Orders of the Day — National Insurance Bill

Part of the debate – in the House of Commons at 12:00 am on 13th November 1957.

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Photo of Mr Denzil Freeth Mr Denzil Freeth , Basingstoke 12:00 am, 13th November 1957

My right hon. Friend's Bill has been criticised from the benches opposite for a number of reasons; first of all, that it does not seek to enact some such prototype pensions scheme of a graded nature as may be found in the second part of the Labour Party's pamphlet on pensions and superannuation, that this Bill is not a "Crossman Plan" or a "Titmuss Flier." It has been criticised also because of the level of benefits and contributions. The first criticism which the right hon. Member for Middlesbrough, East (Mr. Marquand) made of this Bill was that it had been born too late. He asked my right hon. Friend why the Government had not brought this Bill in at an earlier date.

I shall come to the possibilities of other schemes later, but in considering whether or not under the present scheme to alter the level of National Insurance benefits the Government have two things to consider. First, the Government have to consider the relationship between the present purchasing power of the benefits and the level either at the time of the 1946 Act or the level which was actually paid in 1948. Secondly, the Government have to consider whether the national product has so expanded, without further demands being made upon it in other directions, that it is possible to raise the proportion of the national income which is paid to the retirement pensioners and those drawing other benefits under the National Insurance Acts.

Of course, in making that last calculation one of the most important things the Government have to consider is the number of people actually drawing benefit, and, in particular, the number of people who may at any one time be drawing National Insurance retirement pensions, because that figure is increasing very substantially next year. Indeed, since the first National Insurance Act was passed in 1946 reviews have taken place, on the average, every three years. Hon. and right hon. Gentlemen opposite reviewed the scheme in the early autumn of 1951. We reviewed it in the spring of 1952, again at the end of 1954 and the beginning of 1955, and again now at the end of 1957 to take effect early in 1958.

When one is considering the level at which National Insurance retirement benefit should be placed it is essential that one should get away from the idea that it is meant to be the full subsistence level. It never has been the full subsistence level, and I do not believe that it was ever designed to be. It has been meant to be a pension, secured as of right through contributions and Government grants, which can make all the difference to a retired person between having just enough on which to live and being able to live at a slightly higher standard than that.

We are told that about one-third of the people now retiring have pensions from private pensions schemes. A growing number of people are delaying their retirement and are, therefore, being able to draw higher retirement pensions with the 3s. per annum increment attached thereto, but I fully agree with the hon. Member for Coventry, East (Mr. Crossman) that we are never going to reach the stage, in the normal evolution of events, at which more than about a half of the retired persons of this country have pensions accruing from their jobs or, alternatively, from private schemes which they themselves have arranged with insurance companies. Those other people will have to fall back on the current scheme and upon National Assistance.

We should face quite squarely that, in fact, that is what the National Insurance scheme ever since 1946 has decided that they ought to do. We have, in fact, said, "If you have no means of your own when you retire, you will have to fall back upon the National Assistance Board." I do not think one need be ashamed of the fact that one pensioner in five, or one in four, or one in three, has to have recourse to the National Assistance Board. It means that most of those people have not been lucky enough to be able to save during their working lives. Therefore, when they retire they have little or nothing to provide them with comfort in their old age.

I am not at all sure that from now on we ought not to consider far more the level of National Assistance than the level of retirement pension, and ask ourselves whether the level of National Assistance really is the level which we think is fit and proper to be the lowest level of subsistence in our community today. Although this Bill does not deal with National Assistance, if we can spare the money, if the Exchequer can pass on money from the rest of the community through taxation to help the aged, I would hope that it might give a higher level of National Assistance benefit rather than greater Exchequer aid to the National Insurance Fund to pay out higher insurance benefits.

Surely, it is common ground between us that the taxpayers' money should first go to help those who most need help, and those who most need help are those who have nothing but their retirement pension. Those are people who will not be in receipt also of £300 or £400 or £500 a year from a private pensions scheme. I hope, therefore, that we may in future devote our taxation subsidy to the National Insurance Fund to raising the level of National Assistance rather than quarrel about the level of the National Insurance retirement pension.

It was announced during Question Time today that the cost of living has risen by about 24½ per cent. since 1951. It is worth while reminding the House and people in the country that, with the benefits included in the Bill, the pension for a single person will be increased not by 25 per cent. but by 66⅔ per cent. Although I do not wish my speech to be very controversial, it is also worth while recording that when the Conservatives came to power in 1951, there were people still on a 26s. a week retirement pension, and these people have had an increase of 92 per cent. under Tory Governments.

I also believe it is worth while drawing the attention of hon. Members to a reply made by my right hon. Friend the Minister of Pensions and National Insurance to my hon. and gallant Friend the Member for Poole (Captain Pilkington). My right hon. Friend pointed out that, taking the equivalent purchasing value as at September, 1957, it would be found that when the National Insurance scheme was enacted in 1946, the purchasing power of the present single person's retirement pension was 42s. 4d. and that it fell steadily until October, 1950, to 36s. 9d. It has never been below that level under a Conservative Government, but it fell until the pension was increased to 30s. for certain pensioners in the summer of 1951. In October, 1955, the value of the retirement pension was 42s. 11d. and in October, 1956, it was 41s. 4d. In fact, we are today raising its purchasing value to 50s.

These are figures which show that there are some pretty substantial increases in train. According to my calculations, the general increase in the cost of living since early 1955, when the last increase in retirement pension was made, is about 11 per cent. Yet my right hon. Friend is proposing to the House that practically every National Insurance benefit is to go up by 25 per cent. I do not think that sufficient recognition has been given to the very wide nature of the increases to be made. Hon. Members have drawn attention to omissions from the increases and I shall agree in a moment with the right hon. Member for Middlesbrough. East about one omission, but this is a comprehensive Measure covering unemployment benefit, widows' pensions, sickness benefit, maternity grants and death grants. Indeed, it covers the whole length of our lives.

I am pleased to see that my right hon. Friend is now proposing to remove the anomaly of paying different rates for married women's unemployment benefit and married women's sickness benefit, which was something nobody could understand and was continually the cause of friction and discontent. The omission to which the right hon. Member for Middlesbrough, East drew attention concerns the fact that when we are putting up, as we have been doing over the years, the level of retirement pensions, it seems anomalous to leave the increment which delayed retirement can bring at the rate of 3s. extra per week for every extra year's work.

I should have thought that in these days we want people to stay at work after the age of 60 for women and 65 for men. It would be an excellent thing. Many cannot do so because of sickness or because of the nature of their job, but when they can do so, it is good for the country and for themselves. When they are deciding whether or not to do so, they must think about how much it is worth to have the extra when they retire. An extra 3s. a week is not a very great deal today. They think about the level of the basic retirement pension and, in particular, about the contributions which they must pay during the extra years that they work. A man may say, "A contribution of 9s. 5d. a week is not a very good exchange for receiving back 3s. a week when I retire." I suggest to my right hon. Friend that the time is coming when, whatever we do with the generality of the National Insurance pension scheme, we ought to increase that increment.