Payments for 1980 and Subsequent Years

Orders of the Day — Pensioners' Payments and Social Security Bill – in the House of Commons at 12:00 am on 29th June 1979.

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Photo of Mr Jeff Rooker Mr Jeff Rooker , Birmingham, Perry Barr 12:00 am, 29th June 1979

I beg to move amendment No. 3, in page 6, line 32, leave out sub-section (3) and insert— (3) The Order shall provide that sections 1 to 3 of this Act are to have effect in relation to the week specified in the order, as if for references to £10 in sections 1(1) and (2) there were substituted references to a larger sum increased by not less than the percentage increase in the pensioners' benefits covered by section 125 of the Social Security Act 1975.".

The First Deputy Chairman:

With this amendment it will be convenient to take amendment No. 4 in page 6, line 34, leave out: and such other matters as he considers relevant".

Photo of Mr Jeff Rooker Mr Jeff Rooker , Birmingham, Perry Barr

What we are talking about here is the future operation of this legislation. The minimum requirement, as far as we are concerned, is that the £10 should at least be raised in line with the general percentage increase that will accrue to pensioners each year on their ordinary pensions, irrespective of how that percentage increase is arrived at. We cannot see why the Government should imply, as was done in the opening speech of the Secretary of State, that there is no commitment on their part to raise the figure of £10 next year, though the right hon. Gentleman has taken the power to do so if he thinks fit.

Over the years from 1972–73 the £10 bonus has become almost worthless. We all know that that is because of inflation. It may be asking a little too much to ask this Government to bring the £10 back to what it was in real terms in 1972–73. It is not something that the previous Government, in their wisdom, did either. However, it is incumbent on the Government to promise that they will, as a minimum, increase the £10 in line with future increases in pensions.

The real problem that we face now, if we are not careful, is that if the bonus remains at £10 there will come a time when the cost of administering it becomes astronomical in proportion. I have taken the trouble to look at the Pensioners Payments and National Insurance Act 1973, when the total cost of paying the bonus was £80 million. It was £80 million because, of course, there were 2 million fewer beneficiaries. The administrative cost of paying the bonus was then only £1 million. The financial memorandum with the present Bill shows a figure of £108 million as the cost of the payments and an administrative cost of £3½ million.

As a percentage of the bonus payment, the cost of administering it—the fat, or waste to which the Minister referred—has risen from 1·2 per cent. to 3·2 per cent. The only reason for that is that in the meantime the wages of civil servants in the Department have risen, but the bonus has not. Wages and cost will continue to rise and it will be a ludicrous position if we reach a point at which it costs £10 million to distribute £108 million—because the number of pensioners will not increase very much. We believe that the Government should come clean on this and at least give an undertaking about the policy that they will operate.

We want to know from the Secretary of State—I do not think that he can brush it off—what the phrase such other matters as he considers relevant means. We can all look at the economic situation and the standard of living that is referred to in the first part of subsection (3). We can go to the Library and look at the statistics to measure what is happening in the economy. We can look at the standard of living, in terms of the cost of living, average earnings, and so on.

We would like to know what other matters the Secretary of State considers relevant. It is a very dangerous phrase. It does not give him as much power as in the "Skinner's Horse" clause about which he talked earlier. I apologise to my hon. Friend the Member for Bolsover (Mr. Skinner). If the Secretary of State chooses, for some reason that is obscure or unannounced, not to increase the bonus when the economic situation or the standard of living in the United Kingdom are crying out for an increase, how are we to argue against such a decision when we do not know the basis on which it is made? People outside the House will not know the basis on which the decision is made.

I do not expect the Minister to give us a precise list. We will not hold him accountable if a factor is missed out. What we should like is some indication of the kind of factors that he will take into account, so that it is on the record for the future and my right hon. and hon. Friends and myself will be able to bring to the House copies of Hansard recording what has been said today in order to hold this Government accountable to the House of Commons.

Photo of Mrs Lynda Chalker Mrs Lynda Chalker , Wallasey

I find the remarks of the hon. Gentleman very interesting. He is worried about the increasing rise of administrative costs, and I share that worry with him. I shall take any sensible steps to reduce the administrative costs, provided it does not harm the people whom we intend should get the benefit. However, from what the hon. Gentleman said I can conclude only one thing, which I am sure he did not mean—that he would have to look at the wages of the people who are responsible for paying the benefit.

Photo of Mrs Lynda Chalker Mrs Lynda Chalker , Wallasey

I am teasing the hon. Gentleman.

Photo of Mr Jeff Rooker Mr Jeff Rooker , Birmingham, Perry Barr

The Government should increase the bonus.

Photo of Mrs Lynda Chalker Mrs Lynda Chalker , Wallasey

I notice that the hon. Gentleman very carefully referred to the time when the bonus was £10 in 73 and only very quietly said afterwards that it remained at £10 in 1974 and in 1977 and 1978.

We, as well as everybody, particularly pensioners, outside the House whose savings were more than halved during the period of office of the last Labour Government, are well aware of the value of £10 now compared with £10 in 1974. We are all well aware of the way in which these benefits lose their value if they are not uprated. The power within this clause is for the Secretary of State to have regard to the economic situation in the United Kingdom, the standard of living in the United Kingdom, and such other matters as he considers relevant. I shall shortly come to the specific clause that is the subject of amendment no. 4.

I know that the intention of the amendment was to make it mandatory for the Secretary of State to increase the amount of the bonus each year in line with the rate of increase in the qualifying benefit, whereas the provision in the Bill that it seeks to replace is permissive only.

First, I repeat what I said in our stand part debate on clause 1. This bonus is not a maintenance bonus. In the view of the Government it is not appropriate for it to be compulsorily operated, though we hope to do it whenever the economy allows.

1.30 p.m.

Clause 4(3), which the hon. Gentleman seeks to delete, gives adequate power for the amount of the bonus to be changed if it is considered appropriate. This Government can be trusted to use that discretion, which the subsection permits, but I remind the hon. Gentleman that the Opposition's track record on increasing the bonus was non-existent. When pressed on previous occasions when in government, the hon. Gentleman's colleagues made very much the same points about the size of the bonus as we, by the economic situation, are forced to make today.

There is a further thing that I must tell the House about amendment No. 3. It is not quite correct. I do not blame the hon. Gentleman for that, because I sympathise with him, having for five years tried to draft amendments to Bills. However, the amendment is technically defective in two ways. This brings me back to something that the hon. Gentleman said. The way in which the amendment is drafted would increase not the £10 but the larger sum. I know exactly what the hon. Gentleman means, but the amendment is not quite correct on that account. More importantly, it takes no account of the fact that not all the qualifying benefits would be increased by the same amount. The hon. Gentleman said that the bonus should be in line with the general percentage increase, irrespective of how it is arrived at.

When the bonus was introduced during the last Government, first by the previous Member for Blackburn, Mrs. Castle and then by the right hon. Member for Norwich, North (Mr. Ennals), one of the attractions of being able to pay it in a year when the economy eased a little was that it was a simple, straightforward payment of a specific sum to everyone on a due date. If we were to incorporate the hon. Gentleman's amendment in the Bill in place of the existing subsection (3) it would be extremely complicated to operate.

In fact, it would be a much more major matter than the hon. Gentleman may have realised. It would make it possible that in some qualifying years some people on benefit would get nothing like the increase that others got. It would not always be slanted so that someone who had small funds and could perhaps make more use of the £10 bonus, or whatever it was then deemed to be, would have the same value from it. It could literally mean a few pence increase for some people, because of the qualifying benefit on which the Christmas bonus is based, and £100, or even more, for others on a different qualifying benefit which gave them entitlement to the Christmas bonus.

It is also probably considered reasonable that the bonus should be rounded up at least to 50p and not to £1, and this amendment would not make that possible without a further amendment. These complications would probably put the cap on the Christmas bonus once and for all. In view of what I have said on that, and what I shall now say about the specific phrase that is the subject of amendment No. 4, I hope that the hon. Gentleman will not seek to press the amendment.

In fact, we took from one of the previous Acts the words and such other matters as he considers relevant", for the simple reason that in 1975, when we debated the Child Benefit Act, it was considered the best way of expressing the matters that the Secretary of State might have to consider. The words appear in section 5(5) of that Act. They were not defined there, and we pressed the previous Government for a definition. They told us that it was to give them that amount of scope to vary if the need arose.

I have nothing more to add today, except to say that in discussing all the social security matters that come before this House I think one must leave it to the Secretary of State, his Ministers and the officials in the Department to see all the arguments for the different competing priorities in the totality of social security expenditure. I can tell the hon. Gentleman that I have never learnt so much as I have done in the last seven or eight weeks about different priorities.

The factors that are more likely to affect any decision are the economic situation and the standard of living. I cannot give greater detail than that to the hon. Gentleman, because there was no greater detail on record when his party was in government, and there can be no more. We must look at the economic situation, the standard of living and the needs of the needy in our community as a whole.

It would hold up the progress of the Bill if the Opposition were to press this amendment. I am quite sure that we all want to see the Christmas bonus paid on time with as little difficulty and additional work—which would mean additional administrative costs—as possible. I therefore hope that the hon. Gentleman will seek leave to withdraw the amendment.

Amendment negatived.

Clause 4 ordered to stand part of the Bill.

Clauses 5 to 8 ordered to stand part of the Bill.

Bill reported, without Amendment.

Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56 (Third Reading), and agreed to.

Bill accordingly read the Third time and passed.