I beg to move, That the Bill be now read a Second time.
This is a short Bill, but I do not doubt that it will be a controversial one. Its primary purpose is to achieve public expenditure savings amounting to £270 million in the financial year 1981–82, rising to £480 million in 1982–83.
A second purpose is to implement the pledge which this party gave at the last election to deal with the payment of supplementary benefit to the families of strikers. As this issue stands a little separate from the other clauses of the Bill, I will deal with it separately towards the end of my speech.
When I spoke in the Budget debate before Easter I explained to the House why it is inescapable that the social security budget must make some contribution to the savings in public expenditure required by the Chancellor. Since 1971 the social security programme has grown three times as fast as national income. Ten years ago it accounted for 17 per cent. of public expenditure. Now it is about 27 per cent. In the difficult years that lie ahead when the gross domestic product is projected to grow at only 1 per cent. per annum, it must be clear to the vast majority of people that social security spending could not possibly continue to grow unchecked. Yet, at the same time, this Government, like their predecessors, have a duty to protect those least able to protect themselves. In particular, we will ensure that retirement pensions are protected against rising prices, that needy families with children are given extra help through family income supplement and the child benefit addition for lone parents, and that the safety net below which none shall fall is maintained intact and fully price protected.
Given these commitments and given the fact, which no one on either side of the House will wish to dispute, that the overwhelming majority of social security benefits are paid to people properly entitled to them, the House will see that it has not been easy to identify scope for savings.
The savings for which this Bill makes provision, therefore, fall under three main heads. First, there are the benefits that ought to be taxed but are not. We propose that pending the introduction of proper taxation it would be right to go for an interim scheme providing for a limited uprating of the benefits next November.
Secondly, if the highest obligation is to maintain the value of benefits for those most in need, it follows that where benefits are paid to people higher up the income scale these have a lesser priority. Under this head, therefore, we propose, first, the reduction and then the abolition of earnings related supplement, the temporary freezing of the earnings limit for pensioners, and abating the amount of unemployment benefit for those who have retired on occupational pensions.
Thirdly, where existing rules have been found over time to lead to abuse and to people becoming eligible for benefits in circumstances that the House never intended, we are taking steps to tighten up the rules. Into this category fall the provisions of clause 3, amending the linking rules as they apply to unemployment, sickness and other short-term benefits.
Although, of course, objections can be and no doubt will be put forcibly to each of these changes, it really is a travesty to suggest, as the right hon. Member for Salford, West (Mr. Orme) suggested in the Budget debate two weeks ago, that these changes seriously threaten the concept of Beveridge's Welfare State. That is an absurd charge and it reflects a total lack of proportion on the part of those who make it. The social security budget, even after the savings to be achieved by this Bill, will still be growing at an annual rate, in real terms, of 2 per cent. I do not think that Lord Beveridge would complain about that.
I have only just started. Perhaps the House will allow me to continue.
It is also, if I may say this to the right hon. Member for Salford, West, a very short-sighted argument. We all of us, in whatever part of the House we sit, share a genuine and common desire, in Disraeli's famous phrase:
to elevate the condition of the people".
We all want to see better provision for the elderly, for the disabled, and for the sick. We all want to see a return to full employment, with decently paid productive jobs for those who seek them.
It is a real achievement—for which both parties can take credit—that the harsh, grinding poverty that disfigured the 1920s and 1930s has gone, but that achievement must not let us forget those in our society who are still in real need. On the other hand, I must make it clear that I certainly do not accept Professor Peter Townsend's theory of relative poverty. He defines poverty in such a way that by his test the poor will always be with us, however well off they become. That, too, is absurd. We really do not need to argue that absurd proposition in order to recognise the continuing need for effective social services.
The reason why, a moment ago, I criticised the right hon. Gentleman's attack was that he should know better than almost anyone else in the House, as he held a job in Government in this Department. It is just not possible to spend more on the social services without first earning the money to pay for them.
By far the biggest influence on reducing poverty—I said this over and over again in opposition—is an economy that generates more resources, creates more jobs, yields more taxation at lower rates, and does all these things not just for a few months but for year after year, continuously. Our Common Market partners can afford better health services, higher pensions, and better care for the disabled, not because they have tenderer social consciences but because their economies have produced the resources to pay for them.
Is the right hon. Gentleman arguing that in fact the measures that he is proposing in this Bill, particularly those affecting the benefits of the unemployed, invalidity benefits, and so on, will help to strengthen the economy of this country? Is it not true that he is trying to pay for the additional benefits for the rich?
The right hon. Gentleman must really begin to understand that there are two main thrusts to the Government's policy here. One is to restore balance to the economy by reducing the public sector borrowing requirement by reducing public expenditure, and the second is to try to get the economy moving through the restoration of incentives. Of course it makes a difficult presentational case when we are having to do both these things at the same time, but they are two sides of the same coin, and it is because the Labour Party has never understood that every time they have been in government they have failed.
Unless we can restore our economic fortunes we shall not be able to match the achievements of our Common Market partners. Right at the heart of the battle to restore prosperity is the need to reduce the gap between what the Government spend and the revenue that comes in. Unless we get that right, nothing else will come right. Of course, a great deal else has to be done as well, but reducing the public sector borrowing requirement is a condition of the achievement of everything else. There is no secure future for the social services, as I said in the Budget debate, if we go on paying more in interest on borrowing than we pay in retirement pensions.
If the right hon. Gentleman is right that the Government have earnestly tried to strike a balance between different people's interests, why is it necessary to do the things in this Bill, on which, as the right hon. Gentleman well knows, he personally is standing on his head, when at the same time there have been massive tax cuts and there has been, for example, something like a 25 per cent. rise in the threshold for parental contributions to student grants? Why is it possible to have a 25 per cent. rise on that and only 15 per cent., or much under that, on the things dealt with in this Bill?
These are immensely difficult judgments for Governments to make when weighing the merits of the different elements of the expenditure programme and of taxation. As I explained a moment ago to the right hon. Member for Norwich, North (Mr. Ennals), it really is not inconsistent for a Government seeking to bring the economy into balance by bringing down the public sector borrowing requirement at the same time to seek to re-establish incentives so that we can get the growth in production on which everything else depends. That is absolutely crucial, and it is because people in the Labour Party like the hon. Member for Fife, Central (Mr. Hamilton), who consistently parade their prejudice against tax cuts, have brought such influence to bear on their Front Bench that the Labour Party have never been able to understand this argument and have never been able to get the economy moving.
The Government put forward this Bill not as an exercise in masochism or because we are hell-bent to destroy the Welfare State. That is a travesty. We do it because we have a consistent, coherent economic strategy to bring inflation under control and to restore the balance in our economy. It is this that will make it possible for us once again to reach the faster economic growth on which alone depends production of the resources to finance the Welfare State. Therefore, the Bill is an integral part of the Budget strategy and it is on that basis that I put it forward.
Would my right hon. Friend confirm that the social security expenditure constraints in this Bill do not cover every field and that whether we take the Donnison argument, the relative poverty argument, or the absolute poverty argument, we are still left with the fact that in November child benefits will be over 9 per cent. lower than they were in April 1979, and that they would need to be increased by 30 per cent. to give the same level of child support as in 1955?
My hon. Friend knows that I understand and have a lot of sympathy with the view that he has put over the months; he has been very consistent in the argument about child benefits. But, at the risk of boring the House, I must make two points about the increase in child benefit announced by my right hon. and learned Friend the Chancellor of the Exchequer. The first is that the annual rate of increase from April 1979 to November 1980, of 11 per cent., is exactly in line with the effective annual rate of increase in the personal allowances for taxation. The second point that I make is that if we look at the position as it will be in November 1980 and compare it with what family allowances and the child tax allowances were in the last full year, 1977, revalued in line with the Rooker/Wise formula, we see that there is no doubt that a great many families will be significantly better off than if they had stayed with the old system. [Interruption.] With respect, it is right. I quoted the figures in my Budget speech.
Clause 1 provides for the limited up-rating of certain benefits. The payments affected are those that by common consent ought to be treated as part of taxable income—just like, for instance, retirement pensions, widows' pensions and other comaparable long-term benefits.
This question has been put in the House before and we did not get a clear answer then. Is it the intention of the Government, when we do come to a taxation system in this field—proper taxation, as the very learned Gentleman called it earlier on—that the 5 per cent. shortfall that we are now going to get should be restored?
That will be an option that is open to any Government at the time, but no Government can possibly give a categorical assurance on that two years in advance. That matter has to be judged in the light of the economic circumstances, the public sector borrowing requirement, and all the other factors that determine these things.
The case for taxing these benefits now hardly needs to be argued. It is now widely accepted. As I pointed out during the Budget debate, the previous Government and the right hon. Member for Salford, West committed themselves to this in principle. I also quoted the speech of the former Financial Secretary to the Treasury, the right hon. Member for Ashton-under-Lyne (Mr. Sheldon)—when he said
not only do I agree with the taxation of short-term benefits, but I think that everyone
who has ever been concerned with these problems has agreed with it."—[Official Report, Standing Committee D, 23 June 1977; c. 1182.]
As the right hon. Member for Salford, West made clear in his letter to me from which I quoted, the problem has always been the administrative complications and the numbers of staff needed to apply PAYE.
Having campaigned for many years to have all benefits made taxable, I wonder whether my right hon. Friend will agree with me that there is a very great difference between making benefits taxable and actually taxing benefits. Surely it makes sense to raise the tax threshold well clear of all benefits so that tax is not actually taken from benefits.
The point is—as my hon. Friend has been assiduous in pressing on his Front Bench for many years, for which I warmly commend him—that if somebody is out of work for part of the year and his earnings are subject to tax, whatever the tax threshold, and quite apart from the level of benefit, the benefit that is paid when he is out of work should be treated as part of his taxable income. I do not think that there is any argument about that.
I understand that, but would the right hon. Gentleman not concede that this is not taxation, and that some of the people who are going to lose this 5 per cent. are the poorest and would not be paying tax in any case?
The right hon. Gentleman will not be surprised to learn that I shall be dealing with that. It is a point that has been made perfectly clear in a number of communications to the Government since the Budget.
Still dealing with taxation, the benefits affected by this taxation proposal will be sickness, injury, maternity allowance, unemployment and invalidity benefit. The yield from taxing these benefits will be about £450 million a year. Taxation is essential as one of the steps to deal with the "why work" syndrome. It is the non-taxability particularly of sickness and unemployment benefit, coupled with low tax thresholds, which has been the principal reason for people finding theselves better off if they are out of work for part of the year.
Invalidity benefit is a long-term benefit, but it too has not been taxed. This was explained in the last Parliament by the right hon. Member for Ashton-Under-Lyne, the then Financial Secretary to the Treasury. My hon. Friend the Member for Eastleigh (Mr. Price) had asked the Chancellor of the Exchequer
why, among contributory benefits, sickness and invalidity benefits are tax-free but the retirement pension is not".
The right hon. Member for Ashton-Under-Lyne replied:
Sickness benefit which should in principle be taxable, is exempted because of the practical difficulties of collecting tax on short-term benefits. Invalidity benefit, which is payable when entitlement to sickness benefit runs out, is exempted because it would give rise to anomolies if it were treated differently from sickness benefit".—[Official Report, 26 May 1978; Vol. 950, c. 742.]
If sickness benefit were taxed, the logic is that invalidity benefit should be taxed as well. Hon. and right hon. Gentlemen on the Opposition Benches cannot have it both ways. Not taxing invalidity benefit also creates anomalies. When people reach retirement age and exchange the untaxed invalidity benefit for the taxed retirement pension, many find themselves worse off. This has resulted in people opting to continue on invalidity benefit after reaching retirement age simply to avoid tax. That is something that the House surely never envisaged.
Hitherto I have been talking about proper taxation. But taxation in 1982 is two years away, and the Government have decided that we must start, next November, with an interim scheme in lieu of taxation. The proposal is that these untaxed benefits should be uprated by five percentage points less than the uprating applicable to the taxed long-term benefits. The limited uprating as well as covering the main benefits I have mentioned will cover also the increases for adult dependants paid with these benefits, but not the increases paid for children.
The effect will be to reduce the uprating by 90p for a single person and £1·50 for a married couple; in the case of invalidity benefit, which of course is at a higher rate, the reduction will be up to £1·40 for a single person with the maximum invalidity allowance, and up to £2·10 for a married couple. The yield from this change will be about £130 million net in a full year.
The clause applies directly to the up-rating next November; but power is being taken to repeat the 5 per cent. provision by affirmative resolution in either or both of the 1981 and 1982 upratings. Of course—I make this absolutely clear—no decision on the future years has been made, and any exercise of the power would depend upon the economic circumstances at the time.
I come to the point which the hon. Member for Birkenhead (Mr. Field) has been shouting about from a sedentary position. I stress that this is an interim measure, and there are two important points to be borne in mind. First, the yield from the interim measure at about £130 million or £140 million in a full year is less than one-third of the yield from proper taxation which is about £450 million so that it will have a markedly less overall effect on beneficiaries than the taxation to which both sides of the House are committed in principle. Second, for most people the effect of the 1982 tax proposals will be to abolish or at least greatly reduce PAYE refunds which they will receive when unemployed. The Bill will have no effect on eligibility for tax refunds.
If the right hon. Gentleman is concerned about the safety net, he should be concerned about individual problems rather than the overall picture. He is saying that some people will suffer far more under these proposals than they would if he were carrying out genuine taxation.
No doubt if the hon. Gentleman catches Mr. Speaker's eye he will be able to make that point. He answered his own question by referring to the safety net. The safety net—the short-term supplementary benefit rate—is being fully maintained and fully price protected. That is the guarantee, that no one shall be allowed to fall below the level of the safety net.
The right hon. Gentleman has made quite a point of saying that this is an interim device that the Government are putting forward. He has said that the net product is only about £150 million. Have the Government considered the alternative interim arrangement which I put forward three years ago, which would have produced as much revenue as would taxation of the benefits but with an expenditure of about £50 million on staff? That would have meant a net benefit of between £350 million and £400 million. It would not have meant reducing the benefit at the time it was needed but would have got rid of the tax refund, which is what we all object to.
The hon. Gentleman put forward a scheme which I remember describing at the time as very ingenious and attractive. He has indicated what seems to me to be the major difficulty, which is that it is very staff-intensive.
What we hope to achieve in 1982 as a result of the work done by my right hon. and noble Friend Lord Cockfield and others is effectively to tax under the PAYE system these short-term benefits, with a tiny fraction of the additional staff which previous Governments had thought necessary, by making use of computers and other machinery of that sort. It is worth waiting until 1982 to do it properly, but I maintain that in the economic circumstances of the time we must have an interim scheme in the meantime.
I come to clause 2, which I can deal with more briefly. It freezes the earnings limit for retirement pensioners at £52.
The right hon. Gentleman says "Oh dear", but he and his hon. Friends resisted in debate after debate increases in the earnings limit. It is now £52, and it remains the Government's firm commitment to get rid of the earnings rule as soon as resources allow. At a time when other people are having to accept cuts in the social security budget it does not seem right to proceed with the automatic increase of the earnings limit, which, by definition, would be of value to pensioners with significant earnings in addition to their pensions. I gave the commitment to phase out the earnings rule during the period of this Parliament but this would not be justified in view of the present difficulties we face and the size of the public sector borrowing requirement which it was discovered after the election was infinitely greater than the right hon. Member for Leeds, East (Mr. Healey) had ever let on before the election.
We are continuing to examine the cost of abolishing the rule. The assumptions on which the previous estimates of cost were based have been reworked in the light of later information, and we are now satisfied that the cost of eventually abolishing the earnings rule would be significantly lower than it would have been on the basis of the assumptions made by our predecessors. Nevertheless, there still will be a cost, as there would be a cost of raising the earnings limit, and at the present time we do not believe this would be justified.
Clause 3, which is intended to come into effect in September, amends the definition of a period of interruption of employment in section 17 of the Social Security Act 1975 and makes two changes. The first change is that fewer than four consecutive days of incapacity for work will not constitute a period of interruption of employment for the purposes of the Act. The second change is that any two periods of interruption of employment, whether they are periods of unemployment or incapacity, will not link to form one period of interruption of employment if they are separated by a period of more than six weeks.
The effect of the first change will be to cut out payment for very short spells of incapacity. Most people do not qualify at present because of the normal three waiting days rule. But if a period of sickness or unemployment lasting three days, or less, links with another period of interruption, then benefit is paid for the full period off work. The change we propose is that the periods of three days or less should not link and therefore not qualify for benefit which should become payable only if the period lasts four days or more.
The truth is that the vast majority of people in this country are perfectly capable of sustaining short periods off work out of their own resources. At present, there are over half a million claims a year for these short spells—half a million claims to pay out £2 million of benefit. There are clearly significant administrative savings here. Moreover, this change goes a long way to meet the medical profession's long-standing objections to signing sick certificates covering just a few days incapacity.
The switch from 13 weeks to six weeks as the linking period, as well as saving some £20 million in a full year, will help to stop the anomaly of people becoming eligible for invalidity benefit as a result of a series of short periods off work which, because they can at present be linked, can eventually lead to eligibility for the higher invalidity benefit rate. It is clear that this was never intended by Parliament and the clause will deal with it.
For the unemployed, on the other hand the clause will help those who suffer frequent spells of unemployment. Under the clause, such a person would need only a gap of six weeks and one day between spells of unemployment in order to start a new period and so begin a new 312 days of unemployment benefit. I should point out, however, that when someone has used up his 312 days the requalification period for unemployment benefit remains at 13 weeks, and the clause does not, of course, affect the 13 week link-up period for the supplementary benefit long-term scale rate.
Clause 4 of the Bill provides for the reduction and eventual abolition of the earnings-related supplement which, at present, is added to unemployment benefit, sickness benefit, maternity allowance and the widows' allowance. This may seem a drastic step [HON. MEMBERS: "It is".] But the fact is that successive Governments, particularly in the last 10 years, have allowed the real value of ERS to decline. For instance, between 1972 and 1979, the real value of ERS paid with unemployment benefit has declined by 28 per cent. At the same time, because there has been a growth of increasingly generous occupational sick pay schemes, the case for ERS paid with sickness benefit is much less than it used to be. We estimate that over 80 per cent. of all full-time employees are covered by a sick pay scheme of some kind.
I must press on with my speech. I hope that the right hon. Gentleman will forgive me.
For the unemployed, only about one-third of expenditure on ERS goes to them, and redundancy payments are now a great deal higher in many cases than they were when ERS was first introduced.
The right hon. Member for Llanelli (Mr. Davies), in the Budget debate, demanded to know the effect of this measure on redundant steel workers in Port Talbot. We remember the fun that the right hon. Gentleman had with my right hon. and learned Friend the Chancellor. In fact, as exploratory talks between management and union teams were adjourned only last week, as reported in The Guardian today, it would be wrong of me to say anything which might affect those negotiations. On a more general basis, however, I can tell him that all British Steel Corporation employees receive a 50 per cent. supplement to the statutory redundancy pay, and the average statutory redundancy payment to workers in all industries in 1979 was £874.
Moreover, the British Steel Corporation has, in particular cases, negotiated with the steel unions some very large amounts of severance pay over and above the statutory level. At East Moors, payments averaged £3,500 per man; at Glengarnock in Scotland, payments averaged £2,100 per man; and at Bilston, payments averaging £3,900 per man and at Shotton, payments averaging £4,900 per man were negotiated. I have no doubt that those at Port Talbot will be looking at these figures.
In the Budget debate, the right hon. Member for Salford, West argued that ending ERS was a breach of contract. With great respect, that is just not so. As the right hon. Gentleman knows, the national insurance system is funded on a pay-as-you-go basis. Contributions for the current year, 1980–81, were set by the House last December to cover the benefits payable in 1980–81. That is what is meant by pay-as-you-go. When the contributions come to be set for the year in which ERS is abolished, that will be taken into account in fixing the level of contributions for that year.
I have to tell the right hon. Gentleman that if the system as seemed to be implied by his criticism was a proper insurance system, either the contributions would have had to be much higher or the benefits very much lower. On a pay-as-you-go system, it cannot be said that there is any breach of contract.
I must press on. Because the safety net is to be fully price protected, we shall naturally expect the combined effect of this clause on ERS and of clause 1 to increase entitlement to supplementary benefit. The reduction of ERS in January 1981 and the effect of clause 1 will be to add some 30,000 supplementary benefit claimants and the abolition of ERS will add a further 80,000, making a total of an additional 110,000 claimants for supplementary benefit. This represents an increase of less than 4 per cent. in the numbers claiming supplementary benefit at present.
The savings from the reduction of ERS from January 1981 will be about £65 million in the calendar year. Abolition will save some £360 million, offset by supplementary payments of £5 million and £75 million respectively at current benefit rates.
Clause 5 of the Bill deals with the entitlement of occupational pensioners to unemployment benefit. It provides for the abatement from April 1981 of payments paid to pensioners aged 60 or over who are getting an occupational pension of over £35 a week. For unemployment benefit to be extinguished, a single man on flat rate benefit will have to have an occupational pension next year of £55·70 a week and for a married man this would be £66·40 a week.
This is the fourth occasion in which Governments have brought forward a proposal to make this change, two by each party. On each previous occasion, the House has rejected it for what seemed at the time to be good and valid reasons.
Indeed; I said so when I made my speech and made my statement the day after the Budget. I have spoken and voted against this proposal. I believe now, in the new circumstances in which we find ourselves, that it is right that the House should be asked to look at this again. Unemployment benefit is intended for unexpected and unforeseeable contingencies. It really cannot be said that retirement at the end of a pensionable career—this clause applies to people over 60 years of age—constitutes "unemployment" in the accepted sense of the word.
When the right hon. Members for Norwich, North and for Salford, West sought to introduce this in 1977, I argued that further efforts should be made to make the availability-for-work rule more effective. Naturally, before deciding to come forward with clause 5 of the Bill I looked at this very closely indeed. The fact is that the only effective way of testing availability for work is to offer a man a job. As the House will recognise, job opportunities for occupational pensioners have always been scarce, partly because of a shortage of suitable vacancies and partly because many pensioners move to retirement areas where jobs are scarcer anyway.
When the National Insurance Advisory Committee considered this question back in 1967, it argued that the only way to make the availability condition effective would be to require pensioners to take employment anywhere in the country but this, of course, would not be acceptable or workable. It concluded that there was no satisfactory way of enforcing the availability rule for these pensioners. That remains the position today.
I can tell the House that a recent survey found that over half of unemployed men with occupational pensions of a size to be affected by this change admitted that they were not actually looking for work. Yet the cost of paying unemployment benefit for people with significant pensions is no less than £25 million a year. In today's conditions, I do not regard that as a sensible use of money. A similar view is taken in West Germany and in France where unemployment benefit cannot be paid to a person in receipt of an occupational pension because such a person is deemed to be outside the labour market. It is sometimes said that pensioners—and I know that a number of my hon. Friends are worried about this—claim unemployment benefit only in order to secure eligibility for the retirement pension payable at 65. However, contribution credits do not depend upon drawing benefit. People can and do claim credits for unemployment, although they receive no benefit. The change in the Bill will leave entitlement to unemployment credits unimpaired.
That is right; but they do not receive benefit. A pensioner who already has a substantial occupational pension should not, in addition, be entitled to unemployment benefit.
I hope that this time round the House will recognise that the change we are proposing is indeed fair. I shall quote the right hon. Member for Norwich, North; I hope that it will not embarrass him. He said.
The people we are talking about have been in employment and have retired. The vast proportion knew that they would retire at that age, and they have an occupational pension which was designed for retirement at that age."—[Official Report, 2 December 1976; Vol. 921, col. 1189.]
I agree with that. It really is a misuse of language to describe such people as "unemployed".
The speech that I made then was absolutely right. I shall support the Secretary of State in this particular part of the Bill. However, he was totally opposed to it. He and his colleagues ensured that the measure which he now says is reasonable was not passed. How far can one take hypocrisy?
As the right hon. Gentleman made clear in the debates, he had never sat on the Opposition Benches. He had never been faced with opposing a proposal which he subsequently introduced. That is what he is doing now. He intends to oppose a proposal which he made when in government.
Clauses 1 to 5 all have the effect of reducing the prospective growth of the social security programme. As one looks around the world, one can see that other countries have faced the difficult decision to reduce benefits as part of their retrenchment measures. In particular, Holland, West Germany, Canada and Australia have introduced cuts in benefit increases as part of their public expenditure savings. Yet, even after these reductions, our social security programme will still be growing at 2 per cent. a year in real terms.
I come to clause 6, which deals with the supplementary benefit for strikers' families. Although the clause looks complicated, its intention is simple and straightforward. It is to reduce by £12 a striker's existing entitlement to supplementary benefit for his family.
Contrary to much of the comment in the House and in the press, this is not done by a "deeming" provision but by a straightforward reduction in the amount to be paid. It applies to trade unionists and non-unionists alike, and it applies to anyone who is out of work as a result of his involvement in a trade dispute at his place of employment. The reduction will be matched by a corresponding disregard of strike pay received by the man up to the £12 level. That is logical. The clause also removes the disregard of the first £4 of a tax refund, but the disregard of wives' earnings at £4 and of the striker's own earnings from any part-time work—£2 at present, £4 from next November—remain.
I have always understood that, when the national assistance scheme was established in 1948, there was an understanding between the Government of the day and the TUC that unions would not expect to have resort to national assistance in the event of trade disputes. Certain it is that for many years after 1948 the amount of national assistance paid to the families of strikers was utterly insignificant. However, after the change in the scheme in 1966 which replaced discretion with a legal entitlement to supplementary benefit, the position changed pretty dramatically. Although there was nothing in that Act which in practice affected the position of strikers' families, there is no doubt that from then on it became regarded as acceptable and proper for those on strike to have recourse to supplementary benefits if they were otherwise eligible.
Of course, in the vast majority of strikes, the issue never arises because the strike lasts less than two weeks and the final wages are taken to cover that period. I recognise that even in strikes that go on longer than that, supplementary benefit is not the principal means of support. Figures have been published both by the Engineering Employers' Federation and by the British Institute of Management showing that other means of support such as wives' earnings, savings, postponing the payment of rent and rates and other debts, these constitute for most strikers the way that they get by during a strike.
Yet in a number of strikes which have done great damage to the economy the amounts paid out by way of supplementary benefit have been substantial. In the 1971 Post Office strike, the unions paid no strike pay but over £3 million was paid out in supplementary benefit. In the building strike in 1972 over £1 million was paid out by the taxpayer, yet the Union of Construction, Allied Trades and Technicians had assets of over £2 million and the Transport and General Workers Union over £20 million.
In the miners' strike in 1972, £5½ million was paid out in supplementary benefit and the union paid no strike pay at all. Nor did the NUM pay strike pay in 1974 when over £4 million was paid by the taxpayer. In the firemen's strike in 1977, £1¼ million was paid out in supplementary benefit. The union paid no strike pay despite having assets of over £1 million. In the Ford strike in 1978 the unions paid strike pay but nevertheless over £1¼ million was paid out in supplementary benefit. Yet the combined assets of the unions involved were worth over £85 million.
In the road haulage dispute in 1979, the Transport and General Workers Union paid only £6 a week strike pay despite having assets of £37 million. Nevertheless, £500,000 was paid out as supplementary benefit. As the House knows in the recent steel strike, the two main unions involved—ISTC and the blastfurnacemen—paid no strike pay at all despite having assets of over £11 million. In that case, the taxpayers had to find over £9 million for strikers' families.
Given these figures—and I have only quoted half a dozen of the major instances—it is hardly surprising that there has been a rising tide of criticism of successive Governments for allowing this state of affairs to continue. Many of the strikes have been directed not so much at private employers but at the public itself. In these circumstances, it really is unacceptable that the public should have to find such substantial sums to finance the strikes. One result is that unions which should be regarded as the main source of help for strikers and their families are able to use their funds for other purposes—to finance flying pickets and demonstrations. The time has come to put this right, and clause 6 achieves that.
Nowhere in the world does the striker and his family qualify for social assistance more readily than in this country. Assistance in most countries is paid only in the most exceptional circumstances or where there is particular hardship. In many countries, such payment would normally be in the form of a loan. In this country supplementary benefit paid after return to work is in the form of a loan, but the House will know that securing the repayment of these loans is sometimes a cause of difficulty and acrimony.
No, the right source of support for strikers and their families is their unions. The Bill does not seek to impose a direct obligation on the unions, but the implications of the clause are clear. A man who decides to go on strike must be presumed to have made provision to cover most of his family's needs either by membership of a union or by having set aside sums for this purpose.
The Opposition claim that the Bill treats strikers' families worse than those of murderers and rapists. If I may say so, that is a ridiculous argument. There is a vast difference between someone who is removed from his family by due process of law, often for months or years, and someone who voluntarily decides to cease work for a period that may be only a few weeks.
Some will argue that we have not gone far enough. Why stop at £12? I understand that argument. Twelve pounds compares with an average benefit payment of £17·40 to strikers with dependants last year. In the steel strike the average payment was around £22 per week. It is estimated that if this clause had been law during the recent steel strike the amount paid out in supplementary benefit would have been about halved. The clause makes provision, in subsection (2), for an automatic increase of the sum of £12 in line with prices.
The clause also deals with hardship.
While clause 6(1)(c) precludes the making of urgent need payments to strikers and their families, power is being taken to make regulations to define the circumstances in which special hardship payments may still be payable. Of course, events creating hardship right outside the strike such as fire, flood or similar disaster will still qualify for relief under the normal rules.
Bearing in mind the particular severity—even if justified—of these measures, can my right hon. Friend say what specific measures would be available to him, under the subsection, if a non-unionist was obliged against his will to go into a strike as a result of a union decision and had, consequently, to suffer the same hardship as trade union members?
I understand the anxieties of my hon. Friend the Member for Harrow, East (Mr. Dykes), but it would be impossible for clerks at social security office counters to try to draw a distinction between a willing and an unwilling striker. That would impose an impossible burden upon the clerks. The only way—as has been the case for years in relation to entitlement to unemployment benefit—is to ask whether a man is out of work due to an industrial dispute in which he has an interest. If that is the position, the rules must apply. However, I can tell my hon. Friend that the powers in the Bill will enable the Government to make regulations to take account of the anxieties that he has expressed.
I resist the temptation to answer the hon. Member for Fife, Central (Mr. Hamilton) on behalf of my right hon. Friend, but will my right hon. Friend give some further reassurance to the House at this stage, though I appreciate that there are stages of the Bill yet to be discussed? In cases where non-unionists would suffer unjustly as a result of decisions that were beyond their competence, will my right hon. Friend say that their families will not suffer?
I cannot give my hon. Friend the precise assurance that he seeks. It would not be possible to exempt from the £12 reduction non-union strikers placed in the circumstances that he has described. The clause applies across the board to those who absent themselves from work as a result of an industrial dispute. However, the Bill provides power for the Government to make regulations which enable the Government to deal with cases of special hardship. As I said at the outset—
A lock-out is an industrial dispute, and there have been far fewer lock-outs than there have been strikes. There is no way in which anybody can determine the rights and wrongs in a particular industrial dispute so as to draw a distinction as to where the merits lie.
The Government were elected, among other things, to restore a fairer bargaining balance between employers—public and private—and trade unions. Clause 6 represents one of the steps taken to that end. The effect is to fix responsibility for the support of strikers' families where it rightly belongs, namely, upon the unions which call the strikes in the first instance. That is what the country has demanded, and that is what we are now doing.
My right hon. and learned Friend's Budget has been widely commended as realistic and fair. The Budget is realistic in that it spells out in a way never done before the medium term financial strategy, and does so on the basis of realistic assumptions about economic growth. The projections for the money supply and the PSBR are crucial to this strategy and they in turn depend on our reducing public spending as spelt out in the public expenditure White Paper.
This Bill is an essential instrument to help cut public spending. As such it is an integral part of the Budget strategy approved by Parliament before Easter, and I commend it to the House.
The House is faced with the Social Security (No. 2) Bill before the first Social Security Bill has gone through the House of Lords and returned to this Chamber. As the Secretary of State knows, this Bill amends certain clauses that have been passed by the House on behalf of the Government in the original Bill. We shall deal with that point during our discussions.
This is an extraordinary Bill. In recent times no Government have introduced a Bill that comes anywhere near the diabolical proposals in this legislation. The Bill takes away people's rights. It reduces and abolishes benefit, and it breaches the national insurance principle. At the very minimum, the Bill will put at least 110,000 people on supplementary benefit and a further 1,000 civil servants will be required to administer its provisions.
The long title of the Bill emphasises my point. In my time in the House I have never before seen a long title which says bluntly that the purpose of the measure is to
Amend the law relating to social security for the purpose of reducing or abolishing certain benefits and of relaxing or abolishing certain duties to increase sums.
The Bill takes away benefits and from beginning to end wipes out proposals accepted in the past by both parties concerning social security.
The Bill spells out the price that will have to be paid by a carefully selected group of socially disadvantaged people for the Tory Budget. To describe the Bill as representing a general political philosophy is to accord it an unwarranted dignity. It is certain that St. Francis of Assisi has been left by the roadside. The Bill will create social disillusion and discord that will set the poor against the poor and the employed against the unemployed.
The Financial Secretary to the Treasury, in the Budget debate, spoke of the economic imperatives that dictated the need for this Bill. He might have addressed himself to the economic imperatives of the tax reliefs given by the Government to the better-off members of our society. There is no economic crisis at the moment, and there is no pressure on the Government to take the action that they have taken other than the fact that they believe in the policy of redistributing wealth in our society. The price to be paid is not only the rejection of principles accepted by previous Conservative Governments, but, more importantly, the abandonment of the contributory principles of the Welfare State.
Clauses 1 and 4 are similar, since they both express the same contempt for that contributory principle. Those clauses select and attack the same victims for discrimination. They attack the unemployed, the sick, the disabled and those receiving maternity allowance. Both clauses reflect the two principal contributions made by this Government to contemporary political thinking. The first contribution is a fear of public expenditure, and the second is an unsubstantiated and unproved fear that people are better off out of work than in work. The "why work?" syndrome has taken over.
Under section 125 of the Social Security Act 1975, sickness and unemployment benefit and maternity allowance should rise each year in line with prices, and invalidity benefit should rise in line with prices or earnings, whichever is the greater. Clause 1 of the first Social Security Bill has already broken that principle since it brings invalidity benefit into line with prices only.
However, before the ink is dry on that Bill, that provision is to be changed. If unemployment and sickness benefit and maternity allowance were to continue to be linked with prices they would go up to £21·50 for a single person and £34·89 for a married couple. As it is, those benefits will increase to only £20·65 and £33·40 respectively, that is, by 11·5 per cent.
The invalidity benefit, which has previously always been paid at the same rate as the retirement pension, would have gone up to £27·15 for a single person or £43·45 for a married person. Instead, it will go up to only £26 for a single person or £41·60 for a married person. That may not seem a great difference, but it is for someone who has to live on that benefit alone. It is interesting to recall the number of times that we have heard the Secretary of State, when in opposition, lamenting about the poor from this Dispatch Box. Now we see him taking the action contained in the Bill.
In future the 1981 abatement will be based on the already abated 1980 increase. My right hon. Friend referred to that point earlier. In 1982 the abatement will be based on the doubly abated 1981 increase. That will mean a compound reduction in the real value of the benefits if the powers in the Bill are used in full. Thus, the unemployed, the sick and the disabled can look forward to a declining real income in the inflationary years ahead. Perhaps the Minister will give his estimate of how the gap between long-term and short-term benefits will have widened by 1982.
One of the most startling aspects is that the basis of the Welfare State, which was aligned with the Beveridge report, is to be drastically altered from 1980. The groups that I have mentioned, who will have paid their contributions in good faith and in the expectation of a minimum return from the State, will be eligible only for a rate of benefit less than the means-tested supplementary benefit. That betrays the mutual trust and sense of responsibility that exist between State and individual and which are a feature of our Welfare State.
As Beveridge emphasised:
A permanent scale of benefit below subsistence, assuming supplementation on a means test as a normal feature, cannot be defended.
The whole point of Beveridge was to replace the inadequate, arbitrary and offensive nature of means-tested benefits as they existed in the 1930s with a secure guarantee, based on the contributory principle, against want. That guarantee will, under the clause, no longer be honoured.
If the right hon. Gentleman is to advance his argument on that line, will he take account of the fact that his Government published the report entitled "Social Assistance", at the heart of which, both in its setting up and its drawing up, was the proposition that supplementary benefit, which is a means-tested benefit, was not now just a residual safety net for a few but had become a principle source of livelihood for millions? It had a mass role, and it had to be adapted to suit that.
The Secretary of State is seeking to paraphrase the report, but, as he knows, it was prepared by officials and was issued by Ministers without any commitment. However, the Secretary of State is deliberately increasing the number of people on supplementary benefit instead of taking them off it by raising the scales and standards.
Why are the Government taking these measures? Is it to save money? The £140 million to be saved under this clause hardly compares to the loss through tax evasion each year, a figure that runs into billions. Is it to overcome the "why work?" syndrome? The Chancellor raised this issue in his Budget Statement. If we had fewer slogans from the Chancellor and the Secretary of State, and more statistics on the dimensions of this apparent problem, the right hon. Gentleman and his right hon. and learned Friend might be more convincing.
The unemployed are to be made the scapegoats for many of the problems that face society. That action is taken by a Government who have deliberately increased unemployment since coming into office. So anxious are the Government to discriminate against this group of people that the Bill contradicts the Government's declared intention set out in the first Social Security Bill, which is now before the Lords. Schedule 2 to that Bill states that national insurance and supplementary benefit rates should be aligned. That was heralded as a welcome rationalisation because it brought supplementary allowance up to the higher rate of unemployment benefit. Now, for the first time, the rates of unemployment, sickness and injury benefits will be less than the rate for supplementary benefit. Do the Government intend to force people into low-paid jobs—where those jobs exist—with bad employers? We are entitled to an answer.
As the Child Poverty Action Group says in its document "So who's better off on the dole?", a man might be better off if he had been trying to support a family on a gross income of £35 a week or less. I could give many more examples. We need facts from the Government on this issue. Perhaps the Minister will describe the dimensions of the problem in more detail when he replies to the debate.
By the Government's White Paper, unemployment will be increased by at least 500,000 in the next two years. As Beveridge stated:
Unemployment both through increasing expenditure and reducing income to bear these costs, is the worst form of waste.
We know the cost. In February 1980 about 500,000 unemployed were not entitled to unemployment benefit. Given de-indexation, another £12 million is expected to be charged to supplementary benefit to cover this latest generation of casualties. How will reducing benefits deal with the "why work?" syndrome? Will it generate more jobs in South Wales or Merseyside? Will it equip the unemployed with new skills? Will it encourage social mobility in the search for jobs? The only answer, which the Department admitted, is not
holding down the benefit rate but in raising the income of those in unemployment.
Then I am grateful to the right hon. Gentleman for giving way, even if he did it through a misapprehension. When he speaks of intended unemployment, or the intention to put an extra 100,000 people on supplementary benefit, does he accept that the Government's main aim is to avoid the unintended increase in unemployment that has arisen in the last five years? He speaks about 500,000 people being out of work and not getting unemployment benefit because they have exhausted their entitlement to it. Those 500,000 were almost the total of people out of work when Labour came into office in 1974. Does he not accept that, whatever the merits of the issues in the Bill, the Government's general economic approach is designed to avoid the disaster that the unemployed suffered under his Government?
The hon. Gentleman has been honourable on many of these issues, not least on child benefits. However, he should now stand on his own feet and not try to curry favour with his Front Bench.
Given indexation, another £12 million is expected to be charged to supplementary benefit to cover the latest generation of casualties. We have to ask the Government whether their proposals will assist the areas that I have mentioned, whether they will get people into jobs and whether they will generate jobs. The greatest social evil in society is increasing unemployment, and any Government should be making the maximum effort to reduce it. The Government are not only sitting back and watching it. In some instances they are creating it while reducing unemployment benefit.
That brings me to the taxing of short-term benefits. The Government are being completely dishonest on this issue. They are reducing benefits on the premise that this is a form of taxation against people, many of whom would be exempted if benefits were taxed. In other words, people living solely on benefits—some of the poorest in our community—will have to accept a reduction in those benefits. That is not just a question of taxing benefits but of reducing arbitrarily the entitlement of people who would not have to pay tax if such a tax regime applied at the moment.
The right hon. Gentleman accused me of using the words "this is a form of taxation". I never said that. I have said that it is an interim scheme in lieu of taxation. Of course, it is not the same as proper taxation and, of course, the impact will fall differently on different people. But, as I pointed out, the yield from this clause will be just one-third of the yield from proper taxation, if that were applied now. There is no way in which we can distinguish between the taxable capacity of individuals without imposing proper taxation, and we cannot do that until 1982.
Perhaps the right hon. Gentleman will recall his press stataement, which said "in lieu of taxation". He was equating it with taxation. Initially, when he made his statement in the House, he went to great lengths to explain that it was the same as taxation. It is not the same.
I wish to put a number of questions to the Secretary of State, and I hope that he will reply to them. Since the flat rate of the present benefit does not bring them into tax, will the Government give an undertaking that these benefits will be restored to their full value when taxation is introduced? We are entitled to an answer to that question.
People will be taxed eventually on a false premise—on a reduction that they have taken in their benefits—that if taxation had been started at the present time they would not have to pay the tax. That is important in the context of the fact that the estimated saving from 5 per cent. abatement is £133 million.
What confidence can we place in the estimate that taxation will be introduced by 1982? The latest estimate was the mid-1980s. However, the Secretary of State has stated firmly that it will be 1982. If it does not apply by 1982, what are the contingency plans. Do the Government intend to continue to abate these short-term benefits in the interval?
I deal next with those on invalidity pension. This measure comes as a double disaster to them. There are about 650,000 people on invalidity benefit. Most are under pension age. Indeed, many of them are much younger because this group includes the young chronic sick. Invalidity benefit has always generously recognised the long-term implications of chronic illness. It has been treated as a long-term benefit. That link has now been broken. The Government have failed to keep their most basic promise that long-term benefits should maintain pace with prices. By that decision the Government have outraged the lobbies for the disabled. They have aimed a cruel and unexpected blow at those who are most vulnerable and who form one of the most conspicuous groups in poverty within our society. Perhaps we shall hear from some Conservative Members on this issue. Perhaps they will stand up and be counted.
One disablement group, the Royal Association for Disability and Rehabilitation, raised the point that on Second Reading of the first Social Security Bill the Secretary of State referred to rising prices and the link with benefits. In a letter to me it says—
At no time during the discussion of that Bill was there anything other than explicit commitment to maintain the link of invalidity pension with retirement pension.
In referring to the Second Reading speech by the Secretary of State, RADAR says:
Later in his speech he said 'perhaps the most important single change is the proposal to align supplementary benefit scale rates with their insurance counterparts'.
The Secretary of State's right hon. Friend, who sat in Committee for about 104 hours, never gave any indication that the Government were making a basic reversal of policy. These actions are bringing the charge of dishonesty
upon the Secretary of State and upon the Government. The right hon. Gentleman has been less than frank with the House. His right hon. and hon. Friend, if they did not know, should have known. If they did know, they should have informed the Committee about the Government's thinking in this regard.
The Disability Alliance says:
The Government has launched a deplorable assault on the welfare of sick and disabled people. The future living standards of all those who rely on social security benefits are to be cut. But one group has been singled out for a double blow: the 600,000 long-term sick and disabled people who receive Invalidity Benefit.
Day after day I receive numerous letters from the disabled about invalidity benefits. They are outraged by the proposal. We shall go into detail on this matter in Standing Committee, and I shall read some of the letters so that they may be put on the record.
Another act of robbery is the proposed reduction from January 1981, and abolition from January 1982, of the earnings-related supplement to unemployment benefit, sickness benefit, maternity grant and widow's allowance. Most people think that this is linked solely to unemployment benefit, but it is linked to the other benefits also. ERS continues to be an important contribution to the family budget in time of great financial and mental anxiety. The impact of sickness and unemployment on a family is shattering. Redundancy pay is available only to those who have worked for two years and more. The average redundancy pay is £957. That may sound generous, until it is realised that for a man out of work for a year or more redundancy pay is hardly a realistic income.
The maximum ERS pay for six months is £459. The average weekly payment in 1980 is estimated at £8·80. That is not a large sum, but it is crucial to the family budget in times of unemployment and sickness. The major point about this benefit is that since 1966 working people have contributed to it, with the expectation that when they need it they will receive it. The Financial Secretary gave no indication that contributions would be reduced. I reiterate that when benefits are reduced from January 1981 people will have contributed to that benefit during the previous year. To reduce benefit, and ultimately to abolish it, is to rob contributors of their expected benefits. By reducing ERS the Bill contemplates a further 110,000 people on supplementary benefit, at a cost of £75 million, by 1982–83. What a casual admission it is that the ranks of the means tested are to be suddenly swollen by those who, to date, have been treated as legitimate contributors.
On maternity grant and widow's allowance, it is especially ironic, when the Government will make the maternity grant non-contributory in 1982, and will provide paid leave for women to attend maternity clinics, that the Bill will take money away from them. For many women the loss of ERS will mean a loss of almost one-third of their income. It will affect about 70 per cent. of all women. It is another blow at the family. It will make Britain one of the worst supporters of women's rights in Western Europe. It will undermine the Government's commitment to improve our poor record on infant mortality.
I now come to clause 2. I find it extraordinary that the Government should prevent a compulsory uprating of the amount that men under the age of 70, and women under the age of 65, who are entitled to a retirement pension may earn without their pensions being abated. It is an issue that we have debated on a number of occasions. Both parties are in favour of ending the earnings rule. In a move to bring that about under the previous Labour Administration—with a vote in the House in which the Secretary of State took part—we agreed to adjust the amount each year. If we assume that the limit of the earnings rule should increase at the same rate as prices, namely, 16½ per cent., the limit should have been increased to £60·58. However, the Bill abolishes the duty to increase the earnings rule limit, so it will remain at £52 for the foreseeable future.
Does not the right hon. Gentleman remember that the effect of an amendment that was passed some time ago was to increase the limit from £35 to £50? At that time the right hon. Gentleman, who was then the responsible Minister, argued that it should remain at £35. As the then Opposition spokesman, I acquiesced, and we agreed to cancel the increase to bring the limit to £50. All that we are doing is what the right hon. Gentleman did while in government. We are faced with the same imperatives and we have taken much the same step. The right hon. Gentleman cannot make too much of this.
As my hon. Friend has just said, the quid pro quo was indexation, which has made a considerable difference. It has helped especially those in receipt of lower occupational pensions. In a written answer the Minister for Social Security referred to the earnings rule as it applies to retired people. He said:
It will be increased again in November 1980 in line with the expected movement of earnings over the 12 months from November 1979. The Government are committed to phasing out the rule in the lifetime of this Parliament."—[Official Report, 22 January 1980; Vol. 977, c. 198.]
What has happened between the Minister giving that reply and the introduction of the Bill, a matter of two months? What financial contingency has arisen that has made the change necessary?
Clause 5 seeks to end the right of unemployment benefit for those who have attained the age of 60 years and who have until now been able to claim the benefit for 312 days. The right hon. Gentleman has stood on his head on this issue. I am not prepared to do that. To make such a change in improving economic circumstances is one thing, but to make it in a Bill that cuts and abolishes from start to finish is an entirely different matter. No doubt we could have fun with quotations on this issue, but there is one quotation that is worth putting on the record. I refer to a reply to my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker). The right hon. Gentleman said:
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."—[Official Report, 2 December 1976; Vol. 921, c. 1207.]
The right hon. Gentleman's hon. Friends can, of course, make him an unwise Minister if they so desire. We shall discuss the issue more fully in Committee.
The Secretary of State for Employment was today present during the right hon. Gentleman's speech, including his remarks on clause 6. It seems that he has had to leave the Chamber. He gave no explanation. There should be a Minister from the Department of Employment on the Government Front Bench.
We are talking about the Government's proposals. It is the Government's Bill and they will have to answer for it.
Clause 6 deals with a contentious and emotional issue. This clause above all others reveals the poverty of understanding that characterises Tory attitudes towards industrial relations and the traditional responsibilities of the Welfare State. The clause is different from all others because it is aimed at those who legitimately take industrial action as opposed to proposing real savings in public expenditure.
Over the past 10 years about £2½ million per year has been paid to the families of strikers. Surely that is a pretty small price to pay for maintaining industrial sanity within our society. The Government play with fire when they move into this area. There are several implicit assumptions in the clause. First, it is assumed that the existence of supplementary benefit sustains and prolongs strike activity. Secondly, it is assumed that supplementary benefit is the critical factor in maintaining a striker's income. Both assumptions are false on the best evidence that can be provided by social research.
It is necessary to remind the House of the principles that are at stake. The essential feature of national assistance and supplementary benefit is that the unemployed who are in need receive benefit for themselves and their dependants. That was established as long ago as 1898. It was first written into statute in 1948. It was then provided that the wives and dependants of strikers should not suffer from trade disputes on the ground that they have no direct say in the cause of their own impoverishment.
The right hon. Gentleman's explanation concerning prisoners and strikers was outrageous. We fully support the principle that the families of prisoners should have sustenance. However, to argue that strikers are more criminal than those who have been convicted of criminal offences is completely wrong.
We are talking about a wise and hon. ourable tradition. It has marked the difference between the old poor law, and its refusal to succour the undeserving poor, and the Welfare State. Society has not been prepared until now to allow the wives and children of strikers to suffer. The Government, with their false assumptions and their attitude towards trade unions, plan to revoke the principle that I have outlined.
Much play is made of what other countries do nationally. I am aware of a recent reply of the Minister for Social Security. An authority is the document entitled "Financing Strikers" by John Gennard. I put one paragraph on the record as it deals with a central issue. It states:
It is widely believed that Britain is alone in providing payments to the families of strikers. It is true that except for two states in the USA and one industry in that country—the railways—the USA, all European Economic Community countries and Sweden exclude strikers from unemployment benefit. However, all these countries have developed systems of State support for the needy and have found it impracticable to exclude the families of strikers from benefits. In some cases such assistance is provided from central Government funds but in others it is available from a lower level of Government.
Local government is an example. So this is not the only country in the world to give benefit to strikers' families. What are we to do in such circumstances? Are they to be allowed to suffer poverty? That is what the right hon. Gentleman is aiming at.
First, nobody pays strikers. Secondly, no other country has a nationally financed system that is the same as the British system. While we pay it through national financing, as Mr. Gennard says in his article, some countries pay—[Interruption.] Never mind which countries. The fact is that he quotes the countries—
The point that I am making is that benefit is paid to strikers' families. What do the Government propose? [Interruption.] I do not know what hon. Gentlemen are getting excited about. The Government propose that £12 shall be deducted from the striker's entitlement to benefit on behalf of his dependants. This means that instead of being able to claim £17·50 for his wife and allowances for his children, a married man with no children will get only £5·05, a married man with a 5-year-old child will get £7·60—child benefit is automatically deducted—and a married man with children aged 12 and 18 will get £13·75.
Since 1948, strikers in certain circumstances have been able to claim an urgent needs payment when it is essential for the family, but the relevant clause in the Bill appears to deny any urgent needs payment. There are strong rumours emanating from the Department that the regulatory powers are to be used to protect non-unionists only in regard to these payments. Is this true? We want an answer. The reply that the Minister gave to one of his hon. Friends implied that in regulations there may be some discrimination between unionists and non-unionists.
Linked with this question is that of the lockout. The Secretary of State for Employment ought to be here. We should like to know from him the number of lockouts there have been in recent times. It is very interesting that the employers are setting up a strike fund that will be paid for by the profits earned by the people who work in their companies, yet at the same time the Secretary of State is discriminating against people who take legitimate action.
Since 1971 the Tory Party has been moving towards this policy of reducing strikers' benefits. But it is worth looking at the Tory manifesto of 1974, which stated that while unions themselves should accept a share of responsibility for the welfare of families,
equally it is right that families of strikers should not suffer".
Where is the compassionate Secretary of State now? Why has the Tory Party changed its policy? That policy has been dropped in favour of a frontal attack on the trade union movement. We know that the Secretary of State for Employment wants nothing to do with this Bill and is trying to keep it at arm's length. How dishonest can the Tories get? The right hon. Gentleman feels that it will affect his relationship with the TUC. That shows the sort of measure it is—that it will affect the Government's relationships with the TUC at a time when they should have been trying to improve them.
But what are the facts? The Government appear to believe that the relief afforded by supplementary benefit is the key factor in the stimulation and length of strikes. What nonsense this is. One of the most scientific and thorough reviews of the role of the State in financing strikes has refuted that idea, on the evidence of studies that have been made of many industries and many strikes over the past 50 years. As John Gennard puts it:
The hypothesis that the existence of benefit increases the frequency of industrial disputes does not appear to be borne out by the evidence of … actual strike behaviour. The dimensions of strike activity appear to be affected by labour and product market factors, for example, the level and duration of unemployment. The underlying theory behind the arguments of those who want to change the system is questionable.
That is an authoritative statement by someone who has examined the question in great detail. The point has also been underlined in the study undertaken by the Engineering Employers' Federation, which stated in its document:
Even where a union encourages its members to apply for State support, it is clear that SB provides only a minority—perhaps seldom more than one-quarter—of the average income of a striker's family".
So much for strikers being subsidised by the State. In practice, their income is provided by a variety of sources—savings, loans, the wife's income, strike pay, and income tax rebate.
The Government's proposal will undoubtedly inflame industrial relations. It will create a bad atmosphere and lead to more bitter strikes. It will be most bitterly opposed by the trade union movement. If that is what the Government want, they will achieve it by clause 6 of the Bill alone.
Perhaps Conservative Members would like to take note of an important point made by the TUC. It says:
Not only is the proposal unlikely to influence strike activity, it may make matters worse. In the longer term it may encourage some unions to build up significant strike funds, the existence of which may in turn encourage resort to strike action more readily. The provisions could build up membership pressure for strikes to be made official more readily and more quickly than at present, so that members can receive some benefit from union strike pay, which they are effectively to be treated as receiving. More official strikes will tend to mean that action is intensified and support sought from other unions so that the general effort is to make action more severe. Alternatively, forms of action short of strikes could be adopted or strikes concentrated on small but vital groups of workers (e.g. safety and maintenance men, computer operators).
That is what the TUC says about this issue.
In an editorial on 5 February, The Scotsman said:
If the Government curtail social benefits for strikers' dependants their action will be called mean and despicable by Labour, and industrial bitterness will be intensified. There may be a political dividend for the Tories in risking the reproach of making women and children suffer, but the material savings would be small. The steel strike may cost a few million pounds, which is a tiny proportion of the immense social security bill.
That is the feeling of people who are conversant with industry.
The views of the TUC ought to be taken into account. As the TUC put it:
The TUC is proud that this country has an extensive social security system. Trade unions have fought long and hard for such a system. We believe it is a mark of a fair and caring society that it makes provision for its people in times when they are unable to support themselves.
That is what the TUC says about the whole social security system.
Clause 6, along with clauses 1 and 4, will poison the atmosphere for millions of people and they will hit back. I believe that this Government, who may get a short-term political benefit from the Bill, will live to regret their action. This is a diabolical Bill, which I ask my right hon. and hon. Friends to vote against.
It is the tradition of the House to follow the debating points made by the previous speaker. On that assumption I follow the right hon. Member for Salford, West (Mr. Orme) and take up his last point so that I do not forget my duty. Is the TUC speaking for the rank and file membership? If so, I draw the attention of the right hon. Gentleman to the enormous subvention of £1,000 million to British Leyland, which is currently being undermined by Terry Duffy, who is today calling his members to come out on strike. British Leyland face the question of a strike previously presented to it by 247 shop stewards whose decision was overthrown by a referendum of the work force. Therefore the right hon. Gentleman should be careful when talking about the TUC expressing its view and arrogating to it the right to express the view of every person it represents.
The right hon. Gentleman mentioned the vulnerability of striker's families. I accept that. He also referred to the frequency of strikes. One thing is certain; the larger the number of women employed by a firm the fewer the strikes. Women understand industrial action, especially when they are at the receiving end as members of a striker's family.
I did not notice much support from the Opposition Benches when wives of the steel workers at Sheerness marched in the streets to support and encourage their men to exercise their right to work and not be persuaded by the argument to go on strike. This is relevant, because the right hon. Gentleman specifically referred to the vulnerability of strikers' families. However, he does not seem to be concerned about them when they want to express their view about that vulner- ability to the extent of persuading their men to remain at work.
Many of the organisations that have faced large-scale strikes over the past few years—my right hon. Friend referred to some of them—with the possible exception of Ford's, were State industries, supported by the investment of large sums of public money. If the right hon. Gentleman wants to talk about fairness and justice I can tell him that many ordinary people who are not necessarily members of trade unions do not consider it fair or just to support strikes, as it were, through the sum paid to strikers' families when those strikers are already undermining the public moneys invested in their industries.
In this day and age it is absolutely fair that the vast funds held by major unions should contribute. As has already been said, £8 million was paid out to support the families of strikers during the 13-week strike by workers in the British Steel Corporation. When we were talking about the sum paid out to strikers' families, the hon. Member for Birkenhead (Mr. Field) said on several occasions, from a seated position, that that was but a small sum, but he did not relate that to the fact that the BSC had already had a tranche from public funds of £450 million this year, to which the £8 million in strike pay must be added. The strike did little to justify the expenditure of £450 million to support a basic steel industry in this country.
Emotive claims will be made—already, predictably living up to his reputation, the right hon. Member for Salford, West has made such claims—about the discrimination against strikers' families compared with the families of a criminal. He seemed unable to grasp the fact that a striker has the ability to work, whereas the criminal has had that ability properly removed because of the requirements of criminal justice both to punish him and to protect society.
I am following closely the argument of the hon. Member for Rochester and Chatham (Mrs. Fenner). Reading carefully through the Chancellor of the Exchequer's Budget Statement it seemed that there were two clear lines of policy by which the Government hoped to revive the British economy. One was their virtual addiction to controlling the money supply and the other was the weakening of the bargaining power of trade unions, as the Chancellor called it. Does the hon. Member not agree that one of the dangers of this measure is that in the long run the Government may be creating even more powerful trade unions than we have at present? Ordinary members will have to pay increased subscriptions to build up strike funds to enable strike action to be taken and will therefore be that much more dependent on the whims of trade union leaders.
To answer the point put by the hon. Member for Birkenhead, which he no doubt considers fair, I would need to stretch the tolerance of Mr. Deputy Speaker further than I am likely to be allowed. My answer is that greater participation by the rank and file of the trade union movement would be required to decide whether they should take industrial action. I have no doubt that I and others will have the opportunity to speak about that during the Report stage of the Employment Bill.
In our society today—I believe that many people were aware of this, and it is one reason why they voted for the Conservatives last May—there is far too much talk about rights, whether they be welfare rights or rights to withdraw one's labour, and not nearly enough talk about responsibility. Specifically in the case of strikers' families men should be aware of their responsibilities. The right hon. Member for Salford, West, who has unfortunately left his seat, talked about the family. In my book a man's first responsibility is to his family. I do not believe that his first responsibility is to his trade union.
I was lucky enough to draw a place in the ballot for Private Members' motions, and I spoke in the House in December specifically on the earnings rule. Hon. Members will therefore appreciate that I was disappointed to hear my right hon. Friend put forward this clause. However, my disappointment was tempered by the exact words that he used. I noted them with great care. He referred to a "temporary freezing" of the earnings limit. As a Back Bencher who has returned to the House after a spell outside, listening to the two Front Benchers and knowing what actually occurred during my absence only by reference to the record, I found it strange. It gives credence to the often reiterated assertion that Ministers propose but the Civil Service disposes. It is significant that both parties when in opposition have proposed similar measures on more than one occasion and yet have found it necessary not to pursue them.
The hon. Lady has made my point. The truth is that civil servants and Ministers may propose, but it is this House that decides. She and her hon. Friends must now face the test. Will they allow the Government to get away with the proposals in the Bill? We had a test in the past; it is their turn now.
I take the hon. Member's point. I have listened very carefully to my right hon. Friend and no doubt I shall have an opportunity to listen to him carefully again during progress on the Bill. I know that he is concerned about priorities. I had a junior post in the previous Conservative Government and I am only too well aware of the disciplines involved in making the money go around.
During progress on the Bill I shall seek reassurance from my right hon. Friend that I do not need to be so worried about the report from the other place. I admit that I was worried that after my debate in December, when the Parliamentary Secretary referred to the cost of totally phasing out the earnings rule, my right hon. Friend did not disclose his estimate of the cost. This may be difficult for him but it will be helpful if we are to consider the cost in the light of public expenditure savings.
I respond warmly to my hon. Friend's invitation. It is not possible to put an overall cost on this because it depends on the rise in earnings. As a rough rule of thumb, I can say that for every 1 per cent. increase in the earnings index the cost of raising the earnings limit is about £1 million. Therefore, a 10 per cent. increase in earnings would mean a cost of £10 million.
The cost of abolition depends on the assumptions, and we are looking at these again. We estimate that it will be significantly lower than the cost estimated by the previous Government. The point that I was making previously was that for every 1 per cent. increase in earnings in the review period, the cost of raising the limit would be £1 million.
I am obliged to my right hon. Friend. I take the point that when he makes difficult decisions in the area of social benefits he may feel that it is not an area of the highest priority. Those are almost the exact words used in another place by Lord Cullen of Ashbourne, who said:
There is no doubt however that in the present state of the economy this does not have the highest priority and we have not yet been able to make a start, and I am afraid I am unable to tell the noble Lord when we are likely to do so."—[Official Report, House of Lords, 6 February 1980; Vol. 404, c. 1340.]
The reassurance that I shall seek from my right hon. Friend is this: he introduced this Bill today by explaining that there were two reasons why it was necessary. The first was the need for further public expenditure savings, which I accept. The second related to the clause on benefits to strikers' families. He said that this clause was necessary to implement the Conservative manifesto pledge on strikers' benefits. My right hon. Friend does not need me to remind him that it was our party's manifesto pledge to phase out the earnings rule within the lifetime of a Parliament.
Over the past few months, in answers to questions, my right hon. Friend said that this phasing out will be done "as soon as possible" or "as soon as circumstances allow". I give him the benefit of the doubt, but if he does not make a start, or if he feels unable to do this because of the pressure of other higher priorities, in order to meet our manifesto pledge there will need to be an acceleration in later years. I am concerned about that. Perhaps during the progress on the Bill my right hon. Friend will reassure me on that point.
Given an assurance that my right hon. Friend has no intention of allowing that matter to go beyond the lifetime of this Parliament, I will support his modest Bill. It is a modest measure of few clauses, but I have no doubt at all that there will be a charade of opposition from the Labour Party and the trade unions. They must realise that much of what is in the Bill supports what people in this country believe to be fair and just, and for which my party was elected last May.
I believe that there will be massive opposition in this country for many of the proposals in the Bill. The hon. Member for Rochester and Chatham (Mrs. Fenner) began her contribution with a carping criticism of the quotation from the TUC made by my right hon. Friend the Member for Salford, West (Mr. Orme).
I begin my speech with another quotation, which relates to clause 6 of this Bill. It goes:
This Conference would be the first to howl if we really did have pictures on television of children going hungry for lack of benefit—perhaps because their striking fathers were on low pay and had not been able to save, perhaps even because their striking fathers had not made the necessary arrangements for saving for the purpose. But this Conference would object strongly if children were shown going without food.
That statement was made at the Conservative Party conference in 1973 by the present Secretary of State for Industry, who was then Secretary of State for Social Services. He convinced his party that it should not do what the present Secretary of State is now suggesting.
This is a unique occasion. For the first time in more than a generation Parliament is debating a measure that is designed to reduce benefit to some of the most needy groups in our society. I shall not take us through the list of legislation that has come forward to improve benefits for needy groups, but this is the first time that we have sought to cut back, except for the first Conservative Social Security Bill. This is the No. 2 Bill and I do not know when No. 3 will emerge. Perhaps when it comes it will abolish unemployment benefits altogether. One never knows where one is with this Government, except that the next measure will be always worse than the last.
The Government are introducing this Bill less than a year after they denied that they would cut these benefits. This is a disgrace. It is on a par with the assurance given by the present Prime Minister on 26 April, when she said:
We have no intention of raising prescription charges.
Since then they have done so fivefold. On the same day she said that the Conservative Party had no plans for any new NHS charges. Those charges were announced in the Budget.
Also, on 26 April the present Lord President of the Council said that a Labour Party leaflet had warned of a Tory plan to reduce pensions and social security payments. He claimed that that was a direct lie, yet that is part of the purpose of this squalid Bill, apart from its attack on strikers' wives and children and its decision to take away the statutory right to earnings-related unemployment benefit that has been paid for over the years.
It is all very well to say that everything is on a "pay-as-you-earn" basis. Those who have contributed on an earnings-related basis believed our Governments assurance—perhaps they did not believe this Government—that they would be entitled to an earnings-related benefit as a result of their earnings-related contributions. I am sure that the right hon. Gentleman himself would have said that if my party had come forward in Government with a squalid proposal like this.
The Bill is not only an attack upon the living standards of the most vulnerable members of our society; it creates a new low in political deception. It sets out to enshrine in legislation actions that the Conservative Party denied that it would carry out during the election campaign. No hon. Member suggested to the electorate, in a manifesto or in any speech, that the Conservative Party would reduce the entitlement of those on invalidity benefit, of the unemployed and, in certain circumstances, of widows. If any hon. Member did make such a suggestion during the election campaign I hope that he will now rise. I will then give way and say how honest he or she is. If the Secretary of State gave any such hint to the electorate, I give way. He knows that he did not. Mention was made only of benefits to strikers' wives and children.
This is a deplorably mean Bill. It has been put forward in a deceitful way. When the Labour Party was in Government my right hon. Friend the Member for Salford, West and I fought for funds in order that we could get the long-term unemployed on to the long-term supplementary benefit basis. However, we were faced by constraints on public expenditure. We were also worried about the widening gap between those on long-term benefits who could share in the rising standard of living, and those on short-term benefits who were tied to price protection.
The widening gap worried us, and we tried to find a way of filling it. Meanwhile, the Secretary of State and his friends were planning to keep the gap open at the expense of both groups, by removing the right of pensioners to share in rising living standards and by cutting back on short-term benefits. As a result, those affected became poorer and poorer and less able to protect themselves from the ravages of inflation.
To add insult to injury, the Government have introduced these mean and cruel measures when the rate of inflation is out of control. Both the Secretary of State and his colleague, the Chancellor of the Exchequer, have spoken about a rate of inflation of 16½ per cent. at the time of the next uprating in November. The Secretary of State did not mention that figure today. However, within the next few days the 20 per cent. barrier will probably have been broken, or almost broken. The Government's pay bill is now expected to rise by 25 per cent. Yesterday it was made clear to a Select Committee that the cost of gas, coal, electricity, transport, food and prescription charges was escalating.
This morning I went into my grocer's shop. He told me that during the first four months of this year there had been 5,138 increases in costs. Which hon. Member believes—does the Secretary of State believe—that by November we shall find ourselves with an inflation rate of 16½ per cent.? The Secretary of State said that the entitlement of some of those who are least able to protect themselves will be 5 per cent. less than the inflation rate of 16½ per cent. Does he still believe that the inflation rate will be 16½ per cent.? If the inflation rate is closer to 18 per cent., 19 per cent., or 20 per cent., will he still use the axe that he holds in this Bill? Will he still reduce benefits to a level of 5 per cent. below the inflation rate of 16½ per cent.? The justifications given by the Secretary of State for his mean measures are very hollow and unconvincing.
The problem of work incentives has been greatly exaggerated. The Minister agreed that the numbers were small. He said that the magnitude of the "Why work?" syndrome should not be exaggerated. However, the situation becomes clearer if we look at other statements. The document "Social Assistance" was produced by the DHSS. It states:
Men are now remaining unemployed for longer and having a lower earnings potential than in normal circumstances such as have obtained over the last thirty years. Despite this we found very little evidence that they are declining to return to work and prefer to remain on benefit when jobs are offered to them.
David Donnison, chairman of the Supplementary Benefits Commission, said:
Some realists know perfectly well that cutting benefits will not get people back to work; there are no jobs to go to.
The Secretary of State knows that that is so. However, the Government's action will create more unemployment. They are cutting back on those projects that created job opportunities. The argument for getting people back to work does not stand examination.
As the Secretary of State will admit, the squeezing of child benefit has contributed to the "Why work?" syndrome. The Government are pushing people into unemployment and denying them the job creation schemes that were introduced by the previous Labour Government. More and more people have been out of work for a long time. An increasing number of young people, including youngsters from the ethnic minorities, will not be able to find employment. To try to force them into jobs that do not exist is utterly unrealistic.
This is a very important point. I have been in recent correspondence with British Rail, Southern Region, complaining about the filthiness of the trains that my constituents are expected to use and for which they are expected to pay increasing fares. I was given a solemn reply, in writing from the manager of British Rail, Southern Region, to the effect that British Railways cannot get cleaners because they can get almost as much money by not working. British Railways are major employers—
Given the hon. Lady's keen interest in this subject, I hope that she will try to analyse this question. I hope that she will discover the level of payment given to those working for British Rail. I hope that she will find out how many children they would need in order to approach such a level of benefit. The benefit represents a minute figure. Anyone who has studied this question knows that that is so.
The action taken in the Bill represents a step backwards on issues on which we have sought, and sometimes achieved agreement across the Floor of the House. The Bill gives a commitment that the poor will become poorer. It cannot be otherwise. Why are the Government doing that? They are trying to pay for the tax benefits of the rich. I can see no other reason why they should squeeze the poor. This legislation punishes people for the tragedy of being unemployed or of being invalids.
It is almost inconceivable that although hon. Members from all parties care about human dignity and need they will vote for a Bill that is so damaging to human rights. The Bill contains a commitment to push more and more people on to means-tested supplementary benefits. I thought that the House had agreed to consider measures that would reduce the number of those dependent on the State. We have been told that 110,000 extra people will be put on to supplementary benefit, together with an extra 1,000 civil servants.
In conclusion, I believe that this is a mean and despicable measure. I hope that those on the Government Benches who care about the Welfare State and our responsibility to care for the sick unemployed and those facing hardship will this time have the courage to stand up and say that even though the first Social Security Bill was passed through this House, Social Security (No. 2) Bill should not have the sanction of this Parliament.
I wish to deal briefly with clause 4 and the problems of the unemployed, who do not have the pressure groups and support that many other worthy causes have—I am thinking particularly of pensioners and one-parent families.
Listening to the rhetoric of right hon. and hon. Members on the Labour Benches, one might be led to believe that they are concerned about the matter, but on looking at the empty seats around them one realises that perhaps the rhetoric is more sound and fury than substance. Right hon. and hon. Gentlemen might be better advised to leave the plight of the unemployed to the "wets".
Unemployment is not the fault of the unemployed. I do not suggest that many believe that it is, but a social stigma still attaches to unemployment. A person who does not have a job is frequently not accepted by society. That feeling, unfortunately, often extends to that person's family. Many people who are made unemployed do not know how to face their family to tell them about the disaster that has befallen them.
It is right that we should look carefully at the words and works of the nineteenth century economists, but perhaps we should not pay too much attention to the Protestant ethics and industrial psychology of the nineteenth century. It is important to realise the fear and degradation of unemployment. The majority of people like work and responsibility, want to be involved and wish to participate. That was stated not by a Labour Member or by Keir Hardie, but by a former dean of the Harvard Business School.
I believe that it goes much further than the degradation of not earning money. A person who becomes unemployed finds that his basis and dignity of life are taken from him. I do not accept that money is the only motivating force in the world. We have been too obsessed by the motivation of money, and have not tried to listen to and take account of people's other problems and ambitions.
Redundancy pay has helped the unemployed. In his Budget Statement my right hon. and learned Friend the Chancellor said that redundancy payments are now more generous. However, to take the year 1973, which was the last year of the previous Conservative Government, the average payment was £900 at 1979 retail prices. In 1979 it was £874.
One problem in discussing earnings-related supplement as it affects the unemployed is to discover the true statistics. The right hon. Member for Norwich, North (Mr. Ennals) said that the average payment was £957, but the figure given in an answer on 2 April was £874.
Redundancy payments are no more generous now than they were seven years ago. We should also remember that not only do large numbers not receive redundancy payments for various reasons, but that the actual figure may be very much less than the average. For example, a married man aged 40, with two children aged 8 and 11, who has been five years in work and finds himself redundant, will get only £500.
Furthermore, I hope that at least on the Government Benches redundancy payment is regarded as a capital sum, which we hope people will invest for themselves, their childern or for difficult times. It should not be regarded as income. On the other hand, earnings-related supplement is an insurance policy that is taken out through the national insurance fund, designed specifically to help in moving employment and acting as a cushion.
To take the same married man in the same circumstances, on an average wage of £95 a week, who becomes unemployed, his entitlement, including earnings-related supplement and child benefit, is £55.84. His flat-rate unemployment benefit which is what he will become entitled to after 1982, will be £39.35, and the supplementary allowance will be £43.65, plus rent. After earnings-related supplement is removed, a person who becomes unemployed and goes straight on to flat-rate unemployment benefit will get £4 and a bit less than he would receive by way of supplementary benefit alone.
We have to accept that unemployment will increase in the foreseeable future. Those who become unemployed will rely on flat-rate unemployment benefit that will not be sufficient. They will therefore increasingly rely on a top-up from supplementary benefits. My right hon. and learned Friend the Chancellor said that only 10 to 15 per cent. of those unemployed received earnings-related supplement. However, that still amounts to 160,000 to 200,000 people at present, which is 42 per cent. of those entitled to unemployment flat-rate benefit. It is still a significant number.
As we know, earnings-related supplement is paid for out of the national insurance fund and is 82 per cent. self-financed on a "pay-as-you-go" system. However, the national insurance fund has been in surplus, as the hon. Member for Birkenhead (Mr. Field) found out recently in a parliamentary answer, for several of the past few years by a substantial amount, mainly because the Government Actuary works out the basis of the national insurance fund on what the Government say that wage settlements are likely to be, which is what Government policy is, rather than on what wage claims are settled at. That surplus is therefore reasonably likely to continue if the Government Actuary continues to do the calculations on the present basis.
My right hon. Friend said that the number of those receiving earnings-related supplement in 1980 was estimated at 190,000. If the earnings-related supplement were removed, the saving would be £96 million. If, in future years, the Government Actuary deducts from the national insurance fund the amount that is paid out in earnings-related supple- ment, and the amount of supplementary benefit increases, I cannot see how there can be a saving to the public sector borrowing requirement. Surely there will be an increase. Therefore, is it not wiser to continue to provide an amount that at least cushions people from the £95 average earnings down to a much lower level?
In the 1930s—I have the figures for 1934—the average industrial wage for a married man with two children was 52s 6d. The average flat level of benefit was 30s. The fall was from five to three. Now the fall will be from £95 down to £39, plus whatever is applicable on supplementary benefit.
I was following the hon. Gentleman's argument closely as he took us through the maze of the national insurance fund. Will he complete his argument? In the financial memorandum to the Bill the Secretary of State lists the savings from abolishing earnings related supplement. The right hon. Gentleman was careful to say that this was a pay-as-you-go scheme, and that therefore adjustments would be made to contributions for benefits that would not be received later. Surely the only reason why the financial memorandum to the Bill can refer to a saving is that the contributions will stay at their present level, but the benefit will be abolished. If there were a quid pro quo we would abolish the contribution and the benefit and there would be no saving whatsoever to present at the beginning of the Bill.
The hon. Gentleman is right. If this is an insurance scheme which is self-financed, to the extent of 82·4 per cent., for the unemployed, surely the Government must, in all reasonableness, reduce the employers' surcharge to make sure that this is fairly handled.
I want to continue this line and make it clear what will happen. The figures are very difficult to come by. My right hon. Friend said that the gross savings in cash terms would be £360 million in 1982–83. Of that, the unemployment benefit element will be £110 million. However, on page 113 of the Chancellor's Blue Book on the Government's expenditure plans the final sentence of section 15 reads:
After allowing for the additional claims for supplementary benefit, and the associated staff cost which will ensue and for the effect
of the proposal for employers taking responsibility for payments during short-term sickness, it is expected that the savings from the cessation of earnings-related supplements will amount to some £130 million in 1982–83.
Taking those two figures together, one says £130 million, while the other says £360 million less £75 million—that is £285 million—and the discrepancies become more and more alarming.
We are talking about massive amounts in the national insurance fund of billions of pounds. The investment income alone amounts to £370 million a year. Would it not be more advisable for my right hon. Friend at least to accept at the moment that the self-financed element of earnings-related supplement should be allowed to continue, which will do little if no harm? If that happens, there will be continuing support for those who find themselves out of work and who must face the financial difficulties that come from finding their standard of living halved. They cannot suddenly do away with their mortgage or hire-purchase repayments. They will end up with the trauma of the dole, with no spare money and little mobility.
Will my hon. Friend confirm that if it were possible to retain what he called the self-financing part of earnings-related supplement, that would represent about 85 per cent. of what is at present drawn by people benefiting from this payment?
I agree with the hon. Gentleman's approach. I hope that the Secretary of State will take seriously the argument that was put. Would the hon. Gentleman care to add the additional social argument, which seems to me to be important in terms of the strength of the economy? Is not the purpose of an earnings-related supplement not just to cushion someone from this mighty drop from a good salary to a very low one, but to enable him to have a period when he can be more mobile and give him a breathing space to get into another job in another place? Are not the mobility and employment aspects important?
I take the right hon. Gentleman's point. Obviously, mobility is important. People who are unemployed want to get out, find new jobs and get cracking on them as soon as they can. If they do not, they find themselves trapped in the demoralisation caused by unemployment. It becomes more and more difficult to move as their incomes reduce further and further.
I ask my right hon. Friends to consider this case carefully and judge how it will be financed. If the amount of supplementary benefit is to be increased, it may well increase much more than the Government are currently allowing for. The Government may well take more money out of the public sector borrowing requirement for supplementary benefit, whereas if they go on as they are they will be living with a scheme that is 85 per cent. self-financed.
I came to make this, my first speech on social security, with a certain humility. As I listened to the arguments from both sides of the House, I realised that we on the Liberal Party Bench are the only ones who have not been forced by the changing face of Government to under changes of policy and regurgitate the words that we uttered in the last Parliament. Therefore, one has a certain pride in at least having been consistently consistent in opposing cuts in social security—
On a point of order, Mr. Deputy Speaker. The hon. Member has inferred that I have only just come into the Chamber. That is perfectly correct, and during the brief moment that I was absent the hon. Member must himself have made his first appearance, because I was here for all the opening speeches and all the earlier speakers.
I should like to say that I have been here all of the time.
For the uninvolved and the unwhipped, the crucial question about this Bill is whether it is being brought in for financial or for party political reasons. The amount which will be saved, which is really a very unsubstantial amount in comparison with the enormous giveaway to the high rate taxpayers earlier last year, is so small that it makes us believe it is political. If it were money the Government were after, would they not recruit more tax inspectors than social security snoopers? It is quite obvious that political popularity has played a substantial part in this.
I think that historians will look back at this Government and decide that they got it wrong, that they hit the wrong targets. I believe that in clause 6, which perhaps is the crucial clause in this Bill, it would have been a brave move to hit the unions if they wanted to fight. Their fight was with the unions; I do not believe that it was with the dependants, the wives and the children, of those who are in industrial dispute.
It has been the same sort of argument as this Government used when recommending the boycott of the Olympic Games. I am totally in favour of that boycott but not as the only boycott. The boycott by the athletes should have come after the trade boycott, after the export guarantee boycott, after the ending of diplomatic relations. Then by all means let us hit the Russians by boycotting the Games. By the same token, to hit the families of the strikers is the milkman's horse syndrome. I am thinking of the story of a man who found his wife was having an affair with the milkman and went and kicked the milkman's horse.
To go through the clauses very quickly, under clause 1 it is intended ultimately to bring these benefits into taxation. It is argued that the 5 per cent. reduction is an interim measure, but it is purely arbitrary and bears no relation to the kind of tax which a recipient would be likely to pay. It is not altogether clear whether, when these benefits are brought into tax, they will be indexed. I think this point ought to be investigated. The Secretary of State will know that under the tax credit scheme in which my party has always believed none of the credits would be taxable, but under the present arrangement there is a case for taxing short-term benefits. This seems in clause 1 also to mean that a retirement pensioner with no other source of income would receive more than an invalidity pensioner with no other source of income. This is surely wrong and will be enormously difficult to explain to a constituent who raises that point.
The hon. Gentleman would find it almost as difficult to explain to an invalidity pensioner who reaches pension age why he suddenly finds that his pension is taxed whereas his invalidity pension has not been taxed. But that is the situation that will have to be dealt with in 1982 and, as the hon. Gentleman has said, what we are proposing to do now is an interim phase towards that.
I accept that, and I also accept the valid point made by the hon. Member for Norfolk, North (Mr. Howell) about the differences between taxability and actual tax payments.
Clause 2 seems to be going in the opposite direction from that to which the Government are publicly committed. They have committed themselves to abolishing the earnings rule within the lifetime of the present Government, and they are now backtracking; in this clause they seem to be going in the opposite direction since its effect must be to make the earnings limit progressively more restrictive.
On clause 3, on 27 March I asked the Prime Minister how she would expect a sub-postmaster with one employee to pay that employee eight weeks' sick pay, as he would have to do, and said that my constituents would also like to know who would become rich as a result of the sub-postmaster's having to pay tax on both the employee's wages and the wages of the person who replaced him. The Prime Minister, in her wisdom, answered:
I would be very surprised if a sub-postmaster with one employee had no alternative source of income."—[Official Report, 27 March 1980; Vol. 980, c. 1649.]
I found that a staggering answer; it was the "let them eat cake" syndrome—people who believe deep down that every dustman owns a yacht in San Tropez.
Since 1963 the Liberal Party has argued that benefits should be related to earnings so that for a period at least the drop from earnings to benefit should be cushioned. I listened with care to the speech of the hon. Member for Chippenham (Mr. Needham). It is absolutely right that it is advocated not as a poverty-removing measure but as a hardship-removing measure. People's commitments do not drop when they lose employment or become sick; their commitments remain the same in relation to their previous earnings, their standard of life and so on.
I agree, and we have always agreed, with the content of clause 5. I have received, as I think many other hon. Members have, an excellent document from the Child Poverty Action Group of which the hon. Member for Birkenhead (Mr. Field) is the author or co-author, and he will doubtless elaborate on this. I think it would be wrong not to welcome the fact that at least a safety net exists and remains. It would have been appalling for this debate to have been held under any other circumstances. The Secretary of State, almost at the beginning of his speech, quoted Disraeli, saying that we all wished
to elevate the condition of the people.
What saddens me, and what the whole House must be unhappy about, is the fact that this Bill, if it becomes an Act, will do nothing to elevate the condition of the people. It is, in the Government's own "newspeak", a "substantial reverse elevation procedure".
My right hon. and hon. Friends will oppose and vote against the Bill, as we have always opposed measures to make the poor poorer, even if in this instance it will not specifically make the rich richer.
The Bill contains a miscellany of proposals, perhaps more wide-ranging than in any social security measure within the memory of most of us in the House. Parts of the Bill are opposed by groups of people, and many hon. Members would find fault with at least one aspect of the Bill, but the official Opposition would be wrong to underestimate the degree of appeal that the measure in its totality has for people outside the House.
There are people who say that the measure undermines the Welfare State. I suggest that there is an equal argument, which will not find favour on the Labour Benches, that it is a return to the basis on which the Welfare State was introduced in 1948, in that it strengthens the safety net below which people shall not be allowed to fall and at the same time reintroduces a degree of incentive to people to provide for their own families that has not always been noticeable in the recent past.
I get to the heart of the Bill by talking straight away about the benefits to strikers' families. I do not believe that the public should be asked to finance in any material way the carrying on of a strike when those members of the public have to suffer deprivation as a result of that strike. Large sums are involved. About £8 million or £9 million has been mentioned. Here we are taking a step to honour a manifesto commitment.
It may be, as the right hon. Member for Salford, West (Mr. Orme) said, that in all other EEC countries some measure of public support is given from public funds to strikers. It is also true that in all other EEC countries the trade unions accept responsibility for strike pay to members they call out on strike. In this country we have many large unions with massive funds that are not used, because the public are expected to contribute.
I am uneasy about the earnings rule. I have been round this course more than once during the 10 years that I have been in the House. Provided that what we are being asked to approve is no more than a temporary interruption on the way to achieving the manifesto commitment of the total abolition of the earnings rule, I am prepared to buy it, but only on a relatively short-term basis. I am able to do that because £52 a week is a reasonably high income in addition to the retirement pension. Nevertheless, if I thought that we were reneging on our commitment to phase out the earnings rule I should be very unhappy.
I move on to another hardy perennial, the occupational pensioner who retires at 60 and who until now has been able to draw unemployment benefit for a limited period. On several occasions I have spoken on this matter, and I am by no means convinced that on this occasion we shall be any more successful in achieving our objective than we have been in the past. I have to accept that the aim of that part of the Bill is to penalise only occupational pensioners who are in receipt of a reasonable retirement pension.
I do not think that I am going back on anything that I have said before in saying that I cannot conclude that most of the individuals involved could be classified as genuinely unemployed. At a time when other people, perhaps in greater need, are being asked to make sacrifices as a result of other provisions of the Bill, I am prepared to agree with that part of it which abolishes unemployment benefit for people who retire early on occupational pensions.
On the question of de-indexation, there is an assumption that the whole basis of the Welfare State is being changed. That is not so. Almost the opposite could be said to be true. We are changing back the emphasis of the Welfare State's benefits to those who are truly needy. One matter that has received scant acknowledgement from the Opposition Benches is that we are uplifting the rate of supplementary benefit by the full percentage requirement to take account of inflation. If by the measures that we are taking on de-indexation we are creating a difficulty for some people—I am honest enough to concede that we shall—we must take into account that available to those people will be those increased supplementary benefits.
Invalidity pensions are included in the wide ambit of the proposed changes. To those who suggest that it is a mean act to include invalidity pensions I say that anomalies would be created if they were to be treated differently from sickness benefit. Even under the proposals contained in the Bill, the benefits payable will be higher in real terms than they were after the November 1976 uprating.
I have never felt that we should single out the disabled or point to them as a separate section of the community. So far as possible we should absorb them into the community and treat them as normal members of it. If we are changing the method of payment to the unemployed and the sick it would be wrong not to include invalidity pensions in those changes.
The earnings-related supplement is another aspect of the Bill that leaves me comparatively uneasy. The existence of the earnings-related supplement has provided an immediate cushion in the aftermath of unemployment, and its removal could conceivably cause some hardship. To that extent I ask my right hon. Friend the Minister of State to explore the helpful suggestions put forward by my hon. Friend the Member for Chippenham (Mr. Needham) and to see whether there is a middle course that will allow the Government to reduce expenditure while at the same time having a less immediate effect on the person earning an above average income who is suddenly rendered unemployed. Even before the Minister replies, I am fortified by the knowledge that out of 1.25 million people who were unemployed in May 1979 the number who were in receipt of earnings-related supplement was 176,000. I do not lightly cast aside the fact that 176,000 people will be disadvantaged, but it is wise for the House to get these figures in perspective.
The proposal to transfer to employers the responsibility for sickness payment means that earnings-related supplement will have to be removed anyway, so the Bill anticipates that move. The real living standards of the real poor are protected by the Bill through the maintenance of supplementary benefit. On the whole, this is a measure that deserves the support of the House.
I am always pleased to follow in debate a contribution made by the hon. Member for Brentwood and Ongar (Mr. McCrindle). If I were not also penalised by the so-called 10-minute rule I would like to have taken issue with a number of points that the hon. Gentleman raised. His most important statement was that the Bill could be supported because it returned to the principles of the 1948 Welfare State. In a fundamental way, it does the opposite. The Bill will push more people on to means tests and therefore trap them into poverty. There is growing agreement between the Benches of this House that what is needed is a Welfare State that acts as a floor from which people can build by their own efforts. The Bill contributes nothing in that direction.
The Secretary of State began his speech in grand style. He addressed himself to the challenge that the British economy, in particular, and the world recession, in general, presents to all three major parties in this country. The world economy has broken up the basis for post-war consensus. That basis was that the economy would grow and that part of the new wealth would be used to pay for social reform.
Despite the optimistic comments about growth in the next few years, most hon. Members know that there will be very little, if any, growth. The Government have made their decision on how they intend to behave. They are redistributing to the rich at a time when there is no growth. The challenge that the Government have accepted also confronts the Opposition. Are we prepared to continue a dialogue in which one thinks of paying for social reform only from new wealth rather than by redistributing existing wealth? One cannot separate the measures in this Bill from the measures that the Government have taken in two Budgets. I remind the House briefly of those changes. They nail the untruth put around by some Government spokesmen that there is not the money to pay for social reform.
In the first Budget, taxation was cut by £4·5 billion. The richest 7 per cent. of the population picked up 34 per cent. of those tax cuts. The poorest 10 per cent. got 2 per cent. of the tax handouts of the first Budget. In the second Budget of this Government, though obviously more modest, the richest 2 per cent. picked up 14 per cent. of the net tax reductions. It is, therefore, impossible to maintain any longer the argument that the money is not available. The Government have other choices.
To help pay for those tax cuts, there has been the Social Security Bill. Now we have the Social Security (No. 2) Bill. I should like to spend the remaining six minutes of my contribution looking at some of those cuts and the people they affect. The Government have singled out the weakest for the cuts. At the front of the firing line are children. The Government have made two vicious cuts in bene- fits for children—those whose parents are unable to work as well as children of parents in work. The Government have fiddled for the first time the method of increasing the benefit rates for children of those on national insurance benefits.
The normal method of calculating the increase is to take the whole of the child addition, multiply it by the inflation rate and then subtract the increase in child benefit, if there be an increase. Sadly, in many years there was no increase. This year, the method of calculating the children's addition has been to take the benefit to subtract the child benefit as it stands, then multiply by the inflation rate before deducting yet again the child benefit increase that occurred in the Budget. Children of the poor have increases of a little over 5 per cent. in this Budget. That is not price protected. The increase is not even the 11·5 per cent. of the unemployed; it is only 5 per cent.
On child benefit, the increase is in the region of a little over 9 per cent. The Secretary of State knows, as does his Minister of State, that the child benefit increase announced in the Budget is really an increase to be spread over two years and not over eighteen months, as they maintain. Children are therefore the first group to have their benefits cut more viciously than any group in the population. Because child benefit has not been increased generously enough and because the problem to which the hon. Member for Norfolk, North (Mr. Howell) referred has not been dealt with partly because of the failure to increase child benefit more generously, the Government have had to cut even further the allowance for children of those unable to work.
The second group for cuts have been the sick and disabled. Not only has there been a de-indexing as it is called, under the name of the need to tax benefits. I stand clearly on the proposition that all income should be taxed. I stress the word "all". In the last Budget, the Chancellor was concerned only with 45 per cent. of personal income. Fifty-five per cent. of personal income is legitimately exempt from tax. Benefits form only one small part of personal income that does not come under the hammer of the Inland Revenue.
I am saying that they should be taxable. If the expenditure of the tax allowance Welfare State were controlled and those benefits abolished, we could be talking in terms of a standard rate of tax of about 13 per cent. or 15 per cent. We should not worry only about the benefits of the unemployed. We should also consider the benefits of those who largely depend on untaxed and untaxable income.
I turn now to the third group who are suffering cuts. The hon. Member for Chippenham (Mr. Needham) referred to them in an effective speech. He pointed to the untruth at the beginning of the financial statement to the Bill. If the Government were going to adjust contributions for the abolition of earnings-related benefit, there would be no £360 million gross to chalk up as a saving. The Government intend not only to abolish earnings-related benefit; they intend to keep in being the contribution.
The fourth group suffering cuts under the Bill are strikers—or, to be accurate, the wives and children of strikers. A striker can get no benefit for himself at present and his wife is classified as a non-householder. The hon. Member for Norfolk, North shakes his head but he is wrong on this point. The striker gets no benefit, and the wife is classified as a non-householder. On top of that, £12 is now to be deducted and the £4 disregard scrapped for any tax rebate. As supplementary benefits are not paid for the first two weeks of a strike, the unemployed family with one child, during the first three weeks of a strike under the Bill, will be picking up a fraction over £2·50 a week for the whole family.
I should like to address briefly five questions to the Minister. He argues that there is, and will continue to be, a real increase in social security expenditure, even if the Bill is passed. How much of that increase will be wiped away because of the increase in the number of claimants? If the inflation rate of 16·5 per cent., on which all the calculations depend, is wrong, will the Minister make good the shortfall for those on shortterm benefits, who will obviously suffer most? When the benefits are brought properly into tax, will he make good the de-indexing in the intervening years? Will he answer the point made by the hon. Member for Chippenham about the earnings-related contributions? Will they also be abolished?
Lastly, as all the evidence shows that families with children, particularly poor families, have fallen behind other groups over the past 20 years, will the Minister at least reconsider the particularly vicious cuts against children contained in the Bill?
The overall strategy of the Budget from which the Bill is derived was in step with the election commitment made last May. The hon. Member for Isle of Ely (Mr. Freud) introduced a novel concept when he said that the Bill was designed to curry political favour. Hon. Members in opposition are free to make such statements. However, many of us are here today because we made commitments on union activity and strike pay which caused many people who have always voted for Labour Members to elect us to seats previously held by the Labour Party. It is strange to suggest that there is something disreputable or questionable about trying to introduce legislation based on commitments made during the election campaign.
Why should the State subsidise and finance strikes against itself? I have been an active trade union member for the last 10 years. The issue is not about penalising strikers but about trying to find the correct balance between the rights and needs of strikers and the rights and needs of society. We believe that that balance has been tipped too far in one direction. The Bill is an attempt to redress the balance.
Some Opposition Members have said that the Bill is heartless. If they believe that, they must accept that the majority of people are heartless because the Government are simply seeking to enact what they desire. In the Budget debate the right hon. Member for Salford, West (Mr. Orme) said:
On average the first £15 of any benefits claimed by a striker for his family is for him to pay. Then there is a further £12 on top of that, which makes a total of £27 before a striker's family starts receiving benefits."—[Official Report, 31 March 1980; Vol. 982, c. 62.]
That is not true. We are saying that the union should pay the £12. We are not saying that a striker should be deprived of that sum but that other arrangements should be made for that £12 to be paid. If the £12 is not paid, let people direct their wrath against the unions, not against society.
I say to the right hon. Member for Norwich, North (Mr. Ennals) that the Conservative Women's Federation must also understand that. We face not only a "why work?" syndrome but a "why not strike?" syndrome. Strikes have ceased to be a measure of last resort. They have become the measure of first resort.
The hon. Member for Isle of Ely said that we were indulging in a political fight with wives and children and not with unions. That is untrue. We wish wives and children to receive the £12 a week referred to in clause 6. We wish them to receive it from the unions, not from the Government. It is wrong to prohibit strikes. It is equally wrong for social measures positively to encourage strikes. Clause 6 is in line with our election commitments and the Budget strategy to try to find a proper balance between those competing claims.
I have referred to the "why work?" syndrome. For many years hon. Members on both sides of the House have said that there is unhappiness among people working for a low wage who see those staying at home receive more in benefits than they receive in earnings.
I have sympathy with the arguments about clause 1, particularly with those made by the hon. Member for Birkenhead (Mr. Field) in his typically courteous and helpful way. I have reservations about the reductions in the standards of living that will be caused by clause 1. Nevertheless, it is right, within the overall strategy, to make the provisions. We must concern ourselves with the unskilled who are working as well as with those who are not receiving benefit. There must be some encouragement for them. Those who are not working should not have the protection of index linking which is not afforded to those who are working and whose salaries are closely akin to the benefits of non-workers. Clause 1 does not make my heart leap with joy, but it is certainly defensible.
I turn to clause 4 and make it three in a row for Government Back Benchers. I am worried about the earnings-related supplement. The Government strategy is to shift the balance of employment from the public to the private sector and, at the same time, to increase incentives to work. During the election campaign we said that that would be a delicate balancing act and that there would probably be some increase in unemployment. That is generally accepted. Unemployment would probably rise anyway.
The first two measures of which I have spoken are in line with the Government's overall strategy, but clause 4 is not. The Chancellor of the Exchequer said that the ERS scheme had been diminishing in worth and effectiveness. He gave reasons why it is now possible to abolish the scheme. People have been making contributions to the scheme since the mid-1960s. In the Budget debate the right hon. Member for Salford, West, said that the average worker contributed slightly less than £9 per week and the employer £18 a week.
The question of what is to happen to those contributions has been raised. Most objective people will agree that we are discussing a form of retrospective legislation which some of us find a little difficult happily to accept. People who talk about moral commitments in politics are often regarded with suspicion. I admit that I believe that there should be some cognisance of moral responsibility in the political arena. I am, therefore, slightly uneasy about the ERS scheme.
Government policy is that people should move from unproductive to productive jobs. The willingness to do that voluntarily will be increased if people believe that they will not suffer unduly during the transfer. The Government want mobility of labour, but that requires time. People must look after their own interests during that time. The reduction of ERS runs counter to the Government's strategy. The abolition of ERS may have the negative effect of causing people to stay in unproductive jobs because they are afraid to move.
The Chancellor of the Exchequer said that ERS was no longer needed because of increased redundancy payments and sick pay. My hon. Friend the Member for Chippenham (Mr. Needham) has dealt with the economic arguments and shown that they are substantial. The Chancellor said that 10 to 15 per cent. at any one time would be involved. That could be 150,000 people, and with a turnover time of 10 weeks it might mean 750,000 people in a year. The Chancellor also discussed the cost. My hon. Friend the Member for Chippenham said that £285 million, £280 million and £130 million have been mentioned, but we do not know the cost. It is difficult to understand how £130 million can be found from the savings in earnings-related supplement, but in the context of the Budget it is not at all difficult to find £130 million considering that increased duty on alcohol will raise £288 million.
I support the Government's platform. I support the Budget and I support this Bill, with one reservation: I hope that it will be possible to talk about earnings-related supplement in more detail in Committee.
It is always a great pleasure to follow the reasoned arguments of my fellow Ulsterman the hon. Member for Peterborough (Dr. Mawhinney), but, having said that, I find myself in sympathy with a great deal of what was said by the hon. Member for Birkenhead (Mr. Field).
I do not think that anyone in the House questions the validity of reviewing social security benefits. Benefits need to be updated, and it is true to say that the situations for which benefits were inaugurated can change. That change sometimes renders the need for those benefits obsolete or creates anomalies.
We must look carefully at the provisions of the Bill and ask ourselves whether it will improve or damage the current situation. The Bill is like the curate's egg—good in parts and very bad in parts. Though there is an apparent balance in terms of the number of acceptable and unacceptable clauses in the Bill, there is no balance of importance between the two groups. We believe that the three unacceptable clauses are so important that we shall oppose the Second Reading of the Bill. It is my view and that of my colleagues that the acceptable provisions of the Bill are outweighed by the serious objections that we entertain about the Bill as a whole.
I do not wish to waste the time of the House, and I shall therefore spend the time available to me in an endeavour to explain why we intend to vote against the Second Reading.
I strenuously oppose a reduction in the uprating of benefits. The Social Security Act 1975 stated that sickness benefit, unemployment benefit and maternity benefit should rise in line with prices and the cost of living. As I understand it, a Bill in another place is intended to tie the invalidity benefit to prices alone, thus removing the linking of that benefit to the rise in earnings. It is estimated that price increases will reach 16·5 per cent. by November this year. This Bill will limit increases in sickness, unemployment, and maternity and invalidity benefits to 11·5 per cent. in November this year.
That is objectionable. I find it objectionable for three reasons. The first is because the level of benefit is to correspond with the 11·5 per cent. increase and not the 16·5 per cent. increase in the level of prices. That, retrospectively, penalises the needy. The second reason for my opposition to clause 1 is that the 1981 abatement of 5 per cent. will be based on the already abated 1980 increase. Similarly, the 1982 abatement will be based upon the doubly abated 1981 increase. We have been told, perhaps for good reasons, that the Secretary of State cannot give us an assurance that this abatement will disappear when these benefits are rendered taxable. That compounds our concern and adds to the sense of unease that we entertain.
My third reason for opposing clause 1 is that it is intended to yield approximately £133 million to the Exchequer. That may be no bad thing in itself. But, however we amass more resources for the nation, I do not believe that it should be the purpose of the Bill to amass those resources by fleecing the poor. At the end of the day however, that is what will happen. We are told that these benefits will not be taxable until 1982–83, but in the interregnum the Secretary of State is taking this opportunity to amass resources for the Exchequer at the expense of the poor. When we add to that consideration the irrefutable fact that if these benefits were rendered taxable in this financial year many of those whose benefits are being reduced by 5 per cent. would pay no tax at all, that provides a further reason why the needy should not be exploited in the interregnum.
Though I did not intend to do so, I advance a fourth reason for my opposition to clause 1. As I understand it, the principle of another Social Security Bill is that national insurance and supplementary benefit should be aligned. However, the latter will be uprated to 16·5 per cent. and the national insurance benefit by only 11·5 per cent. I believe, therefore, that we are breaking the principle already enshrined in another Bill.
We also oppose clause 2, which abolishes an index-linked increase in the earnings rule. No consideration appears to have been given to the rise in the cost of living, not to mention the increase in the level of earnings which is the objective of the Social Security Act 1975. On the basis of the increase in prices—the smaller of the two increases—the earnings rule should have reached £60·58. I believe that that figure is accepted by the Opposition Front Bench spokesman. However, the figure is being held at £52 for the foreseeable future.
The Government are clearly going back on their election manifesto promise, rather than moving forward on their commitment to the electorate. I appreciate that the Secretary of State is concerned to enhance employment prospects, and perhaps that point is related more to clause 5 than to clause 2. As an Ulster Member, I must make the point that such is the situation in Northern Ireland that many pensioners do not have the luxury of choosing whether or not they work. It is an absolute necessity for many of them to work, yet this clause will render it not worth while for them to seek employment.
I shall not bore the House by rehearsing some of the reasons why Northern Ireland pensioners need to work. The cost of gas is exorbitant—it is three times higher than in the rest of the United Kingdom. Electricity is much more expensive in the Province, and prices in private and public sector housing have shot up in recent months to the extent that the retirement pension simply will not meet the demands on many pensioners in Northern Ireland. There will be a real disincentive to many of those pensioners if this earnings rule is not abolished.
I move on now to clause 6 to question whether its objective is a legitimate and valid pursuit of a Social Security Bill. Much as I sympathise with, in some way, inducing the trade unions to make a more realistic assessment of the national situation, I doubt whether such a Bill is the right way to pursue that objective. Clause 6 is unique, in that its primary consequence is not the saving or creation of money. The Government are in no position to say that there will be a certain number of strikes next year or the year after and that they will therefore save a certain amount of money by invoking the £12 provision that is implicit in the clause. Since the incidence of strikes is not within Government control, the objective of the clause is clearly to strike at the rights of unions. Whether or not that is a vital priority, it is not and should not be an issue in this Bill.
Furthermore, the Government cannot ensure that payments from non-Government sources will enable families to exist, let alone subsist, at the higher theoretical level indicated by the supplementary benefit subsistence level. How can the Government determine whether a striker's family can exist, let alone subsist, in those circumstances?
The difficulties inherent in these clauses will force us to vote against the Bill tonight, and in doing so we hope that these clauses will be amended later into a form that will enable us to accept them along with the other clauses that are already acceptable to us.
I wish to concentrate on the effect of the Bill on families with children and to emphasise how regrettable it is that in the last Parliament we were not able to establish the principle that child benefits should be indexed. The Government would then have had to argue in the House against that indexation. If it had been possible in the previous Parliament to get the kind of fractured all-party agreement that existed on the earnings rule and on the Lawson-Rooker-Wise amendment, families with children would have been substantially better off. With such indexation child benefit would have been 30 per cent. more than it will be this November.
The social case for substantially higher child benefits has not been successfully opposed. On the general economic case, as I argued in an article in The Times on 25 March, it is even more essential to have substantially higher benefits.
I do not want to discuss the other parts of the Bill on which I fully agree with the Government. Equally I shall not concentrate on the areas of which I disapprove. I am not sure that my disapproval goes anywhere near far enough on the major mistake that the Government are making—a mistake made by all previous Governments in most of the years since the war, apart from the 1951–55 Government which increased the child tax allowance. Successive Governments have allowed income support for families with children to decline—in the case of families with two children under 11 from 5 per cent. of the married couple's pension to the low twenties.
The whole argument about Peter Townsend's relative or absolute definition of poverty is not relevant when we are considering the proposed levels of child benefit. That benefit is lower than it was 25 years ago, and since that time the general standard of living in this country has virtually doubled. In the last year there has been a 6 per cent. increase in disposable income, but not for families with children.
After making one or two statements in the House and outside about child benefit, a number of people wrote to me asking how to get more support for a campaign for higher child benefit. My answer to them is to join a political party or to attend their trade union meetings. One of the most disgraceful aspects of the Budget is the way in which the trade unions have not got up in arms in support of the high proportion of their members who have family responsibilities. Unions should represent those members just as much as they represent the members who are likely to retire soon. This is a question of bringing the family life cycle into social and economic policy.
People write to me asking why parents should get higher child benefit since that serves only to help increase the population. I tell them that that is neither relevant nor true. All the evidence that I have been able to discover shows that the higher the rate of child income support, the lower the birth rate. Even countries such as France which have deliberately set out to increase their birth rates have discovered that there has been a decline the same as or perhaps at times greater than ours. The only way to make sure that the birth rate increases is to drive people into poverty. I do not advocate that and I do not think that those who are not convinced of the need for higher benefits have that in mind either.
There is an economic advantage to higher benefits. But if we are to reduce the general level of pay settlements from the 15 to 20 per cent. range which appears to apply at the moment to a more sensible 3 to 5 per cent.—a figure which could be sustained by increased trade and productivity—over the next two or three years, which I assume is behind the Government's general economic and financial policy, how will there be relative equity for those in greatest need?
A letter that I answered this morning was from a single person who asked why he should pay to have child benefit increased. The simple response is to ask that person how, if he had been supporting a spouse and children on a single income, he would have been able to manage over the last few years. I do not believe that either side of the House can talk about family policy and politics until they are willing to see what has happened to the disposable incomes of those looking after dependants at a certain time. When people say that parents should have only the children that they can afford, I have to point out that parents cannot send their children back to the shop as they can send back a colour television when they can no longer afford the rental payments that they could manage when they were slightly better off.
It seems to me that it is just as impossible for people to provide for themselves before they go to work as it is to provide for themselves when they retire. The arguments apply equally. Some people would argue that parents should not have children until they can afford to bring them up. That argument could just as well be applied to the same income groups to say that they should not get a State retirement pension because they ought to be able to save up during their working lives for their retirement.
As the hon. Member for Birkenhead (Mr. Field) reminded me, part of my usual talk on this subject describes how housing costs can be spread over 20 or 30 years with a mortgage or with subsidies in the council sector. There is insurance for sickness, however it is affected by the Bill, for unemployment and for old age. Children are the only group to be left out. This area needs the kind of bipartisan approach which existed in the 1974 election manifestos. It seems that the Labour Party, the trade unions and much of the Conservative Party have lost sight of the primary target, which should be to make sure that when we all have to suffer the burden is spread relatively fairly and that when we prosper the benefit is fairly spread as well. During the past 25 years, that is exactly what we have not done for people with children.
Those who argue that we cannot afford a larger child benefit should ask "Where have we spent the extra 30 per cent, that we would have spent on child benefit if we still had the combined value of the child tax allowances and the family allowances?" The issue has been forgotten in mainstream politics. There are always convenient arguments for not bringing it forward.
I say to the Government, in the politest possible way, that I shall dedicate myself to this matter rather more over the next year or so. I hope that people do not expect me to curry favour with my Front Bench, as was suggested by the right hon. Member for Salford, West (Mr. Orme). I still have the same habit—which I have not thrown off as a Government supporter—of treating the Government on their merits on the issues involved.
I look forward to supporting the Government's general economic and financial policies, which I believe will be effective in raising prosperity, Above all, I look upon myself as almost the parliamentary father of family policy—I come 30 or 40 years after Eleanor Rathbone, who might be regarded as the parliamentary mother.
I did not know that the hon. Gentleman knew Eleanor Rathbone.
There is growing support, both inside and outside the House, for a reversal of the public expenditure proposal not to increase child benefit. I hope that the Government will decide that it is politically, economically and socially right to ensure that the level of child benefit continues to increase, and that we do not see the fall in real levels that we have seen in the past 25 years.
Had it not been for the time limit I would have been glad to lend my wholehearted support, in great detail, to the remarks of the hon. Member for Woolwich, West (Mr. Bottomley). He must have had many sleepless nights during the past 12 months as he watched his Government behaving in the opposite direction to that in which he would have wished them to behave.
It is not a coincidence that in the first Session of this Parliament a disproportionate amount of time has been spent on legislation and other measures which attack the living standards of those millions of people who depend in whole, or in part, on help from the social services, such as health, education, housing and national insurance benefits.
Not only are those services being cut back; if one takes a casual glance at the Government's White Paper on public expenditure for the next five years, one will see also that these services are to be the principal victims of continuous and sustained expenditure cuts. Expenditure on police and defence is not to be cut; it will increase substantially no matter what the economic circumstances. In order to achieve that, nurses, hospitals, children, schools and those unfortunate enough to exist on national insurance benefits will have to be sacrificed.
For the first time since the end of the war, the Bill makes provision for an actual cut, or cuts, in the value of national insurance benefits. The Minister spoke this afternoon about the need to save public expenditure in that area. However, when one looks at the defence White Paper and other areas where expenditure could be cut, one sees that it boils down to a question of priorities. That is where Conservative Members differ from Labour Members.
I say quite frankly that I shall vote against the Government's proposals on defence. I refuse to go along that road and support a policy of guns before butter, guns before pensions, and massive increases in police and Army salaries at the expense of old-age pensioners and children of families with low incomes. Those priorities are obscene and indefensible.
Clause 6 reduces benefits for strikers. When I heard the proposition put forward at the last election I could scarcely believe my ears. A striker is to be treated worse than a rapist. If a rapist goes to prison his wife and children are still entitled to supplementary benefit. That has always been the case, on the principle that they are innocent and that they should not suffer from the criminal act of the breadwinner.
Clause 6 provides that the wife and children of a striker—who may be perfectly justified in striking—will have £12 per week deducted from their social security entitlement. It will be assumed that the unions are paying that £12, even if they are not doing so. Part of the philosophy of the Government is "We must get tough with the unions because that is electorally popular". That may well be so. But it is also part of the doctrine of seeking scapegoats for the shortcomings of the Government's policy, which we have seen in other areas.
The local authorities are carrying the can for the reduction of social services provision at local level, increased rents, and so on. All those things come back to the Government's cuts in public expenditure. We have heard the emotive terms "the workshy" and "the scroungers". It is part of the Government's policy to place upon the shoulders of those least able to bear them the burdens of their failure to grapple with the real problems of the country.
As the Bill stands, it is true to say that £12 per week will be deducted automatically. That means that a family with two children will be left with £l3·5 per week, plus a rent allowance. Many Conservative Members have said that the unions should face their responsibilities. The assumption is that all strikes are inevitably the responsibility—and the fault—of the unions. However, there are wicked, inefficient and greedy managements. Many strikes are the fault of management. Let us consider the recent steel strike. The unions would argue strongly that the strike was due mainly to shockingly bad and inefficient management.
Yes, the Government bear responsibility also. It is nonsense to assume that all strikes are automatically and without exception the fault of the trade unions, and that they should foot the bill.
I tried to intervene in the Minister's speech earlier today to ask about a lockout. In that position, the employer says "We are not having you in. We will shut the doors on you".
Employers often say that. The hon. Member for Burton (Mr. Lawrence) must learn the facts of life. The Government are saying that if that happens the unions are still to blame and that they will have to foot the bill. The Minister knows—there is no more contemptible Minister than the Minister for Social Security, who is now occupying the Government Front Bench—that some unions are not wealthy. Some workers are badly organised. They are in weak unions, which are not able to provide strike pay. Very often employers take advantage of them because they are weak. They incite workers to strike. Some Tory employers may deliberately incite strikes to break the unions in the knowledge that the Bill is passing through Parliament. I know some employers who would do that.
Let us suppose that there is a strike and that the £12 is deducted. A wife may be left with three or four kids. She may well find that she is unable to support them without the £12. If she is not receiving strike money, she will go to the local authority to say "I cannot care for these kids. You take them off my hands." The local authority will take them into care. It costs at least £100 a week to keep a kid in care. What sort of nonsense is that?
I was a teacher before I became a Member of this place. A report on teachers' salaries has been issued recently. If I were a trade union leader in the NUT and said "We are not going to accept the contents of the report, but the Government are to fine us £12 a head", I should add "We shall not strike. We shall merely bring out the maths teachers in every school in the country. Alternatively we shall bring out the caretakers." We learnt last winter that if caretakers are brought out there are widespread school closures. That is the type of action that the Bill will incite.
Another option is to work to rule. We all know what that can do to the railways, for example. If key workers are brought out, the consequences are enormous—for example, the bringing out of 20 power station workers can black out the whole of London.
I am pleased to take up the remarks of the hon. Member for Fife, Central (Mr. Hamilton). By so doing I may balance things slightly. I am pleased that both of us will operate under the 10-minute rule. That is due to my inarticulate approach and because I would not want to have to listen to the hon. Gentleman for much longer.
In a democracy there is a great temptation for Governments to buy popularity with taxpayers' money. Precedents are set and commitments made in the name of compassion by those who seek to measure the amount of good that they do by the amount of other people's money that they spend.
I represent a constituency with a much above average number of self-employed. I usually talk about farming, fishing and distillery interests. It may be found strange that I should venture forth on social security. I shall explain myself. I am not exaggerating when I say that during the run-up to the general election of May 1979 everyone to whom I spoke at any length about politics brought up the subject that is introduced by the Bill. If there was one overriding political concern among those in the North-East of Scotland, it was the inquities of present legislation, whereby many who work hard and diligently and never come out on strike could find themselves not much better off than if they did not work at all. In fact, there are those who find that when they are sick and off work they are better off than while working. The Bill will go some way to correct the "why work?" syndrome.
I shall not go into the provisions of the Bill in detail because the proceedings in Committee will give us the opportunity to do that. We may examine the Bill line by line in Committee. The hon. Member for Birkenhead (Mr. Field) has left the Chamber. However, I was able to listen to the hon. Gentleman during the proceedings in Committee on the Social Security Bill 1979. He spoke at great length in Committee. I wondered at some of the arguments that he advanced.
The hon. Gentleman spoke of the means test. I thought that everyone in Britain had a means test. I thought, for example, that that was the method by which taxation was charged. I stand to be corrected. It has been said that we are penalising the sick, the weak, the elderly and the unemployed. However, as the hard-headed but soft-hearted people in the North-East of Scotland so readily understand, money must be made before it can be spent. That is my main reason for supporting the Bill. It represents a facing of reality.
We have heard of all the dire deprivations that will stem from the enactment of the Bill. They will be nothing to the deprivations that would follow Britain's bankruptcy. It is nonsense to say that all benefits should be indexed if we ignore whether we have the wherewithal to meet the commitments.
It is true that no one party has a monopoly of concern for the poor, the sick, the helpless, the elderly, the disabled or the unemployed. However, that has been suggested today. I have great concern about unemployment. It seems so often to be ignored that no person can be employed unless there is another person or business willing to employ him. That is why we must support the encouragement that the Government have given to employers to employ.
Can anyone say that any of the categories to which I have referred are to be seriously disadvantaged by any proposal in the Bill? I shall not waste the time of the House by going into detail. What is more, I do not have time to do so. I am sure that the arguments will be advanced adequately in Committee, including those on earnings related unemployment benefit and supplementary benefit.
But the broad question must be asked: is this a Bill for which there is general approval? I can say, without fear of contradiction, on behalf of the people of Banff whom I represent, that the answer is a resounding "Yes".
Perhaps I ought to congratulate the hon. Member for Banff (Mr. Myles) since, apart from the Secretary of State, he seems to be the only Conservative Member to have given a wholehearted welcome to the Bill. I expect that he is already lining himself up for the Committee. I wonder whether the Government will find places on the Committee for most of the Conservative Members who have been critical of the Bill, or whether, as with the earlier Social Security Bill, all the critics will be kept off the Committee so that it is filled with people who can be guaranteed to give the Government an easy ride.
Along with the Secretary of State, the hon. Member for Banff seemed to have little conception of what it really means to be on the poverty line. What depressed me most about the Secretary of State's speech was his complete unwillingness to show any understanding at all of what it is like to have to live on State benefits year after year. Whatever his argument about whether it is relative poverty or real poverty, he obviously did not understand what it was about. He did not seem to have an inkling of what it is like to have only one set of clothes, bought at a jumble sale with little or no chance of renewing them for a very long time. He did not seem to understand what it is like to know week after week that, because one is out of work or sick, one's children will have to go short.
Having listened to the right hon. Gentleman, I thought that it would be worth while referring to just one letter from my constituency post bag, in the hope that he will be able to read it in the Official Report. It is one of many that I get frequently from people who are expres- sing their concern, their worry, at the low standard of living that they, their family and their children have to put up with.
The constituent wrote to me because she was concerned about the damp which has been penetrating one of the bedrooms in the flat that she occupies. There has been a long argument with the council about whose fault it is that the room is damp. She writes:
Thank you for your letter of the 13th March '80 with the letter from Mr. Wright of the Works Division. My comments on that letter are…I did what they advised last year and the problem was still there when the bad weather came round again. So when he says put foil on the wall before redecorating this year, this is not on this year as I can't afford to waste another £36 on redecorating of one bedroom again…If the problem is due to the tile floor of the communal stairway, then is it not the landlord's responsibility? I only wish the housing problem was not solved with blocks of flats and they built houses instead with the same size rooms. Then the problem of flying objects over the verandahs would not be there. Heating problems would also be different. A house that I could afford would be marvellous. From the 1st April our finances will be very thin from what I understand of the new Budget (1) prescription charges up and no exemption certificate for those on social security.
She is on invalidity benefit and that is why there is no exemption for her. She goes to the hospital every week. The letter continues:
(2) the concessionary bus pass for the disabled is not being re-issued after the 31st March.
That is a particular measure from the Tories in Stockport. That will be the position unless she pays out £31 a week, or, as she puts it,
£31 each for my husband and myself. I use it to go to hospital every week. We do not like being ill. We have to live with it.
(3) Rent, heating, up, rates, and higher price electricity, TV licences up.
(4) Invalidity benefit stays around the same. The new rules of the Budget are very hard to understand. I for one get very worried and depressed when I cannot give my family the things they need—a balanced diet, clothes renewed, shoes and bedding renewed. I have been trying to do this now for 26 years, the length of time my husband has been a sick man. How can we live? I can remember being hungry as a child and no shoes on my feet (clogs) and patched clothes to wear. No bedding, just old coats. Those days I thought had gone forever.
She adds a PS:
I pray that we could get a Chancellor who could understand that we do not ask for more than a decent chance to live.
I suggest that we also need a Secretary of State who has some understanding of that sort of problem. From his speech today, it seems that the right hon. Gentleman does not understand what poverty is like. I would challenge him to come to my constituency, or to the constituencies of any of my hon. Friends who are in the Chamber at the moment, and to talk to people who are on the poverty line. They would know what it is like to have any cuts in benefits. They are the ones who will be suffering from the Bill.
I should like to ask the Minister one or two questions. First, how many people remain on invalidity benefits, sickness benefit or unemployment benefit, or a combination of these, for the whole of the tax year? Will not most of these people be £1 a week worse off as a result of these measures? If he adopted in full the idea of taxing benefits, is it not likely that they would have no tax, or very little, deducted from their income? Is he not robbing these people of £1 a week by this interim measure? However much he may say that the full measure will save more money, those people are much worse off as a result of this interim measure.
The Minister has repeatedly refused to say what will happen when we get to the full tax imposition. Will he then make up the benefits for the amount taken out this year? He said that he cannot predict the future or commit a future Government, yet there are instances in the Bill where he is committing the Government to a proposal for 1981–82. When we talk about the maternity benefit increasing, he talks about putting it away until the later part of 1982. If he can commit the Government on those sorts of things when deferring expenditure, he ought to be able to give a commitment to the House that if he is doing it as an interim measure he will at least restore the value of these benefits once they are brought within the tax framework.
The Minister was also challenged about the fundamental principle of insurance. It is no good saying that it is done on an annual basis. That will not convince my constituents who have been paying graduated contributions for the last five or six years and who have never drawn any when they come in the next two or three years to draw those benefits. It is no use telling them that they have either disappeared altogether or been phased out. They will feel that they have been swindled, and that if it is right for the Government to tear up one contract that they have made with them there is nothing to stop the Government tearing up other contracts.
Many hon. Members have dealt with the way the benefits for children have been cut back, so that I shall not press it further, but that is a particularly despicable measure.
I turn now to the clause which deals with taking away benefits from strikers' families. I urge the Government to accept that there may be at least one occasion when the blame rests not with the trade unions but with the employers. Will the Government consider some way of penalising the employers? Is not the logic of the measure that employers who cause disputes unnecessarily ought to be penalised in some way? Would it not be logical to demand that they pay tax on the profits that they would have made had they not become involved in the dispute? If the Government have an intention of trying to discourage industrial disputes, they should be even-handed in their approach.
What is the Government's attitude to clearing-up money? Frequently, when a dispute is finally solved, part of the agreement is that some money is paid out either for clearing up the mess—for example, if it is a refuse dispute—or in terms of a tacit agreement that there will be plenty of overtime so that lost production can be made up. In practice, the £12 will simply be an additional cost in the clearing-up argument. Very likely the unions will say that the employer ought to pay out. Where the unions are strong, they may well try to get the £12 out of the employers. But if the union is weak and is not successful, its members will be the ones who are in difficulty. It is really, in that sense, an attempt to penalise the weak unions.
What is the logic of the pay-round negotiations? I assume that most trade unionists this year will be asking for extra pay to make up for the loss in benefit contained in the Bill. Presumably, if we follow the Government's logic, unions should also be asking for extra pay so that they can charge higher dues, to make sure that they have built up a powerful strike fund.
The Government are, in effect, very firmly telling trade unionists "Make sure that you put your wage demands in that much higher this time so as to take into account the Social Security (No. 2) Bill." Do the Government really want to fuel wage demands in this way? Have they really thought out the logic of it?
The next question I pose to the Government is what happens to the person involved in an industrial dispute who finds that either his family or his house is overcome by disaster? As I read the Bill, he will be ineligible not only for benefit for his family but for emergency needs payments. I hope that the Government do not intend this and that they will give us a clear answer. What will be the approach when there is already a matrimonial dispute within the family and the wife is living apart from her husband? Will her benefit be penalised or will she retain it? Or are the Government encouraging families to split up during disputes?
What depresses me about the Bill is that the Government have no idea—the Secretary of State certainly does not—of what poverty means. If the Government need to save money, they could do it by going after those who avoid the payment of income tax rather than hitting out at the poorest members of society who will have the most difficulty in retaliating.
The reason why this Government have to make any cuts at all is that the hon. Gentleman and his Government supported the policies that threw money at every problem, fuelling the fires of inflation. The result is that a responsible Government now has to do something about it.
It is satisfying for Back Benchers to see their Government implementing a manifesto promise. Few things can be more satisfying for us than the implementation of a manifesto promise that had the overwhelming support of the people at the time and still enjoys that overwhelming support. In the few short minutes that I have left, I want to refer to one of the promises made in our manifesto—the promise to see that the unions bear their fair share of the cost of supporting those of their members who are on strike.
Of all the measures in this courageous and necessary Bill, none will be so popular as clause 6. The reason is clear: in these days strikes normally hurt the public. They are specifically aimed at doing so. The public stoically put up with strikes but they can never understand why they should be doubly punished by having to pay strikers out of their earnings, savings and taxes, as well as having to suffer the harmful effects of strikes.
The people who sent me here have never understood why those who wish to make a sacrifice for their principles—which is perfectly reasonable—should expect those whom they are hurting to make a sacrifice for them. Those who sent me here have never understood why people who marry and have children should be encouraged to surrender responsibility for the care of their families to others who have their own responsibilities and problems but who nevertheless continue to work, earn money and pay taxes. The concept of social security benefits for strikers and their families is completely alien and unacceptable to those who have their own responsibilities, especially when strikers' mortgages are paid, their rent is paid, their television rental is paid, or their hire-purchase payments are paid.
The hon. Member for Keighley (Mr. Cryer) does not strengthen his argument by calling me ignorant. I am merely stating that which is known to be fact, and any social security office will tell him as much. It is completely alien to every comparable Western society to give social security benefits of this kind to strikers and their families. It may surprise Opposition Members, who seem to think that there is nothing more morally wrong with those in work being forced to make sacrifices for others who too often try to extort an extra benefit—
Order. The hon. Member for Keighley (Mr. Cryer) is forgetting that if he wants to intervene he must ask to do so. He should not remain seated and continually shout across the Chamber.
On a point of Order, Mr. Deputy Speaker. I accept your stricture, but you will appreciate that when a person who is paid as a Member of Parliament, and who is a lawyer earning fat fees in the courts for part of the day, lectures strikers and others about supplementary benefits, it goads one into making remarks.
The hon. Member for Keighley would not have any success if he did seek to intervene, Mr. Deputy Speaker. So uninspiring are his arguments that he has to resort to making bogus points of order. He seems to have done so for most of the day.
It may surprise Opposition Members to know that until 1966 there never was any right for trade unionists who were on strike to enjoy the benefit, the taking away or reduction of which they are now bemoaning. I do not remember any great national clamour at the injustices of trade unionists not having the right to social security benefits when they went on strike. Most of the opposition to this measure is hollow and thoroughly unconvincing.
To begin with, supplementary benefit comes to less than 20 per cent. of the total expenditure of people on strike. It is all very well for hon. Members to weep for the children who will suffer, but they are largely protected because child benefit is automatically paid to mothers regardless of whether the husband is at work or on strike. It is all very well for Opposition Members to weep about the so-called low level of assistance given to the needy, but they did not weep when the families of steel strikers were considered to be more needy than the crippled invalids in our society who might have benefited by an increase of £1 per week in mobility allowance, which could have been paid had we not been paying the £9 million to strikers and their families, especially when the steel union had £l1 million out of which it could have paid benefits to strikers.
Apart from the economic benefits that would come to our citizens by reducing benefits to strikers' families there may also be a gain for industrial relations. If unions have to pay more for strikes than the 2½ per cent. of their income they now pay, they may be less inclined to strike or less inclined to do so for long periods. If strikers have to rely on their unions paying them rather than automatically receiving State benefits the union may have better control over unofficial strikers.
It is for those reasons that the people who sent me here overwhelmingly support this measure. It is not only those who sent me here who support this measure; The Sunday Times opinion poll shows that there is a 2 to 1 support for this measure throughout the country. It follows that those who oppose the measure are out of touch with the people, and that is doubtless why they lost the election.
My only regret is that the Government did not find it possible to do away altogther with the subsidy for strikers. Had they done so they might have instilled even more responsibility into some of the unions and some of those who see no need to be responsible for their own families. There might also have been fewer strikes, more productivity and more wealth created, and therefore more money available, so that some of the criticisms made by hon. Members need not have been made, or been justified. I hope that the time will come when we will look at the matter again. Meanwhile. I congratulate the Government on their courage in bringing forward the Bill and I hope that it is passed without amendment.
This is a remarkable piece of legislation, in one small respect. It is the first time in parliamentary history that we are repealing part of a Bill that is not yet even on the statute book. If we look at the schedule at the back of the Bill we see that it refers to the Social Security Act 1980. Part of that Act is to be repealed. But that measure is not even an Act yet, and the Government are already repealing part of it. I wonder whether it is valid to produce a Bill repealing part of something that is not even on the statute book.
Besides being a remarkable piece of legislation, this Bill is a squalid and nasty measure. It is nasty because it hits at the poorest and weakest in our society. It is squalid because it attempts, through a Social Security Bill, to introduce legislation that has nothing to do with social security, but everything to do with hitting the trade union movement. It is squalid also because it is underhand. The Government are using dirty tactics in doing it this way, rather than by more legitimate means within the House.
Clause 1 deals with de-indexation—a rather ponderous and nasty word. Not maintaining the indexation of benefits to the unemployed, sick and the handicapped in our society is really a nasty action. At present, average earnings are at least keeping pace with inflation. Earlier this week the Chancellor of the Exchequer said that the Government were allowing a 25 per cent. increase in their employees' earnings—that is above the present rate of inflation. The last report of the Department of Employment on the increases in earnings of the highest paid people in this country—those earning more than £20,000—shows that they are receiving at least a 23 per cent. increase in their earnings, on top of the enormous tax benefits that they received from the Government. Therefore, practically everyone else in the society is keeping pace with inflation—I accept that there are some lower-paid people who are not; but most people are—yet the poorest, the unemployed, the sick and the handicapped will not receive that benefit.
The fact remains that these sections of society are the hardest hit by inflation. If one is earning in excess of £20,000 a year and inflation goes up by 20 per cent. and one's earnings do not keep pace with it, one still has many choices. One can decide whether to replace the wife's car this year or next; one can decide whether to buy a Prestel set for the television this year or next; one can decide whether to have a video tape recorder. Even if one is lower down the income scale, one still has choices. One can give up some of the payments that were planned and put them off until next year. The things that one gives up in these circumstances are not the necessities of life.
The poorest people find that the large bulk of their income is spent on necessities—housing, clothing, heating and food. They have no choice. If they cannot keep up with inflation they must either buy second-hand clothes for the children in a jumble sale or buy cheaper cuts of meat. Those are the choices faced by the poor.
Also, in many cases the poor pay more for their basic necessities than do many of those who are better off. They do not have lump sum payments, and they cannot afford to go to big superstores on a monthly basis. They cannot afford to buy necessities in bulk at lower prices. They do not have the deep freezers which enable them to get food at cheaper prices. They have to buy on a daily basis from the corner store. As a result, they buy more expensively. This Bill will mean a dramatic loss for many of the poorest in our society. That is why it is squalid and nasty.
There is a class point to be made on clause 4. Most of this legislation is class based—it hits at the working class again and again. Let us look at the earnings-related supplement for maternity allowances and who receives it. If one is a woman in a profession, such as teaching—in other words, middle class—one will not lose by this clause. In teaching, and probably in other professions also, a woman who works up to six months of her pregnancy receives three months' full pay after she has left her employment. In other words, she is paid her full money up to the time that her baby is born. Thereafter, she receives three months' half pay. Therefore, earnings-related benefit does not affect her. It does not affect the middle-class professional woman. It hits the working-class girl. She may be employed as a shop assistant or be in a job where she receives no such benefit from her employer. This is a nasty piece of class legislation.
Most Opposition Members are particularly concerned about clause 6, which relates to strike pay. Perhaps I am ignorant, but I found the Secretary of State's speech very confusing. He used a variety of different terms when describing those who will lose this benefit. He used the phrase "strikers". Then, in response to an intervention from a Conservative Member, he used the phrase "those involved in an industrial dispute". He also used the phrase "those affected by an industrial dispute". I do not know the answer. Will only those whose union has specifically called them out on strike lose their benefit? Does the provision affect anybody in a factory or firm who is locked out by his employer because people in another firm are on strike and consequently his factory cannot operate. If that is the case, the provision is disgraceful. The whole legislation is disgraceful.
A union might specifically tell its members not to go on strike. I have been in such a position. During the steel strike one or two unions told their members not to strike. However, those members could not go to work because they had no work to do. Will those people find that they cannot get their benefit? If that is so, it is disgraceful. I hope that the Minister will answer those points.
Even if the provision affects only strikers, it remains part and parcel of a damaging piece of legislation that is directed against the working class. We have heard about the number of strikes that take place and the damage that they do to the economy. However, that proves only that the Government are incapable of reading basic statistics. If so, they should not be in office. Such statistics prove that this country's strike record is considerably better than that of many other countries. If the Government can read statistics, we must find other reasons for a piece of legislation that is directed against the trade union movement.
Many Conservative Members and many firms, insurance companies and banks which back the Conservative Party are after one thing. They want cheap docile labour. The Secretary of State tried to suggest that the Bill should be taken in two parts, and that clause 6 should be taken on its own. However, those parts come together. The reduction in unemployment benefit makes it less likely that people will take action and put their jobs at risk. People are less likely to stay off work when they are ill. They will stagger in to work. That is cheap docile labour.
The Government are attempting to castrate those organisations—the only organisations in some ways—that specifically work to protect the interests of the working class. This is not a single piece of legislation, but part of an overall design and strategy that seeks to hit the working class and to take all the power away from the trade union movement. For those reasons, I oppose this piece of legislation.
My hon. Friend the Member for Chippenham (Mr. Needham) referred extensively to the proposals on earnings-related supplement. My hon. Friend covered that topic adequately, and I do not propose to go over it again. I hope that my right hon. Friend the Secretary of State will do all that he can to ensure that the Treasury takes on board my hon. Friend's powerful arguments, so that at least the self-financing part of ERS, which I understood from an intervention that I made to my hon. Friend's speech is about 85 per cent., will be retained.
My hon. Friend the Member for Woolwich, West (Mr. Bottomley) dealt with child benefits, which I shall also not go over again. The Government have rightly admitted that the first effects of their counter-inflation policies will be to increase unemployment, and we should therefore reconsider ERS and increasing child benefit to a much greater extent.
I shall concentrate on clause 6, which proposes to reduce the payment of supplementary benefit to strikers' families. It is an excellent clause. I do not wish to place Labour Members in too uncomfortable a position. I am not a manifesto man. One should not be too detailliste about a manifesto. It is, however, worth saying that the Conservative manifesto at the last election said of this country's strike record:
One cause is the financial treatment of strikers and their families. In reviewing the position, therefore, we shall ensure that unions bear their fair share of the cost.
Few people in this country can be unaware that this Government's intention was to move towards a position where the trade union movement bears a greater share of the cost of financing the living standards of its members during strikes.
We have heard much hyperbole from the Opposition Benches. The hon. Member for Fife, Central (Mr. Hamilton) took up the point made by the right hon. Member for Salford, West (Mr. Orme). He suggested that trade union members were being treated worse than criminals—I believe that he said worse than rapists. A criminal has taken an action that has placed him outside the law. It would be quite wrong for his family and young children to be penalised while he is paying the price of his action.
Following that analogy through, the trade union movement becomes the criminal—and I do not accept for one moment that it is a criminal organisation. It is a responsible organisation—an estate of the realm. It can rightly be held responsible for its actions and those that it induces its members to take. The hon. Gentleman's argument does not stand up to examination.
The Employment Bill makes it possible for a striker to end up in prison. Is the hon. Gentleman suggesting that before a striker goes to prison he will not receive benefit but if he happens to go to prison his family will receive benefit?
Like many of his hon. Friends, the hon. Gentleman appears to believe that it is his duty and that of the trade union movement to encourage trade unionists to place themselves outside the law. That is not the traditional role of the movement or the intention of responsible leaders within it.
The right hon. Member for Salford, West quoted extensively from Mr. John Gerald Gennard. I took the trouble during the debate to leave the Chamber and follow up the somewhat selective quotations that the right hon. Gentleman made. The chapter that he quoted from opens with this sentence:
The general principle of national insurance legislation is that those involved in a trade dispute are disqualified from benefit. The definition of a trade dispute contained in the Trades Disputes Act 1906 means that workers locked out are also disqualified, along with those who refuse to cross picket lines and those who are indirectly involved in disputes.
My right hon. Friend the Secretary of State said that, since the National Assistance Act 1948, increasing numbers of strikers had claimed this benefit on behalf of their families. In the hook by Professor
Gennard there is a table which makes the position clear. It gives the figures from 1949 to 1974. In the years 1949, 1950, 1951 and 1952 there were no recipients. The way in which the figures increase over the years until we reach the final date given, 1974, is staggering. My right hon. Friend developed the theme further, giving us the cost to the taxpayers of the recent steel strike.
Perhaps the most selective thing that the right hon. Member for Salford West did was to imply that the treatment proposed under the clause was different from that given by other countries, by our partners in Europe and indeed by the United States. He quoted one sentence:
In some cases such assistance—
that is the additional assistance which the other countries are alleged to give—
is provided from central Government funds but in others it is only available from a lower level of Government.
I then read on to see what was this kind of assistance. For example, I found that in Holland there is a possibility that any assistance can be recovered by the authorities, and that in Germany assistance is repayable and severe standards are applied to decide what is hardship. In France there is an example which I am sure will appeal to many hon. Gentlemen. The passage continues:
However, in practice, in the "left-wing"-controlled municipalities, sympathy with strikers is usually shown by giving assistance in kind, usually free meals and food parcels.
Earlier the hon. Member for Bootle (Mr. Roberts) introduced a Ten-Minute Bill to provide for a kind of independence for Bootle. I dare say that hon. Members representing the area would approve of this dispensation for food parcels and other kinds of charity. To imply that the assistance listed here is given by other countries but not by this country is to mislead the House.
In conclusion, I quote from the final paragraph of the chapter quoted by the right hon. Gentleman. It describes the kinds of measure that we should consider. It says:
In many countries the issue of public aid to strikers has not become the centre of debate as in the UK and the USA because there are fewer strikers and few very long and big strikes where the need for assistance is likely to arise. In addition"—
this is the most important point—
the trade unions provide a more generous level of strike pay in disputes than those in
Britain so that official strikers are often receiving financial support from their trade unions at a level which excludes them from public assistance programmes.
I regret that the right hon. Gentleman did not see fit to quote that passage, as clause 6 takes an important step towards that position in this country.
The hon. Member for Watford (Mr. Garel-Jones) was taking examples from Europe and he should therefore also take examples of wage rates and of the contributions that are made to trade unions. History will show that this Bill is one of the most despicable that this present Government have tried to put on the statute book. A lot has been said about the Bill being welcomed widely by the general public. That, I think, is only because the attitude of employers to what has happened has not really got across.
A person who becomes unemployed or sick faces a traumatic change because of finding himself not only unable to work but also unable to pay his way. What this Government have done is to deduct 5 per cent. from unemployment and sick pay purely and simply to try to force a person back into work. On top of this, they have stopped the tax rebate due to a person until he returns to work, and this has further implications for the finances of such people.
The earnings-related supplement was a scheme that was originally welcomed as a means of cushioning the first effects of unemployment. It was intended to provide benefit for a person moving from one job to another, so that he would not have the experience of dropping from a high level of income to a low level of income in the period in which he was making the change. In this connection, I should like to ask the Minister what happens to such schemes as the National Coal Board scheme, the redundancy payments scheme and the sick pay scheme, of which earnings-related supplements are part and parcel. Who is to pay that difference? Is the National Coal Board to pay it, or will the Government pay it, because the earnings related supplement is part and parcel of the income under the national redundancy payments scheme and the sick pay scheme.
Turning to the £12 deduction from payments to strikers' families—that is what it means, since, whatever the Government may say, the strikers have already had £15 deducted and the £;12 is deducted from the strikers' families—what is the legal position of the striking steel workers to whom an amount is already deemed to have been paid by the uinon but has not been paid? I have written to the Minister about this but have not had a reply as yet. What I want to know is the general policy position of people who have had an amount of money stopped from the social security payment to their families because it has been deemed that that money has been paid by the trade union, when in fact it has not. Will this money now be paid to those people? The Bill is trying to make the position legal, but if it has deemed that it has been paid beforehand I am sure that if is illegal.
Would my hon. Friend not accept that there is also a difficult legal position in the case of managements who cause lock-outs, because the trade union members will be locked out and therefore will be without work and will presumably come under this legislation? This is what happened when the British Leyland management at Speke created a strike. There is ample evidence of that. Would my hon. Friend care to enlarge on that?
I agree with my hon. Friend that is exactly what will happen. It will make a good employer bad and a bad employer worse. This is legislation against the trade unions and in the case of industrial disputes there will be an alternation in the attitudes and the implications of the disputes. What will happen is that trade unions will bring out selected people, and not the whole lot.
The question arises whether, if the employer then locks the other people out, the Government will legislate against the people who are locked out in addition to those on strike, because if they do that they will be changing the fundamental approach to all industrial relations.
I accuse this Government of two things. First, by their policies they cause unemployment and then they bring in legislation against unemployment pay. Thus they bring into industrial relations attitudes which cause strikes. And let us not forget that these are the champions of free collective bargaining. The Inns of
Court, a society of conservative lawyers, made the position quite plain when it said:
Thus it becomes clear that the right to strike can only be justified in a competitive economy.
It is that type of economy that the present Government champion.
As for a deterrent, it is not feasible to impose normal sanctions of a court of law on those who strike or call a strike that is unreasonable or irresponsible. One cannot send people to prison or enforce an injunction against them or even bring them all before a court of law and fine them. It is elsewhere that sanctions must be found.
The Conservative Government have sought to define these sanctions by legislation not against the striker but against the striker's family. This will lead to a worsening in industrial relations; the workers' attitude in a dispute will be intensified; strikes will tend to be made official immediately; co-operation between trade unions will be encouraged; the unions will withdraw selected work people, and there will be higher wage claims.
In spite of what has been said by Government supporters, trade unions do not have strike funds. Most union funds are invested in employees' welfare and sick pay schemes.
It is absolutely true. Most trade unions have no strike fund, so the legislation will compel more people to pay more into union funds. That will lead to higher wage rates and more disputes.
I noticed that the House was empty, so I thought that there should be some comment on the Bill from the heart of the West Midlands. Throughout the council estates of the West Midlands—I speak for one of the largest—there is a great divide between the incentives to work and the incentives not to work. The choice between whether to strike and to withdraw labour or to continue to work has become too difficult for the ordinary working man. Therefore, the changes proposed in clause 6 are extremely significant.
Whatever hon. and right hon. Gentlemen on the Labour Benches may say in their sophistry in the House, however they argue in favour of or against trade unionism or against the structural problems of trade unionism, this is the reality I should like to put before the House tonight. It is wrong that the money of the ordinary person living in an ordinary council house on an ordinary council estate should be used to support other people's right to withdraw their labour. Why should they continue to fund the right of other people to withdraw labour when they have no choice, no interest in and often no support for that decision? Should not the ordinary working person in the ordinary council estate have some form of redress or balance in the difference between working and not working.
We should not assume that the Labour Party has a right to speak for people on council estates. Some of them showed in May last year how popular is the Conservative Party. I assure the Opposition that on the council estates the most popular action the Government could take would be to make it more difficult for people to withdraw their labour.
I should like to see a little reality brought back to the great industries of this country. I spent 18 years working in one of them, having worked my way up from the shop floor. Many Opposition Members have never seen a shop floor and they speak from theory rather than from practice. What it comes to is that a worker may withdraw his labour but he must not depend on the taxpayer to pay for it. If a little justice is done by the clause, it will be justice well done.
The hon. Member for Meriden (Mr. Mills) has a bit of a cheek in claiming to speak on behalf of the West Midlands and making the allegation that my hon. Friends do not know what the shop floor is like. He has clearly not read the Bill. Most hon. Members have said that clause 6 is the major part of the Bill. I take a contrary view. There are equally important parts of the Bill to which I have a fundamental objection, but, at least, those hon. Members who have spoken have shown that they have read the Bill. The hon. Gentleman showed clearly that he had not read it.
One point made by the hon. Member for Meriden with which I agree was his implied criticism of the thin attendance for the debate. My hon. Friends and I who have been present would not go as far as the present Secretary of State for the Environment in swinging the mace above his head, but the Bill makes us feel close to that situation. We understand the implications of the Bill for people outside the House.
There have been more of my hon. Friends wishing to speak than Conservative Members. It has to be remembered that two speakers from the Opposition Benches were not members of the Labour Party but members of Opposition parties, entitled to have their views heard. We have shared our time with those parties. My hon. Friends have put up a good case against the Bill.
The Bill and its ramifications show that the Government have sanctioned a direct attack on the underdog, a declaration of war on the poor and the needy. Not much has been made of the fact—some of my hon. Friends have referred to it—that the Bill is a further attack on women's rights and benefits. I shall return to that aspect.
As my right hon. Friend the Member for Salford, West (Mr. Orme) said when the Bill was announced in the statement following the Budget, this measure is a fundamental attack on the trade union movement. The Government's hands are not clean on the matter of supplementary benefits for strikers' families. Up to now, many people would have regarded the Tory Party, in and out of Government, as generally sniping at the people of this country on whose backs they have trodden for so long. With the Bill, the Government have shown clearly not just to the Opposition but to people outside the House that they are spoiling for a fight. I reckon that they will get one.
It may not have become apparent to millions of people what will be the effect of the Bill on their benefits and the benefits of their families and their loved ones. That will come home later in the year. The people of this country, at the general election last May, did not sanction this Government offensive. They did not sanction what has turned out to be a very offensive Government. They did not sanction this Government offensive against the people.
The methods proposed in the Bill for cutting benefits were not contained in the Tory Party manifesto. The Government cannot claim that the manifesto gives them the right to take these measures. There are six substantive clauses in the Bill dealing with six separate issues. Three of those issues—the interruption of the linking of the weeks for benefit from 13 weeks down to six weeks, the earnings-related supplement and the unemployment benefit to occupational pensioners—were not mentioned in the Tory manifesto.
On the de-indexation of short-term benefits contained in clause 1, the Tory manifesto said:
Raising tax thresholds will let the low-paid out of the tax net altogether, and unemployment and short-term sickness benefit must be brought into the computation of annual income.
The computation of annual income is not used as the system under the Bill. There was no mandate in the Tory manifesto. On the earnings rule issue, in clause 2, the Tory manifesto said:
It is wrong to discourage people who wish to work after retirement age, and we will phase out the 'earnings rule' during the next Parliament.
The Government have said that there is only a temporary abatement. But it is a freezing of the system. Further legislation will be required to get the matter going again. It is clear that the Tories have reneged on the promise in the manifesto and the commitment made while in opposition.
The Government have no mandate for the provisions relating to strikers' families. Of strikes the manifesto said:
One cause is the financial treatment of strikers and their families. In reviewing the position, therefore, we shall ensure that the unions bear their fair share of the cost of supporting those of their members who are on strike.
The provisions in the Bill to cut benefits are not based on that proposition. Detailed arguments in Committee will show that the Government have no mandate for their proposals for strikers' families.
The hon. Member says that the provisions in three clauses were not included in the manifesto. By his logic, the provisions of the other three clauses must have a mandate. However, he argued that there is no mandate for them either.
I refer the hon. Gentleman to tomorrow's Hansard. I have tried to spell out how the provisions in each of the six clauses were dealt with in the manifesto. I said that the provisions of three of the clauses were not mentioned and, by implication, that those in the other three were mentioned. The methods proposed in the manifesto are not the same as those in the Bill. We are entitled to take exception to them.
Nobody, not even the Tory Party, claimed during the election campaign that economically all in the garden was rosy. I remember, as do almost too many of my constituents, having the distinct impression that the Tory Party thought that it had all the answers. However, millions of people were not told the detailed proposals of the Tories' plan to cut spending on the Welfare State.
For instance, the people were not told that the party which bellyached for years about widows planned to cut £15 million from expenditure on widows. I am surprised that we have not received representations from the widows' associations. They were not slow in coming forward to complain that the Labour Government did not do enough for widows. However, the Labour Government never cut widows' benefits as the Bill does. Clause 4 cuts widows' benefits by £15 million. Benefits to mothers are cut by £35 million in the same clause. A total of £50 million is to be taken from women as a result of the earnings-related supplement.
One must examine the other side of the Budget equation. The Budget gave a £70 million handout in capital gains tax. Is that to be paid for by widows and mothers in the first 26 weeks of widowhood and motherhood? We have not heard complaints from Government Members about that.
The hon. Member for Watford (Mr. Garel-Jones) devoted his speech to one clause. I had the distinct impression from his previous speeches that he does not agree with the other five clauses but that he could not bring himself to say so tonight. If he wants to claim that I am wrong, I shall be happy to give way to him.
I am flattered that the hon. Gentleman should pay so much attention to my speech. I opened my speech by referring to the contributions by my hon. Friends the Members for Chippenham (Mr. Needham) and Woolwich, West (Mr. Bottomley) and said that, since I agreed with the content of both, I did not wish to trouble the House by going over the same ground.
The hon. Member for Watford is against five clauses and in favour of one and he will vote for the Bill. We shall put him to the test on Report if he is not a member of the Committee.
The Tories did not only say that they would take action on strikers' families but they went out of their way to say that they would not cut benefits. They accused us of lying when we said that we feared that that was what they would do. My hon. Friend is being too kind to Government Members.
I hope that when I sit down I shall not be accused of being too kind to this reactionary Government.
It must be made clear that all widows are affected by the Bill, including the widows of men killed at work. That point has not been made in this debate. Industrial injury benefits are cut in the Bill. They are cut under the abatement and they are cut under the earnings-related rule. The widows of men killed at work or who die as a result of contract-a work-related disease will lose the earnings-related supplement.
Of course, we are speaking of a small number of people. On average, only 25 to 30 people die each week in this country as a result of an accident at work or of industrial disease. Those people are the underdogs whose families we should be looking after, yet they are the very people being attacked by the Government. However, I suspect that once the trade union movement gets wind of some of the effects of these cuts—Bank Holiday has intervened and the Bill is being rushed through so that the Government can effect the cuts by November—the Government will know about it.
This is not a Bill, as some Conservative Members have said, designed merely to attack strikers and create work incentives. How the hell will we achieve work incentives by cutting the benefits to the families of those killed at work? That is a provision in the Bill and it should be made abundantly clear to people outside this House.
The philosophy behind this Bill is nasty, sick and nauseating. What are the Government doing? If they think that the sick and the unemployed will take this lying down without fighting back, they have another think coming.
It is appalling that we know from press reports—I have no reason to believe that they are innacurate—that many Conservative Members believe that these cuts do not go far enough. In the Financial Times on 4 April, under the headline "Tory fire on Biffen", a story appeared which said that the Chief Secretary to the Treasury
came under sustained criticism from Conservative backbenchers last night for the modesty of the public expenditure cuts announced on Budget Day.
The Chief Secretary is alleged to have replied that the Cabinet had deliberately chosen a gradual strategy so that the country's social cohesion could not be overstrained. It will not be overstrained. It will be overstrained to breaking point and that will produce a whiplash that will throttle Conservative Members. It will be no good then for the Government to look to the Opposition to bail them out of the trouble they have landed themselves in with the trade union movement and the people.
The Government does not appear to belong to the party which was elected in 1970 when the right hon. Member for Sidcup (Mr. Heath) spoke of one nation. This Bill is splitting the nation apart. As we have seer, during the last 11½ months, the Government are soft on tax dodgers. They parade about the country alleging that the Opposition are soft on social security scroungers and those who abuse the Welfare State. So far I have never heard any of my right hon. Friends say that it is right to rip off the public purse. All we ask is a little sanity and that the Government should not chase the tadpoles while the whales are still in the ocean. Because of cuts in the number of tax inspectors, the Government have made it easier for people to fiddle the tax system.
At the same time, the Government have the nerve to attack those people who are off work because of sickness. The Government propose to save £185 million by cutting sickness benefits and part of the reason for that policy is alleged to be the search for incentives. The Gov- ernment say that their policy is not merely a matter of public expenditure cuts but also of incentives.
If the Government really believe that people off work are not ill, what do they say about the doctors who sign the sick notes?
They do not stop there. They follow it with an attack on unemployment benefit in the first 26 weeks with a saving of £110 million. They then attack injury benefit—the money collected by the work wounded, people who are at home off work, some of them never to work again and suffering from any one of 51 prescribed industrial diseases. That list of 51 is not very long. There are many other diseases that we believe are work related, but somehow we cannot seem to get them listed as prescribed industrial diseases. The sorts of diseases that people get from their work, and the benefit paid in respect of which is being cut by the Government, are cancer of the nose, lead poisoning, mercury poisoning, viral hepatitis and farmer's lung. When I read the definition of farmer's lung I thought that it ought to be called farm worker's lung, because I suspect that not many of the fat-fed farmers get farmer's lung. I suspect that it is the farm workers who suffer from it.
Speaking as a farmer, I can assure the hon. Gentleman that the disease is more prevalent among farmers because it usually occurs on the very small farms which do not employ farm workers.
The obvious solution is for the hon. Gentleman to vote against the Bill and against the attack on the work injured. [HON. MEMBERS: "Withdraw."] I did not say that no farmers contracted farmer's lung. I said that I suspected that it ought to be called farm worker's lung because farm workers were most affected by it. Therefore, there is no reason for me to retract what I have said.
Savings from the unemployment, sickness and industrial injury benefits will total £360 million. That figure is exactly the sum handed out in the Budget through the relaxation of stamp duty and capital transfer tax and through the profit-sharing scheme. These benefits will have been paid for. It is no good the Minister's arguing that it is a pay-as-you-go scheme when the benefit received relates to a contribution year which could be two years earlier.
The Secretary of State knows full well that the earnings-related supplement due to be paid between January 1981 and January 1982 was paid for by national insurance contributions in 1979–80.
The hon. Member is confusing two things. One concerns the measurement of the entitlement. The benefit in the calendar year is measured by the amount of the earnings-related contributions in the fiscal year. The second is that it is paid for by the contribution paid in the year in which benefit is received. The hon. Gentleman should recognise those facts.
That is the point that I described as deliberate sleight of hand. For millions of people outside their entitlement to benefit, depending upon the contributions in the previous tax year, is the link between the two. That is what they are concerned about. Of course, the Government have eased their position a little by announcing some of the changes before the end of the last tax year, and that has avoided their being placed in a worse mess than they are in already. I have here a quote that is a few years old, but it describes what will be the feelings of the people of this country over the cheating that is taking place over this benefit.
The broad mass of the people face the hardship of life undaunted, but they are liable to get very angry if they feel that they have been gulled or cheated.
Those words were uttered by Winston Churchill in 1943, but they are appropriate to the cheating that has gone on in respect of the cuts in the Bill.
Several times before, because Conservative Members do not like it. Occasionally there were words of wisdom from that old man. The words that I have quoted were words of wisdom. They were the truth and they apply to this Bill. The Conservatives will soon find out the truth of those words.
Clause 1 is a massive attack on the people. For the Government to bring forward this proposal and say that it is in lieu of taxation or that it is not proper taxation belies belief. The Government know that there are people in this country who during the next financial year will have a cut in benefits when their total annual income is less than the tax threshold. How can that be equality before the law when annual increments are treated on a different basis simply because of the massive cut that the Government will make? The cut will affect single people, couples, people on invalidity benefit and others. It can affect people at work. Someone who may have worked for nine months could be better off if his sickness benefit were taxed than he would be under this system. That is what is so crazy about this proposal. The Government claim that it will not hurt many people because the cut will bring in only £130 million, rather than the £450 million that they would have received from taxing benefits. However, it will be a different group of people who will pay for the cut.
I consider this clause to be a charge upon the people because it is in lieu of taxation. The Government have indulged in sleight of hand. They should have introduced a ways and means resolution on the matter. It is a tax measure, and they are trying to tax people in a grossly unfair manner.
I fail to understand how the House could sanction such inequality and unfairness to our citizens. I hope that Conservative Members, who talk about the underdog in society, equality and fairness, will follow their mouths with their votes when the time comes. They have not been good at doing that since the Government came to power. I am becoming sick of the speeches by Conservative Members, which are applauded in journals such as the New Statesman, who say "The Tories are talking about the underdog. We should hear something about that from Labour Members". Yes, Conservative Members do talk about the underdog. Yet they will vote at the end of the debate to kick the underdog in the teeth.
I turn to clause 6, which deals with strikers' benefits. The definition of a trade dispute is contained not in employment legislation but in social security legislation. My hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton) was correct in the example that he gave of workers locked out. Whether or not they are involved in the dispute, they will be caught by the clause. They will be caught whether or not they are members of a trade union. I shall be interested to hear the remarks of the Minister on this matter when he replies to the debate, bearing in mind the answers given by the Secretary of State earlier today. The Government think that they will find a way to differentiate between union and non-union members. Why is it that they have not yet been able to do that and enshrine it in legislation, so that their manifesto promise to put the burden on the unions could be carried out? They will try to use a back-door method. Such proposals will affect both official and unofficial strikes. About 90 per cent. of the disputes are unofficial, although the number of working days lost as a result of those strikes is out of proportion because of the odd massive strikes.
We have heard the changing tune of the right hon. Member for Leeds, North-East (Sir K. Joseph). I looked at the original quote in the Tory campaign guide for 1974. It was an excellent campaign guide for Labour candidates because most of them returned to the House after the election. It is incredible that the right hon. Gentleman should have used the words that he did at a Tory Party conference. What will happen when pictures of hungry children appear on our television screens? It will be the Prime Minister's equivalent of the Kampuchea experiment—starve them, send them out and tackle them in that way. The photographs that people have seen of the starvation in Asia will not be reflected in this country. But, believe it or not, there will be the odd example that Conservative Members will claim is blown out of all proportion by the press.
No, I shall not give way. I have only six minutes left. If I find that I can give way to the hon. Gentleman later, I will do so.
The Government's hands are not clean on the issue of supplementary benefit for the families of strikers. I can prove that the Government have been bounced into the measures contained in the Bill since October. We all knew that they were planning to act by way of a loan or by deeming that the unions had paid a certain sum. It was their intention to put that in legislative form. Both those approaches were found to be impractic- able. At one stage it appeared that the idea had been dropped.
When a striker went to a social security office a year ago to claim supplementary benefit, he was told that he could not claim it. He was given departmental form BO 3TD, which told him that he could not claim benefit. The form did not mention that he might be able to claim benefit for his dependants; no advice of that sort was given.
The issue was taken up by some of my hon. Friends and myself during the winter of 1978–79. It was agreed in principle that claimants should be made aware of their rights. Nothing was done before the general election. Late in 1979 a reprint of the leaflet was due, as was made clear to me in an answer given by the Under-Secretary of State for Health and Social Security on 25 October 1979. I asked the hon. Lady whether the words that appeared on the leaflet had been changed. She told me that they had not but that a reprint was due. She added that the issue I had raised with my right hon. Friend the Member for Salford, West would be taken into account.
I asked the Secretary of State only last week whether the words on the form had been changed since October 1979. I received a one word answer—"Yes". I telephoned my local office to ask whether it had a new form. It sent me a copy. At the bottom of the same form attention is now drawn, in bold capital type, to the right of the striker to claim benefit for his dependants. It states:
For information about benefit for dependants see leaflet SB11.
The Government have—
No; hang on. The Government have adopted a measure that I applaud. They are now telling people of their rights. I am demonstrating that the Government have been bounced. If they knew that they were to make the £12 reduction they would not have gone ahead with the reprint since October 1979.
There is £15 off for the person on strike and £12 off for the family. That does not leave much change at the end of the day for the small number who will be affected by this measure, or those who will receive the benefit.
Will the hon. Gentleman remind the House of the proportion of strikers' families' expenditure that is financed by social security payments? I have a feeling that it is about 14 per cent.
That is a question that the Secretary of State will be able to answer. I do not have the figure in my head. It is not my job, from the Opposition Dispatch Box, to answer questions. It is the Opposition's job to ask questions. The great tragedy is that usually we are not given answers. If we are given answers, they involve sleight of hand or are downright untruthful.
There is one person's hand behind the Bill. It is not the hand of the Secretary of State. I give him that credit. It is not even the hand of the renegade who will reply. It is the hand of the Prime Minister. As far as I know, no one has ever heard in the Prime Minister's words, or in her tone, an ounce of compassion for the underdog in our society.
The right hon. Lady had the nerve on 4 May 1979, on the steps of No. 10 to quote the words of St. Francis of Assissi. After 11½ months in Government those words have been warped so much that they now would read "Where there is harmony they bring discord. Where there is truth they would bring error. Where there was faith they have created doubt and uncertainty. Where there was hope they have created despair." That is despair that will be inflicted on millions of people—for example, the work wounded, widows, mothers, the sick and the disabled.
We shall oppose the Bill root and branch, and I hope that my right hon. and hon. Friends will be able to vote it down here and now.
Two fascinating trends have become apparent in the conduct of the Opposition during the course of this Session of Parliament. One is that, as one month succeeds another, the language becomes more extreme and the rhetoric becomes more frantic. The speech to which we have just listened is an example of this. A few months ago we were simply said to be damaging the Welfare State. Now I gather that we have destroyed it altogether.
The parallel trend is that the attendance of Labour Members in the Chamber to listen to these speeches has gone down and down, practically to vanishing point. When my right hon. Friend moved the Second Reading there were 12 hon. Members on the Labour Benches, heckling as loudly as they could. When the right hon. Member for Salford, West (Mr. Orme) was explaining to the House how the Welfare State was about to be destroyed, the attendance on the Labour Benches—for reasons that are not for me to say—went down from 12 to eight. Right through the debate, until the last half-hour, the exaggerated rhetoric has reverberated around the empty Benches.
If that is a point to be taken seriously, perhaps I should demand a recount, but certainly during a great deal of the debate there have been more Members present on the Government Benches than on the Opposition Benches.
There have been two main strands of argument. One has concerned the first five clauses, and the other has concerned clause 6. I should like to split my speech between the two, starting with the first five clauses. They represent a modest but necessary pruning of what would have been the expansion of the social security budget over the next few years. The first point to make is that it will still be an expanding budget. We have provided—and will be providing in regulations to be brought to the House in the next few months—for the uprating of pensions and all the other main benefits in November. Most important of all for the poorest in the community, there will be regulations to protect from price rises those within the supplementary benefit range.
The exaggerated language about attacking the poor and the sick is totally irrelevant to the content of the Bill. We are talking about a programme amounting to approximately £20 billion that is planned to grow at a rate of 2 per cent. a year in real terms. The issue is whether, within that very large total, there should be a pruning back which will amount to £270 million in the first full year and £480 million in the year after that.
The Chancellor of the Exchequer in his Budget speech reminded us—my right hon. Friend has since reminded the House of it and I make no apology for repeating it, because it is at the crux of the argument—that in the last 10 years the social security budget, in real terms, has grown by 50 per cent. It has grown more than three times faster than the gross domestic product in those years.
It is time that we had a serious debate—we could have done so today if the Opposition had been in the mood—on the question why the social security budget has grown to the extent that it has, why it has moved ahead of our ability to pay for it and why we now face, just as other Western countries do, the need to look carefully at this problem and challenge some of the decisions of recent years. My right hon. Friend mentioned similar problems in Germany, Holland, Australia and Canada.
The budget has grown for demographic reasons but also for other reasons. It has grown because successive Governments added new benefits and have never felt it politically possible to withdraw benefits already in existence. It has grown because the ground rules for benefits have been expanded and new people have become entitled to existing benefits. It has seldom, if ever, been considered possible to narrow the definition under which people are entitled to benefits. The social security budget has also grown because year after year the uprating of benefits has been in line with the cost of living, or, for benefits such as pensions, higher than the cost of living in some years; it has not been found politically possible to uprate pensions by less than the cost of living.
Does not the right hon. Gentleman agree that there are two categories: first, there has been a great increase in the number of elderly people receiving pensions and in the number of unemployed; secondly, there are new benefits, such as child benefit and benefits for the disabled, both of which were fully supported when his party was in opposition. What is the question all about?
The question is all about exactly that. All that the right hon. Member for Norwich, North (Mr. Ennals) has done is to repeat, in his words, what I said. The reasons are partly demographic and partly that successive Governments of both parties have taken an expansionary view of the Welfare State and have never challenged the assumptions upon which it is based.
The right hon. Gentleman says "rightly". I put it to him that the irony is that this social security budget, which is now over one-quarter of total public spending, has grown at a rate far beyond the ability of the nation to finance it. Therefore it has been one of the major causes of high taxation, high borrowing and one of the main reasons for our high rate of inflation. The victims hit hardest by that inflation have been the retired, the widowed and the chronic sick. In other words, the irony is that our policy—I deliberately say "our policy" because Conservative and Labour Governments have been involved—has done the greatest damage to those whom we have been trying to help most. We have to face this fact realistically. That is what the first five clauses of the Bill are about.
The Labour Opposition have totally failed to face the reality of this in today's debate, just as they have totally failed, since May 1979, to face any financial reality. They overspent when in Government. On top of that overspending they handed to the new Government White Papers for the growth of public expenditure—in the year 1979–80 for more than the preceding year, in 1980–81 for more still, and so on in successive years. On top of that, since last May the Opposition have filed one commitment after another on which to spend money that was not even in their public expenditure plans.
If all Opposition amendments to the first Social Security Bill had been passed in Committee it would have meant extra spending of about £2¾ billion a year, none of which was provided for in their public expenditure White Papers. Unhappily we have failed today to measure up as a House of Commons to a serious debate on the nature of the problem with which we are faced. Against that background I come to the first five clauses.
My hon. Friend the Member for Peterborough (Dr. Mawhinney) said that his heart was not jumping for joy at some of the proposals. Of course it was not; nor is mine, or anyone else's. But none of us would have wanted to make the proposals in any of these five clauses if we could have considered these matters in isolation from the ecomomic background. We had to make difficult choices, and no one has yet suggested any other parts of the social security budget that should have been cut in place of the reductions proposed here.
We see clause 1 as a rough and ready substitute for the taxation of these benefits. No one in this debate has argued against the principle of taxing these benefits. The hon. Member for Birkenhead (Mr. Fields) nods in agreement with the principle of taxing benefits. He was right in saying that the provisions in this Bill do not amount to taxation. They are not as finely tuned to individual circumstances as taxation would be—
I have spent the last 10 minutes explaining why we must do it. The Bill will make a substantial contribution to the savings that I have described.
I understand the particular difficulties that hon. Members feel about invalidity benefits. However, the essential parallel here is the sickness benefit. At present neither benefit is taxed; in future both will be taxed. In the interim period it is reasonable that both should be treated in the same way. Hon. Members have drawn a parallel with retirement pensions, claiming that these are long-term benefits. I remind them that retirement pensions are taxed and are included in the taxable income of every pensioner.
Will the right hon. Member make clear that the basic old age pension is not taxable because it is below the threshold? The point that we have been making is that people on benefits—particularly the invalidity benefit—will face a cut even though their annual income is below the tax threshold.
The hon. Member's first point is correct. The retirement pension is taken as part of the total income for tax purposes. The invalidity benefit will be so taken in future. In the meantime, we do not have taxation proposals in front of us; we have a rough and ready substitute to last until 1982, when we hope to bring in proper taxation.
On clause 2 I repeat that the total abolition of the earnings rule remains our objective. The stages by which we achieve that objective depend upon the financial situation year by year. I was asked specifically by my hon. Friend the Member for Rochester and Chatham (Mrs. Fenner) whether we intend the proposal in clause 2 to be for one year only. We profoundly hope that it will be for only one year, but no one can give a total guarantee about the position 12 months from now. It is certainly our objective that this should be just a temporary postponement of progress along the road towards the phasing out of the earnings rule.
There has been very little discussion on clause 3, and I take it from that that there is general agreement that there was a case for altering the rules about short spells and about the linking periods.
Hon. Members on both sides paid a great deal of attention to clause 4 on the earnings-related supplement. I understand the reasons why Labour Members pay a great deal of attention to clause 4 of any document. However, concern was also expressed by a number of my hon. Friends. I understand the reasons for that. I find this the most regrettable of the proposed cuts, but it is an essential part of the total arithmetic. Again I was faced with the question of possible alternatives. No alternatives have been put forward. In the total savings that we propose in the Bill, the abolition of earnings related supplement will provide a gross saving of £360 million in a full year when it is finally phased out.
There is no clear alternative in sight. My right hon. Friend the Secretary of State pointed out that, over the years successive Governments have not given this high priority. Earnings related supplement has been kept at a relatively low level. It has not been updated annually with the movement of prices. That shows that successive Governments have not given it priority when compared with other demands on resources. Again, that reflects the real situation. Earnings-related supplement was always regarded as a means of helping people to adapt to change and of encouraging them to accept redundancies and a period of unemployment while looking for another job. It provided a means of easing the transition.
The practical effect of redundancy payments has been much greater than that of earnings-related supplement. One must bear in mind the growth in the statutory redundancy scheme and the extent to which additional agreements have been made in the public and private sectors. Those of my hon. Friends who have expressed doubts should bear in mind that, much as they may regret it, it is a choice that we can live with. We can accept it as a regrettable but necessary part of pruning the social security system.
My hon. Friends the Members for Chippenham (Mr. Needham) and Peterborough asked about the effects of earnings-related supplement on contributions. It will be taken into account when contributions are next fixed for the year 198182. They did not suggest that it would be right simply to relate earnings-related contributions to earnings-related supplement and to the benefits mentioned in this clause. Earnings-related contributions pay for all types of benefits. They pay for flat-rate benefits on a graduated basis. They also earn the right to the earnings-related part of retirement pensions. That is far more important than anything mentioned in this clause.
My right hon. Friend used the argument that because the earnings-related supplement had fallen by about 28 per cent. it was not a high priority and could therefore be phased out. I remind the Government that they should never try to use that argument for child benefit. Child benefit is about 25 per cent. below the amount given 25 years ago.
No one would use that argument in relation to child benefit. The speech made by my hon. Friend the Member for Woolwich, West (Mr. Bottomley) on child benefit was typical of the sincere and well-informed way in which he has campaigned for a long time. He commands the agreement, in principle, of virtually every hon. Member.
If there is an equivalent saving on both, there is no saving in the public sector borrowing requirement. However, there is a reduction in public expenditure. Reductions in public expenditure that lead on the other side of the account to reductions in all types of taxation, including national insurance contributions, are desirable.
As for clause 5, there has been wide recognition that when someone has retired on a substantial retirement pension—I am not talking about those on small pensions—and that person registers for employment but finds none, he should not—for most purposes—be regarded as unemployed. That has been the view of successive Governments. Four attempts have been made to change the law. Many comments have been made over the years. I believe that the time has come when the House should resolve to do what successive Governments have wanted to do. I hope that the clause will go through.
Clause 6 is in a totally different category from the remainder of the Bill. It will save public money to a modest extent, but that is not its main concern. I commend the clause to the House irrespective of the economic situation. It is right in principle to make this change, which is well overdue.
It is not—I repeat not—an attack on the right to strike. It is an attack on the assumption that strikers should be subsidised by the taxpayers to the extent that has been so in recent years. It is an assertion that those who take strike action should accept the consequences. Those with families should provide for them, either through their own savings or from other earnings or, more usually, collectively through their union's strike funds. If it is suggested that in certain circumstances the individual or union cannot afford it, the answer is simple. There is the choice not to strike, to go back to work and earn the living that is available.
Will the right hon. Gentleman make it clear to the House that he is talking of those who are on strike and not all the others who may be affected by strikes? That is not clear in the Bill. If a person is locked out essentially because others are on strike, will that person or his family receive benefits?
The hon. Gentleman raises two points. The first is whether there should be a distinction between a strike and a lockout. There will be no distinction. There never has been in the operation of the law. The number of days lost each year through lockouts is very small. Most lock-outs occur as a step in an industrial dispute. An example last autumn was at Rolls-Royce Limited, where the workers were on strike for two days a week and Rolls-Royce locked them out for the other three.
The categories affected will be the same as at present—those participating in and directly interested in the dispute but not other categories.
The main accusation against us, which was eloquently made by the hon. Member for Birkenhead, is that in doing this we are hitting at families. It is unrealistic to assume that under present arrangements the striker does not benefit from supplementary benefit payments. He shares in the food and other facilities of the home financed by supplementary benefit payments. There is no practical way of ensuring that he does not. We are not abolishing supplementary benefit for strikers' families; we are reducing it by £12 a week. There will still be a safety net, although a low one.
In the recent steel strike the average payment to each recipient was £22 a week. The £12 reduction would leave an average of £10 a week for each recipient, with the same number of recipients. However, the number would not be the same, because those at the lower level of entitlement would be taken out of the equation. If the average was £22 a week, those with the greatest need—with large families or high rents—would have received during the steel strike considerably more than £22 a week and would therefore still receive benefits under the new arrangements.
If a person is involved in a strike who is not in receipt of strike pay or any other income and who is fanatical enough to carry on with the strike, even though it will make his children hungry, or, more likely who is under the thumb of those who are fanatical, we shall provide a safety net for him, although one a great deal lower than that provided at present.
I have been asked about regulations that may be made for urgent need payments. In general, those payments will not be available, but they will be available in certain circumstances. Clause 6 allows for the making of regulations. There are certain circumstances in which these payments should be available to everyone; for instance, if some extraneous event creates sudden hardship for the family—a robbery, a fire or an event totally unconnected with the strike, causing sudden hardship to the family. It remains a question that we are studying whether there should be a wider definition in relation to the non-unionist. However, we are studying it. There has been no final decision on this.
There is a case for saying this. Whereas the trade unionist can fall back—and is entitled to fall back—on his union and expect it to provide strike pay, the non-unionist is in a different position. Whatever we do about this, and whatever shape the regulations eventually take, I want to make it clear that we are talking about exceptional circumstances. The circumstances will be limited. They cannot go too wide—otherwise we should defeat the whole purpose of the exercise.
I am fascinated by the history of this matter. Prior to 1966, when the present arrangements were enshrined in legislation, the National Assistance Board had discretionary powers which it exercised according to ground rules similar to those in the 1966 Act. Before 1966 very little use was made of this by trade unionists. The total cost in 1960 was £75,000. In 1967, the year after the law was put on the statute book, it went up to £377,000. By 1969 the figure was £748,000.
In the 1970s we experienced a series of major national disputes, to which my right hon. Friend referred, in which the cost was very high indeed: over £3 million for the Post Office strike in 1971; £5½ million for the first major miners' strike in 1972; over £4 million for the miners' strike in 1974; and approximately £9 million for the recent steel strike.
Of course, we accept that the majority of strikes are over quickly and that the majority of strikers' families therefore never reach the point of entitlement. However, in these major national disputes, the availability of this money and the fact that the unions have not faced up to their financial responsibilities have been factors—certainly not in causing the dispute—in prolonging them and enabling the unions to prolong them beyond the point that would otherwise have been possible.
I was closely involved with the developments in this matter during the period from 1972 to 1974, when I was Shadow Employment Secretary. I noticed two trends in that period. One was that a symptom of the greater militancy of certain trade unions in that period was a positive decision to lean more heavily on the State for the maintenance of strikers' families rather than provide for them from strike pay. The second trend was that even if there had been no deliberate decision to do that, unions simply were not updating their provisions for strike
I do not believe that an earlier generation of trade union leaders would have tried to live by the rule that one grabs everything one can from the taxpayers in order to save the union money, even when many of those taxpayers are fellow workers who may be losing earnings because of one's own dispute. It is an intolerable situation. It is totally different from that in other Western countries. It deeply offends public opinion.
|Division No. 254]||AYES||[10.0 pm|
|Adley, Robert||Burden, F. A.||Fletcher-Cooke, Charles|
|Aitken, Jonathan||Butler, Hon Adam||Fookes, Miss Janet|
|Alexander, Richard||Cadbury, Jocelyn||Fowler, Rt Hon Norman|
|Alison, Michael||Carlisle, John (Luton West)||Fox, Marcus|
|Ancram, Michael||Carlisle, Kenneth (Lincoln)||Fraser, Rt Hon H. (Stafford & St)|
|Arnold, Tom||Carlisle, Rt Hon Mark (Runcorn)||Fraser, Peter (South Angus)|
|Aspinwall, Jack||Chalker, Mrs Lynda||Fry, Peter|
|Atkins, Robert (Preston North)||Channon, Paul||Gardiner, George (Reigate)|
|Atkinson, David (B'mouth, East)||Chapman, Sydney||Gardner, Edward (South Fylde)|
|Baker, Kenneth (St. Marylebone)||Churchill, W. S.||Garel-Jones, Tristan|
|Baker, Nicholas (North Dorset)||Clark, Hon Alan (Plymouth, Sutton)||Gilmour, Rt Hon Sir Ian|
|Banks, Robert||Clarke, Kenneth (Rushcliffe)||Glyn, Dr Alan|
|Beaumont-Dark, Anthony||Clegg, Sir Walter||Goodhew, Victor|
|Bell, Sir Ronald||Cockeram, Eric||Gorst, John|
|Bendall, Vivian||Colvin, Michael||Gow, Ian|
|Benyon, Thomas (Abingdon)||Cope, John||Gower, Sir Raymond|
|Benyon, W. (Buckingham)||Cormack, Patrick||Grant, Anthony (Harrow C)|
|Best, Keith||Corrie, John||Gray, Hamish|
|Bevan, David Gilroy||Costain, A. P.||Greenway, Harry|
|Biffen, Rt Hon John||Cranborne, Viscount||Grieve, Percy|
|Biggs-Davison, John||Critchley, Julian||Griffiths, Eldon (Bury St Edmunds)|
|Blackburn, John||Crouch, David||Griffiths, Peter (Portsmouth N)|
|Blaker, Peter||Dickens, Geoffrey||Grist, Ian|
|Bonsor, Sir Nicholas||Dorrell, Stephen||Grylls, Michael|
|Boscawen, Hon Robert||Douglas-Hamilton, Lord James||Gummer, John Selwyn|
|Bottomley, Peter (Woolwich West)||Dover, Denshore||Hamilton, Hon Archie (Eps'm&Ew'll)|
|Bowden, Andrew||du Cann, Rt Hon Edward||Hamilton, Michael (Salisbury)|
|Boyson, Dr Rhodes||Dunn, Robert (Dartford)||Hampson, Dr Keith|
|Braine, Sir Bernard||Durant, Tony||Hannam, John|
|Bright, Graham||Eden, Rt Hon Sir John||Haselhurst, Alan|
|Brinton, Tim||Eggar, Timothy||Havers, Rt Hon Sir Michael|
|Brittan, Leon||Emery, Peter||Hawkins, Paul|
|Brocklebank-Fowler, Christopher||Eyre, Reginald||Hawksley, Warren|
|Brooke, Hon Peter||Fairbairn, Nicholas||Hayhoe, Barney|
|Brotherton, Michael||Fairgrieve, Russell||Heddle, John|
|Brown, Michael (Brigg & Sc'thorpe)||Faith, Mrs Sheila||Henderson, Barry|
|Browne, John (Winchester)||Farr, John||Heseltine, Rt Hon Michael|
|Bruce-Gardyne, John||Fell, Anthony||Hicks, Robert|
|Bryan, Sir Paul||Fenner, Mrs Peggy||Higgins, Rt Hon Terence L.|
|Buck, Antony||Finsberg, Geoffrey||Hill, James|
|Budgen, Nick||Fisher, Sir Nigel||Holland, Philip (Carlton)|
|Bulmer, Esmond||Fletcher, Alexander (Edinburgh N)||Hooson, Tom|
|Hordern, Peter||Moate, Roger||Shersby, Michael|
|Howe, Rt Hon Sir Geoffrey||Monro, Hector||Silvester, Fred|
|Howell, Rt Hon David (Guildford)||Montgomery, Fergus||Sims, Roger|
|Howell, Ralph (North Norfolk)||Moore, John||Skeet, T. H. H.|
|Hunt, David (Wirral)||Morgan, Geraint||Smith, Dudley (War. and Leam'ton|
|Hunt, John (Ravensbourne)||Morris, Michael (Northampton, Sth)||Speed, Keith|
|Hurd, Hon Douglas||Morrison, Hon Charles (Devizes)||Speller Tony|
|Irving, Charles (Cheltenham)||Morrison, Hon Peter (City of Chester)||Spicer, Michael (S Worcestershire)|
|Jenkin, Rt Hon Patrick||Mudd, David||Sproat, Iain|
|Jessel, Toby||Murphy, Christopher||Squire, Robin|
|Johnson Smith, Geoffrey||Myles, David||Stainton, Keith|
|Jopling, Rt Hon Michael||Neale, Gerrard||Stanbrook, Ivor|
|Joseph, Rt Hon Sir Keith||Needham, Richard||Stanley, John|
|Kaberry, Sir Donald||Nelson, Anthony||Steen, Anthony|
|Kimball, Marcus||Neubert, Michael||Stevens, Martin|
|King, Rt Hon Tom||Newton, Tony||Stewart, Ian (Hitchin)|
|Kitson, Sir Timothy||Normanton, Tom||Stewart, John (East Renfrewshire)|
|Knight, Mrs Jill||Nott, Rt Hon John||Stokes, John|
|Lang, Ian||Onslow, Cranley||Stradling Thomas, J.|
|Langford-Holt, Sir John||Oppenheim, Rt Hon Mrs Sally||Tapsell, Peter|
|Latham, Michael||Page, John (Harrow, West)||Taylor, Robert (Croydon NW)|
|Lawrence, Ivan||Page, Rt Hon Sir R. Graham||Taylor, Teddy (Southend East)|
|Lawson, Nigel||Page, Richard (SW Hertfordshire)||Tebbit, Norman|
|Lee, John||Parris, Matthew||Temple-Morris, Peter|
|Lennox-Boyd, Hon Mark||Patten, Christopher (Bath)||Thatcher, Rt Hon Mrs Margaret|
|Lester, Jim (Beeston)||Patten, John (Oxford)||Thomas, Rt Hon Peter (Hendon S)|
|Lloyd, Ian (Havant & Waterloo)||Pattie, Geoffrey||Thompson, Donald|
|Lloyd, Peter (Fareham)||Pawsey, James||Thorne, Neil (Ilford South)|
|Loveridge, John||Percival, Sir Ian||Thornton, Malcolm|
|Luce, Richard||Peyton, Rt Hon John||Townend, John (Bridlington)|
|Lyell, Nicholas||Pink, R. Bonner||Townsend, Cyril D. (Bexleyheath)|
|McCrindle, Robert||Pollock, Alexander||Trippier, David|
|Macfarlane, Neil||Porter, George||Trotter, Neville|
|MacGregor, John||Prentice, Rt Hon Reg||van Straubenzee, W. R.|
|MacKay, John (Argyll)||Price, David (Eastleigh)||Vaughan, Dr Gerard|
|Macmillan, Rt Hon M. (Farnham)||Prior, Rt Hon James||Waddington, David|
|McNair-Wilson, Michael (Newbury)||Proctor, K. Harvey||Wakeham, John|
|McNair-Wilson, Patrick (New Forest)||Pym, Rt Hon Francis||Waldegrave, Hon William|
|McQuarrie, Albert||Raison, Timothy||Walker, Bill (Perth & E Perthshire)|
|Madel, David||Rees, Peter (Dover and Deal)||Walker-Smith, Rt Hon Sir Derek|
|Major, John||Rees-Davies, W. R.||Waller, Gary|
|Marland, Paul||Rhodes James, Robert||Walters, Dennis|
|Marlow, Tony||Rhys Williams Sir Brandon||Ward, John|
|Marshall, Michael (Arundel)||Ridley, Hon Nicholas||Warren, Kenneth|
|Marten, Neil (Banbury)||Rifkind, Malcolm||Watson, John|
|Mates, Michael||Rippon, Rt Hon Geoffrey||Wells, John (Maidstone)|
|Mather, Carol||Roberts, Michael (Cardiff NW)||Wells, Bowen (Hert'rd & Stev'nage)|
|Maude, Rt Hon Angus||Roberts, Wyn (Conway)||Wheeler, John|
|Mawby, Ray||Rossi, Hugh||Wickenden, Keith|
|Mawhinney, Dr Brian||Rost, Peter||Wilkinson John|
|Maxwell-Hyslop, Robin||Royle, Sir Anthony||Winterton, Nicholas|
|Mayhew, Patrick||Salisbury, Hon Timothy||Wolfson, Mark|
|Mellor, David||St. John-Stevas, Rt Hon Norman||Young, Sir George (Acton)|
|Meyer, Sir Anthony||Scott, Nicholas||Younger, Rt Hon George|
|Miller, Hal (Bromsgrove & Redditch)||Shaw, Giles (Pudsey)|
|Mills, Iain (Meriden)||Shaw, Michael (Scarborough)||TELLERS FOR THE AYES:|
|Mills, Peter (West Devon)||Shelton, William (Streatham)|
|Miscampbell, Norman||Shepherd, Colin (Hereford)||Mr. Spencer Le Marchant dna|
|Mitchell, David (Basingstoke)||Shepherd, Richard (Aldridge-Br-hills)||Mr. Anthony Berry.|
|Adams, Allen||Callaghan, Rt Hon J. (Cardiff SE)||Davidson, Arthur|
|Allaun, Frank||Callaghan, Jim (Middleton & P)||Davies, Rt Hon Denzil (Llanelll)|
|Archer, Rt Hon Peter||Campbell, Ian||Davies, Ifor (Gower)|
|Armstrong, Rt Hon Ernest||Campbell-Savours, Dale||Davis, Clinton (Hackney Central)|
|Ashley, Rt Hon Jack||Cant, R. B.||Deakins, Eric|
|Ashton, Joe||Carmichael, Neil||Dean, Joseph (Leeds West)|
|Atkinson, Norman (H'gey, Tott'ham)||Carter-Jones, Lewis||Dempsey, James|
|Bagier, Gordon A. T.||Cartwright, John||Dewar, Donald|
|Barnett, Rt Hon Joel (Heywood)||Clark, Dr David (South Shields)||Dixon, Donald|
|Beith, A. J.||Cocks, Rt Hon Michael (Bristol S)||Dobson, Frank|
|Benn, Rt Hon Anthony Wedgwood||Cohen, Stanley||Dormand, Jack|
|Bennett, Andrew (Stockport N)||Coleman, Donald||Douglas, Dick|
|Bidwell, Sydney||Concannon, Rt Hon J. D.||Douglas-Mann, Bruce|
|Booth, Rt Hon Albert||Conlan, Bernard||Dunn, James A. (Liverpool, Kirkdale)|
|Boothroyd, Miss Betty||Cook, Robin F.||Dunnett, Jack|
|Bottomley, Rt Hon Arthur (M'brough)||Cowans, Harry||Dunwoody, Mrs Gwyneth|
|Bradford, Rev R.||Cox, Tom (Wandsworth, Tooting)||Eastham, Ken|
|Bradley, Tom||Craigen, J. M. (Glasgow, Maryhill)||Edwards, Robert (Wolv SE)|
|Bray, Dr Jeremy||Crowther, J. S.||Ellis, Raymond (NE Derbyshire)|
|Brown, Hugh D. (Provan)||Cryer, Bob||Ellis, Tom (Wrexham)|
|Brown, Robert C. (Newcastle W)||Cunliffe, Lawrence||English, Michael|
|Brown, Ronald W. (Hackney S)||Cunningham, George (Islington S)||Ennals, Rt Hon David|
|Brown, Ron(Edinburgh, Leith)||Cunningham, Dr John (Whitehaven)||Evans, Ioan (Aberdare)|
|Buchan, Norman||Dalyell, Tam||Evans, John (Newton)|
|Ewing, Harry||Lamond, James||Roberts, Ernest (Hackney North)|
|Field, Frank||Leadbitter, Ted||Roberts, Gwilym (Cannock)|
|Fitt, Gerard||Leighton, Ronald||Robertson, George|
|Flannery, Martin||Lestor, Miss Joan (Eton & Slough)||Robinson, Geoffrey (Coventry NW)|
|Fletcher, L. R. (Ilkeston)||Lewis, Arthur (Newham North West)||Rooker, J. W.|
|Fletcher, Ted (Darlington)||Lewis, Ron (Carlisle)||Roper, John|
|Foot, Rt Hon Michael||Litherland, Robert||Ross, Ernest (Dundee West)|
|Ford, Ben||Lofthouse, Geoffrey||Ross, Stephen (Isle of Wight)|
|Forrester, John||Lyon, Alexander (York)||Ross, Wm. (Londonderry)|
|Foster, Derek||Lyons, Edward (Bradford West)||Rowlands, Ted|
|Foulkes, George||McCartney, Hugh||Ryman, John|
|Fraser, John (Lambeth, Norwood)||McCusker, H.||Sandelson, Neville|
|Freeson, Rt Hon Reginald||McDonald, Dr Oonagh||Sever, John|
|Freud, Clement||McElhone, Frank||Sheerman, Barry|
|Garrett, John (Norwich S)||McKay, Allen (Penistone)||Sheldon, Rt Hon Robert (A'ton-u-L)|
|Garrett, W. E. (Wallsend)||McKelvey, William||Short, Mrs Renée|
|George, Bruce||MacKenzie, Rt Hon Gregor||Silkin, Rt Hon John (Deptford)|
|Gilbert, Rt Hon Dr John||Maclennan, Robert||Silkin, Rt Hon S.C. (Dulwich)|
|Ginsburg, David||McMillan, Tom (Glasgow, Central)||Silverman, Julius|
|Golding, John||McNally, Thomas||Smith, Rt Hon J. (North Lanarkshire)|
|Gourlay, Harry||McNamara, Kevin||Snape, Peter|
|Graham, Ted||McWilliam, John||Soley, Clive|
|Grant, George (Morpeth)||Magee, Bryan||Spearing, Nigel|
|Grant, John (Islington C)||Marks, Kenneth||Spriggs, Leslie|
|Hamilton, James (Bothwell)||Marshall, David (Gl'sgow, Shettles'n)||Stallard, A. W.|
|Hamilton, W. W. (Central Fife)||Marshall, Dr Edmund (Goole)||Stewart, Rt Hon Donald (W Isles)|
|Hardy, Peter||Marshall, Jim (Leicester South)||Stoddart, David|
|Harrison, Rt Hon Walter||Martin, Michael (Gl'gow, Springb'rn)||Strang, Gavin|
|Hart, Rt Hon Dame Judith||Maxton, John||Straw, Jack|
|Hattersley, Rt Hon Roy||Meacher, Michael||Summerskill, Hon Dr Shirley|
|Haynes, Frank||Mellish, Rt Hon Robert||Taylor, Mrs Ann (Bolton West)|
|Healey, Rt Hon Denis||Mikardo, Ian||Thomas, Jeffrey (Abertillery)|
|Heffer, Eric S.||Millan, Rt Hon Bruce||Thomas, Dr Roger (Carmarthen)|
|Hogg, Norman (E Dunbartonshire)||Miller, Dr M. S. (East Kilbride)||Thorne, Stan (Preston South)|
|Home Robertson, John||Mitchell, R. C. (Soton, Itchen)||Tilley, John|
|Homewood, William||Molyneaux, James||Varley, Rt Hon Eric G.|
|Hooley, Frank||Morris, Rt Hon Charles (Openshaw)||Wainwright, Edwin (Dearne Valley)|
|Horam, John||Morris, Rt Hon John (Aberavon)||Wainwright, Richard (Colne Valley)|
|Howell, Rt Hon Denis (B'ham, Sm H)||Morton, George||Walker, Rt Hon Harold (Doncaster)|
|Howells, Geraint||Moyle, Rt Hon Roland||Wellbeloved, James|
|Huckfield, Les||Newens, Stanley||White, Frank R. (Bury & Radcliffe)|
|Hudson Davies, Gwilym Ednyfed||Oakes, Rt Hon Gordon||White, James (Glasgow, Pollok)|
|Hughes, Robert (Aberdeen North)||Ogden, Eric||Whitehead, Phillip|
|Hughes, Roy (Newport)||O'Halloran, Michael||Whitlock, William|
|Janner, Hon Greville||O'Neill, Martin||Wigley, Dafydd|
|Jay, Rt Hon Douglas||Orme, Rt Hon Stanley||Williams, Rt Hon Alan (Swansea W)|
|John, Brynmor||Palmer, Arthur||Williams, Sir Thomas (Warrington)|
|Johnson, James (Hull West)||Parker, John||Wilson, Rt Hon Sir Harold (Huyton)|
|Johnson, Walter (Derby South)||Parry, Robert||Wilson, William (Coventry SE)|
|Johnston, Russell (Inverness)||Pendry, Tom||Winnick, David|
|Jones, Rt Hon Alec (Rhondda)||Powell, Rt Hon J. Enoch (S Down)||Woodall, Alec|
|Jones, Barry (East Flint)||Powell, Raymond (Ogmore)||Woolmer, Kenneth|
|Jones, Dan (Burnley)||Prescott, John||Wrigglesworth, Ian|
|Kaufman, Rt Hon Gerald||Price, Christopher (Lewisham West)||Wright, Shella|
|Kerr, Russell||Race, Reg|
|Kilfedder, James A.||Radice, Giles||TELLERS FOR THE NOES:|
|Kilroy-Silk, Robert||Rees, Rt Hon Merlyn (Leeds South)||Mr. Terry Davis and|
|Lamble, David||Richardson, Jo||Mr, James Tinn.|
|Lamborn, Harry||Roberts, Allan (Bootle)|