HC Deb 17 April 1934 vol 288 cc922-5

The Committee must recognise that these figures do not and cannot cover the cost of any alteration in the benefits under the Unemployment Insurance Scheme. I remember that, in the course of the discussions on the Unemployment Bill, a good deal of concern was manifested by hon. Members in different parts of the House lest the position of the unemployed insured persons under the scheme should be prejudiced in relation to the restoration of cuts by the provisions of the Bill. It was pointed out that it was not the Chancellor of the Exchequer, but the Statutory Committee from whom the initiative must come for any restoration of cuts, and that there was no certainty that the Statutory Committee would use that initiative in such a way as to make the restoration of cuts in benefits coincident in amount and in time with any restoration of cuts which might be made by the Chancellor of the Exchequer for those who Were outside the scheme. At the time it was extremely difficult for me to give a full explanation to the Committee. I could not have done that without disclosing, or appearing to disclose, budgetary intentions, which, in fact, had not at that time been decided upon. I therefore had to confine myself to a rather dogmatic assertion that there was nothing in the Bill which would justify any statement that it would be impossible to restore the cuts in benefit at the same time as the cuts in the emoluments of other classes.

As a matter of fact, my view has always been that there was one exception to the general rule that if we were going to set up a Statutory Committee to give us advice as to the best way, in the interests of the insured, of distributing any surplus there might be in the Unemployment Fund, we should not anticipate the work we were going to entrust to them by making inroads upon that surplus in advance. The one exception concerned the restoration of the cuts in the unemployment benefit. Those cuts were part and parcel of the whole plan of 1931. To have made any distinction which would have been unfavourable to those who were inside the insurance scheme merely because the scheme had been altered, would have been to commit a very gross injustice. Therefore, now that we are proposing to make some partial restoration of cuts outside the scheme, the Government, in my opinion, could not do less than ensure, by legislation, for an equal restoration to those inside the scheme as to those outside it. But I think the Committee will see that even that course would not have completely solved the difficulty. It would still leave to the discretion of the Statutory Committee the restoration of the second half of the cut. There would still be no certainty that the Statutory Committee would choose to restore the second half of the cut at any time when the Chancellor of the Exchequer found it possible to complete the full restoration to the classes outside the scheme, but I am sure everybody here will agree that there must be no uncertainty in this matter. I am sure that everybody will want, if there is to be any inequality in this process of restoration, that the unemployed should come first. Whatever may be the sufferings and hardships of those who may have had their income reduced, their position must still be preferable to that of the unemployed with no income at all.

Therefore, I propose to introduce a new Clause into the Unemployment Bill which will provide for the full restoration of unemployment benefit as from 1st July. That is on the assumption, which I may almost take as a certainty, that the Bill becomes law by 30th June. The Committee is aware that the maximum rates of transitional payments are regulated by Statute according to the benefits under the unemployment insurance scheme. Therefore, this full restoration of unemployment benefit of which I have just spoken naturally carries with it a corresponding alteration in the maximum rates of transitional payments. It is rather difficult, owing to the needs basis of payment, to estimate exactly what that is likely to cost. I am proposing that there should be a Supplementary Estimate in respect of it of £3,600,000, which I estimate will be the cost to the Exchequer of the change during the present year. That comes out of the Budget surplus.

Although in the Budget, I am not strictly concerned with the cost of unemployment insurance benefit, I think hon. Members will probably want to know whether there is any likelihood that this restoration of the unemployment benefit cut will produce any seriously prejudicial effect upon the finances of the Insurance Fund. Fortunately, there is no need for any anxiety upon that score. Under the Unemployment Bill, after making the provisions embodied in the Bill, the fund becomes self-supporting on the basis of a level of 2,500,000 on the live register of unemployed. The last published figure of unemployment was about 2,200,000, and we expect to have further falls during the year. But by every 100,000 that the figures of unemployment fall the surplus in the fund rises by something over £3,000,000. Therefore, if at the end of the year the average level turns out to be 2,300,000, we might expect a surplus of £6,500,000 or thereabouts, and if, as I must say seems more likely, the level should turn out to be 2,200,000 then there would be a surplus approximately of £10,000,000 in the fund. The cost of the restoration of the cut is £4,800,000 in a full year. Therefore, I think the Committee will agree with me that not only can the fund easily bear this new charge upon it, but, after providing for the Debt service as embodied in the Bill there will still be every probability of a very substantial surplus for the consideration of the Statutory Committee to which, I have no doubt, they will give very prompt attention.