Speeches, etc.

Margaret Thatcher

HC I [National Insurance and National Assitance Benefits]

Document type: Speeches, interviews, etc.
Venue: House of Commons
Source: Hansard HC [655/1174]
Editorial comments: Around 1745. Between 1735 and 1755 (Harold Finch speaking, cc1170-76).
Importance ranking: Trivial
Word count: 2200
[column 1170]

Mr. Harold Finch (Bedwellty)

I congratulate the hon. Lady the Parliamentary Secretary on the able manner in which she put her case. Her speech consisted largely of figures and statistics, but, nevertheless, she put her case very ably.

The Minister seems to have anticipated this debate, because, when he addressed a meeting of Conservative women at Bournemouth recently, he said, according to The Times of 8th March, that the Labour Party were

“… going back to their old vomit of pensioneering.”

Mr. Houghton


Mr. Finch

That was a very crude remark. Indeed, it was nauseating.

The right hon. Gentleman has always shown a very wide knowledge of the National Insurance Acts and Regulations in this House, but whenever we approach the subject of pensions he gives the impression of intolerance and impatience. I can only conclude that he is conscious of the plight of the old people, but resents being reminded of it. Nevertheless, we want him to do something about it.

The Times of 8th March also reported that the right hon. Gentleman had received a deputation from the National Federation of Old Age Pensions Associations. It is evident from this that the demands for increased pensions are not confined to any political party. The [column 1171]old-age pension associations consist of people belonging to various political parties, or to none at all. If they express dissatisfaction with the pensions they should know what they are talking about, because they live on them.

Whatever figures may be put forward, the fact is that most pensioners, despite what the hon. Lady says about the increases in April, 1961, are in poverty. I challenge anyone to deny that. The majority of those who depend on rates of benefit under the present legislation are in poverty.

The retail price index has been mentioned. If we take the January, 1956, figure as being 100, then by November, 1960, when the National Insurance Act, 1960, was introduced in the House, and the Government made their decision on the rates of benefit to be paid, the index had gone up to 112. By January, 1962, it had gone up to 117. Since the right hon. Gentleman introduced the Act in November, 1960, the index has risen by 5 per cent. That is very serious for old people.

The right hon. Gentleman must recognise that simply because pensions and other benefits were increased in April, 1961, this does not mean that there should be no further improvement. It is because of that that we are justified in pressing him for an assurance that the pensions will be increased for those who are on the flat rate.

The hon. Lady made play of the position in 1948 and 1951, relating the figures then to the figures today. But we all know that the pensioners are not interested in what took place in 1948 or 1951. Many of the pensioners who received benefits ten years ago are not alive today. There is a new class of pensioners many of whom compare their pensions with their earnings at the time they retired.

When the coal miner retires—there is compulsory retirement in the coal industry—his income falls to £4 12s. 6d. for himself and his wife. Perhaps he had been receiving £15 to £25 a week as a piece worker, which is what can be got in certain coalfields. A fall in income to £4 12s. 6d. a week, plus any supplementary allowance which there may be, is serious for him. It may be said that as a person grows older he [column 1172]does not incur the same expenditure which he incurs when he is younger and in work, but when a person's wage falls from £15 a week to £4 12s. 6d. a week it causes considerable hardship, and it is difficult for him to adjust his life to changing circumstances.

We raise this matter today because we believe that pensions should be dealt with in a more scientific way. The old-age pensioners do not like these debates in the House of Commons all the time. It is most undignified. They do not like the system which causes us continually to plead for pension increases because of increases in the cost of living. We on this side believe that the time has come when there should be a system under which pension increases are automatic, without there having to be these debates.

Whatever the Parliamentary Secretary may say about the German or Swedish method or any other European method, one thing which stands out prominently is that other European countries have methods of adjusting pensions automatically in relation to the cost of living or to average national wages. We have no such policy here. Suppose that the Minister agreed today to increase pensions. In two or three years, or even less, the cost of living will have risen again and the value of the £ will have fallen and we should have to have another debate about the need to increase pensions. We are achieving so much in so many directions, yet we have to spend Parliamentary time in pleading the case of pensioners. The time has come to look at this problem in an entirely different light.

The Parliamentary Secretary is quite right when she says that the German worker makes greater contributions to his pension scheme than the worker in this country. But as time goes on he will be getting a higher pension than the worker in this country, in spite of Germany's present economic position. In Germany, pensions are dealt with automatically. Since 1957, the West Germans have got away from the idea of subsistence levels. Pensions in that country are related to national wages, and they are adjusted in the light of changes in industrial production and productivity.

There is an automatic revaluation of pensions in Belgium when the retail price index varies by more than 2½ per cent. [column 1173]France has an annual revaluation with effect from 1st April each year and there is an adjustment of pension when the wage index varies by more than 3 per cent. in six months. There is an automatic adjustment in Luxembourg everytime the index figure varies by 5 per cent.

I do not propose to go into the merits or demerits of the schemes or rates of benefit which operate in those countries. I merely say that there is a more scientific way of dealing with the problem than the way in which we in this country deal with it. It may be said that it is not correct to base the pension on the retail price index or on national wages, but there is a method by which pensions can be increased automatically by taking the yardstick which I have said is used in European countries. We have no such method as that.

Even the graduated scheme which the Minister introduced some time ago has no regard to the future. As my hon. Friend the Member for Sowerby (Mr. Houghton) said in the last debate, a man of 40 years of age, earning £12 a week, will pay an extra 2s. 8d. a week and his employer an extra 2s. 8d. a week for twenty-five years. For these extra contributions, he will get an increase in his pension of 11s. 6d. In view of the present-day inflation, what will be the value of 11s. 6d. in two or three years' time? The same may be said about a man who has been in employment for 40 years earning £15 a week. If he is married, when he is 65 years of age he will get £6 7s. 6d. a week. But what will be the value of that in ten or fifteen years' time?

Even in this scheme, future increases in the cost of living or changes in the valuation of the £ are not taken into account. This will result in further debates in this House so that we may plead for an increase in pension because of the rise in the cost of living. The time has come when the Minister should consider a better method of dealing with pensions.

We must also pay attention to injury, sickness and unemployment benefits. Here, I return to the position in Germany and in Luxembourg, countries with which negotiations are taking place today about our entry into the Common Market. The figures which I now [column 1174]propose to give are taken from the International Labour Review of the International Labour Office. They concern a married man working in the steel industry who has two children. In Belgium, his industrial injury benefit is 71.3 per cent.; in France, 46.7 per cent.; in West Germany, 70.5 per cent.; in Italy, 68.4 per cent.; in Luxembourg, 78.4 per cent.; in the Netherlands, 75.8 per cent.; and in the United Kingdom, 45.7 per cent. of his gross annual wage.

Sir William Robson Brown (Esher)

Who pays that money?

Mr. Finch

I recognise that the contributions which are paid in some of those countries, but not in all of them, are higher than those paid in this country.

Sir W. Robson Brown

The major part of those payments is made by industry.

Mr. Finch

I agree with what my hon. Friend the Member for Sowerby said. If pensioners and those in industry get value for their money under any scheme, they are prepared to pay increased contributions. But the Government's graduated scheme does not give value for money, and that is why we criticise it.

I now turn to the question of unemployment benefit. In Belgium, it is 42.2 per cent.; in France, 40.2 per cent.; in West Germany, 51.8 per cent.; in Italy, 19.3 per cent.; in Luxembourg, 55.8 per cent.; in the Netherlands, 79.8 per cent.; and in the United Kingdom, 34 per cent. of the workers' annual wage. Similar considerations apply to unemployment benefit and sickness benefit. We are bottom in the table. This information has been given by the International Labour Office.

Mrs. Thatcher

Is it the 1957 information?

Mr. Finch

No. This information is dated July-August, 1961. The family allowances position is not quite as good, for the West German figure is below ours. But in many other countries family allowance benefits are better than ours.

These figures reveal that we must look more closely at the whole scheme. It is not good enough to rely on the graduated scheme now operating because it [column 1175]is only related to retirement benefit and not to the other factors. If the countries which were ravaged far more severely than we were during the last war can raise their sights so much higher than ours it is time that the Government examined the whole basic morality of their social security policy.

The Minister of Health has always argued about our being increasingly selective. I think that the Minister of Pensions and National Insurance also mentioned this at that Bournemouth gathering about which I spoke. But we do not know what is meant by the phrase “increasingly selective.” I recall that last week the Minister of Agriculture asked for a Supplementary Estimate of £78 million without batting an eyelid. It seems that the farmers got £31 million—and I am not complaining about that—but where the balance went I do not know.

It certainly did not result in a reduction in meat prices or in other commodities. It is evident that it went towards the distribution costs and to the middlemen. I speak of a figure of more than £40 million, so I am wondering what is meant when Government spokesmen say that we must be more selective in our expenditure on the social services.

After all, we are dealing with elderly men and women who have helped to make Britain what it is. They have lived through two world wars and times of depression. Are we satisfied that now, in the evening of their days, they should live on £4 12s. 6d. a week with some supplementation? That is poverty. Whatever the Government say, it is sheer poverty. How can they live adequately on such a sum?

These old people would like to take holidays and enjoy our higher standard of living. They see their children living in better circumstances and surely, in justice, we should relate their position to our improved standard of living. What the Labour or any other Government did in 1948 or 1951 is beside the point, for we must look at the problem as it is today. I hope that, as a result of this debate, we shall have convinced the Government that they should look at this whole problem in a completely different light. I realise that after a lot of agitation, perhaps in six or eight [column 1176]months' time—or when a General Election is approaching—the Minister may say that increases will take place.

Mr. Houghton


Mr. Finch


After we have had further general increases in prices, resulting in even greater poverty for these elderly folk, the right hon. Gentleman will no doubt say that increases will be given in the rates of pension. But we want that done now. Now is the time when these people need this money. Although summer is approaching they are already thinking of having to face another winter. It will be one of impoverishment and poverty for them and I hope that, as a result of the remarks that have been made today, the Minister will give a satisfactory reply.

Sir W. Robson Brown

To get the position quite clear, may I refer the hon. Gentleman to my previous intervention? I was drawing his attention to the fact that a good part of the money he quoted as having been paid in other countries was financed by the industries of those countries. I believe that more of that should be done in Britain, although a lot is already done. More should be done by industry to look after and care for its own people.

Mr. Finch

I realise that that is so in many of the instances I gave, particularly in West Germany, where industry makes a greater contribution than it does here.