Mr Major’s Speech on Social Security Reform – 7 October 1986
Below is the text of Mr Major’s speech on Social Security Reform. The text was issued by Conservative Central Office, news release 546/86, and the speech was made at the Conservative Party Conference in Bournemouth on Tuesday 7 October 1986.
JOHN MAJOR:
Mr Chairman, when I first read Margaret Fry’s motion there was one phrase in it which particularly appealed to me as I believe it will to all of you, it was a phrase which found echoes in her comprehensive and well-argued speech and in many of the excellent contributions we have subsequently heard. It was implicit in what Brian Oxley said and certainly in the remarks of Sheila Hewitson.
And the phrase was this: “that benefits should continue to be targeted to those most in need”. I might quarrel with the word “continue” for I am not convinced that benefits have always gone to the people most in need. And neither was Norman Fowler and that was one of the reasons that Norman and Tony Newton led the most comprehensive reform of Social Security since the birth of the Welfare State. It was a reform that was necessary, but it was a reform that other Governments had ducked but we have seen through and that will soon come fully into operation over the next eighteen months or so.
But the principle of what Mrs Fry says in her motion is unchallengeable. Benefits first – and benefits best – to those who are most in need. That must be, and is, our policy now and for the future.
It is the only fair policy. The only policy that makes social, or indeed fiscal, sense. Our opponents – in their varied shades of Socialism – appear to offer more for less in a policy of joy without contributions that is utterly unachievable. Their promises are bogus. We make fewer promises but we achieve more and in the months to come it will be our task to make that clear to everyone in this country.
There is one charge – one accusation rather – to which I wish to turn without any delay. It is one that we are all accustomed in hearing every day from our opponents. It was a staple diet of the Liberal and SDP Conference, indeed it was practically the only thing upon which they were agreed. It was an hourly slander at the Labour Conference.
And you will have guessed by now to what I refer: it is the charge repeated and repeated over and over again that the Conservative Party does not care. Let me respond to that – not as a Member of the Government, not even as a Member of Parliament – but perhaps simply as someone who has been a member of this Party since the first day I became eligible to join it twenty-seven years ago.
And I simply want to say this: I bitterly resent – and utterly reject – the charge that this Party does not care. And anybody who has listened to this debate will know that the Conservative Party’s heart is as sound as its head and when they are together the country is in safe hands. Our commitment to Social Security is massive. Expenditure this year is 43 billion pounds, which is one third of all the public expenditure. And to put that more starkly: for every single pound we spend on Defence or Health or Education we spend not one pound, but 2 pounds fifty on Social Security. That is the scale of this Government’s commitment to the elderly and the vulnerable and let no one tell you otherwise.
But money for the Social Security comes from people who have to pay for it through their taxes, and that is something that I think we must bear carefully in mind. So we must spend that money fairly, precisely because it does come from the tax payer and so I want to make this clear, that is why we are determined to cut out fraud and abuse in the Social Security system.
Over the last year we have dealt with 100,000 such cases and saved 120 million pounds that we can use elsewhere on people genuinely in need, and that is good but it is not good enough and so we propose to step up our actions. We have appointed a further 500 staff who are being specially trained to prevent and detect fraud. And let me give this warning to the cheats so they know. When we detect serious fraud we will not hesitate to prosecute.
Money for the Social Security system is a redistribution from those who have to those who need. It is willingly made, although most of it comes – and always must do – from those on modest incomes. The fact is that the rich – of whom the Labour Party speak so often and so enviously – could not finance this programme if every single penny they had was taken in tax. And it is dishonest to pretend otherwise. And Mr. Hattersley, who does pretend otherwise, knows it is dishonest. And still he pretends, which may tell us more about Mr. Hattersley that he perhaps would wish us to know.
But the largest single item in our budget is the retirement pension itself. For years pensioners have been puzzled, and often angry, that tax and rent and rate changes take place in April but the pension increase is not paid until November. We have changed that. From next April pensions will be raised at the same time that taxes are changed. That is a small but, I think, welcome and overdue reform. And it was because we were making that change that we had that interim up-rating in pensions of 65p and 40p.
That up-rating was one of three benefit increases in seventeen months. The first two increased pensions by 2 pounds 50 for the single person and 4 pounds 65 for a couple. Norman Fowler will soon be announcing another. We have a record of achievement on pensions. Under this Government inflation is down and pensions are up. Under this Government we are paying higher pensions to more pensioners than ever before. And let me make this clear. Our commitment to the pensioner is absolute and it stands.
We achieve in pensions and other matters while others promise. Labour’s Social Security Spokesman, Mr. Michael Meacher, travels the country like a peripatetic Santa Claus littering uncosted promises with every speech he makes. And let me tell you this, a Meacher speech is an expensive speech for he is a master of the blank cheque. He writes it but the tax-payer has to pay it.
A few weeks ago, Mr. Meacher and Mr. Hattersley – the Laurel and Hardy of the people’s party – announced their tax and Social Security proposals. But in all their long catalogue of promises, and it was a very long catalogue of promises, there was but one calculation of cost. It was that their immediate pension and child benefit changes would cost 3.5 billion pounds.
But that looked wrong. And so we costed it. And it is wrong. Unless they make adjustments to Supplementary Benefit and Housing Benefit the very poorest pensioner would get absolutely nothing at all. The widow with no other income would lose so that Denis Healy and Jim Callaghan could gain under Mr. Meacher’s proposals, and that proposition is bizarre even for Michael Meacher.
What is more, if they follow the long standing practice of increasing linked rates to the sick and others, the true cost becomes not 3.5 billion pounds but 4.5 billion pounds and onwards to 5.5 billion. One costing in the whole programme and it is two thirds wrong. And I wondered how that could possibly be. And I think that I know – Roy Hattersley did that costing and he did it after lunch.
But that is not all. Labour’s proposals are now utterly unclear. Pledges that seem to be pledges are not pledges at all. Vague promises are made. Time-scale uncertain. Costing unstated.
Last week Mr. Meacher promised to increase pensions effectively to one half or one third of average earnings for couples and single pensioners respectively. Desirable maybe. But the gross cost of that depending on the assumptions made could be as much as 16 billion pounds a year and how do you suppose that that is going to be met?
It could, of course, be met by borrowing with ruinous inflationary consequences that we would have from that, not least for the pensioners and those on fixed incomes, or it could of course come from the tax and National Insurance payer. And if it did that, if it came from tax and National Insurance, it would increase National Insurance for example by 14 pounds per week for every person in work. That is the cost of Michael Meacher’s promises last week. It is clear that if he did it that a Labour Chancellor, should there be such an unlikely creature, would have his hands in your pockets more frequently that you would. In short, it is an unachievable, cynical, bogus and dishonest promise. They know it cannot be achieved and yet still they promise it.
Perhaps Michael Meacher believes that it is part of the rough trade of politics. But let me tell him this – it is a cruel deception upon those people who may be inclined to believe his promises. If Mr. Meacher cannot deliver what he says, then he shouldn’t say it. If he says it, then he should cost it. If he costs it, he should set out who will pay for it. Nothing less is acceptable, and by golly, nothing less will convince.
Our policies are clear cut. The timetable is set and the performance is certain. One thing is clear, we will not promise what we cannot achieve for we will have to carry out our promises in Government – and Michael Meacher and Roy Hattersley will not.
In any barometer of need the chronically sick and disabled and those who care for them must stand near the top. This motion makes that point most eloquently. We do have a special responsibility to them and it is a responsibility that we shall meet. Our new Income Support scheme will introduce a special disability payment for the disabled and a higher payment for those with severe needs. There will be more help for families with disabled children and new rules to help those in work.
But that is not all. We are also undertaking the largest ever survey into the special needs of the disabled. We still know far too little of the scale of difficulties they face. We wish to know more – so that we have the knowledge to match our support to their needs. This Government has no doubt that disabled people have the same right to fulfil their potential in society as anyone else, and we accept the obligation to enable them to do so.
In the meantime our new Social Security system will be simpler. Better, more understandable and simpler. And the benefits for the disabled are better. Although rates are not yet finalised, most disabled people under pension age will gain over 200 pounds a year with many gaining much more.
That is not a pie in the sky promise of the Meacher variety. That is a practical result of the Social Security reforms that Norman Fowler and Tony Newton have fashioned. And it illustrates graphically the priority I set out earlier, that is also in this motion, help first to those who need it most.
Nor is our record simply one of action tomorrow. We might recall a little of what has happened already under the past Labour Government and our record since 1979. It is instructive particularly for those who accuse us of not caring, for under Labour disabled people paid tax on mobility allowance. We removed that tax.
Under Labour, tens of thousands of disabled women were humiliated by a household duties test. We abolished that test.
Under Labour, tens of thousands of sick and disabled were caught in the invalidity trap. We removed that trap.
The tax has gone. The test has gone. The trap has gone. How dare they say we don’t care for those people in need?
And we have raised benefits for the long-term sick and disabled by 55%; doubled the blind tax allowance; increased the therapeutic earnings limit. And, as Margaret Fry reminded us, extended invalid car allowance to more carers, including those married women to whom the Labour Party specifically disallowed that particular benefit. That is a substantial record of achievement and we need no lectures from any other party about how to care for those in need.
In all our Social Security reforms I believe, quite simply, that we are building something better. Something that will last and endure, fairer, simpler and better.
We have a record in the last few years on Social Security of compassion and of care. It is a record of cash and not crocodile tears. It is a record that people can trust from our actions and can trust in future from our policies. It is, I submit to this Conference, a record worth supporting and a policy worth pursuing and I commend it to you all.