Orders of the Day — National Insurance Bill

Part of the debate – in the House of Commons at 12:00 am on 8th December 1954.

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Photo of Mr Douglas Houghton Mr Douglas Houghton , Sowerby 12:00 am, 8th December 1954

The hon. Member for Aylesbury (Mr. Summers) began his speech with a compliment to the Chancellor of the Exchequer and to the Government for bringing the finances of the country into such a state as to be able to bear the heavier charges upon the national economy which this Bill will eventually bring. Is he aware that, up to this moment, not a single penny piece of the block grant provided for under the 1946 Act, representing payments by the Exchequer to the National Insurance Fund, has been spent on pensions—not a penny?

Under Section 2 (3) of the 1946 Act there was a contract by the Exchequer to pay into the National Insurance Fund, in addition to the proportionate grants, a sum beginning at £40 million a year and rising by £4 million a year until it reached £60 million a year, for five years, when the matter was to be reviewed. A sum of £300 million was contracted to be paid into the National Insurance Fund in anticipation of a level of benefits to be paid, and in order to keep the Fund solvent and not a penny piece of that money has had to be spent until now.

Why was that? It was because, when the contributions were fixed in 1946, there was a contemplated level of unemployment of 8½ per cent. of the employed population. In experience, that turned out to be not 8½ per cent. but never more than 2½ per cent., except for a few weeks during the fuel crisis of 1947. Furthermore there was a much lower sickness record in those years than the 1946 Act contemplated, and that happened under a Labour Government, when we were supposed to be underfed and down and out. The happy state of National Insurance finances in 1951 arose principally from these two favourable factors.

Again, the hon. Gentleman, in common with hon. and right hon. Gentlemen opposite, talked about the taxpayer. They always separate the taxpayer as if he were some separate being from all the rest, but if the hon. Member for Aylesbury, as a contributor, will look in a mirror, he will find a close resemblance to himself as a taxpayer, because one of these days, if not already, he will, I hope, be a beneficiary under the National Insurance Scheme.

All that is in question when we are talking about contributions, Exchequer grants, and all the rest is how the burden of paying for these benefits shall be spread. We know that we have to find the money somehow, because there is nowhere else from whence it can come. Insurance benefits have to come out of the national product year by year, and if in any year there is not a national product to meet those benefits, they will be worthless. When we talk about the taxpayers and the contributors, we are talking about ourselves to ourselves, and if we get that clear then we can proceed to the next item on the agenda.