HC Deb 22 June 1921 vol 143 cc1473-8

Order for Second Beading read.

The MINISTER of HEALTH (Sir Alfred Mond)

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

The object of this Bill is to meet a situation which has arisen owing to the increased cost of the administration of health insurance societies and insurance committees. There has been a progressive increase owing to the effects of the War—cost of postage and other costs of administration—since 1919. The position was last reviewed in January, when a Departmental Committee went into the question and reported in favour of raising the present figure of 4s. 5d. to 4s. 10d. per annum as the allowance to approved societies. This figure has been arrived at after very careful examination. The Committee examined returns from over 600 societies and branches and interviewed witnesses representing over 9,000,000 insured persons. The 4s. 10d. includes all postal charges, including the latest charges which have been put in force by the Postmaster-General. The Bill has been approved, I think, by those who represent approved societies and by the Treasury. The details are of a very technical character and I do not think I need trouble the House with all the rather complicated calculations of how these figures are arrived at. I should only like to point out broadly one or two important matters. One of them is that the societies will contribute in future 6d. instead of 4d. to the cost of Insurance Committees, and that the approved societies will get 4s. 10d. instead of 4s. 5d. I am very glad to be able to say that a method has been found by which this change will be effected without either diminishing the benefit to the insured' persons or increasing their contribution, and also incidentally the alterations which are taking place are going to effect a saving of £300,000 to the Treasury.

The reason why it has been possible to achieve this result is due to some extent to what I can only call a happy accident. The Act of 1918 established a fund, called the "Central Fund," which is made up of a fixed Exchequer contribution of £150,000 a year, and every society contributes yearly a levy amounting to an eighth of its Contingency or Reserve Fund. The object of the Fund is to make grants to societies which are found on valuation to be in deficiency, and liable either to a levy or a reduction in the normal rates of benefit. It has accumulated to over £2,000,000, and the valuation of the approved societies has come out so satisfactorily that it has become evident to those who have gone into the matter that calls upon the Fund will be few in number and for relatively small sums. In view of the accumulations of interest probably no more money will be required for the Fund for a great many years, in any event. The Departmental Committee which investigated the matter therefore felt justified, being entitled by the Regulations to suspend the levy on the Society's Contingencies Funds in diverting this money from the Contingencies Fund to the Benefit Funds, which will enable the increase from 4s. 5d. to 4s. 10d. per member to be met and also the Benefit Fund to be debited with a further 2d. per member in respect of the cost of insurance committees without in any way interfering either with the present contribution or the benefits. I think I ought to state that the present figure of 4s. 10d. is a tentative figure fixed for two years, and, of course, subject to revision when costs come down. The Exchequer will be relieved of its annual contribution of £150,000 to the Central Fund, as long as the levy on the society's contingencies fund is suspended. That is obviously only fair. It would be unreasonable that the Exchequer should be the only party contributory to the fund if societies are no longer required to contribute to it. That is really the scope of the Bill, with this further addition, that it is proposed to reduce the membership of insurance committees. Experience has shown that the present membership of many insurance committees is really too large for a practicable working body, and it considerably adds to the administrative expenses. The committees at present have a membership of from 40 to 80, and it is proposed now to make considerable reductions in these numbers. The committees will thus be more workmanlike, and there will be an actual saving on travelling and subsistence allowances of £4,000 to £5,000 a year.

As far as I understand, there is general agreement on the subject amongst those most interested in the question, namely, the approved societies, as to the amount of the administration allowance which has been arrived at. I know soma question was raised of making the amount still larger, but I think the general view is that it is a reasonable increment. I hope the House will give the Bill a Second Reading in order to prevent a very unfortunate thing happening, namely, deficiencies occurring in the administration accounts of the approved societies, with a resulting levy on the insured workers.


There is only one question I should like to raise on the Bill, and that is with regard to the administration allowances. The Bill proposes to make it possible for the administration allowances which a society may be allowed to expend per member per annum to be raised from 4s. 5d. to 4s. 10d. That proposal is made, I understand, on the recommendation of a Departmental Committee which reported some time ago, and presumably took into consideration all the circumstances of the case then existing. Since then the position has been altered, and in particular it has been altered in respect of the postal charges. A very considerable amount of the expense which is incurred by approved societies is in respect of postal charges in sending out circulars to members and getting them back. If 4s. 10d. was the appropriate figure which this committee made its recommendations it is of necessity not the appropriate figure to-day. I have been unable to get any figures to express the additional amount per member which will be caused by the very large increase in the postal charges, but I should think it is very considerable. Has the right hon. Gentleman considered the altered situation since the committee reported? He must admit that the position has changed very materially since the report was made, and if he desires to make up to the societies the additional expense to which they have been put in recent years he will need to make a further addition, in order to cover them from the additional postal charges which have been put upon them in the last few weeks.


I understand that this Bill is operative for two years only, but I cannot find any provision in the Bill which stipulates that it comes to an end after two years. It seems to me that the present time is very inopportune to increase the expenses allowance of any committee. We are to-day endeavouring to get wages down, and a violent attempt is being made by the Government to force the wages of the coal miner to something like the pre-War level, and yet we are suggesting that insurance committers should get practically a 10 per cent. increase in their expenses allowance. I hope the right hon. Gentleman will take steps to ensure that this is a very temporary allowance and that it comes to an end at the earliest possible moment.

9.0 P.M.


I am afraid that if my hon. Friend who has just spoken had any experience of the work of approved societies he would complain that the allowance for expenses provided in the Bill is altogether insufficient. Experience of the working of the National Health Insurance Act has shown that had it not been that many of the friendly societies, and trade unions had supplemented the fund for administration out of their ordinary fund the administration of the Act would have collapsed long ago. I speak with experience of the Act from the beginning. My right hon. Friend is to be commended for giving effect to the Report of the Departmental Committee, and although those of us who have been connected with the administration of the Act from the beginning did not think that the amount recommended was sufficient we very gratefully accept the Bill as being some relief of the drain put upon outside funds. I hope the Bill will be treated by the House as non-controversial, and that it will only not get its Second Reading tonight, but that the further stages will be taken very speedily. When one realises that as the result of the War money values are less than half what they were in pre-War times, that the staff of clerks who have had to administer the Act has necessarily received increases of salary to meet the increased cost of living and that postage has doubled in cost, we must see that it has been a very serious matter for the approved societies. The approved societies feel very grateful to my right hon. Friend for so speedily adopting the recommendations of the Departmental Committee.


The hon. Member for Aberdeen (Major M. Wood) raised the question of postal charges. I would like to point out that the increased postal charges were announced in the House in a speech by the Lord Privy Seal on the 19th April, 1920, when he said: Charges for postcards and printed papers will be raised. The inland rates for these cannot be put up until the foreign rate is increased, and the foreign rate depends upon the decision of the International Congress which meets at Madrid in the autumn. We propose, however, to take power now to increase the charge for postcards to 1½d. and for printed papers proportionately, but not to bring these changes into force until after the Conference."—[OFFICIAL REPORT, 19th April, 1920; cols. 81–82, Vol. 128.] That increase has only been made recently, but as it was announced when the Budget speech of 1919–20 was delivered, the Departmental Committee took that additional cost into consideration and mentioned it in their Report. Therefore, my hon. Friend may be assured that there is no cause for anxiety on that score. I was glad to hear the words of my right hon. Friend (Mr. Hodge), who has large practical experience in the administration of this Act. It is undoubtedly essential unless contributions are to be increased and the benefits diminished that this step should be taken. The hon. Member who spoke before him asked about the two years' limit. There is no Clause dealing with it, because it will be dealt with by administrative measures. This Bill provides that the Ministry may make Regulations diverting funds from the purpose to which they are applied now to another purpose. Therefore, by Regulation, which I anticipate may possibly come into effect after two years, it would be possible to rescind these provisions and return the contributions to the fund from which they are now being temporarily diverted.


I desire to express gratification on the introduction of this Bill. I put a question to the Government on this point as to their intention to take action, and received a reply that this would be done, and on behalf of those friendly societies which I represent I thank the right hon. Gentleman.

Question, "That the Bill be now read a Second time," put, and agreed to.

Bill read a Second time, and committed to a Standing Committee.