Retirement Pension (MRS. Green)

– in the House of Commons at 12:00 am on 10th November 1965.

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Motion made, and Question proposed. That this House do now adjourn.—[Mrs. Harriet Slater.]

11.25 p.m.

Photo of Mr Christopher Woodhouse Mr Christopher Woodhouse , Oxford

I am grateful to the Joint Parliamentary Secretary to the Ministry of Pensions and National Insurance for staying to this late hour to answer this debate, and the more so because we have had some correspondence already on the unfortunate case of Mrs. Green, one of my constituents. I fear that the hon. Gentleman may still find himself obliged to reply that there is nothing he can do to help the matter, not even by altering the law, which is a subject which we could not discuss on the Adjournment in any case. But I hope, still, that he may have second thoughts about what can be done within his existing powers, and in any case I think it is right to give publicity to this lady's misfortune.

I think it is right, in the first place, because her experience may very well not be unique and, in the second place, because something possibly could be done to prevent a recurrence of a case of this kind by devising some better means than appears now to exist of obtaining clear information about the individual's rights under the welfare services and the consequences of making a wrong choice, where the individual has a choice open to him or her.

It was a case of unlucky choice that I wish to expose tonight and, moreover, an unlucky choice not by the victim, Mrs. Green, but by the National Health Service on her behalf, acting certainly in good faith but no doubt equally in ignorance of what the consequences would be.

This is the story. Mrs. Green worked for 50 years until she retired at the age of 65 in November last year. Her 65th birthday fell on 29th November. She had paid insurance contributions from the age of 16 until her retirement. She was also, incidentally, a 10s. widow until last year. I think that it would be agreed from these circumstances that she had every reason for believing that she was qualified for the maximum possible pension. If I have done the arithmetic right, that maximum would be today in her case a sum of £5 1s. a week, made up of the standard rate of £4 a week plus 21s. representing the maximum increase that could be earned by deferring retirement, as Mrs. Green did, from the age of 60 to the age of 65. Yet, instead of receiving a pension of £5 1s. per week, she is receiving only £4 18s. per week, representing a forfeiture of 3s. per week in comparison with what she expected. I know that the Minister will not be so heartless as to argue that this a trivial sum. She expected the full sum, and she is not getting it. Why has that happened?

The answer, as I understand it, is that for a period of 39 weeks between the ages of 60 and 65 Mrs. Green was in the Wing-field Hospital, Oxford. The exact dates divided into two periods, were from 20th October, 1960, to 15th April, 1961, and from 17th December, 1962, to 23rd March, 1963. I am sure that these dates are correct. Mrs. Green has been extremely precise and conscientious in giving me all the facts and dates relevant to her case, and these dates exactly account for the 39-week period which led to the loss of 3s. per week from her pension.

During those periods when she was in hospital Mrs. Green was not allowed to contribute to the National Insurance Scheme, and the period was disallowed from the calculation of the extra pension which she was earning by continuing at work and deferring her retirement until 65. The Minister has pointed out to me in correspondence that for weeks of sickness a contribution is not paid and, in effect, pension is not forgone. But this seems to put the matter in a somewhat unfair light for several reasons.

In the first place, in effect 3s. a week of Mrs. Green's pension is forgone, and not simply for a period corresponding to the 39 weeks that she was in hospital but for the whole of the rest of her life. This is something which she can never recover.

In the second place, Mrs. Green had no choice over the payment of contributions while she was in hospital. She was simply not allowed to pay. If she had been allowed to pay and if she had known the consequences of this gap in her contributions, she certainly would have wanted to keep the payments up.

In the third place—this is the most important point of all that I wish to make— it would have been possible for her to choose a different period to go into hospital if she had known the consequences of entering hospital between her 60th and 65th birthdays, for, as I understand it, it is only in that particular five-year period—though she did not know it— that these unfortunate conditions apply. Her entry into hospital was not, though it might have been, an emergency case. Her doctor had informed her more than 18 months, nearly two years, earlier that she would have to go into hospital at some time, but neither she nor her doctor made any special effort to get her into hospital and get it over before her 60th birthday because neither of them knew that she stood to gain financially by going into hospital either before her 60th birthday or after her 65th birthday but that she stood to lose financially by going into hospital between those two dates. If she had not gone into hospital between those two dates, which she could perfectly easily have arranged had she known the consequences, her pension would not have been reduced.

That is, briefly, the story. I have said that Mrs. Green did not know, and presumably also her doctor did not know, the consequences of taking her hospital treatment just when she did at this, as it turned out, wrong and unnecessary period. I admit that I would not have known either if Mrs. Green had consulted me before making her decision.

I am sure that the Joint Parliamentary Secretary will not reply with debating points about the previous Government having failed to provide any remedies in such situations any more than I want to blame the Minister for the inflexibility of the law. The hon. Gentleman will surely agree that it is a hard case. I have no doubt he will explain that he has no power to render the existing law more flexible and I know from experience how often Ministers wish the law were more flexible when they come up against hard luck cases for which the law allows them no discretion.

I know, too, how reluctant Parliament is to give Ministers wide discretionary powers while, at the same time, hon. Members never cease from criticising them for being inflexible in particular cases, although Parliament itself has compelled them to be inflexible. All this I know. I know, too, that nothing can now be done to remedy Mrs. Green's hard case and Mrs. Green, I have reluctantly to say, knows it herself because I have fully explained it to her.

But I ask the hon. Gentleman to look sympathetically at the problem and to see whether it is possible to find some way of improving the facilities open to citizens under the welfare services to understand their rights and to avoid such unlucky consequences in future. The welfare services in my experience are very humanely administered within the limits laid down by Parliament but when unforeseen hard cases arise it seems to me right, without blaming those responsible for the administration, that publicity should be given to such cases in the hope that, even if they cannot be remedied, their repetition can at least be avoided.

11.37 p.m.

Photo of Mr Norman Pentland Mr Norman Pentland , Chester-le-Street

I must congratulate the hon. Member for Oxford (Mr. Woodhouse) on his good fortune in securing this debate so early in the new Session in order to bring forward the case of his constituent, Mrs. Green. I know that he feels strongly that something should be done to enable her to qualify for a higher retirement pension. He has pursued this most vigorously and, listening to him, I thought I found in his argument the thread of experience from his service in the last Government and an understanding of what the position involves. I am also grateful for the courteous way in which he kept me in touch with the points he wished to raise.

I should make it clear at once that I myself and my right hon. Friend have every sympathy with Mrs. Green and we can fully appreciate her disappointment at not being able to qualify for a higher retirement pension than the £4 18s. a week she is now receiving. But the hon. Gentleman anticipated my reply in more ways than one and I am afraid there is nothing that my right hon. Friend or I can do. I shall try to explain why.

As the hon. Gentleman said, the matter has been the subject of correspondence between us and I think that the arguments on both sides are well known to us. Therefore, I do not propose to go over all the facts in detail. But, briefly, Mrs. Green's National Insurance position is as follows. As we all know, the minimum pensionable age for a woman is 60 and for a man 65. This does not mean that, if a woman can qualify for a National Insurance retirement pension at that age, she is obliged to take it then. She can defer her retirement.

For those who wish to defer their retirement beyond the age of 60 in the case of a woman or 65 in the case of a man and who continue to work, the National Insurance scheme is flexible. It offers a measure of encouragement by providing, through what we call increments, a higher rate of pension for those who continue to work and pay contributions after the minimum pensionable age. This higher pension is payable on eventual retirement or in any event five years after minimum pensionable age if the person has not by then retired: that is to say, at the age of 65 for a woman.

I stress that the increased rate of pension is earned by forgoing pension to which one would otherwise be entitled and by paying contributions. The amount of the increase is calculated by reference to the number of contributions paid during the period of deferred retirement, since that provides a convenient method of assessment. The basic point, however —and I stress this as the hon. Member has raised it forcibly this evening—is that the pension must be forgone. The payment of contributions is subject to that.

I need only deal here with the flat-rate pension,. since the graduated part of the Natoinal Insurance Scheme is not applicable to Mrs. Green's case. Since 1959— which, as the hon. Member has said, is the relevant date for Mrs. Green—the rate at which increased pension can be earned has been Is, of extra pension per week for every complete set of 12 contributions paid. Thus, the maximum amount of increased pension which can be earned during the full five years of deferred retirement—I am talking now of a single person—is £1 1s. a week, or 21 times 12 in the total span of the five-year period. That is how it is assessed.

There is one other provision which I should explain. It is obviously only fair that someone who goes on working after minimum pensionable age should be able to qualify for sickness benefit when he or she is ill. To prevent abuse, however, the National Insurance Act fixes the rate of benefit payable during those periods of sickness at the same rate as the rate at which the pension would have been paid had the person retired at minimum pensionable age. In other words, for those weeks the person, in effect, receives his pension and no contributions are payable. I shall explain the reasons for this arrangement presently.

Mrs. Green reached the age of 60 at the end of 1959. As the hon. Member has said, she was at that time receiving a widow's basic pension of 10s. a week. For reasons with which I need not trouble the House, since that pension is not in dispute and is not relevant to the amount of increased pension which we are discussing, I will leave that aside.

On reaching 60, Mrs. Green became provisionally entitled to a National Insurance retirement pension at the standard rate, which in 1959 was £2 10s. and now is £4 a week. This pension could be paid to her as soon as she retired. However, Mrs. Green decided not to retire but to forgo this pension, to stay at work and to continue paying contributions for a higher pension on eventual retirement under the conditions which I have described.

During the five years before her 65th birthday, when her pension became payable regardless of retirement, Mrs. Green paid 223 contributions which entitles her to 18s. a week extra pension on top of the present standard rate of £4, making £4 18s. in all. The reason why she did not pay more contributions during those five years, as the hon. Gentleman quite correctly said, was that she was ill for two spells of 25 weeks and 14 weeks, 39 weeks in all; she was ill from October, 1960, to April, 1961, and from December, 1962, to March, 1963 respectively. No contributions were due for those 39 weeks, for which she was paid sickness benefit at the same rate as that at which her pension would have been paid if she had retired at the age of 60.

I do not think these facts are in dispute between the hon. Gentleman and myself. Rather, the hon. Gentleman's argument, as he put it forward to me in correspond-ance and as he has amplified it here tonight, is that the provisions should not be as they are, or that they should not have been applied in the way they have been. I think that is a fair assessment of the hon. Gentleman's argument. Here, of course, we come to the crux of the matter.

The hon. Member says that Mrs. Green is in effect losing 3s. a week extra pension because she was ill and had to go into hospital between her 60th and 65th birthdays, and that she should not be penalised for these reasons. The hon. Member also said that Mrs. Green knew some time before she was actually admitted to hospital that she would have to go there. The fact remains, however —I must impress this upon the hon. Member—that extra pension can be obtained only by forgoing pension in the first place, and Mrs. Green did not forgo her pension when she was ill. Those are the facts. She received her pension as sickness benefit at the same rate for those weeks. I am sure the hon. Member will appreciate that that is the essential point, and that it would not in any way be practicable or fair to run the system of increments to National Insurance retirement pensions with regard to such arbitrary factors as hospital waiting lists. I am quite sure he would agree with that.

I should also point out that, in so far as an element of choice on the part of those concerned may be possible, we, of course, make it quite clear to people that only weeks of actual work count for increments, and that weeks of sickness or unemployment do not. My information is that that is made quite clear to the people concerned.

One could argue, of course, that receiving in effect a pension by way of sickness benefit should not prevent someone from also being able to earn extra pension at the same time. That could be argued, but let us examine this proposition. Here, I admit, I am taking an extreme case, but, of course, the extreme case may quite often be a good way of testing the value of a proposition. It would mean, in an extreme case, that a sick person who had no prospect at all of returning to work would be able, simply by refraining from giving notice of his or her retirement, to receive his or her pension by way of sickness benefit for the full five years, and then at the end—

Photo of Mr Christopher Woodhouse Mr Christopher Woodhouse , Oxford

I am sure that the hon. Gentleman would agree with me that this is not the kind of contingency which would have been likely to arise in the case of Mrs. Green.

Photo of Mr Norman Pentland Mr Norman Pentland , Chester-le-Street

Oh, no. I fully accept that. As I have already said, we have great sympathy with Mrs. Green. All that I am pointing out is the circumstances that could apply in a situation where it is claimed that periods of sickness should be taken into account when calculating the increments to be paid in addition to the pension.

I was going on to say that in the extreme case, which could happen, at the end of the day a person would qualify for the fully incremented pension of £5 1s. 0d. a week. In other words, he would get £5 1s. 0d. for giving up nothing, whereas someone who had retired at minimum pensionable age would get only the £4. I am sure that the hon. Member will agree that that would be unfair and obviously absurd, since it would defeat the whole purpose of having a system of increments to pension.

Again the hon. Gentleman's anticipation is correct; I have had to deal with the position as the law stands. I should be out of order if I attempted to discuss possible changes in the law. The hon. Member understood that himself quite clearly, and he has not raised any question involving those issues either. Perhaps I could just say that I suppose that it could be argued that we should have no increments at all. One could have a system under which a person who deferred his retirement received nothing extra when he later retired and began drawing his pension. But the facts are that we do have a system of increments, and they do depend on the person concerned giving up pension and paying contributions to earn them. Therefore, I must tell the hon. Gentleman that I cannot hold out any hope of a change in the system such as would get over the case of Mrs. Green.

I know that the hon. Gentleman appreciates that my right hon. Friend and I have to administer the provisions of the National Insurance Act as they are laid down by Parliament. We have no discretion in these matters at all. We cannot make exceptions to the rules on compassionate grounds or on grounds of hardship, and it is on that statutory basis that Mrs. Green's case has been decided, after very thorough examination.

As the hon. Gentleman knows, she has received a Minister's decision on the number of extra contributions that she paid. She has exercised her right of appeal to the local tribunal, which did not allow her appeal. Through the hon. Member, her case has been brought to my attention and, in the final analysis, to the attention of the House this evening. So, while I and my right hon. Friend have every sympathy with her particular circumstances—and there are other people in the country whose circumstances are very similar to those of Mrs. Green in the matter of increments and their not qualifying for them through sickness—we are quite satisfied that the provisions have been properly applied in her case, and I am bound to say that these provisions are both fair and reasonable.

The hon. Member has pursued the case with vigour and with the courtesy which we all expect from him and which we all get from him, but I am very much afraid that my reply this evening, disappointing though it may be, is the only one I can give on the facts of the case.

Question put and agreed to.

Adjourned accordingly at six minutes to Twelve o'clock.