I beg to move Amendment No. 2, in page 48, line 11, at end insert:

'and otherwise required in connection with those provisions'.

It will be for the convenience of the Committee if we also discuss Government Amendments Nos. 3 and 4, and new Clause 1:

Amendment No. 2 is a technical amendment adding to the description of the amendment specified in Schedule 4 so as to cover amendments proposed for insertion in the schedule in connection with the new provisions for mobility allowances which may not strictly be described as consequential on those provisions.

Amendment No. 3 extends mobility allowances—a non-contributory benefit—from the items included in Chapter 1, Part II of the principal Act, the contributory benefits.

Is there a correlation between the £5 allowance and the cost of running a Ministry car?

I shall come later to many points that will be raised in the debate. The life of a Ministry vehicle is seven years, and over seven years the mobility allowance will produce £1,820. I do not at this stage propose to go into fine detail about costs. I am presenting what I believe to be a major step forward for disabled people in speaking on the new Clause which embodies the Government's policy of mobility for the disabled.

If disabled people choose to have a car rather than cash, they should have the choice of a car that suits them. They should have the same freedom of choice as everyone else. The way to give them that freedom is to allow them to exercise the same choice that able-bodied people have to spend the money in their pockets. That is why our basic decision is cash and not cars.

In the 16 months since the Government came to power, the overall value of additional resources made available or pledged for benefits for disabled people amounts in cash terms to well over £1,000 million a year. That includes upratings and new cash benefits but takes no account of the provision of services. Some disabled people who only a few years ago had no benefit without a test of their means will be getting by early next year £7·90 non-contributory invalidity pension, £10·60 higher rate attendance allowance and £5 mobility allowance, and all these benefits are entirely without means test.

I was interested to hear that 100,000 people are likely to benefit from the mobility allowance on the basis of a test as set out in the new Clause. Is my hon. Friend able to tell the Committee, either now or later, how many people would have been eligible if the test had been a somewhat different one? I do not want to refer to an amendment which has been ruled out of order, but can my hon. Friend say how many disabled people would be eligible for the benefit if it were available to those who are unable through physical or mental disability to use public transport. I do not suppose he has the figure readily available, but if he is able to obtain it and give it to the Committee it will be of assistance.

I should like to help my hon. Friend, but it is difficult to give a precise figure. The 100,000 new beneficiaries under the proposal must not be taken as a definite indication of the number of people who will receive the new allowance. I emphasise that I am trying to make the money available to disabled people in the fairest possible way. I understand that my hon. Friends the Members for Mitcham and Morden (Mr. Douglas-Mann) and for Eccles (Mr. Carter-Jones) and certain Opposition Members are concerned about people whose mobility is not so severely restricted that they virtually cannot walk.

This subject is introduced into the Social Security Pensions Bill simply because the Bill is the best available suitable vehicle if we are to fulfil our promise to introduce legislation this Session so that payments to the first group of beneficiaries can start early in the new year. I said earlier that my hon. Friend the Minister of State had been in touch with the hon. Member for Rushcliffe (Mr. Clarke) and other members of Standing Committee A to explain that the timing is the earliest we can manage as well as the latest we can risk.

There has been a great deal of consultation. I have discussed this and other questions with the all-party Disablement Group in the House and I have also had a great deal of consultation outside the House with distinguished people who are themselves disabled or who speak representatively for disabled people.

The purpose of the clause is to provide for the payment of a mobility allowance of £5 a week—£260 a year—to severely disabled people who are unable to walk, or are virtually unable to do so, and who are likely to remain so severely handicapped for at least a year. It will be available to disabled people over the age of five but under pension age. An award will not depend—as the present vehicle service depends—upon ability to drive a car. The person receiving the benefit will be able to use it in any way he chooses as being the most suitable to help with his mobility problems.

By definition of its title, the mobility allowance will not be payable to someone who is totally incapable of mobility. Here we have in mind, for example, someone who for medical reasons should not be moved or who is in a coma and has no appreciation of his surroundings. We all know that severe head injuries caused by a road accident may mean, in rare and tragic cases, that someone spends the rest of his life, such as it is, in a coma and dies without recovering consciousness. It would clearly be inappropriate to pay such a person a mobility allowance. Equally, it is not the intention that a severely disabled person who can appreciate a change of surroundings but for whom outings are infrequent—and expensive—should be disqualified. We fully accept also that quite severely mentally handicapped people can in their own way enjoy mobility which has been previously denied to them by their additional loco-motor disabilities.

The allowance will not be means-tested and it will be generally disregarded in considering entitlement to other benefits.

The major advantage of the mobility allowance is that it starts to give assistance to many who in the past have had no help. In the last 10 weeks a working party of the Central Council for the Disabled has talked to more than 2,000 disabled people and their organisations in many parts of the country. I pay warm tribute to George Wilson, the Director of the Central Council for the Disabled. I am most grateful to him and his colleagues for the many long hours they have spent on this task.

I know that the working party's report is not complete, but its work has done much to ascertain the wishes of disabled people. Many of those who have already received assistance—for example, disabled drivers—have expressed the wish that their equally or more handicapped colleagues should be helped before any further improvement is made in their benefits. The mobility allowance now stands at £260 per annum as compared with £208 as originally proposed.

There is the question of whether the allowance will allow a driver to buy the car of his choice if he so wishes. The allowance should help with motoring costs as with other mobility costs. I know that the Central Council for the Disabled is considering the possibility of a scheme for offering loans to disabled car purchasers. Naturally, I eagerly await its findings. I am sure that the hon. Member for Exeter (Mr. Hannam), who raised with me the possibility of commutation, will rejoice in the work that is being done by the Central Council for the Disabled to ensure that every recipient of the new allowance receives maximum value for money in spending the allowance.

I know that the hon. Member for Exeter, the hon. Member for Wallasey (Mrs. Chalker) and many of my hon. Friends are in constant rapport with the Central Council for the Disabled. I know that they will join me in congratulating the council on its remarkable job of work in consulting not only the Government but also disabled people about the use to which the allowance can be put.

As we have promised all along, the invalid three-wheeler will continue to be available as an alternative to the allowance for those who prefer it and who are considered capable of driving it. Thus we are now providing by means of a new cash benefit an alternative choice for those who do not want a Ministry vehicle. Once the allowance has been introduced there will be, first, a single scheme with a single medical criterion and, secondly, a subsequent choice between a cash allowance and a vehicle.

There is also power in the clause to adjust the allowance if certain expensive aids to mobility are supplied free of charge under the National Health Service. This is a reserve power to be used if developments justify its use. We have in mind the possible future supply of occupant-controlled electrically-powered outdoor wheelchairs which might meet many of the mobility needs of some disabled people.

The legislation does not specify the timetable for introducing the allowance but allows different starting dates to be appointed in respect of different age groups. The allowance will be phased in over a three-year period. We intend to work as quickly and as flexibly as possible by bringing small age groups within the broad age bands and in the order of 15 to 50, 5 to 14 and finally 51 to pension age. We cannot be certain about numbers at this stage. As I have explained to my hon. Friend the Member for Mitcham and Morden, his question presents an even more difficult problem than the one with which we have been dealing in seeking to try to establish further how many people will have an entitlement under the arrangements as we propose them. If there are approximately 100,000 new beneficiaries the process of take-up, which we hope will start in January 1976. should be complete by March 1979.

I think it will be helpful to the Committee if I say something briefly about the limitations on what we are able to do. I shall seek to reply to detailed points that are raised during the debate. I have explained that there is much more that we want and need to do. Nevertheless, this is a significant Bill for many severely disabled people. What we are proposing will more than double—indeed, nearly treble—present expenditure on mobility for disabled people. Within that context, and recognising the present severe economic difficulties as I must, there are inevitable constraints. Even Ministers with responsibilities for the disabled are not protected from the economic winds.

6.15 p.m.

The scheme is limited to people of working age and to children. We have made unprecedented increases in retirement pensions and further increases have now been announced. As with the present arrangements, we are concentrating on locomotor disability—that is, inability to walk. Blindness is not covered but it may sometimes be a factor in the assessment of a person's ability to walk. Again, I must emphasise that this is an allowance for locomotor disability and not a general expenses allowance for severely disabled people.

Will the Minister clarify the situation of people without a distinct locomotor disability who are physically weak from other conditions, and who are without a car and are unable to go out because they might catch a disease because they are so weak? As I understand what the Minister is saying, children and adults in that situation who can walk but who have other susceptibilities to distinct infection will not benefit from the mobility allowance. Am I right?

I cannot be precise about any particular case. I shall be explaining that there are entirely new arrangements for appeals machinery, which I think is a major step forward for disabled people. The sole criterion will be loco-motor disability or inability to walk. I have said that some disabled people may have a combination of disabilities the total effect of which makes them virtually unable to walk. I must not try to fill the rôle of the medical assessors who will make decisions within the criterion I have mentioned.

Is there a chance that when the regulations are drafted there will be more room for flexibility, so that cases such as the one described by the hon. Member for Wallasey (Mrs. Chalker) can come within the umbrella of the mobility allowance?

I regret that I cannot go further than the clause now before us. There will be much further information about the allowance as we go forward. There will be disabled people who do not qualify for the allowance. Nevertheless, my best estimate is that about 100,000 people will qualify. As the debate proceeds I shall try to give further information in reply to the points that are raised, but I must emphasise that this is an allowance for locomotor disability and not a general expenses allowance for severely disabled people who are not able to walk.

Mobility expenses are a significant item in the costs that severely disabled people have to meet. The new single medical criterion reflects, as we announced it would, the sort of medical criterion now in use for the vehicle service. The essential difference is that we are now replacing a discretionary scheme with a statutory scheme. There will be a statutorily defined base, independent adjudicating authorities, medical boards and medical appeal tribunals, insurance officers, local appeal tribunals and national insurance commissioners. There will be formal appeal rights and a vastly increased number of claimants. It has not been possible to retain the additional social criteria of the vehicle scheme regarding the need for transport to get to work or to run a home. These additional criteria have not worked very satisfactorily as a means of sorting out claimants even in the present entirely discretionary scheme.

I conclude by saying that overall our policies are ones that I am very happy to put forward. They make a real advance and are both fairer, more comprehensive and more generous than what has gone before.

We welcome the proposal for a mobility allowance. It is the Government's aim to give priority to care for the disabled and handicapped as it was the aim of the Conservative Government to give priority when we introduced such measures as the tax-free attendance allowance and the long-term special invalidity benefit. Better provision for the disabled must remain the aim of any Government, whatever their composition In that spirit we welcome the new allowance and the way in which the Minister proposed it.

The provision removes a major injustice in the present system, namely, the distinction between disabled people who can drive and those often more seriously disabled people who cannot drive. As the matter stands, a seriously disabled person who can drive receives either a cash allowance or an invalid vehicle. A more seriously disabled person who cannot drive receives nothing at all, not even the cash allowance. We agree that help should be based not on the consideration whether a disabled person can pass a driving test but on the degree of disability.

We welcome the general principle of the allowance, but there are a number of fundamental questions which remain to be answered. The first relates to inflation. In these debates there is sometimes a tendency on the Government benches to speak as though inflation were outside the scope of departmental interest. Nothing could be further from the truth Groups such as the disabled are the most vulnerable to inflation. The value of the mobility allowance will quickly diminish unless the Government tackle the problem.

This was the point made, in a different context, by the Child Poverty Action Group in its pamphlet "Back to the Thirties for the Poor." That group spelt out the crisis which many of the poor now face, and observed that at present inflation disguises the crisis faced by Britain's poor. We recognise the problem, but mere recognition is not enough. We must seek to guard against it. Clearly, in the long term a correction of the situation can be tackled only by a permanent reduction in the rate of inflation.

We should seek in this legislation to ensure that mobility allowance does not fall behind the rate of inflation by requiring that the allowance should be subject to regular reviews. Some hon. Members would like a six-monthly review, and indeed, that is the view of the Disablement Income Group, but the Government, far from accepting the case for a six-monthly review, have moved specifically to exclude annual reviews. I understand that that is the effect of the Government amendment to Schedule 4, and this explains why we have tabled an amendment to that amendment. I gather, Mr. Thomas, that it would be convenient to debate that amendment now, but to vote on it at a later stage.

Our case can be put shortly. We live in times of exceptional inflation. At such a time it is all the more important that groups such as the disabled should be protected from the rise in prices—increases which those affected can do so little to prevent or influence. We realise that the Government have powers to increase the allowance, but we believe that they should not just have general powers. We believe that a requirement should be placed on them to review the allowance annually, as is the case with so many other benefits.

Our amendment does not go as far as the DIG or some hon. Members would like. However, I commend it to the Committee as a compromise which we can all accept. I certainly commend it to the Government because all they have to do is to move to an annual review of the mobility allowance.

The second major question concerns the reduced rate of mobility allowance to be paid, for example, to the disabled person who has the use of an invalid three-wheeler. This is an important proposal. A number of disabled drivers take the view that it is all very well to have an invalid car, but that it is expensive to run and, therefore, they would not make great use of such a vehicle. Indeed, they do not get the full benefit of the mobility intended to be extended to them. Clearly, the mobility allowance would help to pay the extra running costs, but at what level is the allowance to be paid? Will it be in addition to the tax-free petrol allowance of £10 or will it be in place of that figure?

The third point concerns the invalid three-wheeler and future Government policy. I shall try to choose my words carefully because it is all too easy to raise hopes which may not be fulfilled. I am sorry to say that the Minister was guilty of raising such hopes when, in a censure debate in 1972 against the then Conservative Government, he said that three-wheelers were unsafe, unstable and should be replaced by four-wheelers. Far worse was the speech of the Prime Minister only days before the February 1974 election when he accused the Conservative Government of meanness in their attitude to disabled drivers. He said that for a couple of years—and I quote from the Press release:

"… there has been strong pressure not only from disabled drivers but from road safety experts to the effect that the three-wheeled vehicle which the Government still insist on issuing to disabled drivers should be replaced by a proper four-wheeled version."

The implication of that speech is clear and unmistakeable—namely that a Labour Government would replace the three-wheeler. There could be no other interpretation of those remarks. But what has happened is that, rather than scrapping the three-wheeler, the Government are ordering more of them. Therefore, in view of Labour's previous statements, we are entitled to ask the Government for their current view.

I listened carefully to the Minister's reply to an Adjournment debate introduced by my hon. Friend the Member for Exeter (Mr. Hannam) on the day the House rose for the recess. However, many of the questions then asked by my hon. Friend were not answered.

I would remind the hon. Gentleman that on that occasion the hon. Member for Exeter (Mr. Hannam) and I had available to us a debating time of 30 minutes. He left me with 12 minutes in which to reply to his 8-minute speech. Obviously I was put in an impossible position in having to reply in such a short period. I have since written to the hon. Gentleman about the points on which I was unable to reply on that occasion.

I accept what the Minister says. I was not seeking to attack him on that point. I hope that he will use the opportunity of this debate to come forward with the answers to questions which I should now like to ask him.

In Opposition the Minister and the Prime Minister told the country that three-wheeled vehicles were unsafe. I repeat that no other interpretation could be placed on those statements. The Minister must be aware of the concern which those statements caused. He must also be aware of Press reports, notably those by Adam Raphael in The Guardian. the views of the Disabled Drivers' Action Group pointing to the same conclusion, and also the views of Lady Sharp in a letter to The Guardian last year. I hope that the Minister will give a clear statement of the situation in regard to the safety of these vehicles. As he knows, many drivers would like to retain the three-wheeler, and, of course, their wishes should be respected, irrespective of the form taken by general policy in this area.

6.30 p.m.

As regards costs, the Sharp Report suggested that a four-wheeler car would be cheaper to provide. If that is so, it must dispose of a considerable part of the objection. Most of us believe that a four-wheeler vehicle would be socially preferable. If it is also cheaper, the argument and the case for a four-wheeler becomes very strong indeed. As an Opposition we clearly reserve our position until we hear the Government's reply, although the Government will know what we have said on previous occasions.

I should like to make a suggestion. In my view we have been provided over the past years with a great deal of information on the three-wheeler vehicle, but we have had nothing like as much information on the possible four-wheeler replacement for it. I suggest that it would be of value to us, and certainly to the public generally, if the Government were to commission a study to cover two points. One is to review the practice in other European countries, such as Holland and France, and to study the cars which are used in those countries and the costs involved. The second is to carry out a study in this country to ascertain the prospects of producing either a purpose-built four-wheeler or adapting a present production model taking into account the costs involved in such an exercise. Such a study would not be particularly expensive and it should not take long to complete. I urge the Minister—and I say this in a constructive spirit—to give consideration to that matter.

We are all concerned about resources. Therefore, I point out to the Minister that early in 1974 the Council of Ministers of the European Community approved a social action programme which in turn gave rise to the handicapped workers' action programme issued by the EEC Commission later that year. The programme envisages money being granted for the training, housing and transport of disabled persons under Article 4 of the Social Fund. I suggest to the Minister that he should take this matter up with the European Commission to see whether funds can be made available here. After all, we are all Europeans now and we all recognise that resources are a crucial problem in this sector.

It is the aim of the Opposition to improve provisions for the disabled and it is in that spirit that we approach the debate and put forward our suggestions. We welcome the mobility allowance and we hope that the Government will accept the improvements that we have suggested.

Like the hon. Member for Sutton Coldfield (Mr. Fowler), I welcome the provision of the mobility allowance. He would be a fool or a callous person who did not welcome the fact that a vast number of people will now benefit from such a scheme. When we have won a battle, we should not linger with our war memories. We have won our battle, and now we must go to the next round and look at the plight of those who possibly have not been included.

If I am not ruled out of order, I can refer once again to the infamous money resolution. Two of my amendments still stand in the Paper, but before I deal with them I must point out that 100,000 people and their families will welcome the action of my hon. Friend the Minister, which must stand to his credit. No one can take it from him. If I am critical, I am sure he will understand that I speak as a long-standing friend.

I seek information about the method by which the figure of £5 has been reached. As I understand it, the three-wheeler will continue for those who want it. I have no love at all for the three-wheeler. In my view it is an extremely difficult vehicle to drive and it has some unsafe features. Nevertheless, if I go through my long list of mail—and I suppose I receive just as much mail as anybody else—I receive a tremendous amount from owners or users of three-wheelers urging the Government to continue with them.

The first figure I want from my hon. Friend the Under-Secretary is the cost of running a three-wheeler in relation to the £5 allowance. If the cost of running a three-wheeler is higher than the £5 allowance, there is very good reason for increasing the allowance.

Secondly, will my hon. Friend consider something which I know the Central Council for the Disabled is considering, namely, tying the whole concept to a cost-of-motoring index and having a six-monthly review? That was one of the amendments which was ruled out of order, but it is now in Hansard and reflects my thinking that I should like to see a costof-motoring review every six months so that we can update the value of the allowance.

Another matter which worries me greatly is the problem of the elderly who might receive at present the private car allowance of £100. What will happen to them with the introduction of the new mobility allowance of £5? My understanding is that if they receive the £100 allowance it will continue beyond pension age. Will the mobility allowance affect them adversely in any way?

I took the view that the money resolution—not the mobility allowance—was obscene because it prevented us from mentioning cases which we felt were important. I can illustrate the theme by considering the position of a haemophiliac who can walk. By definition it will be said that such a person is mobile, but let us consider the case of a haemophiliac who walks to a bus stop, gets on a bus and gets battered in the bus. Frequently after such a journey, because of the nature of their complaint, the battering that these people receive on the bus is such that they have to pay four or five visits to hospital. Are not such people deserving cases? Should they not be considered? They are not vast in numbers but they are a group who I feel should be considered.

I keep looking at you, Mr. Thomas, because as a compatriot of yours I realise that I am getting very near the wind. Perhaps you could glance elsewhere or engage in conversation.

Order. That is always possible until my attention to drawn to the matter, when it becomes impossible. I remind the hon. Gentleman that he cannot pursue amendments that are beyond the scope of the Bill and certainly beyond the scope of the money resolution.

That is a good point. I should have realised that as an ex-Rugby man I should not have tried to come on your blind side, Mr. Thomas.

I turn to the amendment which is acceptable for debate, that which would reduce from five years to two years the starting age of entitlement. A person who suffers from agoraphobia is afraid to go out of the house and therefore lacks mobility. A child sufferer must be accompanied and looked after. I cannot for the life of me understand why we are not allowed to give the mobility allowance to children under five years of age and over two years. I have been assured that the behaviour pattern of some of these youngsters is such that a private form of transport is the only reasonable way of taking them around from the point of view of their parents, their guardians or the rest of their family.

I do not know why the age of five has been chosen. Some civil servant in his wisdom probably said that that is the age at which children go to school. What do civil servants know about what happens to children under the age of five? Are the children to be kept permanently under sedation? Very often when they have passed the age of five they can be looked after at school, but between the ages of two and five there is a major problem for the parents and families of some children. Therefore, that age group should also be included.

Not all the mentally handicapped are immobile, but some are, and at present they are excluded. Many haemophiliacs are immobile. Why are they excluded? Many agoraphobics are immobile. Why are they excluded?

Those are questions to which the Committee deserves answers. They account for my intemperate language at the beginning of the debate about the way in which the Treasury drafted the money resolution. We, not the Treasury, decide the matter. There is a large enough body of knowledge within the House of Commons, and we are fed enough information from outside to make us capable of making a major contribution.

The only other amendment which I managed to make stick on the Notice Paper and which has been selected concerns the advance of technology. I should like my hon. Friend the Minister to consider very carefully what will happen when, in the not-too-distant future, we see the development of an outdoor vehicle which is capable of being power-driven and which could possibly be used in the home. The hon. Member for Wallasey (Mrs. Chalker) and I have seen such developments, and I think that in the next 12 months these vehicles will become available. I should hate to think that this sort of advance will disqualify from the allowance a person who can use a technically-developed wheelchair within the home and outside.

When the regulations are being drafted, will my hon. Friend use his native guile, his good will, ingenuity, skill and compassion to make sure that there is scope for widening the provision, not for a large number of people but for a small number, whose needs are as great as those he has now covered? I end by paying him tribute for the fact that he has brought in 100,000 souls and their families, and by making a plea for a few more thousand. I say to my hon. Friend "Please use ingenuity, and defeat the prophets of doom".

Like other hon. Members I welcome the mobility allowance, which has long been sought. I hope that in this debate we can turn our attention to some of the cases covered by the amendments which have escaped the red pen, and that with the Minister's good will we can succeed.

I am concerned about the increase in the cash benefit from £4 to £5 which the Government have been able to introduce since last September. Will it be sufficient in view of the increase in costs since then? I hope that when other benefits are being reviewed the Minister's mind and voice will be to the fore, and that out of the total cake he will keep on pushing for the slice that the disabled deserve and are beginning to have.

6.45 p.m.

I support the amendment in the name of the hon. Member for Eccles (Mr. Carter-Jones) to reduce the age of eligibility from five to two years, for very good reasons. I sought clarification from the Minister earlier about the problem of young disabled people, who are very susceptible to infection. It is a particular problem during the fast growth years between the ages of two and five. It is also a problem thereafter, but that is not a subject of disagreement. I hope that the Minister will be able to accept that amendment.

There are a tremendous number of children who are physically able to walk but have severe management problems. They are not yet at school and are being coped with at home by young mothers with other young children. They cope but they do so with great difficulty. Whether these disabled children be hyperactive, aggressive or violent—whatever their manifestation of anti-social behaviour—they are usually unable to travel by public transport. I have seen distressing examples of mothers with whole families which include one hyperactive child being turned off public transport because of the activities of that one child. That sort of thing has a tragic effect on the other children in the family.

There is a great need to keep families together. One of the difficulties is that such children alienate themselves from the other children in the family. Children are much less able to reason. Although they may be able to cope with the situation in the home, when they are transferred outside the situation does not make the same sense. The Minister could well amend the Bill to bring in this young age group.

I am also concerned to see that we encourage the integration of non-handicapped and handicapped children. We have very few specialist playgroups for severely handicapped children. The chance to take a handicapped child to a normal playgroup often exists only if the mother can get the child to the playgroup. Some of those children who are able to walk are very heavy and cumbersome to take to an activity which will give the mother and other members of the family a short respite during the day, which is something I am sure the Minister wants to do.

I fear that in his reply the Minister will tell us that those who are able to walk but who have other severe disabilities must remain to be looked after by the Joseph Rowntree Memorial Trust, by the Family Fund which has begun to help many disabled families. That fund, doing its best to cope with many of the problems brought to it so far, has to cover clothing, telephones, laundry, home and holidays as well as mobility. Already 30 per cent. of the £2·25 million of the fund has been spent on paying for transportation of young congenitally handicapped people. It has helped only a small number so far, and many others need that help.

Therefore, I ask the Minister closely to examine the definition of ability to walk. Walking is one thing, and being accepted as moving in the normal train of society is another. I should welcome from the Minister a clear interpretation of the words in the clause.

I also remind the Minister that many of the people who are excluded under the Clause because they are so badly mentally handicapped that they are unable to appreciate their surroundings are still a grave drain on the family funds in paying for transportation. It is necessary to take even the most handicapped of children to the dentist or doctor and to get special clothing. It is necessary also for a parent to expose that child to other stimuli outside the home and the near-home environment. This simply cannot be done unless the family can actually travel. Therefore, I believe that the Minister has a duty to look at this aspect. If he cannot include these children here, perhaps he will include them in an extension of the Family Fund started so well by my right hon. Friend so many years ago but needing increased funds, as ever, now.

That brings me to the question of increased funds. My hon. Friend the Member for Sutton Coldfield (Mr. Fowler) mentioned just now the possibilities of assistance from other countries through the Social Fund of the EEC. I have been privileged to see some of the things that are beginning to be done in other countries, and I am quite sure that to facilitate the reduction in age from five years to two years an application to the Social Fund of the EEC would be well worth making. I am sure that it would be listened to sympathetically.

The other aspect of international cooperation that I hope will bring about a greater possibility of locomotion is that concerned with amendment (f). We have already heard from the hon. Member for Eccles of the advances which are taking place in motorised wheelchairs for use both within and without the home. It is thought nowadays that many of the younger handicapped people who are unable to walk, or unable to walk any distance, might benefit from a much earlier age from such a vehicle, though not a car, and I hope the Minister will look sympathetically at this. The prototypes which are currently being utilised are to my knowledge quite able to be controlled by a 12-year-old. This begins to develop the child so that later he or she may lead a full and probably fully-earning life. It is this investment at the early stages which I believe to be so vital.

Those two amendments are well worth the Minister's kind consideration, not only with words but, if necessary, also with his feet. In welcoming the measures that he has found it possible to bring before us today, I hope that the hon. Gentleman will also find himself able to lend support to those amendments, which happily are in order for our debate.

In all the years during which I have been speaking on disablement I have never spoken on the mobility of the disabled. The reason for that is that I have more or less left the problems of the disabled to the magnificent campaigns that were conducted for many years by the hon. Member for Banbury (Mr. Marten). The hon. Member conducted a single-handed campaign for the mobility of disabled people long before many of us ever dealt with the problem of disability, and as a consequence we tended to leave the matter in his hands and in the hands of those of his colleagues who specialised in it. Later my hon. Friend who is now the Under-Secretary took great interest in the subject and did a great deal concerning the problems of the mobility of the disabled. Latterly the hon. Member for Exeter (Mr. Hannam) has taken a very great interest in it too.

I should have been more than happy to leave matters like that, and I know that it is quite unusual for a Parliamentary Private Secretary to participate in a debate, no matter how briefly, but I want to speak briefly in this debate because certain charges have been made about the Government's policy outside the House, especially about the negligence of the Minister concerned with the disabled and the negligence of the Secretary of State. That is a very serious charge against anyone—a charge of negligence concerning the safety and mobility of disabled people.

It so happens that when the present Government came into office they were faced with a clear choice, given the very difficult economic circumstances, of either helping all disabled people or, alternatively, helping those who were faced with the problem of mobility. What the Government did, in my view, was to help the immobilised people much more than they helped the other groups of disabled people. The various other categories of disabled people—the blind, the deaf, spastics, vaccine-damaged children and so on—did not get a great deal from the present Government, or indeed from any Government, in terms of direct assistance.

What the Government then did was to allocate more money to the immobilised disabled, and having done that they more or less sat back and expected some kind of reaction. But the reaction has been a hostile one. Far from being thanked by people who are disabled and immobilised, the Government are being criticised. That is fair enough. We expect this criticism from Opposition Members, and we receive it.

I listened with great interest to the hon. Member for Rushcliffe (Mr. Clarke) and to the hon. Lady the Member for Wallasey (Mrs. Chalker). I do not know why the hon. Lady is not on the Front Bench, nor do I know why the hon. Member for Exeter is not there. I have listened to their criticisms and they have been interesting, but they seemed to miss the simple point—I am anxious to make no party point in this debate—that it is the present Government who have allocated far more resources to the problems of the immoblised disabled than have ever been allocated before. Hon. Members should recognise that.

We are facing a very serious economic crisis. I welcome the suggestions for extending the mobility plan to more people. Professor Townsend has put a very powerful case elsewhere. I hope that his case will be listened to very sympathetically and echoed here by hon. Members, though not perhaps with Professor Townsend's eloquence.

My point is that as a result of the mobility allowance a far larger group of people have been assisted than if we produced the three-wheeler. This is very important. A campaign has been waged by disabled drivers for a very long time, both before the present Government took office and now. Jolly good luck to them. But none of them waged a campaign for the disabled passenger. One or two Opposition Members and my hon. Friend the Under-Secretary and I campaigned for the disabled passenger, and, as a result of the mobility allowance the disabled passenger is for the first time being helped.

In our anxiety to improve the safety of the three-wheeler—we should certainly try to do that—we must not forget the priorities of trying to help, first, all the people with different disabilities and, secondly, the disabled passengers and others who will be helped by the mobility grant. In my view it is absolute nonsense to accuse my hon. Friend the Under-Secretary or my right hon. Friend the Secretary of State of negligence. It is a charge that should never have been levelled. By all means let us criticise them, but they are not negligent. The mobility grant has my warmest support, and I commend it to the Committee.

I believe that the Government should be pressed to extend the mobility grant. Let us have the children. Let us have the mothers. Let us have as many people as we can. But let us agree that the mobility grant is more important than any of the suggestions put forward by the disabled drivers. I think that we should have regard to priorities, and those priorities have been laid down by the Government.

I followed the speech of the hon. Member for Stoke-on-Trent, South (Mr. Ashley) with great pleasure. Although—rather unusually—he spoke as the PPS to the Minister involved in the debate, a contribution from the hon. Gentleman is welcome in any debate about disablement because of the leadership and experience that he gives to all of us who are concerned with the affairs of the disabled.

I wish to express my own general welcome to the mobility allowance. It introduces a long awaited and much wanted principle of cash help for all disabled people, whether they be drivers or passengers. It also offers a certain degree of freedom. I enables all disabled people to use the money as they wish, whether on bus or taxi journeys or to save in order to purchase vehicles of their own.

My main criticism is that the time involved in saving for an alternative vehicle will be too long, taking into account the cost involved and the amount of the allowance that we are discussing. I regret that even with the £1 additional allowance announced on the Friday we adjourned for the Whitsun Recess, taking account of the obvious erosion by inflation, it is a moot point whether the allowance will be of greater value in real terms than the 1972 £100 private car allowance.

Earlier, the Minister talked about those hon. Members and people outside this Chamber who have an obsession about cars for disabled people. He spoke of the need for cash rather than for cars. I do not wish to go back over the arguments I voiced in the debate we had on the Whitsun Adjournment about the three-wheeled invalid tricycles issued by the Department, but, like my hon. Friend the Member for Sutton Coldfield (Mr. Fowler), I remind the Minister and all those concerned that he and the present Prime Minister only about 18 months ago expressed very similar views to those we are expressing now in calling for the phasing in of a four-wheeled vehicle and the gradual phasing out of the three-wheeler, together with a mobility allowance—in other words, a choice of cash and car or three-wheeler. It is for this, in effect, that we are asking.

For anyone to wish to move to a four-wheeled passenger carrying vehicle which is safer and more reliable for a disabled person is not to have an obsession. It is quite normal. It is fair to say that 90 per cent. of those concerned with disabled people do not want to see those who have three-wheelers and who wish to retain them deprived of their vehicles. The hon. Member for Eccles (Mr. Carter-Jones) has made the point strongly on many occasions that about 15 per cent. of all disabled drivers wish strongly to retain their existing three-wheeled vehicles. So this is not what we are calling for, and certainly not what I want to see. We all want to see a three-way choice—a mobility allowance, a three-wheeler, or an adequate four-wheeled vehicle.

The Minister referred to the work carried out by George Wilson of the Central Council for the Disabled in touring the country gathering information from disabled people as to how the allowance can be best used. I am especially pleased with the information that we have been given today to the effect that consideration is being given to possible ways whereby loans might be made available for recipients of the allowance to purchase their own vehicles. This is very important and will go a long way towards satisfying the criticisms of the hon. Member for Stoke-on-Trent, south.

It had been my hope to move an amendment allowing a disabled person in receipt of this allowance to commute the amount over a five-year period so that he or she might have an initial capital sum with which to purchase a vehicle and, as a result, not have to go on using vehicles provided by the State. However, the restrictive money resolution about which we were grumbling earlier prevented my amendment from being selected.

We have made our complaints about that, and I resented the attack of the Secretary of State, who suggested that some of us were being less than adult in our approach to the money resolution. I do not need any lessons about the state of the economy. I do not need to be told that inflation is the greatest enemy of the disabled. If any measures to control inflation mean controlling Government expenditure, I support them fully, but we were trying to underline the fact that, within a total overall sum for such an allowance, ways and means could be found for using the money to the best possible advantage of the disabled. These amendments relate to the best means whereby we can apportion the total sum.

Disabled people face above average increases in costs through inflation combined with lower than average increases in any income they may have. As a result, they are hit harder by inflation than most other people. I welcome the mobility allowance, though I fear that it is not quite enough, and that the taxing of the allowance will mean that the net amount received by disabled people who are earning and trying to integrate normally into every day life will be less than one would hope. What is more, it may result in their receiving less than they may have been with the private car allowance.

I press the Government to look carefully at the possibility of commuting the allowance and of bringing forward a five-year amount in a lump sum so that disabled people may purchase their own vehicles. This would reduce the number of disabled drivers who are dependent on the State for their vehicles, and who are not happy with them and who, therefore, are critical of the State about the vehicles with which they are provided. There would be a saving to the Treausry in the longer term. That is why I regret the constraint placed upon us in terms of our ability to discuss all these matters in detail on specific amendments.

My hon. Friend the Member for Sutton Coldfield presented a forceful case for the re-examination of the relative costs of three-wheelers and four-wheeled cars. I am satisfied that an adapted Mini would cost less than the unsafe, unsocial and unreliable tricycle at present issued by the Department. If we consider the cost to our balance of payments of a vehicle which has an Austrian engine, an Italian suspension and an American transmission, we must agree that a British vehicle ought to be provided in its place.

I restate my welcome for this step forward in the provision of a car allowance for disabled people, whether they be drivers or passengers. I hope it will be followed by other major steps forward. I should like to see a more open mind about eligibility and about the provision of better cars for the disabled. It should not be a case of cash or car. We need a fuller choice of an allowance, a three-wheeler, a four-wheeled car, and the commuting of the allowance for the purchase of vehicles. We have to move away from the glorified bath-chair, which was provided originally for those people wishing to make short journeys from their homes. I hope that this step will be the first of many and that we shall move quickly, economic circumstances permitting, towards a disability allowance and the provision of decent vehicles for disabled people.

My contribution will be astonishingly brief. I recognise that all hon. Members have covered much of the ground about which I intended to speak. I intend to concentrate my remarks upon the first of the surviving amendments, in the name of my hon. Friend the Member for Eccles (Mr. Carter-Jones).

I am reluctant to appear critical of any aspect of the legislation that is being reviewed by Parliament today. The Bill is an enormous step forward. In many respects it makes previous provisions appear paltry. I am particularly pleased with the conception of the mobility allowance. The clause breaks entirely new ground; this is truly enlightened legislation.

However, together with other hon. Members, I deeply resent the restriction that is imposed upon the entitlement. I refer to the ruling that handicapped children under the age of five should not benefit from the allowance. There is nothing in the money resolution to prevent the allowance being extended to those from two years of age upwards. No global sum is mentioned. It simply refers to "people under pensionable age", as defined by the 60-year and 65-year age limits. There is no problem in that area.

We must all have witnessed the melancholy plight of youngsters of three or four years of age who are confined to trolleys or wheel-chairs in order to get about at all. We have all shared the embarrassment and, indeed, the despair of mothers who endeavour to manoeuvre disabled children on to public transport and try to get them out and about at all. It is a hideous experience even to witness at times.

We must be aware of the cumbersome nature of some of the disabilities and the distress to the child, and, indeed, to the parents, when the consequences of a disability prevent the family participating in everyday activities that the more fortunate among us take very much for granted.

To amend the clause—this would be in line only with the provisions for attendant allowance—would not impose financial burdens of formidable dimensions on the State and the community. Even if that were so, we should accept the cost as being trifling when compared to the burden carried by the young disabled person. To make this gesture would in many cases introduce a joy, an excitement and a real delight into young lives that, generally speaking, are restricted, drab and often painful. Who can place a fee on such a transformation?

If my plea for reconsideration is short, it is not in proportion to my deep and heart-felt feelings on the matter. I hope that this modest amendment may be accommodated by my hon. Friends.

I should like to comment briefly, following the remarks of my hon. Friend the Member for Exeter (Mr. Hannam), who raised many of the points I was about to raise.

I welcome wholeheartedly the fact that we are making a greater range of mobility available to a larger number of people. This is undoubtedly a milestone in the progress of help for the disabled to which all hon. Members have contributed over the years. There are dangers in it. We may lose sight of giving enough attention to the right type of vehicle when individuals want to choose their own vehicles for their own specific use. Concentration on specific vehicles in the past has, perhaps, been too great, but now there is a danger that it will be too little.

I hope that the Minister of State will take seriously the point made by my hon. Friend the Member for Sutton Cold-field (Mr. Fowler) about encouraging more research into suitable four-wheeled vehicles to replace the three-wheeled vehicles in the future. Perhaps the Minister of State could consider issuing a challenge to the motor industry to develop an adaptation which could be used in a great many more cases that the ordinary Mini and other suitable vehicles.

7.15 p.m.

I ask the Minister to consider carrying out more research, as is the case in Europe. In some cases our partners in Europe are ahead of us. It is difficult to find out exactly what they are all doing. In the short period that has been available—because we have not had much time in the last week or so—I have been trying to find out. All the information I have received is rather out of date. The Department could help considerably now that we are wholeheartedly in Europe by finding out what other countries within the Community are doing and whether we could share some of the costs of research and development into these matters. We all face the same problems, and some countries are well ahead of us.

The Minister of State was not willing to reply to the point made by the hon. Member for Eccles (Mr. Carter-Jones) about the correlation between the costs of maintaining and running a vehicle and the new allowance. It is important that the public should know. If the cost is a good deal more than the allowance, we understand the reasons for it, but we feel that the allowance has to work up so that it covers the full cost of running a vehicle. I have made that point clear and I hope the Minister will answer it.

The new allowance is taxable. I understand that, because in the main, all allowances are taxable in order to help those less well off. The general policy throughout the whole social security area is that allowances are taxable.

Will the Minister make special inquiries to find out whether the allowance for children will be aggregated with the incomes of parents? I know that this does not fall truly within the sphere of the Department of Health and Social Security, but it is important. If that is the case, there will be many instances where this allowance will mean very little help towards the mobility of children. It is, perhaps, a small point, but it is an important one and may affect a limited number of people.

I share the feelings expressed at the opening of today's proceedings against the money resolution. It has not enabled us to amend this new clause in the way in which Parliament thinks best. It has been brought before us, and we have to take it or leave it. We have not been able to amend in any way to include some of the groups which outside organisations have brought to our attention. This was brought to my attention by the Family Fund, which is administered by the Rowntree Memorial Trust. It is quite clear that there are children under the age of five and parents who would greatly benefit if a mobility allowance were extended. The cost would not be great. I cannot believe that the difference in cost between five years and two years is anything like as much as the Secretary of State implied in her opening statement on the money resolution.

With those remarks and queries, in general I think that this is a milestone. I pay tribute to the Minister with responsibility for the disabled. He has piloted the provision through. I am sorry that we have not had the proper time or opportunity to discuss this matter more fully. Nevertheless, I welcome it very much.

Speaking so late in the debate I am sorry to strike a slightly sour note. I have been present throughout the debate. I should have liked to have had the opportunity to make this point earlier. Although, like everyone else, I am delighted that 100,000 people will have their particular forms of hardship alleviated by the introduction of a mobility allowance, which is something I have been very anxious to see, I am, nevertheless, rather concerned about it because every time we introduce a new allowance, the eligibility for which is specific and closely defined, we clear some anomalies but create others.

I am sure that my hon. Friend the Minister is well aware that one can have two families both including severely disabled people and living next door to each other. One person may have sustained an injury in an industrial accident and be getting industrial disablement benefit or a special hardship allowance, or be entitled to an attendance allowance, when another person, next door, who is almost exactly as severely disabled, does not receive such benefits. We shall now have yet another anomaly—those eligible for mobility allowance and those who may not be eligible.

These differences can be cumulative. Certainly in the case of eligibility for attendance allowance and mobility allowance, one can find people with very similar disabilities, of whom some will be eligible for both allowances and others not eligible for either. But in each case the hardship for the family is almost exactly as great. My hon. Friend the Member for Eccles (Mr. Carter-Jones) and the hon. Member for Wallasey (Mrs. Chalker) referred to some of the anomalies that will arise as a consequence of the very precise definition in the clause and the money resolution as to the eligibility for this mobility allowance. They have given examples of cases which are just as deserving and needy as others but in which it will not be possible, because of the restriction, for the allowance to be paid.

As I indicated when we were debating the money resolution, it would be preferable, when dealing with this allowance, to widen the net, even if it were necessary because of financial restrictions imposed by the Treasury to limit the total amount we are spending on it. As to the anomalies we are creating by this restrictive definition, I can think of not only the examples given but of the blind and the epileptic. I have a constituent who is unable to travel on public transport because he is so severely incontinent that it is quite impossible for him to get any distance away from the opportunity to relieve himself. He continues to be as "locked in", despite the introduction of this allowance, as he was previously.

Apart from the question of the anomalies arising from this allowance I would urge my hon. Friend the Minister to set up a review of the entire system of the allocation of specific benefits. Every time we create a new benefit precisely defined we create anomalies. We have already the example of an alternative system—the industrial injuries benefit system. Under that system disablement is assessed overall on a percentage basis. It can take account of the inability to drive a car and all the myriad forms in which disability can present itself.

Although the forms of allowance we have at present may be desirable as they stand it is certainly also desirable that we should have some form of more flexible discretionary benefit, even if we do not take the whole step towards an overall disablement allowance for all disabilities, irrespective of the nature of their causation. If we cannot take that step in one go, we could have, as we urgently need to have, some kind of more flexible disability benefit.

Although this measure will resolve hardship for many it is liable somewhat to increase hardship for others. Every time we reduce the number discriminated against, the likelihood of their having their problems resolved is reduced. Although I am delighted for those who will be eligible for this benefit, that it is to be available, I am apprehensive that, by the creation of further anomalies, we shall be creating even more hardship for those left out.

This has been a most valuable debate. I am glad that so many hon. Members have been able to contribute to the discussion of legislation which is profoundly important for the most severely disabled people in this country.

The hon. Member for Sutton Coldfield (Mr. Fowler) warmly welcomed the new allowance. He also acknowledged that we must have regard to resources. I have also said that I should very much have liked a bigger allowance. In current economic circumstances, it was highly unlikely that I would be able to get more than I have announced in this debate.

I am glad that it has been accepted that we are today removing a cruel anomaly. It is utterly wrong that under the present scheme help is based not on a person's disability but on his ability to drive. The hon. Member for Sutton Cold-field readily accepted that by excluding the disabled passenger and helping only the disabled driver the present scheme is unfair as well as anomalous. He referred to inflation and the need for reviews. As he mentioned, there is an amendment on the Order Paper, which he discussed together with the main proposition.

There is a case for putting mobility allowance in the same category as maintenance benefits and attendance allowance and for guaranteeing that it is increased at least annually in line with earnings. Mobility costs will rise if costs in general rise, and mobility expectations may to some extent rise if earnings increases outpace price increases. Indeed, it can be argued that where mobility is related to ability to maintain oneself, because some severely disabled person will use the allowance to help meet his travel-to-work costs, any distinction between maintenance and mobility is a little artificial.

However, the case for automatic up-ratings is not stronger than the case for widening the scope of the allowance, which has also been very strongly urged upon me. My hon. Friend the Member for Mitcham and Morden (Mr. Douglas-Mann) is disquieted at the fact that we are not able to make the allowance more widely available. He accepts that to include 100,000 new beneficiaries is a major step forward. Yet he is prepared to contemplate an allowance of a lower value to more people. The hon. Member for Sutton Coldfield is concerned about preserving the value of the allowance and, as I read his mind, about increasing as rapidly as we can its real value. There are these two conflicting views in the Committee.

The only reason why I am willing to accept that it should be of a lower value is that we have a money resolution which precludes us from discussing whether it should be maintaining its value.

I well appreciate my hon. Friend's difficulty. He will know that I am not without difficulty. We have finite resources, as he has noted. He says that, given the quantum, he would be prepared to accept an allowance of lower value.

7.30 p.m.

The hon. Member for Sutton Coldfield wishes at the same time to preserve the value of the allowance and to increase its value. We are not in a situation where we can take action which would be regarded as good by hon. Members on both sides of the Committee.

I appreciate the point made by the hon. Gentleman. However, he and I are not debating Government plans. The Opposition point is that the increased allowance should retain its value given the present rate of inflation. Will the hon. Gentleman confirm that the effect of Amendment No. 7 is to exclude the mobility allowance from the annual review procedure?

The Government are not guaranteeing annual uprating in their proposals. As Minister with responsibility for the disabled, my list of subjects on which urgent action is required is long. There will be pressure from my hon. Friend the Member for Eccles (Mr. Carter-Jones, my hon. Friend the Member for Mitcham and Morden and many others to extend the entitlement to the allowance. I shall move as quickly as I can to implement the proposals now before the Committee. Today I cannot go further than the proposals.

We shall look at the need for upratings. In doing so, we shall take account of all the relevant factors. I am sure that we would not wish to allow long periods to go by without any changes in the mobility allowance if costs rise steeply. The price to be paid for achieving anything in the present situation is the acceptance of changes which are less than perfect. That does not seem to me to be consistent with the strong exhortations to make massive cuts in public expenditure, or to make every possible improvement in these arrangements.

The hon. Gentleman cannot get away with that. The Opposition urge that the proposed allowance, which we support, should retain the value it has when it is introduced. I should have thought that that proposal would have found support on both sides of the Committee. I should not have thought that that was remarkably controversial. I urge the hon. Gentleman to think again.

There is, clearly, strong support for the proposition that we should seek to preserve the value of the allowance that we now propose.

I have said that we shall look at the need for upratings. In doing so, we shall take account of all the relevant factors. I am sorry that I cannot go further. The hon. Gentleman will appreciate that I accept the force of what he said and the support for what he said which was expressed in speeches made by hon. Members on both sides of the Committee.

A further important point was raised by the hon. Gentleman. He referred to the reduction of the mobility allowance in certain circumstances under subsection (5), where the disabled person enjoys other provisions—for instance, the provision of appliances—under the National Health Service. Regulations will be made in due course. The point raised by the hon. Gentleman remains to be considered. I said that we had in mind the occupant-controlled, powered out-of-door wheel-chair. I cannot anticipate technical progress, although perhaps an extremely expensive new machine may become available to help those who cannot manage a three-wheeler or four-wheeler. We must await the regulations. I shall bear in mind the points made by the hon. Member for Sutton Coldfield and others.

Reference was made to comparative costs of three-wheelers and four-wheelers. That question depends on the specification, whether there is automatic transmission and what hand control adaptations there are. It is not easy for me to give precise details of comparative costs. However, I am advised that it would cost the Government more to provide a three-wheeler than to pay the mobility allowance. The running costs of three-wheelers are borne partly by the Government. Insurance, maintenance and repairs must be taken into account. There is also the £10 petrol allowance. That allowance was discontinued by the previous Government in 1972, but was retained as a preserved right for people who were then receiving the allowance. Nevertheless we have restored the allowance. We doubled it from £5 to £10.

I was asked about the safety of three-wheelers.

Will the Minister say what will happen to the quarterly maintenance allowance available to those who use their own cars? Will that be eliminated now that there is to be a mobility allowance?

If a person who is entitled to the mobility allowance is now receiving the private car allowance he will take the mobility allowance as his total entitlement to mobility help. Many disabled passengers have made the point to me that our increase in the petrol allowance was decidedly unfair to them. I hope that disabled passengers will regard this as their day in that we are seeking to bring them into the Government scheme, after what many of them will regard as a long delay.

I was asked about the safety of the three-wheelers. The hon. Member for Exeter (Mr. Hannam) said in a recent Adjournment debate, as did the hon. Member for Sutton Coldfield today, that 18 months ago I spoke in the same sense as hon. Gentlemen who are now speaking from the Opposition benches. A great deal has happened in the past 18 months. While in Opposition I pressed strongly for the publication of the Sharp Report. I was informed that that report had been made available to the Department of Health and Social Security early in October 1973. I pressed for the publication of the Sharp Report. After the Labour Government took office and I became Minister with responsibility for the disabled, one of my first actions was to publish the report of Baroness Sharp.

I exerted a great deal of pressure in Opposition for the publication of the inquiry by the Motor Industry Research Association into the vehicle. Some independent reports had given the impression that the vehicle was extremely unsafe and unstable. I said that we had heard from the Cranfield Institute that the vehicle was unsafe and unstable. There were other pointers in that direction. Many hon. Members will remember that I pressed again and again for publication of the MIRA reports. After I became Minister for the disabled the MIRA reports were published. They are important documents and have been placed in the Library of the House of Commons. We have taken action on the MIRA reports.

Some have said that the synopsis of the wind gust tests did not give the whole story about what happened when the vehicle was tested by MIRA. The full report showed, as I informed the hon. Member for Exeter, that the synopsis was in no way misleading. No essential information was hidden in the synopsis of the report placed in the Library.

Over the past 18 months there has been a great deal of consultation with organisations representing disabled people. I spend much of my time with disabled people. The Central Council for the Disabled has recently discussed the mobility allowance and mobility problems of disabled people with 2,000 severely handicapped people and the organisations representing them. The information from those we consulted after publication of the Sharp Report was extremely instructive. I heard far more about the need for a high-profile vehicle with light steering after becoming Minister for the disabled than I heard before.

Some months ago my hon. Friend the Member for Eccles asked me to see a deputation in his constituency. I was visiting the Swinton Children's Hospital, which cares for abandoned children. Some of them are in hospital on custodial, not medical, grounds. I saw the deputation. My hon. Friend's constituents said that they were very angry about the London-based criticism of the three-wheeler. One man, who is representative of disabled people and runs an organisation for disabled drivers, said "If you take my three-wheeler away, you immobilise me".

In the last 18 months we have published the Sharp Report and the MIRA reports. More than that, we have had wide-ranging and detailed consultations with disabled people and their representatives.

It is eminently clear that many disabled people want to keep the three-wheeler. My preference was to go for cash against vehicles of any kind. Many able-bodied people make a simple error when they talk about disabled people. They think that the disabled are standard people. If one argues for a standard vehicle, the assumption is that the disabled are standard people. About 12 months ago an hon. Lady from the other side of the Committee told me that one of her constituents was so tall, wide and disabled that he could not fit into either a three-wheeler or a four-wheeler.

My hon. Friend the Member for Eccles, after I became a member of the Government, put forward what some might regard as the rather eclectic proposition that a milk-float was the only vehicle that some disabled people could possibly drive.

I should like to make this point clear. It sounds like a joke, but it is absolutely true. There is a disabled person in Horsham, and the best vehicle for him is a milk-float. Hon. Members may smile, but it is a fact. He is the horizontal man, Paul Bates, and, with the aid of some advanced technology, he drives a milk-float. There is no standard vehicle. I could not agree more with my hon. Friend on that point.

I am arguing strongly that the disabled are not standard people. Therefore, the more freedom of choice that we can give the disabled, the better it will be for them and for society, because large numbers of disabled people will be able to take a much greater part in our social life.

I was extremely concerned when, in the context of the test on the invalid vehicle carried out by MIRA, the hon. Member for Exeter, in a recent Adjourn- ment debate, referred to the number of three-wheeled tricycles which overturned. In reply to a number of questions, including some posed by the hon. Gentleman himself, I have given an account of one overturning incident which was reported to me and was entirely unrelated to the test. If the hon. Gentleman has any information leading him to suppose that there was another such incident, I shall of course look into it immediately.

Regarding the specific request that I should give permission for MIRA employees to discuss the incident, which was entirely unrelated to the test, I should point out that that is a matter for MIRA. That body, which is completely independent, was carrying out the test on the three-wheeler for my Department on a contract basis.

I know that the hon. Member for Exeter, as secretary of the all-party disablement group, is deeply concerned to maximise the safety of disabled people and, with me, to give them the greatest possible freedom of choice. I, too, am concerned to maximise the safety of disabled people.

There has been a great deal of publicity about the safety of the three-wheeler. My hon. Friend the Member for Stoke-on-Trent, South (Mr. Ashley) referred to articles in the Press about the safety of the three-wheeler. An article in the Press last Monday stated that there were 1,412 accidents—this was all accidents, including parking scrapes—in the half year to 31st March 1975 compared with 2,502 accidents for the whole of the year before. These figures related to the Model 70 three-wheeler. What the article did not point out, although it was clear from the information that I gave the House at the time, was that the later figures related to a larger number of vehicles and that the accident rate per vehicle showed a slight fall.

Nevertheless, I am anything but complacent about the safety of the three-wheeler or the safety of disabled people in other vehicles. Bearing in mind that the number of three-wheelers on the roads is, and has been throughout the five years up to September 1974, about double the number of four-wheeled vehicles, the accident figures are not adverse to the three-wheeler, although they may suggest that the dangers of driving for disabled people, whatever vehicle they may drive, are somewhat greater than for other drivers. That is another reason why the introduction of cash as the main benefit is right.

My hon. Friend knows that we have been arguing about the three-wheeler or the four-wheeler for many years, in Opposition and in Government. I accept that he has gone to great trouble to be satisfied about the safety of the vehicle, but I would draw his attention to the safety and health of the disabled driver. Does he realise that the single driver may, if he has a breakdown in the middle of the night, have to sit there until people go to work at 5.30? Would he bear in mind that grave danger of the three-wheeler?

I can say more than that I shall bear it in mind. It is that consideration and many others which have made me opt for cash against cars. For the future we are seeking to get away from the three-wheeler as the main benefit. For any disabled person who can drive a car and wants to do so there will now be the mobility allowance. We know that it is not by itself enough to buy and run a car, but by raising it to £5 for everybody we have gone as far as is humanly possible. It would be unfair to single out for extra benefit people who can drive a car. We are moving, as no previous Government have done, towards helping disabled people to choose for themselves, rather than forcing any machine on them.

As I have said, I have learned a great deal since I became the Minister for the disabled about the wishes of large numbers of the disabled themselves. I am satisfied that the main decision that we have made is the one that the vast majority of disabled people would have wanted us to make.

I was asked about the Netherlands. As I have explained, schemes abroad may reflect different national priorities and may benefit one group rather than another. I recognise that the Dutch scheme has advantages for some disabled drivers, but I would not accept that the Dutch have found a complete solution which we have only to adopt. I understand that it is a requirement of their scheme for the provision of cars that the disabled person should be able to move his arms freely. People with limited arm movement who cannot manage an adapted car are, therefore, better off under our scheme because often one or other of the special steering arrangements available on the three-wheeler will suit them. It is their own decision whether to apply for or drive a three-wheeler. Our scheme makes it available, and in future they will have the option of the mobility allowance.

I shall be looking into the extremely important point raised about the EEC Social Fund. I have not ignored this matter, and I hope to have helpful information to give at an early date.

My hon. Friend the Member for Eccles referred to the possibility of a "cost of motoring index". He mentioned elderly beneficiaries under the existing scheme and was anxious to know their position when they retired. Existing beneficiaries under the present arrangements will have preserved rights to retain their benefit or revert to it as long as they continue to meet the conditions under which it was awarded. So people over pensionable age with a private car allowance keep it. They are unaffected by the fact that the mobility allowance is not payable beyond pension age.

The hon. Member for Wallasey (Mrs. Chalker) stressed the need to ensure that handicapped children should have every possible assistance to integrate them with other children who are not disabled. She referred to the Rowntree Family Fund. We have recently doubled the amount of the fund, and I announced on 4th December last year that it is now available to all severely handicapped children and not just those who are severely congenitally handicapped.

The hon. Lady said that the fund was helping the families of severely disabled children not only with mobility but with telephones and other forms of assistance. Her right hon. Friend the Member for Leeds, North-East (Sir K. Joseph), when Secretary of State for Social Services, made it clear that the fund would not be asked to provide help which was provided for under legislation. He had in mind the Chronically Sick and Disabled Persons Act 1970, Section 2 of which provides for all forms of help for the greater safety, comfort and convenience of disabled people—a wide-ranging provision. The right hon. Gentleman the Secretary of State in the previous Government was right to emphasise the availability of forms of help which can be given under existing legislation.

The hon. Lady clearly wanted to reduce the age of entitlement below five. Like my hon. Friend the Member for Chorley (Mr. Rodgers) she was concerned that the allowance would not start to be paid until that age. It is our intention that the allowance will be payable to the parents of the disabled child. The view which has been taken is that the problems of mobility with younger children are less acute and that it is right to start at school age. However, strong pressure on behalf of children under five—

What does the hon. Gentleman mean by "less acute"?

There are children born severely handicapped who are not recognised as such in the first few months of their lives. There are forms of handicap which do not even make themselves plain to the parent. I am saying that very young children are given mobility help whether able-bodied or disabled. I am not arguing that we would gladly exclude children under five.

My hon. Friend gave as an example those who clearly have difficult problems of transport. In what way are they "less acute" than those to which the Minister is referring?

In the example given, the disability was extremely acute. Considering, however, the general problem of mobility of handicapped children, it can be argued that one should begin at school age. Children go to pre-school classes. I am not arguing that there is no case for children under five. My hon. Friend the Member for Chorley and the hon. Member for Wallasey made a very strong case for the under-fives, but we are trying to spread the finite resources as equally and as well as we can.

On the specific question of the limitation of resources, we all realise the difficulties that face my hon. Friend. Will he say how much it would cost to extend this benefit to children between the ages of two and five as the amendment suggests?

I do not have the precise figure for that, just as I was unable to give a definitive reply to my hon. Friend the Member for Mitcham and Morden. I shall be in touch with my hon. Friends about the costing. Even the figure of 100,000 is not definite, which is why I referred in approximate terms to there being 100,000 beneficiaries from the scheme.

My hon. Friend the Member for Stoke-on-Trent, South spoke with great authority on the problems of the severely disabled. I shall bear his point very much in mind. He knows we have been extremely concerned to use the new resources available to us as equitably as possible. I am sure he agrees that this is a historic day for the majority of the disabled who are incapable of mobility. They are the people, including large numbers of disabled children, who cannot drive a car.

The hon. Member for Wells (Mr. Boscawen) referred to comparative costs, and I said something about that in reply to the hon. Member for Sutton Coldfield.

I have not dealt with all the points which have been raised. This is a most complicated matter. The announcement which we have made is a major breakthrough for the most severely disabled people. Money buys mobility for the disabled as much as for the able-bodied, and £1,300 every five years will buy a lot of mobility. The new allowance will enable many people to become a part of society instead of being treated as apart from society. The main purpose of the allowance is to let the individual decide how and when he will be mobile as well as bringing an end to the cruel discrimination against those who are so severely disabled that they cannot drive.

I beg to move, as an amendment to the proposed amendment, sub-amendment (a), to leave out lines 1 to 3.

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

With this clause we may also discuss the following: sub-amendment (a), at end of subsection (7)(b), insert—

'(c) shall require that the Secretary of State shall publish the full actuarial bases of such tables and shall give five years' notice of any change in such bases'.

This new clause fulfils a promise I made in Committee. During our Committee debates my right hon. Friend the Minister of State, the Under-Secretary and I made it clear that what we were seeking in the Bill was a permanent solution of the pensions questions, in so far as anything can be considered permanent in our developing political life. Perhaps it would be better to say that we are seeking an enduring solution based on an agreement between both sides of the House that the right way to solve our problems is to secure a partnership between the State scheme and private occupational schemes. That is what we have sought to do in the Bill.

We have recognised that working men and women attach considerable importance to their private occupational schemes when they are good ones, so we have sought to improve the schemes and to enable the good private schemes to continue. We have sought to remove any disincentive in the Bill to the contracting-out of good, recognised schemes. I am sure Opposition Members will appreciate that we made several concessions in Committee to that end. They will remember that we agreed to a larger reduction in the contribution for the approved contracted-out scheme, and we made a concession on the buying-back of early leavers. As the Committee stage developed, however, it became clear that there remained one major uncertainty which was likely to act as a disincentive to employers to contract out. That was described in Committee as the open-ended commitment which faced the contracted-out employer if for any reason he wanted or had to terminate his arrangements for contracting out.

Under the provisions of the Bill as it stands and as it came out of Committee, when an occupational scheme ceases to be contracted out the employer has to pay a premium to the State scheme in respect of the earners in the scheme. The amount of that premium is the cost of providing or continuing to provide guaranteed minimum pensions for the employee and his wife.

Clause 41, which is being deleted by Amendment No. 31, provides:

"In calculating the costs … the Secretary of State shall apply the prescribed actuarial tables".

which will be set out in regulations.

The complaint made in Committee and by the pensions interests to my right hon. Friend the Minister of State who has been in continuing consultation with them, is that at a time when wages are rising rapidly and investment yield is falling, the employer could be caught between the upper and nether millstones of rising costs and falling resources and that the fear of being caught in that way could make him hesitate to contract out under the scheme. In addition, it was put to us that when a scheme was winding up the employer might be driven to realise his assets to pay high premiums at a time when the yield on and therefore the market value of his assets was low.

None of us expects this to be the permanent background to this legislation. If it were, not only the scheme but the country's whole economy would be in a parlous state. But the experience of recent years has caused a great deal of understandable nervousness and uncertainty among employers. Therefore, it was put to us in Committee that a way must be found to close the open-ended commitment which the employer faced when his scheme ceased to be contracted out for any reason and he had to buy back his employees into the State scheme.

During discussions in Committee and during the talks which my right hon. Friend had with pensions interests, various and highly complex solutions were advanced. The ingenuity of some members of the Committee has been commendable but not always completely fruitful in finding an answer to this problem. There was no consensus of opinion among hon. Members and there has been no consensus of opinion among pensions interests, because we are seeking to deal with an emergency situation and we cannot legislate on the basis that the emergency is endemic and that provision for dealing with it should therefore be built into the legislation. There has to be a fall-back position for dealing with a situation which it is hoped will not face any of the schemes concerned.

We were immensely intrigued and stimulated by the various suggestions that were put forward. As I told the Committee when we last discussed this matter, my right hon. Friend has been in continuing consultation with the pension interests to see whether an agreed solution can be reached. In the end, it became clear to us that there would not be a complete consensus of opinion. Therefore, we have had to reach our own decisions.

New Clause 1, which I am recommending to the House, embodies the result of our thinking, in the light of the talks that have been held and of the Committee's discussion. I pay tribute to my right hon. Friend, who has been continuously thinking about this problem, and to the officials of my Department who have been working to clothe his bright ideas with the practicalities of legislation and administration. The clause is our answer, and no better one has been produced. It suceeeds remarkably well in dealing with the potential catastrophe with which we are trying to deal.

The clause does three things. First, it meets a suggestion made in Committee that there might be a little more clarification of nomenclature. It distinguishes between the two types of premium which have to be paid on the termination of contracting out by giving them names. We refer to the "accrued rights premium", payable in the case of the employee with accrued rights, and to the "pensioner's rights premium", which relates to the retired person with a guaranteed minimum pension when the scheme winds up.

Subsection (6) limits the employer's financial liability when he is buying his employees back into the State scheme. Thirdly, in subsection (7) it is provided that in calculating the cost on which the premium is based the actuarial tables shall vary with the yield on investment.

The way in which the provision will work is as follows. First, under subsection (6), for buying-back purposes the employer, instead of having to revalue the amount of the guaranteed minimum pension earned in line with national average earnings, can choose to revalue on the basis that earnings have risen by 12 per cent. a year in each of the five complete tax years in the period before the scheme ceased to be contracted out. That, as the House will appreciate, has the effect of letting the employer know in an uncertain situation the maximum extent of his commitment for five years ahead. At a time of an upsurge in earnings such as we have been through it would limit his liability in respect of the guaranteed minimum pension. After a period of high inflation, the employer would be able to wait and see whether the income from and the value of his investments were catching up with earnings before having to take a decision to buy back. In other words, it gives him time.

8.30 p.m.

Secondly, under subsection (7) the premium paid into the State scheme to transfer the guaranteed minimum pension liability back to the State scheme will vary according to current market yields. It is envisaged that the regulations which we shall be laying under the subsection will provide for a set of buying-back tables, the particular tables to be applied at any time depending on the value of some measure of market yield. For practical reasons it would probably be desirable for the same tables to remain in operation for a minimum period of at least, let us say, one month.

The details of how the scheme would operate are still being worked out. We have not yet decided whether the measure to be used should be the price of a particular stock or some market index, and whether it would be desirable or feasible to take account of changes in the yield of equities as well as gilt-edged stocks. When the proposals have been worked out in detail it will clearly be only reasonable to give the pension interests an opportunity to comment before the proposals are embodied in regulations, and that is what we shall do.

Together these two new provisions should remove the fear on the part of employers that a period of rapid inflation could result in a high buying-hack premium to be met out of depreciated assets, with a resulting deficiency in the occupational scheme which would be absolutely beyond the employer's ability to make good without serious damage to his enterprise.

It would be helpful if the right hon. Lady could clarify the way in which the Government Actuary is involved. It is said in subsection 7(a) that the regulations will be made after there has been consultation with the Government Actuary. Subsection 7(b) says, as the right hon. Lady has just explained, that the applicable tables will take into account the yield on such investments as the Secretary of State thinks fit. It would help if the right hon. Lady were able to say that in the arrangements which she is now working out the Government Actuary will be consulted as to the appropriate investment to take into account.

Yes, of course he will be consulted. I do not think that the lack of a specific mention has any significance. We rely very much on the Government Actuary's advice in this whole area.

These two new provisions should remove the fear of the open-ended commitment which was referred to in Committee by so many hon. Members. It would give the employer an assurance that it is no part of our intention that he should be placed in a situation in which, as a result of his statutory obligations, he could be bankrupted. I repeat what my right hon. and learned Friend said in Committee—namely, that it is no part of our purpose to place undertakings on occupational pension schemes that they are manifestly unable to fulfil. The whole purpose of the Bill would be invalidated if we were to do so.

There could be cases where a firm was in difficult financial straits and had to apply the provisions of the clause. Would the liability under the clause produce, as it were, a preferential creditor, as it would in the case of salaries, or would the position be that of an ordinary creditor under the bankruptcy scheme?

If there is to be any guarantee to the members of the scheme, that must be so. We are trying to meet the needs of both employer and employee. To ensure that the scheme is acceptable, we are limiting the liability. That does not mean that the rights of the employer go out of the window. I think that is obvious.

In Committee the hon. Member for Somerset, North (Mr. Dean) asked me to confirm that when I produced the Government's proposals I would ensure that they covered three areas—first the case of the scheme when contracting out ceased, secondly the case of the scheme on winding up, and thirdly the case of the early leaver.

The provisions in the new clause cover both schemes—namely, schemes which cease to contract out and those which are involved in a winding-up. In amendment No. 36, with which we shall deal a little later, I shall be extending the concession which varies the premium in line with the market rate of interest to cover early leavers. We can examine that point later. I hope that the hon. Gentleman will be satisfied that I have met the three matters mentioned in Committee.

We have throughout been in close touch with the pension interests and it is fair to say that they have welcomed our provisions. I think they recognize that the clause deals satisfactorily with the problems in respect of earnings revaluation where a scheme ceases to contract out and the situation involving a decrease in yield, which in turn leads to a fall in asset values.

I have been asked to go further. Indeed, it has always been my experience in the Government that once one makes a concession one is asked to take even further steps. That is what has happened in this case. I have been asked to ensure that the tables should not operate for a period of five years. Indeed, that is the effect of sub-amendment (a). We do not know whether it will be moved, and we shall wait and see, but, if it is moved, my right hon. Friend the Minister of State will explain why we cannot accept sub-amendment (a).

I hope that the House will welcome the clause as further proof of the fact that we have been genuine in our intention of a partnership between the State and private schemes. I hope indeed that the proposals will not be accepted grudgeingly. I want a message to go out from this House today as we reach the concluding stages of this Bill. The message is that yet again the Government have shown their real desire that good private schemes shall flourish and shall be enabled to operate. We want the message to be understood—and the message is that this scheme will stick.

The clause is substantially the result of the bipartisan approach adopted in Standing Committee and our deliberations there. I am happy to confirm that we appear to be making real progress towards a bipartisan agreement on a scheme which will reassure those with an interest in occupational pensions that a genuine partnership will be achieved and will last into the future.

It is in a way surprising that we begin on this note. I should certainly like to add to what the Secretary of State has said by paying tribute to her right hon. Friend and to her staff for the genuine way in which they responded to the arguments during Committee and for the great deal of work which has clearly been done in trying to meet the points and representations that were made. It is surprising that we have reached this stage in this manner, given the background of anger with which we began when the White Paper was first produced.

The Crossman scheme produced by the Labour Government in 1970 fell with a General Election and was rejected by the succeeding Conservative Government. We committed ourselves to a scheme which we still defend vigorously—namely, the Joseph scheme—which provided occupational pensions for all. However, the present Government found it unacceptable. The anger arose when that scheme was rejected. Fortunately, both sides clearly reached the view that if we continued successfully to destroy each other's pension schemes, with successive parties throwing out a measure with a view to bringing forward something else, the uncertainty and change would succeed in completely destroying the occupational pensions industry outside. Moreover we would jeopardise the interests of the substantial number of people who have great expectations of good occupational pension schemes. Although we prefer the principle of funding and of occupational funded pensions being the main expectation of most people in work, we are prepared to settle for good contracting-out arrangements, for the maximum number of people, in schemes which meet the Government's requirements in this legislation.

The clause deals with what the occupational pensions industry saw as the major obstacle. We must test the clause as it now stands, and the work of the House so far, to see whether we shall achieve the target which we are all agreed upon—namely, that when the new scheme comes into operation in 1977 or 1978 it will provide a structure which can be accepted by successive Governments thereafter as the structure within which any further political debate will take place, and that approximately 8 million working people will contract out under the arrangements that the Bill will lay down.

The biggest single obstacle to that expectation and the factor most likely to persuade employers and those who advise them not to contract out but to abandon their general occupational scheme and to rely on the State was what we came to describe as the open-ended commitment that seemed implicit in the Bill as it originally stood.

As the Secretary of State has said, fear about the open-ended commitment especially arises because of the unfortunate relationship that has persisted for some time between the yield on investment—the income coming into a fund—and the high level of inflation of wages and salaries, given that final salaries determine benefit.

Those who manage any kind of invested fund have found that they have had a negative yield. Therefore, on paper they are losing money. The return on their investment has not been increasing at an adequate level to keep pace with rising wages and salaries. If that negative yield continues indefinitely there is simply no basis upon which any occupational pension, as we know it, can conceivably continue in business.

There is one particular problem which follows this legislation. In the past there have always been short periods when this sort of situation has arisen and it has been a risk at the back of everybody's mind. However, an occupational pension fund, in the last resort, could wind up and do the best it could to satisfy as many of its beneficiaries as possible, and then close down.

For the first time the Bill imposes a legal liability on the fund and, through the fund, on the employer to keep match with the open-ended inflation-proof obligation of guaranteed minimum pensions come what may, even if it is suffering a negative relationship between the yield on its investment and the inflation of its employees' salaries. As a legal liability the problem that was being contemplated in Committee was in the last resort—and I accept that we are talking about a doomwatch situation—an emergency situation which all Governments would hope to avoid. In the last resort one could reach a situation where the legal liability upon the fund and, through the fund, upon the employer could possibly bring down the company and cause bankruptcy and difficulties to other creditors. We must therefore see how far this substantial and welcome clause has gone towards removing that fear in all but the most unlikely situations.

There are two other matters that we must consider. I have already said that the whole matter is bedevilled by the appalling economic climate and the serious difficulties that occupational pensions have faced for the past three or tour years, and that they are very fearful of facing for two or three years more. We are talking about the relationship between yield on investment and the high level of inflation and salaries. In Considering the clause in detail, we must keep in mind that the essential thing that will remove doubts and fears, the only thing that can make any sense if we continue expecting this to mean anything in 1978, is that there must be a change in the inflation in wages and salaries and the yield on investment, particularly the relationship between the two.

The black fears sometimes expressed, one hopes unnecessarily, by some people in the pensions industry are in part conditioned by the apparent impossibility of this Government's producing any economic policy giving anyone confidence that the rate of salary and wage inflation will be checked in the foreseeable future. The problems of their yields on investment and the difficulties their funds face were made worse during the progress of the Bill through Committee by an asinine interjection by a Secretary of State in another Department, then Industry and now Energy. He started producing policy documents pre-supposing that at some future date a Government would start intervening with investment managers, directing that their funds be invested in areas approved by the Government or the National Enterprise Board, in such a way as to reduce the yield on investment that they would receive by investing elsewhere.

That proposal was fantastically ill-timed. It ran totally counter to every thing Ministers now in the Chamber were saying about pensions policy, and it caused a great deal of fear. I am glad to say that the Secretary of State for Social Services ultimately associated herself with the Prime Minister's repudiation of the then Secretary of State for Industry's proposals, although her letter to me seemed a somewhat lukewarm repudiation and more an obedient falling in with the authority of the repudiation of those views by the Prime Minister. Given what the right hon. Lady has done in the clause, one trusts that she accepts that such proposals affecting the yield on investment would do terrible damage if they were ever introduced, if any such restraints were put on pension funds and the way in which the savings of working people, put into those funds, are invested in the future. We trust that such wild schemes will not be implemented.

Against the background I have described, an employer contemplating contracting out must look at the limits of his commitment. He is bound to consider the worst that could happen to him if the present economic climate continued and he found himself facing liabilities because of his pension fund. Those whose commercial interest it is to try to persuade employers to contract out will be able to give that advice honestly, will be able to give good advice which will carry weight, only if they can tell an employer that there is a tolerable limit to the commitment that can fall upon him through his pension fund, that that commitment is reasonably ascertainable, with plenty of warnings, and that it could in no circumstances cause disaster to his company.

When deciding what the extent of the commitment could be, one must look at the situations which may arise when a negative yield situation is persisting and the actuaries and others advising on the management of an invested pension fund realise that the fund faces serious difficulties in continuing to meet its obligations.

It seems to me that there are three situations that can occur when a fund gets into such a situation and an employer is receiving advice. There are three courses open to an employer who has his mind trained to the situation when real difficulties are occurring in the management of his fund.

The first is that the employer should cease to contract out, and buy back into the State scheme, which is one of the bases of the clause.

The second—in my opinion, preferable to ceasing to contract out and buying back—is to contract out of the scheme, so that there is no ongoing commitment to a guaranteed minimum pension, but to make other arrangements for the preserved rights that have so far accrued, so that there is no question of buying the whole thing back into the State.

The third course—I accept that it is the Government's preference—is to choose not immediately to cease to contract out but to do what any properly managed investment fund ought to be able to do—that is, to ride out a period of temporary difficulties until the climate improves, and then, having ridden out the storm, to look at the liability which falls on the fund management, if the worst comes to the worst. It would not do that if real disaster, possibly bankruptcy, lay at the end of it.

In each of these situations it is necessary to look at limited liability. The third of those situations is covered by new Clause 1, because, as I understand it, a firm which chooses to ride out difficulties, hoping to continue to be contracted out, will have at the back of its mind the risk of winding up. This limits the liability on winding up, so that course may not be too bold, and is the preferable course that we would like it to take. This is an encouragement to do that.

We have to test the clause. We seem to be agreed on the aims of it. Are we now completely out of the wood in the situation where an employer might face bankruptcy in some foreseeable situation, or where there are real risks? I think that substantially we are, and I pay tribute to the Government for introducing a scheme of their own which seems to cover most of the situations about which we were all so fearful in the Committee.

The 12 per cent. limit on the revaluation of earnings factors for the last five years seems to me to be entirely an O'Malley idea, or that of those who advise the right hon. Gentleman. It supersedes all those which were pouring in on the Government, and the representations of the Opposition. The figure seems to be fairly steep at 12 per cent. I would not want to lobby against it. Some limitation of that kind is an advantage, and there is no point in trying to go to the market place haggling for the most advantageous bargain.

I welcome the fact that subsection 7 (b) is applying the prescribed actuarial tables. That is the point we made in relation to an emergency arising at a time when the value of investments is depressed, so that depreciated assets have to be sold to pay the premium that has to be paid.

Having said those things about it, and that it covers most aspects of the situation, I still have some doubts—as the right hon. Lady said, those in the industry have some doubts—whether the Government have completely achieved the purpose I described of encouraging the employer to ride out bad times, waiting for his well-managed fund to enjoy the usual relationship between yield, investments and liabilities, and to continue to contract out. When an employer looks at that situation, and at the limits of his liability upon winding up, it is true that, following this clause, one limitation is that there will now be a 12 per cent. limit on the revaluation of earnings factors in the last five years before he ceases to contract out. But he still has to pay a premium which takes account of the future cost of providing a guranteed minimum pension and that premium is still uncertain. It would still be an uncertain factor to be calculated at the time when the employer was deciding whether to ride out the storm.

The CBI has been one vehicle for putting forward this complaint, as Ministers know. But it is not simply a CBI point. I understand that, on this occasion, the CBI has put forward an agreed problem.

I quote from a letter which I have received from Mr. Martin Cobb of the CBI:

"We are concerned, however, that there is still an element of openendness since if, when the new tables are issued under Clause 41 these are based on less favourable assumptions with regard to future earnings increases, or indeed to other factors such as reduced mortality of pensioners, occupational schemes might not be able to take the way out by winding up before the new tables come into force. We therefore think it essential that there should be one further concession to the effect that when the new tables are issued a sufficient period is provided in the legislation before these come into force so that companies will have an adequate opportunity to pay premiums on the old basis for which they will have funded. We assume the new tables will normally apply from the beginning of a tax year and we think it necessary to write into the legislation a provision that they will not be brought into force until at least 5 years after their approval by Parliament. This time factor would be consistent with the 5 year period in Sub-clause (6), and a period not much shorter than this would often in practice be required for a scheme to carry through all the consultation with employees and their representatives and make the administrative arrangements necessary in a winding up situation."

We are back to the problem of the premium being calculated on the actuarial tables which have to be produced under the Bill. In Committee we all got used to these acturial tables and the problems of using them as the basis for assessing the various bills—in this case, the bill for buying back if anyone ceased to contract out.

Sub-amendment (a) deals with the effect of changes in the actuarial tables. The Government say that the actuarial tables will usually last for five years and that there will usually be about 12 months' notice of any change. But the problem arises when those changes are made.

If I understand the representations aright, the problem is that every time the tables are changed, at that stage the possible cost of the premium may change substantially. If there is to be only 12 months' notice of a change being made, that is not long enough if 12 months is not long enough with which to organize a winding-up situation or to decide about contracting out.

The amendment would mean that, instead of having five-year tables changed at five-year intervals with 12 months' notice each time, there would be, to use town and country planning jargon, a five-year rolling period, with the tables being reviewed each year but with no change coming into force until five years after the date on which they were announced. The five years would give all the time necessary for the advice and the consultation for which the Bill wisely provides, and it would mean that at every stage when the price of the premium was being changed, the employer who decided that the price had moved to his advantage would have the option of shutting up shop, contracting out, winding-up and buying back at the price which he knew before.

It is already the case that, in a sense, the tables would be rolling tables, since this clearly would indicate the premiums required according to investment yield at a given level and at a given time. Secondly, it is the case that they would not be rolling tables in the sense that the underlying, basic assumptions would be changed every year.

However, the hon. Member for Rushcliffe (Mr. Clarke) should bear in mind that in the initial round of reactions which we had from the industry there was almost complete unanimity that the period of five years for the review of the fundamental assumptions underlying any such tables was a sensible period in which to operate.

I am obliged to the right hon. Gentleman. There is complete unanimity now on the representations of the CBI. What he referred to was put forward in a different context, before new Clause 1 was tabled. That was when the acturial tables were being revised five years at a time, with 12 months' notice. Certainly, if they were to be applied in that way, the industry would not want them chopped and changed every year. The industry now wants, because of the circumstances the clause gives rise to and because of the two types of premium we are considering, a last-resort protection against the risks involved from the open-ended commitment. The industry wants five years' notice of change so that there will be a five-year interval between announcement and their coming into effect.

If this is to be the industry's last protection, which it is now, it is the Government's answer to the open-ended commitment but it is not the situation which was discussed previously.

The industry needs time to take advice from its actuaries and expert advisers and then to consult its members and trade unions—which, easily, demonstrably could certainly take a number of years, given the slow progress with the OPB, if that is involved—but it also has another advantage which would satisfy what the Government are trying to meet; namely, certainty. With the five years' notice the price of the premium at any given time is there. I am advised that it would give certainty, which is the ultimate protection which any prudent investment manager or employer would like. It would make the liability insurable and coverable, and it would close finally the suggestion that this was an open-ended commitment because it would be open to insurance companies acting legally within the restraints put upon insurance companies by other branches of legislation to give cast-iron insurance cover to the liability, which they cannot do at present.

As Ministers are aware, an insurance company cannot legally give any kind of cover for an open-ended, unlimited liability of any kind. The Secretary of State has already intimated that that is not acceptable, and the Minister of State will give further reasons why not. By his intervention the Minister of State thinks that it is the opposite to what was put to him earlier, when representations were made.

I have put the case. It has considerable merit. It is intelligible, and it is obviously of serious concern. I was first made aware of it in a letter from the CBI. No doubt the Minister also first heard of it in this way. The Minister has probably found that it has been backed up solidly by almost every branch of the pensions industry. No hon. Member will listen to the pensions industry and say that it must be right. All the lobbying and representations that industry has made have to be sifted and considered, and what is of commercial interest has to be disregarded.

However, expert advice should not go unheeded, because if we have a genuine partnershp these are the partners, and the actuaries, with their professional standards, will give objective advice to employers, who, in the last resort, are the people who have to make the decisions on whether they contract out or whether they rely on the State.

Given that such strong representations have come forward on a new clause which was tabled only recently, that the representations so far are coupled with an acknowledgment of the Government's good faith in tabling the new clause and that we appreciate that the Government have responded with a novel suggestion to all our representations in Committee, at this stage they should say that if there is a problem they will look at it, especially as we have gone so far down the road towards an agreement not only between the Government and the Opposition but between the Government and the occupational pensions industry. There should be an agreed structure which would give 8 million people the benefit of occupa- tional pensions. I ask the Government seriously to consider this.

There are two other important points with which I hope the Minister will be able to deal. First, I am still rather worried about what happens to a scheme which ceases to contract out, in the difficult circumstances I have described, but preserves its pension rights, a scheme which decides that it will cease to contract out but not buy back, a scheme which decided that it could not continue to contract out would still want to do rather than have all the problems of buying back. It seems to me that the clause does not give much reassurance on that point.

May I ask the hon. Gentleman a question so that I may the better answer him at some stage? What is the proposition that he is putting to me? Is it that the scheme ceasing to contract out nevertheless would wish to maintain to the fund the full responsibility of pre-award dynamism in respect of the GMP,—or is the proposition that such a scheme would wish to pay a premium into the State scheme as the Bill now stands and merely maintain a liability in respect of pre-award dynamism to the extent of 5 per cent.? Which set of circumstances is the hon. Gentleman envisaging?

I was envisaging the former—I think—which is that the scheme would wish to cease to contract out so far as future liability of the GMP is concerned, because it would have received the advice that it was no longer covered by investment but it would not wish to pay a premium of any kind to the State to buy back to pre-award liability for its GMP. That again involves an element of risk which, among other things, an employer would want to take rather than go through the process of buying back. It does not seem that there is a limitation on the possibility of winding up.

I should like the Minister to get another reaction about what the industry would prefer. Instead of having a premium of this kind, liability could be fixed at a certain fixed level of revaluation. This is still being urged and has the overwhelming merits, which this scheme does not have, of simplicity and of clear, defined liability and a clearly insurable risk which everyone could manage. I trust that the Minister has not thrown that out of the window, even at this late stage.

I also draw the Minister's attention to Amendment No. 29 and I ask him to give his reactions to it. This bears slightly on the same point. It is the liability which could fall on a scheme in relation to the solvency requirements in a later part of the Bill. The Occupational Pensions Board can quite rightly require a scheme to top up its fund when the board considers that the scheme cannot guarantee its liabilities. That could be punitive, particularly if the OPB requires a topping-up payment to be made at a time when a company is in cash flow difficulties.

These are not light sums of money. Some of the corporations in the public sector have been paying out huge sums in recent months to cover their pensions liability. The Post Office and the British Gas Corporation have been paying out millions of pounds. In this case it is public money, so it is all right for them. But major breweries and others have used a great deal of money in topping up funds. If the cash cannot be raised, this involves a question of a legal liability. This is a requirement that the OPB can impose. A company might be made insolvent if it could not raise the cash to top up its fund. It might be guilty of an offence under the Companies Act if it continued to trade.

It would be helpful if we got this little area out of the way at this stage. I believe there would be general agreement on both sides of the House, and indeed, between the pensions industry and the Government, that differential solvency requirements lead one into a series of extremely serious anomalies which one could not sensibly contemplate. Therefore, in the type of circumstances that the hon. Gentleman is describing, I think we must expect the Occupational Pensions Board to use its discretion in a sensible way to avoid the kind of difficulties which can be avoided under the discretionary powers which the board has under the Bill.

I believe that it would be generally the view of the House that the OPB, both on its present representation and on the manner on which it has acquitted itself so far since it was set up by the hon. Member for Somerset, North (Mr. Dean), could be expected with some confidence to deal sensibly with the type of situation that the hon. Gentleman describes.

That is a considerable reassurance. I accept that the OPB can be relied upon to do that, if it has the necessary discretion, and to make sure that its solvency requirements are not more stringent and out of line with those which will be imposed under other legislation, especially the Companies Act. That amendment might not be necessary. It is an attempt to fix the liability limit to revaluation. I hope that the Minister will deal with that point in general. I hope he will accept the principle of the main burden of my remarks. We hope that the Government will look at this problem with considerable care. They have moved a long way to close the open-ended commitment.

We have moved a long way, through an interesting Committee stage, to produce a workable bipartisan scheme involving partnership between occupational pension schemes and State schemes. We should like to complete that deal and to take the structure of pensions out of politics. I trust that the Minister will reassure us that the subject will be looked at again in the other place.

I welcome the new clause as a genuine effort on the part of the Government to meet the points that were made in Committee and in the consultations which the Minister of State had with pensions interests. I believe that this is a genuine and successful attempt to meet the open-ended uninsurable commitments which existed in the Bill before the new clause appeared. I welcome the co-operation of the Government and the careful thought which they have given to the points raised.

In the context I should like to make two general points and one detailed point. The first general point is minor in scope. The right hon. Lady, in introducing the new clause, spoke of clarification. I do not know what hon. Members think. We find reference to "accrued rights premium", "pensioner's rights premium" and, in a later new clause, "contribution equivalent premium". I suggest that that is not clarification but is the worst form of jargon creeping in. I know why it has happened. The Minister has been through the process which I went through a few years back and has endeavoured to meet the points which have been made and to introduce amendments to meet them. As a result, complexities have been introduced into the Bill which were not there before. I give credit to him for introducing these amendments. I suspect that he will be criticised, as I was, for making the measure more complex than it was to begin with.

My main point was referred to by my hon. Friend the Member for Rushcliffe (Mr. Clarke). However, in spite of the new clause, which I welcome, those concerned with pensions are still unhappy. Their anxieties stem not from the Bill but largely from the economic and financial situation. The ugly spectre of inflation casts its dark presence over all, including pension funds, which are one of the strongest and safest forms of investment. The Bill will fail, even with these amendments, unless inflation is curbed. It will be a dead letter. It will not be worth the paper on which it is printed. The fears of those concerned will be realised unless the Government take action and the country backs them in that action.

9.15 p.m.

Up to now we have had talk from the Government on inflation, but not action. In recent months, to be charitable, the Government have been paralysed by the referendum. From last Thursday, however, that reason no longer applies. Unless the Government are prepared to take effective action to deal with the problem of inflation, the fears of the pensions industry will be realised. However, I believe that those fears stem largely from the general financial and economic situation, not from the Bill as amended.

I should like to make one or two detailed points on the clause as it stands. The Secretary of State, referring particularly to subsection (6), said that it lays down the maximum extent of the com- mitment on an employer and that he is therefore able to plan on that basis. I think that the subsection does that, and I welcome it.

Subsection (7) refers to consultation with the Government Actuary and to taking into account the yield on various investments which will be selected by the Secretary of State as she thinks fit.

We are here moving into a new area. It is important that the Minister of State should be able to assure the House tonight that the decisions on the types of investment to be taken into account will be actuarial and in no sense political, social or any other type of decision. They must be based firmly on the discussions which Ministers will have with the Government Actuary, and the advice that he gives on the types of investment which are most appropriate in assessing the tables must be the criterion on which those tables are based. It is important to get this point established clearly now as we move into this new area.

Is the hon. Gentleman saying that pension fund investments ought to meet a national criterion or that they ought not necessarily to meet a national criterion but should be based purely upon actuarial assessment?

The hon. Gentleman has not quite grasped the point I am making. I am talking about a fairly important point of detail. The clause deals not with the investment of pension funds in general but with a particular circumstance: in what circumstances can a pension scheme, finding that it can no longer fulfil the liabilities of contracting out, cease to contract out or, if necessary, wind up its scheme?

I am asking the Government to assure us that in those circumstances the only criterion which is acceptable and should apply is an actuarial criterion, that the judge of that should be the person who is most expert to decide these matters—the Government Actuary—and that political considerations should not come into it. I believe that the Minister of State will be able to assure us on this point. I hope that that is the case, because it will help the pension interests, employers and those concerned with pension schemes in their planning following this debate.

Can the Minister also say a little more—I appreciate that it may not be easy at this stage—about what types of investments are likely to be taken into account and over what period the criterion will apply? Presumably it will be comparatively long rather than short. Any further information that the right hon. Gentleman can give will give additional assurance to those concerned about these matters.

With those observations I welcome the new Clause as a genuine and helpful attempt by the Government to meet the points put forward. I hope that we shall get a little more information, particularly on the point about a longer period of notice before new tables come into operation.

I know that we want to make progress but it is not the fault of those who were on the Standing Committee that we are only now dealing with new Clause 1. We should not be diverted from thoroughly exploring vital issues.

I shall confine myself to one comment and one question. I hope that the comment will be received as it is intended—constructive and helpful. It is that it is vitally important that the Government should recognise that their present aim should be to buy time, in the sense of stopping precipitate movement to contract in before the scheme starts by schemes at present contracted out. The danger is that decisions will be taken hastily and that, once they have been taken, there will be no chance for second thoughts. The Government must give a favourable impression of the justice of this scheme right from this moment.

There could not be a more unfavourable economic background against which to introduce it. Our present inflation presses particularly hard on schemes set up by what I would call, in shorthand and, I hope, uncontroversial terms, good employers—those schemes which have been long established, have final salary provision and at the moment face a heavy commitment for existing pensions in payment and a heavy liability for accrued pensions for those in service. It is just such schemes which are under pressure and will look hard at any opportunity to limit their liability. If they are in any doubt about whether or not to continue to contract out, such schemes will seek to contract in.

I am sure that the Minister of State will regard as helpful—it is surprising that the Secretary of State did not make it more strongly—the point that the liability for guaranteed minimum pensions will build up very slowly. One of the criticisms of the Bill is that help to new pensioners in the early days will be very small. There will be very little liability for a guaranteed minimum pension before 1980, and, therefore, established schemes will have time to evaluate the sense of what the Government have done. The problem is much more urgent for schemes which are just now being brought into existence or are in contemplation. There is a tendency not to appreciate the slow impact of the statutory obligation for a guaranteed minimum pension, and the attitude to that obligation is being influenced by existing liabilities which are pressing very hard on companies but have nothing to do with the Bill.

The question concerns the tables. We keep coming back to the actuarial tables, and I wish to pursue the point now. I hope that I shall be coherent and reasonably concise. We have been told, and we can see, that the liability for actual current guaranteed minimum pension at any one time will be limited by the option to substitute a 12 per cent. earnings escalation over the previous five years for what might have been a higher actual figure. Presumably there will be an element in the premium calculation and a variable in the tables to take account of this. We understand that the tables will be cast in semi-permanent forms with columns from which one can read off the appropriate current yield: but will there be another column from which one can read off the projected future escalation of earnings?

It seems that somewhere in the actuary's assessment of the premium to be paid must be taken into account his assumption of future earnings escalation. It will not be much consolation if the assumed yield is realistic—I echo the words of my hon. Friend the Member for Somerset, North (Mr. Dean), that the figure must take into account the equity yield as well as fixed interest, although they do not always vary as much as people think in an actuary's assessment—but has a factual yield of, say, 15 or 16 per cent. and an actual earnings escalation of perhaps 25 per cent., giving a negative 10 per cent. yield.

We have been told that the actuary will take into account the current yield position. In arriving at a figure the actuary is looking at a future liability as well as a current liability in terms of buying back, and that future liability must reflect his assumption about the level of future earnings escalation. Will there be any limitation on that? Are we, as was hinted in Committee, never to have a negative yield assumption? Is the minimum yield position to be zero? This point must be answered, or people will feel that there is an element in the calculation which may turn against them very quickly indeed.

However long one may be connected with this subject, one always runs up against new questions. The last two posed by the hon. Member for Morecambe and Lonsdale (Mr. Hall-Davis) I have heard tonight for the first time. I shall attempt to answer all the questions which have been raised in the debate.

This new clause, with the associated amendments, is extremely complex. We are involved with such questions as yield, negative yield, assumptions about inflation and the last five years of employment rather than the whole period of employment. Questions have been asked about whether that affects the whole of the accrued liabilities of pension schemes, particularly at a time of rapid inflation. This is a complex matter because complex solutions are the only solutions to what is a simple problem. I shall put the matter on which there is broad agreement as simply as possible and comment on the further requirements and observations of the Opposition.

During the past decade there has been a significant increase in the number of occupational schemes and occupational pensioners covered by final salary type provision. Inherent in such provision is complete pre-award dynamism based on earnings movements. The occupational pensions movement has demonstrated its ability to provide pre-award earnings dynamism.

Two things have changed and produced the type of discussion we have had on the open-ended commitment. Before the Bill was introduced an occupational scheme, if it ran into financial difficulties, could in the last resort do the best it could for its members and wind up. Now, for the first time, such schemes are faced with a legal liability, which could in certain circumstances lead directly to the bankruptcy of an employer, particularly if he were required to wind up at a time when he was not especially liquid, when the stocks and assets in the pension funds were at a low level. This is the essential first leg of the open-ended commitment problem.

The second leg is that throughout the whole of the post-war period there have been peaks and troughs but over the period as a whole the occupational schemes have existed in a positive yield situation. That situation has changed dramatically in the past two years. Occupational pension schemes are in a negative yield position. Funded occupational pension schemes cannot continue indefinitely to provide final salary type pensions with this inbuilt pre-award dynamism in a negative yield situation.

Unless we get out of such a situation these schemes will not be able to carry on. We are dealing here not with the money of employers or of a fund but with the deferred pay of millions of men and women. It is, therefore, right for hon. Members on both sides of the House to say that we must get out of the position of negative yield. If that negative yield were to continue for long enough, the people who would be hurt are the men and women in the work force of this country whom we represent in the House. We clearly have to get out of that situation.

Coming to the detail of the Bill, the position is as simple as this. We want to avoid a situation in which because of a new legal liability an employer at a time of low liquidity and falling asset values is driven into bankruptcy by the provisions of the legislation. Secondly, we want to safeguard the position during periods, such as the present, when there is a short-term negative yield. As Lord Byers said, it is wrong to write off good occupational pension provision, whether in the public or private sector, but that provision depends on a positive yield situation. To allow such provision to continue and to flourish, there must be a limitation on the open-ended commitment contained in the Bill when it first came before the House.

There has been general agreement on the type of solution we have brought forward, namely, the 12 per cent. limitation of the premium tables, varying with the investment yield, as was described by my right hon. Friend the Secretary of State. In that context I give an assurance that the Government Actuary will advise the Government. We are consulting pension interests in an attempt to get a fair index which represents yield. We want to be able to measure the yield of funds in occupational schemes. We shall carry forward that consultation as we have carried forward other consultations.

The hon. Member for Somerset, North (Mr. Dean) referred to the question of names. I do not find the names poetic either, but what is in a name? What became obvious during my discussions with the pension interests was that when we talk about buy-back situations we have to go into a lot of longhand to decide what type of buy-back situation we envisage. It is better that there should be some names rather than no names.

The hon. Gentleman asked me a question which I did not understand. He will no doubt interrupt me if I answer him wrongly. He asked me over what period the premium tables would operate. It is the yield on investment at a certain point in time which determines the market value of the investment and, therefore, the level of the buy-back premium. I think that I was right all along. As my right hon. Friend said, the premium would depend on the yield within the table. As I have described to the hon. Member for Rushcliffe (Mr. Clarke), there would be roll-on tables. The basic assumption having been made, one would turn at a certain time to the yield on the investment at that time. From the part of the table dealing with the yield on investment one would be able to see the type of premium which would be required to be paid.

One would not necessarily wish to take into account the yield over the one year. One would probably want to take into account the yield over a longer period. I was seeking an assurance that that would be one of the elements that would be taken into consideration.

I think that the hon. Gentleman misunderstands the situation. We are concerned with a situation in which assets have declined in value. That decline can be measured through the level of yield.

Therefore, the tables could vary according to the yield.

As my right hon. Friend explained—and this is subject to consultation—we might take a period of one month in which to use a particular assumption or figure of yield for the purpose of assessing the amount of premium payable at a certain time. I hope that this answer satisfies the hon. Gentleman. No doubt he will read what I have said—I shall also read what I have said—and if he has any further questions I shall be pleased to answer them.

The hon. Member for Morecambe and Lonsdale rightly pointed out that the liabilities under the scheme would grow slowly because the liabilities only begin with the inception of the scheme in 1977 or 1978, whatever is the starting date of the new scheme. The hon. Gentleman asked me whether there would be an escalation of earnings figures on the tables. I have not been asked that question before. It is a highly technical matter. I would not regard such figures as suitable for inclusion in a set of tables of the kind we are discussing. However, I shall consider the question. I shall write to the hon. Gentleman and give him my considered judgment. I do not think I can answer him now with any finality. I shall contact him and let him know the full facts of the situation and the assumption that will be made.

The hon. Member for Rushcliffe asked me questions about preservation. By permission of the Occupational Pensions Board, preservation can be either with full revaluation or with the 5 per cent. plus the premium as the Bill stands. First, I deal with the situation in which the premium is paid. In such a case the 12 per cent. limitation is not in the Bill as it stands, but I give the hon. Gentleman an assurance that a suitable amendment will be moved in another place to meet that point. It was the Government's intention that such a matter should be contained in the Bill, and we have endeavoured to meet the point.

9.45 p.m.

I should like to deal with sub-amendment (a) to new Clause 1. The effect of the amendment is twofold. First, it requires the Secretary of State to publish the full actuarial basis of the tables. In Committee the Government accepted in principle that the premium tables would be brought within the review procedure of Clause 27 and that any changes in the bases of the tables would be subject to affirmative resolution in both Houses. It has not been possible to prepare amendments in the time available, and amendments will be tabled in another place. When those amendments have been made, any changes in premium tables will be within the full control of Parliament and the bases on which the tables will be calculated will have already been published in a memorandum by the Government Actuary.

I turn to the second part of the sub-amendment. I find that sub-amendment—which comes from the CBI and also from a large number of organisations interested in pensions—somewhat surprising. I thought that we were all concerned to assess premiums on the actuarial cost of paying for the pension. The sub-amendment would freeze any actuarial assumption for five years. That assumption could be completely out of date, so that it would be a negation of any actuarial assumptions. We could work on a basis quite apart from actuarial assumptions in these circumstances. The five-year situation could operate to the acute disadvantage of employers. I wonder whether the organisations concerned have considered all the aspects.

I repeat that I find the sub-amendment surprising. Frankly, as I see the situation, I regard it as an unsound proposal. I did not receive any information about the proposition until the CBI's letter of 2nd June. I am not complaining about the date of the letter, but I wish merely to say that if the pensions industry would like to discuss the problem further with me, so that I may have the opportunity of listening to its views and of pointing out the fundamental flaws in the propo- sition, I shall continue the type of consultation which we have already pursued on the Bill. Before the matter is discussed further in another place, I shall look to see whether the proposition which is being put forward stands up to detailed scrutiny. Therefore, if the hon. Gentleman decides not to press his subamendment—although I give no commitment about what would happen as a result—I shall be happy to undertake such consultations before the Bill is considered in another place.

Will the Minister of State assure us that in carrying out his consultations he will explain to the interested parties exactly what problem he envisages in this amendment? Moreover, will he assure us that he will enter the consultations with a genuine open mind seeking perhaps some alternative solution to close the open-ended commitment entirely, and that if such a solution can be reached he certainly will consider tabling the necessary amendments in the House of Lords to complete the understanding and the bargains that the Government are clearly trying to seal with the interested parties?

It is one thing to make not concessions, but sensible arrangements for a partnership. However, the hon. Member for Rushcliffe must also understand that it is in the nature of interested organisations., whether in this business, politics, diplomacy or anything else, not to be impartial.

As the Secretary of State said at the outset, if one makes a concession someone always wants something more. Therefore, I give no commitment of any kind that I shall accept anything. Of course, I shall enter into any discussions with an open mind. I shall put my views and objections to this amendment in detail to the organisations. I am prepared with an open mind to see what the results of those consultations will be. I hope that on that basis the hon. Member for Rushcliffe will be able to withdraw his amendment. I am most grateful for the way in which the Government amendment has been accepted.

It would certainly help me and other hon. Members if we could see the format of these tables as early as possible. One of our difficulties is that tables are being scribed where the curtain is lifted only in part and not in full. I do not expect to see the tables now, but discussions would be more fruitful if, the Government having gone so far in devising these all-important tables, their format could be disclosed as soon as possible.

I shall certainly let the hon. Member for Morecambe and Lonsdale have as much information as I can on that matter at the earliest possible date.

Does the hon. Member for Rushcliffe (Mr. Clarke) wish to move his amendment?

Accepting the Minister's open-mindedness on the discussion, I beg to ask leave to withdraw my amendment.

The hon. Gentleman cannot withdraw it because it has not been moved.

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

With this we shall consider Government new Clause 3 and Government Amendments Nos. 30 and 34.

The two new clauses make two changes from the existing Clause 40. They introduce, first, the term "contributions equivalent premium" and, secondly, a new provision to permit employers to buy back a widow into the State scheme where the earner dies during the first five years of contracted-out service.

Our proposal has been tabled in response to representations from pension interests. It provides more flexibility for the employer, who is thus able to buy out a widow's small guaranteed minimum pension by paying a contributions equivalent premium to the State scheme.

There are administrative drawbacks to paying small pensions. If a widow had an entitlement to any pension in excess of the guaranteed minimum pension, the scheme would be able to make lump sums available under Clause 37(3).

I am happy to welcome both new clauses in the name of the right hon. Gentleman. New Clause 2 replaces Clause 40, which deals with the situation of early leavers with less than five years' service. It has never been the cause of any disagreement between us and merely clarifies the position. We welcome the sincerity which the Government have shown in the provision to buy back the widow's reserve guaranteed minimum pension, which is tiny. We urged this on the Government in Committee and pointed out the great difficulties faced by schemes having to pay out these tiny reserve pensions. The Government have responded to what we said, and we are glad to see that they have included this provision in the Bill at this stage.

I beg to move Amendment No. 1, in page 2, line 19, leave out '6·5' and insert '7'.

The amendment touches on the delicate problem of the contribution rates payable by the working population who will be paying into the new pension scheme. Therefore, it is probably as well that I do not move it at an hour when I have time to dwell on it, because it is the aspect of pension policy which is the least attractive to those who discuss it, the aspect that Governments in particular wish to gloss over.

However, I wish to point out that a great cost will fall on the working population, both in the near future, when the scheme comes into effect, and the distant future, when it matures. Although we are trying to reach bipartisan agreement with the Government on policy for the future, we very much regret that they have been so determined to take the State into earnings-related, fully inflation-proofed pensions, on a pay-as-you-go basis that in 20 years' time there will be a great obligation on our children. We must make sure that contribution rates do not reach the limit of the capacity of the working population and their willingness to pay.

To remind the Government of what has already been done, I take the example of a middle-income man hard-pressed by inflation and taxation, a man earning £80 a week and paying the Class 1 contribution. In fact, £80 a week is slightly higher than the middle income, but those in that group are probably the section of the working population most hard-pressed by all the economic difficulties and taxation changes of the past 12 months. Anyone whose pay was £80 a week for the past 18 months was paying in February 1974, when we left office, £2·83 each week, contracted out of the graduated scheme. By August 1974 that had risen to £3·40, and by April this year to £3·79, and on the Bill as it stands it goes up to £5·20. Since the day we left office, his contribution has already nearly doubled.

We said in Committee that the figures in the Bill are not a realistic calculation of what the contributions will be in 1978, when it comes into force. The whole thing is based on the assumption that there will be 2½ per cent. unemployment, which is only 575,000 registered unemployed. That will obviously be a dream in 1977 or 1978, as the Government are using unemployment as an economic weapon, and it is reasonable to expect that the figure will be at least double whenever the scheme comes into effect.

With 5 per cent unemployment in 1977 or 1978—not a breathtaking figure, being a little over a million—another l¼ per cent. contribution will have to he raised, and so it will go, with an extra quarter per cent. for an extra half per cent. unemployment.

The Government are so blind to this that the legislation restricts their flexi-

I beg to move Amendment No. 2, in page 2, line 36, leave out

'when subsection (1) above comes into force'.

I cannot promise to be articulate, but I hope to be substantially briefer than some of the earlier contributors to the debate. I suspect that after all the discussion during the earlier part of this evening about negative yields, guaranteed minimum pensions, pre-award dynamism and buy-back premiums, the House will welcome the fact that we now turn to a situation which concerns people in their everyday lives.

The amendment concerns the Government's plans to phase out the married women's option, as a result of which we contend that many working married women will suffer.

The House has been over this ground before, not once but many times. Therefore, I do not propose to weary the House overlong. However, the Opposition hold this matter to be sufficiently important to return to it again before coming to the last stages of the Bill.

We want the working widow or married women to go on having the option to pay reduced contributions for reduced benefits. We believe that the 3 million out of the 4 million working women who exercise this option at the moment want it to continue, too. They will not understand the Government's determination to end their freedom to keep this option when the full implications become clearer.

The Bill is supposed to be a charter for women. In many ways it is. In Committee I paid tribute to the Secretary of State for making it so. Why then, in the interests of what I can only call a specious and largely unwanted equality, is it proposed to take away from women something which, by all the evidence, they very much wish to retain?

The Government will no doubt again tell us that, among other things, it is to end the dependant status of women. But the women in question are not complaining. The Government will say that it is to improve the benefits that a woman can enjoy in her own right. In that case, I suggest that the woman in question is getting a very poor bargain.

I will quote one set of statistics. Of the married couple pension of £18·50, £11·60 applies to the husband, and £6·90 is the so-called dependant allowance for the wife. If the option is taken away, she will lose the £6·90 and gain £11·60—in other words, a net improvement of £4·70. But she will then be paying the same as the single woman, who gets £11·60 in her own right. So far from giving the married woman a better bargain, it is a very poor return on the additional money that she is expected to invest.

I cannot see this as a measure to liberate or to bring equality to the married woman. In fact, a respectable case could be made out that it is quite the reverse. Therefore, this proposal is against the wishes of the majority of women and is a bad bargain as well.

With 3 million women involved—therefore, 3 million votes at stake—why should the Government be so obstinate? I believe that it is because they have no alternative if they are to raise the considerable revenue that their scheme requires. So it has little to do with the abhorrent principle of dependency: it is really all about hard cash. We think that the woman on £20 a week—hardly a princely income in 1975—who finds that the Government have reduced her take-home pay by £1 a week will discover that she needs the cash more than the Government.

10.30 p.m.

I expect I shall be told again that I do not understand the mentality of the women concerned and that I am doing them a disservice in pressing for the retention of the option. But I am not recommending that married women exercise the option. I can understand that in many ways, because they cannot see sufficiently far ahead, women would be well advised not to exercise it. But so many women have become used to exercising it that the Government are wrong to take it away.

The women of whom I speak are often mothers, their children are at their most expensive age, mortgage payments perhaps are biting their hardest, and for them going out to work even for a short period makes a good deal of sense. To reduce their take-home pay by a sizeable proportion will be a disincentive at a time when male unemployment might be making the woman, for no matter how short a time, the principal breadwinner. I do not think that the Government understand the women we are talking about, defenders of the working classes though they would have us believe they are.

So the amendment was tabled for three reasons. First, 3 million women who take advantage of the option at the moment demand its retention. Second, the Government are offering a poor deal in return for its withdrawal. Third, their reasons have nothing to do with release from dependency and everything to do with raising extra revenue.

The last time that they took action against a minority of the people—the self-employed—the Government reaped the whirlwind when that minority, suddenly and perhaps for the first time, became a highly articulate body. When married women find that this option is being withdrawn, the reaction against the Government who introduced such a measure will be considerable. I ask the Government, even at this late stage, seriously to consider withdrawing this proposal if we are to avoid dividing the House.

This seems likely, mercifully, to be a brief debate. As the hon. Member for Brentwood and Ongar (Mr. McCrindle) said, we have gone over these matters extensively in Committee. I am interested to see that the Opposition persist in their rôle as latterday Bourbons, who have forgotten nothing and learned nothing—

The Secretary of State cannot take any notice of the Lancashire papers.

I am sorry that the hon. Lady did not put her views into words before I rose to reply—

I have raised this point with the right hon. Lady so often that I have the speech coming out of my ears. I am sparing the House yet another repetition, but she knows my views. They have been expressed in all the Lancashire papers that she reads too.

I have never had the pleasure of reading the hon. Lady's views in the Lancashire papers. But this is a late hour and to avoid duplicating my speech I wanted to give everyone the opportunity to express his views.

A simple principle is at stake here. What kind of benefits and security do we think are needed by women who work? Under the present insurance schemes, embodying the principle to which the hon. Member referred—that of opting out of equal responsibilities—they are the greatest sufferers. They are the ones who end up on supplementary benefit after years of inadequate wages and very often practically non-existent coverage in their own right.

We have one simple principle. We believe that women, more than almost any other section of society, need security, because they have been on low wages, because they have never been given equal pay and have never, therefore, been given equal responsibilities. Do we want women's benefits improved? Do we want the expensive new charter for women contained in the Bill to which the hon. Member for Brentwood and Ongar has frankly and honourably paid tribute? Or is the hon. Member arguing that women should have equal benefits for unequal contributions? That has never happened in human history, and it has not happened to women up to now.

The freedom of the married woman or widow when she is at work to opt out of paying the full national insurance contribution has meant that she has had second-class benefits even when she has made a full contribution. The hon. Member knows that she has had inferior unemployment and sickness benefit even if she paid the full contribution. That situation was perpetuated under his Government's legislation. He knows that she has suffered from the half test. He and his hon. Friends know that under their conditions which continued the married woman's option she had a poorer accrual rate than the man. They want to perpetuate the unequal treatment, but I and my Government do not.

The hon. Member claims that I am proposing a specious and what he called largely unwanted equality. He tried to say that 3 million women would be outraged. How does he know? I do not know whether he had a private poll during the referendum, whether he slipped one in on the side about the married woman's option. I do not know where he gets his scientific certitude from—or should I say his pseudo-scientific certitude? There is a lot of confused thinking among women.

I am not proposing this scheme because I believe it will necessarily be particularly easy to get across. There was a revealing Freudian lapse in the hon. Member's remarks when he talked about "3 million votes". Oh, yes, how the Conservative Party loves to capitalise on the more obscurantist elements in our national thinking! That is their one hope of survival. Here they are again appealing to the least far-sighted and forward-looking attitudes. On that basis one never progresses in society.

The Conservatives may pick up the odd vote or two. That, however, is not the most important criterion when considering a pensions reform that we have all agreed on both sides should last us for a considerable number of years. We cannot build into a pensions scheme designed to carry us through a decade or two the principle of continuing inequality of treatment of women. I am surprised that the Conservatives still cling to the past in this way.

Perhaps I may, therefore, answer some of the hon. Gentleman's more major inaccuracies. He said that the married woman who no longer has the right to opt out, who will get a pension and a right to her husband's insurance, is getting a poor bargain. The truth suffers some strange distortions in this House. What the woman will get in return for this obligation to pay the same as a man on the same earnings when she is at work is the same accrual right. We ignore this irrelevant factor of longevity to which the Opposition always attached such importance. We will not punish women for living longer, as the Opposition did when in government. The woman who contributes in full will get her pension at 60.

As I said in Committee, the Conservatives overlook the 1 million women, often working-class women—the waiting wives—who reach retirement before their husbands, often five years before. There is sometimes a great drop in family income as a result.

Older widows will receive 100 per cent. of their husbands' retirement pensions plus their own additional component instead of the 50 per cent. entitlement in the Conservative's Act. They will receive equal short-term benefits for unemployment and sickness, and the half test will be abolished. In addition, the woman at work will have the fall-back safeguard of the dependency pension if that should prove to be more advantageous. The Opposition call that a bad bargain. It is an odd use of words.

Does the right hon. Lady recall that her Department sent out a letter to Members of the Standing Committee on 14th April which showed the extra benefits and costs related to the phasing-out of the married woman's option? Does she further recall that there was only one year between now and 2009 when the extra benefits for the married woman exceeded the extra costs?

I was coming to that point and the accusation that this was a swindle designed to raise revenue at the expense of these people. That letter was sent out to guide the Committee in deciding whether we were robbing the married woman in some way. The hon. Gentleman has totally misunderstood the figures. In Committee he added them up and quoted a figure of additions. These are not consecutive years but sample years of a broad kind.

What matters from the point of view of our argument is the conclusion which the actuaries who gave these figures drew from them. I quote from the letter:

"The general picture is that during the first 30 years of the scheme the additional contribution income including Treasury supplement broadly matches the additional benefit cost. Thereafter the benefit cost gradually exceeds the contribution income."

There is no basis there for saying that the abolition of the option is a way of compelling women to subsidise everyone else. I am sure the House will accept that with my record of involvement with equal pay legislation that would be the last thing that I would be prepared to authorise in my ministerial capacity.

10.45 p.m.

I know that ending the option, far from being a swindle for women, is their gateway to greater financial security as well as to the dignity of being able to stand on their own feet.

I will give the House one example. On the basis used in the Government Actuary's report on the Bill, we estimate that a woman who marries after the start of the new scheme, who would not qualify for the option, would on average pay about £50 extra in contributions but would on average qualify for about £70 a year in short-term benefits, including sickness benefit and unemployment benefit, and invalidity pension, in addition to building up entitlement to extra pension in the longer term. To allow women to continue to opt out would be cheaper because they would forfeit so many benefits by doing so. This is extra expenditure which we believe we owe to my sex.

We are not proposing to introduce this change brutally. All the widely representative women's organisations we consulted said that if women are ever to have a square deal the option for people who marry after the scheme comes into operation must be abolished. But we are all agreed that for the woman who is at the moment opted out we must temper the wind of change to her shorn income. We are, therefore, putting forward detailed alternatives for the phasing out of the option and for dealing with people who at present are entitled to exercise the option. All the details have been circulated to hon. Members, and we are urgently getting back the final response

Historians may be surprised at some of the things that we do in 1975, but I suspect that in the immediate future, when it is appreciated what the right hon. Lady's action means, the 3 million working married women will express surprise and probably an emotion which will have a more direct effect on the right hon. Lady's political future.

In view of the late hour I do not wish to take up all the points that the right hon. Lady has made in replying to this short debate. It is obvious that nothing has changed in her mind and that the division that separates both sides of the House on this important matter is as deep as ever. I am bound to say that the right hon. Lady gave me no satisfaction on some of the points that I particularly wanted to stress, not least that effectively what she is doing is pulling 3 million women, who do not seek the equality which she wishes to impose, kicking and screaming into a situation that she would like to have them occupy. I believe there is no alternative but to recommend to my hon. Friends that we show our disapproval of the Government's policy by dividing the House.