HC Deb 26 June 1931 vol 254 cc773-857

Order for Second Reading read.

The MINISTER of LABOUR (Miss Bondfield)

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

This Bill is in the form of the Financial Resolution and contains nothing more nor less than the Money Resolution which has been passed by the House. It will be for the convenience of the House if I repeat some of the figures given in the debate on the Money Resolution, in order that the position may be made perfectly clear. Clause 1 extends the limit of borrowing powers from £90,000,000 to £115,000,000. The position with regard to the margins of borrowing is as follows: When I moved the Money Resolution I informed the House that on the 13th June the borrowing powers had reached £85,870,000. On the 20th June they had reached £86,970,000, and for the 27th June, that is, for the payments that will be made to-day, the figure will be £88,030,000. I told the House that the margin was barely sufficient to carry us over the first week of July, and the House will now see, from the figures that I have given, that there is just enough left of the borrowing powers to carry us through the first week of July. That is the reason for the urgency of the Measure and for having put it in this form, in order to get it through before the essential dates.

The income of the Fund at the present time, based upon a live register of 2,500,000, was estimated as £44,550,000. The live register figures on the 15th June, the last available figure, was 2,621,000. Just in proportion as the live register rises the income of the Fund is reduced to the extent of the contributions not paid. On the 8th June the figure was 2,603,000, so there is an increase of 18,000 odd. I will repeat and rather enlarge upon the position of the register, because it is one of those points, as I said last Monday, on which there is the greatest possible misunderstanding abroad. It is looked upon as a static permanent unemployed army. That is not the case. The analysis that I gave last week shows that, whereas the number of wholly unemployed was 1,845,000, there were 643,000 only temporarily stopped, and 115,000 were reckoned as casual workers, who are always in and out. On the particular morning, the Monday morning, on which the count is taken these casuals happen to be unemployed. A large number of these casuals may have got work by the Monday afternoon or by the Tuesday, but they happen to be in the unemployed class, because we try to discover on the Monday morning how many people are not in fact at work on that day. It is very important to remember that, because I do not think there is any other country that compiles its figures in that way and therefore there is no other country that can give us a comparison.

Take the length of the period of unemployment. We have a more exact reckoning than, I think, almost any other country gave. For instance, 645,000 men or 36–2 per cent. of all men on the register on that given date had not been wholly unemployed for a longer period than four weeks. Of the women, 222,000 or 38.9 per cent. had not been wholly unemployed for a longer period than four weeks. I will give a further analysis, a rather exhaustive analysis, of what has happened this week, because I think there is nothing that will bring home to the House more clearly the exact nature of our statistics. Far from having this enormous standing army of 2,600,000 unemployed the analysis shows that we have a movement, which I am certain is going on in every industrial country in the world, a great turnover of labour. There is a larger percentage of labour which is not fully employed throughout the 52 weeks of the year, and a larger percentage which is not kept fully employed for any given two months or three months. That margin is constantly increasing and it is due under whatever system of Government or politics may prevail to the inevitable development of the processes of production which make labour more fluid than it used to be.

The net increase in the number of unemployed for the week from the 8th June to the 15th June was 18,032. Let me show how those figures are compiled. In the Midlands there was very little change. What change did take place was in the coal mining area, to the extent of 2,900 unemployed, of which number 2,033 were temporarily stopped. Then we come to the north-eastern district where mainly in raining in Yorkshire, there was a decrease of 11,135 in the number of men unemployed. They have gone back to work. They were unemployed the previous week; this week they are in employment. In the North Western district there is in certain towns in the cotton area a decrease in unemployment and in certain other towns an increase. In one area there are 1,229 at work this week who were out of work last week. In the Scottish area there is a decrease in the number of men. There are nearly 3,000 men back at work this week who were unemployed last week, but against that there are 3,000 women in the jute trade temporarily stopped this week who were at work last week.

In Wales all the decreases in the different divisions have been wiped out by the increase in the temporary stoppages in South Wales alone (largely in Merthyr Tydvil), where there is a temporary stoppage of 18,375. Taking the plus and the minus and striking a balance we are left with a net increase of 18,032, most of whom are people who were in work last week. I want to make that point quite clear because it is frequently misunderstood abroad and it is used as a criticism of the labour of this country, as though it was in a state of permanent deterioration. I will admit, indeed everybody will admit, that there are certain fringes, both on the elderly side of the scale and of the young side of the scale, which cause us deep anxiety. There are those who have never had a footing in industry, those who are regarded as too old to be reemployed in new forms of industry; these represent a very serious problem indeed. With regard to the great mass of our unemployed we are able to state that they are as competent and as efficient to-day as they ever were.


Has the right hon. Lady any figures to show the proportion on the live register at work during last year?


I have just given the figures. There were 645,000 men, or 36 per cent., who had work within the last four weeks, and in another group 42.7 per cent. of the men and 38 per cent. of the women have been in work within the last 24 weeks. If you add those two percentages together there are few left who have not had work at some time or other during the last six months.


Has she any figures for London?


I could get them, but I have not them with me this morning. I now come to the point as to the extent to which we are able to estimate the additional increase in borrowing powers which will carry us over. Everyone will be aware that these figures are entirely problematical, they are not exact, they cannot in the nature of the case be exact in any sense. They are merely arithmetical. If we have a register of 2,500,000 on the average the borrowing powers will last until January, 1932. If we have a register of 2,750,000 on the average then the borrowing powers will last until November, 1931, but if the register should rise to an average of 3,000,000 then the borrowing powers for which I am asking will be exhausted by October, 1931. It is because of the utter impossibility for my Department, or for anybody else, to predict exactly the course of unemployment during the next three or four months that I am asking for this additional sum of £25,000,000. The accountancy of the Fund is so strictly supervised that I cannot spend a penny more than is allowed to be spent under the Act of Parliament, and if we are to see a turn in the tide of trade and a reduction in the register no harm is done by taking these extra powers because the money will not in that case be spent.

Clause 2 of the Bill deals with the transitional period and extends it from the 18th October, 1931, to 17th April, 1932. The House is perfectly familiar with the method of calculating what is called the additional benefit year. It means, of course, that there is no fixed date for the whole transitional benefit drawers because it is a moving figure. The expiry of the benefit year happens every day in the year for somebody, and the beginning of the expiry of the benefit year would under existing legislation take place on October 18th. The effect of the Bill is to extend the beginning of the exhaustion of the benefit year for another six months. Sub-section (2) of Clause 2 provides for the cost of this extension, and Sub-section 3 is consequential. The method of financing the Fund is familiar to the House but perhaps it may be well to point out that a great deal of Subsection (3) is simply book-keeping. The Treasury does pay transitional benefit and the Unemployment Insurance Fund has been relieved to the extent of the claims of transitional benefit and has also been relieved of the cost of the administration of transitional benefit. The reason why we are putting it through the Insurance Fund account is in order that the House may be presented with a complete statement not only of the Insurance Fund but also of the transitional benefit payments and the cost of administration. It is put in on one side and taken out on the other in order that the accounts may be complete. Clause 3 is the usual formal provision dealing with the title of the Bill and its non-application to Northern Ireland.

In discussing the Money Resolution we have, I think, put before the House quite clearly the policy which His Majesty's Government has adopted in connection with the finances of this Bill. I have rend with great interest the Amendment on the Order Paper put down by hon. and right hon. Members of the Conservative party. I should like to ask hon. and right hon. Members opposite who are to follow me in the debate if they will answer this question; if a Conservative Minister of Labour was standing at this Box, in the world situation in which we find ourselves, with trade and industry in the position it is to-day, would they endeavour to improve the finances of the Fund by moving a reduction of benefits or by moving an increase in contributions or by moving the extinction of the transitional arrangements? I suggest that they would do nothing of the kind. I have read most carefully the whole of the debate of last Monday, and no single suggestion emerges for dealing with the present situation other than the one made by the right hon. Member for Sevenoaks (Sir H. Young) in which he suggested that it was necessary to enforce a needs test in connection with transitional benefit. I am not going to argue whether that is a good thing or a bad thing, but I say as Minister of Labour that it is a physical impossibility to get that in working in order to meet the situation on July 8th and, therefore, the greatest catastrophe which could happen to the Conservative party would be that their Amendment should be carried to-day.

In the light of that situation I suggest that to put down such an Amendment on an occasion like this, knowing as they do all the facts of the situation, is really nothing more than political eye-wash. I ask the House to give me the Second Reading of the Bill. The House has already agreed to the financial provisions being made. I have to meet a situation in a fortnight's time in which, unless this Bill goes through, the unemployed will be penniless, and I do not believe there is a single Member of the House who will be willing to face a situation like that.


I beg to move, to leave out from the word "That" to the end of the Question, and to add instead thereof the words: this House declines to authorise such extensive further borrowing for the purpose of making up a continually recurring deficit in the Unemployment Fund, in view of the refusal of the Government to take any adequate steps to carry out its declared policy of making the unemployment insurance scheme solvent and self-supporting. I am rather surprised at the attitude of the Minister of Labour, as revealed in her concluding remarks, and her objection to the wording of our reasoned Amendment to the Second Reading. The governing words of that Amendment are taken from the terms of reference drafted by herself to her own Royal Commission, which, we were assured, when the last borrowing Bill came before Parliament, was to devote itself to the precise point with which the Minister now challenges us to deal. Our suggestion that the unemployment insurance scheme should be made solvent and self-supporting—those are not our words, that is not our statement; that is the policy of His Majesty's Government, repeated again and again since they came into office two years ago, repeated on every occasion up to now, the fifth occasion on which they have come to the House demanding more and more time, and always pleading the excuse: "If I do not have this money in a fortnight there will be no money to pay out to the unemployed." The story of the Government's dealing with this great financial, social and moral problem is a story of perpetual procrastination and perpetual evasion of all the major issues.

What is the real scandal of what is called the dole? What is the real abuse? What is the real anomaly? It is the fact that you are going on borrowing money which you know will never be paid back, which you know can never be got back from the contributions of the employers and the employed, and that it is a system of borrowing to pay out week by week cash when you know that it is absolutely unsound finance which has been denounced by right and hon. Gentlemen opposite, and even by the Minister herself, in no unmeasured terms. After all, it was the Government's great case against us as a Government—the unemployment figures were then going down—that borrowing did take place on the credit of the Fund. Here is the present Minister's first speech on the first Money Resolution for her first borrowing: 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 even £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 RBPORT, 26th November, 1929; col. 1103, Vol. 232.] Less than two years ago that was the policy of the Labour Government. They then declared that this was a dishonest method of financing the needed relief of unemployment. They asked on that occasion for an increase of borrowing powers on the ground that they had not then had time to change this wicked and dishonest system of borrowing and to put a proper system in its place. They then, being all-wise, having had "Labour and the Nation" written for them, having come into power with the promise to the country that they had a solution for unemployment and all our evils, had their own inter-departmental Committee and they went into the question. That investigation ended in nothing. We were never told what the result of the deliberations was.

When the next Bill to borrow further and increasingly dishonestly on the strength of this bankrupt Fund was brought forward, they said "Oh, we think it desirable that the Council of State should operate, and that all parties should co-operate in facing this problem of how to finance properly and in the interests of the country the needed relief of unemployment." They called in the two Opposition parties, or rather the Opposition party and the party that oscillates between opposition and support of the Government. There was an inter-party conference, in which the Minister of Labour and the Minister of Health took part. All through the summer of last year, when other members of Parliament were away on their holidays, they sat and they worked. It is common knowledge that though they never actually reported finally, they came to an agreement on certain fundamental heads as to how this hopeless system of financing unemployment relief ought to be changed, and there are in existence series of Minutes which represent the agreement of the Labour Ministers and of the representatives of the Liberal and Conservative parties. Those Minutes were referred to the Cabinet and were turned down by the Cabinet. Consequently what did we have? We had another borrowing Bill.


Do I understand the right hon. Member to say that this Minute which went to the Cabinet was a unanimous opinion? Can the right hon. Gentleman give us any evidence of that fact?


Obviously, it is not for me to say what was the exact nature of a confidential document. All that is common knowledge is that for weeks these members and the Ministers met together, that they did present a document to the Cabinet, that it was rejected by the Cabinet, and that the Government have persistently refuse to publish either the minutes or the points of agreement between the three parties.


The right hon. Gentleman knows that I cannot enter into a discussion of this matter. I only wish to enter my caveat against the statement that he has just made.


It is perfectly true that the Government have refused to publish. It is most undesirable, when representatives and delegates of the three parties are called into a conference of this kind and make their contributions, agreeing or even disagreeing on particular points, that the whole matter should be held up, and that it should always he flung as a taunt to the Opposition that we have made no contribution to the solution of this difficult problem. We have seen it in every Labour paper: "The unemployment relief problem ought not to become a matter of politics." Yet when we tried to treat it in a nonparty manner, when we tried to get back to a non-political basis and bring in all parties to deal with this great problem, that is the way it was treated by the Cabinet. The way in which it was treated by the Cabinet, and the way in which the right hon. Lady's own proposals were treated, indicates that all along the Government are simply interested in putting off the grasping of the nettle, in putting off grappling with this fundamental financial problem, time and again, and seeking every excuse and subterfuge rather than face the issue.

That is the record of the last two years. It is, as I have said, one of continual procrastination. But I must make one exception about procrastination. When they had set up their Royal Commission—this Commission of their own choosing—when they had given it their own terms of reference, and when that Commission had got to work, the Chancellor of the Exchequer was faced with the prospect of making a very awkward Budget statement. One of the corner stones of that Budget statement lay in the passage to the effect that the Budget could only be expected to balance if substantial economies were made, and that he was looking to the Report of the Royal Commission for substantial reductions in the cost to the Exchequer. The result was that the Royal Commission were not left to report in their own time, or even within their terms of reference, but a pistol was put to their heads and the Government's own Royal Commission now report to this effect: Since we were appointed it has been pressed upon us by communications from Your Majesty's Government and by continuous reference to the subject in your Majesty's Houses of Parliament that there are matters raised by our enquiry of which in the interest of the State immediate consideration is required. Not content with establishing their Royal Commission, under terms of reference which prescribe pretty definitely the kind of report which you expect them to make, the Government pressed the Commission—I will say that this is the one occasion on which the Government have shown some hurry in connection with this subject—as a matter of urgency to deal with the grave financial situation which had arisen. Before I go a little further into the history of the Government's general behaviour in connection with this question may I say that the right hon. Lady was only too wise in her introduction of the Bill to-day when she said that this Clause was in the usual form, and that Clause was in the usual form, and the other Clause was in the usual form and so on. What is this Bill? It is the fifth borrowing Bill since this Government came into office, and I believe that it is actually the 27th Unemployment Insurance Bill since the War. [HON. MEMBERS: "Since the War!"] Yes, the 27th Bill since the great War. I am only mentioning that as an example of the position into which we have got in relation to this question. [Interruption]. I wish hon. Members would follow what I am saying, I am saying that this is the fifth Bill of this Government and the 27th Bill in all. [HON. MEMBERS: "Twenty-two were yours!"] I am not talking of the faults of parties or Governments, I am talking about the national situation in regard to this grave matter.

Look at the position. The amount of money that has to be paid out week by week in relief of unemployment to-day is at the rate of from £130,000,000 to £135,000,000 per year. How is that money found? As to £44,000,000, by the contributions paid into the Fund; as to a varying sum, now assessed at about £24,000,000, it is paid by the Exchequer—over and above its contributions to the Fund—out of current revenue, and, as to the rest, that is to say, approximately half, by borrowing on this bankrupt Fund. That is the real scandal. That is the real issue. How long are we going on with this dishonest and condemned system of borrowing? That is the main issue which confronts us. How long are you going to finance the payment of the weekly benefits, whatever those benefits are, whatever the machinery by which they are paid and to whoever they are paid—how long are you going to keep on financing them by borrowing?


What is your alternative?


How long are you to go on evading the necessary issue? When this Government came in, the borrowing was £37,000,000—admittedly other people had done it—but to-day it is £115,000,000 or a threefold increase in two years. Are we going to have a three-fold increase on the present amount?


What is your alternative?


Is it statesmanship to go on when you see the whole thing drifting and getting beyond control? Is it satisfactory treatment of the nation to refrain from bringing the nation to face the necessity of relieving unemployment out of current revenue—because that is what has to done sooner or later? You can never go on with this iniquitous system of borrowing. The system of borrowing is quite indefensible, yet on five occasions the right hon. Lady and the present Government have found excuses at the last minute for saying, "Give us another few millions of borrowed money; let us wait for another report; let us wait for something to turn up, and we will evade facing this awkward and difficult issue." So they are carrying on a system of financing unemployment relief which directly and indirectly is doing more harm to the finance, the credit, and the trade of this country than any other system that can be imagined. Nothing is worse than that continuance which has been condemned by the Treasury officials giving their evidence, approved by the Labour Chancellor of the Exchequer, before the Royal Commission. It is a system which cannot, and ought not to be allowed to continue. What are the commitments of the Government about this matter? I have here four quotations which I propose to give in the order in which the speeches were made. The first is from the Prime Minister speaking on 14th November last year: Unemployment insurance must be put back on to an insurable basis. The Chancellor of the Exchequer says: I have to find £21,000,000 this year to finance a large class of unemployed persons who have no insurable qualification. I think it is the duty of Parliament now to face up to this problem and to put the Insurance Fund upon an insurance basis. He is followed by the hon. Gentleman the Parliamentary Secretary to the Ministry of Labour, whom I see in his place, and who said, speaking in this House on the 8th December last: Nobody … assumes that the Unemployment Insurance scheme is to-day in a satisfactory condition. The piling up of debt cannot go on; the scheme must be put on a self-supporting basis."—[OFFICIAL REPORT, 8th December, 1930; col. 65; Vol. 246.] Yet to-day we are asked that it shall go on, and go on to an unprecedented amount. Now, most important of all, in February of this year, when the last borrowing Bill, the one which is being found to be bankrupt on the 8th July next, came before Parliament, the right hon. Lady the Minister of Labour herself said: It is our Considered view that a scheme of unemployment insurance should be a self-supporting scheme, that it should contain the elements of the tripartite contribution, that it should cover the able-bodied unemployed, and that we should do everything we can to see that there is a fund which will cover the risks that it is intended to cover."—[OFFICIAL REPORT, 10th February, 1931; col. 909; Vol. 248.] And then, quite as important, we have the exact terms of reference, drafted by the Labour Government, to the Labour Government's Royal Commission: To enquire into the provisions and working of the Unemployment Insurance Scheme, and to make recommendations with regard to … its future scope, the provisions which it should contain and the means by which it may be made solvent and self-supporting. Their policy is perfectly clear. Their policy is that, instead of borrowing, instead even of financing directly by the State, the Chancellor of the Exchequer should not have to find £21,000,000 for the transition, but that the Fund should be put on a solvent and a self-supporting tripartite basis to cover the able-bodied unemployed. That is the declared policy of the Government. Again and again they have pinned their faith to that solution of this problem. Why do they always evade it when it comes to the point? Why do they always run away from their declarations and their promises and their policy in this respect? It is because they know, I presume, that the only way in which you can make the Fund self-supporting and solvent at this moment is by increasing contributions or lowering benefits.


Would you do it?


I am not the Government. I do not believe that the Government's declared policy can be carried out. I do not believe that the terms of reference to the Royal Commission will get you anywhere. I believe that those terms of reference were drafted advisedly by the Government to get you nowhere, in order that we may have more borrowing, yet more borrowing, and borrowing again. Look at the position of the Government's Royal Commission. Given these terms of reference, how else could they have reported? Given the statement of the Chancellor of the Exchequer that he is not going to pay, how else could they have reported? And when they have reported, your Commission, which you chose without any consultation with us or anybody else, what happens? This Commission and these Commissioners are denounced on every Labour platform in the country. Never has a Royal Commission been so abominably treated, both in regard to its terms of reference and in regard to its report; and the sole responsibility is upon the right hon. Lady and the Government, who have been playing with this great issue ever since they came into office, always evading, always saying, "What is your policy?" I see the right hon. Gentleman the Secretary of State for War sitting there smiling. Was there ever a failure like him, with less contribution to make to this problem of unemployment?

The SECRETARY of STATE for WAR (Mr. T. Shaw)

I am smiling because I have read the speech of Lord Hailsham, and now I can truly appreciate why the hon. Member is tearing a passion to tatters.


In view of their declarations of policy, in view of their terms of reference to their Royal Commission, in view of their continual putting off facing up to this problem, the credit of this country is being more and more engaged by extending the borrowing powers of an admittedly bankrupt Fund, which you admit will never pay back the amount borrowed. That is the real scandal, that is the real anomaly, that is the real abuse in which the futility, the lack of responsibility, of His Majesty's present Ministers have landed the country at this day, and until you do get a Government that is prepared to face up to the problem in regard to the finding of money for the relief of unemployment, it will be a disgrace to this country.

It is not the quotations from M. Rueff, the French economist, it is not attacks upon the British working man by foreigners or upon us as a nation that are doing the harm. What is doing the harm is not paying your way, presenting fraudulent budgets, going on with this system of borrowing. That is the real issue, and as long as that evil of borrowing goes on in that way, so long you will get discredit and so long you will deserve discredit. Five borrowing Bills in two years, after you have denounced borrowing and said it is dishonest! That is the contribution of His Majesty's Government, and they now ask for an unprecedented amount of borrowing to carry us on, long after Parliament has met again in the autumn, long after their despised and now apparently, from their own party point of view, discredited Royal Commission has reported, because if they hope that the Labour party are now going to embrace anything that this Royal Commission is going to recommend, they have only to read the speeches of their own followers in the country. It is perfectly clear that there is no hope from this Royal Commission, in view of the way in which it has been treated by the people who set it up and in view of its terms of reference.

The result is that no doubt in the autumn we shall have another Commission and be asked to borrow again, and more and more borrowing will be going on indefinitely. As long as the present Government remain in office, it is clear that they mean to do nothing about unemployment insurance, except a little bit of eyewash about removing anomalies. It is perfectly clear that they are deaf to anything else, and until there has been a General Election and until the people who are only thinking about the narrowest soap box method of getting votes, who are prepared always to curry favour with democracy by hiding from democracy all the unpleasant truth; who are always ready to evade their real fundamental responsibilities—until they have been thrown from office, we shall never get the finance of unemployment insurance put upon a proper and a balanced basis, whereby outgoings will be covered by incomings. Until that is done, and you pay your way, you cannot as a nation say that you are balancing your Budget or attempting to do so. You are going the way of Central American Republics by borrowing to pay out week by week, with no prospect of paying back, with no Sinking Fund, and with no honourable tradition in finance.


I will not follow the example of the right hon. Gentleman the Member for Stafford (Mr. Ormsby-Gore) who complained of the soap-box oratory of Labour speeches, except to say that a more glaring example of hysterical tub-thumping than that which he has just contributed to the Debate is impossible to conceive. Of this I am quite sure that the soap-box oratory he so vigorously condemned—and I confess to have done some of it in my time—possessed at least some virtue of substance so conspicuous by its entire absence in the speech which the right hon. Gentleman has just contributed to the Debate.

12 n.

My main object in rising is to deal with an element that has been introduced during the whole debate by few Members, and that is the question of casual and short-time labour. But before I do that, if I am not wearying the House, I may perhaps be permitted to deal shortly with the question of borrowing. I accept the right hon. Gentleman's definition. Quite frankly "borrowing" is not the right word. As a matter of fact, it is no use our disguising the fact and we should clear our minds of any such subterfuge. He is quite right. It cannot be paid back, and, personally, I do not see why it should. It is one of the penalties of the present economic system represented by right hon. and hon. Members opposite that we are paying to-day for the rotten economic system which has brought about the evil on which complaint is based. The right hon. Gentleman the Leader of the Opposition was very severe upon the effects of the financial disadvantage to this country accruing from the growing expenditure of the country. But when he attempts to throw all the responsibility of this on the Labour party I respectfully suggest he cannot escape his share and entirely ignore his own record. To go back to the genesis, surely he will agree that when he himself was Chancellor of the Exchequer he was responsible for the settlement of our War debt to America which has produced most of the difficulty from which we are suffering to-day. I am not questioning his intentions, which were perfectly honest. I give him that credit. I give the devil his due, but a certain hypothetical region, which it is not parliamentary to describe here, is said to be paved with good intentions. The result has been that not only this country but the whole of the economic world has become largely a financial vassal of America. I am not going to discount the latest gesture of the Americans in the least but I do say that I cannot help being impressed by the fact that, after all, it is making a virtue out of a necessity. That by the way.

Originally, the system of unemployment insurance was confined to a few scheduled trades—trades that found permanent employment, with standard employers and standard employés. A mistake was made with the extension in 1920, but, first of all, there was an enormous number of trades that were not insured—railway servants, local government servants, domestic servants, agricultural workers and, a little bit higher up the scale, what is known as the black-coat brigade. On a rough estimate, there are 500,000 or more outside unemployment insurance who ought to be in, and who would have been contributing for 12 years, or whatever the time, who would have so augmented the fund by their contributions as to go far to make the scheme solvent. That was not done.

The inclusion of the casual labourer—and this is my strong point—and the short-time labourer, was another initial blunder. I ventured to prophesy to this House at the time that that extension was under consideration, that confusion worse confounded would arise from the inclusion of casual labour. My prophecy has been more than fulfilled. Men with no standard employment roam about looking for a job hourly, daily, weekly, as the case may be, and with no real test as to when, how and where they are going to get employment. Even in this debate we have confusion of thought. I sat here listening to the speeches of the hon. Member for Leith (Mr. E. Brown) and the hon. and gallant Member for Central Hull (Lieut.-Com-mander Kenworthy) the other day on this particular question. It occured to me that, after all, perhaps these are occasions when a little learning is a dangerous thing. The hon. Member for Leith was no doubt divided in his mind between the importance of being "Ernest," and of exercising his new characteristic of attempting to balance himself on the political tight-rope to avoid the risk of being compelled to walk the plank of a General Election. He, however, gave some valuable information—at least, to the House; not to me, because I knew it already. He quoted from the report of the Departmental Committee which the right hon. Lady created and of which I was a member. The committee sat for six long years considering this question. It has completed its labours so far as it can, and the report is in the hands of the right hon. Lady.

He did not exhaust the list by any means. I can add to it. The casual labourer is generally accepted as an unskilled man; but an all-round docker who knows his business—as he had to do in my time—is required to have—I was going to say the intelligence of a Cabinet Minister, but that would not fit the job; he certainly requires to have the combined abilities of a constructive engineer and a Ting-tailed monkey in order to get his living. The complications of this problem are so enormous that it requires expert knowledge to get down to the bed-rock of the difficulties.

The hon. and gallant Gentleman the Member for Hull deplored the existence of casual labour. So do I, and so do we all, but under the present economic system and the present geographical and physical system, where time and tide wait for no man, it is difficult to declare absolutely and definitely that casual labour can be entirely abolished. I wish it could. That is the difficulty with which we are grappling, and we have grappled with it for the last six years. Under such conditions, abuses may creep in; I am not going to deny it; but is it any wonder that abuses creep in? I am pre- pared to admit that even under the present system of Unemployment Insurance with all its faults—and it has faults—the casual dock labourer has not on the whole been very badly treated.

Where there are abuses, as there are here and there, they will not be forgotten. I will give my own case in point. These are only snatch jobs after all. I have had some experience. I have gone on a salvage job at the end of the week with my life in my hands all the time I was there. From Saturday morning till Monday night I have earned as much as I could earn in ordinary circumstances in three weeks, but the interval between that job and another job has sometimes been something like three months. That would not justify, I admit, the drawing of benefit for the following day of the week. All I want to say to hon. Members, to whom I am grateful for the interest they have taken in the question of casual labour, is not to give any justification to the casual labourer to cry, "Save me from my friends." We have made our recommendations on the committee, and I suggest to hon. Gentlemen and right hon. Gentlemen that they might safely leave this matter between ourselves and the Minister, who are negotiating on the question with the hope, though not of an entire solution, at any rate of a modification of the existing conditions.

The speeches of hon. Gentlemen opposite have been based on the assumption that there are abuses. There may be, and it may be a fact that somebody is getting something for nothing. Is it characteristic only of the industrial classes to get something for nothing? The whole system reeks with it, and the pivot of it is the Stock Exchange which mortgages the future. I strongly resent, as I always have done, and will do while I live, the position of the insured man being based upon the cost of living. We want something more than that. Hon. Members opposite shelter themselves behind the laissez faire policy of supply and demand, but I suggest that there is an artificial and natural law of supply and demand. Their idea of supply and demand is based upon the cost of living, against which I protest most solemnly, and on the fact that it is sufficient to pay the working classes enough wages to keep them alive. They fill the warehouses with the necessities of life, and when the financial panic takes place—engineered by speculators on the Stock Exchange—and people are not able to buy what they produce, the workers are turned adrift only to be kept alive until the time comes when they are needed to produce more. I have always protested against that system, and always will.

The right hon. Gentleman asks how long we are to go on. That entirely depends on how long the right hon. Gentleman and those who think with him try to justify and to excuse the system that brings about the very evils which they try to bolster up. They will have to recognise—and I say this with all seriousness—that the system they are attempting to bolster up is tottering at its base; it is becoming top-heavy in spite of the feeble attempts of hon. Members opposite to bolster it up with patchwork ideas of Protection and Safeguarding. There is a limit even to their philosophy and to human endurance, and it is being reached in spite of them. I am sure that the force of circumstances will eventually bring about the philosophy of the hon. Member for Bridgeton (Mr. Maxton), although it is possible that I shall not be here to congratulate him on its success. I say, in conclusion, that the system is simply top heavy and cannot be justified by hon. and right hon. Gentlemen opposite in their attempts to bolster up the case for it behind human nature and the Christian era. Human nature, free from the greed of gain, is all right. Human nature is demonstrated by the miner when he goes down the pit to rescue his comrades——


I have allowed the hon. Member wide latitude, but what he is saying now really has nothing whatever to do with the Bill.


I bow to your Ruling, Sir, but the psychology of the thing tempted me, and I fell. It is no wonder that soap box oratory is applied to the circumstances of the case. Soap box oratory is mild in comparison with the theories of hon. and right hon. Gentlemen opposite and the pallantines by which they would try to create more employment. I have sat in this House through Debate after Debate, and heard the right hon. Member for Epping (Mr. Churchill) describe how unemployment is going to be solved or modified by the taxation of knives, forks and scissors, ladies' underwear, paper bags and the rest. It was only the action of the women in bobbing their hair that robbed the party opposite of the chance to tax hairpins!


The hon. Member is really widening the Debate and inviting other hon. Members to follow him into these topics.


Again I bow to your Ruling, Sir, and I will try not to offend. I have been answering the complaints against the efforts we are making to relieve the distress which has been brought about by the economic system of hon. and right hon. Gentlemen opposite. I have not achieved all that I would like to have accomplished, but I hope I have cleared up some of the points of contention arising from the complaints against the so-called abuses of the unemployment insurance system; and when the anomalies come along, perhaps, Mr. Speaker, you will give me somewhat greater scope. At present human nature, Christianity, has not a dog's chance. I think I can sum up with this quotation, which is not new to the House, but which fits the case admirably. Woe unto you, scribes and Pharisees, hypocrites! for ye are like unto whited sepulchres, which indeed appear beautiful outward but are within full of dead men's bones.


The hon. Member for St. Helens (Sir J. Sexton) is one of the most respected Members of the House and when he is talking of casual labour we know that he is speaking of what he knows. However, I do not intend to follow the hon. Member into what he said about casual labour or into other perhaps less apposite matters. The question we are now discussing is far and away the most important political issue in our internal affairs. My right hon. Friend the Member for Stafford (Mr. Ormsby-Gore) said just now that there would have been great advantages if this matter could have been treated as a non-party issue, and he showed how every effort was made in that direction through the non-party committee which was appointed and which apparently made certain recommendations. I wish even now that it could be treated as a non-party matter, because the importance of it is so great and the financial issues which depend upon it are so tremendous that one almost shudders to think what may happen unless it can be dealt with satisfactorily. The financial position of the Fund is extraordinarily grave. According to the report of the Royal Commission the annual contributions of the State to unemployment insurance amount to £89,300,000—the actual contributions and the borrowings. That is a serious state of affairs, and everybody in the House who studies the question knows that it simply cannot continue indefinitely.

We have had the gravest warnings from people of responsibility, including warnings from the Treasury, warnings backed up and approved of by the Chancellor of the Exchequer, as he told us the other day. Borrowing on this scale means that the Sinking Fund of our Budget is being entirely wiped out, and, as we all know, it is bringing this country into the state of being very near to having an unbalanced budget. It is said with some truth that history repeats itself. I happened to be looking the other day at the history of this country about 100 years ago, and it may be of interest to hon. Members to hear what was said by the writer of a text-book on history published in 1895, 36 years ago, with regard to the position which existed shortly after, in fact during, the Napoleonic wars. It is really very interesting and apposite to the present situation. The writer says: The main cause of the degradation of the agricultural labourers in the early years of the nineteenth century was a series of unwise poor laws, which had been passed at intervals since 1795. There had been much local distress in the early years of the revolutionary war, and to alleviate it many parishes had commenced the system of indiscriminate doles of money, without much inquiry whether the recipients were deserving or idle, able-bodied, or impotent. The old test of compelling persons to enter the workhouse was entirely forgotten and money was given to everyone who chose to ask for it. Moreover, the rules laid down that the larger the family the more was it to get from the rates in its weekly subsidy. These unwise schemes at once led to reckless marriages and enormous families. The labourers saw that the more their children increased the larger would be the dole from the parish. In these days, we hear a good deal of what are called "marriages on the dole." I will continue the quotation: But not the labourer only was to draw profit from the new Poor Law. The farmers began to see that if they kept down the wages of their men the parish could be trusted to make up the deficiency. … Thus the agricultural classes began to live, not on their natural wages, but on a pittance from their employer, supplemented by a weekly grant from the parish. This suited the farmers well enough, but was ruinous to everyone else, for well-nigh every labourer was forced to ask for local aid, and thereby to become a pauper.


Those were the days of Protection.


I certainly think they were, but I do not see what that point has to do with my argument. There is a comparison to be made between what was done then by farmers and what is known as working short time in connection with unemployment insurance. The state of things that existed 100 years ago went on, and became so tremendously acute that it was finally dealt with by Lord Grey's Ministry in 1832, and on this point the same text book from which I have already quoted says: The best piece of work of the Grey Ministry was the new Poor Law of 1834, Which put an end to the ruinous and degrading system of outdoor relief, which had been crushing the agricultural labourer and loading the parishes with debt ever since the unwise legislation of 1795. The new law reimposed the old test of the Workhouse on applicants for charity. Only aged and impotent persons were to receive doles of money and food at their own homes. … The result was to force the farmers to pay the whole of their labourers' wages and to cease to expect the parish to find half of the amount. … In seven years the total cost of the poor relief of England fell from nearly £8,000,000 to £4,700,000—an immense relief to the country.


Who is the authority which the right hon. Gentleman is quoting?


It is a very well-known history of England written by an hon. member of this House the Junior Member for Oxford University (Sir C. Oman).


That organisation was brought into being for the payment of those doles in order to get cheap labour.


I shall be very glad to allow the hon. Member for Springburn (Mr. G. Hardie) to see the book which I think is available in the Library.


I have read the book, and I think the right hon. Gentleman ought to quote it further in order to make the argument complete and fair.


I was merely quoting from that well-known history text book in order to show that the conditions existing 100 years ago formed, in some respects, a very close parallel to the conditions of to-day. I will now come to the existing situation. The Government have urgently asked their own Royal Commission to make a report, and it has done so, and the Members of that Commission have received rather scurvy treatment from the Government and also from some Members of this House. I listened to the Debate on the Financial Resolution, and I do not think that the Minister of Labour paid a single tribute to any of the Members of that Commission. After all, the Members of that Commission are busy, impartial, and distinguished men in their spheres of life. They have given a tremendous amount of time to this question; they have taken great trouble, and they have been at work for months hurrying on at the request of the Government, and not a word of thanks has been tendered to them; in fact, there has been nothing but abuse.

I think that from one quarter of the House at least there should be a word of thanks and appreciation to those distinguished gentlemen for all the trouble that they have taken, and for the report which they have presented to Parliament. The Minister of Labour, at the conclusion of her speech, asked the question which has been asked over and over again: "If you were in the position of the Government of the day, what would you do?" I am speaking entirely from the point of view of a back bench Member on this side of the House, but it does seem to me that any Government at this moment, whether it be the present Government or any other Government, in view of the terribly serious position of this Fund, should adopt the main recommendations of the interim report of the Royal Commission. The excuse of the Government for not doing so is that they must await the final recommendations of the Commission. The Commissioners would hardly be so foolish as to issue an interim report which could not well be carried out in connection with their final recommendations whatever they may be. In refusing to carry out the main recommendations of the interim report, and making the excuse that they are waiting for the final recommendations, the Government are neglecting a favourable opportunity of dealing with a very serious and grave problem as it exists at the present time.

I have read the interim report very carefully, and I must say that I do not think it is a violently extreme report. In many respects, it is much more moderate than many people thought would be the case. With regard to the alterations of benefit which are proposed, they are based on the figures given by the Commission. I will take, for example, the case of a married man with two children. On the figures given by the Commission in the ease which I have mentioned, with the alterations of benefit which the Commission have recommended, it is quite clear that even if the benefit were reduced from 30s. to 27s. as suggested, on the basis of the cost of living, the benefit would be 4s. 4d. more than was similar benefit paid in 1924, and 2s. 2d. more than was the benefit paid in 1928.


Could you live on that sum?


I do not for a moment say that a man can live on that sum, but my point is that if a person could live on the sum allowed in 1924 and 1928 he could live now upon what is proposed by the Royal Commission.


Is it not a fact that the trade unions in 1924 could afford to pay something to those people from their own funds, but now, owing to continued unemployment, they cannot do anything of the kind?


I am sure that what the hon. Member for Houghton-le-Spring (Mr. R. Richardson) has said is quite true. I know that the hon. Member holds a very important position in the trade union movement, but the question he has raised was not the point to which I was drawing attention.

I was merely drawing attention to the fact that these proposed new benefits, quite apart from any help that may be given from other sources, will, according to the Royal Commission, amount to more in terms of cost of living than the benefits did in 1924 and 1928. I can understand the terribly difficult position of the unemployed, and I have never taken the view that what has been called the dole was a mistake. I think that unemployment insurance as a system has justified itself, that it has enabled, and is enabling, this country to get through the present crisis and the present grave depression more easily and with less trouble than most other countries. But it seems to me to need the corners rounding off, the edges cutting off, and a certain amount of pruning. It needs to be made watertight. That being so, I cannot see why we should not follow the main recommendations of the report.

The Minister of Labour herself really seems to agree that the recommendations in regard to the conditions of transitional benefit are not extreme and do not go too far. Those recommendations, as we all know, are, roughly speaking, without quoting them in detail, to the effect that there are certain classes of workers who are primâ facie not in the same need of relief as the general body, that, in the case of those classes, transitional benefit should not be paid without some inquiry, and that the amount of benefit should be related to their circumstances. They refer to single persons residing with parents or relatives who could keep them, to married women living with their husbands who could keep them, and to persons in receipt of workmen's compensation, service pensions and other fixed incomes. The right hon. Lady to-day, and, indeed, on earlier occasions, has admitted that these recommendations might have some force, and at any rate she did not cast them aside as impossible and intolerable; she said that administratively it was impossible to carry them out before the 8th July. I quite see that that is very probably the case. Admittedly, since these recommendations as to qualifications for transitional benefit, rates of benefit, and rates of contribution could not be carried out in a Bill which has to become law before the 8th July, it is necessary to borrow more money for the moment; but the real gravamen of the charge against the Government is that in their subsequent Bill they are not attempting to meet the real facts of the situation; but are simply putting off the evil day.

In the Debate the other day, most hon. Members who spoke from the opposite side of the House seemed to take the view that this situation must go on as it has been up to the present, that there could be no change, and must be no change. They seemed to think, as, indeed, they often do think in this House on economic questions, that there is some great well of money from which indefinite supplies can be drawn for ever. There were, however, at any rate two Members on the opposite benches who faced up to the situation to the extent of saying that they realised that the financial position of the Fund was extremely grave. They were the right hon. and gallant Member for Newcasile-under-Lyme (Colonel Wedgwood) and the hon. and gallant Member for Central Hull (Lieut-Commander Kenworthy). Both of them said, in the Debate on the Financial Resolution, that the financial position of this Fund was extremely grave. The right hon. and gallant Member for New-castle-under-Lyme said that it was getting so terribly grave that something would have to snap, and he thought that, rather than that anything else should snap, the currency ought to be allowed to go; and the hon. and gallant Member for Central Hull also said that we should have to go in for some form of inflation in dealing with this question.

I think, and probably most hon. Members opposite would agree with me, that if ever we started inflation in an effort to keep up these benefits and to keep the Fund solvent, we should be starting on a slippery road from which there would be no return. Inflation in any form is the most dishonest way of reducing wages or payments that anybody can conceive of, and hon. Members opposite know it. What you do by inflation is to say to a man, "I am giving you the same money wage, but that money wage will not buy anything like what it bought before," and you are, in fact, reducing his wages without his knowing it. Inflation of that kind is dishonest, it is wrong, it is the worst form of reduction of wages or payments that any government or people could ever conceive of. We know that, in the present crisis in Australia, Mr. Theodore, the Treasurer there, proposed, as a means of getting over the troubles of Australia, an increase of the currency and what amounted to inflation; and for a time it seemed that the Government there were going to follow his advice; but eventually the Labour Government in Australia came round to the view that that was a dishonest policy, and that it could not be carried out. I feel very strongly that, whatever happens in the future to this Unemployment Fund, the one thing that we must avoid at all costs is any kind of inflation, which is going to deceive the recipients of benefit in this country, which is going to deceive the people of this country, and which is a thoroughly dishonest course such as would be pursued only by the most reprobate financier.

I feel that at this very serious time what the people of this country really want is some leader who will take them into his confidence and tell them the truth. I have an immense admiration for the British people. I think that the British people are the salt of the earth. They have shown themselves able to face up to great crises of all kinds in the past, particularly crises of war and crises in economics; and I believe that they will be able to face up to this crisis. But they need somebody who will tell them the truth, who will not mince matters, who will not simply adopt a popular policy because he thinks he is going to get votes. Nothing pays in politics, in my view, like courage. We have seen in the last few days a remarkable example of courage. We have seen the President of the United States adopt a policy which he had every reason to think would be bitterly opposed by a large number of people in the United States. He had the courage to introduce what was probably thought by many people to be an unpopular policy, because he believed that it was the right thing to cure the financial troubles of the world. What happened? He was received in his own country as the saviour of the country. His own Republican party, which many thought would disapprove, now think that what he has done was the proper thing. I believe that, when we get in this country a leader who will give up the idea of vote-catching and will come out and tell the people the truth and take them into his confidence, this country will be able to face up to its troubles and to carry through to the end in this economic difficulty, as it did in the time of the Great War.


The right hon. Baronet gave a high example of courage when he said, in response to the question put to him, that he would be in favour of carrying out the recommendations of the Royal Commission, cutting down benefits and increasing contributions. It is very interesting, therefore, to know that a section, at any rate, of the Conservative party is clearly in favour of the policy recommended by the interim report. I only wish the right hon. Gentleman who was speaking from the Front Bench had been as frank in response to the question put to him. I agree with a great deal of the criticism that he directed towards the Government, because there is no doubt that the present position is profoundly unsatisfactory and the Government had not carried out their pledges in connection with the matter. But it is not fair to blame the Government for not doing what you dare not do yourselves and do not intend to do and, therefore, the Amendment that the Conservative party has put down is insincere and unfair.


What proof have you that we do not intend to do it?


It was stated by Lord Hailsham in the House of Lords that it would not be done, and the right hon. Gentleman to-day, in reply to an intervention, made it quite clear that the party had some different policy.


By changing the Lobby into which he usually goes, will the hon. Member give us an opportunity of showing whether we will do it?


While I fully appreciate that the Government have many demerits and do not rise to the high standard that I believe a Liberal Government would exhibit, I think they are infinitely preferable in their policy and practice to hon. Members on this side. I have no intention of giving the hon. Gentleman the opportunity which he would like me to give. The policy of the Liberal party in this matter is perfectly clear. We should not be prepared to carry out the recommendations of the interim report, and we do not think it right to abuse and condemn the Government for not doing what we would not do ourselves. We take a perfectly clear and straightforward view in that matter.


Has the hon. Member read the Amendment that we have put down? It says, the declared policy of making the insurance scheme solvent and self-supporting. Do we take it that it is not the intention of his party to make it solvent and self-supporting?


I will deal with that point in due course. The effect of the Amendment of the official Opposition would be either to insure that in two weeks' time there will be no money available at all for the unemployed, or, if they were willing to grant money for a shorter period, the House would have to meet in September, and I cannot imagine a date more inconvenient to Members on these Benches than that month. Although the official Opposition as a whole are not prepared to state officially if they would reduce benefits, they have another policy which, undoubtedly, would have the effect of automatically reducing all unemployment benefit and all wages. I feel that this question, when it comes to be dealt with, as I hope and believe it will be in the autumn, can only be effectively treated by all parties acting together. That may be a difficult thing to carry out, particularly in view of the unwillingness, as shown on so many occasions, of the Conservative party to co-operate in carrying on the affairs of the State, but, at any rate, I am sure we shall be willing to deal with this matter by taking it right out of the party arena. However deplorable and unsatisfactory the position may be now, we have to fact the situation as it is, and I cannot see at the moment any alternative to the proposals that the Government have brought forward. There are 2,500,000 out of work, and, although one hopes that the splendid lead given by President Hoover is going gradually to set going the wheels of industry all over the world, that is bound to take time, and we have to act at once. We have to maintain the unemployed.

Is there anyone who would say that the amount they are receiving in benefit is too much, or is really adequate for maintaining life in decency? I cannot see why those who are the worst off in the country should be called upon at a time of great crisis and depression to bear the burden. It may be that, if things got very much worse, the country as a whole would be obliged to deal with the crisis in some other way, and I think the very interesting experiment that is being carried out in Australia would have to be considered, but, when you come to a state of affairs where you have to reduce the standard of living, you have to call for sacrifices all round and not from one class of the community only. I think we in this country ought to congratulate ourselves to a very considerable extent on the way in which we are sailing through this period of depression. The situation is very far from perfect in many respects, but internal trade is really not too bad. I believe it is better than in other countries, and I believe it is very largely the result of the tens of thousands of pounds that are going out in unemployment benefit in the towns and cities and villages of the country week after week. As a result of this, you get the working man and his wife going to the shops, buying food, clothing and other things, and thereby giving the best and most effective kind of employment that you can possibly have. I believe that in this time of crisis we have less suffering and less hardship than in any country in the world, that we are maintaining a higher standard of living, and that we have an altogether more humane system. It is interesting to note, quite apart from our wages standard, the benefits that we are enjoying as the result of our social services. If you take the standard of our social services as being 100, the equivalent in Germany is only 48——


We cannot introduce the whole question of social services into this Debate.


It is true that I was including other social services than unemployment insurance, but unemployment insurance supplies a very important part in the figures I was giving, and, as there are only three more, perhaps I may be allowed to complete them. In the case of France it would be 17, Belgium 7, and Italy 4. I hope, when the time comes, and the Royal Commission has presented its full report, the Government will carry out their pledges. They are pledged to put the Fund on an insurance basis and to make it solvent. I hope it can be done with general consent, because I believe it is not only the will of their party and of all parties in the House but of the country as a whole. At the same time, in existing circumstances, I do not see that they can do anything else but bring in the Measure that they have and I support them.


I do not propose to follow the hon. Gentleman the Member for East Wolverhampton (Mr. Mander) very far, because his speech seemed to be an apologia, in advance, of the direction in which he may be taken when a Division is called on the Bill. We on this side of the House have such complete contempt for the lack of principles which his party display that we are only inclined to look upon speeches such as he delivered as containing no constructive effort at all, but merely an attempt to justify in advance the step we know to be inevitable. The Minister in her speech challenged us on this side with lack of any constructive policy. I hope that by the time I sit down, whatever other criticism may be made on what I have to say, and whether the proposals I have to make are palatable either to one side of the House or the other, it will not, at any rate, be said that they are entirely devoid of constructiveness. From the course of the Debate, I should like to call attention to the fact that there has been a complete confusion of thought as between maintenance and benefit. We are not discussing maintenance, but the question of whether this Bill, for the purposes of making the insurance scheme solvent, is the right method. For that reason, I wish to make one or two points which at first sight seem to be quite elementary. What is this insurance scheme? It is a contractual arrangement between the parties in industry, with the assistance of the State, by which the parties contribute sums and the State contributes other sums, and the insured person can then draw an amount, which is regulated by the contributions, out of the Fund that is sustained in that way. It is not intended, and never has been intended in the policy of any party, that a sum in full maintenance of an insured person should be provided out of the Fund. Indeed, the principle of insurance has been accepted by everybody. The Liberal party, even in the meeting of the Liberal Council, which my hon. Friend seems to have overlooked, in a Resolution they passed yesterday, once again reinforced the principle of insurance and the principle of the necessity of maintaining it as an insurance fund. It is also the principle in the Labour policy stated by "Labour and the Nation," and which has been reinforced by the Minister in many of her recent speeches, and certainly in the speeches she made when she first took office.

In a scheme of that kind, obviously, from time to time, where you have a fluctuating number of people upon the unemployment register, there would be over-frequent adjustments of contributions and benefits if there was not what my hon. and gallant Friend the Member for Kelvingrove (Major Elliot) has described as the "fly-wheel" function of the borrowing powers of the Fund which prevent unnecessarily frequent alteration and adjustment of rates of contribution and rates of benefit to cope with purely ephemeral conditions of employment. That is the function which the borrowing powers of the Fund ought to perform, and it is its sole function. But when you get an increase of unemployment which is not ephemeral, which is not temporary, but is consistent and chronic, as the Royal Commission have pointed out and as the Minister herself has pointed out, then an adjustment of this purely ephemeral fly-wheel factor is not the proper method by which you ought to sustain the solvency of the scheme.

I apologise for this re-statement of what are completely elementary principles, but they seem to be overlooked by those who will persist in speaking as though the Fund ought to be the means of providing maintenance for the unemployed. It is not its function and it is not its method, and it can never be devised to provide maintenance for the unemployed either for an indefinite period or at all. How complete is the misconception of the other side is shown by the speech of the Minister on Monday, and again to-day she seemed to think that the only matter that would concern us was as to how long this borrowing was going to last. That is not the point which is concerning us at all. We want to know how long it is going to take to penetrate the crania of His Majesty's Ministers that the scheme, as at present constructed, has not worked, cannot work, and is a hopeless shambles, and is perpetuating the existing situation. They know it, as shown by the terms of reference which they made for their own Commission. If that is not enough, and if hon. Gentlemen opposite will turn to paragraph 6 of the report, they will see that not only are those the terms of reference but they addressed to them a special communication to accelerate their interim report upon this very point. That is the point to which the Commission addressed themselves and it is the point upon which the Commission have made a recommendation.

1.0 p.m.

The existing situation is perfectly obvious. Here is a scheme which, in the current lingo, balanced at 900,000 unemployed. In other words, the contributions of the State and of the insured person and of the employer comprise a Fund which will pay the present rates of benefit while there are 900,000 people on the unemployment register. At the present moment, taking only the people who come upon the Insurance Fund, there must be something like double that number of people drawing upon the scheme. Obviously, it will not work and obviously, merely to adjust the borrowing factor is simply to throw dust into the taxpayers' eyes and to prevent us from facing up to the disagreeable realities of the situation involving the complete and radical reconstruction of the major adjustable features of the scheme. That is what, in fact, the Royal Commission suggested. For the reasons I have given, they have abandoned fiddling with this purely temporary feature of the scheme—the borrowing function—and they have addressed their minds to the main features that we must face and which we must adjust if we are to keep it as an insurance scheme at all. Those features are contributions, rates of benefit, and the duration of the period of benefit. Those are the three major features of the scheme which have to be dealt with if you are to keep the scheme solvent and self-supporting.

I cannot myself see any reason why the Government should not accept at once the Royal Commission's recommendations as to the duration of the period of benefit. It does not have any effect upon the person in existing circumstances who draws benefit, because he draws the same amount whether he draws it as transitional benefit or from the Unemployment Insurance Fund. It may be said that you are doing nothing if you transfer those people to transitional benefit by shortening the duration of the period. That may be said, but it is not accurate, because you are doing three things very definitely. You are recognising and fortifying the principle of insurance by maintaining within insurance only those people who are insurance risks and who have complied with the insurance qualification. You are transferring the burden of maintaining the people who fall outside insurance upon the Exchequer, and, in doing so, you are including the necessity for maintaining them in the financial system of the year. You are making the taxpayer face up to it, and you are bearing the burden out of the revenue of the country, out of current expenditure, and not by borrowing. Thirdly, and perhaps it is only redefining the other two, you are doing something to recognise the scientific distinction between insurable unemployment and wholly uninsurable unemployment, one a class of unemployment that can and ought to be dealt with by an insurance scheme, and the other a class of unemployment which ought to be treated as a responsibility of the nation itself, under a proper supervision, subject to the requisite methods of testing the degree of need. In the former case—insurable unemployment—obviously no means test ought to be applied, and nothing ought to be required of the person who goes to draw benefit except that he should have satisfied the conditions entitling him to benefit.

In what I am going to say now I want to make it perfectly clear that I am speaking for myself, which is all that one can do from the back benches; but I feel that if one has a contribution to make it ought to be made in a national emergency, for that is what I deem the present situation to be. Speaking for myself, I do not accept the statement made by the leader of my party in another place, if it is taken to mean that in no circumstances ought benefits to be reduced. I do not accept that statement. I do not, however, put that interpretation upon the words of the noble lord, but I regret that the statement was made in equivocal language which is capable of that interpretation. I read that statement as meaning that benefits are the last elements in an insurance scheme which ought to be attacked. [Laughter.] Yes, and it is in that sense that I support it. After you have considered all the major adjustments which are possible in your insurance scheme you are still to be open to consider benefits. I could not accept the position that, at a time when the co-operative societies are reducing wages, when the Civil Service is reducing wages, when the railwaymen are accepting reduced wages, when industry is readjusting itself from end to end of the country, there should be a sacro-sanctity and fixity in the right to payments of benefit which would be wholly out of place in any flexible economic structure.


The hon. and learned Member said that the statement made by a Noble Lord in another place was one that he repudiated. Does he now definitely say to the House that his policy is the reduction of benefits?



I am not asking the non. Member for Rushcliffe (Sir H. Betterton). I am asking the hon. and learned Member for Central Nottingham (Mr. O'Connor). What does he mean? He says that he speaks for himself.


If the hon. Member will do me the honour of waiting, he will see that I am perfectly prepared to face up to the implications of what I am saying. I say that as the corollary of a complete adjustment of the major factors in the scheme, a reduction of benefits is not to be ruled out in any constructive survey of the problem of unemployment insurance. I am prepared to justify that view and to face up to its implications.


Would the hon. and learned Member say that if he and his family had to live on it?


The hon. Member did not listen to what I said at the beginning. I said that I am not looking at insurance benefit as being a method of maintenance. I am looking on the benefit as being money paid out of a fund which has been contributed to under insurance conditions. It is not intended that it is maintenance, or anything of that kind. I am sensitive, and always have been sensitive, to the criticism which is reasonably made from the other side that, in a situation which does involve hardship all round, the whole of the burden should be apparently borne by those persons who are suffering from the problem which we are trying to solve. That is a point on which many of us in the House are sensitive. We are sensitive to the suggestion that the position of the rentier remains unchanged while the unemployed are called upon to suffer. The criticism we make of the Government is that they simply state the position and make no proposals to deal with it. They do not present a coherent scheme or any measure for asking for sacrifices all round. They say: "We will not accept these recommendations." But they make no proposals of their own. Therefore, personally, I should not rule out a reduction in benefit to accord, roughly speaking, with the price level. I would not rule out an increase in the workers' contributions, but I would rule out an increase in the employers' contributions. [HON. MEMBERS: "Oh!"] Yes, I am quite frank about it, and I will tell the House why. It is because an increase in the employers' contributions would be a direct and definite additional burden upon industry which, as the Chancellor of the Exchequer has said, would be the last straw that might perfectly well break the camel's back.

Therefore, if from the figures you were to eliminate for the moment an additional contribution from the State, which the Commission included in their sum, and eliminate the employers' contribution, there would be, upon the basis that the duration of benefit was shortened, a deficit of £13,650,000 on the working of the Fund. The real problem for the Government would be how that deficit should be made up. I think it ought to be made up and something added by way of a sinking fund to pay off the accumulated debt of £90,000,000, and I think that the funds to provide a figure of that kind ought to be met out of the general revenues of the country and out of economies. If the Government have any constructive suggestions to put before us on this side, or to some of us, as to any specific addition to taxation which would distribute the burden equitably, I from my own point of view should not by any means rule it out. I should not rule out the consideration of an additional burden of taxation specifically directed to the rentier, counter-balancing the demand which we should be making, by way of a reduction of benefits, from the beneficiaries, and related in the same way to the reduction in commodity prices which has occurred in the last two years.


Is the hon. and learned Member referring to a kind of crisis tax, like they have in Germany?


I am referring to something for this special purpose—because I recognise, on the whole, that my case is that it ought to be met out of current revenue and not by borrowing—some method of taxation, call it a special dividend tax, if it were practicable—I am not speaking with knowledge as to its practicability—which would remove from any constructive proposals of the Government the criticism that they demand sacrifices from one side only and that they are not imposing correlative Sacrifices upon the rentier classes, who have benefited by exactly the same fall in commodity prices as the people whom you are asking to bear the burden. I recognise that it is controversial, that it is not palatable, that it is not accepted officially, so far as I know, in any part of the House, but I would say, let the Government come forward with some constructive scheme. Our criticism is, that they are coming forward at the present time and completely ignoring all the fundamental facts of the situation, repeating the borrowing elements of the scheme as if it ever could afford a solution of the problem, and as if it ever could restore the solvency of the insurance system which we are seeking to make solvent and self-supporting. In that way they are straining the whole credit structure of the country. The Budget becomes a fraud and the Sinking Fund becomes a perfect gamble. They are not including in the national balance-sheet one of its largest outgoings. They are borrowing for the purposes of this Fund, for purposes producing not one penny of assets, four times as much as the total amount of capital assistance lent under the Credit Facilities Act, which is money lent for constructive purposes and for enhancing the wealth of the country. But here, if these borrowing powers go through, you are simply pouring money into the sands—[Interruption]—economically; I do not mean it offensively at all——


It is not offensive; it is simply stupid.


If that is the case, it is the fault of my head and not the fault of my heart, but from the economic point of view you are not providing one pennyworth of assets for the country out of the money you are borrowing. In the borrowing of money you ought to proceed upon two principles, one, that there is going to be a capacity to repay and the other that there is going to be something for the money out of which you are going to be repaid. Neither of these qualifications apply here at all. We are drifting to the ordinary borrower's state; damaged credit and inflated currency, and the funny thing is that the rentier, the unemployed and the trade unions, whatever may be the pretended protests made here, are all tacitly acquiescing in the present situation because they each have a reluctance to face up to the irresistible facts of the situation. The rentier is not prepared to face up to the necessity of increased taxation which this method is postponing for a little while, the trade unions are not prepared to face up to any alterations in the present system which would involve a reduction of benefits, and nobody can expect the unemployed man to face up to a situation which is going to involve him in an immediate experience which is unpleasant.

We have a duty not only to the contributors to this scheme but to the whole financial structure of the country. The experience of Australia ought to be a warning to us, because it shows with what silence but with what velocity great economic structures slide to their doom. Australia is a country of primary producers with something behind it, but the economic land slide which would occur in a great industrial and top heavy country like our own, if once the credit structure is assailed, would be so appalling that it defies the mind of man to conceive. The borrowing method is the surest way of accelerating a descent of that kind, and it is the duty of everybody who believes in the financial structure by which we live to voice his feelings even if they are not palatable to anybody.


I have been much interested both to-day and last Monday in listening to the speeches of hon. Members opposite to hear how they would deal with the present unemploymnt situation. I am thankful that at last we have from them a statement as to their policy. Last Monday no hon. Member opposite would say definitely and candidly that they were out to reduce benefits and increase contributions. I do not live in a seaside resort. I live among the unemployed. Next door to me is an unemployed ex-service man who has not had a day's work for three years, and cannot get it, and all the talk about reducing benefits is heartless and cruel. We have heard a lot about the Commission's Report. The hon. and learned Member for Central Nottingham (Mr. O'Connor) is always interesting, and he has been candid and courageous this morning in telling us what he would do if he had a chance. He is prepared, in order the get the financial solvency about which he so fluently speaks, to get it at the expense of the most helpless, and the poorest in the country. It is all very well to talk about the Report of the Commission. I congratulate the Government on refusing to accept the recommendations of that Commission.

There have been other Commissions. We in the mining industry remember the Sankey Commission, and we know that at the behest of certain people the Coalition Government refused to accept the findings of that Commission because they would have benefited the miners. The right hon. Member for Bewdley (Mr. Stanley Baldwin) has twitted the Government with not carrying out the recommendations of their own Commission. What did he do in 1926 with the Samuel Commission's Report? In these two cases the people we represent would have benefited by the recommendations, but in the present case if the recommendations are accepted it is the poorest, the most ill-clad and the worst fed, who will suffer. I congratulate the Government on their courage in refusing to reduce benefits or increase contributions. Whatever happens, no matter what anybody may say, no vote of mine will go for reducing benefits, they are already low enough.

An unemployed man came to me last Saturday night. He has a wife and two children. He gets 30s. a week benefit, and with him I went through the various amounts that have to be paid. There is 8s. 6d. for rent, 1s. 6d. for gas and electricity, 3s. 2d. for coal, cleaning materials and other things 9d., footwear 2s. per week on an average for four people, clothing on the average 2s. per week, and insurance 8d., and it leaves the wife with less than 12s. per week to find food for four persons. Talk about reducing benefits! A little humanity should enter into our souls and we should think about these unfortunate people who are suffering to this extent. I hope we shall hear no more talk about a reduction of benefits. In 1892 Mr. Keir Hardie came into this House as representing the unemployed, and one of the things which this party stood for then, and stands for now, is work or maintenance. Hon. Members opposite represent those who control the means of producing and distributing the wealth of the country. While you have control of that system, while you believe in that system, while we are not given power to alter that system, as long as you are unable or refuse to find these unfortunate people a job, we at least must stand between them and starvation. I congratulate the Government for refusing to accept the plausible pleadings of hon. Members opposite, and I hope that the Second Reading of the Bill will be carried.


The hon. Gentleman who has just spoken has made an appeal that in no circumstances should the amount of benefits now payable be reduced. Before I deal in any way with that matter—he may be surprised to hear that on that point I am largely in agreement with his views—I would like to make clear what exactly is the implication of the Amendment which has been moved. I have listened to the Debate so far, and it appears to me that there is a complete misunderstanding regarding the effect of the Amendment. It has been stated over and over again that the result of the carrying of the Amendment would be that there would be no money for unemployment benefit on 8th July. Certainly it is true that if the Amendment were carried in the present form and nothing else were done, that would be the result, but no one is so stupid as to think that that is the idea underlying the Amendment.

The object of the Amendment is clear; it is to force the Government to bring before the House a request for a smaller amount of money, so that before the House rises at the end of July the Government would have to bring forward definite proposals for dealing with the Unemployment Insurance Fund in the manner which their own spokesmen have so often promised to do. There is no question of any person in the House not realising that money must be borrowed for a temporary period in order to carry on the Fund. That has been the position every time the five different borrowing Bills have been brought forward by the present Government. There is a marked difference between the situation since 1929 and that of the year or two previous to 1929. I do not join with those who approve of borrowing, even by the past Government. But there was one very marked difference. At the end of the time when the Conservative Government were in office, the figures of unemployment were steadily dropping, and the total of those supported over and above the balancing figure, was a small one; there was good ground for hope, therefore, that the borrowing would be merely temporary and the Fund again solvent. That is not the position to-day. No one can suggest that there is any possibility of the Fund balancing in the near future, on the figures given by the Minister to-day. Therefore we have to face a totally new situation. The complaint of the Opposition is not that the Government are going to borrow, say, £10,000,000, to carry on the Fund until they can bring forward their proposals; our very definite complaint is that they borrow a sum to carry them on to November with no definite proposals, and with no promise of any, although they have promised them often enough in the past.

The truth is that the Government have shelved the whole question of dealing with the abuses of the Unemployment Fund. We have been told by the Minister of a Bill which is to deal with certain anomalies. That is not the point. Our point is, how are you going to deal with the whole subject, not what you are going to with a few anomalies? My hon. and learned Friend the Member for Central Nottingham (Mr. O'Connor), in a most interesting speech and in a courageous way, put forward certain suggestions which appealed to him, as to the way in which the problems should be handled. I say at once that I am not in entire agreement with him. There are two points which hon. Members opposite have constantly put forward. One is that the condition of unemployment in other countries shows quite clearly that the unemployment here is not as bad as there, and that no fiscal policy which exists in those countries can have any bearing on the problem. In this Debate, I cannot enter into any details of the fiscal conditions in other countries, but that is one statement constantly made by hon. Members opposite. The other is that any reduction in our standard of living would merely mean more distress because it would reduce the purchasing power of the people.

I gather that the reasons for the interruptions of my hon. and learned Friend by hon. Members opposite were based on the view that any reduction in benefit would immediately reduce the standard of living. Both these statements are wrong, but both contain an element of truth. The first statement, that the conditions in other countries, now so bad, show that unemployment is a world-wide matter and that we here cannot expect any improvement until world trade returns to prosperity and to normal, is wrong for this reason—that the conditions in other countries are no parallel whatever to the conditions here. Take the case of the United States, a country which is so constantly referred to. There you have an immense agricultural production, unlimited scope for expansion and a population which to-day is by no means large in comparison with the area of the country. In this country you have a totally inadequate, tottering basis of agriculture, and a very closely centred urban population. The problem which the United States is facing is a recent problem, arising out of what are called exceptional world-wide conditions. It is a totally different matter from the permanent unemployment with which we have to deal in this country. One might as well say that it was fair to take the case of a country like India, with 350,000,000 people, 72 per cent. of whom are agriculturists, and compare their problems with the problem of these small islands and their closely packed urban population.

The fact that there is distress in countries like the U.S.A. is no proof at all that the fiscal system under which they work would not be of benefit to us, and it is equally no definite and final proof that it would be of benefit. The conditions are utterly different. Here we have a condition in which we are so dependant upon cur export trade, that it is impossible to face a real revival of prosperity unless we take our export trade as the first and most important factor. If I were permitted, I would like to deal with what is necessary for the revival of that trade. But the rules governing this Debate do not allow me to do so. All I can say now is that when we are dealing with the future of the unemployed, when we are considering what must be done to put the Unemployment Fund on a proper financial basis, it is well to remember that it is no use considering what will happen in other countries, when a revival in trade comes, as any guide to what we may experience here.

Everyone who knows the conditions of trade in this country knows that, even with revived prosperity, we have to face a permanent unemployment problem. Perhaps "permanent" is too strong a word. One never knows what will happen in the eventual future, but at any rate we have to face the fact that there is a problem of unemployment which is going to confront us for a great many years, even with a revival of trade, because our ability to dominate world trade to the extent which we did in days gone by has passed away and we cannot expect it to return. We are facing the competition of other nations to an extent never known before. This outstanding manufacturing country has been passed in the race, under an out of date fiscal system. We have to face the position that, in order to get our people back to employment, we must get our manufacturing industries prosperous again. There is no other way of dealing with the problem.

The Lord Privy Seal the other day made a statement which showed clearly the limits to the number which could possibly be put back into work by State-aided schemes. His figures showed that the number of people employed, directly or indirectly, on State-aided schemes was 245,000, of whom only 110,000 were directly employed, and he estimated that the cost of the schemes to give employment to those 245,000 was £103,000,000! At that rate it would appear that it would cost over £1,000,000,000 to put the whole of the unemployed to work by that method and public expenditure on such a scale is unthinkable. Therefore the problem cannot be solved by State-aided schemes and that is why all these ideas about exaggerated road building are, in the end really beside the point. I do not minimise the advantages of such schemes of a profit-earning character as can be put into operation to help temporary unemployment, but, as a long-term remedy, State-aided schemes must be shut out. To get the unemployed back to work, the one thing is to restore the prosperity of industry. We must realise that until we do that we shall have what, for want of a better word, I must call a permanent unemployment problem. I think there is no dispute in any part of the House that the first thing to be done is to get our unemployables separated from the genuine unemployed. [HON. MEMBERS: "Oh!"] I do not think there is any real difference of opinion on that point. There is no nation in the world in which there are not some unemployables.


What do you propose to do with them? Shoot them?


What is the good of shutting our eyes to the fact that there are people who are unemployable and that they should be placed outside the insurance scheme altogether. I am not, at the moment discussing, how it is to be done, but surely there is no difference of opinion that it ought to be done. To keep them in the scheme is not fair to those who are paying contributions and if hon. Members opposite, or a few of them, think that they are going to—if I may use the expression—"cod" the people of this country into the belief that the increased money re- quired to pay for these people, who will never again be employed, is coming only out of the pockets of the wealthy they are quite mistaken.


On a point of Order. Is the hon. Gentleman also including those who do not work and is he prepared to offer any suggestion as to them?

Mr. DEPUTY-SPEAKER (Mr. Dunnico)

The hon. Member of course is entitled to ask a question, but there is no point of order involved.


I want to know exactly what the hon. Gentleman means by the unemployable?


The hon. Member began by saying that he raised a point of Order and I wished to make it clear that there is no point of Order involved. He is asking for an explanation on an entirely different matter.


It must have been my fault if I have not made my meaning clear and I am only too glad to try to do so. I did not put forward the suggestion as to the division of the unemployables from the genuine insurance cases as a matter of controversy at all. I thought it was a matter of agreement. Surely there can be no question that in every nation there must be some who cannot be employed. I suggest that, for the benefit of the insured who are paying contributions, those contributions-should only be placed against a fair insurable risk. They should only be devoted to the payment of benefit to those who fall out of employment because employment is bad for the time being, and who, in the ordinary way with a return of prosperity, will again be able to contribute to the Fund. I did not think there could be any difference of opinion on an elementary proposition of that kind.


Who does the hon. Gentleman suggest should bear the expense of the maintenance of that category or classification which he proposes to segregate from the rest?


I was coming to that point. My point is that those who are permanently unemployed should no longer rest upon the Fund and therefore, as you cannot leave them to starve, it stands to reason that they must be supported by the taxpayer. There is no other way but I suggest that it should be a cardinal feature of the Fund to have that differentiation made clear.


How are you going to feed the people in Park Lane?


The right hon. Lady the Minister for Labour the other day made it quite clear that of the 2,500,000 at present unemployed, 1,000,000, roughly speaking belong to the three great trades of this country, namely, shipbuilding and engineering, textiles and mining. It is surely clear where our trouble lies. We are trying to support an able-bodied population on a basis of insurance which has broken down, and must continue to break down, under the conditions in which we find ourselves. What we on this side of the House complain of is that the Government are not facing, and will not face the fact that those conditions exist. They go on borrowing money presumably with the idea that some day the Fund will balance. I speak only for myself when I state my view that it never will balance, until you change the outlook for industry and the fiscal conditions of the country. Not even when trade improves and a measure of prosperity returns to this country can it balance under present conditions. Why not face that problem and put the Fund on a proper basis?


Will the hon. Gentleman tell us where this money goes to? When the money is lost where does it go to?


I do not understand the question. I never said that any money was lost.


The hon. Gentleman speaks of the money which is raised for these people as if it were going out of the country altogether, or being buried in the earth. How can it be lost when it is spent again in the country and regained in taxation?


I do not recollect dealing with that point at all. I said at the beginning that I did not entirely agree that a reduction of benefits ought to be our aim. I have said that all along. The problem is, first, to get the Fund solvent in dealing with those who are unemployed in the ordinary way and who are insurable, and, secondly, how you are going to deal with those no longer capable of regular work. It is clear that the position that the Government should take up is that it can never balance—using the word "never" in the ordinary sense—even with the return of prosperity, and that we are not likely to get our figures down to 900,000 while you include, as you are still doing, those who to my mind, are unemployable. When you remove them, it is quite possible that you may eventually get down to that figure, but, so long as you include them, the Fund must be put on a proper basis by one of three methods.

You must either increase the contributions and reduce the benefits—and, even if desirable, that would be a long process before you got solvency—or you must fund the whole of your present debt and get back to what I would call a workable basis for your Fund, in fact write off what you have spent as lost, or, thirdly, you must so change your system that in addition to decreased benefits and increased contributions you will get a change in the whole financial aspect within a very short time. This you can do by enlarging the whole scope of insurance altogether, because the more people there are paying contributions and being brought into the Insurance Fund, the greater will be the revenue and the smaller the payments as against the risks. Those are the three things that you can do, but when we come to the position which is taken up by the Government, namely, of giving no indication of what they intend to do, is it surprising that the Opposition should say, "We are not going to give you the £25,000,000 that you want until you tell us what you mean to do"?

That is the whole gravamen of the charge against the Government. We say that they should come here and ask possibly for a small sum of money with which to carry on, until they have had time to put their proposals up, but they must tell us what they means to do before the House rises. What is their policy in regard to unemployment? The hon. Member for East Wolverhampton (Mr. Mander), speaking from the Liberal benches—I am sorry he is not here at moment—engaged in that most delightful occupation, which is so common in this House, of playing skittles by putting up a large number of ninepins and throwing balls at them. He made a number of statements of his own and then demolished them. He knew apparently what the Conservative policy was, far better than do the Conservatives themselves, and at the same time he condemned my right hon. Friend the Member for Stafford (Mr. Ormsby-Gore) for not dealing with it in his speech to-day. That is not the point. It is not a question of whether or not the Conservative party have a policy. It is not for us to put forward a policy—that is for the Government to do—but surely to some extent our views have been made clear in the speeches from this Front Bench and from the back benches, for whatever value the latter may have. We are prepared to do one thing, and that is to tackle the problem of putting this Fund on to a proper basis.


Why did you not do it when you were in?


The difficulty of speaking here is evidenced when hon. Members opposite come in and, without having heard what one has already said, put these questions. I have already said quite clearly that the situation when the Conservative Government left office was totally different and that at that time the figures of unemployment were falling.


I heard you.


Then I wonder why the hon. Member asked the question.


I asked the question because you did not go into it; you evaded it altogether.


There was nothing evaded in the very definite statement that I made as to the difference in the conditions two years ago and the conditions to-day. You are borrowing now to a sum which the right hon. Lady herself has said has risen from £30,000,000 to a prospect of £120,000,000, or whatever the figure may be. I have not been accusing the Labour Government of the fault for bringing about this state of affairs. What I say is that that is the problem, and that you know that it is the problem. It is not a question to-day of whose fault it is that there are 2,500,000 people unemployed, I might have a great deal to say about that, and about the suicidal policy on the part of the present Government which has brought that about—I only wish it were in order—but the point is that that is the problem, and that the Government know it. It has been said over and over again by their own Prime Minister, in one form or another, and I would like to quote just one written statement of his on that subject: The greatest risk the Labour Government will have to run in the development of its industrial policy will be the temptation to offer doles instead of prosperity. I should very much like to develop reasons why we have arrived at this figure of 2,500,000 unemployed, but I cannot do that. I can, however, repeat that it is the business of the Government to face the situation as it is, a situation that cannot be met by any system of temporary palliatives. They know, as well as I know, that there is no hope whatever of this Fund on the present basis ever balancing. I confess that I do not like using the word "ever," but I mean at any time that we can see under present conditions, and therefore it is wrong for the Government to ask for this money without giving us some idea of how they propose to deal with the whole problem. The object of the Amendment now before the House is to insist that, while they may ask for some temporary money, they shall not be able to bring about the separation of Members of this House at the end of next month without telling the country what they mean to do and whether they intend to carry out their so oft-repeated pledge.


The Bill before us deals with two aspects of this general subject; one is the additional money necessary and the other is the extension of the period for meeting obligations under the transitional benefit. One has heard a lot of condemnation of the Government for departing from what is termed actuarial soundness in this matter, but I wonder if hon. Members opposite ever let their minds go back to 1920, when they said "Never mind about any insurance basis. There is £22,000,000 standing to the credit of the 1912 Unemployment Insurance scheme, and we want that money, because there are ex-service men whom we are paying out of direct taxation"—they were paying them at one time 29s. per week—"and we want to get rid of our responsibility and to use that £22,000,000 of credit balance that represents contributions paid by those persons insured up to that date."

Then again the Government of that day said, "Early in 1921, when we commence our attack on wages, it will not do to leave persons thrown idle because of dispute or unemployment in consequence of our acts without at least bread and butter being made available for them." They passed the 1920 Act, and put into benefit persons who had only to prove that they had, at some time or other, been employed in the occupations then included. They commenced borrowing in 1921. They borrowed twice in 1921. They borrowed £20,000,000 in that year, and used up the £22,500,000 balance standing to the credit of the contributors since 1912. What were they afraid of then that they did that? Were they so much concerned then about this virtue of balancing incomings and outgoings, about the actuarial soundness, about the great principle which was at stake, that you must not provide a measure of maintenance to persons who did not establish a right to it by reason of paying contributions? They were afraid of the ex-service men, and had to make provision for them. They got rid of the State's liability to meet that, and took the £22,500,000 to get them out of the difficulty. That was the policy of the Conservative Government, the members of which to-day complain to the country that the Labour Government are not concerned about the actuarial basis of the insurance scheme, and that they will pay people who will not work in any circumstances.


That was not a Conservative Government.


Their memories are so short that they cannot go back to 1925, when the contributions were reduced by 2d. from the worker and 2d. from the employer, in order to start the widows', orphans and old age pension scheme. Did they not then take from that Fund a State responsibility also? Did they not so arrange the State contribution under the Economy Act, 1926, that not only was the 2¼d. per individual paid by the State repealed, but the Exchequer contribution was reduced by three farthings per week, with the result that the Fund lost between the years 1926 and 1929 £15,000,000. The total effect of it all is that that Fund has lost something like £46,000,000 by the rearrangements in which the Conservative Government engaged. They were not concerned about the financial soundness of the scheme, or the building up of reserves to meet emergencies. They were all the time seeking where they could to ease their own responsibility, to shift it back on to this Fund and create new social services by withholding a certain amount of contribution that should rightly flow to that Fund.

2.0 p.m.

The hon. and learned Member for Central Nottingham (Mr. O'Connor) said he would tell us one or two elementary things. The things which he told us only showed his elementary knowledge. Had he reviewed the matter back to 1920, he would have seen that if there had been any departure at all from insurance principles, that departure was taken by the Coalition and the Conservative Governments. On the other hand, he said, "What are you prepared to do? Where are you going? You cannot everlastingly proceed in this way by borrowing." I hope the people of the country will eventually say that it is our responsibility, that there shall be no question of actuarial basis from the point of view of three-party contributions, but that it shall be non-contributory, and the State raise the necessary amount to meet maintenance charges for unemployment purposes from general taxation. I am led into that because of what has been said. We have been told about the wickedness of giving food to a person who is hungry because he has not been fortunate enough to be at work to provide a stamp qualification by contributions.

It is the transitional part of this Bill which is causing the greatest anxiety, and nobody has yet said, except in a general way, as the last speaker did, that there is a difference in the position of the man who has been so regularly employed that he has a financial stake, or has established a certain standard of claim by reason of his contributions, and his less fortunate comrade who has been out of work for a very long period, and has found, as time has gone on, a diminishing possibility of ever being in the insurable field. That is his hard fortune. Some hon. Members suggest that, because of that, we should put him on one side, and hide from the world the gravity of the situation in this country—destroy his soul and all possibility of his ever being able to re-establish himself as a useful unit in the industrial world. You would say, "Back to the Poor Law!"—to the Poor Law with diminished possibilities of money; but, anyhow, he must go out, for the sake of resisting this demand for raising money to meet a State responsibility, and to bring the Fund on to what you term an actuarial basis. I am not prepared to face up to that alternative. I think that that alternative is wrong. It is said that it is wrong to meet expenses or to meet demands in the way I suggest, but may I remind hon. Members opposite that during the debate on the Unemployment Insurance (No. 3) Bill, on 4th April, 1930, the right hon. Gentleman the Member for Epping (Mr. Churchill) said: It might well be that an increase of indirect taxation borne by the whole of the consumers would be preferable to raising the millions for the maintenance of the Insurance Fund directly by a tax upon the regularly employed workmen in the prosperous industries."—[OFFICIAL REPORT, 4th April, 1930; col. 1725; Vol. 237.] Therefore, it is no strange, new doctrine for us to say that it is a State responsibility, that it should be on a non-contributory basis, and that you have no right to increase the contributions of those who are regularly employed, and ask them to carry the whole of the burden. I do not know that the right hon. Member for Epping will say to-day, but he said on that occasion that it might be necessary to raise the money by a general tax on all consumers. That, of course would mean a form of indirect taxation. I would prefer a form of direct taxation, letting the workers in an emergency pay a percentage according to their earnings, but only for the emergency until we got to better times.

I have heard two speeches in the past three weeks, one by a French employer of labour, and, taken in combination with the speeches from the Opposition and a certain publication from the Employers' Confederation of this country, I cannot help thinking that the real attack against the Government is an attack in order to sever the transitional men from the rest of the unemployed so that they will be eager seekers for employment at wages less than those now established in industry. This French employer of labour said—and he was obviously referring to the British system—that unemployment insurance as developed in some countries had been definitely the cause of unemployment. He argued that unemployment insurance permits the stabilisation of wages at a certain level and does not permit of those wages being adapted to the economic situation; in other words, it prevents the drastic cuts which the employers would like to enforce.

That was said by a gentleman well known to many hon. Members opposite, M. Lambert-Ribot, who was the employers' representative recently at Geneva, and he said it in a discussion on unemployment. His argument was very similar to the argument in a publication of the Employers' Confederation, which advocated a cut of one-third in unemployment benefit, and argued that in the export industries of this country everybody should be brought down to the level of the standard of living which was capable of being sustained in view of the, competition in our export trade. If one takes side by side with that another statement which I heard from a Japanese workers' representative, who said that they had knowledge in their own country, where no provision was made for the sustenance of the unemployed, of whole families committing suicide——


That is a national pastime in Japan.


I should not like to suggest that it should become a national pastime in this country, although evidently the people who might be driven to it are looked upon as sport for a good many people. I am sure that the Government in their present temper will resist anything in the direction of severing the transitional men from the rest of the unemployed. I hope that they will boldly admit that it is a shame that they should have to come continually to the House for borrowing purposes for the unemployed, and decide that such money as is required shall be raised by some form of taxation. If that proposal comes forward, we shall be able to quote speeches of hon. Members opposite in support of it. There is another system in relation to transitional men to which I want to call attention. A method is growing up of casting off the unemployed list men who are on transitional benefit by the imposition of test work, and using them to keep other men unemployed. Unemployed men are sent to test work, particularly in London, and have to work for 32 hours for a meal while they are at work and four shillings in addition to their unemployment insurance benefit. They are set to do picture-frame making, painting, and other work under the guise of test work.

If there is real work to be done in painting, picture-frame making or in pipe track work, let the men who are unemployed do it at trade union rates. Test work does not take one man off the unemployed register for it is work that could properly be done by craftsmen at craftsmen's wages. Sometimes a trade unionist who is unfortunately on transitional benefit is asked to perform, under the guise of test work, work which is his original work when he is employed. If he refuses to do it, he is threatened that he will be prosecuted for being unwilling to assist his wife and children, or as a rogue and vagabond. He is threatened in this way, and yet, if he does the test work, he suffers the disadvantage that when he seeks employment in his own work, he is at once known as a man who has been put on test work, and is looked upon as an inefficient man. I urge the Government, since they have been challenged, to review the method of raising the money. I hope that they will scrap the contributory basis, at all events at it exists at present, and raise the money by a direct tax during the period of emergency; and, if that is found insufficient, to impose some emergency tax upon earnings up to a certain amount as a contribution from those fortunate enough to be employed.

In this way, the Government will be able to meet a responsibility which I hope that they will never turn down. We have gone through eleven years of very hard times, but I am not so pessimistic as some hon. Members who have spoken. They have spoken in a very gloomy way, and declared that we shall never raise the money. Fancy a Member of the British House of Commons proclaiming to the world that we have been outstripped in our industrial ability to meet the demand for world supply. Imagine a Member of the British House of Commons saying that we shall have 3,500,000 unemployed! I imagine him saying that we shall never be able to have an insurance fund unless we lop off a great proportion of the human element which is at the moment dependent for some form of sustenance on the machinery of the Unemployment Insurance Act!


The hon. Member who has just spoken pleaded as an excuse for the present situation that the responsibility for first departing from the insurance principle rested on what he described as a Conservative, but what was in fact the Coalition Government. Some of us first came into this House by standing in direct opposition to the policy of the Coalition Government, and therefore we cannot accept any responsibility to-day for the actions of that Government.


The hon. Member will appreciate that while they may have fought against the Coalition ticket they were still making their contribution to or continuing to support the policy of the Coalition Government in that respect.


But the hon. Member put forward that orginal departure as an excuse for what is happening to-day. He went on to state frankly, not for the first time, both on his own behalf and on behalf of the important body with which he is connected, that the State ought to accept full liability for unemployment insurance. We may disagree with that point of view, but at all events we respect the sincerity with which it is put forward. But I do submit—and I would like to support the remarks of the hon. Member on this point—that we are entitled to know whether it is the policy of the present Government. The hon. Member appealed to his own Government to face up to that issue, and I should like to endorse that appeal. We ought to know where we stand in this matter. I do not say that if that course were suggested it is one which would commend itself to this side of the House, but it would be a far more honest course of action than that of the Government to-day. No Government have found themselves in a more anomalous and, indeed, ignominious position than that which is occupied by the present Government on this fundamental issue. Never have a Government shown such a capacity for eating their own words; and, to do them justice, I must confess that no one seemed to feel this more than the spokesmen of the Government; in this and previous Debates. Realising that they are not only bankrupt of policy but, apparently, barren of ideas on this subject, they have wisely recognised that the best tactical course is to endeavour to shift what must be their responsibility, and their responsibility alone, on to the shoulders of the Opposition, to challenge the Opposition to say what they would do if they were confronted with the task. I do not think anyone on this side is likely to fall into that very obvious trap. I certainly hope that at an early date the Government will be relieved altogether of their present heavy burdens, and then I am confident that the next Government, a Conservative Government, will be prepared to face up to this problem, and in a very different manner.

This subject has been debated so frequently that it is difficult to say anything particularly novel about it, but the situation is so grave that the salient facts can hardly be repeated too often, in order that they may be kept prominently before the House and the country. For the fifth time in two years we are asked to approve a vast increase in the borrowing powers of the Unemployment Insurance Fund, the debt of which has risen from £37,000,000 in 1929 to something considerably over £100,000,000 today. Still we are told that there is no prospect of finality, that even this additional amount may not carry us on much beyond the end of October. We know, further, that no one has condemned this policy of continued borrowing more than the leading members of the Government, or more than the present Minister of Labour. She has been reminded to-day, and I should not be surprised if she were reminded on a good many subsequent occasions, of the famous speech in which she described this borrowing as a dishonest course, and definitely dismissed from consideration any further increase. We know that ladies are traditionally permitted to change their minds, but it certainly was a little startling, after having heard that speech, to find the right hon. Lady coming to the House within four months for further borrowing powers. On that occasion she frankly admitted that circumstances had been too much for her, she even used the expression that it was "a rake's progress" upon which she was engaged, but pleaded that her rakishness was somewhat less than that of her predecessors, that it was under better control, and that the prospects of reform were clearer. After a, further 18 months of this dissipation, as so often happens all hope of reform has been abandoned. The rake's progress is apparently to continue indefinitely, and one can only say of the right hon. Lady in the words of Pope: Men, some to business, some to pleasure take; But every woman is at heart a rake. Not only the right hon. Lady but the Prime Minister has in recent times condemned this policy in the strongest language. Quotations have been made from some of his speeches showing that he has said that unemployment insurance must be put back upon an insurable basis. He has been supported by the Chancellor of the Exchequer, who has said that it is the duty of Parliament to put it back on an insurance basis. Are we not entitled to ask, do these words mean anything or do they not? If they do mean anything, surely they must imply that this borrowing has got to cease, and obviously it was because the Government felt so that the Royal Commission was appointed.

The appointment of that Commission has been strongly criticised from their own ranks. The Government were criticised first for appointing the Commission, and several hon. Members opposite have made the rather strange criticism that if a Commission had to be appointed the Government should have seen that those selected to serve upon it possessed what is described as "a Labour background." Many of us felt that the Commission was not likely to serve any useful purpose, and events have shown that we were right and that it was really appointed for the purpose of delay and to enable the Government to postpone taking a decision. I think events have justified us in that view, for reasons I will refer to; but I would like in passing to protest against the curious suggestion, made not by any means for the first time, that it is the duty of the Government when appointing Royal Commissions or official enquiries to pack those bodies, so far as they can, with their own sympathisers. The desire does not seem to have been to appoint individuals who may be expected to report impartially on the evidence placed before them, and act more or less in a judicial capacity, but to report more from the point of view of their own personal predilections and sympathies. If that view were accepted, and I am glad it is not accepted, it would be a fatal blow struck at the public life of this country. The Commission was appointed, and it was composed of the most suitable and impartial people which the Government could choose. The responsibility for the appointment of the Commission rests upon the Government, and the Government alone. I assume that the Government still have confidence in that Commission. That must be so, because they are putting forward the excuse that they cannot declare their policy in advance of the final report of the Commission. Therefore, we must assume that the Commission still enjoys the confidence of the Government, and yet it seems deporable that owing to the treatment meted out to the interim report the Government have made it very difficult for the Commission to draw up its final report.

The Commission was pressed to issue an interim report, and we know now that its recommendations, except in minor respects, are being disregarded. The Minister of Labour protested against the suggestion that the Commission was appointed for the purpose of delaying dealing with this question, but the Government cannot have been taken by surprise at the recommendations of the interim report. The trade union publications and members of the Labour party have declared that the proposals of the interim report were inevitable. Why did the Government press for an interim report if the Commission's proposals were to be rejected? They must have known in advance, broadly speaking, what the nature of those proposals would be. The Commission had to make some suggestion as to how the Fund could be made solvent. How could that be done except by an increase of contributions or a decrease of benefits, or both. At the time the Commission began its inquiry the Fund was paying out £46,000,000 more than it was receiving. I do not suggest that the Government are not entitled to turn down the report of their own Royal Commission, if they think fit, but, if the Government take that course, they must produce an alternative policy for bringing about the solvency of the Fund.

Is it the policy of the Government to put the whole burden on the taxpayers, as the supporters of the Government suggest? Does the Chancellor of the Exchequer agree—not really approve—with the view that the whole stability of our financial system is threatened by continued borrowings. It is obvious that for the moment borrowing must proceed, because otherwise chaos would come about, but we are entitled to ask for how long borrowing is to continue? Is it to go on indefinitely, or have the Government some alternative plan? The Parliamentary Secretary to the Ministry of Labour and the Minister of Labour have told us, in effect, that the piling up of debt cannot go on, and that the Fund must be placed on a self-supporting basis. The Parliamentary Secretary has also told us that he agrees with the argument that able-bodied workers must be dealt with outside the existing arrangement. That is exactly the view which many of those on this side of the House are endeavouring to press forward and which is being opposed by many hon. Members opposite. That is not our view alone, but it is the view of the Parliamentary Secretary and the Minister of Labour. I am sure that there is no desire on the part of any hon. Member on this side of the House to force the unemployed on to the Poor Law. That has never entered into our minds, but we suggest that it should not be beyond human ingenuity to devise a scheme for dealing with each case on its merits, not with harshness or want of sympathy, but in a Way that is just and fair.

We have heard a good deal about abuses. I do not propose to deal with that point now, because it will be discussed when we consider another Bill, but I should like to clear my own mind with regard to what is the position of many bon. Members opposite on the subject of abuses and monopolies. Some hon. Members say that it is untrue to state that there are any abuses at all. Others say that abuses and anomalies exist, but they are so few as to be negligible as compared with the magnitude of the problem. Others say that there are abuses, whether few or many, but they are not as great as many other anomalies with which it is not proposed to deal. I should like to know which of these views is the true one. It is suggested that only £5,000,000 will be saved if the recommendations of the interim report are dealt with, but surely it is of some importance that we should save £5,000,000, or even £1,000,000, in present circumstances. I am inclined to wonder whether the Government are in earnest when we hear of the appointment of another committee to investigate this problem. On all these points, we have a right to demand from the Government a clear indication of their policy. We ought to be told whether borrowing is to continue indefinitely, or what is to be the alternative. We want to know wether the Government are going to distinguish between those who fall within the ambit of the insurance scheme and those who are outside. Is it the policy of the Government to differentiate between those two classes. The Government repudiate the report of the Royal Commission without producing an alternative, and their policy is one of drift and delay. Sir William Beveridge is an authority on this question, and in an important speech he said: If it is true that the control of credit may be the test of capitalism, it is equally true in all probability that the reform of the insurance system is a test of democracy. It is because I feel that the Government are failing altogether to make that test, that I shall without hesitation support the Amendment.


In speech after speech from the Opposition benches, the greatest possible sympathy has been expressed with the Front Government Bench. I desire to reciprocate, because, from all the speeches that we have heard from the Opposition benches to-day, and indeed, all the speeches made from those benches with regard to unemployment and the proposals for dealing with it, it has been easy to discover that the courage of Members on the Opposition side is in inverse ratio to their proximity to the Front Bench. From the Front Opposition Bench this morning we had a speech which denounced the Government for their failure to carry out what was alleged to be their original intention, namely, to put this Fund on a solvent basis, but not a single word was said about the methods to be chosen for bringing that about. This Amendment, I presume, arose out of the recommendations of the Royal Commission. The Royal Commission made definite proposals, whether one agrees with them or not and the whole point of the Amendment is that it oriticises the Labour Government for not carrying out the proposals of its own Commission. We heard, however, not a single word from the right hon. Gentleman the Member for Stafford (Mr. Ormsby-Gore) as to whether the Front Opposition Bench were in favour of those proposals or the reverse.

We have already been told, by someone who is supposed to speak with a certain measure of authority, that these proposals would be rejected by a Conservative Government, if ever they came into office again, quite as ruthlessly and contemptuously as they are alleged to have been rejected by the present Government. In short, although the right hon. Gentleman showed a great deal of vigour, anyone who listens to his long harangue in the hope of hearing the germs of a policy would have been disappointed. In fact, we were reminded forcibly of the words of Shakespeare: Full of sound and fury, signifying nothing. When we came to the back Benches, we found rather a different state of affairs. The right hon. Gentleman the Member for Antrim (Sir H. O'Neill) had no doubt as to what should be done. He told us that we ought to prune the Fund in order to stop a leak. That is one of the most extraordinary manœuvres that any engineer could ever contemplate. He went on to describe what he regarded as similar conditions which existed 100 years ago. He referred to the aftermath of the Napoleonic Wars, and the abuses of the old Poor Law. It is rather remarkable that those abuses all took place during the continued existence of Conservative Governments. Or perhaps I am wrong in using that description; they did not call them Conservative Governments then, they called them Tories.


They were Whig Governments.


No, I think it will be found that they were Tory Governments at that particular time. The Whig party had suffered somewhat the same fate that the Liberal party is suffering to-day. It had virtually gone out of existence, and the historians tell us that the country was practically ruled by Lord Liverpool, who was not even Prime Minister. The old Poor Law was then in full operation, carried on by the Tory party in this House and by the Tory party throughout the country. Not only was a Tory Government in control of the administration in those days, but they had actually adopted all the panaceas for dealing with unemployment which are advocated by right hon. Gentlemen opposite to-day. They had a whole-hog system of Protection as far as food was concerned, and manufactured articles were protected to a similar degree. In fact, all the policies that are advocated, not to modify unemployment but to abolish it entirely, were in full operation at that date. The particular instance which the right hon. Gentleman gave dealt with agriculture and the position of the farmer and the farm labourer, whose wages were so low that they had to be subsidised out the Poor Rate and out of taxation. But at that time the farmer was protected, and ought to have been able, if there is any soundness in the arguments of hon. Gentlemen opposite, to pay a substantial wage, to establish agriculture in this country on a firm basis, and to make it impossible for anyone to be unemployed at all. While there has been a conspicuous lack of courage on the Front Opposition Bench, the courage on the back benches might almost be described as temerity.

Another right hon. Gentleman went further still. He gave us a policy, and his policy could be summarised very briefly as one of sacrifices for all. He boldly accepted the main proposals of the Minority Report. I fully expected him to go further, and probably, if he had been right outside the House instead of on a back bench here, he would have gone further. Indeed, I might have improved the reference that I made at the beginning, by saying that the courage of hon. Members opposite was not only in inverse ratio to their proximity to the Front Bench, but that, when they got completely outside the House of Commons, their policies were remarkably bold. When we read of a policy to reduce unemployment benefit by one-third, to reduce the period for which that benefit is to be paid, and to eliminate a great number of people from unemployment benefit entirely and place them under local control, we can readily appreciate how really mild the recommendations of the Royal Commission are. But even those recommendations are not only too drastic for the Government Front Bench, or, indeed, for the back benches on this side, but they are also too drastic, at any rate now, as far as one can see, for the Front Opposition Bench. Whether they will be too drastic when right hon. Gentlemen opposite come over to the Front Government Bench, I am not prepared to say; probably it is another case for a free hand.

At any rate, the hon. and learned Member for Central Nottingham (Mr. O'Connor) had no doubt as to what should be done, though he was careful to impress upon the House that he was speaking for himself. He would shorten the period in precisely the same way as the Royal Commission recommend; he would also reduce the benefits to correspond with the fall in the cost of living; and, in addition, he advocated a reduction of the payments made to the rentier class, meaning, I suppose, the holders of War Loan. I did not see any enthusiasm for those suggestions on the benches opposite, and there are one or two things about them that would make them extremely ineffective in practice. When we speak of the country being unable afford more money for the unemployed, or for the purpose of maintaining the present payments to the unemployed, we have the right to ask, who is the country?

We hear speeches in this House that would suggest that the taxpayer was an abstraction, having no relation whatever to other members of the community, but it must be clear that to reduce unemployment pay or to increase unemployment pay would undoubtedly have an effect upon the rest of the community. If you say that you will reduce the payments to the unemployed, and will reduce taxation by that amount, and will also take care to reduce the income of everyone else in the same proportion you simply end where you began. There would be no difference, except a decrease in the nominal income of everyone, which means, in effect, that no one would be called upon for any sacrifice whatever. I think that that proposition must be clear if it is thought out for any reasonable length of time. What hon. Members opposite fail to see is that, when they suggest a decrease in any of these payments, whether for unemployment benefit or for social services, they are not really reducing the expenditure of the country at all, but are simply changing the ownership of a certain amount of income from one person to another. As you take from one set of taxpayers and give to another, the total income of the country is not decreased, but one set of taxpayers has more income and another set has less income; and the reverse takes place when taxation is reduced and unemployment pay is decreased by a corresponding amount.

When hon. Members suggest that a solution can be found by sacrifices being made by everyone, they are simply asking us to come back to the position from which we started, making no material difference anywhere, except in so far as these contributions may enable us to sell our goods cheaper abroad, and thereby improve our competitive position in the world. That is a subject into which I do not want to enter for the time being, but I might point out that these proposals, which aroused no enthusiasm on the benches opposite, would undoubtedly have met with quite as great hostility from other sections of the community as any suggestion to decrease unemployment benefit would meet with from this side. I am afraid we shall have to make up our minds that, if the well-being of the country depends on this Fund being placed in a solvent position, there is very little hope either from our own Front Bench—which we do not deplore for the time being—or from the Front Bench opposite. It is quite certain that, however much they might like to do one or other of these things, they have neither the boldness nor the capacity to tackle the job at present.

There is one material difference between the conditions outlined by the right hon. Baronet and the conditions to-day. The abuses that were carried on by Tory Governments under the old Poor Law were corrected by another Govern- ment, but that Government and that Parliament were elected at a time when working people had not votes. I do not expect that the proposals of the hon. and learned Gentleman the Member for Central Nottingham will be adopted by his party. Hon. Members opposite all through the Debate have urged that the great scandal is either the scandal of the dole, as it is called, or the scandal of borrowing. That to me is not a scandal at all. The great scandal is that there should be not only in this country 2,500,000 unemployed but all over the industrial world a similar state of affairs, and, instead of devoting our attention to measures necessary to correct that tragic occurrence, the whole energy of hon. Members opposite is confined either to advocating proposals which they believe, rightly or wrongly, would strengthen our competitive power or to finding fault with other people who are trying to alleviate the position of those who are suffering from this state of things.


I think we are entitled to feel a certain amount of indignation at the attitude of hon. Members opposite and, still more, at the absence from the Treasury Bench of any representative of the Exchequer. Here we are discussing a proposal which, in the view of the Treasury experts, is calling into question the whole stability of the British financial system. The Chan-caller of the Exchequer does not condescend to grace the House of Commons with his presence on so important an occasion, nor can he even find it possible to have here the hon. Member for Huddersfield (Mr. J. Hudson), his Parliamentary Private Secretary, on whom devolves the great responsibility for the national finances in his absence. The House of Commons and the taxpayers of the country are invited to incur a debt of £1,000,000 a week towards unemployment insurance, but there is no representative of the Treasury present. [An HON. MEMBER: "You have only just come in."] It is true that I have been absent for a certain part of the time, but the Chancellor has been absent all the time. How much more fortunate might the unemployed be if we were being asked to incur a debt of £1,000,000 a week to set the unemployed to work! We are asked to incur a debt of £1,000,000 a week for the wages of idleness, but the Government has repeatedly told us it does not think it advisable to borrow any sum of money at all to give work to the unemployed and to enrich the resources of the country. No one, as far as I am aware, has advocated any reduction of the benefits that are now being paid to the unemployed. I certainly should be no party to doing so, but, if the present situation continues, not only the unemployed but the whole of the rest of the country will be deprived of resources.

What is the argument of the Treasury bench? The whole burden of the speech of the Dominions Secretary was an interrogatory which he administered to someone who was not present. He said Lord Hailsham had made the perfectly iniquitous statement that the Unemployment Insurance Fund should be put upon an insurance basis and he said, "Ask Lord Hailsham or anyone who can speak on his behalf how you are going to put it upon an insurance basis except by reducing benefits or increasing contributions." But that is an interrogatory that he ought to have been administering to the Chancellor of the Exchequer, for the worst crime of which Lord Hailsham can be found guilty is the crime of plagiarism. All that Lord Hailsham said was what the Chancellor himself had said a little previously I think it is the duty of Parliament to face up to this problem and to put the insurance fund upon an insurance basis. That is why we are entitled to have the Chancellor here, to answer the question administered by the Dominions Secretary to Lord Hailsham. How did the Chancellor think he could put the Insurance Fund upon an insurance basis except by reducing benefits or increasing contributions? If there is an answer to that question, it is an answer that must be given by the Treasury Bench. The Government asked this very question of the Royal Commission, "How are we to put this fund upon an insurance basis?" No one wanted the Royal Commission. Every one protested against it. The Government chose from all the personnel at its command the very best nominees it could find, and they have treated its report as if it were an election manifesto of the Conservative and Liberal parties. It stands there and says, "We who represent the unemployed are going to defend them from this Royal Com- mission." Never was a more disreputable act committed by any Government. We are asked whether we on this side would put these recommendations into effect. My answer to that is "No. We did not appoint the Royal Commission." But the Chancellor of the Exchequer gave a guarantee that he would put them into effect. This is what he said: Having appointed this Royal Commission, he wanted the actual facts to be ascertained by an authoritative body whose recommendations and conclusions would be accepted as impartial by everybody. What then is his right, what is the right of any Member of that bench, to ask Members on this side of the House whether they would put those recommendations into effect? Do hon. Members opposite realise that it is not only a question of borrowing money, but it is a question of paying interest of £4,500,000 a year, which takes 2d. out of every week's contribution paid by those in work?

We on this side of the House are told that we have no policy. What is the policy of hon. Gentlemen opposite? [An HON. MEMBER: "To keep the unemployed!"] Yes, the policy is to deceive the unemployed by appointing Royal Commissions, and when day after day people ask, what are you going to do for the unemployed, you on that side of the House say, "Have patience." Well there is a traditional virtue which has been exercised by British Governments who could no longer carry out the policy upon which they were elected. And it is a policy very much akin to patience; it is a policy of resignation. That is the historic policy of discredited Governments in this country. The Government are leading England on the same road as Australia. Great Empires have gone down before by refusing to face the facts. The Chancellor of the Exchequer said that it was the duty of Parliament to face the facts. Face the facts! Why, hon. Gentlemen opposite turn their backs upon the facts and turn their backs upon the country, and then say that the country is behind them. We are asked to vote money by hon. Gentlemen who are the custodians of the unemployed. We will not deprive the unemployed of anything. We can only deplore that hon. Gentlemen opposite are the custodians and say to them, "Take your cash, for your credit is gone."


I rise to support the Amendment which has been moved by my right hon. Friend the Member for Stafford (Mr. Ormsby-Gore) to the effect: That this House declines to authorise such extensive further borrowing for the purpose of making up a continually recurring deficit in the Unemployment Fund, in view of the refusal of the Government to take any adequate steps to carry out its declared policy of making the unemployment insurance scheme solvent and self-supporting. 3.0 p.m.

I, like my right hon. Friend, was surprised to hear at an earlier stage the tirade and complaint of the Minister of Labour, that such an Amendment had been put upon the Paper by the Opposition. But my right hon. Friend pointed out with acumen that the words of the Amendment are taken almost textually from the terms of reference to the Royal Commission to the drafting of which the Minister of Labour herself was a party. It seems hard that the Opposition should be censured. In fact, almost the only part of the right hon. Member's speech in which she developed any warmth, or, indeed, any vigour, was in censuring my right hon. Friend. It seems hard that he should be censured for reproducing in the form of an Amendment almost the actual words which the Government themselves had drafted weeks ago for the guidance of their Royal Commission. We have had a great many debates on unemployment insurance. I cannot remember how many times I have spoken in the lifetime of the present Parliament. [An HON. MEMBER: "It is the same old story."] That is one of the difficulties with which I find myself confronted. It is not quite the same story, because the tale is getting much worse and the difficulty is in finding a variant of words and of ideas which will cope with the increasing gravity of the situation and the increasing failure of the Government.

This Bill represents the financial collapse of His Majesty's Government. I do not see any representative of the Treasury here. Although this is a scheme which is destroying the whole solvency of the Chancellor of the Exchequer's finances, neither he nor his Financial Secretary has honoured us with his presence to-day. The Chancellor of the Exchequer said in the City: I have to find this year £21,000,000 to finance a large class of unemployed persons who have no insurable qualification. I think it is the duty of Parliament now to face up to this problem and to put the Insurance Fund upon an insurance basis. [An HON. MEMBER: "That has been quoted before!"] Is it not right that it should be quoted when it has never been answered? We quote, we argue, and we ask questions, and no reply is given. Instead of making replies and instead of entering the debates upon these matters, the representatives of the Government spend their time in reading out rigmaroles about some French economist and toiling laboriously through the charts published by the "Times" newspaper.


Tell us what you would do?


The hon. Gentleman is afraid that I may say something—[Interruption].


Will the right hon. Gentleman tell us what he would do?


The hon. Gentleman not only has a guilty conscience and is afraid that I am going to say something which is not in the interests of his party, but has abrogated to himself a function which did not belong to him, namely, to make my speech instead of letting me make it. [Interruption.]


If the right hon. Gentleman will sit down, I will get up.


I am sure that the hon. Gentleman must recognise——


I am one of the bantams.


I think that the hon. Gentleman will recognise that this bantam, at any rate, has had all the notice it deserves. [Interruption.] The Chancellor of the Exchequer said he was basing the whole of his Budget scheme upon the economies that would be effected on unemployment insurance. Now he has abandoned all that. He faces now a certain deficit. He has accepted the position of having an unbalanced Budget. Every principle of finance which the Chancellor of the Exchequer professed. [Interruption.] All these sporadic interruptions are signs of a guilty conscience. Never do I see the Government's supporters deny full hearing even to arguments which they dislike, except on those questions where they know that they have an indefensible position, where they know that they have something to conceal and where they know that they have a case of which they are ashamed. No doubt I am going to be perpetually interrupted from this quarter or that. I am quite content. I can make my point just as well by the practical demonstration as by any words that I can say. The Chancellor of the Exchequer has abandoned all those principles which he used to profess so loudly, so austerely, and which he condemned with so little consideration when they were broken by others. He has cast aside the reins and thrown them on the horses neck. He has abandoned the helm. [Laughter.] Will hon. Members allow me to make my point? [Interruption.] We are going to listen to the right hon. Gentleman opposite and I hope that we shall give him a fair hearing. The Chancellor of the Exchequer has thrown the reigns round the horse's neck. He has abandoned the helm. [Interruption.] He has released his control of the brakes. [Interruption.]


I hope that we shall conduct this Debate in an orderly manner.


Hon. Members opposite who are laughing at what they suppose is a mixed metaphor, are only showing their mixed methods of thought. All hopes of establishing financial equilibrium; all efforts to establish it, even the pretence of trying to do so, have now been abandoned by the Chancellor of the Exchequer. But that is not the worst. It is not only a collapse of our finance that we are witnessing, but it is the mental and moral collapse of His Majesty's government, and also, to some extent, I must admit, the collapse of our Parliamentary system. There are many subjects about which we are puzzled in this House, grave economic, currency and other issues, which baffle and puzzle men of every side, apart from Party, but this is not a subject about which we are puzzled or in bewilderment. It is not a subject where there is any difficulty in the House in arriving at definite conclusions. There is; no subject upon which the vast majority of Members of Parliament are more accurately informed and more generally agreed than on this question of what to do about the Unemployment Insurance Fund.

Three out of every four Members in the House this afternoon know exactly what ought to be done in the interests of the country, taking a far reaching view, and in the permanent interests of the wage earners. They do not require commissions or committees, or even three party conferences, to find out what to do. The light shines clear. All see it; none follow it. The hon. Member for Gorbals (Mr. Buchanan) whose speeches on this subject are a contribution which ought never to be lacking from a discussion of this kind, asked a very pointed question of the Government. He said: The Government set up a three-party committee. … It has been said that the three parties—the Tory party, the Labour party and the Liberal party—agreed to a means test. Is that true?"—[OFFICIAL REPORT, 22nd June, 1931; col. 109; Vol. 254.] That is the question which the hon. Member asked. What was the answer? I did not see the right hon. Lady the Minister of Labour leaping to her feet to respond to that direct question.


I did, and I said that it was not true.


I had a copy of the OFFICIAL REPORT with me.


I answered it today.


I am not referring to what happened to-day, and the right hon. Lady with all due respect knows that I was not referring to to-day. The hon. Member for Gorbals has not spoken to-day and therefore it could not have been in reply to him. The question asked by the hon. Member ought to be answered by His Majesty's Government. Is it true that Ministers of the Crown, Socialist Ministers, have committed themselves in any way to the idea of imposing a means test on those unqualified for insurance? Surely we are going to get an answer! Not one of them dare answer; not even the exuberant Lord Privy Seal. No, I mean the Minister for the Dominions, or is the right hon. Gentleman the Chancellor of the Exchequer—I do not know what he is, he passes so rapidly from one triumph to another. Is it a fact that there is not a single Minister on the Bench who dare answer the question put by their own supporter below the Gangway? Why is it that they do not give an answer? We are not obstructing a reply. Those who were invited by the Government to join in the three-party conference, this embryo of a Council of State, they are making no objection to the question being answered. Why is it not answered?


The right hon. Member evidently was not in the House when his colleague made the statement this morning and when I pointed out that I did not accept the statement as correct, but obviously I could not discuss the matter.


Why not?


I was present and I heard the right hon. Lady say that she entered a caveat. That is a sort of parry to a perfectly direct question. She said that she entered a caveat. Why cannot she say Yes or No? Why all this secret diplomacy? It is because the right hon. Lady knows perfectly well that there is a general agreement amongst responsible people in regard to what ought to be done on this subject and that the only thing that is stopping action is the Government's fear of electioneering consequences. Of course, I do not pretend that under our present condition of parties, this three-party system or catch-as-catch-can, on the eve of an election—I do not pretend that bad electioneering is not an important argument. But it is weighing with the Government in contradiction to their obvious and recognised and well understood duty. That places the Government, who are after all responsible, in a very discreditable position. Of course it would be affectation to pretend that this question does not affect all parties. Where it depends upon the votes of millions of working men and women, and rather more millions than the party opposite and an increasing number of millions, judging by recent results—


Mostly fools.


That is a strange remark for a Labour representative to make, to describe as fools millions of his own class, millions of people who choose to exercise their undoubted rights by voting for someone a little different from him.


Those who vote Tory.


There has come into existence a new vested interest, a dole vested interest, and behind it is enforced by the dole vote. In our present Parliamentary system we have not yet shown ourselves capable of resisting pressures of that kind. That is the gravest thing in the situation which is disclosed by these repeated debates. The Parliamentary system, the structure and virtue of the Government, is not capable of taking what is thought to be an unpopular course, however necessary, however salutary, however right it may be. Such symptoms are dangerous to institutions. Not to know is bad, but to know and not to be able to act is fatal. So we are led by His Majesty's Government through these tedious and interminable labyrinths of deception and delay, round and round the maze, from committee to conference, from conference to commission, from commission to personal inquiry by this or that Minister, and then back again to committee, always with a few months delay, and each time "wait for the interim report," "hurry up the interim report," and when it comes "wait for the main report," and so on—all with the object of gaining time, while Ministers of the Crown continue to shovel out the dole, let deficits accumulate in the finances, let confusion deepen and let abuses rip. That is the position. No one has spoken so vehemently and so pitilessly as she has upon this question. It is quite true that the quotation which I am about to give has been read before, but I read it again because at the close of this Debate the House ought to have the salient facts before it. She said: 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. 252.] How far we have travelled from the days when the right hon. Member said that. That was when the Fund was only £37,000,000 in debt; now it is £115,000,000, and soon it will be £130,000,000 or £150,000,000. It is said, if I quote correctly, that the road to hell is paved with Money Resolutions. At first the right hon. Member was noble and impeccable and self-righteous at the expense of her predecessors. She has now flung away every vestige of political decorum. Not only has she broken consistency with the past but at this very moment she is acting out of harmony with her declared convictions only a little while ago. At the present moment she is defending and aggravating the very system which she declared was dishonest and improper.

I deplore sincerely the downfall of the right hon. Member. I know her as an able and earnest social reformer, as a would-be statesmanlike administrator, as the first woman to be called to Cabinet rank and, bearing a great sense of responsibility in that respect, she is now revealing to the whole world that she is unequal to the task of doing her duty as she sees it. Somebody has talked about "The Rake's Progress," and we have all heard of "Eric, or Little by Little" and I used to be much affected by a popular drama called "The Girl Who Took the Wrong Turning," but these demoralisations come on so gradually, step by step, that it is difficult to resist them. If the Minister of Labour could only transport herself back to 29th November, 1929, and if she had then been confronted with a demand to raise the borrowing powers to £115,000,000, without any reform of the abuses in the system, which were well known to her then and are better known to her now—if she could then have been confronted with such a proposal she would rather have left her office than have been responsible for it. But, bit by bit, she has been drawn into this position. I am impelled to quote from a poet because he has expressed so well the process by which the Government and the supporters of the Government were insensibly drawn to their present position upon this unemployment insurance question and the borrowing by which it is financed: Vice is a monster of so frightful mien, As, to be hated, needs but to be seen; Yet seen too oft, familiar with her face We first endure, then pity, then embrace. I do not hesitate to say, at any rate—I speak only for myself, and for those who agree with me—what ought to be done. I have no sympathy with the proposals of the Royal Commission. It was a Socialist Commission, set up by a Socialist Government. They picked the members with full knowledge of their attainments and outlook. They set the reference, they asked the very question to which a Report like this could, I believe, be the only possible answer, and they ordered the interim Report to be presented to them. They are responsible for the Commission. Throughout the country it must be made clear that it is their Commission, that it was their method of dealing with this problem, and that we were not consulted in that matter at all. His Majesty's Government alone are responsible. They have drawn from this Commission, by the questions which they asked, what I can only describe as clumsy, crude, unscientific and unhelpful recommendations. We know the way that hair is cut in some places. You put a bowl on the child's head and cut off all that showed round the edges.

This Report seems to me to miss the whole vital point of principle at stake in this question. It proposes to cut down the benefits and increase the contributions throughout the whole insurance area; it makes no distinction between the insured and the uninsured; it adds to the burdens of the insured wage-earners and reduces the rights for which they have paid; and it leaves insured wage-earners hopelessly intermingled with the non-self-supporting element. All are lumped together under the generic disparaging term of the dole. Thus the self-respect of the great majority of working men who have ever used insurance is affronted, and the whole structure, the whole character, of these great social institutions like unemployment and other forms of insurance is brought into disrepute and contempt in all parts of the world.

We are certainly not bound by the Commission's Report, neither ought we to fail to proclaim, in my judgment, a clear view. I hold most strongly that a line must be drawn without delay, clear and unmistakable, between insurance and assistance. The insured pay for themselves; let them draw the benefits they have purchased by State organised thrift. The assisted stand in another category; they must be provided for according to their needs. The aid which is accorded to them must be measured by the policy of the State, but it should not be pretended for one moment that that aid is a kind of right, an actuarial right, arising from any process of insurance. I repudiate the suggestions of an inhumanitarian position on this side of the House or certainly among a great many of its Members altogether. All my life I have been engaged at frequent intervals, short intervals, in dealing with great schemes of insurance. I am the original author of the first Unemployment Insurance scheme by trades that was introduced in this House, now nearly a quarter of a century ago, and the labour exchange system I brought into being and set up.

All these great schemes, which were largely copied from Germany and which derived inspiration from that great Empire built by Bismarck, who saw and understood how a nation could be made strong and its people united—all these schemes, which the hon. Members and the party opposite would have been incapable of devising, and not had the wit or the patience to devise or the power to execute, now constitute the characteristic social bulwark of the British working classes——[An HON. MEMBER: "What about the right hon. Member for Carnarvon Boroughs?"]——I followed with him in many of these matters. I only say that I have been associated with the whole of this great structure and I stand here, not to assail it, but to defend it, and to urge that it shall be purged of abuses. It is, indeed, a shame to see these schemes vitiated and exploited, sinking into solvency and disrepute.

The Government, which knows quite well what is happening, and what ought to be done, refuses to do its duty, nay, is incapable of doing its duty, and falls back into a jungle of prevarication, obstruction and delay, which these debates have revealed with unprecedented ingenuity. It is lamentable. It is our duty to rescue the Insurance Fund, which, in the main, is working well, and better than any other system devised. Hundreds and thousands of men and women are having the resources, just at the time they need them, out of the contributions they have paid. They are having no more than their right. They can look every man in the face. They are dependent on the State in no way except under the covenant they have entered into, and they are getting the aid which enables them to avoid selling their household goods, and enables them to carry on until a new opening occurs. All this great scheme, which is the glory of our country, properly understood, is being vitiated by the abuses that you are allowing to creep into it, and in not drawing the line which separates the self-supporting element in the community from those who are compelled to incur the bounty of their fellow subjects.

That is the position as I see it. But there is one more stage, and it is the least satisfactory of all that we have to consider. The Ministerial speeches show that the Government are now playing for the dote vote. It has become a definite part of their plain of campaign. Very large numbers are involved when 2,600,000 are upon the register, and before Christmas the number will probably be 3,000,000, and next year probably still larger. Not only those who are on the register at any given moment, or who may have recourse to it at any time throughout the year, but their dependants, constitute an appreciable part of the electorate. The dole vote, the dole-vested interests—that is what, in default of all other foundations of respect in the country, His Majesty's Government are increasingly relying upon. They are trying to marshal this vote by representing out of doors and here in this House that they are the party who will extract larger sums from the Exchequer, and will distribute them more loosely to larger numbers than any other party in the State.


It is not true.


That is why the Minister of Labour and the Chancellor of the Exchequer have been made to eat their words, have been made to consent to a policy which they have publicly denounced. I say undoubtedly that the speeches which were delivered from that Bench on the last occasion show every desire to turn this great public disaster into a means of gathering support for the party which at the present time has control of the public purse.

Our duty is plain. We have to proclaim the principles of correct finance and of sound and scientific administration of the Insurance Fund. We have to separate insurance from assistance, if it costs us votes. Indeed, I believe that a party in the present political situation which adopted a sound and scientific policy on this subject, even if it looked at first sight as though it would cast them votes, would gain very quickly an enormous measure of support from that central and untouched mass of voters who are not now taking part in politics, but who are seeking amid their fog and confusion for something that they can trust and something that they can respect.

The LORD PRIVY SEAL (Mr. Johnston)

I have listened to this Debate since the moment it was opened by the right hon. Gentleman the Member for Stafford (Mr. Ormsby-Gore) in a speech which, I hope, I may characterise quite inoffensively as packed with hysterical histrionics. The Debate, so far as the Opposition is concerned, has ended by what I may equally inoffensively describe as the Merry Andrew note. There is at least this to be said for the right hon. Gentleman the Member for Stafford, that he stuck within limits to his brief. He set out to argue that there should be no borrowing as a means of maintaining the Insurance Fund in this country. He forgot that borrowing has been proceeding since 1921. He forgot that it was a Coalition Government which introduced borrowing in the Act of 1921, and that he himself voted for it. He forgot that that Act reduced benefit from 20s. to 15s. for men and from 16s. to 12s. for women, and borrowed at the same time, and that he supported it. Ever since then, successive Governments have continued the policy of borrowing. The Conservative Government borrowed when the unemployed on the register numbered just over 1,000,000. What was a virtue on their part when the unemployed were just over 1,000,000, becomes a crime with a Labour Government when the unemployed are over 2,500,000. But I observed that the right hon. Member for Epping, whatever else he said, was not being caught in the trap of the official Opposition Amendment. He did not support any attack on borrowing. Why? Because he is an advocate of borrowing. On the 28th March last year he said this: I still hold the view that a Fund with an independent income of over £50,000,000 is not compromised or imprudently administered if, during a period of wholly exceptional unemployment, its borrowing powers are used to the full statutory limit, or even to some extent beyond the original statutory limit. Broadly speaking, I have long been of opinion that the position of this Fund would not be unsatisfactory if its borrowing powers were extended to a figure equal to, say, at least one year of its annual income. He added this: I could not see that any greater advantage would be achieved by transferring a large portion of burden from this Fund, with its own independent income, to the National Exchequer when the National Exchequer had a debt which was eight or nine times its annual income, whereas the Fund had only a debt of less than one year of its annual income."—[OFFICIAL REPORT, 28th March, 1930; col. 850, Vol. 237.] What does that mean? That borrowing is a virtue up to £50,000,000, but is a crime over £50,000,000. [Interruption.] I cannot understand what the right hon. Gentleman means when he shakes his head.


I am saying that I spoke my own view, and borrowing up to the limit of a year's income of the Fund was not an imprudent step to take in those exceptional circumstances, but you are already borrowing up to two years' limit and——[Interruption.]


Now we understand where we are. Borrowing is a virtue up to £50,000,000. [HON. MEMBERS: "Within your means."] Thereafter, according to the right hon. Gentleman, we must proceed to put the Fund upon what he calls an insurance basis. What he calls an insurance basis has been made clear this afternoon; it is to put the persons on transitional benefit on to the Poor Law. But neither he nor his party held that view, or at any rate put that view into legislation, when they were in office, because since 1921 there not only has been borrowing there have been uncovenanted benefits on a non-insurable basis, there have been extended benefits, there have been transitional benefits; and for the past 10 years—not for the past 10 months, when the present Minister of Labour was in charge—all parties in the State have been driven, willy nilly, to recognise the fact that large numbers of our unfortunate fellow citizens, unemployed through no fault of their own, unemployed as a result of a rotton social order—[HON. MEMBERS: "A rotten Socialist Government."]—unemployed, and no one dare challenge this, not be cause of any moral obliquity on the part of the unemployed man or woman—now we have it from the Front Opposition Bench that these people are to be thrown on the Poor Law.

The right hon. Gentleman the Member for Stafford who spoke partly I hope for the Opposition—I am excluding that part of the Opposition which is sitting beside him for the moment—said that borrowing without any means of repayment meant national bankruptcy. I agree with the right hon. Gentleman, and so do we all. The first effect of borrowing with no prospect of repayment means a failure to borrow except at a high rate of interest. The second effect means failure to borrow at all; and the third effect means the taxation of a depressed national income at a very low yield. Therefore, if we can only borrow without prospect of repayment, and no provision for repayment, I agree that we ought to face up to our responsibilities, and raise the necessary funds in other directions. The Opposition have made it clear how they intend to balance the Fund, and that is to place the burden on the poor people of this country.

There is one exception, and that is the Member for Central Nottingham (Mr. O'Connor), who told us that he was speaking for himself. With that one exception no hon. Gentleman who spoke from the opposite side of the House has stated that he would raise the money other than out of the pockets of the poorest of the poor. Speaking solely for himself, the hon. and learned Member for Central Nottingham declared that he would make it part of his policy to impose a special tax upon the rentier class. With this exception, the official attitude of the Opposition is now declared to be that they would make this Fund balance at the expense of the poorest of the poor.

The leader of the Conservative party in another place, speaking at Tredegar Park, said that the Conservative Opposition had its own plan, that it was a better plan than the Royal Commission had produced, and that they were not prepared to accept the majority report. The last thing—not the first—said Lord Hailsham, that the Conservative party would do, would be to reduce benefits and increase the contributions; and yet this afternoon practically every speaker has thrown overboard that public statement of Lord Hailsham, and has agreed that the attack must be on the lines of the Majority Report.

The right hon. Gentleman the Member for Epping (Mr. Churchill) writes about "Government of the Dole Drawers, by the Dole Drawers, for the Dole Drawers," in the article which he published in a widely read newspaper, with—he is not responsible for it—a most offensive drawing. If ever there was a drawing that was derogatory to the best interests and dignity of this House, surely it was the drawing which prefaced his article. In that article, "Government of the Dole Drawers, by the Dole Drawers, for the Dole Drawers," he himself weeps over the abolition of what we call the "N.-G.-S.-W." statutory condition. He regrets that the not genuinely seeking work condition was swept away. He quotes Sir William Beveridge in language of commendation, but he has omitted to observe that Sir William Beveridge, in his most recent book—a book to which he himself referred—throws overboard the not genuinely seeking work condition, and declares that he hopes it will never again be resurrected from its dishonoured grave. [Interruption.]


I quoted Sir William Beveridge on the question of separation between insurance and assistance.


That is quite true. The right hon. Gentleman quoted Sir William Beveridge's book in language of commendation on another point. I am drawing his attention to the fact that the great civil servant who was associated with him in the early stages of Unemployment Insurance, and whose volume is quoted very frequently by Members in other parts of the House, Sir William Beveridge, is at pains to declare that for his part he dissociates himself utterly and entirely from the not genuinely seeking work condition.

In the one or two moments that are left, I should like to say a word about the demand that the fund should be put upon an insurance basis. It has never been on an insurance basis. Uncovenanted benefit, extended benefit, transitional benefit, were based on the very fact that men who pay precisely the same premium draw different rates of benefit according to the number of dependants they have. That denies fundamentally the contention that this has ever been an insurance fund in the ordinary sense of the word "insurance". The Government are determined, and they have shown their determination, within the limits of their power to prevent sponging on the fund, but they will do nothing, and I hope they will do nothing to deny to any bonâ fide workman or workwoman in this country minimum standards and rights which past Parliaments have put upon the Statute Book, in the Unemployment Insurance Acts. So long as there are two crusts in the locker, we will not begin to balance our Budget, we will not begin to square our accounts, by taking from the poorest of the poor, but we shall go, for the money necessary to balance our Budget and square our accounts, to where that money is.





There are still two or three minutes left.


England has been through social and industrial crises before, when a minority government, unsupported by the national confidence, was in power. Historians remember the Tudor crises, when inflated currency and rising prices set the poor man singing: I'll tell thee what, good fellow, Before the mo nks went hence A barrel of the best beer Was sold for eighteen pence, And twelve eggs for a penny That were both fresh and good. There was about 1558 a moribund government depending on a moribund Queen—with every social and spiritual foundation shaken. Within three years, under a new government that was stable, well-trusted and above all things economical, the crises had passed away in the spacious days of Queen Elizabeth.

Question put, "That the words proposed to be left out stand part of the Question."

The House divided: Ayes, 240; Noes, 180.

Division No. 355.] AYES. [4.0 p.m.
Adamson, Rt. Hon. W. (Fife, West) Henderson, Thomas (Glasgow) Paling, Wilfrid
Adamson, W. M. (Staff., Cannock) Henderson, W. W. (Middx., Enfield) Palmer, E. T.
Addison, Rt. Hon. Dr. Christopher Herrlotts, J. Parkinson, John Allen (Wigan)
Aitchison, Rt. Hon. Craigle M. Hicks, Ernest George Peters, Dr. Sidney John
Alpass, J. H. Hirst, G. H. (York W. R. Wentworth) Pethick-Lawrence, F. W.
Ammon, Charles George Hollins, A. Phillips, Dr. Marion
Angell, Sir Norman Hopkin, Daniel Pole, Major D. G.
Arnott, John Hore-Belisha, Leslie Potts, John S.
Aske, Sir Robert Hudson, James H. (Huddersfield) Price, M. P.
Attlee, Clement Richard Isaacs, George Ramsay, T. B. Wilson
Ayles, Walter John, William (Rhondda, West) Raynes, W. R.
Baldwin, Oliver (Dudley) Johnston, Rt. Hon. Thomas Richards, R.
Beckett, John (Camberwell, Peckham) Jones, J. J. (West Ham, Silvertown) Richardson, R. (Houghton-le-Spring)
Benn, Rt. Hon. Wedgwood Jones, Rt. Hon. Leif (Camborne) Riley, F. F. (Stockton-on-Tees)
Bennett, Sir E. N. (Cardiff, Central) Jones, Morgan (Caerphilly) Ritson, J.
Bennett, William (Battersea, South) Jowett, Rt. Hon. F. W. Romeril, H. G.
Benson, G. Jowitt, Rt. Hon. Sir W. A. (Preston) Rosbotham, D. S. T.
Bevan, Aneurin (Ebbw Vale) Kennedy, Rt. Hon. Thomas Rothschild, J. de
Bondfield, Rt. Hon. Margaret Kenworthy, Lt.-Com. Hon. Joseph M. Rowson, Guy
Bowen, J. W. Kinley, J. Salter, Dr. Alfred
Bowerman, Rt. Hon. Charles W. Knight, Holford Samuel, Rt. Hon. Sir H. (Darwen)
Brockway, A. Fenner Lang, Gordon Samuel, H. Walter (Swansea, West)
Bromley, J. Lansbury, Rt. Hon. George Sanders, W. S.
Brooke, W. Lathan, G. (Sheffield, Park) Sandham, E.
Brothers, M. Law, Albert (Bolton) Sawyer, G. F.
Brown, C. W. E. (Notts, Mansfield) Law, A. (Rosendale) Scurr, John
Buchanan, G. Lawrence, Susan Sexton, Sir James
Burgess, F. G. Lawrie, Hugh Hartley (Stalybridge) Shaw, Rt. Hon. Thomas (Preston)
Caine, Hall-, Derwent Lawson, John James Sherwood, G. H.
Cameron, A. G. Lawther, W. (Barnard Castle) Shield, George William
Cape, Thomas Leach, W. Shiels, Dr. Drummond
Carter, W. (St. Pancras, S. W.) Lee, Frank (Derby, N. E.) Shillaker, J. F.
Charleton, H. C. Lee, Jennie (Lanark, Northern) Shinwell, E.
Cluse, W. S. Lees, J. Short, Alfred (Wednesbury)
Clynes, Rt. Hon. John R. Lewis, T. (Southampton) Simmons, C. J.
Cocks, Frederick Seymour Lindley, Fred W. Sinclair, Sir A. (Caithness)
Cove, William G. Lloyd, C. Ellis Sitch, Charles H.
Cripps, Sir Stafford Logan, David Gilbert Smith, Ben (Bermondsey, Rotherhithe)
Daggar, George Longbottom, A. W. Smith, Frank (Nuneaton)
Dallas, George Longden, F. Smith, Rennie (Penlstone)
Dalton, Hugh Lovat-Fraser, J. A. Smith, Tom (Pontefract)
Davies, D. L. (Pontypridd) Lunn, William Smith, W. R. (Norwich)
Davies, Rhys John (Westhoughton) Macdonald, Gordon (Ince) Sorensen, R
Day, Harry MacDonald, Rt. Hon. J. R. (Seaham) Stephen, Campbell
Denman, Hon. R. D. MacDonald, Malcolm (Bassetlaw) Strauss, G. R.
Dudgeon, Major C. R. McElwee, A. Sutton, J. E.
Dukes, C. McEntee, V. L. Taylor, R. A. (Lincoln)
Duncan, Charles McGovern, J. (Glasgow, Shettleston) Taylor, W. B. (Norfolk, S. W.)
Ede, James Chuter McKinlay, A. Thomas, Rt. Hon. J. H. (Derby)
Edmunds, J. E. MacLaren, Andrew Thurtle, Ernest
Egan, W. H. Maclean, Nell (Glasgow, Govan) Tillett, Ben
Elmley, Viscount MacNelli-Weir, L. Tinker, John Joseph
Gardner, B. W. (West Ham, Upton) McShane, John James Toole, Joseph
George, Major G. Lloyd (Pembroke) Malone, C. L'Estrange (N'thampton) Townend, A. E.
George, Megan Lloyd (Anglesea) Mander, Geoffrey le M. Turner, Sir Ben
Gibbins, Joseph Manning, E. L. Vaughan, David
Gibson, H. M. (Lanes. Mossley) Mansfield, W. Viant, S. P.
Gillett, George M. March, S. Walkden, A. G.
Glassey, A. E. Marley, J. Walker, J.
Gossling, A. G. Marshall, Fred Wallace, H. W.
Gould, F. Mathers, George Watkins, F. C.
Graham, Rt. Hon. Wm. (Edin., Cent.) Matters, L. W. Wellock, Wilfred
Gray, Milner Maxton, James Welsh, James (Paisley)
Greenwood, Rt. Hon. A. (Colne) Messer, Fred West, F. R.
Grenfell, D. R. (Glamorgan) Middleton, G. Westwood, Joseph
Griffith, F. Kingsley (Middlesbro' W.) Mills, J. E. Whiteley, Wilfrid (Birm., Ladywood)
Griffiths, T. (Monmouth, Pontypool) Montague, Frederick Whiteley, William (Blaydon)
Groves, Thomas E. Morgan, Dr. H. B. Wilkinson, Ellen C.
Grundy, Thomas W. Morley, Ralph Williams, David (Swansea, East)
Hall, G. H. (Merthyr Tydvil) Morrison, Rt. Hon. H. (Hackney, S.) Williams, E. J. (Ogmore)
Hall, J. H. (Whitechapel) Morrison, Robert C. (Tottenham, N.) Williams, T. (York, Don Valley)
Hall, Capt. W. G. (Portsmouth, C) Mort, D. L. Wilson, C. H. (Sheffield, Attercliffe)
Hamilton, Mary Agnes (Blackburn) Muggeridge, H. T. Wilson, J. (Oldham)
Hamilton, Sir R. (Orkney & Zetland) Nayler, T. E. Wilson R. J. (Jarrow)
Hardie, David (Rutherglen) Newman, Sir R. H. S. D. L. (Exeter) Winterton, G. E. (Lelcester, Loughn'gh)
Hardie, G. D. (Springburn) Noel Baker, P. J. Wise, E. F.
Harris, Percy A. Noel-Buxton, Baroness (Norfolk, N.) Wood, Major McKenzie (Banff)
Hastings, Dr. Somerville Oldfield, J. R. Young, R. S. (Islington, North)
Haycock, A. W. Oliver, George Harold (Ilkeston)
Hayday, Arthur Owen, H. F. (Hereford) TELLERS FOR THE AYES.—
Henderson, Right Hon. A. (Burnley) Palin, John Henry Mr. Charles Edwards and Mr. Hayes.
Albery, Irving James Elliot, Major Walter E. Moore, Lieut.-Colonel T. C. R. (Ayr)
Amery, Rt. Hon. Leopold C. M. S. Erskina, Lord (Somerset, Weston-s.-M.) Morrison, W. S. (Glos., Cirencester)
Ashley, Lt.-Col. Rt. Hon. Wilfrid W. Everard, W. Lindsay Muirhead, A. J.
Astor, Maj. Hn. John J.(Kent, Dover) Ferguson, Sir John Newton, Sir D. G. C. (Cambridge)
Atkinson, C. Fermoy, Lord Nicholson, O. (Westminster)
Balfour, George (Hampstead) Ford, Sir P. J. Nicholson, Col. Rt. Hn. W. G. (Ptrsf'ld)
Balfour, Captain H. H. (I. of Thanet) Fremantle, Lieut.-Colonel Francis E. O'Connor, T. J.
Balniel, Lord Ganzonl, Sir John Oman, Sir Charles William C.
Beamish, Rear-Admiral T. P. H. Glyn, Major R. G. C. O'Neill, Sir H.
Beaumont, M. W. Gower, Sir Robert Ormsby-Gore, Rt. Hon. William
Betterton, Sir Henry B. Graham, Fergus (Cumberland, N.) Penny, Sir George
Bevan, S. J. (Holborn) Grattan-Doyle, Sir N. Percy, Lord Eustace (Hastings)
Birchall, Major Sir John Dearman Greene, W. P. Crawford Pilditch, Sir Philip
Bird, Ernest Roy Granted, Edward C. (City of London) Power, Sir John Cecil
Boothby, R. J. G. Gretton, Colonel Rt. Hon. John Ramsbotham, H.
Bourne, Captain Robert Croft Gritten, W. G. Howard Rawson, Sir Cooper
Bowyer, Captain Sir George E. W. Guinness, Rt. Hon. Walter E. Reid, David D. (County Down)
Boyce, Leslie Gunston, Captain D. W. Remer, John R.
Bracken, B. Hacking, Rt. Hon. Douglas H. Rentoul, Sir Gervals S.
Brass, Captain Sir William Hall, Lieut.-Col. Sir F. (Dulwich) Reynolds, Col. Sir James
Briscoe, Richard Georgo Hammersley, S. S. Roberts, Sir Samuel (Ecclesall)
Broadbent, Colonel J. Hanbury, C. Ruggles-Brise, Colonel E.
Brown, Brig.-Gen. H. C. (Berks, Newb'y) Hartington, Marquess of Russell, Alexander West (Tynemouth)
Buchan, John Harvey, Major S. E. (Devon, Totnes) Salmon, Major I.
Buchan-Hepburn, P. G. T. Haslam, Henry C. Samuel, A. M. (Surrey, Farnham)
Bullock, Captain Malcolm Henderson, Capt. R. R. (Oxf'd, Henley) Sandeman, Sir N. Stewart
Cadogan, Major Hon. Edward Herbert, Sir Dennis (Hertford) Sassoon, Rt. Hon. Sir Philip A. G. D.
Campbell, E. T. Hills, Major Rt. Hon. John Waller Savery, S. S.
Carver, Major W. H. Hoare, Lt.-Col. Rt. Hon. Sir S. J. G. Simon, Rt. Hon. Sir John
Castle Stewart, Earl of Horne, Rt. Hon. Sir Robert S. Smith, R. W. (Aberd'n & Kinc'dine, C.)
Cautley, Sir Henry S. Howard-Bury, Colonel C. K. Smith-Carington, Neville W.
Cayzer, Sir C. (Chester, City) Hurd, Percy A. Smithers, Waldron
Cayzer, Maj. Sir Herbt. R.(Prtsmth, S.) Hurst, Sir Gerald B. Somerville, A. A. (Windsor)
Cazalet, Captain Victor A Hutchison, Maj.-Gen. Sir R. Southby, Commander A. R. J.
Chamberlain, Rt. Hn. Sir J. A. (Birm., W.) Iveagh, Countess of Spender-Clay, Colonel H.
Chamberlain, Rt. Hon. N. (Edgbaston) Jones, Sir G. W. H. (Stoke New'gton) Stanley, Hon. O. (Westmorland)
Christie, J. A. Kindersley, Major G. M. Steel-Maitland, Rt. Hon. Sir Arthur
Churchill, Rt. Hon. Winston Spencer Lambert, Rt. Hon. George (S. Molton) Stuart, Hon. J. (Moray and Nairn)
Cobb, Sir Cyril Lane Fox, Col. Rt. Hon. George R. Sueter, Rear-Admiral M. F.
Cockerill, Brig.-General Sir George Latham, H. P. (Scarboro' & Whitby) Taylor, Vice-Admiral E. A.
Conway, Sir W. Martin Leighton, Major B. E. P. Thomas, Major L. B. (King's Norton)
Cooper, A. Duff Lewis, Oswald (Colchester) Thompson, Luke
Courtauld, Major J. S. Little, Graham-, Sir Ernest Thomson, Mitchell-, Rt. Hon. Sir W.
Courthope, Colonel Sir G. L. Llewellin, Major J. J. Titchfield, Major the Marquess of
Cranborne, Viscount Locker-Lampson, Rt. Hon. Godfrey Train, J.
Crichton-Stuart, Lord C. Locker-Lampson, Com. O.(Handsw'th) Tryon, Rt. Hon. George Clement
Croft, Brigadier-General Sir H. Long, Major Hon. Eric Turton, Robert Hugh
Crookshank, Capt. H. C. Lymington, Viscount Vaughan Morgan, Sir Kenyon
Cunliffe-Lister, Rt. Hon. Sir Philip McConnell, Sir Joseph Wallace, Capt. D. E. (Hornsey)
Culverwell, C. T. (Bristol, West) Macdonald, Capt. P. D. (I. of W.) Ward, Lieut.-Col. Sir A. Lambert
Dalkeith, Earl of Macquisten, F. A. Waterhouse, Captain Charles
Dalrymple-White, Lt.-Col. Sir Godfrey Maitland, A. (Kent. Faversham) Wells, Sydney R.
Davidson, Rt. Hon. J (Hertford) Margesson, Captain H. D. Williams, Charles (Devon, Torquay)
Davies, Dr. Vernon Marjoribanks, Edward Windsor-Clive, Lieut.-Colonel George
Davies, Maj. Geo. F. (Somerset, Yeovil) Mason, Colonel Glyn K. Wolmer, Rt. Hon. Viscount
Davison, Sir W. H. (Kensington, S.) Meller, R. J. Womersley, W. J.
Dawson, Sir Philip Merriman, Sir F. Boyd Wood, Rt. Hon. Sir Kingsley
Despencer-Robertson, Major J. A. F. Milne, Wardlaw-, J. S. Young, Rt. Hon. Sir Hilton
Dugdale, Capt. T. L. Mitchell, Sir W. Lane (Streatham)
Eden, Captain Anthony Monsell, Eyres, Com. Rt. Hon. Sir B. TELLERS FOR THE NOES.—
Edmondson, Major A. J. Moore, Sir Newton J. (Richmond) Sir- Frederick Thomson and Captain Austin Hudson.

Bill read a Second time.

Bill committed to a Committee of the whole House for Monday next.—[Mr. T. Kennedy.]