HC Deb 28 March 1930 vol 237 cc783-800

Considered in Committee under Standing Order No. 71A.

[Mr. ROBERT YOUNG in the Chair.]

Motion made, and Question proposed, That it is expedient to raise to fifty million pounds the limit on the amount of the advances to be made by the Treasury to the unemployment fund under section five of the Unemployment Insurance Act, 1921, as amended by subsequent enactments, which may be outstanding during the deficiency period."—(King's Recommendation signified.)—[Miss Bondfield.]

The MINISTER OF LABOUR (Miss Bondfield)

To-day I must direct the attention of the Committee to the question of the financing of the Unemployment Insurance Fund, which is the biggest thing of its kind in the world and to which all parties in this House have contributed both in regard to its benefits and to its defects. It is a matter in which undoubtedly the mere passage of time and experience produce the necessity for a very serious study of the problem presented. That is inseparable from the development of the Fund. I want to-day to give the Committee a plain statement of facts, which will, I hope, lead to a helpful and interesting discussion. The purpose of the Motion before the Committee is to authorise the introduction of a Bill to allow the Treasury to advance out of the Consolidated Fund any sums required for the purpose of discharging the liabilities of the Unemployment Fund during the deficiency period up to a limit of £50,000,000. It is within the knowledge of the Committee that the present legal position is that the Unemployment Insurance Act, 1928, limited the amount of borrowing powers to £40,000,000, and that, also, this amount automatically falls to £30,000,000 on the 31st December next unless we pass legislation in the meantime.

The events leading up to the present position require to be stated as briefly and as clearly as possible. In June, 1929, when this Government took office, the Fund was in debt to the extent of £36,870,000, and the balancing point at that date—and by balancing point I mean the point in the register at which the income balances the expenditure—was one million on the live register. At that date, the live register was standing at 1,132,281. The Exchequer contribution to the Fund was less than one-third, the transitional period had been continued for another year without provision being made for the necessary finance of that period. By the Act of 1929 which raised the Exchequer contribution to one-third of the total, the annual revenue of the Fund was increased by£3,500,000. That was the very first thing which I had to do in order to ensure that nothing should happen in the period during the adjournment, of the House that would face me with a position of bankruptcy before the House met again in November. It was an act of justice to the Fund as well as a matter of common-sense and expediency to carry over the summer months.

By the Act of 1930, which was introduced into this House in November, 1929, the cost of transitional benefit was placed upon the Exchequer alone, and that added £10,500,000 to the annual revenue of the Fund. So that I have to take the responsibility and the credit for having added to the income of the Fund an annual increase of £14,000,000. Against that, the policy of the late Government was to decrease the revenue of the Fund to the extent of £10,000,000 annually. It would not be fair to leave the matter just at that. The Opposition would be entitled to say that it is only one side of the story. Let us examine the expenditure side. The last Government reduced the expenditure of the Fund. To the extent that that was done by reducing benefits—well, I make them a present of it. I admit at once, and I am prepared to take credit for it, that we have not reduced the expenditure of the Fund, but we have increased the expenditure of the Fund in this matter by increasing certain benefits. When the last Government left office, the revenue and expenditure, as I said just now, balanced at a 1,000,000 persons on the live register, but even taking the additional expenditure provided it the new Act of 1930 and taking into account the increase of the income on the other side, the Fund can now finance a live register of 1,240,000 applicants. In that matter, I would like to quote what I said in the House at the time in order to demonstrate that the estimate presented to the House was an under statement rather than an over statement of the effect of the transaction. I said on 25th November: Under this arrangement, the income and the expenditure of the Fund will balance at the point of 1,200,000 persons on the live register. 1 wish that to be perfectly clear; it will balance at the point of 1,200,000 persons on the register. Everybody hopes that the numbers of the register will be a great deal less, but my business is to make it absolutely certain that I have the money with which to pay these people if they are on the Fund and that we do not again run into a deeper bog than the one from which we have just emerged."—[OFFICIAL REPORT, 25th November, 1929; cols. 1106 and 1107, Vol. 232.] The Committee will agree that by increasing the revenue of the Fund by £14,000,000 and by raising the balancing point by 240,000 the finances of the Fund have been substantially strengthened since the present Government took office.

I want to come to the present position of the Fund. The amount borrowed at 22nd March was £37,680,000. The payment of six months interest, about £915,000, is due on the 31st March. It is, therefore, quite clear that the statutory limit, assuming that the figures do not experience an abnormal decrease, is bound to be reached before Easter. The Committee will properly want to know why there has been this abnormal increase in the register that has caused the balancing point to be so unsatisfactory from the standpoint of the indebtedness of the Fund. I have made a very careful analysis, and I want to submit two or three sets of figures, which are only approximations in some respects, but which will indicate to the Committee the trend of events. Nothing in the case of the live register before Christmas gave any inkling of the phenomenal rise which has taken place since the turn of the year. Every previous year for which figures are recorded had shown a steady fall in the first quarter. As may be seen by going right back to 1922, and, tracing the figures up, that is the natural fall of the figures. The Opposition may say, and a great many people have already said, that the phenomenal rise in the figures is due to the operations either of my administration or to the new Act, or to both combined. I want to make it quite clear that that would be an entirely erroneous conclusion. The new Act only came into operation on the 13th March and the actual practical working of it will take some months to demonstrate the exact effect upon the live register. I have, however, certain figures which I will give to the House.

There are three sources from which new entrants can come upon the live register. There is what is known as the two months file. That is to say, those who are on that file for various reasons, some administrative reasons and some legislative reasons, which have been altered by the effect of the new Act, will come upon the live register. The other source is known as the dead file— a file still retained at the employment exchange, of books which are more than two months old. The other source is the accumulation of books at Kew. When the local Exchange wants to weed out the dead file, they send the books to Kew. Therefore, the books at Kew will be of an earlier date than those on the two months file and the dead file. I will give certain figures, but I would remind the Committee that they are tentative figures, and I do not stress them as accurate, because we have not had time to get the necessary returns, except in some cases by telephone and in other cases by incompletely averaging sample figures.

So far as we have been able to ascertrain, from the two months file, the administrative changes account for, roughly, 5,000, and from the dead file some figure up to 5,000, but certainly not in excess of 5,000. From the books at Kew, none whatever. The total, therefore, accounted for by the administrative changes from the two months file and the dead file represents 5,000 to 10,000 new names on the live register. For my purpose, I will take the outside figure of 10,000. The administrative changes are very largely bound up with the setting up of the boards of assessors last August, and the effect which they have upon the two months file and the dead file. The legislative changes, so far as we can trace them at present, appear to have put something like 2,000 upon the live register from the two months file and about 5,500 from the dead file, and from the books at Kew something between 27,500 and 32,500 applicants, making a total of between 35,000 and 40,000. I will take the top figure of 40,000, which I am sure is the outside figure. Add to that figure 10,000, and we get a total of 50,000 at the outside that can be attributed to either administrative or legislative changes. That represents those who have been out of touch with the employment exchanges so long that the employment book has been treated in the way that I have described.


In order to save misconception, may I take is that that is the number up-to-date?




It may increase later on?


Yes. Mat is the figure up-to-date, but it is a purely tentative figure. Closer analysis may readjust the totals. The Committee will remember that, in the actuarial White Paper and in my speeches last November, I pointed out that I contemplated that there would be at least 80,000 brought upon the new register as the result of the changes. Up to the present time we appear to have matured about half that number. Further weeks may, and possibly will, show an increase in the figures. How are these being dealt with? It is important that some of the exaggerated ideas should be at once dispelled. I notice that some newspapers are always looking for sensations. These sensations do the country a great deal of harm when they are based on the misuse of figures and when they represent the position as being very much more serious than it really is. The situation in regard to the figures may be analysed, but the Committee will understand that, as the new Act has not been in operation more than a few days, I have not been able to get a complete return. I hope that in the next fortnight I shall be able to give the House, in the form of a White Paper or in some other convenient form, a more careful analysis of the changes. It is most important and necessary to watch the figures as we go along.

In the Press there was a tremendous outcry for a little while about the enormous numbers, thousands, who were rushing to the exchanges, and of the queues that were waiting outside to get on to the register. I have been provided with an illustration from the only district in the country, so far as I have been able to gather, where the sensationalism occurred. It occurred in a district in the Midlands. This is the extent of it, in connection with a group of Employment Exchanges. At Bilston, there were 879 applicants, not all on one day, as a direct result of misrepresentations of the Act in a weekly newspaper. A statement was made in that paper which seemed to indicate that all that people had to do was to register in order to get their money. I do not know why this district appears to have been particularly affected by that statement, but it so happened that it was so affected. Of the 879 applicants at Bilston, 150 have already been dealt with by the court of referees. It must be understood that none of these applicants are on benefit. Of the 150 who have been dealt with by the Court, 146 have been disallowed as not being genuine claims. At Wiilenhall, there have been 500 applicants, the court have already dealt with 100, and 100 have been disallowed. At Tipton. there have been 374 applicants, and 28 have been dealt with and 26 disallowed. At Dudley, there have been 500 applicants, but they have not yet had a court sitting to hear the cases, and therefore I cannot give the result. At Brierley Hill there have been 700 applicants and the court of referees have already dealt with 175 and have disallowed 145. At Walsall, there have been 300 applicants, already dealt with 20, disallowed 20. The number of cases heard in the courts totals 473, and 437 have been disallowed as being claims which have no justification in fact.

These figures are interesting as showing that to a certain extent there is an artificial inflation of the figures which are before us at the present time. I do not wish to put that very high, but I do not think that we can in any way assume that it represents the difference between what would he normal and what is undoubtedly abnormal in the figures. In other words, as far as one can roughly analyse the situation, taking industry by industry and noting the causes of industrial depression in those different industries, we find that it divides itself very much Eke this: the increase in the figures on the live register since the Government took office to the present time can be divided, broadly, into an increase of 50,000 due to administrative and legislative changes, and of 200,000 which would be the normal increase due to seasonal causes, leaving about 250,000 which must be regarded as abnormal for this time of the year and it is that increase, of course, which it seems to me we have to regard with the greatest possible concern. The Opposition may also say that the increase is due to uncertainty in the safeguarded industries. I want to clear that out of the way.


I must make it clear that we cannot have a debate on the policy of Safeguarding.


I apologise. I was only going to give the figures, but hon. Members can get them for themselves.


Will it not be in order, Mr. Chairman, to point out certain fluctuations in particular industries, although some of them may happen to be safeguarded industries?


It would not be in order for hon. Members to deal with the question of Safeguarding, and the statements which have been made in regard to Safeguarding. The question of the policy of Safeguarding does not arise.


But would it not be in order to deal with the fluctuations in particular industries?


I will deal with that point when it arises.


Surely, the number of people employed in any trade is directly relevant to the subject which we are discussing to-day, and, therefore, apart from discussing the principle of Safeguarding, would it not be entirely in order to refer to the number of people in the different industries which have been affected by Safeguarding.


It is my duty to point out that if the Minister of Labour makes any such statement regarding the policy of Safeguarding the Opposition may be entitled to ask leave to controvert it, and that would be wide of the Resolution.


There are two other groups of figures to which I want to draw the attention of the Committee. In the motor vehicle and silk industry groups the increased unemployment since December last is something under 11,000 on the register; that is, the increase in unemployment in these two industries combined is something under 11,000. Therefore, the 50,000 and this 11,000 does not explain away or account for the abnormal increase. We are therefore bound to say, and no one will attempt to refute the statement, that the phenomenal rise in unemployment is due to world causes which have had an immediate effect in this country, the seat of which is to be found in the headlong fall in commodity prices. The position has been aggravated by the heavy unemployment in the cotton industry, and it may interest the House to have two groups of figures in connection with this matter. We have made a complete analysis of the cotton industry. During the whole year there has been a tidal wave of short time. The figures have risen steeply as a result of this abnormal position, and we have this position to-day as compared with the position in February last year. The cotton trade was not happy in February of last year, when the total measure of unemployment was 11.9. That was on the 25th February. On the 24th February this year we find that the figures have risen steeply to 24.2.


Can the right hon. Lady give us the actual figures?


Yes. The total number of unemployed in the cotton trade on the 25th February, 1929, was 66,025, and on the 24th February, 1930, 134,309. Of that number 90,000 are women engages in the textile trade. The importance of these figures is that those who are temporarily out of work or permanently unemployed in the cotton industry are fully paid-up members of the Unemployment Insurance Fund. They are all people who are regular contributors to that Fund and there is no question of their not receiving the benefits to which they are entitled.

Given this position at the moment we have now to consider what is to be done. It is perfectly obvious that the House would not allow the Fund to go bankrupt. There are four courses which I have considered and examined with the greatest care—reducing benefits; increasing contributions, further grants from the Exchequer, and increased borrowings. The benefits paid under the Unemployment Insurance Act have been settled so recently by Parliament that I think it is inconceivable that any Minister could come to the House and ask for a reduction of benefits at this time, and, in any case, I hold strongly that if ever we may have to consider a reduction of benefits it should not be a time when industries themselves are suffering from the depression which exists to-day. When the workers of the country get the benefits which are promised them under rationalisation, increased wages and greater security, then the time may come to reconsider the question of the benefits from the Fund. The only effect of doing so now would be to throw back on the Poor Law Authorities, which are unable to bear it, the increased burden of maintaining the able-bodied unemployed.

There is another factor, which in my opinion is an asset to the country, which cannot be demonstrated in figures but which the House I hope will never forget. Hon. Members on this side of the House will probably remember the days when there was no unemployment insurance at all; when we had to hunt for work and when starvation was not a word to be used as it is to-day in a comparative sense, but in an actual and real sense. Some of us took our place at the head of processions of hungry men, not because we had any great faith in the benefit of processions, as such, except to bring before the eyes of the comfortably fed the awful state of wretchedness and poverty, but because we felt that unless we led them through the streets and into the parks, where they would he safe, there would be no other way but violence and unrestrained action, with unhappy results to those who participated in any riot. We are safe from that to-day, and in Lancashire during this long period of depression it has been largely due to the fact that they have been able to depend on the payments from the Unemployment Insurance Fund. The decrease of benefits, therefore, as a remedy is ruled out.

With regard to increasing the contributions, I would have been quite prepared to come to this Committee and ask for them to reconsider the state of the Fund, but, apart from the fact that it would be premature and that we think that this peak of unemployment is abnormal and in all probability the situation will readjust itself, and unemployment is bound to show a diminution in the near future, there is the outstanding fact that to increase contributions now would be to penalise industry just at a time when it is struggling ever a period of reconstruction, and it would probably result in a postponement of the recovery of industries to a healthy state of normal trade. Therefore, that solution was also dismissed.

There was the question of a further grant from the Exchequer. I have already informed the Committee that the Exchequer has practically doubled its contribution. It has placed the Exchequer contribution on a basis of equal thirds, and it has transferred to the Exchequer the liability for the non-insurance part of the Fund's burden. Frankly, I could not find any reasonable basis on which I could go to the Exchequer and ask for a further direct grant of money. No doubt, in view of the general financial position, even if I had been able to establish this basis my right hon. Friend would have given one of his most emphatic "Noes." I have, therefore, been driven to the fourth expedient. For the satisfaction of the Opposition let me quote extracts from a speech which I made on that subject when it was before the House last year. On 21st November, speaking in criticism of the late Government's policy, I said: There is one other course which the party opposite might follow. They might borrow, despite the fact that this would involve asking the House to extend the statutory limit which they themselves set. This is the course that they have always followed, and I suppose they would continue to follow it to the hitter end. Admittedly, this would benefit the taxpayer, who already receives just under £2,000,000 a year in interest from this bankrupt fund. but would any reasonable man suggest that the right solution of this problem is to add £8,500,000 to the Fund's debt, and £425,000 a year to the interest which it is compelled to pay?"—[OFFICIAL REPORT, 21st November, 1929; cols. 751 and 752, Vol. 232.] Let me correct a misunderstanding for which I am responsible in connection with a sentence in that speech. The Treasury, of course, does not make a profit out of the loan to the Unemployment Insurance Fund. I should have used the word "lender" not "taxpayer." I am glad to have this opportunity of correcting what was an obvious error in that speech. Then on 25th November, I said: There is the way of the late Government, of extending the margin of borrowing powers. They extended it from £30,000,000 to £40,000,000 and then said it was to go back to £30,000,000 at the end of 1930. Having done it once, they can do it again. If you came forward and wiped out the limit of borrowing powers at £40,000,000 and went on borrowing to £50,000,000 or £60,000,000, it would be a dishonest course, because it would be contracting a debt that you saw no possible way of paying off. Therefore I have dismissed definitely from my consideration any question of increasing the borrowing powers of the fund."—[OFFICIAL REPORT, 25th November, 1929; col. 1103, Vol. 232.] That was my opinion then; it is my opinion now. I detest this principle of borrowing; but I find myself in the grip of circumstances to which I have to bow my head. When a circumstance such as this has one in its grip at least it should receive the support of the party opposite, because they, after decreasing the annual revenue of the fund by £10,000,000, decided to borrow up to £40,000,000, with a live register of 1,364,000, while the balancing point of their own fund was only 1,000,000.


Do I understand that the Minister admits that she still holds the opinion that the course she is recommending to the Committee is a dishonest one?


I am coming to that point. After increasing the annual revenue of the fund by £14,000,000 we have decided to extend the limit of borrowing by £10,000,000, with a live register of 1,600,000, while the balancing point is 1,240,000. This is the point that I have been making and it is the only point. I am prepared to take the lambasting which I expect from the party opposite. Let us assume that it is a rake's progress on both sides of the House. At least I can claim that my rake's progress is under better control and has a more definitely temporary aspect than anything which preceded it from the other side. I take this course with the greatest reluctance. I would call attention to the figures and to the difference which is apparent in the state of the Fund now compared with its state in the period that I have criticised. A year before the Conservatives left office the debt was £24,690,000. When they left office it was £36,870,000. They had increased the deficit in 12 months by £12,180,000, and they had taken no steps whatever to increase the revenue of the fund. On 15th March, 1930, the debt was £37,450,000, an increase during the 9½ months of only £580,000.

If I had not taken the steps which I took last November to put more money in the Fund the limit of borrowing powers would have been reached months ago. Therefore, speaking from the standpoint of the financing of the Fund, I claim that this Government has done far more than the last to bring the Fund into a more satisfactory state. It is perfectly true that the debt has been increased because of the exceptional rise in the unemployment figure. Apart from that, every statement that I made last November would have been justified and would have corresponded with the actuarial expectations.

How long will this £10,000,000 last? I am not going to prophesy. I have always taken up the position that it is not possible for anyone to foresee what is going to happen to British industry in the next two or three years. Whatever statement is made can only be guesswork. My business as the custodian of the Fund is to make an arithmetical calculation, and that is all that I propose to give to the Committee. With an average live register of 1,500,000 the £10,000,000 will last until the beginning of 1931. On the other hand, if the live register remains at or about 1,600,000 the £10,000,000 will be exhausted by November next, and in that case I shall have to come to the House again to reconsider the situation before the rising for the Summer Recess. I am perfectly frank about it. The situation is going to be scrutinised week by week. I have already taken steps to have the closest analysis made with regard to the various categories of recipients of the Fund. We have already had a most careful analysis of the dock situation. We are making the same analysis for the cotton industry and of married women's claims on the Fund. Other groups of industries will be taken into account in the same way, so that we may be able to present to the House an exact statement, so far as statistics can give it, of the direction in which the money goes and the cost in each particular group.

As to the activities on the other side of the account, it will be some months, I think, before it will be possible to give a clear picture of the effect of the new adjudicating machinery, of the principle of decentralisation and local co-ordination which is now in active operation—that is to say, the principle of co-ordination which will start simultaneously with the setting up of the Public Assistance Committees. It is being worked in in relation to the general question. We shall not be able to tell the effect of the new adjudicating machinery certainly for some months, but I hope that before the House rises we shall be able to give some firm figures with regard to this matter. There is, of course, on the other side, the possibilities of the results of increased activity on the placing side of Exchange work, of which a great feature was made in the Debates on the last Unemployment Insurance Measure.

It is clear that all these factors will have their effects, one way or the other, and until we see what those effects are, it is not possible to come to the House with further proposals, financial or otherwise. With an average live register of 1,240,000 people, the income and expenditure of the Fund will balance. If the live register is less than 1,240,000 the Fund will be able to repay debt; but if, for any considerable period, the live register substantially exceeds 1,240,000, then the relation between the revenue and expenditure of the Fund will have to be reexamined and it may be that to establish the equilibrium of the Fund, steps will have to be taken to increase contributions. I have made a perfectly frank statement to the Committee; I have given all the facts at my disposal, and I hope that the Committee will give me my Resolution.


I am sure that Members in all parts of the Committee view the appearance of this Financial Resolution with profound misgivings and the very frank, and, if I may say so, somewhat bureaucratic speech of the right hon. Lady has done nothing to remove those misgivings. Into the first part of her speech, which dealt with the administration of her Department, I do not propose to enter. I am quite satisfied, and I have no doubt the house is satisfied, that the actual administrative work is being quite adequately done, that the rubber stamps are being applied in the right places, and that all the details of administration are being carried out with the usual precision. The alarming fact of this Resolution and its meaning, came into the second part of the right hon. Lady's speech, when she had to face the fact that she, on behalf of the Government, was resorting to the practice of borrowing which in the past she has denounced with such bitterness and force. As I understand the matter, apart from raising the contributions, the two methods open to the right hon. Lady and the Chancellor of the Exchequer for dealing with the debt were, either to borrow as they have done, or to get another direct contribution from the Exchequer. For my part, I always prefer the borrowing course, if we can assume that we are facing a temporary depression and a temporary peak in the figures of unemployment.

I think that a Fund of this kind can safely borrow up to a year's income without, in any way, imperilling its integrity, but that, most emphatically, has not been the view expressed by hon. and right hon. Gentlemen opposite. They have always professed to regard this borrowing, which relieves the taxpayer in a time of depression from raising new money, as being on a somewhat lower moral plane from the point of view of financial integrity than anything to which they themselves would stoop. I am not gong to refer back to the Debates of 1928 and the indignation which was forcibly expressed when the limit of borrowing was raised from £30,000,000 to £40,000,000. I was not in the House at that time, and I leave those who were here to deal with that matter. Besides, the right hon. Lady has, to a great extent, disarmed criticism by her very frank avowal and her withdrawal of the words which she used on that occasion. For my part, I propose merely to refer to what has happened here since I have had the honour of being a Member of this House. We have heard the distresses of this Fund attributed to the depredations of the right hon. Gentleman, the Member for Epping (Mr. Churchill). It has been said that his action in borrowing instead of taxing, was "robbing the Fund" and he has been held up to us as "the man who robbed the Insurance Fund."

When 1 heard that language I formed a picture of the right hon Gentleman's activities which, I have no doubt, was shared by many equally innocent auditors all over the country. I pictured the right hon. Gentleman, during his tenure of office, penetrating into the vaults of the Treasury, by night and alone, his familiar and distinguished features partly hidden by a mask, armed with a crowbar, and a dark lantern his only illuminant. I pictured his remorseless eye going over all the boxes and coffers in those vaults, until he hit upon a coffer marked "Unemployment Insurance Fund". Then he said, "Ha, Ha! and inserted the crowbar; there was a splintering of wood, and off the right hon. Gentleman went with £20,000,000. That is the sort of picture which, to those who still believe that the words of the English language have a certain definite meaning, is always conjured up by this description of the right hon. Gentleman's activities as "robbing the Fund". But it appears that the Fund's accounts were strictly audited at the end of the year and not one penny was missing. No one seems to have lost any money as a result of the right hon. Gentleman's depredations, and, when the facts are exposed, the right hon. Gentleman appears not in the sinister aspect of a robber of the Fund, but as a benevolent and even cherubic gentleman who, in times of stress remitted taxation. Where is the money of which he "robbed the Fund"? It is in the pockets of the taxpayers and of the employers and workmen who contribute to the Fund, and the money is much better there and will fulfil much better purposes there, than it ever conceivably could under the control of right hon. Gentleman opposite.

If the right hon. Lady and the right hon. Gentleman the Chancellor of the Exchequer will permit me to say so, I have always considered that this matter is symptomatic of their whole attitude on unemployment. There is a certain doctrinaire and school-masterish type of mind—I am afraid the word "pedagogic" is now patented in this assembly—whose emotions and affections are much more readily roused by something abstract like a fund, than by something concrete like a taxpayer, and it is the case that, while right hon. Gentlemen opposite have always guarded the Fund with the greatest care, they have always been quite willing that the taxpayer should be mulcted in order to swell the balance in that Fund. That is the attitude which they have persistently adopted. They have always believed that to tax is better than to borrow. They have a sort of delight in taxation for its own sweet sake, and they prefer to cherish an abstract thing like a fund, rather than to cherish anything so concrete and real and, therefore, so unimportant as an ordinary taxpayer. Even in this Parliament we have had two Bills carrying out that same policy. We were told with no little horn-blowing and self-congratulation that the steps taken by the Government, by increasing the direct Exchequer contribution, were going to put the Fund into a state of solvency and that there would be no need to resort to the despised expedient of borrowing.

The Chancellor of the Exchequer on the Third Reading of the last Unemployment Insurance Bill only three months ago—only 90 days ago—told us how he had scornfully rejected the expedient of borrowing. He was not going to rob the Fund—not he! He was only going to mulct the taxpayer. He raised on that occasion and on a previous occasion enormous direct levies from the Treasury, every penny of which must be borne out of taxation. He raised these great levies, he doubled the direct Exchequer contribution to the Fund, as the right hon. Lady has told us, and we all anticipated from his statement that there would be no more borrowing. There was an Amendment on that occasion, moved from these benches, which declined to give support to a Bill the provisions of which, we said, were bound to put the Fund into a deficit, and the right hon. Gentleman, replying, characterised that Amendment as audacious Well, who was right? Here is a deficit within three months, after 90 days. These great levies, this doubling of the direct Exchequer contribution, have not sufficed. He has taxed, but now he must borrow in addition. He must, resort to the expedient on which he poured scorn; and what is the meaning of all this? Surely the only conclusion from any analysis of these events is that His Majesty's Government have all along grossly miscalculated the situation, that when we had these financial figures given to us in December last they were given with a complete misapprehension of the depth and gravity of the problem which they were trying to solve. They had no idea of the commitments into which they were entering on behalf of the people of this country, and it is, to my mind, the most alarming and the most serious aspect of this Financial Resolution, this complete change of financial front, that we are now forced to the conclusion that in three months the calculations of the right hon. Gentleman have all gone astray. The puny defences which he raised against undue raiding of the Fund have been overleaped by an increasing and mounting army of unemployed. No longer does the right hon. Gentleman opposite control the situation. There is a complete lack of control of the whole unemployment situation, a complete lack of grip, of understanding, and of control. They are borne down by a stampede to the Employment Exchanges, and it is a most alarming situation, which no one can view without grave concern.

For my part, if the right hon. Gentlemen opposite were following some consistent but wrong-headed policy, if my grievance was that I did not agree with their policy, I should have a less feeling of alarm than I have to-day, because I am always quite willing to consider that they may be right in their view of policy and that I may be wrong in my view, but when I see them following no consistent policy at all, it is not wrong policy that we complain of, it is the fact that the right hon. Gentlemen opposite have got no policy at all. It seems that we are bound to ask, that being the case, how long it is to go on. Have we touched bottom yet? If they were wrong three months ago, so wrong that they have completely to change their financial attitude, how do we know that to-day the figures that we are being given and the hopes that are being held out of this terrible drain on the country's resources being nearly at its end bear the slightest relation to the fact? Have we any confidence, can the country have any confidence, can hon. Members opposite have any confidence that their own Government understand this momentous problem, that they are taking any steps to deal with it, and that they can give us any assurance how far the country requires to be committed to it?

The right hon. Lady, in the course of her speech, mentioned that in December, before Christmas, there was nothing to indicate the present alarming increase in the number of unemployed. But the very factors which she now puts before us as causing that increase were plainly evident and patent to observation before Christmas. If the troubles of the country at present with regard to unemployment are due to the two factors which she mentioned, namely, the fall in commodity prices and the slump 12 n. in America, these things were evident to any clear-sighted Government in December. They were then existent, and it is idle to come here and say that no one could have foreseen this, when the very causes to which she has ascribed this unemployment were those which took place before Christmas when she produced the last Bill. Let us consider for a moment what are the pleas that are put forward on behalf of the Government by the right hon. Lady and the Lord Privy Seal as accounting for this terrific increase in the number of the unemployed. We hear a great deal about rationalisation being responsible. One would almost think, to hear right hon. Members opposite, that rationalisation of industry commenced on 30th May last, and that there was no rationalisation before then, but surely it is obvious that throughout the whole of 1929, and for several years previous to that, the process of rationalisation had been going on and that no change as all took place in that respect simply because right hon. Members opposite achieved office. And it is the fact that during the first five months of 1929—

Whereupon the GRNTE FMAN USHER OF THE BLACK ROD being come with a Message, the CHAIRMAN left the Chair.

Mr. SPEAKER resumed the Chair.

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