Orders of the Day — Finance Bill

Part of the debate – in the House of Commons at 12:00 am on 24 April 1968.

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Photo of Mr Douglas Houghton Mr Douglas Houghton , Sowerby 12:00, 24 April 1968

I appreciate the question. If all the families who are below the supplementary benefit level were the larger families, the hon. Gentleman would have a good case, but they are not. In looking at the composition of these families we find that a large proportion of them are two-children and some even one-child families. Although many of them are large families, they are by no means the greater proportion of the total number of families living below the supplementary benefit level. One must, therefore, ask the wage system to at least satisfy the reasonable requirements of a man and wife and one or two children, supplemented, as it will be, by family allowances.

The third objection to this proposal which I have heard is that it will create difficulties and friction between man and wife. The Chancellor said in his Budget speech that 350,000 men would be brought into the P.A.Y.E. system for the first time, because they would have to pay more in tax so that their wives could get still more in higher family allowances. I have been treated at different times to a dramatic presentation of John coming home from work and saying, "Mary, they have taken 9s. from my pay packet in P.A.Y.E." I have heard how Mary will reply, "That is all right John. I have another 15s. in the family allowance", to which he will reply, "If I am to suffer from P.A.Y.E. and if you are to have more in the family allowance, we must make an adjustment in the housekeeping budget." Then I have been told that the trouble will start, with Mary saying, "You are a mean man. I knew you were like that when I married you and now you have proved it"—and the rolling pin will come out and the Marriage Guidance Council will be on the premises before one can say Jack Robinson.

That is a fantasy. As the Minister of Social Security pointed out, most of the parents of young children these days are themselves young. They belong to a different generation. With respect to those who wish to preserve the harmony of married life, I suggest that they need not fear that the Chancellor's proposals in Clause 14 will upset it all that much.

I make my next suggestion with some hesitation because it may not be fully acceptable to my hon. Friends. I believe that it is time to consider a new method of approaching uncovenanted pension increases. The National Insurance Scheme is a gigantic system of transfer payments financed on a pay-as-you-go basis from joint contributions of employers and employees and from Exchequer contributions. The benefits have no relation to the contributions paid and the contributions are becoming an exaction on the lower-paid workers, who have the uncovenanted benefits of the pensions of better-off workers slung round their necks.

Total expenditure on pensions is much higher than it need be and I believe that higher benefits for those who need them could be paid for far less expenditure, on precisely the same principle as that adopted for family allowances. For a lower net cost, hundreds of thousands of pensioners could be taken off supplementary benefits and given an adequate pension as of right, with a scaling down of benefits for those with higher incomes. This could be done by an adjustment of the personal tax allowances for married and single persons and those receiving retirement pensions.

This presents some administrative problems, but they are no more insuperable than the problems connected with family allowances. I am, of course, talking about pension increases and I would like this matter considered in relation to the next pension increase so that we could see if we could make it bigger for poorer people and scale it down for the better-off, instead of giving it, as we do at present, equally across the board, inadequate at one end and a surplus at the other.

Of course, with a contributory scheme one has to maintain the fundamental basis of benefits as of right by reference to contributions. Therefore, a minimum claim to a pension must be clearly established, but when it comes to uncovenanted increases every two years right across the board at the cost of £300 million a year and still have nearly 2 million having to go to the Supplementary Benefits Scheme, there is something radically wrong with the whole system. Therefore, with some diffidence but with profound conviction, I believe that now is the time to begin to consider what the breakthrough of the interlocking scheme of family allowances and Income Tax allowances can do in other branches of the social services.