HL Deb 27 July 1931 vol 81 cc1186-215

Order of the Day for the Second Reading read.

LORD MARLEY

My Lords, on the 2nd of July, when we were debating the Unemployment Insurance (No. 4) Bill, I promised noble Lords who were desirous of speaking upon it that there should be au opportunity of debating the whole question of unemployment insurance when the No. 3 Bill was before your Lordships' House. Here is the No. 3 Bill, and the opportunity for debate is available. I propose to be extremely brief, so as to give ample time for those who wish to speak in the debate. Perhaps I might say on the broader issue of unemployment insurance, that, on the whole, I think we may feel that the unemployment insurance system has had a beneficial effect on the economic status of this country, a stabilising effect. The machinery of unemployment insurance has proved equal to an extraordinarily difficult task in a time of great economic depression, and it has served as some means of maintenance to those who, through no fault of their own, have become unemployed. The stabilisation of purchasing power is, I believe, something of very great value, and the system has, generally speaking, worked smoothly.

It is interesting to note that in countries which have riot an unemployment insurance scheme very considerable difficulties have arisen. In the United States, we learn, there is suffering and misery among millions of unemployed because there is no system of assistance. Private charity has been inadequate and loans from friends have now largely come to an end. Their fuel was exhausted at the end of last winter, and they are facing the coining winter with very great misgivings; so much so that we learn that the great industrial States in the United States are considering generally a scheme for unemployment insurance. The State of New York intends to found a scheme on our experience, and actually has at the present moment an expert observer in this country preparing details for the plans which it is understood will be adopted by the State of New York for next winter.

There must be anomalies in, and possibly abuses of, a scheme of the vast magnitude of the unemployment insurance scheme in this country, but in that connection I would point out to your Lordships that there has been a great deal of very loose talk. How often have we heard about the domestic servant who prefers the "dole" to domestic service! How often have we heard about the farm labourer whose benefits are more than his wages! Neither of those categories is included in the scheme, and, therefore, immediately, we know that such criticisms are based on a lack of adequate knowledge of the terms of the scheme. A letter was brought to my notice which appeared in The Times a few months ago from a distinguished public man. He quoted from a letter in which it was stated: "Millie"—that is the lady's name—"has left school, and had a job for a month, so she has got the 'dole.' "If Millie did get the "dole" that was a definite abuse, or a. failure on the part of the exchange to watch over the interests of the Act. In point, of fact Millie could not have got payment of unemployment insurance benefit unless she had thirty weeks' work, and, therefore, thirty payments to her credit. Moreover, Millie in that ease would have had to attend an instructional centre had there been one in the area in which she lived. As this was a biggish industrial centre, it is probable that there was an instructional centre in that area.

That is a feature of criticism which has served to discredit what on the whole has been a very remarkably successful scheme. However, difficulties did of course arise and there was widespread anxiety because of the cost of the scheme and the rate at which the debt of the Insurance Fund was rising. In consequence, a Royal Commission was appointed last year and an Interim Report was published on June 1 this year. The Government have considered that Interim Report and decided that the recommendations were so wide that it would be wiser to await the final Report before reconstructing the scheme. But they decided that as regards the abuses, which the Report, terms "anomalies," they would take action. Perhaps I might quote the paragraph of the Report dealing with that. Paragraph 103 of the Report states: Much attention has been directed to certain provisions of the scheme which give rise to what have been commonly termed the abuses ' of the Acts Inn which may more fairly he called 'anomalies.' The Report goes on to state: It is difficult to make provision in an Act of Parliament for unanticipated problems, and it is not surprising that the general provisions of a scheme which is designed to deal with the normal type of unemployment should, in their application to an infinite variety of individual circumstances, operate in some eases in a way which was not within the intention of the Legislature. We wish to make it clear that the classes of claims which have been criticised as not properly within an insurance scheme are permissible under existing legislation. Moreover, as we shall show later, some of them arise out of longstanding provisions of the Unemployment Insurance Acts which have only recently been called in question. Then the Report in the next paragraph draws attention to the seriousness of these anomalies—that is to say, the unnecessary expenditure, their effect on the repute of the scheme to which I have referred, and the "encouragement of methods of industrial organisation which may be harmful to trade and employment in general." The Report goes on to deal with certain classes of claimants to which the attention of the Royal Commission was specially drawn. It is the object of the Unemployment Insurance (No. 3) Bill, the Second Reading of which I am now moving, to remove the anomalies as regards the four classes particularly mentioned. Clause 1 (2) of the Bill refers to the four classes particularly concerned. Briefly, I will call them the substantial earners, the seasonal workers, the intermittent workers and married women. Under the Bill, the Minister must by the provisions of Clause 1 (1) make regulations for the purpose of removing the anomalies. It was felt that it was better to deal with this very difficult and complex problem by regulations rather than by actual provisions in the Bill itself, because in the first place the anomalies themselves are exceedingly complex, and it is more than probable—as suggested by the Report of the Royal Commission—that any Act of Parliament while trying to deal with some anomalies would create other anomalies in the attempt to provide legislation for these difficulties.

The rules must in their nature be extremely detailed. They would make an Act of Parliament very bulky and would tend to make it inflexible. It is felt to be important if we are going to deal with this matter adequately that there should be elasticity in the regulations that are drafted. The regulations which are made by the Minister will be submitted in draft to an Advisory Committee before they are actually made. The Committee must report without delay to the Minister, and that report—which will be a report by the Committee on the draft regulations—must be laid before both Houses of Parliament at the same time. I know that the noble Viscount, Lord Bertie, will be pleased to hear that. The regulations themselves—after the Committee has reported on the draft regulations—when issued by the Minister, must also be laid before Parliament. That comes under the 1920 Act, not under this Act. The function of the Committee is to advise the Minister whether, having regard to the intentions of the Act, the draft regulations submitted are really effective in doing what they purport to do. Moreover, they must also say whether they consider the regulations are generally suitable to the difficulty that they are intended to deal with.

The constitution of the Advisory Committee is dealt with in Clause 2. The Committee must be formed within six weeks of the passing of the Act and will consist of a. Chairman and nine other members, one of whom must be a woman. Three of those members are to be appointed by the Minister after consultation with the General Council of the Trades Union Congress, three after consultation with the National Confederation of Employers' Organisations, and one after consultation with the Treasury. It is interesting to note that the two principal organisations concerned included this recommendation in the proposals which they put before the Royal Commission.

If your Lordships will turn to Clause 3 of the Bill, you will see that that deals with the question of the policy of industrial transference, and perhaps your Lordships will forgive me for a moment if I deal with that. The policy of industrial transference was first adopted by the Conservative Government in 1928 on the recommendation of the Industrial Transference Board. It its limited in its action to what are known as the depressed areas, such as those connected with coal, iron and steel and shipbuilding, and more lately cotton. Each area can be helped under this scheme according to a definite schedule. The lists are actual and clear lists, scheduled and limited to these places only. Under the scheme facilities are provided—I want to be very brief in dealing with this matter—for such matters as the advance of fares (which are recoverable) to men seeking employment outside the depressed area. Latterly this advance of fares has been extended to men who are going to another area, not having a definite job but having a good prospect of employment in that area, provided the man has friends or relations who will give him accommodation for a limited time while he is making good his search for work.

Then there are grants for juveniles and young persons, including their fares and in certain cases the making up of a small wage to allow for the cost of living in a new place away from home. There are also grants to married men and to single men with dependants, for the permanent removal of households, their furniture and household effects, when they find work in another area. There are loans to men who are waiting for their first week's wages—recoverable loans—and advances towards the cost of temporarily maintaining two households until the family can be removed. There are special loans to single men awaiting their first week's wages and there are advances for clothing and hoots, and in cases of men taken ill while away from home there is provision to enable a man to have a free ticket home. These are rather pitiful aids to the maintenance of human relationships in cases of extreme difficulty. I feel certain that your Lordships will want to continue these aids. The reason for the clause is that to some extent the conditions of the Labour Exchanges Act, under which industrial transference is allowed have been exceeded, and this has been going on for some two years. The clause is put in as an attempt to regularise the practice and make possible the continuance of these extended facilities.

The Public Accounts Committee drew attention to this matter in their Report in 1930. They said: Your Committee are informed that both the Treasury and. the Ministry of Labour were aware of, and accepted, the constitutional view, and the Treasury requested the Ministry to take steps at the earliest possible opportunity to obtain amending legislation. No such legislation has as yet been introduced. Your Committee, in calling attention to these facts, desire to reaffirm in the most emphatic terms the opinion expressed by their predecessors and accepted by the Treasury in 1908. Your Committee recommend that appropriate legislation should be introduced forthwith. This clause is included in this Bill because it was not possible to include legislation in previous Bills, since they were Money Bills, dealing only with borrowing powers and the extension of transitional periods, and it would not have been appropriate to include such a proposal in those Bills. The services for which the clause is required include free fares for juveniles, grants, and loans for lodging and removal expenses, advance of fares for employment found in directions other than through employment exchanges and other small miscellaneous grants. The total sum involved is something like 840,000. As regards the anomalies, the Government believes that the Bill will effect its object in taking away abuses and remedying anomalies, and by removing one of the chief excuses for attacks on the whole scheme of unemployment insurance it is hoped that the result of this Bill will be to safeguard the Fund for those for whom it is really intended—that is to say, for the unemployed and their dependants. I beg to move.

Moved, That the Bill be now read 2a.—(Lord Marley.)

THE MARQUESS OF LONDONDERRY

My Lords, we have listened with interest to the very lucid exposition of this Bill by a noble Lord who always addresses your Lordships very eloquently and, if I may say so, states his case with great precision and lucidity. But we have been watching the mountain in labour, and I think your Lordships will agree that we see now only a very diminutive and I might say a dwindling mouse. In a word, the Bill which the noble Lord has introduced amounts to very little. In fact, I think your Lordships will agree with me that, while it does amount to very little, we can say in its favour that it is a very halting and undecided step perhaps, but a step in the right direction. While I listened to the noble Lord developing his argument, I was hoping to hear something from him of the larger question. In his opening remarks he told us that this would be an opportunity of raising the whole question of unemployment insurance, and that on this little Bill we would have an opportunity of developing all our arguments.

I was hoping to hear from the noble Lord something on the question of economy, because it seems to me that that is what is really in the minds, not only of your Lordships, but of all thinking people throughout the country. I think I am right in saying that we are all filled with feelings of alarm and, in fact, at the present time I suppose that the position reached as regards finance is one of the most difficult, and perhaps one of the most dangerous, that we have ever passed through. And yet, when there is a great problem which touches our finance as closely as unemployment insurance, we hear nothing from the Government but the explanation of the few little proposals which are contained in this Bill, and nothing on the larger question which is in all our minds. It is not as if the leaders of the Government were not aware of the gravity of the situation. I could quote to your Lordships many statements from the Prime Minister and from Mr. Snowden and his colleagues showing that they are fully aware of the very dangerous position in which we stand at the present moment.

If I wanted an authority that would carry weight with your Lordships, I need only quote the statement of Sir Richard Hopkins. It is a statement which your Lordships know quite well, but I venture to quote it again. In giving evidence before the Royal Commission, he used these words: Continued State borrowing on the present vast scale without adequate provision for repayment by the Fund would quickly call in question the stability of the British financial system. The State has every year to borrow large sums for various productive purposes. This additional borrowing—for purposes other than productive—is now on a scale which, in substance, obliterates the effect of the Sinking Fund. Apart from the impairment of Government credit which such operations inevitably involve, these vast Treasury loans are coming to represent in effect State obligations at the expense of the future, and this is the ordinary and well-recognised sign of an unbalanced Budget. It seems to me that we are drifting very rapidly into the position which has been so clearly put by Sir Richard Hopkins. In relation to unemployment insurance policy, the Government are carrying out a policy of postponement and procrastination, and at the same time there is hanging over our heads this great and menacing problem.

This Bill may be said to have made a stormy passage through the House of Commons. The opposition to the measure was carried on by what is known as the Left Wing of the Socialist Party, and in reading the debates which took place in the House of Commons I find some very interesting statements in regard to economy. As I have said, the leaders of the Government know quite well that economy is vital to this country, and yet we read the doctrine put forward in another place that economy is merely a policy of relieving Income Tax and Super-Tax payers in this country and defrauding the working classes of money which is rightfully theirs. It might be surprising that Members of Parliament sent to another place by the voters of the country should support individuals who hold those doctrines, and I feel that the Government, instead of paying lip service to the policy of economy, ought to do something to show that they are seriously determined, not only to carry out economy in every way they possibly can, but to establish it as a policy throughout this country.

I think I am entitled to say a few words regarding unemployment and I can assure your Lordships that I am not mentioning this subject in a controversial spirit. It is a controversial matter, no doubt, but it is not in the hope of gaining any Party advantage that I discuss it. I feel very strongly that the question of unemployment and the method of dealing with it is a matter which concerns all Parties, and that no one has any right to make capital in the country in relation to the scourge of unemployment or to the method by which successive Governments may help to deal with it; but I think there are one or two significant factors which I am entitled to mention. The debt on unemployment insurance has steadily increased from the year 1929. We can remember the indictment which was brought against the previous Administration by the Socialists, who were then aspiring to office, and I think your Lordships will agree with me that none of the promises and prognostications which were put forward so lavishly and extravagantly then have been carried in any sense into effect.

I may perhaps be allowed to compare the two periods. In 1929 the debt on the Insurance Fund amounted to £36,870,000. The increase in that year was £4,430,000. When the. Conservative Government left office the outgoings and the incomings were almost balancing, on a register of 900,000 unemployed, and if the indictment is raised at this moment that the Conservative Government should have taken sonic definite steps, I think I am entitled to say that we had every hope at that time that there was going to be a. turn in trade, and that better times were coming. I have regretfully to say that the idea in our minds has not been fulfilled, and it would not be true to say that it was entirely due to the Socialist Government. I am not saying that at all, but what I would venture to say is that in the year 1929 the situation rapidly changed, and for the worse, and now in 1931, after a little more than two years, we find that the debt is nearly £90,000,000, and is increasing at no less a rate than £1,000,000 a week. My Lords, that denotes a very serious situation indeed, and one would have thought that at this time, after mature consideration and after the many hopes held out and promises made, one would have seen some attempt on the part of the Government to grapple with this grave problem, this vast expenditure of money, which is the life blood of this country gradually flowing away without any steps being taken by the present Government to check it.

The noble Lord who introduced this Bill spoke of the principle of unemployment insurance, and it is one to which we all subscribe. We believe that those unfortunately displaced by circumstances from the capability of earning their living should, by some scheme or other, be saved from the wants and requirements which the destitute would have to suffer. In 1912 this scheme was put forward. Since then there have been many developments. Now one might say practically that, with the exception of the two cases mentioned by the noble Lord, the whole of the industrial population of this country is included. That certainly is a step in the right direction, and I would agree with the noble Lord that it has created many influences of a very beneficial character. In fact we stand in the forefront of all countries in this social legislation. It is legislation with which we all agree and which we want to see continued and developed on proper and businesslike lines.

I would venture to say, however, that there is no excuse whatever for the dilatoriness of the Government. We know quite well that a year ago, in response to the clamour at that time, they established a Committee which contained representatives of all three Parties. That Committee deliberated in private for some considerable time but, without letting either the Conservative or Liberal members know that they had another plan, the Government then put forward the policy of a Royal Commission. This was a matter which required dealing with as speedily as possible. It was recognised on all sides that it had to be dealt with; yet a Royal Commission was set up, and the Government continued their play acting, if I may so describe it, and told us they were only waiting for the Interim Report. In fact they pressed the Commission to bring forward its Interim Report at the earliest possible moment. That Interim Report was brought out and this is what the noble Lord has said—that when that Interim Report was issued the only thing the Government could do was to bring in this miserable Bill because they were waiting for the final Report before deciding on a complete scheme of reconstruction. It seems to me that the matter is relegated to the future, and that while the present Government remain in office we shall see little done with regard to reconstruction on a subject of such vital importance.

I do not feel that I need say very much more on the subject which I have ventured to develop. With relation to the Bill itself I can only repeat what I said in my opening remarks. The Bill achieves practically nothing. It may be said to remove a few anomalies where they exist, but with regard to what may be called the chief anomaly, on which I do not propose to express any opinion, that was struck out of the Bill which had been brought in in another place by the determination of the Left Wing of the Socialist Party. What the Government told us was a very important provision they were quite willing to let go owing to representations made to them by the Left Wing of their own Party. On the subjects of the Advisory Committee and regulations I am not proposing to quarrel with the proposals of the Government. I think there is a great deal to be said for an Advisory Committee, and for the Minister making regulations in connection with the difficulties which are bound to surround a Bill of this description. It is much easier to deal with them in the manner which the Bill prescribes. These regulations do actually come before the House of Commons in their final form, and I think there is enough general supervision to prevent any steps being taken which would not be in accordance with the wishes of the majority of the people of this country. The noble Lord spoke of elasticity, and I think with regard to the Advisory Committee and regulations there is the elasticity which in very difficult circumstances should be granted to the Minister.

Beyond this I do not feel that I have anything to add. I repeat that it is a matter of very great regret to me that when the Government had the opportunity of dealing with this subject in a comprehensive way—and I maintain that they have enough information in their hands at the present moment to go very far into this question—they have put off the country with this Bill, which practically amounts to nothing at all.

EARL BUXTON

My Lords, I do not think that at this time of the Session there will be any particular advantage in going into great detail on this Bill. I should like to make a few preliminary observations, then say something in reference to the Bill, and perhaps I may be allowed at the end to say something with regard to the general position. The noble Marquess, Lord Londonderry, has just pointed out that this Bill is a great disappointment to all of us, and to the nation at large, which is interested in the question of unemployment. It is the sole attempt which they have made to give effect to their own profession, over and over again repeated, that they were determined to bring the insurance system back to a proper actuarial basis and to put it into a state of solvency.

They appointed a Royal Commission in order to bring that about. The history of that is rather peculiar. There was a three-Party Committee, out of which we hoped some advantage would come. For some reason or other that Committee was brought to an end without any information being vouchsafed to the country at large as to what they had recommended, and why their recommendations were not accepted. Then the Government as an alternative appointed a Royal Commission, and directed them in the terms of reference To inquire into the provisions and working of the unemployment insurance scheme, and to make recommendations with regard to (1) its future scope, the provisions which it should contain, and the means by which it may be made solvent and self-supporting …. That must be considered in connection with the declarations of members of the Government. The Prime Minister him3elf in November, 1930, declared that unemployment insurance must be put back on to an insurance basis. The Minister of Labour, Miss Bondfield, as late as February, 1931, said: It is our considered view that the scheme of unemployment insurance should be a self-supporting scheme. She says there should be tripartite contributions, and the funds should cover the risks which they were intended to cover. The Chancellor of the Exchequer expressed the same view that the funds must be put back on to an insurance basis, in view of the alarming expenditure which was falling on the public Exchequer. After the Royal Commission had been sitting for a certain time the Government, in the words of the Commission, themselves pressed upon them the necessity of an early Interim Report, as the matter was urgent from the point of view of the national position. The Minister of Labour said that they were looking forward to the Report in order to base legislation upon it at a very early date.

I think that gave the impression to the country at large that when the Report was made action would immediately be taken in the direction of putting the Fund on a solvent basis. But the Report came out, and made certain obvious recommendations, pointing out that in order to put the Fund on a solvent basis you must make your income equal to your expenditure. They made recommendations which, if they were carried out, would, either by reduced expenditure or increased revenue, have reduced the annual deficit on the Insurance Fund from about £40,000,000 to £7,000,000. The Government, who had pressed for the appointment of the Commission and for the Interim Report, unfortunately did not see their way to accept the proposals. The noble Lord who introduced this Bill said they did not do it because they thought they ought to wait until the final Report is issued. That seems to me to be a perfectly untenable argument, because they specially asked the Commission to hurry up the Report, solely in regard to this financial question, and the Commission themselves in their Report say that the question of solvency was quite apart from the recommendations which they would make later. They promised to deal later with certain fundamental questions, such, for instance, as the relations between the central Government and the Poor Law, and the question of whether benefit did not lead to additional difficulties with regard to unemployment and trade arrangements, and with regard to elasticity. It therefore is really no excuse at all to say that the Government must wait for the final Report before taking action in matter which they themselves have declared was of the utmost urgency, on which they have made declarations that they would deal with it at once, when, owing to the feeling Among their own Party, they are going to postpone it until the Greek Kalends.

That makes it all the more absurd for them now to come before us and say they are introducing a Bill that will deal with an important part of the unemployment insurance scheme. Everybody admits that these anomalies have to be dealt with. I shall certainly support the Bill because it does deal to a certain extent with these abuses. But, while the recommendations of the Royal Commission would have reduced the deficit on the Insurance Fund from about £40,000,000 to something like £7,000,000, all that can at the outside be saved under this Bill is a matter of about. £5,000,000. Indeed, the Secretary of State for War and the Minister of Labour in another place repeatedly said they did not accept that estimate; they did not think the saving would amount to anything like it. As a matter of fact, a very small sum will be saved by dealing with these anomalies. That is the gravamen of the charge which we make against the Government. They made these promises and I believe fully intended to carry them out, but as soon as they had the opportunity they failed to do so.

In reference to the Bill itself, as I said just now I shall certainly support it because it does deal with some anomalies and abuses which are of really grave importance. But I think it is the greatest misfortune that at the present moment there should be suspicion and misunderstanding and a feeling that a great deal of this money does not go to the proper person—that it goes to, I forget the lady's name, but at all events to people who ought not to receive it. That has brought the Unemployment Fund into some disrepute and has been the cause of a great deal of criticism. I agree with my noble friend opposite that the number and quality of the abuses are very much exaggerated. There are abuses, undoubtedly, and they ought to be dealt with. They are met with in administration and now we are going to meet them in law; but that they are exaggerated I am certain. At the same time that does not relieve one of the feeling that the unemployment system, which covers so large, a field and so large a number of persons, is under considerable discredit and suspicion largely due to misrepresentation—but there it is. Therefore, anything that can be done by any Party in your Lordships' House or another place to remove that suspicion and discredit is to the good.

I find it difficult enough to follow the Bill itself and what its exact effect will be, being only an unfortunate layman. The Royal Commission recommended, of course, that three classes of workers should be treated on a separate basis from the present one—casual workers, those working short time, and intermittent workers. Undoubtedly, the Royal Commission made out a good case for dealing with those problems. But it is very difficult to see what definition you can draw up as between persons who ought to receive benefit in addition to their ordinary wages when they are actually on short time or completely unemployed and those who ought not. The noble Lord did not attempt to draw up any such definition, but the attempt has been made by the Minister of Labour in the course of the debates in another place, and I think he put it very clearly. I should like to point out what seems to me to be the real difference, on which this Bill ought to be based, as between those who ought to be in the Bill and those who ought to be excluded from it.

Roughly speaking, I think, Parliament intended that benefit should be drawn by the man who in the ordinary way had regular normal weekly wages and who, through no fault of his own but in consequence of slackness of trade or the prevalence of short time, was unemployed. Those men ought to be excluded from the Bill. But the next class are those who ought, I think, to be in the Bill and I would like to know whether they are definitely included. Benefit is not intended to be drawn by the man who habitually works only on certain days of the week for which lie receives special rates of pay, whose short time is habitual and has no relation to bad trade, and who is not, therefore, unemployed in the ordinary sense of the term. In other words, a man should only receive benefit for the days on which he is willing to work and yet is actually unemployed in his trade, and ought not to receive benefit for the days on which, in consequence of trade custom or for other reasons, he does not work and does not intend to work. It seems to me that is the difference and that is the distinction to draw—whether a man is willing to work on those days but is unable to obtain work and, therefore, is unemployed, or whether he does not work on those days simply because he is overworking on other days of the week.

I am not sufficiently a lawyer to be able to say whether this latter class is included in the Bill. One has some difficulty about understanding that because in the Bill as originally drawn the clause was somewhat different from the present clause. That was discussed for some 19 hours at an all-night sitting, some of the more extreme Labour members opposing the Bill and especially this clause. The Government stuck to their guns, but in the end on the Report stage they proposed other words. As far as I can judge, those words more or less carry out the object my noble friend opposite has in view, but the fact that the original clause was objected to by the more extreme members of the Labour party, that finally the Government capitulated, that members who had been the most active opponents of the Bill withdrew their opposition, accepted the Amendment as a great step in advance and allowed the Bill to pass, makes one suspicious. I should like to know from the noble Lord during the Committee stage a little more exactly what those words mean.

With regard to the machinery part of the Bill I have no adverse comment to offer. It seems to me that the appointment of the Advisory Committee is much the best method of carrying out the proposals, inasmuch as no Act of Parliament in a matter of this kind could so define the various anomalies which exist without raising further anomalies. This gives greater elasticity through the Advisory Committee to the Minister, and I think that is the most satisfactory way of dealing with it. I think the composition of the Advisory Committee is very satisfactory. The proposal is that the employers and the employees should each nominate so many, and of course there is a representative of the other sex. I should like in Committee, if I can get my noble friend to agree, to reduce the number by one because I think it is a little overbalanced as against the interests of the men. But that can be discussed when it arises.

In regard to the general position, as my noble friend behind me said it is appalling at the present moment. Until 1924 under the original Act, for which I was personally responsible, the Fund was solvent and there was a surplus of something like £22,000,000 available. That surplus, especially since 1930 under the Act of the present Government, has become hopelessly insolvent. I do not know whether noble Lords have followed the figures in the Report of the Royal Commission very carefully but there are two Funds. There is, first, the so-called Insurance Fund—though it has very largely lost its insurance properties—the income of which at the present moment is £44,000,000 per annum and the expenditure £84,000,000, a deficit each year of £40,000,000. In addition to that, as noble Lords know, there is what is called the Transitional Benefit Fund under which the State pays something like £35,000,000 a year in addition to the other; so that the whole deficit on the Fund is something like £75,000,000 a year. Because of the fact that it is getting steadily worse and the undertakings of the Government, we hope at all events they will do something, if not very much, to remedy that state of things.

The debt has risen from £4,000,000 in 1924 to no less than £115,000,000 to-day. The most disquieting part of the whole position to my mind, is that for many years past we have always talked of the transitional benefit, the extended benefit, and so on, as if it was a thing so damaging to the Insurance Fund as to put it on a basis which was not an insurance basis. It is perfectly true that it was a very damaging fund, but as a matter of fact it has been taken away entirely from the real insurance part, and in spite of that there is a deficit of £40,000,000 a year on the insurance side. It is no longer the Insurance Fund that it was in the early days. To-day the benefits are far in excess of the contributions, and are allowed to go on for an unlimited time. Unfortunately, these men and women who are getting insurance are not adding anything to the wealth or the prosperity of the country, but very much the opposite. It is their misfortune that they have to remain unemployed. We are spending this enormous sum without any possible benefit to the country, as a whole, except this, which is the other side of the shield that I would like to emphasise if I may. The figures are very large, but they have, after all, prevented an immense amount of serious distress, and, I think, possibly saved us from a social, political and economic upheaval.

Many millions of men and their families have been saved from real privation. Their homes have been kept together instead of being broken up; their health has not been impaired, and they have been saved from a feeling lest at some time or other, through no fault of their own, they would be unemployed and left to starve. It is a striking thing, I think, that it is only twenty years since, under the first Insurance Act, the State admitted that it had a liability to these able-bodied men who were out of work, and, through co-operation with the employers and the men themselves who contributed to the Fund, the State was able, at first in a small way no doubt, to provide for the position which has now arisen—namely, that no man and no woman who is out of work need fear that their homes will be broken up. They are saved from terrible hardships, and are able, at all events as long as they continue unemployed and are genuinely seeking for work, to receive something from the State. I am much obliged to your Lordships for listening to me so patiently. I had not intended to say so much. There are other points in connection with the whole matter which deserve discussion, but I have confined myself to those which seem to me of most pressing importance.

LORD PARMOOR

My Lords, we have no reason on this side of the House to find any fault with the speeches either of the noble Earl, Lord Buxton, or the noble Marquess, Lord Londonderry. I think they have recognised very fully that the discussion on a matter of this sort must not in any sense be a political Party discussion, but that we should try together, if I may use that expression, to deal with what is an extraordinarily great difficulty arising from the trade depression which exists not only here but throughout the world. I do not want to speak for more than a short time. May I at the outset agree with what was said at the end of his speech by the noble Earl, Lord Buxton? He recognised, and I believe all Parties in this country recognise, that an insurance scheme for unemployment is an enormous social advantage and a social advance from the point of view of labour. I am sure the noble Marquess, Lord Londonderry, from what he said to-night, would not question that, and I do not think anyone in this House would question it. When this scheme was settled very much in accordance with what I may call the Conservative outlook, those then concerned had before them the consideration that it should be a contributory scheme. I think all people who look upon this as a question involving great social difficulties were agreed that the scheme should be a contributory one—that is to say, that the workers themselves should pay towards the insurance which is provided for them in case of unemployment.

THE MARQUESS OF LONDONDERRY

It would not be insurance without that.

LORD PARMOOR

I agree. I do not find any fault with what the noble Marquess has said. It was to be a real insurance scheme. What has happened since is this. I am not talking about transitional benefit, but about the ordinary benefits to which the noble Earl called attention. It was to be a true insurance scheme, and it has been of enormous social benefit. It has prevented in the case of unemployment perhaps huge masses of our workers being thrown upon the Poor Law system. Everyone, I believe, is agreed that that is a beneficent and proper social improvement. What has happened is this. Owing to the conditions of employment, which are really worse than anyone could have regarded as probable at the time when this scheme was settled, the obligations which have been thrown upon the State as the third party to this insurance scheme have been enormously increased. I do not think anyone could have foreseen the extent to which they have been in fact increased, and the position now is, how can this matter be dealt with without imposing any hardship—and no hardship ought to be imposed—on those who themselves were contributories to this all-embracing insurance scheme, each paying what was considered at that time should be their contribution to it?

We sometimes hear this spoken of as a "dole." It is not a "dole" really; it is an insurance; and that should be kept very clearly in view. If the workers had not contributed you might have said it was not an insurance but a "dole." When we come to consider this as an insurance scheme surely those who have contributed to it—subject to the question of anomalies about which I will say a word in a moment—are entitled to receive the benefit that was promised to them. I do not think anyone in this House would doubt that proposition. That is the essence of insurance as against what we call the "dole."

Let me pass on a little further. Why is there this uneconomical payment which has now to be made, if I may use an expression which has been used already to-day? I assume everyone in this House is in favour of prudent economy, though we may differ as to what prudent economy may be. I also believe everyone in this House would say that where workmen have contributed on a certain basis to an unemployment insurance scheme they are entitled to the fixed benefit for which they insure if, from circumstances outside their control, they are out of employment. Is there anyone in this House who would contest that proposition? It is not only a simple proposition, but it is carrying out a contractual relationship which had been entered into with the insured for their benefit. It appears to me on that ground, not as a matter of "dole" but as a matter of insurance honour, that these workpeople who have contributed to this Fund are entitled to the benefits which they were told they would obtain if they contributed.

I agree we have come to a very difficult climax. I rather hoped the noble Marquess would have told us in some way or other what his own solution would be. I know he has great experience of the relationship between employer and employed workmen, particularly in the coal districts. But the real question is, what are we to do? Are we to meet this very heavy obligation which we have entered into as a contractual relationship and find the money which is required to carry out that contract? That is the question. I agree very much with what the noble Earl said. You will not find anything like a complete dealing with these difficulties, complete alleviation under what is called the anomalies or abuses clause. My own strong view is that in the interests of the workpeople themselves all these anomalies and abuses should be carefully considered; but when you come to consider them it is not a question of £40,000,000 or an even larger sum—I think a million pounds a week was the sum mentioned by the noble Marquess—but a comparatively small matter. At the same time, I am one of those who think it essential that anomalies should be properly dealt with. But it is not fair towards the insurance scheme as a whole or towards those who have bona fide contributed and who bona fide come within the insurance contemplated, that their position should be worsened by what are called anomalies and abuses in other directions.

This is rather a legal question, and I do not want to be too technical at the present time, but the noble Earl asked me as a lawyer about the drafting of paragraphs (a), (b) and (c) Of Clause 1 (2). I think if he reads paragraph (a) he will see that it has been very carefully drafted to meet the very cases with which he was dealing—those of intermittent employment. I do not see how clearer words could be inserted by any draftsman. The paragraph reads: persons who habitually work for less than a full week, and by the practice of the trade in which they are employed nevertheless receive earnings or similar payments of an amount greater than the normal earnings for a full week of persons following the same occupation in the same district. Surely that is perfectly clear. You have certain employment, which perhaps is for a few days in a week or for very long hours at certain times. It is an abnormal or intermittent form of employment for which, although no full week is ever worked, the workers as a matter of fact receive remuneration equal to that of a normal worker who works a full week.

VISCOUNT BERTIE OF THAME

I think it says "greater than" not "equal."

LORD PARMOOR

I beg pardon. "An amount greater than." Those are the words. I had taken my eyes from the Bill for a moment. Surely that is perfectly clear. I happen to know that these words gave great difficulty to the draftsman. Draftsmanship is difficult, and can only be settled after the very closest examination. I believe that I have drafted—I think I have said the same thing before—more Bills and more clauses than almost anyone else, and well remember a very learned Judge saying "Be sure you are very careful to put down your brains clearly on paper." That is one of the most difficult things in the world, and that is why we find that drafting does not always carry out the desired provisions. In the same way I think paragraphs (b) and (c) are perfectly clear as matters of drafting. Those are the anomalies to which reference was made in the Interim Report of the Royal Commission.

Th only other matter I think is the widest question of all, and I can only say it is an extraordinarily difficult thing in this case to combine public economy with complete justice to those who have contributed towards the Insurance Fund. We cannot, as a matter of national honour, as it appears to me, say that because the obligation on the State, which is the third party, has become heavier than was expected, that men are not to get the benefit to which they would otherwise be entitled. I cannot understand that attitude being taken; yet that would be the position if some suggestions made to-day were carried out. I do not think the noble Marquess would desire that for one moment. Insurance is in its essence the result of an arrangement whereby a man, by putting aside money—in more prosperous times, in the case of the workmen—ensures his position in periods of unemployment and trade depression. I think myself most certainly that the guaranteeing party in this insurance scheme—that is, the Government—is not entitled, except in cases of abuse or anomalies, to deprive a man of a payment to which, under the terms of the insurance, he is justly entitled. That is really the Bill. I do not want at the present time to go further into the general question of economy. No one feels it more strongly than we do. I am sure that no Government are more desirous, within the limits I have mentioned—that is, the limits of fair treatment towards those to whom they are under an obligation—to do what they can, and I hope that when the full Report is received further progress may be possible.

LORD DANESFORT

My Lords, with two observations of the noble and learned Lord who has just spoken I entirely agree, and indeed can anyone dispute them? One is that the proper mode of providing for people out of work is by a system of insurance properly so-called, that is, by contributions from insured persons, the State and the employers. The other proposition is that a man so insured is entitled to the benefit towards which he has contributed. The noble and learned Lord spent a good deal of time in developing and insisting on those two propositions which I should have thought no one would have dreamed of disputing, but I am glad to see—possibly it is a late repentance—that he does give his whole-hearted support to the principle of contributory insurance.

The noble Lord who moved the Second Reading of this Bill made an interesting speech, and I could not help envying him his cheery optimism. He seemed to think that this was, to use his own words, a very satisfactory scheme of payment to those out of work, but it had some few blemishes. I was reminded of a passage in, I think it is, one of the Roman satirists. I have not had an opportunity of looking it up, but the writer complained of those who quibbled over some really big work of art because it had some blemishes and he goes on to say Velut si egregio inspersos reprendas corpore nœvos. In other words, he complained of people who blamed a beautiful woman because she had a mole on her body. The noble Lord seemed to think that there were nothing but small blemishes in his Bill, and he quoted the case of a woman unknown to me, called Millie. He assured your Lordships that Millie's case was not as bad as it was made out. I have not the remotest notion who Millie was or what her ease was, whether it was good or bad, but let us assume it was bad. He went on to say that that was a type of the criticism which assails this scheme of insurance. I assure the noble Lord he is under a complete misapprehension. As we all know, there are two classes of persons who benefit under the scheme—one of them, those who have contributed and have earned benefit. The other class is that of the men and women who have not paid and earn no benefit and who get what is very properly called the "dole."

If the noble Lord who moved the Second Reading of this Bill imagines that the Bill is regarded with any favour among the workmen of this country, except possibly those in receipt of the "dole," he is grossly mistaken. I have myself talked to a considerable number of self-respecting workmen in this country who are not in receipt of the "dole." These men, whether they be agricultural labourers or factory workers—I care not what they are—all expressed he strongest resentment, almost indignation, at the way on which this "dole" is administered. I hope the noble Lord, Lord Marley, will realise that the evils and abuses of this "dole" are not small and slight blemishes, but gross and serious matters, and ought to be immediately remedied. They could have been remedied if the Government had applied their mind to the task. The truth is that, in the matter of this Bill and the insurance benefit, the Government have followed their habitual policy of postponement and evasion. They have postponed the General Election for the very good reason that it is the day of judgment. They have postponed almost every social reform, every economy, everything that will tend to reduce unemployment or to be of advantage to the country. Instead of acting, they appoint Commissions, and as soon as the report of those Commissions are produced they throw them into the wastepaper basket. They have practically done this in the present case. I do not say they have done it for ever; I hope not; but they have acted as if that were what they intended.

I have said that this is a very big question. The Government have admitted that this is a very big question. They urged the Commissioners to make an immediate Report that they could act upon. Now they have decided not to act upon it, but merely to take up some small points to satisfy public indignation. That is what they have done, and the reason, to my mind, why they have not dealt with the real, obvious and flagrant abuses that are incident to the operation of this scheme is that they are afraid of losing votes. No doubt they would lose some votes, but an honest Government does not hesitate to remedy evils because it may lose votes here and there. I am sorry to have to impute that motive, but I tried to discover why they have not acted, and that is the only suggestion that occurs to my fairly impartial mind. The noble Earl, Lord Buxton, who made, if I may say so, a most admirable speech, referred to the extravagance and the incompetence of the Government in dealing with this question, and I suppose I may be entitled to assume from what he said that, were he in another place at the present moment, he would not act with those of his Party who prolong the unfortunate existence of this Government. That is a matter of inference, and I can only draw my own conclusions from his speech.

There are only two other matters to which I want to refer. The first is as to why some provision was not introduced in the Bill that a man should not get a "dole" unless he is genuinely seeking work. It is within your Lordships' recollection that this House introduced a provision into an Unemployment insurance Bill to the effect that, in order to get benefit, a man should show that he was genuinely seeking work. That provision was moved, I think, by the noble and learned Lord, Lord Darling, whom I do not see here at this moment. It was taken from the provisions of one of our great trade unions, which after long experience had decided that such a protection was necessary and right in giving men benefit out of union funds. For some inscrutable reason, the Government refused in another place to insert that provision in the Bill. Since then they have had a good deal of experience, and I should have thought their experience might have satisfied them that some such provision ought to be inserted in this Bill. If they had inserted it, I think they would have removed a certain amount of the objection, and at any rate mitigated a certain amount of the resentment that is felt at the way this relief is administered.

There is only one other point that I wish to refer to, and that is the question of economy. That has been so fully dealt with by my noble friend below me and by Lord Buxton that it is unnecessary for me to say very much about it. I venture to think that it has made a profound impression on the people throughout this country that, at a moment when, by the admission of nearly every person in every Party in the State, of die business men in the country and of all the best economic and industrial experts, economy is the most necessary matter to take up, yet here, when they had an opportunity of effecting some economy—I know not how much, but a substantial economy—instead of doing so, they have brought in this miserable bantling of a Bill, which, I think, has excited contempt throughout the country.

VISCOUNT BERTIE OF THAME

My Lords, there is one question that I would like to ask the noble Lord, because it appears to me that an injustice is being done. If the noble Lord will look at page 2, he will see certain exceptions, certain people taken out of the operation of Clause 1. It is stated that Clause 1 shall not apply to married women whose husbands are incapacitated from work or are unemployed and not in receipt of benefit, nor to widows. There is no mention made of women living apart from their husbands by order of the Court. I ask the noble Lord to take that into consideration. I will leave it to him whether he thinks fit to put down an Amendment in Committee to cover this point.

LORD MARLEY

My Lords, in regard to the last point, I will bring it to the notice of those concerned, and I am very much obliged to the noble Viscount for putting forward the suggestion. As regards the question of economy, the noble Marquess suggested that I should have dealt more fully with it in my opening remarks. I felt that it was not my task to deal with it. I was concerned with introducing this particular Bill which is not intended to be a measure of economy so much as a measure to remedy abuses of the insurance system. That is why I did not think I was concerned with introducing that topic in your Lordships' House, though I knew it would be dealt with by other speakers. The noble Marquess said that Ministers are fully aware of the position, and therefore they are in a position to deal with the matter in the way in which it has to be dealt with.

The noble Marquess said that loans were a charge on the future. That is true. All loans are a charge on the future. For example, I understand that we are still paying for the Peninsular Campaign and the hostilities which terminated in the Battle of Waterloo. We are paying more than 100 years later. I suppose that is inevitable in any system of borrowing. I feel that in any case economy is necessary, but in effecting that economy one must take into account equality of sacrifice. There must be a measure of equality in the sacrifices demanded from all those members of the community who form our nation, and that is one of the difficulties that has to be dealt with in considering this matter.

The noble Earl, Lord Buxton, put forward some suggestions with regard to the debt of the Fund. I want just to remind your Lordships that the Fund has been in debt now for ten years, and that, in point of fact, the debt had risen between 1926 and 1928—in those two years alone—by over £20,000,000, so that it is not a new fact, though the rate of increase is a serious consideration at the present time. I may say also that the debt of the Fund is not £115,000,000, as the noble Earl said, but £92,000,000.

EARL BUXTON

I did not intend to say that. What I meant was that they had power to borrow up to £115,000,000.

LORD MARLEY

That is true; we have power to borrow to that extent, but the present debt of the Fund is £92,000,000. I am not saying that this is not a serious matter, but it is not so serious as the £115,000,000 which was mentioned.

EARL BUXTON

The Minister of Labour said that under certain conditions the present Fund would be exhausted by October, and that if unemployment goes up it would be exhausted before that.

LORD MARLEY

I was only pointing out in the interest of accuracy that the noble Earl did say that the debt was £115,000,000 to-day, which is not October. I think everyone will agree that abuses must be dealt with. I am certain that that is the opinion not only of every member of this House but of all those throughout the country who consider the Fund reasonably. The question of the definition of those who are involved in this matter contained in the Bill has been specifically referred to, particularly the question of persons who habitually work for less than a full week for more than the normal earnings of a full week. I only want to deal with this matter because if it is understood I think it will remove the necessity of any Amendment on this particular aspect of the Bill being brought forward in Committee.

The point is that if there is a worker who, during a portion of the week, earns more than the normal full wages for a full week of a worker in that occupation, under the present law he is entitled to unemployment insurance benefit for the days when he is not working. That is manifestly an abuse, and the scheme was never intended to cover such a case. Therefore the Bill provides for that class of worker being dealt with by recommendations of the Committee. The Bill says further that if such a worker in a specific week earns more than the normal rate of wages in the week his employment insurance benefit may not be reduced by an amount greater than the difference between the wages he receives and the normal rate of wages. Let me fry to give an example. Suppose a man habitually earns £3 5s. for three days' work, acid the normal rate of wages for a full week is £3. He has then got more than the normal week's wages. If he is a married man with two children, under the present law and interpretation of the Acts he is entitled to insurance benefit for three days when he has not worked; in other words, he gets an additional 15s. That is an abuse which must be remedied, and is included in this clause.

That portion of subsection (3) which says: this section shall not operate so as to reduce the amount of benefit otherwise payable to any person in respect of any week by more than the amount by which the aggregate of the earnings or similar payments received by him in that week and of the benefit aforesaid exceeds the normal earnings for a full week of persons following the same occupation in the same district"— means that while the Minister may by regulation alter that anomaly, yet if in any particular week the earnings are less than the normal—say the normal is £3 and the man earn £2 15s. in a special week—then the benefit must remain payable to the extent of the difference between £2 15s. which the man receives and £3 which is the normal—in other words 5s which is his share of the benefit fund towards which he has contributed. I hope that that matter is clear, because it is difficult. It has given me a good deal of trouble, and I hope I have explained it clearly to the House.

The other point mentioned was the possibility of alteration in the composition of the Committee, and I hope the noble Earl will not feel it necessary to press that, because the composition of the Committee has been very carefully thought out and it is felt that a Committee composed on the lines proposed in the Bill will adequately fulfil the functions involved. Lord Danesfort complained that I was optimistic. A few week ago I attended a service in. St. Giles, Edinburgh, and the whole idea of the sermon was the disservice which people did by being pessimistic. I hope the noble and learned Lord is as optimistic as I am. He certainly looks it. It is no good having optimism based on unreality, but I do believe there is no reason for the deep pessimism which surrounds the ideas of so many people. I personally believe in optimism, and I hope your Lordships will not think it is due to art unreal attitude towards the true state of affairs.

I do believe that it is possible to be too pessimistic. Lord Danesfort said that the workers did not approve of misuse of the "dole." I believe it is perfectly true that no one resents more than the workers the abuses of the system of unemployment benefit, but do not let us forget that to millions of the workers the unemployment benefit has proved of the utmost help and assistance in times of stress and strain. On all sides of this House the value of the Fund is admitted. Everybody has paid tribute to its value, and these abuses which are not illegal, not dishonest, but not what the scheme was intended for originally, are what everybody objects to, the workers as much as members of this House. I think the actual details of the Bill have been received very fairly by the House, and with regard to the larger matter I think the Leader of the House has dealt with it far more adequately than I could.

THE MARQUESS OF READING

My Lords, the noble Lord has made a very clear exposition, but there is one point on which I did not quite follow what he said. We are dealing with an insurance scheme against unemployment. Assume that the normal rate of wage is £3, and the man earns, perhaps working only for four days, £3 5s., or even £3 1s. As I understand it he would not be entitled to receive any benefit, for the purpose of part of this Act is to enable regulations to be passed to cure that abuse. I am assuming that he is not engaged every day of the week.

LORD MARLEY

At present he is entitled.

THE MARQUESS OF READING

If he is, it is more difficult for me to understand. I understood the noble Lord to say that if the normal rate of wage was £3, and a man working only for three or four days receives £3 5s., he is not to be entitled to receive any benefit.

LORD MARLEY

Let us take three days for the moment. Under the law, as at present administered, he is entitled to and does receive benefit. He is specifically included in this clause, so that in future he will not be able to receive it.

THE MARQUESS OF READING

I understood that, and was taking the assumption that he is earning during the week, for a certain number of days of work, more than the normal rate of wages for a whole week, and that consequently the regulations would prevent him from getting the benefit he has hitherto been enabled to draw for the days on which he is not actually working. But what is not clear to me is what happens in such a case as this. The normal wage is still £3, and a man is working, let us say, for three days a week. He earns, let us say, £2 15s. or £2 10s. What I want to know is whether it is proposed under this Bill, although certain anomalies have been pointed out in the working of unemployment insurance, that he shall nevertheless be entitled to receive unemployment benefit for the three days when he has not been working, although in fact he has been receiving £2 15s. or £2 10s. a week.

LORD MARLEY

In the circumstances which have been outlined by the noble and learned Marquess, if the normal week's wage is £3, and if he has been habitually receiving £3 5s., he will not be entitled to benefit for the days on which he habitually does not work; but if in one week, owing to some special reason, he only gets £2 15s., he will then be entitled, for the days he has not been working, to receive a measure of unemployment insurance benefit. It will be, not a measure based on the number of days he has not worked, but the difference between the wage he receives in that particular week and the normal wage payable; in other words, in that week he would receive 5s.

On Question, Bill read 2a, and committed to a Committee of the Whole House.