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1961 Dec 13 We
Margaret Thatcher

HC S Report [Family Allowances Bill]

Document type:public statement
Document kind:House of Commons Speech
Venue:House of Commons
Source:Hansard HC [651/487-516]
Journalist:-
Editorial comments:Around 1735-1901, MT speaking from 1830-45 (cc504-12), cc523-28, c1930 and cc544-51, c2040-45. For the sake of easier understanding the whole debate on this amendment - urging the abolition of the widowed mothers’ earnings rule - is reproduced on the disc.
Importance ranking:Minor
Word count:9418
Themes:Social security and welfare
487

New Clause.—(Earnings rule not to apply to widowed mothers.)

(1) No deductions shall be made from a widowed mother's allowance in respect of her earnings; and accordingly section seventeen of the National Insurance Act, 1946 (which provides, inter alia, for such deduction), and certain enactments and regulations, which amend that section and are mentioned in the Schedule 488(Repeals in connection with widowed mother's allowances) to this Act, are hereby repealed to the extent mentioned in the third column of that Schedule.

(2) This section shall come into force on a day to be appointed by the Minister by an order made in the form of a statutory instrument and laid before Parliament.—[Mr. Ross.]

Brought up, and read the First time.

489

Mr. Ross

I beg to move. That the Clause be read a Second time.

The purpose of the Clause is simple and I hope that it commends itself to most, if not all, hon. Members. This is, again, a matter which we shall have to take to a Division if we do not receive a satisfactory answer from the Minister. However, I am more hopeful this time. The Clause seeks to remove altogether the earnings limit in respect of the personal part of the widowed mother's allowance.

In Committee, I suggested that a notice should be put up behind the Minister's table in his office saying, "Beware of widows, especially young ones". It is only fair to say, however, that in respect of widowed mothers the Minister, over the past few years, has shown a very warm and human attitude, both in respect of benefits and in respect of the subject we are discussing.

The amount which widowed mothers can earn has risen. It is now £5. The rise itself has placed the National Insurance Advisory Committee in a dilemma. It wants to know exactly where we are going with the earnings rule. The personal allowance was supposed to take account of the fact that a mother with children could not go out and earn her living. I do not think that there is any dispute that, improved as the benefits are, a widowed mother cannot be expected to keep her family in the comfort and standards she has every right to expect on the allowance given to her and her children under National Insurance and by family allowances without some augmentation of that income.

The total allowances received by a widowed mother with three children are £6 14s. 6d. a week. The widowed mother's allowance for herself and the first child is £4 2s. 6d.; the allowance for the second child is 17s.; the allowance for the third child is 17s.; and she receives 18s. by way of family allowances.

Everyone who has studied the earnings rule has said that, if ever there was a case in which it could be altered without great complications and consequential anomalies, this is the case. That is why we have limited the Clause to widowed mothers. It does not affect retirement pensions or widows. The retirement pension is paid because the 490person is presumed or proved to have retired. If we attempted to abolish the earnings rule in relation to the retirement pension, we should come right up against the first requirement of paying the retirement pension, namely, retirement.

When one realises that a woman in receipt of widow's pension automatically, when she reaches the age of 60, has that translated into retirement pension, one realises that there is a relationship between the ordinary widow's pension and the retirement pension. But the widowed mother's allowance is a transitional benefit. When her children grow up she gets a widow's pension and my hon. Friend's and I are pressing that while she is in receipt of a widowed mother's allowance—for she must maintain her family single-handed and may consider that to do this best she should go to work—there should be no earnings limit at all.

The arguments against doing this in the past appear to have been that if one made this alteration one would be helping the widows who go to work and earn more than £5 but, at the same time, one would be doing little or nothing more for widows doing perhaps part-time work or no work at all. This seems a very unfair argument. It was used, I think, on the last occasion we debated this subject. It seems peculiar to argue that one should do nothing for anyone unless one does something for everyone.

A study of this subject will soon reveal that if something can be done to improve the circumstances of the widows under discussion, it should be done. When the National Insurance Advisory Committee last considered the Minister's increase to £5 the Committee was faced with a measure of dilemma because its members, too, would rather that something was done for everyone. The Committee pointed out, however, that the amount of money available would have been insufficient to do anything either for widows in relation to their allowances or for their children.

Thus, the Committee agreed because, at that time, the Minister was not merely increasing the earnings limit in relation to wages. He was actually making a change. It was because the right hon. Gentleman made that change and widened the gap—by 30s. compared with 491the earnings rule for ordinary widows, of £3 10s.—that we have every justification now to seek to persuade the right hon. Gentleman to remove it altogether. We want him to appreciate that, in this field, this change can be made without any complications concerning the retirement pension.

I do not wish to traverse the entire subject, but I sincerely hope that the Minister will not seek to divide the widows in the way I have described, just to make a debating conquest. The majority of widows who go to work do so because they must. It is a question of striving to bring up their families and to give their children a chance. When one appreciates that, single-handed, they are making this struggle, one must surely realise that they are entitled to our help. After all, we are talking about widows with children. These children have exactly the same appetities as those whose fathers are alive. They are just as hard on clothes, especially school clothes—and practically every school has its own uniform.

I urge hon. Members to realise the household and other expenses these widows have. They are just the same as in a family where the husband is able to help his wife to cope with all the problems of family life. We are, therefore, entitled to make the change proposed by my hon. Friends and I sincerely hope—and I appreciate that the Minister is as sympathetic towards this as anyone—that the right hon. Gentleman will agree to make the change and will not allow this fear of anomaly or comparison—that we are unable to do something for everyone—prevent him from making this reasonable and justifiable alteration.

Mr. J. T. Price (Westhoughton)

I fully support the speech of my hon. Friend the Member for Kilmarnock (Mr. Ross), who put forward, in a reasonable fashion, powerful arguments for making the change that we propose. There are other reasons which strongly appeal to me. For a woman benefit of her husband and claiming benefit under the terms of the Act, while her children are still young and going to school she is, in most cases, bereft not only of the consortium of her husband—I think that is the legal term—but she is also outside 492certain provisions of the financial system of taxation.

As soon as she enters widowhood and begins to cope with the problems of bringing up her family—and she may be living in a house which has been obtained by mortgage—she has all these additional liabilities with which to cope. At that stage she not only loses the financial support of the breadwinner, but she receives, if she is subject to taxation by way of Income Tax, only one allowance for herself and not the joint allowance—I think it is £280—which would normally be payable to a husband and wife.

I have never understood this arrangement, although I am familiar with it and I have tried to go into these problems. Why, because a widow chooses to assist her family income by going to work—to earn an extra £5, £6, or £8 a week—should the Ministry be relieved of part of the liability of paying her the full widowed mother's allowance? While we cannot completely avoid an anomaly in this respect, many hon. Members cannot understand—and I shall welcome anything the Minister may say to enlighten me—why it should be argued for the Government that because a woman chooses during widowhood to earn herself such additional income as she may she should receive this lesser benefit and the Ministry should be relieved of its full liability under the Act.

Many hon. Members—and I may be as guilty as any of them—fall into the error of supposing that many of these benefits are in some way tinged with relief, that because of the introduction of an earnings rule, which is another form of means test, there should be diminution of benefit. I do not consider that this is justified under an insurance scheme. The Government Actuary, who advised originally on the foundation of the scheme from an actuarial viewpoint, surely did not put any loading factor into his calculations that a certain proportion of widows would not qualify for the full benefit because they chose to earn money in suitable employment.

Therefore, with those two additional arguments—first, that there is not available to a widowed mother the full allowances of taxation under our tax system that would fall to the household if the 493husband were living, and, secondly, that this is an insurance scheme paying a specified rate of benefit in respect of a substantial rate of contribution, which, under our system, is constantly rising—I suggest that the time has come to look more compassionately and more favourably upon doing something to remove what, we believe, is a relatively unfair position for the widowed mother.

I know that the widowed mother will get the allowances provided by Statute for the children, but if a woman in this position, in addition to the domestic hardship of having to battle with life without a husband and bringing up children, shows herself so adaptable to her new circumstances as to go out and earn a reasonably good living that will maintain the family in the status to which they have been accustomed, she should not be penalised by a diminution of benefit under the existing regulations.

Therefore, without wishing to exaggerate or to elaborate further, I sincerely hope that on this occasion the Minister will respond in the way in which my hon. Friends have asked him to do.

Mr. Percy Browne (Torrington)

I rise again, as the hon. Member for West Houghton (Mr. J. T. Price) has done, briefly to support the Clause. I associate myself with the hon. Member for Kilmarnock (Mr. Ross) when he said that the Minister and the party to which I belong have lifted the widow, from the point of view of benefit and the earnings rule, above the average level which is given to many other people. That is quite right.

The new Clause opens up generally the operation of the earnings rule, with which I disagree. If I were to go into the pros and cons of the earnings rule now, I should be out of order, so I shall, therefore, keep to the new Clause.

We are all agreed that the widowed mother who is, as the hon. Member for Kilmarnock pointed out, under pensionable age is in a special position. The chances are that when she loses her breadwinner, especially if she has young children to look after, she has to go out to work. This being the case, it seems to me entirely wrong that we should by law take away some of her benefit if she is prepared to go out and earn 494money above a certain limit. That can be said generally about the earnings rule.

At present, the position is that we do not want to "shell out" too much public money. Why I like the Clause particularly is because subsection (2) states that

"This section shall come into force on a day to be appointed by the Minister by an order made in the form of a statutory instrument and laid before Parliament."

I congratulate hon. Members opposite on the Clause. I rather wish that I had put down a proposal about credits for seasonal workers on the same lines. It never occurred to me and it was too late when I saw the new Clause, or I should have done so.

I hope that my right hon. Friend will accept the Clause. He cannot advance the argument that he is unable at this moment to provide funds to operate the Clause, because he does not need to implement it when the Bill comes into force. If he agrees, as I am sure he will, in principle that it is right that the earnings rule should be extinguished for widowed mothers who are drawing their allowance rather than their pension, he should accept the Clause and put it into the Bill rather than bring forward new legislation on another occasion.

Mr. W. Griffiths (Manchester, Exchange)

I support the new Clause. I am delighted that my hon. Friends have put it down, because in Session 1959–60, having been successful in the Ballot, I promoted, together with some of my hon. Friends, a Private Member's Bill to do precisely what my hon. Friends now seek to do. Again this Session, having been successful in the Ballot—although, unfortunately, I am so far down the list that my hon. Friends are quite right to seek to remedy the anomaly in this way—I have done the same thing again, largely with the same supporters as I had two Sessions ago.

The hon. Member for Torrington (Mr. P. Browne), whose support on this occasion we are delighted to have, will, I hope, follow us into the Division Lobby if we have to divide the House. One of the things which attracted the hon. Member about the Clause was that the Minister was not called upon immediately to find the money.

The position under the existing law is that if any widowed mother wishes, or 495has, to cease working, the Government have to meet her pension in full. In the original Act, the Government took power to meet that situation. The operation of the earnings rule prevents a widow in that category from receiving the pension in full. If, however, for any reason she decided to finish working, her pension rights would have to be met in full by the Government.

I agree entirely with the arguments advanced by the hon. Member for Kilmarnock (Mr. Ross) and the hon. Member for Westhoughton (Mr. J. T. Price) about the special responsibilities of widowed mothers to their families. One thing which I should like to add about the position of the widow—it applies not only to widowed mothers, but to widows in general—is the great loss which industry, commerce and the professions suffer when women have to leave their employment. There are a vast number of people in jobs such as nursing, physiotherapy, radiography and in hospitals. These people are trained to do a skilled and necessary job for the community, but, upon marriage, they have to leave their work. I should have thought that to encourage widows with those qualifications and who desire to do so to go back to their employment would be highly desirable.

I have never accepted the theory which is advanced in some quarters that when a woman marries, whether she becomes a widow or not, she should cease to have any interest in her profession or job. She is perfectly entitled to go out to work and should be encouraged to do so if she wishes.

The main argument against the retention of the earnings rule for widowed mothers under the National Insurance Act is the gross inequality which is applied to widows who become widowed as a result of the normal hazards of life and the different treatment accorded to widowed mothers under the Industrial Injuries Act and to other widowed mothers.

Even today, there are large numbers of people who do not realise that if a husband loses his life at work, the widowed mother is not subjected to any earnings rule. She can earn as much as she likes. To repeat an example which 496I have given before, if a man is driving a bus and the bus crashes and he is killed, his widow is able to go out to work and earn as much as she can get. If the bus driver had ceased his employment half an hour beforehand and was a passenger in the bus when it crashed and he was killed, his widow would be subjected to the earnings rule. This distinction is completely indefensible. Whenever one puts it to people outside, they at once describe it is an outrageous distinction. It has gone on for a long time and Parliament should put an end to it.

When I introduced my Bill in 1959–60, I was struck by the enormous volume of correspondence which I received from all over the country and from all kinds of organisations, particularly women's organisations. I have been a Member of the House for 16 years, but never before had I had such a volume of correspondence.

The Minister is well aware of these arguments, because I had the honour to lead a deputation from the National Council of Women to meet him some time ago. He was sympathetic and listened to us courteously, but the right hon. Gentleman raised again the difficulty of creating fresh anomalies. What the Minister did not say to us on that occasion—and I have not heard him or any other Minister from his Department say anything about it in the House—was whether he could justify the continuation of this anomaly between different types of widowed mother. Can he possibly justify the widow of the man killed at work not being subject to the earnings rule and the widow of the man who dies, as it were, a natural death at home being subject to it? These are some of the matters about which we should hear from the Minister. It is for this reason and the reasons which we have heard from both sides of the House that I hope the Minister will agree to the Clause and bring it into operation when he and his colleagues in the Government consider the time convenient.

Mr. Julian Ridsdale (Harwich)

When we discuss pension cases or the earnings rule, I often find myself in agreement with my hon. Friend the Member for Torrington (Mr. P. Browne) because, like him, I have a constituency with many 497seaside towns and with many retired people and with a certain number of widowed mothers with children. I have had arguments with the Minister when I have found myself in agreement with my hon. Friend the Member for Torrington concerning the earnings rule, although quite often we have been torpedoed by the superior science and knowledge of the Minister in some of the cases which we have put forward.

I have, however, been very much impressed by the arguments put forward by the Opposition in support of the new Clause, and particularly by the hon. Member for Manchester, Exchange (Mr. W. Griffiths) when he pointed out that when a person is killed in action or dies of industrial injury the earnings rule does not apply, although it operates when a person dies naturally, despite the fact that the circumstances of the widow are exactly the same in all cases.

I hesitate to speak about increases of any kind when we are in the period of the pay pause as part of our economic policy. I have supported it because I do not wish to see an increase in the cost of living in the country as a whole. The cost of the new Clause cannot be very much. I know of only two cases in my constituency of widowed mothers with children who are affected by the earnings rule. Obviously, in the country as a whole the number is higher. I hope that when the Minister replies he will say what the cost would be if the new Clause were accepted, but, in general, I must say that I find myself very much in sympathy with the new Clause and I hope that the Minister will find it possible if not to accept the new Clause during the period of the pay pause at least as soon as possible afterwards.

Mr. Eric Fletcher (Islington, East)

May I just add two or three words in support of the new Clause moved by my hon. Friend the Member for Kilmarnock (Mr. Ross) and supported by speeches made on both sides of the House? I very much hope that the right hon. Gentleman will give us a sympathetic response to the representations which have been made to him on this subject and that we shall not be met with some stony, obstinate refusal that to make this concession would produce administrative anomalies, for it seems to me that here is real hardship where we can take a well-defined though probably not very 498numerous category of widows and can make a relaxation of the earnings rule, a relaxation which is required on all considerations of humanity and justice.

Personally, I am against the earnings rule altogether, but on this new Clause that wider question of principle does not arise. Here we are dealing with a small, limited number of cases in which, I submit, special considerations arise. Widowed mothers are in a class by themselves. They are not pensioners.

I speak about this matter because only in the last few months I have had two specific cases come to my notice, and they illustrate the difficulty which faces a married woman, perhaps around 50, with two or three children who suddenly loses her husband, not as a result of an industrial accident, in which case she is fully protected, but as a result of some other misfortune—ill-health, as it happened to be in both these cases—causing the sudden, unexpected death of the husband and father.

One case concerns a woman in her forties with young children who is faced with this sudden, unexpected emergency. What is she to do? While her husband was alive she was bringing us those children in reasonable comfort, two of them at grammar schools and the other being educated with natural prospects of a reasonable education; living in the sort of comfort which a woman can enjoy if her husband is enjoying a reasonable income. It is bad enough in all conscience for a woman to find herself suddenly placed in that emergency, but apart from the bereavement and misery and tragedy due to the loss of her husband there is financial loss. In the two cases I have in mind each is a brave, courageous woman deciding that she must continue to try to earn as much as she can in order that while the young children are still at school they may be able to qualify to go out into the world for themselves, and she must try to give them what they would have had if her husband had lived. She can do that only by going out to work.

As one knows, a great many married women in the circumstances of today can earn a reasonable income. It so happens that these two women, before they were married, had secretarial qualifications which enabled them to obtain a reasonable salary. To do that would, of course, 499mean obtaining assistance in the house. It is only by such a method that these brave women, anxious, quite naturally, to do the best for their children, can try to maintain them in the same kind of state which they would have enjoyed had their husbands lived.

On what grounds of principle should they be deprived by this earnings rule? Why should they not be entitled to the allowances which the State gives them under what is, after all, an insurance scheme, and why should they not also be enabled to earn—and retain—as much as they reasonably can without having to sacrifice their contributions from the Exchequer? On what ground of common sense and equity in this society in which we live can that be justified?

As the right hon. Gentleman knows perfectly well, there is ancient and honourable authority and injunction specially to help widows and orphans in their affliction, and it seems to me that this is one way in which we can do it and in which we ought to do it. I hope that no question of administrative difficulties or anomalies will be used, in answer to this new Clause, in order to frustrate what I am sure is not only the wish of both sides of the House but would accord with what it seems to me to be the ordinary common sense of humanity and decency.

Reference has been made to subsection (2) of the new Clause. It is perfectly true that in some ways it should be a comfort to the Minister. It would enable him, in accepting the new Clause, to say, if he wanted to say it—I hope he would not—that no immediate charge would fall upon the Exchequer. It would enable him to say that because of the present parlous state of the economy this ought to be deferred for a time. Personally, I hope that the Minister will have the courage not merely to accept the Clause but to announce that it is his wish to bring it into force at the earliest possible date. But, as my hon. Friend has pointed out, the second part of the Clause would enable the House—I hope we shall agree upon this—to write into the Bill what we all think is fit and required by justice and equity to be enacted, leaving the time for its introduction to be decided as and when the Statutory Instrument is brought forward.

500

Mr. Charles Curran (Uxbridge)

I support the new Clause, and I do so with my eyes open, recognising that if it is carried we shall be creating a new anomaly in place of an old one. I hope that the Minister will accept the fact that we are hoping for a new anomaly.

We recognise that many objections have always been raised to this change, this scrapping of the earnings rule whether for a widowed mother or a widow or any other people subject to it. We are always told that if we do that we start a chain reaction, that if we do it for one group we shall have to do it for all other groups throughout the social services. I recognise that in the long run we should have to do this. It is because I recognise that this chain reaction will flow ultimately from this new Clause that I support it.

The earnings rule is something which should never have been imported into our social arrangements. Although previous speakers have avoided any reference to the circumstances in which the earning rule was invented, and also to the arguments which have been used for it, I think it is just as well, before the Minister replies, to look back at them, because he has, of course, got a formidable debating case for it against the background of the earnings rule as applied to widows and to others.

On what basis does the State decide that a benefit should be paid to someone with the limitation that if that person earns a further sum of money the benefit paid by the State shall be reduced or abolished? Why does the State ever say that?

Mr. Deputy-Speaker (Sir Gordon Touche)

The hon. Member realises that the new Clause applies to widowed mothers?

Mr. Curran

I do. I am saying that the arguments which will be used in defence of the existing state of the law relating to widowed mothers are arguments which have very much wider implications. I want to guard myself against the reply from the Minister that, "It is all right to say you are voting for this in vacuo, but in fact you cannot vote for it in vacuo; you have to accept the implications of voting for it, and they will spread right through the social services." 501

We invented this earnings rule after the war for widowed mothers and retirement pensioners as well. We did so because after the war it appeared that the big post-war risk would be unemployment and that we should, therefore, try to keep people off the labour market rather than encourage them to stay in the labour market. We did it for a further reason, which was the fear that if we provided people with money and allowed them to work that might act as a subsidy to wages and might therefore tend to reduce wage rates.

Hon. Gentlemen opposite will agree that trade unions have always had this almost pathological fear that if we put into the labour market a lot of people getting benefits from the State those people will tend to work for less than trade union rates. The unions have always wanted an earnings rule of some kind because of that fear. I was glad to hear a speaker on the opposite side of the House ignoring that completely unreasonable fear and speaking up plainly in favour of getting rid of the earnings rule. After all, if a trade union cannot maintain wage rates without penalising widows or without penalising pensioners then the sooner that union goes out of business the better.

These two fears led to the invention of the earnings rule. The difficulty now is that if we try to abolish it in respect of one class of sufferers, we run the risk—and it is a real risk, it must be admitted at once—that by abolishing it for one group we shall be forced to abolish it for other groups.

At this point we are always told that to do this would cost a very large and indeed unpredictable sum of money. I hope that when the Minister replies he will grasp this nettle as well.

Mr. W. Griffiths

We are not seeking to create fresh anomalies. What we are seeking to do is to bring the widowed mothers into the same position as the war-widowed mothers and the widows to whom the provisions of the National Insurance (Industrial Injuries) Act apply and so to bring them into the same relationship with those two other classes.

Mr. Curran

I quite agree with the hon. Gentleman. 502

This is, as the servant girl said, only a little one. I know; but, nevertheless, it is the inevitable if unfortunate fact about little ones that they presently grow up to be big ones. I recognise all that. I imagine that the cost of the new Clause would be very small indeed. But when we are arguing in favour of this, we must face the fact that it is perfectly true that, although this is a financial trifle, once we start tampering with the earnings rule in one respect we shall be forced to go on and tamper with it in many other respects. I think that consequence will follow. It is because I accept and want that consequence that I support the new Clause.

This earnings rule both as it is applied to widows and also as it is applied to retirement pensioners is something which causes a bitter sense of unfairness in this country. People argue, quite reasonably, "These are insurance benefits. We have paid for them. We ought to get them as a matter of right, not with strings tied on to them." This feeling of unfairness goes on festering. Members of the Government, colleagues of the Minister, are concerned nowadays, and quite rightly, about the social climate of this country. They all recognise, as we on these benches do, the need for carrying everybody with us if we are to make economic changes. So we have to try to remove any sense of unfairness. I believe that by tackling the earnings rule on the lines proposed in the new Clause we shall make a real contribution.

Many people feel, and with some reason, that where the earnings rule is applied there is one law for the rich and another for the poor. They see that people can retire from their job at 60 or 65 and receive a pension as a right with no questions asked, whilst widows, like retirement pensioners, do not receive the pension as a right with no questions asked but are subject to this limitation. This contrast leads to a widespread and festering sense of unfairness.

It also leads to a great deal of "fiddling". Some widows evade the operation of this rule by earning money in small sums and keeping quiet about it, just as there is a sizeable number of pensioners who similarly avoid the rule by earning money on the quiet and not telling the authorities about it. This leads to a feeling of uneasiness. People 503are afraid of anonymous letters and informers. A good many people, through the operation of this earnings rule throughout the social services, are led to the fringes of the law. For this reason also it would be highly desirable to get rid of it.

Like my hon. Friend the Member for Torrington (Mr. P. Browne), I should like to draw the Minister's particular attention to the proposal in the new Clause that

"This section shall come into force on a day to be appointed by the Minister by an order made in the form of a statutory instrument and laid before Parliament."

I find this feature highly attractive and I join in congratulating the hon. Member for Kilmarnock (Mr. Ross) on his ingenuity in putting it into the Clause. It blocks up one of the great bolt holes—the plea that we are voting at once for an additional payment which may be large and certainly will be inflationary. This provision enables the Minister to impose a pay pause of his own in respect of the earnings rule.

I hope that my right hon. Friend will accept that the need for this is extensive and the demand for it widespread. We members of his party will vote for both because we think it right and a matter of fair play and also because we all want to create a new anomaly—thereby hoping that in the not very long run we shall get rid of the earnings rule completely.

Mr. Edwin Wainwright (Dearne Valley)

I am grateful to the hon. Member for Uxbridge (Mr. Curran) for the point of view that he has put forward. I disagree with him when he says that the trade unions should be strong enough to make certain that if this type of person is employed in industry he should not be employed at a wage-rate lower than that of the ordinary citizen. If I went into the history of how the earnings rule came about I should be going outside the scope of the debate. I would only say that it was due to the massive unemployment in the country at that time.

I urge the Minister to accept the new Clause. I can think of one case of this kind among the many with which I have had to deal. It is the case of a widow whose husband was a regular worker on 504seven shifts a week, receiving a reasonable income. He died suddenly and left her with four children to bring up. She lived for several years in dire poverty. She could not go out to work because the children were young and she had to do whatever was possible to make ends meet. It was pitiful to see her trying to do her best to manage on a mere pittance.

Only someone who has been forced to live on that kind of income can imagine how a person in those circumstances can exist at all. Later, when the children grew up this woman obtained a part-time job but then her widow's allowance was reduced. There are many such cases where women are doing their best to bring up their children as we would like to see them brought up and to give them a reasonable education. There are also minority cases where it is not necessary to pay the widow anything because of her capacity to earn a reasonable salary. That possibly may be at the back of the Government's mind when, from time to time, they refuse to abolish the earnings rule.

In spite of the fact that we have a wages pause and that the Government think that we should cut down on expenses, we are not entitled to refuse any longer to carry out the provisions embodied in the new Clause. We ought now to give the consideration which they deserve to these widows who have carried out the great responsibility, in dire need, of bringing up future citizens. I hope that the Minister will accept the new Clause and will take into consideration that subsection (2) gives him power to bring its provisions into operation at a future date.

The Joint Parliamentary Secretary to the Ministry of Pensions and National Insurance (Mrs. Margaret Thatcher)

I am grateful to the hon. Member for Kilmarnock (Mr. Ross) for the moderate and sincere way in which he moved the new Clause. I will try to reply in the same vein. The debate has ranged over pretty nearly the whole of the National Insurance Scheme and I will try to reply to the points made in a certain order.

First, there was the point raised by the hon. Member for Kilmarnock which I would put briefly as asking 505whether the new Clause would not make the best use of available resources. Secondly, there was the point raised by the hon. Member for Westhoughton (Mr. J. T. Price) about the basis on which we deduct from a benefit where there are earnings. Thirdly, came the comparison with the industrial injuries widows. So far as I do not cover other points under those three headings, I will do my best at the end.

The hon. Member for Kilmarnock posed a problem which on this side of the House we always have to face, when we consider the expenditure of any money on any aspect of the National Insurance Scheme. The problem is posed very vividly by this proposed new Clause and was, of course, considered, as the hon. Gentleman mentioned, by the National Insurance Advisory Committee. The cost of the Clause would be about £1½ million.

Perhaps it would help if I gave the numbers of people who are at present in receipt of widowed mothers' allowances. There are about 148,000 widowed mothers' allowances in payment. Some 20,000 of these women suffer adjustments under the earnings rule. Thus, only 20,000 of the widows would, at present, be affected by the Clause. What we must consider, were this £1½ million available now—and we have considered this problem in the past—is how best to use that money. Should it be used in favour of widowed mothers who are able to go out to work? Or should it be used in favour of those widowed mothers who, because they have more or younger children, cannot go out to work, or, perhaps, can only do part-time work, earning so little that they would not come within the scope of the earnings rule?

Were we to accept this Clause we should be deliberately helping those widowed mothers who, compared with others, are considerably better off because they can go out to work. We should thereby, by implication, be preferring them to those who cannot go out to work. We should, of course, be preferring women such as myself—professional women—over and above those who have young children or who live in areas where they cannot get reasonably highly paid jobs.

As the hon. Member for Kilmarnock pointed out, the earnings rule for the 506widowed mother is at present at the level of £5. That is not something to be dismissed lightly. Hon. Members will be aware that when one sits in Opposition one pleads a cause, but standing at this Dispatch Box one has to consider what would be the very best use of resources.

My right hon. Friend takes the view, which has been endorsed by the N.I.A.C. in the past, that we should use the money in order to increase benefits to those who are hardest hit. The hon. Member for Kilmarnock referred very kindly to the work of the N.I.A.C. on this problem, when the earnings limit was raised for widowed mothers' allowances from £4 to £5 a week. I should like to read out the whole of paragraph 10 dealing with this relaxation. It states:

"We have complete sympathy with the widowed mother and would like everything possible to be done to help her. There have been many suggestions that the earnings rule for widowed mothers should be abolished and any relaxation of the rule will doubtless be widely welcomed. A relaxation of this rule will, however, mainly benefit widows whose family circumstances permit them to undertake a substantial amount of work, or whose work is relatively well paid. It will not help the widow who cannot readily leave her children and go out to work. We should accordingly prefer to see any additional expenditure on this benefit go to increasing the basic allowances for the mother or her children."

That was the recommendation. I will read the rest of the paragraph. Hon. Members will never find me reading selected passages out of paragraphs without trying to give the whole picture. The paragraph went on:

"We understand, however, that the amount which the relaxation of the earnings rule would cost would not be enough to improve the basic allowances significantly. In these circumstances we do not feel able to object to the proposed relaxation."

That was written just before the earnings rule was relaxed in April, 1960. It was upon that proposed relaxation that the N.I.A.C. was commenting. As a result of the relaxation, the widowed mother got a £5 earnings limit which, of course, gives her a considerable preference over other National Insurance beneficiaries. In deciding to make increases in 1961, we could have done what this Clause proposes or what in essence the N.I.A.C. proposed, which was to increase the basic benefit to the widowed mother who cannot go out to work. 507

We chose the second course. We chose to increase all the benefits, throughout National Insurance, which affect the widowed mother. I do not make any particular point of that, but we also increased the benefit payable in respect of the children of the widowed mother by an amount over and above the amount of the increase for the children of other National Insurance beneficiaries. The child of a widowed mother now draws 7s. 6d. more than the child of a person who is unemployed or who is in receipt of sickness benefit. Until April, 1961, the child of the widowed mother drew 5s. more than the children of other National Insurance beneficiaries.

The cost of giving this preferential increase to the widowed mother who could not go out to work because of young children was about £1¼ million. I do not think that anything turns on the odd £¼ million. My point is that when we were faced with this choice of how best to deploy the resources we felt that we should follow the N.I.A.C. and give it to the widowed mother who cannot go out to work.

Mr. Ross

The hon. Lady has a point there, but does she imply that this benefit was given only to widowed mothers who were not working? If it was given in respect of the children, then it was given in respect of all widowed mothers.

Mrs. Thatcher

It was indeed, but it will help most of all those who are unable to go out to work, and that is the particular category which we thought we should help in preference to others.

I now turn to the point raised by the hon. Member for Westhoughton (Mr. J. T. Price). I am grateful to him for raising it. He asked on what basis we reduced benefit when there were earnings. It was a point which I had not completely comprehended before coming to the House. Fortunately, I believe that I did comprehend it before coming to this job. It goes to the root of the whole scheme. I do not think that some of those who complain to us about this rule fully appreciate the significance of the change from the old scheme to the new scheme which was made in the 1946 Act.

The whole basis of the new scheme is that one contributes against the con508tingency of interruption of earnings. One contributes to get benefit when one's earnings are interrupted by unemployment or by sickness, or because one has reached the age of 70 for a man or 65 for a woman or has retired from work during the preceding five years. One is insured against interruption of earnings. It is not an unimportant point but one which goes to the whole basis of the scheme. I hope the hon. Gentleman will see that it applies also to widows' benefits. One contributes to a scheme which supplies benefits when earnings are interrupted, but when earnings are not interrupted those benefits are not payable.

Mr. J. T. Price

Perhaps the hon. Lady will allow me to interrupt her very charming argument, which she is putting with great ability. I can put her mind at rest on one matter concerning the question underlying most of the scheme. I had to live with it at close quarters from 1946 to 1948 when the basis of the law was changed.

The fundamental distinction in 1948 was that, for the first time, this scheme was put on an insurance basis with the payment of substantial premiums. We claim, as reasonably and forcibly as we can, that the £1½ million she now says would be represented by this Clause is really the £1½ million provided as a relief to the Ministry by holders of policies of insurance, and that the disposal of these benefits is not a matter for the Minister. I know that under the Regulations the House is talking of where to put the money instead of giving it to the people mentioned in this Clause, but surely this money is being given by beneficiaries through their willingness to go out to work. It is not provided out of the Exchequer at all.

Mrs. Thatcher

I am glad that the hon. Gentleman comprehends the basis of the scheme. But I must say that at certain times he seems to do his best to conceal that fact. The question remains: What is one insured against? The answer remains: One is insured against interruption of earnings. It is for that reason that there is an earnings rule. The discussion ranged widely over the earnings rule and I do not want to follow certain hon. Members into all its vicissitudes.

I would point out, however, to those who made reference to the earnings rule 509for retirement pensioners that if we want the earnings rule abolished—and certain hon. Members said that if this proposed new Clause came into effect one would ultimately have to abolish it—we would also have to abolish the increments scheme which goes with it. The scheme of increments is extremely valuable, is rapidly maturing and enables people very quickly to acquire a larger weekly income because they go on working when they have the option to retire. I will not pursue that further, but it is an important point.

So the reason why widowed mothers' allowances are subjected to an earnings rule goes to the root of the whole scheme. Were we to abolish the rule for the widowed mother, we should promptly come to the question of what we were to do when she ceased to be a widowed mother and became a widow for the purpose of National Insurance. At that time, she would have been drawing 25s. a week for the last child dependent upon her. According to this proposed new Clause, having been subject to no earnings rule, at the time of going over to the widow's pension—which would also be the time when perhaps she could earn more—she would come under the operation of the earnings rule, having lost a benefit for a dependent child.

I do not think that this position would be tenable. Naturally widows would at that point feel aggrieved and would lobby hon. Members, who would be able to put their case very well. We should then have to give way on the earnings rule for widows' pensions as well, and ultimately right through the system.

The cost of doing so for the widow pensioner would be some £5½ million on top of the £1½ million for abolition of the earnings rule for the widowed mothers' allowances. If one took it all the way through, it would mean an extra £100 million for the abolition of the rule for retirement pensioners as well. The case I am trying to argue is not that there is any inconsistency in the present position but that the basis of the scheme is quite consistent in this respect for the widowed mother, and does not produce any anomaly.

I now turn to the comparison with the industrial injuries widow. One point strikes one immediately in this. If com510parison for the National Insurance widowed mother with the industrial injuries widowed mother is undertaken, likewise comparison of the National Insurance widow with the industrial injuries widow must follow.

The hon. Member for Manchester, Exchange (Mr. W. Griffiths), who put this point, on this argument would support my contention that we could not stop at releasing widowed mothers from the earnings rule because the same argument based on the comparison with industrial injuries widows would likewise apply to the widow's pension. The arguments against assimilating the two go very much deeper than that. One contributes to the N.I. scheme in order to be insured against interruption of earnings and one contributes to the I.I. scheme to be insured against loss of life or injury because of the extra hazards at work over and above those in ordinary life. One contributes a certain amount for compensation for loss of faculty or, in the case of a widow, compensation for the loss of a husband. One is insured against something completely different.

The war widow's pension is not on a loss of earnings basis but is a compensation for the loss of a husband and it is entirely different. There is nothing unreasonable or illogical, if one contributes to certain schemes, in getting the benefit of those schemes when the contingency takes place. It is unfair to take one feature of the Industrial Injuries Scheme, which is what the hon. Member did, and try to assimilate the N.I. widow when the features of the I.I and the N.I. schemes are different throughout. The benefits are different and there are many different features. I have sat through all the debates on the Bill and have heard many arguments against the N.I. Scheme. I sometimes wonder whether it would be better to abolish the whole preference for the industrial injuries, but I do not think that would be in accordance with the wishes of hon. Members.

Mr. W. Griffiths

The hon. Lady has been saying that there is a difference between industrial injuries insurance and National Insurance concerning the widow. The widow has still the same number of mouths to feed whether her husband has been killed in the factory or, as so often 511happens, because of an illness or debility which follows from his employment but is not directly attributable to his work, he dies. It is well known that illness happens and death sometimes follows as a result of certain conditions. I should remind the hon. Lady that before she became a Minister she took a slightly different view about this proposal than she takes now.

Mrs. Thatcher

No, I think that the hon. Member is quite wrong. I went on television in support of the very argument which I am trying to put to the House. In his observations about the I.I. widow, the hon. Member put up a very good argument for abolishing the preferential rates and conditions for the I.I. widow and for assimilating them into the N.I. scheme.

Mr. Griffiths

Not at all.

Mrs. Thatcher

The entire basis is different. It has a different historical basis. Compensation is one of the reasons for the difference. Various figures have been given in the debate and I wish to give one or two. With an earnings rule of £5 we should consider what the widow with one child, the widow with two children, and the widow with three children, respectively, has left, assuming that she is earning right up to the £5 limit. I believe that the hon. Member for Kilmarnock gave the benefits paid in one case. I interpose the point here that it is £5 net. It is not necessarily the amount which the widow receives in her pay packet. She can deduct from that anything which is deducted by way of P.A.Y.E., anything she has to pay by way of national insurance, fares to work, the cost of having someone in to look after her children, and the cost of tools, protective clothing, trade union subscriptions and the like.

When she has deducted all that, she can be left with £5 net. The widow who has £5 net and one child, with what she gets from N.I. and family allowances, will have £9 2s. 6d. If she has two children, she will have £10 7s. 6d. and if she has three children £11 14s. 6d. I am well aware that none of that represents luxury, but that widow is not at present in any way touched by the earnings rule because her net earnings do not bring her within it. The personal benefit of 51257s. 6d., which is the only benefit in the widowed mother's allowance which can be extinguished by earnings, is not, in fact, extinguished until her net earnings reach eight guineas a week.

I shall now try to answer some of the points which have been raised by hon. Members. The hon. Member for Kilmarnock said that children had the same appetites after their fathers had died as when they were alive. That argument applies with equal force to children of widowed mothers who do not go out to work. They have children who have similar appetites to those of the children whose mothers go to work. Therefore, one should give as much to those who do not go to work.

There is the further point in subsection (2) of this proposed new Clause which attempts to suspend its operation until such time as the Minister may decide. I hope that I have said enough to make the House appreciate that I am opposing the new Clause on merit, and for the reasons I have given. It would be entirely dishonest to accept it without having any intention of putting it into operation. I also submit, in answer to my hon. Friend the Member for Uxbridge (Mr. Curran), that if he is to vote for this new Clause in the avowed desire to get the whole basis of the scheme changed from its present one of interruption of earnings, perhaps this is not the best way to go about it. If he is going to do that he should do it after due consideration of the consequences and having a very good idea of what he would put in its place.

For these reasons, I recommend the House to reject the new Clause.

Mr. Houghton

If I speak briefly I hope the House will understand that my hon. Friends have a very important meeting upstairs at seven oclock. I am most anxious that we should bring our discussion on this new Clause to an end before that time. [Interruption.] Hon. Members opposite have meetings upstairs and they must understand what a nuisance it is to have a whole assembly disturbed in the first few minutes after the meeting has begun.

I shall therefore compress my remarks into a very few minutes, although I should like to have spent more time replying to the hon. Lady and to the 513debate. First, I wish to point out that the hon. Lady was the first hon. Member in the whole House to defend the existing arrangement and to oppose the new Clause. On this occasion, not even the hon. Member for Barry (Mr. Gower) stayed to defend the Minister. Unthanked and unrewarded, he has deserted the Minister on this occasion. The whole House has approached this new Clause with sympathy and support.

I want to make quite clear to the hon. Member for Uxbridge (Mr. Curran) that it is not the purpose of this new Clause to open up substantial consequences regarding the earnings rule as a whole. We thought that this new Clause could be accepted by the House without setting up a chain reaction on the earnings rule generally. The widowed mother has been distinguished from the widow and from retirement pensioners for a very long time. First, the gap was 10s., then it became 20s. and now it is 30s.—the difference between the upper earnings rule for the widowed mother and for other beneficiaries. So the House has already distinguished sharply, and to a growing extent, between the widowed mother and the earnings rule in her case, and widows and retirement pensioners.

This new Clause would carry that differentiation to the point of abolishing the earnings rule for the widowed mother. That is all that is intended in the new Clause. The hon. Lady said that the earnings rule for widowed mothers, as for other beneficiaries, goes to the root basis of the whole scheme. The root basis of the whole scheme is not the earnings rule. The root basis of the whole scheme is adequate benefits. Paragraph 346 of the Beveridge Committee's Report, on this very point dealing with the new benefits for widowhood, says:

"For widows of working age no permanent pension will be provided, but every such widow will receive a widow's benefit at the same rate as maternity benefit for 13 weeks. At the end of that time, if and so long as she has the care of dependent children, she will be entitled to guardian benefit. This with children's allowances will be designed to be enough for subsistence even if the widow earns nothing by work. If she does go out to work, a reduction of the full guardian benefit will be made, of a proportion of her earnings."

Those two things were linked—adequacy of benefit without a reduction if she did 514not go out to work, but, if the widow goes out to work, a reduction would be made in the full guardian benefit.

We have to provide the widowed mother with an adequate benefit without her going to work. Who will say that £6 14s 6d. a week is an adequate benefit for a widowed mother who has three children and who does not go out to work? We know that it is not.

The truth is that by the inadequacy of the benefits widows are forced to go out to work. Then an earnings rule is applied in the sacred name of the principle which the hon. Lady says is the root basis of the whole scheme. These two things must be considered together. Unhappily, Clause 8 will worsen the position of many widowed mothers by depriving them of family allowance for their apprenticed son if they bring in more than 40s. a week. There are 50,000 apprentices affected by Clause 8. The widowed mothers will undoubtedly suffer some of the disadvantage, along with other parents.

I do not agree with the hon. Member for Uxbridge that the additional expenditure incurred by lifting the earnings rule for widowed mothers would be inflationary, for it would mean more widowed mothers would be contributing more to the national economy. At present we are deducting from the benefit the additional earnings beyond the £5 which the widowed mother can get by work. She is discouraged from earning more than £5 a week. Under our proposal she would be encouraged to work more and to earn more. I regret that the response by the hon. Lady has been unfavourable, but this problem will be with us for some time to come. I have no doubt that there will be a persistent endeavour to secure a revision of our approach to the earnings limit.

Valuable and wise as I believe the recommendations of the National Insurance Advisory Committee to be, this House has not yet surrendered to that body its right of absolute judgment on a matter of this kind. If ever the time comes when the House can function only by adopting recommendations of outside bodies, we might as well go out of business. We have our job to do. Acknowledging at all times the selfless service of the advisory bodies, we still 515reserve the right of the House to decide for ourselves.

The truth is that throughout the Report of the National Insurance Advisory Committee of 27th January, 1960, was a note of displeasure at what the Government evidently intended to do. That can be seen running through the Report. In paragraph 4 the Committee says,

"We take it, therefore, that it is the Government's deliberate intention to make the earnings rules more generous than they are at present."
516

The Committee could see no reason for departing from what it had said previously. It had to acknowledge that the Government intended to liberalise the earnings rule, which is what we did in the earlier part of 1960.

I am afraid that I must ask my hon. Friends to go into the Lobby in favour of the Clause.

Question put, That the Clause be read a Second time:—

The House divided: Ayes 172, Noes 216.