, and committed to a Committee of the Whole House.