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Clause 1. — (Amendments Relating to Graduated Contributions.)

Orders of the Day — National Insurance Bill – in the House of Commons at 12:00 am on 16th February 1966.

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3.35 p.m.

Photo of Mr Arthur Tiley Mr Arthur Tiley , Bradford West

I beg to move Amendment No. 1. in page 2, line 25, at the end to add: (e) when the employer provides to the satisfaction of the Registrar of Non-Participating Employments a sickness benefit at least equal in value to the graduated benefit provided under this Act the contributions in paragraphs (c) and (d) above shall be reduced to 4¼ per cent. and ¼ per cent. by each of the employer and employee, respectively.

Photo of Dr Horace King Dr Horace King , Southampton, Itchen

I think that it would be for the convenience of the House to discuss Amendment No. 4 at the same time: in Clause 2, page 2, line 39, at the end to insert: (3) Where the employers have an approved contracted-out sickness benefit under the paragraph (e) inserted by section 1(2) above, no graduated sickness benefit shall be payable in respect of the period covered.

Photo of Mr Arthur Tiley Mr Arthur Tiley , Bradford West

The Amendment stands in the names of my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph), my hon. Friend the Member for Somerset, North (Mr. Dean) and myself. It is with pleasure that we discuss Amendment No. 4 at the same time, Sir Samuel, as the Amendments are interrelated. We are glad to do this, because on this important social Measure we have no wish to waste time.

We have been in a great hurry to prepare our Amendments, and I am sure that the Minister and the Parliamentary Secretary appreciate the difficulties in which we have been involved. If we did this when we were the Government, then we ought not to have done so, because it imposes a good deal upon our resources when, only a fortnight ago, the Bill first saw the light of day—and it is full of technicalities. Indeed, the Government have given themselves 10 out of 10 for the Bill, even though there was never a more complicated Bill before the Committee, because there is not a single Government Amendment on the Notice Paper. It may be that they have given themselves 10 out of 10, or that nobody understands the Bill sufficiently to put down Amendments.

I ought to apologise for an error in Amendment No. 4 as it appears on the Notice Paper. The words where the employers have an approved… appear as "where the employers are approved…"

This is clearly an error of transposition from the written word. My right hon. Friend the Member for Leeds, North-East wrote it.

We do not intend to waste time—indeed, we support the Bill—because we want to make adequate arrangements for the Bill to be law in August. We are entering on a new social Measure of great importance which all parties support. This does not mean that we should skip our examination of the Bill. The Government have provided sufficient time for a detailed study. As there are no Government Amendments—this is a smug Notice Paper from a smug Government—the Opposition have no opportunity for a breathing space.

The Amendment deals with contracting out. I need not explain that phrase to the Committee, for it has been in common usage since the graduated pensions scheme was passed some years ago. But I register our objection to the Government's dictatorial attitude to the whole subject of contracting out. For instance, in paragraph 16, on page 5 of the White Paper, we read: There will be no contracting out of the new scheme of earnings-related short-term benefits. No more and no less than that. Similarly, on 7th February the Minister said: There will be no contracting out of the new earnings-related benefits and the extra ½ per cent. contribution will also be levied on those who have contracted out of the 4¼ per cent. contribution for the graduated retirement pension."—[OFFICIAL REPORT, 7th February, 1966; Vol. 724, c. 47.] This is a dictatorial Government: "There will be no contracting out", so it was stated in the White Paper and in the House.

On our side of the Committee we have no wish to burden industry with any more clerical administration in connection with National Insurance or pension schemes. We give industry enough work already in that connection. Scarcely a week passes but what some additional taxation is imposed on industry and commerce, and scarcely a week passes but what some additional administrative work is given to them, also.

As I say, we give them enough work already, but, oddly enough, the Bill, as it now is, gives companies in industry which were contracted out additional work, because for the first time they are brought in, in that the necessity is brought to them to include in their salary sheets and wages books columns for this graduated contribution. Already, therefore, extra work is being imposed.

In our view it would not have been too difficult to consider a method by which contracting out would have been possible under the new Bill. Indeed, we should not have taken up this point if already there had not been machinery provided by the previous Government, a method of dealing with graduated pensions. The machinery is there, the Registrar of Non-Participating Employments is there.

We ought to remember that the Bill is not affecting just a small number of our people who are already in sickness schemes. We on this side thought the number amounted to 14 million people already in sickness schemes and being provided for by employers in varying degrees, but we accept the figure which the Joint Parliamentary Secretary gave us towards the end of our debate on 7th February, when he said that the number was 10½ million. We had included certain people who should not have been included.

The important thing to remember in connection with contracting out is that many of those 10½ million are already in sickness schemes which are better arrangements than those which we are now providing by the Bill. I refer to various grades of people. I have here a Report from the Ministry of Labour on sick pay schemes. It is a Report of a Committee of the National Joint Advisory Council on Occupational Sick-Pay Schemes. If we browse through the details of the various schemes which were reviewed on the instructions of the Ministry of Labour and look down the list of the great organisations we see they include nationalised industries and local authorities throughout the country and the Civil Service. There are, indeed, many schemes in being, and which have been in being for years, and which are providing much better benefits than those under the Bill.

That is all to the good. We are not complaining about that, but here are listed the National Coal Board, British Railways, London Transport Executive, British Transport Docks, Inland Waterways, the Transport Holding Company, British Transport Hotels, the electricity supply industry, the gas industry, the United Kingdom Atomic Energy Authority, and the whole' of the Civil Service and local authority service, and they have between them sickness schemes which are superior to the one which is now before this Committee.

I cited in the Second Reading debate the teachers' scheme, and I shall not weary the Committee with the details of it because I have given them before, but they have a scheme which is superior to that in the Bill. Under the Civil Service scheme, for the white-collar employees, for instance, there is a qualifying period of nil; the period of payment is six months, and 12 months in relation to incapacity, and a further six months on half pay, subject to a maximum of 12 months' sick leave in any four years, and the benefits are full pay less National Insurance benefit, and half pay at the end of six months without any deduction of National Insurance benefit, and there are no waiting days for the period of payment.

3.45 p.m.

A serious problem arises whether sufficient thought has been given as to what the position is now to be with the whole of these sickness and accident schemes. It is not, of course, only the nationalised industries and the Civil Service and the local authorities which are concerned, but there are many great companies in private industry—indeed, great and small companies—in which these private sickness schemes have been in force for some time.

Perhaps the right hon. Lady will deny this, if it is not true, but we wonder if this is not a dictatorial attitude, because we cannot find any trace of consultation having taken place with any of the organisations I have mentioned. Indeed, the worst of Socialism is that the Government say, "Do it because we say so". No explanations have been given. We want to know whether there has been any consultation about contracting out. There may have been consultation about the scheme; we doubt whether there has been sufficient consultation about the whole scheme; but has there been consultation about contracting out?

We know, for instance, that the Confederation of British Industry is concerned about the effect the Bill will have on employers' sickness schemes. Many of these in the private sector of industry and commerce are non-contributory. The Confederation is concerned for two reasons. The first is that the value of the schemes in the private and public sectors is greatly reduced—or will be when the Bill becomes law; the value of the schemes to the workers is greatly reduced. They are, indeed, worried; those 10½ million people are worried about the effects on that concession, which we hope to see spreading throughout the country, and which is part of their working agreements in employment, whether in the public or the private sector. The Confederation is also concerned at the serious over-benefiting which may occur in those private schemes in which deductions are not made for insurance benefit. We pointed the other day by way of illustration to the extra industrial injury benefit of £2 15s. as another example of the over-benefiting in certain cases.

It should be made clear, and I am sure that the Minister will be prepared to do this, as I hope she will, that by the application of the Bill when it becomes law it will be necessary for many of these private schemes to be reviewed. We see the need, and I am sure the right hon. Lady sees the need, that we should, from both sides of the Committee, make it clear, because we think that that would have a good effect on industrial relations, because none of us wants to see conflict or trouble arising because of the passage of a Bill providing enormous benefits throughout the country, and which, for some years, we have wanted to see implemented.

There is also concern in the Civil Service. I have permission from Mr. Richard Hayward, who is Secretary-General to the Staff Side of the Civil Service National Whitley Council, to give an example. I would not have done so without his permission. There is concern in the Civil Service for the future protection of their members. It is as if a principle is being violated for the first time. It must be obvious to all that members of the Civil Service will not readily have compulsory deductions made from their salaries or wages where there is no personal benefit being obtained under the terms of the Bill.

There are 750,000 civil servants which is not a small number, and all of them have a scheme and benefits in being. It is not fair to say that they get them for nothing, because the benefits are part and parcel of their employments conditions and their contract of service.

Hitherto, the contract of service has included all those benefits, but now that vast army of people are being compelled to contribute from their salaries and wages for something which they already have as part and parcel of their service contract.

No one will get very excited about a deduction of 1s. a week, with the knowledge that the money will provide a multitude of people throughout the country with benefits which in a civilised land everyone would wish to see brought about. But there are 750,000 people, and Mr. Hayward estimated that they would contribute £1½ million each year, to which would be added £1½ million in respect of employers' contributions. So it is not a small thing with which we are dealing.

In total, it seeems a great amount, but, as I say, no one will object to a 1s. a week. However, we should like the Minister to make some comment about the principle. The right hon. Member for Sowerby (Mr. Houghton) is an expert on the subject, and he will know that this is the first time that such a deduction has been proposed for something which a man has in his contract of service as a matter of right and, oddly enough, when he is compelled to pay for the privilege of having it he is getting something less than he has as a matter of right.

It is a serious intervention by the Government, and I know that the Staff Side of the Civil Service would like confirmation that it is not a new method of dealing with our social services. The whole country knows that the right hon. Member for Sowerby has been engaged for some time in a review, and I wonder what the effect of that review will be.

I mentioned the possibility in Second Reading. Perhaps we can be told if the Minister has asked or invited the Accident Offices' Association to pass their comments to her about the sickness and accident benefits in the Bill. The business of insurance is a mighty part of our economic life and, as I said the other day, it is something which is the envy of all trading countries in the world. If it had been impossible for the private sector to amend its schemes, or if it gave it too much work to consider it, none the less it is nice to be asked, and I should like to feel that it had been consulted.

The great difference between the two sides of the Committee is that we on our side believe that we should assist private enterprise and private endeavour as much as possible, whereas the Government never even consider it and on many occasions appear to do real harm. To the Government, the State is all supreme, but State schemes do not bring in export earnings in the same way that the great insurance business of our country does.

We are using the Amendments on the Notice Paper to probe the Government's mind. We are filled with apprehension about some of the disregard which the right hon. Lady paid to the contracting-out arrangement in her speech on the Second Reading and we are entitled to know what its future is to be. After all, we may be facing a General Election at any time, and we would like to be told what it is in the right hon. Lady's own words. Tell us now what is to be the future in private pensions about the contracting-out arrangement, because there are millions of members of private schemes who do not wish for Government intervention.

When we examined the right hon. Lady's words, we noted with some alarm that she said: There will be no major alterations at this stage in the contracting-out arrangements. Does she mean in respect of the present Bill, or is a great scheme being hatched to destroy contracting out and thereby destroy the whole system of private arrangements for pensions?

The right hon. Lady went on: The level of equivalent pension benefits will not be changed by the Bill. Existing contracting-out certificates will, therefore, remain valid. That is very kind condescension— In other words, this is an interim scheme."—[OFFICIAL REPORT, 7th February, 1966; Vol. 724, c. 47–8.] It is full of foreboding for the future of the private sector, and it is right—

Photo of Dr Horace King Dr Horace King , Southampton, Itchen

Order. I find it very difficult to relate this to the Amendments.

Photo of Mr Arthur Tiley Mr Arthur Tiley , Bradford West

I felt that you would think that, Sir Samuel, and I am sorry that I have trespassed on your courtesy. Perhaps I shall be able to return to my argument when we come to the Question, "That the Clause stand part of the Bill". For the present, I will leave it.

Photo of Mr Arthur Tiley Mr Arthur Tiley , Bradford West

Do not ask me a question now which Sir Samuel will not permit.

Photo of Mr Thomas Urwin Mr Thomas Urwin , Houghton-le-Spring

I rise merely on a point of clarification. Would the hon. Gentleman assist the Committee by indicating the columns of last Monday's Second Reading debate which he refers to when he quotes the words of my right hon. Friend?

Photo of Mr Arthur Tiley Mr Arthur Tiley , Bradford West

I quoted the column number in my earlier reference to the right hon. Lady's speech, and my later references were a continuation of it. The references were to columns 47 and 48 of 7th February, 1966.

As I have said, we have put down these Amendments as probing Amendments, and we do not intend to divide the Committee on them. We hope that we shall have a healthy debate on the subject of contracting out. I have posed many questions, because I think that people are entitled to know why they cannot contract out under the Bill when the procedure is there already. They are entitled to know what is to be the future of contracting out.

4.0 p.m.

Photo of Captain Walter Elliot Captain Walter Elliot , Carshalton

I should have thought that the Minister would have had no difficulty in accepting the Amendments. I know that Socialists as a body are inclined to think that when they produce a blanket proposal and anyone wants to contract out of it, there is a catch in it and they are getting away with something. But I am quite sure that that could not be the case with the Amendments that we are discussing.

We are dealing with two Amendments to a Bill which, we must remember, is costing £76 million, with the background of other Acts which we have brought in in the last 12 months which are costing hundreds of millions of pounds. Thus, any savings that we can make, particularly when we fail to pay our debts and incur enormous new ones, are not only important in themselves, but show a willingness by the country to cut its coat according to its cloth.

I confess that I cannot work out—I have not the resources to do so—to what extent the amendment will be an economy to employers, but I assume that it will be appreciable. But apart from that, economy in administration, form-filling and the like, is a great consideration these days, particularly with the new proposals which we were discussing yesterday, so anything that can be done to minimise either money or work is well worth considering.

During the Second Reading of the Bill a good deal was said from both sides of the House about absenteeism, and the effect which increased benefits would have on it. I do not want to exaggerate. The fact is that the vast majority of people at work, in whatever job, do a good day's work. They are loath to go sick, and remain at work even when they should not.

There is, however, a certain amount of absenteeism and I believe that if there is a central Government scheme we are more likely to get that sort of thing than if we have a scheme which is organised and run by employers, possibly with the co-operation of the trade unions. A centralised scheme is impersonal, whereas when a scheme is run by employers, or by industry, or by a company, the people running it are in touch with the men, or should be, and they have an incentive to weed out those who take advantage of such a scheme, as it is to the disadvantage of everyone if some malingerers take advantage of it. I believe, therefore, that from that aspect private schemes are to be greatly encouraged.

Amendment No. 1 refers to a sickness benefit at least equal in value to the Government scheme. From my knowledge of schemes which provide all kinds of fringe benefits, I know that when words such as those are used in legislation, private schemes invariably begin to go ahead of the public one, and for this reason, too, I think that private schemes are to be encouraged. It sometimes seems that Socialists are incensed when that happens, but they will, I trust, stifle their feelings.

I believe that if the Amendments are accepted both money and work will be saved. There may be better benefits, perhaps not to everybody, but do not let us take the view that unless everybody gets more, nobody should. If some companies are able and willing to produce better schemes, so much the better. Others will have to produce schemes at least equally as good as that proposed in the Bill. For those reasons I hope that the Minister will give favourable consideration to these Amendments.

Photo of Mr Thomas Urwin Mr Thomas Urwin , Houghton-le-Spring

As there are innumerable schemes in industry. I have some sympathy with the Amendment. During the Second Reading debate last week I asked my hon. Friend to give us a lead and some guidance on what was to be the future of such schemes in the event of this Bill becoming law.

I think that people running schemes in industry are somewhat concerned about the future of those schemes. I say that because I know that in one or two schemes—and certainly in the sickness pay scheme with which I am familiar—there is an escape clause which provides the opportunity for further discussions in the event of legislation of this kind being introduced. I think that the Committee will be greatly assisted if my right hon. Friend can give us a lead on what is to happen to such industrial schemes.

Photo of Mr Paul Dean Mr Paul Dean , Somerset North

I, too, wish to ask a number of questions on this important point of contracting out. As my hon. Friend the Member for Bradford, West (Mr. Tiley) said, there is practically nothing about this in the White Paper, and we heard very little by way of explanation during the Second Reading debate. This makes me wonder whether the problem was fully considered before the Bill was brought in. In answer to questions put from this side of the House during the Second Reading debate the Parliamentary Secretary to the Ministry of Pensions and National Insurance admitted that many of the private schemes would require adjustment. He said: In many cases National Insurance benefits are taken into account automatically; that is, they are deducted from the sick pay; in such circumstances the new supplements may cause the scheme's benefits to be adjusted."—[OFFICIAL REPORT, 7th February, 1966; Vol. 724, c. 140.] This means that the vast majority of schemes—indeed, perhaps all—covering about half the working population, will have to be examined to see what adjustments will have to be made.

People running these schemes will have to make an adjustment where benefit is paid less National Insurance benefit. Every scheme will have to be adjusted to take that into account, but the additional question which arises is whether, in view of this new State scheme, they will feel that more substantial adjustments are required in their schemes. Will they feel that it is no longer possible for them to run these additional schemes now that the State scheme is expanding in this way?

As both employers and employees will have to pay additional contributions, they may feel that they cannot afford to provide the benefits which they are providing at the moment, and many of these benefits, particularly in the public service, in the nationalised industries, and in some private industries, are substantially better than those provided by the State scheme.

Perhaps I might mention just two examples to which I referred on Second Reading. The schemes for teachers and nurses provide good benefits, and in many cases, particularly after a certain period of employment, provide better benefits than those provided by the State scheme, and with no contribution by the employees concerned.

It is essential to have more information about what is likely to be the effect of the Bill on such schemes, because if, at the end of the day, we find that the two schemes to which I have referred, for nurses and teachers, are not able to provide the sickness benefits which they are providing at the moment, it will be a strange comment on the recruiting drive which is now on for both nurses and teachers. These are just two examples. I hope that the right hon. Lady will be able to tell us more about the study which she has done on the effect of the schemes proposed in the Bill and also why it is not possible to formulate a practical contracting-out arrangement. The Joint Parliamentary Secretary said that it would be too complicated and I can see that this is so, but what we on this side are not satisfied about is that sufficient thought and attention has been given by the Government to try to find the answer.

I should like to turn to the action which private schemes will now have to take. It is not at all clear whether this scheme will be the pattern for the future or not. We were told during Second Reading that this was an interim Bill, but I received the clear impression from many of the things said both by the right hon. Lady and the Parliamentary Secretary that this was the future pattern for the short-term benefits, that it is not likely to be changed and that it is the first part we have yet seen of the long-term review which the Chancellor of the Duchy is now undertaking.

The right hon. Lady said during Second Reading: This Bill is the first of the new developments stemming from the review. She also said: The Bill…presents the first stage in the Government's plans to reorganise social security."—[OFFICIAL REPORT, 7th February, 1966; Vol. 723, c. 37, 53.] This suggests an air of finality, that the future pattern is now established for short-term benefits. If this is so, it is very important that those who run occupational schemes should be quite clear that this is the case.

At the moment, in many cases, they do not know whether they should attach more importance to the word " interim " used by the right hon. Lady and, therefore, postpone any long-term look at their own schemes until the Government bring forward their major review, or to the clear indication that this is the first part of the long-term review and that it will form a pattern for future short-term benefits.

Photo of Miss Peggy Herbison Miss Peggy Herbison , Lanarkshire North

The hon. Gentleman quoted a part of my speech from col. 37 of that Report, but he did not quote the full sentence. I went on to say: But I want to stress that it is an interim Measure which will be re-examined"— that is clear enough— in the light of the results of the completed review."—[OFFICIAL REPORT, 7th February, 1966; Vol. 723, c. 37.] I do not think that anyone could be clearer than that.

Photo of Mr Paul Dean Mr Paul Dean , Somerset North

I am glad to have that from the right hon. Lady, because this helps to clear up the point. I agree that I mentioned that she said that this was an interim scheme, but the quotations I have given, including that from col. 53, where she said: The Bill…presents the first stage of the Government's plans to reorganise social security suggests, at any rate to me, that this is to be the future pattern upon which these short-term benefits will be based.

I am simply asking for elucidation, because it is important that those running sickness schemes, those who are considering doing so and those setting up new ones, should have as clear an indication as possible of what is in the Government's mind. Is it likely that this pattern will be the pattern for the future for short-term benefits or, when we have the long-term review from the right hon. Gentleman, will something be put in its place? If this could be elucidated, it would be of great assistance to us and to those concerned with these matters.

4.15 p.m.

Photo of Sir Raymond Gower Sir Raymond Gower , Barry

The Minister will, I am sure, have derived the impression that these Amendments and the speeches in support of them reflect no basic opposition to the objectives of the Clause. They reflect rather a profound anxiety about the future of the occupational schemes which have existed for many years in variegated forms and which are generally drawn up to suit the requirements of a particular profession, industry or trade. There is deep anxiety about this and I do not believe that the right hon. Lady will think that unreasonable. Indeed, her hon. Friend the Member for Houghton-le-Spring (Mr. Urwin) confessed that he shared some of this anxiety.

It is right and proper that a humane society, finding that private schemes cannot make the sort of universal provision, should itself do so. That is why we support the main principle of the Clause. At the same time, there is, in some of our minds on this side of the Committee, another anxiety—that we might be beginning to incline too much on the side of universal provision by the State. This is a real anxiety. I would remind the right hon. Lady that, whereas we want the State to do things which cannot be done by people themselves, we do not want it to do those things which people can conceivably do better for themselves.

I would remind her, also, that some of the most dynamic countries in the world and some of the most dynamic economies, which give their peoples very high standards of living—I am thinking in particular of some Western European countries—tend in the direction of occupational schemes of a very high order. Under such schemes, provision is made more by employers in co-operation with the State than by the State itself. This is a salutary tendency in those countries.

We want from the right hon. Lady not a confession that she is wrong—we do not believe that—but an indication that she, also, is deeply concerned about the future of these occupational schemes and that she will do her utmost to ensure that the provision which is now being made with the support of all parties in the House will not fatally damage those schemes and that she and her colleagues will do their utmost to achieve a state of affairs under which State provision will be adequate, but the provision by way of occupational schemes will not be fatally hurt.

Photo of Mr Kenneth Lewis Mr Kenneth Lewis , Rutland and Stamford

I am sure that the right hon. Lady will understand—although she has no experience of the married state—that, in the marriage service, there is a form of words which goes something like, "You take each other in sickness and in health, 'till death do you part." The right hon. Lady will understand that she has been able to opt out of that. There seems to be a grave danger that what applies to marriage will not apply to schemes of this kind. We seem to be in danger of not applying it to schemes of health and sickness for employees in industry.

I am certain that in this scheme, as in others, there should be an opportunity not only for existing independent private schemes to continue, but for direct encouragement to be given to the extension of private schemes. This encouragement is missing from the Clause. If we want to encourage private schemes we must give an incentive. I should like to encourage not only private schemes offered by employers, but also private schemes of health and sickness insurance offered by trade unions.

Over the years the trade unions have had to appeal for membership on the basis, "If you join the trade union you will secure from it all support to get an increase in wages." This has resulted in wages increases, sometimes, let us be honest about it, not justified by productivity. This is a problem just as much for the present Government as it was for the Conservative Government. If trade unions could appeal for membership on the basis of benefits which they provide for their members other than wage increases, it would enable them to bid for members on a basis which was less destructive to the prices and incomes policy.

Photo of Dr Horace King Dr Horace King , Southampton, Itchen

Order. The hon. Member is getting very far from the Amendment which we are discussing. He must relate his remarks to the Amendment.

Photo of Mr Kenneth Lewis Mr Kenneth Lewis , Rutland and Stamford

The Amendment can apply to what I am saying in so far as it seeks to give incentives to employers. It is also possible that an incentive could be given to trade unions. But if, Sir Samuel, you say that I am out of order, I shall move from this subject.

This principle has always appealed to the Conservative Party. In connection with the Health Service, we believe in the private sector. We should make our position clear that in sickness payments we believe that there should be encouragement to the private sector. My hon. Friend mentioned teachers and nurses. In addition, there are a great number of private firms which have always made sickness payments which go beyond what is being offered in the Bill. They should be encouraged to do so and others should be encouraged to introduce schemes equal to the best which are available.

I hope that the right hon. Lady will make it clear that the Labour Party, too, believe that nothing the Government will do will kill the opportunity which they provide and the encouragement which they give to private firms to look after their own workpeople. When I speak of employees I do not mean only the artisans, because almost everyone who works in industry, from the director downwards, is an employee. There is a great danger that people may believe that the State inevitably looks after them.

If we are to encourage people to believe that the firm in which they are working is a joint enterprise of directors, management and workpeople, as well as those who put their money in the firm, we must give all those who work in that enterprise an understanding that what they do matters to the company. There is no better way of doing that than by bringing the company into the task of looking after their employee's welfare.

I hope that the Bill does not represent the beginning of a move by the Government to say that private schemes must be disregarded or discouraged.

Photo of Miss Peggy Herbison Miss Peggy Herbison , Lanarkshire North

This has been a very wide-ranging debate. I was a little surprised when I saw these two Amendments headed by the name of the right hon. Member for Leeds, North-East (Sir K. Joseph) because I assumed from his Second Reading speech that he understood the difficulties of doing other than we have decided to do in the Bill. Having listened to hon. Member after hon. Member speak in the debate today, it has become clear to me why the right hon. Gentleman's name heads the Amendments, It seems to me that hon. Members have no worry about the provisions of the Bill and about contracting in and contracting out for sickness benefits—except, perhaps, the hon. and gallant Member for Carshalton (Captain W. Elliot) who made a specific point about contracting out. He is almost the only hon. Member to do so.

So far, the whole debate has highlighted the doctrinaire ideas of the Opposition not about benefits for sick people, but about what is to be the future of pensions provision in this country. In the last few weeks we have had "noises off" about this. The right hon. Gentleman has suggested that the Labour Government want to kill occupational pension schemes. That suggestion exists only in his imagination. Nothing could be further from the truth. We are delighted that so many people have adequate provision for their old age through occupational pension schemes, and in anything the Government do in future there will always be a place for these good occupational pension schemes.

I do not know who briefed the hon. Member for Bradford West (Mr. Tiley) or other hon. Members. The hon. Member was in the private insurance world for a long time. I do not know who briefed him, or whether he was expressing his own fears when he said that private insurance would not have in future the whole provision for occupational pension schemes which the right hon. Member for Leeds, North-East has told the country it will have. But all that will be the subject for another debate.

I want to make it quite clear that we do not regard private insurance schemes and occupational schemes as rivals to anything which we shall do in the future. They will be partners in the job of ensuring for everyone in the country an adequate income on retirement. Unlike hon. Members opposite, we are not doctrinaire. They say that this is a job which the Government can do for no group of people and that only private insurance can do it.

Photo of Sir Raymond Gower Sir Raymond Gower , Barry

Mr. Gower rose

Photo of Miss Peggy Herbison Miss Peggy Herbison , Lanarkshire North

I will not give way at the moment. I let all hon. Members speak who wished to do so, except for one interruption to correct a statement, and I intend, for the present, to carry on with my speech. We are busy with our review, and I do not think that there are any fears in the private insurance world such as have been expressed by hon. Members opposite. The real fear of hon. Gentlemen opposite is that the State might do something which would interfere with profits for some other people. [HON. MEMBERS: "Oh."] That is evident from the debate today and from what has been said previously. We do not take that view.

I will deal with some of the other matters that have been raised. The hon. Member for Bradford, West spoke about the timing. We are trying to get the Bill on the Statute Book as speedily as possible and we are grateful to the Opposition for the help they are giving us in this endeavour. If we want these extra benefits to be payable in the autumn it is of the utmost importance that we get the Bill through at the earliest possible moment.

4.30 p.m.

The hon. Member for Bradford, West was worried about there not being any Amendments standing in the names of my hon. Friends. The answer is that my hon. Friends do not have an axe to grind on this issue, whereas it is evident that hon. Gentlemen opposite have a number of axes to grind, although they are axes which have nothing whatever to do with the provisions of the Bill. It seems, therefore, that my hon. Friends are, in the main, content with what I would call this breakthrough in the better provision of benefits for sickness, unemployment and widowhood.

The hon. Gentleman went on to ask about the consultations that had taken place. I have had consultations with representatives of the Confederation of British Industry and the T.U.C. They were made aware of the provisions of the Measure and I assure the hon. Gentleman that these consultations were very different from what he suggested. The hon. Gentleman also suggested that we were taking a dictatorial attitude—"There will be no contracting out of this", he said we were saying. What I said on Second reading, and what the White Paper pointed out, was concerned with the facts. I will explain these when I come to deal with the Amendment, but I thought that, at the outset, I would answer this debate, which has had very little to do with the Amendment. I will show why, based on the facts, we have drafted the Bill in its present form.

A number of hon. Gentleman opposite said that we should not burden employers with additional clerical and administrative work. I hope that when I have dealt with the Amendment they will realise that the Bill will do nothing of the kind, whereas if the Amendment were accepted the work of employers in this matter would be greater and more complicated.

I was interested in the list given by the hon. Member for Bradford, West of the industries which, he said, were already making better provision than the Bill in times of sickness. The hon. Gentleman referred to the nationalised industries and the public services.

Photo of Sir Raymond Gower Sir Raymond Gower , Barry

Mr. Gower rose

Photo of Miss Peggy Herbison Miss Peggy Herbison , Lanarkshire North

I wish that the hon. Member for Barry (Mr. Gower) would listen to what I am saying. I am replying to statements made by his hon. Friend who, I take it, was careful to check his facts before speaking.

It is true that some private employers do make this sort of provision, but not for anything like the numbers in publicly-owned industries and others, such as State and local authority employees. This is, perhap, another reason for the Bill—so many people in private industry either have no private sick pay benefit schemes', or have schemes that are inadequate.

The hon. Member for Bradford, West referred to over-compensating and the question of the £2 15s. on top of the earnings-related benefit. That £2 15s. can only be received by a man or woman who has become injured at work. This is, therefore, compensation for injury—something which has existed in this country for more than 100 years and which exists in almost every industrialised country in the world. I hope that we will not hear any more about this business of over-compensating.

It is suggested that this will be the first time that the conditions of public servants—employees in the Civil Service, local authorities, and so on—are being worsened. In 1948—when provisions were introduced to cover many of these people who had not been covered by previous national insurance legislation—a change was made affecting teachers, civil servants' and others. Therefore, this is not the first time that a change affecting these people is being made. If the Opposition are so concerned about the position of these people why, during their 13 years of power, did they not do something to rectify what happened in 1948?

The hon. Member for Bradford, West stated that certain bodies—and he said he had been in touch with Mr. Hayward of the Staff Side of the Civil Service—had grave forebodings about the Bill. I have not learned of these grave forebodings. It is, of course, natural that people should not want to lose anything which they now have. I understand that these bodies are leaving the matter in abeyance pending a full scheme being worked out in the whole social security review so that they will be able to see the position of sickness and unemployment benefits and earnings-related pensions in the future.

Just as we have had consultations with the bodies I mentioned, I assure the Committee that we will give plenty of time for further consultations, not only for ourselves in the Ministry—with the C.B.I, and the T.U.C.—but, I hope, also between the Ministers concerned as employers of these public servants and the Staff Side. Taking them into our confidence about what we hope to do, with every willingness to have close consultations, is the way we wish to proceed, because those concerned have a right to know what will happen to them in the future.

The hon. Member for Barry said that there was deep anxiety over this matter, but he did not give a sign of the quarters from where that anxiety came. I do not know whether he could give such a sign.

The intention of the Amendment is to allow contracting out of earnings-related sickness benefit. I shall deal later with matters intrinsic to the provisions of the Bill, but I would now say that if one were to allow the suggested contracting out a very elaborate procedure would be needed. Not all of those at present contracted out from the graduated pension scheme have a sick pay scheme, and some of those who are contracted into the present graduated pension scheme do have private sick pay schemes. That means that if we were to accept the Amendment there would be four categories.

What would those four categories be? We would have the man who was contracted out for pension and sickness benefits—for both. We would have the man who was contracted in for both. We would have the man who was contracted out for pensions, but not for sickness benefit. We would have the man who was contracted out for sickness benefit, but not for pension. Apart from all the other complications, at least four different rates of contribution would be required, and it does not take much imagination to realise the problems that that would create for the employer, leaving aside the administrative problems for the Ministry.

The Amendment refers to …a sickness benefit at least equal in value to the graduated benefit provided under this Act… Very frequently, it would not be easy to demonstrate what would be a benefit at least equal to that which will be provided under this Measure. For instance, difficulties could arise with the cover afforded by an occupational sick pay scheme, with the amount, duration, and with waiting-day rules of the benefit provided. Any system of contracting out would greatly complicate administration.

There would be no way of deciding from the contributions a man had paid whether a claim was contracted out from sickness benefit.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

Sir Keith Joseph (Leeds, North-East) indicated dissent.

Photo of Miss Peggy Herbison Miss Peggy Herbison , Lanarkshire North

The right hon. Gentleman has, I think, realised from the very beginning the nonsense of this Amendment, but it is important that I should deal with it, so that he and his hon. Friends cannot, in future, say that this was something that could be easily done. That is why I am taking the valuable time of the Committee to deal with the subject properly.

It would be necessary to question all claimants for sickness benefit, and, for different reasons, the answer that our officials got might be wrong. Here, we come to the extra clerical burden on the employer, because a claimant's statements could be verified only by reference to the employer. That would put extra work on the employer and, at the present time, the nation wants as far as possible to keep down any extra work put on the shoulders of employers. There would also be the chance of overpayment, and complicated follow-up action would be almost certain to increase.

Again, the Amendment does not make it clear whether the criterion for withholding the supplement on grounds of contracting out is to relate to the employment current at the time of the claim, or to that in which the employee was employed during the tax year on which title to the supplement is to depend. If the former is intended, we would have to safeguard against the possibility of an employer seeking to evade his contracted-out obligations.

The hon. and gallant Member for Carshalton (Captain W. Elliot), in lauding the private pension scheme, said that the employer was able to weed out the malingerer, but a Government—and, I would hope, everyone—would want to protect the people as well, the people who are willing to work. Just as the hon. and gallant Member has suggested that the employer should use his private scheme to weed out malingerers there are provisions in this scheme for the safeguarding of the workers.

An employer might seek to evade his contracted-out obligations by discharging an employee soon after he fell seriously ill. There would be nothing to prevent that, or to prevent the employer discharging a man when it appeared to him that the man was likely to go off ill. There would be nothing at all to prevent the employer getting rid of the man, just as the hon. and gallant Member accepted that there would be nothing to prevent his getting rid of a malingerer. There would be no safeguard at all for the people who were contracted out—

4.45 p.m.

Photo of Mr Kenneth Lewis Mr Kenneth Lewis , Rutland and Stamford

There would be the one safeguard that the employer who took such action would hardly be likely to have a scheme himself—if he were that type of employer.

Photo of Miss Peggy Herbison Miss Peggy Herbison , Lanarkshire North

Who knows? That is just supposition. It is hypothetical, just as the malingerer might be hypothetical. What we have to ensure is that there is protection for the worker, and I have given that as one example of what might happen to a worker if contracting out were permitted on that basis.

If the intention of the Amendment is to relate the position to the employment in the relevant tax year, complications again would rise where there had been two employments—that could easily happen—one employment being contracted out for sickness benefit purposes and the other not so contracted out. Or, indeed, there might be a time during that year when the worker had no employment at all. I think that all reasonable hon. Members will accept that these instances show that contracting out arrangements will be very far from simple.

I suggest that in this instance contracting out is an unnecessary complication. Employers with sick pay schemes normally already provide for sick pay to be adjusted to take into account National Insurance benefits, as my hon. Friend the Parliamentary Secretary said in the Second Reading debate. As far as I can see, the present sick pay benefit schemes vis-à-vis the provisions made under the Bill will be matters for the usual negotiations between employer and employee.

The National Insurance Scheme has, from the very beginning, been based on the pooling of risks. Provision for contracting out of sickness contributions and benefit would be most attractive to those occupations in which the incidence of sickness is light. To allow this would cut at the very root of the principle behind the scheme, not only behind this scheme, but behind National Insurance almost from its inception.

For all these reasons I hope that if the Opposition intend to push this matter to a Division the Amendment will be rejected.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

The right hon. Lady chose to answer a good-humoured and probing debate in rather acid terms. I think that, on reflection, and, in particular, on contemplating the character of my hon. Friend the Member for Bradford, West (Mr. Tiley), she may regret some of the things she allowed herself to say. To suggest that my hon. Friend, or I, any of my hon. Friends, or any hon. Members of this Committee, in raising the perfectly legitimate subject of contracting out are interested only in profit, or—in her inelegant phrase—are grinding axes, is beneath her, and beneath anyone speaking from the Dispatch Box.

If the right hon. Lady chooses to indulge in this sort of argument it should at least be relevant, for contracted-out sickness schemes—if there were such a phenomenon—or private sickness schemes are very rarely in the hands of insurance companies. They are organised and managed by individual employers, by the Civil Service for the public service, by the nationalised industries for their employees and by private industry for its employees. There may be some schemes run by insurance companies and they may not be mutual ones. They may be for profit, but, even if there is an element of profit here, it is utterly wrong for the right hon. Lady to cast the sort of aspersion she did.

Since the right hon. Lady has said that, I can tell her that my hon. Friend the Member for Bradford, West, who always declares his interest, has been involved in his personal activity of insurance, but that has enabled him, as an hon. Member of this House, to give hundreds of hours to the provisions of the Members' Pension Fund and to advise hon. Members on it. My hon. Friend said that the Opposition have no intention of pressing this Amendment to a Division. I hope that when we finish this debate the right hon. Lady will graciously see fit to withdraw her personal remarks.

If I may, I shall now try to restore the good humour of the debate. I suppose I am one of the "noises off" to whom the right hon. Lady referred. That was a perfectly fair reference. I have spoken in favour of occupational pension schemes being, in her phrase, partners in providing for the older population. We wanted to probe the possibility of private sickness schemes being partners with the State in providing for at least a share of the protection against sickness for the people of this country, but we are certainly not ideologues in this matter.

We recognise the great complexity of trying to operate contracting out for sickness where the sums of money involved are relatively small and the amount of clerical and managerial work relatively heavy. That is why the whole debate was for the purpose of ventilating the possibility, without this party committing itself to saying that this was the right answer. As the right hon. Lady knows, we are in support of the objectives of the Bill. We have a number of criticisms to make, but, in general, we are supporters of the Bill and want to see it on the Statute Book. She must not object if we explore some of the alternative ways of reaching some of her—some of our, shared—objectives.

We have had a number of what I thought constructive and interesting speeches, from my hon. and gallant Friend the Member for Carshalton (Capt. W. Elliot), my hon. Friends the Members for Somerset, North (Mr. Dean), Barry (Mr. Gower) and Rutland and Stamford (Mr. Kenneth Lewis). In an effective intervention the hon. Member for Houghton-le-Spring (Mr. Urwin) took the same line, that this was a possibility worth exploration.

I pick up a point made by my hon. Friend the Member for Barry and repeated by other hon. Members. There are safeguards for the citizen which can be effectively provided only by the State. That is agreed, but there are other safeguards for the citizen which he or his employer or some society to which he belongs can effectively provide as an alternative.

The scope for the State effectively to cover all the things we want it to cover will be limited the more we call on the State to do things which the citizen or his employer can do for him. That is the simple point at issue. So far as concerns the objectives of the Bill, unemployment benefit plainly falls into the first category of things to be provided for by the State. Sickness benefit is arguable. Long-term sickness definitely falls within the purview of the State unless someone has resources properly to insure himself or herself, but short-term sickness is already to a sizeable extent covered to some degree by private arrangements.

It is no mean alternative that we propose to the Goverment in our Amendment. We are not merely proposing that private employers or public employers should accept all the clerical or managerial burden of operating a contracted-out sickness scheme for nothing. We are suggesting that there should be a remission to them of ¼ per cent. on each side. That sounds very little, but it is 50 per cent. of the surcharge which the right hon. Lady is legitimately making by the Bill. We are offering them a remission of 50 per cent. of the cost if they provide adequately by their own arrangements. This is not a monstrous proposal. It is worth examining soberly. I am glad that after the fireworks the right hon. Lady did examine it soberly. She made the sort of strong case we expected, but we wanted to probe it.

This ¼ per cent. on each side is 50 per cent. of the surcharge and it adds up to the formidable sum of £36 million a year. What we were proposing tentatively was that for the benefit of £36 million it would be worth employers, partly—half the benefit would go into the pockets of employees—taking on a certain clerical load. That does not seem to demand an apology from us for putting it forward.

I come to the substance of the argument. My hon. Friend gave the figures. There is some legitimate disagreement about the exact figures, but we have the fact that probably 60 per cent. of the working population is covered by some sort of sickness scheme. Some schemes are substantial and some almost insignificant. Some are formal and some informal. But this is a considerable slice of the working population which to a certain extent is covered. We have evidence that the negotiations which lead to private industrial sickness benefits can do much good for relations between employers and employees. I have with me an article by Mr. Edward James, Assistant Lecturer in Social Administration, University of Birmingham, dealing with private industrial sick benefits and published in the New Society on 23rd May, 1963.

We have to ask ourselves and the Government whether it would not be prudent to build on the 60 per cent. already covered and provide coverage, at least for part of the time if not for the full six months, by the employer. Of course, we recognise that it would involve a fairly elaborate set-up. We recognise that industry might well say, having sniffed at the £36 million or half-share of it, that it is not worth it, that it is too complex and elaborate. We anticipate that that might well be the answer. That is why we are not pressing this proposal. The right hon. Lady spelt out helpfully the four different categories in which people might find themselves, the difficulties of comparing the benefits completely with the benefits under the Bill, the problems of verification, particularly" if the employee had changed his job, and so on. We accept those difficulties.

5.0 p.m.

On the other hand, the right hon. Lady did not deal with some of the points of substance made from this side of the Committee. My hon. Friend the Member for Bradford, West and others of my hon. Friends pointed out the position of those already covered by private sickness schemes. It is common ground between both sides of the Committee that private sickness schemes fall into two categories. In the first case, the employer makes up the national sickness benefit to a set proportion of earnings or wages. Where that happens, as national sickness benefit increases it is the employer that will make the saving. There will probably be no benefit to the individual employee. The employer will have less to make up and will make a saving. He will benefit from the pioneering attitude he has taken to social costs. Good luck to him.

It is a bit galling to teachers, nurses and civil servants to have added to their own taxes, because that is what it comes to, ¼ per cent. out of their own pay packets and ¼ per cent. from their employers, to get as regards sickness not a penny piece benefit, but, in fact, to be used to subsidise the rest of the population. The right hon. Lady replied to this by pointing out with satisfaction that public enterprise has a lead in private sickness benefits over private enterprise. So be it; we do not deny it, but it does not answer the point.

Photo of Miss Peggy Herbison Miss Peggy Herbison , Lanarkshire North

I wonder whether the right hon. Gentleman was listening. I dealt with this point by saying that this would be a matter for negotiation between employer and employee. I made it perfectly clear.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

I wonder what exactly that could mean. Does the right hon. Lady suggest that the employer will make a concession to his employees, or will the employer merely save the amount that he already provides by way of sickness benefit and which will now be replaced by the State benefit? The right hon. Lady is not responsible for employers, and nobody expects her to be. She cannot ride out of this by saying that it is for employers and employees to negotiate. The whole world is open for employers and employees to negotiate. That was not a proper answer, particularly as so many of those who are most affected are public servants. The right hon. Lady has not given us a proper answer on that point.

The second category of private pension schemes is where the employer is in the habit of adding to the national sickness benefit. In this case, it is again common ground that the employer will almost certainly review his scheme and may well take a second look at it and reduce the benefit he has been giving. Again, there will probably be no benefit of substance to those whom the right hon. Lady is seeking to help. For them, there will be no extra benefit. They will have to pay, not just the ¼ per cent. to protect them from unemployment, widowhood and sickness, but the ½ per cent. to protect them against unemployment, widowhood and sickness. They get no extra benefit, but they pay for the sickness benefit they are not getting. I do not think that the right hon. Lady can be very proud of her answer on this matter.

I thought that at the end of her speech the right hon. Lady touched on some most interesting possibilities. She pointed out, legitimately, that there is a different risk rating when it comes to sickness for each industry. There is a greater propensity to be sick in some industries than in others. For private insurance, as she pictured it, to cream off the lowest risks would leave an unfair burden on the State. If her assumptions were true, this would be a very potent argument. The right hon. Lady forgets what she forgot when she was so angry with my hon. Friends and myself. This is not generally an insurable field. It is a field of management. Management running its own scheme carries its own risks. Risk rating is built into its own scheme.

I do not see that the right hon. Lady's argument is relevant. Even if it were relevant, the right hon. Lady fails to recognise that what we are suggesting should be put into private hands—suggesting only tentatively, probingly—is only the graduated element and not the flat-rate sickness pay. It is the flat-rate basic sickness pay which fairly has to be carried by the main population, unless one goes in for the most elaborate risk rating scheme. Otherwise, it would be unfair on the scheme. If the flat-rate sickness scheme is left in public hands, as certainly is common ground between us all, with some private provision for sickness for some part of the time put into private hands, it does not seem to me that the residuary legatee—that is, the general contributor—is thereby damaged.

I ask the right hon. Lady to remember that my hon. Friend the Member for Bradford, West stated at the very beginning that we should not press the Amendment to a Division, but that we wanted to explore the possibilities. We recognise the force of the right hon. Lady's argument. This would be a very complex operation and probably, despite the saving of £35 million, would not be justified. We acept that. We hope that on her side the right hon. Lady will withdraw the imputations that she made, which were thoroughly wrong in character, against the people to whom she was referring. They were also baseless in fact, because the sort of private insurance we are discussing for graduated sickness would, in the vast majority of cases, not be a field of profit at all, but would be a management function of individual employers.

Photo of Miss Peggy Herbison Miss Peggy Herbison , Lanarkshire North

I should like to take up a few points which the right hon. Gentleman has made. He spoke about some of my comments and about my anger. He seems to have had very great difficulty in riding two horses—on the one hand, trying to make out a case for private provision for sickness benefit and, on the other, accepting that the case made against the Amendment from this side of the Committee is a sound one. His having to try to ride two horses makes things very difficult for the right hon. Gentleman.

If the speeches made by the hon. Member for Bradford, West (Mr. Tiley) and everyone else who has spoken in this, our first, debate in Committee had been about the Amendment and contracting out of sickness benefit, I would have dealt with the debate in the way I had intended to deal with it. I should have given all the reasons why it was impossible to contract out of sickness benefit in the way that the Amendment suggests. The right hon. Gentleman need not get so annoyed. The purpose of the Amendment was made perfectly clear. It was to ensure that the case was put for the private insurance companies in whatever is to come out of our general review of social security and provision for retirement.

The right hon. Gentleman cannot ride away in his haughty manner and say, "After all, there is no profit in private sickness schemes" The debate has not been, in effect, about private sickness schemes at all. It has been about what will be the future of occupational pension provision. I say as a statement of fact, casting no aspersions against any hon. Gentleman, that, in the main, occupational pension provision can be a profitable matter for private insurance. If it were not a profitable matter, why should private insurance be in it? I have no intention whatever of withdrawing the remarks I made in answering a debate about what would be the future of private occupational pension schemes.

I stress again what I said earlier. We regard the private provision and the State provision as partners. The right hon. Gentleman, again not dealing with sickness benefit but with providing for old age, spoke about partnership. Partners? Judging from all that the right hon. Gentleman had said in the country, he wants the flat-rate pension to be a State provision, and extra provision for old age to be a matter for private insurance and occupational pensions in private industry. This is a strange partnership. It is not the kind that I want to see.

I want to ensure that in future State and private provision will be partners, ensuring that there will be pensions which will be transferable and which will be dynamic after retirement. The right hon. Gentleman has had great difficulty with this in the country. If he had wanted a debate on the future of occupational pensions he should have taken an Opposition Supply day—and I would have welcomed it—rather than use an Amendment dealing with sickness benefit to talk about the Opposition's deep concern on another matter.

As for the people who have contracted out, we also have been in contact with some of the gentlemen mentioned by the hon. Member for Bradford, West. We know their points of view and I understand that they are willing to wait until there are further developments as a result of the general review. I have made it perfectly clear that there will be every opportunity for consultation when we reach that stage. I do not know what more the Opposition want than the assurance that has been given and which is seemingly acceptable to the people concerned.

The provision of sickness benefit by private employers and the provision of benefit for those employed in nationalised industries or in the public service are matters which will have been taken into account already in private schemes. Private employers have already taken into account benefits paid now under the National Insurance scheme. No doubt employers will want to discuss with their employees what they will do as a result of the provisions of this Bill, and this seems to me to be the right way of going about the matter.

5.15 p.m.

Photo of Captain Walter Elliot Captain Walter Elliot , Carshalton

I am sorry that the right hon. Lady continues to take this aggressive view of profits. The way in which she put the matter in her first speech seemed to indicate that some hon. Members were concerned to make profits at the expense of the sick, but she now appears to have shifted her ground to talk about insurance companies. I have remarked before that when a blanket scheme is produced and somebody tries to contract out, Socialists seem to have a built-in tendency to think that those people are doing something disreputable and that there is a trick behind it. The right hon. Lady displays those characteristics.

Profits, of course, come into it, and I should have thought that after 18 months in power Socialists would have begun to realise the importance of profits. If a company had a better scheme at a cheaper price to help its profits—not necessarily reflected in the balance sheet—would the right hon. Lady think that that was disreputable? A company might well have a sickness scheme and other schemes to improve labour relations and to ensure stability in its labour force.

I remember only too well that on Second Reading the right hon. Lady said that she had an intense interest in the National Plan. It is apparent that the reason for her interest is the so-called 4½ per cent. growth rate. We shall not get that growth rate without profits, and if we as a nation are to pay back our debts that payment can come only from profits. If the Socialist Government have not learned that yet, the country is in for a difficult time.

Photo of Sir Raymond Gower Sir Raymond Gower , Barry

In seeking to justify the remarks which she made in her earlier speech the right hon. Lady got deeper into the mire. Her second contribution would have been perhaps a valid comment on her earlier statement in a different setting, but she knew from the attitude of my hon. and right hon. Friends that these are exploratory Amendments.

Photo of Miss Peggy Herbison Miss Peggy Herbison , Lanarkshire North

We have been told time and again that they are exploratory Amendments, but they are not exploratory of anything to do with the contents of the Bill but of what would be the future of occupational pension schemes.

Photo of Sir Raymond Gower Sir Raymond Gower , Barry

The right hon. Lady is entitled to take that point of view, although I think that it is quite erroneous. But she went further. To any impartial observer the only conclusion to be drawn from her opening remarks was that my hon. Friend the Member for Bradford, West (Mr. Tiley) was not making an objective intervention because in her view, far from being concerned about the welfare of people benefiting from the Clause, he was more concerned with insurance company profits. This is deplorable.

Photo of Sir Raymond Gower Sir Raymond Gower , Barry

Indeed, if he will allow me to say so, the position of my hon. Friend the Member for Bradford, West has not been of such a nature that he would derive any benefit from anything that would happen on that scale.

I hope that, on reflection, the right hon. Lady will feel that it was perfectly in order for the Opposition collectively to make an important examination of the Clause, and that it was perfectly in order for my hon. Friend the Member for Bradford, West and other to ascertain whether the right hon. Lady, in assessing the other methods of dealing with sickness benefit, had contemplated the possibility which they mentioned.

Immediately after we had heard the technical explanation which the right hon. Lady gave, my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) admitted without qualification that part of her answer was convincing. When the right hon. Lady thinks about it, she may well reflect that it is easy to impugn the motives of persons who make a statement, but far more magnaminous and wise to confess one's own error.

Photo of Mr Paul Dean Mr Paul Dean , Somerset North

I very much regret that the right hon. Lady statrted the debate on such a note. When she reads HANSARD tomorrow she will find that nearly all the questions from this side were directly related to sickness benefit. She has answered some of them and has dealt with the complexities—which was one of the objectives of this probing Amendment. I ask her now merely to deal with a point that I raised but which she did not mention.

Are occupational schemes—by which I mean occupational sickness schemes—in the consultations that are to take place, to be based on the assumption that the present pattern, as represented in the Bill, is likely to continue? That is a perfectly legitimate point. Those outside running sickness schemes want some indication. Perhaps the right hon. Lady cannot give an answer now, but if she could say something about it it would considerably assist those interested.

Photo of Miss Peggy Herbison Miss Peggy Herbison , Lanarkshire North

When I intervened earlier in the hon. Gentleman's speech I thought that I had made it clear by recalling what I said on Second Reading. I stressed then that this was an interim scheme and that the provisions would be reviewed in the light of the decisions arrived at after the general review. That is the position. This is an interim scheme because we want to get something done quickly for economic and social reasons. It may be that there will be changes, but I cannot tell at the moment.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

Abuse should have no part in debate in this House, but if the right hon. Lady wishes to abuse anyone she should keep that abuse for a debate when she has not got a strong argument. In this debate she has a very strong argument, and a convincing one, and the abuse to which she descended was quite unnecessary. It is thoroughly abominable of her not to withdraw. She set the debate off on a thoroughly bad note. It was thoroughly unworthy of the subject.

However, we are concerned, as she is, to get on with the Bill. But I point out to her that we welcome the presence of the hon. Member for Liverpool, Walton (Mr. Heffer), who made a constructive speech on Second Reading. Until he came in, together with a few other hon. Members opposite, except for the Front Bench and her Parliamentary Private Secretary, the right hon. Lady had been without the support of one of her hon. Friends for the last one and three-quarter hours. Perhaps, therefore, she was very brave to attack the entire Opposition. Nevertheless, we would like her to withdraw what she said and we shall think far better of her if she decides to do so.

Photo of Mr Arthur Tiley Mr Arthur Tiley , Bradford West

I think that we have had a very interesting debate and that our purpose in moving this Amendment has been fulfilled. I therefore beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

I beg to move Amendment No. 2, in page 2, line 25, at the end to add: (3) The additional half or quarter per cent. of contribution payable under this section will not rank for graduated retirement benefit. It is dangerous business to move an Amendment in this Committee stage, but I will try to make this one as clear as I can. It seeks to remove the extra contribution payable to add graduated retirement benefits to the retirement pension. We believe that the right hon. Lady must have had her tongue firmly in her cheek when drawing up this part of the Bill.

There are three strong reasons why it is most unlikely that the extra contribution payable will result over the years in any extra benefit of any substance. First, the right hon. Lady tells us time and time again that the Bill is interim. Secondly, she knows that we have said that we shall abolish the graduated pension scheme when we return to office. Thirdly, she has been so rude about the scheme herself that we do not think that it has very long to run in her hands.

How does she expect us, therefore, to take seriously the extra benefit that the contribution as drawn in the Bill is intended to yield? Let us look at the prospect of realisation of this extra benefit. How much might it be? The right hon. Lady used to wax eloquent about what she called the "wretched return" for contributions under the graduated pension scheme. But the benefit proposed here will be exactly the same in quality and size as it would have been under the scheme she has attacked.

I remind the right hon. Lady that the basis of the graduated pension scheme is that every £7 10s. of contribution by the employee should be worth an extra 6d. on the graduated pension after retirement. I have done a few calculations. I may be wrong to the odd penny, but I think that I am broadly right as to scale. I calculate that if a man earns about £18 a week, which is near the average industrial earnings, and stays at £18 per week for 40 years—an unlikely supposition, but we have to deal in constant prices, as does the National Plan—the extra contribution will provide the munificent extra benefit of 6s. 6d. per week.

I would like to have heard the right hon. Lady or the Chancellor of the Duchy of Lancaster expatiating on that value for money. The right hon. Gentleman would have torn the pattern to tatters, but now he asks the Committee to accept this proposal of the Minister put, I am sure, with her tongue in her cheek.

The extra contribution will produce an extra benefit. It is true that the benefit will be pretty trifling in relation to the years over which the contribution will have been accumulated, but there will be some extra benefit—that we do not deny. The Government Actuary has spelt out how much the extra benefit will cost.

Extrapolating from Table 1 of column 4 of page 5 of the Report of the Government Actuary, it is fair to say that during the next decade extra graduated pension benefits due within the provisions of the Bill will cost the fund something like £15 million. The Committee must consider whether that £15 million is best spent in adding a basically insignificant amount, in terms of a year's average contribution, to the pension of those who have been contributing and are retired.

It is our suggestion that this sum of £15 million might be better spent. We propose not just the negative thing—although it is a legitimate point for an Opposition to make—that some extra benefit should not be made because it is not justifiable. In view of what happened in the last debate, I had perhaps better emphasise that point. What we are saying is that this £15 million could be far better spent for the benefit of the public.

5.30 p.m.

Here I should like to remind the Committee of what the general outcome of the Bill will be. When an insured person is sick, he will be left to his own reserves, or those of his employer's scheme, for the first 12 days. Thereafter, for the next six months, if earning over £9 a week in a reckonable year, he will receive a graduated sickness benefit. After six months and 12 days, if the person concerned is still incapable of work because of sickness, he will revert to the flat-rate sickness benefit, and if his resources fall below the National Assistance scale, we all know that the National Assistance supplement will be available to help.

This is the situation which on Second Reading we called the switchback and which the right hon. Lady cannot admire objectively, but which she may have had to accept because of the interim nature of the Bill. That we understand. What we propose is that it would make far more sense in social and human terms if we used the £15 million, which from my rough assessment the Amendment would save the insurance fund, to provide the benefits in the new Clause, which would give to the chronic or long-term sick £1 per week benefit, which although probably not the final sum which the community will think just, would be something which would definitely help after the six months' graduated benefit had ceased to be payable, and that that extra £1 should be disregarded for National Assistance purposes.

The right hon. Lady will realise that this would produce a genuine benefit even for the poorest, if necessary, and we have drawn the new Clause in such a way that even where the earnings of a person precluded him from getting graduated benefit because they were below £9, or because of the 85 per cent. rule, there would still be the £1 a week invalidity benefit. That is the reason why we want to make the saving of £15 million. Having explained that, I now return to the Amendment itself.

The right hon. Lady will have to produce extremely good arguments to persuade us that this switch of National Insurance resources does not make sense I remind her again that what we are saying is that the money which she proposes to spend on extra graduated pensions and which over the next 35 years adds up to a sum between £150 million and £200 million, although to only £15 million in the next ten years, would be better spent in other social ways. It is not for us in this debate to make strategic proposals for the whole of social security. What we are immediately concerned with is something which we can forecast, say, the next ten years. In that period, the extra spent on our new Clause will just about balance the money which we propose to save by this Amendment.

I hope that the right hon. Lady will not seek to distort in any way what we are proposing. If the Amendment is accepted, or, if not accepted, carried against the Government, then the Bill will be left with contributions which will pay for short-term benefits plus an invalidity allowance. The Bill as drawn pays for short-term benefits plus a small bonus on the graduated pension scheme. We think that the alternative which we propose makes social sense and we hope that the right hon. Lady will accept it in principle. Of course we shall be entirely satisfied if she accepts it in principle but asks us to withdraw it and the new Clause in order that the proposal may be set down in a more workmanlike form after consultation with her. What we are asking her to do is to address her mind to the principle that the money would be better spent in the way we suggest.

Photo of Bernard Braine Bernard Braine , Essex South East

I must confess that I am greatly attracted to the proposal in the Amendment and the arguments advanced so cogently by my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph). I do not know whether he is right in saying that the Amendment would result in a saving of about £15 million. I have been making some calculations of my own and I think that over the years it would make a saving of at least that amount and probably more. The whole point, as my right hon. Friend has made clear, is that such a saving would be far better used by paying invalidity benefit for the long-term sick, or in providing some pension for those widows who at the moment do not draw any pension at all.

To my surprise—because I have a very high regard for her and we once walked hand in hand through India when she was a very fine colleague on a very notable delegation—the right hon. Lady earlier this afternoon charged hon. Members on this side of the Committee with being doctrinaire. That is a much overworked word, and in this context it was quite unworthy. So were the right hon. Lady's remarks on Second Reading when she said: …the Tories still believe in the ' I'm all right Jack ' philosophy. "—[OFFICIAL REPORT, 7th February, 1966; Vol. 724, c. 54.] adding that we did not believe in the Welfare State. That is untrue.

I think that it was Rousseau who said that definitions would be easy to make if one did not have to use words in order to make them. My definition of a true Welfare State is one which gives practical and timely help to those who really need it, and in an affluent society such as we enjoy in this country today this means and must increasingly mean selective provisions. It means getting rid of many of the inequities and little injustices with which our present social security system is riddled. Nobody knows that better than the right hon. Member for Sowerby (Mr. Houghton) and we are all, irrespective of party, looking forward very much to the outcome of the review on which he has now been engaged for some time.

It was the late Nye Bevan who used to say with great sincerity and truth that Socialism was the language of priorities. We have moved on a great deal since then. Nowadays, in their egalitarian desire to share material blessings with everyone, the Government have virtually elevated the universality of benefits to the status of a religion. They want everyone to be treated alike, with the result that existing inequalities, far from being removed, are in relative terms, increased. We had an example of this only last week when debating a massive increase in the drug Bill, resulting from a doctrinaire decision, taken without regard to the consequences, to remove charges which many people are able to pay at a time when the National Health Service is desperately short of funds, in order to improve services which members on both sides believe to be essential. Returning to the Amendment, it is clear that the extra graduated pensions earned for this extra contribution are not very large. As my right hon. Friend has said, they will be almost negligible.

Photo of Mr Eric Heffer Mr Eric Heffer , Liverpool, Walton

Can the hon. Gentleman clarify one point? Would he say that in the event of there being some substantial cuts or as a result of costs being kept down in the Defence Review, his party will support this fully so that more money can be available for the sort of developments he has suggested?

Photo of Bernard Braine Bernard Braine , Essex South East

That is an extremely interesting question, but we are not discussing that today. I would be prepared to agree, however, and I think I would carry every single hon. and right hon. Member in the Committee with me, that if we could find more resources for our essential social services it would be grand, because most of them, and particularly health, in which I am especially interested, could do with a great deal more money. I would be straying from the Amendment if I followed the hon. Gentleman down that interesting path. I hope that on this important subject he will be able to bring his weight and authority to bear upon the Front Bench opposite, who have the responsibility of governing and defending this country.

In the case of those contracted out of the graduated scheme, the extra benefit would be derisory. It seems, then, that this is another example of the failure of the party opposite to get its priorities right. I noted that the right hon. Lady said that this was an interim measure and that there may well be adjustments, as she inferred, in the light of the review. I accept that. Then why bring the contracted out into the Bill? Where is the urgency? As I understand it, this Bill was given priority by those who are responsible for the Government's programme, because of the need to encourage greater mobility of labour. We on this side of the Committee agree that this is a matter of the highest priority, and there is no quarrel between the two sides of the Committee as to the main purposes of the Bill. But only a very small part of the benefits proposed will go to unemployment earnings graduated pay. Why is the Bill being used to bring in those who are contracted out? The hon. Lady must come clean on this. For, as she said, this is an interim Bill and can be adjusted in the light of the right hon. Gentleman's review. Does the Clause which we are seeking to amend mean that the Government have decided against any contracting-out under its State half-pay on retirement scheme. That is the basic question, and I would hope that when the right hon. Lady comes to reply she will give the committee a very clear answer.

5.45 p.m.

Photo of Sir Anthony Meyer Sir Anthony Meyer , Eton and Slough

It seems that this Amendment provides the Government with an opportunity of disproving an allegation which is very freely made—and which I have certainly made on a number of occasions—that they are more concerned with administrative tidiness than with effecting the maximum relief of distress. I am sure that the Government will not let this opportunity slip and will give the lie to this accusation. This is an opportunity to concentrate the benefits in the near future rather than in the distant future. The effect of this Amendment will be to provide a tangible benefit from a period beginning very soon—looked at from the point of view of the average individual—rather than a benefit to which he can look forward in the very dim and distant future. One of the big considerations in social security is that people who, by and large, are in need of benefits now are those tending to be older than average, who have had less opportunity to make private provision for their old age, who have lived at a time when average earnings were lower and when living standards were lower.

It has always seemed that there is a very strong argument for increasing benefits now and tapering them off later. In the sense that this Amendment is a move in that direction, that it is providing for a tangible benefit to be paid out in the very near future, as against an imperceptible benefit stretched out over a great many years, this seems to be a move in the right direction. I hope that the right hon. Lady will show herself to be open-minded. As a new Member, I was rather appalled by the nature of her replies to the debate on the preceding Clause. I have understood that there was an atmosphere of co-operation in this Committee. This is a Bill which we are as anxious to see on the Statute Book as are the Government, and we have done everything we can to facilitate their task. It seemed churlish, to say the least, that the right hon. Lady should make such totally unjustified accusations. I am sure that on this occasion we shall not hear anything of the sort from her.

Photo of Mr Kenneth Lewis Mr Kenneth Lewis , Rutland and Stamford

I would like to join with those who have expressed pleasure that we have the Chancellor of the Duchy of Lancaster with us. The trouble is that we see him sitting there, we know that he is going to be sitting there for the rest of the day, and we know that the debate will continue tomorrow and that he is going to be there then, we hope. We therefore get a little worried that this may put off the review at which he is working hard. We hope that the review will not be too long delayed. We sometimes wonder whether it will be available before the next General Election.

I support the Amendment because it is in line with Conservative policy. We should concern ourselves with weighing what assistance we give to those who are the worst hit in the community. This includes those people who are sick in the long term. These people are not a very strong electoral factor, no political party gets a lot of votes out of them, but they are in need of the greatest help and the proposal made in this Amendment is that a certain amount of money should be shifted away from those who will be receiving pensions and who will, as a result of increases which will doubtless take place over the years, be reasonably well off, and used to help those people who after the six month period will go back to the flat level of sick payment. Most of these people are unemployable. Sadly, they look forward to a period, which may last for many years—

Photo of Miss Peggy Herbison Miss Peggy Herbison , Lanarkshire North

On a point of order. It seems to me, Sir Leslie, that we are trespassing on later Amendments. It will be difficult to deal with the Bill in this kind of wav.

Photo of Mr Leslie Thomas Mr Leslie Thomas , Canterbury

I thought that the hon. Member was getting a little near the line, but I hope that he will confine himself strictly to the Amendment.

Photo of Mr Kenneth Lewis Mr Kenneth Lewis , Rutland and Stamford

I accept what you have said, Sir Leslie. It is, however, difficult to suggest a saving of £15 million without also suggesting what might be done with it.

Photo of Bernard Braine Bernard Braine , Essex South East

I think that it is perfectly legitimate for my hon. Friend to argue that if there is to be a saving, as undoubtedly there would be if the Amendment were accepted, it would be the intention of my hon. Friends on this side that the money should be devoted to higher priorities in the care of the long-term sick, for example, and to widows who do not at present get a pension.

Photo of Mr Kenneth Lewis Mr Kenneth Lewis , Rutland and Stamford

If there is a saving of £15 million—

Photo of Mr Leslie Thomas Mr Leslie Thomas , Canterbury

It is not in order at this stage to discuss what should be done with the £15 million.

Photo of Mr Leslie Thomas Mr Leslie Thomas , Canterbury

I have given a Ruling and I hope that the hon. Member will conform to it.

Photo of Mr Kenneth Lewis Mr Kenneth Lewis , Rutland and Stamford

I accept your Ruling, Sir Leslie. The difficulty in the argument so far is that the Minister has in previous discussions spoken about the profit motive. All that I was trying to make clear to her was that in this connection we do not want to make a profit. We do not want her Government to make a profit. We want to make sure that the money which is saved is used for a proper purpose. I hope that the Minister will be able to accept the Amendment on that basis.

Photo of Mr Martin Maddan Mr Martin Maddan , Hove

On one occasion shortly after my return to the House of Commons, I accepted a surprisingly sharp Ruling from you, Sir Leslie, about what I should and should not say. I hope that I shall not cause you to deliver any similar rebuke to me on this occasion. Having heard what you have just said, I will do my best to avoid it.

As the problem to which we have to address ourselves on the Amendment is the question of priorities, perhaps we can think in these terms. Is the 6s. 6d. benefit which it is proposed to add to the pension really a first priority that we should consider and pass into law by a vote of the House of Commons? When we are thinking of this, we must think of it in the context of what is done by the Government, political thinking generally and also what employers do to help to alleviate distress of one sort or another.

Many employers give short-term help to the sick. Therefore, from that point of view, the problem of the short-term sick is not a great worry. To the longer-term sick, however, it is a problem. That is the contrast that I wish to point out. The problem tackled by the Minister's proposals is of a lesser priority than that of the long-term sick. It is in this sense that I support the Amendment.

Photo of Sir Tatton Brinton Sir Tatton Brinton , Kidderminster

I add my support to the Amendment in the hope that I, too, will not be ruled out of order as it is somewhat difficult to support the Amendment by itself without indicating where the money which would be saved should go. I support my hon. Friend the Member for Essex, South-East (Mr. Braine), who said that we should concentrate our benefits more upon the present-day problems than upon the longer-term problem in terms of pension.

I should like to make one short point in support of that contention. The people who have the biggest financial problems are those in their middle years when they are most likely to fall sick at work. They are the people who probably have children to bring up or other family responsibilities, and they are most hard hit. Many of those people would much rather have the certainty of an extra £1 a week for a year when they were, perhaps, incapacitated—as, unfortunately, happens; it is by no means uncommon—by either sickness or injury than the prospect of a considerably smaller amount at a much more distant date when they might find it easier to live on a lower income.

Photo of Miss Peggy Herbison Miss Peggy Herbison , Lanarkshire North

It might be better if I intervene at this time. There is much in what has been said by hon. Members opposite with which I agree. Much of it, however, was outside the Amendment and we shall be dealing with it on later Amendments.

My reply to the hon. Member for Essex, South-East (Mr. Braine) is that we have nothing to hide concerning the Amendment. The hon. Member for Hove (Mr. Maddan) was quite right in saying that many people—for example, the chronic sick—would rather have £1 a week immediately on in six months' time than have a few coppers added to their pension a considerable time ahead in the future.

The right hon. Member for Leeds, North-East (Sir K. Joseph), who moved the Amendment, discussed the existing graduated pension scheme. He showed, perhaps more clearly than anyone else could show, how little benefit it would bring to workers in the future. That has always been our criticism. It was not our scheme. When we had to decide that the ½ per cent. should count towards pension purposes, we realised that this would mean a very small addition to the pension in the future.

Again, I stress that this is an interim scheme. The right hon. Member for Leeds, North-East has spoken about the £15 million that will be spent over the next ten years if the Amendment is not accepted. I assure him that we will have our full scheme in operation at the end of the review long before then. The present graduated pension scheme will have been replaced long before that. I have said these things at the outset to show that we are not claiming any great benefit for the pensioner in the future when we say that the ½ per cent. will count for pension purposes.

When we were preparing the Bill as it affected short-term earnings-related benefits, we found that the additional contributions could not be excluded in accounting for graduated pension without considerable extra work for employers. That was one of the biggest difficulties with which we were faced.

Under our proposals in the Bill, employers will be supplied, as at present, with contribution tables showing the appropriate amount of contribution to be paid for each level of earnings. All that an employer will have to do is to read off one amount each week or month, depending on whether a worker is paid weekly or monthly, and record it. He will have only to read one amount and record it. If part of the amount were excluded from accounting for graduated pensions, the employer would have to record two separate figures, one of them amounting to only a few pence, each time. It is necessary to enable our central office at Newcastle to tell what amount should be entered in the pension account by the computer, and how much should not. If we accepted the Amendment, unless there were a great deal of extra work to be put upon employers, it would really be almost impossible to do this.

Again, because of the possible variation in earnings and the duration of employment in the tax year, it would be difficult, and in many cases impossible, indeed, to determine, from a single entry alone, how much should be excluded.

6.0 p.m.

It is because of these difficulties that we propose that the contribution should count for pension purposes in this interim scheme, not because of any lack of thought on the various alternative ideas, but merely because of the serious administrative difficulties on our side and the heavier burden on the employers' side, in the time this will run till our new complete scheme is in operation. This is the only sensible thing to do, to allow this extra graduated contribution on account.

It will be a very small sum—indeed, almost a negligible sum—in the time before we have our full scheme going that will come in for pension purposes, and if we want to get the scheme going in the autumn this is the only sensible way of doing it.

I am sure that hon. Members, having heard that explanation, will be ready to accept that it really was done this way because of the impossibility of the burden on employers and the impossibility of differentiating at Newcastle.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

I must say that I am not at all satisfied with that answer. First of all, we are told that we should treat the whole of this as absolute nonsense, and the Government Actuary's Report as all merely rubbish. The right hon. Lady said we can ignore Table I, that it is all rigmarole. This is not the way to produce a Bill for this Committee. If the Bill is to be superseded in so short a time let us have the relevant tables and the relevant facts.

Are all of us to waste our time studying tables and documents for the right hon. Lady then to dispose of them in such a casual way at that Box? Then she treats us to some rigmarole of semi-digested technological excuse—and this is the right hon. Lady who read this side of the Committee lectures about using computers to do all the administratively difficult tasks which, she said, remained to be done when she came into office. Now, at her first technological difficulty which she comes across, she gives way to it.

Well, I suppose I had better start at the beginning and go over this again. Obviously, the right hon. Lady has not appreciated the point here.

Photo of Mr Leslie Thomas Mr Leslie Thomas , Canterbury

I hope the right hon. Member is not going to give us tedious repetition.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

Obviously, I must not. I thought that my hon. Friend the Member for Essex, South-East (Mr. Braine) put the substance of the case exceptionally well, and I think that the right hon. Lady took the point he was making, that there are priority needs which are not at the moment satisfied.

The right hon. Lady expressed herself as in some sympathy with one step which we cannot discuss now and which comes in New Clause 1, but she said that it was no good discussing this for two reasons, first, that there is no such thing as £15 million to dispose of, because this outgoing will not occur, and, secondly, she said, "We poor Ministers were forced by the argument to do what we did not want to do and make this contribution reckonable for graduated benefit."

Did the right hon. Lady consider the simple solution of gathering in the employers' part of the contribution by way of payroll tax? Did the right hon. Lady consider how much easier it would be if there were no personal account to be kept for each individual case? There would be, if our Amendment were accepted, no credit for graduated benefit. This would then release her to gather in money, at least so far as the employer is concerned, by a payroll levy—½ per cent. over £9 a week up to £30 a week. The right hon. Lady will not expect me to spell out in detail what I have in mind.

It is true that she would then be left with the administrative problem of collecting the ½ per cent. from each employee. She would still need a bookkeeping entry, but, as I understand it, it is not beyond the power of computers to be told to deduct from the credit for graduated pension benefit 5 per cent., 6 per cent. or 7 per cent., whatever proportion the surplus imposed by the Bill bears to the basic graduated pension contribution. If it is ½ per cent. on 4½ per cent. then it is two-seventeenths and the computer would be instructed to ignore two-seventeenths of the contribution without working out graduated pension credit. I am glad to see the hon. Member for Leek (Mr. Harold Davies) nodding his head in agreement. I remember on a Bill about radioactive substances, his harrying me with his technological knowledge, which exceeds mine, so I am glad to have his agreement.

If that can be done, we are left with a solution which seems to me to impose no administrative problem on the Minister. But then we are left with this simple excuse that the whole of the prognostications with which this Bill has been brought forward are rubbish. The right hon. Lady was on very weak ground in taking as she did the Government Actuary's Report. Obviously, I am not for a moment criticising the Government Actuary himself, but when the right hon. Lady says that we can ignore everything beyond the first year I wish she would take seriously the £15 million saving over the next 10 years, and I hope she will reconsider her position on this. We shall for our part have to consider seriously what steps we take about this Government document if she is seriously telling us it should not be taken seriously.

As for the technological difficulties, I wonder how many experts the right hon. Lady consulted. Did she seek advice about what could or could not be administratively feasible? Did the right hon. Lady reckon the amount of benefit which this Amendment, if accepted, would be likely to achieve? There are relatively few of these chronic sick, and this amount of money could bring very—well, I was about to exaggerate—bring benefit to them.

I would have hoped that the right hon. Lady would have approached this proposition with something more than a technologically sterile response. We would like her to be sympathetic to the objective. We would like her to say to us that she will look again at the administrative difficulties, and we would like to know how soon her right hon. Friend will be introducing his plan—and whether it will be acceptable to the House. The right hon. Lady cannot assume that her proposals, or the Government's proposals, are necessarily going to have this projected outgo, and nor should the right hon. Lady assume the acceptability of her proposals to the House. The right hon. Lady is treating us with less than courtesy and an important pair of Amendments with less than proper consideration when she gives an answer such as she has given. I hope that she will reconsider it.

Photo of Mr John Page Mr John Page , Harrow West

I, too, was extremely dissatisfied with the answer of the right hon. Lady. To give the excuse for the administrative difficulty that the computer at York—[HON. MEMBERS: "Newcastle."] Yes, I am sorry. Mention of the Newcastle central office made me feel that there was a great change afoot, but now I understand.

To make the excuse that the computer at Newcastle could not do the computation is quite extraordinary. There is nothing simpler. It could very easily be programmed, and it is known that that computer is working particularly well, unlike another which I happened to see today which cannot work because the Postmaster-General is unable to get a telephone to it.

I ask the right hon. Lady to withdraw that part of her excuse and stick to the more basic objection which is contained in the second part of her speech.

Photo of Mr Eric Heffer Mr Eric Heffer , Liverpool, Walton

Can the hon. Gentleman explain how it is that he is aware of the existence of that wonderful computer, yet he is not sure whether it is at Newcastle or York?

Photo of Sir Tatton Brinton Sir Tatton Brinton , Kidderminster

I do not understand the right hon. Lady's reasoning when she says that an employer would have to fill in two separate entries. She told us herself that her Ministry produces tables showing that if a man earns so much in a week, the amount to be deducted is so much. One knows, therefore, by the sum which is deducted and which ultimately goes to her Ministry and thence to the computer, how much the man earns and how much has been deducted. Surely it will be known how much represents the ½ per cent. and how much the original 4¼ per cent. which was payable before.

I wish that the right hon. Lady would explain to us why that apparently simple mathematical calculation is so difficult even for a human being, much less for a computer.

6.15 p.m.

Photo of Miss Peggy Herbison Miss Peggy Herbison , Lanarkshire North

I am very surprised at the synthetic indignation of the right hon. Member for Leeds, North-East (Sir K. Joseph). He accuses me of being angry, but each time that he comes to the Dispatch Box he seems to be in a raging temper about something.

I want to take up one or two of the points that the right hon. Gentleman made. He said that in my reply I was saying that the Government Actuary's Report was a rigmarole. Really, I was not saying anything of the kind. If one considers what the Government Actuary has to do on any such proposals, it is clear that he has to project calculations for a great many years ahead. The Government Actuary did the job that was necessary, and all of us have a copy of the Report.

The right hon. Gentleman then said that we cannot assume that the Government will continue. That is true. In the work that we have done we cannot assume that we will continue in office, and when the Government Actuary is working out his figures for his actuarial report, he has to work them out on the scheme as it is and project them into the future. That is what the Government Actuary has to do, and that is what he has done.

Then we have to look at the scheme, and again I stress that it is an interim scheme. The big problem that we had to face if we were not to let this contribution go for pension purposes was the overburdening of the employer. The right hon. Gentleman thought that he had found the solution in a possible payroll tax. Then it suddenly struck him—and I could see it come to his mind—that there is then the worker's contribution, and a payroll tax would be of no help to us for that. It would mean two entries for the employer.

Photo of Miss Peggy Herbison Miss Peggy Herbison , Lanarkshire North

This is rather technical, and I want to make it as clear as I can. If my hon. Friend has a point, I will deal with it afterwards.

As I say, it means two entries, and on the question of the computer, of course one can get a computer to do almost anything if one has time to do the programming. But this arrangement has to work by the autumn of this year, and I should have thought that the right hon. Gentleman would have realised the difficulties.

For the short period in which the interim scheme will be going until the complete scheme is ready, there is very little time available for the benefits that hon. Members quite rightly hope to discuss later. The scheme continues for an interim period. The £15 million that hon. Members want to spend in various ways would continue well into the future. I do not know whether the right hon. Gentleman has taken that into account, particularly in the light of this being an interim scheme.

I hope now that I have dealt with the points raised by all hon. Members and that they will realise that there was no ulterior motive behind our having this provision. It is a provision that will be examined with the whole scheme when we come to the complete review.

Photo of Sir Tatton Brinton Sir Tatton Brinton , Kidderminster

Before the right hon. Lady sits down, I am still completely in the dark as to why we require two entries. Much has been made of the inconvenience to the employer and, if that is a valid point, one accepts it. But I do not understand why.

A person earning a certain amount will be due to pay so much. One looks at the tables, and sees that a person earning, say, £31 2s. 6d. will pay so much, and that requires one entry. It is already obvious from the amount paid how much of that represents respectively the old 4¼ per cent., the new ½ per cent. and the new extra slice over £18. It must be obvious how that is split up, and there can be no problem. That single sum is fed into a computer, and one has an individual accounting for every person in respect of each scheme. Where is the difficulty? The computer can split that up without any trouble at all. Why have there to be two separate entries? The right hon. Lady was merely saying that that is so, without explaining why.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

I am grateful to the right hon. Lady for continuing her explanation, and I hope that she will answer my hon. Friend's question.

I am an employer. I am in business, and I am ready to concede full value to the convenience of employers and to administrative cost. But this is the second Amendment where we are being asked to reject something that may or may not be inherently desirable because of the administrative costs for the employer, and we must balance these factors. In the first case, I think that we all accept that the administrative costs and complexities of a private contracted-out sickness scheme were possibly not worth the £35 million that might be saved on the employee and employer. We made our decision on that.

Now we come to a similar question. We have here a possible saving, and the right hon. Lady adjures us to take Table I seriously. We have here a potential saving of hundreds of thousands, if not millions, of pounds. The right hon. Lady says that her Review will come forward shortly. Let us at least make sensible arrangements for the Insurance Fund money until the Government of the day succeed in changing the social security system of the country.

I believe—and I think that my hon. Friends agree with me—that if, administratively, we can switch this money from the negligible extra graduated benefit to some such proposal as is in New Clause 1, it would be socially sensible to do so. The right hon. Lady is not seeking to deal with that argument, but my hon. Friend the Member for Kidderminster (Sir T. Brinton) asked her again why the second entry is necessary, and I hope that she will give us a reply to that.

We on this side of the Committee are prepared to say that even if it does involve a second entry we still think that it does not justify spending this money, even if it is only some hundreds of thousands of, or a few million, pounds, on something which has no objective worthwhile social purpose to justify it. It is an administrative by-product, and the right hon. Lady is not trying to suggest otherwise.

Let us try to address our minds, and ask the right hon. Lady to address hers, to avoiding this waste of resources by using this money as a mere administrative by-product, and make it available for social purposes. We ask her yet again to undertake to reconsider this, and in the meanwhile to answer the point raised by my hon. Friend. If she cannot answer it satisfactorily, and will not give the assurance that she will reconsider our case, I shall have to ask my hon. Friends to divide the Committee.

Photo of Mr Charles Curran Mr Charles Curran , Uxbridge

The right hon. Lady asks us to reject the Amendment for two reasons. She says that it is administratively very difficult, and then she says that it is not worth tackling because we shall soon have the report of the Chancellor of the Duchy of Lancaster on the overhaul of the social services. I do not propose to say anything at all about the first of her reasons, the administrative difficulties. The point has been dealt with by my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph).

It seems to me that if at every stage in this debate we are to be told that this is an interim Bill, and that there is no need to bother very much about it because presently the Chancellor of the Duchy of Lancaster will bring in his social security review, we ought to be given more information about it. I do not know whether the right hon. Lady can give us any idea of when we may get this review. Perhaps it is not fair to ask her, but as the Chancellor of the Duchy of Lancaster is sitting on that Front Bench, perhaps we might ask him to tell us. He sits there silently throughout debates like a brooding Buddha.

Photo of Mr Leslie Thomas Mr Leslie Thomas , Canterbury

I hope that the hon. Member will not continue to press this question of the review, because it is entirely outside the scope of the Amendment.

Photo of Mr Charles Curran Mr Charles Curran , Uxbridge

With respect, Sir Leslie, the argument which is being put to us is that we need not press the Amendment because this is merely a stopgap Bill, that presently the review will come along and will wash away all our fears. I submit, therefore, that it is reasonable to ask to be told a little more about when the review will be completed. If the right hon. Lady is not able to answer that, and perhaps she is not, I suggest that we ask her ministerial colleague who appears to have joined our Dumb Friends League.

Photo of Miss Peggy Herbison Miss Peggy Herbison , Lanarkshire North

The hon. Member for Kidderminster (Sir T. Brinton) is worried about us not being able to separate the contribution for pension purposes from the contribution for short-term benefits. The basic problem here is that the contribution is to be 4¾ per cent. only on earnings from £9 to £18. We are building it on top of the present graduated scheme. That scheme has a contribution of 4¼ per cent. When the ½ per cent. goes on that, it will make it 4¾ per cent. on earnings between £9 and £18. On earnings between £18 and £30 it will be ½ per cent., so that on earnings which exceed £18 it will not be possible to calculate the exact part which the ½ per cent. graduated contribution represents of the total contribution. As that is the case, what we have suggested seems the only sensible thing to do.

Photo of Miss Peggy Herbison Miss Peggy Herbison , Lanarkshire North

If the hon. Gentleman will allow me to complete this point, I will give way to him.

The right hon. Member for Leeds, North-East (Sir K. Joseph) said that this was being done for administrative reasons. The important thing to remember is that, for economic reasons, it was necessary to get this scheme going by the autumn. If there had not been economic reasons for doing that then the Bill may not have been introduced until we had completed the review and were able to bring in the whole scheme. But, for economic reasons, the Government decided that this Measure should be brought in as early as possible, and that the benefits should begin to be paid as early as possible. The suggestions made by hon. Gentlemen opposite would bring us up against administrative difficulties which would make it impossible to pay this money in the autumn of this year.

The hon. Member for Uxbridge (Mr. Curran) wanted to ask my right hon. Friend the Chancellor of the Duchy of Lancaster when the review would be completed, or when we would be ready to bring forward legislation to deal with the whole matter. I assure him that we are getting on with this job. This Bill is the first part of the whole programme, and is an interim Measure. Immediately the review is completed, we will inform the House.

Photo of Sir Tatton Brinton Sir Tatton Brinton , Kidderminster

It is possible that I shall bore the Committee by pursuing this point, but I must say bluntly to the right hon. Lady that I hope her abilities as a Minister are better than her mathematics.

The situation is simply this. We know what percentages have to be accounted for on each part of the income. With a slide rule and a piece of paper I could within half an hour draw up a table from which the right hon. Lady could read the amount deductible in respect of any salary between £9 and £30 a week. It would tell the right hon. Lady exactly how much of each figure was represented by the new ½ per cent. Nothing could be simpler. It would require only one entry, and it would be valid on incomes between £9 and £30. I am sorry to contradict the right hon. Lady, but I think that with a little thought she will realise that she has not got a valid point.

Photo of Sir Raymond Gower Sir Raymond Gower , Barry

I am sure that the right hon. Lady is convinced now that her explanation has not satisfied this side of the Committee. She gave two reasons for not accepting the Amendment. First, as my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) pointed out, administrative difficulties, but we are beginning to believe that these difficulties are of doubtful substance. She went on to admit that if there were no such administrative difficulties the suggestion made in the Amendment was a valuable one. She confessed that it might have attractions if there were not administrative difficulties, but then, as though she had confessed too much, she said that she could not contemplate applying the principle of the Amendment, because later on there would be the review.

In other words, she was saying, "These are desirable things, but we will not have them now because we shall have more desirable things later". This is an astonishing suggestion. It is as if her right hon. Friend the Chancellor of the Exchequer were to say, "We will not have a Budget this year because we shall have a bigger and better Budget next year". This is astonishing. I hope that she will reconsider if not the terms of the Amendment at least her objections to it.

6.30 p.m.

Photo of Mr Martin Maddan Mr Martin Maddan , Hove

On the question of this information being fed into the computer, I want to ask the right hon. Lady a very simple question, the answer to which may help her and us. My hon. Friend the Member for Kidderminster (Sir T. Brinton) made a valid point, that the change of programming required is miniscule on one understanding, that, every time a graduated contribution is made—I am putting to the right hon. Lady rather complicated questions which we have been bandying to and fro and I was on the point of asking whether she would kindly give her attention to it. I am making a very precise point.

The point is that what my hon. Friend has said must be valid, with one proviso—that, every time an entry or deduction

for graduated pensions is made on behalf of people paid weekly or monthly, it is fed into the memory drum of the computer as one item and is not somehow accumulated with others over a time. If it is accumulated for three or four months at a time, I can see that, with varying wages and salaries, this might be so. However, I find it hard to believe that it is not fed into the memory drum every time.

Since the Minister has clearly studied this carefully and gone into these administrative problems in great detail, will she tell us whether each time there is a deduction this information is fed, perse, into the memory drum of the computer?

Question put, That those words be there added:—

The Committee divided: Ayes 159, Noes 167.

Division No. 28.]AYES[6.32 p.m.
Allason, James (Hemel Hempstead)Fletcher-Cooke, Charles (Darwen)Mackenzie, Alasdair (Ross& Crom'ty)
Anstruther-Gray, Rt. Hn. Sir W.Fletcher-Cooke, Sir John (S'pton)McLaren, Martin
Atkins, HumphreyFoster, Sir JohnMaclean, Sir Fitzroy
Awdry, DanielFraser, Rt. Hn. Hugh(St'ffrord & Stone)McMaster, Stanley
Baker, W. H. K.Fraser, Ian (Plymouth, Sutton)Maddan, Martin
Barber, Rt. Hn. AnthonyGammans, LadyMaginnis, John E.
Barlow, Sir JohnGibson-Watt, DavidMaxwell-Hyslop, R. J.
Beamish, Col. Sir TuftonGilmour, Sir John (East Fife)Maydon, Lt. -Cmdr. S. L. C.
Berry, Hn. AnthonyGlover, Sir DouglasMeyer, Sir Anthony
Bessell, PeterGoodhew, VictorMills, Peter (Torrington)
Biffen, JohnGower, RaymondMills, Stratton (Belfast, N.)
Biggs-Davison, JohnGrant-Ferris, R.Miscampbell, Norman
Birch, Rt. Hn. NigelGrieve, PercyMonro, Hector
Black, Sir CyrilGriffiths, Eldon (Bury St. Edmunds)Morrison, Charles (Devizes)
Boyd-Carpenter, Rt. Hn. J.Griffiths, Peter (Smethwick)Mott-Radclyffe, Sir Charles
Boyle, Rt. Hn. Sir EdwardGrimond, Rt. Hn. J.Murton, Oscar
Braine, BernardGurden, HaroldNoble, Rt. Hn. Michael
Brinton, Sir TattonHall-Davis, A. G. F.Nugent, Rt. Hn. Sir Richard
Bromley-Davenport, Lt. -Col. Sir WalterHamilton, Marquess of (Fermanagh)Onslow, Cranley
Brooke, Rt. Hn. HenryHamilton, M. (Salisbury)Orr, Capt. L. P. S.
Brown, Sir Edward (Bath)Harris, Frederic (Croydon, N. W.)Orr-Ewing, Sir Ian
Bruce-Gardyne, J.Harrison, Col. Sir Harwood (Eye)Osborn, John (Hallam)
Buchanan-Smith, AlickHarvie Anderson, MissPage, John (Harrow, W.)
Buck, AntonyHeald, Rt. Hn. Sir LionelPearson, Sir Frank (Clitheroe)
Bullus, Sir EricHiley, JosephPercival, Ian
Buxton, RonaldHirst, GeoffreyPickthorn, Rt. Hn. Sir Kenneth
Campbell, GordonHogg, Rt. Hn. QuintinPike, Miss Mervyn
Carlisle, MarkHunt, John (Bromley)Pounder, Rafton
Cary, Sir RobertHutchison, Michael ClarkPowell, Rt. Hn. J. Enoch
Chataway, ChristopherJenkin, Patrick (Woodford)Pym, Francis
Chichester-Clark, R.Johnston, Russell (Inverness)Rawlinson, Rt. Hn. Sir Peter
Clark, Henry (Antrim, N.)Jopling, MichaelRenton, Rt. Hn. Sir David
Cooke, RobertJoseph, Rt. Hn. Sir KeithSandys, Rt. Hn. D.
Cooper, A. E.Kaberry, Sir DonaldScott-Hopkins, James
Costain, A. P.Kerr, Sir Hamilton (Cambridge)Shepherd, William
Craddock, Sir Beresford (Spelthorne)Kilfedder, James A.Smith, Dudley (Br'ntf'd & Chiswick)
Cunningham, Sir KnoxKimball, MarcusSpearman, Sir Alexander
Curran, CharlesKing, Evelyn (Dorset, S.)Stainton, Keith
Dalkeith, Earl ofKirk, PeterStanley, Hn. Richard
Davies, Dr. Wyndham (Perry Barr)Kitson, TimothyStodart, Anthony
Dean, PaulLagden, GodfreyStudholme, Sir Henry
Deedes, Rt. Hn. W. F.Lancaster, Col. C. G.Summers, Sir Spencer
Digby, Simon WingfieldLangford-Holt, Sir JohnTaylor, Sir Charles (Eastbourne)
Doughty, CharlesLegge-Bourke, Sir HarryTaylor, Edward M. (G'gow, Cathcart)
Eden, Sir JohnLewis, Kenneth (Rutland)Taylor, Frank (Moss Side)
Elliot, Capt. Walter (Carshalton)Longbottom, CharlesTemple, John M.
Errington, Sir EricLoveys, Walter H.Thatcher, Mrs. Margaret
Eyre, ReginaldLubbock, EricThompson, Sir Richard (Croydon, S.)
Farr, JohnMcAdden, Sir StephenThorpe, Jeremy
Tiley, Arthur (Bradford, W.)Wells, John (Maidstone)Wood, Rt. Hn. Richard
Tweedsmuir, LadyWhitelaw, WilliamWoodhouse, Hn. Christopher
van Straubenzee, W. R.Wilson, Geoffrey (Truro)
Walters, DennisWise, A. R.TELLERS FOR THE AYES:
Weatherill, BernardWolrige-Gordon, PatrickMr. R. W Elliott and
Mr. George Younger.
Abse, LeoHale, LeslieOrbach, Maurice
Allaun, Frank (Salford, E.)Hamilton, James (Bothwell)Orme, Stanley
Alldritt, WalterHamiton, William (West Fife)Oswald, Thomas
Armstrong, ErnestHannan, WilliamOwen, Will
Atkinson, NormanHarper, JosephPadley, Walter
Bagier, Gordon A. T.Hazell, BertPalmer, Arthur
Barnett, JoelHeffer, Eric S.Pannell, Rt. Hn. Charles
Baxter, WilliamHerbison, Rt. Hn. MargaretPargiter, G, A.
Beaney, AlanHolman, PercyPark, Trevor (Derbyshire, S. E.)
Bence, CyrilHorner, JohnParker, John
Bennett, J, (Glasgow, Bridgeton)Houghton, Rt. Hn. DouglasPearson, Arthur (Pontypridd)
Binns, JohnHowell, Denis (Small Heath)Pentland, Norman
Blackburn, F.Howie, W.Popplewell, Ernest
Boardman, H.Hoy, JamesPrice, J. T. (Westhoughton)
Boston, TerenceHughes, Cledwyn (Anglesey)Probert, Arthur
Bottomley, Rt. Hn. ArthurHughes, Hector (Aberdeen, N.)Randall, Harry
Bowden, Rt. Hn. H. W, (Leics. S. W.Hunter, Adam (Dunfermline)Rankin, John
Boyden, JamesHunter, A. E. (Feltham)Rees, Merlyn
Broughton, Dr. A. D, D.Hynd, John (Attercliffe)Rhodes, Geoffrey
Brown, Rt. Hn. George (Belper)Irving, Sydney (Dartford)Richard, Ivor
Buchanan, RichardJenkins, Hugh (Putney)Roberts, Goronwy (Caernarvon)
Carmichael, NeilJohnson, James(Klston-on-Hull, W.)Robertson, John (Paisley)
Chapman, DonaldJones, Dan (Burnley)Rogers, George (Kensington, N.)
Coleman, DonaldJones, Rt. Hn. SirElwyn(W. Ham, S.)Rose, Paul B.
Conlan, BernardJones, J. Idwal (Wrexham)Shore, Peter (Stepney)
Craddock, George (Bradford, S.)Jones, T. W. (Merioneth)Short, Rt. Hn. E. (N'c'tle-on-Tyne, C.)
Crawshaw, RichardKelley, RichardSilkin, John (Deptford)
Crossman, Rt. Hn. R. H. S.Kenyon, CliffordSilverman, Julius (Aston)
Cullen, Mrs. AliceLawson, GeorgeSilverman, Sydney (Nelson)
Dalyell, TamLeadbitter, TedSlater, Joseph (Sedgefield)
Davies, G. Elfed (Rhondda, E.)Lewis, Arthur (West Ham, N.)Small, William
Davies, Harold (Leek)Lewis, Ron (Carlisle)Snow, Julian
Davies, Ifor (Gower)Lomas, KennethSpriggs, Leslie
Dell, EdmundLoughlin, CharlesStones, William
Doig, PeterMcBride, NeilSymonds, J. B,
Driberg, TomMcCann, J.Taverne, Dick
Dunn, James A.McGuire, MichaelTaylor, Bernard (Mansfield)
Dunnett, JackMcInnes, JamesThomas, lorwerth (Rhondda, W.)
Edwards, Rt. Hn. Ness (Caerphilly)Mackenzie, Gregor (Rutherglen)Thornton, Ernest
Edwards, Robert (Bilston)Mackie, John (Enfield, E.)Urwin, T. W.
Ennals, DavidMacMillan, MalcolmVarley, Eric G.
Ensor, DavidMahon, Peter (Preston, S.)Wainwright, Edwin
Evans, Ioan (Birmingham, Yardley)Mahon, Simon (Bootle)Walker, Harold (Doncaster)
Fletcher, Ted (Darlington)Mallalieu, E. L. (Brigg)Watkins, Tudor
Foot, Sir Dingle (Ipswich)Mallalieu, J. P. W. (Huddersfield, E.)Whitlock, William
Foot, Michael (Ebbw Vale)Manuel, ArchieWilkins, W. A.
Ford, BenMapp, CharlesWilliams, W. T. (Warrington)
Fraser, Rt. Hn. Tom (Hamilton)Marsh, RichardWillis, George (Edinburgh, E.)
Freeson, ReginaldMillan, BruceWilson, William (Coventry, S.)
Garrett, W. E.Miller, Dr. M. S.Woodburn, Rt. Hn. A.
Garrow, A.Milne, Edward (Blyth)Woof, Robert
Ginsburg, DavidMorris, Alfred (Wythenshawe)Wyatt, Woodrow
Gourlay, HarryMorris, Charles (Openshaw)Yates, Victor (Ladywood)
Gregory, ArnoldMorris, John (Aberavon)
Grey, CharlesNeal, HaroldTELLERS FOR THE NOES:
Griffiths, David (Rother Valley)Oakes, GordonMrs. Harriet Slater and
Griffiths, Will (M'chester, Exchange)Ogden, EricMr. Alan Fitch.

Question proposed, That the Clause stand part of the Bill.

Photo of Mr Arthur Tiley Mr Arthur Tiley , Bradford West

The right hon. Lady complained that my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) is always angry when he speaks from this Box. We know that she has a tiger in her tank; there is not much of her, but we know that she is there.

It was a pity that we started the debate earlier this afternoon on the wrong foot.

I do not wish to prolong that atmosphere, but when she mentions profits, I ought to suggest that it is time that the word "profits", throughout the country and by both parties, was looked at in a better way than the vicious way in which it has been looked at sometimes from the Government benches and in the trade unions.

I was asked by the hon. Member for Liverpool, Walton (Mr. Heffer) about unemployment. I know personally that when the textile firms of Bradford were not making profits a quarter of the working strength of our city was on the dole and out of work. It is only from profits that we can find this £38 million for the contribution of industry and commerce.

My right hon. Friend mentioned that many of the large insurance companies are mutual companies with no shareholders; the whole of the profits belong to the members and the policy holders. In defence of myself I feel entitled to say that.

6.45 p.m.

The right hon. Lady takes it as a personal affront sometimes when we ask questions. I wish that she would not do so, because the purpose of our being here is to debate this very important Bill. We have had a very good debate. During the afternoon we have cleared up some important details in the process of the cut and thrust of debate. We regret it if she thinks that we are attacking her personally; our comments are not made with that purpose at all.

There was a doubt about the philosophy and practice of contracting out because of the manner in which contracting out had been deleted by the Clause. The right hon. Lady told us that our doubts are not founded on fact. She has removed the fears which we may have had about the philosophy and practice of contracting out. If we had not had this debate, that fact would not have been established. It has been established not only in our minds, but in the country.

The right hon. Lady also confirmed that there will always be a place for both Government and private insurance when we are dealing with sickness benefits or pensions. She said that they are partners in the job of dealing with this great social service. All this is very important for the future of the country's trade. It is important to both sides of the Committee and also to industry and commerce. Moreover, it is important in other parts of the world where people are buyers of this commodity which we in Britain make better than does any other country. The right hon. Lady, therefore, should be glad that she had the chance to give this confirmation.

I pay tribute to her in that when we ask questions, she answers them. Some times Ministers do not do that. She has a great knowledge of this technical and complicated Bill and it is interesting for us to sit back and listen to her answers. We are grateful for the attention which she has given to the dozens of questions which have been asked.

We asked, rightly, whether there had been consultations. No matter how cross she looked when she was replying, we established that there had been consultations, and that was the knowledge which we were seeking. We were glad to know that consultations had taken place. During the discussion it became clear that the right hon. Lady was aware that there had been a deviation from the original meaning of hundreds of service contracts and certain other contracts of employment—in the Civil Service, the coal mines, the Transport Commission and teaching. The fact that she was aware of this came out in the debate, and that was what we wanted to ascertain. It can do only good to the future of the Bill and of the social service scheme that all these points have been cleared up.

The right hon. Lady was also asked why contracting out was not permitted, and she gave a detailed explanation showing that it was very difficult to permit contracting out. We were told in the debate that contracting out had not been summarily dismissed because it was a theory to which the Government did not wish to subscribe but that it had been deleted from the Bill because of the difficulties which it would bring in the administration of the scheme both at Government level and in industry.

We have a right to know these things. After all, the purpose of our discussion today is to gain information from the Government. It is not merely a question of you, Mr. Bowen, announcing, "Clause 1"—whereupon we all nod. We are not little nodders. We are serious and sensible debaters and, so far today, we have been doing our job well.

In the large-scale review which we have heard so much about, and which is now taking place, I trust that consideration is being given to the question of simplifying the whole procedure with which we are involved. Earlier today I had a chat with the Joint Parliamentary Secretary in the corridor and we both confessed how befogged we were becoming because of the multitude of Measures which each Government introduce on this subject. We are equally befogged by the fractions which must be worked out. In Clause 1 there is reference to 4¼ per cent., 4¾ per cent. and ½ per cent., in addition to which there are stamps at this, that and another price. I am glad that my hon. Friend the Member for Kidderminster (Sir T. Brinton) understands the workings of computers because if things go on as they are we will need computers to comprehend the meaning of Bills.

It would not be divulging great secrets in the closed shop that is going on about the review which is taking place if the Minister said that the present complicated arrangements were receiving consideration. Things are becoming extremely difficult as Measures of this sort get more complex. That is all I will say on this issue because I do not wish to delay the Committee and I have no intention of speaking about the Amendment on which we just voted.

The right hon. Lady referred to the graduated pension scheme and said that it provides little benefit. She agreed that to the little benefit that is provided the Government are adding even littler benefits. It is indeed true that the scheme provides only small payments and we all appreciate what a difficult task it is to provide the substantial benefits which we would like to see paid. We are seeking in Parliament a way to provide really substantial retirement benefits, but they can be provided only by hard work and the saving of a substantial amount of money.

We must remember that, without the help of the social services, it would take a man 40 years—from the age of 25 to 65—to save enough to provide a comparable retirement pension with which to lead a comparatively happy life. We are trying to make that provision not in 40 years, but in just a few years, and we are operating without any past savings having accrued. It is, therefore, doing great harm constantly to speak of the graduated pension scheme as being a swindle, as it is sometimes called.

When the word "swindle" is used in that context one should consider where the millions of pounds that were collected via the scheme have gone. About six months ago it was stated in the House that more than £800 million had been collected in contributions under the graduated pension scheme. It should be remembered that half of that came from industry and commerce in the form of employers' contributions and the other £400 million from the contributors.

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

On a point of order. Is not this explanation of the ramifications of the graduated pension scheme out of order on this Question?

Photo of Mr Roderic Bowen Mr Roderic Bowen , Cardiganshire

I thought that the hon. Gentleman was going rather wide of the Question before the Committee. While he is in order in making a passing reference to the Scheme, he should not develop his argument too far along that line.

Photo of Mr Arthur Tiley Mr Arthur Tiley , Bradford West

I did not intend to develop it much further, Mr. Bowen, and I accept your rebuke. I was merely answering the charge which is constantly made about the smallness of the benefits provided under the graduated pension scheme.

As I was saying, about £800 million has been collected—but that has already been paid out. Our old people have had that money in their pockets and have spent it. If the Government had not introduced this Measure I wonder where we would have got the extra money from. I am not indulging in political propaganda. This is sheer common sense. The money comes from those who work and contribute, in the same way as the money we are providing in Clause 1. I have asked only one question—about a possible simplification of the present arrangements—and I trust that the right hon. Lady will answer it.

Photo of Miss Peggy Herbison Miss Peggy Herbison , Lanarkshire North

The hon. Member for Bradford, West (Mr. Tiley) asked one question which I will answer immediately. He wants to know when our review will be completed and whether we will have a social security system which covers all the various benefits in a simpler system than the one which now exists. I cannot give him a precise answer, or a categorical "Yes", but my hope is that that will be the case.

The hon. Gentleman may be aware that we have taken steps in the Bill to get rid of some anomalies and to achieve simplification in some parts of the scheme. We have tried to do that even in this interim Measure. It is my strong hope that when the final proposals come before the House a real attempt will have been made to achieve simplification.

Several hon. Gentlemen opposite have shown their desire to discuss the graduated pension scheme at length. I would be delighted if the Opposition chose a Supply day to debate the whole question of provision for retirement. I will merely say at this stage that, while the hon. Member for Bradford, West pointed to some good points in favour of the scheme, his right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) has, here and elsewhere, made it perfectly clear that the graduated pension scheme will go.

Question put and agreed to.

Clause ordered to stand part of the Bill.