Mrs. Margaret Thatcher (Finchley)
Being unaccustomed to opposition, I referred to the debate on the last Pensions (Increase) Bill which the Tory Government presented, to see how the right hon. Member for Sowerby (Mr. Houghton) coped with the situation from the Dispatch Box at which I now stand. His speech had four aspects. First, he expressed congratulations. Then he went on to commentary, then to criticism and, finally, to constructive suggestion. I propose to follow the precedent which he has set. He was very skilled in opposition. I hope never to attain such skill in opposition as he did.
First, I will follow the right hon. Gentleman, by congratulating Miss M. Herbisonthe right hon. Lady in being so fortunate, in the first few weeks of her Ministry, as to, to be able to bring forward increases in pension benefits. She will agree that it is a very pleasant duty.
I now pass to criticism, commentary and what I hope are some constructive suggestions. First, I want to take the right hon. Lady up on some of the debating points that she made at the beginning of her speech. She made a fighting speech, but I think that she was fighting her own side. She pointed to the striking contrast between the present proposals and what happened under the Tory Government in 1951. But when we returned to power in 1951 it was after an election immediately before which there had been a pensions increase. This was the only time that there had been an increase in pensions just before an election. The Socialist Government increased them three weeks before the 1951 election, having left them untouched for five whole years. But that increase did not restore the level of benefits to the position in 1946.
The right hon. Lady now comes to office under very different circumstances. [column 1313]There have been swift increases under past Tory Governments. There was an increase in 1961 and another increase in 1963, to deal only with what happened in the last Parliament. So there is no basis for the analogy which the right hon. Lady is seeking to draw.
The right hon. Lady then said that we would be against these increases because we had denied the Government the means of paying for them. Presumably she means that we voted against the increase in the standard rate of tax. I must point out that if on the five occasions on which we increased benefits we had also increased the standard rate of tax by 6d., that standard rate would now be 12s. in the £. I have never heard such nonsense. We inherited a standard rate of tax of 9s. 6d. imposed by Hugh Gaitskellthe last Socialist Chancellor of the Exchequer. We managed to make five pensions increases and, at the same time, to reduce the standard rate of Income Tax.
I would point out to the right hon. Lady that it augurs very ill for retirement pensioners if she is saying that every time she increases pensions 6d. must be put on the standard rate of tax and another 6d. on petrol.
Miss Herbison
Will the hon. Lady tell us how the Tory Government were expecting to pay for the increases, since it was made clear that they would be dependent on a 4 per cent. increase in production? We would like to know that.
Mrs. Thatcher
I speak as one brought up in trade and still in trade, and I can say that the economic situation would have been quite different if we had been returned to power. I also speak as a Member who has not merely sat on the benches opposite distributing the moneys which other folk have made; I speak as one who has been concerned in manufacturing and retailing, in both the home and export trade.
I commend to the right hon. Lady the difference between her general attitude and that taken by Lord Attlee on past Tory records. The right hon. Lady spoke very highly of the work done by the Beveridge Committee. I entirely agree. But to listen to the right hon. Lady one would have thought that its Report was entirely the child of the Labour Party. On 7th February, 1946, Lord Attlee, speaking on the National Insurance Bill, said: [column 1314]
“This Bill is founded on the Beveridge Report. I would like here to pay a tribute to my right hon. Friend the Lord Privy Seal, who set Sir William Beveridge to work on this, to Sir William Beveridge himself and, as I have already said, to members of all parties who worked on it. The White Paper produced by the wartime Coalition Government, accepted by all parties, and by the country, is different in kind from all its predecessors.” —[Official Report, 7th February, 1946; Vol. 418, c. 1896.]
At least Lord Attlee was prepared to be accurate, honest and magnanimous.
I now turn to one other point of commentary—the comparison of rates of benefit with average earnings and retail prices, of which the right hon. Lady has made a considerable point. She said that increases in pension benefits had lagged behind earnings, taking them over the whole period from 1946. I agree that if we take them over the whole of that period it is true that they have not risen as much as have the increases in average earnings. If, however, we take 1951 as the base year, which was the beginning of the stewardship of the Tory Government, we find that the reverse is true.
Brigadier Terence Clarke (Portsmouth, West)
And the pensioners know it.
Mrs. Thatcher
I want to give the right hon. Lady some figures which were supplied to me by her Department before I left. In October, 1946, the single rate of pension introduced by the right hon. Lady's Government was 21½ per cent. of the then average earnings. In October, 1951, which was the end of the period of Labour Government, it had fallen to 18 per cent. of average earnings. That was the situation which we inherited, in spite of an increase three weeks before the October, 1951, election.
Over our period of Government, up to April, 1964, the pension was increased again until, in that month, it stood at 19 per cent. of average earnings. In our stewardship, therefore, we increased pensions benefits, expressed as a percentage of average earnings. In the right hon. Lady's own memorandum—Cmnd. 2518—she compliments us, over her own signature, on our performance over the last five years when she says:
“Over the period of the quinquennium under review the rise in earnings was about 27 per cent., as compared with the increase [column 1315]in benefits of 35 per cent., so that in recent years improvements of benefit rates have been overtaking the rise in earnings.”
There are many other figures that I could give concerning the position, but I will pass from the point. One test of the adequacy of pension benefit rates used by the right hon. Lady and by her right hon. Friend when they were in opposition was the test of how the rates compared with the then average earnings. Naturally, as I expect she has done, I have been looking back over the debates, and have been studying the Amendments which she and her right hon. Friend put forward. I notice that on 6th February, 1963, she and her right hon. Friend moved an Amendment to increase the level of pension which we were then putting forward. They used as one test of the adequacy of the rate that they were then proposing the comparison between it and average earnings.
The right hon. Gentleman then mentioned that according to his researches average earnings in manufacturing industries were £16s. 6s. It is interesting that, when he was in Opposition, for average earnings of £16 6s. he then proposed a £4 rate of pension. Now average earnings are £17 12s. 5d., but he is in power and he is not proposing an increase proportionate to the increase in average earnings since that time.
The Chancellor of the Duchy of Lancaster (Mr. Douglas Houghton)
May we expect that the hon. Lady and her friends will put down an Amendment to improve the benefit?
Mrs. Thatcher
No, we believe in behaving when in Opposition as we would if we were in the Government. We do not believe in having a public auction of pensions. The right hon. Gentleman knows full well that every time we had an increase he put down an Amendment which made a bid for higher increases. When we had an increase of 10s. last time he put down an Amendment for an increase of 22s., or it may have been 22s. 6d. We shall not behave in that way because we believe that once again we shall soon be the new Government and that people will judge us then by what we said we could do in Opposition. Indeed the right hon. Lady has found this out, because they expected her to do in power what [column 1316]she said she could do when she was in Opposition. I have turned up the reference to the increase to which I referred proposed by the right hon. Member for Sowerby. It was 22s. 6d. for single persons when we were proposing 10s., and he proposed 32s. 6d. for a married couple when we proposed 16s. 6d.
The right hon. Lady said that to restore the rate of benefit to where it was—presumably in May, 1963—would require, I believe she said, 2s. 7d. In her own memorandum again on page 7, she goes on to say in paragraph 8:
“… simply to restore the purchasing power of the present standard rate of £3 7s. 6d. would by then” ——
that is late March, 1965—
“require between 4s. and 5s.”
Is she says that to restore it now would require 2s. 7d. she is expecting a very great rise in the cost of living between now and the end of March; for she said 2s. 7d. in her own memorandum published as late as last Friday morning at three minutes past eleven. By then, March, 1965, it would require between 4s. and 5s. increase. There is only one way to get that figure and it is to postulate an increase in the index of prices of 3 or 4 points. The right hon. Lady may be being extremely honest, in which case I congratulate her.
She will perhaps remember, if she has gone back over the earlier debates, that when the Labour Government of 1945 fixed the pension increases they fixed them in these terms. On 6th February, 1946, a statement was made in the House to this effect:
“The House will be aware that the Chancellor of the Exchequer has expressed the Government's intention to hold the cost of living at about 31 per cent. over the September, 1939, level. We decided, therefore, to review the leading rates proposed in the White Paper and in the Beveridge Report on the basis of an overall addition of 31 per cent. instead of 25 per cent.” —[Official Report, 6th February, 1946; Vol. 418, c. 1742.]
For that reason the Labour Government increased the Coalition Government's proposal from 20s. single and 35s. married to 26s. single and 42s. married, on the basis that Hugh Daltonthe Labour Chancellor of the Exchequer would hold the cost of living at 31 per cent. over the September, 1939 level. What happened? The cost of living rose at unprecedented rates. In 1948 it rose 4.6 per cent., in 1949 by 3..6 per cent. In 1950, 3.9 per [column 1317]cent., and in 1951, the last year of the Labour Government's rule, by 13 per cent.—in one year. So that by that time the benefits had been eaten away. There was an increase in pensions three weeks before the 1951 election. So much for some of the traditional indicators.
I come on to another point raised by the right hon. Lady, that of contributions and taxation, and I also will deal with what hon. Members opposite have said about taxation in this connection. We have never shied away from the fact that to increase pensions benefits we must increase contributions. Indeed, from the Government Dispatch Box I was always trying to urge hon. Members opposite, who were then on this side of the House, that they should never try to convey the impression that we could have large increases in benefits without the ordinary people paying any increased contributions. So therefore we have an absolutely clear record on this matter.
The total weekly stamp has gone up very greatly in cost. It is now 26s. 7d. basic rate for those participating in the scheme. For those who have contracted out it is 31s. 5d. I think it is worth mentioning that for those participating in the scheme with average earnings the cost of the weekly stamp has gone through the £2 barrier. For those on average earnings the cost is now 41s. 3d. for the weekly stamp. For those earning £18 and over it is 41s. 11d. each week. We have a clear record on contributions, but hon. Members opposite have been very acid when before there has been an increase on the flat-rate contributions. Indeed, the right hon. Member for Coventry, East (Mr. Crossman), as reported in the Official Report on 28th January, 1963, said:
“But a flat-rate increase of 1s. for a lower paid worker is a very heavy imposition indeed. … So heavy is the burden put on the worker now by saying that all workers must pay the same that everyone earning under £15–£16 a week is being mulcted of far more than the share due from him for the rest of the social services. This, of course, is the old evil of the poll tax on the poor. Each time the Government put one shilling on that tax they make the burden more intolerable.” —[Official Report, 28th January, 1963; Vol. 670, c. 657–8.]
I wonder whether he would say the same to the right hon. Lady if he were here today. I understand that he has other duties. She is in fact now putting a 2s. increase in place of the 1s. basic [column 1318]increase which was the subject of his comment.
Hon. Members opposite have always said that the Exchequer should bear a large proportion of the contributions. But I understand that the Exchequer contribution will be unchanged by the provisions of this Bill. It seems to me that hon. Members opposite are now, for the first time, being brought face to face with the realities of power which they should have faced upon these benches, had they been prepared to look at the whole scheme on a sound financial basis, instead of being more concerned to outbid us regardless of the consequences.
The right hon. Lady made some strong strictures on the graduated scheme. I was not surprised, as she made equally strong strictures on the scheme in one of her party political broadcasts where I think that she was thoroughly misleading in a sentence which I shall quote. On 9th October on the Light Programme, in a party political broadcast on behalf of the Labour Party, the right hon. Lady said this:
“The truth is that the Tories' graded scheme is not a pension at all. It is really a way of getting extra taxes.”
This is the bit on which I want to comment:
“Take last year, the Government collected £177 million in graduated contributions from people at work; but they paid out only £130,000; almost every penny collected was spent in meeting Government bills.”
A more misleading statement I could not imagine. It is as if the rest of the Government had used the money collected for graded pensions. The right hon. Lady knows that every single penny went to meet pensions and benefits paid out under National Insurance. But she did not say that in her broadcast. She deliberately chose to use the phrase, was spent “in meeting Government bills” . After her speech today I am not surprised at the way she put it.
I turn now to taxation. The right hon. Lady accused us of hypocrisy. I wish that some people who make accusations would cast the mote out of their own eye. First we have been talking about contributions and taxation as a means of financing the scheme. The right hon. Member for Sowerby as he pointed out in his election address, was Chairman of [column 1319]the Public Accounts Committee, a broadcaster— “Can I Help You” and Labour's expert on taxation, finance and pensions. This is all in his write-up on the left-hand side of his election address. What did he say about the taxation of social services? He said:
“Labour will not be a spendthrift Government. It will not need to increase the general level of taxation to pay for its programme.”
Also on the left-hand side, it said, “Douglas Houghton” —and in a box immediately below “Integrity, Vision, Knowledge, Experience.” I pay the right hon. Gentleman this compliment. Had I read that in his election address as an elector, and knowing him, I would have believed him. I also say this, that I am bitterly disappointed that the Labour Government should now have increased the taxation on top of that pledge which the right hon. Gentleman, Labour's expert on taxation and pensions, gave. I would have had much more glee in trotting that out had it come from one of his right hon. Friends, than coming from him.
Mr. Houghton
That was written without a realisation of the depth of deception that we have since discovered in the economic and political record of the hon. Lady's party.
Mrs. Thatcher
I have had to say “Nonsense” to the right hon. Gentleman before, and I now say it once again.
May I make another quotation on taxation? This comes from The Guardian of 15th October, 1964, in an article on page 2 entitled “Nursery Economics—Mr. Callaghan. Mr. Maudling 's figures screwy” . Then there is a sub-heading which says “Serious Point” . This is what the present Chancellor says:
“As far as we are concerned the fulfilment of our social programme depends upon the achievement of a faster rate of growth in the economy. We shall not cash cheques until the money is in the bank. That is quite clear.”
I should think that that was meant to imply that taxation would not be increased.
The third main point is the inter-connection and relation of National Insurance with National Assistance and the propaganda that there has been about a national income guarantee. Throughout the time that I sat on the Government benches hon. Members of the [column 1320]Opposition have got up and said, “Is it not scandalous that there are still as many people on National Assistance?” The number on National Assistance depends on the rate at which the Government increase the Assistance scale rates. One could quite easily have cut down the number on National Assistance by putting up the pension, but not the scale rates. The right hon. Lady has not chosen to do that. We did not, either.
During the time that the present Government were in opposition they built up a thorough objection to National Assistance and helped to implant that objection in the minds of the people by the kind of language they used. I quote from “Election Forum” on 23rd September, 1964. This is the terminology which Harold Wilsonthe present Prime Minister used. He said:
“Instead of being driven, as 2 million are being at the present time, on to National Assistance with its means test—and many more who are too proud, rightly or wrongly, to go and ask for National Assistance when they're entitled to it; instead of that, we are going to provide a minimum income; and, having done that—substantially more than the existing National Assistance scale—we are going to guarantee it against rising prices.”
The terminology which the right hon. Gentleman used was, “instead of being driven on to National Assistance” .
In another broadcast, on 12th October, 1964, the right hon. Gentleman said:
“That is why I pledged the Labour Government to urgent action to deal with this problem with a humanity that has been lacking, to ensure to each a guaranteed and adequate pension on which our old-age pensioners, widows and others can live, without the need to go cap in hand to the National Assistance.”
The right hon. Lady talked of people being abandoned to National Assistance. One cannot in one breath talk about trying to increase people's standard of living by increasing the National Assistance scale and then talk in the other breath of abandoning them to National Assistance. National Assistance is a very wonderful instrument. I personally do not mind whether it is called National Assistance, whether it is called a basic standard of living, whether it is called a basic income, or what. It is the instrument which we use for meeting variations in individual needs, and if, instead of denigrating [column 1321]National Assistance, people would urge its many advantages upon their constituents, then I do not think that there would have been built up the present reluctance which I am told exists about going to it.
The whole of the Labour propaganda, both in broadcasts and in “New Britain” and in election addresses, led us to believe that top priority was the introduction of an income guarantee scheme. This, we were led to believe, had been ready for a very long time indeed. At the beginning, “New Britain” said:
“Labour is ready. Poised to swing its plans into instant operation. Impatient to apply the New Thinking that will end the chaos and sterility.”
The Prime Minister also indicated that the national income guarantee was the one thing that would not wait.
On page 16 of “New Britain” it was stated:
“For the same reason we stress again that, with the exception of the early introduction of the Income Guarantee, the key factor in determining the speed at which new and better levels of benefit can be introduced, will be the rate at which the British economy can advance.”
The exception to that was the introduction of the income guarantee. That was going to be done immediately. It has not come immediately for reasons that I would have expected. The right hon. Gentleman, with his knowledge, knows that one cannot introduce a scheme of this complexity immediately, or in the first year at all. He also knows that there are very considerable difficulties in the form of plan which he was proposing. So it has not come immediately, and it will not come immediately.
If I may, I will make one other point about testing the adequacy of pension benefits by a rule used by the right hon. Gentleman in a former debate. He said that another test of the adequacy of pension benefits would be how they compared with National Assistance. He also said that one of his criteria of adequacy would be to take the National Assistance scale rate and add to it the National Assistance average rent. So let us test his scale by his own test to see whether the present rate is adequate.
The present National Assistance rate is 63s. 6d. and the present National Assistance average rent is 25s. 10d. Had [column 1322]the right hon. Gentleman been standing where I am and using that scale he would have been criticising me were I at the Dispatch Box on the Government Front Bench for introducing a pension benefit of £4 and would say that, on his test, it should be £4 10s. I am not going to adopt his tactics, but the test of adequacy of benefits by his test would mean that the single rate should go up to £4 10s.
Mr. Houghton
rose——
Mrs. Thatcher
The right hon. Gentleman will be winding up the debate tonight. I have given way a good deal. I did not interrupt the right hon. Lady in the only speech in the House which I have seen her read.
Mr. Sydney Silverman (Nelson and Colne)
The hon. Lady said just now that the increases in the pension could not be paid immediately. I agree with her—that is too painfully obvious to all of us—but if the Administration, of which the hon. Lady was a distinguished member, had intended to raise pensions and had put the preparations in hand at the tail end of the last Session, would there then have been any difficulty in paying them immediately this year?
Mrs. Thatcher
The hon. Gentleman is right off beam. I am not talking about the timing of the increase in retirement pensions. I am talking about the introduction of the national income guarantee, which is an entirely different point. National Insurance itself, as I understand it, is a basic universal scheme. It is the magic of averages. Everyone gets so much in return for actual contributions. It cannot begin to cater for different individual needs. National Assistance, on the other hand, does cater for individual needs and for variations.
There has been a movement on our side, and I believe on both sides, of the House to try to get something rather between those two. Our reasoning, and I believe the reasoning of hon. Members opposite, was that there are circumstances which are not catered for either by National Insurance as it is at present or by National Assistance as it is at present. For example, there are people who would not qualify for help under National Assistance, but who need help because [column 1323]they are suffering under permanent illness like disseminated sclerosis, or poliomyelitis, or they are chronically sick. Perhaps they get National Insurance benefits, but those are not enough. Therefore, we on this side were tackling the problem by trying to urge increasingly selective benefits.
The right hon. Lady will remember that on the last Bill the Labour Party was thinking along very much the same lines in the Amendment on the constant attendance allowance, which would have been the same thing for the chronically sick. We were grappling with this problem through last summer. I hope that the right hon. Lady will continue to grapple with it where we left off and find an answer. It is extremely difficult—[Interruption.] I wish that the right hon. Lady would not jump to rather bitter conclusions when I am trying to tell her what we were doing.
It is extremely difficult to define the chronically sick. Each of us knows whom we want to benefit, but it is extremely difficult to put in legislation a system which would be administratively equitable and capable of an insurance basis. I know from Amendments which, in the past, were tabled by the Labour Party that the right hon. Lady will agree that there are people such as the chronically sick who are not catered for adequately now by either scheme. I believe that both sides of the House are trying, and will go on trying, to find a solution to this problem.
The other day, when the right hon. Lady made her statement in the House, I put a point to her to which I would like to return. It concerns the increased amounts for child dependents under the new increased benefits she has announced. Hitherto, it has been our pride in this country that our scheme has always given preference to the family man—rather more preference than has been given to him on the Continent. The Continental schemes, being based on earnings, have taken their benefits as a percentage of earnings, regardless of the family commitments of the beneficiary. We have not had such an interest in percentage of earnings until now, but we have always seen that family commitments were met under National [column 1324]Insurance by increased benefits in proportion to the increase in family commitments.
In 1963, when we proposed increases of 10s. in the single rate and of 16s. 6d. in the married rate, the increase in respect of each child was 2s. 6d. Therefore, when I saw the right hon. Lady's initial proposals, which were not detailed, I expected that she would increase the dependency benefits in respect of children by at least 3s. In fact, she has chosen to give maximum advantage from her increased benefits either to the single man or to the married couple, and the advantages decrease proportionately as the size of the family increases.
I am very surprised at this, because there has been a tremendous amount of commentary from sociologists to the effect that the larger the family the lower the standard of living comparatively; therefore, an increase in family allowances is needed—not dependency allowances to cope with this. The increase in family allowances would be completely non-selective and would bring extra help to many people who do not need it, but the way family allowances can be increased for the sick and the unemployed is to increase the dependency benefits, because these by very definition go to the children of people who are either ill or unemployed. Therefore, I would have expected the right hon. Lady to have given larger dependency increases in respect of children than she has given.
It is particularly marked in the case of widowed mothers. I am the first to admit that by abolishing the earnings rule for the widowed mother and for the widow the right hon. Lady is doing a great deal for the widow who goes out to work, that is, for the widowed mother who earns more than £7 a week, and for the widow who earns more than £5 a week. But the right hon. Lady's record is not so good in respect of the widowed mother who cannot go out to work because she must stay at home to look after her children. She will not be affected at all by the abolition of the earnings rule.
Every time this came up before, we took the advice of the National Insurance Advisory Committee and increased the benefits payable for children. Under [column 1325]us those were not subject at all to the earnings rule. So on the last occasion when the widow herself got a 10s. increase in benefit each of her children got a 5s. increase in benefit. On this occasion the widowed mother herself is getting a 12s. 6d. increase but each of her children is getting only a 2s. 6d. increase in benefit. Under our last increases the widowed mother with two children got a 20s. increase. Under the Bill she will get an increase of only 17s. 6d. Under us the widowed mother with three children got a 25s. increase. Under the Bill she will get an increase of only 20s. Under us the widowed mother with four children got a 30s. increase. Under the Bill she will get only a 22s. 6d. increase.
Under us the increase in benefit for the widowed mother with five children—I have gone up to this level because I happen to have very much in mind a family of five small children I know whose mother cannot go out to work—would have been 35s. Under the Bill it is only 25s. We did, in fact, every time put the increased amount towards increased dependency allowances for the children, thus benefiting to a higher extent the widowed mother who could not go out to work. Under the Bill it is a little ironic that she has the least good bargain of all from all the increases that the right hon. Lady is proposing.
I come to the present position with regard to widows' benefits. I agree entirely that under us it was anomalous. As I mentioned the other day, there was a difference already under us of £600 between what the 10s. widow could draw out of the scheme and what the no-shilling widow could, the 10s. widow being able to draw up to £600 more from the scheme than the no-shilling widow.
I will make the point clear by an example. The differences emerge from two brides—one married at Easter, 1948, and the other married on August Bank Holiday, 1948, to men with identical insurance records. They are widowed this week at the age of, say, 36. Under the right hon. Lady's proposals the one married at Easter will be able to draw £1,800 more from the scheme than the one married on August Bank Holiday. I am a post-1948 bride, married to a “pre-1948” man, so if the worst came to the worst I would be a no-shilling [column 1326]widow, whereas many of my contemporaries, if the worst came to the worst, would be 10s. widows. A difference of £1,800 is an untenable difference, unless at the same time something else is to be done elsewhere in the scheme.
These anomalies are again accentuated by the abolition of the earnings rule. I will take another example. A woman, who is widowed on her fiftieth birthday will now get widows' benefit regardless of how much she earns, and she will get it until she draws retirement pension, and she will not in fact have to pay any more contributions for retirement pension. The basis on which she will get that benefit at 50 is that she is deemed to be unable to go out to earn her own living, but she will get it regardless of how much she earns. But had she been widowed on the day before her fiftieth birthday, she would get nothing beyond the 13 weeks' resettlement benefit because she would be deemed to be able to earn her own living. She would get nothing even though she could not earn her own living.
We therefore have an absolutely rigid boundary at the age of 50. [Interruption.] I hope the right hon. Lady will listen, because we did a great deal for widows, for example, widows and children. After the immediate increases three weeks before the 1951 election the allowance for children of widows was 10s. for the first child, 7s. 6d. for the second and 7s. 6d. for the third. When we left power this time, the allowance for each child was 37s. 6d. We did a great deal and the hon. Lady knows we did.
I am on a fairly complicated and intricate point, and I believe that, however much one has done, there is not a time when one can ever say that one has finished, and there never will be such a time. At the moment, we are running for widows two quite different sorts of schemes, one based on benefit for the event of widowhood—that is the 10s. widow and now the over 50 widow—and the other based on benefit for the absence of earnings. That difference has been accentuated by the steps which the right hon. Lady has taken. I do not think that one can have two quite different bases for widow's benefit and say “We will leave the solution of this to a review.” The only thing to do to [column 1327]soften the age 50 line is to follow the precedent of the Industrial Injuries Scheme and have a lower rate of benefit equal to the 10s. widow's benefit for the woman who is widowed below the age of 50.
Miss Herbison
Why did not the hon. Lady do that?
Mrs. Thatcher
This is probably one of the things that I would have done. [Laughter.] The Department will be able to tell hon. Members opposite, and if the right hon. Lady asks she will find that I was extremely interested in widow's benefit and always concerned about the anomalies. She has put the matter over to a review. I think that she got the idea from us. I do not think that, having taken the actual steps that she has, she can leave the matter until a review.
Mr. Eric Lubbock (Orpington)
rose——
Mrs. Thatcher
May I continue for a moment?
The right hon. Lady was severe in her strictures about what happened after the 1956 National Insurance Advisory Committee review on the question of widows' benefits, when we introduced the change for the widowed mother from 40 to 50, on the recommendation of the National Insurance Advisory Committee, coupled with considerable other advantages in benefit to those widows. The right hon. Lady accused me of hypocrisy. But that change came before the House and the Labour Party did not vote against it. It accepted it, and, therefore, can only be taken to have concurred in the changes then made.
Mr. Lubbock
I wonder whether these criticisms that the hon. Lady was making of previous arrangements were in the Conservative election manifesto.
Mrs. Thatcher
I have a copy and if I can find it I will let the hon. Member have it. He will find a reference to a review of changes in widows' benefits. I am sorry that I cannot lay my hands on it at the moment, but there is such a reference in the manifesto. I now want to go on to another point, about timing.
Miss Herbison
The hon. Lady has made great play of this increase from 10s. [column 1328]to 30s. and suggests that we ought immediately to do something for the no-shilling widows. I suggest that her own Government made many more of those no-shilling widows and 10s. widows. Since she feels so strongly about this, will she put down an Amendment and back up the case, or will she oppose the regulations which will come before the House to raise the 10s. to 30s.? That would be the honest thing to do.
Mrs. Thatcher
I propose to put down an Amendment for the no-shilling widow. That is why I am giving so much notice now—[An Hon. Member: “Cynical.” ] It is not cynical. We, too, had considerable plans which we would have carried out had we got back into power. [Hon. Members: “Oh.” ] Of course we had very considerable plans. I would have looked forward to a period of five years of power, with a complete future of five years in front of one, when other considerable changes could have been made in the scheme similar to the considerable changes which were made in the previous 13 years.
May I now continue? The right hon. Lady and the Joint Parliamentary Secretary are not being nearly as courteous to me as I was to them. May I now go on to the point about timing? When the right hon. Lady and her hon. Friends were in opposition I would have thought that, having studied pensions, they would have known most of the things about timing and the difficulty of giving increases which the right hon. Lady, very kindly and in great detail, told us today. Then they put forward a different solution which I have no doubt some of their back benchers will take up. They said, “If we accept that it takes a long time to make the increases, why can you not make some of the increases retrospectively?”
The right hon. Lady herself on 28th January, 1963, said:
“I want to repeat the plea made by my hon. Friend the Member for Blackburn. If it is impossible to pay these increases until nearly the end of May, then cannot the Government seriously consider giving them retrospectively? I can think of many uses to which the old people could put a lump sum at the end of May.” —[Official Report, 28th January, 1963; Vol. 670, c. 694.]
I do not remember whether we voted on this, but the right hon. Lady herself suggested retrospective payment, and the [column 1329]right hon. Gentleman Douglas Houghton the Chancellor of the Duchy of Lancaster supported her. If, having studied pensions closely, as she did, the right hon. Lady gives indications when in opposition of what she would do if she were in power, she cannot be dismayed if her own back-benchers now believe her. She, in fact, made a good deal of play of the excellent computer which we have at Newcastle. I hope that she will inquire further into the computers for the 10 centres throughout the country which were under way. The fact that they were under consideration was published in The Guardian on 6th May, 1963.
I agree with the right hon. Lady that the factor which stops her and stopped us from increasing benefits in a shorter period is the time that it takes to deal with every single book individually; this must be done because that book relates to an individual record. It seems to me that this is one of the points which could quite well be considered by a major review of the social security schemes, but from our viewpoint we do not think that a major internal review would be enough. We agree that there should be another review of the social security provisions in this country. The Beveridge Report was brought out in relation to the conditions of the 1930s. Beveridge reported in about 1943. The White Paper was brought forward in 1944. The scheme came fully into operation and was heralded as a tremendous advance in 1948. It has, therefore, been in operation now for about 16 years.
If we want to have major changes, it will take another four years or so to have big changes of the kind which the Beveridge Report itself proposed. We think, therefore, that there should be a major public review which can take evidence from interested bodies and that it should deal with many of the questions which we know are now raised. To some extent we have already departed from Beveridge in introducing a certain amount of wage relation, but there are other things absolutely basic to the Beveridge conception which people have never accepted. The earnings rule is one. That stems from the basis of State insurance—insurance for the absence of earnings.
Whether that is an appropriate basis for insurance in the modern society is [column 1330]one question. Whether all benefits should merge together and we should have the same rate for sickness, unemployment, widows benefit or retirement benefit, or they should be separate as before Beveridge, is another question; Whether one should relate actual benefits to actual individual contribution records—it is that which causes the time factor now—or use contributions as a method of financing benefits, the benefits being universal but the contributions not necessarily related to them—these are some of the questions which should be dealt with in a review. This review should challenge the accepted principles then either reaffirm, adopt, or radically change them. Such a review should be instituted now. It should be undertaken, not as a departmental review, but by an outside body which can take evidence and publish its findings.
I had intended to go into a number of miscellaneous points of detail. If the right hon. Lady is interested in the kind of approach I shall adopt in Committee I shall now mention some of the points I have put down to be considered further. The first one was under consideration at her instigation during my time in office. It is the death grant in respect of mentally handicapped children of over 19 years of age. We were considering making a dependent on the recipient being an insured person. Another thing I should like to have tackled is the six months' bar to benefit claims. If one does not claim benefit within six months there is an absolute bar to getting any benefit. It used to be three months, but now it is six months and I think that it should be longer.
The theory about increments has always been that they should be related to the amount of pension forgone. We have had no increase in increments since 1959, although there have been two increases in pensions and there will now be a third. It is time that we increased the increments to give extra incentive to deferred retirement. The Government Actuary's Report on the Quinquennial Review records a trend towards earlier retirement, surprisingly, among men. We have to decide whether we want to reverse it. Increasing the increments would be a way of giving that extra incentive.
I agree with what the right hon. Lady has done about maternity grant. I know [column 1331]the administrative problems of having a separate home confinement grant. Although that means that the woman who has her baby at home will get no increase in maternity benefit, I agree that it is right to have a single grant.
I should have liked to have seen something done about disregards for National Assistance. They have not been moved since 1959: changes are not made as often as the scale rates are moved. I hope the right hon. Lady will bear that in mind when she is laying National Assistance regulations and increase the capital and income disregards.
The earnings limit improved five times under our Government, but is not to be increased under the present Bill. Perhaps the right hon. Lady does not think the time is ripe for that, but at a time when increases in benefits are being justified by reference to average earnings, the same reasoning should apply also to raising the earnings rule. This is a point we shall have to consider in Committee.
In spite of all my comments, criticisms and, I hope, some constructive suggestions, I congratulate the right hon. Lady on having the very pleasant duty of bringing forward a Bill which substantially increases benefit for many people who need increases. We shall help her as far as we can in speeding the Bill on its way and hope that it gets the Royal Assent as quickly as possible.