HC Deb 10 July 1925 vol 186 cc767-91

Considered in Committee under Standing Order No. 71A.

[Mr. JAMES HOPE in the Chair.]

Motion made, and Question proposed,

That, for the purpose of any Act of the present Session relating to insurance against unemployment, it is expedient to authorise the payment, out of moneys provided by Parliament— (1) as from and after the fifth day of April, nineteen hundred and twenty-six, of a contribution, towards unemployment benefit find any other payment to be made out of the unemployment fund, not exceeding the amount determined by the Treasury to be approximately equivalent to the sum which would be produced by weekly contributions paid in respect of the two periods mentioned in the following Table at the rates therein specified in relation to those periods, respectively: —


During the extended period (that is to say, the aggregate of the deficiency period and a further period thereafter ending on such date as the Minister of Labour may by order prescribe, not being a date later than the first day of the insurance year commencing next after the end of the deficiency period) or, if the extended period does not expire on. or before the fir6t day of January, nineteen hundred and twenty-eight, during the period ending on that date:—

Description of persons in respect of whom contribution is payable. Rate.
Insured persons being men 8d.
Insured persons being women 6d.
Insured persons being boys 4⅝d,
Insured persons being girls 4⅜d.
Exempt persons being men 2½d.
Exempt persons being women 2¼d.
Exempt persons being boys l¼d.
Exempt persons being girls l⅛d.
During such time as the extended period continues after the first day of January, nineteen hundred and twenty-eight: —
Insured persons being men 7d.
Insured persons being women 5½d.
Insured persons being boys 4⅛d.
Insured persons being girls 3⅞d.
Exempt persons being men 2d.
Exempt persons being women l¾d.
Exempt persons being boys 1d.
Exempt persons being girls ⅞d

(2) Of the increased contribution towards unemployment benefit and any other payment to be made out of the unemployment fund which will become payable if the Minister of Labour, with the concurrence of the Treasury at the end of the first quarter of the year nineteen hundred and twenty-six, or at the end of any subsequent quarter of any year, declares that the average of the amounts of the advances made by the Treasury to the unemployment fund outstanding on the last day of each week in the quarter, together with the interest accrued up to the said last day in respect of advances exceeds the amount of the advances outstanding on the thirty-first day of December, nineteen hundred and twenty-five, together with interest accrued up to the said thirty-first day in respect of advances, and the rates of the contribution, payable out of moneys provided by Parliament, are consequently deemed to have been increased in respect of the quarter in the case of employed persons being men by one penny, and in any other case by one halfpenny.—(King's Recommendation signified.)


My right hon. Friend, the Minister of Labour had, until this morning, intended to move this Resolution, but I think that the Committee, knowing the circumstances and the duties which keep him away, will excuse his absence, at any rate during the first part of the proceedings. Therefore it falls to me to endeavour to explain, as clearly as I can, the financial provisions of the Bill which we introduced the other day, and which are explained in the Actuary's report. Many of the estimates are necessarily hypothetical, depending as they must do on uncertain and on unknown considerations. For instance, we cannot forecast with anything like mathematical certitude what would be the state of the Insurance Fund at any given date as the state of the Fund depends on the amount of unemployment which prevails at that date. Therefore many of these calculations are founded on uncertain and unknown contingencies. The Bill which we introduced the other day, the proposals of which we explained very fully, contained proposals involving a charge upon the Treasury, and, that being so, it is necessary to obtain a financial resolution from this House before Treasury sanction can be obtained for this proposal.

I will now explain as clearly as I can what is the broad effect of the financial provisions which we propose to make. The effect of the Bill is, in a sense which I am going to describe, to impose a charge upon the insurance fund of £10,000,000. I mean that if things remain as they are we should save the £10,000,000 on the basis which was anticipated under the Bill of last year. The Committee will recollect that the £10,000,000, which is itself a hypothetical figure, is based on the assumption that if there is no Bill the number of persons struck off the register under the Act of last year will be something between 200,000 and perhaps a maximum of 250,000, and therefore, were there no Bill, the fund would be saved an amount which we estimate as nearly as we can at £10,000,000. Against that £10,000,000 we have, as the Committee know, imposed certain limitations of benefit in the Bill which we introduced the other day. The two classes with which we deal are persons who are affected by the extension of the waiting period from three days to six, and those who may be affected by the exercise of the discretion which the Bill seeks to give the Minister. We estimate that the result of those two provisions, which are of course a limitation of benefit to somebody or other, will, upon a register of 1,300,000, amount to £6,500,000. Therefore the net increase, so far, upon the fund is the difference between the £10,000,000 referred to a moment ago and the £6,500,000 to which I have just referred. The net increase of charge, therefore, is a sum of £3,500,000.

Now the Bill proposes to reduce the contributions of employers and employed by 2d. and 2d. respectively. I will not complicate the matter by giving the reduction for men, women and juveniles, and so for the purpose of description when I am talking of reduction, unless I otherwise specify, I mean the reduction of the bulk contribution by employers and employed. The reduction in these contributions of 3d. and 2d. will we estimate cost the fund £6,800,000. So therefore the total increase in the charge upon the fund comes to £10,300,000 which is made up of £6,800,000 represented by the cost of the reduction in contribution and of £3,500,000 to which I referred a moment ago. The Financial Resolution proposes that additional money shall be obtained from the, Treasury which will give a sum, to what extent I will in a moment explain, to make up what I may call the deficit. The Financial Resolution, proposes that that additional money from the Treasury shall be an additional 1¼d. in the case of men and an additional contribution of ¾d. in the case of women, this will give us a relief to the extent of £2,200,000 a year and it dates from the beginning of the next financial year.


That is for men, women and children.




What is the amount for men alone?


I will give the hon. Member that figure before the end of my statement. The Financial Resolution in paragraph 2 on the last page contains what looks like a very complicated statement. Shortly it means that every year there is to be a calculation made as to whether in any quarter the deficiency fund in that quarter exceeds the amount at which it stands on the 31st December next. If in any subsequent years, therefore, the deficiency fund at the end of any quarter is higher than it was on the 31st December next, the Treasury will give a further contribution of 1d. It is estimated that this additional contribution will, if it is paid, yield approximately £1,700,000. That is, therefore, a contingent contribution, contingent upon the deficiency fund being greater than the basic point of December 31st next. Assuming, as we must assume, that that further sum will become payable, the Committee will observe that the total increase of Treasury contribution is the £2.200,000, to which I have referred, plus £1,700,000 contingent contribution, which I have just spoken of, making in all a total increase of Treasury contribution of £3,900,000 a year.

The fund is making a deficit at present of something like £8,000,000 a year. If there were no Bill and if we took no action, we should have saved £10,000,000. Therefore we should have been £2,000,000 to the good. But, for the reasons which we discussed the other day, we find ourselves unable to take that course. I will give a picture of the balance sheet of these proposals. Owing to the powers that we seek with regard to the waiting period and the discretion of the Minister, on the credit side find against those two items we put a figure of £6,500,000. We are getting an increase from the Treasury for the 1¼d and ¼d. which amounts to £2,200,000 a year, and we have this additional contingent Treasury contribution of one penny, which gives us an additional £1,700,000, or a total of £10,400,000. On the other side, on the debit side, we have of course to meet the loss consequent upon the reduction in the contributions. That amounts to £6,800,000. Therefore the net saving is £3,600,000.

On a figure of 1,300,000 unemployed, the fund will continue to run into debt to an amount not less than £4,400,000 a year, which is the difference between the £8,000,000, the present estimated annual deficiency, and the £3,600,000.

An hon. Gentleman opposite asked me to differentiate, in the £2,200,000 increase in Exchequer contributions, between men. women and juveniles. I have now obtained the figures. Men, it is estimated, will come to £1,750,000, that is at lid., and women and juveniles at ¾d. come to £450,000, making £2,200,000 in all. I think that all figures are complicated and I detest them, but I have endeavoured as clearly as I can to explain these figures. I will gladly, as far as I can. answer any questions arising upon them. But, for reasons I have given, these figures are necessarily hypothetical, because the conditions on which they depend are unknown. I hope that the Committee will give us the resolution and enable the Treasury to give us the grant which it is prepared to give.


I think every Member of the Committee will understand the absence of the Minister, and will certainly be pleased if the result of the work in which he is engaged is a favourable result. All we can hope is that his efforts may be crowned with success. The hon. Gentleman has been lucidity itself in comparison with the legal language that one finds in this Resolution. I do not pretend to be a lawyer, but I do pretend to understand plain English, and I have wondered whether it would not be possible to simplify this language and put it into terms that the ordinary man may read and understand. It has required the hon. Gentleman's plain language to let the light into the Resolution for many Members of the Committee. Let me just criticise the attitude of the Government with regard to the powers they are now seeking and the methods they are adopting, I would have liked to know rather more about this deficiency. It would have been interesting, for instance, to know what deficiency the Labour Government found and what deficiency they left, also what deficiency the Conservative Government found and what deficiency they now have. That would have been interesting as a comparison, in order that the country might understand exactly what has been taking place. We have not had the statement so far, but perhaps we shall get it by question and answer.

I am disappointed that the Treasury has not been bolder. This method of dealing with the problem is a tinkering method with which we cannot agree. We hold that it is the duty of the Treasury, dealing with money provided by all the inhabitants of the country, to act in a more generous way towards this fund, and that a substantial burden should be taken immediately from industry and placed on the broad back of all the taxpayers of the country. We shall certainly not vote against the Treasury being even as gently generous as it has been. I agree that it is very difficult to make calculations and I would be the last person in the world to complain against the attitude of the Government when it says that hypothetical conditions cannot be correctly estimated. May I, in the gentlest way possible, call attention to the fact that I once stood at the Box opposite and was asked to be very precise. I was asked for accurate estimates of everything possible and impossible. I am now trying to show an example of the generosity which the Treasury might show when I say that I do not expect impossibilities from the hon. Gentleman. Certainly if I did expect that, judging from the results up to now very likely I should be deceived. He who expecteth little is less likely to be deceived than he who expecteth much from the Treasury.

The position of the fund itself ought to be explained in greater detail. We ought to know rather more about what will take place if the figures drop, and I hope they may do so, to 1,200,000 or 1,100,000. We might have some declaration from the Government as to the continuance of its policy. I know that certain provisions are made in the Financial Resolution for the year 1928. Is it impossible to tell us, before we vote on this Resolution, whether this is the end of the policy and whether the Government intend to continue to legislate on the lines of these financial proposals, or whether it is the intention of the Government to change their insurance policy and to modify the provisions of this Resolution at an early date? I am sure the hon. Gentleman will do his best to give us the fullest information. The financial statement which he has made shows again in the clearest possible light what is to take place in regard to the unemployed. Whatever the Treasury may do, the unemployed have to lose £6,500,000. That is quite definite and clear. We cannot discuss the provisions of the Bill itself, but I would not advise my friends to divide against this Financial Resolution although I believe the provision to be utterly inadequate, and cheeseparing on the part of the Treasury. It does, however, mark a move forward on the part of the Treasury. It marks an appreciation of the fact by the Treasury that the situation is growing worse and that it is necessary for the nation as a whole to step in. The step that the Treasury is taking is a very timid and very hesitating one, but I am not going to attempt to check the Treasury from making any advance at all. We shall have to rely on efforts in the future to improve, the whole method, and if possible to get another proposition from the Government of a wider and deeper and more generous character than this. Taking into account all the imperfections of the scheme, nevertheless I advise my friends not to divide against these proposals.


The financial proposals made from the Treasury side in regard to unemployment seem to be based upon what I may call the oscillation between two funds. In other words, one fund is supposed to react upon the other; and, where necessary, one fund or the other is expected to make up the balance. It seems to me that any Government taking a serious view of the situation should depend on something more substantial in their financial arrangements. No man in private business could hope to run his affairs on a basis like that and escape bankruptcy. The only two fixed things in the speech which the Parliamentary Secretary has made are first the constant factor of the unemployed man, and second, the taxpayer, but in the regard to the real finance of the problem of unemployment, these proposals in no way lay a basis for dealing with that question. It is no use talking about saving. You cannot save in present circumstances. What you are doing is to transfer the burden from the nation on to the local areas. You bring those burdens on to the local rates and the parish councils, and it seems to me the only thing we can look forward to is running into debt. It is easy to talk about the nation running into debt and having a way out over the general taxpayer, but what is the position of the areas which are already suffering from high rates? Take any industrial area in England, Scotland or Wales, and you will find every one of them in difficulties through this continued disregard by the Government of their national responsibilities.

You cannot get a proper basis of finance outside the national basis for dealing with a national question. The moment you begin to transfer your national responsibilities you only place them on the local bodies. If you take a coal area or a steel area, leaving out the shipbuilding areas for the moment, you find in every one of them that the council rates are constantly going up in relation to unemployment. The Government seem to make their calculations as if unemployment were caused by the flux of trade, and the idea is that all they require to provide for is a rise in trade giving employment or a fall in trade causing unemployment. I do not make the remark in any insulting sense, but that seems a very stupid method of dealing with the question. If we had only to work out our financial arrangements with the idea that unemployment was governed by the flux of trade we could accept the sliding scale without, much criticism. But you have a permanent factor in creating unemployment, and that is the displacement of men by improvements in methods of production. That is an ever-increasing factor month by month, and it produces a body of men who can never hope to get-back into employment, because of displacement, and not because of the influx of trade. This financial proposal is insufficient if we keep that factor in view. If we compare the position in the big rolling mills for steel in this country to-day with the position five years ago, we find there has been a displacement of men of almost 35 per cent. These are mostly highly skilled men who are getting rather grey in the hair, and they represent a serious factor. This is not the type of man who is down and out, or in and out or a man on whom you can cast the aspersion that he is merely seeking for the dole.

There is no provision in these proposals for that type of unemployed man. It is no use hon. Gentlemen opposite trying to put a man like that, who has always stood face to face with his work and has been able to do it, into the position of the crushed bootless man whom you want to see in the street as something you can easily subject to the policeman's baton. The Government has to bear this in mind, that, just as that type of man is thrown out of employment, just as his numbers increase, you are not going to get the, starvation idea, that you get with the ordinary casual "in-and-out," and it is for this Government to try now—there is plenty of time yet—to avoid that becoming a serious body of unemployed men. I would like the Government to try to show some human relationship in finance towards those who at least have always done their service when the opportunity of service has been given them. We have never in this House had from the Tory Government any basis that goes to show that they recognise this man. They are always trying to make it appear that this is something which is going to go up today and down to-morrow, and that if you wait a few months it will be better, but the permanent unemployment is there through our advances, because we are still in such an undeveloped, disorganised state in industry that we cannot absorb what we should be able to absorb oven without the improvements in production.

Commander WILLIAMS

I think we are all agreed with a good deal of what has fallen from the hon. Member for Springburn (Mr. Hardie). We realise as clearly as anyone—it does not matter whether you are an employer or a worker —that where you have large bodies of men who are out of work, and who are of a skilled character, it is of real importance to the State that those men should be got back into work as soon as possible, because every man who has even the most elementary knowledge of these men must know that they are depreciating in value while out of work, and, after all, we are all of some value to the State, it may be much or it may be little.


I thought the hon. Member for Springburn (Mr. Hardie) was getting a little wide of the Resolution, and I think the argument of the hon. and gallant Member for Torquay (Commander Williams) deals rather with unemployment policy generally. The present question is only as to the Treasury contribution towards the working of an existing system.

Commander WILLIAMS

I fully appreciate that it would not be in order to expand this, but I was simply using it as an illustration to show the Government is justified in coming with this Resolution and making a call on the individual taxpayer to endeavour to keep these people in work at the present time. I will not, however, carry it any further, but I would like to ask the hon. Gentleman in charge of the Hill one question. Up till the present point there has been a definite proportion in the amount which the State has paid in this matter, i believe that the proportion of the State at present is, roughly, a quarter of the whole. Under the Resolution that we are taking to-day, we are reducing by £6,800,000, as I understand it, the amount of contributions coming in from the employer and the employed, and we are increasing the Stale contribution by, I think, something over £2.000,000. I would like, before we pass this Resolution, to have a clear statement from the Government as to what the effect of this change in proportion will be, and as to what proportion the State will be contributing in the future. because we are more or less responsible here for finding this money sooner or later, and we are responsible, on the whole, to the taxpayers to see what it is. Therefore, it ought to be made clear, in the change we are bringing about to-day, as to what exactly is the new proportion the State is going to carry. We have heard a great deal from the other side, and a good deal from the right hon. Member for Preston (Mr. T. Shaw), that the Treasury are rather mean in this matter.


Very mean.

Commander WILLIAMS

I would like to see as much done as possible, but when you consider this from a wider point of view—you cannot go into it very deeply from the one side, at any rate—but when you consider it from the taxpayers' point of view as a whole, the Treasury has to look after their money, and has to guard it carefully and efficiently. If they do not do that, the effect is going to be bad on trade all round, and create more unemployment. It is a question in these matters, however generous we might like to be personally, of remembering clearly that the mere taking of money from the Treasury means that the taxpayer and trade and industry have to find that money, and that the more we take the more difficult it is for industry to carry it. Therefore, I would like to urge on the Government, in considering these questions, to try to be as generous as they possibly can, but at the same time to remember that any generosity on their part is at the expense of other traders, however much all of us would like to help the unemployed themselves.


In considering the amount which the Treasury should give to this purpose, we have, of course, to consider where the balance is being drawn from, and we must remember that it is only possible to pass this meagre Estimate to-day by taking over £6,000,000 from people who are out of work. It is not a question of driving from the register people who ate committing frauds. The amount of fraud is very small. There is fraud in all classes and in every kind of financial transaction, as we know, but that is not the point. The point is that this Estimate is only possible because many people are going to be driven into a state of oven greater hardship by a reduction of their benefit. We must bear that in mind, and I think it is utterly unjustifiable in the present state of the finances of the working people. The hon. Member for Springburn (Mr. Hardie) mentioned one case, and I have seen many of these people, naturally, as a Member of Parliament. Take the case of a man who has been working all his life, and is now told that he cannot any longer hope to find work. That, in itself, is a sufficiently discouraging thing to say, but when you tell him you will put him out of benefit, although he may have paid for many years, because he is done for, that is an announcement to him that, morally and financially, he is to be thrown on the scrap-heap, and that produces a feeling of bitterness which may have social results of a disastrous nature.


The hon. and gallant Member is discussing Clause 3 in the Bill.

Captain BENN

I am anxious not to trespass beyond the proper bounds, but it is difficult to consider what the Treasury should give without considering what is the total balance that has to be met and where the rest is coming from. However, I will not pursue it further. The hon. and gallant Member for Torquay (Commander Williams) spoke about the burden of this on industry, and said we must remember that this money from the Treasury is only money from ourselves, the taxpayers, and that if you increase the grant from the taxpayers you thereby lay a burden on industry. That is true. We are not individually finding this money. It is being found by those whom we represent, namely, the taxpayers, but the Government's scheme in this and in the Pensions Bill—because the two are interlocked, and the finance of one cannot be considered without the finance of the other—is laying the burden on a very sore spot. It is putting the burden in respect of unemployment not on the broad back at all, not on the man who may have the money, but on the man who is struggling to maintain the trade and commerce of the country, and I think the hon. and gallant Member's criticism would have been better directed to the Government than to those on this side who complain of the scanty character of this scheme. The Estimate is the Government's redemption of a promise made to relieve the aggregate burden in respect of widows' pensions and unemployment, and, in our judgment, it should have been made very much wider, because the aggregate of that burden is, in the opinion of Members, not on this side alone but on the other side as well, a very crushing and dangerous one to industry at the present moment.

There is a third point I would like to put to the hon. Gentleman, to whose very able exposition of this matter I would like to pay my tribute. Is it not a fact that we are not merely dealing with un-covenanted benefit? The argument has always been that if a man has not paid for it, if, in the words of the Minister, he wishes to get his benefit on credit in respect of contributions he or others may pay later, we are entitled to say we will impose conditions on the payment of the benefit. I may be wrong, but I am under the impression that by increasing the waiting period, you are depriving people of the standard benefit, I am not very expert in this matter, but it does appear to me that, whereas last year the man who was in full benefit was enabled to get that benefit at any time after three days' delay, now he will not get it until after six days' delay. And it is not an eleemosynary grant, but the right of the man to standard benefit, which is being curtailed in order that the Treasury shall not ask for more than £2,000,000 or £3,000,000.

All this unemployment is very largely the result of the War, and we are hoping to get paid some of our expenditure in the War from our Allies, and particularly from Germany. In an increasing degree, the payment, of these debts and the payment of the reparation will create unemployment in this country. It is arguable whether it is a good thing to take this or not. Some people think it is a bad thing; other people think that to replenish our Treasury, if it can be done, by free goods from other countries, is a good thing. There are two views. On the other hand, it is perfectly clear that such replenishment, if it is to go forward, must create unemployment in the industries affected. We have seen it already in coal and in ships. Does not the Government realise that to the extent unemployment is created by the receipt of reparation and debts, the unemployed have a direct claim in equity upon the funds which so accumulate in the British Treasury? There may be a balance inuring to the benefit of the general taxpayers, but the first claim is with those whose employment is lost on account of the payment of these debts.

I think we stand to get, in a full year, about £27,000,000 under the Dawes Report. What we shall get from the French and Italian debts, we do not know; the correspondence has only just begun. But £27,000,000 to the Treasury and £2,000,000 in this Estimate make a very wide gap, and I do not at all feel alarmed that the unemployment created by the payment of these debts should make an increasing demand upon the Treasury, because I believe it is only in that way that you can correct the hardship inflicted by the receipt of these payments, if you consider it desirable to take them. To these observations I would ask the hon. Gentleman if he would direct a few remarks when he replies. I do not know whether the point has been raised before, but it has a very direct bearing upon this subject. We are in an unfortunate position as Members of Parliament, as we are not allowed to. move for the grant of any money, and, therefore, we have to take, with what grace we can, whatever the Front Bench offers us in any particular case.


Like the last speaker, I am rather disappointed with the very meagre contribution that the Government intend to make for the obvious deficiency that is bound to increase rather than decrease. If there is one thing that emerges from this Financial Resolution, and the Bill of which this will form a part, it seems to me to be the uncertainty in the minds, of the Government as to the tendency of unemployment in the coming months and the new year. There is no certainty in their minds that there is going to be any real improvement at all, and, because of their own incapacity to do anything towards alleviating the unemployment problem, it does seem to me that the very hesitating, halting and meagre fashion in which they are dealing with this great financial and social problem, justifies a protest from these benches. There is no Member on this side, or on any side, who would, of course, vote against this Resolution, but the Government, as the hon. and gallant Gentleman has just said, ought to have been more generous in carrying a fairer portion of the general unemployment burden than this Financial Resolution permits them to do. The hon. Gentleman who spoke from the opposite benches said that the Government need to be very careful before they indulge in the expenditure of large sums of money, with which we are bound to agree, but when he referred to the question of placing a further heavy burden upon industry when dealing with these questions, he failed to discriminate between payments made by the general taxpayers and burdens imposed upon the industries of this country.

After all, here is a national problem, which should be met in a national way out of national finances, and no great industrial area should be called upon to pay more than its fair share of the burden as compared with—shall I say? —the residential areas. But finance of this kind, in the nature of things, does impose unfair burdens upon industrial areas, whereas residential areas are almost excluded from any payment whatsoever. Taxation, in the nature of things, Is derived from income, whether that income be derived from industrial sources, rents or interest, or from whatever it may be received. And while the general taxpayer, with an income derived not from the ordinary industrial activities, could well afford to meet a fairer share of the burden, many industrial concerns would be in very low water if they were called upon to pay more than they are called upon to pay at this moment.

While the Government are relieving employers and employés of £6,800,000 a year, they are deducting from the income of industrial areas, by reducing the amounts to the various recipients £6,500,000 a year. Therefore, they are not relieving, practically, the industrial areas of any of the burdens that they are bearing at the present moment. That, I submit, is an unfair means of dealing with a problem of this kind. Necessitous areas are already carrying more than their fair share of this national burden, and I think the Government could well have afforded to have been much more generous in their contribution towards the Unemployment Fund than they are going to be under the terms of this Financial Resolution. For that reason, I suggest that, while we cannot afford to vote against this Financial Resolution, we are bound to utter a protest on behalf of those individuals who are certain to suffer, and, secondly, on behalf of industrial areas. I think the Government ought to have been much more generous in dealing with this problem, as under the Bill the industrial areas are called upon to pay a much larger share than they ought to be called upon to do. The Financial Resolution is most unfair in its incidence in meeting the needs of the problem in the districts.


I should like to make a short contribution to the discussion on the financial aspect of unemployment, and of the situation generally covered by the present Financial Resolution. This Resolution recognises for the first time since the passing of the Unemployment Act a certain principle, which is the assumption by the State of at least one-third of the sum total of the contributions towards the Fund. The deficiency in the Unemployment Fund at the moment is a consequence of the contributions of the employers and workmen being too small in proportion to meet the liabilities of the Fund, or, rather, by reason of successive Parliaments failing to recognise the full responsibility of the State in its financial relationship to the Fund. The deficit at one time was put at 15½ millions. Let us, however, go back to the period of about 1920. The State took full responsibility for paying the donations of the ex-service men who were unemployed, who had been demobilised, who had had no opportunity of qualifying, and for whom no Act was available, for the Act of 1920 had not yet been passed. The State, I say, took full responsibility of meeting the financial obligations of these men.

12 N.

Early in 1921 the State passed over to the Unemployment Fund, under the Act of 1920, all these ex-service men for whom they had accepted full responsibility. That placed a great financial burden upon the workmen and the employers who had contributed, and who had created a surplus under the old Unemployment Act. The surplus then acquired was used to take over the State's financial responsibility for the ex-service men which they had accepted. The State never had met its proportion of the financial responsibility of unemployment. It might have been one-fifth or one-fourth of the total. So you had it, a dead-weight, a financial responsibility, thrown upon the joint contributors to the Unemployment Fund. I am assuming that the accrued income from these courses was not only insufficient to meet the current obligation, but also ate up the reserves accumulated from 1911. The reserves all went. The State still did not accept its full financial responsibility. What the. State did, when the Fund became insolvent in itself, was to come to this House upon three occasions and ask for power to borrow from the Treasury certain amounts in order to meet their responsibility without in any way increasing their own direct contribution or the contributions of the employers and workmen. At one time they took power to borrow up to 10 millions, then up to 20, then up to 23, then up to 30. They have never yet had occasion to draw upon more than 15½ millions.

The point I am making I hope may be taken into consideration by the right hon. Gentleman when he sets up the Committee of Inquiry which, I believe, will include an inquiry into the financial relationships of this matter. It is, that if we assume the State had accepted one-third responsibility for the financial obligations of the Fund from 1920 there would actually have been a surplus to the credit of the Fund to-day. I assume that, I say. I have not called for the figures. If the State had accepted, on the assumption I am making, a one-third partnership responsibility instead of their being a deficiency there would be a surplus on the funds. There would thereby be no need for saving the 6½ million pounds as proposed. There would have been no need, therefore, for us to be confronted to-day with the desire of the Department to get the Fund on a sound basis and to wipe out the 8½ millions. I should like to suggest the possibility, in the near future, if such facts as I have suggested reveal themselves at the inquiry, that the Government should come to the House and ask permission to gauge their maximum responsibility in the past, wipe off the deficiency out of the unpaid contributions from the State, and remove many of the evils inserted in the Acts. There would be in that case no need to curtail the outgoings or to restrict the qualifications of the recipients. If the State appreciates these points this, I think, can be done, as they recognise in this Money Resolution their liability for approximately one-third of the contribution of the State.


This is a Resolution arising out of the Bill presented dealing with the unemployment question, and it arises solely because of the miscalculation of the Government in the early part of the year. I believe the present Financial Resolution has been rendered necessary because of the speech of the Chancellor of the Exchequer on the introduction of his Budget. There was a miscalculation when the right hon. Gentleman promised he would introduce the Widows' and Orphans' Pensions scheme, and suggested he would place no burden on industry. He based his calculations on the assumption that unemployment was going to fall to about 800,000. That calculation has been entirely wrong. Hon. and right hon. Gentlemen opposite stated in their Election speeches, posters, and literature —and I have almost come, to the conclusion that they were foolish enough to believe it—that a Tory Government did mean stability of trade and a check upon economic developments, which I am persuaded that up to the present no Government has been able to touch. I believe that is why the unemployed have to be robbed of about £6,500,000. The State come along with a meagre proposal to grant £2,000,000 from the Exchequer in support of this proposal, and there are few local authorities in the country who will not have cause to curse the Government for the proposals which were originally made by the Chancellor of the Exchequer, and which this now is attempting to cover up.

In my own constituency, with a vast amount of unemployment, with probably one in three of the wage-earners unemployed, with rates at 27s. in the £, this thing will only be made possible by the fact that many men who should come to the State for relief are going to be driven back to the sorely distressed local authorities for the means which the State ought to supply. Although one cannot very well vote against this proposal, I want to protest against the meagre way in which the Government are treating this matter. As a matter of fact, their method of dealing with unemployment, if it were not so tragic in its consequences, would be comic. It would take W. S. Gilbert to do justice to the Government's proposals for dealing with this problem. I want to protest with all the strength I have at my command against the additional burdens which are going to be placed upon the local authorities in my district and in other districts in South Wales where we are being snowed under with a vast amount of ever-increasing unemployment. I want to protest against the fact that the proposals of the Government are only going to be made possible by the local authorities having tremendous additions to their almost already back-breaking burdens.


I rise only for a minute or two to ask one or two questions of my hon. Friend opposite who is going to reply. The Committee will agree that before we part with a Resolution of this kind, we ought to have some definite information regarding the present position and the future of this fund, and also, as far as possible, regarding the scope of the financial inquiry which the Minister hopes to undertake. It is perfectly clear to us on this side of the House, and I hope to all hon. Members, that this Financial Resolution can only be put into practice at the risk of very great hardship to considerable numbers of people in this country, because, plainly, the benefits are governed by the general conditions of the fund, and by the changes that we are compelled to make from time to time, which they in their unemployment and distress necessarily find it very difficult to understand. The truth of the matter is that this morning we are engaged,—I do not use the phrase in any way offensively—in the doctoring of the Unemployment Insurance Fund to meet an exceptional state of circumstances which at the time of the initiation of the fund no one expected.

This fund has never had a chance, first because large numbers of good lives, so to speak, for the purpose of unemployment insurance, were excluded, and secondly by reason of the fact that there descended upon the fund at a comparatively early stage of its career a great volume of unemployment which, at all events at that period, it could not carry. So, by successive stages, we have gone through the process of altering and adjusting the contributions and modifying the fund until we have arrived at this Financial Resolution, which I am not surprised that my right hon. Friend the Member for Preston (Mr. T. Shaw) finds it difficult on the technical side to understand. Let us notice what the Financial Resolution proposes. First of all, the idea is that there should be reduced contributions at some later date from employers and employed. Secondly, it contemplates a substantial reduction in benefit to a considerable number of people. Thirdly, as regards what I may call a kind of exceptional deficiency, above a level to be taken at the end of this year, the Treasury is to pay in an extra contribution. And there are other proposals. That summary in itself must appeal to hon. Members as a very doubtful financial proposition. Here is a mixture of contradictory elements in finance, very difficult to follow, and all of them bearing upon their face the marks of expediency and of almost any device which a Government is driven to adopt in an emergency of this kind.

But do let us try to understand exactly what the Ministry mean with regard to the position of this fund. As I understand the Parliamentary Secretary to the Ministry of Labour, if unemployment is at the rate of 1,300,000 people, then, under the proposals of this scheme, the deficiency in the Fund will continue to accumulate at the rate of £1,400,000 per annum. If, on the other hand, there is an intermediate figure of 1,200,000 people unemployed, then, under the proposals now made, there will be no deficiency. The situation will just about balance. But, if there is an improvement to the extent of 1,100,000 people unemployed, then, as I understand it, the Fund will benefit in a reduction of the deficiency to the tune of rather more than £3.000,000 per annum. That appears to be the state of affairs. The Minister has made it perfectly plain that, of course, we have proceeded in the realm of hypothesis as regards the numbers of unemployed, but, if the gloomy view be taken, then undoubtedly the deficiency in the Fund is not arrested by the present proposals, and, for all we know, other proposals will be necessary later in which some further inroad will be made, either on the rights of the people unemployed, or by the withdrawal of concessions to employers and employed in contributions, or by some other device.

All that leads me to the only suggestion which I will venture to put to the Committee this morning. Surely, the Committee will agree that on the financial side of these proposals we are in a very unsatisfactory position. The Government themselves have related this scheme to other proposals of social insurance on which they are embarking at the present time we are on this Resolution confined within very narrow limits, and I am not, therefore, justified in making any more reference to them—and they have also indicated that they propose to make an inquiry into the financial position of this fund. Much of the difficulty turns on this fact, that in certain classes of social insurance—in the new widows' and orphans' pensions scheme, in old age pensions, in other devices of that kind, and now in this proposal—you have here and there, but only here and there, a definite fund capable of actuarial measurement, under which you can say that, according to certain circumstances, definite benefits will be provided; but it is only to a very limited extent that we have that arrangement at the present time. What have we generally on the other side? This is a very good illustration of the case. We have no real fund at all in the strict sense of an actuarial proposal under a definite superannuation, insurance, or other scheme. What really exists is a Treasury account. It is not disputed that the rights of the contributors are safeguarded—I trust the State will never let them down—but what is suggested is that this is not really a sound financial scheme.

The whole burden of investigation is in the direction of setting up proper actuarially measurable funds, if I may use that awkward phrase. Where there is a Treasury account we get merely a periodical measurement of what they call the equivalence of the contributions on the one side and the benefits payable on the other. The outcome of all that is, that in certain circumstances that may enure to the advantage of the State, that is, the State might be getting the benefit of conditions in a fund which benefits, strictly speaking, ought to go to the contributors. On the other hand, in difficult times the question that arises is what contribution the State is going to make, and it becomes a competition in this House between what we press the Government to do and what the Government-invites the employed or the employers to do in a scheme of this kind. Can that be considered a satisfactory state of affairs? If we are going in for insurance, do let us try to get down to some comprehensive basis, and although I do not profess to speak this morning for anybody much more than myself, I believe there is a large measure of agreement in this House that if we are going to inquire into the financial mechanism of this scheme we ought to go right down to the root of the whole basis of this and kindred proposals.

Let us have some definite fund which we can measure, and under which we will be able to say to the people, "We will not meddle with and tinker with and alter your benefits from time to time in the way we have been compelled to do in the past. Here is something in which you have more than a. kind of concession or equity that is extended to you, something in which you have a legal right, as you would have a real right in contributing to an actual fund." Financially I believe that to be in the interests of the State, but, not less, I believe it to be strictly in the interests of the insured persons themselves, and when the Minister replies I hope be will be able to say that the Government are not going on any longer with Treasury Accounts and the equivalence of benefits and contributions, but are going to try to set up something which we can defend in this House and which will protect, amongst others, unemployed people.


In view of what I think I may describe as the common agreement in all parts of the Committee that the Committee 6hould agree to this Resolution I propose to apply myself only to one or two of the very helpful suggestions made in the course of this discussion. I think I agree with almost everything the right hon. Gentleman the Member for Central Edinburgh (Mr. W. Graham) has said. Nobody can pretend that a scheme of finance which contemplates a deficiency of something like £4,500,000 each year is satisfactory, and it is not less repugnant to my much less instructed mind than to the financial mind of the right hon. Gentleman. My right hon. Friend the Minister of Labour announced the other day the setting up of a committee to inquire into this problem under three heads: First, administration; secondly, policy; and thirdly, finance. Might I appeal to hon. and right hon. Gentlemen in all parts of the House, and particularly to hon. Members opposite, to give the benefit of their experience to this committee, either individually or through the associations to which they may belong? What we desire is exactly what the right hon. Gentleman the Member for Central Edinburgh desires, namely, that we shall put this scheme, if we can, into a position where it can be defended rather than criticised as it is, and rightly criticised, in so many particulars. It may be said, "Why did not you set up this committee, why did not you decide upon your financial pro- posals before you introduced this Resolution and this Bill?" The answer is this—and it is really the answer to a good deal of the criticism that has been made this morning—that unless we bring in a Bill we have to deprive over 200,000 insured persons of benefits amounting to approximately £10,000,000 a year.

If we did nothing, so far from being involved in these financial criticisms, we should be £2,000,000 a year to the good, and it is because we think that we cannot allow these 200,000 or 250,000 people to come off the register in October that we are bound to act now, bound to act in advance of the assistance which we hope to get from this Committee. That, I think, deals with the point which was raised by the hon. Gentleman the Member for West Nottingham (Mr. Hayday). He is anxious, as we are all anxious, about the financial position of the fund. He made certain suggestions and comments which I Have not the slightest doubt the committee will take into consideration. The hon. Member for Don Valley (Mr. T. Williams) raised, if I may say so, perhaps the most difficult question in relation to the whole matter, the ultimate incidence of these charges. I find it quite impossible to answer his question, and I doubt if anybody else can answer it. In some cases, probably, the charge falls upon the consumer. Where the employer can pass it on to the consumer no doubt he does so, and the ultimate charge falls on the consumer. In other cases where, owing to the stress of competition, foreign of otherwise, he is unable to do so, probably the industry itself bears the whole or a considerable part of the charge. But he must forgive me if I decline to express, as in fact, nobody can express, any opinion generalising about the ultimate incidence of the burden.


And if the hon. Gentleman tried I should have to stop him.


The hon. and gallant Gentleman the Member for Leith (Captain Benn) invited me to give my views about reparation and the Dawes annuities, and the effect upon them of the finance of this scheme. I must again, for the reason which you, Mr. Chairman, have given, totally decline to do so. It is a, question of which I should require long notice, and I do not think it would be strictly relevant to the proposals before the House. The right hon. Gentle- man the Member for Preston (Mr. T. Shaw) asked me a specific question to which I will give the exact answer. He asked me about the amount of the outstanding Treasury advances to the unemployed fund in February, 1924, when the Labour Government came into power. At that date it amounted, roughly, to £11,500,000. In October, 1924, when they went out of office, the amount was about £5,000,000. At the present time the amount is about £8,500,000, but in attaching importance to those figures it is very relevant to bear in mind that during practically the whole time that the Labour Government were in power the rate of benefit was 15s. in the case of men, with corresponding figures for women and juveniles. Under the Act of last year it has been raised to 18s. and certain other alterations were made. I now ask the Committee to pass this Resolution.

Commander WILLIAMS

Will the Parliamentary Secretary answer my question as to the amount of the Treasury contribution?


Broadly speaking, the ordinary Treasury contribution, which is now slightly over one-third of the joint contribution of employers and employed, will become about half from April next, year, and between one-third and two-fifths from the beginning of 1928.


These figures are very confusing, and I would like the Parliamentary Secretary to tell us what is the proportion of the whole which is paid by the State. When the hon. Member says the State is paying one-third of what the employers and the workers pay, it is rather misleading. I think it is about one-fourth.


Yes, I think it is somewhere about one-fourth, but if the right hon. Gentleman asks me for these figures by putting down a question, I will give him the information, but I have not got them in mind at the moment.


In order to make this point clear, can the hon. Gentleman tell us approximately what is the proportion? In 1920 it was about one-third of the total. It has since been given as one-fourth, and I believe the new proposal makes it approximately about one-third.


I think that is right.

Question put, and agreed to.

Resolution to be reported upon Monday next.