HC Deb 24 November 1911 vol 31 cc1933-43

If at any time after the expiration of five years from the commencement of this Act it appears to the Board of Trade that the Unemployment Fund is insufficient or more than sufficient to discharge the liabilities imposed upon the Fund under this Part of this Act, or that the rates contribution are excessive or deficient as respects any particular insured trade, or any particular branch of any such trade, the Board may, with the sanction of the Treasury, by special order made in manner hereinafter provided revise the rates of contribution of employers and workmen under this Part of this Act, and any such order may, if the Board think fit, prescribe different rates of contribution for different insured trades or branches thereof, and where any such order is made the rates prescribed by the order shall as from such date as may be specified in the order be substituted as respects trades or branches thereof to which it relates for the rates prescribed by this Act:

Provided that where such a revision has been made no further revision under this Section shall be made before the expiration of five years from the last revision, and that no order under this Section shall increase the rates of contribution from employers or workmen by more than one penny per workman per week.


I beg to move to leave out the words "as respects any particular insured trade, or any particular branch of any such trade."

We do not think it fair that any one particular trade should be called upon to bear the deficiency in that trade, and with the object of making the burden of levy as light as possible; we think if there is a deficiency it should be met generally.

The PRESIDENT of the BOARD of TRADE (Mr. Buxton)

The object of this Clause 76 as the Bill as amended will stand is that both the contribution and benefit shall be the same for all trades included under the Bill until they are altered, and that the same should apply to any trade brought under the provisions of the Act, unless further evidence and experience showed that to keep exactly the same contribution and the same benefits for all the trades might act unfairly and unequally between them. As the Committee are aware, the proposals in this Insurance Bill are quite unprecedented. There is no such thing as compulsory insurance elsewhere and scarcely any compulsory insurance at all on a large scale such as this, and therefore evidence about percentages of unemployment or the measure of it in various trades was to a certain extent limited, and it is only subsequent experience that will show that in any one particular trade or industry unemployment is very slight, and that it might not be unfair in such circumstances to vary either the contributions or benefits, or both. What the hon. Member proposes, as I understand it, is in effect the question of variation of benefits which comes in under another part of the Clause, and that the contribution shall not be altered, although the benefits may be. May I point out that as a matter of fact that from the point of view of change or variation as between trades, it is very much better to have a variation on contribution rather than on benefits, because as far as the particular unemployed man is concerned, his needs are equally great, whether he belongs to a trade in which the unemployment is large or small, and also of course it is to be remembered that in regard to these particular trades, a considerable number of men are at one time working one section and at another time another section, and if the benefits are to vary as between those two sections it will be very difficult to know which would be the better benefit that a man shall receive at the particular moment When he becomes unemployed, so if there is to be any differentiation it had better be done by contribution than by benefits, but as a general principle, I think the hon. Member himself must see that before we decide that for the future and for ever there shall be one contribution and benefit, we ought to have obtained a greater amount of experience in regard to it. I point out to him that I am proposing later on in the Schedule to make benefits the same for two great branches of trade.

As the Bill stands benefits are unequal in these trades. In one case they are 6s. and in the other 7s. We are prepared to make them equal because it has been represented to us, and I think with justice, that if we take a longer period than the period our actuaries were able to work on, we should find that on the whole the unemployment in the building group of trades was substantially the same as the unemployment in the engineering and shipbuilding group. The figures we have of the percentages of unemployment in the former group are larger than in the latter. We are prepared to take that as a proposition and see whether it is likely to prove correct. But it will be rather difficult to start with these equal benefits if we were unable at any time when experience had shown that they should be altered, we were unable to vary them. This elasticy must be left to the Board of Trade, subject to special inquiry and subject to laying the rules upon the Table of the House of Commons. It is subject to these very proper checks that such changes should be made, and subject to them there should be a discretion on the part of the Board of Trade, if experience shows there should be variations, to allow it on contribution. I think there is some misapprehension in the mind of Members on both sides of the Committee as to the amount by which the contribution could be increased. The limit under the Clause is 1d.; it cannot go beyond that. It does not mean successive periods of five years in which there would be successive pennies. The outside maximum covered by the Act would be 1d. and the discretion remains with the Board of Trade to decide whether or not it should be advantageous. Under these circumstances I hope the hon. Member will not press his Amendment.


I am sorry the President of the Board of Trade has not lent a more willing ear to the representations made by my hon. Friend. The Clause seems to make provision not only for a revision of the rates of contribution in any particular trade, but for the rates of contribution in particular branches of a particular trade. I should like to know what is contemplated there. Trade unions make no distinction between branches of trades, and I should like to be sure that there is nothing contemplated in the nature of splitting up the benefits covered in any particular trade union. But over and above that I am sorry the President of the Board of Trade has not met us, because I think this is a good claim, and that the men or group of men in any particular trade having a greater degree of unemployment should not be penalised because of that unemployment. That is really the kernel of the whole thing. The President of the Board of Trade is going to meet us to some extent in the revision of the benefits between the engineering and the building trades. I should say he has recognised himself that although the unemployment in the building trade is larger than in the engineering trade, that is no reason why the men in the building trade should only get 6s. and in the engineering trade 7s. In putting this claim forward we simply ask that the same principle which the President has signified his intention of carrying out with regard to benefits should also apply with regard to contributions. If a particular trade has not unemployment, then it seems to us that instead of relieving the men of that trade from contributions, their contributions ought to be kept up. These men are all the better able to pay because they have constant employment, and their contributions ought to go to the relief of those men who have not constant employment, and who to that extent are more unfortunate. I regret therefore, the President of the Board of Trade has not met us as we would wish upon this matter.


May I point out to my hon. Friend that the answer to his question why this Section refers to branches of trade is this: The expression "insured trade" is used in the Bill to cover as a whole each one of the list of five insured trades in the sixth Schedule. It is not at all the intention of the Bill narrowly to distinguish between subdivisions of general trades, but a case might arise in which it was not improper to regard two separate branches as existing within one of the insured trades in the Schedule, and in fact trades union practice itself recognises these special circumstances. Take, for instance, such a head as the fourth insured trade in the Schedule—the insured trade of mechanical engineering—it is, of course, known to everybody several trade unions exist that cover that general industry, and it is only to provide against such a possible case as that, that the expression "branch of trade" is introduced, and for the rest, the general policy of those who frame this Bill, is shown by the fact that at present we propose a flat rate and level benefits. We only demand this power after the elaborate machinery of special order is satisfied.


Take the case of the building industry. If the President of the Board of Trade retains these words in the Clause, he will have the various sections of industry squabbling. We have heard a great deal about this being the first time that compulsion is applied to Insurance. Rates are compulsory, and

Division No 8.] AYES.
Baldwin, Mr. Harmsworth, Mr. Cecil M'Callum, Mr.
Boscawen, Sir Arthur Griffith- Hayden, Mr. Price, Mr.
Brady, Mr. Holt, Mr. Robertson, Mr. John
Buxton, Mr. Sydney Ingleby, Mr. Solicitor-General, Mr.
Denman, Mr. Jones, Mr. William Stewart, Mr. Gershom
Goldman, Mr. Joyce, Mr. Williams, Mr. Penry
Hackett, Mr.
Barnes, Mr. Palmer, Mr. Smith, Mr. Albert
Benn, Mr. Hamilton Roch, Mr. Walter Wilson, Mr. Tyson

I wish to make it quite clear that this contribution cannot be raised, whatever the contribution may be in the Schedule, more than 1d. at this quinquennial valuation. There seems a fear in the mind of some hon. Members of the Committee, and others, that at each quinquennial valuation an additional 1d. might be added, but the total amount would not exceed 1d. The second point is consequential upon an Amendment I accepted from one of the Labour Members, making the rates equal as between employers and workmen.

Amendment made: At the end of the Clause add the words "above the rates specified in the Eighth Schedule to this Act, or shall vary such rates unequally as between employers and workmen."—[Mr. Buxton.]

Question proposed, "That the Clause, as amended, stand part of the Bill."


This is a very important proposal, because it practically gives to the Government, by means of the process of Special Order, the right to levy additional taxation. That is what it comes to. They can increase the rates of contribution both for employers and for workmen, and I wish to point out that such a power as that ought really to be granted by Parliament. After all, in the case of a Bill like this, Parliament is only making a big experiment, and if it turns out that the experiment is unsound financially, the proper way is to allow Parliament an opportunity of revising the scheme upon which the Bill is based. Instead of that, you give the Government Department power to revise

people in a district have to pay rates irrespective of whether they are responsible for the deficiency which these rates have to make up. That being so, I hope we will hear no more about this compulsion.

The Committee divided: Ayes, 19; Noes, 6.

taxation, a thing which ought not to be done without reference to Parliament. It may be you will find yourselves in great difficulties. You may find at a given moment—say after a period of trade depression, that the Fund is depleted, and something must be done. May I point out that the Government have already got full power to deal with any temporary emergency under Clause 69 Sub-section (2), in which we have given power to vary the rates of contribution, or the rates or periods of unemployment benefit, by means of temporary modifications. I would submit to the Committee that having in Clause 69 Sub-section (2) met all that is necessary, the power to deal with an emergency, or a temporary variation of the rates, you ought not to have a permanent variation without an appeal to the House of Commons. I think if this scheme is to be revised permanently, it ought to be done by Act of Parliament, and for these reasons I oppose this Clause.


I feel that this is a very serious Clause, because it vitiates the whole principle of the Bill. The Chancellor of the Exchequer, when he introduced this measure, said he was going to construct this portion of the Bill on a flat rate system, and this Clause contemplates the change of the flat rate system to a differential system, and doing it permanently. That is the point I wish to emphasise. This Clause upsets the whole character of the Bill as introduced by the Chancellor of the Exchequer. The employer and the workman are in the first instance to contribute 2½d. each. By Clause 69 the contingency might arise of increasing the contribution by 1d., making it 3½d. Under this Clause you contemplate a further increase of 1d., making the employers' contribution 4½d., and the workman's contribution 4½d. or 9d. between them. Clause 69 contemplates a great deficiency, towards which you propose to devote this 1d. If at the end of five years you find that this Fund shows such a considerable depletion that you want to re-cast the whole scheme, and start afresh by imposing 1d. in respect of the workmen and the employer, the Government should give us some indication how they are going to meet this deficiency. I understand that under this scheme both the employer and the workman have to pay more, and I suppose the Treasury will have to pay more as well. Under these circumstances, this proposal is not sufficiently clear, and I want some assurance from the Government that in certain emergencies the Treasury will come forward and increase their contribution, even to a greater amount than merely one-third of the total contribution of the workman and the employer. I think we ought to have some assurance from the Government that if there is a heavy deficiency at the end of five years, and the scheme has to be recast to make it solvent in the future, the Treasury should give us some assurance that they are going to contribute a larger amount than is provided under this Bill. For these reasons, I associate myself with my hon. Friend's Motion.


Hon. Gentlemen have been objecting to this quinquennial revision, giving power to the Board of Trade to deal with this matter, but what is the alternative? Simply to put the Schedule rates in the Bill, and allow them to continue until some subsequent Parliament may think fit to deal with the matter, which must lead to very great difficulties and hardships. Some hon. Members seem to assume that the only object of this Clause is to raise the contribution. On the contrary, the evidence we have before us at the present moment, makes us believe that the finance provided for the Unemployment Fund will leave a substantial margin, and it is, therefore, at present, on the side of safety. With further experience, better years of employment, and with unemployment reduced, it is more likely that the contribution and the burden thrown on the employer and the workmen will be reduced than that they will be increased. The hon. Member wishes to know what will be the financial position of the Fund if the contributions increase. In order to make it solvent there will be an additional contribution by the workman and the employer of 1d. and there will also be the State contribution of one-third of the total. Nothing could be worse than if the Government were to announce that whatever the deficiency the State would make it good.


As far as the past is concerned. If at the end of five years there is a great deficiency, and you are starting to make your fund solvent, so far as the solvency of the past is concerned I should like to see that wiped out by the Treasury.


I see no difference between the two, for it comes to the same thing. If the State is called upon to make up the deficiency, it deprives the Fund of any incentive whatever for economical and proper working. I want to press the point that in regard to this revision we are in the experimental stage, and it is quite possible that within a limited time it may be found that the Fund, as a whole, has such a considerable surplus, that either the contributions can be reduced or the benefits increased; and that is just as likely to happen. In fact, I think it is even more likely to happen, than that the contributions will be increased or the benefits reduced. I really do not know who the hon. Member was quoting in this respect. He said that this Bill was announced as a measure based on a flat rate. May I point out that it was not introduced on the flat rate, and it is not a flat rate. As introduced, the Bill had two rates. It divided its insured trades into two groups, with different rates of benefit, and therefore there was no flat rate. We have found after further going into the matter, and subject to one or two Amendments which have already been introduced, and some Amendments which have still to be introduced, that we consider ourselves—and our Actuary was able to certify to this effect—in a sufficiently sound financial position to be able to give a flat rate at the beginning. It did seem to us before that we should have some power of elasticity in the matter, and I put it to the Committee, that it is really better, in a matter of this sort, that some elastic power should be given to the Board of Trade to deal with this matter, when it is shown that there is either a deficiency or a surplus involving some alteration of their scheme. Let me point out that, as far as the House of Commons and the interests of the public are concerned, they are protected by a special order, which will mean inquiry and publicity, and full information on both sides. This is not a matter which the Board of Trade by a stroke of the pen can carry out at their own desire, but it is a case in which there will be the fullest inquiry under the special order of procedure. I wish the Committee to realise that it is necessary we should have this power of elasticity, and I think I have shown that all interests are fully protected by the method we are adopting.


I wish to associate myself in this matter with the course taken by the hon. Member for Dudley. The arguments which have been used by the President of the Board of Trade is partly my reason for so doing. The right hon. Gentleman said this Bill was of an experimental character. If the contributions show a surplus at the end of five years, then we may take it that the experiment has been a successful one; but if at the end of five years there is a heavy deficiency, so as to make it necessary to call upon the employers and employed for a larger contribution, then we may take it that the Bill is not entirely a success, and ought in that case to come before Parliament again for revision, and receive that care from Parliament which it deserves in such a case. I have no objection to the Board of Trade revising the rates, but when it comes to a question of increasing the rate I think Parliament ought to have a chance of considering the matter anew.


As I understand it, no alteration can be made in these rates without Parliament having an opportunity of expressing that view.


That is not so.


Perhaps one of the representatives of the Government will put me right on this point, because it is very important we should understand exactly where we are. As I understand it, no alteration whatever can be made in these rates under this Clause without Parliament having an opportunity of expressing an opinion upon such alterations.


Yes, under the special order.


But that is not Parliament.


Parliament must have an opportunity, and the increase cannot be made if Parliament disapproves of it. Under these circumstances it is in the hands of either House of Parliament to render the Bill absolutely unworkable if they do not approve of what has happened, and they would be able to force the Fund into hopeless bankruptcy and compel the Board of Trade to bring in an amending Bill. It appears to me that, under these circumstances, the interests of the public are amply safeguarded.


In confirmation of what has been suggested by my hon. Friend, and for the comfort of some hon. Gentlemen opposite, I wish to point out that Sub-section (2) of Clause 78 provides for a special order of procedure, which gives a double check. It provides that if either House of Parliament before the expiration of thirty days, during which the Order is to lie on their respective tables, presents an Address to His Majesty against the Order or any part thereof, no further proceedings shall be taken thereon. I submit to the members of this Committee, who would be disposed to place rather more confidence in the Upper House, that the object they have in view would be adequately protected by the House of Lords. On the other hand, I would submit to those members of the Committee who prefer the judgment of the House of Commons that that Chamber will also have an opportunity of veto.


There is an Amendment on the Paper to make the period for the operation of this Clause ten years instead of five years, so that we should get rather more experience before this Clause actually came into operation. If the President of the Board of Trade could see his way to met us in that direction—remembering that he has power to make any temporary adjustments required to continue the solvency of the scheme—by providing that this Clause should not come into operation until a longer period has elapsed, I think that would meet our case. If the right hon. Gentleman cannot accept ten years, perhaps he might suggest some shorter intervening period. In that case I think my hon. Friends would feel that their objections had been met. This is really a serious power to be given to the Board of Trade, and we ought to have all the information in our possession before the Board of Trade is allowed to exercise the powers conferred upon it by this Clause.


If the hon. Member for Dudley had moved his Amendment I was going to suggest that ten years was too long, and I should have been prepared to accept a shorter period. The first five years is too short, and I would suggest seven years as a good period for the purpose. Taking trade generally, seven years is the sort of period which covers a cycle of trade, and I think there would be an advantage in accepting the period over five years. I cannot put this Amendment in now, but I will only take to substitute seven years for five years on Report, if that will meet the view of hon. Members opposite.


In view of what the President of the Board of Trade has promised I will not press my opposition to this Clause. I had intended to move my Amendment, fixing the period at ten years, but I was unavoidably delayed. If the right hon. Gentleman will agree to seven years on that understanding I withdraw my opposition to this Clause.

Question put, and agreed to.