Amendment of Regulations for Crediting Contributions

New Clause A – in the House of Commons at 12:00 am on 24th March 1977.

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Lords amendment: No. 1, in page 3, line 23, at end insert new Clause A— A. The power to amend regulations made before the passing of this Act under section 13(4) of the principal Act (crediting of contributions for the purpose of enabling contribution conditions to be satisfied) may be so exercised as to restrict the circumstances in which and the purposes for which a person is entitled to credits in respect of weeks before the coming into force of the amending regulations; but not so as to affect any benefit for a period before the coming into force of the amending regulations if it was claimed before 18th March 1977.

3.56 p.m.

Photo of Mr Stan Orme Mr Stan Orme , Salford West

I beg to move, That this House doth agree with the Lords in the said amendment.

Photo of Mr George Thomas Mr George Thomas , Cardiff West

With this amendment we are to discuss Lords Amendments Nos. 14, 15 and 17.

Photo of Mr Stan Orme Mr Stan Orme , Salford West

These amendments are a very late addition to the Bill, but a very necessary one. As Baroness Young said in another place—I shall acknowledge the point that the right hon. Member for Wanstead and Woodford (Mr. Jenkin) will probably make to me—it would have been much better had the problem they are designed to solve been spotted much earlier, or indeed, never allowed to arise. As she also acknowledged, once the problem had been recognised for what it was, it would have been quite impossible to ignore it.

The purpose of the amendments is to avoid the unintended and very expensive effect of changes to the national insurance scheme since 1975 which would have enabled people to acquire contributory benefit rights although they have not paid contributions or received contributory benefit for many years. The problem lies mainly in the credits regulations. The new clause will extend the existing power to make regulations on credits, so that we can restrict the use of credits given for 1975–76 and 1976–77 in establishing future benefit rights. We already have statutory powers to deal with credits awarded for later tax years.

I can set out the basic points fairly simply, although a great deal of complication lies behind the simple facts. Under the Social Security Act 1975, there are provisions enabling people not in work, because of sickness or unemployment, to be credited with contributions to maintain their contribution record for entitlement to contributory benefits. It was not realised at the time just how much further this went than the corresponding provisions before 1975. Nor was it realised that there would be a cumulative effect when the credits provisions operated together with other new or changing provisions—notably the new non-contributory incapacity benefits and the arrangements for phasing out the married woman's contribution option.

In brief, if a person had at some time—however remote—paid some contributions, incapacity or unemployment years later could lead to credits and thence to contributory benefit, without any intervening work record or continuing receipt of contributory benefit. As hon. Members will appreciate, it is hardly consistent with the principles of a contributory scheme to provide benefits where there is only a connection with contributions so tenuous that the beneficiary himself would be most unlikely to be aware of it. Arguments have been put for a scheme without contributions as such and therefore without contribution conditions. The right hon. Member for Wanstead and Woodford has put forward such a scheme at certain times.

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Redbridge Wanstead and Woodford

I must correct the record. I have never put forward such a scheme. Indeed, when such a scheme was examined when I was at the Treasury the net cost was thought to be about £500 million if we were to transfer the test of entitlement to benefit from contributions to residence. Can the right hon. Gentleman tell us what the current cost would be? It must be double that, and probably more.

Photo of Mr Stan Orme Mr Stan Orme , Salford West

I am sorry if I misinterpreted something which I had read of what the right hon. Gentleman had said. I withdraw that if I am wrong. I do not have the figures for which the right hon. Gentleman asked, but I could obtain them for him. Certainly such a scheme would be very expensive indeed, but it can at least be rationally argued. What cannot be rationally argued is that when we have a contributory scheme we should incur additional expenditure, amounting to perhaps £100 million, in paying uncovenanted benefits to people it was never intended should qualify for contributory benefits. That would be totally irresponsible and would make it impossible to pay for priorities which have been deliberately chosen and agreed by Parliament. I hope that the House recognises that we are dealing in large sums of public expenditure which could go to much more deserving causes.

The remedy is to make regulations limiting the circumstances in which credits given under the new contribution system can count for benefit entitlement. The details as to the circumstances and the benefits involved are a matter for the regulations and are not dealt with in the new clause, which, as I have explained, is necessary to enable the regulations to restrict future benefit rights where these depend on credits given between 1975 and a current date, and so avoid letting in a large number of unwanted claims this May, when the post-1975 rules come fully into effect. But the House will wish to know that, using this clause and our existing powers under the main Act, our aim is to achieve a restriction consonant with our original intentions and with the contributory nature of the scheme, and more in line with the pre-1975 arrangements.

As the clause makes clear, we shall not be seeking to touch benefit claimed before 18th March for any period before the regulations bite. That sets the outer limit of the new provisions. Within that outer limit, we have it in mind to be rather more generous—both to avoid anything that looks like retrospection and to match as far as possible the pre-1975 arrangements. For example, credits given to someone getting contributory benefit will not be affected, nor will credits given in a year in which there is also a not insignificant record of contributions actually paid.

In very few cases will the regulations or this clause disappoint expectations that have already been raised. As with any unintended loophole, some people have already used it or are on their way to using it, and we shall, within reason, recognise this fact. But the prime consideration must be, in fairness to contributors, as well as in the interests of responsible administration of the scheme, to close the loophole.

The related amendments flow naturally from the introduction of the new clause. Lords Amendment No. 14 provides that the regulations we shall be making under our powers as extended by the new clause need not be referred beforehand to the National Insurance Advisory Committee. Time is, I am afraid, too short for this. Lords Amendments Nos. 15 and 17 enable us to give effect to the new clause and to the exemption of the regulations from reference to the NIAC immediately the Bill receives Royal Assent. We shall be making the regulations as soon as we can after Royal Assent, and bringing them into effect at the earliest possible date.

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Redbridge Wanstead and Woodford

We recognise, Mr. Speaker, that the three amendments which you have been kind enough to say should be taken with Amendment No.1 flow from it. They are consequential upon it, and it is certainly convenient to the Opposition that we should discuss them at the same time.

I am very glad that the Secretary of State has joined us at this stage, because some of the things I shall say will be somewhat critical of the way in which the matter has been handled, and it is right that he should listen. I must tell the Minister for Social Security that this is a very unsatisfactory business. In the light of that, it is not only the right but the duty of the Opposition to probe more deeply what lies behind what the right hon. Gentleman said.

We do not intend to oppose the Government in trying to put matters right. The right hon. Gentleman referred to the potential public expenditure consequence of the errors that have come to light and mentioned a figure of £100 million. I suspect that that is very much an outside estimate, but even if it were £10 million it would probably be right to take steps to close an unintended loophole, if "loophole" is the right word for what we find here.

However, I am very unhappy about the way in which the matter has been dealt with and the way in which it is proposed to put it right. I shall explain why in a few minutes, but first I wish to say that I accept that under a contributory scheme contributions must be the basis of entitlement to benefits.

The right hon. Gentleman may have misread, misheard or conceivably even misunderstood something which he attributed to me. There is a case for abandoning the contributory principle and making the test of entitlement to benefit solely that of residence. The consequences would be considerable. I suggested that there might be a cost of about £1,000 million. I am glad to have the Under-Secretary of State's nod of assent that that is the right order of magnitude.

The attraction of such a scheme is the abandonment of the whole of the administration connected with the collection of contributions, their separate identification and the maintenance of contribution records and all that goes with it. But the cost would be considerable, and there would be considerable opposition from large numbers of the population who believe that entitlement to benefit could not be relied upon in the same way if it rested solely upon statutory entitlement as opposed to the contractual entitlement that goes with contributions.

When we examined the matter when we were in office as one way of achieving simplification the point was made that the trade union movement, for example, had always set great store by the contributory principle, believing—I suspect rightly—that where benefits are secured by contributions there is a much greater reluctance on the part of this House to interfere with entitlement than where they would rest solely upon statutory entitlement. After all, we took out from the Bill a clause to disentitle certain categories of occupational pensioner from receiving unemployment benefit mainly because we believed that it was a breach of the contributory principle and would have introduced a means test in the entitlement as of right flowing from the National Insurance Scheme. So I accept that contributions must be a very important entitlement to benefits in a contributory scheme.

Secondly, the Opposition say that, where there are benefits of a comparable nature some of which are based on a contributions record and some of which are non-contributory, it is right and inevitable that the contributory benefits should be higher. Sometimes it is argued that, with the progressive introduction of noncontributory benefits such as the NCIP, the attendance allowance, the invalid care allowance, the mobility allowance and a whole range of other benefits, the contributory principle has been so undermined that it could be done away with. It is a point, though it is not one with which I agree. Where there are overlapping benefits, as with the invalidity pension and the NCIP, it is right that the contributory benefits should be higher than the non-contributory ones.

The third point which I accept, because it is an intergral part of the system, is that, when there is a brief interruption of contributions and a person is entitled to contributory benefits, it is sensible to operate a system of credits for the contributions during that period of interruption. The alternative would seem to be to pay a higher benefit but to require the beneficiary to pay back part of it in a continuing contribution. That might seem a logical paper transaction, but I can understand that, for people off sick or unemployed, the machinery necessary to collect contributions could be unduly cumbersome. It is more simple for the amounts to be held as automatic credits when a person is sick or unemployed.

Fourthly, I accept that there must be a limit upon the system of granting credits in these circumstances. There must be some point at which a person ceases to be regarded as a contributor to the National Insurance Scheme and becomes a dependant. If this were not so, it would blow a gaping hole in the system and in the entire contributory principle.

What the Minister told us and what his noble Friend in another place said was that the legislation as it now existed placed no such limitation on the extent of the credits for contributions paid while enjoying benefits and, perhaps more significantly in relation to this amendment, that there was no power now to make regulations to provide such a limitation.

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Redbridge Wanstead and Woodford

I am glad to have the Under-Secretary's assent to that. What the Minister is now proposing is a new regulation giving him power to close this loophole.

I have indicated the extent to which the Opposition agree with the Government and accept what they say. It is at this point that our anxieties arise. Perhaps I may refer to what Lord Wells-Pestell said on 22nd March in another place when he spelt out clearly what the Government were doing. He said: The extension of existing powers is needed if we are to avoid letting in a large number of unwanted claims from this coming May, when the post-1975 rules come fully into effect. But, as the clause itself makes clear, we shall not be seeking to touch benefit claimed"— pausing there, I emphasise the word "claimed"— before the 18th March for any period before the regulations bite. That sets the outer limit of the new provisions. Within that outer limit, we in fact have it in mind to be rather more generous, both to avoid anything that looks like retrospection and to match so far as possible the pre-1975 arrangements. For example, credits given while in receipt of contributory benefit will not be affected."—[Official Report, House of Lords, 22nd March 1977; Vol. 381, c. 395.] 4.15 p.m.

What the Government are doing here is, first, to amend legislation by regulation. That in itself has always been regarded as undesirable. It was the subject of an important recommendation of the Donoughmore Committee in 1932, and I am sure that the Secretary of State will recall our debates on the Health Services Bill when it was proposed to amend legislation by regulation. So critical were we on that occasion that the right hon. Gentleman decided to put down amendments on Report to make unnecessary the amendment of legislation by regulation.

There is no possibility of doing that here. There is not time. We are dealing with a provision introduced in another place, and this is the last opportunity that we have to bite at this cherry.

The second factor which is apparent is that, whatever may be said, this legislation is retrospective. That in itself is always highly undesirable.

The third and perhaps the most important factor is that we are being asked to do this without the Government being able to tell the House at all, let alone precisely, what it is they intend to do with the regulation-making power which they ask us to confer upon them. Perhaps I may digress for a moment and remind the House how this comes before us. The Minister was quite frank about it. It comes before us at the last possible moment in the passage of the Bill through Parliament.

The amendment was tabled in another place six days ago, on Friday of last week. It appeared on the Order Paper in another place on Monday. It was debated on Tuesday. The Bill got a Third Reading in another place yesterday, Wednesday. The amendment appeared on our Order Paper this morning, Thursday, and we are now debating it this Thursday afternoon.

Photo of Mr Stan Orme Mr Stan Orme , Salford West

I do not dispute any of the facts. However, as we appear in this Parliament to be in a new period of consultation, I hope that the right hon. Gentleman will acknowledge that he has been fully informed of the Government's proposals and that he has seen both our proposals and the draft. We only proceeded as we did because of the tight time scale of the Bill.

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Redbridge Wanstead and Woodford

The right hon. Gentleman boasts about the amount of consultation. I said that this amendment was tabled in another place on Friday of last week. Does he challenge me when I say that his consultation involved sending me a letter the day before, on the Thursday—

Photo of Mr Stan Orme Mr Stan Orme , Salford West

I spoke to the right hon. Gentleman personally.

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Redbridge Wanstead and Woodford

I agree. The right hon. Gentleman happened to bump into me in the corridor. As a matter of fact, I do not know whether it was a Freudian slip, but the letter which was sent to me was undated. I have not been able to check the date.

Photo of Mr Stan Orme Mr Stan Orme , Salford West

We are getting clever.

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Redbridge Wanstead and Woodford

Furthermore, will the right hon. Gentleman deny that the letter purporting to send me a copy of the amendment did not include the amendment and that it only reached me later—[Interruption.] The right hon. Gentleman may find that amusing, but it is shoddy administration and it is not the first time that we have had occasion to complain about mistakes of this kind by his Department. It does not help him get through contentious legislation when his Department treat right hon. and hon. Members like that. But then the right hon. Gentleman has the effrontery to boast about prior consultation. One day before the amendment went down he sent me a letter explaining what it was about. This is no way to treat Parliament, and we are entitled to express some indignation.

The right hon. Gentleman is entitled to some sympathy, of course. He has been put in an unenviable position arising out of events which occurred when he was occupied elsewhere. But the least that he can do now is try to make amends by explaining a great deal more fully than he has so far what the amendment is about and try to allay the Opposition's anxieties.

The first question to which we need to know the answer is what are the categories of people who will be affected by this retrospective legislation. All we have been told so far—and here again I rely on Lord Wells-Pestell's speech—is that there are certain people with noncontributory incapacity benefits and that there are certain people affected by the phasing-out of the married women's contribution option.

But will it not apply to very much wider categories of people, including many who have simply broken contribution records, people who have earned some years ago and paid contributions, had a long period off work when no contributions were paid—the biggest category here is married women—and have then returned to work and become entitled to claim benefits on the basis of the credited contributions? We need to be told more precisely the ranges of people affected. We must be given some indication of the number and of the circumstances in which they are likely to be affected.

The second question concerns the retrospective effect. I believe that we need to have this very much more clearly defined. The House is always jealous about retrospective legislation—legislation which seeks to change the law retrospectively, or deny entitlement to benefit, or, as in this case, entitlement to credits after the event, thus defeating expectations. The right hon. Gentleman said that this will not affect benefits claimed before 18th March, the date on which this new clause was tabled in the House of Lords. Today is 24th March, only six days later, but I shall be glad if he will confirm that, despite what is said in the clause, it is intended to disallow benefit entitlement where that entitlement arose before the date, even if no formal claim was made.

How will the regulations define the making of a claim? If the entitlement is there, will the simple approach to a benefits clerk behind the counter amount to a claim, or will the claim form particulars need to have been filled out in full before a claim can be allowed if it was made before 18th March? It is clear that, whatever may be said by Ministers, this is a retrospective amendment. I agree that they are seeking to limit the retrospectivity, but they have not succeeded, and part of the purpose of the clause is to effect the savings which would flow if it were not retrospective.

But we need to know the precise point at which it is retrospective. There will be claims that will be defeated on the basis of the retrospective operation of the clause, and we need to know what they will be.

My third point is the most important of all. The Minister must tell us how the limitation that it is intended to include is to be framed. How will it be defined? Will it be defined by the length in the gap between two periods of contribution? If so, what length of gap has the Minister in mind? He has told us that it is the intention to make regulations as soon as may be after the Royal Assent, and I will not accept that he has no idea at present of how he is to achieve this. If it is not the gap between successive contributions, will it depend upon a minimum total level of past contributions? If so, what level? How many contributions will the person need to have made before he avoids the mischief of this clause and the regulations to be made under it?

Perhaps at this point I should draw attention to an interesting exchange in another place. My noble Friend Lord Hawke said: I think the noble Lord is mistaken. A considerable number of these people will be elderly ladies who work part-time. Lord Wells-Pestell replied: If that is so, then it may well be that they have a substantial contributory record behind them, so that if and when they are sick they would be entitled to benefits. We are entitled to know what amounts to a "substantial contributory record" so that they will be entitled to benefits, including, presumably, the benefit of a credit for contributions. If it is not the gap between successive contribution periods, or the level of past contributions, what other test has the Minister in mind to apply as to whether the credits will be available?

The phrase used by the Minister for Social Security himself today was "a not insignificant record of contributions". He implied that it referred to the particular year. Is that the case? Is it the case that there must be a record of contributions in a particular year—the 12 or 24 months, or whatever it may be—before the benefit is claimed? We cannot pass from this clause until we have a clearer idea of how the Government propose to implement their intention of blocking this loophole. With the Bill having progressed so far and being within a few days or a week or two of the Royal Assent, the Government must have some idea of what they are to do.

The right hon. Gentleman did not refer today to it, but could he explain the cryptic statement by Lord Wells-Pestell towards the end of the debate in the other place on 22nd March? The noble Lord said: It is very difficult to introduce a scheme which would produce a great deal more complexity than the existing schemes are producing at the present moment. I think that there must be a misprint there. I know that the Labour Party has a pronounced penchant for producing complex schemes, but I do not think that it is its objective in life to do so. I suspect that in that passage a "not" has been omitted and that the sentence should read, "which would not produce a great deal more complexity than the existing schemes are producing at the present moment."

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Redbridge Wanstead and Woodford

The Under-Secretary of State shakes his head. Perhaps he thinks that I am misinterpreting what Lord Wells-Pestell said.

Photo of Mr Eric Deakins Mr Eric Deakins , Waltham Forest Walthamstow

I think that the right hon. Gentleman is in fact misinterpreting the remarks by Lord Wells-Pestell. Surely what my noble Friend is saying is that the existing social security legislation is so complex that it would be very difficult to devise a new scheme or add to a scheme in a way which would make it even more complex. What we are trying to do is to simplify.

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Redbridge Wanstead and Woodford

If that be the case, it lends point to the next sentence in Lord Wells-Pestell's speech. I said that it was cryptic. He went on: We need to have a deep and close look at the whole benefits system with which we are faced at present."—[Official Report, House of Lords, 22nd March 1977 Vol. 381, c. 397–400.] Is Lord Wells-Pestell saying there that the Government are now proposing a new review of contributory benefits? That is what it seems to imply. If so, the House is entitled to be told rather more about it. Who is to undertake the review? What is meant by a "deep and close look" at the whole benefits system?

We know that an important review is going on, which I have warmly welcomed, arising out of the first annual review of the Supplementary Benefits Commission, produced by Professor Donnison a year ago and published as Command Paper 6615.

4.30 p.m.

Photo of Mr Stan Orme Mr Stan Orme , Salford West

Will the right hon. Gentleman allow me to clear up this point? It is not the Government's intention to have a wide-scale review of contributory benefits at the moment. I am sure that my hon. Friend the noble Lord did not mean to imply that.

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Redbridge Wanstead and Woodford

I think that any of us might be forgiven for thinking that that is what the noble Lord was saying. It may have been one of those sentences that slip out at the end of a speech when one is trying to justify legislation that is difficult to justify, but there it is. We now learn that the Government are not proposing to have a deep and close look at the whole benefits system, notwithstanding the fact that a member of the Government said in another place that they were.

This is part of the pattern of legislation. It will become a great deal more difficult in future. We shall have the right hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) saying that there needs to be a great review of some aspect of Government policy, and we shall have the Minister standing up and saying that it is not the Government's intention to have a review. We can expect a great deal of that sort of confusion to come. Perhaps I am being a little lighthearted.

I have asked a number of serious questions about the amendment and we are entitled to answers, if only for the reason that it was only this morning that any hon. Member could have seen the amendment, unless he had got hold of papers prepared for another place.

Photo of Hon. Robert Boscawen Hon. Robert Boscawen , Wells

I shall make only a brief intervention. I apologise if my voice is not very good today. I feel in need of a non-contributory invalidity benefit myself. I intervene only to say that I find it very worrying when a Government seek regulatory powers regarding the contributory system.

The contributory system is so important that we need to have careful explanations of exactly what the Government are doing and what the implications are. I am as guilty as anyone in the House of having sought to have the contributory system modified in certain cases of individual hardship. We have always done so in cases of hardship involving our constituents but the argument has always gone against us, for the very sound reason that one cannot give way on one or two cases only. If we gave way on one case, we should have to give way on many others.

The contributory principle in the social security system has been sacrosanct. I accept the established benefit system. I therefore feel very strongly that if a Government come to the House to seek regulatory powers, especially retrospective regulatory powers to alter the contributory system, they must explain themselves very carefully. This is an important matter. There are not many hon. Members in the House at present, and perhaps not many hon. Members appreciate the importance of what the Government are doing. No doubt the Minister knows very well that he is interfering, or could be accused of interfering, in a system which has affected people in the past as much as it will do so in the future. Hard decisions have had to be taken in the past, possibly affecting people who are no longer alive. They were decisions which perhaps seemed particularly harsh on some cases at the time.

There is the example of the contributory principle affecting the death grant. Certain groups of people cannot obtain a death grant at all because they are not in the contributory system. I am sure that there is no difference between the two sides of the House on this matter. A clause such as the one we are considering needs a great deal of consideration and explanation. I am considerably worried about it and am uneasy that Ministers could alter the contributory system by regulation in a number of individual cases, which could be most unfair to people who were affected by decisions taken a long time ago.

I know that the Minister will appreciate this. I feel it is right to say this. To affect the contributory principle in any way, particularly by regulations, is a very serious matter.

Photo of Peter Bottomley Peter Bottomley , Greenwich Woolwich West

I feel slightly worried about intervening in the debate, because we are dealing with a complicated matter, and, having gone through the report of the debates in another place, I am almost as confused as I was when I first read the amendment and before I had read the explanations that were given. I shall read one sentence from a speech made by Lord Wells-Pestell: And, finally, there is the need to correct omissions and mistakes in legislation, and to provide firm statutory backing where at present the law appears open to doubt."—[Official Report, House of Lords, 3rd March 1977; Vol. 380, c. 809.] I do not think that the noble Lord was referring specifically to the new clause that we are examining, but the assumption is that they had not found the mistake. Perhaps the Minister will confirm this.

The question of what the Government would have done if the Bill had already passed through this Chamber is one to which the Government should turn their mind. Just because there is an opportunity of tagging this matter on to the Social Security (Miscellaneous Provisions) Bill, it does not mean that the House should, without protest, allow the Government to give power to the Secretary of State which normally he would not be allowed to have. The Government must have turned their mind to the way in which they would deal with this problem. They are lucky to have found time in the other place to put at least some of the debate on record so that we have had a decent opportunity of understanding the problem, even though we have not been able fully to take it up.

I do not know whether Standing Orders allow us to amend the new clause in order that it will take effect for a limited period only, so that the Government can consider the effect of the regulations and decide whether these powers should effectively reside with the Secretary of State for ever under this Bill and give him, as far as I can see, an unlimited amount of power to affect the benefits and contributions with which people may be credited. That is a very serious matter, especially when we do not know what the regulations are. I do not know whether the Department has had time to work out precisely what the regulations would aim to achieve, but it should have done.

If we are to give the Secretary of State this power, it is important to let the House know how the regulations are to work so that we can test their effectiveness. If the problem has been getting legislation through, or amending the 1975 Act quickly so that more claims do not become established—which seems to be the Secretary of State's intention—one presumes that the regulations will be subject to the approval of the House either by negative or affirmative resolution procedure. Or will the regulations go through without the House being able to consider them? If they are not subject to the approval of the House, how can we check that the new clause by itself will not achieve the purpose that the Department is quite rightly trying to achieve.

It is important to know how much the mistake cost. As the noble Lord said, and as many Labour Members have said, if we rush through legislation—as we unfortunately did last year, and as we appear to be doing this year with this clause—we shall let through things that the Government, the Department and the Opposition would not want to see go through.

The cost or the possible cost of the mistake should be put on the record. The Government should also spell out the categories and classifications of those who are at present entitled to what the Government did not intend them to be entitled. This would be a good reminder to all of us of how important it is to get legislation right, especially when dealing with social security provisions and national insurance contributions and benefit provisions which affect virtually every working person, every retired person, and which will affect many people who have not yet started work.

The question of retrospection is important in this case. We have seen enacted retrospective legislation which has affected people's jobs. I do not want to go into the ramifications of the closed shop legislation which is taking away people's livelihoods. Retrospection in circumstances such as these will have a similar effect on people's income, or at least it could, unless we hear from the Minister that that is not so.

Publicity is another issue which must be dealt with. If those who might want to put in claims do not hear clearly how they should put the claims in or in what way they would be accepted a large number of people who may be their advisers or claimants themselves will want to know whether they qualify. This may be a slightly academic point. It might be rather like the case of people getting unemployment pay while on holiday in Spain. While it is a significant political issue is might not affect many people—and in the case I have cited the Government woke up in time.

Photo of Peter Bottomley Peter Bottomley , Greenwich Woolwich West

Yes, sometimes the capitalist Press comes to the aid of the Government, and in that case it stopped the Government providing holidays abroad for those who were receiving benefit.

I should warn the Government that I feel so strongly about this mistake being brought to the attention of the public that I intend to divide the House, if only as a symbolic gesture of what one person can do. The only way to avoid this happening again is to be on the look out for it. I congratulate the person who discovered that the 1975 Act had a loophole, and I feel that a Division might help in driving the point home for the House.

Photo of Mr Stan Orme Mr Stan Orme , Salford West

I am terrified at the hon. Gentleman's threat to divide the House. I shall have to make sure that the Liberals are aware of his intention—

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Redbridge Wanstead and Woodford

Ought not the Minister of State quickly to summon the joint consultative committee under the chairmanship of the Lord President in order to tell it what is to happen?

Photo of Mr Stan Orme Mr Stan Orme , Salford West

I shall not comment further on that point.

The hon. Member for Woolwich, West (Mr. Bottomley) asked about the cost. I can assure him that not to do what we are proposing would cost far more than doing it. The two Front Benches agree that perhaps tens of millions of pounds could go to people who should not be entitled to the money.

I freely acknowledge to the right hon. Member for Wanstead and Woodford (Mr. Jenkin) that a mistake was made. The Government have made no attempt to flannel their way out of that, or to hide the fact. Ministers have to take responsibility for it, and I accept that responsibility on behalf of the Government. We are now trying speedily but democratically to rectify the mistake.

Let me assure the hon. Member for Wells (Mr. Boscawen) that the whole point of the regulations provided for under the clause is to reinforce the contributory principle, not to remove it. We had a slight altercation with the right hon. Member for Wanstead and Woodford and he made his position quite clear. We are not out to undermine that principle.

It is not possible at this stage to give the details of the regulations, and that ties in with the point made by the hon. Member for Woolwich, West. The regulations will be introduced under the negative resolution procedure. The hon. Gentleman will be entitled to pray against them and, if necessary, to force a Division.

The details are still to be settled. I can confirm, however, that they will aim to achieve a restriction on the use to which credits may be put, but that this restriction will be consonant with our original intentions and with the contributory basis of the scheme. For example, credits traditionally awarded with sickness and unemployment will not be limited by the regulations. People with a not insignificant contribution record for a year for which they have been awarded credits will be able to use those credits without restriction.

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Redbridge Wanstead and Woodford

The phrase "not insignificant" is most vague. Does it mean one, three or six months' contributions? We must have some indication of that.

4.45 p.m.

Photo of Mr Stan Orme Mr Stan Orme , Salford West

The intention is to place a limitation on the use of credits which will be appropriate to the nature of the contributory National Insurance Scheme and which will be somewhat closer to the pre-1975 arrangements. Credits already awarded will be allowed to stand for benefit if in the year in which they were awarded a claimant had received a contributory benefit or had paid contributions of a specific amount. The amount to be specified will be contributions on earnings amounting to 13 times the lower earnings limit.

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Redbridge Wanstead and Woodford

This is difficult to follow. I realise that the right hon. Gentleman is doing his best to be helpful in difficult circumstances. He said that in the year in question—and it was implied that benefit had been received in that year—part of the contributions would go towards an entitlement to a long-term benefit. Will the contributions to be credited in the circumstances that the right hon. Gentleman has described count towards the entitlement to the appropriate level of long-term benefit when the person reaches an appropriate age?

Photo of Mr Stan Orme Mr Stan Orme , Salford West

I shall come to the question of sickness, unemployment and retirement in a moment. These are complicated and difficult matters, which I could not pretend to answer without looking at them in greater detail. If my reply does not satisfy the right hon. Gentleman completely I can assure him that in good time and before the regulations are laid I shall set out as clearly as possible what the Government intend to do. He will then be able to raise matters with me before the regulations are brought before the House. I hope that this goes some way towards meeting his point. I think that he has recognised that I am not in any way trying to avoid this matter or deal with it in a slipshod manner. He recognises, however, as I do, that this is a very difficult and complicated matter.

Let me press on with my explanation. Anyone who has worked is likely to have satisfied the first contribution condition, which is a certain number of contributions actually paid in any one year. The second contribution condition is a record of credits or contributions in the last tax year or in a certain number of tax years. This condition can be satisfied on credits alone. Six-months' unemployment or sickness would be enough to give sufficient credits to satisfy the second contribution condition. I hope that that goes some way towards meeting the specific point raised by the right hon. Gentleman.

The total of those affected comprises people who satisfy the first condition and satisfy the second condition on credits alone, but do not have any more orthodox or traditional entitlement to benefit. In particular, there will be many thousands of married women who have not taken employment for a long period. I cannot, therefore, be precise about the numbers involved, because of the difficulties and because we have to look at these matters in some detail when the regulations are presented to the House.

I now want to say something about retrospective credits. Strictly speaking, the provision in the Bill and in the regulations will not restrict entitlement to credits. The intention is to place a limitation in the regulations on the use to which these credits may be put for benefit entitlement. The normal provisions in the claims and payments regulations will apply. I have endeavoured to answer this complex and detailed debate and the important points raised by hon. Members. I hope that we can now accept this amendment.

Photo of Peter Bottomley Peter Bottomley , Greenwich Woolwich West

By leave of the House. I think that the Minister has missed out one or two important points. How would the Secretary of State have dealt with the problem if the Bill had already gone through? I suspect that the answer is that he does not know. Does he need the powers running on or would the new clause be amended in such a way that he would have the powers to deal with this problem without having permanent regulatory powers which were not in the Social Security (Miscellaneous Provisions) Bill?

Photo of Mr Stan Orme Mr Stan Orme , Salford West

The Government would have had to find other legislative time to bring in these proposals. The fact is that we had the Bill at the time, and that is why we took the first occasion to raise this matter. But we would have had to come before the House at some time.

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Redbridge Wanstead and Woodford

I think that the right hon. Gentleman has fairly recognised the complexity of these matters. I say at once, that to use his own words, he has endeavoured to answer our questions. For that we are grateful. But he has left us not much wiser than we were beforehand. He said that there could be large numbers of women who will have worked for a few years before marriage or a year or two after and who then have a long gap while bringing up their families. They then register for work, have a period of sickness and unemployment, and the credits automatically give them entitlement to benefits. We are talking about not just tens of thousands of people but millions.

The Minister of State looks quizzical at that comment. If this provision includes any married woman who has had a break in her contribution record, we are talking about 10 million or 15 million people. This is a wide-ranging clause, which makes it all the more unsatisfactory that it is just six days since it appeared in Parliament. I do not know what time the Vote Office opened this morning, but I collected my copy at 8.30 a.m. That was the first time anyone in the House had the chance to see the clause.

We are entitled to be critical of the Government's legislation. I appreciate their difficulties. The right hon. Gentleman implied—my hon. Friend the Member for Woolwich, West (Mr. Bottomley) made it clear—that if the matter was not dealt with in this Bill it would have been dealt with in some other Bill—perhaps the direct labour legislation or the Scotland and Wales Bill, or some other piece of legislation that will be introduced by the leave and licence of the Liberal Party.

The right hon. Gentleman said that we would not be disentitling anyone from credit but that that person would not get any benefits as a result of the credit. I do not know what value a credit is if it does not entitle a person to benefit. Are we to assume that this is a matter of semantics—that a person will be disentitled to the credit even though it will be put up in a computer somewhere in Newcastle?

Photo of Mr Stan Orme Mr Stan Orme , Salford West

Credits are most important for the retirement pension.

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Redbridge Wanstead and Woodford

This is interesting, because that was exactly the question I asked earlier. The right hon. Gentleman said that he would deal with pensions. I did not hear him say anything about them, but he now mentions them. Are we to understand, therefore, that the purpose of these regulations is to disentitle the claimant to short-term benefits but to allow the credit to stand for the purpose of claiming long-term benefits, retirement benefits or long-term invalidity benefits? We need to know more about this.

There is one group of people for whom credits are more important than for others. They are the people who stay at home to look after elderly relatives. My noble Friend Lord Drumalbyn had two attempts at raising this problem. I shall not quote the first, because it was rather long, but in the second attempt he said: My Lords, could I put it in another way? I am wholly in favour of the contributory system. I think that it ought to be safeguarded. There are in certain circumstances occasions when a person could be treated as having made a notional contribution because of the saving he—or more often she—is making to the State in other ways. There are considerable savings to the State from people looking after parents or relatives at home. Lords Wells-Pestell replied: My Lords, this is so. Then he changed the subject. He said: Later we will deal with the question of the allowances to foster parents in the matter of handicapped children. He went on to say: they are saving the State a considerable amount".—[Official Report, House of Lords, 22nd March 1977; Vol. 381, c. 400.] My noble Friend Lord Drumalbyn got absolutely no answer to his question.

We all know of—because we have all met representatives of that wholly admirable organisation—the National Council for the Single Woman and her Dependants. I was privileged to address its annual meeting about a year ago, in the Grand Committee Room in this House. I have been a great admirer of the Rev. Mary Webster, now deceased, and her successors, who established that important and powerful organisation.

There is a category of people who could well be prejudiced by this clause unless the regulations are drawn much tighter so as to disallow only those whom Parliament could not have had in mind as being entitled to the benefits of the credit contributions when the 1975 Act went through Parliament. This merely reinforces the totally unsatisfactory way in which we are having to deal with this legislation, at such desperately short notice.

I read my noble Friend's question and the inadequate answer. I now have a representation which reached my hon. Friend the Member for Wallasey (Mrs. Chalker) in an urgent letter from the secretary of the All-Party Group for the Disabled, who read the Lords' Report this morning. It was only on Tuesday that these matters were debated in another place. The Secretary of the group is an extremely active young man, and many of us know him. He recognised the importance of this point and made sure that we were entitled to raise it in the debate. We cannot do anything about it. We cannot amend the clause because the Question has already been put.

We cannot even do what my hon. Friend suggested—give the Government a limited power to look at it and return to the House later. We can do none of these things. I accept that there is a great deal of money at stake which Parliament, if attention had been directed to the matter by the Government, would never have dreamed of allowing to slip through the net. For that reason we have to give the Government their new clause. That is a desperately unsatisfactory way of legislating. I hope that the right hon. Gentleman will bring it home to those responsible that Parliament regards this as a disgrace and quite the wrong way to treat important matters of legislation.

Photo of Mr Stan Orme Mr Stan Orme , Salford West

The right hon. Gentleman has asked some specific and searching questions, but his anger is a little synthetic. He is trying to elicit information to which the House is entitled. I shall deal with the points he made about the single person looking after their parents, aged people and so forth.

5.0 p.m.

Credits are awarded to people in receipt of invalid care allowance. The regulations will not affect the use to which those credits can be put. If invalid

care allowance has been provided that will be covered. It is intended that the additional powers given by this Bill should be used to restrict the use of credits for the purpose of sickness benefit, invalidity pension, unemployment benefit and maternity allowance. Retirement and widows' pensions based on the 1975–76 and 1976–77 credits will not be affected.

Question put:

The House divided: Ayes 229, Noes 47.

Division No. 95.]AYES[5.00 p.m.
Abse, LeoForrester, JohnMcDonald, Dr Oonagh
Allaun, FrankFowler, Gerald (The Wrekin)McElhone, Frank
Archer, PeterFraser, John (Lambeth, N'w'd)MacFarquhar, Roderick
Armstrong, ErnestFreeson, ReginaldMacKenzie, Gregor
Atkins, Ronald (Preston N)Freud, ClementMaclennan, Robert
Bagier, Gordon A. T.Garrett, John (Norwich S)Madden, Max
Bain, Mrs MargaretGarrett, W. E. (Wallsend)Magee, Bryan
Barnett, Guy (Greenwich)George, BruceMarks, Kenneth
Barnett, Rt Hon Joel (Heywood)Gilbert, Dr JohnMarshall, Jim (Leicester S)
Bates, AlfGinsburg, DavidMason, Rt Hon Roy
Bean, R. E.Golding, JohnMaynard, Miss Joan
Beith, A. J.Gould, BryanMeacher, Michael
Benn, Rt Hon Anthony WedgwoodGraham, TedMendelson, John
Bennett, Andrew (Stockport N)Grant, George (Morpeth)Mikardo, Ian
Bidwell, SydneyGrimond, Rt Hon J.Millan, Rt Hon Bruce
Bishop, E. S.Grocott, BruceMiller, Dr M. S. (E Kilbride)
Blenkinsop, ArthurHamilton, James (Bothwell)Mitchell, R. C. (Soton, Itchen)
Booth, Rt Hon AlbertHamilton, W. W. (Central Fife)Molloy, William
Bottomley, Rt Hon ArthurHardy, PeterMoonman, Eric
Boyden, James (Bish Auck)Harper, JosephMorris, Charles R. (Openshaw)
Bray, Dr JeremyHarrison, Walter (Wakefield)Morris, Rt Hon J. (Aberavon)
Brown, Hugh D. (Provan)Hart, Rt Hon JudithMoyle, Roland
Brown, Robert C. (Newcastle W)Hatton, FrankMurray, Rt Hon Ronald King
Brown, Ronald (Hackney S)Hayman, Mrs HeleneNewens, Stanley
Buchan, NormanHealey, Rt Hon DenisOgden, Eric
Butler, Mrs Joyce (Wood Green)Heffer, Eric S.Orbach, Maurice
Callaghan, Jim (Middleton & P)Henderson, DouglasOrme, Rt Hon Stanley
Campbell, IanHooley, FrankOvenden, John
Canavan, DennisHoram, JohnOwen, Rt Hon Dr David
Carmichael, NeilHowell, Rt Hon Denis (B'ham, Sm H)Palmer, Arthur
Cartwright, JohnHuckfield, LesPardoe, John
Castle, Rt Hon BarbaraHughes, Rt Hon C. (Anglesey)Park, George
Clemitson, IvorHughes, Mark (Durham)Parker, John
Cocks, Rt Hon MichaelHughes, Robert (Aberdeen N)Parry, Robert
Cohen, StanleyHughes, Roy (Newport)Pavitt, Laurie
Coleman, DonaldHunter, AdamPerry, Ernest
Cook, Robin F. (Edin C)Irvine, Rt Hon Sir A. (Edge Hill)Phipps, Dr Colin
Cowans, HarryIrving, Rt Hon S. (Dartford)Prentice, Rt Hon Reg
Cox, Thomas (Tooting)Jackson, Colin (Brighouse)Prescott, John
Crawshaw, RichardJackson, Miss Margaret (Lincoln)Price, C. (Lewisham W)
Crowther, Stan (Rotherham)Janner, GrevillePrice, William (Rugby)
Cryer, BobJay, Rt Hon DouglasRadice, Giles
Cunningham, G. (Islington S)Jeger, Mrs LenaRees, Rt Hon Merlyn (Leeds S)
Davies, Bryan (Enfield N)Jenkins, Hugh (Putney)Richardson, Miss Jo
Davies, Denzil (Llanelli)John, BrynmorRoderick, Caerwyn
Davis, Clinton (Hackney C)Johnson, Walter (Derby S)Rodgers, George (Chorley)
Deakins, EricJones, Alec (Rhondda)Rooker, J. W.
Dean, Joseph (Leeds West)Jones, Barry (East Flint)Rose, Paul B.
Dell, Rt Hon EdmundJudd, FrankRoss, Stephen (Isle of Wight)
Douglas-Mann, BruceKaufman, GeraldRowlands, Ted
Duffy, A. E. P.Kelley, RichardRyman, John
Dunwoody, Mrs GwynethKerr, RussellSedgemore, Brian
Eadie, AlexKilroy-Silk, RobertShaw, Arnold (Ilford South)
Edwards, Robert (Wolv SE)Kinnock, NeilSheldon, Rt Hon Robert
Ellis, John (Brigg & Scun)Lambie, DavidShore, Rt Hon Peter
English, MichaelLamborn, HarrySilkin, Rt Hon John (Deptford)
Ennals, DavidLamond, JamesSilkin, Rt Hon S. C. (Dulwich)
Evans, Ioan (Aberdare)Latham, Arthur (Paddington)Silverman, Julius
Ewing, Harry (Stirling)Lestor, Miss Joan (Eton & Slough)Skinner, Dennis
Ewing, Mrs Winifred (Moray)Lipton, MarcusSmall, William
Fitch, Alan (Wigan)Luard, EvanSmith, John (N Lanarkshire)
Foot, Rt Hon MichaelLyon, Alexander (York)Snape, Peter
Ford, BenMcCartney, HughSpearing, Nigel
Spriggs, LeslieUrwin, T. W.Willey, Rt Hon Frederick
Stallard, A. W.Varley, Rt Hon Eric G.Williams, Rt Hon Alan (Swansea W)
Steel, Rt Hon DavidWainwright, Edwin (Dearne V)Williams, Alan Lee (Hornch'ch)
Stewart, Rt Hon DonaldWalden, Brian (B'ham, L'dyw'd)Williams, Rt Hon Shirley (Hertford)
Stoddart, DavidWalker, Harold (Doncaster)Wilson, Rt Hon Sir Harold (Huyton)
Strang, GavinWalker, Terry (Kingswood)Wilson, William (Coventry SE)
Strauss, Rt Hon G. R.Ward, MichaelWise, Mrs Audrey
Swain, ThomasWatkins, DavidWoodall, Alec
Taylor, Mrs Ann (Bolton W)Watkinson, JohnWrigglesworth, Ian
Thomas, Jeffrey (Abertillery)Watt, HamishYoung, David (Bolton E)
Thomas, Ron (Bristol NW)Weetch, Ken
Thorpe, Rt Hon Jeremy (N Devon)Wellbeloved, JamesTELLERS FOR THE AYES:
Tomlinson, JohnWhite, James (Pollok)Mr. Joseph Ashton and
Torney, TomWhitehead, PhillipMr. James Tinn.
Tuck, RaphaelWhitlock, William
NOES
Arnold, TomHordern, PeterOsborn, John
Bennett, Sir Frederic (Torbay)Hutchison, Michael ClarkPage, Rt Hon R. Graham (Crosby)
Bennett, Dr Reginald (Fareham)James, DavidRees, Peter (Dover & Deal)
Body, RichardJessel, TobyRees-Davies, W. R.
Brittan, LeonJones, Arthur (Daventry)Rodgers, Sir John (Sevenoaks)
Buck, AntonyLawrence, IvanScott-Hopkins, James
Clarke, Kenneth (Rushcliffe)McNair-Wilson, M. (Newbury)Sinclair, Sir George
Cooke, Robert (Bristol W)Marshall, Michael (Arundel)Smith, Dudley (Warwick)
Cormack, PatrickMates, MichaelTebbit, Norman
Durant. TonyMaxwell-Hyslop, RobinViggers, Peter
Eden, Rt Hon Sir JohnMayhew, PatrickWalker, Rt Hon P. (Worcester)
Eyre, ReginaldMiller, Hal (Bromsgrove)Warren, Kenneth
Fairbairn, NicholasMills, PeterWinterton, Nicholas
Farr, JohnMontgomery, Fergus
Fookes, Miss JanetMorris, Michael (Northampton S)TELLERS FOR THE NOES:
Fry, PeterNewton, TonyMr. Peter Bottemley and
Harvie Anderson, Rt Hon MissOnslow, CranleyMr. Anthony Steen.

Question accordingly agreed to.

Lords amendment agreed to.

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Redbridge Wanstead and Woodford

On a point of order, Mr. Deputy Speaker. I apologise for raising this matter now but no notice has yet been given to the House about how the Government have suggested, or how the Chair has agreed, that the amendments should be grouped. When Amendment No. 1 was moved the Chair indicated that certain amendments would be debated together. I understand that there will be further grouping, and it would be helpful if we could have some indication about this.

More generally, is it not usual, even with Lords amendments, that where a selection is made that involves some grouping, the information should be made available so that we know how the amendments will be taken? Otherwise it is inconvenient for those of us who are trying to grapple with the legislation.

Photo of Mr Myer Galpern Mr Myer Galpern , Glasgow Shettleston

I accept the point. The grouping has not been presented. However, I am willing, if hon. Members do not have these details, to give them to the House now.

Amendment No. 2 will be taken alone, as will Amendment No. 3. Amendment No. 4 will be taken with Amendments Nos. 5, 6, 7 and 16.

Photo of Mr Eric Deakins Mr Eric Deakins , Waltham Forest Walthamstow

On a point of order, Mr. Deputy Speaker. It was the Government's intention that Amendment 16 should be debated separately and only Amendments Nos. 4, 5, 6 and 7 taken together.

Photo of Mr Myer Galpern Mr Myer Galpern , Glasgow Shettleston

I have not received any intimation of that, so perhaps even the Chair is being hoodwinked to some extent.

In that case, Amendment No. 5 will be put formally as will Amendments Nos. 6 and 7. Amendment No. 8 will be called on its own and Amendment No. 9 will be called with Amendments Nos. 11 and 12. Amendment No. 10 will be called separately. Amendments 11 and 12 will then be put formally. Amendment 13 will be called separately, Amendments Nos. 14, 15 and 17 will be put formally, and Amendment No. 16 will be taken alone.

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Redbridge Wanstead and Woodford

I am grateful to you, Mr. Deputy Speaker. That was extremely helpful, and fits logically with the way in which the amendments hang together. I am not clear why the Government are suggesting that Amendment No. 16 should be taken separately, but we are perfectly happy if that is the way the Government want it.