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Social Insurance And Assistance

Volume 486: debated on Tuesday 10 April 1951

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Next, I come to the social insurance and assistance group. As far as I know, nobody has proposed any cut in these payments. The question is whether there should or should not be an increase. In view of the very high level of expenditure on defence, it is difficult to contemplate this. But I must remind the Committee again that those dependent on small fixed incomes which they have difficulty in increasing suffer most from the price increases imposed upon us from outside and aggravated by a rise in costs internally. It must be understood, of course, that any increase in National Insurance payments, though falling on the National Insurance Fund, would affect the Budget in the same way as if it were a direct charge, for it would increase total expenditure and reduce the available supply of savings, thus making necessary a corresponding increase in the Budget surplus.

There is, however, another feature of the present situation which cannot be ignored. It is well known that in the next 20 years there will be a larger and larger number of elderly persons, who, if they retire from work, will have to be supported by the efforts of a group of workers more or less constant in number. For every man over 65 and woman over 60, there were, in 1950, very nearly five people of working age. In 25 years' time, the probability is that the proportion will not be one in five but very little more than one in three.

We have reached a point where we can no longer afford merely to state these facts—and these have, of course, been stated before—and leave it at that. We need a totally new outlook on the question of the age of retirement.

I am not sure whether the right hon. Gentleman is referring to his present status of retirement or not.

In the past, the public attitude on this question has been greatly influenced by the fact of heavy unemployment. We have got away from all that now. We must encourage the wish—already widespread among older workers—to remain in employment after the retirement ages current today. After all, in recent years hours of work have been reduced, holidays have been increased, the age of entry into employment has gone up and, above all, our general health and expectation of life as a people have markedly improved. It is a natural corollary of these changes that we should work longer and retire later. The subject has already been discussed by the Minister of Labour with his National Joint Advisory Council. Discussion of it as regards Government employment is about to begin on the Civil Service National Whitley Council.

The Government now ask employers and workers generally to give the most serious consideration to the possibility of postponing retirements and to removing any obstacles which prevent those who are physically capable of continuing at work from doing so. In due course, some formal alteration of pension age in pension schemes, both national and occupational, may well be necessary. It would be premature to alter the age in the national scheme on this occasion; but any changes we make must be framed in a way which will encourage those reaching present pension ages to remain at work without pension.

The Minister of National Insurance has considered most carefully the best method of giving effect to those principles within the limits set by our present financial position. She has worked out proposals which have been accepted by the Government, which I will now outline.