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The intensive care unit of Birmingham children's hospital is a sensitive issue. Last winter journalists were queuing outside its doors and the staff there are reluctant to talk to the media because they know that anything they say can be twisted out of all proportion. The Central Birmingham health authority managers have told the press and all the world that 50 per cent. of the unit's 49 staff are receiving pay increases of between £2,100 and £3,100. What about the other 50 per cent? Averages can be misleading.

Last week my two hon. Friends and I met 13 of the unit's staff. I hasten to add, for the benefit of the Fleet street scumbags, that we met those nurses when they were off duty, in their own time. I say that because two weeks ago the Fleet street mongrels were at the hospital only to look for information that could be used to attack the nurses there. Those nurses, including several in membership of the Royal College of Nursing, tried working to the grades allocated by the Government. Five sisters, six staff nurses and two enrolled nurses gave us example after example of the differences between them. I shall not detail them all because to do so might be unfair. However, of the 12 sisters in the unit, five have been placed in grade F and seven in grade G.

Two of the nursing sisters were of the same age, had the same skills, received the same training, and were in the same job. They are also members of the same team, because there are only six beds in the unit and the nursing staff operate as a team looking after a maximum of two patients. The only difference between them is six months' service as nursing sisters. They have both served for several years as nurses, but one has been a sister six months longer than the other. On that basis, one was graded F and the other G. Prior to the change, sisters on the top rate had a salary of £12,000. Now a grade F sister receives £12,500, which is an increase of only 4.2 per cent., while one graded G receives £13,925, which is a rise of almost £2, 000, or 16 per cent.

Working to grade in that intensive care unit will not work. Other health authorities in the west midlands region are telephoning members of the intensive care unit's 49 staff offering higher grades if they will move authorities. They are headhunting. This time last year, one hon. Member after another representing west midlands constituencies pressed for emergency debates under Standing Order No. 20 because children needing urgent operations were being turned away. That was when only three of the intensive care unit's beds were being used and there was surplus capacity. We were told that there were not enough nurses and that the Government were doing something about the situation.

It is true that extra training has begun, but what will happen now with all the discontent about the dividing of salaries and splitting of grades, and with other health authorities headhunting? The situation is absolutely crazy. Nursing staff are leaving the unit because, although they want to work there, they also want to be nurses--and can serve adjoining health authorities equally well for an extra £2,000 per year. An increase of that sort is not to be sniffed at, because, like the rest of the population, they have mortgages to pay. It is grossly unfair to put them in that situation.

It is even more unfair that, when those nurses tried working for a couple of days to the Government's allocated grades, they were pilloried by their own management, resulting in headlines such as

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"Action hits child heart operations",


"Admissions halted as nurses work to rule".

The Press even telephoned some nurses and asked, "When you work to grade, will there be pickets?" That is the kind of pressure that those nurses were under.

The fact remains that not one patient in Birmingham children's hospital failed to receive an operation as a result of the nurses there working to grade for two days. That is contrary to what was said by management--they told lies. At all times, all six beds in the intensive care unit were occupied, and the unit could not have accommodated another child from the operating theatre, so no further operations could have taken place anyway. Every bed in the unit was already occupied. It was grossly unfair to put around stories that, because nurses were working to grades allocated by the Government and dividing their responsibilities, they caused young children to miss vital operations. That is not true.

The situation appears even more obscene when one recalls that a year ago parents of children desperately needing operations at Birmingham children's hospital attempted to make the courts order the Government to use their resources in ensuring operations for their children. By and large, the courts threw out those applications, saying, "It is nothing to do with us-- we don't want to know." Today, Ministers of the Crown, aided and abetted by management, are actively encouraging health authorities to take nurses to court. That is obscene when one remembers that, a year ago, parents could not get any redress in the courts, but now Ministers are telling health authorities that they should take their nurses to court for breaking their contracts. That is a sad state of affairs. I hope that Ministers will in their quieter moments reflect on why it is that, having paid an extra £1 billion into the Health Service, which I do not deny, they have created the fiasco that they have.

I turn to two aspects of the Prime Minister's speech on Tuesday--the one that she made in this House, not that read out by Her Majesty the Queen in another place. In the first few minutes of her speech, the Prime Minister clearly showed that she had no idea what my right hon. Friend the Leader of the Opposition meant when he attacked the Government for their centralisation and dictatorship. She did not have a clue what he was on about. That worries me, because the Prime Minister's shallowness is a danger to us all.

Mr. Hayward : My right hon. Friend is not shallow.

Mr. Rooker : She is extremely shallow. Her response to my right hon. Friend's remarks shows that to be true. It is because she has been surrounded by yes-men over the years.

One has only to look at the Prime Minister's rebuttal in columns 20 and 21 of Hansard. If hon. Members want to defend the Prime Minister, that is fine, but to make everybody a shareholder and a home owner is not freedom when shareholders and home owners are not allowed to read books published overseas about their own country. It is not freedom to take less tax if at the same time the burden of taxation is shifted from the well-off to the less well-off--as will happen with the poll tax. It is not freedom for parents to have choice over education and then to prevent them and their children from seeing the history of

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their own country on television simply because some of the participants, dead or alive, are now non-persons. It is not freedom either to talk--as the Prime Minister did--about giving people independence and then to remove the right of a public interest defence from those people of independent mind who put loyalty to the state above loyalty to the Government, who might not always be telling the truth in order to avoid political embarrassment. The shallowness of the Prime Minister's simple equation is, "You've got shares, so you're free". It is not like that. People are asking many questions about the nature of the society in which they live and why certain avenues of dissent are closed to them--the very points that my right hon. Friend the Leader of the Opposition put to the Prime Minister. These are serious issues, but the Prime Minister treated them in a shallow way. She ignored these points--not, unfortunately, at her peril but at ours. We, as Members of Parliament, and our constituents will suffer from this approach to Government. My second point concerning the Prime Minister relates to her use of terrorism for scoring party political points. She does it all the time. The Prime Minister, her family and her colleagues, as well as some of my colleagues, have been and are now under terrorist threat. I, like every other hon. Member, bear the Prime Minister no personal ill will, but that does not prevent me from legitimately criticising the way in which she seeks to use terrorism for party political purposes.

It was not a Labour Government who, when it was convenient, put a terrorist on a plane in the early 1970s to get her out of this country so that the Government did not have to face the consequences. That was a Government in which the Prime Minister was a member of the Cabinet. It was not a Labour Government who knowingly allowed the killer of a police officer to leave this country and go free. That was done by this Government. Yet the Prime Minister never misses an opportunity to taunt and to taint Her Majesty's loyal Opposition by saying that they are soft on or, by implication, support terrorism. She tops the league when it comes to people rushing to get into black, especially when there is a camera about. That is usually after some of her own laws have failed, whether they concern acts of terrorism or shipping safety.

The Prime Minister said to us on Tuesday, as she has said before, that if hon. Members do not vote for her Bill they do not share the Government's determination to fight terrorism. She is seeking to obtain a crude party political advantage when we should combine as a nation to fight terrorism. We have heard today that in the early hours of this morning there was another tragedy in County Tyrone when an elderly man and his grand-daughter were killed. Those murders would not have been prevented by the Prime Minister's laws against terrorism, but they might have been prevented if there were more bobbies on the beat. That tragedy occurred a few days after the Chief Constable in Northern Ireland said that there are to be fewer policemen on the beat in Northern Ireland because money is short. That is the reality of fighting terrorism. The Prime Minister should not seek to make cheap party political points about terrorism. In 1943, the Prime Minister, as she was perfectly entitled to do, went to Oxford. If I were in her shoes, I should be slow to condemn and smear Labour supporters who voluntarily donned military or Land Army uniforms or factory overalls before they were required to do so in order to fight Hitler. Many of them lied about their age so

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that they could get into that fight. Those people now question the validity of the Prime Minister's methods and laws to fight terrorism. They see, year after year, that the Prevention of Terrorism Act 1974--which I admit I have never voted against--does not stop terrorism. They deeply resent their loyalty and patriotism being called into question by this Prime Minister. She knows that she is in no position to do it and she should stop it.

6.55 pm

Mr. Robert Hayward (Kingswood) : Before I comment on the Gracious Speech, I want to make a few observations about the latter comments of the hon. Member for Birmingham, Perry Barr (Mr. Rooker). When he reads his comments, I hope that he will regret having made some of them. He referred to the shallowness of my right hon. Friend the Prime Minister. I think that he meant to use a different word. He may disagree with my right hon. Friend about many political issues. I respect him for having disagreed with his own party on previous occasions about a number of issues. He knows how to stick to his guns and to put forward his own point of view. However, his comments about my right hon. Friend--her shallowness and, both specifically and by innuendo, the proposals for Northern Ireland--were utterly reprehensible and in the cold light of day they will be seen to be indefensible. There may be a difference of opinion, but some of the hon. Gentleman's comments were utterly unacceptable to most hon. Members.

I pay tribute--it may seem a little late, but for personal reasons I wish to do so--to my hon. Friend the Member for Pudsey (Sir G. Shaw) for having moved the motion on the Loyal Address. For a period I served as his parliamentary private secretary. He displayed in the Chamber on Tuesday the wit, charm and good humour that he displayed to me as his PPS and to his civil servants in all the Departments in which he served, which he so wittily identified during his speech. The hon. Member for Newham, North- East (Mr. Leighton) made a series of accusations about the unemployment statistics. They are well-used accusations. However, in a debate on the economic situation in 1987, my hon. Friend the Member for Eastbourne (Mr. Gow) challenged the hon. Member for Kingston upon Hull, East (Mr. Prescott). He asked : "Does the hon. Gentleman agree with the Shadow Chancellor's statement that, if the Labour party came to power, it would make no change in the way in which unemployment statistics are collated?" The hon. Member for Kingston upon Hull, East replied :

"I am grateful to the hon. Gentleman for giving me a chance to make that absolutely clear. We have made clear that our job contribution will be on the registered figures. We have no desire to change them."--[ Official Report, 19 March 1987 ; Vol. 112, c. 1072.] Will Opposition Members therefore please stop whingeing about the re-calculation of the figures? All their leading spokesmen have confirmed that the Opposition do not intend to change the basis of the calculation.

The Gracious Speech refers to employment in simple terms. It says :

"A Bill will be introduced to remove unnecessary obstacles to employment, particularly in relation to women and young people, and to alter training arrangements."

I understand that one of the proposals relates to practices connected with discrimination against women : I hope so. In what I believe to be a quotation from a press release, the Financial Times says :

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"The anti-bias requirements of the Sex Discrimination Act 1967 will override all other legislation."

Many of my constituents hope that that will apply to, for example, pensions for those employed in education. At present, if a male head teacher dies, his wife--if she survives him--is entitled to half the pension. If a female head teacher dies, her husband is not entitled to any pension unless a substantial extra contribution is made. I cannot understand why, in this day and age, when both individuals could potentially have made equal contributions throughout their time in the profession--whether as ordinary teachers, heads of department or head teachers--a female head teacher should be asked, as one of my constituents has been, to pay more than £5,000 extra so that her husband can receive what she would receive if her husband died. That is utterly illogical and I hope that one of the Government's intentions is to remedy it, although I have a sneaking suspicion that it is not.

I welcome the announcements made this afternoon about improvements in pension arrangements. I was fortunate enough to be able to intervene in the speech of my right hon. Friend the Secretary of State on this subject. I have expressed concern previously about people marginally above the income support and supplementary benefit levels who are being penalised in many different ways. We do not know the full details yet, but my right hon. Friend's recognition of the problem is a clear indication of its existence. I hope that the House also welcomes this announcement, and that it shows the Government's intention. I am, however, disappointed that so few Opposition Members have even had the grace to welcome the substantial extra payments made not only to those people but to the most elderly pensioners. The hon. Member for Livingston (Mr. Cook), if I heard him aright-- unfortunately he is not here now, but we can check Hansard --said categorically that, immediately on the return of a Labour Government, he would reintroduce the earnings link. The hon. Gentleman accepted that that would cost £5.5 billion. If that is so--the figure was his--we have started early in this Parliament. In the last Parliament the Opposition did not start making promises until 18 months or two years before the general election, but this afternoon we have had promises not only from the hon. Member for Livingston but from the hon. Member for Newham, North-East, who proposed that we put another £180 million into employment training. That, of course, was a contribution from the Back Benches. But I presume that the £5.5 billion mentioned by the hon. Member for Livingston would take precedence over the £2 billion for the NHS, the extra money for the nurses pleaded for by the hon. Member for Perry Barr and the extra money for overseas aid, rate support grant, transport infrastructure, heating allowances, housing and child benefit or television licences. If the Labour party is to make such promises so early in the Parliament, surely we can reasonably expect some prioritisation. We need to know whether those commitments will all be included in the first Budget or will be introduced at later stages.

It is dishonest for each Labour spokesman to make policy on his feet and to promise huge sums of money in this fashion. After all, £5.5 billion is 2.5 times the tax cuts that the Government introduced in the last Budget. The hon. Members for Livingston and Newham, North-East must find the money from somewhere, and they ought to have the courage to say where it will come from.

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I said that I wanted to deal primarily with employment, availability tests and employment training. The taxes and prices index issued by the Department and introduced by the present Government is, I feel, unnecessary. While it may show what someone needs to maintain his income of the previous year, it should surely be argued that people should be paid in terms of their productivity and their contribution to the company concerned--and what the company can therefore afford. That is measured by neither the taxes and prices index nor the retail prices index. If, as many of my collegues argue--rightly, in my view--wages and salaries should be paid on the basis of what a company can afford, the taxes and prices index performs no useful task and should be done away with.

We already have fairly rigorous employment availability tests, but I support further progress in ensuring that only those who are genuinely unemployed and seeking work receive benefit. A fair number of people are not now in that position. The Government estimate 3 per cent. unemployment as full employment : rather higher than the previous estimate, and if the south and west are anything to go by, the figure may be even higher. But any employer in the west country will say that he is having difficulty in recruiting trainees of all ages, regardless of salary or the nature of the jobs involved. Astoundingly, Avon and Somerset police have recently had to increase the minimum age at which they are willing to recruit because they cannot get people into the police force, yet the unemployment figure in Bristol is certainly nowhere near 3 per cent. It is substantially higher in the constituency of the hon. Member for Bristol, South (Ms. Primarolo) than in mine. But there is no suggestion that all those who are supposed to be available for work are so available.

Ms. Primarolo : It is true that in Bristol there are problems of recruitment in certain sectors of industry. That is not for the want of unemployed people applying for the jobs. As in the south of England, there is a mismatch between the skills of the unemployed and those that the employers are seeking. That is another indictment of the Government's failed training schemes. Bristol employers are looking for highly trained staff. The Government's employment training projects teach people to type, clean or fill supermarket shelves, which is not what is required in Bristol's hi-tech industries. The problem is not that no one is looking for work.

Mr. Hayward : I was going to come on to that point. I do not agree with the hon. Lady about whose responsibility it is.

We are putting large sums into employment training. There may be some criticisms of the scheme. Before I came to the House I was a personnel manager and worked with a series of Government schemes under both the present Government and a Labour Government. Government-sponsored training schemes have for the most part improved, but I am worried about the amount of money that they spend on employment training as such. Training is the responsibility of companies, not of the Government.

I was disappointed to hear the hon. Member for Newham, North-East repeatedly say what the Government could do. One of the problems is that for decades, with the exception of some large companies,

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companies have not generally perceived the need for apprenticeships or training schemes. British management's attitude has for many decades been that, once somebody is 21, he is trained for life. There has been no attempt to train employees to a higher standard.

Mr. Peter L. Pike (Burnley) : The hon. Gentleman said that he supports availability testing and a strengthening of it. In September, one of my constituents had his benefit stopped because, when asked what wage he sought, he replied £80 a week. I do not think that £80 a week is unreasonable, even in a low wage area such as Burnley. Does the hon. Gentleman support that withdrawal of benefit? Perhaps I can avoid being accused of not putting the case in perspective by saying that that man is now in work, although his appeal has still to be heard. Does the hon. Gentleman agree that benefit should be stopped in such circumstances?

Mr. Hayward : I am willing to consider the case, as I am sure my hon. Friend the Minister is, but I cannot comment as I have so few details. Nor is it for me to make such a decision. I could cite cases that arose in the 1970s and ask the hon. Gentleman to tell me what he thinks, but he would be right to say that he could not comment. We must encourage management to train more. When management has identified skills shortages, it ought to cast around within the company to see whether it is possible to train existing employees with basic skills to improve the quality of the work force. Such training should be done at the company's expense. Management should not expect the state to train people. Such an expectation gets it nowhere. The average foreman on the shop floor in German industry is expected to have attained a high academic standard and to be a problem- solver. British managers never expect that. Management does not train people to that standard, so why should they perform such functions? There must be a change of attitude in British management. Without it, we will be left behind.

Mr. Allen McKay (Barnsley, West and Penistone) : The hon. Gentleman is describing exactly what happened before 1979, when firms trained their own personnel. The hon. Gentleman may disagree, but I was an industrial relations manager with what is now British Coal. We worked seven years ahead with apprenticeships and the training scheme and expected to lose people to other industries but also to gain them. People moved between the coal, steel, engineering and glass industries which used to be in my constituency. What has happened since 1979?

Mr. Hayward : I accept what the hon. Gentleman says about training, but even in 1979 it was nowhere near adequate. Like him, I was responsible for a training school. We must consider what we turned out. I had long discussions about changing apprenticeship schemes with trade union officials, but they regarded schemes as immutable and sacrosanct. When we talked about introducing some form of technician grade so that people could be trained to the same level as a French or German person with similar academic qualifications, the trade unions said no way.

We must train people under 21, but we must also train them after they are 21. Unfortunately, the majority of industries have not trained people after they are 21. That makes a dramatic contribution to today's skills shortages. Employers are quite prepared to go outside the company

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and to pay more to get the necessary skills, but they are unwilling to consider paying an existing employee to be trained. That is a failing of British management. Industry has the profits necessary to afford such training. Indeed, I hope that even in unprofitable circumstances training will continue. It is all too easy to cut training during a period of relative recession.

There are a few other matters on which I had hoped to speak, but I have taken some of the House's time and I do not think that it would be fair to speak for much longer. The proposals in the Gracious Speech are worth while. Long-term employment will continue to grow and unemployment will continue to fall, despite what Opposition Members say. I support my right hon. Friend's proposals which are to be brought forward this year.

7.15 pm

Mr. Archy Kirkwood (Roxburgh and Berwickshire) : It is always a pleasure to follow the hon. Member for Kingswood (Mr. Hayward), as he has always shown a deep interest in training. The House is always better informed after listening to him on employment and training matters.

The hon. Gentleman issued a challenge to Opposition Members and said that we were unwilling to welcome the Secretary of State's announcement about additional help for older pensioners. I am perfectly prepared to welcome it. It is not a significant step in terms of the money involved and much more needs to be done, but it would be churlish not to recognise that older pensioners are most in need and that their plight is recognised by the Secretary of State's announcement.

I tried to read the Queen's Speech from the point of view of a pensioner. I wanted to see whether pensioners can derive any hope of improved income in the next 12 months as a result of the proposed measures. Experts now predict that inflation will run at 7 per cent. for the foreseeable future. The proposed privatisation of water and electricity will lead to the expectation that charges for those utilities will rise. It is also widely expected that council rents will increase as a result of the Government's proposals for changing housing and local government finance. My overall impression is that pensioners will face higher charges.

In view of the farcical imposition of charges for dental and eye tests for retired people, pensioners are right to be worried about the drift of the Government's thinking. We must also remember the effect of the changes that were made to housing benefit in the spring as a result of the Social Security Act 1986. I had the dubious honour of serving on the Standing Committee which considered that Bill. Those of us on that Standing Committee warned the then Secretary of State for Social Services about the problems that are now emerging and being raised by my constituents in my surgeries, and no doubt in those of other hon. Members. If anything, the problems have occurred more quickly than I expected.

Pensioners look forward with no enthusiasm to the imminent imposition of a minimum 20 per cent. contribution towards poll tax and water rates in Scotland. The Secretary of State's announcement about the increase of £200 million for pensioners says much about the Government's agenda for the future evolution of the social security system. Taken together with the other changes that I mentioned, there is now a real worry that the

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Government are deliberately and unashamedly moving away from the universal welfare state that the country has enjoyed since the days of Beveridge. There may be an argument about that, and I am prepared to join in it. A successful and forceful argument can be made for maintaining and improving universal benefits.

It is unacceptable for the Government, by stealth, to dismantle major pillars of the welfare state that we have enjoyed to date. There is a worry that they are doing so. A system that moves towards selectivity would inevitably cost more. The Government know that it costs £3.20 to administer £100-worth of housing benefit and only £1.40 to pay £100-worth of pensions. The Government are right to try to reduce administrative costs, but moving towards selectivity will cost substantially more in the future.

The Secretary of State mentioned the rate of take-up of benefits. We know from historical figures that housing benefit has a take-up rate of only 77 per cent. The take-up rate for the recently introduced family credit system is only about 40 per cent. I heard what the Secretary of State said about introducing campaigns to increase the level of take-up, and I support that move because it is necessary. However, it will never serve senior citizens as well as they would be served by a system based more on universal payment of welfare. Savings are inevitably penalised when a selective system is used. I was pleased that the hon. Member for Kingswood was worried about that. Like him, I shall be looking carefully at the detail of the announcement made earlier to see whether people who are marginally above the income support level will derive any substantial benefit from the changes. I suspect that they will not, because that is a difficult end to achieve administratively.

If one is arguing about a selective system versus a universal system, one cannot avoid bringing into the equation the fact that there are very many universal tax breaks. Tax allowances, by definition, are universal. For example, there is the famous mortgage interest tax relief and other allowances. One cannot argue for a selective benefit system and then accept, willy-nilly, universal tax allowances. There should be an open and fair-minded discussion about the evolution of the Government's thinking on social security. I used to study these matters carefully, and I am again responsible for dealing with social security for the Social and Liberal Democratic party. I shall be looking carefully at all the pointers in future to see whether the Government are, by default, bringing about sea changes in the running of the social security system.

There is great difficulty with the statistics that bedevil the whole argument. I receive a clandestine copy of the Members' brief produced by Conservative Central Office. There is a mole there, but I will not tell the House who it is. The brief contains statements such as :

"Pensioners have benefited from an economy revitalised by Conservative policies : Since 1979 the Conservatives have increased spending on the elderly by 27 per cent. in real terms."

That statement is phrased in a way that can be defended statistically. However, it is equally true that since November 1978 the increase in the value of the pensions in relation to prices has been 1.4 per cent. That is not a massive increase. The brief goes on :

"Fully 50 per cent. of the current social security budget now goes on spending on the elderly."

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That is also statistically true, but most of that expenditure is covered by the cost of contributory benefits paid for by the national insurance contribution scheme.

Among other things, the brief says :

"This Government has more than maintained the real value of the state retirement pension."

Again, taken at face value, that statement is also true. However, in November 1978, the value of pensions was 20.4 per cent. of gross male earnings. In April 1989, assuming a rise in inflation of about 7 per cent., that 20.4 per cent. will fall to 16.2 per cent. of gross male earnings.

It is interesting that we are now using different indices for costs and for pension upratings. A 5.9 per cent. uprating is due to take effect in April next year. As I have said, prices are, however, now expected to rise by about 7 per cent. in that time and average earnings will increase by 9.25 per cent. There are different ways of looking at the statistics and if we bandy them about we must bandy them about with great care if we are to cast any real light on what is actually happening.

According to Age Concern, by April 1989, assuming inflation rises by about 7 per cent. between now and April next year, a single pensioner will be £10 per week worse off because of the delinking in 1982 of pensions from prices or earnings, whichever was the greater. Like the hon. Member for Kingswood, I do not think that it is sensible to argue that it is possible to spend immediately £5.5 billion to bring that link back on stream. It would waste resources and drive a coach and horses through the rest of the economy. We do have to remember that we must create wealth in order to redistribute it. However, the hon. Member for Kingswood must accept that the continuous erosion in the level of pension increases compared with the level of earnings increases means that, year after year, pensioners are falling further behind the general wealth enjoyed by the community.

Mr. David Nicholson (Taunton) : The hon. Gentleman is making some interesting points. Does he acknowledge that the previous Labour Government, who had a policy of increasing pensions in line with prices or earnings, whichever was the greater, broke that pledge in 1976 and 1978? Was not the Liberal party involved in the Lib-Lab pact in 1978?

Mr. Kirkwood : I was still in short trousers in 1978. Therefore, I shall treat that intervention with the contempt it deserves.

Mrs. Margaret Beckett (Derby, South) : I was not in short trousers in 1978 but what I recall may help the hon. Member for Taunton (Mr. Nicholson) who, like many of his colleagues, does not understand the issue. Whatever the shortcomings of the previous Labour Government, which I would not wish to cloud, during that Government's period in office, the basic pension increased by 20 per cent. in real terms. That is the pension received by the majority of pensioners and that is most important to the poorest pensioners. Under this Government, it has increased by 2 per cent. in eight years. That is a shocking and disgraceful record.

Mr. Kirkwood : I feel like the piggy in the middle of this argument. The last Labour Government had nothing to do

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with me, nor have the Government's present proposals. I am trying to pick my way sensibly and rationally through this minefield as best I can.

Average figures used in the statistics mask the poverty of the lower 60 per cent. of pensioners, especially those over 75 years of age. Age Concern and the other pressure groups and agencies have demonstrated the extent of that poverty to the satisfaction of any objective person.

I should like to say a word or two about another group of disadvantaged people in the social security system. This is familiar territory for me because I raised the matter in the Standing Committee that dealt with the Social Security Act 1986. In discussions about those who have lost as a result of the social security changes made in April, one group has received little publicity but deserves attention and support--widows aged under 45. They have been treated scandalously by the Government. During debates on the Social Security Act 1986 the Government said that no existing widow would lose the benefit she is currently receiving. Most of those affected are widows who lost their husbands before 11 April 1988, but whose widow's allowance ran out after that time. Most of them thought that they would be dealt with under the old rules, but I discovered to my horror--I fully understand why they are most upset--that the cut-off date was October 1987. This change has left many widows distressed and they have experienced a substantial loss in expected income. According to Government estimates, 14,000 widows are affected.

The raising of the age limit and the abolition of the personal extension to widowed mother's allowance means that thousands of widows aged between 40 and 55 are experiencing severe hardship. I cannot accept that Ministers believe that the sums saved can justify the anxiety that has been caused. Transitional payments have been offered to other categories in the social security system, so I ask the Minister to review this matter and to consider restoring widows, lost income.

Ministers previously promised to review the widow's payment of £1, 000. The level of the payment was set in 1985, prior to its implementation in April 1988. Where is the review? Is it being carried out now, and is there not a strong case for increasing the payment?

The Gracious Speech missed an opportunity to help elderly people. In 1986, the then Secretary of State was warned that the proposed changes would cause much hardship. I welcome the additional £200 million for older and disabled pensioners who are experiencing the worst hardship, but I wish that the Government would listen more to what pensioners are telling hon. Members at their clinics. That group of people, not a minority, desperately need help. I have looked in vain for help in the legislation promulgated in the Gracious Speech. 7.33 pm

Mr. David Nicholson (Taunton) : I shall not follow the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) on the interesting subject of pensions, although I shall refer to it later. In 1979, the hon. Gentleman was 33 years old, so heaven knows what he was doing posturing in short trousers.

In view of what the hon. Gentleman has just said about widows, I support what my hon. Friend the Member for Portsmouth, South (Mr. Martin) said yesterday about early-day motion 1237 of the previous Session :

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"That this House recognises the unfair treatment of the war widows and widows of Servicemen who retired before 31st March 1973". It also dealt with other categories of widows. I hope that in this Session there will be some amelioration of their plight.

I welcome the reference in the Gracious Speech to housing and home improvement grants. I especially welcome the report--which I hope is reliable--in The Times of Monday last. The headline reads : "Low-cost homes to help villagers left behind by the boom." The report suggests that my right hon. Friend the Secretary of State for the Environment and my noble Friend the Minister for Housing, Environment and Countryside are proposing measures to assist the building of 40,000 homes in rural areas to help young villagers priced out of their communities by soaring property costs. The report says :

"It is understood that ministers will impose restrictions on the future sale of the low-cost homes to keep them available for local people."

If the report accurately reflects the Government's intentions, I shall welcome them vigorously. I do not want to develop the subject, because I have spoken on it before. It was the subject of my maiden speech a year ago, and you, Mr. Deputy Speaker, may have noticed an article written by me in The House Magazine this week which deals substantially with it. I am extremely grateful to the editors of the The House Magazine for giving me that opportunity.

I should like to make a further preliminary point that is appropriate in view of the regrettable remarks of the hon. Member for Birmingham, Perry Barr (Mr. Rooker) about the Prime Minister and terrorism. I welcome the passage in the Gracious Speech dealing with Northern Ireland and strongly support the proposed measures. Conservative Members welcome the remarks made yesterday by the right hon. Member for Plymouth, Devonport (Dr. Owen) about Northern Ireland and terrorism. We welcome the support that he gave to those measures. I think I am right in saying that he is the only leader of an Opposition party outside Northern Ireland to support those measures, and Conservative Members are grateful for that.

My hon. Friend the Member for Orpington (Mr. Stanbrook) had the courage yesterday to make a controversial speech on Northern Ireland. I should like to place on record the fact that we need to consider and discuss measures, such as those that he proposed, of last resort--I emphasise that they would be measures of last resort--as a counter to the unholy alliance that exists in pubs, clubs and drawing rooms of defeatists and secret Republicans who are bent on scuttle. Scuttle, as the Prime Minister told me during Prime Minister's Question Time three weeks ago, would be grievously detrimental to the lives of thousands of people in Northern Ireland. It would grievously threaten the unity and morale of this kingdom.

While keeping under consideration the rather drastic proposals suggested by my hon. Friend the Member for Orpington, we must continue to batten down the hatches and soldier on, resolving that scuttle is unthinkable. We owe that to the people of Northern Ireland, the families of service men and policemen who have been killed and maimed, and, not least, to the memory of our former

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colleague, who was my friend and mentor for over 20 years and who died in hospital in my constituency, Sir John Biggs- Davison. I entirely support and understand the economic policy set out in the Gracious Speech and the indication of prudence regarding reductions in taxation. The 1988 Budget has, however, created certain expectations about tax reductions, especially among those on or around average earnings who did not benefit substantially from the budgetary measures as a whole.

I refer my hon. Friends to a written answer that I obtained on 20 October 1988, at column 989 of Hansard. It shows where we stand now compared with the past 25 years. All Conservative Members recognise, and our opponents do not deny, the substantial gains that have been made in reducing taxation in recent years. I asked the Treasury for the proportion of gross income represented by the amount of income tax and employees' national insurance contributions payable on certain incomes at certain dates. For a married couple on average earnings the deduction was 26 per cent. in 1988-89, which was an improvement on 1983-84, when the deduction was 29.6 per cent. It was still slightly worse than the position in the last year of the Government led by my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath), when it was 25.6 per cent., and it was much more than the figure in the last year of the so-called 13 years, 1963-64, when it was 17.6 per cent.

The pattern repeated itself in the figures for incomes of half average earnings--17.9 per cent. in 1988-89, which was down from 20.1 per cent. in 1983-84, marginally up on 1973-74, when it was 16.2 per cent. and substantially up on 1963-64, when it was only 7.6 per cent. Absolute living standards at both levels have improved considerably over that period. The figures show the objectives that we need to pursue in this and subsequent Sessions.

I want to speak about pensions, but I do not wish to pull two ways at once. I have pressed for continued pressure to reduce taxation. All Conservative Members would want to do what they can for our pensioners, especially those in greatest need. Economic success will enable us to do that. Economic success has accompanied our policies, at least since 1982, and, despite our various concerns, I believe that it will continue to do so.

I greatly welcome today's announcement by my right hon. Friend the Secretary of State, and I do not think that he could have improved his timing. My mailbag in recent weeks has revealed the considerable worries among pensioners about a number of matters, including the introduction of eye test charges for pensioners or retired people. Several of my hon. Friends and I tried to avert that measure and were narrowly unsuccessful. Certain other factors have contributed to people's worries.

I should like to quote from a typical letter from an old lady about her plight, which she sets out reasonably. She says that she paid extra in graduated contributions and in working an extra year and that she felt that she had been penalised for what she did to better herself. She said :

"in the main we are a generation which has given far more than it has taken and has considered self-reliance and duty to the community at large before any thought of what we can get for ourselves I am a life-long Conservative and have given a lot of time for working for the party in younger days".

She goes on to describe how she is disturbed about what is happening. I am sure that she will welcome, as I do on

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her behalf, the measures announced today by my right hon. Friend the Secretary of State. They will be valuable and helpful, and we want to build on them.

Before knowing that my right hon. Friend the Secretary of State was to make an announcement, I asked the Library to chase up for me a reference in a weekend newspaper. The Library provided me with the figures on gross weekly incomes of households whose head had retired. Those figures from the 1986 family expenditure survey showed that nearly 30 per cent. of such households had incomes of less than £60 a week and that almost 20 per cent.--bringing the total to half the number of households--had incomes of between £60 and £80 a week. I would not consider such people wealthy. Ministers must be careful when talking about wealthy pensioners when proposing measures. I, too, have the document that was leaked to the hon. Member for Roxburgh and Berwickshire. I do not know whether the same mole sent it to me as sent it to him. If any Opposition Members wish to argue about the figures, no doubt Ministers will respond, but I believe that they have been carefully researched. Between 1979 and 1986, pensioners' average incomes from savings rose by more than 7 per cent. a year in real terms. We must take account also of the income that pensioners have from other sources, including occupational pensions. Pensioners' average real incomes increased by 23 per cent. between 1979 and 1986, compared with 3 per cent. under Labour. I take the point made by the hon. Member for Roxburgh and Berwickshire. Most of the figures that show a happy state of affairs reflect proportional increases. I have spoken of the plight of many pensioners. My constituency and other West Country constituencies include a number of such people, who worked as farm labourers, or worked in retail industry, in public services or in public administration. In the 1950s and 1960s, those people did not work in what passed for the higher paid manufacturing industry, which has since suffered substantial job losses.

The Parliamentary Under-Secretary of State for Employment (Mr. Patrick Nicholls) indicated assent.

Mr. Nicholson : I am glad to see my hon. Friend, whose constituency is not a million miles from mine, nodding in agreement. One needs only an elementary sense of logic to deduce that, if the proportionate improvement has been significant over the past seven years, and if there are still aspects of privation, the position when the Conservatives came to power must have been squalid. We have had a small interchange across the Floor of the Chamber about what the Labour Government achieved, or did not achieve. I shall relate it for the benefit of the House. In 1975 and 1976, Labour withheld the Christmas bonus. The Labour Government failed dismally--

Mr. Paul Flynn (Newport, West) : We all have the brief.

Mr. Nicholson : I hope that the hon. Gentleman will read, mark and inwardly digest it. There is substantial hypocrisy on the Opposition side-- I refer principally to the Labour party, as the Liberal party was responsible for these matters for such a short period.

Mr. Flynn : We have all listened with great care to the hon. Gentleman's remarks. Does he agree that the great

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divide between rich and poor in society has also occurred among pensioners, and that by giving average figures he ignores the plight of the millions who rely on basic pensions? Under the Labour Government, the basic pension increased by 20 per cent. in real terms. Under the Conservatives it has increased by only 2.1 per cent.

As for the timing, it is disingenuous to suggest that today's announcement is anything other than what will be known in the future as "Nigel's embarrassment bonus", stemming not from any desire to please pensioners or to achieve justice, but from the need to save the Treasury embarrassment. Had it been part of any plan or act of compassion, we should have heard about it three weeks ago in the uprating statement.

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