HC Deb 13 November 1928 vol 222 cc839-51

Considered in Committee under Standing Order No. 71A.

[Mr. JAMES HOPE in the Chair.]

Motion made, and Question proposed, That it is expedient to increase from thirty million pounds to forty million pounds the limit on the amount, which may be outstanding during the deficiency period, of the advances to be made by the Treasury for the purpose of discharging the liabilities of the Unemployment Fund under the Unemployment Insurance Acts, 1920 to 1927: Provided that after the thirty-first day of December, nineteen hundred and thirty, no further advances shall be made unless and until the amount of the advances outstanding has been reduced below thirty million pounds, and thereafter the amount of advances outstanding at any time during the deficiency period shall not exceed thirty million pounds." (King's Recommendation to he signified.)—[Sir A. Steel-Maitland.]

The MINISTER of LABOUR (Sir Arthur Steel-Maitland)

The object of the Bill, which it is hoped to found on this Resolution, is well known, and it is quite clear also from the Memorandum that has been published explaining the nature of the Financial Resolution. I understand that the general desire of the Committee is that the points of substance should be discussed on the Second Reading of the Bill, for which Thursday next has been set apart. The Resolution, however, is necessary as a formal stage, and therefore it would he, I understand, the wish of the Committee if I merely formally moved it to-night.

Mr. T. SHAW

I think the Minister might have given us a little more detail, but I must congratulate him on having for the first time come before the Committee with a request for money the necessity for which was not based on the general strike. Evidently the general strike has been worn out. He wants credit to the extent of £10,000,000 entrusted to his Department on, I suppose, as solid a basis as he had last year for the Bill which he introduced founded on calculations that by this time we should have 750,000 unemployed and have almost wiped out the deficit. When the Minister asks for an extra £10,000,000 credit, he ought to give us some idea of how the debt has been contracted, and when it was contracted. He might have told us what the debt was when he came into office, how much it has grown since he came into office, and how much it has grown since last year, when he introduced that Bill with elaborate statements and actuarial reports of such an extraordinary character that I think every one in the House, with the exception of himself, knew how futile it was to talk of them being based on any reasonable assumptions. Certainly everybody on this side knew they were so utterly wild that no responsible Minister ought to have submitted them. We ought to know whether the Ministry is entitled to ask the country to give it another credit, and whether its dealings with unemployment insurance have been such as to justify it in asking for anything at all.

Let me deal with the extraordinary position disclosed in this Paper. According to this the Minister has succeeded in arriving at the end of his resources so far as the £30,000,000 is concerned. He says that on 9th November the amount advanced was 229,320,000, and that the deficit is growing at the rate of £350,000 a week, and so evidently by this date the £30,000,000 has disappeared. Unless we can look forward to a serious decrease in unemployment this additional £10,000,000 will just about finish when the Government will he going out of office if the Prime Minister's prognostication as to the general election is true. It is a perfectly simple estimate to make. If the £350,000 a week is not increased, and the likelihood is rather that it will increase instead of decrease, more than 30 weeks cannot elapse before it is exhausted.

Thirty weeks will carry us to the end of May. When the Minister is asking for an extra £10,000,000 it is enough to see him out of office temporarily. We want to know whether the Minister is going to make any provision so that if he goes out of office he will not leave someone in the cart with his debts. The Resolution proposes that this £10,000,000 shall only be guaranteed up to the end of 1930. I understand that our Amendment to strike out this date is not in order, but we are entitled to say that the Committee ought to have from the Minister some explanation of this extraordinary state of things. We want to know how it is that all the calculations of last year have gone wrong, how it is that the right hon. Gentleman can come before the Committee after making all these miscalculations, and ask, without any explanation, for an increased credit of £10,000,000. There should be some justification for the right hon. Gentleman asking for credits at all. We have had no explanation. I shall not vote against these credits, because that would be hard upon people who have been innocent all the time. If by voting against these credits we should be voting against the Minister's action on unemployment I should not hesitate about it. The Minister will get this Resolution tonight. I shall not vote against it, but I think we are entitled to a plain statement as to why the Government find themselves in this position and why all their calculations have gone wrong. Owing to these wrong calculations the unemployed will have to suffer.

Mr. ERNEST BROWN

I wish to ask the Minister one question. All those who have been watching the growing roll of unemployment will have been expecting some such Resolution as the one which we are now discussing. I want to know whether any calculation has been made or any samples taken dealing with the last nine months which will enable hon. Members on the Second Reading to come to a conclusion as to whether these actuarial calculations will be modified by the 19th of April after the new regulation of 30 contributions for two years is applied to the permanent working of the scheme? If any large number of men fail to secure benefit because of the full operation of the Act of last year, will that number going off the live register as regards receiving relief affect the actuarial calculations as regards the solvency of the Fund? Have the Minister and his Department, during the transitional period of the last nine months, made inquiry, either at any particular exchange or of all the exchanges, or any sample investigation of cards produced, which would give them any estimate as to the number of men who will cease to draw unemployment pay when the 30-contributions date arrives in April next? I hope the Minister will be able to tell us Something in preparation for Thursday, so that when the Debate takes place we may be in some position to give a reasoned vote on this Financial Resolution. I assure the Committee that this question is agitating the minds of local authorities, boards of guardians and parish councils in all the necessitous areas in the country, and I expect that this £10,000,000 will be found to be all too small an estimate.

Mr. HAYDAY

The Minister, no doubt, in the Debate on Thursday, will make a statement., but, with regard to the present debt of the Fund, namely, £29,320,000, I would like to know whether in part that is made up of interest charged upon the loan by the Treasury. The White Paper shows that the amount so advanced was £29,320,000. Does that figure include the accumulated interest charged on the money drawn, and, if so, to what extent? Upon the answer to that question much will depend. If it is that it does not in any part represent interest, I would like the Minister to be prepared to tell us what is the amount of interest that has been charged against the Fund since March, 1921, when powers were sought for the first drawing upon the Treasury up to an amount of £10,000,000, followed in July of the same year by an extension from £10,000,000 to £20,000,000. Interest has been accruing, charged by the State, for money that is lent to meet unemployment obligations, at Bank rate, covering the period from early in 1921 up to the present time, varying in amount according to the amount allowed to be drawn and the amount that has been met when the unemployment figure was less, and there was some slight surplus represented by contributions.

The matter has become so involved that, while it may be said that it should not be debated at any length on a Money Resolution, yet there are one or two points in regard to the financial aspect that cannot be discussed in a general Debate. No doubt on Thursday next we shall be able to debate such points as the cutting out of benefit of many thousands in order that the £30,000,000 point may not be reached; and, as my right hon. Friend says, next week will see the £30,000,000 limit reached. If that £30,000,000 is represented by some millions of interest, it certainly seems to me the Government ought to consider very seriously whether on Thursday they will not say that, as this is to meet a national emergency, the interest ought not to be a charge inflicted on the future contributions of employers and workmen, but that money ought to be advanced free of interest. I feel that if my own party had thought of that aspect of it the possibility is that an Amendment to cut out any question of interest being charged upon the amount drawn from the Treasury might have been in order, because it did not increase the charge on the Treasury in the sense of drawing on the amount. I should like the point cleared up, because ever since 1921 we have done nothing but temporarily patch up. There has been no serious attempt to secure a permanent scheme. You tried it last year. All your calculations have gone west. It is regrettable that they have, but to my mind it is more serious that we should be confronted with a Money Resolution of this character, and I am particularly interested to know to what extent the Treasury has fleeced the fund by charging the bank rate of interest during a national emergency of the character that we have been going through.

Mr. STEPHEN

I want to ask the Minister whether he intends to have legislation this Session which will continue the transition period in view of the very large volume of unemployment. I can scarcely congratulate him on bringing forward this Resolution, because I am convinced that it will be utterly inadequate, in view of the volume of unemployment and in view of the necessity for the unemployed being treated much better than they are at present. The Minister is pledging himself that the financial arrangements will require to be reviewed in 1930. I am inclined to think he is as optimistic with regard to the additional amount of money he is asking for to-night as he was when he put upon the Statute Book the measure of last year. I should like him to give us an indication whether there is going to be a continuance of the transition period in order that we may know what we have to expect on Thursday and also to suggest to him that between this and Thursday he should consider that, in view of these millions of people, he should have the courage to ask for a sufficient sum to give a greater measure of justice to the unemployed than is given at present.

Mr. KELLY

I should like the Minister to explain why the Government have chosen to limit this period to 31st December, 1930. What calculation has made them come forward with that particular date? Again why have they chosen this figure of £10,000,000 and why are they burdening industry, particularly in view of their many pledges on other occasions, with this further charge that they are imposing upon it? In view of the present position of unemployment, why could they not come forward with a grant of this amount? I should not be satisfied unless the money was given free of interest, nor do I think that that would be anything for which to thank them. This money should have been paid over without even calling upon the Insurance Fund to repay it. I wish also to ask why, seeing that they have already burdened industry with a charge of £29,000,000—[Interruption.] Evidently, there are some hon. Members in this House who do not suffer from unemployment, but those coming from Yorkshire, at any rate, ought to have some regard for the unemployment problem. I wish further to ask why, in view of the many representations which they have had from employers' federations as to the burden which the previous loan of £20,000,000 placed upon the industry, the Government are now accentuating the position by coming forward with a proposal of this kind? Will the right hon. Gentleman tell us whether they gave any consideration to the question of making a grant of this kind without making any demand for the repayment of the principal or for the payment of interest? In view of their statements as to their desire to ease industry in respect of the burden of rates, it seems strange to impose an added burden upon it as a result of the loan which they are now making.

Mr. GILLETT

I should like, in the first place, to say, with all due respect to the Minister in charge, that I do not understand how it is that we should not have the presence of the Financial Secretary to the Treasury when a Motion is put down dealing with the financial aspects of this matter. The point which I wish to raise is a purely financial one and it ought to be answered by the representative of the Treasury. I do not mean to imply that the right hon. Gentleman the Minister of Labour cannot answer it, but the point that I wish to bring forward concerns those who are connected with the finances of the country. I desire to protest against the proposal that this money is to be raised by loan. You have instituted a scheme of insurance for the purpose of providing for those who are out of employment. Without wishing to make any criticism as to whether the arrangement is bad or good, it is obvious that somebody has made a mistake, or that the circumstances are such that the scheme has proved to be ineffective. What arc you doing to-day? You are saying that the money required for the relief of men who are out of employment has to be raised by loan. Boards of guardians have come in for a great deal of criticism for being in exactly the same position and for raising money by loan. We have always understood that to a certain extent hon. Members opposite are inclined to condemn them because they have been forced into that position. But this country is not in the same position as Poplar, Chester-le-Street, and other places. It is quite possible to raise £10,000,000 by taxation. My view is that this is thoroughly bad finance. To increase a debt of £30,000,000 by the sum proposed to be borrowed in order to pay expenses that really concern the current expenditure of the nation, is not sound finance. The Chancellor of the Exchequer brings in a Sinking Fund in order to reduce debt, and he will claim at the end of March that his Budget has balanced, while, on the other hand, he will have borrowed a sum of £10,000,000. The financial position of the country will have been presented in a wrong light, because by the raising of a loan he will be paving for what ought to be met from the current expenses.

I protest against this as being thoroughly bad finance. If it had been done by a Labour Government there would be protests from all the financial interests among hon. Members opposite, but they dare not protest on these purely financial matters, when it is done by a Tory Government. We have seen other things connected with finance that hon. Members opposite swallow from the present Chancellor of the Exchequer which they would never have taken from a Labour Chancellor of the Exchequer, without strong protests. I am sorry that the hon. Member for the City of London (Mr. Edward Grenfell), who is the only Member opposite who supports the old principles of finance, is not here to make his protest. No Minister of the Treasury has dared to come here tonight to justify these methods of finance. It reminds me of the methods of those ladies who divide the money in their purses, so much for housekeeping and so much for rent, and when they borrow a bit from one portion they put in a slip of paper: "Five shillings owing to this account." That is what the Government are doing. They borrow money and then put in a slip of paper to say that £10,000,000 is owing on this account. Later, the Chancellor of the Exchequer will say that his finances have balanced, and he has a small surplus, and that he is putting £50,000,000 or £60,000,000 aside for the Sinking Fund, and he will not mention that he has increased the liability by £10,000,000—a liability which vitiates the whole of our national finance. The scheme is thoroughly unsound from the financial standpoit.

Sir A. STEEL-MAITLAND

I will say a few words in reply to the specific points which have been raised, particularly in view of the fact that the general principles of the Bill are to be debated on Thursday. In regard to the question as to the failure to secure benefits under the new conditions, and how far it will affect the actuarial calculations in the Bill, in the near future or next year, I think the effect will be negligible. We have not taken it into calculation for the coming year. As regards the sample investigation a question has been put down for to-morrow, and I will answer then. The hon. Member for Nottingham West (Mr. Hayday) asks whether the interest is included in this sum. The interest charged by the Treasury, which is something under 5 per cent., has always been included in the sum. I cannot say off-hand what proportion of the sum is interest and what is deficiency.

Mr. HAYDAY

Will the right hon. Gentleman he able to give it on Thursday? The point is bound to arise as to how much of the £29,000,000 is represented by interest or other charges.

Sir A. STEEL-MAITLAND

I will see if I can get the information.

Mr. E. BROWN

I think the amount is given in the accounts of the Unemployment Fund, 1926.

Sir A. STEEL-MAITLAND

That is nut the point of the hon. Member for Nottingham. What he wants to find out is how much has been paid back to the Treasury in interest since the year 1921. If I can get it I will give the figure to the hon. Member. The hon. Member for Rochdale (Mr. Kelly) asked: Why 1930; and why £10,000,000? The answer is that we want to take a figure which will carry us over one or two years but such that the House itself should be able to keep control of the unemployment question. When the figure of £40,000,000 is reached we should have to come to the House again. On each occasion that the amount has been extended it has been by a sum of £10,000,000 in order to offer a reasonable margin in which to operate.

Mr. KELLY

Have you had deputations from the Employers Federation with regard to this matter within the last year?

Sir A. STEEL-MAITLAND

No. I am just wondering whether the Parliamentary Secretary has while I was away; I understand that he has not. The hon. Member for Finsbury (Mr. Gillett) dealt with the purely financial aspect and it would lead to a general Debate if we went into the question of the 30 contributions.

Mr. STEPHEN

Are you going to make any change?

Sir A. STEEL-MAITLAND

That is really a question for debate next Thursday.

Mr. STEPHEN

I only want a simple yes or no.

Sir A. STEEL-MAITLAND

If the hon. Member could tell me precisely what is going to be the course of unemployment in the near future he would earn a character for a degree of foresight which I think he cannot claim at the moment. The hon. Member for Finsbury is of the opinion that it is wrong to finance this fund by way of loan, and he adduced the instance of the Poor Law authorities. It is wrong to finance by loan when the likelihood of repayment is small, but in this case there is no question that this fund can be kept solvent. That is the reason why it is justifiable to finance it in this way.

Mr. BUCHANAN

I congratulate the right hon. Gentleman on his lecture on foresight. He was the one person who attempted to make a forecast of events. It is never too late to learn, and I am glad to know that he has taken his lesson to heart. When we ask what is going to happen to the men 'and women on this fund, it is not sufficient to say that we have to try and forecast what is going to happen in regard to unemployment. Before we can discuss whether a sum of £10,000,000 is adequate or not, we must know what is going to he the trend of legislation in the future.

I want to submit that it is not possible to discuss this £10,000,000 adequately unless you know whether the Act is to remain the same or is to be altered. We ought to have from the Minister an answer to the perfectly courteous question that has been put to him. I hope he will not adopt the tactics which he adopted on the last Bill with so little success. Whenever he was cornered he mixed temper with humour which sometimes was not too good. I hope for the sake of his party, which has not done too well in the country, that he will not make it any worse and that he will try to answer the question.

If we are to know whether the £10,000,000 which is now being asked for is sufficient, we must know what Bill is going to he worked. It will not be sufficient if the Bill remains in its present form. I take it that the Minister has no intention in April next of allowing men now claiming benefit under the transitional Clauses then to claim benefit. I take it that by June or July of this year the whole of this £10,000,000 will be gone. The Minister is making provision for it to last two years, but according to the calculations we have got in this White Paper of £350,000 per week it will be gone by July. Yet he anticipates that by April all the mining community, all the shipbuilding, engineering and cotton community who are now more or less benefiting from the transitional period, will be knocked off and that mass who are now drawing benefit and consequently adding to the debt will not then be drawing benefit. He is to-night basing his £10,000,000 on the fact that he intends in April not to continue the transitional period at all. Otherwise he would not have asked for £10,000,000 which is due to expire before July and which on his own figures can but last till June.

It shows the folly of introducing even this Motion. We ought to have the whole Bill of last year recast. You cannot do it properly unless the financial part of it is built on a proper basis. The Bill of last year was built on a rotten foundation. The financial part of it was not sound from start to finish and the Committee that reported did not know a thing about the actuarial basis of insurance or they would never have introduced it at all. Instead of this temporary patching up with £10,000,000 for a problematical six months or two years, we ought to have had a completely new Bill altering the financial basis of unemployment and putting it on a proper basis, saving the Minister of Labour from this constant cheeseparing partial method which he has to adopt. Possibly he might not have brought this Motion forward had it not been for the General Election in May and that he wanted to save his party's fortunes, though even this will not be sufficient. We ought to have had a completely new Bill. No Tory can look at the present Bill and say that it is anything like a decent one. No Tory can defend it, and the Conservatives have always held themselves to be the custodians of British finance. I am surprised at the Minister making himself such a cheap jack for the rest of the Cabinet: His sense of dignity should have made him demand decent treatment for the unemployed. While he castigates the hon. Member for Camlachie (Mr. Stephen) for forecasting what is to happen, he himself has been about the wont prophet, as to what will occur under this Act, of any Minister of Labour.

Mr. BATEY

When the Government decided to bring forward this proposal, did they consider going back to the proposals of 1925? We spent some time in the House over the Unemployment Insurance Bill in 1925, when the Government took power to increase the State contribution to the unemployment fund. Would the Minister tell us on Thursday what would have been the position of the fund it the Government had carried out their proposal? What would have been the state of the fund if the Chancellor of the Exchequer, in the Economy Bill in 1926, had not decreased the State contribution from 6¾d. to 6d. per person? The estimate then was that the Treasury would save £5,500,000 each year; so that in two years there would have accumulated just the amount of money that the Minister now seeks power to borrow.

Mr. MAXTON

During the discussion of the Amendment on unemployment in the Debate on the Address, each Minister in succession appealed to the Horse not to make the question of unemployment a party question. I have not a great deal of sympathy with that point of view. I think unemployment must necessarily remain a party question until the problem is settled and the treatment of the unemployed is decent and adequate. If the Government really want the House to act as a united body in the discussion of this problem, the Minister must take the House completely into his confidence, and give the maximum of information and not the minimum This White Paper is a very scrappy contribution. The paper from which the hon. Member for Leith (Mr. E. Brown) quoted, I understand is the most up-to-date statement of the condition of unemployment insurance in this country, and. that is a statement for the year 1926. I remember that, in the course of the discussion of the last Bill we were able to extract two White Papers, or at least one, from the Minister, after battling night after night.

If the Minister wishes to treat the House decently, let him take the House into his confidence and put into our hands, before the discussion of the Bill starts all the information he has about the outgoings and income of the Fund and all the statements which have led him to the conclusion that this demand for £10,000,000 is necessary. I hope he will do so in advance, so that the House may be in a position to criticise the Bill adequately, instead of being in the position of last year, when we were well into the middle of the Committee stage before the Minister would give us any little bit of information—and even then it was only given in the most grudging fashion.

Question put, and agreed to.

Resolution to be reported To-morrow.