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Up-Rating Orders

Orders of the Day — Social Security and Housing Benefits Bill – in the House of Commons at 4:02 pm on 20th April 1983.

Alert me about debates like this

Photo of Mr Jeff Rooker Mr Jeff Rooker , Birmingham, Perry Barr 4:02 pm, 20th April 1983

I beg to move amendment No. 1, in page 1, line 8, leave out 'month of June' and insert'months of June and December'.

The Chairman:

With this, it will be convenient to discuss the following amendments: No. 4, in page 1, line 8, after 'June', insert 'and December'.

No. 27, in page 1, line 17, at end insert 'provided that if it appears to the Secretary of State in the December of any year that the percentage rise in the general level of prices in the period of 12 months ending on 30th November of that year is not less than two percentage points more than the percentage rise in the general level of prices in the period of 12 months ending on 31st May of that year, he shall lay before Parliament the draft of an up-rating order increasing each of the sums in question in the following May at least by a percentage equal to the difference between those two percentages.'. No. 31, in page 2, line 1, leave out subsection (3).

No. 32, in page 2, line 5, leave out 'the period of twelve months ending on 31st May' and insert 'in the case of a review carried out in June, the period of six months ending on 31st May, and in the case of a review carried out in December, the period of six months ending on 30th November.'. No. 33, in page 2, line 5, leave out 'twelve months ending on 31st May' and insert 'six months ending on 31st May and the period of six months ending on 30th November'. No. 34, in page 2, line 5, leave out 'twelve' and insert 'six'.

No. 36, in page 2, line 5, at end insert 'and six months ending on 31st December'. No. 37, in page 2, line 10, leave out 'month of June' and insert `months of June and December'. No. 40, in page 2, line 10, after 'June', insert 'and December'.

New Clause 3—Twice-yearly upratings.'The Secretary of State shall, not later than six months after the date on which this Act comes in force, recommend to Parliament a method to provide for biannual upratings of the retirement pension.'.

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

Any danger that our debates relating to the income support of the best part of 20 million people in this country would be reported by the media has diminished because I am aware of only two journalists in the Gallery, others having higher priorities than those 20 million people.

The Opposition's aim with this group of amendments is to assist the Minister. The Opposition repeat the offer that they made on Second Reading, that if the Government are prepared to make a statement or accept any of these amendments, or seek to move any manuscript amendment to ensure that there will be no loss due to the changeover from forecasting to historic systems of uprating for social security benefits, we shall facilitate the passage of the Bill without much further ado. We remain ready at any time to give way to a Minister who wishes to make the Government's position clear.

Amendment No. 1 is clear in its intent. It calls for a review of social security benefits in view of what will happen to prices, not only once but twice a year. The whole thrust of the first group of amendments is to go for a twice-yearly uprating of benefits. It is not true to say that it cannot be done any more. That view has been put forward by both sides of the House and I imagine it will be today.

I wish to set out the two main arguments before I develop them in a little detail. Amendment No. 27 would give a trigger mechanism to the Government. It is not actually calling for twice-yearly upratings irrespective of what is happening to inflation. The thrust of amendment No. 27 is that if between May and November in any one year inflation has risen by two percentage points or more the Government would be required to bring in a further uprating to cover the change in the inflation rate. Obviously, that is quite reasonable. It is a reasonable assumption for this year's figures in any event. The Government have already forecast an increase of 50 per cent. in the rate of inflation between May and November rising from 4 per cent. to 6 per cent. The Opposition say that if there is an increase any larger than that there should be a second uprating based on a December review for a payment in May of next year. That is quite consistent with the timetable that the Government are allowing between a review in June of this year following May's retail price index for payments in November. Unless amendment No. 27 is accepted in some form and there is a gap of 2 per cent. in the rate of inflation, quite simply the pensioners, the unemployed and the long-term sick and disabled —almost everyone in receipt of social security benefits of one kind or another—will lose during a year at least a week's benefit. That is what the 2 per cent. gap actually amounts to over 12 months. One week's benefit may not seem much to hon. Members compared with the salaries we receive. I submit that one week's benefit to a pensioner, be it a couple or a single person or someone on an invalidity pension, is an enormous amount of money. It will make a tremendous difference on the margin to the standard of living of those persons or pensioners. The Opposition believe that this is a modest amendment that the Government ought to accept. The aim of the Opposition is to assist the Minister. We hope that he can give some answers to the questions posed on Second Reading. He was unable to answer them then due to lack of time.

The Minister is on record on umpteen occasions as saying how difficult it would be to narrow the gap between the announcement and the actual payment of uprating. I have no need to read the Minister's words. The Minister knows from his own evidence to the Select Committee on 15 December last year and from his own statement in the House on 7 February this year about the difficulties and the problems. In that intervening time, a solution has been found. Were it not for the admission by the Government that they can operate benefits now within five months of an announcement, it would not be reasonable for the Opposition to seek a twice-yearly uprating. Nevertheless, the Government have admitted that it is possible. They have explained their previous difficulties. It is quite clear that they no longer exist, and for that reason a twice-yearly uprating ought to be on the cards.

4.15 pm

Britain is not alone in having annual upratings, but most of our partners in neighbouring countries have more frequent upratings in their social security provisions, especially in respect of old age pensions.

I will briefly refer to three or four countries as examples. These are in respect of old age pensions and not other parts of the social security system. In Belgium, there is an automatic 2 per cent. rise in the pension if the retail price index rises by a 2 per cent. average in two months and on 1 January, a revaluation procedure relating to the general standard of living is applied. The general standard of living must mean an input of wages and earnings increases in the calculation in Belgium.

In Denmark, there is an adjustment on 1 April and 1 October for changes in the retail price index of three percentage points. In France, pensions are adjusted on 1 January and 1 July each year according to coefficients linked to changes in wage levels. Luxembourg has an automatic adjustment of pensions whenever the retail price index varies by 2·5 per cent. Pensions are also adjusted to movements in wage levels in that country. As for the Netherlands, on 1 January and 1 July each year, pensions are increased in accordance with a wage index relating to the 31 October and 30 April previous to those two announcements.

There is no dispute between what the Community partners are doing. Ireland in the past, if not at present, has had twice-yearly upratings. This is the position in the European Community as related to 1981, as published by the Department of Health and Social Security and given as comparative information. There has been much pressure on the Government from outside bodies, and I intend to refer to only one, to the effect that because of what the Government have admitted is implicit in the Bill—that we shall not know until June what the November uprating will be—it is possible to go for twice-yearly upratings. Age Concern reminded me of some of the comparisons I have given about our neighbouring countries and has been pursuing and pushing both Conservative and Labour Governments about the possibility of more frequent uprating of pensions. It hopes that attempts will be made in Committee to see whether we can carry that on to the statute book. I suspect and hope that there will be more than one political party represented in our Lobby unless the Government accept our amendments.

I shall not spend much time on the Library brief, because other hon. Members will wish to refer to it. However, it graphically details the reasons that Labour and Conservative Ministers have given in the past for saying that it is impossible to have more frequent upratings. The words are virtually the same every time, and have probably been written for various statements and in reply to parliamentary questions by the same civil servants. However, that is now water under the bridge, because we are in a new ball game, and therefore the Government must be more amenable about considering the possibility of a twice-yearly uprating.

The detailed report of the Select Committee on the Chancellor of the Exchequer's autumn statement gives the impression that it would be very much in favour of a more frequent uprating of social security benefits. Even in November and December, it did not accept the reasons given by Ministers for the long delay. Two out of three of the arguments were rejected by the Select Committee before it knew that the Government had found a way round the problem. Therefore, the thrust of the argument and the conclusion is that we should go for a more frequent uprating.

The Labour Opposition have not tabled all the amendments. Indeed, there is clearly cross-party support for the proposition and I hope that that will be demonstrated in the Lobby. I do not intend to steal from the hon. Member for Macclesfield (Mr. Winterton) any of his thunder when he speaks to new clause 3. However, if the Government reject our modest proposals, which are basically wrapped up in amendments Nos. 1 and 27, and which seek a twice-yearly uprating to prevent pensioners and others from losing, I shall ask my hon. Friends to support new clause 3. After all, the new clause implies that the Government must bring forward proposals, and so represents a fall-back position.

I hope that we shall learn something from the debate about Conservative party policy. Ministers may fall into the trap of saying that they are here to speak on behalf not of the Conservative party, but of the Government. Sometimes, Ministers are inclined to draw a distinction between the two. I mention that because of the exchange that took place in the Select Committee on 15 December. The hon. Member for Macclesfield asked the Minister a very short question, which appears on page 21 of the report as question No. 66. The question and answer leave me — and I suspect Members of other parties— in some confusion as to what Conservative party policy has been, and will be. The question was: If that is the case"— the case that the Minister had just made for not having more frequent upratings— why was it that on two occasions the Conservative Party pledged in its Manifesto that we would in fact have biannual increases in old-age pensions? Had we not in fact taken the cost into account? The answer was, "That, of course."

I am at a loss to know when the Conservative party put that forward twice and whether the Minister agreed that it should be put forward. Had the cost been taken into account? If so, why have not the Government found a way of bringing twice-yearly upratings into force in the very year in which they want to change the system of uprating anyway? Indeed, they intend to change the uprating in a way that is likely to lead, because of inflation, to a loss of more than £30 per week for a single pensioner during the next year if the Government's own inflation forecasts are correct.

Photo of Nicholas Winterton Nicholas Winterton , Macclesfield

I shall be extremely brief in moving new clause 3 which, in your wisdom, Mr. Weatherill, you have selected for debate with the first group of amendments. It states: The Secretary of State shall, not later than six months after the date on which this Act comes in force, recommend to Parliament a method to provide for biannual upratings of the retirement pension.

The Chairman:

Perhaps I can put the hon. Gentleman right. He can speak to his new clause, but he cannot move it now.

Photo of Nicholas Winterton Nicholas Winterton , Macclesfield

I was not moving the new clause; I was merely highlighting it and drawing its wording to the attention of the Committee. I am well aware that I am not permitted to move it, as it is grouped with other amendments.

I tabled the new clause because, like hon. Members in all parties, I feel deeply about the plight of many retirement pensioners. Many of us receive heart-breaking letters from pensioners, despite the policies that have been followed by successive Governments. All Governments since the war—not least this Government—have done an immense amount for our pensioners. I believe that in the course of the five upratings made by the present Government from November 1979 to November 1983 inclusive, prices are likely to have risen by about 70 per cent. and pensions by about 75 per cent. Therefore, I hope that even the hon. Member for Birmingham, Perry Barr (Mr. Rooker) will concede that this Government have improved the lot of pensioners.

Photo of Nicholas Winterton Nicholas Winterton , Macclesfield

I repeat that this Government have improved the lot of pensioners in Britain. Although the new clause is hostile to the Government, it is only right that I should concede that they have done a considerable amount for retirement pensioners. However, I tabled my new clause for the reason that the hon. Member for Perry Barr highlighted.

On two separate occasions the Conservative party has pledged in its election manifesto that, if elected to power, it would introduce a system of biannual increases or adjustments to the retirement pension. It could well be that since those two manifestos were printed and we contested those elections my party, in its wisdom, has changed its opinion because of the cost involved in a biannual uprating, or other reasons of which I am unaware.

However, if a respected political party that always drafts its manifestos responsibly included such a pledge, it had clearly given considerable thought to the issue. The new clause is particularly relevant, given the Chancellor of the Exchequer's decisions in this year's Budget, which are incorporated in this Bill. The Government have had undoubted success in reducing inflation faster than the Treasury expected. It is therefore unfortunate that the unexpected bonus received by pensioners should be taken away from them in the following year. That is unjust and unfair. Irrespective of what my right hon. and hon. Friends tell me, I believe that our pensioners are likely to be 2 per cent. worse off as a result of this Bill for at least a year unless the new clause, or any of the other amendments, are accepted by the Government.

Perhaps I should draw the Committee's attention to the confusion that clearly exists even within the Government. Yesterday, a question was tabled on this very issue. The hon. Member for South Ayrshire (Mr. Foulkes) put to the Under-Secretary of State for Health and Social Security, my hon. Friend the Member for Braintree (Mr. Newton), the following: That is unbelievable. Does the Minister seriously believe that he can hide the clawback by the deception of changing the system? Is he aware that the Chief Secretary to the Treasury answered my hon. Friend the Member for St. Pancras, North (Mr. Stallard)"— who is in the Chamber now— on 11 April by saying that the clawback from the pensioners would be £210 million?When will the Government allow the pensioners a real increase in their standard of living, instead of making them eke out a living on the poverty line?"—[Official Report, 19 April 1983; Vol. 41, c. 157.]

Photo of Nicholas Winterton Nicholas Winterton , Macclesfield

I am doing only what the hon. Member for Perry Bar did in a debate last week, during which I was the subject of many quotations by Labour Members. I am trying only to balance what happened on that occasion.

If there is doubt among Ministers about the clawback, I hope that my Front Bench colleagues will clear it up in this debate. It appears that there is a misunderstanding if the Chief Secretary to the Treasury says that there is a £210 million clawback and my hon. Friend the Under-Secretary of State says that there is not. I must accept, initially—

Photo of Nicholas Winterton Nicholas Winterton , Macclesfield

I think that the hon. Member for Ormskirk (Mr. Kilroy-Silk.) will do better to remain silent until he catches the eye of the Chair and is called to participate in the debate. If he continues to interject from a sedentary position, I might not continue in the vein in which he would wish me to pursue my argument.

Photo of Nicholas Winterton Nicholas Winterton , Macclesfield

I must accept the words of the Chief Secretary to the Treasury —

Photo of Mr Robert Kilroy-Silk Mr Robert Kilroy-Silk , Ormskirk

Perhaps my hon. Friend will remember that the hon. Member for Macclesfield (Mr. Winterton) is a nice chap and that he is doing his best.

Photo of Nicholas Winterton Nicholas Winterton , Macclesfield

As I have said, I must accept the words of the Chief Secretary to the Treasury, who clearly stated that there was a £210 million clawback.

The Government would be ill-advised to ignore the feelings of ordinary people, not only pensioners, on this issue. They believe that if the Government can achieve a reduction in inflation far greater than that planned by the Treasury, perhaps the most deserving of all—pensioners — should benefit from their success. I emphasise that this stems from the Government's success.

Photo of Mr Robert Kilroy-Silk Mr Robert Kilroy-Silk , Ormskirk

Is the hon. Gentleman amazed that, having levelled such an enormous charge at his Front Bench colleagues—he implied that one or other of the two Ministers to whom he has referred is lying or is incompetent — the four Ministers sitting mute on the Front Bench have not sought the opportunity to intervene to put the record straight? Does not their silence suggest that the hon. Gentleman and the Chief Secretary to the Treasury are right and that the Government have robbed the pensioners of over £210 million?

Photo of Nicholas Winterton Nicholas Winterton , Macclesfield

I am not so unfair to my colleagues as to draw the implication that the hon. Gentleman has suggested. I think that I have been reasonable in saying to my Front Bench colleagues that there appears to be some confusion and that I should accept the word of the senior Minister involved, the Chief Secretary, who vindicated the impression that there will be a clawback of about £210 million.

Photo of Nicholas Winterton Nicholas Winterton , Macclesfield

I hope that the debate will be taken seriously by the Committee. The hon. Member for Perry Barr opened the debate seriously and advanced a number of valid arguments. It is sad that some of his colleagues below the Gangway and elsewhere are trying to trivialise the debate. Their behaviour will not go down well with the pensioners.

Photo of Nicholas Winterton Nicholas Winterton , Macclesfield

I shall give way later.

I am making a serious point. I want to know whether my right hon. and learned Friend the Chief Secretary to the Treasury is correct, and, if not, whether my hon. Friend the Under-Secretary of State is correct.

Photo of Mr Andrew Bennett Mr Andrew Bennett , Stockport North

I appreciate that the hon. Gentleman has many commitments in the House, but if he had been present when the Select Committee on Social Services sat yesterday—

Photo of Mr Andrew Bennett Mr Andrew Bennett , Stockport North

—he would have had the opportunity in the early part of the sitting to put questions to officials from the Department. In so doing he would have been able to confirm his argument that there has been an attempt to save £210 million.

Photo of Nicholas Winterton Nicholas Winterton , Macclesfield

I am grateful to the hon. Gentleman. Likewise, if he had been present later in the same sitting he would have heard me put questions to officials on biannual increases of retirement pensions. All hon. Members have many commitments and responsibilities and it is not possible always to sit in one place for two and a half hours. We have other jobs to do and they are important. We all seek to do them to the best of our ability.

Photo of Nicholas Winterton Nicholas Winterton , Macclesfield

I shall give way later.

I seek clarification of the apparent conflict to which I have referred. The debate might be brought to a speedier conclusion if it is clarified once and for all.

Mr. Mike Thomes:

Go on, tell him.

Photo of Nicholas Winterton Nicholas Winterton , Macclesfield

I am coming near to seeking the defence of the Chair. The hon. Member for Newcastle upon Tyne, East (Mr. Thomas), who represents the simply divine or Socialist defectors party, and the hon. Member for Ormskirk, who at least is consistent in the views that he expresses, are seeking to trivialise the debate and prevent me from having the opportunity to present my case.

Photo of Nicholas Winterton Nicholas Winterton , Macclesfield

I ask my Front Bench colleagues to answer what I consider to be a valid question. Will my Front Bench colleagues admit that on two occasions in previous Conservative party manifestos it has been stated that, if elected to Government, biannual upratings of the old-age pension would be introduced? That is a straightorward enough question that I believe should merit a straightforward answer.

I have introduced the new clause because I remain unhappy, despite the discussions that I have had with the Under-Secretary of State, my hon. Friend the Member for Braintree, and the Minister for Social Security, my hon. Friend the Member for Hornsey (Mr. Rossi). However, I express my appreciation of the courtesy that has been extended to me. No one has done more for the disabled that my hon. Friend the Minister for Social Security. The new clause is before the Committee because I believe that retirement pensioners have been deprived of a 2 per cent. improvement in their pensions and their standard of living.

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

It would greatly facilitate hon. Members if, even before one of the hon. Gentleman's Front Bench colleagues answers his question about two pledges, he could assist us by giving the dates of the manifestos in which he thinks the pledges appeared—I do not want to read all the Tory party manifestos since the war —because that information would help us to understand the answer that I hope he will be given by one of the Ministers.

Photo of Nicholas Winterton Nicholas Winterton , Macclesfield

I think that that information will be forthcoming from one of my Front Bench colleagues. I want to leave the Minister who is to reply with something to say. If the pledges or assurances were given, I, too, should like to know when they were given. If they appeared in Conservative party manifestos, it is clear that the policy had been thought out. Perhaps even the cost of such a policy had also been thought out. I am confident that one of my Front Bench colleagues will provide the information.

The new clause gives the Government an opportunity to honour their commitment to pensioners and to ensure that, during the next 12 months, they are not deprived of the additional benefit that accrued to them during the past 12 months as a result of the Government's successful policy in fighting inflation. It would enable the Government later this year not only to give the pensioners 4 per cent. but to improve that offer in line with rising inflation. The lot of the pensioners would be improved if a biannual system were introduced. It would ensure that they received an increase that kept pace with inflation. They would not be kept waiting for almost 12 months for the increase that would enable them to maintain and not be subject to a reduction in their standard of living.

My contribution has gone on longer than I intended because of interventions. I promised to give way to the hon. Member for St. Pancras, North (Mr. Stallard). I shall do so now before I sit down.

Photo of Mr Jock Stallard Mr Jock Stallard , Camden St Pancras North

I was beginning to feel victimised, particularly as I have always understood that it is the normal courtesy in any Committee to give way.

When the hon. Gentleman was making the point about the Chief Secretary to the Treasury, I wanted to ask him if he would join us in pressing the question put by my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) at the beginning of the debate. Why is the Chief Secretary, or someone representing him, not in the Chamber for one of the most important debates of the whole Budget season? As has been said, the Bill is aimed at saving £210 million. Apparently there is controversy about that figure between the two Departments, yet the Chief Secretary is not present. Will the hon. Member for Macclesfield (Mr. Winterton) reinforce our request — because he might get an answer—and ask his Ministers if they will support our application for the Chief Secretary to be present?

Photo of Nicholas Winterton Nicholas Winterton , Macclesfield

I do not think it is my duty or responsibility to demand the presence of a Minister. He may well be employed on important duties elsewhere. All I can say to the hon. Gentleman is that I want an answer to the question that I have put. If representatives of the Government, or the civil servants in the box who are supporting my right hon. and hon. Friends, have to move quickly between here and the Treasury or to a telephone to communicate with the Treasury or with my right hon. and learned Friend, I am only too happy that they should do so.

Photo of Mr Clement Freud Mr Clement Freud , Isle of Ely

In view of what has been forthcoming from the Front Bench, would the hon. Gentleman care to hazard a guess as to whether his Ministers are professional or amateur mutes?

Photo of Nicholas Winterton Nicholas Winterton , Macclesfield

I have the highest regard for everyone who is on the Government Front Bench at the moment.

Photo of Nicholas Winterton Nicholas Winterton , Macclesfield

I am not sure that it is. Even if it is not, I still feel that I have a duty and responsibility as a Member elected for a north-western constituency to raise in the House matters which I believe are important and which have been raised with me by individual constituents and by organisations representing the elderly and those who are in need of help, advice and assistance. I will say no more.

I feel deeply on the issue. My right hon. and hon. Friends on the Front Bench know that already. As I said, I have put down what I consider to be an acceptable and reasonably worded new clause to give my Government the opportunity to ensure that retirement pensioners do not lose in any way. If the uprating method were changed next year rather than this year, I do not think there would have been any criticism of the Government. I made this point clear to my hon. Friend the Member for Hornsey previously, and I do so again. Unfortunately, no assurance was forthcoming on matters which I raised previously. It is for that reason that I have put down the new clause and other amendments, one of which has been selected.

Without further ado, I shall conclude by saying that I am here, when I should have been in a Select Committee upstairs, like the hon. Member for Stockport, North (Mr. Bennett), whose name also appears on the amendment list frequently and whose support I am delighted to have for my new clause, to get clarification from my party on two issues: first, was the Chief Secretary to the Treasury right or was he not; secondly, was it said in two previous manifestos that the Government would introduce a policy of biannual uprating of retirement pensions?

Photo of Frank Field Frank Field , Birkenhead 4:45 pm, 20th April 1983

I should like to speak briefly, like the hon. Member for Macclesfield (Mr. Winterton), to amendment No. 1, amendment No. 27 and new clause 3. I think the hon. Gentleman was wrong in suggesting that if we pass new clause 3, as I hope we shall, it will make good any clawback which the Government are attempting this year. It is crucial that amendment No. 27 is passed if we are to do that. In my brief contribution I hope to explain why.

On Second Reading, I welcomed the change which the Government were making. I thought it was a proper change for the House to make, provided two conditions were fulfilled. One was that if we again entered a period of rising prices the Government should consider moving towards upratings every six months. That is why amendment No. 1 is important; it gives Parliament a chance of moving towards twice-yearly upratings.

The second proviso that I attached to moving back to the historic way, as people have described it, of making good any shortfall caused by the rate of inflation was that no claimants should be worse off. My hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) put it well on Second Reading when he said that if we did not challenge the change that the Governent were making, pensioners and most other beneficiaries would be worse off to the extent of losing a week's pension or benefit.

I wish to put a simple question to the Minister. Am I right in assuming that had we maintained the old method of reviewing pensions and other benefits, beneficiaries would have got a larger increase this year than under the method proposed by the Government? I am happy to give way now so that the Minister can answer that point.

Photo of Mr Hugh Rossi Mr Hugh Rossi , Haringey Hornsey

I am happy to answer the hon. Gentleman now; it will save me answering him later. There would have been, only on the assumption that the Government would not have made an adjustment, but it was implicit that an adjustment would have been made because year in, year out, when forecasting has been wrong, in the past few years, adjustments have followed automatically. Therefore, that would have happened this year. Going to the historic method will avoid that necessity. Therefore, there will be no clawback.

Photo of Frank Field Frank Field , Birkenhead

I am grateful for the Minister's intervention. He has done two things. First, he has said clearly that there is a clawback and that by supporting the Government on the measure we will reduce the size of the increase which pensioners and other beneficiaries will get. That is the clearest statement we have had from the Minister on this. The second thing he said is not true. I hope my hon. Friend the Member for St. Pancras, North (Mr. Stallard) will take him up point by point on the occasions when Labour Governments have not made adjustments.

Amendment No. 1 would give an increase every six months. I respect the motives underlying new clause 3; it is important that if parties give commitments those commitments are fulfilled. I think the hon. Member for Macclesfield is wrong in assuming that if we pass his new clause we will prevent a clawback. It is important for him to look carefully at amendment No. 27. If we are to prevent the clawback which the Minister today for the first time has admitted will take place, we need to pass amendment No. 27. I hope we shall do so and that we shall also support the hon. Member for Macclesfield on new clause 3. That would lead to a double uprating each financial year for pensioners and other beneficiaries.

The medley of amendments which we are debating are important. I hope the Committee will prevent the Government from making a clawback by passing either amendment No. 1 or new clause 3, which would allow us to move to a regular uprating of benefits every six months.

Photo of Mr Andrew Bennett Mr Andrew Bennett , Stockport North

I support the amendments, but it is important to put the matter in context. Last autumn, the Government announced that, because they believed that they had overpaid pensioners, they would adjust the amount that would be spent on pensions and other benefits this autumn. Then, it amounted to £180 million. Everyone else knew that that was a clawback. Put another way, it meant that pensioners would receive a week's benefit a year less.

The Government were therefore talking about depriving pensioners of £180 million this autumn. There was outroar from their own Back Benchers, who said that that adjustment was totally unacceptable. As a result, the Chancellor looked for a new method of saving that money and has now come to the House with the Social Security and Housing Benefits Bill in which he is asking pensioners and others on benefit to face a sacrifice of £210 million — £30 million more. By changing the system, he is trying to mislead pensioners, the House and the country into believing that there will not be a public expenditure saving. But that £210 million works out at about a week's pension for each individual.

On another occasion, the Government said that pensioners would have to make a sacrifice. The then Secretary of State, the right hon. Member for Wanstead and Woodford (Mr. Jenkin), said that, as soon as the economy started to improve — [Interruption.] Is the Minister saying that I am wrong? At yesterday's Select Committee hearing, his officials confirmed that the Government are now making an extra £30 million saving compared with what they asked for last autumn.

In 1980, the then Secretary of State said that, as soon as the economy improved, the Government would ensure that pensioners shared in that improvement. We hear from almost every Minister that things are supposed to be getting better. Perhaps they do not believe it—perhaps they are part of the cut and run school that wants a June election because things will not get better in the autumn—but if they genuinely believe that things will get better, why is this measure necessary? Why cannot the pensioners enjoy some more money in the autumn? If the Government are uncertain about things getting better, surely the way to deal with the problem is to have two upratings—one now and another in the autumn so that pensioners can share in any increased prosperity that may occur.

That would be a reasonable approach, and the Government ought to support these amendments, especially if they stick by what the former Secretary of State said about pensioners sharing in any general improvement in prosperity. Otherwise, pensioners will not share in any such improvement until November 1984, the date of the next uprating, unless the amendments are carried.

Photo of Frank Field Frank Field , Birkenhead

I very much support my hon. Friend's argument that there should be twice-yearly uprating. Does he agree that even if there were a twice-yearly uprating from now on, that would still not make good the clawback which, for the first time, the Minister has admitted will occur this year?

Photo of Mr Andrew Bennett Mr Andrew Bennett , Stockport North

It would depend on whether the remainder of the Bill was carried in its present form or whether it was further amended. If it is carried in its present form, there will be a clawback of £210 million.

The Minister will no doubt argue that it is technically too difficult to have more than one annual uprating. My pensioner constituents simply do not believe that, especially when they know that price increases can be carried through in a matter of days, if not instantaneously. It seems easy to put up telephone, gas and electricity bills almost at the stroke of a pen. Even with complicated things such as income tax, it is possible to make rapid adjustments, particularly if the Government think that they are bribing people for an election.

If it is possible for such things to be changed quickly, why is it not possible for pensions to go up? It seems that the only excuse for not uprating pensions regularly is that the Treasury does not want to provide the extra money.

Photo of Nicholas Winterton Nicholas Winterton , Macclesfield

It is perhaps wrong of me to seek to come to the defence of my Front Bench, but I raised this matter yesterday in the Select Committee with officials from the DHSS. They said that biannual upratings of the retirement pension were more complicated than many people thought. First, it means that new pension books would have to be printed, and that is not as easy as many people believe. Secondly, as the hon. Gentleman knows only too well from his close attention to these matters, many pensioners are also in receipt of social security. At present, social security cases are dealt with not by computer but by individuals on a one-to-one basis as each case arises. Therefore, there would be problems with biannual pension upratings.

I agree with the hon. Gentleman that it should be possible, and I believe that we promised it in our election manifesto. However, my hon. Friend may argue that we promised a biannual review. Nevertheless, does not the hon. Gentleman agree that there are additional complications that he may not have envisaged?

Photo of Mr Andrew Bennett Mr Andrew Bennett , Stockport North

I was about to comment on those complications. It must be remembered that from 1973 to 1975, upratings were more frequent than once a year. Therefore, it has been proved to be possible. At that time it was argued that it was much more complicated because housing costs were included in supplementary benefit. One of the arguments for the new system of housing benefit was that it would simplify supplementary benefit and the problems facing pensioners who receive both a pension and supplementary benefit. The housing benefit element has now been taken out, and the matter should now be much simpler.

Many benefit offices have in the past uprated the books, usually in April, to take account of local authority rate increases. They have often done so later in the same year to take account of rent increases. Further adjustments have been made where local authorities have imposed supplementary rates or a second rent increase. All this has now been simplfied, and that should provide departments with enough staff to carry out more regular upratings.

The Government could simplify this even further if they increased the pension, thereby reducing the number of people who need their money topped up with supplementary benefit. Therefore, it ought to be possible to uprate pensions at least twice a year. It seems crazy that we can do so only once a year, when many other European countries often manage to do so three or four times a year —each time the cost of living increases by a percentage point.

If it is so difficult, the Government would increase the pension twice a year and then work out the calculations. If they have to give a crude increase initially, any supplement can be paid in the Christmas bonus. I shall withdraw my amendments here and now if the Government say, "If the pensioners do not get the right money in November, we shall make it good in the Christmas bonus." The Government could always use the Christmas bonus to make the necessary adjustment so as to give pensioners that money. It happens with income tax when, for example, the codings have to be altered and money is returned to people.

Pensioners see no reason why their pensions should not be uprated at least twice a year. It should happen and the Government should do it as soon as possible. They are opposed to the Government asking them to make another sacrifice of £210 million—roughly one week's pension for everyone — at a time when the Government are claiming that we are starting to see an upturn in the economy.

5 pm

Photo of Mr Reginald Prentice Mr Reginald Prentice , Daventry

I have been listening to the debate with some nostalgia because when I was Minister for Social Security I listened to the same hon. Gentlemen opposite using the same arguments over two years ago. I had not intended to intervene—I promise to be brief—but I feel somewhat provoked.

In considering whether there should be one or two upratings a year, it is crucial that everyone's income—be they wage or salary earners, pensioners or in receipt of any other type of income—should not be adjusted more than once a year.

Photo of Mr Reginald Prentice Mr Reginald Prentice , Daventry

I though that aspect of incomes policy had stuck. In the attempts that have been made in the last 20 years under successive Governments to have voluntary or statutory incomes policies, or no incomes policy at all, most efforts at containing increases in incomes have failed, but the one that has basically succeeded for most people has been the 12-month rule. Let us stick to that.

Photo of Mr Reginald Prentice Mr Reginald Prentice , Daventry

The hon. Gentleman knows perfectly well why — because a six-monthly increase for wage earners, pensioners or anyone else means the circulation of more cash and thus more inflation. That is a fact. The most important benefit Parliament can confer on pensioners is to bring inflation under control. When we talk of inflation in relation to pensions we are talking not only about the value of state pensions but of private pensions—many of which are not index-linked—and savings, often of a modest character. Therefore, the battle against inflation is central to the well-being of pensioners.

Photo of Mr Robert Kilroy-Silk Mr Robert Kilroy-Silk , Ormskirk

Assuming that there has been an uprating of pensions in November and in the intervening six months there has been a massive increase in inflation —of, say, between 30 and 50 per cent.—which is not impossible considering the past, is the right hon. Gentleman saying that in those circumstances, pensioners having experienced that reduction in their standard of living, with many of them perhaps dying from hypothermia, to retain the inviolability of his 12-month principle there should not be an uprating of pensions at the end of such a period?

Photo of Mr Reginald Prentice Mr Reginald Prentice , Daventry

I will not be led down the road of dealing with hypothetical questions. The biggest threat on record of a rate of inflation of 50 per cent. is contained in the Labour party's recent policy document. There is no other imminent threat.

Photo of Mr Reginald Prentice Mr Reginald Prentice , Daventry

No, I will not give way; the hon. Gentleman must take his turn.

There has been a great deal of hypocrisy on the Labour Benches about some alleged cut from some alleged possible level of pensions that might have occurred in certain circumstances. Let us consider exactly what hon. Gentlemen opposite appear to be seeking. The estimate is that the likely increase in pensions by November will be 75 per cent.—that is, 75 per cent. higher in cash terms than it was when the present Government took office—and that the cost of living will be up by about 70 per cent.

If hon. Gentlemen opposite do the simple sum of putting 75 over 70 and multiplying by 100, they will find that that amounts to a 7 per cent. increase in real terms in the value of pensions — at a time of severe world recession in which most wage and salary earners have not had an improved income in real terms, and many people have had to take a cut.

Several Hon. Members:

rose

Photo of Mr Reginald Prentice Mr Reginald Prentice , Daventry

No, I will not give way. I beg hon. Gentlemen opposite to listen for once instead of simply repeating their slogans and never being prepared to listen to counter-arguments. One of the many things that has gone wrong with the Labour party in recent years is its growing intolerance and unwillingness ever to listen to a counter-argument.

A 7 per cent. increase in real terms will have occurred and hon. Gentlemen opposite are arguing for an increase of about 9 per cent. Let them argue their case, but they must argue why this year there should be a 9 per cent. instead of a 7 per cent. increase. When they do that, they must bear in mind that they are talking about all pensioners, over 9 million people of all states of income, ranging from the very poor to the very rich. The extra £210 million or so would have to be found by wage and salary earners, also of all incomes. How would hon. Gentlemen opposite justify to their constituents earning less than average wages, trying to bring up a large family of children in some cases, that they should pay extra national insurance contributions and taxes to pay for that additional 2 per cent. for pensioners, including pensioners who are well off?

The Opposition have not made a case in terms of the social consequences of what they are arguing. They are playing their favourite game of pensioneering. One of the most cynical forms of electioneering is pensioneering, which pretends that pensions can go up without someone else finding the necessary money.

Photo of Mr Reginald Prentice Mr Reginald Prentice , Daventry

No, I will not give way. What the Opposition are really proposing are cuts in people's wages, including low earners, so that there shall be an additional pension for people, be they well-off or not. Hon. Gentlemen opposite have taken up a great deal of time today without adducing one constructive argument for that transfer of resources. Unless they can do better than that they should keep quiet on the subject.

Photo of Mr Mike Thomas Mr Mike Thomas , Newcastle upon Tyne East

The right hon. Member for Daventry (Mr. Prentice) will forgive me if I do not deal with the issues he raised.

I can understand the desire of the Government to avoid the biannual uprating of pensions and other benefits. Hon. Members on this side of the Committee— particularly those, including the hon. Member for Birmingham, Perry Barr (Mr. Rooker), who during a period of Labour Government advanced the case for biannual upratings—should step back for a moment and appreciate that a Labour Government had difficulty in contemplating such an event, and did not do so. Let us be clear at the outset that this is not a matter on which it is easy to achieve what we all ideally wish — I give the hon. Member for Daventry credit for so wishing — which is to see pensioners fairly treated.

The assurance the pensioner needs, particularly if we are moving back to the historic system, is that inflation over a reasonable period ahead will be low and stable. That is the condition for making the argument both for a return to the historic system—to which I do not object in principle, and I understand that the official Opposition do not object to it in principle—and for the avoidance of a biannual uprating.

We do not have that assurance from the Government. If they were to say, "We assure pensioners that inflation will remain at a low level and be stable for a substantial period," we could then say that the disadvantages of a biannual uprating—the administrative costs and so on—should not be contemplated. But that is not what the Government are saying. They are saying that they are expecting between May and November that the rate of inflation will rise by 50 per cent., from 4 to 6 per cent. Most realistic estimates, even those of the Government, are that within a relatively short period it will be back to the 7 to 8 per cent. level—that is, a 100 per cent. increase on the May figure.

Photo of Mr Mike Thomas Mr Mike Thomas , Newcastle upon Tyne East

As usual, we are facing sedentary, not straightforward, interventions from the Treasury Bench. It is a brave man or woman, as the hon. Member for Birkenhead (Mr. Field) prompts me— I note that the Government are not doing it — who would give the commitment that they are sure that inflation will not rise above 6 per cent. to double what it will be in May when the uprating takes place.

I understand that amendment No. 1 — the hon. Member for Perry Barr will confirm this — is not intended to operate on its own but is a paving amendment for amendment No. 27. I believe that the official Opposition have found a sensible way of operating a trigger mechanism which would avoid the need for biannual upratings when inflation was stable and, hopefully, still low. If inflation was increasing rapidly, the trigger mechanism would come into operation. The biannual uprating would operate and pensioners would not suffer. I hope that the Minister will at least accord me the compliment of saying that I am not known as a universal admirer of the activities of the Labour Front Bench in these matters, but it seems an entirely sensible and reasonable proposition to put to the Government.

The Government know perfectly well that the one major snag of reverting to the historic assessment of upratings is high and growing inflation. They know that there is an 18-month delay in putting right any error, which may result in serious consequences for pensioners. I cannot see how the Government can argue that the formula put forward in amendment No. 1, leading to amendment No. 27, is unreasonable in any way.

I can give the clear commitment that my party and the Liberal party would wish to implement such a commitment if we were in government. The trigger mechanism for biannual uprating seems to be a good arrangement.

One point was raised by the hon. Member for Macclesfield (Mr. Winterton) that I feel I should not let pass. I believe that I know more about the manifesto on which I stood than he seems to know about the manifestos on which he stood. I believe that the dates for which he is looking are the two 1974 elections or one of those in 1974 and the one in 1979.

Photo of Mr Mike Thomas Mr Mike Thomas , Newcastle upon Tyne East

We have established the answer to that question. Clearly, I know his manifestos rather better than the hon. Gentleman does.

My adherence to the manifesto on which I stood seems to be more consistent than that of the hon. Member for Ormskirk (Mr. Kilroy-Silk) or other Labour Members, who seem to have departed from it in may respects since it was drawn up in 1979. I am sure, Mr. Armstrong, that you would rule that is a matter into which we cannot go any further.

Photo of Mr Robert Kilroy-Silk Mr Robert Kilroy-Silk , Ormskirk

Why does not the hon. Gentleman seek re-election if he has these wonderful policies?

Photo of Mr Mike Thomas Mr Mike Thomas , Newcastle upon Tyne East

What the Labour Party is asking for in its amendment is entirely reasonable. My party supports it and we look forward to answers from the Minister not just to those questions but to the questions raised by the hon. Member for Macclesfield.

Photo of Mr George Foulkes Mr George Foulkes , Ayrshire South

Like the hon. Member for Newcastle upon Tyne, East (Mr. Thomas), I am not going to follow much of what the right hon. Member for Daventry (Mr. Prentice) said because much of it was bombast. We have to listen carefully to his accusations of hypocrisy because we know that, through his experience, he is an expert in hypocrisy.

Photo of Mr Ernest Armstrong Mr Ernest Armstrong , North West Durham

Order. The hon. Member must not make a direct accusation of that kind. He should withdraw it.

Photo of Mr George Foulkes Mr George Foulkes , Ayrshire South

Even if someone crosses the Floor?

The Chairman:

Order. The hon. Member understands what I am saying. He must withdraw that remark.

Photo of Mr George Foulkes Mr George Foulkes , Ayrshire South

I shall say no more than that the right hon. Member for Daventry accused us of hypocrisy and therefore I accuse him equally.

The Chairman:

Order. The hon. Member should withdraw his remark.

Photo of Mr George Foulkes Mr George Foulkes , Ayrshire South

If you say so, Mr. Armstrong, I will withdraw it. All hon. Members know the position.

5.15 pm

I should like to be helpful, not to the right hon. Member for Daventry but to the hon. Member for Macclesfield (Mr. Winterton) and take up the point about the Conservative party manifestos which were referred to by the hon. Member for Newcastle upon Tyne, East. There were two manifestos—one in February 1974 and the other in October 1974. I believe that the hon. Member for Macclesfield stood as a candidate on both occasions, although his wife did not. The manifesto upon which he stood in February 1974 clearly said: We will now move to a six monthly up-rating of pensions and other long-term benefits. It was clear and unequivocal. It was not a review, not an analysis or examination, but "We will now move". Nothing could be clearer than that.

One might suggest that the Conservatives were saying that because they did not understand the facts, the details, the implications, the cost and so on. But of course they did, because, before writing the manifesto, they were in government. They knew all the implications, exactly what cost was involved, and whether their proposal was practical.

In October 1974 the manifesto stated: A Conservative government will therefore increase retirement pensions … every six months. Again, that is a clear, unequivocal statement. It is not just the manifesto — I know that some Conservative Members, including the hon. Member for Macclesfield, pay scant attention to the manifesto—but the present Secretary of State for Social Services on 22 May 1975, attacking Labour Members, said: why does the right hon. Lady still resist six-monthly reviews of pensions, for which we have pressed? Is it really only because the proposal comes from the Opposition side?" — [Official Report, 22 May 1975; Vol. 892, c. 1626.] Why are the Government resisting on this occasion? Is it really because the proposal comes from the Opposition side?

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

I have listened to my hon. Friend's interesting quotation and I believe that I have worked out why the Government have not done it. First, one of those manifestos contained a commitment to abolish rates. The Prime Minister, who made that commitment, has always said, "We lost that election and therefore that commitment is lost." They lost both the 1974 elections. The Secretary of State's remarks, which have just been quoted, were made just before the present Prime Minister sacked him as shadow Secretary of State for Social Services—probably for supporting biannual increases.

Photo of Mr George Foulkes Mr George Foulkes , Ayrshire South

I am grateful to my hon. Friend for his startling revelations. That may well have been one of the reasons why the present Secretary of State was not too popular.

Let us examine the two main possible arguments against what the Opposition are proposing. I am sure that the Secretary of State, if no one else, would not oppose it for opposition's sake because the Opposition are putting it forward. He said the same when he was in opposition. Is it the cost? If it is the cost, let him come clean. We know that this is not the first clawback of pensions. The first was the removal of the link with earnings—£500 million. The second was the two weeks delay in uprating when the Government invented the 54-week year, when the clawback from pensions amounted to £100 million. In 1981 there was a further 1 per cent. clawback—another £164 million. We are accused of "pensioneering" but all we are doing is pointing out the facts that the Under-Secretary is trying to hide, as I said yesterday, by deception.

My hon. Friend the Member for Birkenhead (Mr. Field) said that the Government would face a revolt if they had a simple clawback that even the most blockheaded Conservative Back Bencher could understand. The Government drew up the serried ranks of people at the Elephant and Castle to devise some way of covering up the clawback. It is our duty to expose the facts. We are exposing this trick.

Photo of Frank Field Frank Field , Birkenhead

They have admitted it.

Photo of Mr George Foulkes Mr George Foulkes , Ayrshire South

The Government have not denied it. As my hon. Friend said, they have admitted it. This is a device to cover up the clawback. The Chief Secretary to the Treasury has revealed the fact that the purpose is to save £210 million, assuming a 2 per cent. change in inflation.

If the cost and the money that could be saved concern the Government, they should come clean and say so. They should be honest, open and manly and say, "We need the money." They should tell us what they would use the money for. They would use it to maintain the fortress Falklands policy and to give tax concessions to those who are already well off. They should come clean and tell the people that. Alternatively, if it is not the cost or the money that you want, Mr. Armstrong, it might be that it is just impossible to implement it.

The Chairman:

I hope that the hon. Gentleman is not accusing me of using all that money.

Photo of Mr George Foulkes Mr George Foulkes , Ayrshire South

I am sorry, Mr. Armstrong. You are the last person whom I would accuse. I got carried away there.

I was about to say that it might be impractical to implement the scheme. Some of us with less good intentions than others might accuse the Government of using the alleged impossibility or impracticability as a device, a reason and an excuse for not implementing it when the real reason is that they want to save money.

After four years' experience in government the Conservatives put in the 1974 manifesto that the scheme was practicable. How much more practicable is it nine years hence, when we have the microchip revolution and our tax changes are easily administered? I receive huge folders from the Minister for Industry and Information Technology. If the money that was spent on those folders was spent on the pensioners, it would probably pay for the clawback. Those huge folders are about the advantages of information technology and how soon we shall be able to speak in microcomputers, which will be activated by voice command. We can do those amazing things, yet apparently we cannot uprate pensions twice a year for poor pensioners.

Photo of Mr Mike Thomas Mr Mike Thomas , Newcastle upon Tyne East

I much admire the hon. Gentleman's vibrancy and resolution. Has he not noticed that the Minister has already come clean and confessed that the Government needed the clawback of £210 million? Has it occurred to the hon. Gentleman that what the Government wanted the money for, was to raise the mortgage interest tax relief from £25,000 to £30,000, benefiting a few people in the south-east who are very well off?

Photo of Mr George Foulkes Mr George Foulkes , Ayrshire South

The hon. Gentleman has made a good point. He has chosen yet another example of what the money clawed back from the pensioners is to be used for. However, with respect, Ministers responsible for social security have not come clean.

Photo of Mr George Foulkes Mr George Foulkes , Ayrshire South

I understand that the Chief Secretary to the Treasury, a well-educated man, let the cat out of the bag, and shamefaced Conservative Members are now trying to bluff their way through it. They may admit the clawback here, but the Secretary of State denies to voluntary organisations that there is a clawback. Therefore, even if they admit it here, outside in the country they deny it.

Why is it that other countries, such as Italy, which is not as advanced as the United Kingdom, can increase pensions more often? Many other countries do it, too, as my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) mentioned. It is important that we make that change now. When inflation is high, it is needed, but Governments find it difficult to introduce. However, when inflation is relatively low, that is the best time to introduce it. It is technically possible now. As my hon. Friend the Member for Perry Barr said, the Government have conceded that there is a five-month implementation period.

The truth is out. The Government, mean-minded as ever, and having saved £2 billion in social security benefits, find that that is not enough. They have to claw back another £210 million from the pensioners. The pensioners should have their pensions uprated every six months because some of them are eking out a living and are on or just above the poverty line, not like the right hon. Member for Daventry and other hon. Members who can afford to wait a year. The pensioners are desperately poor. If the right hon. Gentleman wishes, I will take him to see some of the people in my constituency. That is why we are vigorously opposing the Bill and supporting the amendment.

Photo of Mr Jock Stallard Mr Jock Stallard , Camden St Pancras North

I know that we want to make progress, so I shall try to be brief. Most of the points that I would have made have been covered by my right hon. and hon. Friends. I do not intend to begin by accusing the right hon. Member for Daventry (Mr. Prentice) of hypocrisy, much as I would like to, because I should be ruled out of order, as was my hon. Friend the Member for South Ayrshire (Mr. Foulkes).

However, I might make an accusation of intolerance. The right hon. Gentleman is the second Back-Bench Member of the Conservative party who has refused to give way, which is unusual in Committee. I was not surprised by that intolerance from the right hon. Member. He showed exactly the same quality when he was on the Front Bench, when the Government were pushing through previous legislation. I was not surprised at his lack of tolerance or the spleen and bile that he constantly pours out against those whom he was once proud at one time to call his colleagues.

Photo of Frank Field Frank Field , Birkenhead

The right hon. Gentleman is not here at the moment.

Photo of Mr Jock Stallard Mr Jock Stallard , Camden St Pancras North

I was speaking about the right hon. Gentleman, whose contribution provoked me. He said that some hon. Members' contributions provoked him. I remember the long debates that we had. I accept that, as he was not feeling too well, he had to disappear early in the evening in those days when the rest of us carried on through the night. He said then that the pensioners would be the first to benefit from any improvement in the country's economy and from a fall in inflation. Why is he now supporting the £210 million clawback? If the pensioners were going to benefit, that would not happen. It would be of benefit not to take something away. I hesitate to repeat the adjectives that he used, but I think that the right hon. Gentleman will know what I mean.

The Chairman:

Order.

Photo of Mr Jock Stallard Mr Jock Stallard , Camden St Pancras North

I shall think about that as I go along. I am usually a tolerant member of the Labour party.

The right hon. Gentleman challenged us to justify having a 9 per cent. increase this year. I wish I had time to do so. My hon. Friend the Member for South Ayrshire has mentioned some of the robberies from the pensioners that have taken place in the past few years. I could give a long list. I have never accepted that the pension was properly based in 1948–49. It has never been properly based. Therefore, when one is increasing something that starts from a low base, by any percentage, one never really catches up. Under the Labour Government there was a huge increase of between £10 and £16, which was the largest increase ever. However, there has been no attempt to bring up the base rate to where it should be. I am constantly arguing, and will continue to argue, about the base rate of the pension. It is not correct.

I should have liked to add to the catalogue of my hon. Friend the Member for South Ayrshire of shortfalls, percentage increases that were not high enough under all Governments and increases related to a retail price index that does not adequately reflect the cost of living of pensioners, whose main expenditure is on fuel, housing and food.

Photo of Frank Field Frank Field , Birkenhead

The right hon. Member for Daventry reminded us of what the Prime Minister likes to tell us —that during this Parliament, pensions have risen by 75 per cent. and are 7 per cent. higher in real terms. Is he aware that the low pay unit has constructed an index which shows how inflation rises for people on low incomes? It shows that prices have risen by four percentage points more for those on low incomes than has the official retail price index. If the low pay unit is right, the gap between the rise in pensions and the rise in prices is only 1 per cent. That suggests that today's debate and opposing the clawback are important.

The right hon. Member for Daventry, to whom I know my hon. Friend the Member for St. Pancras, North (Mr. Stallard) will not give way, might say that the pensioner price index has risen even less slowly than the retail price index. The Minister might like to explain why it has risen so much more slowly than the index constructed by the low pay unit.

Photo of Mr Jock Stallard Mr Jock Stallard , Camden St Pancras North 5:30 pm, 20th April 1983

I am grateful to my hon. Friend for that intervention, as he has said exactly what I was trying to say. The right hon. Member for Daventry was not present when we had a short debate on an alternative retail price index. A case for one was made out by Age Concern in literature that was sent to all Members of Parliament. The case for a new retail price index is unanswerable. I am sorry that new clause 2 has not been selected as it would probably give rise to a crucial debate on the subject. It is time that we reviewed the system by which we link pensions, benefits and the rest. Although I did not have much hope of it, I thought that the right hon. Member for Daventry, who has experience of office, might have accepted that case.

I am equally sorry that the Minister withdrew the confession that he made only half an hour before. He confessed in a reply to my hon. Friend the Member for Birkenhead that the Government needed the £210 million. He withdrew that confession when he received further instructions and probably a message from beyond. The right hon. Member for Daventry could have slanted his speech at his own Front Bench. He could have directed there some of the words that he used against us.

Photo of Mr Mike Thomas Mr Mike Thomas , Newcastle upon Tyne East

If it turns out that the Minister has withdrawn the full confession that he made earlier, I am sure that the hon. Member for St. Pancras, North (Mr. Stallard) will observe that he was given a clear sedentary wigging by the Secretary of State, who waved his finger and shouted at him.

Photo of Mr Jock Stallard Mr Jock Stallard , Camden St Pancras North

We all saw that, but I was not sure that I did not see someone behind the Secretary of State give him a wigging as well. I did not want to say where it came from.

Photo of Mr Andrew Bennett Mr Andrew Bennett , Stockport North

It is the Secretary of State who has got it wrong and the Minister who got it clear and right when he spoke from the Dispatch Box.

Photo of Mr Jock Stallard Mr Jock Stallard , Camden St Pancras North

The case rests. It has been aired adequately and every hon. Member will have noticed what happened.

Neither the organisations nor the Opposition have objected to the return to the historic forecasting method.

Age Concern says: the argument is not for the principle of the return to the historic method of calculating inflation for upratings. The British Association of Retired Persons said: We certainly agree that the change of method of calculation of the pension rate has been unfortunate at this time, and many of our members consider that the change now is a method of enforcing the 'clawback' in concealed form. All these organisations are well known to Conservative Members. Pensioners' Voice, the National Federation of Old Age Pensions Associations, said: The Federation welcomes the change to the historic cost method of calculating inflation.The Chancellor's proposals are merely a shabby masquerade attempting to disguise what is in effect, a 'clawback' of the 2 per cent. alleged overpayment in 1982. I have sent most of the Front Bench off to check my quotations. I shall give them another one. The British Pensioners and Trade Unions Action Association does not complain about the restoration of the old method either but has said: Senior Citizens have been robbed of millions of pounds since 1980, and therefore any Goverment has a duty to at least pay a pension in line with the Retail Price Index, which Economists state will be a minimum of 6 per cent. come November 1983. I do not know whether the Minister would like me to give way so that he can correct something that I have said.

Photo of Mr George Foulkes Mr George Foulkes , Ayrshire South

Perhaps he will make another confession.

Photo of Mr Jock Stallard Mr Jock Stallard , Camden St Pancras North

I have demonstrated adequately that the entire pensioners' movement and those who are involved with pensions and benefits have objected not to a return to the historic forecasting method but to the reasoning and motives behind the change. Without exception everyone has said that the change is a shabby device to claw back what the Chancellor said he intended to take back in his Autumn statement.

The twice-yearly increase has been mentioned frequently since I have been a Member of Parliament. We are not making any new demands. We have always known that the announcement of an increase in pensions in the April Budget statement is the only slightly constructive thing that the Chancellor has to say. Budgets are often a tale of increases in the price of cigarettes, beer and everything else. There must be something that sounds as though it could be constructive. Pensions have been put in that slot. The Minister can check that. I have, and it has happened for years. We also know that within weeks of the increase in pensions being announced, rents have also increased, because April is the favourite month for them. Rates increase for the same reason. bus fares and everything else that is associated with the Budget also increase. Long before the pensioners receive the increase that is announced in April, it is taken away from them and they are out of pocket by November. The demand is not new, nor is the reply. Successive Governments have always said that it cannot be met.

We now have the computer. As my hon. Friend the Member for South Ayrshire said, we now have the most marvellous gadgets that can do wonderful things in seconds.

Photo of Mr Andrew Bennett Mr Andrew Bennett , Stockport North

They cannot give answers to Ministers.

Photo of Mr Jock Stallard Mr Jock Stallard , Camden St Pancras North

That is different. Some Departments still use old-fashioned telephones with handles on. However, there are places where such new technology exists. I understood from a previous Secretary of State that all the information would go on computers. I shall not name him. He promised me that, when all the information was on computers, the process would be simple and there would be six-monthly upratings. He said that in the context of the two quotations that my hon. Friend the Member for South Ayrshire (Mr. Foulkes) read from the Conservative manifestos of February and October 1974, which gave a clear commitment. The hon. Member for Macclesfield (Mr. Winterton) should have been here to listen to those quotations.

It emerges that, so far, the computer has not been able to cope and we have had to put up with the annual increase. But this year, the Government have suddenly discovered, for whatever reason, that they can announce a pension increase in June and pay it in November. They have overcome the problems. If I said nothing else, I would say that the case has now been made for considering pensions at four or five-month intervals and increasing them in line with what has happened during the months before. It now seems to be possible to increase pensions biannually, so it must be possible to review them in view of what has happened and to keep tabs on the increases in the cost of fuel, food, housing and heating. I shall be interested to hear the Secretary of State or the Minister of State making yet another lame and unacceptable excuse about why they cannot increase pensions biannually.

I do not have time to go through all the manifesto commitments that have not been carried out. The earnings rule was a clear commitment that has now been completely abandoned, so it is nothing new for the Government not to carry out its manifesto commitments. On 10 April 1974, the Chancellor of the Exchequer, speaking to an amendment to the National Insurance Bill that urged consideration of more frequent uprating, said: It is worth pointing out that even the most economic purist from the Chicago school, and I have in mind Milton Friedman for one, actually argues now that if we are to obtain acceptance by a community of all that is necessary to overcome inflation —and that will not be easy—it is legitimate often to index benefits of this kind while the inflation persists. That is an interesting statement.

The Chancellor continued: I hope that no one on either side of the Committee thinks that the provision for a periodic review of benefits—although it is part of what we must do to deal with inflation—represents, for me anyway, an acceptance of any form of institutionalising inflation. Far from it. While inflation is with us we have to be prepared to make this kind of change in our machinery."—[Official Report, 10 April 1974; Vol. 872, c. 575.] I thought that the House might be interested to hear those remarks of the Chancellor of the Exchequer.

In July 1979, 50 Conservative Back-Bench Members, including some who are now Whips, signed an early-day motion calling on the Conservative Government to change to twice-yearly upratings. There has been enough pressure, and we now have proof from the Government that it can be done. I hope that we shall accept no excuses from the Government about why it cannot be done.

Photo of Mr Robert Kilroy-Silk Mr Robert Kilroy-Silk , Ormskirk

I have never known an occasion in the Chamber — nor do I suppose have you, Mr. Armstrong — when so many serious accusations of misleading the Committee, of incompetence and of making mistakes have been levelled at Ministers by hon. Members on both sides, and when those Ministers, who were sitting at one time in a huddle on the Treasury Bench, have not tried to catch your eye to intervene in the debate to defend their actions and policies, or to correct what they are clearly saying from a sedentary position are the mistakes of my hon. Friends. The four Ministers have been in a constant huddle. Pieces of paper have gone backwards and forwards from them to the civil servants, who have also been in huddles and who have constantly gone in and out of the Chamber. It has been a pantomime, but the four Ministers have sat mute, unable or unwilling to defend themselves and their policies or to respond to the many serious accusations about stealing money from pensioners and other vulnerable beneficiaries that have been levelled at them by my hon. Friends as well as by the hon. Member for Macclesfield (Mr. Winterton).

5.45 pm

The motive of my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) in moving, and of my other hon. Friends in supporting this amendment is clear. They wish only to ensure that pensioners are given more money and that their standard of living keeps pace at least with the increase in the cost of living. The Government, and the one hon. Member who spoke in support of them, wish to prevent pensioners from having an increase in their pensions. They wish to give less money to pensioners; they want their standard of living to decline, not to increase.

I support the amendment, which provides for the uprating of pensions on a twice-yearly basis in June and December. As many of my hon. Friends have said, pensioners must already wait for what seems to them a long and unnecessary time to receive the pension increases that they believe are their right and that are necessary if pensions are to keep pace with inflation.

Those of us who saw television pictures of the Prime Minister being hackled by pensioners—[Interruption.] "Hackled" is a good new word. It is a combination of harrassed and heckled. We have already had the word "outroar" from my hon. Friend the Member for Stockport, North (Mr. Bennett), which is no doubt a combination of outrage and uproar.

The resentment of the pensioners was displayed for all to see on television. The question to which they sought an answer from the Prime Minister was, "Why must we wait until November for an inrease in our pensions?" Although their pensions will be increased in November 1983, they must wait a full 12 months for another increase, but as my hon. Friends — most notably my hon. Friend the Member for Stockport, North—said, gas and electricity prices, and rent and rates will all increase in the meantime. Pensioners cannot understand why it is impossible for their pensions to be increased quickly when it is clearly possible for gas and electricity prices and rent and rates to increase, and while it is also possible for deductions in income tax or in the mortgage interest rate to go through the pipeline quickly.

It is no good saying, as the right hon. Member for Daventry (Mr. Prentice) tried to say, that many pensioners are well off and that we should not give them such increases—certainly not on a six-monthly basis. They may be rich in Daventry, Eastbourne, Hastings, Brighton and all other havens of Tory majorities, but there are no rich pensioners in Kirkby in my constituency. Some pensioners there live in dire poverty, which is made worse by the unnecessary period that they must wait before their pensions are increased in line with the price increases that have occurred in the meantime.

As my hon. Friend the Member for South Ayrshire (Mr. Foulkes) said, if we have all this amazing technology at our disposal in microprocessors and computers, and if we can—to use the cliché—at a moment's notice send a task force to the south Atlantic, surely it is possible to provide a proper administrative procedure so that the nine million people, some of whom are our most vulnerable, disadvantaged and poor citizens, can receive increases in their pensions when they need them.

My hon. Friend the Member for Perry Barr said that it is already done in other countries. In Belgium there is an automatic 2 per cent. increase in pensions if the retail price index increases by an average of 2 per cent. in two months. In Denmark there is an adjustment on 1 April and 1 October if the retail price index changes by three percentage points. France, Luxembourg and the Netherlands all have such a procedure. Surely Britain has the expertise, the resources and the administrative procedure to do it if it wishes. The question is whether we wish to do it. The Government clearly do not have the will. If they did, they would find the means. They do not want pensioners to share in whatever increase in prosperity there is, or at least not be subjected to a dramatic cut in their living standards because of the increase in inflation.

The evidence of the Government's lack of will and their desire to ensure that pensioners do not receive the increase to which they are entitled was partially given in the rather bizarre speech of the right hon. Member for Daventry and by the Minister's unwillingness to explain why they found it necessary to steal £210 million from pensioners and other state beneficiaries. The right hon. Member for Daventry had only one argument against the twice-yearly uprating of pensions—that we had the 12-month rule. We know that we have a 12-month rule, but the point of the amendment is to change that rule to a six-month rule so that we can uprate pensions every six months.

The right hon. Member for Daventry said that we should keep the principle intact. Never mind what is happening to inflation and pensioners' living standards, never mind that the pensioners may be sinking ever deeper into poverty, destitution and distress, there is this wonderful 12-month principle that is so sacrosanct that it must override all other considerations. Surely the right hon. Gentleman did not mean that. However, that was the whole basis of the one argument that we have heard in the past two hours from the Government Benches. I do not accept the argument, and presumably neither does anybody else on either side of the House.

Photo of Frank Field Frank Field , Birkenhead

My hon. Friend is being unfair to the right hon. Member for Daventry (Mr. Prentice). Although the right hon. Gentleman argued for a 12-month rule for wage earners and those dependent on benefits, he did not mention those on unearned incomes who, under his system, would still get their dividends every six months. We suggest that what happens for those on unearned incomes should happen for those on pensions.

Photo of Mr Robert Kilroy-Silk Mr Robert Kilroy-Silk , Ormskirk

My hon. Friend, as always, makes a pertinent and valid point, which demonstrates the usual hypocrisy of Members on the Conservative Benches. We are used to that hypocrisy, particularly in these debates. It has been compounded today by the fact that not one right hon. or hon. Gentleman on the Government Benches has been prepared to stand up and defend the shoddy tactics and disgraceful policies of the Government.

Photo of Mr Nigel Spearing Mr Nigel Spearing , Newham South

To avoid the difficult word "hypocrisy", which might get my hon. Friend into trouble with the Chair, would it not be better to say that there is morality in extending to the old age pensioners of Newham and East Ham in particular, the advantages of those on unearned income in Daventry?

The Chairman:

Order. I hope that hon. Members will return to the point of the amendment.

Photo of Mr Robert Kilroy-Silk Mr Robert Kilroy-Silk , Ormskirk

You know me, Mr. Armstrong. I shall do so. I hope that you have every confidence in the fact that I shall steer the Committee back to the appropriate point of the amendment, whatever that is. I am not quite sure. My hon. Friend the Member for Newham, South (Mr. Spearing) has made an important point, which demonstrates the clear divide of the attitudes in the House between the Labour party and those who speak for, or on this occasion fail to speak for, the Government.

There are two arguments against the amendment. One is the nonsensical one about keeping the 12-month rule intact, to which I do not subscribe. Apparently, neither did any Conservative right hon. or hon. Members when they were in Opposition because, as my hon. Friends have demonstrated, the Tory commitment to the biannual uprating of pensions in the manifesto was clear and unequivocal. However, the real reason why the Tories are opposed to six-monthly uprating is not the practicalities or the difficulties, but the fact that it will mean that pensioners will receive more money. The Secretary of State and his junior Ministers have the unenviable task of having to defend a situation that is geared to taking more money from pensioners.

The Government are not content with the £210 million that they have already stolen from pensioners and other state beneficiaries. They have not disputed that, but they have tried to disguise it by changing the system. They are cheating the pensioners and state beneficiaries out of a week's benefit a year, and Ministers are not prepared to defend that. The policies and colours of the Tory Government and their response to the real needs of the pensioners and social security beneficiaries have been clearly demonstrated by their actions, policies and response, or lack of it, to the substantial arguments of my hon. Friends today. I hope that hon. Members from other parties will support my right hon. and hon. Friends in the Lobby not only to ensure that we have a system that is fair to pensioners and all state beneficiaries, but to ensure that their benefits rise in line with inflation when it is up, and not six, nine or 12 months later.

Photo of Peter Bottomley Peter Bottomley , Greenwich Woolwich West

The hon. Member for Ormskirk (Mr. Kilroy-Silk) said that he would return to the point of the amendment, but he was not quite sure what it was. Most of his attitude as he spoke demonstrated that he was trying to have a good parliamentary row and not concentrating on the point.

Photo of Peter Bottomley Peter Bottomley , Greenwich Woolwich West

If the hon. Member for South Ayrshire (Mr. Foulkes) will keep quiet for a moment, I shall admit that I was not here throughout the debate, but I have heard enough to make two points.

First, if the Labour party felt so strongly about bringing in increases every six months, it had five years out of the past nine to do so. Secondly, the greatest benefit to pensioners is getting the rate of inflation down. If the rate of inflation were 16 per cent. or more, one might be able to see the point of the amendment. However, inflation is down to a range of 4 per cent. to 6 per cent., which is a much greater advantage to pensioners, and one that should be increased.

If I were trying to provoke Labour Members I should ask them what rate of inflation they would expect during the first and second years of their being in government and putting into effect their programme. The Labour party is making a fuss about this because it knows that its future actions, if it is given a chance to put its policies into effect, would lead to a massive increase in inflation, and it is trying to pre-empt the interest of pensioners in keeping inflation down.

Photo of Mr Jock Stallard Mr Jock Stallard , Camden St Pancras North

Had the hon. Gentleman been here—I accept that there are probably good reasons why he was not here at the beginning of the debate—he would have heard my hon. Friend the Member for South Ayrshire (Mr. Foulkes) give two quotations from two different Conservative manifestos, one of October 1974 and the other of February 1974. In both those manifestos the Tory party gave a clear commitment: We will now move to a six-monthly up-rating of pensions and other long-term benefits. Is the hon. Gentleman saying that he also wishes to opt out of those commitments and throw them back on to Opposition Members, or is he saying that he accepted those commitments then, stands by them now, and will support the amendment in the Lobby?

Photo of Peter Bottomley Peter Bottomley , Greenwich Woolwich West

The hon. Gentleman has made an intervention that was longer than the speech that I intended to make. First, I make the obvious point that not only did my party not win that election, but I did not succeed in my seat. I saw many commitments made by the Labour party in that election that it did not carry out, such as most of its arguments about statutory incomes policies and strict control of wages. We also saw, during five years of Labour Government[Interruption]. Labour Members may make as much noise as they like, but the fact is that the average rate of inflation during their time in office was substantially higher than under the present Government, and that is the answer for which my right hon. Friend the Prime Minister was searching during Prime Minister's Question Time yesterday.

Photo of Peter Bottomley Peter Bottomley , Greenwich Woolwich West

If the hon. Gentleman is challenging the fact that the rate of inflation was higher under the Labour Government than it has been under the present one, he can produce the figures. I have made the assertion and he can challenge it.

The only reason for making a fuss about six-monthly increases for pensioners during the next year or two is the prospect of inflation increasing dramatically and staying high, and the only party that appears to offer that to the electorate is the Labour party. I have much in common with many individual members of that party, but I should like Labour Members to join me in producing an economic policy that will keep down inflation and help pensioners as much as possible in that way.

6 pm

Photo of Mr Hugh Rossi Mr Hugh Rossi , Haringey Hornsey

This has been a wide-ranging debate, and I shall try to deal with the main points that have been raised. I hope that the Committee will bear with me, because there is much other business to deal with. I am grateful to the hon. Member for Ormskirk (Mr. Kilroy-Silk) for his personal endorsement.

In themselves, the 10 amendments and one new clause are confined to a narrow point—whether the uprating of pension should take place once a year or twice a year. They suggest different methods, different dates, and different reasons for doing so. However, I must advise the Committee not to accept any of the amendments.

The prime reason is administrative. It takes the best part of six months to carry out the logistical process of uprating pensions, and, in particular, supplementary pensions. The reason is twofold. People in this country ask to be paid weekly. They like to have an order book containing about 26 weekly vouchers which they can take along to the post office, cash, and then go round the shopping centre, meeting their friends and spending their money. As long as we have that system, a long period must elapse between the announcement of the uprating and the date on which those pieces of paper can be presented and become valid.

The second complication relates to supplementary benefits which, as we know from our discussions of this matter on previous occasions, are tailor-made to individual needs. It is a labour-intensive process to work out the individual needs of about 3 million people. The best part of six months is needed to prepare the paper that it is necessary for people to present at the post office counter. This problem has faced not only the present Administration but past Administrations as well. We have all tried to find ways of overcoming the logistical problems.

Hon. Members have put forward two propositions. First, they asked, "What about new technology? Why cannot new technology overcome these problems?" We are moving in that direction. At present, the DHSS has the largest computer complex in western Europe, and a number of benefits are processed by that method. We are continually developing and seeking to develop payments of benefits through new technology. Supplementary pensions and benefits are the most difficult of all, because each payment is tailored to individual needs, and it would be at least 1987 before any Government would be in a position to process those payments through a computer, bearing in mind the hardware that would have to be installed, the software that would have to be prepared, and the programming. Those all require a great deal of time, and cannot be achieved simply by waving a magic wand, as everyone would like to do.

The other question that has been put to me in answer to this logistical problem is, "How is it that certain other countries can do it?" The hon. Member for Birmingham, Perry Barr (Mr. Rooker) mentioned a number of countries which uprate biannually, and even more frequently than biannually. However, those countries have a completely different system of payment. First, the payments are invariably monthly, or even quarterly. Secondly, people there accept direct payment into bank accounts. If people in this country were prepared to have their benefits paid direct into bank accounts or post office accounts on a monthly basis, it would be possible for us to proceed very rapidly, by the use of new technology, to a system in which it would be possible to have more frequent upratings than the present annual upratings.

Difficulties have arisen, for instance, when the Government suggested that child benefit might be paid, not by book, but by direct payment into accounts on a monthly basis. What happened? All the sub-postmasters, for their own good reasons, mounted an effective campaign throughout the country to persuade people to insist on weekly order books, and people insisted on that. As long as people in this country wish to be paid by a particular method, they must accept the disadvantages as well as the advantages of that method. The disadvantages are that logistically it is not possible to have more frequent upratings of benefits as long as we have a system of payment by weekly vouchers in 26-weekly order books.

Photo of Mr George Foulkes Mr George Foulkes , Ayrshire South

Will the Minister interrupt his tortuous apologia and tell us why he and his party, having been in government, were able in 1974 to put an unequivocal pledge into their manifesto that they would introduce six-monthly payments? The excuses that he now parades before us must have been known then. Nine years have passed since then, with all the advances in automation, microelectronics and systems that could be used. Why was that in the Tory manifesto? If it was promised then, why cannot it be done now?

Photo of Mr Hugh Rossi Mr Hugh Rossi , Haringey Hornsey

If that is the kind of intervention that I am to face, I shall be most reluctant to give way. I said at the outset of my remarks that I hoped to deal with the major points that were raised in the debate. If the hon. Gentleman will compose himself in patience, he will find that I shall come to that matter in a moment. At the moment, I am dealing with two questions that were put to me —the first: "Why is it administratively difficult to move into biannual payments?"; the second: "Why cannot we use new technology?" I have tried to answer those two specific questions.

Photo of Frank Field Frank Field , Birkenhead

I thank the Minister for giving way. Is he not being unfair to the Government's record when he says that it takes almost six months to revise the claim books for supplementary benefits? Have not the Government made three important changes in the administration of supplementary benefits, which must simplify uprating? First, they have moved housing payments to local authorities. Secondly, they have simplified the number of people claiming diet additions. Thirdly, to the Government's credit, they have automatically given more people the heating additions. Those are three big changes that the Government have made to the supplementary benefit scheme. Surely, with those changes, it should take a much shorter time to make the uprating than before.

Photo of Mr Hugh Rossi Mr Hugh Rossi , Haringey Hornsey

I am grateful to the hon. Gentleman for recognising what has not been previously recognised by Labour Members—that the simplifications that we have been seeking to achieve during this Administration are to the advantage of people generally. We are moving forward and the simplifications that the hon. Gentleman mentioned have helped us to shorten the period of uprating from seven or eight months to about five or six months. That is as far as we can go and that is why we are able to uprate in November based upon May figures. That is a great advance but it has been achieved as a result of some of the administrative simplifications that we have brought about. But those simplifications do not enable us to narrowthe gap to the extent that the hon. Gentleman is suggesting. With the advantages of the simplifications that we have brought about we can now deal with the upratings on a five or six months basis, but we cannot do better than that at the moment.

Photo of Mr Jock Stallard Mr Jock Stallard , Camden St Pancras North

I have followed the Minister's arguments closely and I assume from his remarks that he has conceded the case when he says that we can now shorten the period to within five or six months. Twice five is 10 and twice six is 12. Either way, it means that the Government can uprate twice a year. Has the Minister conceded the amendments and will he be supporting us in the Lobby?

Photo of Mr Hugh Rossi Mr Hugh Rossi , Haringey Hornsey

I am saying that it is now possible, for the reasons that I have given, to shorten the uprating gap to between five or six months. To have biannual upratings would continually occupy a staff doing nothing else but upratings, and that is an impossible task. I assure the hon. Gentleman that it simply cannot be done under the present circumstances.

Photo of Mr Mike Thomas Mr Mike Thomas , Newcastle upon Tyne East

Will the Minister allow me to speak for a moment in my capacity as Member of Parliament for Newcastle upon Tyne, East where the central office that undertakes this work is located? The Minister knows perfectly well that the argument about the time delay on uprating is completely bogus. If we wish to uprate faster than the five months that he now claims to be able to achieve, we can do so, at a cost. Why does he not say that there is a trade-off here? Why do we not look at some more imaginative scheme, such as the allocation of coded coupons that tell the post office how much to pay? That could be changed by one letter to every post office.

Photo of Mr Hugh Rossi Mr Hugh Rossi , Haringey Hornsey

Obviously, there is a cost element in this. If we were to uprate twice a year instead of once a year it would immediately double the administrative costs because the same exercise would be done twice. If the uprating were brought forward it would mean an increase in benefit costs in a particular financial year. But those are all matters that could be weighed up and on which a judgment could be made if it were administratively possible.

Photo of Mr Hugh Rossi Mr Hugh Rossi , Haringey Hornsey

I can give the hon. Gentleman the figure. for each 1 per cent. uprating brought forward the cost would be £150 million.

Photo of Mr Mike Thomas Mr Mike Thomas , Newcastle upon Tyne East

We know how much it would cost to increase the level of benefit. But how much would it cost to employ all the extra staff that would be necessary to uprate twice a year? I should welcome an increase in employment in a constituency which has 50 per cent. unemployment.

Photo of Mr Hugh Rossi Mr Hugh Rossi , Haringey Hornsey

I cannot give the hon. Gentleman that figure. I shall try to find it and write to him about it.

Photo of Mr Mike Thomas Mr Mike Thomas , Newcastle upon Tyne East

The Minister should know that figure before he comes to the House.

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

I have the answer that the Minister does not know. It appears at c. 383–386 of the Official Report of 22 March, in answer to my hon. Friend the Member for Birkenhead (Mr. Field). The figure given for the six-monthly uprating was an additional annual cost of £250 million on public expenditure. That was one of the proposals at the National Pensioners Convention.

Photo of Mr Hugh Rossi Mr Hugh Rossi , Haringey Hornsey 6:15 pm, 20th April 1983

I think that that figure includes benefit costs as well, so we must be cautious about it. I was being asked specifically for the administrative costs. I gave a formula for calculating the benefit cost but I do not have the administrative costs at the top of my head.

Photo of Mr Mike Thomas Mr Mike Thomas , Newcastle upon Tyne East

The Minister undermines his argument. If he does not know what the administrative cost is how, can he say that it is so great that we cannot contemplate it?

Photo of Mr Hugh Rossi Mr Hugh Rossi , Haringey Hornsey

I did not say that at all. The hon. Gentleman did not follow what I was saying. In answer to questions that were put to me I said that there would obviously be an administrative cost and a benefit cost were we to have more frequent upratings than the present annual one. I went on to say that those matters would have to be taken into account were it administratively feasible and desirable to do so.

Photo of Mr Mike Thomas Mr Mike Thomas , Newcastle upon Tyne East

Why will not the Minister come clean with the Committee? The cost that he is worried about is the £250 million that paying people their benefits earlier would cost the Government. We accept that that is a real cost that would have to go on public expenditure. But clearly the administrative cost is not the most significant; it must be minuscule compared to £250 million.

Photo of Mr Hugh Rossi Mr Hugh Rossi , Haringey Hornsey

I shall find the figure and give it to the hon. Gentleman. Even the figure of £250 million is based on an assumption of what the rate of inflation might be that would trigger off the uprating. Those are assumptions and would obviously have to be taken into account at the right time if we decided in mid-year to have a special uprating. However, as I have tried to explain to the Committee—if the Committee will not accept it it will not—biannual upratings are so administratively difficult that they are presently beyond contemplation.

Photo of Mr Hugh Rossi Mr Hugh Rossi , Haringey Hornsey

I shall not give way to the hon. Gentleman again.

Photo of Mr Hugh Rossi Mr Hugh Rossi , Haringey Hornsey

I made it perfectly plain that I shall not give way to the hon. Gentleman.

My hon. Friend the Member for Macclesfield (Mr. Winterton) referred to the position that prevailed in 1974–75 when six-monthly upratings were very much in vogue because inflation was running at a high rate. Indeed, on one occasion when the Labour Government had a midyear uprating, the rate of inflation was running at 30 per cent. and they were faced with the position that the value of benefits was being eroded almost as fast as the new rates could be fixed. That is why the special administrative effort was made and it caused a great deal of administrative dislocation within the DHSS. The redeployment of staff caused problems in other areas that took a long time to overcome. That is why the Labour Government did not repeat that experiment of uprating more than once a year. They tried it once when they had to because of the hyperinflation that they created, but having experienced the administrative consequences they never tried it again. That is the answer to my hon. Friend's question. The situation is now totally different.

Photo of Mr Hugh Rossi Mr Hugh Rossi , Haringey Hornsey

No. I must make progress. I am replying to my hon. Friend the Member for Macclesfield. Inflation is now running not at 30 per cent. but at around 5 per cent. Therefore, fortunately, there is no longer an urgent need for biannual upratings. As the Government's policy becomes more and more successful—as the economy is stabilised and inflation brought down to a low figure—such questions become academic. In this context, there is no need for us to go down the road that my hon. Friend urges us to take.

Photo of Frank Field Frank Field , Birkenhead

The Minister has presented a fairly complicated argument. I shall try to keep it simple. He said that there are administrative problems in connection with twice-yearly uprating and, that major costs are involved. Then, in answer to his hon. Friend the Member for Macclesfield (Mr. Winterton), he took a trip down memory lane, recalling the circumstances in which the Conservative Opposition gave promises about a twice-yearly uprating. He said that that was a time when prices were rising rapidly—in other words, a period when a twice-yearly increase would have massively increased the public expenditure costs of the measure. If his major argument is one of cost, how can the Minister say that at a time of rapidly rising prices—when it would have been very costly to make the change—it was right to give those promises, but that now, when it would not be costly to make the change, it would not be right to give that promise?

Photo of Mr Hugh Rossi Mr Hugh Rossi , Haringey Hornsey

At times of rapidly rising prices, it behoves a Government to do what they can to protect the vulnerable sections of the community. That is why, having created inflation of 30 per cent.—faced with hyperinflation—the Labour Government found it necessary to increase pensions twice in one year. That was the scenario in which there was the debate between the parties as to whether there should be a commitment to biannual increases in pensions. The scene has changed totally and dramatically since then, and those considerations no longer apply.

Photo of Mr Hugh Rossi Mr Hugh Rossi , Haringey Hornsey

I cannot give way. I must deal with another important matter. My hon. Friend the Member for Macclesfield also referred to the answer given by the Chief Secretary to the hon. Member for St. Pancras, North (Mr. Stallard) on 11 April. I did not have the text of the question at that time. The hon. Gentleman had asked, assuming that inflation over one period of time was 4 per cent. and over another period of time was 6 per cent., what that difference would amount to in terms of public expenditure. The answer was £210 million, and it was correct. The arithmetical difference in 1983–84 between an assumption of 4 per cent. inflation and an assumption of 6 per cent. inflation is £210 million.

However, the question was based on a misapprehension. The uprating would not necessarily have been 6 per cent. under the forecasting method just because there was a 6 per cent. forecast for the November in question. The Government made it perfectly clear that we would have adjusted that uprating to have regard to the overshoot at the November 1982 uprating. [Hon. Members: "Clawback."]. Thus, that uprating would have been only 3·3 per cent. on the forecast method, assuming 6 per cent. inflation in November and a full adjustment.

We have departed from that entirely. That is no longer relevant to today's debate, because we have gone over to an entirely different method whereby pensions will be uprated on the actual increase in prices from May to May. That will be made good, and any shortfall will be made good from year to year. If upratings are based on what has happened in the past, what may have been lost in the year before is automatically made good in the next year. That is in absolute contrast to the methods used by the Labour party when it cheated the pensioners of £500 million—£1 billion at present-day prices — and never made it good. Under our method, shortfalls will automatically be made good.

However, I must ask my hon. Friend to be careful when he considers these figures because they are based on assumptions. An assumption is only a guess. It is the best-informed guess that one can make. At this time last year, the Chancellor of the Exchequer assumed an inflation rate of 9 per cent. in the following November. Opposition Members said at that time that the figure of 9 per cent. was too low, just as some of them are saying today that the figure of 6 per cent. is too low and that we should be looking higher. However, the figure of 9 per cent. was not too low; it was too high. Again, in the year when we posited 16·5 per cent., some Labour Members said that we should be thinking of 20 per cent. They were working on assumptions—on guesswork made by well-informed commentators outside the House. One can make assumptions, but they will not necessarily be proved right. It was the confusion caused by such methods that persuaded us to scrap them entirely. They were introduced by the Labour Government for very bad reasons. Nakedly, brazenly and clearly they did it in order to save themselves money. With the new method there will be no guesswork in the way in which pensions are uprated. There will be absolute certainty. On top of that, we shall make sure that if there is any inflation, the pensioners' money will eventually—year in, year out, on a 12-month basis—be made good. That is better than the Labour Government's record, with their £500 million cheat. That is our pledge.

Photo of Mr Hugh Rossi Mr Hugh Rossi , Haringey Hornsey

In general terms, we have maintained the pledge upon which we were elected for this Parliament, irrespective of what might have been said for other reasons in 1974. We have maintained, and have improved upon, the level of pensions as against the rate of inflation. We can go to the country on that. We shall do so, and we shall win.

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

I wish to respond briefly to a couple of points made by the Minister. He correctly reminded the House that the assumption for November 1980 was 16·5 per cent., but that in the early summer of that year the Opposition disputed that figure, believing that by November inflation would be 21 per cent. In fact, pensions were raised by 16·5 per cent. on the Government's assumption, but the outturn was 15·5 per cent. So what did the Government do? They produced a special, one-off Act of Parliament to claw back 1p in the pound from pensioners. There was no statutory obligation to do that. That is why they had to introduce special legislation. In those circumstances, I do not know how the Minister can have the brass face to remind us of what happened in 1980. He knows full well, as he admitted in an intervention earlier today, that the Bill is nothing but a substitute for the type of legislation that the Government introduced in 1981.

6.30 pm

In 1980, the Government cut 5 per cent. from most benefits, including unemployment benefit, industrial injury benefit, maternity allowances and invalidity pension. They said that the cut was in lieu of taxation. The Bill is in lieu of a clawback, as the Minister has made clear. That is the logical conclusion of his statements. He said that it was not fair to assume that if the Bill had not made the change to a historical system, pensions would have increased by 6 per cent. in November. He is therefore saying that the Government would have taken legislative powers in another Bill to ensure that the pension did not rise by 6 per cent.

As I said on Second Reading—no one contradicted me then — pensions in November would be higher without the Bill than with it. If any Minister wishes to contradict that, I shall be happy to give way. I see that there are no takers, because my assertion is absolutely correct.

The House owes a debt of gratitude to the hon. Member for Macclesfield (Mr. Winterton). He certainly deserves the thanks of the Opposition for reminding us of the clear, firm and detailed Tory commitments reinforced by the Secretary of State for Social Service when he was shadow Secretary of State. That should certainly be put on record today.

The defence of the Goverment's actions offered by the right hon. Member for Daventry (Mr. Prentice) is understandable in the light of his own record as a Minister. He was the Minister who did not even move to an annual uprating—there are 52 weeks in a year, but he had 54—so he would naturally oppose a twice-yearly uprating system.

The Minister's comments lead me to worry whether the Government will meet their commitment to those on the receiving end of the social security system. He clearly stated, just after 6 o'clock, that the problems were administrative and logistical. He said that the uprating process took the best part of six months, so it was beyond contemplation to have twice-yearly increases. My hon. Friend the member for St. Pancras, North (Mr. Stallard) pointed out that that would not prevent a twice-yearly uprating. As no one will know before 17 June what the increase will be and uprating day is 21 November, the interval is five months, or just over. If, as the Minister constantly says, the process takes the best part of six months, which is nearer six months than five, does that mean that there is no guarantee that all the necessary calculations will be completed by 21 November for the means-tested part of the welfare state — that is, supplementary pensions and supplementary benefit? According to the Government's announcements about dates, the target period for all 20 million people is five months and one week. The Minister should give some reassurance on that.

Photo of Mr Hugh Rossi Mr Hugh Rossi , Haringey Hornsey

I can give the hon. Gentleman that assurance. A great deal of extra effort will be required on the part of the Department. It means that some beneficiaries will receive two order books instead of one. I have written fully to the Chairman of the Select Committee about this. The full explanation is in the Library if the hon. Gentleman cares to read it.

To save writing a letter on the subject, I can also tell the hon. Gentleman that the administrative cost of one yearly uprating is £10 million.

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

I am grateful for that response from the Minister.

The Minister has not told us, however, what the staff do in the other six months of the year, when they are not occupied with uprating procedures, which would make a twice-yearly uprating impossible if there were the will to achieve it.

The Government intend to reject the amendments. That is why we shall press amendment No. 1. Given the Government's forecast of inflation at 4 per cent. in May and 6 per cent. in November, if our amendment is defeated, 90 per cent. or more of those who rely on the social security system—not only old age pensioners, but invalidity pensioners, the long-term sick or disabled, and also the unemployed, despite the restoration of the 5 per cent. abatement—will suffer as a result. Millions of families will lose a week's benefit in the next 12 months. That is not good enough.

Question put, That the amendment be made:—

The House divided: Ayes 208, Noes 274.

Division No. 122][6.36pm
AYES
Abse, LeoHardy, Peter
Allaun, FrankHarman, Harriet (Peckham)
Alton, DavidHarrison, Rt Hon Walter
Archer, Rt Hon PeterHattersley, Rt Hon Roy
Ashley, Rt Hon JackHaynes, Frank
Ashton, JoeHealey, Rt Hon Denis
Bagier, Gordon A.T.Heffer, Eric S.
Barnett, Guy (Greenwich)Hicks, Robert
Barnett, Rt Hon Joel (H'wd)Hogg, N. (E Dunb't'nshire)
Beith, A. J.Holland, S. (L'b'th, Vauxh'll)
Benn, Rt Hon TonyHome Robertson, John
Bennett, Andrew(St'kp't N)Homewood, William
Bidwell, SydneyHooley, Frank
Booth, Rt Hon AlbertHoram, John
Boothroyd, Miss BettyHoyle, Douglas
Bottomley, Rt Hon A.(M'b'ro)Hughes, Mark (Durham)
Bradley, TomHughes, Robert (Aberdeen N)
Brown, Hugh D. (Provan)Hughes, Roy (Newport)
Brown, R. C. (N'castle W)Janner, Hon Greville
Brown, Ronald W. (H'ckn'y S)Jay, Rt Hon Douglas
Brown, Ron (E'burgh, Leith)John, Brynmor
Buchan, NormanJohnson, James (Hull West)
Callaghan, Jim (Midd't'n & P)Johnston, Russell (Inverness)
Campbell, IanKaufman, Rt Hon Gerald
Campbell-Savours, DaleKerr, Russell
Canavan, DennisKilroy-Silk, Robert
Cant, R. B.Lambie, David
Carmichael, NeilLamond, James
Cartwright, JohnLeadbitter, Ted
Clark, Dr David (S Shields)Lewis, Ron (Carlisle)
Clarke, Thomas(C'b'dge, A'rie)Litherland, Robert
Cocks, Rt Hon M. (B'stol S)Lofthouse, Geoffrey
Coleman, DonaldLyon, Alexander (York)
Cook, Robin F.Lyons, Edward (Bradf'd W)
Cowans, HarryMabon, Rt Hon Dr J. Dickson
Cox, T. (W'dsw'th, Toot'g)McCartney, Hugh
Craigen, J. M. (G'gow, M'hill)McElhone, Mrs Helen
Cryer, BobMcKelvey, William
Cunliffe, LawrenceMacKenzie, Rt Hon Gregor
Cunningham, Dr J. (W'h'n)Maclennan, Robert
Dalyell, TamMcNally, Thomas
Davidson, ArthurMcTaggart, Robert
Davis, Clinton (Hackney C)McWilliam, John
Davis, Terry (B'ham, Stechf'd)Marshall, Dr Edmund (Goole)
Deakins, EricMarshall, Jim (Leicester S)
Dean, Joseph (Leeds West)Martin, M(G'gow S'burn)
Dewar, DonaldMason, Rt Hon Roy
Dixon, DonaldMeacher, Michael
Dobson, FrankMikardo, Ian
Dormand, JackMillan, Rt Hon Bruce
Dubs, AlfredMiller, Dr M. S. (E Kilbride)
Duffy, A. E. P.Mitchell, Austin (Grimsby)
Dunlop, JohnMitchell, R. C. (Soton Itchen)
Dunwoody, Hon Mrs G.Morris, Rt Hon A. (W'shawe)
Eadie, AlexMorris, Rt Hon J. (Aberavon)
Eastham, KenMorton, George
Edwards, R. (Whampt'n S E)Moyle, Rt Hon Roland
Ellis, R. (NE D'bysh're)Oakes, Rt Hon Gordon
Ellis, Tom (Wrexham)O'Brien, Oswald (Darlington)
English, MichaelO'Halloran, Michael
Ennals, Rt Hon DavidO'Neill, Martin
Evans, Ioan (Aberdare)Orme, Rt Hon Stanley
Evans, John (Newton)Palmer, Arthur
Field, FrankPark, George
Flannery, MartinParker, John
Foot, Rt Hon MichaelParry, Robert
Ford, BenPavitt, Laurie
Forrester, JohnPendry, Tom
Foster, DerekPenhaligon, David
Foulkes, GeorgePitt, William Henry
Fraser, J. (Lamb'th, N'w'd)Powell, Raymond (Ogmore)
Freud, ClementPrescott, John
Garrett, John (Norwich S)Radice, Giles
Golding, JohnRees, Rt Hon M (Leeds S)
Graham, TedRichardson, Jo
Grant, John (Islington C)Roberts, Albert (Normanton)
Grimond, Rt Hon J.Roberts, Gwilym (Cannock)
Hamilton, W. W. (C'tral Fife)Robertson, George
Rooker, J. W.Tinn, James
Roper, JohnVarley, Rt Hon Eric G.
Ross, Ernest (Dundee West)Wainwright, E.(Dearne V)
Sandelson, NevilleWainwright, B.(Colne V)
Sever, JohnWatkins, David
Sheldon, Rt Hon R.Weetch, Ken
Shore, Rt Hon PeterWellbeloved, James
Silkin, Rt Hon J. (Deptford)Welsh, Michael
Silkin, Rt Hon S. C. (Dulwich)White, Frank R.
Silverman, JuliusWhite, J. (G'gow Pollok)
Skinner, DennisWhitehead, Phillip
Smith, Cyril (Rochdale)Whitlock, William
Smith, Rt Hon J. (N Lanark)Wigley, Dafydd
Snape, PeterWilley, Rt Hon Frederick
Soley, CliveWilliams, Rt Hon A.(S'sea W)
Spearing, NigelWilson, Gordon (Dundee E)
Spellar, John Francis (B'ham)Wilson, Rt Hon Sir H.(H'ton)
Spriggs, LeslieWilson, William (C'try SE)
Stallard, A. W.Winnick, David
Steel, Rt Hon DavidWinterton, Nicholas
Stewart, Rt Hon D. (W Isles)Woodall, Alec
Stott, RogerWoolmer, Kenneth
Strang, GavinWright, Sheila
Straw, JackYoung, David (Bolton E)
Taylor, Mrs Ann (Bolton W)
Thomas, Mike (Newcastle E)Tellers for the Ayes:
Thorne, Stan (Preston South)Mr. James Hamilton and
Tilley, JohnMr. Allen McKay
NOES
Adley, RobertCockeram, Eric
Aitken, JonathanColvin, Michael
Alexander, RichardCope, John
Alison, Rt Hon MichaelCormack, Patrick
Ancram, MichaelCorrie, John
Arnold, TomCostain, Sir Albert
Aspinwall, JackCranborne, Viscount
Atkins, Robert(Preston N)Critchley, Julian
Atkinson, David (B'm'th,E)Dorrell, Stephen
Baker, Kenneth(Sf.M'bone)Douglas-Hamilton, Lord J.
Baker, Nicholas (N Dorset)Dover, Denshore
Bendall, Viviandu Cann, Rt Hon Edward
Benyon, Thomas (A'don)Dunn, Robert (Dartford)
Benyon, W. (Buckingham)Durant, Tony
Berry, Hon AnthonyDykes, Hugh
Best, KeithEden, Rt Hon Sir John
Bevan, David GilroyEdwards, Rt Hon N. (P'broke)
Biffen, Rt Hon JohnEggar, Tim
Biggs-Davison, Sir JohnEmery, Sir Peter
Blackburn, JohnEyre, Reginald
Blaker, PeterFairgrieve, Sir Russell
Bonsor, Sir NicholasFaith, Mrs Sheila
Bottomley, Peter (W'wich W)Farr, John
Bowden, AndrewFenner, Mrs Peggy
Boyson, Dr RhodesFinsberg, Geoffrey
Braine, Sir BernardFisher, Sir Nigel
Bright, GrahamFletcher, A. (Ed'nb'gh N)
Brinton, TimFletcher-Cooke, Sir Charles
Brittan, Rt. Hon. LeonFookes, Miss Janet
Brooke, Hon PeterForman, Nigel
Brotherton, MichaelFowler, Rt Hon Norman
Brown, Michael(Brigg & Sc'n)Fox, Marcus
Browne, John (Winchester)Fraser, Rt Hon Sir Hugh
Bruce-Gardyne, JohnFraser, Peter (South Angus)
Bryan, Sir PaulFry, Peter
Buck, AntonyGardiner, George (Reigate)
Budgen, NickGardner, Sir Edward
Bulmer, EsmondGarel-Jones, Tristan
Burden, Sir FrederickGilmour, Rt Hon Sir Ian
Butcher, JohnGlyn, Dr Alan
Carlisle, John (Luton West)Goodhart, Sir Philip
Carlisle, Kenneth (Lincoln)Goodhew, Sir Victor
Carlisle, Rt Hon M. (R'c'n )Goodlad, Alastair
Chalker, Mrs. LyndaGorst, John
Chapman, SydneyGow, Ian
Churchill, W. S.Gower, Sir Raymond
Clark, Hon A. (Plym'th, S'n)Grant, Sir Anthony
Clark, Sir W. (Croydon S)Gray, Rt Hon Hamish
Clarke, Kenneth (Rushcliffe)Greenway, Harry
Clegg, Sir WalterGrieve, Percy
Griffiths, E.(B'y St. Edm'ds)Murphy, Christopher
Griffiths, Peter (Portsm'th N)Neale, Gerrard
Grist, IanNeedham, Richard
Grylls, MichaelNelson, Anthony
Gummer, John SelwynNeubert, Michael
Hamilton, Hon A.Newton, Tony
Hamilton, Michael (Salisbury)Onslow, Cranley
Hampson, Dr KeithOppenheim, Rt Hon Mrs S.
Hannam,JohnOsborn, John
Haselhurst, AlanPage, Richard (SW Herts)
Hastings, StephenParkinson, Rt Hon Cecil
Havers, Rt Hon Sir MichaelParris, Matthew
Hawkins, Sir PaulPawsey, James
Hawksley, WarrenPercival, Sir Ian
Hayhoe, BarneyPink, R. Bonner
Heddle, JohnPollock, Alexander
Henderson, BarryPorter, Barry
Higgins, Rt Hon Terence L.Prentice, Rt Hon Reg
Hogg, Hon Douglas (Gr'th'm)Price, Sir David (Eastleigh)
Holland, Philip (Carlton)Prior, Rt Hon James
Hordern, PeterProctor, K. Harvey
Howe, Rt Hon Sir GeoffreyPym, Rt Hon Francis
Howell, Rt Hon D. (G'Idf'd)Rathbone, Tim
Howell, Ralph (N Norfolk)Rees, Peter (Dover and Deal)
Hunt, David (Wirral)Rees-Davies, W. R.
Hunt, John (Ravensbourne)Renton, Tim
Irvine, RtHon Bryant GodmanRhys Williams, Sir Brandon
Irving, Charles (Cheltenham)Ridley, Hon Nicholas
Jenkin, Rt Hon PatrickRidsdale, Sir Julian
Jessel, TobyRifkind, Malcolm
Jopling, Rt Hon MichaelRippon, Rt Hon Geoffrey
Joseph, Rt Hon Sir KeithRoberts, Wyn (Conway)
Kaberry, Sir DonaldRossi, Hugh
Kellett-Bowman, Mrs ElaineRost, Peter
Kershaw, Sir AnthonyRoyle, Sir Anthony
Kimball, Sir MarcusRumbold, Mrs A. C. R.
Knight, Mrs JillSainsbury, Hon Timothy
Knox, DavidSt. John-Stevas, Rt Hon N.
Lang, IanShaw, Giles (Pudsey)
Latham, MichaelShaw, Sir Michael (Scarb')
Lawrence, IvanShepherd, Colin (Hereford)
Lawson, Rt Hon NigelShepherd, Richard
Lee, JohnShersby, Michael
Le Marchant, SpencerSilvester, Fred
Lennox-Boyd, Hon MarkSims, Roger
Lester, Jim (Beeston)Skeet, T. H. H.
Lewis, Sir Kenneth (Rutland)Smith, Sir Dudley
Lloyd, Ian (Havant & W'Ioo)Smith, Tim (Beaconsfield)
Lloyd, Peter (Fareham)Speed, Keith
Loveridge, JohnSpeller, Tony
Luce, RichardSpicer, Jim (West Dorset)
Lyell, NicholasSpicer, Michael (S Worcs)
McCrindle, RobertSproat, Iain
Macfarlane, NeilSquire, Robin
MacGregor, JohnStainton, Keith
MacKay, John (Argyll)Stanbrook, Ivor
Macmillan, Rt Hon M.Stanley, John
McNair-Wilson, M. (N'bury)Stevens, Martin
McNair-Wilson, P. (New F'st)Stewart, A. (E Renfrewshire)
McQuarrie, AlbertStewart, Ian (Hitchin)
Madel, DavidStokes, John
Major, JohnStradling Thomas, J.
Marland, PaulTapsell, Peter
Marlow, AntonyTaylor, Teddy (S'end E)
Marten, Rt Hon NeilTebbit, Rt Hon Norman
Maude, Rt Hon Sir AngusThatcher, Rt Hon Mrs M.
Mawby, RayThomas, Rt Hon Peter
Mawhinney, Dr BrianThompson, Donald
Maxwell-Hyslop, RobinThorne, Neil (Ilford South)
Mayhew, PatrickThornton, Malcolm
Mills, Iain (Meriden)Townend, John (Bridlington)
Mills, Sir Peter (West Devon)Townsend, Cyril D, (B'heath)
Miscampbell, NormanTrippier, David
Moate, Rogervan Straubenzee, Sir W.
Monro, Sir HectorViggers, Peter
Montgomery, FergusWaddington, David
Morris, M. (N'hampton S)Wakeham, John
Morrison, Hon C. (Devizes)Waldegrave, Hon William
Morrison, Hon P. (Chester)Walker-Smith, Rt Hon Sir D.
Mudd, DavidWaller, Gary
Walters, DennisWiggin, Jerry
Warren, KennethWilkinson, John
Watson, JohnWolfson, Mark
Wells, BowenYoung, Sir George (Acton)
Wells, John (Maidstone)Younger, Rt Hon George
Wheeler, John
Whitelaw, Rt Hon WilliamTellers for the Noes:
Whitney, RaymondMr. Carol Mather and
Wickenden, KeithMr. Robert Boscawen.

Question accordingly negatived.

Photo of Mr Derek Foster Mr Derek Foster , Bishop Auckland

I beg to move amendment No. 2, in page 1, line 8, leave out 'June' and insert 'May'.

Photo of Mr Paul Dean Mr Paul Dean , Somerset North

With this it will be convenient to discuss the following amendments: No. 3, in page 1 line 8, leave out 'June' and insert 'July'.

No. 35, in page 2, line 5, leave out '31st May' and insert '30th April'.

No. 38, in page 2, line 10, leave out 'June' and insert 'May'.

No. 39, in page 2 line 10, leave out 'June' and insert 'July'.

Photo of Mr Derek Foster Mr Derek Foster , Bishop Auckland 6:45 pm, 20th April 1983

The effect of this amendment and this group of amendments is to change the month in which the uprating is announced. There may be those who regard this debate as academic and irrelevant. Indeed, that was the word that the Minister of State used in his concluding speech on the previous debate. I remind those hon. Members that the income next year of 20 million people in this country—

Photo of Mr Hugh Rossi Mr Hugh Rossi , Haringey Hornsey

When I used the word "academic" I was using the phrase that the hon. Member for Pontypridd (Mr. John) had used. He said that he hoped that would be an academic debate, or that he was quite prepared to have an academic debate on the difference between the historic and forecast methods. I picked that up in replying.

Photo of Mr Derek Foster Mr Derek Foster , Bishop Auckland

I accept what the Minister has said, but I certainly gained the distinct impression that he was trying to say that such matters were academic. However, I stress that the incomes of 20 million people and the year-to-year inflation rate on which their benefits are rated are dependent on the outcome of this debate. The Government would rather not have this debate. They seek to muddy the waters so that the electorate is unaware of the savings made at the expense of the poorest in the land. But they cannot and must not complain. It is the Government who have created an immoral and uncivilised society during the past four years. They have produced 4 million unemployed and 7 million people who depend on supplementary benefit. It is this Government who have reduced inflation on the backs of the poorest, whom we seek to defend with this amendment.

Why does the May to May inflation rate have to be used and why does the announcement have to be made in June? On Second Reading the Secretary of State said: Under the Bill the uprating will be based upon the actual inflation rate between May 1982 and May 1983. The reason we have chosen that 12 month figure, which will become available in mid-June, is that mid-June is the last date that will enable the Department to carry out the work of uprating and ensure that all the new benefits are paid on time. It is also the case that it is only following 17 June that the uprating order itself can be presented to the House and debated before the summer recess. Let me say at once that no one would be more pleased than I if we could reduce further the time between the making of the annual uprating statement and the uprating itself. No one wants that time gap to be wide, least of all pensioners who often understandably complain about the time between the statement and the date when the increased pensions are paid."—[Official Report, 13 April 1983; Vol. 40, c. 820.] That is what the Secretary of State said then. However, as recently as 15 December 1982 the Minister told the Social Services Committee: It does take six months, from the time the uprating decision is made up to its being physically possible to start making the payments. A DHSS memorandum submitted to the Social Services Committee—annex 5—stated: The timetable reflects the operational need"— this was in December— for a period of 6 to 7 months from the time the new rates are decided and announced to the time they take effect. The main factors leading to this requirement are:

  1. (i) the need for clerical re-assessment of some 3 to 4 million cases receiving supplementary benefit to take account of the changes in other income, changes in relevant expenditure such as rent or rates, and changes in family circumstances
  2. (ii) benefit order books which, in the main cover periods of 4 to 6 months and which need to provide for the new rates to apply from the uprating date months in advance as they come up for renewal. To issue duplicate order books would add considerably to encashment and other administrative costs and would also increase the risks of error and confusion
  3. (iii) in the case of mobility allowance and family income supplement, where order books cover a 12 month period, it is desirable to keep to a minimum the numbers issued which take no account of the November increases. For this reason specific ministerial approval is given to anticipate the relevant legislation almost immediately the statutory statement of intent has been made, and within days of that statement guidance is being issued to local offices and others concerned with the process of implementing the increases. From April onward order books are being prepared which include the new rates applicable from November."
The Minister said six months and the Department, in its evidence to the Social Services Committee, said six to seven months. What miracles has the Secretary of State been able to work since December to change that? The Committee deserves an answer to that question tonight. The Minister said at least six months and the Department said six to seven months, yet today we miraculously hear from the Minister that the time involved is the best part of six months or five to six months. As the Secretary of State will know, under this Government the time between the announcement and the implementation has been considerably longer than under a Labour Government. Indeed, my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) pointed that out on Second Reading, when he said: In the four upratings under this Government the average delay between announcement and uprating has been seven and a half months. The six upratings in the four and a half years of the Labour Government saw an average delay of 5·7 months. That is almost two months less in terms of average delay between announcement and payment. So despite the use of computers in the national insurance part of the system, the delay has increased in recent years … Nevertheless, the Government suddenly say 'We do not need to do anything until 17 June, and we can make all payments by the date in November.' We need some assurances on that matter, if only because between May 1979 and the end of last year there has been a 22 per cent. increase in the ratio of means-tested supplementary benefit claimants, compared with the local staff in the DHSS offices who have to make the calculations.—[Official Report, 13 April 1983; Vol. 94, c. 885.] We need some assurances from the Minister tonight. The increased work load on DHSS staff offices is the direct result of the Government's economic policies. Can the Department cope with that extra work load? If so, how? How much, for example, extra overtime will have to be worked, and at what cost? What consultations have been held with the trade unions? An even more worrying aspect of the problem was raised by my hon. Friend the Member for Perry Barr on Second Reading. What if the House is prorogued on 17 June? What if the Prime Minister has cut and run and we find ourselves in the middle of an election? Can we cope with all the necessary procedures if the House is prorogued and if the announcement cannot be made on 17 June? The Government must ensure that the administrative machinery is set in motion so that those who are dependent on social security payments do not suffer as a result of such action.

As has been pointed out, the period between 17 June and 21 November amounts to only just over five months. The Minister has referred to the best part of six months or between five and six months. We are getting dangerously close. If the House is prorogued, and that statement cannot be made on 17 June and those arrangements cannot be put in hand, the Government must reassure at least 9 million pensioners and all the other beneficiaries that their payments will not be delayed. If that were to happen, there would be considerable suffering.

We need that assurance tonight, because the Secretary of State failed to give an assurance to my hon. Friend the Member for Perry Barr on Second Reading. He said that there would be further time to explore the matter in Committee. We are now in Committee and I hope that either the Secretary of State or the Under-Secretary will give us the assurances that I have sought.

The amendment substitutes May for June. The April to April figure would allow time to complete the procedures, and that would remove the danger of delay in paying the increased benefit. I think that we know why it is June that appears in the Bill. That is because the Government expect that period to embrace the lowest inflation rate during the year and—this is my guess—for many years to come. As my hon. Friend the Member for Pontypridd (Mr. John) said on Second Reading, that is why June appears in the Bill. He said: The Government must explain why we have the Bill at this juncture. The answer is to be found in the Budget and in the surrounding figures. According to the Government, they over-provided by 2·7 per cent. and they were, therefore—this was announced to the House—considering having to claw it back. The reception that that might receive in the House and in the country generally in a possible election year deterred them from that course. Instead of abandoning that suggestion, the Government turned their ever fertile minds to how they could get it back without appearing to claw it back. The inspiration for the fraud came from the Chancellor's forecast for inflation figures. They stated for the month of May that inflation was likely to be 4 per cent., the lowest this year, and probably for many other years both past and future. The Chancellor by his Budget speech candidly conceded that inflation was likely to be running at 6 per cent. That is the figure which will be prevalent when the uprating figures are paid. Using the forecast method, the Government would have had to uprate the pension by 6 per cent. next November, because that is the forecast for inflation then. However, they found that if they could somehow use the month of lowest inflation—May—"— that by all the forecasts is likely to be May— they could save themselves £500 million. In effect, they could carry out a disguised and, they hoped, unobserved clawback of 2 percentage points, of the 2·7 per cent. that they say was overpaid last year."—[Official Report, 13 April 1983; Vol. 40, c. 830.] 7 pm

That is the real reason why June appears in the Bill. It is because the Government want to get away with the disguised clawback. They realise that an open clawback would be extremely damaging in a possible election year. That is why they have found this "fertile" way of moving back to the historic method. In the amendment we are asking why an earlier month or later month could not be used. Will the Government now come clean and tell us exactly why it is that they have decided that the May-May uprating figure must apply? Why have they not chosen an earlier month or a later month? They have sought to explain why it is impossible now to move to a later date. If that is so, why cannot we have an earlier month—for example, April-April—than May-May?

Photo of Mr Norman Fowler Mr Norman Fowler Secretary of State for Health and Social Security

The last remarks of the hon. Member for Bishop Auckland (Mr. Foster)—that great savings are being made in the social security programme—would have had more validity if we had not added to the programme, compared with the contents of the public expenditure White Paper, by £220 million in 1983–84. Instead of cutting we have made that increase. That is a figure that we may need to return to in our later discussions.

Photo of Frank Field Frank Field , Birkenhead

To what extent is the increase to which the right hon. Gentleman has referred due to an increase in unemployment and to what extent is it due to real increases in benefit?

Photo of Mr Norman Fowler Mr Norman Fowler Secretary of State for Health and Social Security

It is not due to an increase in unemployment. I could give the hon. Gentleman a complete breakdown of the extra £2 billion of expenditure on social security over the coming year. However, the majority of that—about £1 billion—goes on retirement pensions. About £0·2 billion will go in incapacity and unemployment benefits. I hope that I can establish, without going through the entire list of benefits, that the increased expenditure is not because of the increase in unemployment benefit payments.

Photo of Mr Mike Thomas Mr Mike Thomas , Newcastle upon Tyne East

Will the right hon. Gentleman go through the list?

Photo of Mr Norman Fowler Mr Norman Fowler Secretary of State for Health and Social Security

First, I shall seek to reply to the debate. There will be other opportunities to return to this issue.

The hon. Member for Bishop Auckland asked fairly why the Government have chosen the May-May measure of inflation, which means that we shall have that available on I7 June following an announcement during the course of June. We have fixed the review date in June because that is basically the last month by which uprating decisions can be taken if the work associated with the uprating is to be completed in time for payment in November.

These provisions are being introduced as primary legislation. We are not introducing the May-May measure for one year—it is something that we want to last. It seems that no one will wish to go back on the change to the historic method. I cannot believe that any Government will change to the forecast method now that we have reverted to the historic method. We have come as near as we conceivably can to the time when benefits are paid because there was widespread dissatisfaction about the time that lapsed between the announcement of upratings and the upratings taking effect. As I said on Second Reading, no one would be more pleased than myself if we could reduce the gap even further.

One of the problems, even with the historic method, is the gap between the announcement of the measure and the time when the benefits are paid. The shorter that we can make that gap the better it will be for everyone involved. We have decided that May is the latest month that can be chosen to do that.

The proposal in the amendment to go back to April would be a retrograde step because it would interfere with what I think both sides of the House of Commons would want to achieve if we were to revert to the historic or actual method. To go even further than that would be impracticable at this stage. I shall not rehearse all the arguments that my hon. Friend the Minister for Social Security deployed when replying to the previous debate. However, there are difficulties that stand in the way of further improvement.

The majority of the 8 million pensioners are paid weekly by means of an order book. That covers their weekly entitlement for up to 20 weeks, or 26 weeks for those on supplementary benefit or invalidity benefit. Order books that cover the week of the uprating will be in use several months before the uprating date.

As my hon. Friend the Minister for Social Security said, it would be possible, as suggested by the Rayner scrutiny, to switch to another system of payment, such as monthly or quarterly payments by credit transfer to a bank. That would undoubtedly quicken the process. We are in the process of giving pensioners the choice of having their pensions paid in that way. However, only a small percentage so far have opted for payment made through a bank in that way. Clearly it is no part of the Government's policy — I doubt very much if it is the policy of Opposition Members — to move against their wishes. The inevitable consequence is that there is no chance of shortening significantly the uprating time scale, at least for some time.

Photo of Mr Andrew Bennett Mr Andrew Bennett , Stockport North

Does the Minister accept that if he was moving to monthly payments in advance, that would have more attractions than the proposed system, which is monthly in arrears? For people on these income levels it is a considerable disincentive to have to wait four weeks for money.

Photo of Mr Norman Fowler Mr Norman Fowler Secretary of State for Health and Social Security

I see that point. There would also be a benefit cost, as I am sure the hon. Member will appreciate.

Photo of Mr Mike Thomas Mr Mike Thomas , Newcastle upon Tyne East

I want to make much the same point. I should have thought that the Government could at least pay in the middle of the month, which would mean a shorter gap for those who transferred. Why is it that the Government cannot print order books which simply have a code, with the local post office being instructed to pay the amount which corresponds to the code?

Photo of Mr Norman Fowler Mr Norman Fowler Secretary of State for Health and Social Security

We have talked about this, as the hon. Gentleman would have expected. The Post Office would not want that. It prefers the present system. I see a great deal of attraction in what the hon. Gentleman has said. Discussions have taken place and the Post Office has replied that it would prefer to continue with the present system rather than have the kind of system the hon. Gentleman has put forward.

Photo of Mr Mike Thomas Mr Mike Thomas , Newcastle upon Tyne East

I fail to see the difficulty. If a difficulty is raised by the trade unions within the Post Office because their members are reluctant to operate such a system, surely it is not beyond the wit of man to devise a simple system. Could it not be pointed out to those involved that they are employed for the benefit of the community and not vice versa?

Photo of Mr Norman Fowler Mr Norman Fowler Secretary of State for Health and Social Security

I am happy to take that argument further. One of the legimate concerns is the prevention of fraud. That is important for us, for the Post Office and for pensioners to take into account. I point out the difficulties simply to give to the hon. Gentleman the truth that the Department has not been sitting back seeking to accept the situation. We have tried to explore ways forward.

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

When the Secretary of State referred to the Post Office, do we take that to mean that it was a Post Office board or management decision?

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

If the answer is yes, I do not need to pursue it on the grounds on which the hon. Member for Newcastle-upon-Tyne, East (Mr. Thomas) asked his question.

Photo of Mr Norman Fowler Mr Norman Fowler Secretary of State for Health and Social Security

It is a management decision. There has not been negotiation with postmasters or trade unions.

The hon. Member for Bishop Auckland asked how we could get an improvement even to the May to May system. As it is, we shall have to produce extra books for some pensioners and for some who are on supplementary benefit. Those will be in the nature of extra topping-up payments. We can handle that but I would not advise the Committee that for this uprating we could go any faster.

In future it may be possible to make improvements. For example, by computerisation we may be able to reduce the period for supplementary benefit increases to 12 weeks or thereabouts, but it is unlikely that we would be able to reach that much before 1987. If we can, that will open further doors to closing the gap between the time of the announcement and the time of payment.

As for the questions about the timing of upratings and uprating statements under different Governments, the fairest reply is that the differences relate most of all to the decision on when to make the announcement rather than the efficiency of the DHSS machine under either Government. For example, in 1979, under this Government, there was a 22-week gap. In the previous year there was a 31-week gap. I do not claim that suddenly we galvanised the DHSS into even higher peaks of efficiency; of course, it is an incomparably efficient Department. The point is that the announcements were made at different times.

The right hon. Member for Norwich, North (Mr. Ennals) reminded the House on Second Reading that in 1974 the Labour Government carried out an uprating over a period of only 17 weeks. He skated over the problems that that created, and he did not add that no Government after that ever tried to repeat that exercise. After the 1974 uprating, the time taken by the Labour Government from the announcement of new rates to their implementation was 21 weeks, 26 weeks, 32 weeks, 25 weeks and 31 weeks.

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Why have no Government tried to repeat the 1974 timetable? Again, the reasons were fairly set on the record by Mrs. Barbara Castle when she announced the 1974 uprating plans when she said: The 17-week timetable can only be met at a risk that some beneficiaries may not receive their increase until shortly after the operative date. In the same debate she said: these proposals will mean putting the staff of my Department under considerable strain." — [Official Report, 27 March, 1974; Vol. 871, cc. 451, 457.] The uprating in 1974 was timed for the week beginning 22 July and on 18 July Mrs. Castle, in reply to a parliamentary question, made it clear that 550,000 beneficiaries would not be paid on time.

There is another factor to be taken into account: once we have made the decision and put the uprating process into being, the payments themselves should be made on time to the beneficiaries.

Photo of Mr Andrew Bennett Mr Andrew Bennett , Stockport North

Problems existed then, but we have greatly simplified the whole system, particularly by taking out housing benefit. That means that benefit offices do not have to do upratings every time rates or rents go up. That simplifies it also. In the calculations for supplementary benefit, housing benefit does not have to be taken into account. With all the simplifications, surely we ought to be able to do the uprating in at least the same time as it was done in 1974.

Photo of Mr Norman Fowler Mr Norman Fowler Secretary of State for Health and Social Security

Improvements have been made but they are not sufficient to allow us to quicken the pace substantially, first because of the processing of the books in Newcastle, and secondly, because of the way that supplementary benefit is handled at local office level. I have been over the ground and no one would be more pleased than I if we could make further improvements. The hon. Gentleman is pressing at an open door. It is difficult to find a way forward that will reconcile the need for speed with the fact that we also want beneficiaries to be paid in full and on time.

Photo of Frank Field Frank Field , Birkenhead

Can the Secretary of State reconcile the statement he has just made with the statement made earlier in the debate by the Minister of State? Is he giving the House an assurance that beneficiaries will be paid on time this year? How does that square with the statement that some may need two order books?

Photo of Mr Norman Fowler Mr Norman Fowler Secretary of State for Health and Social Security

It is because the extra order book is precisely the method by which they will all be paid on time. That is the short answer. I can confirm what my hon. Friend said. Clearly there comes a time when we cannot produce more and more order books because then the timetable would go, but I can give the assurance the hon. Gentleman seeks.

Photo of Mr Mike Thomas Mr Mike Thomas , Newcastle upon Tyne East

Will the right hon. Gentleman give way—after all, we are in Committee?

Photo of Mr Norman Fowler Mr Norman Fowler Secretary of State for Health and Social Security

Yes we are, but the hon. Gentleman tends to bob up and down like a jack-in-the-box. I shall, however, give way.

Photo of Mr Mike Thomas Mr Mike Thomas , Newcastle upon Tyne East

I always understood that the purpose of being a Member of Parliament was to ask questions on behalf of one's constituents and to get answers from Ministers. Unfortunately, we do not seem to be successful with the second half of that equation.

As the right hon. Gentleman knows, I represent those who work in the central office in Newcastle. They tell me that there is no great difficulty in speeding up the uprating, but I shall not go into that again. If he chose to speed up the benefit by increasing the number of staff at Newcastle, which I accept is a trade-off, it would be perfectly possible to do so. I should like some information on the cost of the trade-off. I do not accept for a minute that six-monthly upratings would cost £10 million.

Was not the 1974 uprating done so quickly because the then minority Labour Government were desperate to introduce it before an autumn election? Is it not also a fact that Governments since then have paid little attention to it because they do not wish to speed up the uprating beyond November?

Since then, the uprating has been put into the Budget. It was probably the right hon. Member for Leeds, East (Mr. Healey) who did so initially because on one occasion he found himself bereft of any goodies to put in the Budget and seized on the pension uprating that had not previously been included. Has not the announcement in the Budget taken all the pressure off looking at this important matter?

Photo of Mr Norman Fowler Mr Norman Fowler Secretary of State for Health and Social Security

The hon. Gentleman has made a mini-speech. I make no complaint about that. If it saves him from making a longer one later, we shall all benefit.

It is not only cost that is preventing us from narrowing the gap between the announcement and the time of payment. I recognise the hon. Gentleman's constituency interest, but there is the process of producing the books faster and the uprating of supplementary benefit in local offices. I believe that we shall be able to adjust that period, but at present we are unable to go further than we have gone. Indeed, the hon. Member for Bishop Auckland seemed to suggest the opposite—that we were going too fast rather than too slow. It is because of the speed that we have chosen May, and I would not advise the Committee to go further.

As to the prospect of a June election, it is almost impossible to debate anything at present without that being raised. It is a material point.

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

Did the right hon. Gentleman say "the" June election?

Photo of Mr Norman Fowler Mr Norman Fowler Secretary of State for Health and Social Security

I think that I said "a" June election, and if I did not, I should have done. The hon. Gentleman is a near neighbour of mine in Birmingham, and we shall no doubt continue this debate in the west midlands.

There are three processes — the review of the benefits, the announcement of the uprating, and the parliamentary approval of the uprating orders. Under the Bill, the Secretary of State must carry out the review of the level of benefits in June each year. He must decide whether benefits have maintained their real value in the preceding year up to 31 May. It makes no difference to that review whether Parliament is in session, in recess or dissolved. As I said last week, our intention is to carry out the review in mid-June when the May RPI figures become available. Obviously, I shall have to decide on those matters if such an eventuality exists.

There is then the announcement of the uprating. That can be made at any time after the review. It does not strictly depend on Parliament being in session, although I would make such an announcement to Parliament first if it were in session. Under successive Governments, the custom in the Department has been that the announcement can trigger off the beginning of the work process.

The third process is the approval of the uprating orders. That is fundamentally a question for Parliament itself. That can be done only when Parliament is in session.

I am satisfied that we shall be able to manage those three processes, even if there were a June election. That should not get in the way of either the uprating process or of beneficiaries and pensioners getting their benefits on time.

Photo of Mr Derek Foster Mr Derek Foster , Bishop Auckland

I welcome the assurances given by the Secretary of State that all these procedures and calculations can be carried out in the event of a June election. However, we still believe that he is coasting close to not being able to pay the upratings in the way that they ought to be paid. We welcome the assurances that he has given, and we shall keep him to them at the appropriate time.

The right hon. Gentleman has not yet explained in great detail how the Department has managed to shave almost a month off the interval between the announcement and implementation, as revealed in a statement by his Department to the Select Committee. We shall probably press him on those points on another occasion. Neither has he said whether overtime in his Department will be required to achieve the formidable task of paying all beneficiaries by November. If overtime is involved, there will be a cost, and we shall press the right hon. Gentleman further on that.

There is also the important question of consultation and whether the right hon. Gentleman has taken his staff with him in the formidable burden that he may well be placing on them. We shall use the opportunities of another occasion to press him on that point.

Will the right hon. Gentleman consider mounting a seminar on the technicalities and problems of uprating for interested Members? These are extremely difficult matters, and many of us would welcome a departmental initiation into those complexities.

Photo of Mr Norman Fowler Mr Norman Fowler Secretary of State for Health and Social Security

Let me respond directly to that request. I shall gladly seek to arrange such a seminar.

Photo of Mr Derek Foster Mr Derek Foster , Bishop Auckland

This is basically a probing amendment and we do not wish to press it to a vote. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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

I beg to move Amendment No. 7, in page 1, line 9, at end insert 'and at the end of that subsection there shall be inserted the words "provided that in 1983, in the case of benefits abated by section 1 of the Social Security (No. 2) Act 1980, the basis for his review shall be the sums that would have applied but for the passing of that Act".'. The subject of this brief debate is the abatement. It is well known to hon. Members and others that in 1980, the Government cut 5p in the pound off the increase in five separate benefits — unemployment benefit, maternity allowance, invalidity benefit, sickness benefit and industrial injury benefit. I omit from my remarks sickness and industrial injury benefits as they are now dealt with under a totally different system that has just come into operation.

The fact that invalidity benefit has not been brought into taxation after all this time means that people who receive it are still suffering from that cut of 5p in the pound, because the cut was made only in lieu of proper taxation.

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As is well known, benefits that year increased by 16·5 per cent. in the round, but the five benefits I have mentioned were increased by only 11·5 per cent. Thus, they suffered what in affect was a cut of 30 per cent. in the increase of November 1980, which was equivalent to income tax at about 30p in the pound. The Chancellor of the Exchequer announced in the Budget that the 5 per cent. cut in unemployment benefit would be restored this year, 1983. It is now three years since the cut was made. After three major debates in this House last year, when all parties combined to vote against the Government, it was restored, and we accept that.

It is grossly unfair, however, that the uprating situation for invalidity benefit — that is the main benefit in contention here; it goes only to the long-term sick and disabled — means that 700,000 people are receiving £1·40 a week less than they should be getting, in addition to what they lost because of the break with the earnings link. The amendment seeks to ensure that the review that the Secretary of State will conduct in June will include a review of the benefits that were cut under the Social Security (No. 2) Act 1980 and will restore them to the sums that would have applied had it not been for the passing of that Act.

I have no idea what the Minister will say in reply because we have received several apparently firm commitments from Ministers that, when invalidity benefit is brought into taxation, the 5 per cent. will be restored. We accept that and we do not question it. However, there is no sign on the horizon of the Government introducing a system to tax invalidity benefit. If there were, there would be no need for this debate. Obviously the issue would have to be raised, however, because three years is a long time to maintain that cut of 5 per cent. After all, each year's benefit increase is less than it should be because the base to which it is added has been cut.

It is clear that the Government do not plan to tax invalidity benefit in the 1983–84 tax year; we are in that year now and, had they intended to do that, they would by now have made an announcement. They have made no announcement giving an inkling that they will be ready to introduce such a system of taxation in 1984–85. The result is that it has become a cruel joke on the 700,000 people on long-term invalidity benefit that the Government should continue to leave them with 5p in the pound less than they should be receiving. That is a substantial sum. For a single person it represents about £1·40 a week and, for a couple, about £2·25. That is not the only loss they have suffered, as I said, because of the break in the earnings link with pensions and long-term benefits, of which this is one.

It means that we are talking about 700,000 long-term sick and disabled people who have lost in total the best part of £3 for a single person and £4·50 for a couple. Half of that is represented by the cruel deception of abatement in lieu of proper taxation. It has become immoral that the Government should continue this cut in the benefit when they are showing no sign of bringing the benefit into taxation.

The other benefit that is still on the receiving end of this cut is the maternity allowance. About 130,000 women a year receive that allowance. As the nature of the benefit implies, it is not a long-term one. Nevertheless, since 1980, women drawing maternity allowance have been receiving about £1·10 a week less than they would otherwise have received.

It is no good the Minister arguing, as has been done before, that my hon. Friends, when in power—I do not have the statements with me — said that all benefits should be taxable. To believe that all income should be added up for tax purposes—allowing for a high enough threshold so as not to catch those on basic benefit—is one thing. To cut an increase in benefit because of an inability to find a way of taxing it is another. For the Government to do that knowing that they will be pressed to restore the amount, and then not to do anything about reversing the cut is wrong. I am not aware of the Government or the Inland Revenue having put any work in hand to bring those benefits into tax. I consider that to be immoral, it being three years since the Government made those cuts.

The Government made them in an off-hand way in that the matter was never properly debated in Parliament. The enabling measure was quickly guillotined in Standing Committee and because most of the results of the 1980 Act did not come into effect that year, the people on the receiving end of the cuts were not aware of what was going on. The proceedings on that measure were not adequately reported by the media, who did not understand what was going on because of the way it was introduced—a quick announcement soon after the Pudget with the enabling measure coming forward quickly. Frankly, the Government stand charged with an immoral and unfair act committed against 700,000 sick and disabled people. They now have an opportunity, by accepting the amendment, to put right that cruel deception.

Photo of Mr David Ennals Mr David Ennals , Norwich North

I strongly support the amendment. My hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) referred to the attitude of Ministers in the last Labour Government. I was one of the Ministers who said I thought the principle of bringing short-term benefits into taxation was right, but that the Budget did not provide an occasion on which to do anything administrative at that stage. Many of my hon. Friends when we were in government may have felt that was wrong. I feel now, as I felt then, that the principle is right that short-term as well as long-term benefits should be brought into taxation.

The decision taken in lieu of taxation—to have a 5 per cent. abatement covering the unemployed and sick, the maternity allowance and invalidity benefit — was, however, absolutely wrong. The Government were forced by their supporters—who are not very evident today—to replace the 5 per cent. abatement of unemployment benefit. It took them some time to do it. With an election approaching and threats from behind that there would be votes in the Lobby if they did not do it, they were forced to do it.

I want to know why the feelings expressed on behalf of the unemployed—that the 5 per cent. abatement should be restored — have not been heeded for the other beneficiaries. That is immoral, heartless, careless, thoughtless and cruel to 750,000 people—taking alone the sickness beneficiaries and those on invalidity benefit —who are among the least able to assist themselves. They are suffering this penalty and apparently the Government have no intention—unless the amendment is accepted—of replacing the 5 per cent. That is totally unjustifiable, and I agree with my hon. Friend that the situation is not clearly understood.

I hope that the debate will make it clear that the Government — unless they accept the amendment —intend to carry out a policy which is to the detriment of those who receive invalidity benefit and maternity allowances. I believe that is a disgraceful action by the Government. The Minister has a soft heart, and I suppose that if he has to say that he cannot accept the amendment it will be against his better judgment. If it were not so, I should not have the respect for the hon. Gentleman that I have. I believe that the policy should be put right by the amendment. Of course the amendment cannot completely replace what has been lost over the years but it can put right, as from the next uprating, a cruel act by a cruel Government.

Photo of Mr Tony Newton Mr Tony Newton , Braintree

I am grateful for some of the remarks made by the right hon. Member for Norwich, North (Mr. Ennals). However soft-hearted I may be taken to be, I cannot give the Opposition the immediate assurance about restoration that they are seeking.

The hon. Member for Birmingham, Perry Barr (Mr. Rooker) and I served—I in a silent capacity as a Whip — on the Committee that dealt with the 1980 Act. While I regret what was contained in the Act, I do not feel any sense of shame about it. The Act was brought in against the background of a Government who had decided that tackling inflation was the major single need, not least in the interests of the poor, and that that entailed some reduction in public expenditure. With social security occupying over one quarter of public expenditure, it was inevitable that some savings were found in the social security budget. The Government attempted to collect some limited savings from the social security budget which they thought would cause less hardship than some of the alternatives that might have been selected.

We were, are, and have shown ourselves to be, determined to protect the value of the retirement pension and the basic supplementary benefit safety net. We have more than succeeded in doing so.

Photo of Mr David Ennals Mr David Ennals , Norwich North

Bearing in mind the benefits that have been received by those at the upper end of the taxation limits earning £30,000 and more, how can the Minister justify savings which hit people who he knows are living on a very small income, many of them in great hardship? How can he say that the decision was justifiable? If there were savings to be made, surely other groups should have taken the rap.

Photo of Mr Tony Newton Mr Tony Newton , Braintree

The Committee will probably understand that I do not wish to embark upon a debate about the whole of the Government's economic policy which the right hon. Gentleman is inviting me to do. Everyone in the Committee would recognise, if we were not simply swapping shots in a propaganda war, that these have been years during which all sections of the community, in one way or another, have experienced some difficulty.

Photo of Mr Tony Newton Mr Tony Newton , Braintree

It is all very well for the hon. Member for Birkenhead, (Mr. Field), the right hon. Member for Norwich, North and others to shake their heads, but many people—in the mythology of those who would occupy the Opposition Benches if they were here—who are the beneficiaries of the policies that they have been describing, have in many cases seen businesses in which they had their money invested go bankrupt. Whatever the partisan arguments, it is not: sensible to ignore the fact that people in all sections of the community have shared some of the difficulties that the country has experienced over the past year.

Photo of Mr Tony Newton Mr Tony Newton , Braintree

The usual channels have told me that the Committee is anxious to make progress. In those circumstances it is not sensible for me to engage in a wide-ranging debate of the kind that would be more appropriate to an election platform. I wish to concentrate—

Photo of Mr Tony Newton Mr Tony Newton , Braintree

I shall give way to the hon. Gentleman, but I wish to make it clear that I wish to concentrate on the specific and legitimate points that have been raised about invalidity benefit rather than to swap political yah-booing with Opposition Members for the next half an hour.

Photo of Mr Andrew Bennett Mr Andrew Bennett , Stockport North

The Minister started the yah-booing by saying that it was necessary to make the cuts. We accept his arguments on the rest of the 1980 Act, but we were gold that these cuts were in lieu of taxation. As a silent Whip, was he party to misleading the Committee, because the Government had no intention of ever bringing invalidity benefit into taxation and restoring the 5 per cent. abatement?

Photo of Mr Tony Newton Mr Tony Newton , Braintree 7:45 pm, 20th April 1983

I hardly need answer that question. I did not, either silently or had had a voice, lend myself to misleading the Committee, either intentionally or unintentionally, about the Government's intentions which were as stated then. I reaffirm tonight, if I need to, that it remains the Government's firm intention to restore the abatement when the benefit is brought into taxation. The question when it may be brought into tax is a matter for my right hon. and learned Friend the Chancellor of the Exchequer, not for me.

It is clear that we shall not agree on this matter. The Opposition may feel that they wish to press it to a vote. However, it should be recognised that this proposal—against a background of a need to reduce, as we saw it, the overall size of the social security budget—was partly influenced by the fact that in our view, and I believe that as a general proposition it is shared, invalidity benefit and certain other benefits which had not hitherto been taxable should be taxable.

One of the matters that influenced us to choose this way of making some contribution to the required reduction in public expenditure was recognising the reduction in the public sector borrowing requirement that would have occurred had the benefit been taxable. That is a rough and ready method as it is not related to individual circumstances in the way in which taxation would be, but it is not as rough and ready as some of the Opposition speeches have suggested.

I must reiterate a point that was made in more general terms by my hon. Friend the Minister for Social Security during Question Time yesterday. During the fiscal year wich has just ended, the amount of invalidity benefit payable, had the benefit not been abated, regardless of any other income, to both single people and married couples was higher than the single or married personal allowance. The single person's allowance in 1982–83 was £1,565. The unabated rate of invalidity benefit last year would have been just less than £2 short of £1,600—above the single person's tax threshold.

Photo of Mr Brynmor John Mr Brynmor John , Pontypridd

The Minister will recognise that that was an exceptional period, because in the Budget before last the Chancellor of the Exchequer failed to raise personal allowances. If he had had a decent threshold policy, that position would never have arisen.

Photo of Mr Tony Newton Mr Tony Newton , Braintree

The hon. Gentleman had no need to interrupt me, because it was a point that I was about to acknowledge. We estimate that about 90 per cent. of those in receipt of invalidity benefit last year—it can only be a rough and ready estimate because we do not have all the details about people's personal circumstances and their other possible sources of income and tax allowances—had the rate been unabated, would have paid some tax.

Photo of Mr Tony Newton Mr Tony Newton , Braintree

I recognise the point that the hon. Member for Pontypridd (Mr. John) made—that, because of the recent increase in tax thresholds as a result of the Budget, the picture will be modified to some extent this year. It is difficult to know to what extent it will be modified. We still think that well over half—possibly up to 70 per cent. or 80 per cent.—would continue to be in the tax bracket, because this is another angle of the problem that has not been touched on at all—over 70 per cent. of invalidity beneficiaries also receive invalidity allowances ranging up to £7 a week, which is another £300 to £400 a year for the younger beneficiaries. The abatement of the invalidity allowances that were originally abated in 1980 was restored in 1981.

I do not make those points to disguise the fact that the 5 per cent. abatement in lieu of tax remains a rough and ready measure. However, the impression has been created that in some way hundreds of thousands of people are bearing a burden that they would not bear if we had managed to make benefit unabated and taxed. That is an exaggeration.

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

In that case, will the Minister explain what has happened between 1980 and the present to alter the Government's figure, which they gave at the time of the passing of the Social Security (No. 2) Act 1980, that over 400,000 invalidity beneficiaries were going to have their benefits cut, and it was known and estimated that they would not pay tax even if the benefit was taxed? What has happened in the meantime to alter that figure?

Photo of Mr Tony Newton Mr Tony Newton , Braintree

I shall not attempt off the cuff at the Dispatch Box

Photo of Mr Tony Newton Mr Tony Newton , Braintree

I shall write to the hon. Gentleman about the estimates that I have given. I emphasise that inevitably they are broad.

Photo of Mr David Ennals Mr David Ennals , Norwich North

This is not a matter on which the Minister can just write to my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker); it is a matter for the House of Commons and the nation. If the figure was 400,000, the level of taxation must be such that more and more people have been caught by it during that period. Even if that is not so and the Minister has an explanation and even if, according to the Minister's figures, the figure is 200,000, there must be 200,000 people who are sick or getting a disability pension and who are suffering. The Minister says that the measure is rough and ready. It is certainly rough. One assumed when it was introduced that the Government were ready to introduce a system of taxation. It is rough on the poor, and the Government have been unready in introducing the system.

Photo of Mr Tony Newton Mr Tony Newton , Braintree

The right hon. Gentleman is making too much of a meal of this. A number of factors may be involved. One is the relative movement of tax thresholds and the levels of benefit. The hon. Member for Pontypridd referred to the year in which there were no increases in tax thresholds. Another factor may be that at the time the estimates were given for the 1980 Act, the invalidity allowance was also being abated, which would have affected the issue to some extent. Yet another factor is that much would depend upon whether one made any allowance for the fact that large numbers of invalidity beneficiaries are, for various reasons, likely to have other forms of income as well, including, for example, occupational pensions or other benefits. That would contribute to bringing their total income into tax and would affect the extent to which tax could be seen to be falling on their invalidity benefit. Any estimates that we swap, that have been given in the past or that I have given this evening inevitably verge on the speculative. The most that one can attempt to do is to build up a reasonably broad picture.

The point that I want to register, in the interests of sensible discussion and not just for the sake of point scoring, is that many people who are currently subjected to abated invalidity benefit in lieu of taxation would be paying tax if the abatement were restored and taxation introduced.

Photo of Mr Andrew Bennett Mr Andrew Bennett , Stockport North

The Minister said that when the benefit would be brought in was a matter for the Treasury. Are discussions taking place between his Department and the Treasury so that there is some prospect of it being done in the next five years?

Photo of Mr Tony Newton Mr Tony Newton , Braintree

It is a matter on which we keep in touch with the Treasury. I cannot give the hon. Gentleman an estimate of the pace of progress or developments in that area. That is for my right hon. and learned Friend the Chancellor of the Exchequer.

I should like to make two other points. First—this will not entirely ease the anxieties of Opposition Members —it should be recognised that the least well off in this case, as in the case of unemployment benefit abatement which we debated in the House not so long ago, will be protected because supplementary benefit is not and never has been abated. We estimate that about 60,000 or 70,000 of those who would otherwise be affected by the abatement are protected by the availability of supplementary benefit. That will offset any loss of invalidity benefit or maternity allowance and the other benefits that have been affected at various times.

Secondly, Opposition Members, not unreasonably, could make a come-back on the fact that the merits of the protection of the supplementary benefit system have been considerably weakened, to put it no higher, by the existence of the invalidity trap, which has prevented those on invalidity benefit from moving on to the long-term rate of supplementary benefit, which would give my argument about the protection of supplementary benefit its greatest strength. In circumstances where it remains difficult for us to find as much additional money as we would like to do all the things that I, my hon. Friend the Minister of State and my right hon. Friend would like to do in social security, and where we therefore have to consider and choose our priorities carefully, I view with pride the end of the invalidity trap. For many years under successive Governments, with or without abatement, about 60,000 or 70,000 of our fellow citizens caught in the invalidity trap have been unable to qualify for long-term supplementary benefit. I view with pride the fact that we have been able to end that trap—for the over-60s by the end of next month and for the other 30,000 who are also caught in the trap by the time of the uprating in November 1983. At one fell swoop that will prevent about 70,000 people from being affected by the abatement and remove a longstanding injustice.

Although there are many things that I would like to do in social security, including some that have been pressed on me tonight, we must take them step by step and choose our priorities. By choosing the priority at this time of ending the invalidity trap, we have made a useful contribution to social justice and taken a partial step in dealing with the problem to which Opposition Members have referred.

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

I think that the Minister is rejecting my amendment. He has not said so, but I have got the general gist of what he said.

The Opposition wish to divide on this matter as it is not unimportant. The Minister talked with pride about what the Government have been able to cobble together in the Budget. However, he cannot escape the fact that when he was a silent Whip in Committee when the Social Security (No. 2) Act 1980 was being rushed through the House, each of that Bill's six clauses cut or abolished some sort of social security benefit. On the Minister's own admission, in answer to my parliamentary question of 18 November 1982, that saved the Government £500 million to last year. In other words, all the cuts that were made in 1980 have had a knock-on effect on the social security budget to 1982–83 of £500 million. When that is added to the £1 billion that the Government cut from last year's social security budget, one sees that there is little to be proud of.

Just in case any hon. Member thinks that it would be a good idea to know what has been cut from the social security budget for 1983–84 because of what the Government have done since they came into office, I should tell them that the Minister has blocked any questions on the subject. He has refused to give the reasonable figures for which I asked so that I can update the information that he gave previously about the value of the cuts that were imposed by the legislation to which I have referred, including the abatement that we are discussing today. The Minister will not give that information, but one way or another we shall get it out of the Government.

8 pm

Photo of Mr Andrew Bennett Mr Andrew Bennett , Stockport North

Will my hon. Friend ask the Minister how much this amendment would cost? That would at least start to give us a little of that information.

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

That was my final point. Whatever else the Minister said, he did not tell us the cost of our amendment. Later this year, the Government will make their boasts, irrespective of whether the increase is 4 per cent. or 6 per cent. We are led to believe that everyone will get 4 per cent., but for the 700,000 long-term sick and disabled on invalidity benefits, that 4 per cent. will be on 95 per cent. of the benefit. The increase will not be 4 per cent. of 100 per cent. Therefore, they will be short-changed again this year. For that reason I ask my right hon. and hon. Friends to join me in the Lobby in support of the amendment.

Question put, That the amendment be made:

The Committee divided: Ayes 182, Noes 247.

Division No. 123][8.1 pm
AYES
Abse, LeoEdwards, R. (W'hampt'n S E)
Allaun, FrankEllis, R. (NE D'bysh re)
Alton, DavidEllis, Tom (Wrexham)
Archer, Rt Hon PeterEnglish, Michael
Ashley, Rt Hon JackEnnals, Rt Hon David
Ashton, JoeEvans, Ioan (Aberdare)
Bagier, Gordon A.T.Evans, John (Newton)
Barnett, Guy (Greenwich)Field, Frank
Barnett, Rt Hon Joel (H'wd)Flannery, Martin
Beith, A. J.Ford, Ben
Benn, Rt Hon TonyForrester, John
Bennett, Andrew(St'kp't N)Foster, Derek
Bidwell, SydneyFoulkes, George
Booth, Rt Hon AlbertFraser, J. (Lamb'th, N'w'd')
Boothroyd, Miss BettyFreud, Clement
Bottomley, Rt Hon A.(M'b'ro)Garrett, John (Norwich S)
Bradley, TomGolding, John
Brown, Hugh D. (Provan)Graham, Ted
Brown, R. C. (N'castle W)Grimond, Rt Hon J.
Brown, Ronald W. (H'ckn'y S)Hamilton, James (Bothwell)
Brown, Ron (E'burgh, Leith)Hamilton, W. W. (C'tral Fife)
Buchan, NormanHardy, Peter
Callaghan, Jim (Midd't'n & P)Harman, Harriet (Peckham)
Campbell, IanHarrison, Rt Hon Walter
Campbell-Savours, DaleHart, Rt Hon Dame Judith
Canavan, DennisHaynes, Frank
Cant, R. B.Heffer, Eric S.
Carmichael, NeilHome Robertson, John
Cartwright, JohnHomewood, William
Clark, Dr David (S Shields)Hooley, Frank
Clarke, Thomas(C'b'dge, A'rie)Horam, John
Cocks, Rt Hon M. (B'stol S)Hoyle, Douglas
Coleman, DonaldHughes, Mark (Durham)
Cook, Robin F.Hughes, Robert (Aberdeen N)
Cowans, HarryHughes, Roy (Newport)
Craigen, J. M. (G'gow, M'hill)Janner, Hon Greville
Cryer, BobJohn, Brynmor
Cunliffe, LawrenceKilroy-Silk, Robert
Cunningham, Dr J. (W'h'n)Lambie, David
Dalyell, TamLamond, James
Davidson, ArthurLewis, Ron (Carlisle)
Davies, Rt Hon Denzil (L'lli)Litherland, Robert
Davis, Clinton (Hackney C)Lofthouse, Geoffrey
Davis, Terry (B'ham, Stechf'd)Lyon, Alexander (York)
Deakins, EricLyons, Edward (Bradf'd W)
Dean, Joseph (Leeds West)Mabon, Rt Hon Dr J. Dickson
Dewar, DonaldMcCartney, Hugh
Dixon, DonaldMcElhone, Mrs Helen
Dobson, FrankMcKay, Allen (Penistone)
Dormand, JackMcKelvey, William
Duffy, A. E. P.MacKenzie, Rt Hon Gregor
Dunwoody, Hon Mrs G.McTaggart, Robert
Eadie, AlexMcWilliam, John
Eastham, KenMarshall, Dr Edmund (Goole)
Marshall, Jim (Leicester S)Shore, Rt Hon Peter
Martin, M(G'gow S'burn)Silkin, Rt Hon J. (Deptford)
Mason, Rt Hon RoySilkin, Rt Hon S. C. (Dulwich)
Meacher, MichaelSilverman, Julius
Mikardo, IanSkinner, Dennis
Millan, Rt Hon BruceSmith, Rt Hon J. (N Lanark)
Mitchell, Austin (Grimsby)Snape, Peter
Mitchell, R. C. (Soton Itchen)Spearing, Nigel
Morris, Rt Hon A. (W'shawe)Spellar, John Francis (B'ham)
Morris, Rt Hon J. (Aberavon)Spriggs, Leslie
Moyle, Rt Hon RolandSteel, Rt Hon David
Oakes, Rt Hon GordonStewart, Rt Hon D. (W Isles)
O'Brien, Oswald (Darlington)Stott, Roger
O'Halloran, MichaelStrang, Gavin
O'Neill, MartinTaylor, Mrs Ann (Bolton W)
Orme, Rt Hon StanleyThorne, Stan (Preston South)
Palmer, ArthurTilley, John
Park, GeorgeTinn, James
Parker, JohnVarley, Rt Hon Eric G.
Parry, RobertWainwright, E.(Dearne V)
Pavitt, LaurieWatkins, David
Pendry, TomWeetch, Ken
Penhaligon, DavidWelsh, Michael
Powell, Raymond (Ogmore)White, Frank R.
Prescott, JohnWhitehead, Phillip
Price, C. (Lewisham W)Whitlock, William
Radice, GilesWilley, Rt Hon Frederick
Rees, Rt Hon M (Leeds S)Williams, Rt Hon A.(S'sea W)
Richardson, JoWilson, Rt Hon Sir H.(H'ton)
Roberts, Albert (Normanton)Wilson, William (C'try SE)
Roberts, Gwilym (Cannock)Winnick, David
Robertson, GeorgeWoodall, Alec
Rooker, J. W.Woolmer, Kenneth
Roper, JohnWright, Sheila
Ross, Ernest (Dundee West)Young, David (Bolton E)
Ross, Stephen (Isle of Wight)
Ryman, JohnTellers for the Ayes:
Sever, JohnMr. Norman Hogg and
Sheldon, Rt Hon R.Mr. George Morton
NOES
Adley, RobertChalker, Mrs. Lynda
Aitken, JonathanChapman, Sydney
Alexander, RichardChurchill, W. S.
Alison, Rt Hon MichaelClark, Hon A. (Plym'th, S'n)
Amery, Rt Hon JulianClark, Sir W. (Croydon S)
Ancram, MichaelClegg, Sir Walter
Arnold, TomCockeram, Eric
Aspinwall, JackColvin, Michael
Atkins, Robert (Preston N)Cormack, Patrick
Atkinson, David (B'm'th.E)Corrie, John
Baker, Kenneth(St.M'bone)Costain, Sir Albert
Baker, Nicholas (N Dorset)Cranborne, Viscount
Bendall, VivianCritchley, Julian
Benyon, Thomas (A'don)Dorrell, Stephen
Benyon, W. (Buckingham)Douglas-Hamilton, Lord J.
Berry, Hon AnthonyDover, Denshore
Best, Keithdu Cann, Rt Hon Edward
Bevan, David GilroyDunn, Robert (Dartford)
Biffen, Rt Hon JohnDurant, Tony
Biggs-Davison, Sir JohnDykes, Hugh
Blaker, PeterEden, Rt Hon Sir John
Bonsor, Sir NicholasEdwards, Rt Hon N. (P'broke)
Bottomley, Peter (W'wich W)Eggar, Tim
Bowden, AndrewEmery, Sir Peter
Braine, Sir BernardEyre, Reginald
Bright, GrahamFairgrieve, Sir Russell
Brinton, TimFaith, Mrs Sheila
Brittan, Rt. Hon. LeonFarr, John
Brooke, Hon PeterFenner, Mrs Peggy
Brotherton, MichaelFletcher, A. (Ed'nb'gh N)
Brown, Michael(Brigg & Sc'n)Fletcher-Cooke, Sir Charles
Browne, John (Winchester)Fookes, Miss Janet
Bruce-Gardyne, JohnForman, Nigel
Bryan, Sir PaulFowler, Rt Hon Norman
Budgen, NickFox, Marcus
Burden, Sir FrederickFraser, Rt Hon Sir Hugh
Carlisle, John (Luton West)Fraser, Peter (South Angus)
Carlisle, Kenneth (Lincoln)Fry, Peter
Carlisle, Rt Hon M. (R'c'n )Gardiner, George (Reigate)
Gardner, Sir EdwardMills, Sir Peter (West Devon)
Garel-Jones, TristanMiscampbell, Norman
Gilmour, Rt Hon Sir IanMitchell, David (Basingstoke)
Glyn, Dr AlanMonro, Sir Hector
Goodhart, Sir PhilipMontgomery, Fergus
Goodhew, Sir VictorMorris, M. (N'hampton S)
Goodlad, AlastairMorrison, Hon P. (Chester)
Gorst, JohnMudd, David
Gow, IanMurphy, Christopher
Gower, Sir RaymondNeale, Gerrard
Grant, Sir AnthonyNeedham, Richard
Gray, Rt Hon HamishNelson, Anthony
Grieve, PercyNewton, Tony
Griffiths, E.(B'y St. Edm'ds)Onslow, Cranley
Griffiths, Peter (Portsm'th N)Oppenheim, Rt Hon Mrs S.
Grist, IanOsborn, John
Grylls, MichaelPage, Richard (SW Herts)
Gummer, John SelwynParris, Matthew
Hamilton, Michael (Salisbury)Patten, John (Oxford)
Hampson, Dr KeithPawsey, James
Hannam, JohnPercival, Sir Ian
Haselhurst, AlanPink, R. Bonner
Hastings, StephenPollock, Alexander
Havers, Rt Hon Sir MichaelPorter, Barry
Hawkins, Sir PaulPrentice, Rt Hon Reg
Hawksley, WarrenPrice, Sir David (Eastleigh)
Hayhoe, BarneyProctor, K. Harvey
Henderson, BarryPym, Rt Hon Francis
Heseltine, Rt Hon MichaelRathbone, Tim
Hicks, RobertRees, Peter (Dover and Deal)
Higgins, Rt Hon Terence L.Rees-Davies, W. R.
Hogg, Hon Douglas (Gr'th'm)Renton, Tim
Holland, Philip (Carlton)Ridley, Hon Nicholas
Hordern, PeterRidsdale, Sir Julian
Howell, Rt Hon D. (G'ldfd)Rifkind, Malcolm
Howell, Ralph (N Norfolk)Rippon, Rt Hon Geoffrey
Hunt, David (Wirral)Roberts, Wyn (Conway)
Hunt, John (Ravensbourne)Rossi, Hugh
Irvine, RtHon Bryant GodmanRost, Peter
Irving, Charles (Cheltenham)Rumbold, Mrs A. C. R.
Jenkin, Rt Hon PatrickSainsbury, Hon Timothy
Jopling, Rt Hon MichaelSt. John-Stevas, Rt Hon N.
Joseph, Rt Hon Sir KeithShaw, Giles (Pudsey)
Kellett-Bowman, Mrs ElaineShaw, Sir Michael (Scarb')
Kershaw, Sir AnthonyShelton, William (Streatham)
Kimball, Sir MarcusShepherd, Colin (Hereford)
Knox, DavidShepherd, Richard
Lamont, NormanSilvester, Fred
Lang, IanSims, Roger
Latham, MichaelSkeet, T. H. H.
Lawrence, IvanSmith, Tim (Beaconsfield)
Lawson, Rt Hon NigelSpeed, Keith
Lee, JohnSpicer, Jim (West Dorset)
Le Marchant, SpencerSproat, Iain
Lennox-Boyd, Hon MarkStanbrook, Ivor
Lester, Jim (Beeston)Stanley, John
Lewis, Sir Kenneth (Rutland)Stevens, Martin
Lloyd, Ian (Havant & W'Ioo)Stewart, A.(E Renfrewshire)
Lloyd, Peter (Fareham)Stewart, Ian (Hitchin)
Loveridge, JohnStokes, John
Luce, RichardStradling Thomas, J.
Lyell, NicholasTapsell, Peter
McCrindle, RobertTaylor, Teddy (S'end E)
MacKay, John (Argyll)Tebbit, Rt Hon Norman
Macmillan, Rt Hon M.Thompson, Donald
McNair-Wilson, M. (N'bury)Thornton, Malcolm
McNair-Wilson, P. (New F'st)Townend, John (Bridlington)
McQuarrie, AlbertTownsend, Cyril D, (B'heath)
Madel, DavidTrippier, David
Major, Johnvan Straubenzee, Sir W.
Marland, PaulViggers, Peter
Marlow, AntonyWaddington, David
Marten, Rt Hon NeilWakeham, John
Mather, CarolWaldegrave, Hon William
Maude, Rt Hon Sir AngusWalker-Smith, Rt Hon Sir D.
Mawby, RayWaller, Gary
Mawhinney, Dr BrianWalters, Dennis
Maxwell-Hyslop, RobinWarren, Kenneth
Mayhew, PatrickWatson, John
Mills, Iain (Meriden)Wells, Bowen
Wells, John (Maidstone)Wolfson, Mark
Whitelaw, Rt Hon WilliamYounger, Rt Hon George
Whitney, Raymond
Wickenden, KeithTellers for the Noes:
Wiggin, JerryMr. John Cope and
Wilkinson, JohnMr. Archie Hamilton.

Question accordingly negatived.

Photo of Mr Brynmor John Mr Brynmor John , Pontypridd

I beg to move amendment No. 24, in page 1, line 17, at end insert 'provided that any increase made in those sums in 1983 shall not be less than the increase that would have been made but for the passing of the Social Security and Housing Benefits Act 1983.".'.

The Chairman:

With this it will be convenient to take the following amendments: No. 25, in page 1, line 17, at end insert 'provided that in 1983 those sums shall be increased by not less than 6 per cent.".'. No. 50, in clause 3, page 3, leave out lines 8 and 9 and insert 'This Act comes into force on 21st May 1984.'. No. 47, in clause 3, page 3, line 8, leave out subsection (2).

No. 48, in clause 3. page 3, line 8, leave out from 'shall' to end of line 9 and insert 'come into force on 1st January 1984'. No. 49, in clause 3, page 3, line 8, leave out from 'shall' to end of line 9 and insert 'come into force on 16th March 1984'. No. 51, in clause 3, page 3, line 9, leave out 'March' and insert 'July'.

No. 52, in clause 3, page 3, line 9, leave out '1983' and insert '1984'.

Photo of Mr Brynmor John Mr Brynmor John , Pontypridd

This group of amendments is the technical key to the Bill and, if passed, they will have the greatest practical effect upon the categories caught by the Bill. The reason why I demurred when my hon. Friend the Member for Birkenhead (Mr. Field) mentioned amendment No. 27 during an earlier debate was that if amendment No. 24 is passed it will have the effect of uprating in November by a sum equivalent to what would have happened had the Bill not been enacted. That means the relevant rate of inflation in November.

The Government have said that the Bill introduces only a technical change. When the Secretary of State was selling it to the House—or prescribing it, in view of what I called him on Second Reading—he advanced it as a measure of uprating that replaces guesswork with uncertainty. The Minister of State, who is not present now, suffered considerable embarrassment in his reply to that debate when he tried to square that statement with the evidence that he gave to the Select Committee in December, and to the House in January and February, when he said that both methods were equally erratic.

8.15 pm

However, we must concede—I do that so that the Minister who will reply need not make the point—that a week ago the House accepted the principle of historic uprating. Therefore, my amendments will tackle the other part of the equation, which is the effect of the uprating and whether people should be hurt unintentionally by a technical change.

May 1983 has been chosen as the date for the change. We must remind the Department that the Chancellor's estimate of inflation in May is about 4 per cent. He said that in the Budget statement, and has never denied the fact that that will not only be the lowest figure for some time past but may well be the lowest for some time to come. On 16 June, when the Department will calculate the inflation rate from May to May and decide by how much to uprate pensions from the following November, it is likely that the material at its disposal will be the lowest rate of inflation for some time.

In his Budget statement, the Chancellor said—these are Government estimates and the best available, and I hope that the Secretary of State does not pour scorn on them, because the Chancellor may be a poor thing but he does his best with figures—that the best estimate of inflation for November is 6 per cent. That means that during the six months from May to November the rate of inflation will have increased by about 50 per cent. it may be a small figure, but it is a large percentage increase. There will be a 2 per cent. shortfall between the increase in prices for which the pensioner is compensated and the increase in prices that he must pay in the shops when he receives his larger pension. He must pay for goods in November with a pension that was calculated on shop prices in May, and the shortfall must last at least until the following November.

Ministers have tried to give several answers to that point. The first is that an increase next November will compensate people for the loss that they have suffered. However, one can never compensate people for what they have lost because the category is not static. By November 1984 some people may no longer receive the benefit that they will enjoy this November and will miss out on that 2 per cent. for ever. Even under this Government, some of them may get a job and no longer be entitled to unemployment benefit. They will not be compensated. Some pensioners, and some of those who receive invalidity benefit, will be dead by then, and they can never be compensated.

Photo of Frank Field Frank Field , Birkenhead

Is not my hon. Friend being too kind to the Government? The Government cannot argue that one compensates people for the year that is lost. They may compensate in year two for price increases that occurred before year one, but the loss of the price increases in year one is never made up.

Photo of Mr Brynmor John Mr Brynmor John , Pontypridd

I was going from the category argument to the conceptual argument, as to whether one can ever compensate in arrears for hardships undergone day by day and month by month. For year one, one cannot compensate. In any event, some of the categories of beneficiaries will be retrospectively compensated in some measure but will never collect that compensation because they have ceased to be in the category.

We must ask ourselves who is involved. My hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) spoke of this, and I have no hesitation in reminding hon. Members of it because of an important mistake that is sometimes made, but which should be corrected. We talk of the pensioner, and any category of 9 million people—the retirement pensioners—is bound to loom large in our considerations. However, the retirement pensioners are not the only category affected. I should like to go through the categories affected and show how a 2 per cent. gap between the actual rate of inflation and the rate of inflation for which they are compensated will affect their weekly income.

First, there are the retirement pensioners and with them those in receipt of invalidity pension. In both those cases a married couple, on the historic basis—calculating the expected inflation rate—will lose £1·05 a week, and a single person will lose 65p a week. In addition, the unemployed and those on sickness benefit will lose 80p a week from the income of a married couple and 50p from that of a single person. Widows, on pensions and the widowed mothers' allowance, will lose on average 60p a week. Those on widows' allowance will lose 90p a week.

The non-contributory invalidity pension was hard fought for and was a major step forward in the treatment of invalids in this country, because so many had failed to qualify under the contributory rules. Married couples will lose 65p, and single persons 40p of that pension. Invalid care allowance also decreases by respectively 65p and 40p. At the higher rate of attendance allowance, married couples will lose 55p a week and at the lower rate 35p a week.

In addition to these categories, there are war pensioners, industrial injury benefit beneficiaries, supplementary benefit beneficiaries, housing benefit beneficiaries and public service pensioners. We are talking about an enormous number of people. My hon. Friend the Member for Perry Barr spoke of a figure near to 20 million people, and he was not exaggerating. That is 20 million people in our society who are affected by the measures going through the House tonight. Like my hon. Friend, I only wish that the importance and the relevance of the subject were reflected in the amount of interest shown by the media.

So often, these matters of great moment—I think that the Treasury Bench will not disagree—which have a direct and vital connection with many millions in our community are lost in the pursuit of the trivial and the sensational. I know what I think will be the headlines tomorrow. They will not be about the Bill but about something that occurred before the Bill and outside the Chamber. It is a shame that people who are among the poorest in the country are allowed to suffer these cuts without any great outcry or publicity in the press.

In addition to the argument about compensating for a year in November, another argument has been made. It is wearing a bit thin now, and the Minister for Social Security has worn out and gone. However, he was using the argument that, by giving the 4 per cent. in November the Government are actually giving more than if they had uprated by 6 per cent. on the forecast method. The argument goes that, if they had uprated on the forecast rate, they would have been bound to claw back the 2·7 per cent. overshoot last year. If they had clawed back the overshoot, the recipients would have got only a 3·3 per cent. increase. They are saying, "Generous old us: we have changed the system and are thus giving 0·7 per cent. more than we would have done, because of the historic method."

Let me repeat what my hon. Friend the Member for Perry Barr said, because repetition in this matter is not a fault. We must get the facts of this case across. There is no statutory obligation on the Government to claw back any overshoot that they make under the forecast system. When the Minister suggested that all Governments had done so, I was guilty of a sotto voce unparliamentary expression, which, fortunately, the Chair did not hear. I did so because in 1976 and 1977 there was a similar overestimate, but that was not clawed back in 1977 or 1978. It is nonsense for the Minister to say that the Government would have had to claw back any overshoot and would have had to have taken away 2·7 per cent.

The lie to the Minister's argument—I use that in non-pejorative sense — was given by the Chancellor when he made the initial announcement. He said that he did not yet know whether they would take away 2·7 per cent., 2 per cent. or 1·7 per cent. That shows that there was no necessity to take back the full 2·7 per cent., and that was already recognised by the Chancellor.

That announcement had quite a reception. The hon. Member for Macclesfield (Mr. Winterton) and others on the Conservative Benches joined us in their outrage at it — whether because of the election or because of the principle, one can only speculate. Let us be generous. My hon. Friend the Member for Birkenhead accused me a little while ago of being over-generous, so I shall be under-generous now. However, there was a cry of outrage from both sides of the House, which meant that the Government would have faced real difficulty in securing the full clawback even had they pressed ahead and done it by means of their so-called in-built majority. They have had enough narrow squeaks on unemployment benefit without a further challenge. The swiftness and hostility of the reaction is another reason why I do not believe that the Government would have clawed back the 2·7 per cent.

So because of the lack of a requirement to do so, and because of the public reaction to the suggestion that the Government might possibly do so, I believe that the full 6 per cent. uprating would have been made next November, had we stuck to the forecast system. Therefore, a 4 per cent. uprating on the historic basis and a 2 per cent. shortfall between the inflation rate in May and next November would go a long way to compensate the Government. I shall not use the word "clawback", because the Government dislike it, although it was the Secretary of State for Industry, the right hon. Member for Wanstead and Woodford (Mr. Jenkin), who invented that noun. The non-payment of 2 per cent., saving £210 million in this tax year, but £580 million in a full tax year, will compensate the Government for what they consider was an overpayment last year.

Let me put another point to the Government to explain why I believe that no clawback would have been effected, had the Government stuck to the forecast method. The Chancellor of the Exchequer proclaimed loudly that living standards had gone up by 5·5 per cent. under this Government. He said that everyone was better off. We had a Budget designed to better the standard of living of some people. That was the sole purpose of the giveaway part of the Budget. Therefore, it would have been inconceivable, at a time when the Government were encouraging and inducing people to feel that they were better off, that they should have clawed back the full amount from 9 million pensioners, of whom the majority are not among the richest in the country.

8.30 pm

I come back to the answer that was given to my hon. Friend the Member for St. Pancras, North (Mr. Stallard). He asked whether the Chancellor of the Exchequer would revise the figure of £180 million estimated savings in the social security budget, assuming a rate of 4 per cent. May on May and 6 per cent. November on November. It is interesting that that information was not first elicited on 11 April. The Chancellor had already estimated that he would save £180 million. All that was elicited on 11 April was that a further £30 million had to be added to that sum in the first year of operation, so as to make it £210 million.

The Minister of State said that that was full of assumptions. We had to assume that the Government would have uprated by 6 per cent. As I said, I think it is highly likely that they would have done so. Had they not done so, they would have faced a tremendous electoral outcry, because at the time when the clawback was suggested the reaction of organisations involved in this sphere was fierce. Moreover, for many reasons, I believe that the Government would have had to obey their own inclinations. Thus, the £210 million in the first tax year, and the £580 million in a full year, represent a saving to the Government and a loss in cuts in the weekly income of all the categories that I have mentioned.

My hon. Friend reiterated that at the margins at which most of these beneficiaries operate, to deprive them of £1 a week is an enormous penalty. That may not be a penalty to many categories in society, but £1 a week to a married couple on invalidity pension, £1 to people on retirement pension, and 80p a week to people on unemployment pension are tremendous penalties. It is quite unfair that they should be the victims of what is presented by the Government as a choice made by the Government so as to give them a fairer uprating. They say, "The historic method is much fairer, so let us do it in a way that actually causes a loss to those whom we seek to protect."

The Government can avoid doing that by the alternative that we have proposed. Amendment No. 24 would insert at the end of line 17: provided that any increase made in those sums in 1983 shall not be less than the increase that would have been made but for the passing of the Social Security and Housing Benefits Act 1983. We are suggesting that when, part way through a year, a change is made which is ostensibly technical, those dependent upon that uprating for their standard of living shall not be taken by surprise. At least for that year, they should be protected against the consequences of that technical adjustment. I see no good reason why the Government should not do that.

The alternative is that set out in amendment No. 50 and those consequential upon it. That is a less satisfactory way of doing it, but—

Photo of Mr Clement Freud Mr Clement Freud , Isle of Ely

Does the hon. Gentleman agree that, if the Government really were trying to make a fairer uprating, the Christmas bonus, which is a misnomer in any case, could be used as a genuine bonus to compensate pensioners for the loss in real pension that they suffer during the year?

Photo of Mr Brynmor John Mr Brynmor John , Pontypridd

Yes, that is true. The hon. Gentleman may know that I put forward three alternatives for this year, any one of which, or one of their own choosing, the Government could have produced had they been able to tear themselves away from the memoirs of my right hon. Friend the Member for Heywood and Royton (Mr. Barnett) long enough to be able to get down to the nitty-gritty of social security.

I allowed the Government a choice of three, one of which was that described by the hon. Gentleman. Another was roughly what my hon. Friend the Member for Stockport, North (Mr. Bennett) asked—if 2 per cent. Is one week's income during the course of a year, why not give an extra week's payment in order to secure that compensation? There are several ways of doing it.

The hon. Member for Macclesfield suggested that, if we are to change the rule, we should do so with due notice and postpone the coming into operation of the Act until everybody will know about it, will have expected it, and, what is more important, will have budgeted accordingly. However, one of the problems of changing the rules midway through a year is the lack of preparation for budgeting by people on fairly small incomes.

If the Government are serious in saying that they want a change of method which will more adequately protect the beneficiaries, they will ensure that no one suffers. If the Government do not ensure that no one suffers, the suspicion will be that the real motive behind the change is the saving of £210 million in this tax year and £580 million in a full tax year. There was a 20 per cent. real increase in pensioners' incomes over the last Labour Government's period of office. That is a record that the Government will not even remotely approach. The £580 million in a full year must be added to the £1·5 billion that the Government have already pared away by changing rules, regulations, dates of uprating, and so on.

Photo of Mr Norman Fowler Mr Norman Fowler Secretary of State for Health and Social Security

Does what the hon. Gentleman is saving mean that he defends the decision of the last Labour Government to change the method of uprating?

Photo of Mr Brynmor John Mr Brynmor John , Pontypridd

I defend the record of the last Labour Government in their overall dealing with pensioners. They received a 20 per cent. real increase. The right hon. Gentleman said that the cost of living had risen by 70 per cent. and that the Government had increased pensions by 75 per cent., but that is over a base of 100 which they do not admit. Therefore, they arrive at a crude figure of 5 per cent. whereas, in fact, the real increase is 2.6 per cent., of which 1·8 per cent. was an inherited commitment to restore the undershoot of 1979.

Photo of Frank Field Frank Field , Birkenhead

Does my hon. Friend accept that some Labour Members do not think that what the last Labour Government did was acceptable? Does he care to go on record as saying that if he were the Secretary of State for Social Services—

Photo of Frank Field Frank Field , Birkenhead

My hon. Friend may have another task to fulfil in the next Government. If he were the Secretary of State and the Cabinet asked him to bring forward such a measure, would he not welcome his supporters voting against such a proposal?

Photo of Mr Brynmor John Mr Brynmor John , Pontypridd

I should never welcome supporters voting against me, because they would not then be fulfilling their role as supporters. However, let me give the categoric assurance that, if I were to be Secretary of State for Social Services, I should never introduce a change in the method of calculating pensions without, at the same time, ensuring that no one lost in that year as a result.

In case right hon. and hon. Members wish to quote that back to me in future years, I am quite categorical about it. It is a matter of honour and I would be prepared to follow the consequences of it. Any Secretary of State for Social Services who — like this Secretary of State —allows the poorest in the land to suffer for the sums that I have mentioned under the guise of a technical change and at a time when the Chancellor is giving money away to other categories of people, is practising a cruel deception on the people. He ought to have the courage to take the action that I have outlined.

Photo of Frank Field Frank Field , Birkenhead

I shall be brief, Mr. Weatherill. I am pleased to see that the hon. Member for Wirral (Mr. Hunt) is present. In the Wirral, Members of different parties work closely together in trying to protect the interests of those whom we represent. The hon. Member was not present earlier when the Minister for Social Security made it plain that, although it is not described as such, the Bill is a clawback measure. As my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) said very effectively the other day, the effect of the measure is to deny a whole week's benefit to large numbers of beneficiaries.

The Wirral and Birkenhead are neighbouring seats. Every pensioner there will lose a week's pension. Every national insurance widow will lose a week's pension. Everyone with a public service pension will lose a week's pension, and every widow of a public service pensioner will lose a week's benefit. Almost every beneficiary in our two areas — leaving out those who claim only child benefit — will lose a week's benefit through this measure. I hope that the spirit that prevails in the Wirral on other issues—the spirit of putting the interests of our constituents first—will be applied to this measure as well. I hope that I and the hon. Gentleman—I might well call him my hon. Friend, because we work closely together on so many issues—will be in the same Lobby tonight to protect the people in both the Wirral and Birkenhead from suffering those cuts in benefit.

The Minister for Social Security today made the important admission that the Bill is a clawback measure. I therefore hope that the spirit of fellowship and brotherhood that always operates in the Wirral will operate when we vote on the clause.

Secondly, I should like to take up the argument of my hon. Friend the Member for Pontypridd (Mr. John) and to refer to the moment when I accused him—fairly, I hope—of being too soft on the Government in reviewing the measure as he did.

We know that everyone will suffer a cut in benefit as a result of the Bill and that if the inflation forecasts are wrong the loss will be even greater. We are told by the Government that the shortfall will be made good at some future date, but in fact shortfalls are never made good. Let us take the example of a very simple economy, existing for only three years and with a 1 per cent. increase in inflation per year. Under the Bill, in the first year people would lose the compensation for one year's inflation at 1 per cent. At the end of the second year, again assuming an increase in inflation of 1 per cent., they would receive an increase of 1 per cent. for that year and 1 per cent. for the first year. Prices, however, would have risen by 3 per cent. in all. The hon. Member for Isle of Ely (Mr. Freud) suggested that we should not be talking about making compensation in future years by adjusting the rates of benefit because we never do it properly. In that context, achieving the same end by means, for example, of a Christmas bonus is extremely effective.

We have tabled a number of amendments that would protect everyone in Birkenhead and Wirral. Amendment No. 24 would ensure that nobody in my constituency or in that of the hon. Member for Wirral would be worse off because the shortfall would be made good. Amendment No. 25 refers to an increase of 6 per cent. this year. If that amendment is passed none of our constituents will be made worse off. Amendment No. 50 would postpone implementation of the legislation until 1984, again ensuring that none of our constituents would be made worse off. I hope that if those amendments are pressed to Divisions they will not only be supported by Opposition Members.

Photo of Mr Andrew Bennett Mr Andrew Bennett , Stockport North 8:45 pm, 20th April 1983

I support the amendment. I was delighted that my hon. Friend the Member for Pontypridd (Mr. John) gave an assurance about how he would deal with the problems of uprating next year. I hope that he will be in a position to carry that out this time next year. Today, however, we should seek assurances from all parties, not least an assurance from the Minister, as to what the Conservatives will do if they are still in office this time next year.

The Government have deliberately chosen a month that will allow them to make the minimum uprating this year. That being so, in the very nature of things they will have to make a bigger uprating in 12 months' time than if they had chosen a different month. We want a clear assurance that they will not try to fiddle the system again. They might say, for instance, that the Opposition pressed hard for the uprating to be a month later this year to narrow the gap between announcement and implementation and thus slip onwards to the month of June. Alternatively, they might try to say that there were more difficulties this year than they had expected and slip back to April. Having chosen an especially favourable month this year to give away as little money as possible, their track record suggests that they will twist and turn to spend as little as possible next year as well. We therefore require a clear assurance that if they are still in office they will not attempt to twist the system again. We must have a clear assurance at this stage that, whatever happens, pensioners will be treated better next year than they have been treated this year.

The Government say that they have devised a system to raise pensions by 2 per cent. less this autumn than would have been the case without the legislation, and that they are saving £210 million as a result. That means the Government are saving £210 million to spend on something else, such as fortress Falklands or a series of other Government measures. I can produce a long list of cuts that would save £210 million and avoid affecting pensioners and other people on low incomes. What would it mean if that sum of money were raised by extra taxation? For the person on average earnings or above an extra lop a week would be asked for. Most people in this country can afford to pay an extra 10p per week, thereby producing £210 million. Most people in the country would agree that to pay that money to help pensioners and those on low incomes would be worthwhile.

The Government are saying that it is easier not to bother and to let the pensioner and others on low incomes to be worse off by 65p or £1·05.

Very often the House talks in percentage terms. It does not spend long enough assessing how much money pensioners have in their pockets. How would the Minister start to spend that money if he were trying to live for a week on the old age pension? The basic pension, if it goes up under this measure, will be only £34·15. What does the Minister consider should be spent out of that income on food? Does he expect to get away with spending much less than £3 a day on food——£21 a week? It is not possible to get much change out of £21 a week when shopping. Try buying a joint of meat. That may not be an item that is bought more than once or twice a week, but it makes a hole in £3 a day.

Photo of Mr Clement Freud Mr Clement Freud , Isle of Ely

Will the hon. Member for Stockport, North (Mr. Bennett) accept that, while I follow exactly what he says, an old age pensioner suffers additional expense because he often has to cater only for himself and the figure of £3 a head, which might be a general figure, is really much higher for a person living on his own?

Photo of Mr Andrew Bennett Mr Andrew Bennett , Stockport North

I fully accept that point. I am sure the hon. Member for Isle of Ely (Mr. Freud) will realise that many people spend much more than £3 on a meal. Many hon. Members often spend £3 on one item in a meal. In many instances larger amounts of food are bought than are immediately required, and it is necessary to eat the same food day after day or waste it—all because it is not possible to purchase small portions. The Minister should tell the House how much money he thinks the pensioner has to spend on food and try to budget for the pensioner. It is not easy.

A pensioner will be lucky if he is able to heat most of his accommodation for under £4 or £5 a week. Many pensioners who attend my advice bureau have bills for heating and lighting considerably in excess of that. Will the Minister tell the Committee how much he considers should be allocated out of that £34·15 to heating and lighting? How much needs to be put way each week for clothing, replacing bedding and curtains and items of that type? The Minister would be lucky, when he did his budget, if he could put more than £2 or £3 aside. Then there are expenses such as dry cleaning, cleaning windows and the house. Again, the Minister would be lucky if he could allocate more than £1 a week for that in that budget. Then there is insurance, house repairs and bus fares. If the Minister is allocating reasonable amounts of money, he will begin to find he has not sufficient money to make ends meet. All hon. Members will agree that pensioners and those on supplementary benefit ought to be entitled to some pleasures, such as a television and a television licence. More than £1 a week must be spent on that. The Minister would quickly discover that £34·15 is not enough to get by on. If a pensioner is to get by he needs children who can contribute cash or who can invite him out for meals and so on. A person on benefit will need someone to subsidise him in some way to enable him to get by.

The Minister should tell the Committee how he would allocate the money and try to convince us that he should not give that extra 65p a week. He should try to persuade us that it is unreasonable to give pensioners that money or to ask the taxpayer to pay the extra 10p a week that would be necessary. The hon. Gentleman must address himself to that argument. How can today's pensioners or those on supplementary benefit get by on such sums of money?

I do not want to take up the time of the Committee, but I could mention the problems faced by a married couple. The chance of getting by on their incomes is virtually nil. Most of us would have to struggle to do it. The Government should be prepared to say that they will increase benefits by at least 6 per cent. this autumn, rather than by the 4 per cent. that they intend.

Photo of Mr George Foulkes Mr George Foulkes , Ayrshire South

I am glad to have an opportunity to speak on this amendment, because I have been doing a little detective work. I notice that the Minister has slunk away and—to use, I believe, a cricketing expression—retired hurt. He was certainly under tremendous attack and did not seem well able to defend himself during our previous important debate. You were not here, Mr. Weatherill, but you would have found it unbelievable if you had been.

The Minister said that, thanks to increased efficiency, he could now get the uprating through in just over five months. He was congratulated by my hon. Friend the Member for Birkenhead (Mr. Field)—a saint if ever I saw one—on his great efficiency. However, although the Minister can get the uprating through in just over five months, he somehow cannot do it twice a year. As my hon. Friend the Member for St. Pancras, North (Mr. Stallard) pointed out, there are 12 months in a year, and, if one uprating takes just over five months, it is possible to do it twice a year. The Minister could not give us any reason earlier, so now we have the big guns in the Chamber who are possibly better able to answer. Perhaps the Minister has left because he has a record—

Photo of Frank Field Frank Field , Birkenhead

As long as your ann.

Photo of Mr George Foulkes Mr George Foulkes , Ayrshire South

Indeed, as long as anyone's arm.

Let us trace the genesis of the savings that are necessary. We have a little clue if we look at the minutes of the Social Services Committee for 15 December 1982. The Minister said: we will have to achieve a saving of £180 million in our anticipated expenditure plans for next year. Therefore, the genesis can be traced to a saving that is required of the Department by the Treasury. The Secretary of State may shake his head, but he will have an opportunity to reply. As far as I can see, that is the genesis. Later, the Minister said: I hope to avoid legislatior, if at all possible"— after the last time, I do not blame him— because legislation leads to other problems, as the hon. Gentleman well knows. Let us consider the evidence when the clawback was introduced in 1981. Conservative Members, including the hon. Member for Brighton, Kempton (Mr. Bowden), were furious and up in arms. The hon. Member for Bridlington (Mr. Townend) looks round. The hon. Member for Brighton, Kempton is normally here for such debates, but he is not here today. He pressed and pushed hard against the clawback. He tried to obtain an assurance from the Minister that such a dreadful clawback would not be introduced again. The Minister said: The operation is for this year alone. If we had wished to reserve the power to take such action annually, we could have drafted the clause accordingly. However, I hope that my hon. Friend will take this limitation as an earnest of our good intent not to go through the operation again. Picture the dilemma at the DHSS at the Elephant and Castle, Mr. Weatherill—that marvellous building on the other side of the river. The Department is required to make a saving. That is probably the requirement not only of the Treasury but of the great leader, who is the First Lord of the Treasury. However, the Minister for Social Security, as an earnest of his good intent, has said that no clawback will ever take place again.

9 pm

The great minds of those at the Elephant and Castle were set to finding a way of disguising a clawback. They were asked to produce some clever device which, when implemented, would amount to a clawback but would not be apparent as one. Of course, the device has been rumbled. The cover-up did not last long. It was thought to be too much of a coincidence that the Government found it convenient to revert from the forecast method to the historic system at this stage. With our suspicious minds, and the alacrity of response of my right hon. and hon. Friends and others, it became clear quickly that the clawback would be rumbled. However much bluster may be exhibited on the Government Benches, the pensioners know that a clawback is taking place.

Like my hon. Friend the Member for St. Pancras, North, I have received letters galore on this issue. They have been passed to me from various organisations. Individual pensioners in my constituency have spoken to me about it. My hon. Friend the Member for St. Pancras, North quoted the British Pensioners and Trade Unions Action Association and Pensioners' Voice. George Dunn of Pensioners' Voice, who is well known to many hon. Members, stated that the Chancellor's proposals are merely a shabby masquerade attempting to discguise what in effect, is a 'clawback'. That comment was extremely well put. The British Association of Retired Persons has a distinguished list of honorary vice-presidents, including the hon. Member for Macclesfield (Mr. Winterton), myself and one or two others. The members of the association are not all radicals and militants.

Photo of Mr Norman Fowler Mr Norman Fowler Secretary of State for Health and Social Security

My hon. Friend the Member for Macclesfield (Mr. Winterton) is not.

Photo of Mr George Foulkes Mr George Foulkes , Ayrshire South

The hon. Gentleman is not here to defend himself. I shall have to defend him. The hon. Gentleman has been a great man today. Ian Mackenzie, the founder and chairman of the British Association of Retired Persons, said: We certainly agree that the change of method of calculation of pension the rate has been unfortunate at this time, many of our members"— they are retired middle-class people— consider that the change is a method of enforcing the 'clawback' in a concealed form. The pensioners and their organisations realise what is happening. They have rumbled what the Government are doing.

I am worried that some of my hon. Friends and some Conservative Members accept that it is adequate for pensions merely to keep up with the retail price index. That should never be our acceptance. As my hon. Friend the Member for St. Pancras, North said, pensions started from a low base. Apart from the 20 per cent. increase that pensioners received under the Labour Government, it can be fairly asked, "Are they never going to receive any real increase? Are they never going to get near one third of average earnings for single people or half average earnings for a married couple?" Those are the fractions for which the pensioners' organisations are asking.

Photo of Mr Clement Freud Mr Clement Freud , Isle of Ely

Does the hon. Gentleman accept that pensioners do especially badly on the retail price index argument? One of the causes for the reduction of inflation is that mortgage rates have decreased, but only one pensioner in 50 has a mortgage.

Photo of Mr George Foulkes Mr George Foulkes , Ayrshire South

There are three main elements in a pensioners' budget, and the pensioners' price index, which the Government have devised, is a fraud. It has been exposed in the book "Inflation and Elderly People" by William Smith, a discussion document by Age Concern.

There are three main elements in a pensioner's budget. The first is food. The point was well made by my hon. Friend the Member for Stockport, North (Mr. Bennett) that food costs are not going up rapidly on the retail price index. A family unit, such as mine—I have a wife and three children—can buy family packs. The vast majority of people are part of family units. Ironically, it is cheaper to buy products in family packs than to buy small packs. When pensioners can get small packs, they have to pay more per pound, per kilogramme or per litre. Therefore, their costs go up more than the retail price index. Sometines they cannot get small packs. Has anyone seen half pints of milk recently? When I was young I used to see them, but we cannot get them now. Pensioners have to buy larger packs than they need, with the result that the food goes off before they can use it all.

Another major element in the pensioner's budget is fuel. Fuel costs have gone up rapidly—much more than inflation. Fuel takes a larger percentage of an old person's budget because he is at home most of the time. The same applies to the disabled and the unemployed. If a family man is out working, his children at school and his wife out shopping, the heat is not on all the time, but the pensioner's heating is on all the time and has to be at a higher level because he feels the cold more.

As the hon. Member for Isle of Ely (Mr. Freud) said, mortgage relief—the item which has depressed the RPI more than anything else—applies only to one in 50 pensioners. If a proper scientific analysis is made of the pensioners' price index, it will be found that it has gone up more than the retail price index. I understand that Age Concern reckons that it has gone up 4 per cent. more.

The point I was making earlier was that I was worried about the seeming acceptance that pensions should just keep up with the cost of living. The advantage of the link with earnings or prices, whichever was the higher—the system adopted by the Labour Government—was not fully appreciated at the time. It had a ratchet effect. It meant that all pensioners got a real increase, which it is very difficult to get any Government to agree to otherwise.

I hope the Government, or some members of it, will give some consideration to the amendment. The hon. Member for Galloway (Mr. Lang) has taken the place of the hon. Member for Wirral (Mr. Hunt). Galloway is full of old age pensioners, many of whom will lose money because of the Government's proposals.

As pensioners have told me on a number of occasions, the postponement of any increase effectively means that about 500,000 pensioners each year will die before it comes into effect. They will never get the benefit of any increase.

It has also been pointed out to me that many pensioners are not taking up their entitlement to supplementary benefits, and that results in a leeway of about £150 million. Pensioners would not have to apply for extra benefit if the basic pension were increased, and that is what we are suggesting.

Photo of Mr Joseph Dean Mr Joseph Dean , Leeds West

The Government appear to be saying that pensions are now pitched at the right level and that the percentage is almost immutable. Does that not mean that, as earnings increase, pensions in real terms will continue to diminish on a progressive scale? Unless something is done, many people will be buried before the increased benefits accrue.

Photo of Mr George Foulkes Mr George Foulkes , Ayrshire South

My hon. Friend is correct. Although real earnings have gone up, pensioners have not received a real increase. They have therefore fallen behind in real terms compared with the employed.

It is wrong of the Government to suggest that people in work are unwilling to pay for proper pensions for the elderly. Everyone during his working life contributes fully and well towards the pension that he will receive on retirement. That should never be forgotten. Secondly, most of the working people to whom I have spoken are willing to contribute to ensure that the elderly have a decent standard of living.

I hope that this amendment will find more favour than amendment No. 1. It is ridiculous that we should be going through this pantomime now—even the Minister has said that the legislation will cause more problems —when we know that there will be an election within the next 12 months and that there will be a change of Government — [HON. MEMBERS: "Oh."] That is quite clear. We know that a Labour Government will be returned. In view of the pledge given by my hon. Friend the Member for Pontypridd (Mr. John), it is crazy to go through this exercise at this stage.

Worst of all, this is part of the whole Budget exercise, which has given extra mortgage and tax relief to the already well off, helped those who are already rich, and penalised the poor. It is in that context that the Bill must be opposed. I hope that some Conservative Members—if not the hon. Member for Wirral, perhaps the hon. Member for Galloway — will at least vote for the amendment to postpone the introduction of the penalty contained in the Bill. This measure should not be called by its long, cumbersome title of Social Security and Housing Benefits Bill; it should simply be called the "clawback" Bill.

Photo of Mr Joseph Dean Mr Joseph Dean , Leeds West

I listened to most of the comments of my hon. Friend the Member for South Ayrshire (Mr. Foulkes), just as I did to the comments of my hon. Friend the Member for St. Pancras, North (Mr. Stallard) in an earlier debate. In the debate last week, along with other colleagues, I pointed out that the Chancellor's prediction of a 6 per cent. increase in the cost of living could well be a conservative estimate.

9.15 pm

Since the Chancellor made that speech there have been some dramatic increases in vital commodities, including fuel prices. I am sure that the right hon. Gentleman did not know, when formulating the Budget, that the oil companies, despite a reduction in the price of a barrel of oil, would lump, in one go, 20p on the price of a gallon of petrol. That sort of increase is bound quickly to work its way through into retail prices and affect the cost of living.

My hon. Friend the Member for South Ayrshire thought that few pensioners were owner-occupiers. From my experience in my constituency I would agree with that. Most of them, because of the make-up of the constituency, are council house tenants. Although some of them have received help, there has been a drift because of substantial increases in council house rents in the past three years. More money has been taken out of their pockets by the drift in social security benefits and rent rebates and because of lower standards forced on low-paid workers. Each substantial increase in council house rents —arbitrarily imposed because of the actions of the Government—has resulted in more people, including wage earners, having to apply for assistance. This measure will escalate that trend, which will continue until there is a complete reversal in the economic situation and people return to work.

If the sums involved are as insignificant as the Minister predicts I see no logical reason why the Bill should not be put on ice for 12 months. As the Act which was passed last year has begun to take effect, it has been shown to be a complete flop. Old-age pensioners are finding difficulties with it. In the debate last week I pointed out that in one weekend a councillor in my area had had to deal with two threatened evictions because of benefits not reaching people in the privately tenanted sector in time. I have received another letter from him, councillor Fathers, a diligent person, and with the permission of the Committee I will read a section of it: Dear Joe,Further problems with the unified benefit scheme have arisen. You will remember that some council tenants were given notice of eviction for non-payment of rent"—

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

Order. I think that is going a little wide of the subject.

Photo of Mr Joseph Dean Mr Joseph Dean , Leeds West

I am explaining why the measure should be delayed for 12 months. The whole thing is a shambles. When I raised the matter last week the Minister did not answer it. It is not a lot to ask for a few minutes in which to make the point so that it is on record and the Government know of the difficulties their actions are causing. I do not think I am noted for delaying matters. I do not speak all that often, anyway, and I probably will not get another chance to make this point to the Government if you instruct me to resume my seat now, Mr. Weatherill. That is why I asked for the permission of the Committee to quote from the letter, and I thought I was given permission. The letter states: You will remember that some council house tenants were given notice of eviction for non-payment of rent"— Some hon. Members are laughing. I received a telephone call late one evening about two constituents who were threatened with eviction because the Act is not working. They do not think that it is a laughing matter. They think that we are fools for having passed legislation that affects the houses in which they are living. The letter goes on: because although their benefits had been cut, the social security housing allowance was not being paid in time by the local authority. That gives the lie to the part of the Act that says there will be no extra work for the local authority. I have never found that one could have legislation that introduces a new scheme without increasing local authorities' work. They have been asked to take on extra duties although they have had staff cuts imposed upon them by the reduction of the rate support grant.

I know an owner-occupier whose benefit has been cut by the removal of any contribution to his housing costs. Nevertheless, he has received no payment from the local authority but has been sent a bill for his full rates of over £100. Last night I was asked to help in the case of two private tenants in Armley who were threatened with eviction. Again, their benefits have been cut but they have not received any payment from the council. Understandably, their landlord holds them responsible for their rents even though they have no money. It appears that the necessary information is not being passed from the DHSS to the local authority. I remember also that central Government was being mean about the additional resources it was allowing to the local authority for the extra work involved. I am only one councillor. If my experience is typical, there must be a lot of people in this city who are worried silly by the thought that they may well be made homeless by this cock-up. Can you help find out why this is happening? Whatever the cause, I feel too, that this messy state of affairs should be given an airing in the hope that we might prevent someone being put on the streets purely out of impatience with such bureaucratic bungling. It is not an intrusion on the normal procedures of the House to bring such circumstances to light. Leeds is a large city of 750,000 peple but those problems are not unique. Every hon. Member, whether he belongs to the Labour or the Conservative party, will receive examples of such cases in the near future.

I said that the original Act was a mess and that it would create difficulty where there was none. In my opinion, these latest measures will only compound that difficulty. I ask the Minister to look upon the amendment sympathetically and put the Bill on ice for 12 months. If he cannot do that, will he assure the Committee that there will be a full investigation into the workings of the Act, because it is not working as the Government thought it would?

Photo of Mr Norman Fowler Mr Norman Fowler Secretary of State for Health and Social Security

I want to say to the hon. Member for Stockport, North (Mr. Bennett), who raised the issue with me, that, as I made clear when we were discussing the group of amendments before this, we intend to keep to the May to May measure. That is why we put May into the primary legislation. We should only want to change that if we could reduce the gap between the time of the uprating announcement and the uprating. We should then have to bring amending legislation before the House.

Photo of Mr Andrew Bennett Mr Andrew Bennett , Stockport North

Is that a similar undertaking to that which we have received from the Opposition Front Bench — that they would not make use of that manoeuvre to pay a small increase, but would ensure that it was used in a year which would result in a bigger increase being paid?

Photo of Mr Norman Fowler Mr Norman Fowler Secretary of State for Health and Social Security

I am coming to the commitment that the hon. Member for Pontypridd (Mr. John) made. The initial point that we all move from is that the Labour Government introduced the forecast system in 1976. There is no serious doubt that in 1976 they did that to save money. That is clearly documented.

The hon. Member for Birkenhead (Mr. Field) was frank about his position. He said that the system was not acceptable. However, he will concede that it was prepared and introduced by the Labour Government. I was a little less clear about where the hon. Member for Pontypridd stood on that matter. When I asked him whether everything he had been saying up to that point meant that he was opposed to the change that took place, he promptly sat down, not enabling me to get a reply.

Photo of Mr Norman Fowler Mr Norman Fowler Secretary of State for Health and Social Security

I shall not give way. I was addressing my remarks to the hon. Member for Pontypridd.

The hon. Member for Pontypridd and others have lectured the Government throughout the debate, but they should be reminded where this story began. We did not drift into the forecast method. We went into the forecast method through a deliberate act of policy by the Labour Government.

This is unquestionably an important group of amendments.

Photo of Mr Brynmor John Mr Brynmor John , Pontypridd

The Secretary of State will accept that I was in another Department and therefore had other preoccupations at that time. How many votes did the Conservative Opposition mount against the change in the system? My understanding is that they did not oppose that change, even in those circumstances.

Photo of Mr Norman Fowler Mr Norman Fowler Secretary of State for Health and Social Security

We did not oppose the change. The hon. Gentleman is right. We did not seek to challenge the Government's judgment of public spending at that time. If the hon. Gentleman is seriously putting forward the argument that the responsibility of the Opposition excused him and the Labour Government for putting forward that policy, that is the most extraordinary case for the defence that I have heard for a long time.

Photo of Mr Brynmor John Mr Brynmor John , Pontypridd

It means that a few of the pious and sanctimonious words of the right hon. Gentleman ought to stick in his throat and choke him.

Photo of Mr Norman Fowler Mr Norman Fowler Secretary of State for Health and Social Security

It means that the hon. Gentleman's sanctimonious attitude is misplaced. The Labour party—including the hon. Member for Birkenhead, who was frank enough to concede that he wants no part of the system and does not accept it, and I think that the hon. Member for Birmingham, Perry Barr (Mr. Rooker) is probably in the same position—knows perfectly well that the Labour Government fiddled the system. Those are the facts. The change was approved by present Opposition Members. The modest point that I make is that, far from Conservative Members being sanctimonious, Opposition Members who lecture us need to adopt some humility and recognise their past record.

These amendments are important. The intention of hon. Members on both sides of the Committee is clear. They want to retain the present provision for the 1983 uprating as inflation in November is currently forecast to be above the rate of inflation in May. My right hon. and learned Friend the Chancellor of the Exchequer made it clear during his Budget statement that inflation in November is likely to be about 6 per cent., whereas for May we are working on the assumption that it will be 4·25 per cent. Obviously, those forecasts, like previous ones, might be wrong.

The debate has not been about the forecast and historic methods. Whatever divisions there are in the Committee, the case for change to the historic method has now been accepted in the Committee just as it has been outside. That is not surprising because the forecast method was introduced for the wrong reasons and did not work.

9.30 pm

I cannot accept that we should postpone the Bill's coming into effect or write in a requirement that the Government should increase pensions in November by not less than 6 per cent. I shall say why. In 1976, when the system was changed from the historic to the forecast method, the Government ignored the eight months of rapid inflation which had taken place and substituted their own estimate of what inflation would be in the 12 months to November 1976. The result was that pensioners and other social security beneficiaries missed out on those eight months, which were lost for ever. There was and is no way in which those months can ever be recovered.

The fundamental difference between the proposals that were made by the Labour Government and the proposals that we have presented to the Committee today is that, under our method, that gap will not exist. In other words, any increase in inflation between the end of May and November will be caught automatically in the following year's uprating. If the Budget forecasts are correct and inflation is 4·25 per cent. in May and 6 per cent. in November, the difference will automatically be paid as part of the following year's uprating. Of course, the system could equally work the other way. If inflation falls rather than increases between May and November, pensioners will benefit from that.

The other point that has been ignored is that this year pensioners and other beneficiaries have enjoyed the advantage of the overestimate of inflation in the 1982 Budget. The estimate for inflation for the 12 months between November 1981 and November 1982 was 9 per cent. Inflation worked out at 6·3 per cent., which resulted in a 2·7 per cent. overpayment in the current year. The recipient will receive whatever the May figure is. He will retain the 2·7 per cent. and have the assurance that any increase in inflation between May and November this year will be picked up in the next uprating. Even without that assurance, as my right hon. and learned Friend the Chancellor of the Exchequer has estimated, in the five years from November 1978 to November 1983, the retail price index will have increased by 70 per cent., whereas pensions will have increased by 75 per cent. If we had stuck to the forecast method and automatically adjusted for the overshoot this year — such adjustments were an integral part of the forecast method—the payment in November would be not about 4 per cent., but 3·3 per cent.

My last point goes directly to the remarks of the hon. Member for South Ayrshire (Mr. Foulkes). The Government have been criticised for making a saving in the social security budget. In 1982 we spent £32·5 billion on social security, and in 1983–84 we plan to spend £34·5 billion. The significance of those figures is that it is not a reduction in the planned expenditure—

Photo of Mr George Foulkes Mr George Foulkes , Ayrshire South

Does the Secretary of State agree that those gross figures are meaningless because there are now more old people and more unemployed, so the social security budget is bigger? We must consider the real value of the pension that each individual receives. The Government are clawing back £210 million with this Bill.

Photo of Mr Norman Fowler Mr Norman Fowler Secretary of State for Health and Social Security

The hon. Gentleman is wrong on both points. If we consider the real value of the pension compared with the retail price index — the Select Committee said that the retail price index was probably the best comparison—and take it up to the current year, we are ahead of prices. On the forecast we are ahead of prices, which means a real increase—[Interruption.] I am not talking about the total budget.

The hon. Member for South Ayrshire, in an amusing and polished speech, said that he had done some detective work, but, regrettably, his detective work did not take him to the Government's expenditure plans. They are significant because the money being made available for social security represents not a reduction in the plans published in February, but a £220 million increase for 1983–84 and a £590 million increase in a full year. That shows the significance and importance of the Government's proposals. I therefore ask the Committee to reject the amendment.

Photo of Mr Brynmor John Mr Brynmor John , Pontypridd

I wish that the Secretary of State's reply had been more adequate. I must remind him of what we are doing. We are not assailing the principle of the Bill because, Second Reading having been given, the Committee cannot do that. We accept that there will be a change to the historic system, but we ask whether a Government who exhibit the care and compassion that the Secretary of State says they do will make sure that those who are affected by the change this year will not lose as a consequence. That is what amendment No. 24 says, but the Secretary of State did not even mention it in his reply. He is more in tune with 1976 than with 1983. I remind him, so that he will not use it again, that in 1976 the Conservative Opposition did not vote against the previous change.

Photo of Mr Tristan Garel-Jones Mr Tristan Garel-Jones , Watford

Where was the hon. Gentleman in 1976?

Photo of Mr Brynmor John Mr Brynmor John , Pontypridd

I know that the hon. Member for Watford (Mr. Garel-Jones) is in a difficult position. As a Whip he can only smile benignly or scowl, as he more frequently does, but in 1979 he signed an early-day motion that called for twice-yearly upratings. That is in sad contrast to what he has done tonight, and he has the temerity to ask me where I was in 1976. I ask him where he is tonight.

My hon. Friend the Member for South Ayrshire (Mr. Foulkes) was worried that it might be believed that some Labour Members accepted only parity in pricing. Some amendments sought to restore an earnings link, but they were properly ruled out of order. However, it is fair to say that we do not accept that proposition. The great change between 1976 and now is that in 1976 pensioners could still get the better of earnings or prices in any year. Now they are tied only to prices.

The Scretary of State boasts about the volume increase in spending in his Department. I have never heard such a ridiculous argument. If the Government go on making people unemployed at the rate that they have done in the past four years, he will have an even larger increase. That is nothing to be proud of but something to be ashamed of. It is the quality of the service that we want improved, not the quantity.

The Secretary of State said that pensioners are well ahead, and returned to the point about the RPI having risen by 70·7 per cent. and pensions having increased by 75·1 per cent. We have put the 1976 argument on the record once and for all, so let us now put the Prime Minister's boast on the record once and for all. A 75·1 per cent. increase in pensions as against a 70·7 per cent. increase in the RPI is 175 over 170 and not a 5 per cent. increase in real terms, which is what the Secretary of State is trying to pretend. Therefore, it is a 2·6 per cent. real increase, of which 1·8 per cent. was the inherited undershoot from 1979 and 0·7 per cent. is the undershoot of what he is allowing the pensioners to keep back under the partial clawback of the 2·7 per cent. that was overpaid last year.

The Secretary of State has denied that there has been a volume cut is social security expenditure, but let him deny that the plans that he inherited were for £1·5 billion more than what he is now spending, and that he acted to cut the plans in various and devious ways. He has cut in the meanest possible way, because he has refused to safeguard the people whom he is trying to subject to the historic method. He has refused to say that, whatever method the Government choose to operate for the pensions, they will make sure that the pensioners do not lose. That is the minimum pledge that a civilised Government should make, and the fact that he has not even been able to mention it is ample justification for making the amendment.

Question put, That the amendment be made:

The Committee divided: Ayes 181, Noes 258.

Division No. 124][9.42pm
AYES
Allaun, FrankFoster, Derek
Archer, Rt Hon PeterFoulkes, George
Ashley, Rt Hon JackFraser, J. (Lamb'th, N'w'd)
Ashton, JoeFreud, Clement
Bagier, Gordon AT.Garrett, John (Norwich S)
Barnett, Guy (Greenwich)Golding, John
Barnett, Rt Hon Joel (H'wd)Graham, Ted
Beith, A. J.Hamilton, James (Bothwell)
Benn, Rt Hon TonyHamilton, W. W. (C'tral Fife)
Bennett, Andrewf(Sf'kp't N)Hardy, Peter
Bidwell, SydneyHart, Rt Hon Dame Judith
Booth, Rt Hon AlbertHaynes, Frank
Bottomley, Rt Hon A.(M'b'ro)Heffer, Eric S.
Brown, Hugh D. (Provan)Hogg, N. (E Dunb't'nshire)
Brown, R. C. (N'castle W)Holland, S. (L'b'th, Vauxh'll)
Brown, Ronald W. (H'ckn'y S)Home Robertson, John
Brown, Ron (E'burgh, Leith)Homewood, William
Buchan, NormanHooley, Frank
Callaghan, Jim (Midd'tn & P)Horam, John
Campbell, IanHoyle, Douglas
Campbell-Savours, DaleHughes, Mark (Durham)
Canavan, DennisHughes, Robert (Aberdeen N)
Cant, R. B.Hughes, Roy (Newport)
Carmichael, NeilJanner, Hon Greville
Cartwright, JohnJay, Rt Hon Douglas
Clark, Dr David (S Shields)John, Brynmor
Clarke, Thomasf(C'to'dge, A'rie)Kaufman, Rt Hon Gerald
Cocks, Rt Hon M. (B'stol S)Kilroy-Silk, Robert
Coleman, DonaldLambie, David
Cook, Robin F.Lamond, James
Cowans, HarryLewis, Ron (Carlisle)
Craigen, J. M. (G'gow, M'hill)Litherland, Robert
Cryer, BobLofthouse, Geoffrey
Cunningham, Dr J. (W'h'n)Lyon, Alexander (York)
Dalyell, TamLyons, Edward (Bradf'd W)
Davidson, ArthurMcCartney, Hugh
Davies, Rt Hon Denzil (L'lli)McElhone, Mrs Helen
Davis, Clinton (Hackney C)McKay, Allen (Penistone)
Davis, Terry (B'ham, Stechf'd)McKelvey, William
Deakins, EricMacKenzie, Rt Hon Gregor
Dean, Joseph (Leeds West)McTaggart, Robert
Dewar, DonaldMcWilliam, John
Dixon, DonaldMarshall, Dr Edmund (Goole)
Dobson, FrankMarshall, Jim (Leicester S)
Dormand, JackMartin, M(G'gow S'burn)
Duffy, A. E. P.Mason, Rt Hon Roy
Dunlop, JohnMeacher, Michael
Dunwoody, Hon Mrs G.Mikardo, Ian
Eadie, AlexMillan, Rt Hon Bruce
Eastham, KenMitchell, Austin (Grimsby)
Edwards, R. (Whampt'n S E)Mitchell, R. C. (Soton Itchen)
Ellis, R. (NE D'byshre)Morris, Rt Hon A. (W'shawe)
Ellis, Tom (Wrexham)Morris, Rt Hon J. (Aberavon)
English, MichaelMorton, George
Ennals, Rt Hon DavidMoyle, Rt Hon Roland
Evans, loan (Aberdare)Oakes, Rt Hon Gordon
Evans, John (Newton)O'Brien, Oswald (Darlington)
Field, FrankO'Halloran, Michael
Flannery, MartinO'Neill, Martin
Ford, BenOrme, Rt Hon Stanley
Forrester, JohnPalmer, Arthur
Park, GeorgeSteel, Rt Hon David
Parker, JohnStewart, Rt Hon D. (W Isles)
Parry, RobertStott, Roger
Pavitt, LaurieStrang, Gavin
Pendry, TomStraw, Jack
Penhaligon, DavidTaylor, Mrs Ann (Bolton W)
Powell, Raymond (Ogmore)Thorne, Stan (Preston South)
Prescott, JohnTilley, John
Price, C. (Lewisham W)Tinn, James
Radice, GilesVarley, Rt Hon Eric G.
Rees, Rt Hon M (Leeds S)Wainwright, E.(Dearne V)
Richardson, JoWatkins, David
Roberts, Albert (Normanton)Weetch, Ken
Roberts, Gwilym (Cannock)Welsh, Michael
Robertson, GeorgeWhite, Frank R.
Robinson, G. (Coventry NW)Whitehead, Phillip
Rooker, J. W.Whitlock, William
Roper, JohnWilley, Rt Hon Frederick
Ross, Ernest (Dundee West)Williams, Rt Hon A.(S'sea W)
Sever, JohnWilson, Gordon (Dundee E)
Sheldon, Rt Hon R.Wilson, Rt Hon Sir H.(H'ton)
Shore, Rt Hon PeterWilson, William (C'try SE)
Silkin, Rt Hon J. (Deptford)Winnick, David
Silkin, Rt Hon S. C. (Dulwich)Woodall, Alec
Silverman, JuliusWoolmer, Kenneth
Skinner, DennisWright, Sheila
Smith, Rt Hon J. (N Lanark)Young, David (Bolton E)
Snape, Peter
Spearing, NigelTellers for the Ayes:
Spellar, John Francis (B'ham)Mr. Walter Harrison and
Spriggs, LeslieMr. Lawrence Cunliffe.
Stallard, A. W.
NOES
Adley, RobertCockeram, Eric
Aitken, JonathanColvin, Michael
Alexander, RichardCope, John
Alison, Rt Hon MichaelCormack, Patrick
Ancram, MichaelCorrie, John
Arnold, TomCostain, Sir Albert
Aspinwall, JackCranborne, Viscount
Atkins, Robert (Preston N)Critchley, Julian
Atkinson, David (B'm'th,E)Dorrell, Stephen
Baker, Kenneth (St. M'bone)Douglas-Hamilton, Lord J.
Baker, Nicholas (N Dorset)Dover, Denshore
Bendall, Viviandu Cann, Rt Hon Edward
Benyon, Thomas (A'don)Dunn, Robert (Dartford)
Benyon, W. (Buckingham)Durant, Tony
Berry, Hon AnthonyDykes, Hugh
Best, KeithEden, Rt Hon Sir John
Bevan, David GilroyEdwards, Rt Hon N. (P'broke)
Biffen, Rt Hon JohnEggar, Tim
Biggs-Davison, Sir JohnEmery, Sir Peter
Blackburn, JohnEyre, Reginald
Blaker, PeterFairgrieve, Sir Russell
Bonsor, Sir NicholasFaith, Mrs Sheila
Bottomley, Peter (W'wich W)Farr, John
Bowden, AndrewFenner, Mrs Peggy
Braine, Sir BernardFisher, Sir Nigel
Bright, GrahamFletcher, A. (Ed'nb'gh N)
Brinton, TimFletcher-Cooke, Sir Charles
Brittan, Rt. Hon. LeonFookes, Miss Janet
Brooke, Hon PeterForman, Nigel
Brotherton, MichaelFowler, Rt Hon Norman
Brown, Michael (Brigg &Sc'n)Fox, Marcus
Browne, John (Winchester)Fraser, Rt Hon Sir Hugh
Bruce-Gardyne, JohnFraser, Peter (South Angus)
Bryan, Sir PaulFry, Peter
Budgen, NickGardiner, George (Reigate)
Bulmer, EsmondGardner, Sir Edward
Burden, Sir FrederickGarel-Jones, Tristan
Carlisle, John (Luton West)Gilmour, Rt Hon Sir Ian
Carlisle, Kenneth (Lincoln)Glyn, Dr Alan
Carlisle, Rt Hon M. (R'c'n)Goodhart, Sir Philip
Chalker, Mrs. LyndaGoodhew, Sir Victor
Chapman, SydneyGorst, John
Churchill, W. S.Gow, Ian
Clark, Hon A. (Plym'th, S'n)Gower, Sir Raymond
Clark, Sir W. (Croydon S)Grant, Sir Anthony
Clegg, Sir WalterGray, Rt Hon Hamish
Grieve, PercyNeedham, Richard
Griffiths, (B'y St. Edm'ds)Nelson, Anthony
Griffiths, Peter (Portsm'th N)Neubert, Michael
Grist, IanNewton, Tony
Grylls, MichaelOnslow, Cranley
Hamilton, Hon A.Oppenheim, Rt Hon Mrs S.
Hamilton, Michael (Salisbury)Osborn, John
Hampson, Dr KeithPage, Richard (SW Herts)
Hannam, JohnParkinson, Rt Hon Cecil
Haselhurst, AlanParris, Matthew
Hastings, StephenPatten, John (Oxford)
Havers, Rt Hon Sir MichaelPawsey, James
Hawkins, Sir PaulPercival, Sir Ian
Hawksley, WarrenPink, R. Bonner
Hayhoe, BarneyPollock, Alexander
Heddle, JohnPorter, Barry
Henderson, BarryPrentice, Rt Hon Reg
Heseltine, Rt Hon MichaelPrice, Sir David (Eastleigh)
Hicks, RobertProctor, K. Harvey
Higgins, Rt Hon Terence L.Pym, Rt Hon Francis
Holland, Philip (Carlton)Rathbone, Tim
Hordern, PeterRees, Peter (Dover and Deal)
Howell, Rt Hon D. (G'ldf'd)Renton, Tim
Howell, Ralph (N Norfolk)Ridley, Hon Nicholas
Hunt, David (Wirral)Ridsdale, Sir Julian
Hunt, John (Ravensbourne)Rifkind, Malcolm
Irvine, RtHon Bryant GodmanRippon, Rt Hon Geoffrey
Irving, Charles (Cheltenham)Roberts, Wyn (Conway)
Jessel, TobyRossi, Hugh
Jopling, Rt Hon MichaelRost, Peter
Joseph, Rt Hon Sir KeithRoyle, Sir Anthony
Kaberry, Sir DonaldRumbold, Mrs A. C. R.
Kellett-Bowman, Mrs ElaineSainsbury, Hon Timothy
Kimball, Sir MarcusSt. John-Stevas, Rt Hon N.
King, Rt Hon TomShaw, Giles (Pudsey)
Knox, DavidShaw, Sir Michael (Scarb)
Lamont, NormanShelton, William (Streatham)
Lang, IanShepherd, Colin (Hereford)
Latham, MichaelShepherd, Richard
Lawrence, IvanSilvester, Fred
Lawson, Rt Hon NigelSims, Roger
Lee, JohnSkeet, T. H. H.
Le Marchant, SpencerSmith, Tim (Beaconsfield)
Lennox-Boyd, Hon MarkSpeed, Keith
Lester, Jim (Beeston)Speller, Tony
Lewis, Sir Kenneth (Rutland)Spicer, Jim (West Dorset)
Lloyd, Ian (Havant & Wloo)Spicer, Michael (S Worcs)
Lloyd, Peter (Fareham)Sproat, Iain
Loveridge, JohnSquire, Robin
Luce, RichardStanbrook, Ivor
Lyell, NicholasStanley, John
McCrindle, RobertSteen, Anthony
Macfarlane, NeilStevens, Martin
MacKay, John (Argyll)Stewart, A.(E Renfrewshire)
Macmillan, Rt Hon M.Stewart, Ian (Hitchin)
McNair-Wilson, M. (N'bury)Stokes, John
McNair-Wilson, P. (New F'st)Stradling Thomas, J.
McQuarrie, AlbertTapsell, Peter
Madel, DavidTaylor, Teddy (S'end E)
Major, JohnThatcher, Rt Hon Mrs M.
Marland, PaulThomas, Rt Hon Peter
Marlow, AntonyThompson, Donald
Marten, Rt Hon NeilThornton, Malcolm
Mather, CarolTownend, John (Bridlington)
Maude, Rt Hon Sir AngusTownsend, Cyril D, (B'heath)
Mawby, RayTrippier, David
Mawhinney, Dr Brianvan Straubenzee, Sir W.
Maxwell-Hyslop, RobinViggers, Peter
Mayhew, PatrickWaddington, David
Mills, Iain (Meriden)Wakeham, John
Mills, Sir Peter (West Devon)Waldegrave, Hon William
Miscampbell, NormanWalker-Smith, Rt Hon Sir D.
Mitchell, David (Basingstoke)Waller, Gary
Monro, Sir HectorWalters, Dennis
Montgomery, FergusWarren, Kenneth
Morris, M. (N'hampton S)Watson, John
Morrison, Hon P. (Chester)Wells, Bowen
Mudd, DavidWells, John (Maidstone)
Murphy, ChristopherWhitelaw, Rt Hon William
Neale, GerrardWhitney, Raymond
Wickenden, KeithYounger, Rt Hon George
Wiggin, Jerry
Wilkinson, JohnTellers for the Noes:
Wolfson, MarkMr. Douglas Hogg and
Young, Sir George (Acton)Mr. Alastair Goodlad.