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Part of Orders of the Day — Social Security Bill – in the House of Commons at 9:28 pm on 20th May 1986.

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Photo of Sir Brandon Rhys Williams Sir Brandon Rhys Williams , Kensington 9:28 pm, 20th May 1986

I am glad to have the opportunity to explain why I shall vote against the Bill. I shall speak as briefly as I can in this unnecessarily truncated debate.

As I said on Second Reading, the Bill is really two Bills. The first part, which deals with pensions, could have been introduced as separate legislation, and it might have been better if it had been. The Government have made a mistake in not pursuing their policy of ending the state earnings-related pension scheme and simultaneously increasing the minimum rates of contribution. That would have been the right, clear-cut approach to reform.

The Bill as it now stands presents in part I an unstable compromise. Some of its provisions are good. I welcome the moves to widen the options for employers and employees; and I welcome the emphasis on money purchase. However, insufficient emphasis has been placed on the protection of post-retirement benefits and not enough has yet been done to ensure transferability of pension rights on terms that are fair to long-service employees. Minimum employers' contributions are still not high enough because they are being drained off in national insurance contributions which are not then applied to their proper purposes.

In particular, I am convinced that the concept of the 2 per cent. subsidy in clause 7 is an improper use of taxpayers' money that will serve only to distort the market for pensions, temporarily but, seriously. That part of the Bill should be dropped. We must hope that it will be thrown out in the Upper House.

The strategy for the reform of the various systems for the redistribution of income constitute the other parts of the Bill. The Government had the choice of providing for citizens' benefits on the basis of citizenship by means of universal benefits such as the Health Service and public education. In cash terms, the clearest example is the payment of child benefit. The Government are obviously trying to edge away from the universal services. I believe that is a mistake. They could have gone for contributory entitlement, but, as I have said, the contributory systems are not getting enough money, especially national insurance and the private pension and savings schemes.

The Government could have chosen to place their main weight on income-related benefits — that is to say, means-tested benefits. That is what they have done in the Bill, but they have made the wrong choice. Having made the wrong choice, everything that follows in the Bill is wrongly slanted and the Bill is a blunder which the public will not in the end accept. The emphasis has been placed on the reform of the means-tested systems, and even there it has not been done in a way that the public will accept.

On 14 February I asked in a written question about the combined effects of the reforms on the disposable income of all those receiving income-related benefits, together with an assumption of a 20 per cent. minimum rates contribution. We have to remember that this is not the only reform that the Government have in mind. Fewer than 500,000 people will gain from the Bill. One million recipients will be in about the same position as they are now, but 5 million people will be down, some of them substantially down, as a result of this Bill. Some 400,000 people will be down by more than £5 per week. I am afraid that the Bill will be seen as a millstone round the neck of every Conservative candidate at the coming general election.

Quite apart from the effects of the Bill in terms of cash, I deplore the inevitable results of relying on the means test to provide a minimum income for every citizen. On 14 April I received another parliamentary answer. It seems that we now have 14 million people living in families receiving supplementary benefit, housing benefit or family income supplement. That is altogether too many people dependent on proof of need in order to obtain the minimum subsistence income that we think that they should have.

Of course we know that some people receive benefits that they do not strictly need, but this is the wrong way to go about correcting that. If there is to be reform, we should not do it by adding, as the Bill will do, to the number of people who will have to apply for benefit on the basis of proof of need. There will be disastrous consequences in the long run for the unity of the nation if we have a large number of people living in a supplementary benefit subculture; and the systems of public administration which are already on the verge of collapse in many areas will find themselves with an even heavier burden.

I admit that we need to reform the systems for giving help to people on proof of need, and the Bill contains some ideas which may prove workable and useful; but the Government are entirely misjudging the mood of the nation in producing this Bill. It will prove largely unworkable in practice if the Government are so unwise as to seek to implement it in full as it stands. The Bill is not, as we had hoped, a new Beveridge, but merely a regurgitated Neville Chamberlain. I suspect that it has been forced on the Department by the Treasury in its enthusiasm for reducing the standard rate of tax.

The right approach would have been to increase the level of contributions in real terms to the national insurance fund—and to set it up again as a real fund, not just an accounting mystery—and and to the approved private systems of provision, so that the contributory systems could genuinely take over their appropriate share of the job of income support.

At the same time, the Government should have proceeded to the amalgamation of the negative tax allowances with the positive public outlays for income support to produce a simple, comprehensible system for a partial basic income guarantee, balancing the citizen's obligations and entitlements on a basis which could be seen to be morally and administratively sound.

The Government's U-turn in abandoning their commitment to the tax credit scheme, an established commitment in 1974, repeated in the election manifesto of 1979, has proved to be a blunder. They should now proceed to implement it as quickly as possible on a revenue-neutral basis. That would not give a generous basic income guarantee, but it would give a partial basic income guarantee, which would be the right way to begin.

The cheapest way of providing our citizens with an adequate level of income is not to appoint hundreds more officers to ensure that millions of people remain in idleness. We should instead be hastening to set them free to provide for themselves.