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Social Security Bill

Volume 976: debated on Tuesday 20 November 1979

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Order for Second reading read.

Before I call the Secretary of State, I should inform the House that at 7 o'clock I propose to exercise the discretion of the 10-minute rule for speeches.

4.30 pm

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

The House is becoming accustomed to dealing with a social security Bill in almost every Session. This Bill, however, contains the first stage of a major reform of the supplementary benefit scheme. It is, therefore, a good deal more than just a routine tidying-up measure. It also faces up to some of the problems confronting the nation from the rising share of the national income absorbed by social security.

Social security Bills tend to be complicated, and this is certainly no exception. We have, therefore, tried to find ways to help the House. First, we have detailed the changes in the supplementary benefits scheme in a short White Paper published with the Bill. The changes are numerous and technical, and it would be difficult to do them justice in a Second Reading speech. I hope that the White Paper will be a helpful guide.

Secondly, we have made use of the device known as a Keeling schedule. Last year when we debated a social security Bill—I am sure that the right hon. Member for Salford, West (Mr. Orme) will recollect it—I said that these Bills would be very much easier for the House to understand and deal with if, in suitable cases, the sections of the Act that are being amended were reprinted in a schedule to the Bill, with the amendments clearly shown. The procedure for that is a Keeling schedule. This forms part2 of schedule 2. It sets out the provisions of the Supplementary Benefits Act 1976, as amended by the Bill. Its intention is to enable Members to see at a glance what the legislation would look like if the Bill became law.

Thirdly, in order to help members of the Standing Committee in their consideration of the Bill, we are preparing comprehensive notes on clauses in the usual way. They will be available as soon as the Committee is appointed.

Fourthly, the Bill contains wide powers to make regulations, particularly to fill in the framework of the new supplementary benefit scheme. Members of the Standing Committee will also have a paper setting out how it is proposed to use these powers.

I turn now to the substance of the Bill. It has five main objectives.

First, it enacts the Government's firm commitment to protect pensions and other long-term benefits against rising prices, in place of the existing and unsustainable commitment to link benefits with the higher of prices or earnings.

Secondly, the Bill provides for the reform of the supplementary benefit scheme. Thirdly, arising from that reform the Bill establishes a new Social Security Advisory Committee, which will cover both contributory and non-contributory benefits. It abolishes the separate Supplementary Benefit Commissions in Great Britain and Northern Ireland and the National Insurance Advisory Committee. Fourthly, we are taking powers to extend equal treatment for men and women in social security. Finally, there are the inevitable tidying-up amendments to existing social security law.

I recognise that the Bill is controversial in some respects. We shall listen with interest to the speeches of the right hon. Member for Salford, West and his right hon. Friend the Member for Brent, East (Mr. Freeson),who will wind up the debate for the Opposition. The House will be particularly interested to hear what they would have done if they had been in our place today. If they do not tell us what they would have done, we shall know precisely what significance to attach to their criticisms.

I turn immediately to clause 1, which many hon. Members will regard as the most controversial part of the Bill. In his Budget Statement last June, my right hon. Friend the Chancellor of the Exquer announced the Government's intention to break the statutory link with earnings. At present, basic retirement pensions and other long-term benefits have to be increased, at least in line with the movement of earnings or prices, whichever is the greater. The main reason why we are amending the law is that, as experience has shown, promise has not been, and probably can never be, matched by performance. Politicians do themselves no good if they enact legislation, and thereby raise expectations which, in practice, when it comes to the point, are not met.

I do not need to remind the House of the events of 1976. Up to 1975, Governments had uprated pensions by reference to the known movement of the index over a past period, the so-called historic method. For the November 1976 uprating, however, they changed the rules and pensions were uprated on the basis of estimating the future movement of the index. In doing so, the Labour Party deprived pensioners of about £500 million in a full year. Had they not resorted to that dodge, pensioners would now be getting about £700 million a year more. That was the first occasion on which the rule was applied, and it was fudged.

As we know, that was challenged in the courts, and the Government won. But that merely underlines my point. The pledge given proved in practice to be flexible.

The case also revealed a second weakness. The Labour Government's Act was so drafted that it is no failure of the Secretary of State's statutory duty if the forecast turns out to be wrong. That obviously worried the hon. Member for Birmingham, Perry Barr (Mr. Rooker) and I wonder whether that is the reason why he has not been invited to take part in today's debate. Last year, the hon. Gentleman wrote to his right hon. Friend the Member for Salford, West and asked him what the Government proposed to do if in January, when the earnings figures for November 1978 became available, they showed an increase above the figure of 12 per cent. year on year—I think he meant 11½ per cent.—on which the right hon. Gentleman and his Government had based their pension uprating.

So impressed was the hon. Member for Perry Barr by his right hon. Friend's reply that he asked him to publish the correspondence in Hansard. It is reported there, in all its loving detail. It is interesting to see what the right hon. Gentleman said to his hon. Friend. I quote:
"Dear Jeff,
There is no set action which the Government is statutorily bound to take, if in January it should be found that the earnings figures for November 1978 show an increase since November 1977 higher than was allowed for in this year's up-rating of retirement pensions."—[Official Report, 17 January 1979, Vol. 960, c. 772–3.]
The same point was made more succinctly by the right hon. Member for Norwich, North (Mr. Ennals) to the National Association of Pensioners. He said:
"There is statutory duty to make a forecast, but there is no statutory duty to get it right."
In practice, there is no statutory duty to make up any shortfall. Over the years the pledge could turn out to be worth a good deal less than that promised by the Labour Party.

Everything that the Minister has said so far is correct, except that the Government in which I was Secretary of State determined and set aside the funds in order that the shortfall should be made up. The Minister has followed that policy. The shortfall was made up.

The right hon. Gentleman has virtually formed my next sentence. It fell to us and not to the previous Government to make up the shortfall. There is no statutory obligation to make up the shortfall. Therefore, that also represents some derogation from what everyone expected the promise to mean.

If the Secretary of State is saying that there is no statutory obligation to make up the shortfall, why is there any need to change the law?

I shall come to that.

The last of the reasons for change is really the other side of the coin. If the pledge, as people understood it, were strictly honoured, it would not just keep pensioners in line with rising prosperity; it would mean that pensions over a period would rise faster than either prices or earnings, so that the burden of paying for them, which falls on the working population, would mean an ever-rising level of contributions. That was never explained to the people when the provision was put on the statute book.

The Phenomenon has come to be known as the ratchet effect. I am sure that it will be recognised in all parts of the House that it really could not be sustained without any regard to the ability of the economy to pay for it.

The right hon. Gentleman is right in saying that there is, of course, a small ratchet effect. That is why some of us think that the present provision is such a good one. If the right hon. Gentleman feels that because of the ratchet effect he has to index-link pensions to only one of those two, why did he not select earnings? It is the rise in earnings, not prices, that measures the general rise in the standard of living, to which he says he wants to tie pensions.

I should like to be allowed to develop my own argument. But if the hon. Member for Edinburgh, Central (Mr. Cook) is saying that he was in favour of the ratchet effect, can he point to any speech in which the told his constituents that it would inevitably mean, over the years, a higher and higher national insurance contribution to pay for it? I do not suppose that there is one Labour Member who made that point to his constituents. If the hon. Member made that point, he must be in a minority of one.

Is it not clear that if the Labour Government had remained in office, they would have had to do something about this? What is clear is that they were certainly thinking about it. It will be remembered that in the Budget debate last June, I quoted at length from an article in New Society by Mr. Tony Lynes, the then Secretary of State's political adviser. The article was headed "Dear Mr. Jenkin" and it said:
"You will have to think long and hard about future increases in benefits."
After pointing out how the existing statutory provision produced this ratchet effect, he went on to propose an alternative formula which, although he saw it as being couched in statutory terms, would achieve precisely the intention of the present Government, namely, that pensioners should be protected against rising prices, and that they should share in the long-term prosperity of the economy.

Whatever an adviser may have written in a magazine—and I recall the present Prime Minister saying that Ministers do not necessarily take the advice of their advisers—I give the right hon. Gentleman an absolute assurance that at no stage had I or any of my colleagues within the Department considered doing what he is trying to do, I hope unsuccessfully, in the Bill.

Then presumably the right hon. Gentleman, had he been in my position today, would have come to the House and said "No, we intend to stick to this and we shall include a short-fall." He would have had to say to the House and to the country outside that it would mean having an ever-rising share of the national income going into national insurance contributions. Would he have said that? The right hon. Gentleman mutters "Probably". I wonder whether he would, because he has never said so publicly in the House or anywhere else.

I have been accused of muttering. I was not muttering. I was saying that we would have said this. After all, pensioners have started from a low level. We honestly said to people, as a Labour Government—I said it as Secretary of State—that one of the consequences of the measure passed by this House in 1975 would be that over the years pensioners would have a higher and higher standard of living compared with that of the working population—and quite right, too. It was a different measure, but it was in 1975.

The right hon. Gentleman has fallen absolutely flat into his own trap. What was the 1975 measure about? It was about the second pension, the additional pension, which, of course, would have to be paid for. This is the core of the case. If the working population today is paying not only to maintain the existing level of the basic pension, the real level of the basic pension, to keep up with prices and earnings, but is paying on top of that the contributions to the additional, second, pension, that is a burden that we simply cannot ask the working population to accept.

No right hon. or hon. Member on the Labour Benches has ever said so. [Interruption.] If that is disputed, I look forward to hearing quotations showing where the point was made. What the right hon. Member for Norwich, North said about the 1975 measure is not an answer, because that dealt with the new second pension scheme. We all recognised, of course, that contributions would have to go up to pay for that. I accept that the right hon. Gentleman has said that he would not have considered it, but would the Labour Government, had they remained in office, not have had to change the law? We shall have to wait and see what the right hon. Member for Salford, West has to say about it.

But this Government's commitment is clear. The Bill contains a guarantee for pensioners against rising prices. My right hon. Friends and I have repeatedly committed ourselves to ensure that pensioners share in rising prosperity. Ministers will decide each year, in the light of the economy and of other spending priorities, how to honour this pledge. Our record when we were last in Government shows that, without any statutory requirement whatever, pensions increased by substantially more than prices. I think that hon. Members in all parts of the House will recognise that this is a more realistic, a more honest and, above all, a more sustainable, prospectus.

There is one other minor change in the uprating provisions. At present, the new rates of benefit have to come into force not later than a date 12 months after the end of the previous uprating. This means that the uprating date creeps forward each year. In 1975, it was the week beginning 17 November. By 1979, it had come back to 12 November. By 1980, leap year, it would under the existing law have moved forward a full week to 10 November. I am sure this was never intended, and the Bill gives rather more flexibility to fix the date at which increases will take effect.

I now come to the heart of the Bill, which is the reform of the supplementary benefits scheme, provided for in clause 5 and in schedule 2. The package of measures represents the first stage in the Government's plans for this. As the House will recognise, it has been drawn up in the light of the previous Government's review of the scheme, published as a report entitled "Social Assistance" We have also taken account of the very many comments on the report which have been sent in by bodies and interests all over the country.

Last year I gave my party's view on the report in the Second Reading debate on the Social Security Bill. I said:
"it will fall to the next Parliament and the next Government to carry matters forward in the light of all the comments and suggestions that are made."
Later, I said:
"major changes, now badly needed, in our welfare system are being left to be made by the nest Government. If, as I expect, that is a Conservative Government, I and my right hon. Friends will take up that challenge with enthusiasm."—[Official Report, 21 November 1978; Vol. 958, c. 1139–41.]
My prediction proved true and the Bill is our response.

May I, by way of a preface, make a point about a subject that is not in the Bill but to which I know hon. Members on each side of the House may wish to refer? It is the issue of incentives. The Bill is not about the quantum of benefits but about the system. Many of my right hon. and hon. Friends are concerned about the erosion of incentives to work, especially around the cross-over of tax and benefits. They are concerned—and I know that this concern is shared on the Opposition Benches—about the effect of the poverty trap. I understand these anxieties and I share them myself. It has for some years been common ground between the parties that the short-term benefits should be taxed. It was stated in our manifesto as one of our pledges, and the Government are looking at the whole question in the context of incentives and in the context of public expenditure. When we have completed our studies, we shall announce our decisions. However, today it is the proposals in this Bill that we are putting forward for consideration and debate. I have nothing to add to them on that score at this stage.

Is it not very hypocritical of the Government to be attacking people for being work shy when thousands of people search day after day for jobs? Would not the best way of making sure that people did not have disincentives be actually to be providing jobs, not hounding people for being out of work?

The central point of the whole strategy is that we shall create an economy, and help the people of this country to create an economy, which will rebuild prosperity and provide jobs for as many people as possible.

I come now to the supplementary benefits system. Reform has become essential if the system is not to collapse in ruins. This was the central message of the review report. It has been said on many occasions by the present chairman of the Supplementary Benefits Commission, Professor Donnison, and right hon. and hon. Members in all parts of the House who are closely in touch with their local offices will know that in many parts of the country the system is under very severe pressure.

It therefore follows that action is essential. I say straight away that our predecessors are to be commended for having set the review in motion. They did so, moreover, as is made clear in the report, on a nil cost basis. That was only realistic. Of course, it is very much easier to promote reforms if there is extra money to ease the transition. Some reforms will have to wait until there is extra money. However, many of them must be carried out and, as the review report makes clear, must be carried out even if it means doing it at no net extra cost to the Exchequer.

Many of the comments made on the report attacked the nil cost basis. Those who are arguing, as I expect the right hon. Gentleman will argue, that we ought not to be proceeding on this basis must explain where the additional money is coming from.

This perhaps is not the moment to rehearse the whole public expenditure debate, but if the right hon. Gentleman is to criticise those parts of the package which he dislikes, he owes it to the House to tell us how much extra money his party would have provided, and where it would have come from. If not, he owes it to the House to tell us how he would otherwise have responded to the report; and if he would have done nothing, would he have just stood by and seen the system collapse before his eyes? The House will listen with some interest to what the right hon. Gentleman has to say.

The keynote of the reform is simplification. The overwhelming message from the review report, and from the response to it, has been that the system has to be simplified.

The simplification we propose takes two forms. First, we are establishing a new legal and administrative framework. The rules of the scheme will be clearer and simpler for all to understand, and the emphasis will be shifted from discretionary payments to payments made under clear rules of entitlement. Secondly, we are proposing to simplify the structure of the benefits themselves. Hitherto, the scheme has rested on an uneasy combination of legal framework and administrative discretion. Responsibility for the scheme has been divided between, on the one hand, Ministers and the DHSS and, on the other, a statutory authority, the Supplementary Benefits Commission.

The principles on which discretion has been exercised have been often obscure and the mysterious "A" code has for years been a target for criticism and for journalistic probing. As a result, claimants rarely know what they ought to get. They are given no written notice setting out their entitlement. Officials operating the scheme have to refer to a huge mass of complicated and frequently changing guidance, which, it has to be admitted, many of them do not fully understand.

In a speech last year, Professor Donnison described the system as
"One of unlimited, potential flexibility, and so had to protect itself in practice. In our case, what happens is that demand is restricted and the service is, in effect, rationed by ignorance, delay, squalor, hostility, stigma and in many other ways".
The review report recommended a sweeping change in the legal structure, and that is what the Bill provides.

The revised scheme will spell out a clamant's rights and his obligations in full. The emphasis will move from discretion to entitlement, and the rules will be published in the form of regulations. Decisions on entitlement to benefit of individual claimants will, in future, be taken by independent adjudicating authorities, consisting in the first instance of a supplementary benefit officer, from whom there will be a right of appeal to a local tribunal, and a further right of appeal, on a point of law, to the commissioner. The system will closely resemble that which already exists in the national insurance and industrial injuries schemes. These adjudicating authorities will be entirely independent of Ministers, who will not be able to intervene in any way in their decisions on in dividual cases.

My responsibility as Secretary of State will remain as it is now for the operation of the scheme, and for the management of the staff who run it. What has hitherto been the function of the SBC—that is, determining individual claims, and interpreting the rules—will be transferred to these officials. The SBC has had a substantial policy-making role as well. This will now fall to Ministers. Quite frankly, I do not believe that many people, and perhaps not all Members of Parliament, have fully understood the precise division of functions between the Commission and Ministers. How many members of the public, for instance, have realised that it is not the SBC that runs supplementary benefit offices, but my Department?

The right hon. Gentleman speaks of a claimant having to go through the procedure. Could he give the House some indication of the time before the matter reaches the commissioner to get a decision?

That is a question which it would not really be realistic for me to answer. In some parts of the system there are delays in reaching the final appeal on the national insurance side. I recognise that; but we must look to the structure and see that we set up the system to work it.

I was saying that people did not realise the difference between the function of the Commission and Ministers. How many people realise that in supplementary benefit it is not Ministers who determine much of the policy but the Commission? I believe all this has given rise to great confusion in the past and to some blurring of responsibilities. It has also made the system very muddling for those who have to depend on it.

One important consequence of the new legal structure is that the policies will be set out clearly in a guide, which will be much more easily understood than the present published handbook. It will be issued on the authority of the Secretary of State, and not of a body not answerable to Parliament.

We also intend that claimants should in future be given a written notice, setting out the basis of their entitlement, something which some hon. Members may be slightly surprised to know does not happen automatically at present.

That, then, is the first and perhaps the more important part of the reform. It will mean that the operation of the scheme will be more accountable to this House. The changes have been greatly welcomed by the existing Commission, even though it carries the consequence of its own extinction—a point I shall come to in a moment.

Before the right hon. Gentleman leaves the main part of the reform, as he has called it, could he say a little more about the body that will be replacing the Supplementary Benefits Commission?

I shall do so in a moment.

The second area of reform is the simplification of some of the benefits. These changes are, as the White Paper makes clear, complex and detailed and will no doubt be fully debated in Committee. I shall say a word about our aims in constructing the package and about some of the major changes. Again, our first priority is simplification, and I should add that it is simplification not just for the staff who have to run the scheme, but for the claimants who have to know what they ought to get.

Perhaps the most important single change is the proposal to align the supplementary benefit scale rates with their national insurance counterparts, a change which is not only a major simplification in itself but which provides the money to improve the scheme elsewhere.

The existing very small differences between national insurance and supplementary benefit rates have grown up almost entirely by historical accident. I asked for a description of how this came about and I can tell the House that it filled three closely typed foolscap pages; the House will, no doubt be relieved that I do not intend to read them out. Suffice it to say that, over the years, the results of changes in the rates at different times by different amounts are that for a great many beneficiaries supplementary benefit pays a few pence more a week than the corresponding national insurance rate.

We often hear about the many hundreds of thousands of people who are entitled to but do not claim supplementary benefit. Our estimates suggest that many of them are people who are entitled only to some pence extra a week over and above their national insurance benefit, and it may be that they think it hardly worth claiming.

The Bill therefore proposes to bring these benefits into line. This will result, as has been made clear to the House in a series of written answers, in small losses and some gains by various categories of beneficiaries. However, I must go on to state straight away that these losses will not take place until the next uprating of pensions next November, and will mean that for those people the uprating will be marginally less than it otherwise would have been. The actual figures are about 40p per week for a single pensioner and35p for a married couple. Bearing in mind that pensioners, who are the main group to be affected, have done relatively better than other supplementary benefit beneficiaries in the past, I think it will be seen that this is not unreasonable. Between 1970 and 1977 the real income of households receiving supplementary benefit, most of them pensioners, went up by 12 per cent. For families with children the increase was an average of only 4 per cent.

The resources released by this change are being redirected to help families with children. That was the proposal in the review report, and that is what is being done in the Bill. The reduction in the qualifying period for the long-term rate of benefit from two years to one will help about 98,000 claimants, two-thirds of them single parents, who will gain £5·40 a week from the change. We are simplifying the children's scale rates, and reducing the number of rates from five to three. Three hundred and forty thousand families with half a million child-rent in the age ranges from 4 to 5 and 11 to 12 will gain up to £1·65 per week per child. I should say that all these are current benefit rates.

Another change affecting one-parent families is the earnings disregard for lone parents of £6 and thereafter there is an automatic pound for pound cut-off. I have for a long time felt that this was an awful obstacle to a single parent trying to help to support herself and her children. We are therefore introducing a tapered earnings disregard for single parents, and some 20,000 will gain up to £6 a week. Some, if their earnings remain completely static between £4 and £8 a week, could lose a little. This change should on balance give encouragement to more lone parents who want to become self-supporting.

There is one other proposal to which I think I should refer, and that is the proposal to defer school leavers' entitlement to supplementary benefit until a fixed date around the beginning of the next school term. The main purpose of this change is to redeploy DHSS staff to more useful work. Hon. Members will know that at the end of each school term, and especially in the summer, DHSS offices tend to be crowded out in some parts of the country with youngsters seeking supplementary benefit on the basis that they have left school and have not got work. Quite apart from the merits of this process, it has made it extremely difficult for staff to cope with other claims as promptly as they should. Many elderly disabled and other disadvantaged claimants find themselves in those periods at the end of very long queues. Around 400,000 of the 640,000 school leavers claimed supplementary benefit last summer and, quite frankly, it is absurd to believe that more than a small fraction of them really needed it.

Indeed, the case for change goes further than that. The Commission commented that the present arrangements tempt youngsters in their first encounter with the social security system to misrepresent their plans about leaving school in order to get benefit. Some young people are being advised deliberately to conceal their intentions. I have here a copy of a leaflet put out by the Claimants Union to school leavers in Glasgow. I quote:
"If you say you intend to return to the sixth form or college, benefits may be refused. This is not the law—simply a self-made DHSS rule. If you think you might go back to school or college, it is better to keep this to yourself".
That tempts people to be dishonest. I might add that the leaflet also has a small sketch of school children blowing up their school with a bomb!

Instead of supplementary benefit, parents will get an extension of child benefit through the holiday. There will be full protection for families already receiving supplementary benefit or other social security because, of course, they will still get the addition for their dependants, and that will include any school leavers.

The Minister should take into consideration other points of view. There are families, especially in my constituency, the parents of whom have low-paid jobs. Historically, they have always depended on their sons and daughters starting work. In some cases they still do. The proposal will severely penalise these families. Has the Minister taken that fact into consideration?

I have taken that fact into consideration. I recognise the force of the point made by the hon. Gentleman. I have no doubt that that point will be discussed. There are exceptions to the rules about schoolchildren, for instance for children over the age of 19, young people who have children of their own, and for children who have moved away from home. However, those points no doubt will be considered in Committee.

Is my right hon. Friend aware that supplementary benefit and unemployment pay for those under the age of 21 costs hundreds of millions of pounds? Many Government supporters would prefer that a far larger proportion of that money went to help one-parent families and children in need, who have far greater need of the money than those who receive it now.

I entirely take my hon. Friend's point. One of the problems that we must deal with—I am not sure that I wholly agree with the comment previously made by the hon. Member for Penistone (Mr. McKay)—is to ensure that young people, many of whom are mobile, actually take the jobs that are on offer. In many parts of the country there are jobs available. People do not take them. That is why we are strengthening the unemployment review officers in our offices and the Department of Employment to make sure that there really is an effective pressure on people to take the jobs that are going.

I referred a moment ago to the Supplementary Benefits Commission.

Could my right hon. Friend say a word about the treatment of resources? It seems to me that the discontinuance of the £1 disregard for occupational pensions, and also the disregard for sick pay from the employer, could mean that some top long-term beneficiaries would be worse off. If I am correct in that assumption, does my right hon. Friend propose transitional arrangements to deal with those cases?

That is indeed part of the complications of the scheme and why we set out the details in the White Paper. Yes, my hon. Friend is correct. Both of those changes would lead to those people being worse off, other things being equal. But then there are other changes. The matter is extremely complicated. We made an attempt, in a series of answers to hon. Members on both sides of the House, to give our calculations of how many people might be worse off and by how much. However, it is not absolutely possible to state these figures with complete accuracy. There is a whole range of changes. They will affect people in different ways.

I refer now to the Supplementary Benefits Commission. It follows logically, indeed inexorably, from the change in the legal structure of the scheme that the SBC should come to an end. The principal role of the Commission disappears under the Bill and we have concluded that it does not make sense to retain a separate advisory body for supplementary benefits. As the House will know, there is another committee, the National Insurance Advisory Committee, which advises on contributory benefits and on the operation of the national insurance scheme. There is already considerable overlap between national insurance benefits and supplementary benefit, and now that we are aligning their structures it seemed to us sensible to merge these two bodies into a single Social Security Advisory Committee, and this is included in clause 8.

I come now to the point that was made by the hon. Member for Birkenhead (Mr. Field) in an earlier intervention. The committee will be responsible for advising me and also the Department of Health and Social Services in Northern Ireland on supplementary benefits, on the whole range of national insurance benefits and—I draw the attention of the House to this as it is new—child benefit and family income supplement. I think that will be welcomed. Industrial injury benefits will remain within the purview of the Industrial Injuries Advisory Council and we are not proposing any changes for the Attendance Allowance Board or the Occupational Pensions Board.

I have no doubt whatever that the new advisory committee will be of considerable importance in the development of the social security system. For the first time Ministers and the House will have the benefit of advice from an independent advisory body which spans the major part of our social security system. This was recognised by the Supplementary Benefits Commission itself. In its statement on the publication of the Bill it said:
"We see advantages also in the Commission's advisory role being taken over by the proposed Social Security Advisory Committee which we see as an important new body. This will complete the process of integration begun in 1966."
Schedule 3 sets out the membership of the new committee which will include representatives of both sides of industry and the chronically sick and disabled and also of the special interests of Northern Ireland.

We have deliberately defined the role and the functions of the committee in very broad terms. As well as its reporting on draft regulations, Ministers will be able to ask the committee for advice on particular issues and the committee will now have a statutory backing for its advisory role—something which, very curiously, the SBC never had. Apart from that, I am convinced that it would be wrong to try to tie the hands of the committee by statute in any way. The hon. Member for Wolverhampton, North-East (Mrs. Short) has tabled questions about the committee and in my replies I have made it clear that it will be for the committee itself to consider whether, and if so to what extent, it could usefully undertake further activities in addition to its statutory duties.

There is nothing in the Bill to prevent the committee from studying the Department's work and the financial, staffing and practical constraints under which it operates. In one sense, there is a sadness in the ending of the Supplementary Benefits Commission and the National Insurance Advisory Committee. I take this opportunity of thanking not only the present members, but their many predecessors, for all the time, effort, care and skill they have put in to what is very demanding work.

I am grateful for the support of the right hon. Member for Norwich, North. In particular—I think that I do this on behalf of the whole House—I give thanks to Professor Donnison for the imaginative way in which he has brought the whole supplementary benefit system out of the darkness into the light. It would be wrong to describe him—I believe that he would not accept the title—as the "onlie begetter" of the reforms in the Bill; many others have played a notable part. But Professor Donnison has certainly been the prime mover, if I may so describe him. For that the House and the country will be most grateful.

Professor Dennis Lees, the chairman of NIAC, is known by many hon. Members to have done an excellent job. I am sorry to tell the House that he is not well at present. I am sure that we all wish him a swift recovery.

I must touch briefly on the remaining parts of the Bill. Paragraph 2 in schedule 1 implements the Government's commitment on equal treatment for men and women receiving social security. For instance, in regard to contributory benefits, a married woman will be able to claim an increase in short-term benefit for her husband and their children if the husband's earnings are less than the increase in benefit being claimed for him. This is intended to cover the so-called "role reversal" cases which are left in doubt under the existing scheme. This should become effective in November 1983.

The second stage under which married women will be able to claim for children, irrespective of the husband's earnings, will become effective in November 1984. I should make it clear that I am talking about contributory benefits that are not subject to a means test.

The Bill contains enabling powers to make regulations that will spell out in detail the introduction of equal treatment in supplementary benefits. Broadly, the changes will enable a woman as well as a man to claim for the couple. Their requirements and resources will, of course, continue to be aggregated. These changes will be introduced from November 1983.

A third heading refers to family income supplement, as to which clause 6 makes some changes which will be welcome to those who have been campaigning for years for more equal treatment under family income supplement. I should add that all the changes are in line with EEC proposals.

Finally, the Bill provides for a number of miscellaneous changes to clarify existing social security law, and no doubt these can be examined in detail in Committee. However, perhaps I should make just one point. Last year's Bill provided for supplementary benefit appeals on points of law. At the time, as the right hon. Member for Salford, West will recall, I argued that this was premature since we were about to embark on the major reform that we have in the Bill. The new appeal right was due to start in January 1980, but we propose that its introduction should take place at the same time as the rest of the Bill, which is next November.

I said at the outset that this was a complicated Bill and I only hope that my explanations have not made confusion worse confounded. The heart of the Bill is the reform of the supplementary benefit system, a reform which simply has to be undertaken now if the system is not to collapse. Though I realise that there are some changes in it which some hon. Members will find unpalatable, I simply have to ask them to recognise that the present state of our economy does not allow us to put in the extra resources which would mean that no single beneficiary would lose. We have tried to make sure that such losses as there are are individually very small. They will be absorbed in the upratings next November and no beneficiary is expected actually to end up with less than he has now.

On the other hand, without this switch of resources, it would have been impossible to make the other modest improvements which simplification must entail. The provisions in the Bill represent but the first stage of the reform. As and when it becomes possible to make further progress, we shall bring further proposals before the House.

The Government are currently studying one of the more important proposals put forward in the review report—the unified housing benefit. I do not yet know whether it will prove possible to bring this to the House in the near future, but I can assure the House that the matter is in hand.

Other changes, such as the simplified form of claim for the first few weeks of benefit, or the substitution of lump sums for discretionary payments, cannot be proceeded with at this stage, though they will be kept firmly in mind.

I hope that the House will feel that we have made a fair start, and it is in that spirit that I commend the Bill to the House.

5.14 pm

This is day 2 of the debate on the Welfare State. Yesterday we had a debate on the National Health Service and today we have a Bill and a debate on the social security system.

The Bill fits into an emerging pattern. It sets the better off against the poor, those in work against those out of work, and the "deserving" poor against the "undeserving" poor. The Secretary of State used several arguments to which I shall return. I wish to refer, as the Secretary of State did, to some matters not contained in the Bill but currently under discussion in Cabinet papers and missives from one Minister to another, on which the House has a right to answers.

We want to know what will be done about the families of strikers. We want to know whether the Minister will break the link with prices when considering the uprating of short-term benefits. Are the pensioners, the sick, the unemployed, one-parent families and the disabled to shoulder further burdens to protect the better off from increased taxes?

It is not rhetoric; it is fact. The Secretary of State talked about finding the money for pension increases and benefits, but what the Government are really concerned about is cutting public expenditure so that they can find money for further tax relief.

As my right hon. Friend is asking a series of questions, would he also ask whether the rumour that child benefits are to be frozen as a means of saving public expenditure has validity?

I thank my right hon. Friend for that intervention. I shall say something about child benefits in a moment. I want to return to the report in the Daily Mirror recently about a £10 a week levy on benefits received by the families of those who are on strike. The right hon. Gentleman has talked a lot about the family, child benefit and child support. Yet here is a report about a proposal from the Government which they have not refuted in any way. The Government have acknowledged, by their silence, that the report in the Daily Mirror must be correct.

What I find extraordinary is that the letter or minute that was referred to in the newspaper went from the Secretary of State for Industry to the Chancellor of the Exchequer. Where is the Secretary of State for Social Services in this argument? Surely he is supposed to be the Minister in charge, and he should defend his Department. I should like an answer to that question.

On a number of occasions I have said that if the Government make further substantial cuts in public expenditure, the Department of Health and Social Security will have to carry a heavy burden. Nearly one-third of total Government expenditure now goes in cash benefits, as the Secretary of State knows.

The Economist on 1 December advocated the cutting of benefits as a popular way of cutting into Government spending. That article said:
"Unless the social security's appetite is checked, the Tories' attack on public spending will go on earning them maximum unpopularity for minimum results."
That is surely the policy of the Government. The Secretary of State referred to the amount paid in benefits. We need an answer from him, because there is an important social point here.

We have always had two buffers to protect us against social unrest at a time of rising unemployment and difficulties with inflation. One is redundancy payments and the other is a reasonable level of benefits for those in need. If we start to interfere with that pattern, we may see that the unemployed will not allow their families to go hungry or to suffer without putting up a fight.

The steel industry is an interesting example. There have been riots in France. We have got away without that despite the hardship and hard feelings that have been caused, but I warn the Government that they are playing with fire on this important social issue.

The benefit structure may be inadequate but it has met the minimum requirements for the family. If we break that structure, we shall be in difficulty. I say that with all the seriousness that I can command.

The Bill is not a "no-cost" exercise, as the Secretary of State tried to suggest.

I was talking about clause 5 and schedule 2. Other provisions will have financial consequences.

In other words, the Bill will cost beneficiaries money and the proposed changes in the pension uprating formula and the uprating date mean that the Bill saves money at the expense of the pensioner and other long-term beneficiaries. It is part of the Government's public expenditure cuts.

There is an important omission from the Bill. It contains no provision for uprating child benefit. I am pleased to see that the hon. Member for Woolwich, West (Mr. Bottomley) supports us on that.

The right hon. Gentleman knows that he has my support on that matter, but may I go back to what he said about the pension increases? If the date of payment of pension increases is advanced by one week every five years, action to prevent that from happening is not taking money away from pensioners, but making sure that they do not get unintended increases. We all want them to get intended increases.

I shall come to that point later, because I want to say more about the change of date.

By next April the £4 child benefit will be worth only a little over £3 compared with its value when it was last increased. There was a forecast in The Sunday Times last week that the benefit is to be frozen. But if it is left at its present level it is not frozen but reduced—because of the increase in the rate of inflation. The quotes from Government Ministers about child benefits are too numerous to mention, but let me give a couple of examples. The Secretary of State said at the 1977 Conservative Party conference:
"We must concentrate relief where there are dependent children."
The Prime Minister has said:
"We are the Party of the family."
The Under-Secretary of State for Health and Social Security—the hon. Member for Wallasey (Mrs. Chalker)—said earlier this year:
"our concern for the family is in no way diminished by the economic situation we in herited…out aim is to…help families much more than they have been helped in the past."—[Official Report, 19 July 1979; Vol. 970, c. 2171.]
Will the hon. Lady stand up and be counted? If nothing is done about child benefit, it will be reduced dramatically.

The families that the Conservatives talk about are having to face increased charges for school meals and transport and a whole range of other services. The family is catching the draught from the Government's policies. Child tax allowances have been phased out, and we all remember the Secretary of State's enthusiasm when he criticised the previous Government for proposing to phase in child benefit over three years. But we introduced the benefit and increased it to £4. If we had been returned to power the benefit would have been increased to £4·50 last month. The incoming Government did not implement that increase, and if something is not done soon we shall see a real reduction in family support.

Is my right hon. Friend aware that many families are worse off under the child benefit scheme than they were in 1973, when they enjoyed family allowance and/or child tax allowances?

I saw the answer that my hon. Friend received to his question about a comparison between 1973 and 1979. If that 50p increase had been implemented, those families would not be worse off. Without the 50p, some families are worse off.

As my right hon. Friend is one of the few Members who can speak with pride about his record on child benefits, will he deal with the other vulnerable group mentioned by the Secretary of State, who taunted us by claiming that we would not have been prepared to defend in the country an increase in national insurance contributions to protect the old? Will my right hon. Friend remind the Secretary of State that the previous Government increased not only the coverage but the rate of national insurance contributions, so that pensioners and other vulnerable groups could share in the increasing living standards of the community?

I shall be referring to pensioners later.

The Secretary of State mentioned the measures in the Bill that could be welcomed. The powers for equal treatment, which were agreed under the previous Government, the changes in the scale rates for children and some of the changes relating to one-parent families are welcome, but they are small change compared with the rest of the Bill.

The Secretary of State said that the cost of the supplementary benefit rules changes was neutral, but that does not mean that the numbers are neutral. There will be 1·8 million losers and fewer than 750,000 gainers. One-fifth of all families will lose under the proposal in the Bill.

We welcome the provision that long-term supplementary benefits are to be paid after one year instead of after two years, but against a background of rising unemployment, some of which has been created by the Government, it is disgraceful that the long-term rate is still being denied to the unemployed.

The Secretary of State talks about incentives and the Prime Minister refers to the "Why work?" syndrome as though that explained the economic ills of this country and as though the unemployed were responsible for the fact that the economy is not right. The Government's motto is "If things go wrong, blame the most vulnerable in our society."

The right hon. Gentleman is waxing eloquent, but the long-term supplementary beneficiaries, other than the unemployed, receive the long-term rate after two years and we propose that they should receive it after one year. Under the previous Government, the long-term unemployed never received the long-term rates. Why is the right hon. Gentleman attacking us for not doing something which his Government never did?

I am placing that against the background of the Government's policy. I am prepared, at this Dispatch Box, to say that it was one of the issues that we were pressing, but one that we did not implement. However, we were not faced with the sort of economic background, inflation rate, and increased unemployment that the present Government have created. We shall see unemployment rising towards 2 million. It is not the time to wage war on incentives, or to undermine hard-won rights to decent compensation and financial protection when a job is lost.

There is an interesting Tory paradox. Through their policies of cutting subsidies, fuel and help, the Government have been reducing incentives. The announcement on milk and vitamins for large families is an indication that those who are in work, who have large families and who are earning are being penalised because they have two children under school age. That is outrageous. What does it save in public expenditure terms? The answer is peanuts.

I turn to the extremely mean proposal that unemployed school leavers should be penalised. The gap between child benefit level and supplementary benefit for school leavers is between £7and £10 a week. The Secretary of State told the hoary tale of a leaflet issued in Glasgow stating that some were claiming benefit when they were not entitled to do so. Nobody has stronger views on that issue than I have. If children are returning to school, they have no right to benefit. The right hon. Gentleman is not attempting to close that door; he is closing it completely. Young people in the North-East and parts of Wales and Scotland, where there are no jobs, will be unable to obtain benefit. Is that supposed to encourage the young in our society? They will see that not only are the jobs not available but that there will be no benefit for them. Once again, families will suffer through that change.

I turn to the decision to abolish the Supplementary Benefits Commission.

I am sure that my right hon. Friend will agree that some of the young, especially those struggling into manhood in deprived areas, were encouraged to return to school because there were no jobs available. It is a monstrous position that the Government are forcing on the young in the community.

The right hon. Gentleman has told the House of the problems of families in such areas as the North-East. If someone is in school one day and not in receipt of supplementary benefit, will the right hon. Gentleman explain why on the day that he leaves school his family suddenly requires additional money? My constituents, and most of my hon. Friends, cannot understand that.

A young person leaves school at 16 and is available for work. The family has been helping to sustain that youngster by means of the £4 child benefit. A low-income family desperately needs extra support, and many children help to sustain the family once they have left school and are in work. In many instances where youngsters cannot find work families can find themselves below the poverty line. That is what I am objecting to. It is a despicable proposal.

We believe that the abolition of the Supplementary Benefits Commission is wrong, and we totally oppose it. We do not accept the reason for ending the SBC. We believe that it is to be ended because the Government do not wish for criticism from it while they go ahead with their policies of slashing benefits. The body has played a major part in recent years. It is a body independent of Government, which carries out important functions that an advisory committee could not do, especially if that advisory committee had no statutory teeth. Britain needs a body for the poor, especially with the Conservative Party in power. The SBC stands between the Government and the millions that they administer. It takes responsibility for decisions made in its name and shields Ministers from direct political responsibility—from which they should be shielded—for millions of individual cases. The national insurance model, in which decisions are left to local officers, is not appropriate for supplementary benefit.

I appreciate that the changes in the Bill are complicated. The right hon. Gentleman has misunderstood the new position. The SBC is responsible for quite a lot of policy and it shields Ministers from policy decisions on which Ministers should be answerable to the House. Under the Bill decisions on the individual cases will be taken by the supplementary benefit officers, who are insulated from ministerial interference. Surely Ministers must be responsible for policy, and that is what we are providing.

That is not my interpretation of the way in which the SBC worked when I was a Minister. We found the SBC, at least under Professor Donnison, a worthwhile and important organisation. At times we did not necessarily agree. There are times when independent bodies are good for both the Government and the people.

Does my right hon. Friend recall that the SBC has made it perfectly plain that it rejected the idea of a no-cost review? Is he also aware that the recent report by the SBC stresses the importance of index-linked earnings? Is it not bizarre that the Bill, which makes the SBC an advisory body, rejects the two most recent pieces of advice that the Government received from the SBC?

My hon. Friend has probably put his finger on it. If the SBC were still in operation next year, its report might be an embarrassment to the Government because of the policies that they are advocating.

I raise wider issues. There is still a much greater level of discretion. It is less desirable for local officers to be main arbiters. More is at stake for the claimants of supplementary benefit because it is the minimum level of income needed to live on.

When the SBC is replaced and discretion is drastically reduced, will the new regulations contain a new code similar to the A code covering administrative matters and the remaining discretion? Will it be published? Will there be a chief benefit officer similar to the chief insurance officer? The chief insurance officer issues guidance to his local officers which is not published. Will there be a similar guide to the local SBC officers, and will it be published? Will all that not lead to claimant confusion? There will be an Act, the regulations, the SBC handbook, the new, slimmer A code and the chief benefit officer's guide. Confusion is likely to abound, not least for officers.

Those are important issues, especially for the new committee. They are questions that need serious answers, and we look forward to the Secretary of State's reply.

I agree that in many ways the Supplementary Benefits Commission is an odd animal. Many people do not understand it. Certainly it is not understood by many outside the House. They have not understood how it worked. Its responsibilities have been wider than supplementary benefits. For instance, it has had responsibility for resettlement homes.

I have a letter from CHAR. It refers to reception and resettlement centres, and states:
"Worse still, with the abolition of the Supplementary Benefits Commission, the Bill hands over the running of these Units to the Secretary of State. The present Chairman of the SBC has courageously advocated the phasing out of these places. How does the Government propose to prosecute that policy vigorously with only a Social Services Advisory Committee?"
That is a valid question to put to the Government.

There is a suggestion in the White Paper that social services departments should meet exceptional needs payments under section 1 of the Children and Young Persons Act 1969. From where are the local authorities to find the extra money?

The Secretary of State referred to discretion. It is often a vexing, difficult problem within the social security system. It is claimed that it would be simpler, less arbitrary and more open if there were reduced discretion. That may be true. Professor Donnison has been quoted already this afternoon. He is in favour of reducing discretion.

Yes, but he said that there must be two vital ingredients if reduced discretion was to be achieved. He said that the first ingredient was a higher basic level of benefits. According to him, the second ingredient is regular, automatic lump-sum payments. The right hon. Gentleman is not providing those ingredients.

I thought that I made it clear that that is a reform that we are not able to undertake now. Many of the payments will have to be quantified in regulations. We are not implementing the recommendation to which the right hon. Gentleman refers.

That answers the question.

Much will depend on the regulations. It is vital that we are aware of the contents before we consider the Bill in Committee. They must be properly discussed. We must be told how these matters are to be handled. The regulations will be complicated. I note that the Secretary of State is nodding. I take it that we shall see the regulations.

I said at the opening of my speech that the members of the Committee will receive a paper that will set out how it is intended to use the regulation-making power. That will be done as soon as possible. We shall not be able to do that until we know the Members who are to consider the Bill in Committee.

We shall watch that.

The major provision in the Bill is to change the basis of the uprating of long-term benefits from earnings and prices to prices only. The right hon. Gentleman set up a smoke-screen in the Chamber to hide a flagrant breaking of confidence with pensions and long-term beneficiaries. I do not think that they fully understand what is in store for them. If 1974–79 is taken as a base line, pensioner couples are now receiving £5 a week less. If earnings next year move ahead of prices—the estimate is that they will do so by 2 per cent. each year—by the end of the 1980s pensioners will be worse off by over £8 a week. That is the consequence of breaking the link.

What is the Government's reason for taking such a course. Their purpose is to reduce public expenditure. There are 8·5 million pensioners and 1·5 million others in receipt of long-term benefits. They will lose as a result of the Government's action.

The Secretary of State told the House that the incoming Conservative Government met their uprating commitment. The right hon. Gentleman cannot point to an occasion when a Labour Government have not met an uprating commitment. There is one simple reason for the Government's action, and one only, namely, to reduce public expenditure.

I welcome that interjection. Is money to be taken from pensioners to be given to the better off in our society? Is that what the hon. Gentleman wants?

I do not want to confuse the right hon. Gentleman with too many figures. However, I ask him to suppose that next year there are wage increases that average 20 per cent. and that following through the year after is a 20 per cent. increase in prices. If that happens, the pensioner will receive a 20 per cent. increase next year, followed by another 20 per cent. increase, even though the general standard of living might have remained at exactly the same level over two years. Is the right hon. Gentleman arguing against that?

That is a hypothetical question. When earnings are higher than prices, there is increased prosperity. Increased taxation is drawn from those earnings. It is right that pensioners and long-term beneficiaries should share in the allocation of the additional revenue. That is what I am saying.

My hon. Friend the Member for Woolwich, West (Mr. Bottomley) asked a good question.

Order. The right hon. Gentleman is not giving way.

I follow through the right hon. Gentleman's argument. In November 1976, when earnings increased by 19·4 per cent., the right hon. Gentleman, as the responsible Minister, satisfied himself with an uprating of no more than 15 per cent.

At that time I was fighting a war in Northern Ireland. If the Government think that their system is so good—

The right hon. Gentleman has not answered the question put to him by my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle). During the period to which my hon. Friend referred, the right hon. Gentleman cannot deny that the then Labour Government consistently failed to match upratings with earnings. The right hon. Gentleman was the Minister responsible for pensions at the time.

Only a few months ago the right hon. Gentleman was trying to explain his failure from the Government Front Bench. How can he change his tune so quickly?

Synthetic anger does not fit the hon. Gentleman. He knows that what he has said is not true.

I have made my case.

The right hon. Gentleman said that pensioners will not be left behind. If extra money is to be made available, will it come from the Contingency Reserve? If not, are pensioners to be left with the cost of living index only?

The answer to the hon. Member for Woolwich, West (Mr. Bottomley), I believe, is that he should not come to the House and confuse money incomes with real incomes in trying to give an example. A more fruitful line of advance would be to compare the record of the previous Administration which, using the formula that is now being destroyed, produced pensions £5 higher than would have been the case had the Tory formula operated over the same period.

That is the central point of the argument that I have been putting. It speaks for itself. The difference is £5.

The uprating date is dealt with in clause 1(3) designed, presumably, to stop the creeping forward that now takes place. But the Bill allows the date to be put back to two weeks next year and a further one week the following year. This can be used as a backdoor method of savings. The sum could amount to £100 million in 1980 and £50 million in 1981. If the Secretary of State makes those savings, as proposed, will he also ensure that the money goes back into benefits? Or will the money go to the Treasury? We are entitled to know the answer.

As my hon. Friends have shown, this is a thoroughly bad Bill. No smoke screen that the Secretary of State puts up can hide the fact. I should like to summarise the questions that I have put. They are important and need emphasising. Are the Government going to break the link between prices and the short-term benefits? An attempt is made in the Green Paper on the sick benefit. What will the Government do about the unemployment benefit and other benefits? Are they going to hit the families of strikers? Will these changes be added as amendments to the Bill during its passage through the House?

I must tell the right hon. Gentleman that if any of these major proposals are put into the Bill at Committee stage or on Report it will be outrageous. They are major issues that would demand a Bill of their own. We want an assurance from the right hon. Gentleman that he is not going to introduce these measures.

Are child benefits to be ignored? When shall we get an answer? We have asked often enough. Not least among those entitled to an answer are the 7 million mothers who claim child benefit as such. I return to the basic point. It will be left to the Labour side of the House to defend pensioners, the disabled, the sick and the unemployed, and one-parent families. We will continue to do so, despite this Bill, for we will fight every line.

5.53 pm

I am sure that we have sympathy for Ministers in the Department of Health and Social Security in the extremely difficult task facing them. The Bill before the House has many excellent clauses. I must, however, tell my right hon. Friend that in this barrel there is one very bad apple indeed. I wish to concentrate my comments not upon the good parts of the Bill but upon clause 1.

On 17 December, in The Daily Telegraph, under an economic commentary headed "Cutting the pensioner's coat to our cloth", it was stated:
"Most of the obligations to index were written into law at the end of the 1960s after a decade of exceptional economic growth. At the end of the 1970s after nearly a decade of negligible growth during which there has been a substantial improvement in pensioners' relative position the situation looks rather different."
That it is totally to misunderstand the position in which pensioners find themselves. That article would have been valid if the national insurance pension itself were a sum of money upon which it was possible for a single person or a married couple to live. It is not. The low base figure from which the pension started created an entirely different situation.

Tomorrow's pensioners may be all right. It is today's pensioners who worry me. It is today's pensioners who, in the last 10 years, have suffered excessively. After the failure to solve our economic problems in the 1970s, the House should perhaps ask itself sometimes how we have survived economically. In the last few years, a major contributory factor has been the use of North Sea oil. What we have been doing is to misuse the birthright of our children in order to subsidise standards of living that we are not earning. Throughout the whole of the 10 years, we have been living on the backs of the savings of the pensioners of this country.

We have seen the value of those savings destroyed year by year. Those who have gained, in the House and in the country as a whole, are people in full-time employment. The pensioner who retired in 1970 with £1,000 worth of savings is today well under 80. But what is that £1,000 of savings worth? If he is lucky, it is worth £300. Yet that pensioner played no part whatever in the economic decline and in the industrial difficulties and problems that we have failed to solve in the last 10 years.

The savings of the thrifty and the savings of pensioners, who worked all their lives for their retirement and who were determined to put away sufficient money to be independent of the State and independent of their families, have been steadily whittled away. My right hon. Friend the Secretary of State is right—I shall give the House some figures—in saying that the statutory rule involving earnings was fudged. However much the right hon. Member for Salford, West (Mr. Orme) may wriggle, he knows that. I must, however, tell my right hon. Friend that it is no excuse to say that because it was fudged and because it was not legally enforceable, we should now do away, with it. What is needed is exactly the opposite. My right hon. Friend should be producing a watertight clause to ensure that a pensioner is protected in the future. I shall enlarge on what I mean.

My right hon. Friend made great play with the question whether the House, or any party, would be prepared to put the burden on the backs of the working population. I maintain that if the issue were explained to the people they would accept the burden. The working population—I use that description in the broadest sense—have been living on the backs of the pensioners for the last 10 years. Savings, investment income and all the efforts of a person who has devoted his life to working hard and preparing for retirement have suffered greatly during those 10 years.

Many pensioners worked for an independent retirement. It will give me no pleasure tonight to vote in the Opposition Lobby against the Bill. Labour Members have betrayed the pensioners many times. They have imposed harsh taxation and created appalling inflation. But, worst of all, having presented the House with a Bill to bring in both earnings and inflation, accompanied by a great fanfare of trumpets and from which all possible political capital was extracted, they then proceeded, not once but twice—and I believe that there would have been a third time if they had been re-elected—to kick those 8·5 million pensioners in the teeth. They broke the link.

When asked about that matter, the right hon. Member for Salford, West dodged the question, but let the House understand the figures. In November 1976 earnings in the 12-month period increased by 19·4 per cent. The pension increased by 15 per cent. In November 1978 earnings within the year increased by 13·3 per cent. The pension increase was 11·4per cent. Those are the facts.

If the Labour Party had won the general election, going by the figures put out during the campaign it intended to increase the old-age pension by 12.8 per cent., but in the period that it was supposed to cover earnings rose by 14.5 per cent. Therefore, the right hon. Member for Salford, West should not attempt to lecture those of us on the Government Benches along the lines that he did.

I shall give way in a moment. I shall be going into the Lobby with the Opposition, but it will be with great regret and only to show my total disagreement with clause 1.

I am following with great interest what the hon. Gentleman said. The point that I made was that a married couple on pension would have been £5 a week better off under a Labour Government than under this proposal.

The right hon. Gentleman is wriggling again. The House would respect him much more if he had the honesty to say that financial resources at that time did not enable the Labour Government to carry out the terms of the legislation that had gone through the House. But the House does not respect those who wriggle and attempt to claim that they maintained the index when they did not. Whatever one may say about clause 1, my right hon. Friend's integrity is unquestioned. I believe him to be wrong, but no one can deny his integrity and honesty in presenting this proposal to the country.

Therefore, I say that all Opposition Members, including the hon. Member for Birmingham, Perry Barr (Mr. Rooker), should hang their heads in shame for the way in which they treated pensioners in the past four or five years. The pensioners will not be fooled by speeches made by the right hon. Member for Salford, West or his deputy.

Between January 1970 and January 1978 the retail price index rose by 168 per cent. Pensioners spend a high proportion of their income on food, fuel and housing. The pensioner index does not include housing. The increase in the pensioner index in that same period was 192 per cent., not 168 per cent.

I ask my right hon. Friend and his colleagues in the Department to consider this matter. I know that I cannot change their minds on clause 1. However, I ask them, when looking at increases in the pension in future, to consider basing it fairly and squarely on the goods and services used by pensioners. A pension increase based only on the general RPI does not truly reflect the costs, expenses and increases faced by pensioners. I fear—not at this time, but in the next few years—that these costs will get steadily worse. We know that because of world prices fuel bills will steadily increase for all of us. Therefore, I hope that my right hon. Friend will feel able to look at that matter when future increases are proposed.

I should like to quote the words of the director of Age Concern England, Mr. David Hobman:
"The general trend since 1951 has been for earnings to rise faster than prices, and it should also be pointed out that the General Retail Price Index does not reflect the higher inflation rate experienced by lower income householders."
We are talking about today' pensioners. Those who retire in 15 or 20 years will be in an entirely different situation, but the nation owes a great debt to today's pensioners. They all went through one world war; many went through two world wars. Many had hard and difficult times in the world depressions of the 1920s and the 1930s. Many had to work long, hard hours, in tough conditions. That is why I argue strongly for those people. I believe that Parliament should clearly establish the fundamental right of those pensioners to receive their share of rising living standards in the years ahead.

Order. Before I call anyone else to speak, I remind the House that even with the 10-minute rule we shall not get everyone in who would like to be called—I am not making any comment about the hon. Member for Brighton, Kemptown (Mr. Bowden), whose speech was brief—unless everyone co-operates to allow others to be called.

6.5 pm

I am naturally tempted to deal with many points in the Bill but I shall follow your request, Mr. Speaker, and, like the hon. Member for Brighton, Kemptown (Mr. Bowden), deal only with the aged and the retired.

I congratulate the hon. Member for Kemptown on his speech. There were parts of it with which I disagreed and with which I shall not become involved now, but the hon. Gentleman showed great courage. He does so as co-chairman of the all-party committee.

I want to consider what happened a few months ago. During the general election campaign, on many occasions I, as Secretary of State, challenged the present Prime Minister and the present Secretary of State for Social Services to accept or deny that their intention was to do what is contained in clause 1. They would neither accept nor deny it. They would not come clean before the public about their intentions. Certainly they and their supporters accused me, as Secretary of State, of being rumour-mongering and scare-mongering, and the newspapers said that this was one of the listed lies in terms of what would result from a Conservative Government.

I argued then that it was essential that pensioners should share in rising living standards during those years in which living standards were rising and should be protected against inflation during those years in which inflation was at its height. I argued that pensioners should get the best of whichever of the two options was before them. I said that they should not only be protected against inflation but entitled to see their living standards rise when that was so nationally.

I felt that it was right that that should be so. I said that the Government, of which I had the honour to be a member, had no intention of doing what the present Government are trying to do. I think that they are wrong to do it. I believe that most people feel that pensioners started from a low base and that, bit by bit, their standards are improving. I think that the hon. Member for Kemp- town will recognise that under the Labour Government the real income of pensioners rose by over 20 per cent.

I said that it was my belief that the present Prime Minister was so determined to slash public expenditure that even the elderly, the disabled and children could expect to feel the effect of the chopper. I said that the present Secretary of State for Social Services, if he were appointed to that post, would fulfil it as if he were a Treasury Minister, not a Social Services Minister. My regret is that the right hon. Gentleman has not fought against clause 1.

Therefore, I am right. I submit that the Conservative Party came to office on a false prospectus. If Conservative Members had honestly told nearly 10 million pensioners that as one of their first measures they would take action to under-mine the statutory obligation created by the Labour Government, I believe that that would seriously have affected the result of the election. I believe that that is why they refused to come clean. It is why the right hon. Gentleman refuses to answer my questions and why the Prime Minister refused to answer questions put to her by the present Leader of the Opposition.

Even now I do not think that elderly people recognise those facts. Those who speak for them do. The organisation representing them feels deeply and strongly about this part of the Bill. I believe that there will be revulsion throughout the country when it is realised what powers the right hon. Gentleman is taking in this Bill.

Is the apparent unconcern of the large number of elderly people due to the fact that they know that under the last Conservative Government pensions rose considerably faster than prices and because they know that this Government have made a commitment that pensioners will fully share in our rising standard of living? They may, therefore, recognise some of the arguments of the right hon. Member for Norwich, North (Mr. Ennals) as shadow box-in.

I am not shadow boxing. I was interested in the Minister's promise to pensioners. If he meant to keep that promise, there would have been no need for clause 1. It would have been unnecessary. I believe that the Secretary of State was shadow boxing by trying to pretend to pensioners and to the public that the right that he is consciously taking away from them does not mean that they will be worse off.

My right hon. Friend the Member for Salford, West (Mr. Orme) was quite right to say that if the formula contained in the Bill had been applied over the past five years pensioners would have been £5 a week worse off. We on the Labour Benches will do everything that we can to tell the public what has been done. I believe that there will be a feeling of revulsion, and I hope that the right hon. Gentleman will think again and be influenced by the speech of the hon. Member for Kempton.

6.12 pm

I had hoped that, after much dissension during the late 1960s and early 1970s, what has come to be known as "pensioneering" was on the decline. I had hoped that both sides would concede that neither had a monopoly of concern for the less well-off in our society. Pensioners are not advantaged by what I can only call partisan "me-tooing". Unfortunately, I have been disappointed in the debate so far and so I begin by placing it on record that I address the House as the first Back-Bench supporter of the Bill.

The principal part of the Bill aims to achieve parity in uprating between unemployment and sickness benefits on the one hand—which at the moment are linked to prices only—and pensions and long-term benefits on the other. At the moment they are linked to either prices or earnings. If for no other reason than simplification there is a case for the principal clause in the Bill. I suggest, however, that it goes much further than mere simplification. The clause removes an expectation that has frequently been disappointed.

Without being unduly partisan, I think that it is fair to remind the House that the Labour Government broke their implied promise on uprating in two of the last three upratings. The figures given by my hon. Friend the Member for Brighton, Kemptown (Mr. Bowden) were correct. He might have said that they were admitted by Mrs. Barbara Castle. She made the admission at a press conference on 8 April 1976, when she said that if the then Government had maintained their formula pensions would have gone up to £16 a week, whereas they went up to £15·30, and that the pension for married couples would have gone up to £25·50, whereas it went up to £24·50.

These are the facts. I believe that as a result of appearing to promise something that Governments do not deliver we are well on the way to making pensioners and other people totally disenchanted with the actions of Government.

The hon. Member for Brentwood and Ongar (Mr. McCrindle) will recognise that, though there were occasions when the objective that was set by the Secretary of State was not achieved, it was taken into consideration in the next uprating. That was so in the case of the uprating for which the Secretary of State is responsible. In the year before that the estimate was based on prices, and prices were running ahead of earnings.

One might contend, if one wished to be punctilious in argument, that the uprating that we have experienced, and perhaps enjoyed, under the present Government was catching up because of the shortfall under the preceding Labour Administration. If that is what the right hon. Member for Norwich, North (Mr. Ennals) wishes me to concede, I am ready to do so, but I do not think that I can do that without drawing to his attention a quotation in Pensioner's Voice of January this year—when the right hon. Gentleman was still Secretary of State for Social Services—which said:

"There is a statutory duty to take these figures into account—which was done by the Labour Government—but no statutory obligation to do it right."
That is the opinion that many Conservative Members hold.

It was held out to the pensioners that there would be an uprating. I have no doubt that that was the intention but it was not done. Having, therefore, made a moral commitment in loose legislative form, it was financially impossible for them to fulfil their commitment. Of such things is cynicism born among the electorate. It is better by far to enact an honest, specific commitment to which Government must conform.

There is nothing in the Bill to say that pensioners should not go on receiving more than is legislatively laid down when financial circumstances permit. I realise that to say that is to lay oneself open to ridicule from Labour Members. The former Secretary of State could do worse than cast his mind back to the period of the last Conservative Government and contrast it with his own period in office. I think that he will find that both Governments did their best within limited financial circumstances to raise the standard of living of the pensioner, so far as that could be done.

That is why I started my speech by saying that I thought that the continuing "pensioneering" did no service to the pensioners and reduced the standing and the reputation of hon. Members. We cannot consider uprating future pensions without thinking of uprating contributions. It is infinitely easy to say how much we should like to give to pensioners—I am as guilty as any in that I have joined in that exercise in the past—but we must keep a fair balance between what we think the pensioners are entitled to expect and what we ask the working population to contribute.

I believe that the Bill is fair to the contributor and fair to the pensioner. It holds out the prospect of our giving more to the pensioner and thus improving his standard of living as soon as circumstances permit. I believe that the principal part of the Bill is moderate. I do not believe that it deserves the denunciation to which it has been subjected, particularly by the right hon. Member for Salford, West (Mr. Orme).

I turn to the supplementary benefits aspects of the Bill. There has been much talk recently of social security scroungers and of making an end to the automatic annual uprating of certain benefits. I am known to have a long-standing interest in social security matters and I would approve strongly of any measures aimed at weeding out abuse of the social security system. I would support strongly the encouragement of those who could work, but will not, to take available jobs. At the same time I remind the House that when we talk of supplementary benefits we talk of the neediest and the poorest section of our community.

I am worried lest the hard-faced approach to abuse, which is correct, conceals concern for the poor and the need to uplift their condition. I am at one with those hon. Members who are in favour of an improvement in child benefit. However, the only feasible way of doing that that I can envisage in the for-seeable future is to make such an increase in child benefit selective.

Expenditure could be saved by taxing some benefits or ending some automatic increases. I am prepared to agree to those changes provided that, while part of that saving may have to go towards reducing the public sector borrowing requirement, part must also go to increasing the standard of living of the poorest people in our community—people who are worse off than the pensioners on whom we have concentrated most this afternoon. I have in mind in particular one-parent families and large families.

I am an unashamed supporter of the selective taxation of benefits. However, before we reach that stage we must simplify the supplementary benefit system. That is dealt with in what I believe to be the more important part of the Bill. The Bill starts to simplify the system at nil net cost. Some useful steps, which can easily be overlooked if one concentrates on clause 1, are embarked upon in the Bill. An attempt is made to eradicate some of the criticisms that rightly have attended the system.

For example, a statement is to be presented to each claimant with a calculation of his individual benefit. If my surgery cases are typical, that will be welcomed by many beneficiaries. There is to be published a book of entitlements and much less discretion is to be given to individual officials. The five rates of benefit for children will be reduced to three. In itself that is a move towards simplification. Lone parents will be able to retain half their earnings between £4 and £20. At a time of extreme economic stringency these are correct steps along the road towards the simplification and improvement of the supplementary benefits system. They may be small changes in themselves but they are useful. I hope that they will be the foundation for using the social security system to help those in greatest need.

Some people inveigh against scroungers as if no decent people rely on our social security system. My concern about that is mollified by the assurance in the Bill that care, concern and compassion are not restricted to one side of the House. In that spirit I commend the Bill.

6.24 pm

I apologise to the Secretary of State and to my right hon. Friend the Member for Salford, West (Mr. Orme) for not having been here to listen to their opening speeches. I was incarcerated in a Select Committee, which began exactly when the Secretary of State began his speech. I was looking forward to hearing those speeches and I feel deprived because I was unable to hear them.

Many people have argued for years for simplification and a real review of the whole social security system. Many of us called for a review of the entire system of inter-related income maintenance, taking into account taxation, housing and other benefits, as well as national insurance and supplementary benefits. The Department's review "Social Assistance" was only a piecemeal attempt to examine one aspect of the system. A great opportunity has been missed by not taking on board the real need to examine the whole scheme.

That is why I and many organisations believe that this is a ragbag Bill. It has been referred to as a "no-cost Bill" in the press and elsewhere. It may cost the Government nothing, but it will cost some claimants a great deal, because they will be disadvantaged by some of its provisions. Reference has already been made to clause 1 and to the effect of the decision not to adopt the Labour Party proposal to link pensions to earnings or prices, whichever is the higher, but to link pensions only to prices. That will be to the detriment of pensioners.

The Supplementary Benefits Commission said that to implement the recommendations following its review would involve a further £200 million and that that would ensure only that claimants were no worse off. The Bill does not propose an increase in expenditure. It will take away from many poorer claimants in order to give a tiny fraction to other groups.

The system needs simplifying, but for whom does the Bill simplify the system? The more that I look at the Bill the more it seems that it simplifies the system for the sake of the Department of Health and Social Security, but not for the claimants. That is reprehensible because the beneficiaries of a social security system should be considered first.

Much has been said about establishing the rights of claimants. The hon. Member for Brentwood and Ongar (Mr. McCrindle) listed certain rights that the Bill establishes. No one would disagree with the establishment of such rights. However, it is no good giving claimants rights if they result in the claimants being disadvantaged in the amount of money that they receive. In the last month there has been an argument whether it is right to lay down in list form what claimants are entitled to and whether it is right for supplementary benefits officials to be given discretion.

I would be in favour of listing people's rights as closely as possible, provided that the benefits were generous enough to ensure that no one was disadvantaged. However, we now have the worst of all possible worlds. It is a great pity that we shall now lose the safety net of discretionary payments. We shall also see the demise, in its present form, of the Supplementary Benefits Commission. In the last few years that Commission has done much to help people remain above the poverty line.

I turn to EEC directive 79/7, concerning equal treatment for men and women in social security. The Bill purports to enact that directive. However, I draw the attention of the House to the fact that it does not really do that. It does not fully implement the principle of equal treatment for men and women. The Bill apparently improves the position of women, as they will now be able to claim for dependants through the sickness, unemployment and supplementary benefit schemes. However, claimants will be subject to certain qualifying conditions. Those conditions are not specified in the Bill and will have to be drawn up by the Department.

Reference has already been made to the large parts of the Bill that will come into effect by regulation. We do not know what those regulations will comprise, and we shall have little opportunity to debate them. I do not know whether they will be made by affirmative order or whether we shall have to pray against them. Either way, there will be little opportunity for Back Benchers to make their views known.

There is a good deal of outrage among groups outside the House—one-parent families, the Child Poverty Action Group and other women's organisations—concerning that part of the Bill that deals with equal treatment, because many of the provisions of the Bill will be brought into effect by means of statutory instruments. The EEC directive calls for equality of treatment of the sexes. In my view equality means equality. The Equal Opportunities Commission, in its response to the consultative document "Social Assistance", stressed that nothing less than full equality for men and women under the supplementary benefits scheme would be acceptable.

Part 1 of schedule 1 is entitled:
"Amendments relating to similar treatment for men and women".
The word "similar" is used throughout the Bill. There is no reference to equal treatment, only to "similar treatment", but similar treatment does not necessarily mean equal treatment.

I hope that the Minister will assure us that what is described in the Bill as "similar" will actually be real equality.

Although the EEC directive makes particular reference to equal treatment for people in old age, sickness and invalidity, it omits two key benefits. I had hoped that any Government would try to include those two benefits in a new social security Bill. I refer, of course, to the married women's non-contributory invalidity pension and to the invalid care allowance.

Those allowances fall outside the scope of the directive, but a golden opportunity has been missed of correcting those anomalies. They could have been included in the Bill. The argument still goes on about the difficulties that are caused to married women through the operation of the non-contributory invalidity pension scheme and the fact that a married woman cannot claim invalid care allowance. Even when the Bill is implemented, many thousands of disabled housewives and married women who care for dependants will remain in the same disadvantaged position.

The EEC directive also raises the question of who in the family should claim supplementary benefit. Part I of schedule 2, paragraph 3(b), suggests that certain qualifiying conditions will operate. They will also be drawn up by the Department. No conditions are specified in the Bill, and eventually they will be in the form of a regulation. Perhaps the Minister will tell us whether there will be consultation about those regulations before they are introduced.

Neither Parliament nor the new Social Security Advisory Committee will have control over the content of the orders. The Minister should therefore give an undertaking that before those orders are introduced there will be consultation not only with Back-Bench opinion but with organisations outside. That will ensure that these subjects are being properly dealt with.

There have been discussions about the nominated breadwinner. The Equal Opportunities Commission recommended that a couple should choose which one of them would be the nominated breadwinner. Although there is some substance in the EEC recommendation, and although other organisations also hold that view, there are some disadvantages. It does not take into account the large number of women who are only in part-time work. The concept of the nominated breadwinner does not take into account the changing attitudes within families, whereby the married woman's part-time earnings are taken as part of the family income on a more established basis than before.

There is a growing feeling that a more balanced relationship now exists between partners in a marriage. There is a better relationship between the wage earner and the person who contributes to running the household. If the proposal that there should be a nominated breadwinner is carried out it will perpetuate the bread-winner-and-dependant concept. When we were in government I thought that we were beginning to get away from that concept, which has been decried by many organisations, all of which have an interest in that subject.

The more that one looks at the Bill, the more it gives rise to great anxiety among large numbers of people. Cuts and benefits are shrouded beneath the cloak of tidying up the system, and pensioners will lose possibly as much as £8 because their pensions will be linked to prices only rather than to prices or earnings. There is no promise to uprate child benefit allowance. All these aspects reveal that the Bill will disadvantage poorer families in the end.

We should throw out the Bill and replace it with one that has had proper consideration and that takes into account not only national insurance and supplementary benefit considerations but the whole wide range of the social security system. If we are to have a new Bill and a new system, let us for goodness sake see that it is a proper system. The Bill does not achieve that.

6.38 pm

Since I have been a Member of the House, in every parliamentary Session a Minister has stood at the Dispatch Box and said that he was introducing a social security Bill and that its aim was to simplify the system. My cynicism causes me to doubt whether this Minister will succeed.

Some of the changes sound reasonable, although I sometimes wonder whether the Minister understands the complexity of the problems that the supplementary benefits system causes. Like many hon. Members, since becoming a Member I have written to my local social security officers in the course of taking up individual cases. I pay credit to those officers for the excellent way in which they deal with those letters. That correspondence consists of about 15 letters a week, and sometimes when I post them I am tempted to put them into a big envelope and send them to the Minister. I should do so, not because I expect him to sort out the problems of my constituents, but rather to let him know the amount of correspondence that takes place behind his back about this complicated and bureaucratic system.

I admit to the Minister that I have so little confidence in my comprehension of the details of the system that I will not give my constituents any advice unless I have a letter from the manager of the local office of the Department of Health and Social Security to confirm my view. That advice has been well placed in the past, because on more than one occasion I have written to the local office and thought that I was wasting the time of both myself and the manager, yet I have received an affirmative reply indicating that all the calculations were wrong.

I believe that we have landed up with the most horrible of systems, and I still take the view that the Liberal Party scheme of negative income tax—others call it other things—is the only long-term answer to this problem. I recognise that this is a complicated matter, and I do not criticise any Government for not solving it immediately. But if only we started along the path, I would be a great deal happier.

The main impact of the Bill on the mass of our constituents will be the change in the base for pension increase calculations. Previously, the base was calculated on inflation or wages, whichever was the larger, but it will now be calculated on prices. I do not believe that this is a good part of the Bill. The clause relating to this matter is enough in itself to persuade my colleagues and me to vote against the whole Bill.

Had the Government explained the ratchet difficulty—and there is a difficulty, so we should not try to kid ourselves—and had they said that the calculation would be based on earnings, the matter would be more understandable and tolerable.

Will the hon. Gentleman consider the possibility that during the next two years prices will rise faster than earnings and, therefore, that it might be appropriate to retain the calculation on prices?

The hon. Gentleman may well be right, but I should be interested to know how many times during the great May experience, through which we all went, he explained to his constituents that, given the election of a Conservative Government, we should see a net and miserable reduction in our standard of living. Clearly, we should have a system whereby, over a period of four or five years, the pensioner can expect to follow earnings increases rather than price increases. I accept that on a year-to-year basis the figures sometimes produce peculiarities and that we can end up in some peculiar situations. However, I am appalled that in general during the next few years all that pensioners can look forward to is a maintenance of their present standard of living, which to my mind is quite disgraceful.

I believe that in x number of years we shall once again have growth in the economy. I do not believe that Britain has reached the pinnacle of its gross national product for all time. But the Bill means that the pensioners of Britain will receive a gradually reducing percentage of the GNP. That is wrong, and I could not support it in the Lobby tonight.

About 2¼ million retired people are on supplementary benefit, and they have a miserable standard of living. I remember that during discussion on the Social Security Act 1975, which was the first Committee on which I ever served—and it was enough to put me off serving on Committees for the remainder of my life as a Member of this House—I warned that the sad thing about the Measure—which everyone other than myself seemed to favour—wasthat it condemned those who were retired and on supplementary benefit to die on supplementary benefit. The way in which the sums of money were taken in, and the way in which they were paid out, meant that there was no real prospect of increasing the base of the pension scheme in real and substantial terms. If one looks at the figures since that Act was implemented, one sees that that is precisely what has happened. There has been no real increase in the basic pension at all, yet that is the only way in which we shall get the mass of those who are currently retired and on supplementary benefit off supplementary benefit.

The reality is that the retired are paying the penalty for our weak economy. All of us must take part of the blame for the way in which we have failed to run the economy successfully. Those with small savings have been robbed. I often look in my local newspaper and read about someone taken to court for stealing £5 and being rightly and sensibly dealt with. I then think of some pensioners I know who have saved about £4,000, who will be robbed because of the system, and about whom not one squeak will be heard. Those are the people who have war loan stock. If ever anyone was conned when he bought something, it was the person who is now retired.

Many retired people also receive small pensions from their companies. In my constituency a lot of former employees who are now aged 75 were given a pension—a pittance really—of about £2 or £3 a week. At that time it was a useful addition to their pensions, but it still remains £2 or £3 a week. Frankly, they have been robbed.

I cannot understand why the Minister will not say that he will ensure that pensions will at least rise according to earnings. If he gave only a verbal assurance, many hon. Members would feel a lot happier. One of the reasons given for the change was that our working population was not prepared to pay increased national insurance contributions for an increase in pensions. I take issue with that view. Our working population may not be prepared to pay tax for most things, but I am quite certain that it is prepared to pay more tax for an increase in pensions. That is the one public expenditure that can be defended on any platform. In the factory in which I worked it was generally assumed that if people were to have a decent pension it had to be paid for, and it was recognised by the workers that they would have to pay for it themselves. I therefore believe that the Secretary of State was wrong in that assertion.

The real disaster occurred in 1976—the year in which the then Labour Government decided to change the basis for calculating pensions. The change was that in future pensions would be based on the Government's guess of next year's rate of inflation instead of the previous year's real rate of inflation. At the time, I called it the biggest money-saving fiddle of all time, and I stand totally by that view. Frankly, the sheer magnitude of that change puts the present proposal in the shade. That was a disgraceful thing to do, and the shenanigans of Labour Members who pretend that they never did it are a disgrace.

By definition, Governments are bound to under-guess next year's rate of inflation. How can any Minister announce next year's pension increase and say that pensions will be increased by 20 per cent., when he knows that inflation will rise by 16 per cent? That means that pensions are increased by 4 per cent. We all know that with his lovely, straight face, to which we have all become used, he must say that he is sure that inflation is about to come down and that it will be only 10 per cent. It was crazy to change the calculation to next year's guess at the change in the rate of inflation, yet that is what the Labour Government did. As perhaps the only neutral Member in this House, it is only right that I point that out.

Perhaps the hon. Gentleman will note that our "guesstimate" for this November was 17·5 per cent., and that the actual figure was 17·4 per cent.

When we see how the "guesstimate" goes for the next 12 months we shall be able to judge.

What do the Government intend to do about the graduated pension contributions? Shall we ever reach the stage when graduated pension contributions will be adjusted to take inflation into account? The "won't work" problem really does exist. Certainly in rural areas the "won't work" or "not very keen to work"—or as I sometimes put it "stupid to work"—philosophy exists. The rural areas in my part of the country are among those with the lowest earnings. People who live in villages earn the lowest wages. I have to tell London continually that the rural areas of Cornwall or Wales are not as rural areas are regarded in London. If one is really successful in London, one goes to the rural areas, buys a fancy house and commutes to London.

The really poor people are those who live in the villages of the remote areas of Britain. The Government propose to charge them for sending their kids to school. They intend to charge an economic price for school meals, and they say that help towards those two items will be limited to FIS and supplementary benefit. I cannot think of anything that has been done for a long time that will increase the "stupid to work" problem more.

My final question concerns child benefit. I believe that it is one of the most useful benefits, but I wonder why the Government have never considered taxing it, which would enable the sum paid out to be increased by about 25 per cent. to 28 per cent. It would give a real increase in income to those who pay no tax. If a little extra money could be afforded, the system could be such that no one with a taxable income of less than £6,000 a year would be one farthing worse off through the change. Those with incomes in excess of £6,000 a year are, quite frankly, capable of bringing up their children on their own. I have never understood why the idea of taxing child benefit was not considered, and I ask the Minister whether it is possible now.

I am a little afraid to suggest it in case the Government tax child benefit and do not increase it at the same time, but a genuine transfer of disposable income from those who are well off to those who are really poor could be made through such a scheme. If it is rejected, what shall we do about child benefit? It should be included in the Bill whether it is tied to prices or to something else. The loss of a steadily increasing child benefit in a period of inflation will genuinely erode the living standards of poor families, and it is those families that the House has the main responsibility to defend.

6.51 pm

We have had much party controversy in the course of the debate, although the opening speeches from both sides were deeply sincere. In spite of the fireworks, the House is united in a profound sense of shame about the present position of the British Welfare State. We know that there is not enough money for people in need and that our pensioners, large families, one-parent families and the disabled are not getting the level of income that we should like.

There is a serious problem before us, and I quite understand why the House is anxious, particularly about the provisions of clause 1, which appears to be abandoning the aim of slowly increasing the amount of benefit by the operation of the ratchet. I never liked the ratchet, because it did not seem to be founded on any principle.

I have often tried to draw attention to the need to analyse the nature of beneficiaries' entitlement, so that we can decide what the moral commitment of society is to pensioners and others in receipt of national insurance benefits, supplementary benefit, earnings-related benefit or whatever it may be. I do not believe that one single rule is the right one, and we need to look into the matter much more deeply.

Where we are dealing with entitlement based on contributions, the benefits need to move with the flow of contributions. Where earnings-related benefits and national insurance benefits are concerned, the right system is that they should be linked to earnings. Where the root of the entitlement is citizenship—and the obvious example is child benefit—there again, the income comes from the taxpayers' contributions and is related to earnings, and the benefit ought also to be related to earnings.

The third major category of benefits is supplementary benefit, where the entitlement of the recipient is derived from his need. The money is paid by society as an act of compassion because we cannot allow anyone in our society to have less than a minimum standard of living. Therefore, for supplementary benefits the appropriate uprating principle must correspond to prices.

In the Bill an attempt is made to choose just one part of the ratchet and tie the entire structure to that, but I do not believe that that is the appropriate way to do it. The first clause should be split, so that basic national insurance benefits and child benefit should continue to be related to earnings on the principle known in France as "repartition", worked out at a time of high rates of inflation in France after the war; but supplementary benefits should be related to needs—that is to say, to prices—so as to provide a minimum income guarantee.

Such a split would result in the basic rates of benefit drifting apart and might mean that needs-related supplements came to more than the basic allowances, as indeed they used to in the early days of national insurance when the national insurance pension was regarded simply as a help in old age and not by any means as a minimum income guarantee.

We must see the attraction of fixing identical rates of benefit, as the Secretary of State is hoping to do, whether in supplementary benefit or in national insurance. However, it is doubtful how much that means when such a large proportion of those dependent on supplementary benefit are paid additional allowances for rent, which varies greatly from one part of the country to another. While so many recipients of supplementary benefit have separately assessed rent allowances, the idea that the rates of benefit for national insurance and supplementary benefit are identical is an illusion, and I wonder whether it is worth pursuing at present.

My right hon. Friend mentioned studies into the possibility of a unified housing benefit. Professor Donnison has made a particular study of that matter. I am greatly concerned about that, since if we could achieve a fair system of unified housing benefit, we would be taking an enormous step forward in the abolition of casework and be taking the most constructive step we could towards the abolition of the means test almost altogether—which is an extremely desirable objective.

I have often sought to draw attention to the need to probe the provision for household costs in the total structure of benefits. I am still in doubt as to exactly the reasons for the relationships in national insurance between the allowance that we give to a household consisting of only one person and the allowance that we pay to a household consisting of two people. It is obvious that there is a common element in the figures, but I do not believe that there is any serious thought behind the determination of what that common household element should be.

In the meantime, we have to recognise that, if basic benefits were related to earnings, as I am suggesting, they might even fall in 1980. We have worked ourselves into such a state of gloom about our economy that our prophecies will be self-fulfilling, and we shall talk ourselves into a recession, as we did before the war. One of the things that we have to fear is the fear of recession itself, which is making people so nervous about investment and future plans.

If there is to be a fall in the total level of the nation's earnings in real terms next year, my right hon. Friend is right not to try to relate benefits to earnings. That would result in an actual cut in the standard of living for those on very low incomes, and we would all be extremely loth to allow that to happen.

That leads me to make a comparison between the treatment of pensioners in this country and in certain other major industrial countries. I have been able to procure figures that I believe to be broadly correct, which show the way that a man and wife in retirement are treated in several other industrial countries. The comparison is an unfavourable commentary on the way in which we treat our pensioners in the United Kingdom, both in the way our pensioners' incomes are related to the national average wage and in the absolute level of benefit.

Internationally, if we take the net income of a retired man and wife, after allowing for tax, and compare it with the net income of a man and wife before retirement, it can be seen that in Germany the pensioner's income falls to about 60 per cent. of the national average wage, in Italy to about 70 per cent. in Holland over 60 per cent. and in Belgium to 78 per cent. Belgian pensioners do very well by comparison with the Belgian national average wage. However, in the United Kingdom, the figure falls to only 45 per cent. That represents a heavy drop in the spendable income of a pensioner couple in this country.

In terms of absolute values, the figures in this country are also unfavourable. The pension paid for a couple in this country on the basis of purchasing power parities is less than half the Belgian rate, 60 per cent. of the West German rate and 20 per cent. less than the Italian rate—even though the Italians are agreed to have a low standard of living. The figures that I have quoted relate to October 1978, but I believe that they are still true today.

The House is unanimous in wanting to find ways to increase the total level of pensions and to encourage the Government to increase the basic rate of child benefit. If we cannot raise the rate of child benefit for all children, we should try to do it for the second and subsequent children at least, and for the children of one-parent families. This Government are interested in creating incentives. By far the most rational and merciful way of increasing the incentive to work is to increase the level of child benefit. The benefit is paid for children whether the parents are employed, unemployed, in work or sick. The more the fall in the rate of receipt of benefit is diminished, when a man returns to work, the more effectively we solve the problem of disincentive and the poverty trap. I hope that the House will unite in continuing to press the Government to find the earliest opportunity to increase the rate of child benefit.

The hon. Gentleman is saying that there is a need to increase the incentive to work in a civilised way and I agree with that. However, I am puzzled by his suggestion that child benefit should be increased for second and subsequent children if it cannot be increased for all children. Given that the majority of poor families are small, with two or fewer children, would it not be more sensible, if he is thinking of that form of selectivity, to increase the benefit for the first child only?

That would depend on the problem that we are trying to meet. If we are dealing with the poverty of families it is true, as the hon. Genleman says, that small families may be in great need: it is not only the large families who are in need. However, if we are trying to minimise the effects of inflation, in so far as it damages large families more than small families, the second and subsequent children must be thought of first.

I have often said that when the price of bread, cheese, meat or another household necessity that is required by each member of the family, goes up, the large family is hit much worse by inflation than the single-person household or a couple. In one case, the housewife has one or two plates to cover with food, whereas, in the other case she may have five or six. Price rises in food are much more devastating for the large family than for the small family.

Of course, we should remember that disadvantaged families with only one child are largely one-parent families. Although none of us would wish to see anything taken away from such families, it may be pointed out that they receive more for the first child than do other families.

These are contentious points. I should speak for much longer than 10 minutes if I tried to explain how I would deal with all these problems. As far as one-parent families are concerned, I should like to see the household element increased. For those families the element of support for the household is missing. Mothers particularly need household support when they have to try to raise children on a limited income and are unable to earn because of their responsibilities to the children.

I respect the Government's desire to reduce the burden of taxation, particularly at the marginal rate of tax. There is not much that could be gained by a further increase in VAT or other indirect taxes for our purposes. There is scope there, but not enough to do what we want for pensioners and families. Therefore, I should like to make a specific suggestion as to how the money can be raised.

I believe that the personal allowance is much larger than it needs to be for those with no responsibility for household outgoings. I am thinking particularly of teenagers who live at home and the earning wife in a two-income, two-person household. We all know that many people in our constituencies are badly off. Yet, we have only to open any of the national daily or evening newspapers to see whole-page advertisements for Japanese trash and imported luxuries. People are obviously buying such items, otherwise the firms would not be able to insert such enormous and costly advertisements in the newspapers week in and week out. Evidently, there are people who can be tempted to spend some hundreds of pounds on stereophonic speakers, new developments in colour television and on television games and we should recognise that some people in society have much more money than they know what to do with.

At the same time, plenty of people cannot make ends meet in the attempt to keep their children and wives in decency. I believe that this area where money is going to waste and is sucking unwanted imports into the country is paid for by the large personal allowance.

Ideally, I should like to see a unified housing benefit introduced for householders, whether as income taxpayers or in receipt of benefit, as a positive tax credit. However, I recognise the administrative difficulties of a system of that sort in the short run. Therefore, I suggest that we should reduce all personal allowances by a substantial amount.

We should also make good the loss of net spending power after tax to householders by making rates deductible from income for tax purposes. In that way, we could restore to householders what they lose in the reduction of the personal allowance, but, at the same time, we would retain an enormous amount of money in the tax system. That money could be spent on such objects as increases in pensions and child benefit.

The advantage of this scheme is that there would be no disincentive effect through an increase in marginal rates of tax. The marginal rates of tax would remain the same. Also, direct help would be given to householders and indirect help would be given to the local authorities. That would be a most democratic system for helping local authorities, because the individual ratepayer would be in a better position to meet the payment of his rates, yet he would only be getting support for local government to the tune of the 30 per cent. which would be the amount that he would gain from the recovery of tax.

Help could be given to families under this scheme, but there would be less for the household with which I have little sympathy today—the two-person, two-income household. It is an element in our social structure which is doing particularly well. One thing that young newly married couples who are waiting to start a family fear is the sharp loss of income when the wife has to give up full-time work. Under the system which I am recommending, that contrast would be alleviated. The second earner in the household would not be taking home so much in the first instance, and when she decided that the time had come to start a family, she could look forward to a compensating child benefit to make up for the loss of her earnings. It would also bring pensioners closer to the level of the rest of the population.

I think that there is the will in Britain to do something of that kind. The Government must put it into effect. I hope that the Bill will not be the final word of the Government on the matter. I recognise their difficulties, and the problems which they have inherited from the previous Administration. Even when the Bill is passed, the House will still not be satisfied. It must not be the Government's final word on social security.

From now until nine o'clock the 10-minute rule will apply. I hope that hon. Members will time themselves to save the Chair having to intervene.

7.11 pm

I listened with great interest to the remarks of the hon. Member for Kensington (Sir B. Rhys Williams). I am sure that there are many suggestions of which the Government and the House will wish to take account in the future. However, I shall not follow the hon. Gentleman further than that. The Bill clearly worsens the position for many people, although it improves it for others. The position is obviously worse for pensioners. The right to share increased standards of living which they enjoyed previously by Act of Parliament is to be replaced by a system of uprating over and above the cost of living which will be completely at ministerial whim. If experience is anything to go by—one has only to look at the figures—they are in for a bad time. Under the Tory Government between 1970 and 1973 the position of pensioners relative to the rest of the community worsened. Under the previous Labour Administration their position improved.

There is provision in the Bill to deal with the position of strikers. My right hon. Friend the Member for Salford, West (Mr. Orme) mentioned this in his opening remarks. Judging from newspaper re ports—especially the report in the Daily Mirror—the Government are considering further penalties against strikers and their families. It is indicative of the Tory attitude towards ordinary working people that the Government are even prepared to consider treating strikers more harshly than murderers, rapists and thieves. They are prepared to spend £100 a week to feed, house and guard criminals and look after their families into the bargain. But decent law-abiding men, who are merely acting to safeguard or improve their conditions, are apparently to be pauperised and starved into submission.

It is assumed by the Government that men on strike are always at fault. It never occurs to the Government that the employer may be a bad employer and may have driven his workers out on strike. What are they prepared to do to penalise bad employers who are seen to force their workers out on strike? The position is very one-sided.

I urge the Minister to take that into account, to urge his ministerial colleagues to get off this apparently popular bandwagon, and to look at the matter in a reasonable, sensible, humane and democratic way. They should leave strikers alone, and retain freedom of action in the country—

Order. The hon. Gentleman is making it clear that he does not intend to give way. I shall allow him another minute to compensate for the intervention I am making. In a 10-minute speech, some interventions are almost of that length.

I am most obliged, Mr. Deputy Speaker, particularly since you will allow me injury time.

I wish to comment on child support. Many hon. Members have raised points about the subject. It is one of the most important problems facing us at the present time. When in Opposition, the Secretary of State for Social Services and the pretty and charming young lady who is now Under-Secretary of State for Health and Social Security, for ever pledged their commitment to family support and to the child benefit system. I have read with interest some of their criticisms of the Labour Party.

However, since taking office they appear to have changed their tune pretty quickly. They should have increased the child benefit in April and November of this year. Their failure to increase child benefit is disgraceful. In our society at present families with children are the poorest. There is no question in my mind but that that is the case. The more children there are in the family, and the older those children are, the poorer the family is.

What is more, many of the public expenditure cuts will hit families hardest. In my constituency the school meal charge will go up next April. It is being raised by the Wiltshire county council to 45p. That is an increase of 50 per cent. The county council, in accordance with the Education (No. 2) Bill, will restrict free meals. Half of those children who now enjoy free school meals will no longer enjoy them. Their parents will have to find an additional £2·25 every week for each child, if the children are to continue to eat school meals. School transport charges will also go up. In the last Budget, VAT was raised. Families are being hit hardest. They received the least tax relief, and they have not been compensated in any way by the increase in child benefit.

Is there any Government measure that my hon. Friend can think of that helps families, rather than penalises them?

I do not have much time to think about it, but I can think of nothing that the Government have done since they have been in office to assist families. Everything that they have done penalises families.

I refer to the answer given by the charming Under-Secretary of State for Health and Social Security on Tuesday 11 December, when I asked her the value of child benefit now, expressed at 1973 prices. She said that it was £1·56, based on the retail price index for October 1979. At 1973 prices the value of child benefit now is only £1·56. Following that answer I conducted a little research. I looked at one or two families and tried to work out what they would have received in 1973 by way of tax relief, family allowance, or both.

I am glad to note that the Under-Secretary of State is now with us. Her presence brightens up the Front Bench considerably.

Taking account of tax allowances, and the standard rate of tax for 1973–74, which was exactly the same then as it is today, this is what I found. A family with a child over 16 received £1·53 in 1973, as against £1·56 now. Parents of a child between 11 and 16 received £1·35 in 1973, as against £1·56 now. Parents of a child under 11 received £1·15 in 1973 as against £1·56 now.

But what is the position of a fairly typical family, with one child of over 16 and one child between 11 and 16? With tax relief and child benefit, that family received £3·22 in 1973, as against £3·12 today. The standard rate taxpayer who has one child over 16 and one child between 11 and 16 is worse off by 10p per week. A family with two children over 16 and two children between 11 and 16 would in 1973 have received £6·78, as against £6·24 now.

The position of many families under child benefit has worsened considerably. What is more, the older the child gets, the worse off the family becomes. That is obvious, for as the children become older they need a lot more food. They have to be clothed every six months—

Order. The hon. Gentleman has now had more than 11 minutes. Mr. Anthony Steen.

7.22 pm

Any debate on the question of supplementary benefits inevitably provokes very deep emotions, but it is quite wrong and quite inexcusable for the Opposition to portray themselves as the sole champions and defenders of the poor, the underprivileged and the disadvantaged. On the Conservative Benches we care deeply about these people, and I remind Labour Members that there is as yet no State monopoly of care and compassion.

The questions that arouse such strong feelings are: how much should the State pay to those who cannot cope, and how should we administer the organisation that pays the money out? On the Conservative Benches we are determined to see that there is an adequate safety net protecting every member of our society from the indignity and the hardship of poverty. We are not the exploiters of labour—the ruthless owners of the dark, satanic mills.

I speak as a former social worker and community worker. I worked for 15 years in the poorest parts of the country with the old and the handicapped, and I am still involved actively in the care of the old and the lonely. I wonder how many Labour Members are involved in this sort of work, or know very much about it. We are deeply concerned, and our record bears it out.

In the short time available I want to concentrate on those aspects of the Bill that will help those on the lowest incomes. In the past, people eligible for supplementary benefits have often not understood the complicated process by which their allowances have been calculated. That was not ignorance on their part; it was due to the complexity of the system, coupled with the very wide discretion given to the officers. This can be seen by looking at what happened to those who claimed between 1967 and 1968, when exceptional need payments rose from 386,000 claims to 1,199,000, and exceptional circumstances payments claims rose from 594,000 to 1,666,000.

The Bill should ensure that the money gets to the claimant more quickly and that he knows why he is getting it and how it is being calculated. In the past, claimants often felt that they were deprived of something to which they were entitled—hence the Claimants' Union movement that sprang up. The position will now change. They will know exactly what they can claim and why they are entitled to it.

While discretion allows flexibility, unfortunately it is often seen more as a device that individual officers use to avoid making payments. It is because we care about the needs of the poor that the Government have taken this important step, but we must be careful that rigidity does not replace flexibility. The supplementary benefit has always been individually tailored to the individual's needs. That must remain. Will the Minister feel able to say something in reply about the need to maintain a measure of discretion and to deal flexibly with cases that do not precisely fit the rules?

If the changes proposed in the Bill are really to benefit claimants and to get to those who need help most, sufficient resources must be provided to ensure that those who are entitled know about the benefits. The previous Labour Administration always made a great deal about the benefits that they were giving to the disadvantaged, but failed to mention that they knew full well that the take-up of these benefits would be extremely modest. Will the Minister there fore ensure that sufficient resources are made available so that information reaches the widest possible audience?

One way of doing this is through the visiting officer, who plays a crucial part in the supplementary benefits system, providing a direct link between the claimant and the local office. However, the previous Administration substantially reduced the numbers of visiting officers, and this in turn weakened the link with those who most need care. Will the Minister, in his reply, say something about this and about the need to retain an adequate number of visiting officers? Without these officers, many of the excellent provisions made in the Bill would be less effective. Two examples come to mind of Acts of Parliament passed in the last nine years which have had limited effect because of inadequate resources—the Chronically Sick and Disabled Persons Act 1970 and the Children Act 1975.

That the public is well served by the Department's staff needs to be said. The principal difficulty relates to the need to find experienced counter staff, for they are the people who deal face to face with the public. Youth is often seen by claimants as being equivalent to inexperience. There is often a level of resentment when a young man turns down a claim. There is a strong case for seeing that those who deal with the public are not always the lowest paid. Why is it that those who perform the basic tasks of dealing face to face with public are usually on the bottom financial rung of the ladder?

There are those who prefer to deal with the public but who feel obliged to seek promotion in order to earn more and who take on some administrative task. The teacher seeks to become a headmaster. The social worker seeks to become an area administrator. The supplementary benefits clerk needs to go behind the scenes in order to earn more. There needs to be a greater overlap in pay structure, so that those who wish to continue to deal with the public face to face can do so without suffering financially. A large number of mature counter clerks would go some way to inspiring confidence among those whom they are serving.

The Minister should also have regard to the deep-felt concern of staff in local offices that the new legislation tends to put heavy duties on them without providing extra resources. While it is right for productivity to increase in some areas of social service, it is difficult always to provide satisfactory criteria for performance. Has the Minister considered the staffing implications of offering every claimant, as of right, a detailed statement of his entitlement? Has the Minister allowed for this in his calculations?

Most of the social service officers in the DHSS deal not just with supplementary benefit but with a wide range of schemes offered by the Department involving sickness, old-age pensions and unemployment benefits. The proposal that the Supplementary Benefits Commission should be disbanded and replaced by a new body that covers all the schemes raises a number of questions, not least whether the new body will enjoy similar independence to that enjoyed up to now by the Supplementary Benefits Commission. Will the Minister make sure that the Government do not over-centralise the new agency and limit its freedom?

The Bill is a useful forerunner—we hope—of other Bills to ensure that those who are genuinely entitled get the benefits. There are faults in every organisation today, and faults will creep in, but I am sure that the scale of fraud is greater in Inland Revenue than in the Department of Health and Social Security. But people on supplementary benefit are less educated and less sophisticated, and the sums of money are far smaller. Understandably, though, the public are resentful when those with larger families, with three or more children, are seemingly entitled to weekly payments that far exceed the basic wage of a working man. The Government need to consider whether they can insert in the Bill at a later stage a device for dealing with anomalies.

Finally, I want to say a word about those who, I believe, misunderstand that nature of supplementary benefit and believe that it is only for those who sponge off the State. A vast majority of people want to help themselves and earn their living. They do not believe that the State should prop them up. They want to fend for themselves. However, in any Western society there will be those who are weaker and more vulnerable. In the United States the contrast between the very rich and the very poor is disturbing. In this country the range is far less. There is none of the grinding poverty that one sees in the large American cities.

The Welfare State, however, plays, and will continue to play, an important part in our way of life. I am certain that supplementary benefit needs to be applied compassionately, but also with a measure of flexibility. Whilst it should not rob a man of his sense of achievement or discourage him from working, it should be there to provide the basic requirements for life. One way of ensuring that it does this is to consider taxing unemployment benefit while at the same time providing larger child benefits. I believe that the Bill is an important first step to the simplification of a complicated system. There are many good things in it and I welcome it.

7.30 pm

I take part in the 10-minute scramble only to refer to certain Northern Ireland aspects of this Bill, for although only six of the clauses of the Bill are directly applicable to Northern Ireland, the whole Bill must under the principle of parity, which I am sure is here the case, in due course—and I hope as promptly as possible—be applied exactly in the same way in Northern Ireland. This will take place, curiously enough, partly by Bill in this House, as a Social Security (Northern Ireland) Bill, and partly by order.

I spare a moment to say that that anomaly is surely indefensible and that if we are enacting a code—this is an increasingly coherent code—of social security for a part of the United Kingdom, and indeed for the kingdom as a whole, it ought to be enacted in the same way, enacted as a whole and enacted in the proper manner by this House. Incidentally, I am sorry that, contrary to practice, it has not apparently been possible for a representative of the Northern Ireland Office to attend any part of this debate.

I come to the six clauses, and they are important clauses—clauses 8 to 14, with the exception of clause 10—which apply directly to Northern Ireland. My hon. Friends and I are strongly in favour of what is proposed in these clauses. They believe that the substitution of a comprehensive advisory committee for the separate advisory bodies, and the substitution of that body for the two separate Supplementary Benefits Commissions, is wholly logical and wholly beneficial.

It was always absurd that under the principle of parity, applying presumably the same principles in the same way in Northern Ireland as in Great Britain, there should be a separate Supplementary Benefits Commission for Northern Ireland. I make no criticism—that will be well understood—of the method in which it did its work; and all my colleagues representing Northern Ireland seats can testify to that. Nevertheless, it is clearly right that we should now have this one body for the whole United Kingdom, securing both uniformity and fairness throughout the Kingdom, and also that co-ordination between the different forms of social security, which will now be within its reach.

It will have the duty, in quite a new sense, of advising Parliament; and I want to invite the attention of the House a little more closely to clause 9, in which it is given that task. Under that clause, whenever proposals are brought forward which fall within the social security area, the House will have to have placed before it the view of this independent committee. That is wholly good. It will certainly increase the information of the House and it will increase our powers of judging and controlling what the Government are proposing; but there are a number of defects which ought to be put right.

In clause 9(2)(a) there is an exception for urgency. I do not dispute that there may be circumstances in which regulations and provisions have to be brought forward by the Government so urgently that the views of the committee upon them could not be obtained in time to comply with the provisions of this clause; but I cannot think that that is any reason why the House should not have the opinion of the committee on what is done. After all, we do not just stop when the emergency measure has been taken. It forms part of the social security code; and it is just as necessary for this House to have the advice of the committee upon what has had to be done under the emergency provisions as upon what is done in a more leisurely fashion. I hope, therefore, that the Government would agree that although the time scale cannot be kept in the case of urgent proposals, the House should nevertheless still, in those cases also, have the views of the advisory committee.

Then I come to the predicament of Northern Ireland. It might appear to the cursory—and why should he not be cursory?—Great Britain student of clause 9 that Northern Ireland is protected in the same way as the rest of the kingdom by having the advantage of a report in respect of Northern Ireland from the committee. I am afraid that that is not the case, and for a quaint and objection- able reason. It is only where proposals are laid either before Parliament or before the Northern Ireland Assembly that this advisory mechanism comes into action. But at present, since the1973 Constitution Act is not in operation, these regulations when they apply to Northern Ireland do not receive any parliamentary scrutiny whatever, nor is there any way of bringing them forward on the Floor of the House.

I therefore make two propositions. The first is analogous to that which I have already made, which looked to me as though it might have achieved a glad eye—no, two—no, four glad eyes, on the Treasury Bench. That is, that, whether or not the regulations applying to Northern Ireland are at the time subject to parliamentary procedure, Parliament—which is the only representative body for Northern Ireland at present—should have the benefit of the advice which the committee tenders upon them, no less than upon any others. That is my first proposition.

My second proposition, which the House may have heard before but which is none the worse for that, is that we should give up the silly habit of legislating in Acts of the Imperial Parliament for a constitution which, since I last made these remarks, the Government have themselves declared is never going to be reactivated. For on 29 November the Secretary of State declared in this House in so many words that the constitution under which the Northern Ireland provisions of clause 9 are drawn will never work again. I must say, little excuse as there was before for drawing Acts of Parliament in this absurd fashion, there is none now. Until there is some different constitutional dispensation, it is the duty of this House to legislate properly for Northern Ireland as for any other part.

I therefore hope that this Bill will be the first case where this House will insist not merely upon the advisory committee doing its duty for Northern Ireland as for the rest, but upon legislating for Northern Ireland, in this parity area of social security, as it legislates for Great Britain.

7.40 pm

We are discussing the Bill against a backcloth of the realisation of the need to hold back expenditure and of the decline in world trade and the creation of wealth. It is extremely difficult to see the way forward to light at the end of the tunnel. Unless we expand wealth in this country, it is inevitable that we shall have a no-cost Bill.

At the moment there appear to be two divisions in our society. The first consists of those who are dependent on the State—we might say that they are in State bondage, and they are legion—and those who are independent of the State. Today we are discussing provisions for those dependent on the State and how we may transfer to them, most efficiently, the static resources of our society.

It is inevitable that this should be a no-cost Bill. As a society we are spending £9,000 a year more than we have. We need to know from those who wish the Government to spend more from where precisely the money should come. We may be compared with an ancient aristocratic family that has been living above its means for a long time and has already hocked the silver to pay the butler. We cannot conceivably go on doing that.

The Conservative Party believes that a precondition of social concern must be the creation of wealth. I also believe that. What we must do—I believe that the Bill has started to do it—is to help those in real need. In the Bill we are making a beginning in simplifying the administration of social benefits, which to many people, including myself, is completely incomprehensible. We are taking a few more steps along what I consider to be the road to the ultimate satisfactory goal, which is the introduction of a tax credit system.

I reject the comments made by the hon. Member for Swindon (Mr. Stoddart) that we are hard-nosed Tories. The facts belie that myth. I think that our record is a fine one.

I pay tribute to my predecessor, Airey Neave, who did so much work for the over-80s in providing pensions for them under the previous Conservative Administration and, for the first time, the annual increase for pensioners. We introduced the Christmas bonus and we increased pensions by 54 per cent. Pensions will be increased by 19½ per cent.; again, there will be a Christmas bonus; the earnings rule limit will be raised from £45 to £52 and in some cases abolished. That will please many thousands of people. We promised to protect pensioners against price rises in future. Pensioners in our society can look forward to sharing the increased standard of living of the country if we manage, as pray God we shall, to increase that wealth.

The maxim "To each according to his need" could, possibly mistakenly, be applied to those who obtain help whether they need it or not. I consider that the current system of welfare benefits is extremely inefficient. It is absolute madness to give benefits to families who do not need them. If the State takes on too much of the responsibility that families have shouldered for generations, the fabric of the family may be undermined.

The responsibility of families who can look after themselves, and who wish to do so, may be regarded as the glue that holds the family unit together. I think that Beveridge would have been amazed at the present tapestry of benefits and the incredible complexity of the system, which many people find incomprehensible and frightening. It was very sad that the Conservatives lost the 1974 election—otherwise we should have introduced the tax credit system by now.

The hon. Member for Birkenhead (Mr. Field) has done great work on the child benefit system. There is a lack in the Bill, because we have not been able to do more at this time.

The Conservative Party has been guilty of talking too much about scroungers in our society. Such talk can give to the many thousands of people who really are in need of State benefits an overweening sense of guilt as they collect them. Those who need the benefits should not be ashamed of claiming them. They should regard them as a right. We should not talk so much about the scroungers in our midst.

Ministers with responsibility for this matter should be wary of the pressure groups—I call them the middle-class vocal pressure groups—who manage to pull the ear of the Minister and cause a tremendous amount of fuss. In our democracy, inevitably, we give to those whence the votes come. If too many people are lobbying as hard as they can for their own corner, we should not allow their voices too much sway. The army of the deprived have no lobby. The one-parent families, the disabled, and those in need, find it extremely difficult to marshal the lobbyists.

I commend the Bill to the House. It is a good start, but it is only a beginning. I am sure that there will be many more in the life of this Parliament.

7.47 pm

The 10-minute rule discourages Members from referring to other speeches.

The hon. Member for Liverpool, Wavertree (Mr. Steen) referred to poverty. If he wants to see grinding poverty, he can see it in his own constituency—and certainly in Liverpool—without having to refer to the United States. The Bill is a fitting message from the Conservative Government in their last major item of public business before Christmas. In fact, it robs pensioners. The Government could have done little meaner than this in their first six months. The saddest aspect is that the Bill brings the pensions issue back into the ping-pong of party politics.

I am surprised that the measure is a clear statement that the Government expect their economic strategy to fail. If the Government believed that their economic strategy would succeed and that the present cuts would create future wealth, the measure would have been unnecessary, as they would know that the extra money would be there to pay the benefits.

Do the Government believe that by next November, when this measure has its effect, incomes will have risen by more than the level of inflation? If they do, does that mean that no extra real wealth will have been created? If that is the argument, it is a measure of the fact that the Government have failed. If they do not create real wealth, they will try to ensure that incomes do not rise. If incomes do not rise faster than inflation, again the measure is unnecessary.

If the Government have faith in their own strategy, they should believe that they will create extra wealth. Therefore, pensioners should be in a position to share in that extra wealth. When the Minister for Social Security winds up the debate perhaps he will explain why, as a Labour Cabinet Minister, he believed that pensioners should be guaranteed the best of both worlds. He believed that extra wealth would be created, yet now he seems to believe that the pensioner cannot expect to have the best of both worlds. I understand how people can cross the Floor of the House. However, on this kind of principle it is difficult to change one's views in such a short period.

Perhaps the right hon. Gentleman could also say how his right hon. Friend made a promise that the pensioner would benefit in some way from the measure and future wealth. Although I doubt whether the Government will create much more wealth by their economic package, at least North Sea oil should give them the opportunity to give benefit to pensioners. Perhaps the Minister will explain how he envisages pensioners' real income improving in the future.

The argument in the Bill is based on the ratchet effect. In practice, if the ratchet effect worked out at its most favourable from the pensioners' point of view over the next five years, the actual improvement in pensions would mean that the majority of pensioners would still have to claim supplementary benefit. They would still have a pension that would need to be topped up by supplementary benefit. So that argument is a non-starter.

What I find most offensive is the Government's attack on scroungers. It amazes me the amount of effort that people put in, week after week, searching for a job. What Government Members should do is pay tribute to those who make the effort to find work, rather than attack them time and again. If the Government put the same amount of effort into stopping tax avoidance and persuading people to pay a fair amount of VAT, particularly the self-employed, they would gain more money than by chasing the scroungers.

I turn now to some of the aspects of the present supplementary benefit system that need reform. I start by referring to the way in which allowances are worked out on a weekly basis. Many elderly people, pensioners and others on supplementary benefit, would like to take advantage of the Government's provisions for a home insulation grant. It would be to their benefit to obtain a better standard of heating in their homes, and it would make better use of their resources.

These elderly people cannot do that because they are unable to provide the small amount of capital required for their share towards the local authority grant to have the work done. If the Supplementary Benefits Commission could make them a loan, they could pay it back out of their benefit over a few months and that would enable them to have the work done, which would benefit them and the community because of the amount of energy that would be saved. That is a simple example of how a weekly payment assumes that people need money merely to get them through that week, with no thought for the future.

In Stockport we have a rather mean local authority. One of its policies is that the tenant should be responsible for much of his own repairs and maintenance. For instance, if a garden gate falls off, the council will not replace it. Those on supplementary benefit, with no resources on which to draw, are unable to get any help from the Supplementary Benefits Commission to have the repairs done.

In Manchester, just down the road, the corporation has a slightly different attitude. Included in "repairs allowed" are such things as garden gates. A slightly higher rent may be charged by that corporation, but that extra rent is automatically paid by the Supplementary Benefits Commission. So we have one local authority where tenants can have repairs done and paid for by the Supplementary Benefits Commission, while people in the adjoining local authority do not receive that assistance. That is a simple example of the way in which benefits are so unfair as between one area and another.

There is need for a change in the housing subsidy system, with part of it coming from supplementary benefit and part through the rebate system. Time and again people are given advice about which way they would benefit most—whether to go for a rent rebate, a rate rebate, or to apply for supplementary benefit. Often it is found that, because of marginal changes in the system, people are given the wrong advice. They find the system extremely confusing.

I, as a Member of Parliament, find it difficult to advise people which way to go. Often people lose one benefit because of the passport effect. Sometimes they are better off claiming supplementary benefit because it gives them the passport to various other benefits; or they might find that they could get more benefit by claiming for a rent or rate rebate. It is high time that we had a uniform housing benefit.

The only reason why I have reservations about pressing for that at present is that I want it to be done through extra money being put into the system and I fear that the Government might take the opportunity to go for a unified housing subsidy in order to cut back the amount of money available.

Reference has been made by many hon. Members to the need to uprate child benefit. There is an overwhelming case for making sure that child benefit is increased next April. If the Government want to remove the disincentive to go back to work, the simplest way to do it is to increase child benefit, because child benefit is there whether the person is in or out of work. It is an important area of family support. There is a need for an announcement of a major uprating in that system.

I regret that the previous Government did not increase child benefit to a level where it could justifiably have been index-linked. It still needs to be raised considerably, as my hon. Friend the Member for Swindon (Mr. Stoddart) said, so that, in real terms, it is above the old benefits that were available under family allowance and tax relief. Once it is above that level it should be index-linked, just as pensions should be index-linked, so that it continues to rise without becoming a ping-pong ball across the Chamber.

The Bill ought to have little support from the House. It is particularly harsh on pensioners and takes them into the political arena again. What we need is a major reform of social security which brings further benefit to those on very low incomes, and not a no-cost Bill such as this.

7.56 pm

I welcome the Bill and the new radical and reforming attitude that the Government are showing towards the whole question of social security benefits. I welcome the reforms that have been specifically inserted into the Bill and the future reforms to which my hon. Friend referred when he opened the debate.

I want to make one general proposition and four specific points. The general proposition, as a kind of background to the Bill, is that I believe that the social security system is now running out of control. It is running out of control, first, because it is costing the country more than it can afford, and, secondly, because too often too much goes to the wrong people and too little to the right people. I emphasise the second part of that proposition—too often too little goes to the right people. People always pick on the fact that some people get too much out of the social security system, but the other part of the proposition is just as important and is complementary to the first part.

I turn now to my four specific points. First, I believe that all short-term benefits should be taxed, just as wages are taxed. Secondly, benefits to strikers' families should be curbed. Thirdly, short-term benefits should not be index-linked. And, fourthly, a firmer legislative line should be drawn between those who are unemployed and genuinely want to work and those who are unemployed and do not want to work.

The reason why I say that short-term benefits should be taxed is that I believe that one of the most important things that we must do in this country today is to make it worth while to work hard again. At the moment there is far too little difference between taxed wages and untaxed social security benefits. There must be a greater difference between those who are working and those who are not, in terms of reward. The fact is that too many people in this country are either better off not working, or almost as well off. If a man can get £50 a week by not working instead of £65 a week after tax in a job—

The average couple get £63 a week for the first six months. We had a parliamentary answer on this matter to the hon. Member for Norfolk, North (Mr. Howell). [Interruption.] If the hon. Member had been in the Chamber earlier he might have heard that this is a Ten-minute Rule speech.

There are people who are almost as well off when they are not working as when they are, and if they are not working they are in a position to take moonlighting jobs where they can get payments, and get them tax-free [Interrup-tion.] If Labour Members do not realise that they certainly do not realise what is going on in the black economy in this country today. Too many people find it too profitable to live off a combination of tax-free social security benefits and tax-free moonlighting payments. That is a fact whether or not Labour Members like it.

My second point relates to strikers families' benefits. They must be curbed, because to many people in this country there is something deeply offensive about a situation in which they are first hurt by the strike and then asked to pay to subsidise it through their taxes.

The paper that we have seen leaked in the press over this last week makes some sensible proposals about how these payments could be curbed. As The Guardian rightly said this morning, it would certainly save money. It would also act as a deterrent to strikes—not an enormous deterrent, but certainly a deterrent. Since I believe that restrictive practices and over-manning, backed by the threat to strike, are one of the biggest single factors holding this country back today, I would welcome that.

The hon. Member would pay the families of murderers, but not the families of strikers.

The third point that I wish to make is that short-term benefits should not be index-linked. I put old-age pensions apart. When times are rough it is right that every section of society should bear its fair share of the rough times. After all, if wages are not to be protected against inflation, why should benefits automatically be proteced? People in work must be protected because that, above all, is what is needed today. Nobody has an automatic right to be protected against the ravages of inflation. Of course it is the Government's economic priority to squeeze inflation out of the system, but until that happens everyone should bear a fair share of the rough times. That is social justice.

My fourth specific point is that we need a far firmer line drawn between those who are unemployed and who genuinely want to work and those who are unemployed and have no intention of taking a job as long as they can get away with it. This syndrome means that so many of the unemployment figures are totally phoney and seriously misleading. If one thinks of the vast ramifications of Government policy and Government spending that are based on totally false unemployment figures, one realises that it is important for the Government to recognise the difference between those who are genuinely unemployed and those who are not.

Hon. Members often ask "Where are all these jobs?" I shall tell them. This afternoon I called up the chairman of a dairy factory in my constituency. For the last few months he has tried every week to get a man to drive one of his milk floats in the north-east of Scotland. Every week he has put advertisements in the local paper, and every week he has gone to the jobcentre in Peterhead. [Interruption.] How much does he pay? He pays £88 a week, and that is not a bad wage by anybody's standards. In Peterhead there are 600 people registered as unemployed, yet for six months this man has not had one application for a job worth £88 a week.

That demonstrates quite clearly that if such a job is going begging in a place where 600 people are registered as un employed and there is not one applicant, only someone who is totally blind to reality will refuse to admit that out of that 600 there must be many people who have no intention of getting a job be cause the combination of social security benefits and tax-free moonlighting means that they are better off. [Interruption.] I should be interested to hear whether any Labour Member who is now interrupting from a sedentary position could explain why it is that in a place where 600 people are registered as unemployed there is not one applicant for a perfectly respectable job.

Those are the four main points that I wish to make. I welcome the fact that the Government recognise that our social security system has run out of control and that the time has come for radical reform. I welcome the Bill as a first step towards that reform.

8.6 pm

I assume that when the hon. Member for Aberdeen, South (Mr. Sproat) referred to moonlighting milkmen, he was referring to hours of work.

At every level of poverty income up to 140 per cent. of supplementary benefit level, the proportion of families in poverty in Wales exceeds the proportion in England, Scotland and Britain as a whole, and in all English regions with two exceptions. Given the appallingly low level of our social security benefits, this adds to the burden of poverty and exacerbates the situation. The greater dependency on social security benefits in Wales is an important reason for the low average incomes there. There are relatively more old people, more sick and disabled, more unemployed and more people dependent on supplementary benefits.

If one looks at the statistics published in 1978 in the family expenditure survey of the sources of household income and the percentage of gross household income derived from social security benefits, one sees that the proportion of the latter in Wales far exceeds that in the rest of Britain. It is 14·5 per cent., compared with only 9·1 per cent. in South-East England. Because of this, the severe dependence on supplementary benefit for in come maintenance within the United Kingdom income maintenance system is so important to Wales. Personally, I deeply deplore this.

We are now in a situation where the 3 per cent. of the population who were initially dependent on the national assistance scheme in 1948 has grown to more than 9 per cent. We must look particularly at those categories within the system itself who are deprived. Because of the nature of the contributory system of national insurance, fewer than two-fifths of the unemployed are actually in receipt of unemployment benefit. Therefore, nearly half of them are claiming supplementary benefit. In that context we must look at this Bill and the review out of which the Bill emerged.

The DHSS review "Social Assistance" recognised that
"the social assistance scheme in this country is having to play a role for which it was neither originally designed nor subsequently adapted."
The review concluded:
"either the numbers of claimants must be reduced to a much lower level at which discretion could be properly administered on an individual basis; or the scheme must be adapted to its mass role".
The Government have adopted the second course. In a quite ingenuous reference to the "Social Assistance" paper, paragraph 4 of the White Paper says:
"We therefore propose to adapt the structure of the scheme to meet its present role, as 'Social Assistance' suggested."
It fact that was one of the two options that had been suggested by "Social Assistance" and it is significant that, given this Government's overall policy, it is to the so-called low-cost option that they have turned.

What is deeply distressing about the White Paper, and the whole debate, is that there is, apparently, in our attitude towards social security not even the vestige of a commitment to some sort of long-term change. We are to rely on the supplementary benefits system as it now exists, with a few administrative changes here and there. There is no idea of a programme that would increase the general level of social security and national insurance benefits and take people away from dependence on the means-tested benefit. The vestige of paying lip-service to that has disappeared from our debates.

I oppose the Bill because it is an attempt to avoid the major issue, and an attempt not to end the discrimination—the most serious aspect of our supplementary benefits system—against the long term unemployed.

In the time that is available to me I wish to refer specifically to the failure of the Government to extend the long-term rates of supplementary benefit to the unemployed. It was referred to in the last annual report of the SBC, which states:
"We regard this discrimination against the unemployed and their families as wrong, and its removal is our highest priority for the improvement of the supplementary benefits scheme. Some 120,000 claimants, about one-third of whom have children, are being denied £7·95 a week (£5·40 if single). They include many people who are unskilled, and all of them have been without work for at least two years with all that this means in poverty and damage to their confidence. They include many people who are physically weak or suffer from minor disabilities. They include, above all, people on whom society's demands place a heavy strain at any time. Such people have no chance of securing work while unemployment remains at its present level, and it is unjust to deny them the increase in benefit all others get."
The SBC report goes on to cost the change that I am advocating of placing the unemployed on the long-term rate on the same basis as all other claimants who are being given access to the long-term rate after one year. The additional cost would be £40 million a year, and 180 extra staff would be needed. That would remove the discrimination that the SBC contrasts with the £2·7 billion cost of uprating all social security benefits in 1979, or the hundreds of millions spent on any child benefit uprating.

We are facing a position in Wales, especially on Deeside and the south east, where we shall see a massive increase in unemployment. We must protect the living standards of the families of those who are deliberately being made unemployed by the Government's policies. We hear talk of incentives, the work ethic, and the personalist and individualist analyses of unemployment from Conservative hon. Members. They miss the basic fact that the structural policies of the Government and the failure of the economic management by succesive Governments are creating unemployment that is not a personal phenomenon but a social phenomenon. We should not try to tackle it in terms of the personalist attitude of individuals refusing work. In the steel communities of Shotton, Port Talbot and Newport we shall face the devastation being deliberately created by the Secretary of State for Industry. What sort of work incentive will there be for the unemployed? I plead with the Government, when the Bill is considered in Committee, to reconsider their decision not to allow the unemployed access to the long-term rates.

A recent study indicated that the supplementary benefit—as a pro portion of the estimated cost of child support in real terms, adjusted for inflation—gives for a child aged 2 a supplementary benefit rate that reflects only some 66 per cent. of the minimum cost. At the age of 8, it falls to 58 per cent. of the minimum cost. Quite clearly, on an objective calculation of the minimum costs of bringing up young children, the children's rates—even as they are simplified and allegedly improved in the Bill—are still basically inadequate.

I strongly object to clause 1 because of its effect on pensioners. The whole attitude in the Bill means that it will not provide any real benefit to claimants. It will not increase their living standards. There are certain administrative changes, such as automatic notices and publicity for rules, which we welcome. The Bill represents the Government's failure—and that of successive Governments—to come to terms with the real role of a supplementary benefits scheme, and to attempt to reflect that scheme as a part of social policy. Its real cost is the cost of the Government's economic policies. On the one hand, the Government deliberately create unemployment, and on the other they deliberately refuse to maintain the incomes of those who are made unemployed.

8.18 pm

I take issue with the last statement of the hon. Member for Merioneth (Mr. Thomas). No one deliberately creates unemployment, and no Government do. Any Government would hope so to restructure the economy that we obtained a healthier revenue-raising and wealth-creating function. Then we can talk of the social wage on which that is built.

I shall not give way on this occasion, for obvious reasons. I take issue with the hon. Member for Swindon (Mr. Stoddart) and the hon. Member for Birmingham, Perry Barr (Mr. Rooker). They both trotted out the old slogan about the better treatment given to the families of convicted prisoners compared with the potential treatment that the Government might give to the families of strikers. I sometimes think that that slogan, often as we have heard it during election campaigns, was probably the result of three days in a smoke-filled room in Transport House. I can see the lads in Transport House posing themselves the question, "How best do we draw a red herring across the electorate's trail to dissuade it of the sense of the Tory Party's potential proposals on strike pay?

A convicted criminal has paid for his crime by being put in gaol and deprived of his freedom. Opposition Members would surely not argue that the family should be allowed to starve? I suspect that Opposition Members would be the last to argue that. By comparison, if a wage earner consciously withdraws his labour and deprives his employer and the nation of part of the wealth-creation process, it is surely morally right for us to ask whether the State should subsidise him in that objective. I hope that in future social security Bills the Government will not lose track of their hinted pledge—never overtly stated in such terms—that deemed strike pay will be considered as an option as far as performance is concerned.

I wish to consider three measures incorporated in the Bill that come under the heading of the simplification of the methods of assessment of benefit. First, I draw a comparison of the present situation with the future situation on the treatment of capital resources when a client goes into the DHSS office and starts a discussion on the extent to which he can support himself. Under the present system, officials must use a table in order to arrive at a notional figure of assumed income from capital. That bears no relation to the actual interest rates that the applicant receives on his capital. A very complicated table is used, which incorporates a rigid sliding scale. The result is that, understandably, the officials some times arrive at the wrong answer. At all times extra checking is required by a supervising officer.

The Bill provides a cut-off point of £2,000 of capital, which is extremely helpful. Those with less than £2,000 will be assumed to have no notional income when benefit is calculated. Those with more than £2,000 will not receive benefit.

The second aspect where simplification is to be welcomed is in the reduction of the number of children's scale rates from five to three. At present officials must continually be on the look-out as children grow older. The rates have to be changed frequently and the mother's supplementary benefit book must be correspondingly amended. When the Bill is enacted the changes will be less frequent. Staff will be relieved of many of the time-consuming chores that the changes entail.

The third aspect that I welcome concerns rent contributions from non-dependent members of a household. At present, officials must make a complicated arithmetical calculation that is based on a proportional sum depending on the amount of rent paid and the number of persons in the household. The calculation changes every time the rent is changed.

I take the example of a man and wife with four children, one of whom is working and therefore non-dependent. The formula dictates that the non-dependent wage earner must pay two-ninths of the rent. The supervising officer has to under take a fairly sizeable calculation. The Bill proposes that the non-dependant of the household contributes a fixed sum. Nothing could be simpler.

I am sure that the staff in DHSS offices throughout the country will welcome the three moves to which I have referred. When we boil it all down, the provision and the quality of the service to the clients of the DHSS are a function of two factors. The first factor is the level of aid available, namely, the revenue that we commit to the services. The second factor is the ease and simplicity with which officials can interpret the rules and explain them to the clients. I believe that the right hon. Member for Salford, West (Mr.Orme) would have welcomed the opportunity to introduce the three provisions that I have highlighted. At all times we should bear in mind the role of the staff, the front line troops in DHSS offices. The Bill goes quite a way towards assisting them in their endeavours.

Finally, I direct a question on staffing to my right hon. Friend the Minister for Social Security. Simplicity is of the essence. How does my right hon. Friend see the holding or the reduction of the level of staffing, bearing in mind that there were 58,244 staff in 1966 and 74,549 in 1971, whereas there are 87,603 now. As a rider to that question, I urge the Government to consider the introduction of computerised methods. It is an open secret that the tax credit system, which had all-party support and which was to be welcomed on social and economic grounds, was thwarted by the lack of computer resources and the level of expertise within the Department.

I have a dream—I apologise if I sound like the late Martin Luther King—of applicants entering a DHSS office and facing the little red box that issues tickets. They clutch the tickets and hold them until it is their turn. They have to wait, whether they are short-term, long-term or immediate claimants, or professional wheeler-dealers who try to get as much as possible out of the system. They are all mixed. Imagine the day when those who are in genuine need and genuine receipt can go into the office with a little plastic card—a glorified cash system—to receive their benefit. The system would provide for rate changes. It would be programmed to allow it to cope with changes. That is a dream, but, as the Americans say, the technology is already here. All that we need is the will and the money.

I hope that my right hon. Friend the Minister for Social Security will take up my question. I shall welcome some guidance on the staffing implications of the Bill's simplicity provisions.

8.26 pm

I take the House back to the contribution of the hon. Member for Aberdeen, South (Mr. Sproat. Many of my right hon. and hon. Friends feared that the hon. Gentleman was giving us the true face of the Tory Party. He is campaigning for the breaking of the index-linking of short-term benefits. If he is successful, those on short-term benefits will experience real cuts in their living standards. We did not do that to the unemployed in the 1930s. At that time cuts in unemployment benefit were smaller than price cuts. If the hon. Gentleman is successful, the Bill will mark the end of post-war consensus politics in these matters. If that happens, the gloves will be off. As the hon. Gentle man is not in the Chamber, I shall not develop those arguments. I shall talk about other matters.

Instead of discussing the Bill clause by clause, we could be asking "What are the major crises that face the social security system and how well does the Bill meet the challege?" There are two major crises facing those who are dependent on benefit. Those who receive supplementary benefit or depend on social benefits are part of an ever-growing army that depends for its livelihood on means-tested assistance. The first question that must be asked is "How many will be lifted free of means-tested assistance?" The answer is "Nil".

A second crisis facing those at the bottom of the income pile in our society is "What are we doing to raise the relative living standards of the poorest?" The answer to be gained from the Bill is "Nothing".

The Bill does nothing to meet the two great challenges that face the Welfare State. When we propose reforms that we should like to see take place, the question endlessly asked is "Where is the money to come from?" I am amazed at the cheek of Conservative Members who pose that question. The Bill, which deals with the poorest, has to be linked to the Budget. In that Budget the richest 7 per cent. were given tax handouts amounting to £1·5 billion. Conservative Members have the cheek to ask where the money will come from to guarantee that pensioners enjoy a real increase in their standard of living. The fact is that they have made other priorities. However, they pretend that there is something important about presenting reforms at nil cost.

One of the excellent briefing papers that we were given by One-Parent Families told us that the Bill was a reform that involved robbing Peter to pay Paul. That was the only mistake that I could and in that paper. It is a reform that involves robbing Paul to pay Paul. The last Liberal Government—I see no Liberal Members on the Liberal Bench although there is one present in the Chamber, the hon. Member for Truro(Mr. Penhaligon)—introduced the National Insurance Act 1911. A Member called Jack Jones, who represented Silvertown, opposed the Bill. In going through the Lobby against the Bill, Jack Jones sang "It is the poor that pays for the poor". He argued that the poor have to pay for any reforms that are served up. That is the tune we could be singing tonight.

We can see the significance of this measure on the poor in our constituencies if, for example, we see what difference it is going to make to the poor in Wallasey. Wallasey is not only represented by the hon. Lady on the Government Front Bench but is a neighbouring constituency to mine. In the Bill, under the guise of nil cost, the Government are serving up a diet that will make 3,000 poor people in Wallasey worse off. That goes under the euphemism of nil cost. Among the major objections to the Bill is the fact that it is shovelling money around among the poor. There is no redistribution from rich to poor.

Despite that objection, some good things can be said about the Bill. The notice of assessment is to be automatically issued. That is a good reform. The tapering of disregards is also a good reform, as is the news about simplification of children's benefits.

There is now a wealth of evidence that the most hard-pressed in our community are those with children. Whether one looks at the reports of the Supplementary Benefits Commission, the nutritional work of people like Church and Walker or the latest pamphlet by David Piachaud, one finds that those with children are the most hard-pressed and those to whom we wish most resources to go.

Before giving an unqualified welcome to the changes in the children's rate, I hope that the hon. Lady will take note of a point and pass it on to the Minister who is to wind up the debate. Am I right in assuming that, although the rates of the youngest children from 0 to 5 are being increased to the next age band, the 0 to 5s will still carry in addition the 95p heating addition? I wish to know whether the youngest children will be getting larger benefits than those in the next age group.

I welcome the proposals in the Bill for simplification of the exceptional needs payments. It seems simple when one reads the White Paper. But how will the Government lay down what is supposed to be covered by the scale rates and what might be covered by exceptional needs payments when we have no idea of the costs of living for those at the bottom of the pile? Before that question can be answered sensibly, major budgetary studies need to be undertaken into the costs of guaranteeing people living standards at a certain level of income. I hope that this will come from another reform that I almost welcome. That is the replacement of the Supplementary Benefits Commission by a new body.

On this I wish to put a number of questions to which I hope the Minister will be able to reply. We do not wish to see a weakening of the role developed by the Commission. It is crucial that the new body not only has a chairman with time to devote to the task, but that it has a duty to report annually to Parliament on what is happening to living standards not only of those receiving benefit but of the poorest in work. We shall never make sense of the worries expressed on both sides of the House about incentives to work if there is no body to oversee living standards of all poor people.

I should like to end by making one comment about breaking the link between pensions and earnings. Many hon. Members have concentrated on this point. I should like to add a piece of information that may shed light on why the Government are bringing forward this measure. The hon. Member for Abingdon (Mr. Benyon) referred to my previous life, if I may so express it. One of our actions at the Child Poverty Action Group was to take the previous Administration to court over what the Government are calling the fudging of the uprating. The result of that case, as the Secretary of State said, is that we lost. But the reason for clause 1 of the Bill is that, although we lost the case, it prevented the Government from manoeuvring again. There is no more room, in other words, to fudge on the pension uprating. The Government have now to seek powers in clause 1 to allow them to cut the living standards of pensioners.

It was right that my right hon. Friend the Member for Salford, West (Mr. Orme) should remind the House and the country that, had the present Government's formula been in existence over the past five years, pensions would have been £5 lower today than they are. There are some good measures in the Bill. Some of the simplifications are to be welcomed. But the two most vulnerable groups are left out. The pledge given to pensioners is about to be torn up and the children of those who work do not even rate a mention in the Bill.

8.35 pm

I am glad to follow the hon. Member for Birkenhead (Mr. Field), but I shall not deal with the points that he covered.

I should apologise to the right hon. Member for Salford, West (Mr. Orme), because I slightly misled him by not adding a figure at the end of the question that I put to him and that he failed to answer, not because he did not understand it, but because he did not have an answer. Per haps I may briefly take him through the figures. [Interruption.] I should be grate- ful if he would not interrupt before I give the figures.

Taking the pension as £25 a week and average earnings as £75, if average earnings increase by 20 per cent. in one year, at the end of that year the pension, being uprated by 20 per cent. in line with earnings, would go to £30 and earnings to £90. If in the following year the consequences, of those earnings meant no increase in production, but a 20 per cent. increase in inflation, the pension in the following year would go up by another 20 per cent. to £36 while earnings would remain at £90.

Perhaps the right hon. Gentleman would cease from saying that I cannot do it and allow me to do it. That seems reasonable. The only conclusion that I can draw from his muttered comments is that he does not like the figures. I shall continue with the figures and show that that movement from in creases in earnings unearned to increases in prices, which may follow, will lead to a difference in the percentage that the pension represents from 33 per cent. to 40 per cent.—a 7 per cent. increase, or a straight increase of 20 per cent. on the pension. Unless we have the change put forward by the Government, that can happen in the circumstances that I have postulated. I think that the right hon. Member for Salford, West should accept that and accept that he did not answer the question. To say that it can never happen is not to deal adequately with it.

Does my hon. Friend agree that the theory that a 20 per cent. general increase in wages inevitably leads to a 20 per cent increase in inflation, or, as the Opposition would put it, in the RPI—and they are different things—is not the theory on which the Government are proceeding?

I shall continue with the second point that I wish to make. The point of my first discussion of the pension was to deal with the ratchet. From what one can see, the Opposition do not seem to appreciate the effect of the ratchet. Nor do they seem to appreciate that no Government during the lifetime of a Parliament have kept the pension only at the level necessary to keep it in line with rises in prices. I think that we can trust Governments—if not, they are likely to be thrown out of office at the next election—over the long term, which is for more than a year, which is all we are trying to get ride of for the ratchet, to keep the pensioner's income in line with the general rise in the standard of living.

I should be tempted to vote against this provision if I thought that the Government were not determined to do that. The argument against the automatic ratchet demands that attention be paid to it.

I have already given way once. I do not have much time to give way. I do not want to take my full 10 minutes.

I deeply regret that the Government have not taken on board the importance of increasing child benefit. If I were speaking from the Treasury Bench, I should give a Government commitment that over a period of years—I accept that it would have to be a period of years—the child benefit level must be increased at least to the short-term national insurance benefit for children and ought to be level with the higher rate. There is no logic in having a target that is anything less. When we talk about incentives to work, as has been said by many other speakers, we must accept that child benefit must be increased. If we want to deal equitably with the burden of dependency, child benefit is the method to deal with it.

It is a disgrace to the House and the country that neither of the main political parties since the war has done anything effective to bring the level of income support for children into line with the increase in levels of income for people who have retired. Because children spend their time as dependants with their families whereas some pensioners do not seems an inadequate excuse for leaving the effective level of child benefit where it was when family allowance was introduced shortly after the war.

It is a disgrace that the Conservative Party has not done more about it. It is equally disgraceful, though not more so, that the Labour Party did not do much more during its periods of office since the war. One looks back to high alumina cement and what the previous Chancellor of the Exchequer said about the reactions of trade unionists and the rest and one recalls Governments not carrying out their minor commitments.

I intend to wait and see what the Government announce during the next three or four months on child benefits. I do not intend to wait vaguely and vainly for no comment from them. If I am a member of the Committee, I shall do what I did in Opposition and vote for increases in child benefit. If by the time this Bill comes back from Committee there has been no Government announcement on child benefit, I shall consider that a suitable reason for regarding this Bill as inadequate. I do not give a total commitment because I am not a rebel all the time, but if the Government decided not to link child benefit to either the short-term national insurance benefit rate or to earnings or prices, the Bill will be totally inadequate.

Having said that, I shall do my best to gather support from the Opposition as well as from the Government Benches for a coherent case to be presented to the country. It is clear that there is more interest in arguments about the third London airport or what should happen to the steel industry than in these issues. When we discuss regular dependable in come support for 7 million families—that means 14 million children—attendances in the House are poor and we do not get the support of lobbies outside. We have an ineffective political system which needs to be changed.

I shall not go through the provisions of the supplementary benefits scheme while speaking of raising money. If there is to be a no-cost change following a no-cost review, we may have to live with that for a short time. But if one looks forward to having increased transfer payments—and I look for that—and if over the years one raises the level of supplementary benefit to a scale which people who are in work say would be right if they were out of work, one must have increased revenue.

Clearly, the Government's industrial and economic policy will, over a period, reduce social expenditure in industry. I say that we are right to give transitional help to industries in trouble, but we should be paying social benefit to people in domestic need rather than giving money to decaying industries.

We should re-examine what used to be called by the previous Government the social wage and see whether we can alter housing subsidies and expand the tax base through adjustment to the mortgage interest relief system, which is not always as effective as it should be. We should do the same with council tenants and make sure that rents paid by council tenants are about 15 per cent. to 16 per cent. of their average incomes rather than half that amount.

I should like to see a Government commitment on revenues from tobacco and alcohol—especially from tobacco. They should raise the tax on tobacco at twice the rate of inflation. I speak as a reluctant smoker. There is no argument for accepting that the essential costs that families have to meet should rise faster than the cost of things which are inessential and, in general, harmful.

I have given the Government the answers and have made the speech that I would have made had I been on the Treasury Bench. I have shown the Government how to raise the money and I have invited the Labour Party to join in a crusade waged in the country as well as in this Chamber.

8.43 pm

Had I been fortunate enough to catch your eye before 7 pm Mr. Deputy Speaker, I would have developed many of the points that have been raised though all too briefly. I would have strongly supported the case made in an eloquent speech by the hon. Member for Brighton, Kemptown (Mr. Bowden), with whom I share the chairmanship of the all-party pensioners' group. His speech illustrated the concern felt in the all-party group about the severance of the link between pensions and wages. He dealt with that very well. I fully support everything that he said and I applaud his courage in saying how he would vote in the Lobby tonight.

Hon. Members have referred to resettlement centres. Those of us who monitor the performance of these centres can be forgiven if we are cynical about the simple change in name. We want more than a change in name from reception to resettlement. Is the proposal a genuine attempt to move towards a replacement for reception centres for the single homeless by the provision of housing, social support and health care in the community? Nothing short of that will satisfy us.

In many cases the resettlement or reception centres are no better than the casual wards that existed under the old poor law system. They have been disguised under different names. I should have liked to enlarge upon that topic, but the 10-minute limit on speeches at this time of night prevents my doing that.

I turn to the question of the Supplementary Benefits Commission and the ending of discretionary payments under the social security scheme. We may have been stymied by the chairman of the Commission appearing to welcome its abolition. I am sure that I shall be for given if I do not go all the way with that welcome.

What advantage will such a move have for the poor people who can lift themselves out of poverty and provide the vestiges of a living only through that Commission's benefits? If that move benefited such people, I should accept it, but I am not sure that it will. I am convinced that that is not the intention.

I accept that the present social security scheme, with its wide range of entitlements, is difficult and complicated and that claimants do not always understand it. Because of that complexity, too many needy people are unaware of the benefits to which they are entitled. I could quote at length the statistics on the lack of take-up of the benefits. It is too easy for those who are not equipped to fill in forms or grapple with bureaucratic requirements not to apply for the help to which they are entitled. The complexity of the system provides an awesome task for the officers who administer the scheme. I pay tribute to those officers. They are a tremendous help.

It is in the interests of the claimants and the administrators for the social security scheme to be simplified so that everybody can understand it and for the rules to be published and made available. There is a compelling argument for that. However, that does not mean that we should end the discretion involved in calculating the needs of individual families. We need not abolish the Supplementary Benefits Commission and the discretionary payments in order to simplify the rules.

We are always faced with that kind of choice—that in order to publish the rules and the regulations and make the scheme simpler, we must accept the abolition of the discretionary principle of the Supplementary Benefits Commission. I do not accept that. Perhaps in Committee I shall become convinced, but at the moment I am not. Any welfare benefits scheme must, as a matter of principle, improve discretionary payments to meet individual needs and circumstances.

I oppose the removal of that principle in the Bill, for five reasons. The first is that one must consider the history of the development of all welfare schemes in Britain. It shows that whenever Governments have tried to regulate or control part of the scheme by removing discretionary elements, special arrangements have had to be made by the National Assistance Board or Supplementary Benefits Commission to expand discretionary help to meet special needs. The system has always begun with regulations, but supplementary rules and regulations have to be brought in to put back what others took away. That has always been the lesson of the past.

If this scheme is to cater for the needs of all people, it must contain maximum flexibility. The attempt to remove some of that flexibility and put the scheme into a corset or straitjacket will prove unworkable and will soon have to be changed to meet exceptional needs.

Secondly, the Bill's determination to remove discretionary assistance is no more than a crude attempt to cut down the total number of claims by needy people on the social security system. That is the thinking behind it. In the name of fine principles, such as simplification, open government, polishing the rules, and so on, the Bill is introduced, yet its real aim is to cut down the number of needy who claim.

The Bill will give claimants the right to less total income. In a recent parlia- mentary reply the Under-Secretary of State gave some enlightening figures. She said that as a result of changes in the Bill, 750,000 claimants would be better off, 500,000 would neither gain nor lose, but 1,750,000 would be worse off.

One could go into detail about those who will be worse off. They represent the most vulnerable and poorest people of our society. I am satisfied that it is not the high-sounding principle of simplification or open government that is behind the Bill, but a sinister element—that of trying to cut down on the number of claims.

The White Paper said that the total number of people dependent on supplementary benefit had risen to 5 million in 1978. It went on to say:
"the obvious way to reduce the load on the supplementary benefits schemes would be to remove large numbers of people from it by increasing other social security benefits. But the levels of expenditure needed for this would be very large indeed".
The Government are therefore not going to do that. The White Paper continued:
"We therefore propose to adapt the present scheme to meet its present role."
The Bill makes general cutbacks in many areas—

Order. The 10 minutes allotted to the hon. Gentleman have now expired.

8.53 pm

In the few minutes remaining I shall base my brief remarks on the one line in the Bill that provides for the Supplementary Benefits Commission to be abolished. One imagines that, with a puff of red, white and blue smoke, it will be gone. I hope that the commission's departure is not quite as abrupt as the language of the Bill suggests.

Throughout my 15 years as a councillor in local government I have been closely involved with welfare work. For 13 of those years the Supplementary Benefits Commission was in existence. Despite the occasional sticks and stones, the bones of that Commission are still unbroken. It has done an excellent job, but it was not until Professor David Donnison became chairman that the Commission's annual reports became alive and looked constructively to the future. Under Professor Donnison's chairmanship it adopted the independent and creative attitude that had always been intended. The advisory role of that Commission is vital if the Government are to succeed in solving the greatest problem of the Welfare State—getting the priorities right.

The Commission has repeatedly drawn attention to three issues in particular. The first is the need for a simpler system and less and less discretion. I believe that the Bill is the first step towards simplification, but I should like to see us go very much further. I endorse what my hon. Friends have said about tax credits. They must still remain our long-term aim. We are told that they cannot be introduced now because of the problems of computerisation, but I honestly believe that at a time like the present, when we are looking at ways of cutting back Government expenditure, there are some items of capital expenditure that are worth while investing in. To computerise at this stage would mean that we should be in a position to capitalise upon the recovery when it comes. We must plan well ahead. I am sure that is the answer and I am sure that tax credits will remain our long-term aim.

The second issue that the Commission highlights is the inadequate level of supplementary benefit rates, particularly for families with children. Benefits are too low because inflation is too high. There has been much discussion this evening about the problems of indexation, but if the Government are really sincere in their fight against inflation, any expenditure over which the Government have control must be aimed at a level that is lower than the actual rate of inflation; otherwise they do nothing more than compound the problem.

The third issue raised by the Commission is the exclusion of the unemployed from entitlement to the long-term rate of supplementary benefit. I appreciate that this is another highly contentious issue and that the Government are unable to accept the Commission's recommendation. I fully agree with the principle of retaining a differential between income from work and income from unemployment receipts; otherwise people will ask "Why work?".

I suggest that the long-term rate of supplementary benefit could be paid to the unemployed, and the "Why work?" anomalies removed, if all welfare benefits were made taxable—not necessarily taxed—because the anomaly of the tax rebate when someone goes on the dole for the first few months would then be removed. I am sure that if Lord Beveridge were listening to these remarks he would agree with that suggestion.

Changes of that sort would do much to preserve a real and vital factor in the minds of the unemployed—their self-respect, because without self-respect the task of finding a new job is very much more difficult. As the Commission's latest annual report says:
"What the unemployed want most of all is not better benefits. They want jobs, and they are perfectly capable of working."
Another important factor in finding a job is mobility. That is why we Conservatives are delighted to see the publication of the Housing Bill, which will add greatly to mobility through the sale of council houses. However, some of us are rather disappointed that it has taken until now for the Government to bring forward proposals on the sale of council houses.

I live in a constituency in Bristol where for 18 years the council sold council houses. The other day, for purely dogmatic reasons, it reversed that policy. Now, council tenants in Bristol cannot buy their council houses. I am sure that Conservative Members condemn that action.

While on the subject of housing, I should like my right hon. Friend's views on the problem of fuel costs and related benefits. The cost of fuel has risen dramatically since 1973, and it will go on rising. At the same time, there is terrible confusion about the many and varied fuel discounts and discretionary payments made under the umbrella of the supplementary benefit scheme to help poorer families. Could we not have one comprehensive scheme of rebates or bonuses to give help to poorer families?

In the village of Shirehampton, in my constituency, there are tower blocks, and 211 families live in those flats. They are heated by thermostatically controlled, under-floor electric heating. In most cases, those flats are either too hot or too cold. The heating is unsatisfactory, and it is costly. Those families cannot afford it, as a result of which they are placed in a "heating poverty trap", About 20 per cent. of them are single-parent families. If we had a comprehensive system of fuel rebates, in many ways they would be helped to overcome this short-term difficulty.

We are all aware that this is a no-cost Bill. It is a shuffling around of the sheckels. Some will lose and some will gain, but I welcome it because I hope that it is the first stage in a much needed programme of reform that will make our Welfare State more efficient and fair. However, let us not forget that we can provide for the needs of the more unfortunate and deprived only if our economy first generates the wealth to pay the bill. I am a passionate believer in free enterprise. That is the only way that I can see of preserving a free and compassionate society.

With those words, I heartily endorse the Bill and commend it to the House.

9 pm

I wish first to deal with the change in the uprating linking system proposed in clause 1, which has caused much controversy on both sides of the House. The Government intend to end the link between annual pensions uprating and the national increase in income, which has caused much criticism on both sides of the House and outside. With the greatest respect to the Secretary of State, whatever his views about the present system, he cannot believe that the choice that he has made is right.

It has been made clear that, had that system been operated over the past few years, it would have meant £5 off the weekly pension. However, it is more important to consider the effect of clause 1 on future levels of pension, and the Secretary of State has given no indication of that. His officials must have done the calculations, and he knows that within a few years pensioners could be losing about £4 a week, and that will rise steadily to a weekly loss of over £8.

The effect of Government policy can be simply demonstrated. The 1980 retirement pension for a married couple will be £37.30 a week. If living standards—pay increases less price increases—rise by 1 per cent. per year over the next 10 years, the 1990 pension will be £41.20 a week, and without the pay link pensioners will be worse off by £3.90. If living standards rise by 2 per cent. per year over that period, the 1990 pension will be £45.50 a week, and without the pay link pensioners will be worse off by £8.20 a week. That is on 1979–80 figures.

I did mete out criticism to my right hon. Friend the Secretary of State for Social Services, but I do not think that the hon. Gentleman is being fair. I do not think that he listened to what the Secretary of State said in opening, when he made it clear that it was the absolute minimum that the Government would do, and the right hon. Gentleman is assuming that the minimum would apply over a period of years, but I do not believe that it would. Our record shows that we will do a lot more than that minimum, and the right hon. Gentleman's figures are not valid.

I have the greatest respect for the hon. Gentleman, not just for his speech tonight but generally for his work in social services. I ask him to be patient. I am not leaving aside other aspects. Whatever may have been past experience—and he fairly comments on it—although there has not been a statutory requirement to link pension uprating with income increases, there has been a relationship in practice. Under whatever Government, the country was operating under a somewhat different political mood than at present, as I think in his heart he will accept. I am speaking not merely of the economic situation but of the political mood that is governing this country and attitudes to public expenditure and welfare. They have changed. In the future, we cannot rely, as we may have done in the past, on the good will of the Government collectively. I make no personal comment about the Secretary of State.

In this season, as I have already hinted, one should be particularly charitable. Therefore, I am charitable towards the Secretary of State tonight. He probably fought for a more sensible change, if change there must be, of uprating in line with increased earnings. That would have ensured by law that pensioners at least maintained their relative position as living standards rose generally, provided that they were protected when prices rose more than pay. Nevertheless, the Prime Minister and the Chancellor of the Exchequer, backed by Cabinet Ministers who are narrow in ideology and weak in argument, won the battle for yet another public expenditure cut.

I shall give way to the hon. Gentleman in a moment or two.

Will matters stop there? After seven months of vandalism in the public services, with the hatchet brandished again at the last meeting of the 1922 Committee a week or so ago, we cannot be optimistic.

If there is to be another round of spending cuts, as we read every week—almost every day—in the press, do the Government intend to abandon statutory uprating of benefit altogether in relation to prices as well as earnings? I would gladly give way now so that the Secretary of State could give the House an assurance on that. It is a matter that goes beyond the Bill.

I shall not give way to the hon. Gentleman. I am putting a specific question to the Secretary of State.

The Labour Government's method of uprating in line with the higher rate of pay and price rises ensured that pensioners, widows, industrially disabled and other beneficiaries shared in the rising standard of living experienced by employed people. It enhanced their living standards, relative to employed persons, when inflation outran rising incomes. That produced a ratchet effect. However, is that as much of a problem as the Government and others have made it out to be?

In the debate on the Queen's Speech on 13 June the Secretary of State said:
"the statutory obligation to uprate…in line with either prices or earnings, whichever is the higher, is not sustainable in the long term."—[Official Report, 13 June 1979; Vol. 968, c. 438.]
In the course of time, the present method may well become redundant as the Pensions Act 1975 comes fully into effect. However, that is years away and it will be 1990 before the second tier of the State pensions scheme, the earnings-related additional pension, will pay the average person £10—at 1980 rates—on top of the basic pension. At that time, it might be correct to get rid of the rachet effect.

I have another basic objection to altering the present statutory obligation of uprating. There is an implied assumption by some of its critics that the present relationship between retirement pensions and other long-term benefits and national earnings is the right one and should not be allowed to creep up via the ratchet effect. That assumption must be rejected. The TUC—not alone—is pressing for pensions of one-third for single persons and for a couple one-half of gross average earnings. The national average wage now runs at over £100 a week. That would mean crediting in, as the TUC describes it, to the new earnings-related scheme, the scheme which has been urged for existing pensioners and those retiring during the early years of the new scheme.

Whether the Government accept these proposals is not a matter for today's debate. Can it be denied that the present relationship between pensions and other benefit scales to earnings generally is unsatisfactory? If it is accepted that it is unsatisfactory, the ratchet effect is beneficial, and not damaging, to our social security system.

With respect to the Secretary of State, references to the article by Tony Lynes, and to other exchanges that may have taken place in connection with the ratchet effect, have not been completely accurate. As I recall, in the article in New Society which the Secretary of State quoted in the Budget debate, and which was referred to in the press conference on the Bill, it was urged that one could get rid of the ratchet effect without denying the need to relate, as appropriate, uprating to either earnings or price increases, according to which was appropriate over a period of time. There was no suggestion—as the Secretary of State has suggested in the House and elsewhere—by Mr. Lynes that he supported the Bill. He has never supported it. On the contrary, he is strongly opposed to it.

I do not know the opinion of Mr. Lynes on the Bill. I have never attempted to argue that Mr. Lynes's article supported the Government's policies. I said that Mr. Lynes at least recognised the problem. The right hon. Members for Salford, West (Mr. Orme) and for Norwich, North (Mr. Ennals) have not recognised the problem. The right hon. Member for Brent, East (Mr. Freeson) has at least recognised the problem.

I have not recognised that there is a problem. The right hon. Gentleman was not listening to what I said. I said that the Government have overstated what they describe as a problem. There is not a problem. I have stated and argued that there is a beneficial effect. I believe that it is accepted by most people that the relationship between basic pension and other benefit scales to national earnings is not right at present. It is too low. If we add the creeping-up as a result of the ratchet effect, that is beneficial to the social security system, not damaging.

These matters are not really concerning the Government. They are concerned by the fact that each 1 per cent. saving on the uprating amounts to £130 million, in effect robbing pensioners and others by that amount. If prices rise by 10 per cent. and earnings rise 12 per cent., the Government's uprating method saves £260 million. That is what is in the mind of the Government—or at least in the mind of the Treasury, whatever may have been the original wishes of the Secretary of State for Social Services. This is not a no-cost Bill. It is merely a cost-cutting Bill. Those who can least afford it will once more carry the heaviest burden of Government economies.

That will also be the case if child benefit is not increased next April. That point has been made by a number of hon. Members today, and not for the first time. There has been a decision. Let there be no mistake about that. Another mean decision has been made, not publicly announced, but shrouded by misleading statements in the House and elsewhere. We are entitled to ask the Secretary of State to tell us tonight, and to tell the country, whether there will be an uprating in child benefit in April. That must be known now. I believe it takes about 20 weeks—my right hon. Friend the Member for Salford, West (Mr. Orme) will be able to confirm that or correct me—to operate the system. The beginning of April is only three months away. Three months is well below the normal administrative time re- quired to implement the increase in child benefit, if there is to be one.

We can therefore only assume, from the answers or the non-answers that some of us have had from the Secretary of State in the House and in correspondence with him, that a decision has been taken not to uprate, and that there is a refusal to announce it to the House and to the public. If I am wrong, I shall gladly give way and allow the Secretary of State to correct me and say that there is still a possibility or, better still, that there will be an uprating in child benefit next April.

I am amazed that the right hon. Gentleman has the effrontery to stand at the Dispatch Box and talk about deception. Does he recognise that the Government of whom he was a member, although professing to uprate the main benefits in relation to earnings, totally failed to do so, and that pensioners had to take the Government to court to try to get their rights recognised? Does he not understand that this Government are being honest in producing a system which is related to a clear index? That is far more clear and honest than what the previous Government were doing in practice.

The hon. Gentleman is wrong on both counts. What he says is untrue. There was an uprating which took account of any shortfall. That has been made perfectly clear. What is more, I happened to be talking, when the hon. Gentleman intervened, about child benefit. Indeed, if I may remind him Parliamentary Private Secretaries usually keep quiet in debates.

We are entitled to ask the Secretary of State to tell the House whether there is to be an uprating in child benefit in April. That is now 12 or 13 weeks away. If we do not get that answer, we must assume that there has been a secret decision and no announcement made of it. of it.

Although the right hon. Gentleman knows that I totally support him on the question of the child benefit increase, we should hold open to the Government the opportunity of raising child benefit within a week. Child benefit has the advantage of being a specific sum paid by means of a specific book, and any post office has only to pay out the increased sum.

I wish that it were so. I wish that I could come back to the Dispatch Box towards the end of March and ask the Secretary of State "Can you tell me whether in one week's time there will be an uprating in child benefit?". Unfortunately, that is not practicable. Anyone who knows anything about the subject will appreciate that. That is why it is urgent to press the point now, and that is why I am sticking to it. I have had some rather frustrating correspondence and exchanges in the Chamber. The Secretary of State will forgive me if, even in this charitable season, I am a little persistent in the matter. He could solve the problem by answering my question now. I shall gladly give way to him if he is prepared to do so. It is apparent that he is not. I give way instead to the hon. Member for Northampton, North (Mr. Marlow).

I am very grateful to the right hon. Gentleman for giving way. When the Labour Party was last in power, the proportion of public expenditure on social security benefit, pensions and so on, increased from 20 per cent. to 26 per cent. It increased in real terms by £4,000 million. If the same were to happen under the present Government, we should have to find another 10p by means of VAT or put another 10p on income tax. It is the belief of many Conservative Members that if we introduced that sort of regime it would be entirely counterproductive in terms of the production of wealth, on which all these systems are dependent. Will the right hon. Gentleman comment on that?

Not this evening, although I shall be glad to do so on another occasion. This is a debate on a rather narrower subject than the whole area of public expenditure or the running of the economy generally. I must resist the temptation to make acid comments on aspects of Government policy other than those with which we are concerned tonight. As we are clearly not getting an answer to the question on child benefit, I shall turn now to something else.

If the Government are to end indexing for benefits—and once more I shall gladly give way to the Secretary of State should he care to answer the question that I put to him earlier on this subject—the irony is that there will be still more people coming on to supplementary benefit, if these rumoured policies, leaked from various quarters other than the DHSS, no doubt, turn out to be true.

It is quite clear that the present massive dependence on supplementary benefit is one of the two major shortcomings of the system. The other is the failure of a system such as our national insurance scheme to provide claimants with a decent minimum income to ensure, in the words of the Supplementary Benefits Commission,
"normal participation in the life of the relatively wealthy society in which they live".

Let me pursue this, as there are a number of points that I want to get on the record.

There are other serious shortcomings. There is the failure to relate the supplementary benefits scheme to our social security system, the failure to co-ordinate these systems with a whole variety of financial support schemes in education, job training—[Interruption.]

No, I shall not give way.

There is the failure to co-ordinate housing and social services; failure to co-ordinate the variety of services to individuals and the community at local level; for example, co-location of DHSS social service offices, national insurance offices and jobcentres and other services; failure to consider the potential role of our system of social assistance with social and other services in economic regeneration for deprived areas and groups. On none of these issues do the Government show any sense of direction.

The White Paper to which this Bill relates is a disgrace to any Government with pretensions to thinking through policies for the future, and informing Parliament and the public. I find it difficult to recall such a thin policy document on any topic previously produced. "Social Assistance", the review of the supplementary benefits scheme, recognised that.
"the social assistance scheme in this country is having to play a role for which it was neither originally designed nor subsequently adapted"
and it concluded:
"either the number of claimants must be reduced to the much lower level at which discretion could be properly administered on an individual basis; or the scheme must be adapted to its mass role."
The White Paper admits in paragraph 6:
"The obvious way to reduce the load on the supplementary benefits scheme would be to remove large numbers of people from dependence on it by increasing other social security benefits."
But it rejects this choice because of cost and goes for adapting the scheme to its present mass role.


However welcome quite a number of the Government's proposals are, this cannot be accepted. Again, in the words of the Supplementary Benefits Commission in response to the original review:
"If the reform of the scheme is to be worth-while, and if the living standards of claimants generally are to be protected and improved, it follows that the 'no-cost' assumptions adopted in the Review Report must be rejected.".
In my view, this is fundamental. The Government argue that we cannot afford the cost, but this is as much a question of transferring resources as of increasing them.

Indeed, as poverty is largely relative, it could be argued that a sharply inegalitarian society which increasingly expands consumption at the upper end of the economy automatically sharpens poverty at the lower end as material needs and demands are forced up and social relationships in the family and neighbourhood are weakened by the urban changes associated with rising standards. That is bound to happen. There are here underlying issues which will be sharpened by the social and political divide which is now opening up in Britain under this Government.

More specifically, in this year's Budget the Government have transferred £3,500 million to better-off people, are threatening public and social services up and down the country, and are increasing un employment, while at the same time they are arguing that there are not enough resources to give the unemployed, lone parents, poor children, disabled people and pensioners a decent minimum income. I do not question that there are major problems of resources and priorities which we shall all have to face more rigorously than in the past, the Labour movement as well as anybody else; but this underlines rather than denies the need for a Government programme of objectives which could be achieved in stages, so that the impact on public expenditure levels and employment will be gradual over a period of years.

No Government can act overnight, but there can be changes which would advance things for the long-term unemployed and for one-parent families in particular. We are entitled to ask the Government to tell the House whether it is intended to reduce dependence on supplementary benefit. If the answer is "Yes", may we be told what the strategy will be, at least at some stage?

The Labour Government started down that road—I say no more than that—with the Social Security Pensions Act 1975 which will eventually, as the phrase goes, float the vast bulk of pensioners off the supplementary benefit scheme. But I must say this, too: if we want to act quickly in the area of the long-term unemployed, child benefit and the like, it is perfectly possible to handle this if we abolish the cut-off point of national insurance contributions which, I understand—according to figures that were recently given to my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker), according to Hansard—would produce something of the order of £800 million a year in additional resources for use in the areas of insurance and welfare.

That prospect was not touched on in the debate. I trust that it will be taken seriously as a means of achieving the resources that are required. It is inexcusable that the one enormous omission from the present proposals is the failure to allow the long-term unemployed ever to receive the long-term rate of supplementary benefit. The SBC stated explicitly in paragraph 3.20 of its 1978 annual report:
"This discrimination against the unemployed and their families is wrong, and its removal is our highest priority for the improvement of the supplementary benefit scheme."
I trust that in the seventh year, 1980, the Secretary of State—who has been referring to six years of non-action—will take action, as the Supplementary Benefits Commission urged in its annual report. I understand that it will cost about £40 million a year to do so. The Government should announce tonight their intention to do so or, as soon as may be, in Committee. Our objective should be that the long-term unemployed should be paid at the higher rate of contributory benefit after six to nine months' unemployment and until suitable emploment is found.

We must return to the question of child benefit. It must be significantly increased in the near future. That will be the largest single contribution to an antipoverty programme and will enable large numbers of lone parents in particular to come off supplementary benefit. That is the second single biggest group on supplementary benefit today. If the Government claim that resources are not available for these urgent measures, they have the answer in their hands. As I indicated, £800 million a year could be achieved as an additional resource by abolishing the earnings ceiling on social security contributions.

If the Government reject these proposals and fail to indicate their firm intention to end a mass role for the supplementary benefit scheme, they will be confirming that they have no sense of strategy for the future, unless it be to undermine the Welfare State. There is all the more reason, therefore, for our misgivings over the proposed abolition of the Supplementary Benefits Commission. I shall not go into that matter at any great length as it was discussed by other hon. Members and I wish to allow reasonable time for the Minister to reply to the debate.

The role of the Supplementary Benefits Commission, contrary to the intentions of the Bill, should be retained. It should be widened so that it covers an advisory and study capacity covering the whole area of social policy in Government, across departmental boundaries and indeed across the boundaries between Government and local government. That was the original intention in creating the DHSS, and indeed in creating the Secretary of State for Social Services, who was to look well across the border and not confine himself to health and social security matters.

It is my hope that there will be a powerful Supplementary Benefits Commission with a much wider remit than is at present allowed to it. That would take the Commission into wider areas. It would come up with excellent material and recommendations which would, in the end, lead to the wider role that the Secretary of State for Social Services in any Government should undertake, and should be allowed to undertake. He should look well beyond his Department into areas that are closely related—housing, education, financial support, support systems for employment training, and a variety of areas that are now virtually excluded from his responsibility except in the usual inter-departmental consultations that are allowed in Government. Those are the reasons—put very briefly and inadequately, I accept—for wanting to see the retention of a successful organisation and the expansion of its role along those lines.

Is the right hon. Gentleman aware that the new proposal may be better, and that there is no point in retaining something, that may have outlived its useful purpose?

No, otherwise I would not be arguing as I am. I do not believe that the Bill provides a stronger and more powerful potentiality. I put these thoughts seriously to the Minister. I hope that they will not be rejected out of hand, and that we shall have an opportunity of discussing them at greater length and in greater depth when the Bill reaches Standing Committee and later.

9.30 p.m.

The Bill presents to the House a package of sensible, modest and practical social reforms, with the exception of clause 1, which is clearly controversial.

There is no reason why anything in the Bill should have been the subject of heated political debate. It is something of a tragedy for Parliament that the present hysterical state of the Labour Party seems to require it, on a Bill such as this, to indulge in the series of hysterical and exaggerated cliches that have run through so many of the speeches today, which came to a crescendo in the pompous and strident speech to which we have just listened.

I recognise, however, that clause 1 is controversial and that the controversy crosses party lines. It has been attacked in an eloquent and courageous speech by my hon. Friend the Member for Brighton, Kemptown (Mr. Bowden), as well as by Opposition Members. It has also been attacked outside, not only by the usual stage army of the Left but by such organisations as Age Concern—

No, I will not give way at the moment. A lot has been said in this debate and I do not intend to give way too often.

As I said, I accept that clause 1 is controversial, but I believe that the case for it has been made and I should like to develop it. Whoever is attacking this proposal, it is not the pensioners. I have not had a single letter from a pensioner attacking these proposals, and I challenge other hon. Members to say whether they have. If we are told, as we were in the speech of the right hon. Member for Norwich, North (Mr. Ennals), that that is because the pensioners have not yet realised what is in the Bill, I say that we should look at the correspondence that we have had from pensioners over many years.

During the years that I have been a Member of the House, whether as the Member for Newham, North-East or for Daventry, I have had hundreds of letters from pensioners expressing their concern about pensions under both Labour and Conservative Governments. What have they put to me? They have said to me that in their view—

Is the Minister saying that he and his right hon. Friends have not had representations from Age Concern England, Help the Aged, or the National Association of Pension Funds? Is he saying that all those who represent pensioners in this country have not made protests against this recommendation?

We have not had representations from the National Association of Pension Funds, but we have had representations from the other organisations to to which the right hon. Gentleman referred. However, what I said was that in my capacity as a Member of Parliament I have not had a single representation from a pensioner, and I believe that that is the general experience of all hon. Members. What I was about to go on to say was that it is folly to give way, because it puts one back in time and there are other points to which one does not reply.

Over many years pensioners have written to me expressing concern about the relationship between their pension and the cost of living. They have complained that a particular uprating was too low in relation to prices, or expressed anxiety, when a pension uprating was announced in the Budget, about the extent to which prices would rise between the Budget and the following November. Sometimes they have asked me how long it would be before inflation ate away at the value of the increase they had had. The concern of pensioners is that their pension should keep pace with prices, and that is guaranteed and safeguarded by clause 1 of the Bill.

I ask the House to consider the fact that clause 1 lays down a minimum level for uprating of pensions. The Opposition have been arguing as though this was a maximum level. That is a dishonest argument. They know that successive Governments—Conservative and Labour—have uprated pensions over and over again more than they were required to do by the rise in the cost of living or by other statutory requirements. Every time the Opposition spokesmen trot out the argument that pensions are now £5 higher than they would have been had clause 1 been the law since 1975, they are using the argument as if the rules in clause 1 were the maximum. I repeat that they are the minimum.

During the period of the Conservative Government from 1970 to 1974 the cost of living rose by 40 per cent. and pensions by 55 per cent. There was no statutory requirement to put them up by more than the cost of living, but they were put up by more. A month ago pensions were uprated by 19½ per cent.—more than was required by the rise in either prices or earnings. It is a totally false argument to assume that the minimum level laid down in clause 1 is necessarily the maximum level for the future.

The purpose of the change is to restore to Ministers the choice that Ministers should exercise. It is the Government of the day, subject to the approval of the Parliament of the day, who make the decision on whether and by how much pensions should be raised over and above the statutory minimum in clause 1. Without the change we have the ratchet effect that has been discussed so often. Without it we have the automatic increase over a number of years, higher than either the rise in prices or earnings over that period. That point was put to the House very well by my hon. Friend the Member for Woolwich, West (Mr. Bottomley).

With the ratchet effect pensioners' income rises automatically as a share of the gross domestic product, whether that goes up or not. Since 1975 pensioners' incomes have gone up as a share of a static GDP. They will go up whether the GDP rises, is static or even falls, presenting an automatic increase in the burden on those at work, even at the same time as contributions are increasing because of the impact of the graduated scheme. This has pre-empted a larger and larger share of public expenditure. It has pre-empted resources that might have been required for the expansion of the Health Service, the education service or other social services, which are badly needed by the elderly themselves. That is an ironic by-product of the ratchet system. Elderly people needing hospital treatment or local authority social services may find that those services are not available to them because so much public expenditure has been pre-empted for this one purpose.

I repeat that clause 1 restores to Ministers the duty of making a choice. That is what being a Minister is all about. It restores to Parliament the duty to give a judgment on that choice, and that is what Parliament should be about. I submit to the House that the clause replaces a system that is constitutionally unsound, economically damaging and socially unjust.

The Minister said that he had not received any representations against the iniquitous clause 1. Will he indicate who has been writing to him saying how wonderful is clause 1, apart from Conservative sycophants?

I have neither had, nor would expect, letters to that effect. The hon. Gentleman could have helped the House by saying what letters he has had on the subject. I shall give way gladly to any hon. Member who can quote from a letter from a pensioner in his constituency who objects to clause 1.

The use of the word "iniquitous" is one more example of the silly, exaggerated language that we have been hearing from the Opposition throughout the debate.

The hon. Gentleman has spoken to the House already. I beg him to listen with some degree of courtesty.

Another symptom of the Opposition's hysteria is that they are behaving less and less like parliamentarians and more and more like soccer hooligans.

The simplification of the supplementary benefit package, which is the other main purpose of the Bill, is a matter of urgency. The need for it was spelled out originally in the consultative document "Social Assistance", produced under the aegis of the previous Government about 18 months ago.

The right hon. Gentleman asked, from a sedentary position, whether I will answer the questions. I am answering some of his. [HON. MEMBERS: "Answer."] If the racket quietens I shall continue with my speech. I shall continue in my own way. I shall not be told by the Opposition how to conduct myself.

The consultative document invited comments. Comments came from the SBC and many other sources. They were all agreed on the need for reform and simplification of the system. The reasons for that have been given often, and again in the debate.

The existing system is, in many ways, a jungle of confusion. It is a system which claimants, almost universally, find impossible to understand. It is a system that, as the hon. Member for Truro (Mr. Penhaligon) reminded us, Members of the House find difficult, if not impossible, to understand. It is a system which officers of the Department who administer it often find impossible to understand, especially in the local offices where there is a rapid changeover of staff.

We have a system for about 5 million people who are among the weakest and most vulnerable members of our society. It will not do to continue with the present system without carrying out the maximum degree of reform and simplification that we can manage, but subject to one over riding requirement—

The hon. Gentleman is getting warm. When he said "To save money" I was about to say that the requirement was a reform on a nil cost basis. In other words, there is nothing overall in the Bill affecting the supplementary benefit package—I am now talking not about clause 1 but about the supplementary benefit package—which reduces expenditure on it. The Bill is not designed to save money, but equally it is not designed to spend extra money. That has been implicit throughout the operation.