Retirement pension is not reduced by earnings from 17th April 1975 to 14th
April 1976 (both dates included) because the claimant's weekly earnings for the assessment period 6th April 1975 to 5th April 1976 (both dates included) were £11·34.
The total amount of retirement pension payable from 17th April 1975 to 14th April 1976 (both dates included) is £379·80 comprising 31 weeks at £6·90 per week and 21 weeks at £7·90 per week.
I direct that £37980 paid to the claimant as interim payments from 17th April 1975 to 14th April 1976 (both dates included) is to be treated as having been made on account of retirement pension now awarded for this period. No balance is therefore due.
The sole question is cost. How much would it cost to pay the full pension to those who at present lose it if the earnings limit were raised to £50? What offset would there be from the higher tax yield on the pension so paid? The answer that we have been given is an extra £15 million. What would be the higher tax yield on increased earnings caused by the disincentive being removed? We have had no answer to that. What would be the additional tax yield if more people stayed on at work? How many people would prefer to build up a higher entitlement to pension by not drawing a pension for the first five years in order to obtain a pension which is one-third higher? The assumption is that nobody would do that. I do not accept that assumption.
The Treasury estimates are extremely volatile. In January 1975 the Government estimated that the cost would be £60 million in 1975-76. Later they amended that estimate to £50 million, and later still they admitted that a large part of that increase was due to the increasing number of pensioners retiring early because of the economic situation. The Treasury gave the cost of abolishing the earnings rule as £80 million in January 1975. In March 1976 the estimate was £60 million. £20 million mysteriously disappeared in the interim. Again, in 1975 the cost of raising the limit from £35 to £50 was given as £35 million. Since then pensions have been increased, and I agree that that will take the figure up to about £50 million. But the Bill provides for a figure of £60 million before tax. Even odder is that before the Bill was published the sum was to have been £65 million, but £5 million disappeared in the last week before the Bill was published. How can anyone place any reliance on figures that are subject to such wild vagaries as this?
The Government estimates assume that an end to the earnings rule would mean the end of the retirement condition. That is not so. They are including the full cost of paying pensions to all who defer their retirement. I question that. A large number of pensioners would continue to defer their pension—because they might have to have it taxed at the full rate —in order to draw increments after five years. It cannot be right to assume that if the earnings rule is lifted all the people affected will immediately draw their pension and forgo their increments. That is an absurd assumption and is another weakness in the figures.
My hon. Friend the Member for Rushcliffe (Mr. Clarke) has been vigorous in pursuing the matter. Written Questions to him have shown that of all the people above retirement age with earnings within the earnings rule bracket, only about 3 per cent. had incomes above the earnings rule limit. Is it to be thought that none of those would increase their earnings if the disincentive of the earnings rule were lifted? Even if only one in eight of those within the earnings rule bracket increased their income by £15 a week, the extra tax yield from the change would amount to £16 million.
We contend that the Government's estimate of the cost after all their gyrations, cannot be relied upon. The Government's estimate is greatly inflated and has no credibility. Against that must be set all the social arguments. If the Government can convince me that £60 million or even £45 million is right, then it is right for us to look carefully at the whole question. If not, it is right to stick to the decision which the House took last year.
No such qualifications need to be made about Clause 4—and I come now to the most contentious part of the Bill. Successive Governments have put this proposal to successive Parliaments and successive Parliaments have thrown it out. Ending entitlement to unemployment benefit for occupational pensioners is a breach of the national insurance principle
that benefits are enjoyable as of right. That point is made very clearly by the Council of Post Office Unions:
The Government appears to he proposing to depart from what was held to be a fundamental principle of the post-war reconstruction of the social security system.
I agree. The proposal introduces a new means test where there ought to be none. As the CBI has said,
this will open the door to extension to other forms of benefit.
That is a real fear. It will discriminate against the man with an occupational pension but not the man with other forms of income. That is a point very well made by the Life Offices' Association, which has said,
it is hardly consistent with the Government's policy of encouraging the development of good occupational pension schemes.
It will be open to abuse, as a number of correspondents make clear. People will go for commutation payments, postpone occupational pensions, and vary the rate below the limit in the first year and above the limit afterwards. However, as The Times said on 17th August,
legislation to penalise genuine and bogus seekers for work indiscriminately is unfair and unnecessary, when administrative arrange? ments already exist (capable of reinforcement if required) to discriminate between them.
I hope to be able to satisfy Labour Members that they are on a good wicket in joining us in throwing out the clause. Last week I conceded that there was abuse of the system if someone who has no genuine intention of taking work signs on and draws benefit. There is no conflict between us on that matter. Such a person is not genuinely in the market for employment.
The right hon. Member for Hertford and Stevenage (Mrs. Williams)—now Secretary of State for Education and Science—said in Standing Committee G on 25th May, 1971:
if the Government want to deal with abuse —and there may be some abuse—it seems odd to go about it by trying to change National Insurance entitlement, instead of by taking the obvious step of ensuring that the Department of Employment makes certain that anyone who lists himself for employment and is retired on an occupational pension sincerely means to list himself for employment"— [Official Report, Standing Committee G, 25th May 1971; c. 167.]
As The Times said, if the rules are not adequate they should be tightened up.
So far this afternoon we have had the unedifying spectacle of both Front Benches standing on their heads and their feet at different times. Will the right hon. Gentleman assure us, from the Opposition Front Bench, that if the situation ever arose—God forbid!—in which Conservative Members were to form the Government, they would stick to what they are saying today? Both Front Benches have chopped and changed. Let us get it clear on the record now what is to happen in the future.
Though I have not been long in politics, I have been in politics long enough to know that "never" is a very dangerous word indeed. However, I will say this: the proposal having been introduced three times and thrown out three times, I think that it would be a very unwise Minister who sought to introduce it again.
As one Member who has been either constantly wrong or constantly right, but at least constant, because I have taken the same position when in Government previously and I was not in Parliament when the Labour Party was in opposition, perhaps I may say that if the right hon. Gentleman wants to do some quoting across the Floor of the House, he should note what his hon. Friend the Member for Somerset, North (Mr. Dean) said on Second Reading of the 1971 Bill. He said,
I assure the House we have looked with the greatest care to see whether it would be possible to deal with this misuse of benefit by redefining that test.
That is the employability test.
The National Insurance Advisory Committee has looked at this matter with extreme care but has reached the conclusion that it would not be possible to deal with the situation in that way."—[Official Report, 3rd May 1971; Vol. 816, c. 1088.]
We have now had our quotations across the House. We shall return to the comments of the right hon. Member for Hertford and Stevenage, because on this she has said many wise things.
There was one proposal, which the Government could have dealt with, that was recommended by the NIAC. However, it has not been put into practice. That is to redefine "usual occupation".
Paragraph 40 of the 1968 report, to which the right hon. Gentleman referred, says that the rules should
be amended to state expressly that a person who has retired with an occupational pension should be regarded as having severed his connection with that employment and should be treated as not having a 'usual occupation
As the Committee explained,
We consider that the concept of a 'usual occupation' is inappropriate when considering both the availability of an occupational pensioner and the suitability of employment for him and we think that the questions of availability and suitable employment should be determined without regard to the occupation from which he has retired on pension.
Why cannot that be done? That would greatly widen the scope of employment which would be available for those who chose to sign on and are seeking employment.
The matter goes wider than this. Perhaps here I shall move a little into the realms of speculation, and what I say should not necessarily be taken as clear policy. I believe that we need to take a new look at the availability for work rule as a whole, not merely for occupational pensioners but generally. There is a growing feeling in the country that the rule is not applied firmly enough and that the range of jobs for which a man should be expected to offer himself is unduly restricted. Of course, a man unemployed should have time to find something suited to his abilities and qualifications. However, this can lead—there is evidence that it does—to people turning down jobs which, in all reason, the community might reasonably expect them to take up.
I have seen figures to suggest that despite the very large increase in unemployment over the last two years, the ratio of jobs accepted to jobs offered in one large engineering group has actually fallen by quite a significant amount in the last two years. Part of the explanation might be that the rule is not being properly applied. I realise that one needs to put one's survey wider, and we are trying to do that.
What can be done? I point to what is being done in Australia. In Australia the Minister who is responsible for this area of policy, the hon. Tony Street. Member of Parliament, in both January and March announced a number of measures which would materially accelerate the time by which a man is expected to take a job, albeit not exactly what he is looking for, or otherwise lose benefit. We ought to examine those matters. My right hon. and hon. Friends are examining them to see whether some of them would be applicable here. Of course, they are not all applicable. The situation is not on all fours. The two countries are different.
However, there are some things that would be applicable. For instance, a man who moves away to an area in which he knows or ought to know that there is no prospect of getting a job of the sort that lie wants should not he able to go on drawing unemployment benefit. That would cover many retired people. One always takes the example of a retired bank manager, but there are plenty of others who go to the seaside, where they know that there is no prospect of a job, and sign on for employment.
Always this must be a matter of balance—of balancing fairness to the individual who is seeking employment which is congenial and rewarding and fairness to the community, which has to pick up the tab while he is looking for a job. Successive Governments have said that it is not possible to shift the balance. All I can say is that other countries have shown that it is possible. We must put the matter right, and this is the best way of dealing with the problem of abuse in this field, with which both sides of the House are concerned.
Concerning Clause 4, we believe that the general approach of tightening the availability for work rule is a much fairer way and much more in accordance with principle than the blanket disqualification in the clause. That was the view of the right hon. Member for Hertford and Stevenage. That is the view of the CBI and the TUC. It is the view of th. pension organisations, and it is the view of the many thousands of ordinary people who have written to right hon. and hon. Members in all parts of the House, urging us to throw out the clause. It is a view which in Committee and, if necessary, on Report, we shall press upon the Government in the hope and expectation that the Committee or the House will follow precedent and reject the clause.
I beg to move, to leave out from "That" to the end of the Question and to add instead thereof:
this House declines to give a Second Reading to a Bill that proposes to make small savings in public expenditure at the expense of increased hardship for an already disadvantaged section of society".
In moving the Second Reading of the Bill the Secretary of State described it as a tidying-up Bill. I would describe it as a silly, ill-conceived Bill. Certain parts of it are good but there are parts of it which are very bad. That is an admirable reason for putting down a reasoned amendment to the Second Reading. It is the sort of cause for reasoned amendments being accepted. Therefore, I find it strange that the Conservative Front Bench advised Conservative Members to abstain from supporting the reasoned Liberal amendment.
I listened carefully to what the right hon. Member for Wanstead and Woodford (Mr. Jenkin) said about the Conservative attitude to the amendment. He argued that his hon. Friends should let the Bill through and then amend it in Committee. The truth is that there are not enough Tories present to make a reasonable vote against the Bill. Their attitude is that they have been here for three days and that is enough. I agree with them, but that is another matter. That is why they are not voting tonight. However, I hope that those Tories who arc present will rebel against the Conservative Front Bench and against the advice of the Tory Whips.
The right hon. Member for Wanstead and Woodford said that the Conservative Party would seek to delete Clause 4 in Committee. How does he know that he will carry such an amendment in Committee? The right hon. Gentleman and his colleagues could delete the clause tonight if they were here to vote. Make no mistake, experience has conclusively proved that any hon. Members of the party which is in Government—it applies equally to Tory Governments—who speak against a Bill on Second Reading do not have a cat in hell's chance of getting on the Committee.
The Government will argue that these matters are arranged by the Committee of Selection. That is not true. The party Whips slip notes to that Committee and make sure that the people they want on the Committee are put on.
The Minister says this applies to this side and not to his side of the House. Several hon. Members on his own Benches have made that point in the last three months about other Bills. That is the truth, and the Minister knows it. I understand that some Government supporters are prepared to rebel by voting for the Liberal amendment. I give them credit for that. But it is a fallacy for the right hon. Member for Wan-stead and Woodford to believe that those same people will have the opportunity of being represented, and voting with him, in Committee. That will not happen.
The only hope that the right hon. Gentleman has of defeating Clause 4 is possibly on Report. We shall see, but my own view is that the Tories should have taken the opportunity to vote tonight.
The right hon. Gentleman asked what the Liberals would say to the disabled. I shall tell him what we shall say to those on occupational pensions and to those thousands of students who have joined the Tory Right Wing movement in the universities in the last six months. We shall tell them that the Tories had an opportunity to defeat the Bill but that they did not take it.
I telephoned Cambridge at lunchtime and urged the Liberal candidate to put a leaflet out to the students of Cambridge this afternoon telling them how the Tories in this House were supporting us on this Bill. [AN HON MEMBER: "You will need more than that."] We may need more than that, but at least the students, even though they may be voting blindly for the Tories, will have had their eyes opened before they vote in that way.
The Bill is bad in three parts. That is why the Liberal Party tabled the reasoned amendment. The first relates to Clause 4, which imposes a means test on social security benefits. As the hon. Member for Conway (Mr. Roberts) pointed out, it has not only been sections of the trade union movement which have made representations about this to hon. Members. The Secretary of State himself, who said this applies only to those who are not in the poverty trap, received a letter on 30th November from the Child Poverty Action Group which said that it was opposed to the plan to means test unemployment benefit for occupational pensions. I would not describe that group as being the champion of the most affluent members of our society. It is a fallacy to suggest that Clause 4 deals only with the better-off.
There are two other clauses to which we in the Liberal Party take exception.
The hon. Gentleman talked about increased hardship for an already disadvantaged section of society. Does he dispute the figures that I have given? Is he saying that it will not mean that people will still be able to get between £50 and £60 a week?
The Minister is spellbound by many things, in my experience.
We also object to Clause 5 and Clause 13. Those clauses, with Clause 4, and the consequential clauses which may stem from them,
make small savings in public expenditure at the expense of increased hardship for an already disadvantaged section of society.
I gather that most of the explanations will be given later by the Minister of State. The Secretary of State said constantly that his right hon. Friend would deal with these points at the end of the debate. It rather reminded me of the story of the old council chief officers who always wore frowns on the faces of their deputies.
We may get the explanations tonight, but if I know the Minister for Social Security I suspect that his heart is not in many parts of the Bill.
Let us consider the three clauses to which I have referred. First, there is the clause dealing with occupational pensioners and the proposal to reduce the unemployment benefit to occupational pensioners. The seriousness of that proposal is that it applies a means test to a national insurance benefit. That is the central principle behind the clause. It is the principle behind the clause to which we are objecting.
The central principle behind the claim for insurance benefits is that, provided a claim satisfies the conditions and the criteria laid down, a person who is genuinely seeking work is perfectly entitled to draw unemployment pay regardless of his financial situation. Clause 4 undermines that principle.
If the Government are concerned about stopping people drawing unemployment pay who ought not to be in receipt of it because they are not genuinely seeking employment, there are other ways of stopping them without means-testing the benefit. The other disadvantage of the proposal is that it will penalise only one section of the community. I cannot believe that is fair.
If I put my money into private savings, or bonds of some sort, or even shares in a company, and I receive a vast amount of interest from those shares which exceeds not £25 a week but £100 a week I can still retire at the age of, say, 61 and draw 12 months' unemployment pay, assuming that I am available for work. But if I put my money into a pension scheme, and receive the benefit of that investment in the form of a pension, I am penalised. I do not believe that is fair or just. I do not believe that it can be justified as being fair play. That is another objection to this clause, and it is a major one.
The clause also discriminates against men as opposed to women. A woman can draw an occupational pension at the age of 60 and retirement pension at 60, whereas a man has to wait until he is 65. It means that a woman can claim both a retirement pension and an occupational pension. There, too, is an anomaly. But the biggest discrimination is between those who have their incomes from occupational pensions and those who have them from other sources.
Public sector employees will feel much of the effect. As the Secretary of State said, representations have been made by Post Office workers who are totally opposed to the Bill. But there are many other sections of the community who oppose it. In my constituency I have the largest asbestos factory in the country. It employs 6,000 people. The company deliberately, for industrial health reasons, retires people before the age of 65 on occupational pensions. Those manual workers employed in asbestos who are retired early in order to prevent the contraction of such diseases as pneumoconiosis do not receive vast pensions, but they are sufficiently large to be affected by the clause. Many of my constituents will be adversely affected by the introduction of Clause 4.
Whether people receive £50 or £60 a week, the fact remains that pensions and occupational pensions are subject to taxation, whereas unemployment benefits are not. It means, therefore, that the source of a person's money is applicable to the amount of hardship that he suffers as a result of the taxation of benefits. That is now to be added to by taking away the opportunity for unemployment benefit, again not on the basis of what is earned so much as on the basis of where it is earned. That is quite wrong, in my view.
I turn now to Clause 5, which is the part of the Bill concerned with the earnings limit for pensioners reducing from the proposed £50 to £35 from April 1977. I think that sufficient has already been said by the right hon. Member for Wan-stead and Woodford without the need for me to flog this case. The fact is that this House made a decision by a good majority, and I think that there are times when the Government should accept the opinion, the view and the vote of this House. I find it quite objectionable that, when the House has expressed itself clearly on a matter of this kind, not by votes from one side only but on an all-party basis, bearing in mind that it was based on an amendment moved by a Government supporter who was successful in carrying a majority with him, it is quite wrong now for the Government to attempt to alter it.
In any event, the decision made then was right, in my view, in that a person should not be penalised for going out to work—indeed, encouraged not to work. Very often, for elderly people the opportunity to earn is the opportunity to feel independent. This is not only a financial argument. It is a social and a psychological argument.
In my view, the Government are very ill-advised to take this line for the sake of the puny difference that it will make in financial terms compared with the country's overall plight. We have to bear in mind that here we are discussing £45 million against a borrowing requirement of £12,000 million. If the Government are looking for ways of saving £45 million, I am sure that other ways can be found.
The Secretary of State does not agree, apparently. I accept that the other ways of which I speak may not be within his portfolio, but I have in mind extravagances like some of our embassies abroad and the lavishness of them. The Government will have to abolish a great deal of that kind of extravagance before they convince me that our old-age pensioners must be penalised in this way.
I come next to Clause 13 on which, apparently, I disagree with the Conservative Front Bench. The right hon. Member for Wanstead and Woodford said that the Opposition felt that the Government were correct. They are now on record as saying that they agree with Government policy in relation to students' allowances. That is what the right hon. Member for Wanstead and Woodford said today. I wish that I had known that when I telephoned Cambridge, because it would have made an even better leaflet.
If we are to alter the opportunities of students to earn in vacations and the conditions in which the finance is available to students so that they can live properly, we should alter the whole basis in one package and not have a go at them through one Bill and give them no opportunity to adjust their position through another.
When students go to work at Christmas and Easter, which are the two principal vacations about which we are speaking, it is not simply because they want to go out and earn. It is because they have to. Their allowances are such that they need to do it.
It is also a statement of fact that 72 per cent. of students do not receive full parental contributions to their grants. It may be argued that that is the fault of parents in that they do not pay them. But that does not alter the fact that they do not. Often parents are not able to pay them. In any event, it is a little immoral to require people of voting age to depend on their parents to supplement their incomes in that way.
I am not sure what lies behind the Government's thinking in this clause. It could be that they think students are the easiest lot to take on. However, the financial position of students in terms of the purchasing power of their grants has declined considerably since 1962. I have the figures here for each year from 1962. However, I shall not bother the House with all of them.
In 1962, taking the Retail Price Index at 100, the maximum grant was £320. In 1975 that index stood at 267·2, and the grant had increased to £740. The average income of students was £577 per annum on the basis of a recent survey done by the DES. The full grant was £605. There was a greater incidence of means-tested grants amongst university students. The average vacation income was 92 per cent. from vacation employment and only 7 per cent. from supplementary benefit. Men students earned substantially more than women during the vacation. Only 47 per cent. of students received £400 or more in grants. Of the students receiving means-tested grants, 73 per cent. did not receive their full parental contribution and, of these, 48 per cent. had a deficit of more than £50. Students living in university halls of residence spent 18 per cent. more on board and lodging than the notional element of their grant.
Although the new regulations allow the right of appeal and, therefore, the opportunity for specific financial responsibilities to be met—rent to pay, dependants to support, disability, one-parent families, and so on—the £11·35 notional vacation element will be deducted. It should be noted also that the vacation element is means-tested and thus is not received by 73 per cent. of students.
The bulk of student vacation income comes from casual employment in the vacation. The grant was originally set on the basis that the short vacations should be largely available for study—for example, the Easter vacation before the summer exams is especially important in this respect—with income being supplemented only from employment in the summer.
Of course, most students seek work during both the short vacations, although at a time of high unemployment the proportion of them who are successful in gaining employment has dropped considerably. For example, up to five years ago the Post Office used to employ thousands of people in casual jobs for the Christmas post, but now there is very little vacation employment. Students themselves recognise that employment opportunities should go to unemployed school leavers and young people who are not training for a career. If one both takes away opportunities for work and accepts that the level of student grants has dropped in proportion to the cost of living surely it is unreasonable to remove students' opportunities to receive supplementary benefit during the vacation.
We are opposed to the three clauses to which I have referred. If the Government were to be defeated on our reasoned amendment this evening—as they certainly would be if the Tories were here in numbers—there would be nothing at all, as the hon. Member for Bethnal Green and Bow (Mr. Mikardo) said, to prevent the Government bringing in a new Bill without these clauses and putting it through on the nod within weeks. Such a Bill could go through the House without a great deal of opposition and effort. [Interruption.] An hon. Member behind me comments from a sedentary position "Not in this Session". I do not believe that. It could go through.
We are in only the second week of this Session, yet we are already forecasting what Bills we can get through by the end of July or the first week in August next year. I never heard such rubbish in all my life. Of course the Government can put through a Bill in this Session if they want to do so, whether on this or on any other matter. As the Bill, without the clauses to which I have referred, would have been non-contentious the Government could easily have got it through. The Government are ill-advised to bring in this Bill now. The savings are comparatively puny. In any case, they are being taken from the wrong section of society.
It is for those reasons that my party tabled the reasoned amendment. We shall be delighted to have the more enlightened hon. Members who sit on the Treasury Bench voting with us tonight. Regretfully, we shall not have with us all hon. Members of the official Opposition, although I gather that some hon. Members will rebel against the Whip. I am delighted to hear that. The Government may rest assured that if our amendment is not carried this evening we shall return to this matter later to try to persuade them, or, if necessary, to force them, to change their mind.
If this Bill did not include two very controversial clauses, my right hon. Friend the Secretary of State for Social Services could be charged with being over-modest in claiming that this was merely a tidying-up measure. The clause that deals with those unfortunate industrial workers who suffer from pneumoconiosis and byssinosis, and with mobility allowances. is very welcome. The only criticism that we could make of the clause is that it does not do enough, but we always say that about every social security measure. It is a bitter experience, which successive Ministers undergo whenever they introduce some brand-new relief for people who have never had any help that they are immediately charged with not doing enough.
I think that the Secretary of State, his predecessor, this Government and the previous Labour Government have done more for the disabled, the chronically sick and the unfortunate in our society than any previous Administration, with the possible exception of the remarkable Labour Government of 1945-50, who did so much when the world economic situation was completely shattered. If they had suffered from the weak and frightened attitude that exists on both Front Benches today, we should never have seen the first National Insurance Bill, and we certainly should not have seen the establishment of the National Health Service.
We need to put back into the House of Commons the sort of courage that existed then. We should not be frightened and scared out of our wits by the announcements of a few bankers and by economic analyses made by a few people who have never faced greater danger in their lives than that of being impaled by their own fountain pens.
The Parliamentary Labour Party Social Security Group of which I have the honour to be chairman, has examined the Bill Two clauses concerned us and made us bitter and extremely annoyed because they should not have been included. The more we examined the Bill, the more we came to the conclusion that there was no need for Clauses 4 and 13. Any Minister in this Labour Cabinet who is incapable of finding the sum saved through these clauses from some other source that could better afford it has no right to sit on the Front Bench. Hon. Members who are members of the Social Security Group will demonstrate later in the debate how this could be done.
We all acknowledge and understand that the National Insurance Advisory Committee is a very worthwhile body. But the House of Commons cannot accept that any reports from a Royal Commission or advisory committee should be regarded as tablets brought down from Mount Sinai. Simply because issues have been examined by an outside body, it does not follow that the findings of that body are absolutely true.
It would have been much more to the point for my right hon. Friend the Secretary of State to have discussed this clause with those who have a closer understanding of its effect, such as trade union leaders, who are now extremely bitter because some people will suffer. I know that my right hon. Friend the Minister for Social Security, who will reply to the debate tonight, has a massive industrial understanding. He knows that the people who will be affected by this clause are those who accepted the social contract. I asked him to bear that in mind.
Trade union leaders are extremely angry, bitter and annoyed because the agreements made over the years were entered into on the understanding that the sort of issues that we have in Clause 4 of this Bill would never be raised. Trade union members are also upset.
The last time such a clause was introduced in a Bill—by a Tory Government —it was totally demolished by my right hon. Friend the Secretary of State for Education. How can it now be said that the circumstances that affected the prin- ciples of our argument then do not exist today? I should like to hear what those circumstances are. What my right hon. Friend had to say in Committee demolished the original clause. Her arguments are equally applicable now. I should like my right hon. Friend the Minister for Social Security to explain that.
My hon. Friends and I are closely associated with social security measures. We make it our business to understand what is going on. We have examined the case. We have met trade union leaders and members of the TUC. Possibly we are more annoyed and bitter about this proposal than anyone else.
I hope that the hon. Gentleman is not suggesting that Labour Members are the only ones who have met trade unionists to discuss this problem. I can assure him that I, too, have met union leaders. I am sure that many of my hon. Friends have done so.
I have no doubt that if the hon. Member catches your eye, Mr. Deputy Speaker, he will be able to make that point. I trust that in future, if there is any threat to the trade union movement, as there was a few years ago from the Tory Party, we shall be able to count on the hon. Member's support—if he is still here.
My hon. Friends and I are particularly angry about Clause 4, which deals with unemployment benefit for occupational pensioners. The clause is a complete abomination and constitutes an unjust penalty on those who have made a lifetime's contribution to society. It will apply particularly to the public service and mainly to Post Office workers. Since 1969, when the Post Office became a public corporation, members of the Post Office Engineering Union and the Union of Post Office Workers and others have been obliged by their contracts to retire at 60. Now all of these agreements, which were underwritten by one Department of State and embodied in a massive contract, are being undermined by another Department of State. That is the en-credible situation the Government are in today.
These workers entered into a contract honestly and decently. The Government now seek to ravage that contract. My Social Security Group has spoken to people such as the General Secretary of the Post Office Engineering Union, Mr. Brian Stanley, Mr. Stagg, the Deputy General Secretary of the Union of Post Office Workers, and Mr. Carter, Secretary of the Council of Post Office Unions. All of them, without exception, complained bitterly about the inclusion of Clause 4 and about the fact that they were never consulted. I confirmed that point only yesterday.
I must ask my right hon. Friend for certain assurances. The members of these unions are asking "Why is it that on the great issue of the social contract the Labour Government come to us and ask for our assistance, our patience and co-operation, yet when it suits their purpose they completely ignore us and then stab us in the back?" This is the feeling of ordinary postal workers in all of the unions I have mentioned.
It is plain that these pensions were meant to be a form of deferred wages. The workers could have invested a proportion of their wages and would not now be trapped by this proposal. They realise that. Hence, they are extremely bitter and believe that there is a danger of the Government—as they say, "our Government"—double-crossing them. This is the sort of thing which I am sure my right hon. Friend will consider.
I have also had the privilege of discussing this matter with the General Secretary of the Confederation of Health Service Employees, Mr. Albert Spanswick. He was particularly concerned about how this measure might affect those brave men and women who work in our mental asylums. Only yesterday there were tributes paid to the nurses and others who work in such hospitals in dangerous circumstances. Today there is a danger of those tributes turning into sour grapes.
If the House were to accept Clause 4, it would be behaving in a dishonourable manner. A contract exists for the occupational pensioners, based on an established principle. While I do not have the time to go into the detail, there is no doubt that Clause 4 ravages that principle. I say to my right hon. Friend the Minister for Social Security, who has a massive understanding of this subject, that occupational pensions are always taken into consideration in wage and salary negotiations. He will understand the import of that.
Clause 4 could bust the social contract. It is as serious as that. It will certainly endanger the chances of success of the appeal the Prime Minister made a few days ago to the trade union movement. The hon. Member for Rochdale (Mr. Smith) and the right hon. Member for Wanstead and Woodford (Mr. Jenkin) made the point that abuse of occupational pension schemes by people drawing benefits without any intention of obtaining employment should be stopped. We believe that that is not an insuperable problem. It could be tackled by the employment offices, without withholding benefit from those who genuinely qualify.
Taking all of these things into consideration, I must ask my right hon. Friend to consider giving us the assurance that in Committee there will be full consultation with the trade union leaders, particularly those I have mentioned—not formal exchanges of letters but a deep examination of the issue. I ask my right hon. Friend to be prepared to see the evidence that can be provided. We say that Clause 4 has to be removed.
I will not reply to my hon. Friend now because he has asked me an important question to which I know he and my hon. Friends will want a full answer. I will deal with it when I reply to the debate.
In our opinion, Clause 13 is unjustifiable because it discriminates. Clause 4 is a total abomination which ought to be removed before the debate concludes tonight. That may not be possible. I ask my right hon. Friend to be prepared to see the people I have mentioned and to receive representations from my hon. Friends who have knowledge and understanding of this issue. Let me make it transparently clear that we are not talking about tinkering with Clause 4. We are saying that we believe that we have the evidence and all that is necessary to assist my right hon. Friend to remove this abominable clause from the Bill completely.
Like many other hon. Members who have already spoken, and no doubt others who will speak later, I regard this as a miserable little Bill. But for the fact that Governments were not born yesterday—they put a number of measures in a Bill of which we are bound to approve—I should have liked to see it thrown out lock, stock and barrel.
I regard this as a missed opportunity. As happens with so many social security measures put forward by the Government, massive promises are made at election time, and the cost of measures is either deferred to the next generation or efforts are made to claw it back in various ways. That is what is happening in this Bill. The Government are here clawing back some of the cost of the promises they made so freely at election time.
With regard to Clause 4, dealing with adjustment of benefit. I was one of the five Tory Members who did not vote with the Conservative Government in 1971, and that is why the measure was not put on the statute book. I am no more enamoured of it now than I was then. At that time I was moved by the speech made by the then hon. Member for Hitchin who is now Secretary of State for Education and Science. She made an excellent speech in Committee, putting all the pertinent points about the social effect of bringing in the measure. She showed that it was against a basic principle behind the whole concept of social security.
If I were to be selected to serve on the Committee dealing with the Bill, I should certainly not support it. In order to clobber a few people who are abusing the system, the Bill will be attacking a considerable number of other people who have contributed and who have a right to expect benefits for their contributions, irrespective of their level of income.
It is no good suggesting, as the Secretary of State sought to do, that some of the people affected may be better off than others. That is not the point. It is not his job, with respect. It is the job of the Chancellor of the Exchequer to even out levels of income through the taxation system. It is not right to seek to do it through the social security system.
In this respect the Bill is a retrograde step. On three occasions the House in its wisdom has shown that it did not want the measure to be introduced in this way. We ought to try to find other ways of curing the abuse. Taxing unemployment benefit is one way. There is also the question of availability of work and tightening up on conditions relating thereto. These methods must be applied to those who seek to abuse this aspect of the service. But it is quite wrong to try to breach the principle, and I shall vote against it for that reason.
The Bill does nothing to help in regard to contributions towards retirement made by a person who gives up work after 60 years of age. Under the Bill produced by the Conservative Government there was at least to be a contribution option available for those who could not draw unemployment benefit over 60. It is because they cannot really see why they should continue to pay the contribution after 60 when they have not any work of cannot find any work that they seek the unemployment benefit.
If the Government want to push ahead really seriously with the measure, they should look at this proposal put forward by my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) on the question of contributions. But one senses from the feeling of the House that the measure will not get very far.
With regard to the earnings rule, I am very glad to see the hon. Member for Islington, South and Finsbury (Mr. Cunningham) in his seat, because it is due to his courage and consistency that the earnings rule was tapered in the way it has been over the past three years. But for the obstacle placed now in the way of this particular advance, we should be seeing the death penalty placed on the earnings rule by 1980.
I admit that there was a good deal of cross-pollination of ideas in Committee on the previous measure in an effort to cobble together a series of amendments and produce one answer which would at least start the phasing out of the earnings rule. The whole House wanted to see this happen at that time, and it is a great pity to try to prevent it because it may cost a little more.
The cost figures put forward by the Government are very suspect indeed. How much will come back due to the fact that not all the people who continue to work after retirement draw their retirement benefit because they want to enjoy the advantage of a higher benefit in the end? That aspect has never been taken into account by those who argue against abolishing the earnings rule.
Consideration ought to be given to the great psychological effect of allowing people to continue in work after they retire and to keep their earnings in the way that anyone else can. Surely that psychological effect can be measured in terms of cost when we consider the health and mental stability of people after retirement. Many people when they have to stop work suffer a very rapid deterioration in health because of the change of pattern in their lives. Where people have the opportunity and wish to keep on working, it is good to allow them to do so.
This aspect has been totally disregarded by successive Governments and by those who advise them, who continually say that it will cost a great deal of money and that it cannot be done. Fortunately, thanks to hon. Members on both sides of the House, we have started on the road of getting rid of what I regard as an odious rule. I hope that we shall continue on that road by throwing out the clause.
Having dealt with the bad part of the Bill, may I say that I regard Clause 12 as a slight improvement, but it has a long way to go yet. I accept absolutely that the principle of the mobility allowance is the right way forward—cash instead of hardware. But I feel that there was a grave misunderstanding—which still exists—among those who have the hardware, the invalid vehicles, and who feel that they may lose it all and get nothing in its place.
We must work steadily towards a position where the cash available in terms of mobility allowance is sufficient to enable a vehicle to be purchased where it is needed. If there has to be a priority, it should be that when funds are available they should go to those who need a vehicle for the purpose of getting to work. It will be some time before the mobility allowance can cover the cost of replacement of an invalid vehicle, but we must move forward on this front as and when there is available cash, and make it a priority. It was a valuable move that the Government have made in spreading the mobility allowance over a much wider field of disabled people than those who received a vehicle so far because they could drive. However, we must move ahead as soon as we can.
I hope that we have a good debate in Committee on the question of the anomalies of the mobility allowance. They must be aired in the House so that people outside will recognise that we understand their worries about this allowance.
Lastly, on Clause 13, it is right for the Government to introduce some restriction on supplementary benefit payments to students. After all, students are doing pretty well as a whole out of the State, in contrast to the many people who have not had the benefit of the education that these students are able to have. Students may not agree with this statement, but taking the total of what the State gives students in grants together with the whole cost of their higher education, students draw from the State something which is not available to a very large number of others, because of their inability to qualify for it.
Do I gather that the Conservative argument about education now is that they regard State-aided education not as an investment but as a charity given to those who are to be regarded as sucking benefits from the. State rather than that the State gets something from them?
Higher education in Britain is a privilege that we are able to provide for an ever-widening number of people. I believe that those who are able to benefit from it repay the State overwhelmingly by putting to good use what they have learned during their years of training, thus paying back, so to speak, the benefits they have gained and, in addition giving of their brainpower and skill. This is the right way to look at it. But no one can say that there has not been a good deal of abuse by some students over the past few years. In some few cases it has been a scandal. The Government are doing the right thing in tightening up the benefits in some respects.
If the Government really want to move forward in social security, it is high time that they sought to straighten out the whole question of child benefits. If they really want to bring in a Social Security (Miscellaneous Provisions) Bill, this is an area which they must look at. It is in a muddle. Single parents do not know where they are. They have been promised benefit with one hand, but their money is clawed back with another hand. At an early date we must have a Bill implementing the child endowment scheme, or whatever it is to be called, and full benefits must be introduced, particularly for single parents.
The Bill is extremely bad in several parts. It is minimally good in some parts. I hope that in Committee we shall be able to throw out those particularly bad clauses.
A Second Reading is properly intended for the discussion of the principle of a Bill rather than the details. However, in the case of a miscellaneous provisions Bill of this type I suppose that it can be said, quite apart from one's feelings about the content of the Bill, that there is no principle involved. I want to avoid going over every clause in which I am interested. I shall make comments only upon the two clauses with which I am most concerned.
I want to comment first on Clause 5, which seeks to alter the earnings rule. I do not take back a word of what I said about 18 months ago in Committee and on Report, when we passed the amendment which had been tabled by the hon. Member for Kensington (Sir B. Rhys Williams) to the Social Security Benefits Bill and succeeded in phasing out the earnings rule threshold.
I regret that what we are doing now is to undo that measure to some extent. Up to this point in time the responsibility for putting forward that proposal belongs to the Government and not to the House, but I propose to vote for it and I am prepared to take on the responsibility, therefore, of sharing in the undoing of part of what was done last year, simply on these two grounds. First, the economic situation, though bad last year, is certainly worse this year, and savings which were marginally not worth while last year are marginally worth while this year. Secondly, what is involved in substituting the content of Clause 5 for what is already on the statute book is that we lose the £50 which the threshold would have gone up to next April under present legislation and instead substitute a lower figure which, however, is indexed.
The Minister is entitled to say that is a quid pro quo there. We know that in present circumstances if the figure had risen to £50 next April it would have been a considerable time before any Government would have felt able to propose a further relaxation, whereas under the arrangement proposed by my right hon. Friend the £38, perhaps, or £39, which will come into force in November 1977, will move up and will probably reach the £50 level without too much delay and will then automatically go on up above that. It is a choice. I say only that it is a choice which with some regret I am prepared to go along with the Government in making.
I particularly welcome the statement by the Secretary of State at the opening of the debate that the Government stand by the assurance given at the end of the Report stage in January 1975, that they continue to be committed to the bringing up of the threshold to the point of abolition of the rule. That was a very useful statement to get on the record.
The Secretary of State seemed slightly to take credit for the figure of £35 as it will exist in an indexed form. He suggested that that figure seemed to him to be about right for the purpose. It is worth recalling, on Clause 4, that it was not the Government who adopted the figure of £35 in the first place; it was forced upon them with great bitterness and great protest by a majority of the House. I have no doubt that when we, as we surely shall, defeat Clause 4 on a Division not many months later, credit will be taken by what ever Government are in power for the fact that there is nothing on the statute book limiting unemployment pay for people with occupational pensions. That is the way Front Benches invariably behave, and it is up to those on the Back Benches to keep them on the right lines. They will take credit for what we do in Committee or on Report.
Clause 4 proposes to restrict the payment of unemployment pay in certain circumstances. The Government make no bones about the fact that the only reason for bringing forward this proposal is to achieve some modest savings—estimated at £14 million—at a time of severe financial difficulty. If that is the reason, I find it odd that they are not proposing a temporary change only. They seem to be suggesting that this restriction will become a permanent feature of our social security system.
They are suggesting, for example, that the £25 for the threshold should be an indexed figure. Once it is indexed, we know that it will be extremely difficult to remove that restriction from the statute book. If they thought that they had to find £14 million for the next few years, surely they would bring this in as a temporary proposal and say that it would be dropped later. Surely it cannot be denied that the proposal is a breach of the national insurance principle.
In the discussions about the social security system generally over the past few weeks there has been a tendency to confuse the principles that govern the provision of supplementary benefit and the principles that should govern the provision of the contributory benefits. It was never part of the notion of contributory benefits that they should be means tested.
In opening my right hon. Friend suggested that there would be something wrong if someone retired from his employment at the age of 61 or so and drew, for example, £30 from an occupational pension scheme and £30 unemployment money. That was not the intention of Beveridge. There is nothing wrong with a contributory benefit and a person receiving under it an income that is of high and generous proportions, especially because unemployment benefit is an extremely temporary benefit. My right hon. Friend invoked that point on his side of the argument, but I think that it belongs properly to ours.
A person who receives £30-worth of unemployment benefit will get a fair part of the benefit, and would still register as unemployed so as to draw supplementary benefits if this clause were not passed. Not for 12 months but for six months, because the earnings-related part of it is restricted to six months. He will get the rest for only 12 months. It is temporary because the whole purpose is to ensure that he is seen through until such time as he is able to pick up a job. There is no reason to feel that it is in conflict with the proper operation of the scheme if in that temporary period he has a fairly generous income.
We should be trying to stop those who are abusing the system without clobbering those who are making legitimate use of it. It happens to be the case that most of those affected by Clause 4 are those who almost by definition, because they are entitled to an occupational pension, have been in regular employment. They probably have not drawn unemployment pay at all, or at any rate not very much, in the course of their earlier working life. They then come to the one time when they are likely to get something back for the considerable contribution—an earnings-related contribution—that people now make week by week.
The case that I know best is that of Post Office workers. There are many Post Office workers who do not want to retire at 60. In the past they did not have to retire at that age. They feel that they want to register for a job. They feel that they have to get a job because they cannot live without the extra income. If they have to wait a few months or weeks while obtaining a job, they should be entitled to the benefits that the system was designed to provide.
I agree with those who have said that the key to the correction of abuse is proper enforcement of the availability-for-work rule. If anyone voluntarily retires from a job when he could have stayed on, and even if he draws an occupational pension, I imagine that he will be caught by the six weeks' rule. Having voluntarily made himself unemployed, he would not be entitled to unemployment benefit for six weeks.
I should have had a great deal of sympathy with the Government if they had opened up the question of whether six weeks is the right period for the rule. If a person has made himself unemployed, should he be entitled to unemployment benefit after six weeks? Some people would say that if he has made himself unemployed, he should never be entitled to unemployment benefit.
Between the two points of view I think that there is a compromise. I do not know how much money it would produce if we were to make the period three months instead of six weeks, but it would produce something and would be a principle that we might be able to support. However, enforcing the availability-for-work rule more rigorously in other respects would, I suggest, because it would apply for all ages and not only for people over the age of 60, produce a great deal more than £14 million.
I realise the danger of going along that path. We do not want a person who has lost his job—for example, a skilled craftsman—to be told that he must take the first job that is available irrespective of what it is. That was never the intention of the national insurance scheme. The intention is to see such a person through until he gets the sort of job to which he has been accustomed.
None the less, I agree with those who have said that some review of present practice is overdue. Both as regards the six-week rule and the nature of the employment that the person is entitled to wait for, we have probably gone too far to the other extreme.
The Government should also look carefully, as I think they have indicated they will, at the taxation of short-term benefits, the taxation of unemployment pay for people other than those affected by the clause. Surely that taxation would not be worth the candle. There is hardly anyone on unemployment pay who is above the tax threshold. If people have occupational pensions and are drawing unemployment pay, a large number of them are likely to be above the threshold. If there were a way of distinguishing between the two, we should probably get back the salaries of the civil servants and an awful lot more by the collection of the tax that would be involved.
If we employ my hon. Friend's argument about the taxation of short-term benefits, does he realise that the taxation will fall on the children, the unemployment benefit that is received by large families falling into that category? In fact, he would be bringing in that category while excluding those with quite substantial occupational pensions.
Yes, but there is no reason for a married man with four children paying less tax if he has a bit of occupational pension and a hit of unemployment pay than if he has income of the normal sort. This is an anomaly that is created whenever a certain form of income is taken and regarded as income for tax purposes.
I am the first to agree that the idea of the Inland Revenue communicating code numbers to all the unemployment officers throughout the country, which is what would be involved, is enough to make the mind boggle. The losses in civil servants' time and the money involved would be considerable. However, that needs to be considered. I say that because the other week the Treasury, or my right hon. Friend's Department—I am not quite sure which—estimated the loss to the Revenue that would be involved in taxing unemployment nay. I think that the loss was estimated to be in the region of £150 million.
From memory I think that that figure related to sickness benefit as well. For the moment I am talking only of unemployment pay. I think that the figure was approximately £150 million. If that is true, for 1 per cent. of that take we could buy a lot of civil servants, even at civil servants' salaries. One would think that it would pay for itself. However, I find the estimate of £150 million to be highly dubious. I cannot see how the normal recipient of unemployment benefit would have enough tax to pay if his receipts were taxable to produce a gain of that order.
That amounts to saying that one would not have the rebate that operates at the moment. Even so, I find it a surprising figure. That only goes to show that it needs to be looked into very carefully and that the Government should come back and give sufficient of the facts for us to make up our own minds. They should not say that they have decided to do it or not to do it. It should not be done unless there is a clear case for saying that the return is at least 30 times the extra cost of administration. Otherwise, it is not worth doing.
I should like to draw attention to three anomalies which would arise if we were to allow the Government to have their way on Clause 4. First, as has been said, those who save their money instead of putting it in to an occupational pension scheme would not be affected. Indeed, anyone who, instead of having what would normally be called an occupational scheme, has what I call a private pension scheme—a deferred annuity qualifying for tax relief under the provisions of the Finance Act 1956—would not be caught.
If a small company that does not have an occupational pension scheme pays its employees extra money so that they can buy a private pension scheme qualifying for tax relief under the 1956 Act, those people will be able to take the pension deriving from that scheme—a pension or a lump sum; it has to be a pension under the Inland Revenue provisions—and will not be caught. They can get receipts from such a scheme and unemployment pay with no offset whatsoever.
If I were the Chairman of the Post Office and the Government were to have their way, I should say to the unions "We shall terminate the pension scheme but pay extra in salaries so that employees can take out a 1956-type scheme and they will then escape this provision". That may be unlikely to happen, but with smaller businesses it certainly could and in some instances it does happen. That is only one of the loopholes that would be found to escape this provision. The anomalies would be unbearable.
Secondly, if the abatement of unemployment benefit resulting from an occupational pension scheme were £5, it would be £5 irrespective of whether the unemployment benefit were £30 or £20. Therefore, at the end of the six months, when the recipient loses his earnings-related portion, he will go on having the same £5 knocked off even though his unemployment benefit has fallen considerably.
No one can be asked to believe that that is a fair arrangement. It is the same kind of daftness as exists in the earnings rule. If a £5 abatement takes place, it is £5 off a pension of £20 or £5 off a pension of £5. Therefore it is not viable. In the end the Government would see that it had more anomalies than the cost was worth and they would terminate it. However, it is easier never to start something than to get rid of it after it has begun.
Thirdly, there is the point made earlier that during the 60 to 65 years of age period what bothers many recipients of occupational pensions is that they will lost part of their State retirement pensions unless they keep up the contributions. If I remember aright from reading the debates on the 1971 Act, that point was made very strongly. I see nothing in these proposals for dealing with that point.
It is nice to know that that disadvantage will not exist, although I do not understand how it will not. However, I take my right hon. Friend's word for it.
Finally, those of us who oppose the clause, but do not oppose all cuts in public expenditure and believe that there is a need to be severely restrictive on public expenditure feel an obligation to suggest where the money might be found. I am totally opposed to the old-fashioned notion that if we cannot find this £14 million within the DHSS by this means, we must find it by some other cut within that Department. I thought that after the lunacies of 1966 we had got away from that departmental approach to public expenditure control.
The Cabinet ought to have on the table before it a list, long or short, spanning all the Departments and showing the weak brothers in public expenditure—the items which might or might not be cut. The Government ought to decide those cuts according to their own assessment of priorities, irrespective of whether they are bunched in a few Departments or spread equally over all Departments.
I sympathise with DHSS Ministers who are told by the Treasury that, if they lose this provision they will have to take £14 million off something else. I think that we can probably assure DHSS Ministers that when they lose this clause we shall be on their side in resisting any such cuts in other DHSS programmes. Just as we expect to be successful on Clause 4, we expect to be successful in supporting them in that way.
I suggest three possibilities for other savings. We now spend or do not collect as revenue more than £1 billion a year in the form of tax relief on mortgages. I am not suggesting that we should interfere with that system as a general principle. But one-tenth of that—£100 million—is tax relief above the basic rate. It is an interesting fact that of that £1 billion no less than £350 million goes to people who get some part of their relief above the basic rate. Therefore, more than a third of that relief is going to people who by any standards are pretty well off. We shall have to stop it at some time, but we can do it only gradually. If we start next April, we shall not save much in the next fiscal year.
I have not yet heard of it. It might come along after we defeat Clause 4.
I should guess that if we were to limit this relief to the basic rate from next April, the saving next year would be about £5 million to £8 million. Just as £14 million is not to be sniffed at, nor is £5 million to £8 million.
We could save about £15 million if we were to reduce the value of home loss payments. This is not compensation for a person losing the home that he owns, but for a tenant who has to move as a result of rehabilitation work going on. It is astonishing to me that people who move from rat-infested tenancies to modern tenancies are at the same time given on average £400 to £500. Indeed many of my constituents find it astonishing, too. As it is the law of the land they want it because the next door neighbour has got it. They find it amazing that, having plagued the lives out of counsellors and Members of Parliament for years to get them from an old to a new place, they are offered not only home loss payments but the costs of moving to their new homes.
I think that my hon. Friend is distorting the case on home loss payments. He represents a London constituency, but I represent a Birmingham constituency and I can tell him that my constituents and others in Birmingham have never had an average of £400 or £500 as home loss payment.
The rule regarding home loss payment applies not just because a tenant says that he wants to move out of an old house into a new one. We are talking here about slum clearance and rat-infested homes. People cannot be expected to keep the carpets, curtains and all the rest in a good state when the landlord himself does nothing and ultimately the local authority has to take over because the properties are not maintained.
It is not right to suggest that people should be deprived of a minuscule home loss payment on transferring into a decent home. The matter is by no means as straightforward as my hon. Friend seems to imply.
I am the first to accept that there is another approach to the question and that, while I represent an inner London constituency, my hon. Friend represents a constituency where the situation is not as I have described it. But I know that in inner London such expenditure represents a fairly large amount. Moreover, there is a minimum. There is no question of people getting £30. There is a minimum of £150. However, I feel that I should get off the subject of home loss payments now.
Order. I ask the hon. Member for St. Helens (Mr. Spriggs) to bear in mind that his hon. Friend has been speaking for 25 minutes. The debate is running very slowly, and it is already clear that some hon. Members who wish to take part will not have an opportunity.
I hope that you will not mind my intervening, Mr. Speaker, and I shall not lengthen the debate if I can help it. My hon. Friend has just mentioned tax relief on mortgage interest. Does he propose that a Labour Chancellor should take away the tax allowance on mortgage interest? If he does, I assure him that I shall oppose it.
I am happy to tell my hon. Friend that I did not quite say that. However, I think that I should leave that to another occasion, having expressed a view.
We shall have our battle on Clause 4 this time and that will be the third time that the proposal has come up and the third time, I am sure, that it will have been defeated. I commend to both sides of the House that they follow the rule enunciated by James Thurber—" If first you do not succeed, try, try and try again —and then give up; it is not worth it."
I acknowledge your appeal for brevity, Mr. Speaker, and, as usual, i shall make a short, sharp contribution from the SNP Bench.
The longer the debate progresses, the more it becomes clear that the minds of right hon. and hon. Members are wonderfully concentrated on specific aspects of the Bill. I am sure that the Government Front Bench must by now have realised that the message of the House is that there would be general support for the Bill were it not for the inclusion of certain clauses which are causing great concern throughout the country. For example, no Member of Parliament would vote against the mobility allowance as provided in the Bill. I suspect that the Government are relying on that to ensure that the Bill goes through. In some ways, this is an immoral attitude, inasmuch as one or two unpopular measures might slip through because no one would wish to be seen voting against good measures.
The argument behind Clauses 4 and 13, which have caused so much concern, is that there will be a saving of £35 million in public expenditure. My party has always made plain that it is opposed to cuts in public expenditure. We are already seeing the effects of public expenditure cuts in the services given by our local authorities in basic services, such as home helps, meals for school children and so on. We do not wish to see any further cuts. We feel that the argument based on the £35 million represents an attempt to save a small sum of money at the expense of the elderly and students.
I am concerned, like other hon. Members, about Clause 4. The SNP does not oppose the basic principle of early retirement, but people of retirement age often want to work. The hon. Member for Islington, South and Finsbury (Mr. Cunningham) will recall that during the debate earlier this year on the earnings rule Member after Member pointed out that many people of retirement age want to work because they do not wish to be regarded as being on the scrap heap. It is not acceptable to say that many people over 60 are signing on for unemployment benefit with no intention of taking up employment if it is made available. I assure the Government Front Bench that this is not the case in my constituency, where men over 60 come to my surgery to ask whether I have heard of any work they can take up, because they are keen to work. People are concerned not only about availability for work but about availability of work, and men are entitled to unemployment benefit in that situation.
The occupational pension is in many ways a deferred payment. People have opted out of a short-term benefit during their working life in order to have a more secure future in retirement.
The Minister said that the cut-off point of £25 appeared to be generous. I wonder how many hon. Members would like to live on £25 a week. Organisations outside which analyse the whole question of poverty do not agree with the Government about the figure of £25. I refer, as the hon. Member for Rochdale (Mr. Smith) did, to the Child Poverty Action Group, which has done much in the past to expose areas of concern for all of us.
In the present unemployment situation there is not much likelihood that people will be able to manage to find a job although they are sincerely looking for one.
I agree that it is necessary to enforce the availability for work rule in the context of unemployment benefit. The difficulty here is that, apart from the lack of jobs, with the cut-backs in the Civil Service there is at present increasing pressure on staffs in Government Departments and they are finding it extremely difficult to cope with all the various requests which come in, including making sure that people know of jobs available. This is what my local unions tell me, and I have no reason to believe that conditions are different anywhere else.
I turn now to Clause 13 and students. To take away the right of students to sign on for unemployment benefit during two of the short vacations goes against the basic concept towards which I thought we were working, that is, universal opportunity in education and particularly in post-school education. Many students already find it extremely difficult to cope on their grants, and there is not a great deal of employment available anyway.
It is not as though they can just go out during the vacation and find a job readily, as most of us did when we were students. The market is not there at present.
Many married students in my constituency tell me that, as a result of Government cut-backs, they have lost rent and rate rebates, and now, if they are not allowed to sign on for unemployment benefit during the Christmas and Easter vacations, it will be more difficult for them to cope with the situation. The National Union of Students recently pointed out that 73 per cent. of parents cannot now afford to pay their means-tested contributions towards student grants.
I, too, am worried about handicapped students who need extra help with dietary and heating needs. What will the hardship scheme do for them? I am looking forward to hearing details of the scheme because at present I feel that it is not the answer.
We should examine how we finance post-school students in this country. We need to look at the purchasing power of grants and the overall structure, how money is given out, and whether there should be means tests for parents. To bring in a short-term measure like this and call it a hardship scheme is not to look at the reality of the situation.
Unlike some other hon. Members, we have no fear of going into the Lobby tonight with the Liberal Party. We feel that a warning shot must be fired across the Government's bows. Like the hon. Member for Rochdale and his party, I deprecate the absence of the official Opposition and their failure to keep their Members here to show their displeasure at this piece of legislation as it goes through. But, of course, the SNP and the other minority parties are becoming recognised as the official Opposition in the He use of Commons.
I agree with the hon. Member for Dunbartonshire, East (Mrs. Bain) in her comments about the Conservative Opposition, although I do not accept her closing remark. In addition, as I said earlier, I think it is a thundering disgrace that there is not a Minister from the Department of Education and Science here today. That the Whip on duty when the complaint was first raised did not do anything about it is a further disgrace. The Ministers from the DHSS do not have the answers to the points which hon. Members on both sides are making regarding students. It is bad that the Government have not taken heed of what was said earlier.
I can assure my hon. Friend that questions about students will be answered on behalf of the Government as a whole and not merely on behalf of a Department.
That is not good enough. It is no good questioners being fobbed off by Ministers who have only half an hour to reply to a debate. It is no good their dealing with the matter with the help of a few shorthand notes knocked together by their advisers in the box. The Chief Secretary set a good example, but for the wrong reasons. The case for the Bill has not been made out.
The case against Clause 4 was made by the present Secretary of State for Education in a Committee meeting in 1971. She said that the Conservative Government
are setting a trend, with the changes they are making in the Bill, towards a direct breach of the National Insurance system and the fact that benefits are paid, not as an act of charity or a donation, but as a matter of entitlement "— [Offirial Report, Standing Committee G; 25th May 1971, c. 165.]
Not one word has been said so far by Ministers to change what my right hon. Friend said five years ago.
There is much confusion over the financial benefits of the Bill. The Memorandum says that the Bill will save £75 million of public expenditure. It is admitted that the National Insurance Fund will save £60 million on the earnings rule, and it is argued that the net saving will be only £45 million. I calculate that the savings will amount to £60 million less the £3 million to be paid out in mobility allowances, which makes a net saving through the Bill of £57 million. That includes £14 million from the operation of Clause 14 and £1 million to be screwed out of the students. That is not the same as the estimate that my right hon. Friend made today.
According to the Official Report it is clear from answers given to my hon. Friend the Member for Coventry, South-West (Mrs. Wise) that the Government do not know how many people are involved in the cut-back of occupational pensions, they do not know who are involved and they cannot give the proper figures relating to the financial savings involved. How do they know that they will save £14 million from screwing down occupational pensioners? The best that they can come forward with is a half-baked idea that certainly looks as if it came from the box which I mentioned earlier. The information that we have had from the Government so far does not appear to have been a planned part of the speech of my right hon. Friend's speech, who said that another means-tested benefit would be applied. There was no mention of who has been consulted, or of the level at which the provision would bite.
We have not heard which students will be involved, which courses they will be taking, or anything else. Apparently, Ministers will decide that themselves. Some students will not be regarded as students for the purposes of the Bill. Clause 13 is far too wide. I cannot understand why the hardship scheme has not been more carefully considered. Not enough thought has been given to it. I think that it was concocted only after Monday night, when Ministers had a heavy time of it at a meeting in Committee Room 10.
The Bill discriminates against men in favour of women or pension entitlements. Clause 13 refers to the age of 60—the age at which women retire. Men have to work until they are 65. At Lucas, a large firm in my constituency, women have to retire at 57½ years of age. That is compulsory, and it is expected that they sign on for the dole for 12 months. They collect unemployment benefit—and they will still be able to do that after the Bill is enacted. If they can do that why should not men be able to draw unemployment benefit when they are 62? That is unequal treatment between men and women. Have the Government taken into account the fact that women in private companies are sometimes forced to retire early? Drawing unemployment benefit is part and parcel of their survival until they are 60. Women expect and will be able to collect at least one year's unemployment benefit.
We have heard cock-and-bull stories about the 20,000 occupational pensioners. Earlier I intervened from a sedentary position to suggest that hospital porters are affected. My right hon. Friend said that that was not so, but I am prepared to take the word of the General Secretary of the Confederation of Health Service Employees rather than that of my right hon. Friend. I do not think that my right hon. Friend has been correctly briefed on this matter, which has been festering in the pigeon-holes of Whitehall for many years.
On Monday I was given an example of a hospital porter who is a widower retiring at 62 after 40 years' superannuable service and living in London. During his last year of service he could easily have earned £2,928—including shift pay of about £4 a week, bonus at 25 per cent. and an element of enhancement for weekend work on top of a basic rate of £37·08 a week. His pension would be £28·16 per week, and he would therefore lose £3·15 from his unemployment benefit of £12·90 at any time when unemployed. I admit that that man will not lose all his unemployment benefit, but if he loses one penny he is affected by the Bill. That is why the figure of 20,000 is a misnomer. The figure is based on such a man losing all his unemployment benefit. But many thousands will lose a proportion of benefit, and that is not taken into account. Ministers are not coming clean about the true effects of the Bill.
I have also been told that female workers in a factory assembling telephones in Wales will be affected by the Bill because of earnings and pensions rates. Three general secretaries of three trade unions informed me of the situation on Monday evening.
The Bill is part of the 22nd July measures. It is not part of the commitments in the party manifesto. When we all voted on 22nd August we did not vote to accept the 22nd July measures in their entirety, but we voted against the hypocritical stance of the Opposition in their amendment.
I accept that. I put the matter in too simple a fashion. We did not accept the 22nd July measures, but we always knew that those measures required at least four Bills and at least another six Statutory Instruments. We knew that there would be an opportunity later this Session to pick and choose the issues that we would support or otherwise. This is certainly one of the measures that many of us do not intend to support. I shall not go over the others.
We need a commitment from the Minister tonight. It is all very well for the Opposition to say that they will not vote against the Bill tonight but will oppose Clause 4 in Committee. The reason for that is connected with Clause 13. However, the Conservative Opposition can do that successfully only if all the Opposition parties vote to take out Clause 4 and at least one Labour Member also votes to take out that clause. It needs only one Labour Member, because of the balance in Committees. All that it needs is at least one Labour Back Bencher who has spoken in this debate to be a member of the Committee. So far, all have been opposed. All that we ask is that on the Committee there should be one Labour Back Bencher who has spoken in this debate—or more than one. We are all volunteers and full-time Members, not being barristers with briefs to read, and so on. We would settle for just one such member being put on the Committee.
That is the only way that Clause 4 will be taken out in Committee. I suspect that it will not happen. There is only one way to make sure that we overcome that problem, and that is for all Conservative Members who have gone running off to try to save the Cambridge seat to return tonight and vote against the Second Reading.
I conclude by repeating that the Bill is a disgrace to the Labour Party. It is certainly a disgrace to the present Government. It is hypocritical of the Government to put into the Bill one or two little parts and to say "These are the good parts. You would not vote against those, would you?" They are measures which clearly could be tacked on to a Finance Bill or any other ragbag of a Bill during the remainder of this Session.
The Bill does not deserve the support of any hon. Members even of those who claim the patronage of the payroll vote. Some Labour Members are under a three-line Whip today but have been paired. They are not in the embarrassing position of having to vote for this tardy little measure. We would not want to embarrass some of them by putting down Questions asking about their official engagements today and when they were fixed, because they were clearly fixed after the Business Statement last Thursday, when it became known that the Bill was to have a Second Reading today. That is even more of a disgrace.
No Labour Member—or Conservative Member for that matter—who represents people in a parliamentary consultancy fashion, such as civil servants and others who will be affected by the Bill, has supported this measure. They are conspicuous by their absence today. They will probably be conspicuous by their absence in the Lobbies tonight.
I notice that my hon. Friend the Under-Secretary is making notes for the winding-up speech of my right hon. Friend. He ought to say to my right hon. Friend "It is not worth the trouble. It will waste time in Committee. It will waste the time of Ministers and of Back Benchers, the time of the House and of the Clerks. Withdraw the Bill. Take it away."
Clearly, whatever happens tonight, Clause 4 will not be in the Bill when it receives the Royal Assent. That clause is one of the major planks of the Bill. That is the one that will cause all the trouble and take up all the time of the Committee. It is not worth pursuing. We want a cast-iron commitment tonight that it will be withdrawn. That would save a lot of trouble.
This gloomy debate on a gloomy Bill has been enlivened by an entertaining speech from the hon. Member for Birmingham, Perry Barr (Mr. Rooker), which I much enjoyed. It has also been enlivened by the remarks of the hon. Member for Coventry, South-West (Mrs. Wise), who told us why it was that she voted not against the July measures but against the Opposition.
I am grateful for the hon. Lady's explanation. It makes us much clearer than we were a few moments ago.
Those of us who have been listening to the debate know that the Bill is a gloomy Bill because it withdraws from citizens either rights which they are now enjoying or rights which, as a result of decisions of Parliament, they had every reason to think that they would be enjoying before many more months had passed.
I want first to comment on the proposal to reduce the unemployment benefit for occupational pensioners over the age of 60. As we know, this is a proposal which has a very curious history, indeed, and which, as the Secretary of State has said, has been under debate for many years. I think I am right in saying that it has been under debate for about 10 years as of tonight.
We have heard a great deal about the remarks of the right hon. Member for Hertford and Stevenage (Mrs. Williams) in Standing Committee in 1971. I have read those remarks. It seems that the substance of what the right hon. Lady was saying was that benefits are paid not as an act of charity or donation but as a matter of entitlement. I agree with that.
I believe that there is the crux of the argument tonight. Are occupational pensioners entitled as of right to unemployment benefit without these new restrictions, or are they not? That is the question which must eventually be decided by the House when it is considering the Bill, either in Committee or on Report. I am sure, from what I have heard in the House tonight that both of those stages will be lively.
It is very appropriate that my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin) has rightly criticised the Government's proposal to single out the occupational pensioner for a blanket disentitlement to unemployment benefit. Not only does this breach the principle that unemployment benefit and national insurance benefits exist as of right. It pinpoints the fact that the Government are picking upon the man with an occupational pension. Surely the way to deal with abuse of this system, where it exists, is to tighten up the rules governing availability for work, not to introduce a new means test, which is what the Bill intends to do.
There are a number of substantial objections to the proposals to reduce unemployment benefit for occupuational pensioners. First, people who have saved money via occupational pension schemes will be treated worse than those who have not saved. This means that there will be a further disincentive to save, which I am sure all of us must bitterly regret.
However, the major objection to this proposal is that it breaches the national insurance principle whereby benefits are paid in full in return for contributions made. Except in the case of the earnings rule, no other national insurance benefit is affected by other income. Therefore, if these proposals are carried into law, there will be a serious danger of the principle being extended to other forms of national insurance benefit, including the retirement pension.
One cannot help wondering how many more months or years will pass before the Secretary of State rises at the Dispatch Box to tell us that the economic situation is such that he is forced to bring before the House further measures to extend the principle that is enshrined in this Bill. I warn the House of that danger tonight in considering these proposals.
While there is a case for withdrawing benefit, on the ground of abuse, from occupational pensioners who do not really want obtain to work, that argument does not apply to those who are unemployed but who are genuinely looking for work. The Government's proposals make no distinction between the two. The genuinely unemployed will have to suffer with those who are simply "bomping on" for benefit without any intention of working.
Every hon. Member knows the bitter resentment that that type of abuse causes. Every hon. Member knows that it is a very difficult and sensitive subject to debate. Therefore, it is only right and proper that the Government should give very careful attention to this type of abuse and should bring before the House without delay proposals for dealing with it.
My right hon. Friend the Member for Wanstead and Woodford has referred to experiments that are being conducted in Australia. He also made the point that perhaps what is being done in Australia is not suitable for the United Kingdom. Certain elements in the Australian scheme are worth looking at, particularly those dealing with a man who moves to an area where there is no prospect of his getting another Job that is similar to the one he had before.
For example, there are people who move to the seaside, or to some remote area of the country, where there is no opportunity for them to practise their trade or profession. The distance from a job is another important element of the Australian proposals.
I agree with my right hon. Friend the Member for Wanstead and Woodford that it is important to get the right balance to ensure that there is fair treatment for everyone concerned. If we could get rid of the abuse that has existed in the past few years, we should get rid of a major area of controversy that surrounds the whole question of unemployment benefit.
From what other hon. Members have said, we know that there is substantial public opposition to the proposals in the Bill. Opposition has especially come from those who have to retire at 60, without the option to continue employment, ano who need to continue working in order to maintain their standard of living in the face of continuing inflation.
When I raised this point earlier, the Secretary of State said that it was the kind of comment which might come from me. I assure the Secretary of State that there are many retired occupational pensioners in my constituency who genuinely need to go out to work in order to sustain their standard of living. They are not living on high incomes. It is only fair and reasonable that those people should be entitled to seek employment and to give the country the benefit of their skills in order to make their contribution to the economic recovery. I hope that we shall not hear any more remarks of the kind made by the Secretary of State.
There is also important opposition from the trade unions. In my own constituency the Post Office Engineering Union in particular has been in touch with me. It, at least, has a copy of the Bill and together we have studied its provisions. Most of its members have to retire at 60. They particularly will find the proposals difficult to live with.
The Post Office Council summed it up especially well when in its letter to all MPs it pointed out that the Government proposals were an attack on the fundamental principle of post-war reconstruction of the social security system. I would ask the Government to think again.
It is not often that we get a debate, even one like this which is rather sparsely attended, when there is almost unanimity. I understand that the Government want to save £70 million and I support their intention of doing so. But they should reconsider the method. Let them take up the suggestion made earlier and consider taxing short-term benefits such as unemployment and sickness benefits.
It has been said that this would bring in between £150 million and £300 million a year. There is no reason why a man should be less taxed because he has unemployment benefit or because he has an occupational pension. I do not underestimate the difficulties of introducing such a tax, but I hope that the Minister will say a word about this later.
I think that short-term benefits should be looked at. After all, all benefits are income. It is only right that this should be looked at. When asked about this a few weeks ago the Prime Minister pointed out that there would be great difficulties. No one underestimates the difficulty, but some people who are in receipt of sickness benefit are in receipt of a salary at the same time. It is only fair and reasonable that no one in receipt of a short-term sickness benefit should be at an advantage as a result.
The hon. Gentleman has displayed a lack of knowledge, which does not actually surprise us. The vast majority of people who get sickness benefit have a corresponding deduction made to their salaries. The hon. Gentleman claimed that there was unanimity on this matter. There is no unanimity with regard to the general purpose or, indeed, on the detail. His right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin) specifically said that the Conservatives agreed with the provisions relating to students. That is certainly not the case on this side of the House. Please do not bring us on to your side, because we are not willing to be dragged there.
The hon. Lady has not been listening because I have not made any claim that there was unanimity on this subject. I pointed out that it was a matter which had been raised and which should be investigated. That is fair and reasonable.
I briefly turn to the earnings rule, which has caused a lot of people to lose hope and to become totally disillusioned with the operation of Parliament. Last year Parliament decided to raise the earnings rule limit to £50. Like many other hon. Members, I have been tackled by my constituents about what will happen. I told them "In January last year the House of Commons took a decision which involved the Government being defeated. As a result of that decision the limit will rise to £50."
Everyone has gone away in the belief that Parliament has made its decision and that is what they will have to cope with. Now, only 18 months later, they find that the Government are seeking to reverse that decision. This will be demoralising for many people and will discourage many of them from working. It means that a pensioner earning more than £35 a week will be paying two forms of taxation. Those people will have their pensions reduced and they will be paying income tax on their earnings.
The proposal that the £35 limit will be reviewed annually and will be increased in line with earnings, is not satisfactory. The hon. Member for Islington, South and Finsbury (Mr. Cunningham) made the point earlier that this would be a sort of indexed review related to the rise in earnings. But one has to remember that increases in earnings may be, and in all probability will be, much less than the rise in prices over the same period. One wonders how effective such a review will be and whether we are not being fobbed off with a poor substitute for an increase in the limit.
I am not one of those hon. Members who criticise students. Most of the students with whom I have come into contact are hard working and diligent. Many of them have hardship either because of family circumstances or because they are married. I share the concern of the hon. Member for Perry Barr about the proposed arrangements for reviewing hardship which I cannot see anywhere in the Bill. It will be important to scrutinise those arrangements in Committee.
Let us hear no criticism of students. All of us when we are old and perhaps not able to draw unemployment benefit will depend upon these young men and women for the success of our country. I am sure that many of them will have to bear hardship, but I am sure that they will do so with fortitude.
This is a gloomy and bad Bill. None of us welcomes it. I am sure that the Committee will do a great job in tidying it up. I am sure that when is comes back to the House it will be very much shorter and that we shall be able to pass just those elements which nearly everyone agrees to be desirable.
It has been pointed out that what we are talking about is a method of saving money. It is often put to us that because this was part of the July package we must accept it without question.
I want to echo what some of my hon. Friends have said already. Many Government supporters do not accept the economic strategy behind the July package and do not feel themselves bound to support a measure just because it was in that package.
We have heard a number of suggestions from Opposition Members, from which I dissociated myself completely, of ways in which the Government could save this sum. For example, we have had the appalling suggestion from the hon. Member for Liverpool, Wavertree (Mr. Steen) that we should deny any benefit to unemployed school leavers. We have had the equally appalling suggestion from the hon. Member for Uxbridge (Mr. Shersby) that we should make up this money by taxing the sick. My hon. Friends and I do not go along with those ideas even though we oppose some of these provisions as bitterly as do those two hon. Members.
The hon. Gentleman is twisting what I said. I said that there were 250,000 young school leavers without work and that the Government were doing nothing about them. I suggested that they should be given the opportunity to do something of benefit to the community in return for a wage equivalent to the unemployment benefit so that we did not increase the rate of inflation. The hon. Gentleman must not misinterpret what I say.
If I have misinterpreted the hon. Gentleman's views, I apologise. However, he is one of the easiest Members of this House to misinterpret, because he is one of the most difficult to understand. I realise now that what he is advocating is a system of enforced cheap labour for the young. That is just about as commendable as the scheme proposed by the hon. Member for Cornwall, North (Mr. Pardoe) to turn our unemployed into navvies by abolishing the machinery at present used for road building.
As I was saying, the hon. Member for Uxbridge wanted to make up the money by taxing the sick. We dissociate ourselves entirely from that.
The hon. Gentleman is also twisting what I said. I pointed out that quite a lot of people—not those to whom the hon. Member for Coventry, South-West (Mrs. Wise) referred—enjoy both sickness benefit and their normal incomes when they are sick. They may not form a majority, but there is no doubt that there are a substantial number of people in that position. All that I say is that the Secretary of State should look at this matter. I cannot see anything wrong in that. The right hon. Gentleman should ensure that everyone was treated on a fair and reasonable basis.
The hon. Member for Uxbridge does not wish to commit himself too far. There is no doubt that he is talking about a form of taxation of the sick. But I shall not go into that any further, because I wish to return to the July measures—
I shall give way to my hon. Friend in a moment. I have given way twice already, and I have not really started yet.
I was talking about the July measures, and I had pointed out that it should not be thought that we accepted any measure just because it was in that package. There are ways that the Government could save money and reduce the public sector borrowing rate, if that is what they are intent on doing, far more effectively than the proposals in this Bill.
Some of my hon. Friends will recall that they accompanied me into the Division Lobby at the conclusion of one of our debates on the last Finance Bill to vote against a proposal of this Government costing more than £100 million to give additional income tax relief to people earning more than £6,000 a year. We could have saved that money—and that was £100 million, which is more than the total saving in this Bill. So I am not enamoured of the arguments put forward in favour of the Bill.
It was my intention to speak almost exclusively about Clause 4 and occupational pensioners, but, before I do that, I cannot avoid commenting on the appalling spectacle that we have seen today in relation to Clause 13. it is disgraceful that the Government should introduce a Bill of this kind, having talked about making provision for hardship among students, and be capable of saying how that scheme will work. They could have done justice to their claim if they had prepared the scheme fully. We have been told that my right hon. Friend the Minister for Social Security will be dealing with this when he replies to the debate. However, I think that it is a pity that my right hon. Friend the Secretary of State did not deal with it when he opened the debate. I suspect that we shall have a very hasty scheme cobbled together in the five or six hours which elapse between the two speeches. If the scheme was ready, it could have been announced by my right hon. Friend the Secretary of State earlier.
I am sure that my hon. Friend does not want to distort the facts about this. Certainly I shall try to say more about it when I reply to the debate. However, we shall have a full Committee stage. The Bill will not be on the statute book before April. There will be ample time to discuss the proposals which I shall be putting forward on hardship, and my hon. Friend or anyone else will have an opportunity to amend them if he thinks fit.
I accept that assurance. However, I am worried that we are being asked to approve in principle a Bill which removes the entitlement to supplementary benefit and will have a drastic effect on the living standards of our students without any assurance that anything effective is being offered to help them. I am appalled that the Government are proposing a hardship scheme in place of the supplementary benefit scheme. I always believed that the supplementary benefit scheme was there to meet cases of hardship. I cannot understand why the Government should now be seeking to dispense with it and to replace it with another scheme to relieve hardship.
The reason that this has become so much of a problem over the past year or so has nothing to do with any change in the attitude of students. It has to do with the dramatic decline in the employment situation. Many students do not wish to spend time at Christmas and Easter on supplementary benefit. However, they no longer have the opportunity to do anything else. I hope that my right hon. Friends will look at this again.
The proposal has a long and shabby history. It was introduced by the Opposition when they were in Government. We have seen today how the Opposition have changed their minds. I am aware that the right hon. Member for Wanstead and Woodford (Mr. Jenkin) was not in the Social Security Department at the time and that he can probably shield behind that fact. However, there is such a thing in Government as collective responsibility. Therefore, he bears the responsibility, with his colleagues, for the Bill which was introduced by the last Conservative Government.
It was graceful of them to adopt that kind of approach. However, they introduced the scheme, and they appear now to have changed their minds. Many Government supporters welcome them to our cause, bearing in mind that nothing arouses more joy in Heaven than a sinner who repents.
This problem with occupational pensioners is based on popular mythology rather than on fact. Thousands of occupational pensioners are thought to be enjoying a high standard of living by using the dole to supplement their pensions. There have been unscrupulous attempts to arouse public support for action of the type now proposed, and it has been fuelled by irresponsible stories intended to present an entirely false picture of occupational pensioners.
Not all occupational pensioners are retired bank managers, telephone managers and senior civil servants. The majority of them are postmen, Post Office technicians, clerks and National Health Service employees who retire at 60 because they have no other choice. This proposal may have a great deal of popular support, perhaps from people who are not aware of the realities and who have been worried by the cheap sensationalism which has surrounded this issue. However, uninformed public support is not really a basis or justification for good legislation.
There is a great deal of misunderstanding on the Treasury Bench about the position of occupational pensioners who retire at 60. The reason why I regard this Bill as even more objectionable today than when it was first introduced by the Tories in 1971 is that the economic situation affecting occupational pensioners has changed. In 1971, people in the public service had the opportunity to stay on after the age of 60. Possibly they had to take lower-grade jobs, but they could continue in the public service. That option is no longer open to anyone in public service today. Retirement at 60 is not voluntary. It is now compulsory. It means that for almost all of them it is the sack at the age of 60.
It may be said that people took on jobs in the public service in the knowledge of this fact. But many of them joined the public service in a very different economic and employment situation. They believed that they would have the opportunity to stay in their jobs after they reached the age of 60 if their economic circumstances required them to do so.
That is no longer true. That is why this Bill is harsher upon public servants than was proposed by the Tories five years ago. The proposals will be bitterly and deeply resented throughout the public service, not just by people who have retired or by those who are about to retire—whether or not they intend to claim unemployment benefit—but by thousands of their colleagues who feel, quite rightly, that the Government are trying to take away a basic right that they previously enjoyed.
This proposal is an erosion of the national insurance principle. That was made clear by the Labour Party spokesman, the right hon. Member for Hertford and Stevenage (Mrs. Williams), who is now Secretary of State for Education, when she opposed the 1971 measure. The hon. Member for Birmingham, Perry Barr (Mr. Rooker) urged me to read her speech out fully so that it would be written into the record. He has already read out a chunk of her speech. We agreed that if he read a bit, and I read a bit, and we carried on like that, in the end we should get it all into the record.
One of the most significant things the right hon. Lady said was:
My first point is that considerable damage is being done to the insurance principle. All people concerned have paid over the years for unemployment benefit. They are then told that, because of a rather curious means-testing system, they cannot in certain circumstances draw the benefit for which they have paid because they are getting an occupational pension.
Also—and this is a crucial element—although contributions have been paid, and have had to be paid by law, the Government then regard the people concerned as having no entitlement."—[Official Report, Standing Committee G, 25th May 1971; c. 66-7.]
The right hon. Gentleman went on to criticise the Government and accuse them of playing ducks and drakes with the whole basis of the national insurance system. That is precisely what the Government are doing in this Bill. If the Government are determined to proceed with the proposal, they will bring upon themselves the hostility of millions of public service workers and will bring themselves into confrontation with unions, many of whom have given unswerving support to the Labour Government throughout the economic difficulties. This proposal is tantamount to the imposition of a means test on unemployment benefit, but it is a curious test which takes account of only one source of income. Occupational pensions are deferred wages, as many of my hon. Friends have made clear to the Government tonight and the Government have admitted that they accept this. Occupational pensions are not, as my right hon. Friend the Secretary of State implied, a form of compensation for loss of job. They comprise money which has been paid by and on behalf of the occupational pensioners concerned.
There is, in no sense, a compensation payment. Occupational pensions comprise employees' own money and contributions, and money which employees have had no choice about paying. In the public service one cannot choose whether or not one is in a super-annuation scheme. Those of us who have worked in nationalised industries know that we have to accept that as a condition of employment. Those in noncontributory pension schemes also pay, in effect, because their salaries are set at levels which take account of that.
This is an important part of the debate. From what my hon. Friend the Member for Gravesend (Mr. Ovenden) says, it appears that the occupational pension would be lost. What such a pensioner would lose, as a result of the Bill, would be his unemployment benefit. He is getting a pension because he is retired from work. It is deferred pay and it is pay deferred in order that he may be compensated during his period of retirement.
But such a pensioner has also paid contributions to the National Insurance Scheme and, provided he satisfies the criteria laid down for benefit he is entitled to benefit, and it should not be offset against his occupational pension. This restriction on unemployment benefit applies only to occupational pensioners. It does not affect those who have provided for retirement through private incomes, or who invested privately, or who live on savings. It does not prevent those who have won £250,000 on the football pools from drawing unemployment benefit. But it reduces the entitlement to benefit of a postman who has retired with a pension of £26 a week to which he has contributed. It takes away from him that which he has earned through his national insurance contributions.
The Secretary of State cannot—as the right hon. Lady the present Secretary of State for Education said in 1971—play ducks and drakes with the national insurance principle. I am not prepared to argue whether the level of cut-off should be £25, £35, £45, £55 or £75. I am not prepared to support the Government on this clause whatever figure they insert. We are not here to haggle about figures when the basic principle is involved. A man who has contributed to national insurance is entitled to benefit.
When the Tory Government brought out this shabby scheme for its regular airing, we opposed it. Those of us on the Government Benches who oppose the Bill want to make clear that we are consistent, even if events dictate to my right hon. Friends on the Front Bench that they should not be consistent.
The Government would be well advised to announce that they are prepared to drop Clause 4 of this shabby Bill. The Government will not win. They will be defeated on Clause 4. The Bill could have been defeated tonight if the official Opposition had the courage of its convictions—but that is too much to expect.
The clause will certainly be defeated in Committee—if the Bill is referred to Committee—because if there is fair representation there will have to be Labour Members on that Committee who are hostile to the Bill. If the Tory Party sticks to its guns—although we cannot trust it not to do another turnabout—the clause will be defeated. What will the Government have achieved? They will have earned the hostility of the public service, of the unions and of workers. This Government will be remembered with hostility by public service workers as the one which tried to take away their basic national insurance rights. I urge the Government not to go down in history as the people who earned that reputation but, instead, to tell us tonight that Clause 4 will be taken out of the Bill.
It is significant that no hon. Member who has spoken from the Labour Benches has supported the Government on this question. If, as I hope, there is a vote at the end of the debate tonight, the only people in the Government Lobby will be the payroll vote. That will demonstrate to the public and to the trade union movement that the Parliamentary Labour Party cannot and will not support this shabby measure.
I apologise to the House for my earlier absence. There were important elections in the 1922 Committee and I felt that I should be there. However, I washere to witness the smears and innuendoes of hon. Members on the Labour Benches. I want to make my point clear because I am sure that there has been a misunderstanding. If I take it slowly, hon. Members will understand my point and immediately seize upon its importance and value.
I suggested this afternoon that a young person's benefits were not sacrosanct. When young people do jobs, they should be paid. But when they have never had jobs, when they are school leavers, direct from school, when they have never paid for any stamps or done any job of work, when there is no prospect of their getting work or getting on one of the Government job bonanzas, the question arises whether they should be able to claim benefit automatically.
The benefit is payable only if there is no work to be done. Hon. Members opposite must know of numerous instances of personal need in their constituencies which would be satisfied if young people were prepared to give time and effort—as most are—to help the elderly, the lonely and the handicapped.
If young people are out of work, while there is work to be done in the area, it is immoral to pay them benefits automatically. They should do the work which is there and get a wage at the present level of unemployment benefit. If the hassle between hon. Members opposite and myself is merely over the amount to be paid, let them say so. But if they are opposed to the principle, let them tell the House of any Socialist philosopher who says that people should get paid for not doing work when there is work to be done.
I realise that the hon. Gentleman is trying to dig himself out of the hole he made for himself three or four hours ago. No doubt his words at that time are recorded in Hansard precisely as he said them.
The hon. Gentleman speaks about youngsters having to find work, but many of them try and fail. I am thinking of the 400 prospective young miners in North Derbyshire who went straight from school to the training centre at Grassmoor, only to be sent back by the NCB despite the fact that many miners wished to retire early. I admit that these youngsters were not looking for work to help the elderly, but they were ready to dig coal and help the elderly in that way. The State, through the NCB, refused to allow them to do the work.
There is no question of my digging myself out of a coal mine or a pit. I have made my case repeatedly and I cannot believe that the hon. Member for Bolsover (Mr. Skinner) is not bright enough to understand what I am saying. The 400 young miners who were turned away from the training centre have nothing to do with what I was saying earlier. Is the hon. Member suggesting that they should sit on their backsides and receive benefits for doing nothing, or does he admit that there are things which they could do in his constituency? If there are, why does he not encourage them to do something?
The Government are refusing to recognise that a lost generation of young people who have nothing to do is developing. They refuse to recognise that their own measures involving the expenditure of £400 million to create jobs for young people are still leaving many young people with nothing to do. The House should be aware of the figures: about 200,000 school leavers and 416,000 young people under the age of 25 have nothing to do.
I hope that before hon. Members opposite home in on me next time they will appreciate the gravity of the situation. It is not trivial; it must be taken seriously. I hope that the next time hon. Members opposite attack me they will suggest alternative proposals for helping the hundreds of thousands of young people who are doing nothing.
There is a further twist to this problem because local authority services will be declining rapidly and social service departments in our cities will be unable to sustain the present level of welfare and social work. As a result, there will be more need and more problems. That is why I am so vehemently opposed to Clause 4. The clause says that people are old at 60 and that if they register for benefit they should be deprived of it on the basis that there is no work for them to do.
Is it the Minister's wish to save money which compels him to pursue Clause 4? If so, he could save £90 million a year by scrapping the Job Creation Programme which employs only 25,000 young people. Alternatively, is the Minister concerned about the dignity of old people doing something with their time? The over60s could be doing something for the benefit of the community. The limited definition of the word "work" prevents old people from doing something for the benefit of the community in return for benefits. If we do not redefine the word, the elderly will be punished for registering for work. "Work" must include the relief of social distress and contributions to community betterment.
We could then see both young and old unemployed people doing something for the benefit of others. In return, they would get a wage equivalent to the prevailing level of unemployment benefit. Let hon. Members opposite make no mistake. This suggestion cannot lightly be pushed aside. We could mobilise young and old for the benefit of others.
If hon. Members opposite reject that proposal, they are saying that they do not want young people or the elderly to do anything. I challenge them to say what they feel should be done. So far they have not come up with any answers.
I apologise to my right hon. Friend the Secretary of State for not being here for his speech, but I was returning from a visit to Scotland with a Select Committee. Some of my hon. Friends have been trying to describe to me what my right hon. Friend said and I am now more confused than ever about what is in the Bill.
I am particularly interested in Clause 13 and I had hoped to hear a good description of it from my right hon. Friend together with a list of the sort of people to be excluded. I am told that there is to be a hardship committee. I shall be interested to know how the committee will operate and who will serve on it.
I shall refer to the speech of the hon. Member for Liverpool, Wavertree (Mr. Steen) only because he referred again to this fantastic scheme which he has already proposed on several occasions in the House. I should like to know from him at some stage—please not now—what the scheme entails. I have visions of young people in an area being rounded up by someone who will presumably have toured the area to see what odd jobs need doing, which old people's hedges need cutting and which of their houses need painting.
Will these young people be employed by the DHSS? It is from that Department that they will get benefit. Or will they be employed by the local authority? Under the present pressure of financial stringency, I hardly think that they would welcome having to set up yet another Department in order to employ these hundreds of youngsters in an entirely new scheme. The whole principle of the hon. Gentleman's suggestion is wrong, and if it were not it would be unworkable.
The first point which I must make plain is that it would not be compulsory. Second, if a young person chooses to do no work when there is work to be done, the Government can choose not to pay him. I am saying no more than that. The second point is that the jobs will be created.
I know that the hon. Lady may be able think only in terms of bureaucracies, but I am suggesting that the young have enough initiative to create their own work. They have only to look around the community to see what needs doing. Alternatively, they can go to a job shop to find a list of voluntary organisations which need help. There is nothing impractical about that. It is being done already through the Job Creation Programme.
Perhaps we can take it up on another occasion, because I want to turn to a different topic.
I take objection to other parts of the Bill but it is Clause 13 which sweeps away the right of students who need it to draw supplementary benefit during their Christmas and Easter vacations. The Bill refers to "certain students" and it is difficult to follow. It is a right piece of parliamentary gobbledegook. I do not know who the "certain students" are.
I might have been more satisfied if I had thought that the Government had consulted the National Union of Students. By that I mean not just telling the NUS when the Bill had been prepared, but discussing with it beforehand whether it was a practicality and whether the NUS had objections. In the same way, I understand that the unions which object to Clause 4 would have welcomed genuine consultations instead of simply being told after it was all put together.
Students are unpopular with some members of the public partly because the media blow up odd cases and try to make people believe that students are scroungers. I was glad to hear one Conservative Member say that that was not true, that the overwhelming majority of students do a good job and deserve good grants. We need young people to continue their education and we should not take measures like this to discourage them.
The Department of Education and Science recently produced a publication called "Undergraduate Income and Expenditure", which makes interesting reading. That shows that the average term-time income of a student during the period under review was £577 when the grant was £605. In 1974–75, 81 per cent. of students in their second and later years at university or colleges of education had to take jobs in the summer. Their average vacation income was £182, of which 92 per cent. came from working and only 7 per cent. from supplementary benefits. That revelation firmly nails the lie that students are scroungers and layabouts.
Grants are means-tested. According to this DES publication, 84 per cent. of students receive a reduced grant because of the assessment of the parental contribution. But only about three-quarters of that 84 per cent. actually get the parental contribution. Some get a bit of it and some get none.
There are students of my acquaintance who believe that as a matter of principle they should not take their parents' money at that age, that they should stand on their own feet and look after themselves. However, whether it is because parents cannot afford to pay or for any other reason, a large number of students who are deemed to receive a contribution do not get it.
But they have to manage without that parental contribution. The Bill will not affect the summer vacation but only those at Christmas and Easter. At those times, students will have three choices. They can live with their parents, if they can stay at home and their parents can make a contribution. They can take vacation employment. If neither of those choices is available, they can take supplementary benefit. Now, however, Clause 13 will remove that backstop—it is a backstop, not a first stop—of claiming supplementary benefit.
That is wrong. In present circumstances more and more students will be looking towards supplementary benefit because of the lack of jobs. Over the Christmas period in 1974 the Post Office took on 100,000 extra workers, many of whom were students. At Christmas 1975 the number was 50,000 because employment was already contracting. This Christmas there will be very few jobs available at all with the Post Office.
Post Office work at Christmas is traditionally a job for students and has always been so regarded. The few jobs which exist will probably go as priority is, rightly, given to those who have been unemployed for some time. The National Union of Students, which wants to defend the opportunities of its members, also believes that these jobs should go to unemployed people rather than to students on vacation. The Government estimate that Clause 13 will save about £1 million—an absolutely paltry sum considering the real hardship and deprivation which the clause will cause.
Clause 13 also refers to a change in the wording of the reference to cohabitation. The change is from
cohabiting as man and wife
who are not married to each other are living together as husband and wife.
I had to read that a couple of times to try to discover the Purpose behind it. As far as I can see, this is merely a matter of wording, of cosmetics.
I take it that it is an attempt by the Department to get away from the words "cohabitation" and "cohabiting". That is fine, but would it not have been possible, as we have the chance in this clause, and perhaps in a future Bill, to try not just to change the words but to get a proper and serious definition that is understood by the visiting officers of the Department?
The report of the Supplementary Benefits Commission several months ago made some meagre attempts to change the way in which the cohabitation rule works, but as far as I can find out none of those recommendations has been carried out and visiting officers are still using the same criteria in deciding whether to withdraw the benefit. Many students, whether they have a lodger where they are living, or whether, as so frequently happens with the student population, several students are living together and sharing a flat, if they are in receipt of supplementary benefit, that can be withdrawn if the visiting officer suspects that two people are living in the flat as husband and wife.
I welcome the change in thinking that, has led the Department to try to get away from the word "cohabitating", I would rather that it made a proper attempt to get away from the rule altogether, and that if it could not do that to the mobility allowance, and to what it would make an attempt to define the meaning of the word, in a way that understandable to both officers and claimants.
This is a bad Bill and I go along with my hon. Friends who do not want to support it. It is no good the Minister saying that if the Government do not get this Bill they will have to take the money from elsewhere. We shall not be blackmailed in that way. I repeat that it is no good the Minister saying that if the Bill is defeated the money will have to come from some other group of people who are in receipt of some kind of benefit from the same Department. I am sure that my hon. Friends would join me in opposing that, too, because this is not the way to do it.
If we need to save money on this kind of scale, there are other areas from which it could be found; for example, by way of a wealth tax. I join my hon. Friends in hoping that the Minister will look at stage to take it back altogether.
This is a unique and fascinating parliamentary occasion. I have heard almost every speech that has been made in this debate, and, with the exception of the speech of the right hon. Gentlemen the Secretary of state, the view from every quarter of the House has been identical, namely, that Clause 4 shall not pass.
I say to the Minister of State, who is to wind up the debate and whose task I do not envy, that he has been given good advice from both sides of the House, namely, that it would be in the interests of Parliament as well as of the Government if he were to accept that the plain wish of the majority of hon. Members is that Clause 4 should be struck out of the Bill. The Committee should not waste its time considering it.
My right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin)was right to suggest that we should not oppose the Second Reading of the Bill, because this measure contains a number of useful and, I believe, humane requirements on which the Government deserve to be congratulated. I refer in particular to the mobility allowance, and to what is being done about students. My right hon. Friend was also right in taking exception to such things as Clause 19 and the infringement of confidentiality. I hope that the Minister of State will say something about that.
My right hon. Friend's main attack was on Clause 4, and I want to spend a few minutes on that. It is a badly winged bird, and the sooner its neck is wrung the better. I am sorry that the Secretary of State is not here. I am sorry, too, that he did not allow me to intervene when he was speaking. I wanted to commend him for his courage, because it takes courage for a Socialist Minister to bring this measure to the House, and I recognise courage when I see it. I also recognise his consistency, for it was he who introduced this difficult clause at the begining. He has shown courage and consistency, although I disagree with him.
I wanted to congratulate the right hon. Gentleman also on his newly-found enthusiasm for saving public money from the Welfare State. I wanted to congratulate him, too, on his newly-found anxiety to clamp down on what, on occasion, can be rackets in the Welfare State. I should be more impressed by the right hon. Gentleman's conversion to these views if he had not so eagerly supported a number of other spending measures; but I believe that the right hon. Gentleman is now on the right path.
I want to make two points. The first concerns the earnings rule, and the second relates to Clause 4. The gravamen of what the Government are suggesting is that they need to save money. The right hon. Gentleman made no bones about that. His proposition on the earnings rule was that preventing the proposed increase to £50 a week will save the National Insurance Fund about £60 million. That is a significant sum. But what bothers me is that Government Departments so often get their sums wrong. I have been a victim of this, and I want to give the House three examples of miscalculation on this specific matter.
In January 1975, the Government claimed that their earnings rule defeat in Committee would, on their own figures, cost £60 million in 1975–76. Subsequently they amended this to £50 million and admitted that some of that was due not to the earnings rule but to the increase in the number of pensioners forecast to retire early because of the economic situation. A miscalculation of between £10 million and £20 million was shown to be the case and admitted by the Government in Hansard.
Secondly, the Government claimed that the cost of moving from the £50 limit to complete abolition of the earnings rule would be £80 million. Yet in March 1976 they gave a completely different estimate, £20 million lower. The sum of £20 million had disappeared on their own estimate!
The third example is that the Government gave the cost of moving from the £35 limit to £50 as £35 million. That was in January 1975. Some allowance must be made because of the pension increases since then, which have been about 30 per cent., but now, in the Bill, the Government move this figure from £35 million to £60 million. We are left baffled about how these different estimates, all taken from ministerial replies in Hansard, can possibly have arisen.
What I am saying to the Minister of State—and I say it with some affection—is that those who sit on the Front Bench and speak for the Government are dependent on the best estimates that officials can provide. But too often they turn out to be wrong. I have given three specific examples where differences of £15 million, £20 million and £25 million have been shown, on the Government's figures on the earnings rule alone, over the past 18 months. So I beg the right hon. Gentleman to be a little more tentative in his conviction that he will save as much as he suggests. He should admit that the parameters are a great deal wider than the Government have suggested in the Bill.
Does the hon. Gentleman not agree that the logical conclusion of his argument, whichhe has made with great conviction, is that if the Government's purpose is to bring about a saving and the saving is not worth the paper it is written on, the justification for the measure disappears?
I was dealing with a specific point. I shall come to Clause 4 in a moment. What I am suggesting is that in these areas of vast expenditure the Treasury and spending Departments often have wide margins of error. The right hon. Gentleman made no bones about this Bill. He said that it was designed to save money. I am expressing my doubts, on the evidence of mistakes already accepted, that it will in fact save the specific sum suggested.
There is no need to go over much of the ground on Clause 4 again. But the Secretary of State confused principle and practice. He started by telling us that many occupational pensioners get less than £25 and therefore they need not worry; they would not be caught. As examples, he mentioned some lower-paid Post Office workers, and it is true that their occupational pensions are less than £25, and therefore will not be affected. At the other end of the scale, the right hon. Gentleman told us, there were quite a lot of people over the £35 mark. They were, he suggested, the fat cats, and since, in his view, they were pretty well off, there was not very much to worry about in their case. That may be fair enough, but the right hon. Gentleman said nothing about those in between the £25 and £35 bands. These are the people who will be worst hurt and who will feel most deeply about it.
I declare an interest here, in the Police Federation, for many of those affected will be retired policemen. The police are unique in this area in several respects. First, they are required to pay more of their salary towards their occupational pension than any other part of the public sector. They are required to pay 7 per cent., which is a sizeable amount. The maximum that the majority of the public sector pays is 6 per cent., for example, the teachers.
Secondly, the police are unique in that they are compulsorily retired not at 60 but after somewhere between 25 and 30 years' service. Since a policeman usually joins at the age of 18 or 19 he is eligible to retire with a pension by his late forties or early fifties. He is required to do so because after 30 years' service he is, frankly, no longer physically fit enough to accept the burden of the job.
That is perfectly reasonable, and well understood. What it means is that a large number of policemen are compulsorily retired when they still have ahead of them an average working life expectancy of nearly 20 years before they reach 65. During that period they are certainly available for work. The overwhelming majority want to work, and most of them do. But inevitably there are some who are unemployed, particularly in difficult times. They meet the "availability for work" test but they are unemployed because there are no jobs. Further, they may be unemployed for long periods because they have been compulsorily retired early. In such a case it is hard for a man finding himself between the £25 and £35 bands to have his unemployment benefit docked for long periods of time.
Let me cite two examples. The first is where a police officer of, let us say, 59, having reached a fairly good rank—chief inspector or superintendent—has fulfilled all the requirements of the National Insurance Acts, has paid up to the hilt for his occupational pension, is available for work, wants to work, needs to work but cannot get a job. It is very unfair on that man to take away part of the unemployment benefit which he had been led to expect he could count on.
The second case is more serious, because it is more common. Most policemen, having retired early, get another job. They are usually well sought after and go into a second career, starting in their middle fifties and continuing for another 10 years or so. At that point they start to pay national insurance all over again, and may well pay towards a second occupational pension. But in their second employment, too, they may also become redundant. The firm may collapse. They may be sacked. They then find themselves in a situation in which they may have paid towards two occupational pensions, they have paid their national insurance in two separate sets of circumstances, they have become unemployed, and still under this Bill their unemployment pay is docked.
There will be, inevitably, very hard feelings about this. I quote the words of the Police Federation:
The Police Federation does not condone or excuse any abuse or misuse of the Social Security arrangement, all of which can be dealt wtih by enforcement of the existing powers held by the Department. However, we must make it perfectly clear that our members strongly object to the proposals that, following retirement from the police service, there should be the withholding of unemployment benefit from life long contributors to the National Insurance Scheme".
That objection is not confined to the police service. It is widely shared throughout the public sector trade union movement.
I am glad to support a Second Reading for the Bill, because there are elements in it which are necessary and just, but I believe that Clause 4 fails on these specific grounds; first, it discourages thrift, because people who have saved money via occupational pension schemes will be treated worse than those who did not save; secondly, it is discriminatory, be-because, manifestly, women are treated much better than men; thirdly, it is unfair, because a person who has saved cash and invested it will be better off than a person who has invested in his occupational pension; and, finally, it clobbers the good guys along with the bad guys.
There is a case for withdrawing benefit, on grounds of abuse, from occupational pensioners who from time to time do not really want to obtain work. Those are what I call the bad guys. But this argument certainly ought not to apply to those unemployed persons who are genuinely looking for work and simply cannot get it. These are the good guys—but this proposal exercises no discretion, as it ought to do, between the genuinely unemployed and those who are trying to fiddle the system.
I said at the beginning that Labour Members had given the Government some good advice, for example, that the word "cohabitation" be struck from the statute book. There has been a strange kind of political cohabitation in the House today. It would be a misuse of the time of parliament to pursue into the Committee stage a clause which has been so riddled with holes by all sides in the debate. Manifestly, the demonstrated will and speeches of all who have spoken is that it will not pass. The right hon. Gentleman will not damage his parliamentary reputation or endanger the Government's survival if he recognises the logic of the situation. So let him withdraw Clause 4 now.
What my hon. Friends have said about the principle of the pension provision is right. As for the factual background to Clause 4, the House has been less well treated than it should have been as regards the production of basic facts.
When legislation is being introduced, more information should be provided. If a Bill contains a clause dealing with occupational pensioners between 60 and 64 who receive unemployment pay, I should have thought that the Department would know how many people were involved. However, I have been told:
The information is not readily available in the form requested".—[Official Report, 1st December 1976; Vol. 921, c. 155.]
I did not choose the form. The Department chose the form. It is not unreasonable to expect such information to be available.
My right hon. Friend the Secretary of State for Social Services gave the figures, which we have obtained since that Question was asked by my hon. Friend. We are talking about 16,000 occupational pensioners who would be partly or wholly excluded. That also answers the question which was posed by my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker).
I received the answer only yesterday. It is therefore crystal clear that the Bill was prepared before the figures were known. That was putting the cart before the horse. I should have been given the figures yesterday and not have had to wait until this debate.
I cannot understand why the Secretary of State is able to say that people with occupational pensions of more than £35 will provide the bulk of the saving, as yesterday I was provided with the information that altogether there are 7,000 people between 55 and 64 who are in receipt of occupational pensions of more than £35 a week and who are drawing unemployment pay. It is clear that it is expected that the bulk of the saving of £14 million will come from fewer than 7,000 people. I should welcome more background information.
I know that on Second Reading it is customary to speak to the principle of the Bill and not to the details of individual clauses. I should have followed this practice had there been a discernible principle behind the Bill. As there is not, I have no alternative but to deal with it in a rather scrappy manner.
The only thread running through the whole affair is the July measures. As one who was opposed to the July measures, I believe that this is a very weak thread.
On Clause 13, the Secretary of State quoted the Supplementary Benefits Commission as saying that it does not
see student support as a proper function of the supplementary benefit scheme.
It is true that that was said in the report of the Supplementary Benefits Commission for 1975, which was published in September. It would have been fairer, however, if my right hon. Friend had started the quotation rather earlier. I shall read the whole paragraph:
However, so long as the students' grant fails, during vacations, to provide the minimum level of income which Parliament has laid down in the supplementary benefit scheme for society generally, and in so far as students are able to satisfy the normal qualifying conditions, the Commission sees no justification for excluding them from a right that is available to others.
That passage, precedes and modifies the quotation made by my right hon. Friend.
There was a genuine criticism which could have been levelled at students' claims for supplementary benefit for the Christmas and Easter vacations. That objection or criticism was based upon the fact that it caused the supplementary benefit office a great deal of work. It is quite clear that to have students descending in large numbers on the DHSS office at Christmas and Easter caused them a great deal of work. But Clause 13 cannot be intended to remedy that, because it has already been remedied.
The Supplementary Benefits Commission report states:
The impact of student claims on the administration of the supplementary benefit scheme should be significantly reduced in 1976–77 when, as a consequence of changes which have been announced in the arrangements for student support, it will no longer be necessary or appropriate for the majority of students to claim benefits for the short vacations.
The Commission made that statement because in the House on 23rd February the Secretary of State for Education and Science announced a change in the pattern of student grants. The student grant now includes a notional portion during the short vacations that exactly corresponds to the basic supplementary level payment for a single person. If all that a student is entitled to claim is the basic supplementary benefit, he no longer makes that claim because it is no longer necessary or appropriate.
Even without Clause 13 the impact of work within supplementary benefit offices will be substantially reduced this Christmas. With whom are we left as claimants? We are left with those who are entitled to receive more than the single person's required income. Who are they? They are blind students, who would get an extra allowance as blind people. They are householders, who would be able to claim more. They are students with children, who also would be able to claim more. That latter category may be single-parent families or two-parent families. Therefore, there are the three categories—householders with continuing rent commitments, blind students and people with children. They are the people covered by Clause 13.
This is where the mind boggles. How can it be said that it is fair to attempt to save £1 million at the expense of those categories of students? It is not even students in general: it is students with special needs. We were told by my right hon. Friend that measures would be taken to shield those in special need. My mind boggles even more. If they are to be shielded at the same level, or substantially the same level, as the supplementary benefit entitlement, where are the Government to get the £1 million? What is the use of taking it away by the implementation of Clause 13 and then giving it back out of the goodness of their heart?
So the main purpose of Clause 13 is not to save£1 million as described in the Financial Memorandum. At nearly 8.50 p.m. we are told that the main purpose of Clause 13 is not to save £1 million, as described in the Financial Memorandum, but to save £14 million through the non-payment of unemployment benefit, which a student would not receive in any case unless he were paid up, unless he had a contribution record, and was registering for work but could not get work.
This point was made by my right hon. Friend. It has been public knowledge for some time. The clause excludes students from unemployment pay because they have been signing on in the short vacations. It was felt that unemployment pay was not for that purpose. However, in the long vacations they can claim supplementary benefit or unemployment pay.
The regulations are entirely reprehensible and ought not to have been brought in. But, as we have not had an opportunity of voting on the regulations and as this matter is not concerned with this Bill, it is not relevant. Therefore, I am entitled to revert to the claim that we shall save £1 million—
The decision, which covered both supplementary and unemployment benefit, was that social security benefit was not the proper method of support for students during short vacations. The proper method for student support comes from educational grants. Certainly during the long vacations students could be said to be available for work. Therefore, they will be entitled to unemployment and supplementary benefit. It was a joint decision. One part requires legislation. That is the part relating to supplementary benefit. The other part can be effected by Order in Council. That Order will come before the House and my hon. Friend will have an opportunity of voting on it.
So I revert to the statement that the people from whom that sum of £1 million must come are blind students, student householders and students with children. They are the people who, in the main, would be entitled to more than the basic supplementary benefit level. They would be the only people left entitled to claim supplementary benefit.
If we are to save £1 million from them, it is entirely wrong. If we are not to save £1 million from them because we are to have a different scheme, we are wasting our time. If there is to be a partial giving back, it is still utterly reprehensible, unjustifiable and a sheer waste of effort.
It is ludicrous to talk about hardship cases in this context. Every case where resources are not equal to supplementary benefit entitlement is a hardship case. The objection is that the measure does violence to the basic principle of the Welfare State—that no one should be allowed to fall below a State defined poverty line.
Exactly. I entirely agree with my hon. Friend. If we were dealing with a measure to rationalise the many anomalies in the grants system and to put it on a proper subsistence basis, it would be a different matter. But we are not presented with a measure such as that. We are told that supplementary benefit is not the way to deal with student hardship, but we have nothing before us from either the DHSSor the Department of Education and Science to deal with that hardship. This is cloud-cuckoo land. It is intolerable, and I am sure that it just will not be tolerated.
I believe that my right hon. Friends on the Front Bench do not want to take the bread out of babies' mouths. So why do they do this? Perhaps there is some thought running through their heads that there is a "deserving" and an "undeserving" poor among the students. For instance, it seems that we have got over the merits and the question of hardship in the case of one-parent families, so that the lone parent will find that the safety net, having been taken away, is brought back. But children of two parents are still children and since those parents have to fulfil the income requirements of the supplementary benefit scheme, what right have we to say that their children are not entitled to be treated in the same way as children in any other family?
Incidentally, as has already been said, students are not all 18-year-olds. I am pleased that one part of the Bill which is fairly well and comprehensively drafted makes quite clear that the DHSS realises that not all students are 18-yearolds. Clause 13 recognises this fact—
Without prejudice to Section 7 of this Act, a person under pensionable age who is attending a course of full-time education …".
That shows that the Department realises that not all students are 18-year-olds. Students can come in any shape or size, and certainly in any age.
Is my hon. Friend aware that in the Education Act 1975 the same Government made it easier for mature students to enter higher education by removing the educational qualification which was otherwise necessary for the payment of grant? It is now proposed to take action that would disbar many of those same students from higher education.
I accept that absolutely. I am one of those who welcomes the bringing of mature students into education. I believe that education should be lifelong. We should get away from the idea that people start school at 5 years old, go through the education process and then have a cut-off and never open a book again. I believe that students should come in as many varied ages as possible. But they are apt to bring children along with them. It is a fact of life.
I know that the Department of Education and Science thinks that students should not have—or certainly should not accumulate—dependants while they are students. I know this to be so. It is regarded as fecklessness in the extreme for students to have children. So there may be an idea that, under a different scheme, there will be a distinction drawn between one-parent and two-parent families. We should reject that.
We should reject anything which is lower than the supplementary benefit scales, because we have already established many times that that is the poverty line. If people should be entitled to supplementary benefit and if their number has been reduced, as it has, to only those who would be entitled to something more than £11·35, I appeal to my right hon. Friends to withdraw Clause 13 as well.
When we are called on to vote on the clause, we shall not know what we are voting on, except that it could apply to anybody under pensionable age, because the regulations to be made by the Secretary of State will specify the course and then state whether a person on that course is to be treated as being on that course.
One cannot parody the expression used in the Bill. It states:
The Secretary of State may specify by regulations made under subsection (1) above the courses which are courses of full-time education for the purposes of that subsection and the circumstances in which a person is or is not to be treated for those purposes as attending such a course.
A person is either on an educational course or he is not. I am worried about whether those words hide some mysterious discrimination. I like things set out clearly so that everyone knows what is meant, everyone knows where he is and everyone is treated on the same basis.
It should not be a further task of the Secretary of State to decide whether to treat a student as a student. The Bill states:
regulations so made may authorise the award of supplementary benefit to a person
who would be entitled to it but for this subsection.
That means that this clause will take away benefits and the same clause will authorise the Secretary of State to give back the benefit, or any part of the benefit, that he fancies. That is not up to the standard I expected from Parliamentary draftsmen when I entered the House two and a half years ago.
We live and learn.
The Bill is not properly drawn or factually well based. It will either not save more than 2½p or it will save money at the expense of those who can least afford it.
I urge my right hon. Friends to reconsider. I ask them to reconsider the statement made by the Secretary of State. At least he said that the clause would not be operative until 1977–78. I suggest that if the Government began to follow the alternative Socialist strategy advocated by so many of us in the House, they would not have to save £1 million by a year come Christmas. Surely that is another good reason for thinking again and withdrawing this utter nonsense.
I shall leave the Minister to deal with the speech made by the hon. Member for Coventry, South-West (Mrs. Wise). In my experience this is the first time that only one person—the Secretary of State himself—has welcomed a clause in a Bill. The Secretary of State welcomed Clause 4. Precious few other people have welcomed that, or Clause 6. Someone suggested that the Bill should have been called "The Supplementary Benefits (Largely Irrelevant Provisions) Bill" because it was felt that it would do little to save money where it should and miss out too many of the chances which could be taken.
The Government appear to think that the Bill will stop abuses. I cannot believe either that that is its main purpose or that it will succeed. The Secretary of State said that he was about to save £75 million but already the hon. Member for Coventry, South-West and the hon. Member for Birmingham, Perry Barr (Mr. Rooker) have thrown doubt on that figure.
It is sad that we should have missed out on the chance to deal with some of the small issues that could have been tackled in the Bill and which could have led to net savings. Perhaps tonight is not the time to discuss in detail all the provisions, but we shall look forward to doing that at a future stage.
The hon. Member for Rochdale (Mr. Smith) became excited because his amendment had been called. Has he realised that by succeeding with his amendment he will throw out the industrial death benefit changes for dependants of persons contracting serious diseases whilst at work. The hon. Gentleman would throw out the easement of conditions for benefit under the Industrial Injuries and Diseases (Old Cases) Act. He would throw out the slight improvement on the mobility allowance. None of his taunts on the student situation will persuade me that it is right to utter words in the House in order to buy student votes on an occasion such as 2nd December. I think that the hon. Gentleman is under a spell, because he does not seem to realise that there was not much difficulty for the then Opposition in 1971 in rejecting Clause 7 of the then National Insurance Bill, because feeling in the House then was—as I suspect it is tonight on Clause 4—absolutely unanimous, apart from the Government Front Bench.
I should like to deal first with what is a very small issue, perhaps, as compared with some of the issues raised tonight—the change in the cohabitation rule that will be effected by one of the later clauses of the Bill. I was very pleased to see that change. I realise that it does not go as far as the hon. Member for Barking (Miss Richardson) would like it to go, but it is important to remember that there are now 700,000 one-parent families in real need. Many of them live with relatives not of the same sex, and the word "cohabitation" has conjured up in so many people over so many years something that is obviously not happening in the household. I welcome Professor Donnison's recommendation and the Government's implementation of it in the Bill.
We must remember, on the occasion today of the fourth annual general meeting of the National Council for One-Parent Families, that the problems that one-parent families face will be only marginally eased by the upratings that we had last month, and that there are, each month, a further 3,000 having to claim supplementary benefit. Therefore, I welcome this small amendment, but I want to keep in front of the House our very real concern about this group in our society.
I turn now to the mobility allowance. We have had many discussions, debates and disputes over what should be done. We know that the Government would like to get out of hardware if they felt that they were able to do that. On 23rd July we heard from the Secretary of State that there were likely to be changes. At first we thought that trikes were to go altogether. We have had the mobility allowance, which we welcome. According to one of the officials in the Department, we are now having a real rethink yet again, because he said in a letter to me only last week,
we shall assess the extent of the need for specialised vehicles for the remaining tricycle drivers and see what alternative invalid vehicles are available on home and world markets.
I accept that that was going to happen in any event, but I think that it is time that we got down to a wider discussion —I hope that we can do so in Committee—on the whole question of mobility, as my hon. Friend the Member for Wells (Mr. Boscawen) said. Although we welcome this small improvement, it creates a further anomaly for the non-driver, who will still lose out because he has no trike to give up for mobility allowance, which will continue after the retirement age.
There is a further question that arises on this subject. We have had a great deal of uncertainty. We expect from the Government some small further steps, when other matters improve, towards extending the mobility allowance to some other people who feel unreasonably deprived of it in comparison with those who will be in receipt of it. However, that cannot come at present. Of that we are well aware.
I turn to the thorny subject of students, about which we have heard much this evening from Labour Members below the Gangway. There is no doubt that the Secretary of State spoke very quietly when he referred earlier to the unemployment benefit not being available. I am not surprised that not everyone had realised that this was to come up in regulations. However, the speeches that we have heard tonight show the grave doubt felt by many people simply because we have not had the regulations for the hardship allowance brought before us at the same time as this change.
As my right hon. Friend the Member for Wanstead and Woodford (Mr.Jenkin) said, we agree in principle that the financing of students during their student days should be a matter for the Department of Education and Science, but to have this put in legislative form without knowing any of the details of the so-called hardship allowance is asking for trouble. The Government have only reaped what they truly sowed.
The plight of students is often overemphasised in certain quarters, but we know that there are special problems for some and we look forward to hearing from the Minister of State how the hardship allowance, whatever its value, from the DES will mitigate the situation caused by the removal of entitlement to supplementary benefit.
I shall be interested to know also whether the hardship allowance will be akin to something which used to exist called the holiday grant for those who realy intended to study in the vacation. If it is, it will need to be regularly up-rated if it is to have any continuing value. That is something on which we have no detail at all.
One of the two main issues which divide the Front Benches on the Bill is the earnings rule. At the turn of 1974 I was present during the long and involved debates on this matter in Committee, when we sought a right for those who continue working during the five years directly after the statutory retirement age to retain an increasing amount of their earnings. My hon. Friend the Member for Rushcliffe (Mr. Clarke) said on 29th January 1975:
the rule is a direct financial penalty on the efforts of such people."—[Official Report, 29th January 1975; Vol. 885, c. 483.]
He was referring to men between 65 and 70 and women between 60 and 65.
The history has been outlined in the House. The Conservative Opposition, with the help of the hon. Member for Islington, South and Finsbury (Mr. Cunningham) drove the first nail in the earnings rule coffin in January 1975. His hon. Friends joined us to complete the nailing down of the lid on Report. At that time, 20,000 people were losing much hard-earned cash that they needed. The figure has now gone down to 11,100, we are told, but the earnings rule was a consequent loss of independence and the reinforcement of an outdated idea, and we started to get rid of it.
We did not get the real amendment we wanted in that Committee, but even then we were going in the right direction. Because the figures are in grave doubt, we need to look at this matter carefully in Committee. I think that it was the hon. Member for Birmingham, Selly Oak (Mr. Litterick) who, referring to the figures quoted by the hon. Member for Coventry, South-West, said that if it was in such a muddle we should not support it at all. But it is our duty to sort it out.
Because of their sheer financial mis-management, the Government are seeking to enforce this reduction of the earnings rule on people of retirement age for five years thereafter for the sake of £60 million. I say "£60 million" in good faith, because that is what is written into the published Bill. We have already heard, however, from my hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths) and others of a series of contradictory parliamentary answers to myself and my hon. Friend the Member for Rushcliffe about the earnings rule and relaxing it.
It seems that the Department are still revising it and we are unsure what the real cost will be. I know that the Minister will agree that the main cost will be seen if pensioners who currently defer their pension plans do not do so in future.
On 8th March, the then Minister of State said that the current deferments in March 1967 were 120,000, of whom 70,000 had dependent wives. Under the £35 rule which came into operation last April the figures fell to 70,000 current deferments and 45,000 who had dependent wives, producing a cost of £110 million in 1976–77 for the abolition of the rule.
We have had various other estimates, most of which are contradictory both in numbers and in costs, and tonight is a first-class chance for the Minister for Social Security to put the correct figures on the record. I must remind him that there have been, even in later days, figures which do not add up. I hope that he can reassure us that we really know what we are doing with the proposals that he brings forward tonight. Until we are satisfied that we have sorted out this matter we shall reserve judgment on the Government's proposals.
There is one further matter on which the Minister must comment. On 29th January 1975, we were given a total abolition figure of £80 million at April 1975 rates. On 2nd March of this year the question was asked again and it was revealed that that figure had come down to £60 million at November 1975 rates. The House must forgive me if I am wrong, but logic guides me to think that the £60 million should have been higher even if some of the pensioners had retired due to the state of the economy. I shall welcome some clarification on those figures.
I say of this measure that it is wrong to deny active elderly people the chance to avoid dependence on supplementary benefit which the enhanced disincentive to work causes. It is wrong to use elderly people, who can provide useful services in work, as scapegoats for the state of the economy and this Government's record of unemployment. With this clause, we have just 11,100 people —fewer than 3 per cent. of the 500,000 people of pensionable age—in work. Many are doing part-time work to avoid the rule. Many others are asking not to be paid more so that they can avoid the rule.
I think that we should be able to retain the good work done in 1974 and 1975 and not cause people to seek to get round the rules. That, surely, is not the reason for which we legislate in this House.
Whilst I am dealing with this matter, perhaps I might draw attention to the fact that we have not had from the Government one word about the effect on the wives of invalidity pensioners. The Minister will know from questions which have been asked in the House and from discussions that we have had at other times that invalidity pensions are non-taxable and, therefore, that the taxation liability is not reduced. It means that the wife of an invalidity pensioner earning between £35 and £39 per week is effectively taxed at a marginal rate of 85 percent. Once her earnings rise above £39 a week, the marginal taxation rate is 135 per cent. That seems to be totally crazy. It is a contradiction of the Government's own philosophy.
The Government introduced the invalid care allowance to encourage self-help in families. Surely the wife of an invalidity pensioner is trying to carry out that very same philosophy. It is not enough to say that these people need to be those on whom we save, even though we accept that savings have to be made. Surely it is better for them to care for their invalid husbands in their own homes by their own effort than to have them going into residential care at a far greater cost. If the Minister cannot do anything about the earnings rule for ordinary pensioners, he should at least undertake to look again at the situation of the wives of invalidity pensioners.
I have said already that there have been many different figures and that many arguments have produced much lower costs. In fact, I even went through the figures on one occasion and came to a net cost for the removal of the earnings rule of £4 million. I shall not go through it again now, but we must get the figures straight.
I turn now to the one issue on which everyone other than the Treasury Bench seems to be totally united. It is a victory for common sense that that should be the case in this House. The hon. Member for Ealing, North (Mr. Molloy), my hon. Friend the Member for Wells, the hon. Member for Islington, South and Finsbury, and many others have referred to the unfair restriction on unemployment benefit for occupational pensioners, at a saving of £4 million.
I believe that these proposals have been brought forward for three main reasons. First, the Government are desperate to save money. Secondly, they are more worried than they care to admit about the recent discussions on the abuse of benefits. Thirdly, they regard savings and occupational pensions almost as new income and, worse still, some of their supporters regard it as unearned income. But we are not dividing the House on that issue tonight.
Objections to such a measure have been raised by official Oppositions of both political complexions in the past. In 1971, the former right hon. Member for Kingston upon Thames, now Lord Boyd-Carpenter, together with the right hon. Lady who is now Secretary of State for Education, opposed a far less onerous proposal. With good common sense they defeated Clause 7 in that Bill. The right hon. Lady encapsulated what the House felt about the attempt to restrict payment of unemployment benefit to occupational pensioners, when she said that the Tory Government had over-egged the pudding in pursuit of a small number of people who had abused the system.
There was grave worry about that Bill, which came from a report of the National Insurance Advisory Committee. There was one lone voice on that Committee—the voice of Lord Collison, a former chairman of the Supplementary Benefits Commission, who encapsulated our fears when he said:
What is there to prevent the extension of this principle"—
He referred to the stopping of national insurance benefit—
to sick pay, retirement pensions and other national insurance benefits?
We should heed his words today. They are as true now as when he said them in 1968.
We have heard from the Post Office Engineering Union and many other groups of workers who have put their objections clearly. Members of many occupational pension schemes have no alternative but to provide for their pensions through their pay, and it is a condition of service from which they cannot escape. We have heard of nothing that will alleviate their plight. They cannot take a fuller pay packet; they cannot save through the Post Office, banks or building societies. There are many workers, such as those who work in Her Majesty's dockyards who, after 40 years' service, do not have the choice to carry on working. Their basic occupational pension starts at £29 per week and my hon. Friend the Member for Bodmin (Mr. Hicks) will confirm this.
We have heard from my hon. Friend the Member for Bury St. Edmunds about the situation facing the police. I gather that it also applies to some people working in the fire service. All these examples show the inequity of the Government's scheme.
The Government are taking the incentive out of saving for good occupational pension schemes just as their failure to curb inflation is making it harder for people to save. They are discriminating against people in receipt of occupational pensions of between £25 and £45 per week.
As the hon. Member for Coventry, South-West said, we do not know exactly how many people will be affected, but the Secretary of State said today that it would he 16,000. That may seem a small number, but it could prove to be the thin edge of a very large wedge if the Government decide to restrict, in this way, payments of benefits for which contributions have been made. There are many other calculations that could be made, but we all agree that abuses in the system must be halted.
There are many who register for unemployment in order to preserve their entitlement to a full retirement pension. If they are to be allowed to preserve that right at the age of 60 for women and 65 for men, some special provision will have to be written into the Bill in Committee, since there is none at present. Perhaps that comment underlines one of our worries. A number of Government amendments will be needed to make this Bill work at all, even on those elements which we feel may have to remain.
What analysis is taking place to determine the demand for work among unemployed occupational pensioners? If, as I suspect, it is the abuse which the Minister is trying to curb in order to save £14 million, there is no point in bringing forward this scheme, which will do very little about that problem.
The scheme will encourage people to take lump sum payments from occupational pension schemes to get round the rules. It will not curb the abuses which the Secretary of State suspects are contained in the scheme. Has the right hon. Gentleman looked at the rules on the availability for work which operate in Australia and other countries? That is the way to curb abuses.
I was challenged by the Secretary of State on Tuesday to find a way round this problem. I shall seek to help him, but the Government, with their Civil Service resources, should also be doing something to correct the abuses. They are unfairly discriminating against people who have saved for occupational pensions, and when a person has put money aside throughout his working life, a pension of £25 or £35 on retirement is not very generous.
The Bill is administratively cumber-some, and for occupational pensioners it is blatantly unfair. It will do nothing about those who abuse the system, but it is already creating a great deal of aggravation because of its dubious abandonment of the national insurance principles. We are bound to ask, if the Government abandon this, what goes next? The Bill is a disincentive to the building up of occupational pension schemes, and I think that the House can do better than the Government on this matter. We shall fight the clause tooth and nail, and I think that every hon. Member on the Government Benches below the Gangway will be united with us.
The Bill is irrelevant to the needs of the occupational pensioner and goes against the Government's own 1975 Act. It is irrelevant to elderly people who want to work. It does a little for one section —the disabled—in terms of mobility allowance, but it does not sort out the problem of students who will need further help, because the Bill tells only half the story.
The Bill sets out to save £75 million, according to the Secretary of State, but as it stands it will create more dissension and an atmosphere of blatant unfairness in our society, and this worries me.
There is blatant unfairness to the occupational pensioner and a disincentive, because of the earnings rule limitation, to the many active elderly people who could care for themselves for much longer if they were allowed to continue working. There are other anomalies, too.
Instead of this Bill, it would be nice to see the House revising tax allowances in order to make sense of the benefit taxation nightmare and it would be good to see us simplifying the whole area of benefits for the sake of claimants, taxpayers and the over-pressed departmental staff. It would be good to see the House working towards a system of proper support credits to those in need while encouraging those who can to make greater personal provision by incentive to help weaker people.
We look forward to a thorough revising Committee stage, when all hon. Members can use their practical common sense to put more sensible measures into this dog's dinner of miscellaneous provisions.
I congratulate the hon. Member for Wallasey (Mrs. Chalker) on making her first speech from the Opposition Front Bench. Having said that, I find it odd to be lectured by the hon. Lady on the Welfare State. I note the hypocrisy of it, particularly when we should like to know where the Conservative Party, if it were in office at the moment, would find its £5 billion cuts.
I can assure my hon. Friends that, having taken part in discussions in recent days, I can well imagine where the Conservative Party would look for cuts. It is to the Government's credit that the July measures excluded any cuts in the major social services. In fact, the upratings went ahead a fortnight ago in November. The Government also excluded overseas aid from the cuts. Therefore, the main social security benefits—which run to £10 billion expenditure a year—and overseas aid, were excluded.
My hon. Friends will know that the cuts have not fallen on the main benefits but on the items that are before us tonight. As my right hon. Friend the Secretary of State explained, these cuts had to be made in order to find this amount of money. I know that some of my hon. Friends are opposed to the cuts in principle. I remind them that, faced with this situation, the Government could have made cuts in far more damaging areas. But they did not. We protected the people really in need in our society.
I should like to answer some of the questions asked by the right hon. Member for Wanstead and Woodford (Mr. Jenkin). He referred to the current review of the supplementary benefits scheme which my right hon. Friend announced some weeks ago as being undertaken by the Department. The right hon. Gentleman hoped that the object of that review would be to remove a substantial number of people from supplementary benefit.
All I can say to the right hon. Gentleman and to the House is that the review is going ahead. It may be possible to bring certain aspects of the review before the House without waiting for the full report. Some of the aspects are extremely detailed but as soon as we have any facts and information we shall put them before the House.
The right hon. Gentleman also referred to Clause 19(5) which amends Section 164 of the Social Security Act 1975 so as to permit disclosure of earnings information by the Inland Revenue to the Manpower Services Commission, the Employment Services Agency and the Training Services Agency. The Government are as concerned about confidentiality of records as the right hon. Gentleman. It makes for sensible administration to extend to Government agencies information held by the Department where the Department and the agencies are carrying out similar functions.
My Department obtains earnings information from the Inland Revenue by extracting it from employees' PAYE deduction cards used to record national insurance contributions. The Department then makes use of this information to calculate earnings-related supplement due to social security benefits.
The agencies carry out much of the same functions in this context and it is only common sense and practical administration to extend the disclosure power. I would stress that it is only an extension of Section 164 and not a new principle that the clause proposes.
The right hon. Gentleman referred to the letter of 4th October from the Chairman of the National Association of Pension Funds to us suggesting a number of desirable improvements in the occupational pensions legislation, and he asked about the Government's intentions with regard to pay policy and pensions. As the right hon. Gentleman probably knows from the Prime Minister's speech, it is still the Government's intention at the earliest opportunity to go ahead with legislation to provide for industrial democracy in this field. On the second aspect, that of being allowed to negotiate, the Government still have in mind the deadline of April 1978 for the new pension scheme. The Chancellor of the Exchequer is actively considering the matter, and again as soon as we have any information it will be reported to the House.
I propose to deal first with the earnings rule, because in a sense this has given rise to the least controversy this afternoon, certainly amongst my hon. Friends This aspect raises the largest part of the revenue for which the Government are asking from this Bill. The proposal to uprate the earnings rule to £35 with indexing is a sensible suggestion. It will not penalise people who are taking work and, as my hon. Friend the Member for Islington, South and Finsbury (Mr. Cunningham) accepted, the Government are committed to the removal of this in its entirety when the economic situation allows. My right hon. Friend made that clear, and I emphasise it.
My hon. Friend asked how we arrived at the net figure of £45 million of savings which the hon. Lady the Member for Wallasey challenged this evening. The hon. Member for Bury St. Edmunds (Mr. Griffiths) said that figures produced by Government Departments are often wrong. I am the first to say that they are not always right, but they are not always wrong, either. Because this has become a controversial issue, we have looked at it very carefully indeed. In Committee I shall be able to give hon. Members and the right hon. Member for Wanstead and Woodford more information, and I think that he will find that the net figure of £45 million is fairly accurate.
The second area of debate that has rightly aroused a great deal of passion is that of student and supplementary benefits. I listened carefully to all the speeches, and I want to deal in particular with what was said by my hon. Friend the Member for Coventry, South-West (Mrs. Wise). There has been some confusion, and I am the first to admit that the wording of the clause is not easy for laymen or even experts to understand.
It is our intention that this provision should help those whose inescapable commitments mean that the £11·35 vacation element in their grant is inadequate. Among those for whom we shall consider providing help by means of the hardship scheme are students in board and lodgings, and those with dependants. What we shall seek to ensure is that for the eight weeks of the two short vacations students will not be without financial support.
I ask my right hon. Friend to come back to the point that we tried to put to the Secretary of State. If the hardship scheme supplies enough assistance to be equal to that which would be supplied by supplementary benefit, what is the point of having it instead of the benefit? If it does not supply that much, or if the conditions are more rigid, is not this a violation of the universal rule that nobody must fall below the safety net?
My hon. Friend has reinforced the case made by my hon. Friend the Member for Coventry, South-West. I want to deal with that point because it is central to the argument. I was asked about the hardship cases and the administrative details. We have not worked this out. In a sense this is a matter for the Committee. I have something to say to my hon. Friends in a minute about this which I hope they will find acceptable. These calculations have to be done in conjunction with the Department of Education and Science.
The right hon. Gentleman cannot get away with that. This policy was announced by the former Secretary of State for Education last February. It is now December. To come forward with a Bill proposing these changes and to give us no details of the proposed replacements is shameful.
Discussions have begun and are currently taking place. The information I have received in the House today will be ofconsiderable value in those discussions. The Government have listened to the debate and have taken note of the serious points raised.
Reference has been made to severely disabled students. This, I think, will meet the point raised by my hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo) about putting people back into the scheme. Regulations will be introduced to ensure that their present access to supplementary benefits is preserved. The same will apply to one-parent families where the parent is a student.
I come now to the central point raised by my hon. Friend the Member for Coventry, South-West. I listened to her arguments closely andI believe that she put forward a devastating case. My right hon. Friend and I are prepared to look again at the clause in its entirety. Naturally, I can give no further commitment, but we shall look at all the aspects, all the anomalies that have been thrown up, and see whether it is possible to deal with them. I hope that this will meet the genuine argument that has been put forward.
The difficulty my right hon. Friend faces relates to the purpose of this clause as it has become apparent. It seems that an Order will be laid excluding students from unemployment benefit but that they will still register for that benefit so as to draw supplementary benefit. The saving of £1 million is inserted into the Bill as a purely notional sum to justify the clause. That is the truth, is it not?
It is not necessary to register for supplementary benefit. People receive it in cases of need. I know my hon. Friend's concern about this matter. The Government will look at it in its entirety.
The answer is "Yes".
I come now to the other main point that has been raised in the debate. That deals with the unemployment benefit for occupational pensioners. It has been made very clear from both sides of the House that there is opposition to abuse in this regard. It is well known that there has been and is abuse. It would be wrong not to acknowledge that.
Some of the letters and representations that I have had on this subject are from people who say that they are not genuinely seeking employment but want the unemployment benefit because they have paid the money. This approach does not meet the rule concerning availability to work, and therefore these people are not entitled to benefits in that regard. I think that my hon. Friends would agree that where there is abuse, it cannot be countenanced.
We are dealing here with an issue concerning some 16,000 occupational pensioners. I am not using the argument that because it is a small number, it is an unimportant issue. When one person is affected, it is just as important as when the principle affects a million people. I accept that. But we are dealing with a relatively small number,
Among the public service people involved are the Post Office unions. They have raised great objection to this proposal and letters have been read in the House this afternoon from these unions. Most of the people concerned are excluded because their pensions do not reach the £25 limit. I have a letter here from Bryan Stanley, the General Secretary of the Post Office Engineering Union. We have had letters from Tom Jackson and from Civil Service unions.
My hon. Friend the Member for Ealing North (Mr. Molloy) asked what would be the Government's reaction to consultations not only with the unions concerned but with Members, and he asked whether it would be in order in such consultations and representations to raise the basic principle as well as the other issue. Again I say to my hon. Friends that of course we shall listen, and people are quite free to raise that basic principle and to discuss it with us.
I can give no commitment from the Government. I say to my hon. Friends that I am going as far as it is possible to go. I hope that they recognise that have listened to the debate and that we are replying in kind. We are not trying to push anything down anybody's throat. We shall listen and try to meet the point. It may not be possible at the end of the day to meet the central principal point, but it may be possible to go a considerable distance along the road. Of course we should consider the level of £25. That could be discussed and other aspects could be discussed. I know that many of my hon. Friends are concerned for the principle, but at least I am saying that it is open for discussion with the Government.
My right hon. Friend has already conceded that the principle of student benefits is still open for discussion and that the principle of Clause 4 is still open for discussion. That being so, why does he not withdraw the Bill and come back after he has completed the discussion and decided on these principles?
In a sense I am trying to meet the will of the House. I have not conceded the principle of Clause 4. I have said that we shall discuss the principle. We are proceeding with the Bill because it is a Government Bill to which we are committed. In consequence, what I am trying to do—[Interruption.] I ask my hon. Friends to listen to the argument. I am genuinely trying to meet the main criticisms.
Of course. We have already had a number of consultations with trade unions. We can form our judgment of the strength of the views which have been expressed tonight. I am trying to meet the arguments constructively. I assure my hon. Friends that my colleagues will be informed of the arguments and of their merit. That is surely what Parliament is about. I am not trying to make promises that cannot be met. I am going as far as is humanly possible to meet what hon. Members have said.
I am grateful to my right hon. Friend for what he has said. I ask him to appreciate that a great deal of the argument that will be submitted to him could not be put to him in the House on Second Reading. I therefore welcome his willingness to meet those who understand the position thoroughly. I shall be able to tell those people that when they discuss this issue with my right hon. Friend it will not be a formality but will possibly lead to doing away with the clause or at least to a re-examination of the position.
I am sorry if I have been discourteous to you, Mr. Speaker, but I thought that it was better to turn and face the Benches that are full rather than the empty green Benches opposite whicn are usually occupied by Tory Members. The Tory Party is supposed to be the party of compassion and is supposed to support the Welfare State. Where are the Tories?
We do not intend to vote against the Bill because we want to help the elderly with their mobility, we want to help the family over the cohabitation rule, and we want to help the old cases of industrial injury.
I leave my hon. Friends to judge what the right hon. Gentleman has said.
I have been asked what effect the Bill might have on the miners' retirement pension. We are studying that and I shall inform the House when we have more information.
I was asked by the hon. Lady the Member for Wallasey about the wives of invalidity pensioners. This is a detailed point. I shall write to the hon. Lady when I have more information, but of course it will be before the Committee stage.
The Government have gone some way tonight to meeting the objections that have been voiced. I see that the hon. Member for Isle of Ely (Mr. Freud) is smiling. We have taken part in a serious political dialogue which was important and to which the Government were bound to listen. They listened to it. I hope that my hon. Friends recognise that the Government have their difficulties, but they have listened and they will continue to listen. We want to have consultations on the major issues. On that undertaking, I urge my hon. Friends to give the Bill a Second Reading and to allow it to proceed.
The mobility allowance is a small but important part of the Bill. It will provide £3 million for those who are severely disabled. It will bring about 100,000 people into mobility. It will give them a right that they have never had before. The right hon. Member for Wanstead and Woodford wanted to introduce means testing or discrimination, and that I cannot accept. The Government want to put in more money, and we shall not discriminate between one type of disabled person and another.
It has been said that many people who have the trike want their own mobility. It is said that they want to drive. The House knows that the trike has to be phased out because it is considered by independent assessment to be unsafe. I hope that within the next few years it will be possible to produce a vehicle that can be used by disabled people. I hope that the Government will be able to produce it or to provide for its production. We can make no commitment, but the Government are considering this issue in an active sense and are concerned about it.
It is not possible to do that. My right hon. and hon. Friends have met disabled drivers. My right hon. Friend is writing to every one of the 19,000 trike drivers. We are aware of the issues and we shall try to do something. We want to see another vehicle produced but we cannot give an open-ended commitment.
It has been said that this has been a unique debate in that the Government have not had any supporters. My hon. Friends have examined the Bill. It is a measure of which they are highly critical. They have raised various matters with the Government in an extremely constructive manner. I have tried to reply in the same vein. I hope that they will accept my reply in the sense that the Government want to assist.
We are not out to remove benefits. We shall try to maintain the present situation. We are trying to maintain the Welfare State and to assist those who