HC Deb 01 June 1897 vol 50 cc71-84 "All compensation payable under this Act shall have the like priority in payment in case of bankruptcy or winding up as wages under the Preferential Payments in Bankruptcy Act 1888, or any other Act for the time being regulating the priority of wages in bankruptcy or winding-up."

said there was a broad distinction between this clause and the clause which the Committee had just accepted. That clause proposed that the sum of money which an employer might receive under an insurance should not, in the case of his bankruptcy, be considered as one of his general assets and go to the general creditors, but should be applied to the use for which it was intended—the compensation of injured workmen. He had every desire to. benefit the workmen, but this clause certainly went a great deal too far, and he did not think the Committee would do well to adopt it.

*MR. J. B. BALFOUR (Clackmannan and Kinross)

understood that the preferable claim for wages in bankruptcy was allowed because the work in respect of which the wages were payable had created part of the fund which was divisible among the creditors, and the principle of the Bill was to treat compensation for accidents as part of the cost of production. This being so, payment of damages for loss of life or bodily injury was just as much incidental to the cost of production of the divisible fund as the wages were.


said that this was really a most important point, and he considered that it should be properly adjusted quite as much in the interest of the workmen as of the employer. It was quite evident that the adoption of this clause would practically destroy credit. What banker would give credit to an employer if, owing to an accident, a claim for possibly very many thousands might take preference of anything the banker had advanced for the purpose of carrying on the business? No clause could be more calculated than this to cripple industry. It was well to remember that the liability as to wages was an ascertained liability, but in this case there was an unascertained liability. Could it really be suggested that a large unascertained liability of this kind could suddenly be placed in preference to all other creditors? In that event no one would be more injured than the working classes themselves.

MR. CHARLES FENWICK (Northumberland, Wansbeck)

remarked that the Colonial Secretary had always argued that compensation should be made a charge upon trade, and therefore a charge upon production. The Bill did not compel employers to insure, in which event the Attorney General would surely admit that workmen were entitled to some protection whereby any claim of theirs to compensation should have priority over the claims of other creditors who did not stand in the same relation to the employer as they did.


hoped the Attorney General would reconsider his decision upon this question—["Hear, hear !"]—as this Amendment proceeded on the exact lines of the Preferential Payments in Bankruptcy Bill—namely, that no one ought to be considered before the man who had met with an accident in the course of his employment.


said it had been contended that they were proposing to give a preference to unascertabled liability. It was not clear from the wording of the Amendment whether it extended to compensation which had not been ascertained. In so far as it had been ascertained the objection entirely failed. With regard to compensation which had not been ascertained one would have thought there would be no difficulty in estimating sufficiently what the amount would be. He trusted his hon. and learned Friend the Attorney General would reconsider the attitude he had assumed towards the Amendment.

MR. F. G. BANBURY (Camberwell, Peckham)

felt that, in addition to putting an extra burden on the employer, the adoption of the clause would result in preventing the employer from borrowing money at as reasonable a rate of interest as he did at present.


contended that this was really a question of future wages. But the great point of the Amendment was this—that unless some such provision were inserted the workman's compensation, in case of his employer's bankruptcy, would depend entirely on the employer's caprice in insuring or not insuring. He should vote for the Amendment because it would encourage employers to insure.


said that he was surprised to hear hon. Gentlemen opposite advocating something which would compel employers to insure. He thought that the object of the Labour Representatives was to prevent accidents rather than to compensate workmen. [Cries of "No !"]


said that there was no difference in principle between this Amendment and the Bill for the preferential payment of wages which was now awaiting the Royal Assent. What did the Attorney General call the money which was to be paid to the men injured by accidental?




said that it was remuneration—what, in the Civil Service was called "deferred pay."


said that all were anxious to do justice to the working man, but they must not be unjust to others. Wages were quite different from compensation claims. Priority was given to wages as a claim against an estate, because the wage-earner. unlike most other creditors, was obliged to give credit to his employer. By not giving priority to claims for compensation some inducement was offered to the working man to join in providing for his insurance.


said that he wished to press on the Committee the extreme importance of this Amendment. By reason of the employer alone being made liable for the compensation the chance of the workman getting paid was somewhat precarious. That was one of the weak points in the Bill; and this Amendment was levelled against it. Supposing a colliery owner had a great accident, followed by liabilities for compensation of £40,000 or £50,000. If he were uninsured and became bankrupt, those interested in the compensation claims would have nothing but the chance of a dividend in common with other creditors. Yet these people were peculiarly entitled to consideration. They had more claim to preference than many of the interests named in the Bankruptcy Act of 1883. It was said that the banker would charge more for advances if this Amendment were carried. Everybody knew that in every shipment of produce from abroad to this country or from this country abroad the banker who made an advance upon it required to see not only the bill of lading, but the policy of insurance, and was satisfied if the policy was good. It was incredible that the banker would charge more in this case. He would do this—he would insist, before giving accommodation to a particular firm, that there should be an insurance that would cover him against any great supervening risk, such as that of an accident on a large scale which might make his security comparatively valueless. If this preferential clause were passed, the banker would act practically as a vigilance agent to see that there was an insurance against the liability treated by the Bill; and that was the point made by the hon. Member for Leeds—viz., that the clause would immensely increase the prospect of the insurance being effected. He did not pretend to be more particularly informed on business than anybody else. But he was dealing with insurance and commercial matters of all kinds every day, and he knew that every banker who made advances always expected to have an insurance policy and charged nothing extra for it. If hon. Gentlemen did not agree, they must agree to differ. The effect would be that instead of this claim coming as a preferential claim against general assets, there would be a special fund created by the insurance, against which, under the Amendment already passed, there would be a claim by way of security. He had endeavoured to put this to the Home Secretary and hon. Gentlemen opposite. But after all, this was a matter on which there could be no difference as between employers and workmen—it could only be a question of what was expedient and fair. He supposed they would divide—["Hear, hear !"]—and he certainly should divide in favour of the Amendment. ["Hear, hear !"] Although the Home Secretary was master of majorities, he hoped that he would not dismiss tins subject from his mind, but would give it a fair amount of consideration, and would see whether it was not really and truly in the interest of the employers as well as in the interest of the workmen to insert this preferential clause. ["Hear, hear !"]

MR. PARKER SMITH (Lanarkshire, Partick)

sincerely hoped the Government would not accept the Amendment. Hon. Members who had spoken in support of it had not faced the real difficulty of the question. The real difficulty seemed to him to come out in regard to a. big colliery accident as it did in nothing else. It was of small importance in regard to other trades in which there was no possibility of an accident on a large scale. Hon. Members on both sides of the House who had spoken on behalf of the Amendment had got hold of a false analogy when they put this claim to compensation on the same ground as wages. The position of wages was explained very clearly by an hon. Member below the Gangway. Wages were simply a payment for work already done; and it must be borne in mind that under the Preferential Act of 1888 there was a definite limit set to the amount for which preference could be claimed. A man could not claim preference for wages for more than two months, or a sum not exceeding £20. But here there was a possible enormous claim of £50,000, £60,000, or £100,000, which might come suddenly. What was more, it was an absolutely new right. What was there that could he held sacrosanct about such a right as that? He should like the men, of course, to get their money if they could. But why were they, on grounds of general justice to be put in front of every other creditor in the country? Take the men who had been supplying timber and other materials to the colliery. Take the widow and the orphan who held shares in the colliery. Why should they not have their claims too? Why should this new right be put absolutely in front of all? They were all agreed as to giving the workmen compensation for accidents; and of course they desired that everybody should be solvent and be able to meet all claims on them. But he failed to see the argument that this right, involving a fresh liability, it might be to the extent of £50,000 or £60,000, should come before everything else. He did feel most strongly that it would be a most serious interference with the ordinary course of the business of collieries. The hon. Member for Gainsborough said earlier in the evening that according to his knowledge the great majority of the collieries of Great Britain were in debt to their bankers. His own knowledge, as far as it went, was to the same effect. Speaking as one who knew something of what went on upon both sides in the process of a colliery borrowing money from a bank, he was sure that any fresh liability of this kind would have the very strongest effect in deterring a bank from lending money to a colliery. They knew how cautious bankers were, necessarily and naturally, and how much any small, any reasonable obstacle weighed with them. They wished to have their money advanced on complete security always. The right hon. Gentleman spoke of ordinary advances on bills of lading and property of that kind. Of course it was right and reasonable to insure in such cases. But here was a liability not merely to the extent of the thing they were advancing the money upon, but an entirely indefinable liability—it might be for an amount ten times the value of what they were asked to advance. A bank, in the ordinary way, often allowed a colliery to go on with an overdraft of £10,000 or £15,000, which might last for months or years. What would happen if there was to be a sudden claim for a heavy sum? There was always the possibility of an explosion, and if there was to be a sudden claim for £50,000 or £100,000 coming in front of every other claim on a colliers—the right hon. Gentleman shook his head; but he was of opinion that the cost of the insurance a bank would insist on being paid would be so heavy that it would be a most serious thing for all colliery proprietors. Therefore, he held that this liability was in a wholly different position than that for wages, and he hoped the Government would not accept the Amendment.

MR. F. CAWLEY (Lancashire, S.E., Prestwich)

could not possibly understand why the Government objected to this Amendment. It was calculated to protect the workmen from loss who wanted protection most. It was a well known fact that impecunious employers were the very persons who neglected the ordinary precautions against accidents, and also of insurance, or indeed any other expense that could be immediately done without. It would be quite possible to imagine a colliery proprietor who was in a semi-bankrupt condition neglecting to insure his men and going into bankruptcy directly a large claim for compensation was made on account of an explosion or serious accident. The result would be that the workmen who were injured, or the representatives of those who had perished would come in with the general body of creditors and perhaps get only 2s. 6d. in the pound. If this Amendment passed bankers before granting an overdraft to an employer would demand to see his insurance policies both for fire and under this Bill. And this, as the hon. and learned Member said, would be a very great safety to workpeople.


did not rise to argue this question any further, but to appeal to the Committee whether they were not prepared to come to a decision on the question, which had been adequately discussed on both sides. So far as the Government were concerned the Attorney General had sufficiently expressed their views. They were not prepared to accept the Amendment now before the House. He hoped, therefore, the House, would be prepared to come to a decision.

MR. W. ABRAHAM (Glamorgan, Rhondda)

said it seemed to him that some Gentlemen were trying to get an easement out of the liability. He should like to press on the Government to fulfil their promises and to fulfil the hopes they had raised in regard to working men and the working classes in regard to this Measure. It would be no use unless they carried it out to its logical conclusion, and he hoped the Government would accept the Amendment.


asked was it right that the workman should have a preferential claim over all others? [Cries of "Yes!"] Over the butcher and the baker? [An HON. MEMBER: "It is Promised!"] He did not think that it was promised. It would drive the employer into bankruptcy or into a joint stock company, the next thing to it. There was a certain amount of ungenerosity in the attitude taken up. They had given the workman a claim under this Bill, and they were giving him a claim on the first part of all that was left.

*MR. J. WILSON (Durham, Mid)

observed that the hon. Member for Lynn Regis had lost sight of one of the great blemishes in the Bill when he said that a man who caused the accident might have a claim on a bankrupt estate. He ought to know that a clause had been inserted in the Bill by which no man who wilfully misconducted himself had any claim whatever to compensation.


That refers to wilfully.

*MR. J. WILSON (Durham, Mid)

If he wilfully misconducts himself that implies negligence.


No, no.


Not contributory negligence.

*MR. J. WILSON (Durham, Mid)

contended that that implied any species of misconduct of which a man might be guilty, and in respect of which he would lose his claim for compensation, and consequently any claim upon a bankrupt estate. There was nothing in this Amendment asking that the Government should guarantee the solvency of any man, but all that was asked was that a man, after he had been injured, should have a full claim to the right which the Government established in the Bill. All through the discussions on this Bill the Government had ruthlessly disregarded the liability that was thrown upon the employer, but here, in a most intrinsic point of the Bill, when it was sought to guard the workmen against any loss after being injured, the Government set themselves to care for the liability of the employer. Again, the Government had asserted by this Bill that the injured workman had the first lien upon the industry in which he was engaged so long as he was incapacitated, and that if he was killed his widow or those dependent upon him had a right to be provided for with a sum ranging from £150 to £300. By the bankruptcy of an employer the widow and orphans, unless this Amendment were carried, might be deprived entirely of their means of subsistence. It had been said that the workman stood on the same footing as the ordinary creditor. Hon. Members would see that that was a mistake, for while a creditor had some means of knowing, in part, at any rate, whether an employer of labour was financially sound or bordering on insolvency, the workman had no opportunity whatever of acquiring such knowledge; and yet if he was injured, and the employer suddenly became bankrupt, his means of support were cut off, and he was left in beggary. The Government, having asserted that the workman, as a result of injury, had a right to have some provision made for him, ought to guarantee that provision so far as they possibly could. It had been said that an injured workman did not stand so high in the scale as the wage-earning workman. In his opinion, he stood far higher. A man who was hale and hearty, and who was deprived of his wages by the bankruptcy of his employer, might go and get employment to-morrow elsewhere, but the man who was shorn of the compensation the Bill gave him, being incapacitated, perhaps permanently, had nothing but beggary before him as the result of the insolvency of his employer. If it was right for the ordinary workman to have a preferential claim upon the estate of his late employer—as it undoubtedly was—on that employer becoming insolvent, there was a stronger right on the part of the man who was injured to have a preferential claim on the estate, and to obtain the compensation the Bill gave him. If the Bill had been attractive in the eyes of the working classes up to the present, the refusal of this Amendment would minimise and lessen that attraction. As far as he was concerned, he had said more than once that he was not enamoured of this Bill, and if the Government wished the working classes to continue to look upon the Measure as a boon and a benefit they ought to reconsider their position, and accept this Amendment.


said they all acknowledged the grievance that was entailed, but he would point out that when a concern was in bankruptcy all the creditors were partners in misfortune, and somebody had to bear the loss. When it came to a question of wages, a limited amount paid in respect of wages already earned was perfectly fair, but when it was a case of payment for future wages, which was being asked for on behalf of the workmen, instead of getting it out of the pocket of the employer, the workmen world get it out of the pockets of their fellow creditors, who were in equal misfortune with themselves. He would mention just one more point. Hon. Members who had spoken on behalf of the workmen had said that they regarded this as one of the intrinsic points of the Bill; but did they ever put this point forward in connection with the old employers' liability law? Two or three years ago hon. Gentlemen were perfectly contented to leave that as it stood, and now they sought to introduce a. new principle. They desired to push the matter further. Unless hon. Gentlemen wished to wreck the Bill, they ought on this point to stop short.

*MR. CARVELL WILLIAMS (Notts, Mansfield)

said the hon. Member for Leicester described compensation as the deferred payment of wages. He thought the more accurate description would be substituted payment, and that was his answer to the Attorney General. So long as a man was in health he received weekly wages, and when he became incapacitated he received wages in another form, that was, in the form of compensation; and if it was admitted that wages had a preferential claim, it seemed to him that, logically, the principle should be applicable to the man who was paid by way of compensation. As to the general objection that had been raised, namely, that the adoption of this principle would lead to financial disaster, if valid, held good against the entire Measure. He, however, did not believe the manufacturers of this country would he injured if the relations of employer and employed were placed on an equitable basis.

MR. J. G. WEIR (Ross and Cromarty)

said that bankers were quite competent to look after their own interests. They seldom made a loss in a commercial transaction. In the interest of the sick man, the widows and the orphans, this Amendment ought to be adopted. They were entitled to the first consideration of the House, seeing that they had no means of ascertaining whether an employer was insured or not. He agreed that compensation ought to be considered as having a preferential claim, mid for that reason he should vote in favour of the Amendment.

The Committee divided: —Ayes, 80; Noes, 162.—(Division List, No. 232.)

MR. G. WHITELEY (Stockport) moved the following new clause, to which he said there was no opposition:— Provided that where an employer who is the owner or occupier of any premises has engaged or contracted with any other person to execute any work, act, or thing in or upon such premises not within the scope of the trade or business of such employer, and such other person employs or directs and controls the workmen engaged in such work, act, or thing, then, in the event of any of such workmen being injured whilst so engaged, such other person shall be deemed to be the employer of such workmen for the purposes of this Act, and not the owner or occupier of the premises.


intimated that the Government agreed to accept the clause.

Clause Read a Second time.

Question put, "That the Clause stand part of the Bill."


argued that either this clause or that moved by the hon. and learned Member for Haddington was unnecessary.


explained that his clause was intended to meet cases like the following:—A factory had to be limewashed every year, and a master limewasher was employed who brought in his own men, scaffolding poles, etc., and managed the whole job himself. It would be manifestly wrong in such a case to hold the owner or occupier of the premises liable for any accident to the contractor's men.


feared that this clause might lead to misunderstanding, and suggested that the Attorney General should give it his attention before the Report stage, so that if the clause should be found to be unnecessary it might be deleted.


admitted that it would be reasonable to reconsider this clause in connection with that which had been carried by the hon. Member for Haddington. If he should find, on looking into the question further that this clause was likely to lead to ambiguity, or was unnecessary, as the hon. Member for North Monmouth suggested, the matter could be set right at the Report stage.

Clause ordered to stand part of the Bill.

MR. A. H. DYKE ACLAND (York, W.R., Rotherham)

said that the Bill did not provide for any record either of accidents or of the compensation paid in respect of them. He proposed, in order to supply this omission, to move—" That there shall be laid before Parliament annually a Return showing the particulars of all accidents in respect of which compensation has been paid, and the amount of compensation paid under this Act or under schemes certified by the Registrar of Friendly Societies." Right hon. Gentlemen opposite had repeated several times that experience must be gained of the working of the Measure before it could be extended to trades not at present included, and in order that that experience might be recorded it was necessary to provide suitable machinery. It might, he admitted, be difficult to determine the best way of obtaining the information which it was desirable they should have. That was a point to which he hoped the Home. Secretary would devote his attention. The statistics now available in regard to fatal accidents were, no doubt, fairly correct, but the same could not be said of the statistics of non-fatal accidents, which were often almost worthless. So far as existing Acts were concerned, he did not think any existing statistics were likely to help them. He did not know what the Home Secretary proposed to do with reference to a clause which would be proposed by his hon. and learned Friend the Member for Dumfries Burghs in regard to the notification of the amount of compensation. He was inclined to think that some method of registering both the accidents and the compensation given might be a better method of obtaining statistics than any attempt to alter or modify the present arrangement for the notification of accidents. However that might be, if they were to obtain experience of the working of this Bill, some provision for the laying before Parliament of a report by some public office was certainly essential, especially in view of any future legislation on the subject.


said he was in entire agreement with the right hon. Gentleman that for the future success, not only of this Bill, but of any subsequent legislation, it was extremely desirable that Parliament should have a proper record, and he had already been considering how to introduce into this Bill sonic provision for a compulsory return, so that they might be informed of what took place under the Act. He was not at present prepared to say what shape such a provision should take, and he was not, therefore, prepared to accept the clause which the right hon. Gentleman had sketched out; but he could assure him that the Government agreed that they should endeavour to procure proper information for Parliament of what took place under the Act.

MP. C. B. RENSHAW (Renfrew, W.)

said if the Home Secretary was going to accept this Amendment at a subsequent stage he would point out that there was no particular reason why a return of this kind should be placed before the House. He understood that the whole liability would devolve on the employers, and if they were called upon to make additional returns with regard to this Bill he must really protest against it, as it would be laying an additional burden on the employers of labour which he thought was unnecessary.


said it was obvious that the return, if it were to be of any use, must go much more into detail than did many of the existing returns. Something had been said as to foreign countries, and perhaps a knowledge of the exact nature of the returns made in Germany might give sonic guidance. He thought they ought to protest against the industries of the country being burdened with the expense of elaborate returns.

SIR JOSEPH PEASE (Durham, Barnard Castle)

pointed out the great variety of the existing returns, which were somewhat confusing in their character. The returns of shipping, mines, and railways were at present all drawn out on different lines. There was also a want of instruction to those who made the returns, and it was notorious that the railway returns were made up on various bases by various companies.

MR. STUART-WORTLEY (Sheffield, Hallam)

believed that the Home Office had taken steps to introduce sonic conformity in the various returns. The Amendment of the right hon. Gentleman, however, omitted to say by whom the Return should be made. As this information would be returned for the public advantage, it ought not to be exacted from employers at private cost.

Amendment, by leave, withdrawn.