HC Deb 27 November 1919 vol 121 cc1988-98

Order for Second Reading read.

The MINISTER of LABOUR (Sir R. Home)

I beg to move, "That the Bill be now read a second time."

Last week the House dealt with the question of the unemployment donation, and, in the course of the discussion which took place upon the Government's proposal, I informed the House that a certain number of people, at present or prospectively out of work, would be covered by the unemployment insurance schemes which are already in existence. I further stated that it was the intention of the Government to produce, as soon as might be, a universal unemployment insurance scheme. During the time that we have been investigating the possibilities of a universal unemployment insurance scheme, we have ascertained that the amount of money which is now at our disposal under the Unemployment Insurance Acts already in existence, is sufficient to allow of larger benefits being paid to the beneficiaries than they are at present receiving. I dare say the House is well aware that the amount of benefit which is distributed at the present time to people who are insured against unemployment is 7s. per week under the National Insurance Act of 1911. That Act covers people in the building trade, in the engineering trade, and in the shipbuilding trade, and its benefits were extended by the Act of 1914 to a series of other occupations. These two Acts between them now cover something like three and a half millions of workers, all of whom have the right to this benefit of 7s. per week during unemployment.

The reason why there is more money available than is represented by this 7s. per week is explained in a White Paper which the Government actuary has supplied, and which has been circulated to Members of the House. In the first place, the amount of benefit which could be distributed was estimated on a very cautious basis, with the result that it has been found that, as the result of the contributions, there is more money than was anticipated. In the second place, during the War there has been practically no unemployment at all, and even in the two years immediately preceding the War unemployment had become very low. Funds, therefore, have been accumulating. The result has been that, from these two causes, it is now possible, as the Government actuary shows, quite safely to give 11s. instead of 7s. per week to the people who am unemployed and who are insured under these national schemes. I am sure I am expressing the mind of the House when I say that, looking to the increased cost of living at the present time, it would be the desire of all of us to give the full amount which can be afforded under these schemes. Seven shillings a week is not what it was before the War, and even before the War it was a very small amount to give to a man who was unemployed. I am sure that the House will welcome an opportunity of adding to this meagre amount, and, since it is certified by the Government actuary to be possible, will agree that we should increase the amount to 11s. per week.

It is necessary to have legislation to bring about this object. The Act of 1911 provided that the amount to be distributed should be 7s. We require to have that altered by substituting 11s. for 7s. In the next place, the Act of 1911 provided that there should be a discretion in the Board of Trade to increase the amount of 7s. to 8s., or to reduce it to 6s. We have got to alter those two figures by substituting 12s. for 8s. and 10s. for 6s. Then there is a provision in Clause 2 which I ought to explain. Under the Act of 1911 it is provided that trade unions might have the option of paying the unemployment benefit to their members and being reimbursed by the Government; but that was only possible if the trade union itself paid one-third of the amount which the Government contributed. To give the House an illustration, since the Government's benefit was 7s. per week, the trade union could only obtain the advantage of distributing the unemployment benefit if it provided 2s. 4d. per week. It may be expressed thus, that the trade union must provide one-third of what the Government provided before it could enjoy that privilege. If the Government's payment is increased to 11s., it is obvious that one-third of 11s. is 3s. 8d., instead of 2s. 4d., and that gives rise to this difficulty: Many unions have struggled, in order to have the opportunity of dispensing this benefit, to pay the necessary one-third, and their arrangements at the present time are suitable for getting enough funds from their members, to contribute this one-third; but if we were suddenly to ask them to contribute more, it would so dislocate their arrangements that in many instances they would not be able to give the necessary contribution. Accordingly, we propose in Clause 2 that, at least until the 31st December, 1920, although the Government contribution has increased, the necessary contribution paid by the trade union should not be increased. After the 31st December, 1920, the trade unions will be put in the same position in which they previously were; that is to say, they will only have the privilege of dispensing the Government benefit if they pay one-third of the contribution which the Government gives.

The Bill in its essence is very simple. Its objects, I venture to say, are good, and are such as the whole House would readily agree to at the present time. It is very necessary that we should have the powers as rapidly as possible, looking to the fact that we are now at the beginning of winter weather, and that many people may stand in need of this unemployment benefit. Accordingly I will venture to appeal to the House to give this Bill as rapid a passage as possible.


I should like to have some interpretation of Clause 2. Notwithstanding the increase in the rate of unemployment benefit effected by this Act the expression "unemployment benefit under the principal Act" in Sub-section (1) of Section thirteen of the National Insurance (Part II. Unemployment) Act, 1914 (which limits the power to make or continue arrangements with associations under Section one hundred and five of the National Insurance Act, 1911), shall, during the period ending on the thirty-first day of December, nineteen hundred and twenty, be construed as meaning unemployment benefit at the rate payable before the commencement of this Act. I cannot understand what on earth that means.


I have just explained it.


In making a modest contribution to the debate on this Bill, I should like to address myself to what I regard as the intentions of the Bill and the results. The Bill intends to make better provision for the unemployed, and the proposal is to increase the unemployment pay from 50 to 66 per cent. I want to call the attention of the House at once to the fact that the increase in the cost of living is no less than 130 per cent., and it does seem to me that to increase the unemployment pay from 50 to 66 per cent, to meet that increased cost of living is, to say the least of it, to provide us with a very unsatisfactory Bill. We have been told over and over again during the War that we are never again to return to the deplorable conditions of poverty and unemployment that so often occurred previous to the War. The Prime Minister has told us "The old world must end, where unemployment, through the vicissitudes of industry, brought despair to multitudes of humble homes." I hold it an ethical and elementary right that a wealthy country like this should either find work for its adult population or provide adequate maintenance. There are surely sufficient means to find work, failing which there is wealth with which to provide adequate maintenance. I am aware that an actuarial valuation has given figures showing that the increased allowances suggested in the Bill will entirely swallow up the premiums obtained under the Act of 1911 and 1918. Surely it is recognised as only too true that unemployment means poverty and that poverty breeds vice and disease and crime. We know that disease and crime cost this country a considerable sum of money. Congested workhouses, crowded prisons, and overflowing asylums are so costly that if by giving a better unemployment benefit we can save the cost of these institutions we shall surely find that the increased allowances suggested will be economical from every point of view.

I am not content to be told that some other proposals are to be placed before this House in a little while. The workers of the country want something now, and I would impress upon the Government the seriousness of the position as shown by what occurred yesterday in Sheffield, where a crowd of unemployed thrust themselves upon the council meeting and protested very strongly against the stopping of the Government unemployment donation. The spirit of the country to-day is such that nobody can reasonably expect the working classes to starve peaceably, and the allowances suggested in this Bill mean starvation. The increases will not cover the increases which we are led to expect will take place in rents alone. Nobody can be surprised at the alarm with which this Bill is being viewed by those who know what it is to tramp the streets in search of a job and to knock at office doors while the wife and family are waiting anxiously at home the result of their efforts. If we are to press forward to the new world about which our Prime Minister so grandiloquently speaks, it seems to me that we should begin right here by saying that all possible shall be done to provide work for the adult population, and, failing the finding of that work, that all possible shall be done to save the people from poverty. Never again do we want to see the unemployed standing at our street corners, wrapping their rags about them. If that is to happen there are not wanting those who will want to know and who will ask: What, after all, did they fight for in the Great War? We were proud of the fact during the War that we were a great family and a huge team working together for the common good. Has the time now come when we can put aside these beautiful sentiments which, put into concrete form, saved civilisation? Cannot we continue to be a team and a family and so regulate the economic conditions of this country that something more than a miserable pittance of this character shall fee adopted in this House in order to meet poverty? The Bill is good so far as it goes, but it does not by any means go far enough. The least that could be done, the irreducible minimum which would satisfy Labour, would be to double the amount suggested in the Bill.


The hon. Gentleman opposite (Mr. Hallas) appears to have lost sight of the fact that this is an Insurance Bill. It is not a question whether the benefit to be derived under this Bill is or is not sufficient to supply the wants of a certain portion of the population, but whether the actual funds in the Insurance Fund are sufficient to give the benefits named. The right hon. Gentleman told us that the Government actuaries have arrived at the conclusion that the benefit can be extended from 7s. to 11s. Is that intended to be a permanent part of the Insurance Act?


indicated assent.


Does that mean that the accumulations derived from the fortunate good employment during the four years of war will enable the benefits for all time to be extended from 7s. to 11s.? If that be so, does it not point to a very serious error in the estimate when the original Act of 1911 was passed, because my recollection is very clear that when we were debating that Bill the apprehension was very generally expressed that the Insurance Fund would be insufficient to meet the benefits? It is a very happy circumstance if the estimate has turned out so completely wrong as it appears to have done. I understood from my right hon. Friend that the extra benefits can be expected in the future regardless of whether there are accumulations or not, assuming, I suppose, the average of unemployment in the years to come. I understood him to say, further, that for thirteen months the special contribution from the trade unions in consideration of whch they have been allowed a share in the administration is to be suspended. In other words, that the contributions to the funds will be less by so much for thirteen months. That means that the total amount of contributions will be reduced by that amount. If that be so, would it not have been better that the privileges should also have been suspended during that period, because it is possible, if the administration had depended upon it, that the contribution in many instances would have been continued during those thirteen months, and that the insurance fund would have benefited by that amount and would have been in a stronger position when the thirteen months had elapsed than it is likely to be when depleted by that amount? It appears to me, therefore, that my right hon. Friend is being rather over generous than under generous. I only want to ask whether it is quite certain that the fund will be so strong that it can bear that strain placed upon it.


While I agree with my hon. Friend (Mr. Hallas) as to the necessity for doing what we can for the working classes thrown out of employment, I recognise that we are now dealing with the terms of the Acts of 1911 and 1918. I want, however, to say that I trust the Government, as a result of this measure, will not fail to fulfil their intention of dealing with the unemployment question as speedily as possible. I was glad to hear the re-assuring answer given this afternoon, but we cannot be too insistent in calling attention to the fact that all the great questions affecting our industries to-day will never be settled until we deal with this problem of unemployment. The dread of unemployment is stultifying in many directions that which to-day should be done in the interests of the country, and I therefore do urge my right hon. Friend to use all his influence to induce the Government to bring in as speedily as possible their Bill to deal with universal insurance. They will find that some industries will prefer to deal with the matter themselves, but I hope the Government will make no delay in the matter. I want to take the opportunity to refer to a remark made yesterday by the right hon. Gentleman the Member for the City of London (Sir F. Banbury). I am afraid that he is under the misapprehension that the trade unions are being largely subsidised by these Insurance Acts so far as unemployment is concerned. That is not so. Although they get one-sixth from the Government, they have to do all the clerical work attached to paying out the benefits through the general offices and the branches of the societies, and the paltry sixpence that some get does not compensate them for the work. You must remember that when this was brought in some societies which had paid no unemployment benefit, and others which had paid but a very small sum, were encouraged either to pay a benefit or to increase their payment, so that the unemployed might have at least something like 9s. 4d., or even more. Certain societies immediately commenced to pay 10s. a week, the result being that the subsidy to them was 6d. out of the 10s., because they were doing work which the State had passed on to them. I trust, therefore, no one will run away with the idea that the trade union movement of this country is making a large amount of money out of the administration of the National Health Insurance Unemployment Fund. I am glad the right hon. Gentleman has taken the opportunity of using the surplus already accumulated for increasing the benefit to be paid, but I trust that by the end of 1920 it will be found there is no need to put into practice the proviso which is contained in the second Clause of this Bill. I hope by then some other solution will have been found and that the trade unions will not be called upon to increase their unemployment benefit to their members. Some of the societies already, in addition to the 7s. given by the State, pay 10s. per week to unemployed members. Therefore I do not think you have any right to call upon the trade unions to throw their rules into the melting pot and to call a special delegate meeting, which may involve an outlay of £2,000 or £3,000 on the part of the society for the purpose merely of altering their rules in this connection. I trust that that point will be reconsidered before the time arrives. It means a very large sum to the trade unions to call meetings for the purpose of altering rules, and that necessity should be obviated entirely. I am pleased the right hon. Gentleman is using the extra funds in the Unemployment Fund to increase the benefit to those who unfortunately at this time are out of work, but the 4s. increase per week which has been provided is scarcely more than a 55 per cent, increase, which compares very badly with the increase in the cost of living, and there is no hope, I should say, that by the end of 1920 even the cost of living will have been decreased to that extent.


I think the statement of my right hon. Friend is from many aspects very satisfactory, and the House must be pleased to know that the basis on which the 7s. was originally fixed on the average of the then unemployment in this country has been shown to be wrong, because it means that employment even before the War had improved on the average in this country. Of course, we know that during the War unemployment was a very rare thing. That is satisfactory in itself, but I think it is also satisfactory in this, that I hope it will encourage my right hon. Friend and the Government to-at once grapple with the whole problem. It is quite clear now that, you can get a benefit of a satisfactory nature with regard to unemployment, and whether it may be necessary to call for an increased contribution, either from employers or employed or from the State, it is quite plain, from the calculations made in 1911, that you can fulfil a great work in this respect on such statistics as you are able to get. This should be an encouragement to the Government to bring in a larger scheme, such as they promised the other evening when we had the question of the out-of-works under discussion—a scheme which I understood the Labour party to promise they would gladly assist. So much for that. I think there is a good deal of misapprehension in the country upon one other matter to which I should like to refer. The hon. Member opposite (Mr. Hallas) suggested that this was not a worthy increase to make to the men who had come back after fighting at the Front. That would lead one to suppose that the out-of-work donation had been dropped as regards these men. But I understand that that is not so. It is still going on, and, moreover, these men do not get the insurance we are now dealing with. It has nothing to do with them, and consequently the eloquent peroration in which the hem. Member indulged loses its force, because the soldiers who have served are specially provided for. It should not go forth to the country that they are under the unemployment benefit in the Insurance Act, but it should be known that special provision is made for them, and this particular proposal has nothing to do with their case.


I was referring to those soldiers who had returned to civil life and were no longer recipients of the donation.


By leave of the House, I will answer the questions which have been put to me. I should like to say at once I am very pleased to give an assurance that the Government intend to proceed with all speed with the larger measure we desire to see brought into operation at the earliest possible moment, and I hope to be able to introduce the Bill at a very early date. The matter with which we are now dealing is only a very small section of the problem. When I consulted the Government actuary I found it was possible to increase the amount of the benefit to the unemployed, and that is the sole object of this particular measure. The Government actuary, in explaining the position, stated that owing to the lack of suitable data at the time the original calculation was made the risk of unemployment was over-valued, while the benefit was fixed at a suitably lower rate than would have been otherwise laid down. With regard to Clause 2, the position is really this: Under Section 105 of the 1911 Act it was provided that the trade unions might dispense this benefit and have paid to them the amount of the Government contribution, but it was arranged that if they received the 7s. they should pay out 9s. 4d. in all. Now the Government contribution is to be 11s., and if the House approves of the proposal now before it the trade unions will make the donation up to 13s. 4d. If the matter were left as it stands the trade unions would as a matter of fact, if the same proportions were retained, be called upon to distribute 14s. 8d., but in order not to dislocate their financial arrangements it has been decided to give them until December next year to rearrange their finances. Up to December next year they will, therefore, only be called upon to pay 2s. 4d. over the Government Grant, but after that they will be required to provide 3s. 8d. I hope I have made the point clear, and I ask the House to give us the Second Reading of this Bill.


I do not think my right hon. Friend has made it quite clear whether the increase now proposed from 7s. to 11s. will be a permanent increase, or whether it is only to be a temporary increase consequent on the accumulations referred to by the right hon. Gentleman?


I am sorry not to have answered that part of the question. It will be a permanent increase, because, as a result of the over-valuation of the risk, you can give more benefit than was proposed in the original estimate. Accord- ingly, the increase will be permanent, and it will not require any extra contribution to keep it in existence.


If there be an accumulation of funds and it is contemplated bringing in a new scheme, would it not be possible to increase the benefit over and above the amount now proposed?


I do not think it would be possible now to give more than 11s. under the present arrangement, but I hope when the permanent scheme of uniform insurance is brought in it will be possible to increase the benefit altogether.

Question put, and agreed to.

Bill accordingly read a second time.


I beg to move, "That the Bill be committed to a Committee of the Whole House."

Question put, and agreed to.


On what day?




I hope it is not proposed to take the Committee stage today. No one has any objection to the Bill. We set a very bad precedent during war-time in endeavouring to take a number of stages of a Bill on one particular day, and I do not think we should now follow it. The Committee could be gone through in five minutes on any day the Government like to put the Bill down, and I hope they will not repeat the practice adopted in war-time, one which, in my opinion, is very bad in peace time.


I readily accept my right hon. Friend's suggestion. We will take it on Monday.