Orders of the Day — Public Expenditure and Receipts Bill

Part of the debate – in the House of Commons at 12:00 am on 20th February 1968.

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Photo of Mr William Worsley Mr William Worsley , Chelsea 12:00 am, 20th February 1968

I was supporting the hon. Gentleman in that demand. I could not agree more about the neglect in this House—and I do not think this is a party matter—in the past about civil defence. The hon. Gentleman and I hold different views about the matter, but I think it is wrong that neither of us had the chance of arguing this on the Floor of the House. I regret that, without this background of discussion, the Government have taken this disastrous decision.

In regard to the first two Clauses, like my noble Friend, I find it extraordinary that the Government Actuary should have produced two Reports during the last 12 months—one in June last year and one this month—which show such radical differences.

I always have a healthy regard for actuaries. I feel that they had a higher wisdom. They use figures in a way which impresses me enormously, so I cannot think that it is the fault of the Government Actuary. To make statements so radically different at such short intervals must indicate that his calculations have been based on quite insufficient data. It underlines the fact that we are groping in the dark in all these matters of social policy. Our demographic intelligence has failed conspicuously since the war to warn us of the movements of population and of the situation with which we were going to be confronted.

In December of last year, I asked the right hon. Lady the Minister of Social Security how many full-time qualified research workers she had in her Department. She replied that she had three. We are basing both the structure and the finance on an exceedingly elaborate and important social service on guesswork.

Now I believe that this Actuary's Report is likely to be only the tip of an iceberg of financial crisis which is going to attack the National Insurance Fund in the years that lie ahead—a crisis caused by entitlements against the Fund running ahead of contributions to the Fund.

The Actuary's Report mentions two matters on which he now regards himself as having made a mistake last year. He thought then that the lighter mortality rate was a temporary feature. I cannot imagine why he should have thought that. It seems an exceedingly naive point of view. Surely if he had been backed up by a proper intelligence department in the Government he could have avoided that mistake. The Government Actuary also notes in his Report that there has been a fall in the total working population. Surely this is something which could have been foreseen with rather more clarity than has been the case in the past.

I believe that these features are likely to continue. We ought to know something about the period after 1970. This Report of the Government Actuary deals only with the next couple of years. It says nothing about the latter period. The First Secretary owes it to the House to share with the House a little of his thoughts about the future period. It is clear from the increases which have been made that the Government must intend a further rise before decimalisation, because the new stamps are expressed in decimalised units.

It has been said that an increase in the total population of over six million is expected between 1966 and 1980 and that less than one million of that six million will be of working age. In other words, the facts that the Government Actuary has adduced in his curent Report are likely to become even more effective in future years than they are today. My personal belief is that the present flat rate contribution will not take the strain. Clauses 1 and 2 are another nail in the coffin.

In 1948 the total stamp for a man was 9s. ld. I am talking and shall continue to talk of the contribution of employer and employee together. Under the Bill, and including S.E.T., as, to be fair, we must for a very large section of the population, it will be either 58s. 2d. or 63s., according to whether a person is contracted in or contracted out. The present contribution is seven times greater than the original contribution. This is a rise incomparably higher than either the rise in wages or the rise in the cost of living. The real increase in taxation, as the hon. Member for Poplar correctly called it, has been enormous. In round terms there is a £3 addition on a worker's wages.

Already—in this I am wholly with the hon. Member for Poplar—this level is cruelly high for vulnerable people, particularly those who for family reasons can work only part-time. A good example is a woman looking after an aged relative, but this applies to women over a very large range who have family responsibilities and to those whose ability to earn is impaired through disability, through age, or for any other reason.

The employment of such people is actively discouraged by our present system of a high poll tax. It is worth saying in passing that such people tend to work in trades which attract the full rate of S.E.T. Lighter jobs tend to be service jobs and to be subject to the full 63s. tax, even for a part-time worker—provided he works over 21 hours. This high level of contribution is one of the principal reasons for the scale of family poverty in families whose head is in work.

I turn to consider those reaching retirement age. My belief—I hope that I can carry the House with me; my noble Friend spoke on these lines—is that in a society where people live much longer and are much fitter much longer they should be encouraged not to work at full pitch until a certain single date in their lives and then retire and from that moment onwards do nothing. I believe that they should change gear, as it were. I believe that men and women should be prepared, at an age which would vary but which might be anything between 55 and 65, to take less responsibility and less demanding work, either in their own profession or in other professions.

Social policy should be aimed at encouraging this. Our present social policies have the exactly opposite effect. Such people are losing their earning capacity. They are taxed with this poll tax at nearly the same level as those whose earning capacity is not impaired. We should take steps—this would be a comprehensive measure—to encourage such gradual retirement. The present system, per contra, encourages the elderly to retire when for their own and the national good they would be better doing a lighter job. It turns them thereby needlessly from potential contributors to the fund into beneficiaries of the fund. Therefore, the very existence of this high poll tax contributes to the financial crisis which I see ahead.

I personally believe that we shall have to turn from the present flat poll tax system, which is perpetuated by the Bill, which has all the unfairness which I have indicated and which the hon. Member for Poplar indicated, and which is harsh and counter-productive, to a percentage system which takes account of ability to pay. Such a system would have enormous advantages. It would, first, ensure that the lower remunerations were taxed for social benefit at lower levels. It would also build into the system as incomes and salaries rose an increase so that the rate of stamp would not need constantly to be adjusted. The increase in wages would automatically produce an increase into the fund.

Finally, the introduction of decimal currency which is now near enough actively to influence our social policies would be a very good moment to switch to a percentage system. It would be much easier to work a percentage system on a decimal currency. I therefore urge the Government, as part of the great review which the right hon. Gentleman in his peroration will no doubt tell us is in existence, though we see no evidence of it, to consider replacing the flat rate poll tax with a percentage tax as part of decimalisation.