Pensioners and Family Income Supplement Payments Bill

Part of the debate – in the House of Commons at 12:00 am on 20th November 1972.

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Photo of Mr Brian O'Malley Mr Brian O'Malley , Rotherham 12:00 am, 20th November 1972

The right hon. Gentleman must not try that with me, because I have been dealing with pensions for too long. It is not only the Index of Retail Prices that is significant in assessing the comparative position of the pensioners. We must also consider the food price index and give it a fair degree of weighting for pensioners, because the distribution of their income and the demands on their limited income are effectively different from those of people with higher incomes who are still at work.

It is not without significance when the Government try to blame the trade union movement for everything—everything that has gone wrong is no longer the Government's responsibility but is that of someone else—that the trade union movement is this week in the forefront of the campaign for proper retirement pensions. The trade union movement as a whole has said that the workers are prepared to pay for decent pensions for their ex-members to live on.

The type of emergency measure that we are considering is of course welcome, but it is a stopgap. What we need in addition to deal with the problem, even in the short term, is a massive increase in pensions, and very quickly. The Government may say that the need is not so urgent now because they have frozen prices. They allowed things to get out of control, but now they say "We know that we have failed the country. We know that the famous promises that prices would be reduced at a stroke have all been broken. But we recognise the error of our ways and we shall revert to a statutory type of incomes policy, which we always said was much worse than the disease. We shall try that, and tell the pensioners with pride 'We are running a system in which we have said we do not believe, but the result will be helpful to you. It will freeze prices.'"

But already, before the so-called freeze, there had been a rapid increase in food prices and in the broader index of retail prices. In spite of any price freeze, there will be continuing price rises during the rest of the winter. The Financial Times aptly observed on its front page on 18th November that a number of the price increases—massive increases at that—had not yet been reflected in the official Index of Retail Prices issued on 17th November.

The Financial Times continued: This shows that between September 19 and October 17 prices rose at a faster rate that in any month since April 1971, bringing the annual rate of increase in the last six months to 8·7 per cent... these indices will not magically stabilise in the immediate future. The October retail index was compiled before the freeze was introduced and the November statistics will reflect the burst of anticipatory price increases which were announced at the beginning of the month. Therefore, the index by no means reflects everything. It will rise still further even in the period of freeze because of the increases that had already taken place, seasonal fluctuations and the de facto devaluation resulting from the Government's financial policies. There will be further substantial price increases next year, from which the pensioners will suffer, as a result of the introduction of the value added tax and our entry into the EEC.

It is small wonder the Opposition must say that the £10 is welcome but that the Bill is a stopgap measure. It is not enough. The Government should do far more by giving a major increase in the weekly pension now.

I turn now to some very important exclusions in the Bill. The Secretary of State has explained that the only recipients of the £10 will be those who satisfy a number of conditions. One of the conditions is that every man or woman who draws this £10 bonus has to be over the retirement age, which is 65 in the case of men and 60 in the case of women. If these benefits are introduced because of a crisis in our affairs, because it is recognised that the worse-off people, the pensioners, suffer particularly from this crisis in our economic and financial affairs, do not the same considerations apply, for example, to the long-term sick who are under the ages of 65 and 60? If we are talking about pensioners, why not include the invalidity pensioners?

The Money Resolution does not refer to retirement pensioners. If one looks at the technical use of the word "pensioners" in the national insurance legislation of 1972 and before that, there are a number of pensions in the technical sense apart from retirement pensions. We are therefore bound to ask why the right hon. Gentleman has not included such categories in the Bill and whether he will be prepared to consider the possibility of such inclusion during the Bill's later stages.

We are particularly concerned about the plight and position of invalidity pensioners; of widows; of those receiving the attendance allowance; of those who are disabled—whether they be war pensioners or people suffering from industrial injury; of those blind people who are recipients of supplementary benefit; and, of course, of the long-term unemployed. The right hon. Gentleman and the Government must reconsider this position before we reach the Committee stage.

Clause 3 deals with the modification of the family income supplement. Even the Government now use the phrase "the poverty trap". I can recall that when not so very long ago that terms was used we on this side were told by Conservatives that the poverty trap was a myth and did not apply to many people at all. Now the Secretary of State himself has been bound to admit, as the Prime Minister and other senior Ministers admitted during the tripartite talks, that as a result of the use of means testing and selectivity by the present Administration during the last two years there has been created very high marginal rates of tax and a very serious poverty trap.

The Clause seeks to provide a temporary way out of that trap but at the same time it will provide another increase in the number of working people who are receiving means-tested benefits. The right hon. Gentleman explained that this would be helpful in dealing with the poverty trap; but that poverty trap still exists and will continue to exist in a very serious form even if the Clause is improved. In particular, when one looks forward to the next 12 or 18 months and the development of the Government's prices and incomes policy as it seems likely or possible to develop, it will be seen that the Government will have to think far further than this temporary expedient which they have introduced, once again, as a result of the tripartite talks.

While we welcome its major provisions, we believe that the Bill is presented by a Government in deep trouble, a Government whose whole strategy has collapsed and collapsed particularly in the realm of prices policy. The Bill in itself represents a patched-up policy and is an open recognition that the Government's social security policies have failed. In spite of this little Bill, it is clear that the Government have no policies, even in the medium or long term, to deal with the problem of poverty. We on this side have, and we shall put those policies into operation when we return to power.